DEF 14A of Johnson Controls International plc
Filed Jan 21, 2022 · FY20210001193125-22-014793
Letter from the Chairman and CEO, George Oliver
| Pay-for-performance | ✓ Set majority of compensation as variable and at-risk ✓ Tie incentives to performance against financial, operational, strategic and individual goals ✓ Use quantifiable and measurable performance metrics and goals that are clearly disclosed ✓ Provide significant upside and downside potential for superior and low performance | | Target pay appropriately | ✓ Benchmark compensation against practices in similarly-sized general industry companies ✓ In general, target compensation at market median for comparable positions (+/- 15%) | | Align interests with our stakeholders | ✓ Design programs that discourage unnecessary or excessive risk-taking ✓ Cap payout opportunities under the incentive plans ✓ Minimum vesting periods for equity awards ✓ Reward long-term financial results that drive financial creation through a balanced equity mix ✓ Operate meaningful share ownership guidelines ✓ Provide a pay recoupment (i.e., clawback) policy, which was expanded in fiscal 2021 ✓ Prohibit insider trading, hedging and pledging of Company stock ✓ Engage with shareholders on executive compensation matters ✓ Engage an independent compensation consultant to provide analysis and advice ✓ Conduct an annual say-on-pay vote | | Avoid poor governance practices | No tax gross-ups on any change-in-control benefits No single-trigger accelerated vesting on a change-in-control (double-trigger provisions) No discounting, reloading or re-pricing of share options without shareholder approval No guaranteed compensation or guaranteed increases No excessive perquisites No employment agreements with executive officers, except where legally required, in which case they follow market norms No dividends paid on unvested restricted share units or performance share units until such awards vest |
Letter from the Chairman and CEO, George Oliver
AGENDA ITEMS PROPOSAL NUMBER ONE ELECTION OF DIRECTORS Upon the recommendation of the Governance and Sustainability Committee, the Board has nominated for election at the Annual General Meeting a slate of 11 nominees, all of whom currently serve on our Board. Biographical information regarding each of the nominees is set forth below. We are not aware of any reason why any of the nominees will not be able to serve if elected. The term of office for members of the Board of Directors commences upon election and terminates upon completion of the first Annual General Meeting of Shareholders following election.
Letter from the Chairman and CEO, George Oliver
| | Jean Blackwell, Age 67 Director Since: June 2018 Independent: Yes Committee: Governance, Executive Other Public Directorships: • Celanese Corporation • Ingevity Corporation |
Letter from the Chairman and CEO, George Oliver
Ms. Blackwell served as Chief Executive Officer of Cummins Foundation and Executive Vice President, Corporate Responsibility, of Cummins Inc., a global power leader that designs, manufactures, distributes and services diesel and natural gas engines and engine-related component products, from March 2008 until her retirement in March 2013. She previously served as Executive Vice President and Chief Financial Officer from 2003 to 2008, Vice President, Cummins Business Services from 2001 to 2003, Vice President, Human Resources from 1998 to 2001, and Vice President and General Counsel from 1997 to 1998 of Cummins Inc. Prior thereto, Ms. Blackwell was a partner at the Indianapolis law firm of Bose McKinney & Evans LLP from 1984 to 1991. She has also served in state government, including as Executive Director of the Indiana State Lottery Commission and State of Indiana Budget Director. Ms. Blackwell serves as a Director of Celanese Corporation, a global technology and specialty materials company, and Ingevity Corporation, a leading global manufacturer of specialty chemicals and high performance carbon materials. Ms. Blackwell previously served as a Director of Essendant Inc., a leading national wholesale distributor of business products, from 2007 to 2018 and Phoenix Companies Inc., a life insurance company, from 2004 to 2009. Skills and Qualifications Extensive experience as a business leader, including serving as the Chief Financial Officer of Cummins Inc. Deep financial acumen as CFO and senior finance leader in engine-related industry. Experience serving on the board of directors of multiple international companies. Significant knowledge of the global marketplace gained from her business experience and background. Extensive experience with public policy and ESG topics through service as CEO of the Cummins Foundation and Executive Vice President of Corporate Responsibility for Cummins Inc. Significant board leadership experience though her service as board chair and nominating and governance chair of other public companies. Experience leading global teams.
Letter from the Chairman and CEO, George Oliver
| | Pierre Cohade, Age 60 Director Since: December 2018 Independent: Yes Committee: Audit Other Public Directorships: • CEAT Ltd. |
Letter from the Chairman and CEO, George Oliver
Mr. Cohade served as the Chief Executive Officer of Triangle Tyre, China’s largest private tire manufacturer from 2015 to 2016. From 2013 to 2015, Mr. Cohade was a Senior Advisor at ChinaVest, Wells Fargo’s investment banking affiliate in China. During 2012, he served as an independent consultant for various private equity concerns. Prior thereto he served as the President, Asia Pacific, of The Goodyear Tire & Rubber Company from 2004 to 2011. From 2003 to 2004, Mr. Cohade served as the Division Executive Vice President of the Global Water and Beverage division of Danone SA. From 1985 to 2003, Mr. Cohade served in roles of increasing responsibility at Eastman Kodak Co., ultimately serving as the Chairman of Kodak’s Europe, Africa, Middle East and Russia Region. Mr. Cohade serves as a Director of CEAT Ltd., one of India’s leading tire manufacturers, and Deutsche Bank China. Mr. Cohade was a director of Acorn International Inc., a leading marketing and branding company in China focused on content creation, distribution, and product sales through digital media, from 2017 to 2021. Mr. Cohade is currently the Chairman of IMA in China, a leading peer group forum for CEOs and senior executives located in China, and is an independent advisor to companies on China, strategy and operations. Extensive experience as a business leader in a number of industries. Experience leading large business units at The Goodyear Tire & Rubber Company, Danone SA, and Eastman Kodak Co. Significant experience in a number of senior global positions, with extensive experience and expertise in China. Deep experience in the consumer products industry. Experience in overseeing manufacturing and operations in China at The Goodyear Tire & Rubber Company and Triangle Tyre. Experience engaging with regulators and governments on public policy issues in Asia. Experience leading corporate responsibility initiatives at Goodyear Tire & Rubber Company and Triangle Tyre. Experience leading global teams.
Letter from the Chairman and CEO, George Oliver
| | Michael E. Daniels, Age 67 Director Since: March 2010 Independent: Yes Committees: Compensation, Executive Other Public Directorships: • Thomson Reuters • SS&C Technologies, Inc. |
Letter from the Chairman and CEO, George Oliver
Prior to his retirement in March 2013, Mr. Daniels was the Senior Vice President and Group Executive of IBM Services, a business and IT services company with operations in more than 160 countries around the world. In this role, Mr. Daniels had worldwide responsibility for IBM’s Global Services business operations in outsourcing services, integrated technology services, maintenance, and Global Business Services, the consulting and applications management arm of Global Services. Since he joined IBM in 1976, Mr. Daniels held a number of leadership positions in sales, marketing, and services, and was general manager of several sales and services businesses, including IBM’s Sales and Distribution operations in the United States, Canada and Latin America; its Global Services team in the Asia Pacific region; Product Support Services; Availability Services; and Systems Solutions. Mr. Daniels serves as a Director of Thomson Reuters, a provider of intelligent information for businesses, and SS&C Technologies, a provider of specialized software, software enabled services and software as a service solutions to the financial services industry. Skills and Qualifications Decades of senior leadership experience at IBM. Broad and extensive global business experience in a wide range of global roles as an executive at IBM, including decades of experience in the service space. Deep understanding of critical areas of enterprise service functions and information technology, including cybersecurity. Experience as a senior manager of a global organization as well as international experience living and working in a variety of cultures. Experience leading global teams at IBM and in service on the compensation committee of public companies.
Letter from the Chairman and CEO, George Oliver
| | W. Roy Dunbar, Age 60 Director Since: June 2017 Independent: Yes Committee: Compensation Other Public Directorships: • Duke Energy Corporation • SiteOne Landscape Supplies |
Letter from the Chairman and CEO, George Oliver
Mr. Dunbar was Chairman of the Board of Network Solutions, a technology company and web service provider, and was the Chief Executive Officer from January 2008 until October 2009. Mr. Dunbar also served as the President of Global Technology and Operations for MasterCard Incorporated from September 2004 until January 2008. Prior to MasterCard, Mr. Dunbar worked at Eli Lilly and Company for 14 years, serving as President of Intercontinental Operations, and earlier as Chief Information Officer. He currently serves as a Director of Duke Energy Corporation, one of America’s largest energy holding companies, and SiteOne Landscape Supply, Inc., a national wholesale distributor of landscape supplies, and previously served as a Director of Humana, Inc., Lexmark International and iGate. Extensive experience leading across functional disciplines. Significant experience as a leader and director across US and international markets. Experience in global leadership and service as a director on the compensation committees of multiple companies. Career-spanning depth of experience across numerous disciplines including healthcare, information technology, payments, insurance and renewable energy.
Letter from the Chairman and CEO, George Oliver
| | Gretchen R. Haggerty, Age 66 Director Since: March 2018 Independent: Yes Committee: Audit, Executive Other Public Directorships: • Teleflex Corporation |
Letter from the Chairman and CEO, George Oliver
Ms. Haggerty retired in August 2013 after a 37-year career with United States Steel Corporation, an integrated global steel producer, and its predecessor, USX Corporation, which, in addition to its steel production, also managed and supervised energy operations, principally through Marathon Oil Corporation. From March 2003 until her retirement, Ms. Haggerty served as Executive Vice President & Chief Financial Officer and also served as Chairman of the U. S. Steel & Carnegie Pension Fund and its Investment Committee. Earlier, she served in various financial executive positions at U. S. Steel and USX, beginning in November 1991 when she became Vice President & Treasurer. Ms. Haggerty is currently a Director of Teleflex Incorporated, a global provider of medical technology products, and is a former Director of USG Corporation, a leading manufacturer of building materials. Skills and Qualifications Decades of senior leadership experience at U. S. Steel Corporation and USX Corporation. Deep financial acumen as CFO and senior finance leader in steel and energy industries. Experience serving on the board of directors of multiple international companies. Significant knowledge of the global marketplace gained from her business experience and background. Experience leading global teams.
Letter from the Chairman and CEO, George Oliver
| | Simone Menne, Age 61 Director Since: March 2018 Independent: Yes Committee: Audit Other Public Directorships: • Deutsche Post DHL Group • Henkel AG & Co. KGaA |
Letter from the Chairman and CEO, George Oliver
Ms. Menne served as Chief Financial Officer at Boehringer Ingelheim GmbH, Germany’s second largest pharmaceutical company, from September 2016 to December 2017. She previously served as the Chief Financial Officer at Deutsche Lufthansa AG (“Lufthansa”) from January 2016 to August 2016 and as a member of its Executive Board from July 2012 to August 2016. She also served as Chief Officer of Finances and Aviation Services at Lufthansa from July 2012 to January 2016. Prior thereto she served in a number of roles of increasing responsibility at Lufthansa from 1989 to 2012. She currently serves on the Supervisory Boards of Deutsche Post DHL Group and Henkel AG &Co. KGaA. She also serves on the Börsensachverständigenkommission (Exchange Experts Commission, BSK) and on the Supervisory Board of Russell Reynolds Associates, a global search and leadership advisory firm. Ms. Menne serves as President of the American Chamber of Commerce Germany. Decades of senior leadership experience at Lufthansa and Boehringer Ingelheim. Experience serving on the supervisory boards of multiple international companies. Deep financial acumen as CFO and senior finance leader in transportation and pharmaceutical industries. Significant knowledge of the global marketplace gained from her business experience and background. Experience leading global teams in industries driven by technology and innovation.
Letter from the Chairman and CEO, George Oliver
| | George R. Oliver, Age 61 Director Since: September 2012 Independent: No Committee: Executive Other Public Directorships: • Raytheon Technologies |
Letter from the Chairman and CEO, George Oliver
Mr. Oliver became our Chairman and Chief Executive Officer in September 2017. He previously served as our President and Chief Operating Officer following the completion of the merger with Tyco. Prior to that, Mr. Oliver was Tyco’s Chief Executive Officer, a position he held since September 2012. He joined Tyco in July 2006, and served as President of a number of operating segments from 2007 through 2011. Before joining Tyco, he served in operational leadership roles of increasing responsibility at several General Electric divisions. Mr. Oliver also serves as a Director on the board of Raytheon Technologies, an aerospace and defense company, is a Trustee of Worcester Polytechnic Institute, his alma mater, and serves on the Pro Football Hall of Fame Board of Trustees. Skills and Qualifications Extensive leadership experience over several decades as an executive at Johnson Controls, Tyco and GE. Nearly a decade of experience with Tyco, first as president of several of its business units and then as CEO. Experience as a director, CEO and a senior manager of global organizations. Experience leading global teams at Johnson Controls, Tyco and GE. Experience driving Johnson Controls’ sustainability initiatives. Public policy experience through participation in non-governmental organizations including the Business Roundtable and World Economic Forum, as well as engaging with state and national lawmakers on public policy issues. Mr. Oliver offers valuable insights and perspective on the day to day management of the Company’s affairs.
Letter from the Chairman and CEO, George Oliver
| | Jürgen Tinggren, Age 63 Director Since: March 2014 Independent: Yes Committees: Governance, Executive Other Public Directorships: • N.V. Bekaert S.A. |
Letter from the Chairman and CEO, George Oliver
Mr. Tinggren served as the Chief Executive Officer of the Schindler Group, a global provider of elevators, escalators and related services, through December 2013 and was a member of the Board of Directors of Schindler from March 2014 to 2016. He joined the Group Executive Committee of Schindler in April 1997, initially responsible for Europe and thereafter for the Asia/Pacific region followed by Technology and Strategic Procurement. In 2007, he was appointed Chief Executive Officer and President of the Group Executive Committee of the Schindler Group. Mr. Tinggren also serves as Chairman and head of the Nomination and Governance Committee of N.V. Bekaert S.A., a Belgian based supplier of steel cord products for tire reinforcement and other specialty steel wire products. From 2014 to 2018 he was a Director of the Sika AG Group and from 2017 to 2020 he was a director and Audit Committee member of OpenText Corporation. Extensive business experience as CEO and board member of leading global companies. Experience as senior executive of European, U.S. and Asian based organizations, deep understanding of international markets. Deep understanding of building services, industrial products and installation and service businesses. Deep financial understanding as CEO of Schindler. Deep understanding of digital businesses as a Director of OpenText. Significant experience with mergers and acquisitions. Experience leading global teams as CEO of Schindler.
Letter from the Chairman and CEO, George Oliver
| | Mark Vergnano, Age 63 Director Since: September 2016 Independent: Yes Committee: Compensation Other Public Directorships: • The Chemours Company |
Letter from the Chairman and CEO, George Oliver
Mr. Vergnano is the Chairman of the Board and a director of the Chemours Company, a titanium technologies, fluoroproducts, and chemical solutions producer. Previously, Mr. Vergnano served as the President and Chief Executive Officer of The Chemours Company from July 2015 to July 2021. He served as Executive Vice President, E. I. du Pont de Nemours and Company from 2009 to June 2015. While at DuPont, he served as Group Vice President—Safety & Protection from 2006 to 2009, Vice President and General Manager—DuPont Surfaces and Building Innovations from 2005 to 2006, and Vice President and General Manager—DuPont Nonwovens from 2003 to 2005. Mr. Vergnano joined DuPont in 1980 as a process engineer and held a variety of manufacturing, technical and management assignments throughout multiple global locations in DuPont’s organization. Mr. Vergnano is a former Chairman of the Board of Directors for both the National Safety Council, and the American Chemistry Council. Skills and Qualifications Extensive global business experience as an executive and CEO of Chemours and DuPont. Experience as senior executive of a multinational company. Deep understanding of the operations, global sales and marketing in both the chemical and industrial sectors. Deep financial understanding as CEO of Chemours. Experience leading global teams as CEO of Chemours and in managing a variety of functions and business units at DuPont, including developing and driving Dupont’s government affairs, public policy and corporate social responsibility strategies.
Letter from the Chairman and CEO, George Oliver
| | R. David Yost, Age 74 Director Since: March 2009 Independent: Yes Committee: Audit Other Public Directorships: • Marsh & McLennan Companies, Inc. • Bank of America |
Letter from the Chairman and CEO, George Oliver
Mr. Yost served as Director and Chief Executive Officer of AmerisourceBergen, a comprehensive pharmaceutical services provider, from August 2001 to June 2011 when he retired. He was Chairman and Chief Executive Officer of AmeriSource Health Corporation from May 1997 to August 2001, and President and Chief Executive Officer of AmeriSource from May 1997 to December 2000. Mr. Yost also held a variety of other positions with AmeriSource Health Corporation and its predecessors from 1974 to 1997. Mr. Yost also serves as a Director of Marsh & McLennan Companies, Inc. and Bank of America, and is a member of the Board of the United States Air Force Academy Foundation, and serves on its Executive Committee. Extensive leadership experience gained as the CEO and a director of AmerisourceBergen. Significant corporate governance experience serving as a director of multiple public companies. Exposure to complex risk management concepts gained as a director of Marsh & McLennan and Bank of America. Experience leading global teams as CEO of AmerisourceBergen.
Letter from the Chairman and CEO, George Oliver
| | John D. Young, Age 57 Director Since: December 2017 Independent: Yes Committee: Governance Other Public Directorships: None |
Letter from the Chairman and CEO, George Oliver
Mr. Young has served as Chief Business Officer of Pfizer Inc. since January 2019. From January 2018 to December 2018, he served as Group President of Pfizer Innovative Health, and from June 2016 to January 2018 he served as Group President, Pfizer Essential Health. He was Group President, Global Established Pharma Business for Pfizer from January 2014 until June 2016 and President and General Manager, Pfizer Primary Care from June 2012 until December 2013. He also served as Pfizer’s Primary Care Business Unit’s Regional President for Europe and Canada from 2009 until June 2012 and U.K. Country Manager from 2007 until 2009. Skills and Qualifications Extensive experience as a business leader with 30 years’ experience with Pfizer. Experience leading large business units at Pfizer. Significant experience in a number of senior global positions at Pfizer. Specialized expertise in developing healthcare solutions in a variety of medical disciplines, including through technology and innovation. Experience in corporate social responsibility as a member of the Board of the Pfizer foundation and overseeing Pfizer’s ESG strategy and commitments. Experience leading global teams. Election of each Director requires the affirmative vote of a majority of the votes properly cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy. Each Director’s election is the subject of a separate resolution and shareholders are entitled to one vote per share for each separate Director election resolution. The Board unanimously recommends that shareholders vote FOR the election of each nominee for Director to serve until the completion of the next Annual General Meeting. PROPOSAL NUMBER TWO APPOINTMENT OF AUDITORS AND AUTHORITY TO SET REMUNERATION PricewaterhouseCoopers LLP (“PwC”) served as our independent auditors for the fiscal year ended September 30, 2021. The Audit Committee has selected and appointed PwC to audit our financial statements for the fiscal year ending September 30, 2022. The Board, upon the recommendation of the Audit Committee, is asking our shareholders to ratify the appointment of PwC as our independent auditors for the fiscal year ending September 30, 2022 and to authorize the Audit Committee of the Board of Directors to set the independent auditors’ remuneration. Although approval is not required by our Memorandum and Articles of Association or otherwise, the Board is submitting the selection of PwC to our shareholders for ratification because we value our shareholders’ views on the Company’s independent auditors. If the appointment of PwC is not approved by shareholders, it will be considered as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the appointment is approved, the Audit Committee, in its discretion, may select a different independent auditor at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders. The Audit Committee considers many factors when appointing our independent auditor, including the reasonableness of audit fees, the potential for disruption in our business due to the loss of cumulative institutional knowledge possessed by our current auditor, and the quality of the independent audit firm and overall audit process. In connection with the mandated rotation of PwC’s lead engagement partner, the Audit Committee is directly involved in the selection of PwC’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of PwC to serve as our independent auditor is in our and our shareholders’ best interests. Representatives of PwC will attend the Annual General Meeting and will have an opportunity to make a statement if they wish. They will also be available to answer questions at the meeting. For independent auditor fee information, information on our pre-approval policy of audit and non-audit services, and the Audit Committee Report, please see below. The ratification of the appointment of the independent auditors and the authorization for the Audit Committee to set the remuneration for the independent auditors requires the affirmative vote of a majority of the votes properly cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy. The Audit Committee and the Board unanimously recommend a vote FOR these proposals. Audit and Non-Audit Fees Aggregate fees for professional services rendered to the Company by its independent auditors as of and for the two most recent fiscal years are set forth below. The aggregate fees include fees billed or reasonably expected to be billed for the applicable fiscal year. Fees for fiscal year 2021 include fees billed or reasonably expected to be billed by PwC. All Audit, Audit-Related, Tax and All Other services described below were pre-approved by the Audit Committee.
Letter from the Chairman and CEO, George Oliver
| | Fiscal Year 2021 | Fiscal Year 2020 | | | (in millions) | (in millions) | | Audit Fees | $22.0 | $21.5 | | Audit-Related Fees | 0.8 | 0.7 | | Tax Fees | 3.4 | 3.4 | | All Other Fees | 0.4 | 0.1 | | Total | $26.6 | $25.7 |
Letter from the Chairman and CEO, George Oliver
Audit Fees for the fiscal year ended September 30, 2021 were for professional services rendered by PwC and include fees for services performed to comply with auditing standards of the PCAOB (United States), including the annual audit of our consolidated financial statements including reviews of the interim financial statements contained in Johnson Controls’ Quarterly Reports on Form 10-Q, issuance of consents and the audit of our internal control over financial reporting. This category also includes fees for audits provided in connection with statutory filings or services that generally only the principal auditor reasonably can provide to a client, such as assistance with and review of documents filed with the SEC. Audit-Related Fees for the fiscal year ended September 30, 2021 were for services rendered by PwC and include fees associated with assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. This category includes fees related to assistance in financial due diligence related to mergers, acquisitions and divestitures, carve-outs associated with divestitures and spin-off transactions, consultations concerning financial accounting and reporting standards, issuance of comfort letters associated with debt offerings, general assistance with implementation of SEC and Sarbanes-Oxley Act requirements, audits of pension and other employee benefit plans, and audit services not required by statute or regulation. Tax Fees for the fiscal year ended September 30, 2021 were for services rendered by PwC and primarily include fees associated with tax audits, tax compliance, tax consulting, transfer pricing and tax planning. This category also includes tax planning on mergers and acquisitions and restructurings, as well as other services related to tax disclosure and filing requirements. All Other Fees for the fiscal years ended September 30, 2021 were for services rendered by PwC and primarily include fees associated with information technology consulting, training seminars related to accounting, finance and tax matters and other advisory services. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors In March 2004, the Audit Committee adopted a pre-approval policy that provides guidelines for the audit, audit-related, tax and other permissible non-audit services that may be provided by the independent auditors. The policy identifies the guiding principles that must be considered by the Audit Committee in approving services to ensure that the auditors’ independence is not impaired. The policy provides that the Corporate Controller will support the Audit Committee by providing a list of proposed services to the Committee, monitoring the services and fees pre-approved by the Committee, providing periodic reports to the Audit Committee with respect to pre-approved services and ensuring compliance with the policy. Under the policy, the Audit Committee annually pre-approves the audit fee and terms of the engagement, as set forth in the engagement letter. This approval includes approval of a specified list of audit, audit-related and tax services. Any service not included in the specified list of services must be submitted to the Audit Committee for pre-approval. No service may extend for more than 12 months, unless the Audit Committee specifically provides for a different period. The independent auditor may not begin work on any engagement without confirmation of Audit Committee pre-approval from the Corporate Controller or his or her delegate. In accordance with the policy, the chair of the Audit Committee has been delegated the authority by the Committee to pre-approve the engagement of the independent auditors for a specific service when the entire Committee is unable to do so. All such pre-approvals must be reported to the Audit Committee at the next Committee meeting. Audit Committee Report The Audit Committee of the Board is composed of four Directors, each of whom the Board has determined meets the independence and experience requirements of the NYSE and the SEC. The Audit Committee operates under a charter approved by the Board, which is posted on our website. As more fully described in its charter, the Audit Committee oversees Johnson Controls’ financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process. Management assures that the Company develops and maintains adequate financial controls and procedures, and monitors compliance with these processes. Johnson Controls’ independent auditors are responsible for performing an audit in accordance with auditing standards generally accepted in the United States to obtain reasonable assurance that Johnson Controls’ consolidated financial statements are free from material misstatement and expressing an opinion on the conformity of the financial statements with accounting principles generally accepted in the United States. The internal auditors are responsible to the Audit Committee and the Board for testing the integrity of the financial accounting and reporting control systems and such other matters as the Audit Committee and Board determine. In this context, the Audit Committee has reviewed the U.S. GAAP consolidated financial statements for the fiscal year ended September 30, 2021, and has met and held discussions with management, the internal auditors and the independent auditors concerning these financial statements, as well as the report of management and the report of the independent registered public accounting firm regarding the Company’s internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act. Management represented to the Committee that Johnson Controls’ U.S. GAAP consolidated financial statements were prepared in accordance with U.S. GAAP. In addition, the Committee has discussed with the independent auditors the auditors’ independence from Johnson Controls and its management as required under Public Company Accounting Oversight Board Rule 3526, Communication with Audit Committees Concerning Independence, and the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard AU Section 380 (Communication with Audit Committees) and Rule 2-07 of SEC Regulation S-X. In addition, the Audit Committee has received the written disclosures and the letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence. Based upon the Committee’s review and discussions referred to above, the Committee recommended that the Board include Johnson Controls’ audited consolidated financial statements in Johnson Controls’ Annual Report on Form 10-K for the fiscal year ended September 30, 2021 filed with the Securities and Exchange Commission and that such report be included in Johnson Controls’ annual report to shareholders for the fiscal year ended September 30, 2021. Submitted by the Audit Committee, Gretchen R. Haggerty, Chair Pierre Cohade Simone Menne R. David Yost Agenda Items › Proposal Number Three PROPOSAL NUMBER THREE AUTHORIZATION TO MAKE MARKET PURCHASES OF COMPANY SHARES We have historically used open-market share purchases as a means of returning cash to shareholders and managing the size of our base of outstanding shares. These are longstanding objectives that management believes are important to continue.
