DEF 14A of Smith A O Corp, Feb 29, 2024

DEF 14A of Smith A O Corp

Filed Feb 29, 2024 · FY20230001193125-24-051896

Open on EDGAR

  1. PROXY STATEMENT FOR 2024 ANNUAL MEETING

    | Summary Compensation Table | 39 | | Components of 2023 All Other Compensation | 40 | | Grants of Plan-Based Awards | 41 | | Outstanding Equity Awards at December 31, 2023 | 42 | | Option Exercises and Stock Vested | 43 | | Pension Benefits | 43 | | Non-qualified Deferred Compensation | 44 | | Termination of Employment and Change in Control Arrangements | 45 | | REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE | 49 | | PAY VERSUS PERFORMANCE DISCLOSURE | 50 | | PAY RATIO DISCLOSURE | 55 | | ADVISORY VOTE TO APPROVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | 56 | | REPORT OF THE AUDIT COMMITTEE | 57 | | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 59 | | REPORT OF THE NOMINATING AND GOVERNANCE COMMITTEE | 60 | | DATES FOR STOCKHOLDER PROPOSALS | 61 | | STOCKHOLDER PROPOSAL REQUESTING A BOARD REPORT ON OUR HIRING PRACTICES WITH RESPECT TO FORMERLY INCARCERATED PEOPLE | 62 |

  2. NOMINEES – CLASS A COMMON STOCK

    NOMINEES – CLASS A COMMON STOCK

  3. NOMINEES – CLASS A COMMON STOCK

    | RONALD D. BROWN Retired Chairman and Chief Executive Officer, Milacron, Inc. | | | | Director since: 2001 Age: 70 Committees: • Personnel and Compensation (Chair) • Nominating and Governance | Director Biography: Mr. Brown served as interim president and chief executive officer of Cincinnati Incorporated, a privately held U.S.-based machine tool manufacturer, from July 2020 to December 2020 and interim chief executive officer of LSI Industries Inc., a U.S.-based manufacturer of lighting and graphics, from April 2018 to October 2018. Mr. Brown served from March 2017 to April 2018 as vice chairman of The Armor Group, Inc., which he joined in 2013 as chief operating officer. The Armor Group, Inc. is a certified woman-owned corporation that manufactures equipment and products for a variety of industrial markets. Mr. Brown was chairman and chief executive officer of Milacron Inc. from 2001 to 2008. Milacron Inc. is a supplier of plastic processing and metalworking fluid technologies. Mr. Brown serves on the board of LSI Industries, Inc., where he is chair of the Compensation Committee and a member of its Executive Committee. Mr. Brown served on the board of Zep Inc., where he was chairman of the Compensation Committee and a member of the Nominating and Corporate Governance Committee, from 2010 until it was acquired by New Mountain Capital in 2015. In addition, Mr. Brown was appointed by then Governor Kasich to the University of Cincinnati Board of Trustees in 2013 and was its chairman from 2019 to 2021. | Skills and Qualifications: Mr. Brown’s broad executive-level financial and operating experience with several publicly traded companies provides valuable insight for us as to the issues and opportunities facing our company. He has experience as a chief executive officer, chief financial officer and a corporate attorney. Further, he has international and manufacturing experience with LSI Industries, The Armor Group and Milacron. In addition, his experience as a director of other publicly traded companies brings a different perspective to our Board. |

  4. NOMINEES – CLASS A COMMON STOCK

    | TODD W. FISTER Chief Financial Officer, Owens Corning | | | | Director Nominee Age: 49 Committee: • Audit (starting after the Annual Meeting) | Director Biography: Mr. Fister became chief financial officer of Owens Corning, a global manufacturer of building and composite material systems, in September 2023. Since joining Owens Corning in 2014, Mr. Fister has held several executive-level positions, including president of Owens Corning’s insulation segment from 2019 to 2023; vice president of global insulation and strategy, and managing director of Foamglas and European insulation. He also serves as a member of Owens Corning’s Executive Committee. Prior to joining Owens Corning, Mr. Fister spent seven years at Mead/Westuaco (now known as WestRock) in roles of increasing responsibility. A third-party search firm recommended Mr. Fister to the Nominating and Governance Committee, which considered Mr. Fister and recommended to the Board that Mr. Fister be nominated as a director. | Skills and Qualifications: Mr. Fister is a seasoned executive with broad financial, operational and strategic experience at Fortune 500 companies. He brings both a global and customer perspective. Further, with his strong financial background, Mr. Fister is qualified as an audit committee financial expert under SEC regulations. |

  5. NOMINEES – CLASS A COMMON STOCK

    | LOIS MARTIN Chief Financial Officer, M.A. Mortenson Companies, Inc. | | | | Director Nominee Age: 61 Committee: • Audit (starting after the Annual Meeting) | Director Biography: Since 2017, Ms. Martin has been the chief financial officer of M.A. Mortenson Companies, a privately held general contractor engaged in major construction projects nationwide. Ms. Martin has more than 30 years of financial experience. Prior to M.A. Mortenson Companies, she was executive vice president and chief financial officer at Ceridian Corporation from 2012 to 2017; chief financial officer at Capella University from 2004 to 2008; executive vice president and chief financial officer at World Data Products from 2002 to 2004; and senior vice president and chief financial officer at Deluxe Corporation from 2000 to 2001. Ms. Martin joined Deluxe in 1993 and served as chief financial officer from 1993 to 2001, along with various executive positions. Ms. Martin has been a director of Donnelley Financial Solutions, Inc. since 2016 and serves as chair of its Audit Committee. She previously served as a director of Raven Industries, Inc. from 2018 to 2021, ADC Telecommunications from 2004 to 2010 and MTS Systems from 2006 to 2010. Ms. Martin began her career in public accounting as an auditor at PricewaterhouseCoopers LLP. A third-party search firm recommended Ms. Martin to the Nominating and Governance Committee, which considered Ms. Martin and recommended to the Board that Ms. Martin be nominated as a director. | Skills and Qualifications: Ms. Martin brings extensive executive-level financial experience to our company. With her extensive financial experience, including at publicly traded companies, she qualifies as an audit committee financial expert under SEC regulations. In addition, Ms. Martin brings gender diversity to our board. |

  6. NOMINEES – CLASS A COMMON STOCK

    | AJITA G. RAJENDRA Retired Executive Chairman of the Board, A. O. Smith Corporation | | | | Director since: 2011 Age: 72 | Director Biography: Mr. Rajendra was executive chairman of our company from 2018 until his retirement in 2020. Mr. Rajendra previously served as chairman and chief executive officer from 2017 to 2018; chairman, president and chief executive officer from 2014 to 2017; president and chief executive officer from 2013 to 2014; and president and chief operating officer from 2011 to 2012. Mr. Rajendra joined the company as president of A. O. Smith Water Products Company in 2005 and was named executive vice president of the company in 2006. Prior to joining the company, Mr. Rajendra was senior vice president at Kennametal, Inc., a manufacturer of cutting tools, from 1998 to 2004. Mr. Rajendra also serves on the board of Donaldson Company, Inc., where he is chair of the Human Resources Committee, and on the board of The Timken Company, where he serves on the Audit Committee and chairs the Compensation Committee. In recognition of Mr. Rajendra’s extensive experience and contributions, the Board has waived the normal director retirement age of 72 in our Corporate Governance Guidelines so that Mr. Rajendra may stand for re-election and continue to serve if elected at the Annual Meeting. | Skills and Qualifications: Mr. Rajendra’s extensive manufacturing and international experience and service to our company as our former chairman and chief executive officer, and in various other senior executive positions, brings to the Board knowledge and insight as to our company’s global operations and a thorough understanding of our products and markets. Further, Mr. Rajendra has experience as a director of other publicly traded companies. As an added benefit, Mr. Rajendra brings ethnic diversity to our Board. |

  7. NOMINEES – CLASS A COMMON STOCK

    | MARK D. SMITH Retired Business Manager, Strattec Security Corporation | | | | Director since: 2001 Age: 62 Committees: • Nominating and Governance • Personnel and Compensation | Director Biography: Mr. Smith served as a product business manager for Strattec Security Corporation from 1997 until his retirement in 2019. Strattec Security Corporation designs, develops, manufactures and markets automotive access control products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches and related access control products for major automotive manufacturers. In 2019, Mr. Smith was appointed one of three trustees of the Smith Family Voting Trust, which holds a controlling position in the stock of our company. Mr. Smith is also a first cousin of Robert L. Smith and Bruce M. Smith, who are trustees of the Smith Family Voting Trust. | Skills and Qualifications: Mr. Smith is experienced in managing the operations of a manufacturing business, both at Strattec and previously with our company. Further, an important aspect of his position at Strattec was managing key customer relationships, and he brings this orientation to his service on our Board. Based on his long service to our company, both as a director and as an employee early in his career, Mr. Smith is knowledgeable of company history and culture, and understands our long-term strategic and tactical plans. Mr. Smith is also a member of the Smith family, which holds a controlling interest in the stock of our company. |

  8. NOMINEES – CLASS A COMMON STOCK

    | KEVIN J. WHEELER Chairman, President and Chief Executive Officer, A. O. Smith Corporation | | | | Director since: 2017 Age: 64 | Director Biography: Mr. Wheeler became chairman of our company in 2020 and president and chief executive officer of our company in 2018. From 2017 to 2018, he was president and chief operating officer of our company. From 2013 to 2017, Mr. Wheeler held the position of senior vice president of A. O. Smith Corporation and president and general manager of its North America, India, Europe Water Heating and Export business, which was then the company’s largest operating unit. Mr. Wheeler previously served as managing director of our company’s European operations, where he had responsibility for water heater business in Europe and the Middle East, and upon his return to the United States from the Netherlands, served as vice president-international, with responsibility for all European and Asian operations, including China. Mr. Wheeler joined the company in 1994 as a regional sales manager and has held positions of increasing responsibility. Mr. Wheeler also serves on the board of Graco Inc., where he is a member of the Audit Committee and the Management Organization and Compensation Committee. | Skills and Qualifications: Mr. Wheeler has extensive sales, manufacturing and international experience in various executive positions with our company, most recently as our chief executive officer, and brings to the Board a thorough understanding of our people, products and markets worldwide. Mr. Wheeler has cybersecurity experience. Further, Mr. Wheeler has experience as a director of another publicly traded company, which brings a different perspective to our Board. |

