DEF 14A of Snap-on Inc
Filed Mar 12, 2024 · FY20230001193125-24-065013
David C. Adams
David C. Adams Director since June 2016 Mr. Adams, age 70, retired as Executive Chairman of Curtiss-Wright Corporation, a global provider of highly engineered, critical function products and services to the commercial, industrial, defense and energy markets, in 2022, after serving in such role since 2021; he was originally appointed as Chairman of Curtiss-Wright in 2015. Mr. Adams served as Chief Executive Officer and President of Curtiss-Wright from 2013 and 2012, respectively, until his retirement from those roles in 2021. He previously served as Curtiss-Wright’s Chief Operating Officer, and prior thereto, he served as a Vice President of Curtiss-Wright and as President of Curtiss-Wright Controls, Inc., its former motion control segment. Mr. Adams served as a director of Curtiss-Wright until May 2023. Mr. Adams earned a Bachelor of Science degree from California State University and a Master of Business Administration degree from California Lutheran University.
Karen L. Daniel
Karen L. Daniel Director since December 2005 Ms. Daniel, age 66, retired in 2018 as Division President and Chief Financial Officer for Black & Veatch Corporation, a leading global engineering, construction and consulting company specializing in infrastructure development in the areas of energy, water and information. She also serves as a director of Commerce Bancshares, Inc. and Teladoc Health, Inc. Ms. Daniel served as a director of Livongo Health, Inc. until its merger with Teladoc Health, Inc. in 2020. In addition, Ms. Daniel is a Certified Public Accountant. Ms. Daniel earned a Bachelor of Science degree in accounting from Northwest Missouri State University and a Master of Science degree in accounting from the University of Missouri-Kansas City.
Ruth Ann M. Gillis
Ruth Ann M. Gillis Ms. Gillis, age 69, retired in 2014 as Executive Vice President and Chief Administrative Officer of Exelon Corporation, a utility services holding company engaged in energy generation and delivery. She was also President of Exelon Business Services Company, a subsidiary of Exelon that provides transactional and corporate services to Exelon’s operating companies. Previous roles included service as Executive Vice President of ComEd, an Exelon subsidiary, and as the Chief Financial Officer of Exelon. Prior to the merger that formed Exelon, Ms. Gillis was the Chief Financial Officer of Unicom Corp., a producer, purchaser, transmitter, distributor and seller of electricity. She also serves as a director of KeyCorp and Voya Financial, Inc. Ms. Gillis earned a Bachelor of Arts degree in economics from Smith College and a Master of Business Administration degree from the University of Chicago Graduate School of Business.
James P. Holden
James P. Holden Mr. Holden, age 72, has been our Lead Director since 2009. He served 27 years in the automotive industry, including 19 years with DaimlerChrysler and its predecessor, Chrysler Corporation. He previously served as President and Chief Executive Officer of DaimlerChrysler Corporation, a U.S. subsidiary of DaimlerChrysler AG. Mr. Holden also serves as a director of Sirius XM Holdings Inc. He served as a director of Elio Motors, Inc. until 2021, and Speedway Motorsports, Inc. until 2019. Mr. Holden earned a Bachelor of Science degree in political science from Western Michigan University and a Master of Business Administration degree from Michigan State University.
Nathan J. Jones
Nathan J. Jones Director since July 2008 Mr. Jones, age 67, retired in 2007 as President, Worldwide Commercial & Consumer Equipment Division of Deere & Company, a manufacturer of agricultural, commercial and consumer equipment. He previously served as Deere & Company’s Senior Vice President and Chief Financial Officer and as its Vice President and Treasurer. Mr. Jones earned a Bachelor of Business Administration degree in accounting from the University of Wisconsin-Eau Claire and a Master of Business Administration degree from the University of Chicago Graduate School of Business.
Henry W. Knueppel
Henry W. Knueppel Director since September 2011 Mr. Knueppel, age 75, retired in 2011 as Chairman of the Board and Chief Executive Officer of Regal Beloit Corporation, a manufacturer of electric motors, generators and controls, as well as mechanical motion control products, and served as a director of Regal Beloit until 2019. He previously served as Regal Beloit’s President and Chief Operating Officer and as an Executive Vice President prior thereto. Mr. Knueppel served as a director of WEC Energy Group, Inc. until 2021. Mr. Knueppel earned a Bachelor of Arts degree in economics from Ripon College and a Master of Business Administration degree from the University of Wisconsin-Whitewater.
W. Dudley Lehman
W. Dudley Lehman Director since May 2003 Mr. Lehman, age 72, retired in 2006 as Group President for Kimberly-Clark Corporation, a manufacturer and marketer of a wide range of consumer and business-to-business products from natural fibers. He previously served as Group President–Business to Business and as Group President–Infant and Child Care Sectors for Kimberly-Clark. Mr. Lehman earned a Bachelor of Arts degree in political science from the University of North Carolina at Chapel Hill and a Master of Business Administration degree from Wake Forest University.
Nicholas T. Pinchuk
Nicholas T. Pinchuk Director since April 2007 Mr. Pinchuk, age 77, has been Snap-on’s President and Chief Executive Officer since 2007 and Chairman of the Board since 2009. Prior to his appointment as President and Chief Executive Officer, Mr. Pinchuk served as Snap-on’s President and Chief Operating Officer, and before that as Snap-on’s Senior Vice President and President–Worldwide Commercial & Industrial Group. Before joining Snap-on in 2002, Mr. Pinchuk served in several executive operational and financial management positions at United Technologies Corporation and held various financial and engineering positions at Ford Motor Company. Mr. Pinchuk previously served as a director of Columbus McKinnon Corporation. In addition to his other experience and expertise, Mr. Pinchuk is being re-nominated as a director because it is the Company’s traditional practice to have its Chief Executive Officer serve as a member of the Board. Mr. Pinchuk earned Master and Bachelor of Science degrees in engineering from Rensselaer Polytechnic Institute and a Master of Business Administration degree from Harvard Business School. Mr. Pinchuk served as an officer of the U.S. Army in Vietnam.
Gregg M. Sherrill
Gregg M. Sherrill Director since December 2010 Mr. Sherrill, age 71, retired in 2020 as Non-Executive Chairman of Tenneco Inc., a producer of automotive emission control and ride control products and systems, after having served in such capacity since 2018, and also retired as a director of Tenneco in 2020. He served as Executive Chairman of Tenneco from 2017 until 2018, and previously served as Chairman and Chief Executive Officer of Tenneco from 2007 until 2017. Prior thereto, Mr. Sherrill was Corporate Vice President and President, Power Solutions of Johnson Controls Inc., a global diversified technology and industrial company, and held various engineering and manufacturing positions at Ford Motor Company. Mr. Sherrill also serves as a director of The Allstate Corporation. Mr. Sherrill earned a Bachelor of Science degree in mechanical engineering from Texas A&M University and a Master of Business Administration degree from Indiana University’s Graduate School of Business.
Donald J. Stebbins
Donald J. Stebbins Director since January 2015 Mr. Stebbins, age 66, retired in 2018 as President and Chief Executive Officer, and also as a director, of Superior Industries International, Inc., a manufacturer of aluminum wheels for the automotive industry. Prior thereto, he provided consulting services to various private equity firms. Mr. Stebbins previously served as Chairman, President and Chief Executive Officer of Visteon Corporation, an automotive components manufacturer, after having served as Visteon’s President and Chief Operating Officer prior thereto. Before joining Visteon, Mr. Stebbins held various positions with increasing responsibility at Lear Corporation, a supplier of automotive seating and electrical distribution systems, including President and Chief Operating Officer–Europe, Asia and Africa, President and Chief Operating Officer–Americas, and Senior Vice President and Chief Financial Officer. Mr. Stebbins also serves as a director of Kaiser Aluminum Corporation. Mr. Stebbins earned a Bachelor of Science degree in finance from Miami University and a Master of Business Administration degree from the University of Michigan.
Table 1: Director Compensation
Table 1: Director Compensation
Table 1: Director Compensation
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($)(4) | Total ($) | | David C. Adams | $120,000 | $159,526 | $4,301 | $283,827 | | Karen L. Daniel | 122,500 | 159,526 | 107,365 | 389,391 | | Ruth Ann M. Gillis | 120,000 | 159,526 | 4,301 | 283,827 | | James P. Holden | 142,500 | 159,526 | 91,513 | 393,539 | | Nathan J. Jones | 130,000 | 159,526 | 78,503 | 368,029 | | Henry W. Knueppel | 112,500 | 159,526 | 26,161 | 298,187 | | W. Dudley Lehman | 112,500 | 159,526 | 107,365 | 379,391 | | Gregg M. Sherrill | 112,500 | 159,526 | 34,238 | 306,264 | | Donald J. Stebbins | 120,000 | 159,526 | 4,301 | 283,827 |
Table 1: Director Compensation
| (1) Includes annual retainer and committee and chair fees. For Mr. Holden, this amount also includes his fee for serving as Lead Director. As noted above, directors have the option to receive up to 100% of their fees, including the annual retainer, in cash or shares of common stock under the Directors’ Fee Plan. |
Table 1: Director Compensation
| (2) Amounts shown represent the grant date fair value of restricted stock granted to non-employee directors during the fiscal year. The Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC 718”) requires us to recognize compensation expense for stock awards granted to our directors based on the estimated fair value of the equity awards at the time of grant. The fair value is expensed over the contractual term of the awards. The grant date fair value of the restricted stock in the table is calculated using the closing price on the grant date ($249.26) and differs from the amount disclosed in “Board Compensation—Non-employee Directors” above because the number of shares is determined based on the average closing price for the Company’s stock for the 30 business days prior to the grant date ($242.06). The assumptions used to determine the valuation of such restricted stock awards are discussed in Note 13 to our Consolidated Financial Statements. |
Table 1: Director Compensation
| (3) Each current non-employee director had the following stock awards outstanding as of the end of the fiscal year: |
Table 1: Director Compensation
| Name | Stock Awards | | | Shares of Stock That Have Not Vested (#) | | David C. Adams | 640 | | Karen L. Daniel | 15,977 | | Ruth Ann M. Gillis | 640 | | James P. Holden | 13,618 | | Nathan J. Jones | 11,682 | | Henry W. Knueppel | 3,893 | | W. Dudley Lehman | 15,977 | | Gregg M. Sherrill | 5,095 | | Donald J. Stebbins | 640 |
Table 1: Director Compensation
The restrictions on the shares of restricted stock granted to non-employee directors in the fiscal year generally lapse upon the earliest of the first anniversary of the grant date, the director’s death or disability or a change of control, as defined in the 2011 Plan. The restrictions on the restricted stock units (“RSUs”) granted from fiscal 2009 through fiscal 2012, and on the shares of restricted stock granted prior to fiscal 2009, lapse upon the earliest of the director’s retirement from the Board, the director’s death or a change of control, as defined in the 2011 Plan or its predecessor.
