DEF 14A of Applied Industrial Technologies Inc, Sep 8, 2023

DEF 14A of Applied Industrial Technologies Inc

Filed Sep 8, 2023 · FY20230001193125-23-231559

Open on EDGAR

  1. (Name of Person(s) Filing Proxy Statement)

    | 24 | Executive Compensation | | 24 | Compensation Discussion and Analysis | | 42 | Summary Compensation Table | | 45 | Grants of Plan-Based Awards Table | | 46 | Outstanding Equity Awards at Fiscal Year-End Table | | 48 | Option Exercises and Stock Vested Table | | 48 | 2023 Policies and Practices Related to the Grant of Certain Equity Awards | | 49 | Nonqualified Deferred Compensation | | 50 | Pension Plans | | 51 | Potential Payments upon Termination or Change in Control | | 58 | CEO Pay Ratio Disclosure | | 59 | Pay Versus Performance Disclosure | | 63 | Compensation Committee Report | | 64 | ITEM 2: Advisory (Nonbinding) Vote to Approve Executive Compensation | | 67 | ITEM 3: Advisory (Nonbinding) Vote on the Frequency of Shareholder Votes Regarding Executive Compensation | | 68 | ITEM 4: Vote to Approve 2023 Long-Term Performance Plan | | 73 | ITEM 5: Vote to Ratify Appointment of Independent Auditors | | 74 | Equity Compensation Plan Information | | 75 | Audit Committee Report | | 75 | Delinquent Section 16(a) Reports | | 75 | Shareholder Proposals and Nominee Submissions for 2024 Annual Meeting | | 76 | Householding Information | | 76 | Other Matters | | 77 | Appendix - 2023 Long-Term Performance Plan |

  2. Director Nominees

    Director Nominees

  3. Director Nominees

    | Nominee | Age | Director Since | Principal Occupation | Independent | | Robert J. Pagano, Jr. | 60 | 2017 | Chief Executive Officer, President, and Chairperson of the Board, Watts Water Technologies, Inc. | Yes | | Neil A. Schrimsher | 59 | 2011 | President & Chief Executive Officer, Applied Industrial Technologies, Inc. | No | | Peter C. Wallace | 69 | 2005 | Former Chief Executive Officer, Gardner Denver, Inc. | Yes |

  4. Director Nominees

    Additional information about the nominees and the other continuing directors is on pages 10-14.

  5. Director Nominees

    | 2 | Applied Industrial Technologies 2023 Proxy Statement |

  6. Ratification of Appointment of Independent Auditors

    | Nominees for Election as Directors with Terms Expiring in 2026 | | | | | | Robert J. Pagano, Jr. Chief Executive Officer, President, and Chairperson of the Board, Watts Water Technologies, Inc. Age: 60 Director since: 2017 Committees: ● Audit ● Corporate Governance & Sustainability ● Executive Organization & Compensation | | Neil A. Schrimsher President & Chief Executive Officer, Applied Industrial Technologies, Inc. Age: 59 Director since: 2011 Committee: ● Executive | | Business Experience: Mr. Pagano has served as Chief Executive Officer and President of Watts Water Technologies, Inc. (NYSE: WTS) since 2014, and Chairperson of the Board since February 2022. Watts Water Technologies, Inc. is a global supplier of products and solutions that manage and conserve the flow of fluids and energy into, through, and out of buildings in the residential and commercial markets. He also served as interim Chief Financial Officer from April to July 2018. Mr. Pagano began his career with an international public accounting firm and he is a Certified Public Accountant. Other Directorship in Previous 5 Years: Watts Water Technologies, Inc. Qualifications: Mr. Pagano brings to Applied’s Board his broad management experience as a sitting chief executive officer and director of a NYSE-listed global manufacturing company. In addition, his career includes extensive leadership and operations experience, working with distributors to serve industrial markets throughout the world, as well as a strong background in finance and accounting. | | Business Experience: Mr. Schrimsher joined Applied as our Chief Executive Officer in 2011 and was also elected President in 2013. Before joining Applied, Mr. Schrimsher was Executive Vice President of Cooper Industries plc (formerly NYSE: CBE), a global electrical products manufacturer, where he led Cooper’s Electrical Products Group and headed numerous domestic and international growth initiatives. Other Directorship in Previous 5 Years: Patterson Companies, Inc. (NASDAQ: PDCO) Qualifications: As the only Applied executive to serve on the Board, Mr. Schrimsher contributes a deep understanding of the company’s businesses, markets, and competitive landscape. From his prior employment, Mr. Schrimsher brought to Applied and its Board broad leadership experience, including management of worldwide operations, distribution management, strategic planning and analysis, manufacturing, engineering, supply chain management, and sourcing. | |

  7. Ratification of Appointment of Independent Auditors

    | Nominees for Election as Directors with Terms Expiring in 2026 (continued) | | Continuing Directors with Terms Expiring in 2024 | | | | Peter C. Wallace Former Chief Executive Officer, Gardner Denver, Inc. Age: 69 Director since: 2005 Chairman since: 2014 Committees: ● Corporate Governance & Sustainability ● Executive Organization & Compensation ● Executive | | Madhuri A. Andrews Executive Vice President and Chief Information Officer, MKS Instruments, Inc. Age: 56 Director since: 2019 Committees: ● Audit ● Corporate Governance & Sustainability | | Business Experience: Mr. Wallace most recently was Chief Executive Officer of Gardner Denver, Inc. from 2014 until retiring in 2015. Gardner Denver is a worldwide manufacturer of highly engineered products, including compressors, liquid ring pumps, and blowers for various industrial, medical, environmental, transportation, and process applications, pumps used in the petroleum and industrial market segments, and other fluid transfer equipment. Prior to joining Gardner Denver, Mr. Wallace was President and Chief Executive Officer, and a director, of Robbins & Myers, Inc. (formerly NYSE: RBN), from 2004 until it was acquired in 2013 by National Oilwell Varco, Inc. Robbins & Myers was a leading designer, manufacturer, and marketer of highly engineered, application-critical equipment and systems for energy, chemical, pharmaceutical, and industrial markets worldwide. Other Directorships in Previous 5 Years: Curtiss-Wright Corporation (NYSE: CW), Rogers Corporation (NYSE: ROG) Qualifications: Mr. Wallace has a wide and varied background as a senior executive in global industrial equipment manufacturing. He brings to the Board the perspective of someone familiar with all facets of worldwide business operations, including the experience of leading a NYSE-listed company. Mr. Wallace’s career includes positions with global responsibilities for equipment manufacturers with product lines that Applied (and others) represented as a distributor in the fluid power and power transmission component fields. In those roles, he developed significant knowledge about Applied’s industry, including the dynamics of the relationships between industrial product manufacturers and their distributors. These experiences and knowledge, along with his service on other NYSE-listed company boards, enhance Mr. Wallace’s contributions and value to our Board. | | Business Experience: Ms. Andrews has served as Executive Vice President and Chief Information Officer of MKS Instruments, Inc. (NASDAQ: MKSI) since June 2023. MKS provides technology solutions to leading edge semiconductor manufacturing, electronics and packaging, and specialty industrial applications. Prior to MKS, Ms. Andrews served as Executive Vice President, Chief Digital and Information Officer for Jacobs (NYSE: J) from June 2019 to November 2022 and Senior Vice President, Chief Information Officer from August 2018 to June 2019. From 2015 to August 2018, she was Chief Information Officer at DynCorp International LLC, a global aviation, logistics, intelligence, and field operations service provider. Qualifications: Ms. Andrews is a business-focused technology executive with broad experience leading business and information technology transformation as well as global digital strategies for major firms across a variety of industries. She has led operational business continuity and technology-related transformation projects for organizations through acquisitions and divestitures, achieving synergies and eliminating stranded costs. Ms. Andrews also has practical experience optimizing and integrating governance, risk, and compliance (GRC) frameworks, processes, and technologies in complex regulatory and industry environments. Her skills and experience in these areas make her an important contributor to Applied’s Board. | |

  8. Continuing Directors with Terms Expiring in 2024 (continued)

    Continuing Directors with Terms Expiring in 2024 (continued)

  9. Continuing Directors with Terms Expiring in 2024 (continued)

    | | Shelly M. Chadwick Vice President, Finance and Chief Financial Officer, Materion Corporation Age: 51 Director since: 2022 Committees: ● Audit ● Corporate Governance & Sustainability | | Vincent K. Petrella Former Executive Vice President, Chief Financial Officer and Treasurer, Lincoln Electric Holdings, Inc. Age: 63 Director since: 2012 Committees: ● Audit ● Corporate Governance & Sustainability ● Executive Organization & Compensation ● Executive | | Business Experience: Since November 2020, Ms. Chadwick has served as Vice President, Finance and Chief Financial Officer for Materion Corporation (NYSE: MTRN), a global high-tech solutions provider of performance alloys, advanced materials, and precision optics. From 2016 to November 2020, she was Vice President, Finance and Chief Accounting Officer of The Timken Company (NYSE: TKR), a world leader in manufacturing engineered bearings and power transmission products. Qualifications: Ms. Chadwick leads her company’s accounting, tax, treasury, and financial planning functions. As CFO, she also has responsibility for Materion’s procurement and investor relations functions. She brings to our Board more than 20 years of leadership experience driving financial and operational results and transformational projects at world-class manufacturing companies. | | Business Experience: Mr. Petrella retired from Lincoln Electric Holdings, Inc. (NASDAQ: LECO) in August 2020 as Executive Vice President. He also served as Chief Financial Officer and Treasurer until April 2020. Lincoln Electric engages in the design, manufacture, and sale of welding, cutting, and brazing products worldwide. Other Directorships in Previous 5 Years: The Gorman-Rupp Company (NYSE: GRC; since 2020), Sotera Health, Inc. (NYSE: SHC; since 2020) Qualifications: As one of Lincoln Electric’s top executives, Mr. Petrella helped lead the company’s global expansion in recent decades. His leadership and operating experience, and his knowledge of industrial distribution in North America and abroad, make him a key contributor to discussions about Applied’s strategy. In addition, Mr. Petrella’s finance and accounting background (before joining Lincoln Electric he was a Certified Public Accountant with an international public accounting firm) and his service as Chief Financial Officer for a multibillion-dollar public company make him a valued member of the Board and chairman of the Audit Committee. | |