  9. NOMINEES – COMMON STOCK

    NOMINEES – COMMON STOCK

  10. NOMINEES – COMMON STOCK

    | VICTORIA M. HOLT Retired Director, President and Chief Executive Officer, Proto Labs, Inc. | | | | Director since: 2021 Age: 66 Committees: • Nominating and Governance (Chair) • Personnel and Compensation | Director Biography: Ms. Holt served as the president and chief executive officer of Proto Labs, Inc., a manufacturer of custom prototypes and on-demand product parts with manufacturing facilities in five countries, until her retirement in 2021. Ms. Holt previously served as president and chief executive officer of Spartech Corporation, a leading provider of plastic sheet, compounds and packaging products, from 2010 until its sale to PolyOne in 2013. Prior to Spartech, Ms. Holt was the senior vice president, Glass & Fiberglass at PPG Industries, Inc., a leading coatings and specialty products company, from 2003 to 2010. She also served as a director of Proto Labs, Inc. from 2014 to 2021, when she retired from the company. Ms. Holt serves on the board of Waste Management, Inc., where she is a member of the Audit Committee and the Nominating and Governance Committee. She is also a director of Piper Sandler Companies, where she is a member of the Audit Committee and the Compensation Committee. Ms. Holt was an independent director of Watlow Electric Manufacturing Company, a private company, until its sale to Tinicum in January 2021. | Skills and Qualifications: Ms. Holt’s extensive experience as a chief executive officer of a growth-oriented, publicly traded company provides valuable perspective to our Board and management, particularly with respect to strategy and operation of a growth-oriented company as well as cybersecurity experience. Ms. Holt has completed the National Association of Corporate Director (NACD) Cyber Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight. In addition, she has many years of experience serving on public company boards of directors. As an added benefit, Ms. Holt brings gender diversity to our Board. |

  11. NOMINEES – COMMON STOCK

    | DR. ILHAM KADRI Chief Executive Officer and Director, Syensqo S.A. | | | | Director since: 2016 Age: 55 Committees: • Nominating and Governance • Personnel and Compensation | Director Biography: Dr. Kadri became the chief executive officer of Syensqo S.A. in December 2023 when Solvay S.A. split into two separate publicly traded entities with worldwide operations: Syensqo S.A. and Solvay S.A., both headquartered in Brussels, Belgium. Dr. Kadri led this transaction and, in addition to being named chief executive officer, she serves on the Syensqo board of directors as well as its Finance and ESG Committees. Syensqo is a pure play science company focused on “clean” technology such as lightweighting, electrification, digitalization, resource efficiency and biomaterials. Prior to this transaction, Dr. Kadri was chief executive officer of Solvay S.A. from 2019 to December 2023 as well as chairman of its Executive Committee, a member of its board of directors and its Finance and ESG Committees. Solvay continues to be an advanced materials and specialty chemical company. From 2017 to 2018, Dr. Kadri was president and chief executive officer of Diversey, Inc., a global leader in hygiene and cleaning sectors. Dr. Kadri led the spin-off of Diversey, Inc. from Sealed Air Corporation. Prior to the spin-off, she was vice president of Sealed Air Corporation and president of its Diversey division from 2013 to 2017. She also led the digital strategy and launched the Internet of Clean (IoC) at Diversey, Inc. Prior to joining Sealed Air Corporation, Dr. Kadri held positions of increasing responsibility with Dow Chemical Company from 2007 until 2012, including general manager of its Advanced Materials Division, a specialty materials provider in the Middle East, Africa, and Europe, and the commercial director for Dow Water & Process Solutions, a global leader in water desalination and purification technology. Dr. Kadri also is on the board of directors of L’Oréal S.A., where she serves on the Audit Committee. | Skills and Qualifications: Dr. Kadri has extensive international experience, having held executive leadership roles in Europe, the U.S., Middle East and Africa regions. In addition, as a chemical engineer, with a master’s degree in physics and chemistry, and a doctorate degree in reactive extrusion, Dr. Kadri brings a unique perspective on manufacturing, research and development, with a focus on sustainability and water technology that are directly applicable to our industry. Her extensive experience as a sitting chief executive officer, as well as a board member at L’Oréal brings unique perspectives. She also has extensive digital/e-commerce, cybersecurity and merger/acquisition experiences that benefit our company. Dr. Kadri also brings gender and ethnic diversity to our Board. |

  12. NOMINEES – COMMON STOCK

    | MICHAEL M. LARSEN Senior Vice President and Chief Financial Officer, Illinois Tool Works, Inc. | | | | Director since: 2021 Age: 55 Committee: • Audit | Director Biography: Since 2013, Mr. Larsen has served as senior vice president and chief financial officer of Illinois Tool Works, Inc., a publicly traded, global, multi-industrial manufacturing leader. He previously served as president and chief executive officer of Gardner Denver, Inc. from 2012 to 2013, and its vice president and chief financial officer from 2010 to 2013. Prior to that, Mr. Larsen was chief financial officer at General Electric (“GE”) Water and Process Technologies from 2009 to 2010 and held a number of global finance leadership roles of increasing responsibility at GE from 1995 to 2009. Mr. Larsen was a director of Gardner Denver, Inc. from 2012 until its acquisition by KKR & Co. Inc. in 2013. | Skills and Qualifications: Mr. Larsen has extensive executive, financial and operating experience at companies with worldwide manufacturing operations, like our company. He has a thorough knowledge and understanding of generally accepted accounting principles and auditing standards and how they apply to budgeting and financial reporting systems. He has significant experience with mergers and acquisitions, information technology, including cybersecurity, and ESG. Mr. Larsen is qualified as an audit committee financial expert under SEC regulations. |

  13. NOMINEES – COMMON STOCK

    | CHRISTOPHER L. MAPES Executive Chairman, Lincoln Electric Holdings, Inc. | | | | Director since: 2023 Age: 62 Committee: • Audit | Director Biography: Mr. Mapes has been with Lincoln Electric Holdings, Inc., a global manufacturer of welding, cutting and joining products, since 2011. Most recently, he assumed the role of executive chairman in January 2024. Previously, Mr. Mapes served as president and chief executive officer from 2012 to December 2023, after serving as chief operating officer beginning in 2011. From 2004 to 2011, Mr. Mapes served as executive vice president of A. O. Smith Corporation and president of A. O. Smith Electrical Products Company until the divestiture of this division in 2011. Mr. Mapes serves as a director of Lincoln Electric Holdings, Inc. and a director of The Timken Company, where he is on its Audit and Nominating and Governance Committees. | Skills and Qualifications: Mr. Mapes is a seasoned executive with extensive experience leading manufacturing and distribution companies. He understands the challenges of global growth and the complexity of managing international operations. His broad experience includes cybersecurity. In addition to his management experience, Mr. Mapes has both an MBA and a law degree, as well as public company director experience. |

  14. The Board of Directors

    The Board of Directors Our business is managed under the direction and oversight of the Board of Directors, who are elected by the stockholders. Directors meet their responsibilities by participating in meetings of the Board of Directors and Board Committees on which they sit, through communication with our chairman and chief executive officer and other officers and employees, by consulting with our independent registered public accounting firm and other third parties, by reviewing materials provided to them and by visiting our offices and plants. During 2023, the Board held eight meetings, five of which were regular Board meetings and three of which were special meetings. The standing Committees of the Board of Directors held a total of 19 meetings, including three special meetings. All directors attended all of the meetings of the Board and Committees on which they served during 2023, with the sole exception of one director who had an unavoidable business conflict with one meeting. Although we have no formal policy on director attendance, all continuing directors attended our 2023 Annual Meeting of Stockholders. The nonmanagement directors of the Board met in executive session without management present five times in 2023 in conjunction with each of its regular meetings. In 2023, the Nominating and Governance Committee modified its Corporate Governance Guidelines with respect to selection of the Presiding Director who presides at such meetings. To provide continuity, particularly considering the recent addition of several new Board members, the Presiding Director serves for a two-year term and rotates among the chairpersons of the following Committees in the following order: Audit Committee, Personnel and Compensation Committee and Nominating and Governance Committee. The Presiding Director from April 2022 to April 2024 was Idelle K. Wolf, the chairperson of the Audit Committee. Ronald D. Brown, the chairperson of the Personnel and Compensation Committee will serve as the Presiding Director from April 2024 to April 2026. Any party wishing to communicate with the Presiding Director may send correspondence to the Presiding Director, c/o James F. Stern, Corporate Secretary, A. O. Smith Corporation, 11270 West Park Place, P.O. Box 245008, Milwaukee, Wisconsin 53224-9508. Director Independence and Financial Literacy. The Smith Family Voting Trust has the power to elect a majority of our Class A Directors, who make up a majority of the Board. As of December 31, 2023, the Smith Family Voting Trust directly or beneficially owned 96.9% of Class A Common Stock and therefore 96.9% of voting power with respect to the election of the Class A Directors. Since the Board is currently composed of six Class A Directors and four Common Stock Directors, the Smith Family Voting Trust effectively exercises control over voting power for a majority of the members of our Board of Directors, and therefore, we have qualified as a “controlled company” under the NYSE rules. As a controlled company, under NYSE rules, we may choose to not have a majority of independent directors or compensation or governance committees consisting solely of independent directors. Notwithstanding our status as a controlled company, the Board has not elected to utilize the “controlled company” exemption in any respect because, as described below, we have a Board in which a majority of our members consist of independent directors, and all members of the Audit Committee, Personnel and Compensation Committee, and Nominating and Governance Committee are independent for SEC and NYSE purposes. As described in the Corporate Governance Guidelines available on our website, www.aosmith.com, we apply the NYSE rules to determine director independence. The Nominating and Governance Committee (“Committee”) annually evaluates the independence of each director and makes recommendations to the Board. As part of this process, the Committee evaluates any related party transactions disclosed by directors in the detailed Directors’ and Officers’ Questionnaires completed annually by each director. There were no transactions above the reporting threshold for related party transactions under SEC rules. In making its recommendations, the Committee also applied the NYSE rules and evaluated any other legal, accounting and family relationships between directors and our company. In particular, the Board and Committee considered that Christopher Mapes is the executive chairman of Lincoln Electric Holdings, Inc. Our company has a longstanding contractual relationship with Lincoln Electric subsidiaries to purchase welding supplies, which was entered into in arms’ length transactions following competitive bidding and commenced before he joined our Board. The Board and Committee determined that this relationship is not material and does not affect his independence. The Committee also considered that two directors, Victoria Holt and Ajita Rajendra, are directors of Waste Management, Inc. and Donaldson Company, Inc., respectively, from which we purchase services and supplies in arm’s length transactions in the ordinary course of business. Since their interests arise solely from their director positions, the Board and the Committee determined that these relationships are not material and do not affect their independence. The Committee and the Board also considered that Mark Smith is a trustee of the Smith Family Voting Trust and that he and his descendants are also beneficiaries of material economic interests associated with the Class A Common Stock subject to this Trust. The members of the Committee and Board (other than Mr. Smith) concluded that such voting power and interests do not impair the independence of Mr. Smith and that the economic interests in stock of the company of which he and his descendants are beneficiaries align his interests with those of stockholders generally, consistent with NYSE Commentary to Rule 303A.02 (Independence Tests) which states that “the Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.” The Board has determined that Messrs. Brown, Larsen, Mapes, Rajendra and Smith, Dr. Kadri and Ms. Holt meet the NYSE independence requirements. With respect to Mr. Fister and Ms. Martin, new director nominees, the Board determined that both meet the NYSE independence requirements. Finally, Mr. Wheeler is considered a management director by virtue of his current position as an executive officer of our company. The Board recognizes that the NYSE rules require financial literacy of Audit Committee members only. Notwithstanding that, as a best practice, the Board has reviewed the qualifications and experience of all of the Board members and determined that each director is financially literate within the meaning of the NYSE rules. Board Composition. We believe that the makeup of the Board should be tailored to our company’s evolving needs. Our goal is a mix of tenure, diversity, skills and experience on the Board, with a balance of longer-tenured, experienced directors and newer directors with fresh perspectives. Our Nominating and Governance Committee regularly reviews the experience and expertise of our Board and considers the ongoing and evolving needs of the company as well as appropriate changes based on those needs and the requirements of our Corporate Governance Guidelines, including those mandating that, absent a waiver by the Board, directors not stand for election beyond age 72. The addition of Ms. Holt and Mr. Larsen in 2021 and Mr. Mapes in 2023 brought fresh perspectives to our Board, as will Mr. Fister and Ms. Martin, assuming they are elected by our stockholders at our 2024 Annual Meeting. Further, to provide balance, in light of his extensive experience at our company and knowledge of our business, we have asked Mr. Rajendra to stand for re-election this year, and he has agreed to do so.