Letter from the Chairman and CEO, George Oliver
Under Irish law, neither the Company nor any subsidiary of the Company may make market purchases or overseas market purchases of the Company’s shares without shareholder approval. Accordingly, shareholders are being asked to authorize the Company, or any of its subsidiaries, to make market purchases and overseas market purchases of up to 10% of the Company’s issued shares. This authorization expires after eighteen months unless renewed; accordingly, we expect to propose renewal of this authorization at subsequent Annual General Meetings. Such purchases would be made only at price levels which the Directors considered to be in the best interests of the shareholders generally, after taking into account the Company’s overall financial position. The Company currently expects to effect repurchases under our existing share repurchase authorization as redemptions pursuant to Article 3(d) of our Articles of Association. Whether or not this proposed resolution is passed, the Company will retain its ability to effect repurchases as redemptions pursuant to its Articles of Association, although subsidiaries of the Company will not be able to make market purchases or overseas market purchases of the Company’s shares unless the resolution is adopted. In order for the Company or any of its subsidiaries to make overseas market purchases of the Company’s ordinary shares, such shares must be purchased on a market recognized for the purposes of the Companies Act 2014. The New York Stock Exchange, on which the Company’s ordinary shares are listed, is specified as a recognized stock exchange for this purpose by Irish law. The general authority, if approved by our shareholders, will become effective from the date of passing of the authorizing resolution. Ordinary Resolution The text of the resolution in respect of Proposal 3 is as follows: RESOLVED, that the Company and any subsidiary of the Company is hereby generally authorized to make market purchases and overseas market purchases of ordinary shares in the Company (“shares”) on such terms and conditions and in such manner as the Board of Directors of the Company may determine from time to time but subject to the provisions of the Companies Act 2014 and to the following provisions: (a) The maximum number of shares authorized to be acquired by the Company and/or any subsidiary of the Company pursuant to this resolution shall not exceed, in the aggregate, 70,262,000 ordinary shares of US $0.01 each (which represents slightly less than 10% of the Company’s issued ordinary shares). (b) The maximum price to be paid for any ordinary share shall be an amount equal to 110% of the closing price on the New York Stock Exchange for the ordinary shares on the trading day preceding the day on which the relevant share is purchased by the Company or the relevant subsidiary of the Company, and the minimum price to be paid for any ordinary share shall be the nominal value of such share. (c) This general authority will be effective from the date of passing of this resolution and will expire on the earlier of the date of the Annual General Meeting in 2023 or eighteen months from the date of the passing of this resolution, unless previously varied, revoked or renewed by ordinary resolution in accordance with the provisions of section 1074 of the Companies Act 2014. The Company or any such subsidiary may, before such expiry, enter into a contract for the purchase of shares which would or might be executed wholly or partly after such expiry and may complete any such contract as if the authority conferred hereby had not expired. The authorization for the Company and/or any of its subsidiaries to make market purchases and overseas market purchases of Company shares requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. Agenda Items › Proposal Number Four PROPOSAL NUMBER FOUR DETERMINE THE PRICE RANGE AT WHICH THE COMPANY CAN RE-ALLOT TREASURY SHARES Our historical open-market share repurchases and other share buyback activities result in ordinary shares being acquired and held by the Company as treasury shares. We may re-allot treasury shares that we acquire through our various share buyback activities in connection with our executive compensation program and our other compensation programs. Under Irish law, our shareholders must authorize the price range at which we may re-allot any shares held in treasury (including by way of re-allotment off-market). In this proposal, that price range is expressed as a minimum and maximum percentage of the prevailing market price (as defined below). Under Irish law, this authorization expires after eighteen months unless renewed; accordingly, we expect to propose the renewal of this authorization at subsequent Annual General Meetings. The authority being sought from shareholders provides that the minimum and maximum prices at which an ordinary share held in treasury may be re-allotted are 95% and 120%, respectively, of the average closing price per ordinary share of the Company, as reported by the New York Stock Exchange, for the thirty (30) trading days immediately preceding the proposed date of re-allotment, save that the minimum price for a re-allotment to satisfy an obligation under an employee share plan is the par value of a share. Any re-allotment of treasury shares will be at price levels that the Board considers in the best interests of our shareholders. Special Resolution The text of the resolution in respect of Proposal 4 (which is proposed as a special resolution) is as follows: RESOLVED, that the re-allotment price range at which any treasury shares held by the Company may be re-allotted shall be as follows: (a) the maximum price at which such treasury share may be re-allotted shall be an amount equal to 120% of the “market price,” and (b) the minimum price at which a treasury share may be re-allotted shall be the nominal value of the share where such a share is required to satisfy an obligation under an employee share plan operated by the Company or, in all other cases, an amount equal to 95% of the “market price,” and (c) for the purposes of this resolution, the “market price” shall mean the average closing price per ordinary share of the Company, as reported by the New York Stock Exchange, for the thirty (30) trading days immediately preceding the proposed date of re-allotment. FURTHER RESOLVED, that this authority to re-allot treasury shares shall expire on the earlier of the date of the Annual General Meeting of the Company held in 2023 or eighteen months after the date of the passing of this resolution unless previously varied or renewed in accordance with the provisions of section 109 and/or 1078 (as applicable) of the Companies Act 2014 (and/or any corresponding provision of any amended or replacement legislation) and is without prejudice or limitation to any other authority of the Company to re-allot treasury shares on-market. The authorization of the price range at which the Company may re-allot any shares held in treasury requires the affirmative vote of at least 75% of the votes properly cast (in person or by proxy) at the Annual General Meeting. Agenda Items › Proposal Number Five PROPOSAL NUMBER FIVE ADVISORY VOTE ON EXECUTIVE COMPENSATION The Board recognizes that providing shareholders with an advisory vote on executive compensation can produce useful information on investor sentiment with regard to the Company’s executive compensation programs. As a result, this proposal provides shareholders with the opportunity to cast an advisory vote on the compensation of our executive management team, as described in the section of this Proxy Statement entitled “Compensation Discussion & Analysis,” and endorse or not endorse our fiscal 2021 executive compensation philosophy, programs and policies and the compensation paid to the Named Executive Officers.
Letter from the Chairman and CEO, George Oliver
The advisory vote on executive compensation is non-binding, meaning that our Board will not be obligated to take any compensation actions or to adjust our executive compensation programs or policies, as a result of the vote. Notwithstanding the advisory nature of the vote, the resolution will be considered passed with the affirmative vote of a majority of the votes properly cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy. Although the vote is non-binding, our Board and the Compensation and Talent Development Committee will review the voting results. To the extent there is a significant negative vote, we would communicate directly with shareholders to better understand the concerns that influenced the vote. The Board and the Compensation and Talent Development Committee would consider constructive feedback obtained through this process in making future decisions about executive compensation programs. Advisory Non-Binding Resolution The text of the resolution, which if thought fit, will be passed as an advisory non-binding resolution at the Annual General Meeting, is as follows: RESOLVED, that shareholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in the Compensation Discussion & Analysis section of this Proxy Statement. Agenda Items › Proposal Number Six PROPOSAL NUMBER SIX AUTHORIZATION FOR DIRECTORS TO ALLOT COMPANY SHARES Under Irish law, directors of an Irish public limited company must have authority from its shareholders to issue any shares, including shares which are part of the company’s authorized but unissued share capital. The Company’s current authorization, approved by shareholders at our 2021 Annual General Meeting, is to issue up to 33% of the authorized but unissued share capital of the Company, which authorization will expire on March 9, 2022 — the date of the 2022 Annual General Meeting. We are presenting this proposal to renew the Board’s authority to issue authorized but unissued shares on the terms set forth below. If this proposal is not passed, the Company will have a limited ability to issue new ordinary shares. It is customary practice in Ireland to seek shareholder authority to issue shares up to an aggregate nominal value of up to 33% of the aggregate nominal value of the company’s issued share capital and for such authority to be renewed each year. Therefore, in accordance with customary practice in Ireland, we are seeking approval to issue up to a maximum of 33% of our issued ordinary capital for a period expiring on the earlier of the date of the Company’s Annual General Meeting in 2023 or September 9, 2023, unless otherwise varied, revoked or renewed. The Directors of the Company expect to propose renewal of this authorization at subsequent Annual General Meetings. Granting the Board this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish market practice. This authority is fundamental to our business and enables us to issue shares, including, if applicable, in connection with funding acquisitions and raising capital. We are not asking you to approve an increase in our authorized share capital or to approve a specific issuance of shares. Instead, approval of this proposal will only grant the Board the authority to issue shares that are already authorized under our Articles of Association upon the terms below. In addition, because we are a NYSE-listed company, our shareholders continue to benefit from the protections afforded to them under the rules and regulations of the NYSE and SEC, including those rules that limit our ability to issue shares in specified circumstances. This authorization is required as a matter of Irish law and is not otherwise required for other companies listed on the NYSE with whom we compete. Accordingly, approval of this resolution would merely place us on par with other NYSE-listed companies. Ordinary Resolution The text of the resolution in respect of Proposal 6 (which is proposed as an ordinary resolution) is as follows: “RESOLVED that the directors be and are hereby generally and unconditionally authorized to exercise all powers to allot and issue relevant securities (within the meaning of section 1021 of the Companies Act 2014) up to an aggregate nominal value of US $2,342,000 (being equivalent to approximately 33% of the aggregate nominal value of the issued share capital of the Company as at the last practicable date prior to the issue of the notice of this meeting) and the authority conferred by this resolution shall expire on the earlier of the date of the Company’s Annual General Meeting in 2023 or September 9, 2023, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or might require any such securities to be allotted after this authority has expired, and in that case, the directors may allot relevant securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired.” As required under Irish law, the resolution in respect of this proposal is an ordinary resolution that requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. Agenda Items › Proposal Number Seven PROPOSAL NUMBER SEVEN WAIVER OF STATUTORY PRE-EMPTION RIGHTS Under Irish law, unless otherwise authorized, when an Irish public limited company issues shares for cash to new shareholders, it is required first to offer those shares on the same or more favorable terms to existing shareholders of the company on a pro-rata basis (commonly referred to as the pre-emption right). Our current authorization, approved by shareholders at our 2021 Annual General Meeting, will expire on March 9, 2022, the date of the 2022 Annual General Meeting. We are therefore proposing to renew the Board’s authority to opt-out of the pre-emption right on the terms set forth below. It is customary practice in Ireland to seek shareholder authority to opt-out of the pre-emption rights provision in the event of the issuance of shares for cash, if the issuance is limited to up to 5% of a company’s issued ordinary share capital. It is also customary practice for such authority to be renewed on an annual basis. Therefore, in accordance with customary practice in Ireland, we are seeking this authority, pursuant to a special resolution, to authorize the directors to issue shares for cash up to a maximum of approximately 5% of the Company’s authorized share capital without applying statutory pre-emption rights for a period expiring on the earlier of the Annual General Meeting in 2023 or September 9, 2023, unless otherwise varied, renewed or revoked. We expect to propose renewal of this authorization at subsequent Annual General Meetings.
Letter from the Chairman and CEO, George Oliver
Granting the Board this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish customary practice. Similar to the authorization sought for Proposal 6, this authority is fundamental to our business and, if applicable, will facilitate our ability to fund acquisitions and otherwise raise capital. We are not asking you to approve an increase in our authorized share capital. Instead, approval of this proposal will only grant the Board the authority to issue shares in the manner already permitted under our Articles of Association upon the terms below. Without this authorization, in each case where we issue shares for cash, we would first have to offer those shares on the same or more favorable terms to all of our existing shareholders. This requirement could cause delays in the completion of acquisitions and capital raising for our business. This authorization is required as a matter of Irish law and is not otherwise required for other companies listed on the NYSE with whom we compete. Accordingly, approval of this resolution would merely place us on par with other NYSE-listed companies. Special Resolution The text of the resolution in respect of Proposal 7 (which is proposed as a special resolution) is as follows: “RESOLVED that the directors be and are hereby empowered pursuant to section 1023 of the Companies Act 2014 to allot equity securities (as defined in section 1023 of that Act) for cash, pursuant to the authority conferred by proposal 6 of the notice of this meeting as if sub-section (1) of section 1022 of that Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities up to an aggregate nominal value of US $351,000 (being equivalent to approximately 5% of the aggregate nominal value of the issued share capital of the Company as at the last practicable date prior to the issue of the notice of this meeting) and the authority conferred by this resolution shall expire on the earlier of the Company’s Annual General Meeting in 2023 or September 9, 2023, unless previously renewed, varied or revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or might require any such securities to be allotted after this authority has expired, and in that case, the directors may allot equity securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired.” As required under Irish law, the resolution in respect of Proposal 7 is a special resolution that requires the affirmative vote of at least 75% of the votes cast. In addition, under Irish law, the Board may only be authorized to opt-out of pre-emption rights if it is authorized to issue shares, which authority is being sought in Proposal 6. GOVERNANCE OF THE COMPANY Vision and Values of Our Board Our vision is a safe, comfortable and sustainable world. In addition to achieving financial performance objectives, our Board and management believe that we must assume a leadership position in the area of corporate governance to fulfill our vision. Our Board believes that good governance requires not only an effective set of specific practices but also a culture of responsibility throughout the company, and governance at Johnson Controls is intended to optimize both. Johnson Controls also believes that good governance ultimately depends on the quality of its leadership, and it is committed to recruiting and retaining Directors and officers of proven leadership ability and personal integrity. Our Board has adopted Corporate Governance Guidelines which provide a framework for the effective governance of Johnson Controls. Johnson Controls’ Values: How We Seek to Conduct Ourselves Governance of the Company › Board Mission/Responsibilities Board Mission/Responsibilities The mission of the Board is to promote the long-term value and health of Johnson Controls in the interests of shareholders and set an ethical “tone at the top.” All corporate authority is exercised by the Board except for those matters reserved to the shareholders. The Board has retained oversight authority — defining and overseeing the implementation of and compliance with standards of accountability and monitoring the effectiveness of management policies and decisions in an effort to ensure that the Company is managed in such a way to achieve its objectives. The Board delegates its authority to management for managing the everyday affairs of the Company. The Board requires that senior management review major actions and initiatives with the Board prior to implementation. Management, not the Board, is responsible for managing the Company. Areas of Focus for the Board Governance of the Company › Board Composition, Tenure and Expertise Board Composition, Tenure and Expertise The Johnson Controls Board as a whole is strong in its diversity, vision, strategy and business judgment. It possesses a robust collective knowledge of management and leadership, business operations, crisis management, risk assessment, industry knowledge, accounting and finance, corporate governance and global markets:
Letter from the Chairman and CEO, George Oliver
| Skills and Expertise | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Leadership Experience | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | Experience Leading Global Teams | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | Financial and Accounting Expertise | ∎ | ∎ | ∎ | | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | | Public Policy Experience | ∎ | ∎ | | | | | ∎ | | ∎ | | ∎ | | Cybersecurity, Technology and Innovation | | | ∎ | ∎ | | ∎ | ∎ | ∎ | | | ∎ | | Manufacturing and Industry Experience | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | ∎ | | Corporate Governance Experience | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | ∎ | | | Corporate Responsibility/Sustainability | ∎ | ∎ | ∎ | ∎ | | | ∎ | | ∎ | | ∎ | | M&A Experience | ∎ | ∎ | ∎ | | ∎ | | ∎ | ∎ | ∎ | ∎ | ∎ | | Background | | | | | | | | | | | | | Years on the Board | 3 | 3 | 12 | 4 | 4 | 4 | 9 | 8 | 10 | 13 | 4 | | Age | 67 | 60 | 67 | 60 | 66 | 61 | 61 | 63 | 63 | 74 | 57 | | Gender | F | M | M | M | F | F | M | M | M | M | M | | Diversity* | ∎ | ∎ | | ∎ | ∎ | ∎ | | ∎ | | | ∎ | | * Diversity includes Female / Racial / Ethnic / LGBTQ+ and Geographically Diverse (Non-US Citizenship) | | | | | | | | | | | |
Letter from the Chairman and CEO, George Oliver
Board Leadership The Board’s leadership structure generally includes a combined Chairman and CEO role with a strong, independent non-executive lead director. The Board believes our overall corporate governance measures help ensure that strong, independent directors continue to effectively oversee our management and key issues related to strategy, risk and integrity; executive compensation; CEO evaluation; and succession planning. In choosing generally to combine the roles of Chairman and CEO, the Board takes into consideration the importance of in-depth, industry-specific knowledge and a thorough understanding of our business environment and risk management practices in setting agendas and leading the Board’s discussions. Combining the roles also provides a clear leadership structure for the management team and serves as a vital link between management and the Board. This allows the Board to perform its oversight role with the benefit of management’s perspective on our business strategy and all other aspects of the business. Our Board periodically reviews its determination to have a single individual act both as Chairman and CEO. Governance of the Company › Board Composition, Tenure and Expertise Currently, the Board operates with a designated Lead Director with a well-defined role. The Lead Director, currently Mr. Jürgen Tinggren, acts as an intermediary between the Board and senior management. Among other things, the Lead Director’s duties include: Mr. Tinggren is highly engaged and is routinely in direct contact with members of senior management, including the Chief Financial Officer, the General Counsel, the Corporate Controller and the Corporate Secretary, among others. He also has routine discussions with the Company’s independent auditors. Mr. Tinggren’s level of engagement allows him to have a continuous impact on the Company’s strategic and operational initiatives. Along with the CEO, the Lead Director also hosts Board update calls on a monthly basis in the periods between Board meetings to keep the Directors current on important developments in the business as well as the status of key strategic and operational initiatives. These update calls provide Directors with the opportunity to stay current on matters impacting the Company, which facilitates more efficient and robust discussions at the regularly scheduled Board meetings. Board Oversight of Strategy One of the Board’s primary responsibilities is overseeing management’s establishment and execution of the Company’s strategy and the associated risks. The full Board oversees strategy and strategic risk through robust and constructive engagement with management, taking into consideration our key priorities, global trends impacting our business, regulatory developments, and disruptors in our businesses. The Board’s oversight of our strategy primarily occurs through deep-dive annual reviews of the Company’s long-term strategic plans. During these reviews, management provides the Board with its view of the key commercial and strategic risks faced by the Company, and the Board provides management with feedback on whether management has identified the key risks and is taking appropriate actions to mitigate risk. In addition to the annual deep-dive strategic review, because the Company’s strategic initiatives are subject to rapidly evolving business dynamics, the Board regularly receives updates on key strategic initiatives throughout the year to ensure progress is being made against goals, understand where adjustments or refinements to strategy may be appropriate and stay current on issues impacting the business. The Board’s oversight of strategy was prominent throughout the year as the Company continued its journey to become a smart building solutions leader. At every regularly scheduled Board meeting, the Board received updates from management on how the Company was developing and executing its strategy to build and expand its digital capabilities to deliver new and differentiated services grounded in deep understandings of how the Company’s customers operate, including outcome-based solutions that address customers’ needs to improve energy efficiency and reduce greenhouse gas emissions. The Board also met for a deep-dive technology review of the Company’s OpenBlue software platform and key product lines that are being enhanced with digital technology to drive the Company’s strategy. This included a comprehensive review of the OpenBlue software architecture, how it is being incorporated into the Company’s products and services to provide differentiated and customized solutions, how the Company plans to further augment its digital capabilities and how the Company is managing cybersecurity risk across the lifecycle of its digital products and solutions. The Board applied the knowledge gained from these sessions to provide advice and oversight to management as the Company worked to refine and execute its strategy in fiscal year 2021. The oversight provided by the Board was carried over into its committees, with the Compensation and Talent Development Committee monitoring the Company’s efforts to build a diverse workforce that is digital capable, solutions oriented and focused on continuous learning and growth, and the Governance and Sustainability Committee monitoring the cybersecurity risks associated with the Company’s digital strategy. Governance of the Company › Board Oversight of Strategy Johnson Controls has a clear vision and growth agenda. The visions and values described above are designed to achieve our mission of helping our customers win everywhere, every day through a relentless focus on customer needs, developing and deploying leading products and technology, distributing our products and services through accessible channels, and attracting and retaining top talent. Johnson Controls plans to achieve these objectives through:
Letter from the Chairman and CEO, George Oliver
| • | Creating Growth Platforms by developing sales excellence through building intimate customer relationships to understand customer needs and how to solve them; driving innovation to translate customer problems into business opportunities; developing advantaged solutions and enhanced business models; making it easy for customers to do business with Johnson Controls; and building an acquisition pipeline. |
Letter from the Chairman and CEO, George Oliver
| • | Driving Operational Improvements by standardizing processes and improving cost and service; being best-in-class in G&A effectiveness and efficiency; leveraging IT to increase efficiency and effectiveness; enhancing manufacturing efficiency at all levels; and improving service and installation productivity and optimizing field infrastructure. |
Letter from the Chairman and CEO, George Oliver
| • | Building a Performance Culture by establishing a transparent, data-driven performance culture; aligning strategy, structure, people and processes to create One Team; investing in all talent, focusing on skill building and professional development, and diversity and inclusion; and driving a global commitment to wellness and sustainability. |
Letter from the Chairman and CEO, George Oliver
Through these efforts we plan to achieve top quartile organizational health while creating greater shareholder value and generating long-term free cash flow conversion. For additional information on our strategy, see “Business Strategy” in Item 1 of our Annual Report on Form 10-K filed with the SEC on November 15, 2021. Board Oversight of Talent and Succession Planning Our Board oversees management succession planning and talent development. The Compensation and Talent Development Committee (formerly known as the Compensation Committee) regularly reviews the CEO succession plan and the succession plans for key positions at the senior executive level across the Company. The CEO and CHRO regularly review with the Compensation and Talent Development Committee the assessment and the development of a diverse pipeline of senior leaders who are potential successors for these roles. In addition, the full Board discusses succession and/or talent management at each of its regularly scheduled meetings. These discussions are led by the CEO and Chief Human Resources Officer, with periodic assistance from other senior leaders within the Company and firms with talent assessment expertise. These discussions include critical leadership competencies, talent assessment, short and long-term development and readiness of executives, the pool of external talent, and diversity. The Board also evaluates succession and development plans in the context of our overall business strategy and culture. Potential leaders are visible to Board members through formal presentations and informal events to allow Directors to personally engage with current and future leaders. In 2021, Board members were involved in the search and appointment of a new Chief Human Resources Officer to succeed Lynn Minella in anticipation of her retirement. Board members were involved in reviewing the talent pipeline of candidates and interviewing the finalist candidate prior to approving management’s recommendation to appoint Marlon Sullivan as our Chief Human Resources Officer. In late 2020, the Compensation Committee amended its charter to change its name to the Compensation and Talent Development Committee, enhancing its oversight over our talent development and human capital management efforts. Under its revised charter, the Compensation and Talent Development Committee is charged with reviewing: the talent development and succession plans for the CEO and other senior leadership positions, our human capital management practices, policies, strategies and goals, our senior leadership pipeline development, including the recruitment, development and retention of senior leadership talent, and our diversity and inclusion initiatives and progress. In carrying out these responsibilities, the Compensation and Talent Development Committee annually reviews with our Chief Human Resources Officer: our diversity and inclusion plans and goals, reports on our organizational health, our succession planning and talent development strategy and progress, and the Company’s human capital policies and practices. We have implemented several measures that focus on ensuring accountabilities exist for attracting and developing diverse talent in our workforce. For fiscal years 2021 and 2022, our CEO and other senior leaders have diversity and inclusion objectives embedded in their annual performance goals. We have also committed to having a diverse talent pipeline by partnering with our business units in their workforce planning forecasts to develop initiatives and goals to recruit diverse talent across all leadership and skill areas. We actively develop diversity sourcing strategies and partner with external organizations that develop and supply diverse talent. Our Board also establishes steps to address emergency CEO succession planning in extraordinary circumstances. Our emergency CEO succession planning is intended to enable our Company to respond to unexpected emergencies and minimize potential disruption or loss of continuity to our Company’s business and operations. Governance of the Company › Board Oversight of Risk Board Oversight of Risk Governance of the Company › Board Oversight of Cybersecurity Board Oversight of Cybersecurity We understand that cybersecurity is an essential component of the Board’s oversight responsibility. The Board receives cybersecurity updates from senior management, including the Chief Information Officer, Chief Information Security Officer and Chief Technology Officer. These updates cover the cybersecurity risks facing our enterprise information technology structure, as well as our digital products and services. The Governance and Sustainability Committee provides a deeper level of oversight through quarterly engagements with senior management, including the Chief Information Officer, Chief Information Security Officer and Chief Product Security Officer, to review the Company’s cybersecurity program, including the highest risk areas and key mitigation strategies. Topics covered in fiscal year 2021 included: supplier risk management, the cybersecurity threat landscape, manufacturing security and cloud security. The Company has experienced, and expects to continue to experience, cyber threats and incidents, and the Governance and Sustainability Committee receives quarterly reports on any notable incidents that may have occurred during the quarter, as well as updates on cybersecurity events impacting the marketplace (whether or not the Company is impacted). To date, no such incidents have been material to the Company. Our policies, standards, and procedures apply to all users to ensure the workforce is aware of threats and the importance of information security and cybersecurity. The cybersecurity policies and standards were created following ISO 27001 for the overall enterprise and ISA/IEC 62443 for automation and control system products. We leverage multiple channels to promote cybersecurity topics, deliver targeted initial and refresher training for all users, and conduct an annual mandatory global information security training campaign with certification, which is translated into 20 languages. These elements are designed to maintain a risk aware culture. Our vulnerability management program assures that vulnerability assessments are continually conducted with specific frequencies for specific asset types to validate system health against known threats. We leverage multiple tools, which are routinely updated with new signatures, to continually respond to evolving threats identified as part of our threat detection capability. Events with cyber security impacts are routed to the IT and Product Security Incident Response function for triage, investigation, and if necessary, mitigation. We also maintain a cybersecurity insurance policy. Oversight of Political Spending We participate in the public policy process in various ways including corporate government affairs activities designed to educate policymakers on key issues related to our business, political giving through the Johnson Controls Political Action Committee (“PAC”), and limited direct corporate political contributions. To promote transparency, we make this information publicly available on our website and through various government filings, as required by law. Our PAC is governed by a steering committee, which is chaired by the Company’s Executive Vice President & General Counsel and made up of business and functional leaders across the Company. The committee provides operational oversight and direction of PAC activities. The committee also reviews candidate recommendations and uses the PAC’s selection criteria to determine who will receive financial support.