  10. Continuing Directors with Terms Expiring in 2024 (continued)

    | 12 | Applied Industrial Technologies 2023 Proxy Statement |

  11. Continuing Directors with Terms Expiring in 2024 (continued)

    | Continuing Directors with Terms Expiring in 2025 | | | | | | Mary Dean Hall Executive Vice President and Chief Financial Officer, Ingevity Corporation Age: 66 Director since: 2019 Committees: ● Audit ● Corporate Governance & Sustainability | | Dan P. Komnenovich Former President and Chief Executive Officer, Aviall, Inc. Age: 71 Director since: 2012 Committees: ● Audit ● Corporate Governance & Sustainability | | Business Experience: Ms. Hall has served as Executive Vice President and Chief Financial Officer of Ingevity Corporation (NYSE: NGVT) since April 2021. Ingevity is a manufacturer of specialty chemicals, high performance carbon materials, and engineered polymers. Before joining Ingevity, she served with Quaker Houghton (NYSE: KWR) as Senior Vice President, Chief Financial Officer and Treasurer since August 2019, and, prior to then, as Vice President, Chief Financial Officer and Treasurer beginning in 2015. Quaker Houghton is the global leader in industrial process fluids for the primary metals and metalworking markets. Qualifications: Ms. Hall brings to Applied a well-rounded background in public company accounting and reporting, financial planning and analysis, tax, treasury, corporate development/M&A, investor relations, and enterprise risk management. In addition, her career began in the banking industry, where she developed expertise in M&A, capital markets, and financing. Ms. Hall’s skills and experience in these areas make her an important contributor to Applied’s Board. | | Business Experience: Until retiring in 2013, Mr. Komnenovich was President and Chief Executive Officer of Aviall, Inc., a wholly owned subsidiary of The Boeing Company (NYSE: BA). Aviall, now operating under the Boeing brand, is one of the world’s largest providers of new aviation parts and related aftermarket operations. It also provides maintenance for aviation batteries, wheels, and brakes, as well as hose assembly, kitting, and paint-mixing services, and offers a complete set of supply chain and logistics services, including order processing, stocking and fulfillment, automated inventory management, and reverse logistics to OEMs and customers. Qualifications: Mr. Komnenovich led a global multibillion-dollar distribution company, which grew significantly during his service as a senior executive. He brings to our Board extensive experience with distribution sales, marketing, operations, supply chain management, and logistics. Earlier in his career, Mr. Komnenovich was a Certified Public Accountant and served in finance and accounting roles with various companies. | |

  12. Continuing Directors with Terms Expiring in 2024 (continued)

    | Applied Industrial Technologies 2023 Proxy Statement | 13 |

  13. Continuing Directors with Terms Expiring in 2024 (continued)

    | Continuing Directors with Terms Expiring in 2025 (continued) | | | | Joe A. Raver Former President and Chief Executive Officer, Hillenbrand, Inc. Age: 57 Director since: 2017 Committees: ● Corporate Governance & Sustainability ● Executive Organization & Compensation ● Executive | | Business Experience: Mr. Raver served as President and Chief Executive Officer of Hillenbrand, Inc. (NYSE: HI) from 2013 until retiring in December 2021. Hillenbrand is a diversified industrial company with multiple brands that serve a range of industries across the globe. The company’s industrial businesses provide compounding, extrusion, and material handling; screening and separating; and injection molding and hot runner systems, products, and services for a range of manufacturing and other industrial processes. Other Directorship in Previous 5 Years: Hillenbrand, Inc. (until December 2021) Qualifications: Mr. Raver brings to Applied’s Board his broad management experience as a chief executive officer and director of a NYSE-listed global manufacturing company serving industrial markets worldwide. In addition, his career includes extensive leadership and operations experience in diverse business settings. | |

  14. Continuing Directors with Terms Expiring in 2024 (continued)

    | 14 | Applied Industrial Technologies 2023 Proxy Statement |

  15. Director Compensation — Fiscal Year 2023

    Director Compensation — Fiscal Year 2023 The following table shows information about non-employee director compensation in 2023.

  16. Director Compensation — Fiscal Year 2023

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Option Awards ($) (2) | All Other Compensation ($) | Total ($) | | Madhuri A. Andrews | 100,000 | 127,660 | 0 | 0 | 227,660 | | Shelly M. Chadwick (3) | 91,668 | 192,922 | 0 | 0 | 284,590 | | Mary Dean Hall | 100,000 | 127,660 | 0 | 0 | 227,660 | | Dan P. Komnenovich | 100,000 | 127,660 | 0 | 0 | 227,660 | | Robert J. Pagano, Jr. | 100,000 | 127,660 | 0 | 0 | 227,660 | | Vincent K. Petrella | 120,000 | 127,660 | 0 | 0 | 247,660 | | Joe A. Raver | 115,000 | 127,660 | 0 | 0 | 242,660 | | Peter C. Wallace | 180,000 | 148,081 | 0 | 20,977(4) | 349,058 |

  17. Director Compensation — Fiscal Year 2023

    | (1) On June 30, 2023, each non-employee director held 1,044 restricted shares which vest in January 2024; in addition, on June 30, 2023 (a) Mr. Wallace held an additional 167 shares which vest in January 2024 and (b) Ms. Chadwick held an additional 628 shares, a partial year award granted upon her election to the Board, which vested in August 2023. Restricted stock awards provide for the accrual of dividends and payment at vesting. Directors hold voting rights for the shares. The amounts in the table represent the awards’ grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“FASB ASC Topic 718”). |

  18. Director Compensation — Fiscal Year 2023

    | (2) On June 30, 2023, Mr. Wallace held 3,114 stock options from a 2015 award. |

  19. Director Compensation — Fiscal Year 2023

    | (3) Ms. Chadwick joined the Board in August 2022. |

  20. Director Compensation — Fiscal Year 2023

    | (4) Reflects the value of health care benefits. |

  21. Director Compensation — Fiscal Year 2023

    | 22 | Applied Industrial Technologies 2023 Proxy Statement |

  22. Director Compensation — Fiscal Year 2023

    Beneficial Ownership HOLDINGS OF MAJOR SHAREHOLDERS, OFFICERS, AND DIRECTORS The following table shows beneficial ownership of Applied common stock, on June 30, 2023, by (i) persons believed by us to own beneficially more than 5% of Applied’s outstanding shares, based on our review of SEC filings, (ii) all directors and nominees, (iii) the active executive officers named in the Summary Compensation Table on page 42, and (iv) all directors, nominees, and executive officers (on June 30, 2023) as a group.

  23. Director Compensation — Fiscal Year 2023

    | Name of Beneficial Owner | Shares Beneficially Owned on June 30, 2023 (1) | Percent of Class (%) (2) | | BlackRock, Inc. 55 East 52nd Street, New York, New York 10055 | 6,701,557(3) | 17.3 | | The Vanguard Group, Inc. P.O. Box 2600, Valley Forge, Pennsylvania 19482-2600 | 5,071,358(4) | 13.1 | | Madhuri A. Andrews | 6,812 | | | Shelly M. Chadwick | 1,672 | | | Mary Dean Hall | 6,812 | | | Warren E. Hoffner | 63,693 | | | Dan P. Komnenovich | 25,135 | | | Kurt W. Loring | 74,314 | | | Robert J. Pagano, Jr. | 10,172 | | | Vincent K. Petrella | 19,710 | | | Joe A. Raver | 11,687 | | | Neil A. Schrimsher | 394,093 | 1.0 | | Jason W. Vasquez | 47,626 | | | Peter C. Wallace | 33,015 | | | David K. Wells | 85,638 | | | All Directors, Nominees, and Executive Officers as a Group (14 Individuals) | 780,379(5) | 2.0 |

  24. Director Compensation — Fiscal Year 2023

    | (1) We determined beneficial ownership in accordance with SEC rules; however, the holders may disclaim beneficial ownership. Except as otherwise indicated, the beneficial owner has sole voting and dispositive power over the shares. The directors’ and active named executive officers’ totals include shares that could be acquired within 60 days after June 30, 2023, by exercising vested stock options and stock-settled stock appreciation rights (“SARs”): Mr. Hoffner, 11,525; Mr. Loring, 53,950; Mr. Schrimsher, 105,000; Mr. Vasquez, 36,700; Mr. Wallace, 3,114; and Mr. Wells, 64,750. Mr. Wallace’s total also includes 7,806 shares held in a nonqualified deferred compensation plan account for which he has voting, but not dispositive power. Each non-employee director’s total also includes 1,044 restricted shares (1,211 for Mr. Wallace and 1,672 for Ms. Chadwick), for which the director has voting but not dispositive power. The executive officers’ totals do not include unvested restricted stock unit holdings. |

  25. Director Compensation — Fiscal Year 2023

    | (2) Does not show percent of class if less than 1%. |

  26. Director Compensation — Fiscal Year 2023

    | (3) BlackRock, Inc. reported its ownership, including shares beneficially owned by affiliated entities, in a Schedule 13G/A filed with the SEC on January 26, 2023, indicating it had sole voting power for 6,525,574 shares and no voting power for the remaining shares. |

  27. Director Compensation — Fiscal Year 2023

    | (4) The Vanguard Group, Inc. reported its ownership, including shares beneficially owned by affiliated entities, in a Form 13F filed with the SEC on August 14, 2023, indicating it had shared voting and dispositive power for 69,680 shares, no voting but sole dispositive power for 4,960,467 shares, and no voting but shared dispositive power for 40,686 shares. |

  28. Director Compensation — Fiscal Year 2023

    | (5) Includes 271,925 shares that could be acquired by the individuals within 60 days after June 30, 2023, by exercising vested stock options and SARs. In determining ownership percentage, these stock option and SAR shares are added to both the denominator and the numerator. |

  29. Director Compensation — Fiscal Year 2023

    | Applied Industrial Technologies 2023 Proxy Statement | 23 |

  30. Base Salary and Target Annual Incentive Pay

    Base Salary and Target Annual Incentive Pay

  31. Base Salary and Target Annual Incentive Pay

    | • | The Committee approved base salary adjustments for the NEOs, with Mr. Schrimsher earning a 2.2% raise. |

  32. Base Salary and Target Annual Incentive Pay

    | • | The Committee maintained the NEOs’ annual incentive target compensation as a percentage of salary at the same levels as in previous years, except that Mr. Schrimsher’s percentage was adjusted to 110% (from 105%), and Mr. Vasquez’s to 60% (from 55%). |