  15. The Board of Directors

    We believe that we have an appropriate mix of shorter-tenured directors who bring a fresh perspective and longer-tenured directors with experience and institutional knowledge. Our commitment to Board refreshment is reflected in the fact that the average director tenure has been reduced from 14.1 in 2020 to 8.1 this year, presuming our director nominees are elected by our stockholders at our 2024 Annual Meeting. With respect to our longer-tenured directors, we believe their long-term perspective has been an advantage to us as we entered new markets, providing both historical perspective and a better understanding of upcoming challenges. Further, we believe that long-term service does not adversely affect director independence. With their in-depth knowledge of the company, these directors are comfortable speaking up and asking probing questions, which we believe improves the ability of the Board to provide constructive guidance and informed oversight. Further, given the voting power exercised by the Smith Family Voting Trust, representation of Mark Smith on our Board works to align the interests of our largest stockholder with those of the Board, through his exposure to the company’s strategic and operational planning and decision-making, and his active participation in the governance of the company. To balance our three longer-tenured independent directors, we will have six independent directors (assuming Mr. Fister and Ms. Martin, the new director nominees, are elected at the Annual Meeting) who joined our Board within the last seven years. They have brought new skills, fresh perspectives and diversity to our Board. For all these reasons, we believe that our Board has struck the right balance as to director tenure. We also have a former chief executive officer, Mr. Rajendra, serving on our Board, who, in accordance with NYSE rules, is considered an independent director as of May 1, 2023, three years after his retirement from our company. We believe Mr. Rajendra’s participation on our Board provides a significant benefit to our company, complementing the perspectives of our executive leadership and the members of our Board who have joined us in the past several years. Mr. Rajendra presided over a period of highly profitable growth for our company and provides an invaluable perspective. Board Information and Stockholder Communications. We are committed to making our corporate governance information accessible to stockholders and other interested parties. Accordingly, on our website, www.aosmith.com, under the “Investors” heading, and then “Governance” subheading, we have published the A. O. Smith Corporation Guiding Principles and the Financial Code of Ethics and provided a link entitled “Stockholder Contacts” to communicate with directors. Likewise, under “Investors,” “Governance,” and then “Board of Directors,” we have provided a list of the members of our Board of Directors. Further, under the “Board Committees and Charters” subheading, we have Committee Assignments, the Charters for the Audit, Nominating and Governance, and Personnel and Compensation Committees, Corporate Governance Guidelines and Criteria for Selecting Board of Director Candidates. Finally, SEC filings, including our Form 10-K, Forms 10-Q, Forms 8-K, Proxy Statement and Section 16 filings, are available for review on this website under the heading “Investors,” and then “SEC Filings” subheading. Stockholders may also request that these documents be mailed by sending their request to the address provided below. We encourage communication with our directors. Any interested party may communicate with a particular director, all directors, nonmanagement or independent directors as a group or the Presiding Director by mail or courier addressed to him/her or the entire Board in care of the Corporate Secretary at the following address: c/o James F. Stern, Corporate Secretary A. O. Smith Corporation 11270 West Park Place P.O. Box 245008 Milwaukee, WI 53224-9508 The Corporate Secretary will forward this communication unopened to the addressed director. Procedure for Review of Related Party Transactions. Potential conflicts of interest must be approved in advance, including related party transactions reportable under SEC rules, or related to the Smith family, in accordance with our Corporate Governance Guidelines. We have a detailed code of conduct, the A. O. Smith Corporation Guiding Principles, which applies to all employees, officers and directors, and specifically addresses conflicts of interest. There has been no waiver of the code of conduct, requested or granted, for any directors or officers. Further, the Corporate Governance Guidelines provide the procedure for review of related party transactions reportable under SEC rules, with approval by the Nominating and Governance Committee required if any such transaction involves a director, executive officer or his/her immediate family members. Other than the matters identified in “Director Independence and Financial Literacy,” each of which was reviewed by the Nominating and Governance Committee and the Board and determined to not be material, there have been no related party transactions. Potential Director Candidates. The Nominating and Governance Committee will consider any candidate recommended by stockholders, directors, officers, third-party search firms and other sources for nomination as a director. The Committee considers the needs of the Board and evaluates each director candidate in light of, among other things, the candidate’s qualifications. All candidates’ minimum qualifications are identified in the Corporate Governance Guidelines and the Criteria for Selecting Board of Director Candidates, both of which can be found on our website by clicking on “Investors,” then “Governance,” followed by “Board Committees and Charters.” To summarize, all nonmanagement candidates should be independent and possess substantial and significant experience which would be of value to our company in the performance of the duties of a director. Recommended candidates must be of the highest character and integrity, free of any conflicts of interest, have an inquiring mind and vision, and possess the ability to work collaboratively with others. Further, directors should have diverse backgrounds and expertise, including diversity of gender and race, required for the Board to fulfill its duties. Each candidate must have the time available to devote to Board activities and be of an age that, if elected, the candidate could serve on the Board for at least five years before reaching the mandatory retirement age, which is 72, absent a waiver approved by the Board. Finally, we believe it appropriate for certain key members of our management to participate as members of the Board, while recognizing that a majority of independent directors must be maintained at all times. All candidates will be reviewed in the same manner, regardless of the source of the recommendation. Although not part of any formal policy, our goal is a balanced and diverse Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business. A stockholder recommendation of a director candidate must be received no later than the date for submission of stockholder proposals. Please see the section of this Proxy Statement entitled “Dates for Stockholder Proposals.” The recommendation letter should be sent by mail to the Chairperson, Nominating and Governance Committee, c/o James F. Stern, Corporate Secretary, A. O. Smith Corporation, 11270 West Park Place, P.O. Box 245008, Milwaukee, Wisconsin 53224-9508.

  16. The Board of Directors

    The recommendation letter must, at a minimum, provide the stockholder’s name, address, the number and class of shares owned; the candidate’s biographical information, including name, residential and business addresses, telephone number, age, education, accomplishments, employment history (including positions held and current position), and current and former directorships; and the stockholder’s opinion as to whether the stockholder recommended candidate meets the definitions of “independent” and “financially literate” under the NYSE rules. In addition, the recommendation letter must provide the information that would be required to be disclosed in the solicitation of proxies for election of directors under federal securities laws. The stockholder must include the candidate’s statement that he/she meets these requirements and those identified on our website; is willing to promptly complete the Questionnaire required of all officers, directors and candidates for nomination to the Board; will provide such other information as the Committee may reasonably request; and consents to serve on the Board if elected. A stockholder who desires to nominate a candidate for election as a director must comply with the provisions of our By-laws described under the section of this Proxy Statement entitled “Dates for Stockholder Proposals.”