Letter from the Chairman and CEO, George Oliver
Our lobbying and political activities are overseen by our Chief Sustainability & External Relations Officer, who works closely with our legal department to ensure compliance with our political engagement policy. Our Executive Vice President & General Counsel, Chief Sustainability & External Relations Officer, and Chief Ethics and Compliance Officer meet regularly with the Chief Executive Officer and the senior leadership team to review legislative, regulatory and political developments. The Governance and Sustainability Committee provides primary board-level oversight in reviewing our corporate political activity and public policy efforts. Our Chief Sustainability & External Relations Officer reports to the Governance and Sustainability Committee on our governmental outreach, PAC and other political activities on a quarterly basis and the full Board is briefed on government relations matters at least annually. Director Orientation All new Directors participate in our director orientation program during the first few months on our Board. New Directors receive an extensive suite of onboarding materials covering director responsibilities, corporate governance practices and policies, business strategies, leadership structure, and long-term plans. They then participate in a series of meetings with management representatives from our business and functional areas to review and discuss information about the Company’s strategic plans, financial statements, and key issues, policies, and practices. Based on feedback from our Directors, we believe this onboarding approach provides new directors with a strong foundation for understanding our businesses, connects Directors with members of management with whom they will interact, and accelerates their effectiveness to engage fully in Board deliberations. Governance of the Company › Director Education Director Education Our Board believes that director education is key to the ability of directors to fulfill their roles and supports Board members in their continuous learning. Directors may enroll in continuing education programs at our expense on corporate governance and critical issues associated with a Director’s service. Our Board also hears regularly from management on numerous subjects, including investor relations, human capital management, sustainability, technology, regulatory developments, data privacy, and cybersecurity. In addition, the Board periodically participates in site visits to our facilities. For example, in 2021, our Board participated in a Global Products “virtual visit” where the Board engaged in a deep dive review of Company’s OpenBlue software platform and key product lines that are being enhanced with digital technology to drive the Company’s strategy. Shareholder Engagement In 2021, we continued our focus on regularly engaging with our shareholders. The Company reached out to holders of over 60% of our shares outstanding. Meetings were requested by two shareholders, representing 16% of the Company’s outstanding shares. During these meetings, we discussed many topics including our executive compensation program, our sustainability governance and risk management structure, diversity and inclusion and OpenBlue. Investors were generally supportive of the Company’s governance and compensation practices and were pleased with the Company’s corporate responsibility and sustainability efforts. In addition, several shareholders declined requests for meetings noting that engagement was unnecessary due to no significant concerns with our governance and compensation practices. This outreach and discussions provide our Board with valuable insights into our shareholders’ views. We plan to continue to actively engage with our shareholders on a regular basis to better understand and consider their views. Board Committees To conduct its business the Board maintains three standing committees: Audit, Compensation and Talent Development and Governance and Sustainability, and each of these NYSE-required committees are entirely composed of independent Directors. The Board also maintains an Executive Committee comprised of the Chairman, Lead Director and each committee chair that meets to review matters as delegated to it by the Board. All committees report on their activities to the Board. The Lead Director may also convene “special committees” to review discrete matters that require the consideration of a Board committee, but do not fit within the mandate of any of the standing committees. Special committees report their activities to the Board. To ensure effective discussion and decision making while at the same time having a sufficient number of independent Directors for its three standing committees, the Board is normally constituted of between ten and thirteen Directors. The minimum and maximum number of Directors is set forth in Johnson Controls’ Articles of Association. The Governance and Sustainability Committee reviews the Board’s governance guidelines annually and recommends appropriate changes to the Board. Board Meetings The Board meets at least four times annually and additional meetings may be called in accordance with our Articles of Association. Frequent board meetings are critical not only for timely decisions, but also for Directors to be well informed about Johnson Controls’ operations and issues. One of these meetings will be scheduled in conjunction with the Annual General Meeting of Shareholders and Board members are required to be in attendance at such meeting either in person or by telephone. The Lead Director and the Chair of the Board are responsible for setting meeting agendas with input from the other Directors. Committee meetings are normally held in conjunction with Board meetings. Major committee decisions are reviewed and approved by the Board. The Board Chair and committee chairs are responsible for conducting meetings and informal consultations in a fashion that encourages informed, meaningful and probing deliberations. Presentations at Board meetings are concise and focused, and they include adequate time for discussion and decision-making. An executive session of independent Directors, chaired by the Lead Director, is held at least annually, and in practice occurs at least once during most Board meetings. Mr. Tinggren ensures that the executive sessions are highly interactive and include robust discussions on the Company’s strategic and operational initiatives and related risks. They also include in-depth discussions on matters such as executive performance and succession planning. These discussions are key to informing the Board’s oversight role and appropriately challenging management. Governance of the Company › Board Meetings Directors receive the agenda and materials for regularly scheduled meetings in advance. Best efforts are made to make materials available as soon as one week in advance, but no later than three days in advance. When practical, the same applies to special meetings of the Board. Directors may ask for additional information from, or meetings with, senior managers at any time. Strategic planning and succession planning sessions are held at least annually at a regular Board meeting, but such sessions often occur more frequently. Succession planning meetings focus on the development and succession of not only the CEO but also the Company’s other senior executives. The Board’s intent is for Directors to attend all regularly scheduled Board and committee meetings. Directors are expected to use their best efforts to attend regularly scheduled Board and committee meetings in person. All independent Board members are welcome to attend any committee meeting. The Board also participates in monthly update calls in the periods between Board meetings to keep the Directors current on important developments impacting the Company as well as the status of key strategic and operational initiatives.
Letter from the Chairman and CEO, George Oliver
The Board also makes periodic visits to our facilities to learn more about our products and customers. For example, in 2021 our Board participated in a Global Products “virtual visit” where the Board engaged in a deep dive review of Company’s OpenBlue software platform and key product lines that are being enhanced with digital technology to drive the Company’s strategy. Board and Committee Calendars A calendar of agenda items for the regularly scheduled Board meetings and all regularly scheduled committee meetings is prepared annually by the Chair of the Board in consultation with the Lead Director, committee chairs, and other Directors. Board Communication Management speaks on behalf of Johnson Controls, and the Board normally communicates through management with outside parties including shareholders, business journalists, analysts, rating agencies and government regulators. In certain circumstances Directors may also meet with shareholders to discuss specific governance topics. The Board has established a process for interested parties to communicate with members of the Board, including the Lead Director. If you have any concern, question or complaint regarding our compliance with any policy or law, or would otherwise like to contact the Board, you can reach the Johnson Controls Board of Directors via email at jciboard@jci.com. Depending upon the nature of the communication and to whom it is directed, the Corporate Secretary will: (a) forward the communication to the appropriate director or directors; (b) forward the communication to the relevant department within the Company; or (c) attempt to handle the matter directly (for example, a communication dealing with a share ownership matter). Shareholders, customers, vendors, suppliers and employees can also raise concerns at www.johnsoncontrolsintegrityhelpline.com. Inquiries can be submitted anonymously and confidentially. All inquiries are received and reviewed by the Integrity Helpline manager, who is part of the Compliance function. A report summarizing all items received resulting in cases is prepared for the Audit Committee of the Board. The Integrity Helpline manager directs cases to the applicable department (such as customer service, human resources, or in the case of accounting or control issues, forensic audit) and follows up with the assigned case owner to ensure that the cases are responded to in a timely manner. The Board also reviews non-trivial shareholder communications received by management through the Corporate Secretary’s Office or Investor Relations. Governance of the Company › Board and Committee Evaluation Process Board and Committee Evaluation Process Governance of the Company › Board and Committee Evaluation Process The Board views self-evaluation of Board and committee performance as an integral part of its commitment to continuous improvement. The Governance and Sustainability Committee annually reviews the evaluation process and considers ways to augment it. Board Advisors The Board and its committees (consistent with the provisions of their respective charters) may retain their own advisors, at the expense of Johnson Controls, as they deem necessary in order to carry out their responsibilities. Board Compensation and Share Ownership The Governance and Sustainability Committee periodically reviews the Directors’ compensation and recommends changes in the level and mix of compensation to the full Board. See the Compensation Discussion and Analysis for a detailed discussion of the Compensation and Talent Development Committee’s role in determining executive compensation. To help align Board and shareholder interests, Directors are encouraged to own Johnson Controls ordinary shares or their equivalent, with the guideline set at five times the annual cash retainer. Directors are expected to attain this minimum stock ownership guideline within five years of joining the Board. Once a Director satisfies the minimum stock ownership recommendation, the Director will remain qualified, regardless of market fluctuations, under the guideline as long as the Director does not sell any stock. Mr. Oliver receives no additional compensation for service as a Director. Director Independence To maintain its objective oversight of management, the Board consists of a substantial majority of independent Directors. Our Board annually determines the independence of each Director and nominee for election as a Director based on a review of the information provided by the Directors and the executive officers and a survey by our legal and finance departments. The Board makes these determinations under the NYSE Listed Company Manual’s independence standards and our Corporate Governance Guidelines, which are more restrictive than the NYSE independence standards. Independent Directors:
Letter from the Chairman and CEO, George Oliver
| ∎ | are not former officers or employees of Johnson Controls or its subsidiaries or affiliates, nor have they served in that capacity within the last five years; |
Letter from the Chairman and CEO, George Oliver
| ∎ | have no current or prior material relationships with Johnson Controls aside from their directorship that could affect their judgment; |
Letter from the Chairman and CEO, George Oliver
| ∎ | have not worked for, nor have any immediate family members that have worked for, been retained by, or received anything of substantial value from Johnson Controls aside from his or her compensation as a Director; |
Letter from the Chairman and CEO, George Oliver
| ∎ | have no immediate family member who is an officer of Johnson Controls or its subsidiaries or has any current or past material relationship with Johnson Controls; |
Letter from the Chairman and CEO, George Oliver
| ∎ | do not work for, nor does any immediate family member work for, consult with, or otherwise provide services to, another publicly traded company on whose board of directors Johnson Controls’ CEO or other senior executive serves; |
Letter from the Chairman and CEO, George Oliver
| ∎ | do not serve as, nor does any immediate family member serve as, an executive officer of any entity with respect to which Johnson Controls’ annual sales to, or purchases from, exceed the greater of two percent of either entity’s annual revenues for the prior fiscal year or $1,000,000; |
Letter from the Chairman and CEO, George Oliver
| ∎ | do not serve, nor does any immediate family member serve, on either the board of directors or the compensation committee of any corporation that employs either a nominee for director or a member of the immediate family of any nominee for director; and |
Letter from the Chairman and CEO, George Oliver
| ∎ | do not serve, nor does any immediate family member serve, as a director, trustee, executive officer or similar position of a charitable or non-profit organization with respect to which the company or its subsidiaries made charitable contributions or payments in excess of the greater of $1,000,000 or two percent of such organization’s charitable receipts in the last fiscal year. |
Letter from the Chairman and CEO, George Oliver
Directors meet stringent definitions of independence and for those Directors that meet this definition, the Board will make an affirmative determination that a Director is independent. The Board has determined that all of the Director nominees, with the exception of Mr. Oliver, meet these standards and are therefore independent of the Company. Governance of the Company › Director Service Director Service Directors are elected by an affirmative vote of a majority of the votes cast (in person or by proxy) by shareholders at the Annual General Meeting. They are elected to serve for one-year terms (except in instances where a director is elected during a special meeting), ending after completion of the next succeeding Annual General Meeting. If a Director resigns or otherwise terminates his or her directorship prior to the next Annual General Meeting, the Board may appoint an interim Director until the next Annual General Meeting. Any nominee for Director who does not receive an affirmative vote of a majority of votes cast (in person or by proxy) by shareholders at the Annual General Meeting is not elected to the Board. Each Director is required to tender their resignation from the Board at the Annual General Meeting following his or her 75th birthday. The Board may, in its discretion, waive this limit in special circumstances. The rotation of committee chairs and members is considered on an annual basis to ensure diversity of Board member experience and variety of perspectives across the committees, but there is no strict committee chair rotation policy. Any changes in committee chair or member assignments are made based on committee needs, Director interests, experience and availability, and applicable regulatory and legal considerations. Moreover, the value of rotation is weighed carefully against the benefit of committee continuity and experience. Directors are also expected to inform the Governance and Sustainability Committee of any significant change in their employment or professional responsibilities and are required to offer their resignation to the Board in the event of such a change. This allows for discussion with the Governance and Sustainability Committee to determine if it is in the mutual interest of both parties for the Director to continue on the Board. The Governance and Sustainability Committee is responsible for the review of all Directors, and where necessary will take action to recommend to shareholders the removal of a Director for performance, which requires the affirmative vote of a majority of the votes represented (in person or by proxy) at a duly called shareholder meeting. Nomination of Directors and Board Diversity The Governance and Sustainability Committee, in accordance with the Board’s governance principles, seeks to create a Board that, as a whole, is strong in its collective knowledge and has a diversity of skills and experience with respect to vision and strategy, management and leadership, business operations, business judgment, crisis management, risk assessment, industry knowledge, accounting and finance, corporate governance and global markets. Although the Johnson Controls Board does not have a specific policy regarding diversity, the Board takes into account the current composition and diversity of the Board (including diversity with respect to race, gender, national origin and ethnicity) and the extent to which a candidate’s particular expertise and experience will complement the expertise and experience of other Directors. The Governance and Sustainability Committee also considers the Board’s overall composition and diversity when considering a potential new candidate, including whether the Board has an appropriate combination of professional experience, skills, exposure to international markets, knowledge and variety of viewpoints and backgrounds in light of Johnson Controls’ current and expected future needs. In addition, the Governance and Sustainability Committee believes that it is desirable for new candidates to contribute to a variety of viewpoints on the Board, which may be enhanced by a mix of different professional and personal backgrounds and experiences. The Governance and Sustainability Committee periodically reviews these criteria and qualifications to determine any need to revise such criteria and qualifications based upon corporate governance best practices and Johnson Controls’ needs at the time of the review. The current composition of our Board reflects these ongoing efforts and the continued importance of a diversity of skills, characteristics and experience to the Board.
Letter from the Chairman and CEO, George Oliver
| General criteria for the nomination of Director candidates include: | | ● The highest ethical standards and integrity ● A willingness to act on and be accountable for Board decisions ● An ability to provide wise, informed and thoughtful counsel to top management on a range of issues ● Diversity of expertise and experience as well as diversity with respect to race, gender and ethnicity ● A history of achievement that reflects superior standards for themselves and others ● Loyalty and commitment to driving the success of the Company ● An ability to take tough positions while at the same time working as a team player ● Individual backgrounds that provide a portfolio of experience and knowledge commensurate with the Company’s needs |
Letter from the Chairman and CEO, George Oliver
The Company also strives to have all non-employee Directors be independent. In addition to having such Directors meet the NYSE definition of independence, the Board has set its own more rigorous standard of independence. The Governance and Governance of the Company › Nomination of Directors and Board Diversity Sustainability Committee must also ensure that the members of the Board as a group maintain the requisite qualifications under NYSE listing standards for populating the Audit, Compensation and Talent Development and Governance and Sustainability Committees. In addition, the Governance and Sustainability Committee ensures that each member of the Compensation and Talent Development Committee is a “Non-Employee” Director as defined in the Securities Exchange Act of 1934 and is an “outside director” as defined in section 162(m) of the U.S. Code. As provided in its charter, the Governance and Sustainability Committee will consider Director candidates recommended by shareholders. To recommend a Director candidate, a shareholder should write to Johnson Controls’ Secretary at Johnson Controls’ current registered address: One Albert Quay, Cork, Ireland. Such recommendation must include:
Letter from the Chairman and CEO, George Oliver
| Shareholder- recommended Director candidate nominations must include: | | ● The name and address of the candidate ● A brief biographical description, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification requirements set forth above ● The candidate’s signed consent to serve as a Director if elected and to be named in the proxy statement ● Evidence of share ownership of the person making the recommendation ● All information required by Article 62 of our Memorandum and Articles of Association to be included in notices for any nomination by a shareholder of an individual for election to the Board |
Letter from the Chairman and CEO, George Oliver
The recommendation must also follow the procedures set forth in Articles 54 — 68 of our Memorandum and Articles of Association to be considered timely and complete in order to be considered for nomination to the Board. To be considered by the Governance and Sustainability Committee for nomination and inclusion in the Company’s Proxy Statement for the 2023 Annual General Meeting, shareholder recommendations for Director must be received by Johnson Controls’ Corporate Secretary no later than September 23, 2022. Once the Company receives the recommendation, the Company may deliver a questionnaire to the candidate that requests additional information about the candidate’s independence, qualifications and other information that would assist the Governance and Sustainability Committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in the Company’s proxy statement, if nominated. Candidates must complete and return the questionnaire within the time frame provided to be considered for nomination by the Governance and Sustainability Committee. No candidates were recommended by shareholders in connection with the 2022 Annual General Meeting. The Governance and Sustainability Committee employs an unrelated search firm to assist the Committee in identifying candidates for Director when a vacancy occurs. The Governance and Sustainability Committee also receives suggestions for Director candidates from Board members. All of our nominees for Director are current members of the Board. In evaluating candidates for Director, the Governance and Sustainability Committee uses the qualifications described above, and evaluates shareholder candidates in the same manner as candidates from all other sources. Based on the Governance and Sustainability Committee’s evaluation of the current Directors, each nominee was recommended for election. Other Directorships, Conflicts and Related Party Transactions We recognize the importance of having Directors with significant experience in other businesses and activities; however, Directors are expected to ensure that other commitments, including outside board memberships, do not interfere with their duties and responsibilities as members of the Johnson Controls’ Board. In order to provide sufficient time for informed participation in their Board responsibilities, non-executive Directors are required to limit their external directorships of other public companies to three and Audit Committee members are required to limit their audit committee membership in other public companies to two. The Board may, in its discretion, waive these limits in special circumstances. When a Director or the CEO intends to serve on another board, the Governance and Sustainability Committee is required to be notified. The Governance and Sustainability Committee reviews the possibility of conflicts of interest or time constraints and must approve the officer’s or Director’s appointment to the outside board. Each Director is required to notify the Corporate Secretary of any potential conflicts. The CEO may serve on no more than one other public company board. The CEO shall resign or retire from the Board upon resigning or retiring from his role as CEO, following a transition period mutually agreed upon between the CEO and the Compensation and Talent Development Committee. The Company has a formal, written procedure intended to ensure compliance with the related party provisions in our Code of Ethics and with our corporate governance guidelines. For the purpose of the policy, a “related party transaction” is a Governance of the Company › Other Directorships, Conflicts and Related Party Transactions transaction in which we participate and in which any related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Transactions exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a Director’s independence, must be approved in advance by our Governance and Sustainability Committee. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Code of Ethics, must be approved in advance by a majority of disinterested Directors, following appropriate disclosure of all material aspects of the transaction. Under the rules of the Securities and Exchange Commission, public issuers such as Johnson Controls must disclose certain “related person transactions.” These are transactions in which Johnson Controls is a participant where the amount involved exceeds $120,000, and a Director, executive officer or holder of more than 5% of our ordinary shares has a direct or indirect material interest. Although Johnson Controls engaged in commercial transactions in the normal course of business with companies where Johnson Controls’ Directors were employed and served as officers, none of these transactions exceeded 1% of Johnson Controls’ gross revenues and these transactions are not considered to be related party transactions. Code of Ethics We have adopted the Code of Ethics, which applies to all employees, officers, and Directors of Johnson Controls. The Code of Ethics meets the requirements of a “code of ethics” as defined by Item 406 of Regulation S-K and applies to our CEO, Chief Financial Officer and Chief Accounting Officer, as well as all other employees. The Code of Ethics also meets the requirements of a code of business conduct and ethics under the listing standards of the NYSE. The Code of Ethics is posted on our website at www.johnsoncontrols.com under the heading “Our Company — Ethics and Compliance.” We will also provide a copy of the Code of Ethics to shareholders upon request. We disclose any amendments to the Code of Ethics, as well as any waivers for executive officers or Directors on our website at www.johnsoncontrols.com under the heading “Our Company — Ethics and Compliance.” The Board of Directors annually certifies their compliance with the Code of Ethics. The Company maintains established procedures by which employees may anonymously report a possible violation of the Code of Ethics. The Audit Committee maintains procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters. The Audit Committee also maintains procedures for employees to report concerns regarding questionable accounting or auditing policies or practices on a confidential, anonymous basis. Governance of the Company › Sustainability Governance Sustainability At Johnson Controls, sustainability is at the heart of our business and fundamental to everything we do. As the global leader in smart, healthy and sustainable buildings, our 100,000 employees across more than 150 countries reimagine the performance of buildings and provide innovative products and services that make spaces healthier for those that occupy them and empower customers and communities to consume less energy and conserve resources. We believe our leadership in sustainability ultimately creates long-term benefits for our customers, employees, shareholders, and society. This is a critical time for climate action. As a smart, building solutions leader, we have committed to achieving net zero Scope 1 and 2 carbon emissions before 2040, and announced science-based targets for 2030. We believe that solutions such as our OpenBlue digital platform can help our customers and suppliers meet and exceed their own sustainability goals.