  33. Long-Term Incentives

    Long-Term Incentives

  34. Long-Term Incentives

    | • | Emphasizing performance in Applied’s incentive plans, the Committee awarded approximately 50% (55% for Mr. Schrimsher) of each NEO’s targeted long-term incentive value in performance shares, tied to key company metrics and unchanged from the previous year. |

  35. Long-Term Incentives

    | 24 | Applied Industrial Technologies 2023 Proxy Statement |

  36. Long-Term Incentives

    | • | Stock-settled stock appreciation rights (“SARs”) and restricted stock units (“RSUs”), equally weighted, made up the remainder of the targeted long-term incentive value, and were also unchanged from the prior year. Accordingly, all long-term incentives were equity-based. |

  37. Long-Term Incentives

    | • | After considering market data and subjective factors, the Committee approved single-digit adjustments to annual long-term incentive target values for most NEOs, with Mr. Schrimsher earning a 3.4% increase. |

  38. Long-Term Incentives

    The actions maintained the NEOs’ total targeted compensation at levels reasonably approximating market medians among peer distribution industry companies, consistent with Applied’s pay philosophy. Business momentum continued during 2023 and Applied achieved record financial results, supported by top-tier organic growth, steadfast execution, and ongoing expansion of our next-generation Automation platform. Net sales rose 15.8% and net income rose 34.7%, both to record levels:

  39. Long-Term Incentives

    | | 2023 | 2023 Adjusted (1) | 2023 Goal | 2022 | | Sales | $4.41 billion | — | — | $3.8 billion | | Net Income | $346.7 million | $343.0 million | $285.5 million | $257.4 million | | Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) (2) | $524.5 million | $524.4 million | $454.5 million | $409.6 million | | Average Working Capital as a Percentage of Sales (3) | 26.6% | — | 25.4% | 25.4% | | Return on Assets (“ROA”) (4) | 13.7% | 13.5% | 11.5% | 11.1% |

  40. Long-Term Incentives

    | (1) Following a review, the Committee excluded certain income from the achievement calculations under the NEOs’ incentive programs. The “2023 Adjusted” column reflects results as so adjusted. |

  41. Long-Term Incentives

    | (2) EBITDA is calculated, for purposes of the NEOs’ performance share programs, by adding net income, interest expense, income taxes, depreciation, and intangibles amortization. |

  42. Long-Term Incentives

    | (3) Average working capital as a percentage of sales is calculated, for purposes of the 2023 Management Incentive Plan, by taking the arithmetic average, for the fiscal year’s four quarters, of the following calculations: average working capital for the quarter as a percentage of sales for the twelve months ending with the quarter end. |

  43. Long-Term Incentives

    | (4) ROA is calculated, for purposes of the performance share programs, by dividing annual net income by average monthly assets for the year. |

  44. Long-Term Incentives

    Total shareholder return, considering the change in our stock price and reinvested dividends, rose 48.43% for the year (141.87% over three years). The company returned $54.2 million of cash to shareholders through dividends and share repurchases during the year. Net income, adjusted as described above, exceeded the 2023 net income goal, however the average working capital as a percentage of sales did not meet the 2023 average working capital as a percentage of sales goal. The NEOs earned annual incentive pay for 2023 at an average of 156% of their individual target values. Shares earned or “banked” for 2023 under the performance share programs, described in detail on pages 36-38, are shown below:

  45. Long-Term Incentives

    | Performance Shares Program | Banked Award as % of 2023 Target Shares | | 2023-2025 | 163.4% | | 2022-2024 | 200.0% | | 2021-2023 | 200.0% |

  46. Long-Term Incentives

    2023 achievements under the three-year performance share programs averaged 187.8% of target shares. The average payout for the full three-year period of the completed 2021-2023 program was 200.0% of target.

  47. Long-Term Incentives

    | Applied Industrial Technologies 2023 Proxy Statement | 25 |

  48. Long-Term Incentives

    We believe that our compensation decisions, as described in this CD&A, reflect a balanced and responsible pay approach. We also value shareholder opinion and, in performing its duties, the Committee considers the outcome of the annual advisory vote to approve the NEOs’ compensation. This vote is intended to provide an overall assessment of our executive compensation program rather than to focus on specific compensation items. We are pleased to have earned the shareholders’ affirmation last year, with 96% of the shares cast voting in favor; as a result, the Committee made no material changes to the program.

  49. Compensation Practices Highlights

    | What We Do | What We Don’t Do | | Pay for performance: in 2023, an average of 64% of the targeted primary compensation for the NEOs (82% for our CEO) was tied to performance. Committee members meet independence requirements under SEC rules and NYSE listing standards. The Committee uses an independent compensation consultant. Balanced approach to compensation, combining fixed and variable, short-term and long-term, cash and equity, and performance and time-based shares. Pay philosophy targets market median compensation among peer distribution industry companies. The Committee sets reasonably demanding incentive plan goals that are regularly reviewed for difficulty and analyzes the alignment of our pay program outcomes with our financial results. Diverse incentive goals without steep payout cliffs. Equity award vesting periods encourage consistent behavior and reward long-term, sustained performance. Change in control agreements and equity plan include “double trigger” provisions for cash payment and equity vesting. Limited perquisites and other benefits. Significant stock ownership guidelines for executive officers and directors, with requirement of holding net shares from equity awards until guideline is met. Provisions in plans and award terms to claw back compensation under defined circumstances. | No payment of dividend equivalents on performance shares, or on restricted stock units granted under 2019 Long-Term Performance Plan, until earned. No granting of stock options or SARs with an exercise price less than fair market value at grant. No repricing or replacing of underwater stock options or SARs. No duplication of metrics in the goals for our short and long-term incentive plans. No equity awards granted with vesting periods shorter than one year. No hedging, pledging, or short sales of Applied stock are permitted. No payment of guaranteed, above-market, or preferential interest or earnings on deferred compensation. Change in control agreements only with three NEOs. No excise tax gross-up provisions in change in control agreements. No defined benefit pension plan for current officers. Annual compensation risk assessment conducted to ensure compensation designs do not encourage excessive risk-taking. |

  50. Compensation Philosophy and Objectives

    | • | Attract and retain qualified and motivated executives by providing compensation that, at target performance, is competitive with a peer group of distribution industry companies, |

  51. Compensation Philosophy and Objectives

    | • | Reward executives for results they influence that contribute to long-term shareholder value. |

  52. Roles and Responsibilities

    | • | Evaluating Applied’s executive compensation, including by reviewing market data, which includes data from a peer group that is comprised of distribution companies, |

  53. Roles and Responsibilities

    | • | Overseeing Applied’s executive compensation and benefit plans, including approving incentive awards, |

  54. Roles and Responsibilities

    | • | Approving incentive plan goals that use performance metrics and evaluating performance to determine whether goals were achieved, and |

  55. Roles and Responsibilities

    | • | Identifying and reviewing peer group companies, |

  56. Executive Compensation Program Overview

    | • | Annual incentive pay, |

  57. Executive Compensation Program Overview

    | • | Long-term incentives, |

  58. Executive Compensation Program Overview

    | • | Change in control and termination benefits. |

  59. Executive Compensation Program Overview

    | Component | | Description | Rationale | | Base Salary | | Fixed compensation paid in cash for service during year | To provide base amount of market competitive pay | | Annual Incentive Pay: Management Incentive Plan | | Variable compensation paid annually in cash based on performance relative to annual company goals as well as individual performance | To motivate and reward executives with respect to fiscal year company and individual performance | | Long-Term Incentives | Performance Shares (55% weighting for CEO, 50% for other NEOs) | Shares earned based on achievement of company goals over a three-year period | To promote • Achievement of longer-term company goals • Stock price appreciation through use of stock-based and stock-settled instruments • Executive retention through service-based vesting | | | Stock Appreciation Rights (SARs) (22.5% weighting for CEO, 25% for other NEOs) | Stock-settled awards that provide realizable compensation only to the extent our stock price appreciates | | | | Restricted Stock Units (RSUs) (22.5% weighting for CEO, 25% for other NEOs) | Shares earned after three years of continued service | |

  60. 2023 TARGET COMPENSATION MIX

    Mr. Schrimsher, our CEO, earns higher pay than the other officers, reflecting his role in establishing and achieving the company’s strategic goals, as well as market practices. His overall compensation is weighted, however, more toward incentive pay, particularly long-term incentives. This distinction is appropriate considering his responsibility and influence over Applied’s performance and is typical among companies in the peer group described below. Competitive Pay Review for 2023. To help evaluate Applied’s executive compensation, the Committee creates a peer group of distribution companies, primarily industrial distributors. Distributor comparisons provide the Committee insight into executive pay and benefits at companies in similar market environments. Pay Governance then prepares a competitive review and assessment, analyzing the competitiveness of target compensation for Applied’s executive positions relative to comparable peer group data. For 2023, with assistance from Pay Governance, the Committee selected 20 distribution companies (the “Peer Group”) with annual sales ranging from $1.6 billion to $9.8 billion, and median sales of $5.0 billion, as compared with Applied’s sales of $3.8 billion for the same comparison period. In addition to annual sales levels, the Committee also considered market capitalization, invested capital, number of employees and asset size when establishing the Peer Group. Each Peer Group company disclosed compensation for top officers in SEC filings.