Table 1: Director Compensation
| (4) Includes cash dividends paid on shares of restricted stock and dividend equivalents with respect to the number of shares of common stock represented by RSUs to the extent not reflected in the grant date fair value of these awards. |
Executive Summary
| • | Annual incentive payments to our NEOs based on fiscal 2023 corporate financial performance and personal strategic business goals ranged from 85.0% to 135.8% of target. In determining the payouts, the Committee considered the strong financial performance generated in 2023. See “Total Direct Compensation—Cash and Incentive—Annual Incentives” below for a more detailed discussion. |
Executive Summary
| • | In February 2024, the Committee approved the vesting of performance-based share units (“PSUs”) granted in 2021 based on financial performance during fiscal 2021 to 2023. As a result of the Company’s actual performance during that period, the PSUs were earned at 200% of target. See “Total Direct Compensation—Cash and Incentive—Long-term Incentive Compensation—Long-term Performance-Based Share Units” below for a more detailed discussion. |
Executive Summary
The components of our executive compensation program are described in this section and in “Executive Compensation Information” below. Five Year Financial and Stock Performance plus Incentive Plan Achievement The graph below illustrates year-over-year cumulative growth in the Company’s operating income, the cumulative TSR of a $100 investment in Snap-on common stock on December 31, 2018, assuming that dividends were reinvested quarterly, and annual incentive payouts based solely on consolidated financial results, expressed as a percent of target. Overview of Executive Equity Grants In furtherance of the Company’s pay-for-performance philosophy, the Committee places a greater emphasis on performance-based equity awards as compared to stock options. The Committee regularly reviews the Company’s overall compensation program, including the long-term incentive compensation design. The most recent changes to the program were made by the Committee after considering feedback from shareholders and reviewing incentive plan design practices in the Market with its independent compensation consultant. Since 2021, the long-term plan design has been comprised of the following:
Executive Summary
| • | PSUs consist of 60% of the annual equity award value for Mr. Pinchuk and 50% for the other NEOs; |
Executive Summary
| • | Stock options consist of 20% of the annual equity award for Mr. Pinchuk and 25% for the other NEOs; and |
Executive Summary
| • | Time-vesting RSUs, which promote a long-term ownership mentality and further align the interests of our executives with those of our shareholders, as well as provide a retention element, are weighted at 20% for Mr. Pinchuk and 25% for the other NEOs. |
Executive Summary
| • | Attract and retain high quality executive officers that are critical to the long-term success of the Company; |
Executive Summary
| • | Pay at competitive levels, consistent with our peer group; |
Executive Summary
Our goal is to design a compensation program that rewards executive officers for operating performance, as well as the attainment of corporate and personal performance goals. As such, the majority of our executive officers’ total compensation opportunity is placed at risk by tying it to annual and long-term performance incentive plans. In addition, our objective is to properly balance financial and strategic performance, short- and long-term performance and cash and equity compensation. Our overall compensation program consists of base salary, cash-based annual incentives and long-term incentives, which for fiscal 2023 were granted in the form of stock options, PSUs and RSUs. The total target direct compensation mixes for the Chief Executive Officer (“CEO”) and the other NEOs are illustrated in the following pie charts: Our target annual and long-term incentive programs balance a number of different performance metrics: We believe that the performance metrics mentioned above, coupled with stock price, focus our executives on the important factors that drive our business and create value for our shareholders. Governance We maintain sound compensation practices and have, over the past several years, adjusted our program to better reflect good governance practices and standards. For example:
Executive Summary
| • | We do not have employment agreements other than the change of control agreements described below; |
Executive Summary
| • | Our change of control agreements utilize a double trigger and do not provide excise tax gross-up payments; |
Executive Summary
| • | Our 2011 Incentive Stock and Awards Plan (the “2011 Plan”) requires a minimum vesting period of one year for stock options, stock appreciation rights (“SARs”), performance shares, PSUs, performance-based restricted stock and performance-based RSUs, and a minimum vesting period of three years for time-based restricted stock and RSUs (provided, however, that up to 5% of the shares available for issuance pursuant to the 2011 Plan may be granted without any minimum vesting period); |
Executive Summary
| • | We include balanced performance metrics in all incentive plans and require year-over-year improvement; |
Executive Summary
| • | We have not repriced underwater stock options and the 2011 Plan explicitly prohibits any repricing without shareholder approval; |
Executive Summary
| • | We do not pay dividends until vesting of the underlying equity awards; |
Executive Summary
| • | We retain an independent compensation consultant employed solely by the Committee; and |
Compensation Program and Philosophy
| • | Total compensation of executives who perform similar duties at companies in our peer group; and |
Compensation Program and Philosophy
| • | Incentive plans should generally require continuous financial improvement in order for payouts to occur, while also being adaptable to economic realities within a general set of guidelines; and |
Compensation Program and Philosophy
To further emphasize our pay-for-performance philosophy, we generally derive base salaries from the median for comparable positions reflected in the Market Data (described below). Our targeted total direct compensation levels are designed to generally fall within reasonable competitive boundaries, which we believe are at or somewhat above the median of the Market (described below), with stretch goals built into our incentive plans to achieve above the 50th percentile. For fiscal 2023, we expect our target total direct compensation levels will fall between the 50th and 75th percentiles of Market Data based on information used during the compensation planning process. As stated below, the actual compensation earned by our executives can vary significantly due to the potential variation in the Company’s performance and changes in the market price, and associated shareholder return, of our stock. Each element of our compensation program is outlined below. In addition to base salary and incentive compensation, the Committee also oversees benefits and other amounts payable to executive officers, including retirement benefits and potential benefits that may be payable in a situation involving a change of control of the Company. Retirement benefits are intended both to recognize, over the long term, services rendered to the Company and to ensure that we can attract and retain high quality executives. The Committee periodically reviews market practices with respect to these other types of compensation. For further discussion about these benefits, see “Retirement and Deferred Benefits,” “Other Benefits,” and “Change of Control and Other Employment-related Agreements” below. The Company does not provide other perquisites to executive officers. The Company does not have any specific compensation agreements with the NEOs other than the change of control agreements described below. The Committee periodically reviews these agreements and compares the level of benefits payable thereunder to those offered at other companies and believes these types of agreements remain important to the Company. Severance for executive officers, outside of a change of control event, is determined on a case-by-case basis. There are no special agreements with the NEOs at this time.
Committee Practices
Committee Practices The Committee has the sole authority to retain and terminate a consulting firm to assist in the evaluation of the compensation of the CEO and other executive officers and has the sole authority to approve the consultant’s fees and other retention terms. As part of the process to retain an executive compensation consultant, the Committee considers the consultant’s representations with respect to its practices and approach to maintaining independence. To further ensure independence, our executive compensation consultant reports directly to the Committee. Results of the analyses performed by our consultant on competitive marketplace practices are referred to as the “Market” or “Market Data.” The Committee reviews data that reflects the Market as a benchmark to provide one reference point for compensation practices as well as a source of comparative information to assist in determining various components of an executive officer’s direct compensation; however, it does not use this information to mathematically calculate compensation nor limit itself to the range produced by the Market Data. The Committee reviews the Market Data in general terms and believes it is important for the Committee to use its judgment and discretion to address individual circumstances rather than to simply aim for a level of compensation that falls within a specific range of the Market Data. Therefore, the Market Data is not used to limit the discretion of the Committee in establishing compensation levels for executive officers. The Committee has retained Semler Brossy Consulting Group, LLC (“Semler Brossy”) to provide ongoing advisory services to the Committee. These services include, but are not limited to: providing updates on trends in executive compensation practices; reviewing and making recommendations on the Company’s overall compensation strategy; providing input and reviewing CEO and other executive officer salary increases and incentive targets; reviewing incentive program design; updating the peer group; and performing market analyses. Semler Brossy does no other work for the Company other than acting as an advisor to the Committee. The Committee reviewed the independence factors set forth in applicable NYSE and SEC rules, and determined that the retention of Semler Brossy did not give rise to any conflict of interest in 2023. The following 15 publicly traded companies comprised the Company’s peer group for the 2023 compensation planning cycle:
Total Direct Compensation—Cash and Incentive
| • | Annual incentives; and |
Total Direct Compensation—Cash and Incentive
| • | Long-term incentive compensation. |
Annual Incentives
Annual Incentives We provide annual cash incentives for our executive officers and approximately 1,000 other salaried employees under the 2011 Plan. Annual incentive compensation is intended to place a significant part of each executive officer’s total annual compensation at risk (i.e., pay-for-performance only). While base salaries are generally compared to Market median, as previously discussed, annual incentive targets are designed to generally fall within reasonable competitive boundaries, with stretch goals built into our incentive plans to achieve pay results above the 50th percentile. However, as is the case with base salaries, the Committee exercises discretion and is not bound by the range provided by the Market Data when establishing target annual incentive opportunities. In aggregate, our fiscal 2023 annual incentive targets as a percent of base salary for our NEOs were at or slightly below the 50th percentile of the Market. The fiscal 2023 annual incentive targets for each of the NEOs are set forth in the following table:
Annual Incentives
| Name | Target Bonus as a Percent of Base Salary | | Nicholas T. Pinchuk | 135% | | Aldo J. Pagliari | 75% | | Thomas J. Ward | 75% | | Anup R. Banerjee | 75% | | Timothy L. Chambers | 75% |
Annual Incentives
The general plan design for all participants in the annual incentive plan, including the NEOs, provided for a 50% weighting on consolidated fiscal 2023 financial results, focused on operating income and return on net assets employed before interest and taxes (“RONAEBIT”), and a 50% weighting for personal strategic business goals, which included additional quantifiable measures where possible. These proportions reflect the Committee’s belief that annual incentives should drive shareholder value by focusing employees on the success of the overall Company and encouraging collective behavior, while still allowing for flexibility to meet changing business challenges. It is the philosophy of the Committee and management that to receive a payout on the consolidated financial results component of the annual incentive award, the Company needs to achieve a RONAEBIT at least equal to its weighted-average cost of capital (“WACC”) since the Committee and Board believe that a return greater than the Company’s WACC represents the threshold for enhancing value to shareholders. See the table below for the weighting of the components of the annual incentive plan:
Annual Incentives
| Component | Weighting | | Consolidated financial results | 50% | | Personal strategic business goals | 50% | | Total | 100% |
Annual Incentives
Consolidated Financial Results Component The Committee continued to utilize operating income and RONAEBIT as the operating performance measures for the Company-wide portion of the annual incentive award. These measures were chosen because they are consistent with the Company’s growth goals and objectives. The Committee believes they are important factors in driving shareholder value, and these measures are regularly used to assess consolidated financial performance internally, as well as externally. For each operating performance measure, the Committee set three different performance levels (in order of rank)—threshold, target and maximum. Participants could earn up to twice their target percentage for performance at the maximum level and 25% of their target percentage for performance at the threshold level. Payments are adjusted proportionately and interpolated for actual performance that falls between the threshold, target and maximum levels. Annual goals were set and approved by the Committee at its February 2023 meeting. Under the relevant plans, the Committee has broad discretion in determining goals, results and payments, including modifying goals to reflect corporate developments, such as acquisitions, adjusting results or changing an individual’s goals. However, it only uses this discretion after setting goals when it believes it is appropriate to more accurately reflect the intentions of these incentives and further the interests of the Company and its shareholders. The Committee also can consider unusual financial circumstances. During fiscal 2023, the Committee did not use its discretion to change corporate goals. Consolidated Financial Goals and Results In setting the fiscal 2023 operating income targets, the Committee considered the then-projected macroeconomic outlook, the annual operating plans approved by the Board and the performance of Snap-on as well as its peers. The threshold operating income metric was set at $936.2 million, essentially equal to the prior year’s result, as adjusted for currency fluctuations. The target operating income metric was set 10% over the threshold, and maximum was set 25% above the threshold. The Committee considered the target operating income metric a substantial improvement over the results achieved in fiscal 2022 and considered the maximum operating income metric the product of achieving exceptional stretch goals. In setting the fiscal 2023 RONAEBIT goals, the Committee adhered to its philosophy that the Company should achieve at least its WACC for participants to receive any payout based on consolidated financial results. Therefore, it set a minimum trigger that if the Company’s pre-tax WACC was not achieved, the payout based on consolidated financial results would be zero. In setting the threshold, target and maximum levels of RONAEBIT, the Committee considered the prior year RONAEBIT, the annual plan approved by the Board, the Company’s growth strategies, as well as their impact on assets, and the projected macroeconomic outlook. Based on those considerations, the target level of RONAEBIT was set at 36.0%. The Committee believed that target RONAEBIT reflected reasonable achievement given the Company’s recent performance and its WACC. The threshold level was set 500 basis points lower than target, a level that the Committee believed added shareholder value when coupled with substantial operating income improvement. The maximum level of RONAEBIT required a 500 basis point increase beyond the target level and was considered a significant stretch. A payment at the threshold level could be earned in one of three ways: (i) if the Company achieved the threshold level on both operating income and RONAEBIT; (ii) if operating income at 10% below the level realized in fiscal 2022 was achieved and RONAEBIT equaled the target level; or (iii) if RONAEBIT equaled the Company’s WACC and the Company achieved 5% above the threshold level of operating income. Realizing at least a 25% threshold payment was considered minimally acceptable because it would require recognizable improvement in one of the measures while maintaining acceptable levels of performance in the other measure. The fiscal 2023 goals and actual results for Company financial performance are set forth in the table below:
Annual Incentives
| Company Goals | Threshold | Target | Maximum | Actual | | Operating Income(1) | $936.2 million | $1,029.8 million | $1,170.3 million | $1,047.6 million | | RONAEBIT(2)(3) | 31.0% | 36.0% | 41.0% | 37.6% | | Incentive earned, as a percentage of the Target bonus amount: | | | | 117.5% |
Annual Incentives
| (1) Operating income represents income from continuing operations, excluding financial services income and the effect of foreign currency translation. |
Annual Incentives
| (2) RONAEBIT is calculated using a thirteen-month average and represents return on net assets employed before interest and taxes, excluding financial services and the effect of foreign currency translation. This methodology is consistent with that employed to calculate a company’s WACC. |
Annual Incentives
| (3) As described above, there is no payout if the Company does not achieve its WACC. |
Annual Incentives
In February 2024, after comparing the Company’s consolidated financial results for fiscal 2023 to the consolidated financial performance goals, the Committee approved an award of 117.5% relative to the consolidated financial results component of the annual incentive plan. The Company achieved a RONAEBIT performance of 37.6%, resulting in performance between the target and maximum level. Operating income improvement of 11.9% as compared to fiscal 2022, excluding the effects of foreign currency translation, also resulted in performance between the target and maximum level. Personal Strategic Business Goals Component As previously discussed, 50% of each executive officer’s annual incentive is based on the achievement of personal strategic business goals. Inclusion of these personal strategic business goals is intended to incent a focus on specific objectives that are critical to the individual’s role at the Company. Our objective is to set goals under the plan that are quantitative and measurable where possible; however, certain personal strategic business goals are, by necessity, somewhat subjective in nature. Strategic business goals include strategic growth objectives; business unit performance; advancement of the Snap-on Value Creation Processes in the areas of safety, quality, customer connection, innovation and RCI; employee development; succession planning; cooperation; and collaboration. Achievement of personal strategic business goals ranges from zero to 200% of target. The fiscal 2023 personal strategic business goals for each of the NEOs, as well as the Committee’s determination related to overall performance with respect to the goals, are summarized as follows: Mr. Pinchuk:
Annual Incentives
| • | Continue to execute on the strategic roadmap for growth by enhancing our van channel, driving the extension of our business in critical industries, expanding our position in repair shops, building the Company’s position in emerging markets and pursuing an active acquisition strategy. |
Annual Incentives
| • | Achieve profit and performance targets at Snap-on Credit and execute strategic funding and investor relations strategies. |
Annual Incentives
| • | Strengthen the Snap-on management team, placing specific emphasis on diversity initiatives. Participate in the National Association of Manufacturers Pledge for Action on diversity. Partner with national and local organizations to enhance technical education and career opportunities for diverse populations. Ensure that both strong capabilities and high potential candidates are distributed across each strategic growth opportunity and each primary geography. |
Annual Incentives
| • | Advance down the runways for improvement, including enterprise-wide engagement in the Snap-on Value Creation Processes in the areas of safety, quality, customer connection, innovation and RCI; engage RCI activities to achieve progress in the environmental, social and governance (“ESG”) arena; and extend profitability in Europe and in the Repair Systems & Information Group (“RS&I”) hardware operations. |
Annual Incentives
After review, the Committee approved a payout of 116.0% for Mr. Pinchuk’s personal strategic business goals. Mr. Pagliari:
Annual Incentives
| • | Continue to drive advancement down runways for growth and improvement by: pursuing an active acquisition plan; supporting growth across the organization; continuing the drive for RCI; extending profitability in targeted sectors and cultivating further focus on sustainability efforts around ESG matters. |
Annual Incentives
| • | Strengthen the Snap-on Finance team and actively drive cooperation and collaboration between groups that contribute to profit improvements. |
Annual Incentives
| • | Achieve profit and performance targets at Snap-on Credit and execute strategic funding and investor relations strategies. |
Annual Incentives
After review, the Committee approved a payout of 140.0% for Mr. Pagliari’s personal strategic business goals. Mr. Ward:
Annual Incentives
| • | Achieve the RS&I business plan, which includes year-over-year sales and profitability improvement. |
Annual Incentives
| • | Drive further development and engagement of the Snap-on Value Creation Processes, including the continuation of enterprise-wide customer connection, quality initiatives and RCI, resulting in improvement of operating income margin. |
Annual Incentives
| • | Increase the Company’s innovation pipeline by expanding with repair shop owners and managers, together with the launch of several significant products. |
Annual Incentives
| • | Actively drive cooperation and collaboration between groups that contribute to profit improvements for divisions outside Mr. Ward’s overall span of responsibility. |
Annual Incentives
After review, the Committee approved a payout of 154.1% for Mr. Ward’s personal strategic business goals. Mr. Banerjee:
Annual Incentives
| • | Actively promote cooperation and collaboration of talent between functions, channels and operating divisions. |
Annual Incentives
| • | Utilize the Snap-on Leadership Development Process to enhance internal bench strength, further CEO succession planning and ensure that both strong capabilities and high-potential candidates are distributed across each strategic runway for growth and each primary geography. Participate in the National Association of Manufacturers Pledge for Action on diversity. Partner with national and local organizations to enhance technical education and career opportunities for diverse populations. |
Annual Incentives
| • | Ensure competitive benefits are distributed throughout the organization and that regulatory developments in the benefits arena are implemented appropriately. |
Annual Incentives
| • | Continue to strengthen the Snap-on Value Creation culture across the organization, including safety, quality, customer connection, innovation and RCI, and cultivate further focus on sustainability efforts around ESG matters. |
Annual Incentives
After review, the Committee approved a payout of 135.0% for Mr. Banerjee’s personal strategic business goals. Mr. Chambers:
Annual Incentives
| • | Achieve the Snap-on Tools Group’s business plan, which includes year-over-year sales and profitability improvements. |
Annual Incentives
| • | Increase customer coverage through a greater net van count, while amplifying franchisee capabilities and financial strength, and increase franchisee selling capacity, continuing to match the greater opportunities associated with rising vehicle complexity. |
Annual Incentives
| • | Actively drive cooperation and collaboration between groups that contribute to profit improvements for divisions outside Mr. Chambers’ overall span of responsibility. |
Annual Incentives
| • | Achieve profit and performance targets at Snap-on Credit. |
Annual Incentives
| • | Further build upon the strength of the Snap-on Value Creation Processes, including the improvement of customer-focused product design capabilities and RCI, resulting in improvement of operating income margin. |
Annual Incentives
| • | Efficiently expand the Snap-on Tools Group’s production capacity to reach the growing repair market. |
Annual Incentives
After review, the Committee approved a payout of 52.5% for Mr. Chambers’ personal strategic business goals. Overall payments to the NEOs based on the achievement of consolidated financial results and strategic business goals, ranged from 85.0% to 135.8% of target. See the Summary Compensation Table below for payouts made to our NEOs under the Company’s annual incentive plan.