  17. NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

    NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

  18. NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

    | Pay Element | Committee | Amount | | Board Cash Retainer | | $103,500 | | Board Equity Retainer | | $140,000 | | Committee Chair Cash Retainers | Audit Committee | $20,000 | | | Personnel and Compensation Committee | $15,000 | | | Nominating and Governance Committee | $15,000 | | Presiding Independent Director Cash Retainer | | $30,000 |

  19. Director Compensation

    Director Compensation

  20. Director Compensation

    | Name(1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3)(4) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($)(5) | Total ($) | | Ronald D. Brown | $118,500 | $140,018 | — | — | — | — | $258,518 | | Earl E. Exum(6) | 103,500 | 140,018 | — | — | — | — | 243,518 | | Victoria M. Holt | 118,500 | 140,018 | — | — | — | — | 258,518 | | Dr. Ilham Kadri | 103,500 | 140,018 | — | — | — | — | 243,518 | | Michael M. Larsen | 103,500 | 140,018 | — | — | — | — | 243,518 | | Christopher Mapes | 77,625 | 140,018 | — | — | — | — | 217,643 | | Ajita G. Rajendra | 103,500 | 140,018 | — | — | — | — | 243,518 | | Mark D. Smith | 103,500 | 140,018 | — | — | — | — | 243,518 | | Idelle K. Wolf | 153,500 | 140,018 | — | — | — | — | 293,518 | | Gene C. Wulf(7) | 25,875 | — | — | — | — | — | 25,875 |

  21. Director Compensation

    | 1 | Mr. Wheeler, as an employee director, receives no compensation for his service as a director. |

  22. Director Compensation

    | 2 | Includes amounts earned during 2023, even if deferred. Mr. Exum deferred 100% of his cash retainer fees in 2023. |

  23. Director Compensation

    | 3 | Reflects the grant date fair value of stock awards calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 12 to our 2023 Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Directors receive a stock award of Common Stock as part of their annual retainer. On April 11, 2023, each then serving director except for Mr. Wheeler received a stock award worth $140,018, or 2,126 shares valued at $65.86 per share, which was the adjusted average of the high and low prices on the grant date rounded up to the next whole share. Mr. Brown has deferred his receipt of 69,762 shares until his separation from service as a director. Ms. Holt has deferred her receipt of 6,542 shares until her separation from service as a director. Mr. Larsen has deferred his receipt of 6,542 shares until his separation from service as a director. Ms. Wolf has deferred her receipt of 9,981 shares until her separation from service as a director, which will be April 9, 2024. Deferred stock holdings include dividends on deferred stock which are paid in the form of restricted stock units. |

  24. Director Compensation

    | 4 | Each director as of December 31, 2023, owned the following aggregate number of shares or restricted stock units in connection with service as a director: Mr. Brown, 74,493; Ms. Holt, 6,542; Dr. Kadri, 17,223; Mr. Larsen, 17,967; Mr. Mapes, 12,134; Mr. Rajendra, 8,145; Mr. Smith, 114,548; and Ms. Wolf, 56,935. Please see the “Security Ownership of Directors and Management” Table for additional information. |

  25. Director Compensation

    | 5 | None of the directors received perquisites or other personal benefits in an aggregate amount of $10,000 or more. We reimburse directors for transportation, lodging and other expenses actually incurred in attending Board and Committee meetings. |

  26. Director Compensation

    | 6 | Mr. Exum died on October 1, 2023. Reflects compensation paid prior to his death. |

  27. Director Compensation

    | 7 | Mr. Wulf did not stand for re-election at the April 2023 Annual Meeting of Stockholders. Reflects compensation paid to him prior to his retirement. |

  28. Director Compensation

    The Board requires that every new director participate in a detailed orientation, including visits to our key operations. This encompasses a review of business and financial operations, meetings with business executives and others, and an overview of our corporate governance policies and procedures. New directors receive no additional compensation for their participation in orientation matters. The stock ownership requirement for directors is five times the applicable cash retainer received by the director in the last year. Each director is required to acquire beneficial ownership of A. O. Smith Corporation Common Stock having an aggregate value equal to this stock ownership requirement within five years of his or her election as a new director. All directors have met this requirement, except Ms. Holt, who joined our Board three years ago and Mr. Mapes, who joined last year. Both are on track to meet this requirement. Certain directors have elected to defer the payment of their fees and receipt of Common Stock shares under the A. O. Smith Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan allows directors to defer all or a portion (not less than 25%) of their fees until a later date, but not later than the year in which the director ceases service as a director. Payments can be made in a lump sum or in not more than 10 annual installments. This is handled as a bookkeeping entry, with gains and losses credited to the director’s account each month based on the director’s crediting election. The crediting election is used to designate the investment fund(s) as the basis for calculating the rate of return equivalent for the director’s account. Mr. Exum elected to defer payment of his director fees during 2023. Mr. Brown, Ms. Holt and Mr. Larsen have deferred receipt of their stock awards in 2023, which consequently are treated as restricted stock units. Dividends on stock which have been deferred as restricted stock units are also received in the form of restricted stock units based on the average of the high and low price of our Common Stock on the date of the dividend.

  29. Compensation Philosophy

    Our long-term incentive opportunities link a significant portion of executive compensation to our performance through restricted stock unit and performance stock awards. Executive officers also are expected to comply with established stock ownership guidelines which require acquisition and retention of specific levels of our Common Stock. Our view is that this stock ownership aligns the interests of our management team with our stockholders and encourages executive performance but discourages executives from taking undue risk. We believe executive total compensation opportunity should increase commensurate with responsibility and capacity to influence our results. Additionally, as responsibility and accountability increase, so should the portion of compensation which is at risk. Therefore, not only do base salaries increase with position and responsibility, but short-term and long-term incentive opportunities as a percentage of total compensation increase as well. Our executive compensation package is designed to strike a balance between short-term cash compensation in the form of fixed salaries and variable annual incentive plans and long-term compensation in the form of cash-based performance units and equity awards with three-year vesting periods. For the chairman and chief executive officer, approximately 15% of 2023 total target compensation was comprised of base salary, with the remaining 85% being variable compensation dependent on our company performance. The variable compensation was divided so that approximately 18% of total target compensation was attributable to annual incentive bonus and approximately 67% was long-term incentive compensation. For the other named executive officers, approximately 25-35% of total target compensation was comprised of base salary, with the remaining 65-75% being based on our company performance. The variable compensation is structured so that approximately 20% of total target compensation represents annual incentive bonus, with roughly 45-55% attributable to long-term incentive compensation.

  30. EXECUTIVE COMPENSATION MIX

    | Compensation Component | CEO | Other NEOs | | Salary | 15% | 25-35% | | Annual Incentives & Bonus | 18% | 20% | | Long-Term Incentives | 67% | 45-55% |

  31. EXECUTIVE COMPENSATION MIX

    The Personnel and Compensation Committee (“PCC”) approved a long-term incentive plan for 2023 which targeted 65% of the chairman and chief executive officer’s long-term incentives, or approximately 44% of total compensation, as equity-based awards. The PCC targeted 65% of the long-term incentives, or approximately 30-35% of total target compensation, as equity-based awards for the other named executive officers.

  32. EXECUTIVE CASH / EQUITY MIX

    EXECUTIVE CASH / EQUITY MIX

  33. EXECUTIVE CASH / EQUITY MIX

    | Compensation Component | CEO | Other NEOs | | Cash-Based Compensation | 56% | 65 - 70% | | Equity-Based Compensation | 44% | 30 - 35% |

  34. EXECUTIVE CASH / EQUITY MIX

    We believe this combination results in a competitive compensation package that provides an incentive for our executives to lead with a focus on short-term results, while positioning us for long-term sustained performance. With approximately 30-44% of their total compensation tied to equity awards, we believe the decisions of named executive officers are aligned with the best interests of our stockholders. We believe this combination of base pay and short-term and long-term incentives supports our objectives of pay-for-performance, while mitigating the potential for undue risk-taking because it ties a significant portion of the executive officer’s compensation to sustained, long-term performance.

  35. Outside Consultants

    | Service | Fees | | Management Compensation Surveys and Benchmarking | $16,700 | | Benefits Consulting Services | $546,237 in health and welfare plan consulting paid through credits against commissions earned as broker for life and disability group insurance plans. 2023 year-end credit balance: $66,130; $46,460 for retirement benefits consulting in Canada. | | Health Plan program fees | $115,000 for participation in Rx Collaborative, Willis Towers Watson’s pharmacy purchasing coalition and $92,557 for the Custom Care Management Unit, which provides personalized care for families with a member having a serious health condition. |

  36. Benchmarking

    Benchmarking We endeavor to benchmark our executive compensation against similarly situated executives in comparably sized organizations. We believe we compete for executive resources with other nonfinancial institutions across multiple industrial segments. With that in mind, our consultants utilize broad-based, general industry salary surveys and regress their data to organizations with revenues similar to A. O. Smith. We believe market median is an appropriate target for our total compensation program. We attempt to design both short-term and long-term incentives to produce rewards in excess of median market levels when company performance is better than target. The PCC authorized Willis Towers Watson to perform a detailed analysis of our executive compensation levels in 2023, as we do each year. As we describe below, the PCC asked Willis Towers Watson to provide input on marketplace trends in executive compensation, and overall compensation and components of compensation for 13 executive positions. We utilize Willis Towers Watson because we believe its survey resources ensure consistent and statistically valid data that is representative of the market in which we compete for executive talent. Its database includes a broad array of over 800 companies. We did not rely on a specific subgroup of peer companies within that database. In working with Willis Towers Watson, we played no role in selecting the companies for which the data was obtained. For 2023 compensation, Willis Towers Watson performed a regression analysis to reflect base pay levels of an organization with $3.5 billion in revenue and reported its findings to the PCC in October 2022. Its comparison focused on overall compensation, as well as base salary, annual incentive bonus, equity awards and each of the other compensation elements discussed below. We believe its methodology provides appropriate comparisons by utilizing industrial companies of comparable size and referencing databases with comparable executive officer positions. For 2023, the PCC targeted our overall compensation and benefits programs and each element of compensation at the median level of the surveyed companies. Since a number of variables can influence the relationship of an individual executive’s pay components to the survey median data, the PCC considers a range of 80% to 120% of median to be appropriate when reviewing total compensation. Although the PCC attempts to have each component of compensation in this target range, the PCC puts greater emphasis on achieving the target at the total compensation level. Variables considered include, but are not limited to, education, position tenure, previous experience, level of performance, additional responsibilities and, as appropriate, recruitment considerations. For 2024, we compared ourselves to the market median of other companies with revenues of $3.75 billion, which represents our reported revenues in 2022.

  37. Compensation Elements

    | • | Short-Term – annual incentive bonus |

  38. Compensation Elements

    | • | Long-Term – restricted stock units, performance cash and performance stock |

  39. Annual Incentive Compensation

    Annual Incentive Compensation Each year, the PCC reviews and approves our financial objectives for both the company and its business units. The executive annual incentive bonus is tied to achieving those objectives. The better we perform relative to these objectives, the higher the incentive bonus payment. The annual target incentive bonus typically is calculated as a percent of annual base pay for the performance year. The target percent for incentive compensation, like base salary, is determined through periodic benchmarking and review of the median level survey data provided by Willis Towers Watson. Annual incentive compensation represents an “at risk” component of the executive compensation package. Actual incentive bonus amounts are dependent upon performance against specific measurements and may vary from 0% to 200% of targeted amounts. As a general principle, the portion of an executive’s compensation tied to incentive compensation increases with the executive’s level of responsibility. Thus, the chairman and chief executive officer’s annual incentive opportunity is greater than that of the other named executive officers. We targeted an annual incentive opportunity for the chairman and chief executive officer at 120% of base pay in 2023 based upon Willis Towers Watson survey data for comparably situated executives. The relationship of our incentive targets to market median comparisons as of year end is illustrated in the following table.