  61. 2023 TARGET COMPENSATION MIX

    Management did not participate in selecting the companies. The Peer Group included the companies in the table below, all of which had also been in the 2022 peer group:

  62. 2023 TARGET COMPENSATION MIX

    | 2023 Peer Group | | | | AAR Corp. | GMS Inc. | Rush Enterprises, Inc. | | APi Group Corporation | MRC Global Inc. | ScanSource, Inc. | | Avient Corporation | MSC Industrial Direct Co., Inc. | SiteOne Landscape Supply, Inc. | | Beacon Roofing Supply, Inc. | NOW Inc. | UniFirst Corporation | | BlueLinx Holdings Inc. | Owens & Minor, Inc. | Univar Solutions Inc. | | Boise Cascade Company | Patterson Companies, Inc. | Watsco, Inc. | | Fastenal Company | Pool Corporation | |

  63. 2023 TARGET COMPENSATION MIX

    Pay Governance then prepared a compensation review and assessment, analyzing the competitiveness of target compensation for Applied’s CEO and CFO positions relative to comparable Peer Group data. Pay Governance did not analyze Peer Group data for other officer positions for 2023 but reported on broader compensation trends to assist the Committee in evaluating target pay levels. The study identified Peer Group pay for each position at the 25th, 50th, and 75th percentile levels. The 50th percentile is referred to here as the “market median” and represents Applied’s target pay objective. Beyond the Peer Group data, Pay Governance presented other pay data from several broad industrial company surveys. The Committee requested this supplemental data to help confirm the Peer Group data’s reliability. Pay Governance analyzed base salary, annual incentive target compensation as a percentage of base salary, total cash target compensation (base salary plus annual incentive target compensation), long-term incentive target compensation, and total direct target compensation (total cash target compensation plus long-term incentive target compensation). The study also compared Applied’s performance in each of the past five years with the Peer Group companies’ performance, considering metrics such as sales growth, EBITDA growth, cash flow growth, EBITDA margin, cash flow margin, net income margin, ROA, and total shareholder return. The comparisons assist the Committee in examining how Applied’s executive pay aligns with company performance relative to peers. Using Pay Governance’s study, the Committee evaluated each primary compensation component. In most years, including 2023, the Committee seeks to compensate executives near the market median if Applied’s performance targets are achieved. Sustained performance below target levels should result in realized total compensation below market medians, and performance that exceeds target levels should result in realized total compensation above market medians. However, market medians and ranges only represent beginning reference points; the Committee also uses its subjective judgment to adjust targeted compensation to reflect factors such as individual performance and skills, long-term potential, tenure in the position, internal equity, retention considerations, and the position’s importance in Applied’s organization.

  64. Detailed Review of Compensation Components

    The payouts for these components could have ranged from 0% to 200% of the executive officers’ target award values. The Committee established this range, consistent with prior years, after considering Pay Governance’s guidance on market practices. Payouts for each performance measure are prorated on a straight-line basis for results falling between the threshold 50%, 100%, and maximum 200% payout levels. The Committee assigns an annual incentive target, expressed as a percentage of salary, to each executive officer. For 2023, the Committee maintained the percentages at the same levels as in previous years, except that Mr. Schrimsher’s percentage was adjusted to 110% (from 105%), and Mr. Vasquez’s to 60% (from 55%). The 2023 targets follow:

  65. Detailed Review of Compensation Components

    | Goal | 2023 Achievement | Payout as % of Prorated Portion of Target Award | | Net Income (weighted 60%) | $343.0 million (1) | 200% | | Average Working Capital as a Percentage of Sales (weighted 20%) | 26.6% | 71.4% |

  66. Detailed Review of Compensation Components

    | Name | Annual Incentive Payout ($) | | N. Schrimsher | 1,654,026 | | D. Wells | 536,040 | | W. Hoffner | 384,157 | | K. Loring | 335,173 | | J. Vasquez | 332,388 | | F. Bauer (1) | 285,109 |

  67. Detailed Review of Compensation Components

    | (1) Mr. Bauer earned a partial year payout for the period extending through a post-retirement consulting period. |

  68. Detailed Review of Compensation Components

    Long-Term Incentives. Early in the year, the Committee made long-term incentive awards to the executive officers under the 2019 Long-Term Performance Plan. The plan rewards executives for achieving long-term goals and authorizes incentive awards in a variety of forms. The Committee makes awards annually, after reviewing the previous fiscal year’s financial results. As with the other primary compensation components, the Committee sets the awards’ value after reviewing the independent consultant’s target compensation study. In most years, the Committee seeks to provide awards with a targeted value near the market median for equivalent positions, with variation to reward individual performance and skills, as well as to reflect factors such as long-term potential, responsibility, tenure in the position, internal equity, retention considerations, and the position’s importance in Applied’s organization. The Committee uses long-term incentive awards for purposes of motivation, alignment with long-term company goals, and retention. The Committee intends to pay total long-term compensation near the market median

  69. Detailed Review of Compensation Components

    when Applied meets its goals and above when Applied exceeds its goals. If goals are not achieved, then long-term compensation should fall below the market median. After considering Pay Governance’s study and the subjective factors identified above, the Committee approved single-digit adjustments to annual long-term incentive target values for most NEOs, with Mr. Schrimsher earning an increase of 3.4%. Emphasizing operating performance, the Committee awarded long-term incentives using three vehicles, all stock-settled, in the approximate weightings shown below.

  70. 2023 LONG-TERM INCENTIVE AWARDS

    2023 LONG-TERM INCENTIVE AWARDS The Committee believes these combinations appropriately balance the vehicles’ distinct purposes, with Mr. Schrimsher’s weighting, as befits his broad responsibilities, tilted more toward the operating performance-driven performance shares. Reflecting Applied’s culture, the mix differs from the norm for the Peer Group companies, which tend to place greater emphasis on service-based restricted stock. The awards also reflect the Committee’s subjective judgment that long-term incentive earnings should be paid in shares. In determining numbers of performance shares to be targeted and SARs and RSUs to be awarded, the Committee values Applied’s shares based on data provided by Pay Governance. To reduce the impact of short-term stock price volatility, the valuation method uses an average closing share price for 90 trading days prior to the grant. The Grants of Plan-Based Awards table on page 45 shows the threshold, target, and maximum payouts for the performance shares, as well as the number of SARs and RSUs awarded to the NEOs. The following paragraphs describe the executive officers’ 2023 awards, as well as performance for the year under the performance share programs:

  71. 2023 LONG-TERM INCENTIVE AWARDS

    | • | Stock Appreciation Rights (22.5% of CEO’s Target Long-Term Incentive Value; 25% for Other NEOs) |

  72. 2023 LONG-TERM INCENTIVE AWARDS

    The Committee and management believe SARs are strong performance-based vehicles, as the awards’ value depends on Applied’s stock price growth; until Applied performs in a manner that is recognized by the stock market and creates gains for shareholders, SARs have no value to executives. The base stock price is the market closing price on the grant date. SARs have a ten-year term and vest 25% on each of the first four anniversaries of the grant date, subject to continuous employment with Applied, thereby promoting executive retention. The effects of retirement and other events on SARs and the other incentive vehicles are discussed in “Potential Payments upon Termination or Change in Control,” beginning on page 51. The Committee intends for SARs to align the interests of management and shareholders in achieving long-term growth in the value of Applied’s stock by using a form of award the value of which is determined primarily by long-term stock price appreciation. The four-year vesting period, ten-year term, and stock-settled nature of the SARs are consistent with this objective. Moreover, SARs are less dilutive than stock options, further protecting shareholder interests.

  73. 2023 LONG-TERM INCENTIVE AWARDS

    | Applied Industrial Technologies 2023 Proxy Statement | 35 |

  74. 2023 LONG-TERM INCENTIVE AWARDS

    | • | Restricted Stock Units (22.5% of CEO’s Target Long-Term Incentive Value; 25% for Other NEOs) |

  75. 2023 LONG-TERM INCENTIVE AWARDS

    RSUs are grants valued in shares of Applied stock, but shares are not issued to executives until the grants vest on the third anniversary of the award date, assuming continued employment with Applied. The Committee believes cliff vesting is more demanding than typical market practice, but appropriate considering the nature of the award. RSU grants under the 2019 Long-Term Performance Plan provide for the accrual of dividend equivalents and payment on vesting. The Committee considers RSUs to be a good tool for retaining executives. Because their value will increase or decrease over the three-year vesting period along with Applied’s stock, RSUs also promote efforts to maximize long-term shareholder return.

  76. 2023 LONG-TERM INCENTIVE AWARDS

    | • | 2023-2025 Performance Shares (55% of CEO’s Target Long-Term Incentive Value; 50% for Other NEOs) |

  77. 2023 LONG-TERM INCENTIVE AWARDS

    Performance shares provide incentives to achieve goals over a three-year period. At the beginning of a period, the Committee sets a target number of shares of Applied stock to be paid to each executive at the end of the period, assuming continued employment. The actual payout is then calculated, relative to the target, based on Applied’s achievement of objective goals. As a new three-year period begins, the Committee reviews the business plan and market outlook for each year of the period. Then, after also considering the independent consultant’s guidance as to market practices, the Committee determines performance measures and goal ranges at which payouts can be earned for each year; i.e., the goals for each year of a three-year period are established and approved at the start of the three-year period. Applied’s approach, as opposed to setting goals covering the full three-year period, reduces the risk that a year of over- or under-performance unduly influences payouts for the full three years. The Committee sets goals it believes are attainable without inappropriate risk-taking, but that still require executives to perform on a sustained basis at a consistently high level to achieve the targeted payout. Payouts can range from 0% to 200% of the target number of shares. The target payout is 100% of the target number assigned to the executive. The Grants of Plan-Based Awards table on page 45 shows the threshold, target, and maximum payouts for performance shares awarded in 2023. Because the payout is measured in shares, the award’s value depends on both the company’s operating performance and its stock price, motivating executives throughout the performance period with regard to both. For the 2023-2025 performance shares, consistent with prior years, the Committee set separate goals for each year of the period, with 75% of an award tied to Applied’s EBITDA and 25% to ROA. ROA improvements can be achieved by, among other things, increasing sales and margins, as well as improving working capital management, all of which are important objectives for industrial distributors. The Committee considered these metrics to be appropriate measures of management’s impact on operating performance and efficiency over a three-year period. The metrics also balanced the Management Incentive Plan’s emphasis on bottom-line results and cash flow. Each participant’s targeted number of shares for the three-year period is divided into one-third for each year. Shares awarded for achievement during a particular year are then “banked” for distribution at the end of the three-year term and do not affect the banking of shares for the other years.