Long-term Incentive Compensation
Long-term Incentive Compensation We provide long-term incentive compensation to our executive officers and other key employees. We believe stock-based awards help align the financial interests of management with those of our shareholders since the ultimate value of stock-based awards is tied to the value of Snap-on’s stock and its associated TSR. Similar to annual incentive targets, long-term incentive targets are designed to generally fall within reasonable competitive boundaries, with stretch goals built into our incentive plans to achieve pay results above the 50th percentile. However, as indicated above, we do not aim for any particular numerical equivalency and use our judgment to respond to specific circumstances. Additionally, the actual payouts of long-term incentives can vary significantly from target because of the potential variation in performance over the period measured (in the case of long-term performance-based awards) and because of changes in the market price of our stock (in the case of both stock options and stock-based awards). These types of awards recognize financial and personal performance over a longer period of time than base salary and annual incentives. In fiscal 2023, our long-term incentive compensation grants for executive officers were comprised of PSUs, stock options and RSUs. We emphasize performance-based vehicles because we believe they focus executive officers and key employees on operating and financial performance that is more under their control and which the Committee believes drives shareholder value over the long term. Our long-term compensation design also includes stock options and RSUs with time-based vesting, which reward employees based upon the appreciation of the market value of our shares and, thus, directly mirror our investors’ experience. The aggregate target long-term incentive compensation level of our NEOs for fiscal 2023 was above Market median. As described below, stretch goals will need to be achieved to recognize the target value of the long-term incentive grants. In granting long-term incentive awards, we take into account the following subjective and objective factors:
Long-term Incentive Compensation
| • | Each participant’s level of responsibility; |
Long-term Incentive Compensation
| • | Each participant’s contributions to Snap-on’s financial results; |
Long-term Incentive Compensation
| • | Retention considerations; and |
Long-term Incentive Compensation
| • | The practices of companies in the Market. |
Long-term Incentive Compensation
The Committee believes that using Company stock for a significant portion of these awards provides executive officers with an additional potential equity stake in the Company and helps further align the interests of the executive officers with those of our shareholders. Grants of long-term incentives are generally made at the Committee’s February meeting, which is held in conjunction with a regularly scheduled Board meeting and after the public release of the prior year’s financial results, although the final financial targets may be set after the February meeting, allowing the Committee to consider items from that meeting. Occasionally, grants of long-term incentives are made at other meetings in special cases, such as promotions or new hires. Prior to making a grant, the Committee considers the potential burn rate (awards granted as a percentage of fully diluted weighted-average common shares outstanding), the Company’s then-current share price and the volatility of that share price. When determining eligibility and granting awards, the Committee considers market practice, levels of responsibility and the individual’s contributions to the Company, as well as, for executive officers, the recommendations of our CEO. In fiscal 2023, in order to develop the grant range guidelines for various personnel grades (including both executive officers and other participants), the Committee reviewed market conditions and practice, as well as the estimated value of each grant determined using the Black-Scholes valuation model for the stock option component. We estimated that the total amount of the February 2023 equity grants to all participants would result in a 1.0% burn rate (assuming target outcomes for performance-based equity), which fell within the guidelines established by the Committee and at the 50th percentile of our peer group. See also the Grants of Plan-Based Awards table for further information regarding long-term incentives awarded to each of the NEOs in 2023. Long-term Incentive Plan Design The Committee regularly reviews the Company’s overall compensation program, including the long-term incentive compensation design. The long-term plan design is comprised of the following:
Long-term Incentive Compensation
| • | PSUs consist of 60% of the annual equity award value for Mr. Pinchuk and 50% for the other NEOs; |
Long-term Incentive Compensation
| • | Stock options consist of 20% of the annual equity award for Mr. Pinchuk and 25% for the other NEOs; and |
Long-term Incentive Compensation
| • | Time-vesting RSUs, which promote a long-term ownership mentality and further align the interests of our executives with those of our shareholders, as well as provide a retention element, are weighted at 20% for Mr. Pinchuk and 25% for the other NEOs. |
Long-term Incentive Compensation
The Committee believes that this plan design drives and rewards long-term shareholder value creation, aligns pay with performance, motivates executives, promotes retention and supports management’s focus on the Company’s business strategies. Long-term Performance-Based Share Units In February 2023, the Committee made grants to 48 key employees, including the NEOs, of PSUs that vest depending upon the achievement of operating performance measures over a three-year period. Each PSU is equivalent to one share of our common stock. The Committee believes that the use of these measures serves to focus executive officers and key employees on Company operating and financial performance in order to drive shareholder value over the long term. In addition, providing for the payout of these awards in shares rather than cash is intended to further align the interests of management with those of our shareholders. The Committee made the final long-term performance plan grant decisions for executive officers and approved the total recommended grant size for other participants in accordance with the equity grant process discussed above. In fiscal 2023, we granted our NEOs a total of 29,505 PSUs (at the target performance level). Individual grants to the NEOs ranged from 2,663 to 16,645 units. In aggregate, the number of PSUs granted to executive officers was between the target and maximum of the guidelines. Vesting of the PSUs awarded in fiscal 2023 will depend on cumulative performance relative to revenue growth and RONAEBIT goals set for fiscal years 2023 through 2025. These two measures have been consistently used for our prior long-term plans. We use these measures because they are aligned with the Company’s growth goals and objectives to increase returns to shareholders. We regularly use RONAEBIT as a measure of return to evaluate performance. As previously noted, the methodology used to calculate RONAEBIT is in line with that used to calculate the Company’s WACC. The table below provides examples of vesting at the performance levels under these plans:
Long-term Incentive Compensation
| Performance Level | Percentage of PSUs Vesting | | Threshold (see below for discussion) | 25% | | Target (for both performance measures) | 100% | | Maximum (for both performance measures) | 200% |
Long-term Incentive Compensation
We intend that payments at the target level for PSUs, combined with the value of stock options and RSUs (which are discussed below), would provide total long-term compensation within reasonable competitive boundaries of Market Data. In setting the levels of performance required to earn various percentages of long-term PSUs, the Committee considered current levels of RONAEBIT and sales, the current year’s plan, the Company’s WACC, industry and Gross Domestic Product (“GDP”) growth rates, and past performance. In addition, the Committee considered longer range strategic plans establishing expectations for improved performance over the three-year performance period. In order to achieve target levels of performance, revenue for the fiscal 2023 to 2025 period would need to improve from recent performance and RONAEBIT would need to significantly exceed the Company’s WACC. Target level revenue growth was set at the fiscal 2022 revenue level, plus a three-year, 4.5% compounded annual growth rate, which was considered reasonably challenging given the prevailing economic and industry environment at the time the goals were set. Target RONAEBIT was set at a level 60% greater than the Company’s WACC, which the Committee believes would result in significant enhancement of shareholder value. The maximum level of revenue growth was set at the fiscal 2022 revenue level, plus a three-year, 6.0% compound annual growth rate. This was considered an exceptional stretch over target. The maximum RONAEBIT metric was also set at a level that was considered an exceptional stretch because, assuming a consistent net asset base, it would require an additional $385 million, or 58%, in annual operating income above target over the three-year performance period. The threshold level of revenue growth was set at the fiscal 2022 revenue level, plus a three-year, 3.0% compound annual growth rate. The threshold RONAEBIT metric was set 27% above the Company’s WACC. This was considered acceptable given that the Committee believes that any return over the Company’s WACC would add shareholder value. A threshold level of payment could be earned by achieving the threshold on both the revenue growth and RONAEBIT metrics. It could also be earned in one of two other ways. If revenues remain at fiscal 2022 levels, RONAEBIT would need to grow to the target level. Alternatively, if RONAEBIT met the Company’s WACC, revenues would need to achieve the target level. Realizing at least a 25% threshold payment was considered minimally acceptable because it would require recognizable improvement in one of the measures while maintaining at least current levels, or modest increases, on the other measure. As part of the long-term performance plans, the Committee considers any acquisition, divestiture or other significant change in business practices that occurs during the period and makes adjustments to performance measures to reflect the financial effects of these events. In addition to the Committee’s considerations, the PSU award agreements provide a specific formula related to incorporating acquisitions. In accordance with such formula, PSU performance measures for the 2021 to 2023 plan were adjusted to reflect the 2021 acquisitions of Dealer-FX and AutoCrib EMEA GmbH. In February 2024, the Committee approved the outcome of the PSUs granted in fiscal 2021 based on financial performance during fiscal 2021 through 2023. The metrics for those awards and actual performance are set forth in the table below:
Long-term Incentive Compensation
| Criteria | Threshold | Target | Maximum | Actual | | Sales(1) | $3,989 million | $4,166 million | $4,348 million | $4,730 million | | RONAEBIT(2)(3) | 18.4% | 23.0% | 35.9% | 36.3% | | PSUs earned, as a percentage of the Target: | | | | 200.0% |
Long-term Incentive Compensation
| (1) Sales represent fiscal 2023 Net Sales. |
Long-term Incentive Compensation
| (2) RONAEBIT is a three-year average for fiscal 2021, 2022 and 2023, and is calculated as a fraction expressed as a percentage where (i) the numerator is operating income from continuing operations, excluding financial services income, and (ii) the denominator is average net assets employed before interest and taxes, excluding financial services. |
Long-term Incentive Compensation
| (3) As described above, there is no payout if the Company does not achieve its WACC. |
Long-term Incentive Compensation
Actual performance during the period on these metrics was a RONAEBIT of 36.3% and revenues of $4,730 million; as a result, performance-based share units were earned at 200.0% based on financial performance during the fiscal 2021 to 2023 plan period. In February of 2024, the Committee had discussions relating to targets for the fiscal 2024 to 2026 plan. The Committee continued the same approach as used in fiscal 2023 and the same general financial metrics for these future goals. The Committee believes that the current structure and metrics continue to incent management appropriately and thereby enhance shareholder value. Stock Options & SARs In February 2023, we granted stock options and SARs that vest over a three-year period to 216 employees, including our NEOs. Stock options and SARs have an exercise price equal to the closing price of Snap-on common stock as reported on the NYSE on the grant date and generally vest in three equal annual increments beginning on the first anniversary of the grant date. The Committee considered the total recommended grant size for all participants and reviewed the specific recommendations made by Mr. Pinchuk for grants to the executive officers. After considering the recommendations as compared to outstanding shares and the expected burn rate, the Committee then made the final grant decisions related to the executive officers and also approved the total grant size for all other participants. We granted our NEOs options to purchase 52,449 shares, consisting of individual grants ranging from options to purchase 5,830 to 24,295 shares. In the aggregate, the number of stock options granted to executive officers was between the target and the maximum of the guidelines. The Committee approved the amounts awarded to each NEO based on their contributions and individual performance. Restricted Stock Units The Committee also granted RSUs in fiscal 2023 to 48 key employees, including the NEOs, that have a three-year cliff vesting schedule. The Committee’s intent in granting these awards is to promote a long-term ownership mentality and further align the interests of our executives with those of our shareholders, as well as provide a retention element for our executive officers. Consistent with the granting of options, SARs and PSUs discussed above, the Committee made the final RSU grant decisions for executive officers and approved the total recommended grant size for other participants. In fiscal 2023, we granted our NEOs a total of 11,980 RSUs. Individual grants to the NEOs ranged from 1,332 to 5,549 RSUs. In the aggregate, the number of RSUs granted to executive officers was between the target and maximum of the guidelines, again reflecting the factors discussed above.