  40. Annual Incentive Compensation

    | Name | 2023 Target % of Base Salary | Target Incentive % to Market Median | | Kevin J. Wheeler | 120% | 96% | | Charles T. Lauber | 75% | 99% | | James F. Stern | 67% | 96% | | David R. Warren | 67% | 99% | | Mark A. Petrarca | 60% | 91% |

  41. Annual Incentive Compensation

    For 2023, the PCC again aligned our incentives with our focus on improving growth of stockholder value through profitable revenue growth. Our 2023 annual incentive plan for corporate executives was based on achieving a combination of two financial measures, corporate EBIT of $733.5 million and corporate net sales of $3.853 billion. The goal of the plan was to keep our management focused on providing value to stockholders by incorporating both a profitability measure and a growth measure. Eighty percent (80%) of the incentive opportunity was based on EBIT and twenty percent (20%) on net sales. EBIT is calculated by subtracting our cost of goods sold and operating expenses from revenue before interest and taxes. Net sales is calculated by subtracting returns, allowances and discounts from gross sales. The PCC took into account market practice in the choice and number of measures, and we believe that limiting the net sales measure to twenty percent (20%) of the total incentive opportunity mitigates the risk of executives focusing on growth at the expense of profitability. We expect to use these financial measures for 2024. We followed a similar approach for our business unit executives. As a business unit executive, seventy percent (70%) of Mr. Warren’s annual incentive will be based on two business unit-based measures: business unit PEBIT weighted at eighty percent (80%) and business unit net sales weighted at twenty percent (20%) of this portion. The balance of Mr. Warren’s annual incentive was linked to our corporate EBIT and corporate net sales goals. We achieved 157.3% of the corporate EBIT incentive bonus target and 122.2% of the corporate net sales incentive bonus target, for an overall corporate bonus achievement of 150.3%. The North America Water Heating business unit achieved 177.9% of its PEBIT incentive bonus target and 154.5% of its net sales incentive target, with an overall achievement of 173.3%. Accordingly, the named executive officers were awarded incentive compensation bonuses set forth in the table below.

  42. 2023 Annual Incentive Awards

    2023 Annual Incentive Awards

  43. 2023 Annual Incentive Awards

    | Name | Amount | | Kevin J. Wheeler | $1,942,000 | | Charles T. Lauber | 753,000 | | James F. Stern | 626,000 | | David R. Warren | 558,000 | | Mark A. Petrarca | 485,000 |

  44. Long-Term Incentive Compensation

    Long-Term Incentive Compensation Long-term incentive compensation consists of restricted stock units, performance cash and performance stock, all of which are focused on ensuring sustained performance or achievement of strategic goals over a multi-year period. We believe strongly that equity-based long-term incentives effectively link the interests of senior management to the interests of our stockholders. The allocation of total value between each of the long-term incentive components may vary from year-to-year based on our focus, as determined by the PCC. The long-term incentive portion of an executive’s compensation is “at risk” and is dependent upon corporate performance and growth in stock value. The stated purpose of the Combined Incentive Compensation Plan, which is the vehicle for awarding long-term incentives, is to provide compensation as an incentive to induce key employees to remain in our employ and to encourage them to secure or increase their stock ownership in our company or to otherwise align their interests with our stockholders. The Combined Incentive Compensation Plan motivates behavior through growth-related incentives to achieve long-range revenue and profitability goals. The total target value of all long-term incentive components is compared to comparable positions in the marketplace. Again, the PCC utilizes Willis Towers Watson to assist in benchmarking against the median level of surveyed companies to determine market competitive long-term incentive targets for executive positions. Based upon the analysis provided by Willis Towers Watson in October 2022, long-term incentive grants to our named executive officers were valued in the aggregate at 99% of market median. The following table shows long-term incentive grants to named executive officers in 2023, and compares such grants to market median.

  45. Long-Term Incentive Compensation

    | Name | 2023 Long-Term Incentives Target Value | Projected Market Median | | Kevin J. Wheeler | $4,840,000 | 100% | | Charles T. Lauber | 1,270,000 | 95% | | James F. Stern | 920,000 | 100% | | David R. Warren | 740,000 | 102% | | Mark A. Petrarca | 700,000 | 99% |

  46. Emphasis on Performance-Based Awards

    Emphasis on Performance-Based Awards Prior to 2023, our long-term incentive awards consisted of stock options, restricted stock units and performance cash. In 2023, the PCC decided to align the makeup of the awards more closely with the market, which showed a decline in the prevalence of stock options in favor of performance-based awards. As such, we did not grant stock options and we introduced performance stock awards in 2023. Our approach is to structure our awards so that restricted stock units represent 50% of our long-term incentive awards, performance cash 35% and performance stock 15%. All three components have a financial or strategic performance metric associated with them. Restricted stock units entitle the executive to receive a share of Common Stock for each unit when the restricted stock unit vests. Restricted stock units are time-based, but have a minimum performance threshold based on average Return on Equity that must be achieved in order to vest. The average Return on Equity is calculated by dividing net income by stockholder equity, adjusted to exclude certain extraordinary and nonrecurring items, averaged over the three-year vesting period. We use average Return on Equity because we believe it represents a sound measure of our performance that is easily recognized and readily used by investors and that links executive performance to stockholder interest over the three-year performance period of the award. The value to the executive of restricted stock units is dependent upon the value of our Common Stock at the time of vesting. Restricted stock units are used to provide a combination of retention value and incremental performance incentives. For 2023, the minimum average Return on Equity for restricted stock unit payouts was 5%. Performance cash is valued at $100 per unit at the time of grant. The value to the executive is dependent upon ROIC performance over a three-year vesting period. The 2023 performance cash award uses ROIC to measure how effectively executives manage capital. The goal for achieving 100% of target is based on an average of the company’s last five years of ROIC achievement. The threshold and maximum performance levels are based on a market reference point: the five-year average of median ROIC for the S&P 500 Industrials Index. The threshold for achieving any payout is 125% of this reference point, and the maximum payout is achieved at 225% of the reference point. Target value payouts will be earned at 30.8% performance over the course of the measurement period and a maximum payout of 200% of target will be earned should we return 36% ROIC as a percent of the Cost of Capital between January 1, 2023, and December 31, 2025. As with annual incentive compensation objectives, the PCC sets targets at levels that are difficult to achieve, but with the expectation they are attainable.

  47. Emphasis on Performance-Based Awards

    | ROIC Achieved | 2023 Plan Payout | | 20.0% | 0% – Minimum | | 30.8% | 100% – Target | | 36.0% | 200% – Maximum |

  48. Emphasis on Performance-Based Awards

    Through December 2023, which includes one year of the three-year performance period, the performance cash granted in February 2023 had an estimated value of approximately 200% of target value. Through December 2023, which includes two years of the three-year performance period, the performance cash granted in February 2022 had an estimated value of approximately 121.8% of target value. Payout of the 2022 performance cash award will be based on performance of ROIC as a percent of cost of capital set for the three-year period of 2022-2024. The 2023 performance stock has a three-year performance and vesting period with payout based on achievement of the company’s strategic greenhouse gas intensity reduction goal. This goal of a 10% reduction in intensity from the baseline set in 2019 by year-end 2025 was established in the company’s 2020 Corporate Responsibility & Sustainability Report. The threshold for receiving any shares is a 5% reduction in greenhouse gas intensity from the baseline, which provides 50% of the target shares. Achievement of a 10% reduction provides 100% of the target shares, and a reduction of 25% will provide the maximum number of shares at 150% of target. Recognizing that performance stock and the use of a strategic ESG goal are new to the executive team, the PCC set the value of this component at 15% of the total long-term incentive award amount.

  49. Emphasis on Performance-Based Awards

    | Greenhouse Gas Intensity Reduction | 2023 Plan Payout | | 5% | 50% – Minimum | | 10% | 100% – Target | | 25% | 150% – Maximum |

  50. Emphasis on Performance-Based Awards

    Through December 2023, which includes one year of the three-year performance period, the performance stock granted in February 2023 had an estimated value of approximately 149.1% of shares granted. At target, the combined value of the three components of executive long-term incentives (restricted stock units, performance cash and performance stock) should represent market median long-term incentive awards consistent with the Willis Towers Watson survey. Based upon the PCC’s October 2022 analysis, target long-term incentives for our named executive officers compared to market median are reflected on the table in the Long-Term Incentive Compensation discussion above.

  51. 2024 Long-Term Incentive Award

    2024 Long-Term Incentive Award In 2024, the PCC will follow the same structure for the long-term incentive award as in 2023. The restricted stock unit and performance cash components of the 2024 long-term incentive award will comprise 50% and 35% of the award, respectively, with performance criteria set following the process outlined for the 2023 award. The 2024 performance stock will again have a three-year performance period based on a strategic ESG goal and will constitute 15% of the total long-term incentive. The 2024 award will have a three-year performance period with payout based on achievement of the company’s water savings target. This target, defined as a 20-million-gallon savings in water usage by third quarter of 2026 from the baseline set using the 12 months ending September 30, 2023, is part of a longer-term water reduction target that will be outlined in the company’s 2024 ESG report. Water savings is reduction in water usage plus water recycled. Achievement of a 16-million-gallon reduction provides 100% of the target shares, and a reduction of 20-million-gallons will provide the maximum number of shares at 150% of target.

  52. Payout of 2021-2023 Performance Cash

    Payout of 2021-2023 Performance Cash Performance cash awarded in February 2021 for the period 2021-2023 was paid in February 2024. This award was based upon ROIC as a percent of the Cost of Capital for the three-year period (2021-2023). The cash units originally were valued at $100 per unit. Based upon our performance during the measurement period, our ROIC exceeded the Cost of Capital by 535.1%, which resulted in the performance cash being paid out at 164.9% of the target value.