  78. 2023 LONG-TERM INCENTIVE AWARDS

    | 36 | Applied Industrial Technologies 2023 Proxy Statement |

  79. 2023 LONG-TERM INCENTIVE AWARDS

    Using individual years’ performance makes achieving maximum awards for the full three-year period more difficult because results exceeding maximum goals in any one year do not make up for shortfalls in other years. The goals for the first year of the performance period, 2023, follow:

  80. 2023 LONG-TERM INCENTIVE AWARDS

    | EBITDA (weighted 75%) | Under $363.6 million | $363.6 million | $454.5 million | $568.1 million | | % of Prorated Portion of Target Share Award for 2023 | 0% | 50% | 100% | 200% | | ROA (weighted 25%) | Under 9.2% | 9.2% | 11.5% | 14.4% | | % of Prorated Portion of Target Share Award for 2023 | 0% | 50% | 100% | 200% |

  81. 2023 LONG-TERM INCENTIVE AWARDS

    Banked awards could range from 0% to 200% of the executive officers’ target share award values. The Committee established this range after considering Pay Governance’s guidance as to market practices. Awards for each performance measure were to be prorated on a straight-line proportional basis for results between the threshold 50%, 100%, and maximum 200% payout levels. The performance share terms provide the Committee the authority, in its sole discretion, to adjust performance achievements in order to prevent diminution or enlargement of the benefits intended to be conferred. After reviewing Applied’s reported financial results, the Committee excluded $6.2 million of income from the achievement calculations, reducing the actual amount compared to target. As a result of the 2023 achievements, as adjusted, participants banked awards, to be distributed in shares of Applied stock following the end of 2025, as follows:

  82. 2023 LONG-TERM INCENTIVE AWARDS

    | 2023 Goal | 2023 Adjusted Achievement | Banked Award as % of Target Performance Shares for 2023 | | EBITDA (weighted 75%) | $524.4 million | 161.6% | | ROA (weighted 25%) | 13.5% | 169.0% | | | | Overall: 163.4% |

  83. 2023 LONG-TERM INCENTIVE AWARDS

    | • | 2022-2024 Performance Shares (2023 performance) |

  84. 2023 LONG-TERM INCENTIVE AWARDS

    As described above, the Committee sets separate goals for each year of a three-year performance share program at the time the program is adopted. So, while 2023 was the first year of the 2023-2025 performance period, it was also the second year of the 2022-2024 performance period and the third year of the 2021-2023 performance period. For the 2022-2024 performance shares, the 2023 goals, adopted in August 2021, follow:

  85. 2023 LONG-TERM INCENTIVE AWARDS

    | EBITDA (weighted 75%) | Under $305.4 million | $305.4 million | $381.8 million | $477.3 million | | % of Prorated Portion of Target Share Award for 2023 | 0% | 50% | 100% | 200% | | ROA (weighted 25%) | Under 7.6% | 7.6% | 9.5% | 11.9% | | % of Prorated Portion of Target Share Award for 2023 | 0% | 50% | 100% | 200% |

  86. 2023 LONG-TERM INCENTIVE AWARDS

    | Applied Industrial Technologies 2023 Proxy Statement | 37 |

  87. 2023 LONG-TERM INCENTIVE AWARDS

    As a result of 2023 achievements, as adjusted, participants banked awards, to be distributed in shares of Applied stock following the end of 2024, as follows:

  88. 2023 LONG-TERM INCENTIVE AWARDS

    | | 2023 Adjusted Achievement | Banked Award as % of Target Performance Shares for 2023 | | EBITDA (weighted 75%) | $524.4 million | 200.0% | | ROA (weighted 25%) | 13.5% | 200.0% | | | | Overall: 200.0% |

  89. 2023 LONG-TERM INCENTIVE AWARDS

    The award banked for the program’s first year, 2022, as a percentage of target performance shares, was 178.9%.

  90. 2023 LONG-TERM INCENTIVE AWARDS

    | • | 2021-2023 Performance Shares (2023 performance) |

  91. 2023 LONG-TERM INCENTIVE AWARDS

    The goals for the final year of the 2021-2023 performance shares program, adopted in October 2020, follow:

  92. 2023 LONG-TERM INCENTIVE AWARDS

    | EBITDA (weighted 75%) | Under $232.2 million | $232.2 million | $290.3 million | $362.9 million | | % of Prorated Portion of Target Share Award for 2023 | 0% | 50% | 100% | 200% | | ROA (weighted 25%) | Under 5.2% | 5.2% | 6.5% | 8.1% | | % of Prorated Portion of Target Share Award for 2023 | 0% | 50% | 100% | 200% |

  93. 2023 LONG-TERM INCENTIVE AWARDS

    As a result of 2023 achievements, as adjusted, participants were awarded shares of Applied stock as follows:

  94. 2023 LONG-TERM INCENTIVE AWARDS

    | | 2023 Adjusted Achievement | Banked Award as % of Target Performance Shares for 2023 | | EBITDA (weighted 75%) | $524.4 million | 200.0% | | ROA (weighted 25%) | 13.3% | 200.0% | | | | Overall: 200.0% |

  95. 2023 LONG-TERM INCENTIVE AWARDS

    The awards banked for the program’s first two years, as a percentage of target performance shares, were 200.0% in each of 2021 and 2022. The average payout for the full three-year period was 200.0% of target. By comparison, the average payout for the full three-year period for the 2020-2022 performance shares was 97.3% of target. Qualified, Nonqualified, and Welfare Plan Benefits. Through the plans described below, we seek to provide benefits comparable to those available at Peer Group and other similarly sized companies. The Committee, with its independent consultant’s assistance, reviews executive-level benefits periodically and compares them with market information, considering executives’ positions and years of service.

  96. 2023 LONG-TERM INCENTIVE AWARDS

    | • | Qualified savings plan |

  97. 2023 LONG-TERM INCENTIVE AWARDS

    Applied maintains a defined contribution plan with a section 401(k) feature (the Retirement Savings Plan, or “RSP”) for eligible U.S. employees, including NEOs.

  98. 2023 LONG-TERM INCENTIVE AWARDS

    | 38 | Applied Industrial Technologies 2023 Proxy Statement |

  99. 2023 LONG-TERM INCENTIVE AWARDS

    | • | Nonqualified deferred compensation plans |

  100. 2023 LONG-TERM INCENTIVE AWARDS

    The Committee believes that providing competitive supplemental retirement benefits is important for executive recruitment and retention. Statutory limits exist, however, on the value of benefits executives can receive under the company’s qualified savings plan. Accordingly, Applied maintains the Key Executive Restoration Plan (the “KERP”), an unfunded, nonqualified deferred compensation plan. To participate in the KERP, an executive must be designated by the Committee or the Board. Applied credits a bookkeeping account for each participant with an amount equal to (i) 6.25% (unless the Committee or the Board specifies a different percentage) of the participant’s base salary and annual actual cash incentive pay for the calendar year, minus (ii) the amount of company contributions credited to the participant under the RSP. Account balances are deemed invested in mutual funds selected by the participant from a menu of diverse investment options. Because of the use of incentive pay in the KERP formula, company contributions are tied in part to Applied’s annual performance results. To be eligible for KERP account credits, participants must be employed on the last day of a year or have retired, died, or become disabled during the year. Unless otherwise determined by the Committee or the Board, credits to a participant’s account vest based on years of service with Applied, 25% per year. In addition, a participant will be 100% vested in the event of attainment of age 65, death, disability, or certain separations from service within one year after a change in control (as defined in the KERP). Each NEO participates in the KERP. The Committee set Mr. Schrimsher’s account credit percentage at 10%. Applied also maintains the Supplemental Defined Contribution Plan, which permits highly compensated U.S. employees to defer portions of their pay and to accumulate nonqualified savings. Applied does not contribute to the plan and participants are not provided above-market or guaranteed returns. We describe the plan, along with the KERP, more fully in “Nonqualified Deferred Compensation,” at pages 49-50.

  101. 2023 LONG-TERM INCENTIVE AWARDS

    | • | Welfare plans |

  102. 2023 LONG-TERM INCENTIVE AWARDS

    Applied maintains a contributory health care plan as well as life and disability insurance plans for U.S. employees. Executive officers may also participate in executive life and disability insurance programs. Applied provides continuation health care coverage, at the employee contribution rate, to executive officers who retire after reaching age 55, with at least ten years’ service, for the 18-month period under the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”). In addition, when the retiree attains age 65, Applied provides Medicare supplement coverage through a third-party policy. Individuals first elected as executive officers after 2012 are not eligible for these benefits. Mr. Schrimsher is the only remaining active eligible executive. Perquisites and Other Personal Benefits. Applied does not offer perquisites such as company automobiles or allowances, financial planning and tax services, or country clubs to the NEOs. Applied provides executive officers five weeks’ vacation per calendar year; other employees get five weeks when they reach 25 years of service. Unused vacation time is forfeited at the end of each calendar year. Change in Control and Termination Benefits. Upon his hire, Applied and Mr. Schrimsher entered into a CEO-level severance agreement providing termination benefits as described in “Potential Payments upon Termination or Change in Control,” beginning on page 51. Applied does not have employment contracts with the other NEOs, nor does it have an executive severance policy. The Committee retains discretion to determine

  103. 2023 LONG-TERM INCENTIVE AWARDS

    | Applied Industrial Technologies 2023 Proxy Statement | 39 |

  104. 2023 LONG-TERM INCENTIVE AWARDS

    severance benefits, if any, to be offered to the other NEOs if the company terminates their employment, other than in the circumstance of a change in control. The company has change in control agreements with Messrs. Schrimsher, Wells, and Loring. The arrangements are designed to retain executives and to promote management continuity if an actual or threatened change in control occurs. The Board approved the agreements primarily because it believes that the executives’ continued attention and dedication to their duties under the adverse circumstances attendant to a change or potential change in control are ultimately in the best interests of Applied and its shareholders. The agreements provide severance benefits if an executive’s employment is terminated by the officer for “good reason” or by Applied “without cause” (each as defined in the agreements) and the termination occurs within two years after a change in control. These “double trigger” arrangements are consistent with typical market practices. The executive, in turn, must not compete with Applied for three years following termination (one year under the older agreement). The change in control agreements do not provide for a gross-up for excise taxes. We describe the agreements more fully on pages 53-54 of this proxy statement.

  105. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    Summary Compensation Table — Fiscal Years 2023, 2022, and 2021 The following table summarizes information, for the years ended June 30, 2023, 2022, and 2021, regarding the compensation of Applied’s CEO, CFO, the three other most highly compensated executive officers at June 30, 2023, and a retired executive officer who would have been among the most highly compensated executive officers, but was not serving at the end of the year ended June 30, 2023.