Clawback Policies
Clawback Policies As required by SEC rules and NYSE listing standards, in November 2023, the Company adopted a Clawback Policy for Erroneously Awarded Compensation, effective for specified compensation received on or after October 2, 2023. Unless an exception applies, in the event that the Company is required to prepare an accounting restatement due to material noncompliance with financial reporting requirements, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (each, an “Accounting Restatement”), the Company will recover reasonably promptly from each current or former executive officer any compensation that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure that exceeds the amount of compensation that otherwise would have been received during the three completed fiscal years immediately preceding the Trigger Date (as defined in the policy) of the Accounting Restatement (the “recovery period”) had it been determined based on the relevant restated amounts, and computed without regard to any taxes paid. Any right of recoupment under this policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any other similar Company policy, equity award agreement or similar agreement, and any other legal remedies available to the Company; however, there shall be no duplication of recovery under this policy and any other such recoupment rights or remedies, unless required by applicable law. A copy of the policy was filed as Exhibit 97 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023. In addition to the above policy, the Company’s Clawback Policy, which applies to its top 24 executives, covers all elements of its incentive compensation program (cash and equity). Pursuant to the policy, the Company has the right to clawback, or recoup, an incentive award (in whole or in part), including annual and long-term incentives, received by an employee in the event that the employee benefited from an incentive award and it is later discovered that: (i) a financial statement error resulted in a restatement or an inaccurate operating metric measurement resulted in an inappropriate incentive award; (ii) the employee engaged in misconduct that caused the financial restatement or inaccurate operating metric measurement; and (iii) a lower payment would have been made to the employee based on the restated financial result/operating metric. The Committee also has the right to recoup any such incentive compensation (in whole or in part) from these executives. The Committee has the sole discretion to determine whether an employee’s conduct has or has not met any particular standard of conduct under law or Company policy. The Committee may, in determining appropriate remedial action, take into account penalties or punishments imposed by third parties, such as law enforcement agencies, regulators or other authorities, as well as the Company’s other policies. The Committee’s ability to determine the appropriate punishment for the wrongdoer is in addition to, and not in replacement of, any remedies or sanctions imposed by such authorities or any other third-party actions.
Change of Control and Other Employment-related Agreements
Change of Control and Other Employment-related Agreements Snap-on does not generally enter into employment-related agreements, including with its executive officers. Although the Committee believes that it is appropriate to have change of control agreements, it is the Committee’s view that the Company is better served by maintaining the ability to continuously evaluate the performance of its executive officers without the constraints of specific employment agreements. Snap-on occasionally enters into severance or other agreements with individuals that the Company hires from outside; however, Snap-on does not currently have any such agreements covering its named executive officers. The Company maintains change of control agreements with all of its current NEOs, as well as selected other key personnel. In the event of a transaction involving a change of control of the Company, senior executives and key personnel would typically face a great deal of pressure, including uncertainty concerning their own future. Such arrangements help assure their full attention and cooperation in the negotiation process. The Committee periodically reviews the change of control agreements and believes that the Company’s agreements are conservative compared to the Market as evidenced by: the “double trigger” element of the agreements, which narrows the circumstances in which payments might be made; two times multiples for severance and other benefits; a provision for the continuation of health, disability, life and other insurance benefits, pension credit and 401(k) Plan matching for two years; and the lack of a tax gross-up feature. In order to better align payments under the change of control agreements with best practices, the bonus factored into calculations of payments in the case of a change of control is a three-year average of prior bonus payments. The change of control agreements allow for a reduction in payments so as to avoid adverse excise tax consequences to the executive officer. See “Potential Payments on Change of Control and Other Employment-related Agreements” below for further information about these agreements.
Table 3: Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Nicholas T. Pinchuk Chairman, President and Chief Executive Officer | 2023 | $1,142,473 | — | $5,532,076 | $1,323,023 | $1,800,681 | $455,232 | $321,272 | $10,574,757 | | | 2022 | 1,142,473 | — | 4,673,039 | 1,179,998 | 1,738,702 | 486,011 | 264,437 | 9,484,660 | | | 2021 | 1,142,473 | — | 4,818,839 | 1,116,427 | 2,356,351 | 365,210 | 73,646 | 9,872,946 | | Aldo J. Pagliari Senior Vice President–Finance and Chief Financial Officer(6) | 2023 | 609,837 | — | 1,340,770 | 427,484 | 588,945 | 169,066 | 101,369 | 3,237,471 | | | 2022 | 578,435 | — | 1,221,548 | 411,241 | 553,190 | 169,117 | 83,167 | 3,016,698 | | | 2021 | 556,614 | — | 1,331,129 | 411,207 | 688,809 | 131,463 | 29,520 | 3,148,742 | | Thomas J. Ward Senior Vice President and President– Repair Systems & Information Group | 2023 | 638,152 | — | 1,353,980 | 431,732 | 650,000 | 126,469 | 68,983 | 3,269,316 | | | 2022 | 621,210 | — | 1,244,831 | 419,136 | 606,175 | — | 46,839 | 2,938,191 | | | 2021 | 612,216 | — | 1,356,764 | 419,137 | 734,659 | — | 1,320 | 3,124,096 | | Anup R. Banerjee Senior Vice President–Human Resources and Chief Development Officer | 2023 | 501,101 | — | 1,117,931 | 356,473 | 474,527 | 142,316 | 86,167 | 2,678,515 | | | 2022 | 484,512 | — | 1,013,476 | 341,251 | 463,349 | 143,649 | 70,868 | 2,517,105 | | | 2021 | 470,400 | — | 1,101,172 | 340,166 | 582,164 | 111,211 | 24,341 | 2,629,454 | | Timothy L. Chambers Senior Vice President and President–Snap-on Tools Group | 2023 | 510,221 | — | 995,794 | 317,482 | 325,329 | 118,225 | 71,521 | 2,338,572 | | | 2022 | 490,219 | — | 868,694 | 292,496 | 570,003 | 1,411 | 55,567 | 2,278,390 | | | 2021 | 472,500 | — | 859,062 | 265,394 | 637,875 | 75,262 | 25,443 | 2,335,536 |
Table 3: Summary Compensation Table
| (4) Represents the increase in the actuarial present value of pension benefits between fiscal year-end 2023 and 2022, 2022 and 2021, and 2021 and 2020. For Mr. Ward, the actuarial present value of pension benefits decreased between fiscal year-end 2022 and 2021, and fiscal year-end 2021 and 2020. Since the change in the actuarial present value of benefits was negative—($1,640,515) for fiscal 2022 and ($221,386) for fiscal 2021—in accordance with SEC rules and related guidance, the amounts reported above for 2022 and 2021 for Mr. Ward were zero. See the Pension Benefits and Non-qualified Deferred Compensation tables below for further discussion regarding our Pension and Deferred Compensation Plans. |
Table 3: Summary Compensation Table
| (6) The Company sponsors a Non-qualified Deferred Compensation Plan to which participants may defer all or a portion of each of their base salary, stock awards or non-equity incentive plan compensation. See the further discussions in “Compensation Discussion and Analysis—Retirement and Deferred Benefits” and under “Non-qualified Deferred Compensation” below. Of the amounts included in the table above, Mr. Pagliari deferred $138,298, $172,202 and $95,846 of non-equity incentive plan compensation in fiscal 2023, 2022 and 2021, respectively, and $60,983, $57,844 and $55,662 of base salary in fiscal 2023, 2022 and 2021, respectively. |
Table 4: Grants of Plan-Based Awards 2023
Table 4: Grants of Plan-Based Awards 2023
Table 4: Grants of Plan-Based Awards 2023