Letter from the Chairman and CEO, George Oliver
We create intelligent buildings and efficient energy solutions to enable smart cities and communities. Our employee purpose is to power our customers’ success and protect the environment. We grow our business by providing sustainable products and services, improving operational effectiveness, empowering our people, and reducing the environmental footprint of our operations and supply chain. Sustainability Governance Governance of the Company › Progress toward our 2025 Sustainability Strategy and ESG Commitments Progress toward our 2025 Sustainability Strategy and ESG Commitments New Ambitious ESG Goals In January 2021, we announced a new set of environmental, social and governance goals, including science-based targets, Scope 1 and 2 net zero carbon emissions pledge, reducing operational emissions by 55 percent and customers’ emissions by 16 percent before 2030, doubling annual avoided emissions by 2030 through customer use of our OpenBlue digitally-enabled products and services, increasing women and minority leaders and focusing on underserved markets to increase Johnson Controls’ spend with women and minority owned businesses. We have already made significant progress toward many of these goals and our 2025 Sustainability Strategy:
Letter from the Chairman and CEO, George Oliver
| Products, Services and Solutions | Provide increasingly sustainable products and services In 2021, our Science Based Targets (“SBTs”) were approved by the Science Based Targets Initiative. Our Scope 1 and 2 targets align with the more ambitious, updated Paris Agreement aim to limit global temperature increase to below 1.5 degrees Celsius. Our SBTs establish commitments to reduce our Scope 1 and 2 emissions 55% by 2030, against a 2017 baseline, and reduce our customers’ emissions 16% over the same time period. This includes further reducing our internal carbon emissions and providing increasingly sustainable product and service offerings. Since January 2000, performance contracting projects have helped our customers save more than 32.4 million metric tons CO2e and $7.1 billion USD through energy and operational savings. In July 2021, we launched OpenBlue Net Zero Buildings as a Service, a turnkey solution to deliver decarbonization outcomes for our customers’ building asset portfolios. OpenBlue Net Zero Buildings as a Service leverages our suite of building technology applications with sustainability innovations to track and analyze greenhouse gas emissions, enabling us to assist our customers on their journey to net zero by delivering outcome and risk-management solutions to achieve decarbonization goals. |
Letter from the Chairman and CEO, George Oliver
| | We are committed to the worldwide transition to low-global warming potential (“GWP”) refrigerants and we offer alternative refrigerants across all chiller platforms, with GWP reductions ranging from 56 to more than 99 percent compared to conventional refrigerants. In 2021, we announced that our ducted systems product portfolio will use a new refrigerant with a 78 percent reduction in GWP by 2025. We believe we offer the most comprehensive range of heat pumps and refrigeration equipment across residential, commercial and industrial buildings, enabling solutions with the lowest total lifecycle greenhouse gas emissions for any application. | | | | | People | Foster a culture of sustainability that engages and attracts people who want to make a difference At Johnson Controls, every employee is empowered to engage in our culture of inclusion. We are creating an environment where the voices of our colleagues are heard, contributions to our business success are recognized and rewarded, and differences are valued. Our nine Business Resource Groups (“BRGs”) provide employees the opportunities to engage, advocate and develop, both personally and professionally. In 2020, our company re-launched the Business Resource Group structure with active support and ongoing engagement from our executive team. We are pleased to report over 350% growth in fiscal 2021 in our BRG membership across 39 chapters around the globe. We continued our work to elevate hiring practices, to hold regular inclusion discussions at all levels through our global Perspective Listening Series, and to provide local workshops to empower managers to drive an inclusive culture with their teams. We are expansive in our approach, thoughtful in our engagement and intentional with our purpose. Since 2003, our employees have volunteered over 1.8 million hours in local communities. In FY2021, our corporate philanthropy efforts resulted in contributions of more than $12 million. In addition, our employees gave in excess of $2.6 million. At Johnson Controls, we lead with a strategic approach to philanthropy and volunteerism, building communities that are safe, smart, and sustainable. In 2021, we launched the Community College Partnership Program, investing in the technicians of tomorrow. We are investing $15 million over five years help expand community college associate degree and certificate programs in heating, ventilation and air conditioning, fire and security and digital building automation systems across the United States. Johnson Controls Mexico achieved gold level, the highest level, in the Mexican Standard on Job Equality and Non-Discrimination. Johnson Controls is one of only two multi-national corporations to be awarded the gold level in multiple sites. This certification was issued by Factual Services with the endorsement of the Mexican Federal Secretary of Labor. | | | | | Partnerships | Lead in global partnerships that significantly increase our sustainability impact We joined The Climate Pledge, a commitment co-founded by Amazon and Global Optimism. Signatories of the Climate Pledge commit to reaching net-zero carbon emissions by 2040, ten years ahead of the goal set out in the United Nations Paris Climate Agreement. We align with the United Nations Sustainable Development Goal 7, Affordable and Clean Energy. We became a United Nations UN Energy 24/7 Carbon Free Energy Compact signatory and published an UN Energy Compact, joining other companies, governments and solutions providers in working together to develop and scale technologies, energy policies, procurement practices and solutions to transform the broader energy system and enable rapid and cost-effective carbon-free energy. Throughout the next three years, we intend to invest $2 million in various Urban League programs. As part of the Johnson Controls Foundation’s strategic plan to foster impactful relationships and support social equity, our partnership with this century-old organization reinforces our commitment to economic empowerment, equality and social justice. | | | | | | | | | |
Letter from the Chairman and CEO, George Oliver
Johnson Controls has been publicly reporting its sustainability results since 2002 and is proud of its history of transparency. We report at the GRI Standards-Comprehensive level, United Nations Global Compact Advanced level and respond to the CDP and fulfill additional requests by investors, customers and others for our sustainability data. We are a Sustainability Accounting Standards Board (SASB) Reporter, and align our reports to the UN Sustainable Development Goals and the recommendations of the Task Force on Climate-Related Financial Disclosures. Our public sustainability reports, policies and commitments can be found at: https://www.johnsoncontrols.com/corporate-sustainability/reporting-and-policies. The information contained on this website does not constitute a part of this Proxy Statement and is not incorporated by reference herein. For More Information We believe that it is important that Johnson Controls’ stakeholders and others are able to review its corporate governance practices and procedures. Our corporate governance guidelines are embodied in a formal document that has been approved by Johnson Controls’ Board of Directors. It is available on our website at www.johnsoncontrols.com under the heading “Investors-Corporate Governance.” We will also provide a copy of the corporate governance principles to shareholders upon request. Our corporate governance guidelines and general approach to corporate governance as reflected in our Memorandum and Articles of Association and our internal policies and procedures are guided by U.S. practice and applicable federal securities laws and regulations and NYSE requirements. Although we are an Irish public limited company, we are not subject to, nor have we adopted, the U.K. Corporate Governance Code or any other non-statutory Irish or U.K. governance standards or guidelines. While there are many similarities and overlaps between the U.S. corporate governance standards applied by us and the U.K. Corporate Governance Code and other Irish/U.K. governance standards or guidelines, there are differences, in particular relating to the extent of the authorization to issue share capital and effect share repurchases that may be granted to the Board and the criteria for determining the independence of Directors. COMPENSATION OF NON-EMPLOYEE DIRECTORS Non-employee director compensation for fiscal 2021 consisted of an annual cash retainer of $140,000 and restricted stock units (“RSUs”) with a grant date value of approximately $175,000 and a one-year vesting term. The Lead Director received an additional $30,000 and the chairs of each standing committee received an additional fee of $25,000. A Director who is also an employee receives no additional remuneration for services as a Director. In fiscal year 2021, the Governance and Sustainability Committee recommended no changes to non-employee director compensation in connection with its annual review of Director compensation, which included a review of industry and peer Director compensation practices. The Board believes that the compensation of its non-employee directors is reasonable, appropriate and consistent with market practice.
Letter from the Chairman and CEO, George Oliver
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Current Directors | | | | | Ms. Jean Blackwell (GC) (2) | $140,000 | $175,000 | $315,000 | | Mr. Pierre Cohade | $140,000 | $175,000 | $315,000 | | Mr. Michael E. Daniels (CC) | $165,000 | $175,000 | $340,000 | | Mr. Juan Pablo del Vale Perochena (2) | $165,000 | $175,000 | $340,000 | | Mr. W. Roy Dunbar | $140,000 | $175,000 | $315,000 | | Ms. Gretchen R. Haggerty (AC)(3) | $160,261 | $175,000 | $335,261 | | Ms. Simone Menne | $140,000 | $175,000 | $315,000 | | Mr. Jürgen Tinggren (L) (3) | $174,739 | $175,000 | $349,739 | | Mr. Mark Vergnano | $140,000 | $175,000 | $315,000 | | Mr. R. David Yost | $140,000 | $175,000 | $315,000 | | Mr. John D. Young | $140,000 | $175,000 | $315,000 |
Letter from the Chairman and CEO, George Oliver
| This column reflects the fair value of the entire amount of awards granted to Directors calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718, excluding estimated forfeitures. The fair value of RSUs is computed by multiplying the total number of shares subject to the award by the closing market price of the Company’s ordinary shares on the date of grant. RSUs granted to Board members generally vest and the underlying units are converted to shares and delivered to Board members on the anniversary of the grant date.(1) |
Letter from the Chairman and CEO, George Oliver
| ∎ | Generated substantial long-term value for shareholders, with our stock price at the end of fiscal 2021 near an all-time high and our three-year total shareholder return relative to the S&P 500 industrials above the 89(th) percentile; |
Letter from the Chairman and CEO, George Oliver
| Fiscal 2021 annual incentive awards paid out at 178.9% of target for the NEOs See page 59 for details |
Letter from the Chairman and CEO, George Oliver
| 2019-2021 PSU awards subject to a three-year performance period concluding September 30, 2021, paid out at 145.2% of target See page 63 for details |
Letter from the Chairman and CEO, George Oliver
| ∎ | Farient’s proprietary alignment methodology, which assesses the extent to which 3-year Total Shareholder Return (“TSR”) and 3-year average Performance-Adjusted Compensation (which includes actual salary, actual annual incentives paid, and the value of equity at the end of the 3-year period using actual PSU awards, if known, and target PSU awards for incomplete performance cycles, and the Black-Scholes value of options granted during the 3-year period, all valued at the stock price at the end of the 3-year period) are aligned; |
Letter from the Chairman and CEO, George Oliver
| Shareholder Engagement | The Company continued its yearly shareholder outreach efforts, offering meetings to our top 25 shareholders, representing approximately 60% of the Company’s outstanding shares. Meetings were requested by two shareholders, representing 16% of the company’s outstanding shares, during fiscal 2021 and provided the Company with valuable feedback. In addition, several shareholders declined requests for meetings, noting that engagement was unnecessary due to no significant concerns with our compensation or governance practices. | | | Feedback indicated that investors continue to be comfortable with the general structure and operation of our executive compensation program. Discussions focused on topics related to ESG governance, diversity and inclusion and our OpenBlue platform. Our investors indicated that they were pleased with our corporate responsibility and sustainability efforts. These topics are discussed in detail on page 38 of our Proxy Statement. | | FY21 Compensation Committee Actions | The Committee has made the following changes for fiscal 2021: | | | ∎ Revised the Compensation Committee Charter and renamed the Committee the Compensation and Talent Development Committee, enhancing the Committee’s oversight of talent development and human capital management. | | | ∎ The Committee continued to monitor trends and developments with respect to incentive compensation recoupment policies. As part of this monitoring, in December 2020 the Committee expanded our recoupment policy to allow us to recoup incentive based and equity compensation for misconduct that has the potential to cause material reputational harm. ∎ The Committee monitored the impact of the COVID-19 pandemic on our AIPP and outstanding PSU awards. As a result of our strong performance, disciplined execution and overall ability to successfully manage through the impacts of the COVID-19 pandemic, no adjustments were made to our executive compensation programs in fiscal 2021. ∎ Updated the AIPP with an intentional focus on rewarding our ability to drive greater accountability in achieving our strategic goals, including driving incremental services growth, and rewarding both business unit and individual performance through the use of performance modifiers. The business unit performance modifier takes into consideration financial, diversity and sustainability results achieved by each business unit in order to distribute the overall AIPP appropriately based on performance. Beginning in fiscal 2020, our NEOs and other executives had an individual contribution modifier added to their AIPP. For fiscal 2021, the individual modifier was applied, driving accountability for leadership actions and behaviors related to business financial performance, operational improvements, and maintaining a high-performance culture including ESG, DEI, and OHI. | | FY22 Compensation Committee Actions | The Committee has made the following changes to our PSU metrics for fiscal 2022-2024: ∎ The Committee reviewed our PSU award design and metrics and remains committed to using three-year cumulative metrics. The Committee will maintain its balanced emphasis on pre-tax earnings and TSR. The Committee determined to change one metric for fiscal 2022, removing after-tax return on invested capital (“ROIC”) and adding recurring revenue, which is in-line with our strategy to drive growth through digitally-enabled products, services and solutions. The Committee believes that recurring revenue provides a stronger correlation to executing our strategy, increasing our valuation and the potential to generate higher future returns when compared to ROIC. | | | Recurring revenue generation directly correlates with our strategy to leverage our product and technology portfolio to create differentiated services and solutions. Our high value and advanced services and solutions, such as OpenBlue Enterprise Manager, OpenBlue Buildings as a Service, OpenBlue Net Zero Buildings as a Service and OpenBlue Healthy Buildings, not only support sustainability through energy efficiency and energy usage reduction for our customers, but are also designed to drive higher and less volatile recurring revenues, lower attrition risk, lower cost of sale, and higher profitability over time. We believe recurring revenue will be a growth driver as we pursue more long-term service contracts as well as subscription and “as a Service” revenue. The incorporation of recurring revenue into our fiscal 2022-2024 PSU metrics will align the performance of our executives with our strategy to drive growth through digitally-enabled products, services and solutions and lead the transformation to smart and sustainable buildings. |
Letter from the Chairman and CEO, George Oliver
| Executive Compensation Framework | Executive Compensation Philosophy and Principles | Elements of Executive Compensation | 51 | | Executive Compensation Management | Roles in Determining Executive Compensation | Use of an Independent Compensation Consultant | Annual Say-on-Pay Vote | Shareholder Engagement | Use of Market Data | Metric Selection and Goal Setting | 53 | | Fiscal 2021 Compensation Decisions and Outcomes | Base Salary | Annual Incentive Performance Program | Long-Term Equity Incentive Awards | 58 | | Additional Information | Other Executive Compensation Policies | Executive Benefits and Perquisites | Executive Severance and Change-in-Control Policy | Global Executive Assignment Agreement | Tax and Accounting Considerations | 64 |
Letter from the Chairman and CEO, George Oliver
| Pay-for-performance | ✓ Set majority of compensation as variable and at-risk ✓ Tie incentives to performance against financial, operational, strategic and individual goals ✓ Use quantifiable and measurable performance metrics and goals that are clearly disclosed ✓ Provide significant upside and downside potential for superior and low performance | | Target pay appropriately | ✓ Benchmark compensation against practices in similarly-sized general industry companies ✓ In general, target compensation at market median for comparable positions | | Align interests with our stakeholders | ✓ Design programs that discourage unnecessary or excessive risk-taking ✓ Cap payout opportunities under the incentive plans ✓ Minimum vesting periods for equity awards ✓ Reward long-term financial results that drive financial creation through a balanced equity mix ✓ Operate meaningful share ownership guidelines ✓ Provide a pay recoupment (i.e., clawback) policy, which was expanded in fiscal 2021 ✓ Prohibit insider trading, hedging and pledging of Company stock ✓ Engage with shareholders on executive compensation matters ✓ Engage an independent compensation consultant to provide analysis and advice ✓ Conduct an annual say-on-pay vote | | Avoid poor governance practices | No tax gross-ups on any change-in-control benefits No single-trigger accelerated vesting on a change-in-control (double-trigger provisions) No discounting, reloading or re-pricing of share options without shareholder approval No guaranteed compensation or guaranteed increases No excessive perquisites No employment agreements with executive officers, except where legally required, in which case they follow market norms No dividends paid on unvested restricted share units or performance share units until such awards vest |
Letter from the Chairman and CEO, George Oliver
| Element | Purpose | Performance Alignment | Recent Changes | | Base Salary | Recognize role scope, skills required, performance, contribution, leadership and potential | Individual performance taken into account when considering changes | No increases for fiscal 2021 | | Annual Incentive Award | Tie compensation to the successful execution of our operating plan and strategic goals as well as Business Unit and individual performance | Opportunity of 0%-200% of target based on performance Based on performance against three equally weighted financial metrics: EBIT Growth, revenue growth, and adjusted free cash flow conversion; a strategic initiative modifier (+/- 15%) based on performance against pre-established shared strategic priorities; a Business Unit performance modifier; and an individual modifier (-25% / +10%) | Strategic initiative modifier updated to be based on achievement of year-over-year organic service revenue growth Business Unit modifier takes into consideration financial, diversity and sustainability results achieved by each Business Unit to distribute the overall AIPP appropriately based on performance Individual contribution modifier for the NEOs looks at leadership behaviors and actions related to ESG, DEI and organizational health OHI | | Long-Term Incentive Equity Awards | Attract, retain and motivate executive talent; align interests with our shareholders and value realization with stock price; drive accountability for long-term performance | PSUs (50%), share options (25%) and restricted share units (“RSUs”) (25%) PSUs are based on performance against three equally weighted measures assessed over three years: cumulative pre-tax earnings, average after-tax ROIC and relative TSR versus the S&P 500 Industrials; PSU values also vary based on the value of our Johnson Controls stock price Share option and RSU value realization tied to Johnson Controls’ stock price performance. Options vest 50% after two years and 50% after three years; RSUs vest equally over three years | Updated the ROIC PSU performance metric, moving from pre-tax ROIC to after-tax ROIC, to better align with peer practice and to hold management accountable for premiums paid on acquisitions |
Letter from the Chairman and CEO, George Oliver
In June 2020, the Committee approved several modifications to the compensation peer group. These changes were made to ensure continued business relevance following transaction activity within the industry. This compensation peer group was used to inform pay decisions in respect of fiscal 2021.
Letter from the Chairman and CEO, George Oliver
| Fiscal 2021 Compensation Peers | | Changes | | ∎ 3M Company ∎ Carrier Global Corporation* ∎ Caterpillar Inc. ∎ Cummins Inc. ∎ Deere & Company ∎ Eaton Corporation* ∎ Emerson Electric Co.* | ∎ General Dynamics Corporation ∎ Honeywell International, Inc.* ∎ Otis Worldwide Corporation ∎ Parker Hannifin Corporation ∎ Stanley Black & Decker Inc. ∎ Trane Technologies* | Removed: Fluor Inc., Ingersoll-Rand plc, Raytheon Company Added: Carrier Global Corporation, Trane Technologies, Otis Worldwide Corporation |
Letter from the Chairman and CEO, George Oliver
| (*) | The Committee also referenced a subset of the compensation peers (the “select peer group”) marked above with the addition of Lennox International, to provide additional context when setting performance goals under Johnson Controls’ performance-based incentive plans for fiscal 2021. Lennox International is not included as a compensation peer because it is significantly smaller than Johnson Controls and falls outside of the revenue size criteria. Additional information on the goal setting process is summarized in the following section. |
Letter from the Chairman and CEO, George Oliver
| For AIPP: ∎ Updated the AIPP strategic initiative modifier to achievement of year-over-year organic service revenue growth. Improving this measure has a significant impact on shareholder value and on meeting shareholder expectations relative to the execution of our strategy to drive service growth. ∎ Added a Business Unit performance modifier to the AIPP, taking into consideration financial, diversity and sustainability results achieved by each Business Unit to distribute the overall AIPP appropriately based on performance in all areas. | | ∎ Updated the individual modifier to enable the assessment of an individual’s contribution to business financial performance, operational improvements, and maintain our high-performance culture including ESG, DEI, and OHI. | | For PSUs: ∎ Updated the PSU performance metric from pre-tax ROIC to after-tax ROIC to better align with the peer practice and to hold management accountable for premiums paid on acquisitions. | | Both management and the Committee believe these changes further align our compensation strategy with our business strategy and will focus our executives on delivering long-term, sustainable value creation for our stakeholders. |
Letter from the Chairman and CEO, George Oliver
| | | Fiscal 2021 Performance Goals | | | | Payout Factor | | | Financial Performance Metric | Weight | Threshold | Target | Maximum | Actual | Unweighted | Weighted | | EBIT Growth | 1/3 | 2.0% | 6.0% | 12.0% | 11.6% | 193.7% | | | Revenue Growth | 1/3 | 1.5% | 3.0% | 4.5% | 4.1% | 176.3% | 178.9% | | Enterprise Free Cash Flow Conversion | 1/3 | 90% | 95% | 110% | 105% | 166.7% | |
Letter from the Chairman and CEO, George Oliver
| NEO | Target Opportunity (% salary) | Target Opportunity | Financial and Strategic Payout Factor | Business Unit Modifier | Individual Modifier | Total Payout Factor | Fiscal 2021 Annual Incentive Award | | George R. Oliver | 160% | $2,400,000 | 178.9% | 100% | 100% | 178.9% | $4,293,600 | | Olivier Leonetti | 100% | $740,012 | 178.9% | 100% | 100% | 178.9% | $1,323,881 | | Jeffrey M. Williams | 95% | $760,000 | 178.9% | 100% | 100% | 178.9% | $1,359,640 | | Ganesh Ramaswamy | 90% | $652,500 | 178.9% | 100% | 100% | 178.9% | $1,167,322 | | John Donofrio | 90% | $630,000 | 178.9% | 100% | 100% | 178.9% | $1,127,070 | | Brian J. Stief(1) | 110% | $204,050 | 178.9% | 100% | 100% | 178.9% | $365,045 |
Letter from the Chairman and CEO, George Oliver
| Mr. Stief’s target opportunity and payout was prorated 25% based on the number of days worked within the fiscal 2021.(1) |
Letter from the Chairman and CEO, George Oliver
| FISCAL 2021 LONG-TERM EQUITY GRANT | | | | | | | VALUE OF SHARE OPTIONS | VALUE OF RSUs | VALUE OF PSUs | TOTAL TARGET VALUE OF AWARD | | George R. Oliver | $2,375,000 | $2,375,000 | $4,750,000 | $9,500,000 | | Olivier Leonetti | $650,000 | $650,000 | $1,300,000 | $2,600,000 | | Jeffrey M. Williams | $750,000 | $750,000 | $1,500,000 | $3,000,000 | | Ganesh Ramaswamy | $550,000 | $550,000 | $1,100,000 | $2,200,000 | | John Donofrio | $550,000 | $550,000 | $1,100,000 | $2,200,000 | | Brian J Stief* | — | — | $111,792 | $111,792 |
Letter from the Chairman and CEO, George Oliver
| Mr. Stief received a portion of PSUs to reflect his prorated service within the performance period.* |
Letter from the Chairman and CEO, George Oliver
Fiscal 2021-2023 Performance Share Units Performance Share Units (“PSUs”) help to ensure our executives’ pay is directly linked to the achievement of strong, sustained long-term operating performance. The balance of metrics focuses senior leaders on making strategic investments that optimize long-term shareholder value. Compensation Discussion & Analysis › Fiscal 2021-2023 Performance Share Units For 2021-2023 awards, we moved from a pre-tax ROIC metric to an after-tax ROIC metric to better align with peer practice and to hold management accountable for premiums paid on acquisitions. The 2021-2023 awards are subject to three independently weighted measures, with performance assessed over three cumulative years.