  106. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) (4) | Total ($) | | Neil A. Schrimsher President & Chief Executive Officer | 2023 | 950,000 | 2,730,568 | 759,178 | 1,654,026 | 0 | 267,733 | 6,361,505 | | | 2022 | 930,000 | 2,389,762 | 608,682 | 1,640,520 | 0 | 271,870 | 5,840,834 | | | 2021 | 808,276 | 2,617,925 | 733,176 | 1,748,250 | 0 | 176,965 | 6,084,592 | | David K. Wells Vice President – Chief Financial Officer & Treasurer | 2023 | 490,000 | 526,804 | 169,106 | 536,040 | 0 | 65,715 | 1,787,665 | | | 2022 | 470,000 | 430,588 | 124,926 | 549,430 | 0 | 63,890 | 1,638,834 | | | 2021 | 424,305 | 443,920 | 141,963 | 529,100 | 0 | 47,308 | 1,586,596 | | Warren E. Hoffner | 2023 | 415,000 | 354,408 | 111,538 | 384,157 | 0 | 52,033 | 1,317,136 | | Vice President, | 2022 | 400,000 | 310,212 | 90,372 | 398,400 | 0 | 53,643 | 1,252,627 | | General Manager – Fluid Power & Flow Control | 2021 | 371,267 | 332,940 | 106,023 | 427,350 | 0 | 40,784 | 1,278,364 | | Kurt W. Loring Vice President – Chief Human Resources Officer | 2023 | 395,000 | 374,804 | 118,734 | 335,173 | 0 | 46,751 | 1,270,462 | | | 2022 | 380,000 | 327,184 | 95,688 | 346,940 | 0 | 47,618 | 1,197,430 | | | 2021 | 347,159 | 350,545 | 113,211 | 366,300 | 0 | 36,348 | 1,213,563 | | Jason W. Vasquez | 2023 | 350,000 | 293,608 | 93,548 | 332,388 | 0 | 40,379 | 1,109,923 | | Vice President – Sales & Marketing, U.S. Service Centers | 2022 | 325,000 | 249,631 | 71,766 | 300,300 | 0 | 15,021 | 961,718 | | Fred D. Bauer | 2023 | 261,333 | 364,800 | 118,734 | 285,109 | 214,621 | 186,980 | 1,431,577 | | Retired Vice | 2022 | 435,000 | 336,063 | 98,346 | 397,155 | 0 | 59,534 | 1,326,098 | | President – General Counsel & Secretary (5) | 2021 | 405,018 | 380,405 | 120,399 | 427,350 | 187,981 | 49,603 | 1,570,756 |

  107. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | (1) Amounts represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions used to determine the awards’ grant date fair values are described in the notes to Applied’s consolidated financial statements, included in our annual reports on Form 10-K for those years. The 2023 |

  108. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | 42 | Applied Industrial Technologies 2023 Proxy Statement |

  109. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | awards are described in the Compensation Discussion and Analysis beginning at page 34 and the Grants of Plan-Based Awards table at page 45. The amounts reported for 2023 in the Stock Awards column are totals of the following: |

  110. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | Name | RSUs ($) | Performance Shares ($) | | N. Schrimsher | 789,792 | 1,940,776 | | D. Wells | 176,664 | 350,140 | | W. Hoffner | 114,312 | 240,096 | | K. Loring | 124,704 | 250,100 | | J. Vasquez | 93,528 | 200,080 | | F. Bauer | 124,704 | 240,096 |

  111. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    Performance shares’ grant date fair values assume performance at the target achievement level. If instead it were assumed that the highest level of performance would be achieved, then the values would be twice the amounts reported for the performance shares.

  112. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | (2) Amounts shown reflect Management Incentive Plan earnings. |

  113. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | (3) Mr. Bauer participated in the Supplemental Executive Retirement Benefits Plan (“SERP”), a nonqualified defined benefit plan that was frozen in 2012. He was the last remaining active participant and was fully vested in his benefit. The amounts in this column reflect increases in the estimated actuarial present values of his historical accrued benefit. |

  114. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    The 2023 figure is the difference between the number in the Pension Benefits table on page 51 for 2023 year-end and the same item calculated for July 1, 2022. See the notes to that table for information about how estimated amounts were calculated. In 2012, the Committee stopped the accrual of additional plan benefits by virtue of years of service and compensation levels. Accordingly, the values in this column relate to changes in the discount rate and the components of the three-segment interest rate structure, as well as to mortality factor adjustments, as described below. The SERP uses interest rates and mortality tables imposed on tax-qualified pension plans by Internal Revenue Code (“Code”) section 417(e). The present value for 2023 reflects a 5.50% discount rate and the three-year installment payment stream beginning August 1, 2023, elected by Mr. Bauer. The three-year installment is actuarially equivalent to the lump sum value of his benefit determined using the three-segment interest rate structure in effect for January 2022; 1.41% for the first five years, 3.02% for the next 15 years, and 3.36% thereafter. The value for 2022 reflects a 4.50% discount rate and a three-segment interest rate structure in effect for January 2022, with 1.41% for the first five years, 3.02% for the next 15 years, and 3.36% thereafter. The value for 2021 reflects a 1.75% discount rate and a three-segment interest rate structure in effect for January 2021, with 0.50% for the first five years, 2.38% for the next 15 years, and 3.17% thereafter. In addition, in each successive year, the mortality table reflects adjustments pursuant to Code section 417(e). With the exception of fiscal 2023 which utilized Mr. Bauer’s final calculated benefits, present values were determined assuming zero probability of termination, retirement, death, or disability before normal retirement age (age 65).

  115. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | (4) Amounts in this column for 2023 are totals of the following: |

  116. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | • | Retirement Savings Plan (section 401(k) plan) matching contributions, |

  117. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | • | KERP account credits, |

  118. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | • | Company contributions for executive life insurance, for a $300,000 benefit, and |

  119. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | • | Estimated values of perquisites and other personal benefits. |

  120. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    Amounts relating to the following perquisites and other personal benefits provided to NEOs are included: annual expense related to post-retirement health care coverage for Messrs. Schrimsher (the only remaining active executive eligible for this benefit) and Bauer, company contributions for officer-level accident insurance benefits, and the items described in the next sentence. No perquisite or personal benefit exceeded the greater of $25,000 or 10% of the total amount of perquisites and personal benefits in 2023, except for the following items: upon his retirement, Mr. Bauer received a payout for unused accrued vacation of $43,076; and, post-retirement, Mr. Bauer earned legal consulting fees of $88,262.

  121. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | Applied Industrial Technologies 2023 Proxy Statement | 43 |

  122. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    The following table itemizes “All Other Compensation” for 2023:

  123. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | Name | Retirement Savings Plan Contributions ($) | Key Executive Restoration Plan Account Credits ($) | Gross-up Payments ($) | Life Insurance Benefits ($) | Perquisites and Other Personal Benefits ($) | | N. Schrimsher | 10,502 | 248,233 | 0 | 943 | 8,055 | | D. Wells | 10,550 | 54,046 | 0 | 1,064 | 55 | | W. Hoffner | 8,014 | 42,548 | 0 | 1,416 | 55 | | K. Loring | 10,475 | 35,620 | 0 | 601 | 55 | | J. Vasquez | 10,625 | 29,558 | 0 | 141 | 55 | | F. Bauer | 5,276 | 42,138 | 0 | 73 | 139,493 |

  124. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | (5) Mr. Bauer retired on January 31, 2023 and provided legal consulting services to Applied for two additional months. |

  125. Summary Compensation Table — Fiscal Years 2023, 2022, and 2021

    | 44 | Applied Industrial Technologies 2023 Proxy Statement |

  126. Grants of Plan-Based Awards — Fiscal Year 2023

    Grants of Plan-Based Awards — Fiscal Year 2023 In 2023, the Executive Organization & Compensation Committee awarded the following incentive opportunities and grants under the 2019 Long-Term Performance Plan to the NEOs:

  127. Grants of Plan-Based Awards — Fiscal Year 2023

    | Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number | All Other Option Awards: Number of Securities Underlying Options (#) | Base Price of Option Awards ($/Share) (4) | Grant Date Fair Value of Stock and Option Awards ($) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | of Units (#) (3) | | | | | N. Schrimsher | 8/9/2022 | | | | | | | 7,600 | | | 789,792 | | | 8/9/2022 | | | | | | | | 21,100 | 103.92 | 759,178 | | | 8/9/2022 (Perf. Shares) | | | | 9,700 | 19,400 | 38,800 | | | | | | | 8/9/2022 (Management Incentive Plan) | 522,500 | 1,045,000 | 2,090,000 | | | | | | | | | D. Wells | 8/9/2022 | | | | | | | 1,700 | | | 176,664 | | | 8/9/2022 | | | | | | | | 4,700 | 103.92 | 169,106 | | | 8/9/2022 (Perf. Shares) | | | | 1,750 | 3,500 | 7,000 | | | | | | | 8/9/2022 (Management Incentive Plan) | 171,500 | 343,000 | 686,000 | | | | | | | | | W. Hoffner | 8/9/2022 | | | | | | | 1,100 | | | 114,312 | | | 8/9/2022 | | | | | | | | 3,100 | 103.92 | 111,538 | | | 8/9/2022 (Perf. Shares) | | | | 1,200 | 2,400 | 4,800 | | | | | | | 8/9/2022 (Management Incentive Plan) | 124,500 | 249,000 | 498,000 | | | | | | | | | K. Loring | 8/9/2022 | | | | | | | 1,200 | | | 124,704 | | | 8/9/2022 | | | | | | | | 3,300 | 103.92 | 118,734 | | | 8/9/2022 (Perf. Shares) | | | | 1,250 | 2,500 | 5,000 | | | | | | | 8/9/2022 (Management Incentive Plan) | 108,625 | 217,250 | 434,500 | | | | | | | | | J. Vasquez | 8/9/2022 | | | | | | | 900 | | | 93,528 | | | 8/9/2022 | | | | | | | | 2,600 | 103.92 | 93,548 | | | 8/9/2022 (Perf. Shares) | | | | 1,000 | 2,000 | 4,000 | | | | | | | 8/9/2022 (Management Incentive Plan) | 105,000 | 210,000 | 420,000 | | | | | | | | | F. Bauer | 8/9/2022 | | | | | | | 1,200 | | | 124,704 | | | 8/9/2022 | | | | | | | | 3,300 | 103.92 | 118,734 | | | 8/9/2022 (Perf. Shares) | | | | 1,200 | 2,400 | 4,800 | | | | | | | 8/9/2022 (Management Incentive Plan) | 123,200 | 246,400 | 492,800 | | | | | | | |

  128. Grants of Plan-Based Awards — Fiscal Year 2023

    | (1) The 2023 Management Incentive Plan is described in the Compensation Discussion and Analysis at pages 32-34. Payouts under the plan are shown in the column marked “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table. |

  129. Grants of Plan-Based Awards — Fiscal Year 2023

    | Applied Industrial Technologies 2023 Proxy Statement | 45 |

  130. Grants of Plan-Based Awards — Fiscal Year 2023

    | (2) The 2023-2025 performance shares program is described in the Compensation Discussion and Analysis at pages 36-37. |

  131. Grants of Plan-Based Awards — Fiscal Year 2023

    | (3) RSUs are described in the Compensation Discussion and Analysis at page 36. |

  132. Grants of Plan-Based Awards — Fiscal Year 2023

    | (4) SARs are described in the Compensation Discussion and Analysis at page 35. Their base price is our stock’s closing price on the NYSE on the grant date. |

  133. Outstanding Equity Awards at Fiscal 2023 Year-End

    Outstanding Equity Awards at Fiscal 2023 Year-End The table below presents information about the NEOs’ outstanding SARs, RSUs, and performance shares on June 30, 2023.