| Name | Grant Date | Plan Name* | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(5) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | | | | — | — | — | 4,161 | 16,645 | 33,290(1) | — | — | — | $4,148,933 | | Pinchuk | 2/9/23 | Long-term awards | — | — | — | — | — | — | 5,549(2) | — | — | 1,383,144 | | | | | — | — | — | — | — | — | — | 24,295(3) | $249.26 | 1,323,023 | | | 2/9/23 | Annual incentive(4) | $385,585 | $1,542,339 | $3,084,678 | — | — | — | — | — | — | — | | | | | — | — | — | 897 | 3,586 | 7,172(1) | — | — | — | 893,846 | | Pagliari | 2/9/23 | Long-term awards | — | — | — | — | — | — | 1,793(2) | — | — | 446,923 | | | | | — | — | — | — | — | — | — | 7,850(3) | 249.26 | 427,484 | | | 2/9/23 | Annual incentive(4) | 114,358 | 457,433 | 914,866 | — | — | — | — | — | — | — | | | | | — | — | — | 905 | 3,621 | 7,242(1) | — | — | — | 902,570 | | Ward | 2/9/23 | Long-term awards | — | — | — | — | — | — | 1,811(2) | — | — | 451,410 | | | | | — | — | — | — | — | — | — | 7,928(3) | 249.26 | 431,732 | | | 2/9/23 | Annual incentive(4) | 119,675 | 478,700 | 957,400 | — | — | — | — | — | — | — | | | | | — | — | — | 748 | 2,990 | 5,980(1) | — | — | — | 745,287 | | Banerjee | 2/9/23 | Long-term awards | — | — | — | — | — | — | 1,495(2) | — | — | 372,644 | | | | | — | — | — | — | — | — | — | 6,546(3) | 249.26 | 356,473 | | | 2/9/23 | Annual incentive(4) | 93,966 | 375,863 | 751,726 | — | — | — | — | — | — | — | | | | | — | — | — | 666 | 2,663 | 5,326(1) | — | — | — | 663,779 | | Chambers | 2/9/23 | Long-term awards | — | — | — | — | — | — | 1,332(2) | — | — | 332,014 | | | | | — | — | — | — | — | — | — | 5,830(3) | 249.26 | 317,482 | | | 2/9/23 | Annual incentive(4) | 95,685 | 382,740 | 765,480 | — | — | — | — | — | — | — |
Table 4: Grants of Plan-Based Awards 2023
| * All awards were made pursuant to the 2011 Plan. |
Table 4: Grants of Plan-Based Awards 2023
| (1) The awards relate to grants of PSUs with a three-year performance period. See “Compensation Discussion and Analysis—Total Direct Compensation—Cash and Incentive—Long-term Incentive Compensation—Long-term Performance-Based Share Units” for further discussion regarding the awards. |
Table 4: Grants of Plan-Based Awards 2023
| (2) Consists of RSUs awarded in fiscal 2023. The RSUs have a three-year cliff vesting schedule based on continued service. See “Compensation Discussion and Analysis—Total Direct Compensation—Cash and Incentive—Long-term Incentive Compensation—Restricted Stock Units” for more information. |
Table 4: Grants of Plan-Based Awards 2023
| (3) The options were granted at the regularly scheduled February 9, 2023 meeting of the Organization and Executive Compensation Committee (the “Compensation Committee” or the “Committee”) and have an exercise price equal to the closing price of Snap-on stock as reported on the NYSE on the date of grant ($249.26). The options vest in three annual increments beginning on the first anniversary of the grant date. See “Compensation Discussion and Analysis—Total Direct Compensation—Cash and Incentive—Long-term Incentive Compensation—Stock Options” for further information regarding the awards. |
Table 4: Grants of Plan-Based Awards 2023
| (4) Amounts represent the annual incentive opportunity available. Payouts are dependent on performance as compared to pre-defined goals. The targets relate to quantifiable consolidated Company financial performance—operating income and return on net assets. In addition, a portion of the annual incentive is based on the attainment of personal strategic business goals. Payments related to the total Company financial measures can increase from 25% of the target amount if a threshold level of performance has been reached to 200% of the target amount if a maximum level of performance has been achieved, and are adjusted proportionately and interpolated between performance levels. Achievement of the personal strategic business goals can range from zero percent to the maximum based on personal attainment of those goals. See “Compensation Discussion and Analysis—Total Direct Compensation—Cash and Incentive—Annual Incentives” for further discussion regarding the awards. |
Table 4: Grants of Plan-Based Awards 2023
| (5) For stock awards and options, this amount represents the grant date fair value calculated in accordance with ASC 718. See Note 13 to our Consolidated Financial Statements. |
Table 4: Grants of Plan-Based Awards 2023
The Company sponsors a Non-qualified Deferred Compensation Plan to which participants may defer all or a portion of each of their base salary, non-equity incentive plan compensation and/or stock awards.
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($)(1) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Pinchuk | 130,000 | | $144.69 | 2/12/2025 | | | | | | | 135,000 | | 138.03 | 2/11/2026 | | | | | | | 135,000 | | 168.70 | 2/9/2027 | | | | | | | 92,288 | | 161.18 | 2/15/2028 | | | | | | | 83,059 | | 155.92 | 2/14/2029 | | | | | | | 83,059 | | 155.34 | 2/13/2030 | | | | | | | 27,125 | 13,562 | 189.89 | 2/11/2031 | | | | | | | 10,762 | 21,524 | 211.67 | 2/10/2032 | | | | | | | | 24,295 | 249.26 | 2/9/2033 | | | | | | | | | | | | | 38,066(3) | $10,994,983 | | | | | | | | | 33,116(3) | 9,565,225 | | | | | | | | | 33,290(3) | 9,615,484 | | | | | | | 6,344(4) | $1,832,401 | | | | | | | | | 5,519(4) | 1,594,108 | | | | | | | | | 5,549(4) | 1,602,773 | | | | Pagliari | 34,000 | | 144.69 | 2/12/2025 | | | | | | | 35,000 | | 138.03 | 2/11/2026 | | | | | | | 36,000 | | 168.70 | 2/9/2027 | | | | | | | 26,052 | | 161.18 | 2/15/2028 | | | | | | | 23,500 | | 155.92 | 2/14/2029 | | | | | | | 23,500 | | 155.34 | 2/13/2030 | | | | | | | 9,991 | 4,995 | 189.89 | 2/11/2031 | | | | | | | 3,751 | 7,501 | 211.67 | 2/10/2032 | | | | | | | | 7,850 | 249.26 | 2/9/2033 | | | | | | | | | | | | | 9,346(3) | 2,699,499 | | | | | | | | | 7,694(3) | 2,222,335 | | | | | | | | | 7,172(3) | 2,071,560 | | | | | | | 2,337(4) | 675,019 | | | | | | | | | 1,924(4) | 555,728 | | | | | | | | | 1,793(4) | 517,890 | | | | Ward | | 5,092 | 189.89 | 2/11/2031 | | | | | | | 3,823 | 7,645 | 211.67 | 2/10/2032 | | | | | | | | 7,928 | 249.26 | 2/9/2033 | | | | | | | | | | | | | 9,528(3) | 2,752,068 | | | | | | | | | 7,842(3) | 2,265,083 | | | | | | | | | 7,242(3) | 2,091,779 | | | | | | | 2,381(4) | 687,728 | | | | | | | | | 1,960(4) | 566,126 | | | | | | | | | 1,811(4) | 523,089 | | | | Banerjee | 20,250 | | 155.34 | 2/13/2030 | | | | | | | 8,265 | 4,132 | 189.89 | 2/11/2031 | | | | | | | 3,113 | 6,224 | 211.67 | 2/10/2032 | | | | | | | | 6,546 | 249.26 | 2/9/2033 | | | | | | | | | | | | | 7,732(3) | 2,233,311 | | | | | | | | | 6,384(3) | 1,843,955 | | | | | | | | | 5,980(3) | 1,727,263 | | | | | | | 1,933(4) | 558,328 | | | | | | | | | 1,596(4) | 460,989 | | | | | | | | | 1,495(4) | 431,816 | | | | Chambers | 8,000 | | 138.03 | 2/11/2026 | | | | | | | 9,500 | | 168.70 | 2/9/2027 | | | | | | | 7,594 | | 161.18 | 2/15/2028 | | | | | | | 12,000 | | 155.92 | 2/14/2029 | | | | | | | 13,500 | | 155.34 | 2/13/2030 | | | | | | | 6,448 | 3,224 | 189.89 | 2/11/2031 | | | | | | | 2,668 | 5,335 | 211.67 | 2/10/2032 | | | | | | | | 5,830 | 249.26 | 2/9/2033 | | | | | | | | | | | | | 6,032(3) | 1,742,283 | | | | | | | | | 5,472(3) | 1,580,532 | | | | | | | | | 5,326(3) | 1,538,362 | | | | | | | 1,508(4) | 435,571 | | | | | | | | | 1,368(4) | 395,133 | | | | | | | | | 1,332(4) | 384,735 | | |
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
| (1) Option awards granted under the 2011 Plan. Options have an exercise price equal to the value of our common stock on the grant date, vest in three annual increments beginning on the first anniversary following grant and expire 10 years from the relevant grant date. |
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
| (2) Based on the $288.84 per share closing price of our common stock on December 29, 2023, the last trading day of fiscal 2023. |
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
| (3) Consists of PSUs awarded under the 2011 Plan. Vesting of the PSUs is dependent upon cumulative performance relative to revenue growth and RONAEBIT over the relevant three-year performance period. See “Compensation Discussion and Analysis—Total Direct Compensation—Cash and Incentive—Long-term Incentive Compensation—Long-term Performance-Based Share Units” for additional information regarding awards. |
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
On February 15, 2024, the Compensation Committee and Board of Directors reviewed the Company’s actual performance during the three-year performance period that concluded at the end of fiscal 2023 and approved a vesting percentage of 200% of target for the PSUs granted in fiscal 2021; the amounts reported above reflect this performance. As of the end of fiscal 2023, performance for the PSUs granted in fiscal 2022 was between the target and maximum levels; therefore, the value of the award is shown at the maximum grant number. Actual performance will be reviewed by the Committee and the Board of Directors at their meetings in the first quarter of 2025. As of the end of fiscal 2023, performance for the PSUs granted in fiscal 2023 was between the target and maximum levels; therefore, the value of the award is shown at the maximum grant number. Actual performance will be reviewed by the Committee and the Board of Directors at their meetings in the first quarter of 2026.