  53. Consideration of Risk in Executive Compensation Plans

    Consideration of Risk in Executive Compensation Plans We believe our total compensation package mitigates unreasonable risk-taking by our senior executives. In this regard, we strike a balance between short-term and long-term cash and equity awards. A significant portion of our executives’ pay is linked to the achievement of financial goals directly aligned to stockholder interests: EBIT, net sales and ROIC as a Cost of Capital through 2022 awards and EBIT, net sales and ROIC beginning with 2023 awards. The competitive annual incentive plan rewards executives for achieving short-term performance targets, which keeps them focused on day-to-day business fundamentals. On the other hand, our long-term cash and equity awards incent executives to take a long-term view of our company and to assume reasonable risks to develop new products, explore new markets and expand existing businesses. Further, our executives are stockholders with established share ownership guidelines requiring them to acquire and hold A. O. Smith stock. Their stock grants vest over three-year periods so they are incented to build stockholder value over time. Their performance cash awards also are subject to vesting over a three-year period, and their payout is tied to ROIC over the same period of time. Our performance-based pay components are tied to company-wide results. We have implemented caps on our annual cash incentive plan, long-term performance cash and performance stock. Our equity programs limit and define the number of shares, but the value of the award is determined by the stock market at the time they vest or are exercised, which we believe provides a strong connection with stockholder interests. The PCC reviewed the company’s annual and long-term incentive plans at the PCC’s July 2023 meeting. As a result of its review, the PCC concluded that our program is unlikely to place the company at material risk. In this regard, several of our current practices effectively mitigate risk and promote performance. As part of this process, the PCC reviewed the risk assessment conducted by management using the Willis Towers Watson methodology and discussed any changes over the last year that could impact risk. The PCC concluded that no plan changes were implemented in 2023 that would affect the existing risk profile of any of the plans. In addition, we have implemented the Recoupment Policy for Incentive Compensation, which complies with the SEC’s and the NYSE’s clawback policy requirements and requires us to recover from executive officers incentive compensation erroneously awarded in the event of a material accounting restatement. We believe this policy, discussed in greater depth in the section of the Compensation Discussion and Analysis entitled, “Clawbacks – Recoupment Policy for Incentive Compensation,” mitigates the risk of a financial restatement by helping to ensure that our executive officers monitor and maintain the accuracy of our reported financial results and adhere to our Guiding Principles.

  54. Severance Plan

    Severance Plan The named executive officers participate in the A. O. Smith Senior Leadership Severance Plan (the “Plan”), which protects executives financially in the event of employment termination in circumstances identified in the Plan, including a change in control of our company. These protections help to ensure that executives will remain focused on managing our company in the event of a pending change in control or other circumstances. Furthermore, this Plan provides a more attractive compensation package when recruiting key talent. Lastly, instead of negotiating individual separation arrangements upon a termination, the PCC can ensure consistent and equitable treatment for all executives. The Plan provides each executive with a cash severance (represented as a multiple of their annual cash compensation), medical benefit continuation and outplacement services. Additionally, vesting of long-term incentive awards is accelerated in certain cases. To be covered by the Plan, an executive must sign a noncompete, non-solicitation, assignment of inventions and confidentiality agreement. To receive these benefits, an executive must sign a release from future claims against our company. The Plan also provides for enhanced cash severance benefits upon a change in control, as discussed below. We do not have any individual employment agreements with named executive officers.

  55. Summary Compensation Table

    Summary Compensation Table The Summary Compensation Table reflects information concerning compensation awarded to, earned by or paid to our chairman and chief executive officer, chief financial officer and other named executive officers during fiscal years 2023, 2022 and 2021.

  56. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Kevin J. Wheeler Chairman, President and Chief Executive Officer | 2023 2022 2021 | $1,076,500 1,035,000 1,000,000 | $0 146,000 0 | $3,146,180 1,517,977 1,386,088 | $0 1,518,003 1,385,968 | $4,297,000 2,122,000 2,917,000 | $0 42,393 0 | $236,976 258,674 208,926 | $8,756,656 6,640,047 6,897,982 | | Charles T. Lauber Executive Vice President and Chief Financial Officer | 2023 2022 2021 | 626,000 602,000 556,000 | 0 49,000 0 | 825,486 395,832 363,095 | 0 396,043 363,025 | 1,370,000 574,000 778,000 | 0 0 0 | 115,753 119,842 99,830 | 2,937,239 2,136,717 2,159,950 | | James F. Stern Executive Vice President, General Counsel and Secretary | 2023 2022 2021 | 621,000 597,000 577,000 | 0 47,000 0 | 597,882 288,891 250,883 | 0 288,783 250,797 | 1,053,000 491,000 901,000 | 613,108 0 416,735 | 100,126 94,454 90,241 | 2,985,116 1,807,128 2,486,656 | | David R. Warren Senior Vice President, President and General Manager – North America Water Heating | 2023 2022 2021 | 500,000 479,500 421,875 | 0 47,000 0 | 481,058 232,078 197,961 | 0 232,118 197,980 | 934,000 381,000 689,000 | 0 0 0 | 76,270 77,140 73,151 | 1,991,328 1,448,836 1,579,967 | | Mark A. Petrarca Sr. Vice President – Human Resources and Public Affairs | 2023 2022 2021 | 537,000 516,000 498,500 | 0 37,000 0 | 455,209 218,339 208,004 | 0 218,303 207,923 | 838,000 348,000 666,000 | 644,160 0 407,761 | 85,964 81,299 76,640 | 2,560,333 1,418,941 2,064,828 |

  57. Summary Compensation Table

    | 1 | Includes amounts earned in 2023, even if deferred. |

  58. Summary Compensation Table

    | 2 | The amounts included in the “Stock Awards” column are the aggregate grant date fair value of stock awards granted during a year calculated in accordance with FASB ASC Topic 718. For 2021 and 2022, the values reflect the grant date fair value of restricted stock units. For 2023, the values reflect the grant date fair value of restricted stock units and the grant date fair value of performance stock at target performance, which, respectively, for each named executive officer are as follows: Mr. Wheeler, $2,420,061 and $726,119; Mr. Lauber, $635,144 and $190,342; Mr. Stern, $459,909 and $137,973; Mr. Warren, $369,941 and $111,117 and Mr. Petrarca, $350,135 and $105,074. With respect to the 2023 performance stock grant, the maximum performance level values at the grant date fair value are: Mr. Wheeler, $1,089,179; Mr. Lauber, $285,513; Mr. Stern, $206,960; Mr. Warren, $166,676 and Mr. Petrarca, $157,611. For a discussion of valuation assumptions, see Note 12 to our 2023 Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. See the Grants of Plan-Based Awards table for more information on stock awards granted in 2023. |

  59. Summary Compensation Table

    | 3 | Reflects the annual incentive bonus for 2023 and performance units for the period 2021 to 2023, which, respectively, for each named executive officer are as follows: Mr. Wheeler, $1,942,000 and $2,355,000; Mr. Lauber, $753,000 and $617,000; Mr. Stern, $626,000 and $427,000; Mr. Warren, $558,000 and $376,000.and Mr. Petrarca, $485,000 and $353,000. |

  60. Summary Compensation Table

    | 4 | Reflects the net change in the actuarial present value of the pension benefit for Messrs.Stern and Petrarca who participate in the Executive Supplemental Pension Plan. Messrs Wheeler, Lauber and Warren do not participate in a pension plan. |

  61. Summary Compensation Table

    | 5 | Additional information regarding other compensation as provided in the “Components of 2023 All Other Compensation” table below. |

  62. Components of 2023 All Other Compensation

    | 1 | Amounts shown are company 401(k) plan matching contribution and contribution to the A. O. Smith Non-qualified Deferred Compensation Plan. For 2023, each officer received an $11,550 company 401(k) plan matching contribution, a $9,900 company 401(k) plan nonmatching contribution and the following Non-qualified Deferred Compensation Plan contributions: Mr. Wheeler, $72,763; Mr. Lauber, $28,060; Mr. Stern, $10,185; Mr. Warren, $16,470 and Mr. Petrarca, $7,245. |

  63. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The table below reflects the plan-based awards made under the Combined Incentive Compensation Plan to each of the named executive officers during 2023.

  64. Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Kevin J. Wheeler | 2/13/2023(4) | 0 | $1,291,800 | $2,583,600 | | | | | | | | 2/13/2023(5) | 0 | 1,694,000 | 3,388,000 | | | | | | | | 2/13/2023 | | | | 0 | 10,815 | 16,223 | | $726,119 | | | 2/13/2023 | | | | | | | 36,045 | 2,420,061 | | Charles T. Lauber | 2/13/2023(4) | 0 | 500,800 | 1,001,600 | | | | | | | | 2/13/2023(5) | 0 | 444,500 | 889,000 | | | | | | | | 2/13/2023 | | | | 0 | 2,835 | 4,253 | | 190,342 | | | 2/13/2023 | | | | | | | 9,460 | 635,144 | | James F. Stern | 2/13/2023(4) | 0 | 416,070 | 832,140 | | | | | | | | 2/13/2023(5) | 0 | 322,000 | 644,000 | | | | | | | | 2/13/2023 | | | | 0 | 2,055 | 3,083 | | 137,973 | | | 2/13/2023 | | | | | | | 6,850 | 459,909 | | David R. Warren | 2/13/2023(4) | 0 | 335,000 | 644,400 | | | | | | | | 2/13/2023(5) | 0 | 259,000 | 456,000 | | | | | | | | 2/13/2023 | | | | 0 | 1,655 | 2,483 | | 111,117 | | | 2/13/2023 | | | | | | | 5,510 | 369,941 | | Mark A. Petrarca | 2/13/2023(4) | 0 | 322,200 | 644,400 | | | | | | | | 2/13/2023(5) | 0 | 245,000 | 490,000 | | | | | | | | 2/13/2023 | | | | 0 | 1,565 | 2,348 | | 105,074 | | | 2/13/2023 | | | | | | | 5,215 | 350,135 |

  65. Grants of Plan-Based Awards

    | 1 | Amounts reflect the threshold, target and maximum number of shares of performance stock that each named executive officer can earn under the Combined Incentive Compensation Plan for the period 2023-25. The grant date fair value of these awards was $67.14 for the February 13, 2023, grant per share of performance stock, based upon the average of the highest and lowest price on the date of grant. No dividends are paid on unvested performance stock. The actual number of stock units vesting is dependent upon company performance on a greenhouse gas intensity reduction goal over the three-year vesting period as more fully explained under “Compensation Discussion and Analysis – Long-Term Incentive Compensation.” |