  134. Outstanding Equity Awards at Fiscal 2023 Year-End

    | Name | Option Awards | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/ Share) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#) | Market Value of Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested ($) | | N. Schrimsher | 42,700 | 0 | 74.55 | 8/9/2028 | | | | | | | 20,400 | 20,400(2) | 69.05 | 8/11/2030 | | | | | | | 5,725 | 17,175(3) | 88.79 | 8/10/2031 | | | | | | | 0 | 21,100(4) | 103.92 | 8/9/2032 | | | | | | | | | | | 12,500(5) | 1,810,375 | 65,600(6) | 9,500,848 | | | | | | | 7,800(7) | 1,129,674 | 31,927(8) | 4,623,987 | | | | | | | 7,600(9) | 1,100,708 | 23,500(10) | 3,403,505 | | D. Wells | 27,000 | 0 | 57.85 | 6/21/2027 | | | | | | | 9,200 | 0 | 54.90 | 8/10/2027 | | | | | | | 7,500 | 0 | 74.55 | 8/9/2028 | | | | | | | 8,700 | 2,900(1) | 53.87 | 8/13/2029 | | | | | | | 3,950 | 3,950(2) | 69.05 | 8/11/2030 | | | | | | | 1,175 | 3,525(3) | 88.79 | 8/10/2031 | | | | | | | 0 | 4,700(4) | 103.92 | 8/9/2032 | | | | | | | | | | | 2,400(5) | 347,592 | 10,400(6) | 1,506,232 | | | | | | | 1,600(7) | 231,728 | 5,428(8) | 786,137 | | | | | | | 1,700(9) | 246,211 | 4,240(10) | 614,079 | | W. Hoffner | 5,400 | 0 | 74.55 | 8/9/2028 | | | | | | | 0 | 2,175(1) | 53.87 | 8/13/2029 | | | | | | | 0 | 2,950(2) | 69.05 | 8/11/2030 | | | | | | | 850 | 2,550(3) | 88.79 | 8/10/2031 | | | | | | | 0 | 3,100(4) | 103.92 | 8/9/2032 | | | | | | | | | | | 1,800(5) | 260,694 | 7,800(6) | 1,129,674 | | | | | | | 1,200(7) | 173,796 | 3,831(8) | 554,844 | | | | | | | 1,100(9) | 159,313 | 2,907(10) | 421,021 |

  135. Outstanding Equity Awards at Fiscal 2023 Year-End

    | 46 | Applied Industrial Technologies 2023 Proxy Statement |

  136. Outstanding Equity Awards at Fiscal 2023 Year-End

    | Name | Option Awards | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($/ Share) | Option Expiration Date | Number of Units of Stock That Have Not Vested (#) | Market Value of Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested ($) | | K. Loring | 11,000 | 0 | 38.36 | 8/11/2025 | | | | | | | 12,100 | 0 | 48.19 | 8/11/2026 | | | | | | | 8,000 | 0 | 54.90 | 8/10/2027 | | | | | | | 6,200 | 0 | 74.55 | 8/9/2028 | | | | | | | 6,975 | 2,325(1) | 53.87 | 8/13/2029 | | | | | | | 3,150 | 3,150(2) | 69.05 | 8/11/2030 | | | | | | | 900 | 2,700(3) | 88.79 | 8/10/2031 | | | | | | | 0 | 3,300(4) | 103.92 | 8/9/2032 | | | | | | | | | | | 1,900(5) | 275,177 | 8,200(6) | 1,187,606 | | | | | | | 1,200(7) | 173,796 | 4,151(8) | 601,189 | | | | | | | 1,200(9) | 173,796 | 3,029(10) | 438,690 | | J. Vasquez | 9,300 | 0 | 54.90 | 8/10/2027 | | | | | | | 10,000 | 0 | 74.55 | 8/9/2028 | | | | | | | 11,550 | 3,850(1) | 53.87 | 8/13/2029 | | | | | | | 675 | 2,025(3) | 88.79 | 8/10/2031 | | | | | | | 0 | 2,600(4) | 103.92 | 8/9/2032 | | | | | | | | | | | 5,300(11) | 767,599 | | | | | | | | | 900(7) | 130,347 | 3,193(8) | 462,442 | | | | | | | 900(9) | 130,347 | 2,423(10) | 350,923 | | F. Bauer (12) | 8,700 | 0 | 54.90 | 3/31/2026 | | | | | | | 6,700 | 0 | 74.55 | 3/31/2026 | | | | | | | 9,800 | 0 | 53.87 | 3/31/2026 | | | | | | | 6,700 | 0 | 69.05 | 3/31/2026 | | | | | | | 3,700 | 0 | 88.79 | 3/31/2026 | | | | | | | 3,300 | 0 | 103.92 | 3/31/2026 | | | | | | | | | | | 1,847(5) | 267,501 | 8,070(6) | 1,168,778 | | | | | | | 710(7) | 102,829 | 2,853(8) | 413,200 | | | | | | | 257(9) | 37,221 | 982(10) | 142,223 |

  137. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (1) These SARs vested on August 13, 2023. |

  138. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (2) Half of these SARs vested on August 11, 2023. The remaining SARs vest on August 11, 2024. |

  139. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (3) One third of these SARs vested on August 10, 2023. The remaining SARs vest in equal increments on August 10, 2024 and 2025. |

  140. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (4) One quarter of these SARs vested on August 9, 2023. The remaining SARs vest in equal increments on August 9, 2024, 2025, and 2026. |

  141. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (5) These RSUs vested on August 11, 2023. |

  142. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (6) These awards are the 2021-2023 performance shares described in the Compensation Discussion and Analysis at page 38. The performance period ended on June 30, 2023, and performance for the final year was certified on August 8, 2023. |

  143. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (7) These RSUs vest on August 10, 2024. |

  144. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (8) These awards are the 2022-2024 performance shares described in the Compensation Discussion and Analysis at pages 37-38. The performance period ends on June 30, 2024. The amounts shown include performance shares banked for 2022 and 2023, and targeted for 2024. |

  145. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (9) These RSUs vest on August 9, 2025. |

  146. Outstanding Equity Awards at Fiscal 2023 Year-End

    | Applied Industrial Technologies 2023 Proxy Statement | 47 |

  147. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (10) These awards are the 2023-2025 performance shares described in the Compensation Discussion and Analysis at pages 36-37. The performance period ends on June 30, 2025. The amounts shown include performance shares banked for 2023 and targeted for 2024 and 2025. |

  148. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (11) These RSUs vest on August 11, 2024. |

  149. Outstanding Equity Awards at Fiscal 2023 Year-End

    | (12) Mr. Bauer retired from Applied on January 31, 2023. Pursuant to the award terms, his performance shares and RSUs vested on a prorated basis pegged to the portion of the three-year terms during which he worked (and company performance, in the case of performance shares), and his unvested SARs vested in full. He provided legal consulting services to the company for two months after his retirement under an agreement, pursuant to which he was granted two months’ additional service credit for his awards. The SARs’ expiration dates are truncated to March 31, 2026. |

  150. Option Exercises and Stock Vested — Fiscal Year 2023

    Option Exercises and Stock Vested — Fiscal Year 2023 The following table shows the value realized in 2023 by the NEOs on the exercise of SARs and the vesting of RSUs and banked performance shares.

  151. Option Exercises and Stock Vested — Fiscal Year 2023

    | Name | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | N. Schrimsher | 97,925 | 8,829,166 | 38,934 | 4,150,631 | | D. Wells | 0 | 0 | 6,480 | 693,373 | | W. Hoffner | 15,675 | 984,108 | 4,909 | 525,359 | | K. Loring | 19,900 | 1,335,688 | 5,204 | 556,967 | | J. Vasquez | 0 | 0 | 1,400 | 158,802 | | F. Bauer | 13,200 | 1,089,528 | 5,596 | 598,654 |

  152. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation Applied maintains two nonqualified, unfunded defined contribution plans for key employees, including executive officers. Eligibility is limited to highly compensated or select management employees whose benefits under the Retirement Savings Plan (“RSP”) are subject to certain Internal Revenue Code (“Code”) limitations.

  153. Nonqualified Deferred Compensation — Fiscal Year 2023

    Nonqualified Deferred Compensation — Fiscal Year 2023 The following table presents contributions, earnings, distributions, and balance information for the NEOs’ Key Executive Restoration Plan and Supplemental Defined Contribution Plan accounts for 2023.

  154. Nonqualified Deferred Compensation — Fiscal Year 2023

    | Name and Plan | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) (1) | Aggregate Earnings (Losses) in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | | N. Schrimsher | | | | | | | Key Executive Restoration Plan | 0 | 236,193 | 341,268 | 0 | 2,834,459 | | Supplemental Defined Contribution Plan | 567,130 | 0 | 706,566 | 0 | 5,381,753 | | D. Wells | | | | | | | Key Executive Restoration Plan | 0 | 51,425 | 17,748 | 0 | 240,262 | | Supplemental Defined Contribution Plan | 0 | 0 | 25,468 | 0 | 186,989 | | W. Hoffner | | | | | | | Key Executive Restoration Plan | 0 | 41,548 | 42,564 | 0 | 297,517 | | K. Loring | | | | | | | Key Executive Restoration Plan | 0 | 33,892 | 28,167 | 0 | 289,478 | | Supplemental Defined Contribution Plan | 83,339 | 0 | 27,623 | 0 | 318,213 | | J. Vasquez | | | | | | | Key Executive Restoration Plan | 0 | 28,125 | 3,002 | 0 | 35,946 | | F. Bauer | | | | | | | Key Executive Restoration Plan | 0 | 39,357 | 57,428 | 0 | 479,103 | | Supplemental Defined Contribution Plan | 53,067 | 0 | 44,317 | (101,853) | 514,222 |

  155. Nonqualified Deferred Compensation — Fiscal Year 2023

    | (1) Key Executive Restoration Plan credits are shown net of withholding for certain taxes. The gross amounts are shown as a component of “All Other Compensation” in note (4) to the Summary Compensation Table on pages 43-44. |

  156. Pension Benefits — Fiscal 2023 Year-End

    Pension Benefits — Fiscal 2023 Year-End The following table shows the present value of accumulated benefits payable to the NEOs under the SERP.