Letter from the Chairman and CEO, George Oliver
| | Weight | Fiscal 2021 Performance Goals | | | | Performance Metric | | Threshold | Target | Maximum | | Pre-tax Earnings Growth | 1/3(rd) | The three-year performance goals associated with these measures will be disclosed at the conclusion of the performance period | | | | After-tax ROIC | 1/3(rd) | | | | | TSR Relative to S&P 500 Industrials | 1/3(rd) | ³25(th) percentile | ³50(th) percentile | ³75(th) percentile |
Letter from the Chairman and CEO, George Oliver
| | Below Threshold | Threshold | Target | Maximum | | Payout (% of Target) | 0% | 50% | 100% | 200% |
Letter from the Chairman and CEO, George Oliver
The payout is calculated using interpolation between threshold and target, and target and maximum. Fiscal 2019-2021 Performance Share Units The 2019 – 2021 PSU awards were subject to three independently weighted measures, Pre-tax earnings growth, Pre-tax ROIC and Relative TSR. Based on cumulative performance over three-years, awards vested at 145.2% of target.
Letter from the Chairman and CEO, George Oliver
| Performance Metric | Weight | Fiscal 2019 - 2021 Performance Goals | | | Actual Performance | Results | Weighted Performance | | | | Threshold | Target | Maximum | | | | | Pre-tax Earnings Growth | 1/3(rd) | $375 | $585 | $785 | $548 | 91.3% | 30.4% | | After-tax ROIC | 1/3(rd) | 100 bps | 190 bps | 280 bps | 230 bps | 144.4% | 48.1% | | TSR Relative to S&P 500 Industrials | 1/3(rd) | ³ 25(th) percentile | ³ 50(th) percentile | ³ 75(th) percentile | 89.5(th) percentile | 200.0% | 66.7% | | 2019 – 2021 PSU Final Payout Percentage | | | | | | | 145.2% |
Letter from the Chairman and CEO, George Oliver
Fiscal 2021 Share Options and Restricted Share Units By awarding share options and RSUs, we link long-term incentives directly to our share price. If our share price decreases, so does the value of the executive officer’s compensation. Share options and RSUs also help us maintain competitive compensation levels in the market and retain high-performing employees through multi-year vesting requirements. We valued fiscal 2021 share options using a Black-Scholes valuation. Their strike price is equal to the closing price of our common shares on the date of the grant. Fifty percent of each share option award vests two years after the date of grant, and the other fifty percent vests three years after the date of grant. Share option vesting is subject to continued employment, with earlier vesting upon retirement, and share options have a ten-year exercise term. The Committee does not permit or engage in “backdating,” repricing or cash buyout of share options. We value RSUs based on the closing price of our shares at the date of grant. RSUs generally vest in equal installments over three years. Updates to Fiscal 2022-2024 Performance Share Units For fiscal 2022, the Committee has reviewed the PSU design and metrics. We remain committed to using three-year cumulative metrics and will keep the balanced emphasis on pre-tax earnings and TSR. We will change the third metric from after-tax ROIC to recurring revenue, which is in-line with our digitally-enabled products, services and solutions growth strategy. The Committee believes that recurring revenue provides a stronger correlation to increasing valuation and the potential to generate higher future returns when compared to ROIC. Our high value and advanced services and solutions, such as OpenBlue Enterprise Manager, OpenBlue Buildings as a Service, OpenBlue Net Zero Buildings as a Service and OpenBlue Healthy Buildings, not only support sustainability through energy efficiency and energy usage reduction for our customers, but also drive higher and less volatile recurring revenues, lower attrition risk, lower cost of sale, and higher profitability over time. We believe recurring revenue will be a growth driver as we pursue more long-term service contracts as well as subscription and ”as a Service” revenue. The incorporation of recurring revenue into our fiscal 2022-2024 PSU metrics will align the performance of our executives with our strategy to drive growth through digitally-enabled products, services and solutions and lead the transformation to smart and sustainable buildings. Compensation Discussion & Analysis › Additional Information ADDITIONAL INFORMATION OTHER EXECUTIVE COMPENSATION POLICIES To further ensure the alignment of executive interests with those of our shareholders, the Committee has approved additional compensation-related policies that apply to our NEOs. SHARE OWNERSHIP GUIDELINES NEOs are required to hold specified amounts of Johnson Controls shares. If an executive does not meet the minimum guideline within five years, they cannot sell any shares until they meet the requirement. Until the guideline is met, executives are required to retain after-tax shares resulting from an exercise of share options and must retain shares resulting from the vesting of restricted share units and performance share units. All shares directly or indirectly owned by, and restricted share units granted to, NEOs count towards the requirement. Share options do not count. At the end of fiscal 2021, all NEOs were in compliance with their ownership requirements, demonstrating the strong alignment of interests between our NEOs and Johnson Controls’ stakeholders.
Letter from the Chairman and CEO, George Oliver
The CEO is encouraged to use the corporate aircraft for both business and personal use to enhance his productivity, maintain confidentiality, ensure personal security and protect his health and wellbeing particularly during the pandemic. Compensation Discussion & Analysis › Executive Severance and Change-in-Control Policy EXECUTIVE SEVERANCE AND CHANGE-IN-CONTROL POLICY The Executive Severance and Change-in-Control Policy applies to all NEOs.
Letter from the Chairman and CEO, George Oliver
| | Change-In-Control | Severance | | Triggers | ∎ Involuntary termination other than for Cause, permanent disability or death within the period beginning 60 days prior to and ending two years following a change-in-control ∎ Good reason resignation within the same period | ∎ Involuntary termination other than for Cause, permanent disability or death | | Cash Severance | Base salary + target annual bonus | | | Severance Multiple | CEO: 3X Other NEOs: 2X | CEO: 2X Other NEOs: 1.5X | | Claims Release | Required | | | Benefits Continuation | Aligned with severance multiple | | | Equity Acceleration | ∎ Pro-rated equity acceleration based on number of months worked during vesting period (pro-rated PSUs based on target performance) ∎ However, for awards granted after March 10, 2021, if the 2021 Equity and Incentive Plan would provide more favorable result, then its treatment would govern. Under the Plan, the Committee may provide either for adjustment/assumption of awards that includes a right to full vesting upon an involuntary termination or termination for Good Reason or full accelerated vesting (assuming higher of target or trend for PSUs) and a cash settlement upon the change-in-control ∎ Payment of a prorated portion of the target bonus amount for the year of termination | ∎ Pro-rated equity acceleration based on number of months worked during vesting period (pro-rated PSUs based on target performance earned at vesting) | | Excise Tax Gross-Up | None | | | Restrictive Covenants | ∎ Unlimited time for non-disparagement, trade secrets and confidential information ∎ Two-year post-termination non-solicitation of employees and customers ∎ One and one-half year post-termination non-compete ∎ Employee must affirmatively consent to be bound by these covenants as a condition of plan participation | |
Letter from the Chairman and CEO, George Oliver
| Name and Principal Position | Year ($) | Salary ($)(1) | Bonus ($)(2) | Stock/Unit Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | George Oliver Chairman & Chief Executive Officer | 2021 | 1,500,000 | — | 7,124,944 | 2,374,997 | 4,293,600 | — | 373,476 | 15,667,017 | | | 2020 | 1,348,846 | — | 7,124,972 | 2,374,995 | 2,116,800 | — | 765,878 | 13,731,491 | | | 2019 | 1,500,000 | — | 7,124,992 | 2,374,998 | 3,704,400 | — | 772,247 | 15,476,637 | | Olivier Leonetti Executive Vice President & Chief Financial Officer | 2021 | 740,012 | — | 1,949,958 | 649,996 | 1,323,881 | — | 29,651 | 4,693,498 | | | 2020 | 65,463 | 800,000 | 5,499,976 | — | — | — | 1,442 | 6,366,881 | | Jeffrey M. Williams VP & President — Global Products, Building Technologies and Solutions | 2021 | 800,000 | — | 2,249,913 | 749,998 | 1,359,640 | — | 270,650 | 5,430,201 | | | 2020 | 753,846 | — | 2,249,991 | 749,995 | 670,320 | 230,707 | 2,334,073 | 6,988,932 | | | 2019 | 742,000 | — | 1,499,979 | 500,000 | 960,630 | 288,674 | 378,279 | 4,369,562 | | Ganesh Ramaswamy Vice President & President — Global Services | 2021 | 725,000 | — | 1,649,958 | 549,994 | 1,167,322 | — | 56,707 | 4,148,981 | | | 2020 | 580,000 | 775,000 | 4,049,924 | 549,994 | 478,015 | | 40,742 | 6,473,675 | | John Donofrio Executive Vice President, General Counsel | 2021 | 700,000 | — | 1,649,958 | 549,994 | 1,127,070 | — | 85,011 | 4,112,033 | | | 2020 | 673,077 | — | 1,649,960 | 549,994 | 555,660 | — | 189,530 | 3,618,221 | | | 2019 | 700,000 | — | 1,499,979 | 500,000 | 972,405 | — | 168,081 | 3,840,465 | | Brian J. Stief (7) Former Vice Chairman and Chief Financial Officer | 2021 | 187,539 | — | 111,758 | — | 365,045 | — | 102,726 | 767,068 | | | 2020 | 713,462 | — | 2,012,183 | 670,746 | 719,888 | — | 281,702 | 4,397,981 | | | 2019 | 742,000 | — | 2,012,215 | 670,747 | 1,259,805 | — | 224,568 | 4,909,335 |
Letter from the Chairman and CEO, George Oliver
| Deferred Amounts Included: We have not reduced amounts shown above to reflect a named executive officer’s election, if any, to defer the receipt of compensation into our qualified and nonqualified deferred compensation plans.(1) |
Letter from the Chairman and CEO, George Oliver
| Bonus: The amount reflects the value of one-time cash sign-on bonuses provided to Messrs. Ramaswamy and Leonetti during fiscal 2020 in connection with their appointment as officers.(2) |
Letter from the Chairman and CEO, George Oliver
| Stock/Unit Awards and Option Awards: The amounts reflect the fair value of equity awards granted in fiscal 2021, 2020, and 2019. The equity awards granted in fiscal 2021 to each named executive officer consisted of share options, restricted share units (“RSUs”) and performance share units (“PSUs”). The amounts in columns (e) and (f) represent the fair value of the entire amount of the award calculated in accordance with Financial Accounting Standards Board ASC Topic 718, excluding the effect of estimated forfeitures. For share options, amounts are computed by multiplying the fair value of the award (as determined under the Black-Scholes option pricing model) by the total number of options granted. For RSUs, fair value is computed by multiplying the total number of shares subject to the award by the closing market price of our ordinary shares on the date of grant. For PSUs, fair value is based on a model that considers the closing market price of our ordinary shares on the date of grant, the range of shares subject to such stock award, and the estimated probabilities of vesting outcomes. The value of PSUs included in the table assumes target performance. The values of the PSUs at the grant date if the highest level of performance conditions were to be achieved would be as follows: Mr. Oliver — $9,499,956; Mr. Leonetti — $2,599,944; Mr. Williams— $2,999,914; Mr. Ramaswamy — $2,199,974; Mr. Donofrio — $2,199,974; and Mr. Stief — $223,516. Footnote 13 to our audited financial statements for the fiscal year ended September 30, 2021, which appears in our Annual Report on Form 10-K that we filed with the Securities and Exchange Commission on November 15, 2021, includes assumptions that we used in the calculation of the equity award values.(3) |
Letter from the Chairman and CEO, George Oliver
| Non-Equity Incentive Plan Compensation: The amounts reported in column (g) for each named executive officer reflect annual cash incentive compensation.(4) |
Letter from the Chairman and CEO, George Oliver
Compensation Discussion & Analysis › Executive Compensation Tables
Letter from the Chairman and CEO, George Oliver
| Change In Pension Value: The amounts reported in column (h) generally reflect the actuarial change in the present value of benefits under the qualified defined benefit pension plan established by Johnson Controls, determined as of the measurement dates used for financial statement reporting purposes for the fiscal year indicated and using interest rate and mortality rate assumptions consistent with those reflected in our audited financial statements for the fiscal year indicated. The value that an executive will actually receive under the plan will differ to the extent facts and circumstances vary from what the calculations assume. Changes in the present value of the named executive officer’s benefits are the result of the assumptions applied (as discussed in the footnotes to the “Pension Benefits as of September 30, 2021” table below). No named executive officer received preferential or above market earnings on nonqualified deferred compensation.(5) |
Letter from the Chairman and CEO, George Oliver
| All Other Compensation: The fiscal 2021 amounts reported in column (i) for each named executive officer consist of the following:(6) |
Letter from the Chairman and CEO, George Oliver
| Named Executive | Personal Use of Company Aircraft(a) | Expatriate & Relocation Benefits(b) | Tax Equalization or Gross- Up(c) | Retirement Plan Contributions(d) | Company Vehicle(e) | Financial Planning(f) | Executive Physical(g) | Total All Other Compensation(h) | | George Oliver | 185,194 | — | — | 173,282 | 15,000 | — | — | 373,476 | | Olivier Leonetti | — | — | — | 7,258 | 15,000 | 4,000 | 3,393 | 29,651 | | Jeffrey M. Williams | 15,090 | 1.700 | 106,978 | 99,692 | 15,000 | 32,190 | — | 270,650 | | Ganesh Ramaswamy | — | — | 7,926 | 23,503 | 15,000 | 10,278 | — | 56,707 | | John Donofrio | 16,736 | — | — | 36,862 | 15,000 | 16,413 | — | 85,011 | | Brian J. Stief | 21,126 | — | — | 71,668 | — | 9,932 | — | 102,726 |
Letter from the Chairman and CEO, George Oliver
| a) | The Summary Compensation Table reflects the aggregate incremental pre-tax cost to us for personal use of aircraft for fiscal 2021, which was calculated using a method that takes into account the incremental cost of fuel, trip-related maintenance, crew travel expenses, on-board catering, landing fees, trip-related hangar/parking costs and other variable costs. Because our aircraft are used primarily for business travel, the calculation does not include the fixed costs that do not change based on usage, such as pilots’ salaries, the acquisition costs of our owned or leased aircraft, and the cost of maintenance not related to trips. |
Letter from the Chairman and CEO, George Oliver
| The amount shown for Mr. Williams reflect relocation benefits as part of his expatriate assignment.(b) |
Letter from the Chairman and CEO, George Oliver
| The amount shown for Mr. Williams represents $106,978 in gross-up payments made to him in connection with his expatriate assignment.(c) |
Letter from the Chairman and CEO, George Oliver
| Retirement plan contributions include matching contributions made on behalf of each executive to the Company’s tax-qualified 401(k) plans and Retirement Restoration Plan.(d) |
Letter from the Chairman and CEO, George Oliver
| Amounts reflect costs attributable to the personal use of a vehicle.(e) |
Letter from the Chairman and CEO, George Oliver
| Amounts reflect payments with respect to financial planning for Messrs. Leonetti, Williams, Ramaswamy, Donofrio and Stief.(f) |
Letter from the Chairman and CEO, George Oliver
| Retirement of Brian Stief: On November 17, 2020, Mr. Leonetti assumed the role of Executive Vice President and Chief Financial Officer, with Mr. Stief retaining the title of Vice Chairman. Mr. Stief retired at the end of calendar year 2020(7) |
Letter from the Chairman and CEO, George Oliver
Compensation Discussion & Analysis › Fiscal 2021 Grants of Plan-Based Awards Table Fiscal 2021 Grants of Plan-Based Awards Table The following table summarizes cash-based and equity-based awards for each of the named executive officers that were granted in fiscal 2021.
Letter from the Chairman and CEO, George Oliver
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | | | Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Grant Date Fair Value of Stock and Option Awards | | (a) | (b) | ($)(c)(1) | ($)(d)(1) | ($)(e)(1) | (#)(f)(2) | (#)(g)(2) | (#)(h)(2) | (i)(3) | (j)(4) | (k)(5) | ($)(l)(6) | | George Oliver | N/A(7) | 400,000 | 2,400,000 | 4,800,000 | | | | | | | | | | 12/10/2020 | | | | | | | | 253,739 | 45.69 | 2,374,997 | | | 12/10/2020 | | | | | | | 51,980 | | | 2,374,966 | | | 12/10/2020 | | | | 20,792 | 103,961 | 207,922 | | | | 4,749,978 | | Olivier Leonetti | N/A(7) | 123,335 | 740,012 | 1,480,024 | | | | | | | | | | 12/10/2020 | | | | | | | | 69,444 | 45.69 | 649,996 | | | 12/10/2020 | | | | | | | 14,226 | | | 649,986 | | | 12/10/2020 | | | | 5,690 | 28,452 | 56,904 | | | | 1,299,972 | | Jeffrey M. Williams | N/A(7) | 126,667 | 760,000 | 1,520,000 | | | | | | | | | | 12/10/2020 | | | | | | | | 80,128 | 45.69 | 749,998 | | | 12/10/2020 | | | | | | | 16,414 | | | 749,956 | | | 12/10/2020 | | | | 6,566 | 32,829 | 65,658 | | | | 1,499,957 | | Ganesh Ramaswamy | N/A(7) | 108,750 | 652,500 | 1,305,000 | | | | | | | | | | 12/10/2020 | | | | | | | | 58,760 | 45.69 | 549,994 | | | 12/10/2020 | | | | | | | 12,037 | | | 549,971 | | | 12/10/2020 | | | | 4,815 | 24,075 | 48,150 | | | | 1,099,987 | | John Donofrio | N/A(7) | 105,000 | 630,000 | 1,260,000 | | | | | | | | | | 12/10/2020 | | | | | | | | 58,760 | 45.69 | 549,994 | | | 12/10/2020 | | | | | | | 12,037 | | | 549,971 | | | 12/10/2020 | | | | 4,815 | 24,075 | 48,150 | | | | 1,099,987 | | Brian J. Stief | N/A(7) | 34,288 | 204,050 | 411,454 | | | | | | | | | | 12/10/2020 | | | | 489 | 2,446 | 4,892 | | | | 111,758 |
Letter from the Chairman and CEO, George Oliver
| Amounts reported in columns (c) through (e) represent the range of potential cash payments under the annual performance bonuses that could have been earned under the Johnson Controls Annual Incentive Performance Program for fiscal 2021, as described above under the heading “Annual Incentive Performance Program (AIPP),” in the Compensation Discussion & Analysis. Threshold amounts assume minimum performance levels are achieved with respect to each performance measure.(1) |
Letter from the Chairman and CEO, George Oliver
| Amounts in columns (f) through (h) show the range of potential share payouts for the PSUs granted to our named executive officers assuming that threshold, target and maximum performance conditions are achieved as described in the section titled “Long-Term Equity Incentive Awards” in the Compensation Discussion & Analysis. The number of PSUs that are earned, if any, will be based on performance for fiscal years 2021 to 2023 and will be determined after the close of fiscal 2023.(2) |
Letter from the Chairman and CEO, George Oliver
| Amounts in column (i) show the number of RSUs granted to the named executive officers in December 2020 as described in the section titled “Long-Term Equity Incentive Awards” in the Compensation Discussion & Analysis. These awards vest in equal installments over three years.(3) |
Letter from the Chairman and CEO, George Oliver
| Amounts in column (j) show the number of the share options granted for fiscal 2021, as described above under the heading “Long-Term Equity Incentive Awards” in the Compensation Discussion & Analysis. The share options vest 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date, contingent on the named executive officer’s continued employment, and expire, at the latest, on the tenth anniversary of the grant date.(4) |
Letter from the Chairman and CEO, George Oliver
| Share options were granted with an exercise price per share equal to the closing market price of our ordinary shares on the date of grant.(5) |
Letter from the Chairman and CEO, George Oliver
Compensation Discussion & Analysis › Fiscal 2021 Grants of Plan-Based Awards Table
Letter from the Chairman and CEO, George Oliver
| Amounts in column (l) show the grant date fair value of the option awards, RSUs and PSUs granted to the named executive officers. These amounts represent the fair value of the entire amount of the award calculated in accordance with Financial Accounting Standards Board ASC Topic 718 (ASC Topic 718), excluding the effect of estimated forfeitures. For grants of share options, amounts are computed by multiplying the fair value of the award (as determined under the Black-Scholes option pricing model) by the total number of options granted. For grants of RSUs, fair value is computed by multiplying the total number of shares subject to the award by the closing market price of our ordinary shares on the date of grant. For grants of PSUs, the reported fair value assumes achievement of target performance, which is the probable outcome of performance conditions and is consistent with the estimate of aggregate compensation cost to be recognized over the service period.(6) |
Letter from the Chairman and CEO, George Oliver
| The award reflected in this row is an annual incentive performance award that we granted for the performance period of fiscal 2021, the material terms of which we describe in the Compensation Discussion & Analysis section titled “Annual Incentive Performance Program (AIPP).”(7) |
Letter from the Chairman and CEO, George Oliver
Compensation Discussion & Analysis › Outstanding Equity Awards at 2021 Fiscal Year-End Table Outstanding Equity Awards at 2021 Fiscal Year-End Table The following table shows, for each of the named executive officers, all equity awards that were outstanding as of September 30, 2021. Dollar amounts are based on the NYSE closing price of $68.08 per share for our ordinary shares on September 30, 2021.