Table 5: Outstanding Equity Awards at Fiscal Year-End December 30, 2023
| (4) Consists of RSUs awarded under the 2011 Plan in fiscal 2021, 2022 and 2023. The RSUs have a three-year cliff vesting schedule. The RSUs granted in fiscal 2021 vest on February 11, 2024, the RSUs granted in fiscal 2022 vest on February 10, 2025, and the RSUs granted in fiscal 2023 vest on February 9, 2026, subject to continued service. See “Compensation Discussion and Analysis—Total Direct Compensation—Cash and Incentive—Long-term Incentive Compensation—Restricted Stock Units” and the Grants of Plan-Based Awards table for more information. |
Table 6: Option Exercises and Stock Vested 2023
Table 6: Option Exercises and Stock Vested 2023
Table 6: Option Exercises and Stock Vested 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(2) | | Pinchuk | 130,000 | $19,042,570 | 15,190 | $3,786,259 | | Pagliari | 33,000 | 5,173,071 | 4,300 | 1,071,818 | | Ward | 106,578 | 11,685,004 | 4,462 | 1,112,198 | | Banerjee | 29,750 | 2,725,182 | 3,702 | 922,761 | | Chambers | 14,000 | 2,059,196 | 2,530 | 630,628 |
Table 6: Option Exercises and Stock Vested 2023
| (1) Based on the difference between the exercise price and the sale price on the date of exercise with the exception of shares that were held upon the exercise of options; in such case, the value realized on exercise is based on the difference between the exercise price and the average of the high and low trading prices of our stock on the NYSE on the date of exercise. |
Table 6: Option Exercises and Stock Vested 2023
| (2) The 2020 long-term incentive program had a three-year performance period that concluded at the end of fiscal 2022. On February 9, 2023, the Compensation Committee and Board of Directors reviewed actual performance during fiscal 2020-2022 and determined that approximately 151.4% of the PSUs were earned and vested for each executive officer. The value realized on vesting for this award was based on the closing price of our stock on the NYSE on February 9, 2023, the vesting date. |
Table 7: Pension Benefits
Table 7: Pension Benefits
Table 7: Pension Benefits
| Name | Plan Name | Number of Years Credited Service (#)* | Present Value of Accumulated Benefit ($)** | Payments During Last Fiscal Year ($) | | Pinchuk | Snap-on Incorporated Retirement Plan(1) | 21.5 | $658,662 | — | | | Supplemental Retirement Plan(1) | 21.5 | 3,912,685 | — | | Pagliari | Snap-on Incorporated Retirement Plan(1) | 21.1 | 530,253 | — | | | Supplemental Retirement Plan(1) | 21.1 | 938,400 | — | | Ward | Snap-on Incorporated Retirement Plan(2)(3) | 35.0 | 1,854,604 | — | | | Supplemental Retirement Plan(2)(3) | 35.0 | 4,656,925 | — | | Banerjee | Snap-on Incorporated Retirement Plan(1) | 20.9 | 589,993 | — | | | Supplemental Retirement Plan(1) | 20.9 | 682,147 | — | | Chambers | Snap-on Incorporated Retirement Plan(1) | 20.0 | 381,369 | — | | | Supplemental Retirement Plan(1) | 20.0 | 340,649 | — |
Table 7: Pension Benefits
| * Mr. Ward’s credited service also includes service years from participating in a pension plan that was merged into the Pension Plan. |
Table 7: Pension Benefits
| ** At December 30, 2023. |
Table 7: Pension Benefits
| (1) The defined benefit is determined using an account-based cash balance plan formula with pay credits ranging from 3% to 10% based on years of credited service and age. Interest is credited annually based on the five-year Treasury rate as calculated in November of the preceding year, with a minimum interest rate of 3.75%. The values shown are the present value of the account balances that would be available upon termination of employment. There are no subsidized optional forms of payment. The Pension Plan is a tax-qualified retirement plan. The Supplemental Plan is a non-qualified excess benefit and supplemental retirement plan providing benefits using the same formulas as in the Pension Plan, but without regard to IRS-imposed limits. |
Table 7: Pension Benefits
| (2) The total pension benefit is determined as described in footnote 3 below except that the Supplemental Plan benefit is offset by the benefit payable from the Pension Plan. Benefits from the Pension Plan are as calculated in footnote 3 below for service since August 5, 1996. For service prior to August 5, 1996, benefits are calculated according to the following formula: |
Table 7: Pension Benefits
[(2% x Final Average Pay x Projected Service) - (2.4% of Social Security benefit x Projected Service)] multiplied by (Current Service divided by Projected Service) Early retirement on the latter calculation is age 50 with 10 years of service. “Final Average Pay” is an individual’s average annual earnings during the last three completed consecutive calendar years of employment and generally includes only base salary and commissions paid in a given year. “Projected Service” means the total number of years a participant could have been eligible to earn a pension benefit if he/she participated in the plan until age 65. “Current Service” means the total number of years a participant actually earned a pension benefit.
Table 7: Pension Benefits
| (3) The total defined benefit is determined using the final average pay formula under the Pension Plan and provides, at the normal retirement age of 65, that retirement benefits will be calculated using the following benefit formula: |
Table 7: Pension Benefits
[1.2% x Final Average Pay x Years of Credited Service] plus [0.45% x {Final Average Pay minus Social Security Covered Compensation} x Years of Credited Service] “Final Average Pay” is an individual’s average annual earnings during the five highest completed consecutive calendar years of employment and generally includes base salary, commission and bonus amounts paid in a given year. “Social Security Covered Compensation” is a 35-year average of the Social Security Maximum Taxable Wage Base (according to federal regulations) for each calendar year to social security retirement age. “Years of Credited Service” is the number of years and fractional number of years of continuous employment up to 35 years. The Normal Form of Benefit (as defined in the Pension Plan) for benefits earned through 2012, is a 50% joint and survivor benefit with five years certain, which is unreduced since Mr. Ward has attained age 60. For benefits earned after 2012, the Normal Form of Benefit is a 50% joint and survivor annuity, which is also unreduced since Mr. Ward has attained age 65.
Non-qualified Deferred Compensation
Non-qualified Deferred Compensation The Snap-on Incorporated Deferred Compensation Plan (the “Deferred Compensation Plan”) is primarily intended to allow eligible participants to defer base salary and incentive compensation; however, the Company may also make matching contributions, including those to restore 401(k) Plan matching contributions otherwise limited by IRS regulations. Approximately 60 active and retired executives, including the NEOs, are eligible to participate in the Deferred Compensation Plan. The Deferred Compensation Plan is a non-qualified excess benefit and supplemental retirement plan as defined by Sections 3(36) and 201(2) of ERISA. Participants are allowed to defer amounts into a cash fund or into a Snap-on common stock fund. Participants are allowed to take a distribution of deferrals and matching contributions following a participant’s termination of employment or retirement or to schedule a specific deferral period. Information for each of the NEOs is set forth below relating to the Deferred Compensation Plan. The Deferred Compensation Plan complies with the requirements of Section 409A of the Code.
Table 8: Non-qualified Deferred Compensation
Table 8: Non-qualified Deferred Compensation
Table 8: Non-qualified Deferred Compensation
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($)(2) | Aggregate Balance at Last Fiscal Year End ($)(3) | | Pinchuk | — | $76,535 | $1,859,885 | — | $11,791,534 | | Pagliari | $199,281 | 24,991 | 64,137 | $104,532 | 1,425,679 | | Ward | — | — | 9,655 | — | 204,379 | | Banerjee | — | 19,034 | 688,791 | — | 5,407,295 | | Chambers | — | 22,507 | 6,399 | — | 157,978 |
Table 8: Non-qualified Deferred Compensation
| (1) Amounts reported as Executive Contributions are discussed in footnote 6 to the Summary Compensation Table and amounts reported as Registrant Contributions are reported in the “All Other Compensation” column of the Summary Compensation Table. |
Table 8: Non-qualified Deferred Compensation
| (2) These amounts were deferred in prior years. Mr. Pagliari’s distribution was paid according to a scheduled deferral election. |
Table 8: Non-qualified Deferred Compensation
| (3) Of the amounts reported in the “Aggregate Balance at Last Fiscal Year End” column, the following amounts were previously reported in the Summary Compensation Tables in the Company’s Proxy Statements for its prior Annual Meetings of Shareholders: Mr. Pinchuk—$3,177,981; Mr. Pagliari—$1,214,794; Mr. Ward—$81,623; Mr. Banerjee—$1,235,368; and Mr. Chambers—$55,869. |
Potential Payments on Change of Control
Potential Payments on Change of Control
Table 9: Potential Payments on Change of Control
Table 9: Potential Payments on Change of Control
Table 9: Potential Payments on Change of Control
| Name | Severance Amount(1) | Pension Enhancement(2) | Early Vesting of Stock Options(3) | Early Vesting of Stock Awards(4) | Other(5) | Estimated Tax Gross Up(6) | Total | | Pinchuk | $6,215,437 | $992,115 | $3,964,564 | $23,125,389 | $45,096 | — | $34,342,601 | | Pagliari | 2,456,156 | 381,157 | 1,383,811 | 5,548,945 | 46,776 | — | 9,816,845 | | Ward | 2,613,610 | 87,930 | 1,407,608 | 5,630,420 | 45,600 | — | 9,785,168 | | Banerjee | 2,038,564 | 324,173 | 1,148,259 | 4,614,802 | 45,600 | — | 8,171,398 | | Chambers | 2,049,164 | 307,787 | 961,469 | 4,029,688 | 46,776 | — | 7,394,884 |
Table 9: Potential Payments on Change of Control
| (1) This amount represents two times the sum of the executive officer’s base salary immediately prior to the termination of employment and an amount equal to the average of the individual’s bonus or incentive compensation paid or payable for the three full fiscal years prior to the year in which the change of control of the Company occurs, as specified by the change of control agreements. These amounts are based on the base salary in effect on December 30, 2023, and the average annual incentive compensation paid for the last three fiscal years as reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
Table 9: Potential Payments on Change of Control
| (2) This amount represents the present value of an additional two years of service under the Pension Plans and an additional two years of 401(k) Plan matching payments, as specified by the change of control agreements. These amounts are based on the calculation included in the footnotes to the Pension Benefits table. |
Table 9: Potential Payments on Change of Control
| (3) Accelerated vesting would only occur for outstanding unvested stock options granted under the 2011 Plan if there was a termination of employment following a change of control. The amounts shown represent the value of such unvested stock options based on the $288.84 per share closing price of our common stock on December 29, 2023, the last trading day of the recently completed fiscal year. |
Table 9: Potential Payments on Change of Control
| (4) These amounts represent the value of the unvested PSUs and RSUs (as well as related dividend equivalents) held by the executive officer, which would become vested only if there was a termination of employment following a change of control, based on the fiscal year-end closing price of our common stock. |
Table 9: Potential Payments on Change of Control
| (5) These amounts include payments for two years of life insurance and medical and dental benefits, as specified by the change of control agreements. |
Table 9: Potential Payments on Change of Control
| (6) The agreements do not provide a tax gross up; however, they do allow for a reduction in payments in certain circumstances so as to avoid adverse excise tax consequences to the executive officer. |
Table 9: Potential Payments on Change of Control
In addition to the agreements discussed in this section, the NEOs also participate in, and will be entitled to payments under, the various retirement and deferred compensation plans discussed above under “Defined Benefit Plans” and “Non-qualified Deferred Compensation.”