  66. Grants of Plan-Based Awards

    | 2 | Shows the number of restricted stock units granted to each named executive officer in 2023 under the Combined Incentive Compensation Plan. Restricted stock units vest on February 13, 2026, except in the event of dismissal or voluntary resignation prior to vesting, if not retirement eligible. The grant date fair value of these awards was $67.14 for the February 13, 2023, grant per restricted stock unit, based upon the average of the highest and lowest price on the date of grant. Dividends on restricted stock units are credited to the named executive officer’s account in the A. O. Smith Non-qualified Deferred Compensation Plan. |

  67. Grants of Plan-Based Awards

    | 3 | The value of the restricted stock units and performance stock are the aggregate grant date fair value of restricted stock units and performance stock granted during a year calculated in accordance with FASB ASC Topic 718. |

  68. Grants of Plan-Based Awards

    | 4 | Amounts reflect the threshold, target and maximum awards that each named executive officer can earn under the Combined Incentive Compensation Plan for annual incentive bonus for 2023. |

  69. Grants of Plan-Based Awards

    | 5 | Amounts reflect the threshold, target and maximum awards that each named executive officer can earn under the Combined Incentive Compensation Plan as performance cash units for the period 2023 to 2026. Performance cash units have a value of $100 per unit at time of grant. The actual value of performance cash units is dependent upon ROIC performance over the three-year vesting period, as more fully explained under “Compensation Discussion and Analysis – Long-Term Incentive Compensation.” |

  70. Outstanding Equity Awards at December 31, 2023

    Outstanding Equity Awards at December 31, 2023 The table below reflects all outstanding equity awards made under the Combined Incentive Compensation Plan to each of the named executive officers.

  71. Outstanding Equity Awards at December 31, 2023

    | | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Kevin J. Wheeler | 19,220 22,200 14,675 24,435 16,755 79,240 161,985 65,947 28,754 | 0 0 0 0 0 0 0 32,973 57,506 | 0 | $30.765 31.670 50.160 61.760 57.465 49.420 42.390 60.820 74.265 | 02/09/25 02/08/26 02/13/27 02/12/28 09/01/28 02/11/29 02/10/30 02/08/31 02/07/32 | 22,790 20,440 36,045 | $1,878,808 1,685,074 2,971,550 | 16,223 | $1,337,383 | | Charles T. Lauber | 2,933 7,590 7,775 12,190 8,985 36,850 17,274 7,502 | 0 0 0 0 0 0 8,636 15,003 | 0 | 31.670 50.160 61.760 49.420 52.680 42.390 60.820 74.265 | 02/08/26 02/13/27 02/12/28 02/11/29 05/01/29 02/10/30 02/08/31 02/07/32 | 5,970 5,330 9,460 | 492,167 439,405 779,882 | 4,253 | 350,576 | | James F. Stern | 15,180 15,550 22,400 30,775 11,934 5,470 | 0 0 0 0 5,966 10,940 | 0 | 50.160 61.760 49.420 42.390 60.820 74.265 | 02/13/27 02/12/28 02/11/29 02/10/30 02/08/31 02/07/32 | 4,125 3,890 6,850 | 340,065 320,692 564,714 | 3,083 | 254,121 | | David R. Warren | 3,755 7,995 5,688 16,196 10,520 4,397 | 0 0 0 0 5,260 8,793 | 0 | 50.160 61.760 49.420 42.390 60.820 74.265 | 02/13/27 02/12/28 02/11/29 02/10/30 02/08/31 02/07/32 | 3,635 3,125 5,510 | 299,669 257,625 454,244 | 2,483 | 204,657 | | Mark A. Petrarca | 10,215 14,780 20,250 9,894 4,135 | 0 0 0 4,946 8,270 | 0 | 61.760 49.420 42.390 60.820 74.265 | 02/12/28 02/11/29 02/10/30 02/08/31 02/07/32 | 3,420 2,940 5,215 | 281,945 242,374 429,925 | 2,348 | 193,528 |

  72. Outstanding Equity Awards at December 31, 2023

    | 1 | Mr. Wheeler will have the right to exercise an option for 32,973 shares at the exercise price of $60.82 on February 8, 2024; 28,753 shares at the exercise price of $74.265 on February 7, 2024; and 28,753 shares at the exercise price of $74.265 on February 7, 2025. Mr. Lauber will have the right to exercise an option for 8,636 shares at the exercise price of $60.82 on February 8, 2024; 7,502 shares at the exercise price of $74.265 on February 7, 2024; and 7,501 shares at the exercise price of $74.265 on February 7, 2025. Mr. Stern will have the right to exercise an option for 5,966 shares at the exercise price of $60.82 on February 8, 2024; 5,470 shares at the exercise price of $74.265 on February 7, 2024; and 5,470 shares at the exercise price of $74.265 on February 7, 2025. Mr. Warren will have the right to exercise an option for 5,260 shares at the exercise price of $60.82 on February 8, 2024; 4,397 shares at the exercise price of $74.265 on February 7, 2024; and 4,396 shares at the exercise price of $74.265 on February 7, 2025. Mr. Petrarca will have the right to exercise an option for 4,946 shares at the exercise price of $60.82 on February 8, 2024; 4,135 shares at the exercise price of $74.265 on February 7, 2024; and 4,135 shares at the exercise price of $74.265 on February 7, 2025. No stock options were granted in 2023. |

  73. Outstanding Equity Awards at December 31, 2023

    | 2 | Mr. Wheeler will vest in 22,790 restricted stock units on February 8, 2024; 20,440 restricted stock units on February 7, 2025; and 36,045 restricted stock units on February 13, 2026. Mr. Lauber will vest in 5,970 restricted stock units on February 8, 2024 and 5,330 restricted stock units on February 7, 2025; and 9,460 restricted stock units on February 13, 2026. Mr. Stern will vest in 4,125 restricted stock units on February 8, 2024; 3,890 restricted stock units on February 7, 2025; and 6,850 restricted stock units on February 13, 2026. Mr. Warren will vest in 3,635 restricted stock units on February 8, 2024; 3,125 restricted stock units on February 7, 2025; and 5,510 restricted stock units on February 13, 2026. Mr. Petrarca will vest in 3,420 restricted stock units on February 8, 2024; 2,940 restricted stock units on February 7, 2025; and 5,215 restricted stock units on February 13, 2026. |

  74. Outstanding Equity Awards at December 31, 2023

    | 3 | Market value determined by the NYSE closing market price of $82.44 on December 29, 2023, the last trading day of the fiscal year. |

  75. Outstanding Equity Awards at December 31, 2023

    | 4 | The number of shares of performance stock shown in this column reflects the maximum performance level for the 2023-2025 award. At target, the number of units that would vest on December 31, 2025 are: Mr. Wheeler, 10,815; Mr. Lauber, 2,835; Mr. Stern, 2,055; Mr. Warren, 1,655 and Mr. Petrarca, 1,565. |

  76. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information related to options exercised and stock vested for each of the named executive officers during fiscal year 2023.

  77. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Kevin J. Wheeler | 19,900 | $912,445 | 31,140 | $2,049,012 | | Charles T. Lauber | 0 | 0 | 7,085 | 466,193 | | James F. Stern | 0 | 0 | 5,915 | 389,207 | | David R. Warren | 0 | 0 | 4,670 | 307,286 | | Mark A. Petrarca | 11,005 | 253,585 | 3,890 | 255,962 |

  78. Option Exercises and Stock Vested

    | 1 | Based on NYSE closing price of the Common Stock on the vesting date. |

  79. Pension Benefits

    Pension Benefits

  80. Pension Benefits

    | Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | James F. Stern | Executive Supplemental Pension Plan | 16.59 | $3,084,097 | $0 | | Mark A. Petrarca | Executive Supplemental Pension Plan | 24.57 | 3,362,975 | 0 |

  81. Pension Benefits

    Executive retirement benefits are provided in one of two ways, depending on when the executive became eligible. Executives hired or promoted to a qualifying position after July 2010 participate in the defined contribution component under the A. O. Smith Non-qualified Deferred Compensation Plan that provides an annual contribution of 3% of pay (base salary plus annual bonus) based on compensation above the Internal Revenue Code limit that applies to qualified retirement plans. Messrs. Wheeler, Lauber and Warren participate in this defined contribution restoration component. Executives hired or promoted into a qualifying executive position prior to July 2010, are covered by the A. O. Smith Corporation Executive Supplemental Pension Plan, a non-qualified supplemental executive retirement plan. This plan was intended to supplement a defined benefit plan that was closed to new entrants in 2010, stopped accruing benefits in 2014, and terminated in 2021. Messrs. Stern and Petrarca are the only remaining participants in the Executive Supplemental Pension Plan. The Executive Supplemental Pension Plan provides a benefit equivalent to 1.65% of the executive’s five-year final average pay times years of credited service up to a 40-year maximum, less the qualified plan benefit as calculated under the closed, and now terminated, A. O. Smith Retirement Plan, and also reduced by the amount of the monthly benefit that would have accrued under the A. O. Smith Retirement Plan had benefits not stopped accruing on December 31, 2014. The termination of the A. O. Smith Retirement Plan does not affect the amount, or timing of payment, of benefits under the A. O. Smith Corporation Executive Supplemental Pension Plan. To be eligible for benefits under the Executive Supplemental Pension Plan, the executive must remain employed until at least age 57 and must have 10 years of service. Both Messrs. Stern and Petrarca are currently eligible for benefits once they retire. If the executive retires before age 65, then the benefit payable is reduced by 6.67% per year between the age at retirement and age 64 (also called the unreduced retirement age). The retirement benefit under the Executive Supplemental Pension Plan is paid as a single lump-sum to the executive upon retirement. The lump-sum amount is calculated by determining the amount necessary (on an after-tax basis to the executive) to purchase a commercial annuity that will provide a monthly amount equivalent to the after-tax amount the executive would receive if the monthly pension would be paid directly by us. If an executive retires early, the single lump-sum amount to be paid from the Executive Supplemental Pension Plan is calculated based upon the unreduced benefit commencing at the unreduced retirement age discounted for interest between the unreduced retirement age and the executive’s age at early retirement using the after-tax yield on the Bloomberg Barclays Capital U.S. Corporate Index. To calculate the “Present Value of Accumulated Benefit” for the benefit under the Executive Supplemental Pension Plan, assumptions are made regarding the executive’s tax rate at retirement and post-retirement tax rate and an annuity purchase interest rate (currently 4.8%). As an offset to a portion of the lump-sum payment obligation to the executive, we may transfer life insurance policies to the executive valued at the cash surrender value of the life insurance policies. The “Present Value of Accumulated Benefit” set forth in the table above is based on assumptions and valuation dates that are the same as those used for the valuation of pension liabilities in the company’s most recent annual report. Retirement age under the Executive Supplemental Pension Plan is assumed to be the earliest age that an executive can retire with an unreduced benefit, which is age 64 for Messrs. Stern and Petrarca. Post-retirement mortality rates are based on the Pri-2012 Retiree Mortality Table (white collar variant), including generational improvements using scale MP2021. The assumption is made that there is no probability of preretirement death or termination by any other cause. We do not have a policy to grant extra years of service. No current executive officer has additional service granted under a retirement plan.