  157. Pension Benefits — Fiscal 2023 Year-End

    | Name | Plan Name | Number of Years Credited Service (#) (1) | Present Value of Accumulated Benefit ($) (2) (3) | Payments during Last Fiscal Year ($) | | N. Schrimsher | — | — | — | — | | D. Wells | — | — | — | — | | W. Hoffner | — | — | — | — | | K. Loring | — | — | — | — | | J. Vasquez | — | — | — | — | | F. Bauer | SERP | 19.3 | 3,379,966 | 0 |

  158. Pension Benefits — Fiscal 2023 Year-End

    | (1) In 2012, the Committee stopped the accrual of additional plan benefits by virtue of years of service and compensation levels. |

  159. Pension Benefits — Fiscal 2023 Year-End

    | (2) This figure is the single-sum value as of June 30, 2023, of the participant’s elected benefit form of payment at his known benefit commencement date, discounted at the plan’s U.S. GAAP discount rate of 5.50%. Details of the benefit calculation and present value represented above are as follows: |

  160. Pension Benefits — Fiscal 2023 Year-End

    | • | Mr. Bauer commenced retirement on February 1, 2023 and will begin payment on August 1, 2023. |

  161. Pension Benefits — Fiscal 2023 Year-End

    | • | A lump sum value as of August 1, 2023 was determined using Pension Protection Act 2022 Optional Combined Unisex Mortality Table and a 3-segment interest rate structure using 1.41% for the first 5 years, 3.02% for the next 15 years, and 3.36% thereafter. |

  162. Pension Benefits — Fiscal 2023 Year-End

    | • | The lump sum value as of August 1, 2023 was divided into three equal installment payments, due according to the following schedule, with interest accruals at the first segment rate (1.41%) for the second and third installment payment: |

  163. Pension Benefits — Fiscal 2023 Year-End

    | ○ | $1,162,888.88 on August 1, 2023; |

  164. Pension Benefits — Fiscal 2023 Year-End

    | ○ | $1,178,011.72 on July 1, 2024; and |

  165. Pension Benefits — Fiscal 2023 Year-End

    | ○ | $1,194,621.69 on July 1, 2025. |

  166. Pension Benefits — Fiscal 2023 Year-End

    | • | This payment stream was discounted at a rate of 5.50%, the ASC 715 discount rate as of June 30, 2023. |

  167. Pension Benefits — Fiscal 2023 Year-End

    | (3) SERP benefits are not subject to deductions for Social Security benefits or other material offset amounts. |

  168. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control The summaries and tables in this section describe compensation and benefits that would have been payable to the NEOs on June 30, 2023, if, as of that date, there had occurred

  169. Potential Payments upon Termination or Change in Control

    | • | A termination of the executive’s employment with Applied prior to a change in control, |

  170. Potential Payments upon Termination or Change in Control

    | • | A termination of employment due to death, disability, or retirement, |

  171. Potential Payments upon Termination or Change in Control

    | • | A change in control of Applied, or |

  172. Potential Payments upon Termination or Change in Control

    | • | A termination of employment following a change in control. |

  173. Potential Payments upon Termination or Change in Control

    Compensation and benefits earned or accrued prior to the event, and not contingent on the event’s occurrence, are not included in the summaries or tables.

  174. Potential Payments upon Termination or Change in Control

    | Applied Industrial Technologies 2023 Proxy Statement | 51 |

  175. CEO Pay Ratio Disclosure

    CEO Pay Ratio Disclosure As permitted by SEC rules, to identify our median associate we used a consistently applied compensation measure of total cash pay earned during the twelve months ended April 30, 2022, for approximately 6,000 full and part-time associates (not including the CEO) employed as of April 30, 2022. We annualized pay for those associates who commenced work during the period. Once we identified a median associate, we calculated total compensation for the median associate and the CEO for fiscal 2023 based on the compensation elements required for inclusion in the Summary Compensation Table on page 42, except for also incorporating the estimated company cost of certain Applied-provided basic health and welfare benefits. As a result, the CEO’s total compensation for purposes of this calculation differs from that described in the Summary Compensation Table by the amount of these benefits. The median associate’s estimated total compensation for 2023 was $84,632 (including estimated health and welfare benefits of $19,516) and the CEO’s total compensation for purposes of the ratio was $6,399,305. The ratio of CEO pay to median associate pay is 76:1. We believe the pay ratio disclosed above is a reasonable estimate calculated in accordance with SEC rules, based on our records and the method described above. The rules for identifying the median employee and calculating the pay ratio allow companies to use a variety of methods and apply various assumptions, which may result in significant differences in the results reported. Accordingly, the pay ratios reported by other companies may not be comparable to the pay ratio we report above.

  176. CEO Pay Ratio Disclosure

    | 58 | Applied Industrial Technologies 2023 Proxy Statement |

  177. Pay Versus Performance Disclosure

    Pay Versus Performance Disclosure This disclosure has been prepared in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K under the 1934 Act (“Item 402(v)”) and does not necessarily reflect value actually realized by the NEOs or how the Executive Organization & Compensation Committee evaluates compensation decisions in light of Applied’s or individual performance. For discussion of how the Executive Organization & Compensation Committee seeks to align pay with performance when making compensation decisions, please review the Compensation Discussion and Analysis beginning on page 24. The following tables and related disclosures provide information concerning (i) the total compensation of our principal executive officer (“PEO”) and our non-PEO Named Executive Officers (collectively, the “Other NEOs”) as presented in the Summary Compensation Table on page 42, (ii) the “compensation actually paid” (“CAP”) to our PEO and our Other NEOs, as calculated pursuant to Item 402(v), (iii) certain financial performance measures, and (iv) the relationship of the CAP to those financial performance measures.

  178. Pay Versus Performance Disclosure

    | | Summary Compensation Table (SCT) Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (1, 2) | Average SCT Total for Other NEOs ($) (1) | Average Compensation Actually Paid to Other NEOs ($) (1, 2) | Value of Initial Fixed $100 Investment Based On: | | Net | Adjusted EBITDA ($) (5) | | Year | | | | | Company TSR ($) | Peer Group TSR ($) (3) | Income ($) (4) | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 6,361,505 | 17,661,702 | 1,383,353 | 2,666,450 | 241.87 | 185.01 | 346,739 | 524,421 | | 2022 | 5,840,834 | 8,823,200 | 1,353,747 | 1,776,726 | 158.89 | 129.96 | 257,414 | 408,949 | | 2021 | 6,084,592 | 11,107,443 | 1,412,320 | 2,139,081 | 148.43 | 134.03 | 144,757 | 310,121 |

  179. Pay Versus Performance Disclosure

    | (1) Neil A. Schrimsher was our PEO for each year presented. The individuals comprising the Other NEOs for each year presented are listed below: |

  180. Pay Versus Performance Disclosure

    | (i) 2023 – David K. Wells, Warren E. Hoffner, Kurt W. Loring, Jason W. Vasquez, and Fred D. Bauer. |

  181. Pay Versus Performance Disclosure

    | (ii) 2022 and 2021 – David K. Wells, Fred D. Bauer, Warren E. Hoffner, and Kurt W. Loring. |

  182. Pay Versus Performance Disclosure

    | (2) The tables below show the adjustments, each of which is required by SEC rules, to calculate CAP amounts from the SCT Total of our PEO and our Other NEOs. These amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v). |

  183. PEO SCT Total to CAP Reconciliation

    | Year | SCT Total ($) | Deductions from SCT Total ($) | Additions to SCT Total ($) | Compensation Actually Paid ($) | | | | (i) | (ii) | | | 2023 | 6,361,505 | 3,489,746 | 14,789,943 | 17,661,702 | | 2022 | 5,840,834 | 2,998,444 | 5,980,810 | 8,823,200 | | 2021 | 6,084,592 | 3,351,101 | 8,373,952 | 11,107,443 |

  184. NEOs SCT Total to CAP Reconciliation

    | Year | SCT Total ($) | Deductions from SCT Total ($) | Additions to SCT Total ($) | Compensation Actually Paid ($) | | | | (i) | (ii) | | | 2023 | 1,383,353 | 505,217 | 1,788,314 | 2,666,450 | | 2022 | 1,353,747 | 453,345 | 876,324 | 1,776,726 | | 2021 | 1,412,320 | 497,352 | 1,224,113 | 2,139,081 |

  185. Required Tabular Disclosure of Most Important Financial Performance Measures to Determine 2023 Compensation Actually Paid

    Required Tabular Disclosure of Most Important Financial Performance Measures to Determine 2023 Compensation Actually Paid The following table presents the financial performance measures that we consider to have been the most important in linking CAP to our PEO and Other NEO for 2023 to performance, as further described in the Compensation Discussion and Analysis in the sections entitled “Annual Incentive Pay” and “Long-Term Incentives.” The measures in this table are not ranked.

  186. Required Tabular Disclosure of Most Important Financial Performance Measures to Determine 2023 Compensation Actually Paid

    | 2023 Most Important Performance Measures | | Net Income | | Adjusted EBITDA | | Average Working Capital as a Percentage of Sales | | ROA |

  187. Required Tabular Disclosure of Most Important Financial Performance Measures to Determine 2023 Compensation Actually Paid

    | 60 | Applied Industrial Technologies 2023 Proxy Statement |

  188. Relationship Between Compensation Actually Paid and Performance

    Relationship Between Compensation Actually Paid and Performance The graphs below show (i) the relationship between Applied’s TSR and that of Peer Group, and (ii) the relationship of CAP to our PEO and Other NEOs to (a) Applied’s TSR; (b) Applied’s Net Income; and (c) Applied’s Adjusted EBITDA.