Letter from the Chairman and CEO, George Oliver
| | Option Awards | | | | Stock Awards | | | | | Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) (c) | Option Exercise Price ($) (d) | Option Expiration Date (e) | Number of Shares of Stock That Have Not Vested (#)(2) (f) | Market Value of Shares of Stock that Have not Vested ($) (g) | Equity Incentive plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#)(3) (h) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested ($) (i) | | George Oliver | | | | | 117,569 | 8,004,023 | 376,187 | 25,610,783 | | | 309,996 | — | 35.86 | 11/20/2023 | | | | | | | 331,846 | — | 41.86 | 11/25/2024 | | | | | | | 474,268 | — | 34.82 | 10/12/2025 | | | | | | | 248,994 | — | 41.73 | 10/7/2026 | | | | | | | 336,879 | — | 37.36 | 12/7/2027 | | | | | | | 213,579 | 213,579 | 33.39 | 12/6/2028 | | | | | | | — | 325,788 | 41.75 | 12/5/2029 | | | | | | | — | 253,739 | 45.69 | 12/10/2030 | | | | | | Olivier Leonetti | | | | | 106,182 | 7,228,892 | 28,829 | 1,962,672 | | | | 69,444 | 45.69 | 12/10/2030 | | | | | | Jeffrey M. Williams | | | | | 34,459 | 2,345,973 | 102,760 | 6,995,893 | | | 20,952 | — | 46.29 | 11/18/2024 | | | | | | | 6,437 | — | 42.67 | 1/5/2025 | | | | | | | 33,343 | — | 40.42 | 10/7/2025 | | | | | | | 50,281 | — | 41.73 | 10/7/2026 | | | | | | | 70,921 | — | 37.36 | 12/7/2027 | | | | | | | 44,964 | 44,964 | 33.39 | 12/6/2028 | | | | | | | — | 102,880 | 41.75 | 12/5/2029 | | | | | | | — | 80,128 | 45.69 | 12/10/2030 | | | | | | Ganesh Ramaswamy | | | | | 60,777 | 4,137,735 | 51,840 | 3,529,232 | | | — | 75,445 | 41.75 | 12/5/2029 | | | | | | | — | 58,760 | 45.69 | 12/10/2030 | | | | | | John Donofrio | | | | | 26,696 | 1,817,526 | 83,910 | 5,712,555 | | | 70,921 | — | 37.36 | 12/7/2027 | | | | | | | 44,964 | 44,964 | 33.39 | 12/6/2028 | | | | | | | | 75,445 | 41.75 | 12/5/2029 | | | | | | | | 58,760 | 45.69 | 12/10/2030 | | | | | | Brian J. Stief | | | | | 18,332 | 1,248,066 | 50,667 | 3,449,403 | | | 92,009 | — | 41.75 | 12/5/2029 | | | | |
Letter from the Chairman and CEO, George Oliver
Compensation Discussion & Analysis › Outstanding Equity Awards at 2021 Fiscal Year-End Table
Letter from the Chairman and CEO, George Oliver
| Vesting information for each outstanding option award for the named executive officers is described in the table below.(1) |
Letter from the Chairman and CEO, George Oliver
| Vesting Date | Exercise Price | George R. Oliver | Oliver Leonetti | Jeffrey M. Williams | Ganesh Ramaswamy | John Donofrio | | 2021 | | | | | | | | 12/6/2021 | $33.39 | 213,579 | | 44,964 | — | 44,964 | | 12/5/2021 | $41.75 | 162,894 | | 51,440 | 37,722 | 37,722 | | 2022 | | | | | | | | 12/5/2022 | $41.75 | 162,894 | | 51,440 | 37,723 | 37,723 | | 12/10/2022 | $45.69 | 126,870 | 34,722 | 40,064 | 29,380 | 29,380 | | 2023 | | | | | | | | 12/10/2023 | $45.69 | 126,869 | 34,722 | 40,064 | 29,380 | 29,380 |
Letter from the Chairman and CEO, George Oliver
| The amounts in columns (f) and (g) reflect, for each named executive officer, the number and market value of RSUs which had been granted as of September 30, 2021, but which remained subject to additional vesting requirements. Scheduled vesting of all RSUs and the number of shares underlying awards, for each of the named executive officer is as follows:(2) |
Letter from the Chairman and CEO, George Oliver
| Vesting Date | George R. Oliver | Olivier Leonetti | Jeffrey M. Williams | Ganesh Ramaswamy | John Donofrio | Brian J. Stief | | 2021 | | | | | | | | 12/5/2021 | 19,754 | | 6,239 | 4,575 | 4,575 | 5,580 | | 12/6/2021 | 25,393 | | 5,350 | — | 5,350 | 7,173 | | 12/10/2021 | 17,556 | 4,805 | 5,544 | 4,066 | 4,066 | | | 2022 | | | | | | | | 8/31/2022 | — | 45,884 | — | — | — | — | | 12/2/2022 | — | — | — | 39,431 | — | — | | 12/5/2022 | 19,754 | — | 6,239 | 4,575 | 4,575 | 5,579 | | 12/10/2022 | 17,556 | 4,805 | 5,544 | 4,065 | 4,065 | | | 2023 | | | | | | | | 8/31/2023 | — | 45,884 | — | — | — | — | | 12/10/2023 | 17,556 | 4,804 | 5,543 | 4,065 | 4,065 | — |
Letter from the Chairman and CEO, George Oliver
| The amounts in columns (h) and (i) reflect, for each named executive officer, the number and market value of PSUs at target which had been granted as of September 30, 2021. The number of shares earned will depend upon actual performance relative to the applicable performance metrics at the end of the performance period. Scheduled vesting of all PSUs and the number of shares underlying awards at target for each of the named executive officers is as follows:(3) |
Letter from the Chairman and CEO, George Oliver
| Vesting Date | George R. Oliver | Olivier Leonetti | Jeffrey M. Williams | Ganesh Ramaswamy | John Donofrio | Brian J. Stief | | 2021 | | | | | | | | 12/6/2021 | 152,333 | — | 32,070 | — | 32,070 | 33,309 | | 2022 | | | | | | | | 12/6/2022 | 118,516 | — | 37,426 | 27,446 | 27,446 | 14,880 | | 2023 | | | | | | | | 12/10/2023 | 105,338 | 28,829 | 33,264 | 24,394 | 24,394 | 2,478 |
Letter from the Chairman and CEO, George Oliver
Compensation Discussion & Analysis › Fiscal 2021 Option Exercises and Stock Vested Table Fiscal 2021 Option Exercises and Stock Vested Table The following table shows, for each of the named executive officers, the amounts realized from options that were exercised and RSUs that vested during fiscal 2021.
Letter from the Chairman and CEO, George Oliver
| | Option Awards | | Stock Awards | | | Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($)(1) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($)(2) (e) | | George Oliver | 530,260 | 22,598,738 | 244,723 | 11,102,238 | | Olivier Leonetti | — | — | 45,883 | 3,432,042 | | Jeffrey M. Williams | 19,196 | 412,868 | 53,570 | 2,431,355 | | Ganesh Ramaswamy | — | — | 23,968 | 1,099,891 | | John Donofrio | — | — | 76,209 | 3,454,739 | | Brian J. Stief | 396,770 | 5,825,149 | 628,262 | 28,436,921 |
Letter from the Chairman and CEO, George Oliver
| The amounts in column (c) represent the product of the number of shares acquired on exercise and the difference between the market price of the shares at the time of exercise and the exercise price of the options.(1) |
Letter from the Chairman and CEO, George Oliver
| The amounts in column (e) represent the product of the number of shares a named executive officer acquired on vesting and the closing market price of the shares on the vesting date, plus the value of dividend equivalents released, if any.(2) |
Letter from the Chairman and CEO, George Oliver
Pension Benefits as of September 30, 2021 The following table sets forth certain information with respect to the potential benefits to our named executive officers under the Johnson Controls qualified pension plan as of September 30, 2021. Of our named executive officers, only Mr. Williams participates in the plan.
Letter from the Chairman and CEO, George Oliver
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | | Jeffrey M. Williams | Johnson Controls Pension Plan | 30.67 | 1,715,246 |
Letter from the Chairman and CEO, George Oliver
| Amounts in this column reflect the following assumptions: A calculation date of September 30, 2021, a 2.53% discount rate for the Johnson Controls Pension Plan, retirement occurring at normal retirement age based on Social Security Normal Retirement Age minus three years, and applicability of the 2012 Fully Generational Mortality Table for Annuitants per Treasury Regulations Section 1.430(h)(3)-1(e), that we used for financial reporting purposes as of September 30, 2021. The valuation method used to determine the present value of the accumulated benefit is the same as the method we used for financial reporting purposes as of September 30, 2021. The value that an executive will actually receive under these benefits will differ to the extent facts and circumstances vary from what these calculations assume.(1) |
Letter from the Chairman and CEO, George Oliver
Johnson Controls Pension Plan. The Johnson Controls Pension Plan is a frozen defined benefit pension plan that provides benefits for most non-union U.S. employees hired before January 1, 2006, including Mr. Williams. Because Messrs. Oliver, Stief, Ramaswamy and Leonetti were employed by Johnson Controls after January 1, 2006, they are not participants in the Pension Plan. Subject to certain limitations that the Code imposes, the monthly retirement benefit payable under the Johnson Controls Pension Plan to participants, at normal retirement age in a single life annuity, is determined as follows:
Letter from the Chairman and CEO, George Oliver
| ∎ | 1.15% of final average monthly compensation times years of benefit service, plus |
Letter from the Chairman and CEO, George Oliver
| ∎ | 0.55% of final average monthly compensation in excess of Social Security covered compensation times years of benefit service (up to 30 years) |
Letter from the Chairman and CEO, George Oliver
Service after December 31, 2014 does not count as benefit service in this formula. For purposes of this formula, “final average monthly compensation” means a participant’s gross compensation, excluding certain unusual or non-recurring items of compensation, such as severance or moving expenses, for the highest five consecutive years of the last ten consecutive years of employment occurring prior to January 1, 2015. “Social Security covered compensation” means the average of the Social Security wage base for the 35 years preceding a participant’s normal retirement age. Normal retirement age for Johnson Controls Pension Plan participants is age 65. Compensation Discussion & Analysis › Pension Benefits as of September 30, 2021 Participants in the Johnson Controls Pension Plan generally become vested in their pension benefits upon completion of five years of service. The Pension Plan does not pay full pension benefits until after a participant terminates employment and reaches normal retirement age. However, a participant who terminates employment may elect to receive benefits at a reduced level at any time after age 55, as follows: If a participant terminates employment prior to age 55 and completing 10 years of service, then the reduction is 5% for each year that benefits begin before the participant’s Social Security retirement age; and if a participant terminates employment on or after age 55 and after completing 10 years of service, then the reduction is 5% for each year that benefits begin before the three years preceding the participant’s Social Security retirement age. Mr. Williams is currently eligible for early retirement under the Pension Plan. Non-Qualified Deferred Compensation Table at Fiscal 2021 Year-End The following table presents information on the non-qualified deferred compensation accounts of each named executive officer at September 30, 2021.
Letter from the Chairman and CEO, George Oliver
| Name (a) | Executive Contributions in Last FY ($)(1) (b) | Registrant Contributions in Last FY ($)(2) (c) | Aggregate Earnings in Last FY ($)(3) (d) | Aggregate Withdrawals/ Distributions ($)(4) (e) | Aggregate Balance at Last FYE ($)(5) (f) | | George Oliver | 199,608 | 159,032 | 523,409 | (56,525) | 3,991,656 | | Olivier Leonetti | — | — | — | — | — | | Jeffrey M. Williams | 70,819 | 79,742 | 227,954 | — | 1,594,542 | | Ganesh Ramaswamy | — | 17,803 | 1,125 | — | 18,928 | | John Donofrio | 57,940 | 28,312 | 66,290 | | 574,402 | | Brian J. Stief | 25,356,556 | 57,418 | (447,575) | (4,136,034) | 35,572,111 |
Letter from the Chairman and CEO, George Oliver
| Amounts in column (b) include employee contributions under the Johnson Controls Executive Deferred Compensation Plan, Johnson Controls International plc Senior Executive Deferred Compensation Plan and the Johnson Controls International Retirement Restoration Plan. The Johnson Controls Executive Deferred Compensation Plan allowed participants to defer their annual bonuses, long-term performance share units and restricted share awards. The Johnson Controls International plc Senior Executive Deferred Compensation Plan allows participants to defer up to 50% of their annual base salary and 95% of their annual bonus compensation. The Retirement Restoration Plan allows executive officers to defer up to 6% of their compensation that is not eligible to be deferred into the Johnson Control 401(k) plan because of qualified plan limits that the Code imposes. All of the amounts shown in column (b) are also included in the Summary Compensation Table.(1) |
Letter from the Chairman and CEO, George Oliver
| Amounts in column (c) include employer contribution under the Retirement Restoration Plan. The Retirement Restoration Plan, also credits participants with an amount equal to the difference between the amount of retirement contributions made under the 401(k) plan and what such retirement contribution would have been without regard to the Code limits. All of the amounts shown in column (c) are also included in the Summary Compensation Table.(2) |
Letter from the Chairman and CEO, George Oliver
| The Aggregate Earnings reported in column (d) are not “above-market or preferential earnings” and therefore are not required to be reported in the Summary Compensation Table. The amounts in column (d) reflect all investment earnings, net of fees, on amounts that have been deferred under the Johnson Controls Deferred Compensation Plan and the Johnson Controls Retirement Restoration Plan. Investment earnings include any amounts relating to appreciation in the price of our ordinary shares, and negative amounts relating to depreciation in the price of our ordinary shares with respect to deferred amounts that consist of deferred share units, the value of which is tied to the value of our ordinary shares. In addition, for Mr. Oliver the amounts in column (d) also include earnings or (losses) on his notional account in the Tyco Supplemental Savings and Retirement Plan (the “Legacy Tyco SSRP”), a deferred compensation plan that, prior to the Merger, provided executives with the opportunity to elect to defer base salary and performance-based bonuses and receive tax-deferred market-based notional investment growth. The Legacy Tyco SSRP allowed executives to defer amounts above those permitted by Legacy Tyco’s tax-qualified 401(k) Retirement Savings and Investment Plan (the “Legacy Tyco RSIP”) as well as receive any employer contributions that were reduced under the Legacy Tyco RSIP due to IRS compensation limits. Effective January 1, 2018, the Legacy Tyco SSRP was frozen as to new participants and additional deferrals of compensation (subject to specified deferrals relating to the 2017 plan year). Investment options under the Johnson Controls nonqualified deferred compensation plans and Legacy Tyco SSRP include only funds that are available under Johnson Controls tax-qualified 401(k) retirement plans.(3) |
Letter from the Chairman and CEO, George Oliver
| The Aggregate Withdrawals reported in column (e) for Mr. Oliver consist of distributions under the Legacy Tyco SSRP, which allowed participants to elect in-service distributions that could commence after a minimum of five years of deferral. The Legacy Tyco SSRP permitted participants to elect to receive distributions in a single lump sum payment or in up to 15 annual installments. Distributions under the Legacy Tyco SSRP were required to commence upon retirement or other termination of employment. The Aggregate Withdrawals reported in column (e) for Mr. Stief consists of distributions from the Johnson Controls Executive Deferred Compensation Plan and Johnson Controls Retirement Restoration Plan that resulted from his retirement in December 2020.(4) |
Letter from the Chairman and CEO, George Oliver
Potential Payments upon Termination and Change-in-Control The following table summarizes the severance and other enhanced benefits that would have been payable to the named executive officers upon termination of employment or upon the occurrence of a change-in-control assuming that the triggering event or events occurred on September 30, 2021. Equity award amounts are based on the closing share price of our ordinary shares of $68.08 on the NYSE on September 30, 2021.
Letter from the Chairman and CEO, George Oliver
| | Change-in-Control | | Other Termination | | | | | Name/Form of Compensation | Without Qualified Termination ($) | With Qualified Termination ($) | With Cause ($) | Involuntary Resignation Without Cause ($) | Voluntary Resignation/ Retirement ($)(5) | Death or Disability ($)(6) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | George Oliver | | | | | | | | Severance(1) | — | 14,100,003 | — | 7,800,002 | — | — | | Benefit Continuation(2) | — | 1,360,050 | — | 204,700 | — | — | | Accelerated Vesting of Equity Awards(3)(4) | — | 47,812,640 | — | 33,955,408 | 33,955,408 | 55,283,076 | | Olivier Leonetti | | | | | | | | Severance(1) | — | 3,700,060 | — | 2,220,036 | — | — | | Benefit Continuation(2) | — | 247,893 | — | 97,568 | — | — | | Accelerated Vesting of Equity Awards(3) | — | 9,437,969 | — | 1,548,628 | — | 10,746,415 | | Jeffrey M. Williams | | | | | | | | Severance(1) | — | 3,880,001 | — | 2,340,001 | — | — | | Benefit Continuation(2) | — | 419,981 | — | 91,186 | — | — | | Accelerated Vesting of Equity Awards(3)(4) | — | 13,045,509 | — | 8,844,244 | 8,844,244 | 15,404,563 | | Ganesh Ramaswamy | | | | | | | | Severance(1) | — | 3,407,501 | — | 2,066,250 | — | — | | Benefit Continuation(2) | — | 171,100 | — | 65,250 | — | — | | Accelerated Vesting of Equity Awards(3) | — | 9,239,102 | — | 4,743,942 | — | 10,969,070 | | John Donofrio | | | | | | | | Severance(1) | — | 3,290,000 | — | 1,995,000 | — | — | | Benefit Continuation(2) | — | 267,148 | — | 88,012 | — | — | | Accelerated Vesting of Equity Awards(3) | — | 10,662,020 | — | 7,487,934 | — | 12,391,985 |
Letter from the Chairman and CEO, George Oliver
| Amounts shown include amounts that would have been payable under the Johnson Controls International plc Severance and Change-in-Control Policy for Officers upon a termination by us without cause or a termination due to death or disability, or a termination by us without cause or a resignation for good reason in connection with a change-in-control, as indicated, in each case on September 30, 2021. These amounts include: (a) a lump sum severance payment equal to (1) in connection with a change-in-control, three times for Mr. Oliver and two times for Messrs. Leonetti, Williams, Ramaswamy and Donofrio the sum of annual base salary and target bonus amount or (2) if the termination is not in connection with a change-in-control, two times for Mr. Oliver and one and one-half times for Messrs. Leonetti, Williams, Ramaswamy and Donofrio the sum of annual base salary and target bonus amount; and (b) if the termination is in connection with a change-in-control, payment of a prorated portion of the target bonus amount for the year of termination. Termination for “cause” under the Johnson Controls International plc Severance and Change-in-Control Policy for Officers is defined generally as a termination of the executive officer’s employment by us due to the executive officer’s failure or refusal to perform the duties and responsibilities of his job, violation of any fiduciary duty owed to us or our affiliates, conviction of, or entry of a plea of nolo contendere with respect to, specified crimes, dishonesty, theft, violation of our rules or policy, or other egregious or morally repugnant conduct that has, or could have, a serious and detrimental impact on us, our affiliates or our employees. Resignation by an executive officer for “good reason” is defined generally as a resignation within 60 days prior to or two years following a change-in-control caused by any of several specified adverse changes to his employment circumstances, including diminution of his authority, duties or responsibilities, a change of more than 50 miles in the geographic location at which the executive officer must perform services that extends the commute of the executive officer, reduction of the executive officer’s base compensation or target incentive opportunities, or our failure to secure an assumption of our obligations under the Johnson Controls International plc Severance and Change-in-Control Policy for Officers. For more information on the material terms and conditions of the Severance and Change-in-Control Policy for Officers, see “Executive Severance and Change of Control Policy” within this Compensation Discussion and Analysis.(1) |
Letter from the Chairman and CEO, George Oliver
| Amounts shown include: (a) in the event of a termination without cause or with good reason in connection with a change-in-control (i) the value of continued health plan coverage for thirty-six (36) months for Mr. Oliver and twenty-four (24) months for Messrs. Leonetti, Williams, Ramaswamy and Donofrio (such period, the “benefits continuation period”) and (ii) a cash payment equal to the amount of employer contributions would have accrued under retirement plans during the benefits continuation period; and (b) in the event of an involuntary termination without cause not in connection with a change-in-control, the value of continued health plan coverage for twenty-four (24) months for Mr. Oliver and eighteen (18) months for Messrs. Leonetti, Williams, Ramaswamy and Donofrio. “Change-in-Control” under the Johnson Controls International plc Severance and Change-in-Control Policy for Officers is defined generally as certain persons becoming the beneficial owner of our securities representing more than 30% of the combined voting power of our then-outstanding securities; a change in the composition of a majority of our board of directors (excluding directors whose election or nomination was approved by at least 50% of the incumbent directors); the consummation of certain reorganizations, mergers, consolidations, sales or other dispositions of at least 80% of our assets; or approval by our shareholders of our complete liquidation or dissolution. For purposes of this table, it is assumed that unvested equity awards were assumed or adjusted in connection with the change-in-control and then vested in full upon the named executive officers’ termination of employment. For more information on the material terms and conditions of the Severance and Change-in-Control Policy for Officers, see “Executive Severance and Change of Control Policy” within this Compensation Discussion and Analysis.(2) |
Letter from the Chairman and CEO, George Oliver
| Amounts represent the intrinsic value of unvested equity awards that would have vested upon the indicated triggering event for the named executive officers.(3) |
Letter from the Chairman and CEO, George Oliver
| For Messrs. Oliver and Williams, who were retirement eligible under applicable plans as of September 30, 2021, the value of certain equity awards that would vest on an accelerated basis upon retirement is presented in the table above in column (f).(4) |
Letter from the Chairman and CEO, George Oliver
| A voluntary resignation is a resignation as defined under applicable agreements and plans.(5) |
Letter from the Chairman and CEO, George Oliver
| As noted above, Messrs. Oliver and Williams were retirement eligible under applicable plans as of September 30, 2021. For Messrs. Oliver and Williams, upon the executive’s retirement: |
Letter from the Chairman and CEO, George Oliver
| i. | we are not obligated to pay severance; |
Letter from the Chairman and CEO, George Oliver
| ii. | with respect to equity awards: |
Letter from the Chairman and CEO, George Oliver
| ∎ | for share options and RSU awards, the applicable award would accelerate and vest pro rata based on the number of full months of service completed since the grant date of the award; and |
Letter from the Chairman and CEO, George Oliver
| ∎ | for PSUs, the executive would earn the units that he held at retirement based on actual performance at the end of the performance period, but the amount would be pro-rated based on the number of full months’ employment during the performance period. |
Letter from the Chairman and CEO, George Oliver
| On death or disability, share options and RSU awards would accelerate and vest in full and PSUs would continue to fully vest based on actual performance at the end of the performance period.(6) |
Letter from the Chairman and CEO, George Oliver
As previously disclosed, in fiscal 2017, in consideration for Mr. Stief’s agreement to terminate his previously existing change of control agreement, and to incentivize Mr. Stief to remain Executive Vice President and Chief Financial Officer through December 2020, the Committee approved retention RSU and PSU awards to Mr. Stief that would vest in December 2020. The retention awards approved by the Committee included two performance-linked awards:
Letter from the Chairman and CEO, George Oliver
| ∎ | 299,251 RSUs representing a target value of $12 million, that would be converted to PSUs if the performance goals for the 2018-2020 PSU award were met at or above target, which they were; and |
Letter from the Chairman and CEO, George Oliver
| ∎ | 99,750 PSUs representing a target value of $4 million, subject to the same performance criteria as the 2018-2020 PSU awards. |
Letter from the Chairman and CEO, George Oliver
Performance for the 2018-2020 PSU performance period resulted in a payout factor of 128% of target that was applied to both retention awards, which subsequently vested in December 2020. Mr. Stief also received retirement treatment with respect to the following, in each case in accordance with the existing retirement provisions:
Letter from the Chairman and CEO, George Oliver
| ∎ | His share option awards, under which any such awards that were granted to the executive that were outstanding for at least one full calendar year after the year of grant accelerated so that all of the options became exercisable in full upon his retirement, |
Letter from the Chairman and CEO, George Oliver
| ∎ | His restricted share or RSU awards, under which (a) he retained certain of his restricted shares and RSUs that had not vested at the time of retirement, which were then no longer subject to a requirement of continued employment, and (b) he fully vested in certain restricted share or RSU awards granted in 2017, and |
Letter from the Chairman and CEO, George Oliver
| ∎ | His PSUs, under which he remained eligible to earn a pro-rated portion of his PSUs based on actual performance at the end of the performance period. |
Letter from the Chairman and CEO, George Oliver
The approximate intrinsic value of the share option awards that accelerated, based on the closing share price on September 30, 2021, was $4,515,063. The approximate value of the RSUs that were no longer subject to a requirement of continued employment but that had not yet been settled as of September 30, 2021, was $1,248,066. The number and approximate value of the PSUs that remained eligible to be earned as on actual performance as of September 30, 2021 is shown in the Outstanding Equity Awards at 2021 Fiscal Year-End Table above. In connection with his retirement, Mr. Stief also received a pro rata portion of his bonus under the AIPP for fiscal 2021, as disclosed in the Non-Equity Incentive Compensation Plan column of the Summary Compensation Table for Fiscal Years 2021, 2020, and 2019. In addition, Mr. Williams would be eligible to receive pension benefits upon retirement. For an estimate of the value of these pension benefits, please see the table above titled “Pension Benefits as of September 30, 2021.” CEO PAY RATIO The ratio of our median employee’s total compensation to our CEO’s total compensation (the “CEO Pay Ratio”) is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Due to the flexibility afforded by Item 402(u) in calculating the CEO Pay Ratio, the ratio may not be comparable to CEO pay ratios presented by other companies. We identified our median paid employee using a global employee population of 94,941 as of July 1, 2021, representing employees in over 64 countries. This includes 66,254 non-U.S. employees. As part of our methodology, and in compliance with the pay ratio rule under Item 402(u), we employed the de minimis exemption for non-U.S. employees and excluded all employees in 8 countries totaling 4,960 employees (approximately 4.82% of our total workforce of 102,807). Employees in the following countries were excluded:
Letter from the Chairman and CEO, George Oliver
| ● Poland | 103 | ● Russia | 147 | | ● Indonesia | 146 | ● Thailand | 357 | | ● Philippines | 132 | ● Turkey | 581 | | ● Egypt | 217 | ● Japan | 3,277 |
Letter from the Chairman and CEO, George Oliver