  82. Non-qualified Deferred Compensation

    Non-qualified Deferred Compensation

  83. Non-qualified Deferred Compensation

    | Name | Executive Contributions in 2023 ($) | Registrant Contributions in 2023 ($)(1) | Aggregate Earnings in 2023 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at December 31, 2023 ($) | | Kevin J. Wheeler | $0 | $168,007 | $381,492 | $0 | $3,128,626 | | Charles T. Lauber | 0 | 52,675 | 28,151 | 0 | 326,140 | | James F. Stern | 0 | 28,040 | 741,151 | 0 | 4,825,140 | | David R. Warren | 0 | 31,187 | 10,464 | 0 | 185,365 | | Mark A. Petrarca | 0 | 20,969 | 64,114 | 0 | 518,174 |

  84. Non-qualified Deferred Compensation

    | 1 | All registrant contributions under the A. O. Smith Non-qualified Deferred Compensation Plan in 2023 are also reported in the “Summary Compensation Table.” |

  85. Non-qualified Deferred Compensation

    Each executive has an account in the A. O. Smith Non-qualified Deferred Compensation Plan, which each year is credited with supplemental company contributions and notional dividend equivalents on restricted stock and restricted stock units. The executive’s account is a bookkeeping entry only. Amounts credited to the executive’s account are credited with gains and losses each month based on the executive’s crediting election. The crediting election is used to designate the investment fund(s) as the basis for calculating the rate of return equivalent for the executive’s account. The investment funds available under the Non-qualified Deferred Compensation Plan are similar to those available under our 401(k) plan. There are no above-market or preferential earnings under the Deferred Compensation Plan in 2023. The Non-qualified Deferred Compensation Plan also allows executives to defer payment of all or a part of their base salary, annual incentive bonus or restricted stock units to a future date. Deferred amounts are credited to the executive’s account in the Non-qualified Deferred Compensation Plan, and gains and losses on the deferred amounts are credited in the same manner as described above for supplemental company contributions and notional dividend equivalents, except that deferrals of restricted stock units are deemed invested in shares of our Common Stock for purposes of determining gains and losses, and dividend equivalents on such restricted stock units are credited in the form of additional restricted stock units. Executives are eligible to receive payment of amounts in their accounts under the Non-qualified Deferred Compensation Plan beginning upon termination of employment (six months after termination in the case of the amounts credited to accounts on or after January 1, 2005). They may also elect in-service distributions scheduled for a specific date or series of dates.

  86. Pay versus Performance Disclosure Table

    Pay versus Performance Disclosure Table

  87. Pay versus Performance Disclosure Table

    | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for CEO ($) 1 | Compensation Actually Paid to CEO ($) 2 | Average Summary Compensation Table Total for Non-CEO NEOs 3 | Average Compensation Actually Paid to Non-CEO NEOs ($) 4 | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) 5 | Net Income (millions) ($) | Earnings before Interest and Taxes (millions)($) 6 | | 2023 | $8,756,656 | $13,197,490 | $2,618,504 | $3,202,626 | $186 | $150 | $557 | $734 | | 2022 | 6,640,047 | 180,882 | 1,691,156 | 577,901 | 127 | 127 | 236 | 233 | | 2021 | 6,897,982 | 14,651,874 | 2,094,815 | 3,447,584 | 187 | 135 | 487 | 630 | | 2020 | 5,174,751 | 6,941,943 | 2,558,990 | 2,825,096 | 117 | 111 | 345 | 451 |

  88. Pay versus Performance Disclosure Table

    | 1 | The dollar amounts reported in this column are the amounts of total compensation reported for Mr. Wheeler, our chairman, president and chief executive officer for each corresponding year in the “Total” column of the Summary Compensation Table (“SCT”). |

  89. Pay versus Performance Disclosure Table

    | 2 | The dollar amounts reported in this column represent the amount of “Compensation Actually Paid” to Mr. Wheeler as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Wheeler during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Wheeler’s total compensation for each year to determine the compensation actually paid: |

  90. Pay versus Performance Disclosure Table

    | Adjustments to Determine Compensation Actually Paid for CEO | 2023 | 2022 | 2021 | 2020 | | Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” Column of the SCT | — | $(42,393) | — | $(142,120) | | Increase for “Service Cost” for Pension Plans | — | — | — | — | | Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | (3,146,180) | (1,517,977) | (1,386,088) | (1,320,025) | | Deduction for Amounts Reported under the “Option Awards” Column in the SCT | — | (1,518,003) | (1,385,968) | (1,320,016) | | Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year End | 4,300,908 | 2,142,436 | 4,852,502 | 4,189,162 | | Increase/deduction for Change in Fair Value from prior Year End to current Year End of Awards Granted Prior to year that were Outstanding and Unvested as of Year End | 2,308,145 | (3,958,480) | 5,115,965 | 439,083 | | Increase/deduction for Change in Fair Value from Prior Year End to Vesting Date of Awards Granted Prior to year that Vested during year | 977,961 | (1,564,747) | 557,481 | (78,893) | | Total Adjustments | $4,440,834 | $(6,459,164) | $7,753,892 | $1,767,191 |

  91. Pay versus Performance Disclosure Table

    | 3 | The dollar amounts reported in this column represent the average of the amounts reported for the company’s named executive officers as a group (excluding Mr. Wheeler) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the named executive officers (excluding Mr. Wheeler) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, Messrs. Lauber, Stern, Petrarca and Warren; (ii) for 2021, Messrs. Lauber, Stern, Petrarca and Warren; and (iii) for 2020, Messrs. Lauber, Stern, Petrarca, Warren and Rajendra. |

  92. Pay versus Performance Disclosure Table

    | 4 | The dollar amounts reported in this column represent the average amount of “compensation actually paid” to the named executive officers as a group (excluding Mr. Wheeler), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the named executive officers as a group (excluding Mr. Wheeler) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the named executive officers as a group (excluding Mr. Wheeler) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |

  93. Pay versus Performance Disclosure Table

    | Adjustments to Determine Compensation Actually Paid for Non-CEO NEOs | 2023 | 2022 | 2021 | 2020 | | Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” Column of the SCT | (314,317) | — | $(206,124) | $(513,175) | | Increase for “Service Cost” for Pension Plans | 75,383 | 103,701 | 107,498 | 117,666 | | Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | (589,909) | (283,785) | (260,766) | (432,802) | | Deduction for Amounts Reported under the “Option Awards” Column in the SCT | — | (283,812) | (260,710) | (432,818) | | Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year End | 806,408 | 387,072 | 912,834 | 1,373,554 | | Increase/deduction for Change in Fair Value from prior Year End to current Year End of Awards Granted Prior to year that were Outstanding and Unvested as of Year End | 432,757 | (711,758) | 961,004 | 220,982 | | Increase/deduction for Change in Fair Value from Prior Year End to Vesting Date of Awards Granted Prior to year that Vested during year | 173,801 | (324,673) | 99,032 | (67,301) | | Total Adjustments | $584,123 | $(1,113,255) | $1,352,768 | $266,106 |

  94. Pay versus Performance Disclosure Table

    | 5 | The peer group used for this purpose is the S&P Industrials Index. |

  95. Pay versus Performance Disclosure Table

    | 6 | We have determined that EBIT is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to our named executive officers, for the most recently completed fiscal year, to company performance. |

  96. PAY RATIO DISCLOSURE

    PAY RATIO DISCLOSURE Our philosophy is to pay our employees competitively with similar positions in the applicable labor market. We follow this approach worldwide, whether it be an executive level position or hourly job at a foreign plant. As such, we typically benchmark by position to the applicable labor market every year, and adjust compensation to match the applicable market. By doing so, we believe we maintain a high-quality, more stable workforce. The compensation we paid to the median employee identified below was benchmarked in accordance with this process to verify competitive compensation. As a result of rules the SEC adopted under the Dodd-Frank Act, we are providing the following disclosure about the ratio of the annual total compensation of our chairman and chief executive officer to the median annual total compensation of our employees. For the year ended December 31, 2023:

  97. PAY RATIO DISCLOSURE

    | • | the median of the annual total compensation of all employees of our company was reasonably estimated to be $49,422; |

  98. PAY RATIO DISCLOSURE

    | • | the annual total compensation of our chairman and chief executive officer was $8,756,656; and |

  99. PAY RATIO DISCLOSURE

    | • | based on this information, the ratio of the annual total compensation is estimated to be 177:1. |

  100. PAY RATIO DISCLOSURE

    We identified our median employee using a multi-step process that is permitted under the SEC rules. We first examined the annual cash compensation paid to each of our employees during 2023, which we gathered from payroll data. Then, we excluded approximately 412 employees in India and approximately 60 employees in Vietnam as allowed under the de minimis exception to the SEC rules. The total numbers of U.S. employees and non-U.S. employees were 5,004 and 7,364, respectively, before taking into account such exclusions and for purposes of calculating such exclusions. We annualized the total cash compensation paid to those employees who commenced work with us during 2023 and therefore did not work for us the entire calendar year. Using this annual cash compensation data, we identified 10 employees whose total cash compensation was closest to the median annual cash compensation, as we believed that our median employee was likely within such group since cash compensation reasonably reflects the total compensation for most of our employee population. We then examined the total compensation of each of the employees within such group, calculated the same way as we calculate total compensation for our named executive officers in the “Summary Compensation Table,” to select our median employee whose total compensation is disclosed above. The median employee is a Production Supervisor at our Nanjing, China plant who in 2023 earned the U.S. dollar equivalent of $49,422, which is competitive pay for this position in China.