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE In accordance with Item 402(u) of Regulation S-K, the Company is providing the following information for fiscal 2023:
PAY RATIO DISCLOSURE
| • | Median of annual compensation of all employees excluding the CEO – $67,206 |
PAY RATIO DISCLOSURE
| • | Annual total compensation of the CEO – $10,574,757 |
PAY RATIO DISCLOSURE
| • | Ratio of CEO annual total compensation to median employee compensation – 157:1 |
PAY RATIO DISCLOSURE
The Company continued to rely on its fiscal 2021 calculation of the median employee (the “original median employee”) for pay ratio purposes since there have not been any changes in the Company’s employee population or employee compensation arrangements that it believes would significantly impact the pay ratio disclosure. However, since the original median employee retired from the Company at the end of fiscal 2023, as permitted under SEC rules, the Company substituted a new median employee—an individual serving in a production role in the United States—with substantially similar compensation as the original median employee. For a discussion regarding how the Company identified its median employee from a compensation perspective, please see “Pay Ratio Disclosure” in the Company’s Proxy Statement for its 2022 Annual Meeting of Shareholders. To determine the ratio disclosed above, the Company calculated the median employee’s compensation for fiscal 2023 in accordance with the rules applicable to the compensation elements included in the Summary Compensation Table and compared such compensation to the compensation of our CEO, as reported in the Summary Compensation Table.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE In accordance with Item 402(v) of Regulation S-K, the Company is providing the following information:
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2)(3)(4) | Average Summary Compensation Table Total for non-PEO Named Executive Officers (1) | Average Compensation Actually Paid to non-PEO Named Executive Officers (2)(3)(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income (6) | Operating Income (6) | RONAEBIT (7) | | | | | | | Total Shareholder Return (5) | Peer Group Total Shareholder Return (5) | | | | | 2023 | $10,574,757 | $21,236,348 | $2,880,969 | $5,248,302 | $189.28 | $150.20 | $1,011.1 | $1,047.6 | 37.6% | | 2022 | 9,484,660 | 12,577,620 | 2,687,596 | 3,520,186 | 145.95 | 127.15 | 911.7 | 954.7 | 35.5% | | 2021 | 9,872,946 | 17,335,075 | 2,809,457 | 4,597,000 | 134.00 | 134.52 | 820.5 | 852.9 | 35.5% | | 2020 | 7,933,529 | 3,713,918 | 2,398,651 | 1,274,781 | 104.01 | 111.06 | 627.0 | 630.9 | 27.8% |
PAY VERSUS PERFORMANCE
| (1) Information for the principal executive officer (“PEO”) for all years presented relates to Nicholas T. Pinchuk, Chairman, President and Chief Executive Officer. |
PAY VERSUS PERFORMANCE
Information for the non-PEO Named Executive Officers for all years presented relates to:
PAY VERSUS PERFORMANCE
| • | Aldo J. Pagliari – Senior Vice President–Finance and Chief Financial Officer |
PAY VERSUS PERFORMANCE
| • | Thomas J. Ward – Senior Vice President and President–Repair Systems and Information Group |
PAY VERSUS PERFORMANCE
| • | Anup R. Banerjee – Senior Vice President–Human Resources and Chief Development Officer |
PAY VERSUS PERFORMANCE
| • | Timothy L. Chambers – Senior Vice President and President–Snap-on Tools Group |
PAY VERSUS PERFORMANCE
| (2) The dollar amounts reported in the “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to non-PEO Named Executive Officers” columns represent the amount of “compensation actually paid” to these executive officers 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 these individuals during the applicable year. |
PAY VERSUS PERFORMANCE
Fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns for the PEO and non-PEO NEOs was determined by reference to: (i) for stock options, a Black-Scholes value as of the relevant measurement date; (ii) for outstanding RSU awards from 2021, 2022 and 2023, the closing price on the applicable year-end dates or, in the case of vesting dates, the actual vesting price; and (iii) for the 2020 RSUs and PSUs granted in 2020 through 2023, the same valuation methodology as RSU awards discussed above except that year-end values are multiplied by the probability of achievement as of each such date.
PAY VERSUS PERFORMANCE
| (3) For the portion of compensation included in the “Compensation Actually Paid” columns that is based on the year-end stock price, $288.84 was used for fiscal 2023. For PSUs that vested during the fiscal year, the values are based on the closing stock price on the vesting date, which was $249.26 in fiscal 2023. For further information regarding the valuation of equity awards, see Note 13 to our Consolidated Financial Statements, and for information regarding the stock prices used to value equity awards in the rows corresponding to 2020 to 2022, see “Pay Versus Performance” in the Company’s Proxy Statement for its 2023 Annual Meeting of Shareholders, which was filed with the SEC on March 10, 2023 (the “2023 Proxy Statement”). |
PAY VERSUS PERFORMANCE
| (4) The amounts reported in these columns for 2023 reflect the following adjustments from total compensation as reported in the Summary Compensation Table (the “SCT”): |
PAY VERSUS PERFORMANCE
| | PEO | Average Non-PEO | | Total Compensation Reported in 2023 SCT | $10,574,757 | $2,880,969 | | Less: Value of Option Awards reported in SCT | (1,323,023) | (383,293) | | Less: Value of Stock Awards reported in SCT | (5,532,076) | (1,202,119) | | Less: Change in Pension Value in SCT | (455,232) | (139,019) | | Less: Fair value of awards granted in prior fiscal years that failed to vest | — | — | | Plus: Year-end value of awards granted in the fiscal year that are unvested and outstanding | 7,612,450 | 1,625,158 | | Plus: Change in fair value of prior year awards that are unvested and outstanding | 7,838,581 | 1,716,673 | | Plus: Change in fair value of prior year awards that vested in the fiscal year | 315,496 | 77,852 | | Plus: Year-end value of options granted in fiscal year that are unvested and outstanding | 1,508,537 | 437,038 | | Plus: Change in fair value of prior year options that are unvested and outstanding | 409,847 | 128,925 | | Plus: Change in fair value of prior year options that vested in the fiscal year | 287,011 | 79,944 | | Plus: Dividends paid on unvested awards | — | — | | Plus: Pension service cost in the fiscal year | — | 26,174 | | Actual Compensation Paid for Fiscal Year 2023 | $21,236,348 | $5,248,302 |
PAY VERSUS PERFORMANCE
Pension service cost was calculated using the same methodology as used for the Company’s Consolidated Financial Statements, which is discussed in Note 11 to our Consolidated Financial Statements. For information regarding adjustments from total compensation as reported in the SCT for 2020 to 2022, see “Pay Versus Performance” in the 2023 Proxy Statement.
PAY VERSUS PERFORMANCE
| (5) The share prices illustrate the cumulative total shareholder return (“TSR”) each year of Snap-on common stock and of the S&P 500 Industrials Index since December 31, 2019, of a $100 investment, assuming that dividends were reinvested quarterly. |
PAY VERSUS PERFORMANCE
| (6) Net income and Operating income are reported in millions. Operating income represents income from continuing operations, excluding financial services income and the effect of foreign currency translation. |
PAY VERSUS PERFORMANCE
| (7) Return on net assets employed before interest and taxes (“RONAEBIT”) is calculated using a thirteen-month average and represents return on net assets employed before interest and taxes, excluding financial services and the effect of foreign currency translation. This methodology is consistent with that employed to calculate a company’s weighted average cost of capital. |
PAY VERSUS PERFORMANCE
In accordance with our pay-for-performance philosophy, we place a significant amount of each executive officer’s pay at risk so that the officer is rewarded for achieving Snap-on’s long-term and short-term strategic business goals, taking into consideration both internal business and external shareholder perspectives. Our executive compensation philosophy drives programs structured to pay for operating and individual performance, and our pay program is aligned with our key long-term and short-term strategic business objectives. The graph below illustrates the relationship between the compensation actually paid to the Company’s CEO (referred to in the graphs below as the PEO) and the average of the compensation actually paid to the other NEOs, and the TSR of Snap-on common stock and the S&P 500 Industrials Index for the indicated fiscal years: The graph below illustrates the relationship between the compensation actually paid to the Company’s CEO and the average of the other NEOs and the Company’s net income and operating income for the indicated fiscal years: The graph below illustrates the relationship between the compensation actually paid to the Company’s CEO and the average of the other NEOs and the Company’s RONAEBIT for the indicated fiscal years: The table below includes the metrics that the Company believes are the most important financial performance measures used to link compensation actually paid to Company performance for the most recently completed fiscal year:
PAY VERSUS PERFORMANCE
| Financial Performance Measure | Description | | Operating income | Metric in annual incentive plan | | RONAEBIT | Metric in annual incentive plan and PSUs | | Sales | Metric in PSUs | | Share price | Impacts value of stock options, PSUs and RSUs |