In addition, for employees with insufficient compensation data we assumed that such employee was paid the same as the lowest level employee within that employee’s jurisdiction. This impacted approximately 203 of our employees. As a result, the population used to identify our median employee included 94,941 of our 102,807 employees. For purposes of identifying our median employee, we considered the base salary and annual cash incentive. Base salary and annual cash incentive were chosen because (i) they represent the principal forms of compensation delivered to all employees and (ii) this information is readily available in each country. Pay was annualized for employees who worked a partial year between July 1, 2020, and June 30, 2021. Foreign currencies were converted into U.S. dollars as of July 1, 2021, based on the average daily spot rates during July 2021. In accordance with the requirements of the Summary Compensation Table, we calculated the median paid employee’s compensation. Based on such calculation, our median employee’s total compensation was $43,640, while our CEO’s compensation was $15,667,019. Accordingly, our CEO Pay Ratio was 359:1. THE ANNUAL GENERAL MEETING QUESTIONS AND ANSWERS The following questions and answers are intended to address briefly some commonly asked questions regarding the Annual General Meeting. These questions and answers may not address all questions that may be important to you. For more information, please refer to the more detailed information contained elsewhere in this proxy statement, including the documents referred to or incorporated by reference herein. For instructions on obtaining the documents incorporated by reference, see “Where You Can Find More Information.” Why did I receive this Proxy Statement? We have sent this notice of Annual General Meeting and Proxy Statement, together with the enclosed proxy card or voting instruction card, because our Board of Directors is soliciting your proxy to vote at the Annual General Meeting on March 9, 2022. This Proxy Statement contains information about the items being voted on at the Annual General Meeting and important information about Johnson Controls. Our 2021 Annual Report on Form 10-K, which includes our consolidated financial statements for the fiscal year ended September 30, 2021 (the “Annual Report”), is enclosed with these materials. Who is entitled to vote? Each holder of Johnson Controls ordinary shares in our register of shareholders (such owners are often referred to as “shareholders of record,” “record holders” or “registered shareholders”) as of the close of business on January 6, 2022, the record date for the Annual General Meeting, is entitled to attend and vote at the Annual General Meeting. On January 6, 2022, there were 702,626,855 ordinary shares outstanding and entitled to vote at the Annual General Meeting. Any Johnson Controls shareholder of record as of the record date who does not receive notice of the Annual General Meeting and Proxy Statement, together with the enclosed proxy card or voting instruction card and the Annual Report, may obtain a copy at the Annual General Meeting or by contacting Johnson Controls at +353-21-423-5000. We have requested that banks, brokerage firms and other nominees who hold ordinary shares on behalf of the owners of the ordinary shares (such owners are often referred to as “beneficial shareholders” or “street name holders”) as of the close of business on January 6, 2022 forward these materials, together with a proxy card or voting instruction card, to such beneficial shareholders. Johnson Controls has agreed to pay the reasonable expenses of the banks, brokerage firms and other nominees for forwarding these materials. Finally, Johnson Controls has provided for these materials to be sent to persons who have interests in its ordinary shares through participation in Johnson Controls’ retirement savings plans. These individuals are not eligible to vote directly at the Annual General Meeting. They may, however, instruct the trustees of these plans how to vote the ordinary shares represented by their interests. The enclosed proxy card will also serve as voting instructions for the trustees of the plans. How many votes do I have? Every holder of an ordinary share on the record date will be entitled to one vote per share for each matter presented at the Annual General Meeting. Because each Director’s election is the subject of a separate resolution, every holder of an ordinary share on the record date will be entitled to one vote per share for each separate Director election resolution. What is the difference between holding shares as a shareholder of record and as a beneficial owner? Most of our shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially. SHAREHOLDER OF RECORD If your shares are registered directly in your name in our share register operated by our transfer agent, EQ Shareowner Services, you are considered the shareholder of record with respect to those shares and these proxy materials are being sent to you directly by us. As the shareholder of record, you have the right to grant your voting proxy to the persons named in the proxy card (see “How Do I Appoint and Vote via a Proxy?” below), or to grant a written proxy to any other person, which person does not need to be a shareholder, or to attend and vote in person at the Annual General Meeting. We have enclosed a proxy card for you to use in which you can elect to appoint certain officers of the Company named therein as your proxy. Questions and Answers › What is the difference between holding shares as a shareholder of record and as a beneficial owner? BENEFICIAL OWNER If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares and are also invited to attend the Annual General Meeting. However, since you are not the shareholder of record, you may only vote these shares in person at the Annual General Meeting if you follow the instructions described below under “Admission to the Annual General Meeting” and “How do I vote?” Your bank, broker or other nominee has enclosed a voting instruction card for you to use in directing your bank, broker or other nominee as to how to vote your shares, which may contain instructions for voting by telephone or electronically. How do I vote? A proxy card is being sent to each shareholder of record as of the record date. If you hold your shares in the name of a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or nominee when voting your shares. Otherwise, you can vote in the following ways:
Letter from the Chairman and CEO, George Oliver
| • | By Mail: If you are a holder of record, you can vote by marking, dating and signing the appropriate proxy card and returning it by mail in the enclosed postage-paid envelope. If you beneficially own your ordinary shares, you can vote by following the instructions on your voting instruction card. |
Letter from the Chairman and CEO, George Oliver
| • | By Internet or Telephone: You can vote over the Internet at www.proxyvote.com by following the instructions on the proxy card or the voting instruction card or in the Notice of Internet availability of proxy materials previously sent to you. If you are not a holder of record, you can vote using a touchtone telephone by calling 1-800-690-6903. |
Letter from the Chairman and CEO, George Oliver
| • | At the Annual General Meeting: If you are planning to attend the Annual General Meeting and wish to vote your ordinary shares in person, we will give you a ballot at the meeting. Shareholders who own their shares in “street name” are not able to vote at the Annual General Meeting unless they have a proxy, executed in their favor, from the holder of record of their shares. The Annual General Meeting will proceed subject to the guidance provided by the Government of Ireland and the Department of Health (of Ireland) or any other governmental agency in place at the time of the meeting and such other measures as the Board considers appropriate to address health and safety concerns. As a result, there may be prohibitions or restrictions on travel and/or gatherings that affect or prohibit travel to and in-person attendance at the Annual General Meeting. We therefore strongly encourage all shareholders to vote their shares by proxy in advance of the Annual General Meeting to ensure you can vote and be represented at the Annual General Meeting if attending in person is not feasible or not recommended. |
Letter from the Chairman and CEO, George Oliver
Even if you plan to be present at the Annual General Meeting, we encourage you to complete and mail the enclosed card to vote your ordinary shares by proxy. Telephone and Internet voting facilities for shareholders will be available 24 hours a day and will close at 11:59 p.m., Eastern Standard Time, on March 8, 2022. How do I appoint and vote via a proxy? If you properly fill in your proxy card appointing an officer of the Company as your proxy and send it to us in time to vote, your proxy, meaning one of the individuals named on your proxy card, will vote your shares as you have directed. You may also grant a written proxy to any other person by filling in the proxy card and identifying the person, which person does not need to be a shareholder, or attend and vote in person at the Annual General Meeting. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board of Directors “FOR” each Director and “FOR” each of the agenda items listed below. If a new agenda item or a new motion or proposal for an existing agenda item is presented at the Annual General Meeting, the Company officer acting as your proxy will vote in accordance with the recommendation of our Board of Directors. At the time we began printing this proxy statement, we knew of no matters that needed to be acted on at the Annual General Meeting other than those discussed in this proxy statement. Whether or not you plan to attend the Annual General Meeting, we urge you to submit your proxy. Returning the proxy card or submitting your vote electronically will not affect your right to attend the Annual General Meeting. You must return your proxy cards by the times and dates set forth below under “Returning Your Proxy Card” in order for your vote to be counted. Questions and Answers › What if I return my proxy or voting instruction card but do not mark it to show how I am voting? What if I return my proxy or voting instruction card but do not mark it to show how I am voting? Your shares will be voted according to the specific instructions you have indicated on your proxy or voting instruction card. If you sign and return your proxy or voting instruction card but do not indicate specific instructions for voting, you instruct the proxy to vote your shares, “FOR” each Director and “FOR” all other proposals. For any other matter which may properly come before the Annual General Meeting, and any adjournment or postponement thereof, you instruct, by submitting proxies with blank voting instructions, the proxy to vote in accordance with the recommendation of the Board of Directors. May I change or revoke my vote after I return my proxy or voting instruction card? You may change your vote before it is exercised by:
Letter from the Chairman and CEO, George Oliver
| • | Submitting subsequent voting instructions through the telephone or Internet; if you previously voted by telephone or the Internet; |
Letter from the Chairman and CEO, George Oliver
| • | Submitting another proxy card (or voting instruction card if you beneficially own your ordinary shares) with a later date; or |
Letter from the Chairman and CEO, George Oliver
| • | Voting in person at the Annual General Meeting if you are a holder of record or a beneficial owner with a proxy from the holder of record (however, as noted below, in light of the COVID-19 pandemic, we recommend that you vote your shares by proxy in advance of the Annual General Meeting). |
Letter from the Chairman and CEO, George Oliver
Your presence without voting at the meeting will not automatically revoke your proxy, and any revocation during the meeting will not affect votes previously taken. If you hold your shares in the name of a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or nominee in revoking your previously granted proxy. What impact could the COVID-19 pandemic have on the Annual General Meeting? The well-being of all attendees and participants at the Annual General Meeting is a primary concern for the Company and in this context we are closely monitoring developments in relation to the COVID-19 pandemic. The Annual General Meeting will proceed subject to the guidance provided by the Government of Ireland and the Department of Health (of Ireland) or any other governmental agency in place at the time of the meeting and such other measures as the Board considers appropriate to address health and safety concerns. As a result, there may be restrictions on travel and/or gatherings that affect or prohibit travel to or in-person attendance at the Annual General Meeting. In addition, we may deem it advisable to have the members of our Board and senior management not be physically present at our Annual Meeting in Ireland and instead participate remotely in order to mitigate the health risks posed by the pandemic. Furthermore, to promote the health and safety of attendees, we may impose additional procedures or limitations on meeting attendance based on applicable governmental requirements or recommendations or facility requirements. Such additional procedures or limitations may include, but are not limited to, thorough screenings of attendees, limits on the number of attendees to promote social distancing and requiring the use of face masks. We therefore encourage all shareholders to vote their shares by proxy in advance of the Annual General Meeting to ensure you can vote and be represented at the Annual General Meeting. This can be done in advance of the Annual General Meeting by availing of one of the voting options set forth above under “How Do I Vote?” If it is not possible to proceed with the Annual General Meeting, the Annual General Meeting may be adjourned to a different time and/or venue and/or we may consider alternative measures for the holding of the Annual General Meeting that may be permitted under Irish law, such as changing the date, time, location or format of the meeting. If this is necessary, we will alert shareholders to any changes as soon as possible by press release and/or filing with the Securities and Exchange Commission and also post additional information on the Investor Relations section of our website (http://investors.johnsoncontrols.com). We will also make any required notifications to shareholders in accordance with Company’s constitution. Shareholders are also encouraged to keep up-to-date with, and follow, the guidance from the Government of Ireland and the Department of Health (of Ireland) (as appropriate) as circumstances may change at short notice. Delivery of Documents to Stockholders Sharing an Address Securities and Exchange Commission rules allow us to deliver a single copy of an annual report and proxy statement to any household not participating in electronic proxy material delivery at which two or more shareholders reside, if we believe the shareholders are members of the same family (a practice called “householding”). We believe that householding benefits both you and the Company by eliminating duplicate mailings to shareholders living at the same address and by reducing our printing and mailing costs. Each shareholder will continue to receive a separate proxy card or voting instruction card. Questions and Answers › Delivery of Documents to Stockholders Sharing an Address Your household may have received a single set of proxy materials this year. If you prefer to receive your own copy now or in future years, please request a duplicate set by calling 1-800-579-1639, by going to www.proxyvote.com, by e-mailing sendmaterial@proxyvote.com, or by writing to Johnson Controls, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Alternatively, if your household received multiple sets of proxy materials this year, and members of your household who are entitled to receive proxy materials would all prefer to receive only a single set of proxy materials, you may submit such a request as specified in the preceding sentence. If a broker or other nominee holds your shares, you may continue to receive some duplicate mailings. Certain brokers will eliminate duplicate account mailings by allowing shareholders to consent to such elimination, or through implied consent if a shareholder does not request continuation of duplicate mailings. Since not all brokers and nominees may offer shareholders the opportunity this year to eliminate duplicate mailings, you may need to contact your broker or other nominee directly to discontinue duplicate mailings to your household. What vote is required to approve each proposal at the Annual General Meeting? Johnson Controls intends to present proposals numbered one through seven for shareholder consideration and voting at the Annual General Meeting. The vote required to approve each proposal is described below:
Letter from the Chairman and CEO, George Oliver
| 1. | By separate resolutions, to elect the following individuals as Directors for a period of one year, expiring at the end of the Company’s Annual General Meeting of Shareholders in 2023: |
Letter from the Chairman and CEO, George Oliver
| (a) Jean Blackwell | (b) Pierre Cohade | (c) Michael E. Daniels | | (d) W. Roy Dunbar | (e) Gretchen R. Haggerty | (f) Simone Menne | | (g) George R. Oliver | (h) Jürgen Tinggren | (i) Mark Vergnano | | (j) R. David Yost | (k) John D. Young | |
Letter from the Chairman and CEO, George Oliver
The election of each Director nominee requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting.
Letter from the Chairman and CEO, George Oliver
| 2. | To ratify the appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company and to authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration, which in each case, requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Letter from the Chairman and CEO, George Oliver
| 3. | To authorize the Company and/or any subsidiary of the Company to make market purchases of Company shares, which requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Letter from the Chairman and CEO, George Oliver
| 4. | To determine the price range at which the Company can re-allot shares that it holds as treasury shares (Special Resolution), which requires the affirmative vote of at least 75% of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Letter from the Chairman and CEO, George Oliver
| 5. | To approve, in a non-binding advisory vote, the compensation of the named executive officers, which will be considered approved with the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. The advisory vote on executive compensation is non-binding, meaning that our Board of Directors will not be obligated to take any compensation actions or to adjust our executive compensation programs or policies as a result of the vote. |
Letter from the Chairman and CEO, George Oliver
| 6. | To approve the authorization for the Board of Directors to issue shares up to 33% of its issued share capital, which requires the affirmative vote of a majority of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Letter from the Chairman and CEO, George Oliver
| 7. | To approve the authorization for the Board of Directors to issue shares for cash up to a maximum of approximately 5% of issued share capital without applying statutory preemption rights (Special Resolution), which requires the affirmative vote of at least 75% of the votes properly cast (in person or by proxy) at the Annual General Meeting. |
Letter from the Chairman and CEO, George Oliver
What is the quorum requirement for the Annual General Meeting? In order to conduct any business at the Annual General Meeting, holders of a majority of Johnson Controls’ ordinary shares which are outstanding and entitled to vote on the record date must be present in person or represented by valid proxies. This is called a quorum. Your shares will be counted for purposes of determining if there is a quorum, whether representing votes for, against or abstained, or broker non-votes, if you:
Letter from the Chairman and CEO, George Oliver
| • | are present and vote in person at the meeting; |
Letter from the Chairman and CEO, George Oliver
| • | have voted by telephone or the Internet; OR |
Letter from the Chairman and CEO, George Oliver
| • | you have submitted a proxy card or voting instruction form by mail. |
Letter from the Chairman and CEO, George Oliver
Questions and Answers › What is the effect of broker non-votes and abstentions? What is the effect of broker non-votes and abstentions? Abstentions and broker non-votes are considered present for purposes of determining the presence of a quorum. Abstentions and broker non-votes will not be considered votes properly cast at the Annual General Meeting. Because the approval of all of the proposals is based on the votes properly cast at the Annual General Meeting, abstentions and broker non-votes will not have any effect on the outcome of voting on these proposals. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular agenda item because the broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares with respect to “routine” matters, they do not have discretionary power to vote your shares on “non-routine” matters pursuant to the rules of The New York Stock Exchange (the “NYSE”). We believe the following proposals will be considered non-routine under NYSE rules and therefore your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you: Proposal No. 1 (Election of Directors) and Proposal No. 5 (Advisory Vote on Executive Compensation). Your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you. How will voting on any other business be conducted? Other than matters incidental to the conduct of the Annual General Meeting and those set forth in this Proxy Statement, we do not know of any business or proposals to be considered at the Annual General Meeting. If any other business is proposed and properly presented at the Annual General Meeting, the proxy holders must vote in accordance with the instructions given by the shareholder. You may specifically instruct the proxy holder how to vote in such a situation. In the absence of specific instructions, by signing the proxy, you instruct the proxy holder to vote in accordance with the recommendations of the Board of Directors. Important notice regarding the availability of proxy materials for the Annual General Meeting: Our Proxy Statement for the Annual General Meeting and the form of proxy card are available at www.proxyvote.com. As permitted by SEC rules, we are making this Proxy Statement available to our shareholders electronically via the Internet. On January 21, 2022, we first mailed to our shareholders a Notice containing instructions on how to access this Proxy Statement and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the Proxy Statement. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice. Returning Your Proxy Card Shareholders who are voting by mail should complete and return the proxy card as soon as possible. In order to assure that your proxy is received in time to be voted at the meeting, the proxy card must be completed in accordance with the instructions and received at one of the addresses set forth below by the dates and times specified: Ireland: By 5:00 p.m., local time, on March 8, 2022 by hand or mail at: Johnson Controls International plc One Albert Quay Cork, Ireland United States: By 5:00 p.m., Eastern Standard Time, on March 8, 2022 by mail at: Broadridge Financial Solutions c/o Vote Processing 51 Mercedes Way Edgewood, NY 11717 If your shares are held beneficially in “street name,” you should return your proxy card or voting instruction card in accordance with the instructions on that card or as provided by the bank, brokerage firm or other nominee who holds Johnson Controls shares on your behalf. Questions and Answers › Admission to the Annual General Meeting Admission to the Annual General Meeting The well-being of all attendees and participants at the Annual General Meeting is a primary concern for the Company and in this context we are closely monitoring developments in relation to the COVID-19 pandemic. While all shareholders are invited to attend the Annual General Meeting, the Annual General Meeting will proceed subject to the guidance provided by the Government of Ireland and the Department of Health (of Ireland) or any other governmental agency in place at the time of the meeting and such other measures as we consider appropriate to address health and safety concerns. As a result, there may be restrictions on travel and/or gatherings that affect or prohibit travel to or in-person attendance at the Annual General Meeting. Furthermore, we may impose additional procedures or limitations on meeting attendance based on applicable governmental requirements or recommendations or facility requirements. Such additional procedures or limitations may include, but are not limited to, thorough screenings of attendees, limits on the number of attendees to promote social distancing and requiring the use of face masks. We therefore strongly encourage all shareholders to vote their shares by proxy in advance of the Annual General Meeting to ensure you can vote and be represented at the Annual General Meeting. This can be done in advance of the Annual General Meeting by availing of one of the voting options set forth above under “How Do I Vote?” For admission to the Annual General Meeting, shareholders of record should bring the admission ticket attached to the enclosed proxy card to the Registered Shareholders check-in area, where their ownership will be verified. Those who have beneficial ownership of shares held by a bank, brokerage firm or other nominee should come to the Beneficial Owners check-in area. Beneficial owners who wish to vote in person at the Annual General Meeting are requested to obtain a “legal proxy” executed in their favor, from their broker, bank, nominee or other custodian that authorizes you to vote the shares held by them on your behalf. In addition, you must bring to the Annual General Meeting an account statement or letter from the broker, bank or other nominee indicating that you are the owner of the shares. Registration will begin at 2:00 pm, local time, and the Annual General Meeting will begin at 3:00 pm, local time. Johnson Controls Annual Report The Johnson Controls International plc 2021 Annual Report on Form 10-K containing our audited consolidated financial statements with accompanying notes and schedules is available on the Company’s website in the Investor Relations Section at www.johnsoncontrols.com. Copies of these documents may be obtained without charge by contacting Johnson Controls by phone at +353-21-423-5000. Copies may also be obtained without charge by contacting Investor Relations in writing or may be physically inspected at the offices of Johnson Controls International plc, One Albert Quay, Cork, Ireland. Questions and Answers › Ordinary Share Price and Dividend Information Ordinary Share Price and Dividend Information The shares of the Company’s ordinary shares are traded on the New York Stock Exchange under the symbol “JCI.”
Letter from the Chairman and CEO, George Oliver
| Title of Class | Number of Record Holders as of December 31, 2021 | | Ordinary Shares, $0.01 par value | 31,274 |
Letter from the Chairman and CEO, George Oliver
| | Ordinary Shares Price Range | | Dividends | | | | FY 2021 | FY 2020 | FY 2021 | FY 2020 | | First Quarter | $40.15 - 47.58 | $40.24 - 44.82 | $0.26 | $0.26 | | Second Quarter | 45.91 - 62.40 | 22.78 - 42.65 | 0.27 | 0.26 | | Third Quarter | 59.53 - 68.95 | 24.77 - 37.07 | 0.27 | 0.26 | | Fourth Quarter | 67.39 - 76.83 | 33.31 - 43.20 | 0.27 | 0.26 | | Year | $40.15 - 76.83 | $22.78 - 44.82 | $1.07 | $1.04 |
Letter from the Chairman and CEO, George Oliver
Presentation of Irish Statutory Accounts The Company’s Irish Statutory Accounts for the fiscal year ended September 30, 2021, including the reports of the Directors and auditors thereon, will be presented at the Annual General Meeting. The Company’s Irish Statutory Accounts are approved by the Board of Directors of the Company. There is no requirement under Irish law that such statements be approved by shareholders, and no such approval will be sought at the Annual General Meeting. The Company’s Irish Statutory Accounts, with the Non-Financial Disclosure Report, will be available at least 21 days before the date of the Annual General Meeting, along with the proxy statement, the Company’s Annual Report on Form 10-K and other proxy materials at www.proxyvote.com, and in the Investor Relations section of the Company’s website at www.johnsoncontrols.com. Costs of Solicitation We will pay the cost of solicitation of proxies. We have engaged Mackenzie Partners as the proxy solicitor for the Annual General Meeting for an approximate fee of $12,500, plus expenses. In addition to the use of the mail, certain of our Directors, officers or employees may solicit proxies by telephone or personal contact. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares. We are furnishing this Proxy Statement to our shareholders in connection with the solicitation of proxies by our Board of Directors for use at an Annual General Meeting of our shareholders. We are first mailing this Proxy Statement and the accompanying form of proxy to shareholders beginning on or about January 21, 2022. Transfer Agent Our transfer agent is EQ Shareowner Services. All communications concerning shareholders of record accounts, including address changes, name changes, common stock transfer requirements, and similar issues can be handled by contacting EQ Shareowner Services at 1-877-602-7397 (U.S.), 651-450-4064 (outside the U.S.), www.shareowneronline.com, or in writing, P.O. Box 64854, St. Paul, MN 55164-0854. Shareholder Proposals for the 2023 Annual General Meeting In accordance with the rules established by the SEC, as well as under the provisions of our Memorandum and Articles of Association, any shareholder proposal submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”) intended for inclusion in the proxy statement for next year’s Annual General Meeting must be received by Johnson Controls no later than September 23, 2022. Such proposals should be sent to our Corporate Secretary at our registered address, which is: One Albert Quay, Cork, Ireland. To be included in the Proxy Statement, the proposal must comply with the requirements as to form and substance established by the SEC and our Articles of Association, and must be a proper subject for shareholder action under applicable law. Any shareholder proposal that is not submitted for inclusion in the Proxy Statement but is instead sought to be presented directly at the 2023 Annual General Meeting must be received by the Secretary at the address listed above prior to December 7, 2022. Securities and Exchange Commission rules permit management to vote proxies in its discretion in certain cases if the shareholder does not comply with this deadline and in certain other cases notwithstanding the shareholder’s compliance with this deadline. Questions and Answers › Shareholder Proposals for the 2023 Annual General Meeting New proposals or motions with regard to existing agenda items are not subject to such restrictions and can be made at the meeting by each shareholder attending or represented. Note that if specific voting instructions are not provided to the proxy, shareholders who submit a proxy card instruct the proxy to vote their shares in accordance with the recommendations of the Board of Directors with regard to the items appearing on the agenda. Where You Can Find More Information We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are also available to the public at the SEC’s website (www.sec.gov). The SEC’s website contains reports, proxy statements and other information regarding issuers, like us, that file electronically with the SEC. You may find our reports, proxy statements and other information at the SEC website. In addition, you can obtain reports and proxy statements and other information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. We maintain a website on the Internet at www.johnsoncontrols.com. We make available free of charge, on or through our website, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after such material is filed with the SEC. This reference to our Internet address is for informational purposes only and shall not, under any circumstances, be deemed to incorporate the information available at such Internet address into this proxy. Security Ownership of Certain Beneficial Owners and Management The following table sets forth the number of registered shares beneficially owned as of January 11, 2022 by each current Director, each Named Executive Officer and the Directors and Executive Officers of Johnson Controls as a group.
Letter from the Chairman and CEO, George Oliver
| Beneficial Owner | Title | Number of Ordinary Shares Beneficially Owned(1)(2) | Pct of Class | | Jean Blackwell | Director | 9,391 | * | | Pierre Cohade | Director | 8,237 | * | | Michael E. Daniels | Director | 73,272 | * | | Juan Pablo del Valle Perochena | Director | 11,986 | * | | John Donofrio | Named Executive Officer | 214,208 | * | | W. Roy Dunbar | Director | 11,627 | * | | Gretchen R. Haggerty | Director | 16,302 | * | | Olivier Leonetti | Named Executive Officer | 28,246 | * | | Simone Menne | Director | 9,958 | * | | George R. Oliver | Chairman and CEO | 2,931,165 | * | | Ganesh Ramaswamy | Named Executive Officer | 42,636 | * | | Brian Stief | Former Vice Chairman and Chief Financial Officer | 124,520 | * | | Jürgen Tinggren | Director | 29,455 | * | | Mark Vergnano | Director | 24,216 | * | | Jeffrey M. Williams | Named Executive Officer | 363,230 | * | | R. David Yost | Director | 54,786 | * | | John D. Young | Director | 10,674 | * | | All current Directors and Executive Officers as a group (22 persons) | | 4,283,375 | * |
Letter from the Chairman and CEO, George Oliver
| Less than 1.0%* |
Letter from the Chairman and CEO, George Oliver
Questions and Answers › Security Ownership of Certain Beneficial Owners and Management
Letter from the Chairman and CEO, George Oliver
| The number shown reflects the number of ordinary shares owned beneficially as of January 11, 2022, based on information furnished by the persons named, public filings and Johnson Controls’ records. A person is deemed to be a beneficial owner of ordinary shares if he or she, either alone or with others, has the power to vote or to dispose of those ordinary shares. Except as otherwise indicated below and subject to applicable community property laws, each owner has sole voting and sole investment authority with respect to the shares listed. To the extent indicated in the notes below, ordinary shares beneficially owned by a person include ordinary shares of which the person has the right to acquire beneficial ownership within 60 days after January 11, 2022. There were 702,376,414 Johnson Controls ordinary shares outstanding on such date.(1) |
Letter from the Chairman and CEO, George Oliver
| Includes the maximum number of shares for which these individuals can acquire beneficial ownership upon (i) the exercise of share options that are currently vested or will vest within 60 days of January 11, 2022 as follows: Mr. Donofrio, 198,571, Mr. Oliver, 2,292,035; Mr. Ramaswamy, 37,723, Mr. Stief, 92,009; Mr. Williams, 323,302; and all executive officers as a group 3,132,132 and (ii) the vesting of RSUs that will vest within 60 days of January 11, 2022 as follows: Messrs. Cohade, Daniels, del Valle Perochena, Dunbar, Tinggren, Vergnano, Yost and Young, and Mses. Blackwell, Haggerty and Menne 2,898 RSUs; and all Directors and Executive Officers as a group, 31,878 RSUs.(2) |
Letter from the Chairman and CEO, George Oliver
The following table sets forth the information indicated for persons or groups known to the Company to be beneficial owners of more than 5% of the outstanding ordinary shares.
Letter from the Chairman and CEO, George Oliver
| Name and Address of Beneficial Owner | Number of Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares Outstanding | | Dodge & Cox, 555 California Street, 40(th) Floor, San Francisco, CA 94104 | 64,099,777(1) | 9.12% | | The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 | 58,543,472(2) | 8.33% | | BlackRock, Inc., 55 East 52(nd) Street, New York, NY 10055 | 49,861,295(3) | 7.10% | | Wellington Management Group LLP, 280 Congress Street, Boston, MA 02210 | 43,156,718(4) | 6.14% | | Massachusetts Financial Services Company, 111 Huntington Avenue, Boston, MA 02199 | 35,630,172(5) | 5.07% |
Letter from the Chairman and CEO, George Oliver
| Based solely on the information reported by Dodge & Cox in a Notification of Holdings under Irish law provided to the Company on September 3, 2021 and reporting ownership as of September 3, 2021, Dodge & Cox, together with its affiliates, held an interest in 64,099,777 ordinary shares.(1) |
Letter from the Chairman and CEO, George Oliver
| The amount shown for the number of ordinary shares over which The Vanguard Group exercised investment discretion was provided pursuant to the Schedule 13G/A filed February 10, 2021 with the SEC, indicating beneficial ownership as of December 31, 2020.(2) |
Letter from the Chairman and CEO, George Oliver
| Based solely on the information reported by BlackRock, Inc. in a Standard Form TR-1 under Article 12(1) of Directive 2004/109/EC and Article 11(3) of the Commission Directive 2007/14/EC provided to the Company on October 6, 2021 and reporting ownership as of October 5, 2021, BlackRock, Inc., together with its affiliates, held an interest in 49,861,295 ordinary shares.(3) |
Letter from the Chairman and CEO, George Oliver
| Based solely on the information reported by Wellington Management Group LLP in a Notification of Holdings under Irish law provided to the Company on August 6, 2021 and reporting ownership as of August 5, 2021, Wellington Management Group LLP, together with its affiliates, held an interest in 43,156,718 ordinary shares.(4) |
Letter from the Chairman and CEO, George Oliver
| Based solely on the information reported by Massachusetts Financial Services Company in a Notification of Holdings under Irish law provided to the Company on December 6, 2021 and reporting ownership as of December 3, 2021, Massachusetts Financial Services Company, together with its affiliates, held an interest in 35,630,172 ordinary shares.(5) |
Letter from the Chairman and CEO, George Oliver
ANNEX A NON-GAAP RECONCILIATIONS This Proxy Statement contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include integration costs, net mark-to-market adjustments, an acquisition related compensation charge, restructuring and impairment costs, Silent-Aire transaction costs and other nonrecurring costs, Power Solutions divestiture reserve adjustment and discrete tax items. Financial information regarding free cash flow, free cash flow conversion and organic sales are also presented, which are non-GAAP performance measures. Management believes that, when considered together with unadjusted amounts, these non-GAAP measures are useful to investors in understanding period-over-period operating results and business trends of the Company. Management may also use these metrics as guides in forecasting, budgeting and long-term planning processes and for compensation purposes. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure. Diluted Earnings Per Share Reconciliation The Company’s Proxy Statement contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include integration costs, net mark-to-market adjustments, an acquisition related compensation charge, restructuring and impairment costs, Silent-Aire transaction costs and other nonrecurring costs, Power Solutions divestiture reserve adjustment and discrete tax items. The Company excludes these items because they are not considered to be directly related to the underlying operating performance of the Company. Management believes these non-GAAP measures are useful to investors in understanding the ongoing operations and business trends of the Company. A reconciliation of diluted earnings per share as reported to adjusted diluted earnings per share for the respective periods is shown below (unaudited):
Letter from the Chairman and CEO, George Oliver
| | Net Income Attributable to JCI plc from Continuing Operations | | | | Twelve Months Ended September 30, | | | | 2021 | 2020 | | Earnings per share as reported for JCI plc | $2.10 | $0.84 | | Adjusting items: | | | | Integration costs | — | 0.18 | | Related tax impact | — | (0.02) | | Acquisition related compensation charge | — | 0.05 | | Related tax impact | — | (0.01) | | Net mark-to-market adjustments | (0.56) | 0.36 | | Related tax impact | 0.13 | (0.09) | | Restructuring and impairment costs | 0.34 | 1.04 | | Related tax impact | (0.05) | (0.06) | | NCI impact of restructuring and impairment costs | — | (0.01) | | Silent-Aire transaction costs and other nonrecurring costs | 0.03 | — | | Power Solutions divestiture reserve adjustment | — | — | | Discrete tax items | 0.67 | (0.05) | | NCI impact of discrete tax items | — | 0.01 | | Adjusted earnings per share for JCI plc* | $2.65 | $2.24 |
Letter from the Chairman and CEO, George Oliver
| May not sum due to rounding* |
Letter from the Chairman and CEO, George Oliver
Adjusted Free Cash Flow Conversion Reconciliation The Company’s Proxy Statement contains financial information regarding free cash flow and adjusted free cash flow conversion, which are non-GAAP performance measures. Free cash flow is defined as cash provided by operating activities less capital expenditures. For fiscal 2021, there were no items excluded from the calculation of adjusted free cash flow. Adjusted free cash flow conversion is defined as adjusted free cash flow divided by adjusted net income attributable to JCI. Management believes these non-GAAP measures are useful to investors in understanding the strength of the Company and its ability to generate cash. This non-GAAP measure can also be used to evaluate our ability to generate cash flow from operations and the impact that this cash flow has on our liquidity. The following is the twelve months ended September 30, 2021 reconciliation of free cash flow, adjusted free cash flow and adjusted free cash flow conversion for continuing operations (unaudited):
Letter from the Chairman and CEO, George Oliver
| (in millions) | Twelve Months Ended September 30, 2021 | | Cash provided by operating activities from continuing operations | $2,551 | | Capital expenditures | (552) | | Reported free cash flow | 1,999 | | Adjusting items: | | | Transaction/integration costs | — | | Restructuring payments | — | | Nonrecurring tax payments (refunds) | — | | Total adjusting items | — | | Adjusted free cash flow | $1,999 | | Adjusted net income from continuing operations attributable to JCI(1) | $1,910 | | Adjusted free cash flow conversion | 105% |
Letter from the Chairman and CEO, George Oliver
| A reconciliation of adjusted net income from continuing operations attributable to JCI to net income from continuing operations attributable to JCI is included later within this annex(1) |
Letter from the Chairman and CEO, George Oliver
Organic Growth Reconciliation The components of the changes in adjusted net sales for the twelve months ended September 30, 2021 versus the twelve months ended September 30, 2020, including organic growth, are shown below (unaudited):
Letter from the Chairman and CEO, George Oliver
| (in millions) | Adjusted Net Sales for the Twelve Months Ended September 30, 2020 | Base Year Adjustments — Divestitures and Other | | Base Year Adjustments — Foreign Currency | | Adjusted Base Net Sales for the Twelve Months Ended September 30, 2020 | Acquisitions | | Organic Growth | | Adjusted Net Sales for the Twelve Months Ended September 30, 2021 | | | Building Solutions North America | $8,605 | $— | — | $49 | 1% | $8,654 | $4 | — | $27 | — | $8,685 | 1% | | Building Solutions EMEA/LA | 3,440 | — | — | 135 | 4% | 3,575 | 37 | 1% | 115 | 3% | 3,727 | 8% | | Building Solutions Asia Pacific | 2,403 | (9) | — | 117 | 5% | 2,511 | — | — | 143 | 6% | 2,654 | 10% | | Total field | 14,448 | (9) | — | 301 | 2% | 14,740 | 41 | — | 285 | 2% | 15,066 | 4% | | Global Products | 7,869 | (266) | -3% | 146 | 2% | 7,749 | 212 | 3% | 647 | 8% | 8,608 | 9% | | Total adjusted net sales(1) | $22,317 | $(275) | -1% | $447 | 2% | $22,489 | $253 | 1% | $932 | 4% | $23,674 | 6% |
Letter from the Chairman and CEO, George Oliver
| A reconciliation of adjusted net sales to net sales is included later within this annex(1) |
Letter from the Chairman and CEO, George Oliver
A-2 Johnson Controls International plc Adjusted Net Income and Adjusted Net Sales The Company evaluates the performance of its business units primarily on segment earnings before interest, taxes and amortization (EBITA), which represents income from continuing operations before income taxes and noncontrolling interests, excluding general corporate expenses, intangible asset amortization, net financing charges, restructuring and impairment costs, and the net mark-to-market adjustments related to restricted asbestos investments and pension and postretirement plans. The financial results shown below are for continuing operations and exclude the Power Solutions business.
Letter from the Chairman and CEO, George Oliver
| | Twelve Months Ended September 30, | | | | | | 2021 | | 2020 | | | (in millions; unaudited) | Actual | Adjusted Non-GAAP | Actual | Adjusted Non-GAAP | | Net sales(1) | | | | | | Building Solutions North America | $8,685 | $8,685 | $8,605 | $8,605 | | Building Solutions EMEA/LA | 3,727 | 3,727 | 3,440 | 3,440 | | Building Solutions Asia Pacific | 2,654 | 2,654 | 2,403 | 2,403 | | Global Products | 8,602 | 8,608 | 7,869 | 7,869 | | Net sales | $23,668 | $23,674 | $22,317 | $22,317 | | Segment EBITA(1) | | | | | | Building Solutions North America | $1,204 | $1,204 | $1,157 | $1,168 | | Building Solutions EMEA/LA | 391 | 391 | 338 | 340 | | Building Solutions Asia Pacific | 349 | 349 | 319 | 326 | | Global Products | 1,441 | 1,454 | 1,134 | 1,186 | | Segment EBITA | 3,385 | 3,398 | 2,948 | 3,020 | | Corporate expenses(2) | (290) | (290) | (371) | (269) | | Amortization of intangible assets(3) | (435) | (425) | (386) | (386) | | Net mark-to-market adjustments(4) | 402 | — | (274) | — | | Restructuring and impairment costs(5) | (242) | — | (783) | — | | EBIT(6) | 2,820 | 2,683 | 1,134 | 2,365 | | EBIT margin | 11.9% | 11.3% | 5.1% | 10.6% | | Net financing charges | (206) | (206) | (231) | (231) | | Income from continuing operations before income taxes | 2,614 | 2,477 | 903 | 2,134 | | Income tax provision(7) | (868) | (334) | (108) | (288) | | Income from continuing operations | 1,746 | 2,143 | 795 | 1,846 | | Income from continuing operations attributable to noncontrolling interests | (233) | (233) | (164) | (158) | | Net income from continuing operations attributable to JCI | $1,513 | $1,910 | $631 | $1,688 |
Letter from the Chairman and CEO, George Oliver
| The Company’s definition of adjusted net sales and adjusted segment EBITA excludes special items because these items are not considered to be directly related to the underlying operating performance of its businesses. Management believes these non-GAAP measures are useful to investors in understanding the ongoing operations and business trends of the Company.(1) |
Letter from the Chairman and CEO, George Oliver
A reconciliation of segment EBITA to income from continuing operations is shown earlier within this footnote. The following is the twelve months ended September 30, 2021 and 2020 reconciliation of net sales, segment EBITA and segment EBITA margin to adjusted net sales, adjusted segment EBITA and adjusted segment EBITA margin (unaudited):
Letter from the Chairman and CEO, George Oliver
| | Building Solutions North America | | Building Solutions EMEA/LA | | Building Solutions Asia Pacific | | Global Products | | Consolidated JCI plc | | | (in millions) | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | | Net sales as reported | $8,685 | $8,605 | $3,727 | $3,440 | $2,654 | $2,403 | $8,602 | $7,869 | $23,668 | $22,317 | | Adjusting items: | | | | | | | | | | | | Nonrecurring Silent-Aire purchase accounting impacts | — | — | — | — | — | — | 6 | — | 6 | — | | Adjusted net sales | $8,685 | $8,605 | $3,727 | $3,440 | $2,654 | $2,403 | $8,608 | $7,869 | $23,674 | $22,317 | | Segment EBITA as reported | $1,204 | $1,157 | $391 | $338 | $349 | $319 | $1,441 | $1,134 | $3,385 | $2,948 | | Segment EBITA margin as reported | 13.9% | 13.4% | 10.5% | 9.8% | 13.1% | 13.3% | 16.8% | 14.4% | 14.3% | 13.2% | | Adjusting items: | | | | | | | | | | | | Nonrecurring Silent-Aire purchase accounting impacts and transaction costs | — | — | — | — | — | — | 13 | — | 13 | — | | Integration costs | — | 11 | — | 2 | — | 7 | — | 13 | — | 33 | | Acquisition related compensation charge | — | — | — | — | — | — | — | 39 | — | 39 | | Adjusted segment EBITA | $1,204 | $1,168 | $391 | $340 | $349 | $326 | $1,454 | $1,186 | $3,398 | $3,020 | | Adjusted segment EBITA margin | 13.9% | 13.6% | 10.5% | 9.9% | 13.1% | 13.6% | 16.9% | 15.1% | 14.4% | 13.5% |
Letter from the Chairman and CEO, George Oliver
| Adjusted Corporate expenses excludes special items because these costs are not considered to be directly related to the underlying operating performance of the Company’s business. Adjusted Corporate expenses for the twelve months ended September 30, 2020 excludes $102 million of integration costs.(2) |
Letter from the Chairman and CEO, George Oliver
| Adjusted amortization of intangible assets for the twelve months ended September 30, 2021 excludes $10 million of nonrecurring asset amortization related to Silent-Aire purchase accounting.(3) |
Letter from the Chairman and CEO, George Oliver
| The twelve months ended September 30, 2021 exclude the net mark-to-market adjustments on restricted investments and pension and postretirement plans of $402 million. The twelve months ended September 30, 2020 exclude the net mark-to-market adjustments on restricted investments and pension and postretirement plans of $274 million.(4) |
Letter from the Chairman and CEO, George Oliver
| Restructuring and impairment costs for the twelve months ended September 30, 2021 of $242 million are excluded from the adjusted non-GAAP results. Restructuring and impairment costs for the twelve months ended September 30, 2020 of $783 million are excluded from the adjusted non-GAAP results. The restructuring actions and impairment costs related primarily to workforce reductions, plant closures and asset impairments.(5) |
Letter from the Chairman and CEO, George Oliver
| Management defines earnings before interest and taxes (EBIT) as income from continuing operations before net financing charges, income taxes and noncontrolling interests. EBIT is a non-GAAP performance measure. Management believes this non-GAAP measure is useful to investors in understanding the ongoing operations and business trends of the Company. A reconciliation of EBIT to income from continuing operations is shown earlier within this footnote.(6) |
Letter from the Chairman and CEO, George Oliver
| Adjusted income tax provision for the twelve months ended September 30, 2021 excludes tax provisions from an intra-entity sale of certain of the Company’s intellectual property of $417 million, a Mexico valuation allowance adjustment $105 million, and net mark-to-market adjustments of $93 million, partially offset by tax benefits related to other valuation allowance adjustments of $39 million, restructuring and impairment costs of $39 million, and Silent-Aire nonrecurring purchase accounting of $3 million. Adjusted income tax provision for the twelve months ended September 30, 2020 excludes tax benefits from net mark-to-market adjustments of $65 million, restructuring and impairment costs of $48 million, tax audit reserve adjustments of $44 million, valuation allowance adjustments of $26 million, integration costs of $18 million and an acquisition related compensation charge of $9 million, partially offset by tax provisions related to Switzerland tax reform of $30 million.(7) |
Letter from the Chairman and CEO, George Oliver
A-4 Johnson Controls International plc JOHNSON CONTROLS INTERNATIONAL PLC ONE ALBERT QUAYCORK, IRELANDVOTE BYINTERNET—www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on March 9, 2021 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE—1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on March 9, 2021 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.We are monitoring COVID-19 developments and other circumstances, as well as guidance issued by relevant health organizations. Should we determine that alternative arrangements may be advisable or required, such as changing the date, time, location or format of the meeting, we will announce our decision by press release and post additional information on our Investor Relations section of our website. Furthermore, to promote the health and safety of attendees, we may impose additional procedures or limitations on meeting attendance based on applicable governmental requirements or recommendations or facility requirements.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:D28806-P47758-Z78757 KEEP THISPORTION FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLYJOHNSON CONTROLS INTERNATIONAL PLCOrdinary BusinessThe Board of Directors recommends you vote FOR proposals one through eight:1. By separate resolutions, to elect the following individuals as Directors for a period of one year, expiring at the end of the Company’s Annual General Meeting of Shareholders in 2022: Nominees: For Against Abstain 1a. Jean Blackwell For Against Abstain 1b. Pierre Cohade 2.a To ratify the appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company. 1c. Michael E. Daniels 2.b To authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration.Special Business 1d. Juan Pablo del Valle Perochena 3. To authorize the Company and/or any subsidiary of the Company 1e. W. Roy Dunbar to make market purchases of Company shares. 4. To determine the price range at which the Company can re-allot 1f. Gretchen R. Haggerty shares that it holds as treasury shares (Special Resolution).5. To approve, in a non-binding advisory vote, the compensation of 1g. Simone Menne the named executive officers. 1h. George R. Oliver 6. To approve the Johnson Controls International plc 2021 Equity and Incentive Plan. 1i. Jürgen Tinggren 7. To approve the Directors’ authority to allot shares up to approximately 33% of issued share capital.8. To approve the waiver of statutory pre-emption rights with respect 1j. Mark Vergnano to up to 5% of issued share capital (Special Resolution). 1k. R. David Yost 1l. John D. Young Yes No Please indicate if you plan to attend this meeting.Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date ADMISSION TICKET 2021 Annual General Meeting of Shareholders of Johnson Controls International plc March 10, 2021 3:00 PM, Local Time Arthur Cox Ten Earlsfort Terrace Dublin 2, D02 T380 IrelandImportant Notice Regarding the Availability of Proxy Materials for the Annual General Meeting: The Combined Notice and Proxy Statement, Annual Report, Irish Statutory Accounts and Non-Financial Disclosure Report are available at www.proxyvote.com.D28807-P47758-Z78757JOHNSON CONTROLS INTERNATIONAL PLCTHIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoint(s) George R. Oliver and John Donofrio, or either of them, as proxies, each with full power of substitution, and hereby authorize(s) them to represent and to vote all of the Ordinary Shares of Johnson Controls International plc that the shareholder(s) is/are entitled to vote at the Annual General Meeting of Shareholders to be held at 3:00 p.m., local time on Wednesday, March 10, 2021 at Arthur Cox, Ten Earlsfort Terrace, Dublin 2, D02 T380 Ireland, and any adjournment or postponement thereof, as indicated on the reverse side of this proxy card with respect to the proposals set forth in the proxy statement and, in their discretion, upon any matter that may properly come before the meeting or any adjournment of the meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. IF YOU ARE NOT VOTING ON THE INTERNET OR BY TELEPHONE, PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.PLEASE MARK YOUR VOTES IN THE CORRESPONDING BOXES ON THE REVERSE SIDE1. By separate resolutions, to elect the individuals as Directors for a period of one year, expiring at the end of the Company’s Annual General Meeting of Shareholders in 2022.2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent auditors of the Company and to authorize the Audit Committee of the Board of Directors to set the auditors’ remuneration.3. To authorize the Company and/or any subsidiary of the Company to make market purchases of Company shares.4. To determine the price range at which the Company can re-allot shares that it holds as treasury shares (Special Resolution).5. To approve, in a non-binding advisory vote, the compensation of the named executive officers.6. To approve the Johnson Controls International plc 2021 Equity and Incentive Plan.7. To approve the Directors’ authority to allot shares.8. To approve the waiver of statutory pre-emption rights (Special Resolution).