DEF 14A of Smith A O Corp, Feb 27, 2025

DEF 14A of Smith A O Corp

Filed Feb 27, 2025 · FY20240001193125-25-037641

Open on EDGAR

  1. NOMINEES – CLASS A COMMON STOCK

    NOMINEES – CLASS A COMMON STOCK

  2. NOMINEES – CLASS A COMMON STOCK

    | RONALD D. BROWN Retired Chairman and Chief Executive Officer, Milacron Inc. | | | | Director since: 2001 Age: 71 Committees: • Personnel and Compensation (Chair) • Nominating and Governance | Director Biography: Mr. Brown served as interim president and chief executive officer of Cincinnati Incorporated, a privately held U.S.-based machine tool manufacturer, from July 2020 to December 2020 and interim chief executive officer of LSI Industries Inc., a U.S.-based manufacturer of lighting and graphics, from April 2018 to October 2018. Mr. Brown served from March 2017 to April 2018 as vice chairman of The Armor Group, Inc., which he joined in 2013 as chief operating officer. The Armor Group, Inc. is a certified woman-owned corporation that manufactures equipment and products for a variety of industrial markets. Mr. Brown was chairman and chief executive officer of Milacron Inc. from 2001 to 2008. Milacron Inc. is a supplier of plastic processing and metalworking fluid technologies. Mr. Brown serves on the board of LSI Industries Inc., where he is chair of the Compensation Committee and a member of its Executive Committee. Mr. Brown served on the board of Zep Inc., where he was chairman of the Compensation Committee and a member of the Nominating and Corporate Governance Committee, from 2010 until it was acquired by New Mountain Capital in 2015. In addition, Mr. Brown was appointed by then-Governor Kasich to the University of Cincinnati Board of Trustees in 2013 and was its chairman from 2019 to 2021. | Skills and Qualifications: Mr. Brown’s broad executive-level financial and operating experience with several publicly traded companies provides valuable insight for us as to the issues and opportunities facing our company. He has experience as a chief executive officer, chief financial officer and a corporate attorney. Further, he has international and manufacturing experience with LSI Industries Inc., The Armor Group, Inc. and Milacron Inc. In addition, his experience as a director of other publicly traded companies brings a different perspective to our Board. |

  3. NOMINEES – CLASS A COMMON STOCK

    | VICTORIA M. HOLT Retired Director, President and Chief Executive Officer, Proto Labs, Inc. | | | | Director since: 2021 Age: 67 Committees: • Nominating and Governance (Chair) • Personnel and Compensation | Director Biography: Ms. Holt served as the president and chief executive officer of Proto Labs, Inc., a manufacturer of custom prototypes and on-demand product parts with manufacturing facilities in five countries, from 2014 until her retirement in 2021. Ms. Holt previously served as president and chief executive officer of Spartech Corporation, a leading provider of plastic sheet, compounds and packaging products, from 2010 until its sale to PolyOne in 2013. Prior to Spartech, Ms. Holt was the senior vice president, Glass & Fiberglass at PPG Industries, Inc., a leading coatings and specialty products company, from 2003 to 2010. She also served as a director of Proto Labs, Inc. from 2014 to 2021, when she retired from the company. Ms. Holt serves on the board of Waste Management, Inc., where she is a member of the Audit Committee and the Nominating and Governance Committee and Piper Sandler Companies, where she is a member of the Audit Committee and the Compensation Committee. Ms. Holt was an independent director of Watlow Electric Manufacturing Company, a private company, until its sale to Tinicum in January 2021. | Skills and Qualifications: Ms. Holt’s extensive experience as a chief executive officer of a growth-oriented, publicly traded company provides valuable perspective to our Board and management, particularly with respect to strategy and operation of a growth-oriented company as well as cybersecurity experience. Ms. Holt has completed the National Association of Corporate Director (NACD) Cyber Risk Oversight Program and earned the CERT Certificate in Cybersecurity Oversight. In addition, she has many years of experience serving on public company boards of directors. As an added benefit, Ms. Holt brings gender diversity to our Board. |

  4. NOMINEES – CLASS A COMMON STOCK

    | DR. ILHAM KADRI Chief Executive Officer and Director, Syensqo S.A. | | | | Director since: 2016 Age: 56 Committees: • Nominating and Governance • Personnel and Compensation | Director Biography: Dr. Kadri became the chief executive officer of Syensqo S.A. in December 2023 when Solvay S.A. split into two separate publicly traded entities with worldwide operations: Syensqo S.A. and Solvay S.A., both headquartered in Brussels, Belgium. Syensqo is a pure play science company focused on “clean” technology at the service of lightweighting, electrification, connectivity, resource efficiency, circularity and biomaterials. During her appointment as CEO of Solvay, 2019-2023, Dr. Kadri profoundly transformed the company. Under her leadership, Solvay nearly doubled returns, with 18 consecutive quarters of positive free cash flow, double-digit bottom-line growth and strengthened its balance sheet, all while cutting emissions two times more than the Paris Agreement requirement. From 2017 to 2018, Dr. Kadri was president and chief executive officer of Diversey, Inc., a global leader in hygiene and cleaning sectors. Dr. Kadri led the spin-off of Diversey, Inc. from Sealed Air Corporation (SEE) and sold it to private equity Bain. Prior to the spin-off, she was vice president of SEE and president of its Diversey division from 2013 to 2017. She also led the digital strategy of SEE and launched the Internet of Clean (IoC) at Diversey, Inc. Prior to joining SEE, Dr. Kadri held positions of increasing responsibility with Dow Chemical Company from 2007 until 2012, including general manager of its Advanced Materials Division in the Middle East, Africa and Europe (MEA), as well as the commercial director for Dow Water & Process Solutions, a global leader in water desalination and purification technologies. Dr. Kadri is also on the board of directors of L’Oréal S.A., where she serves on the Audit Committee. | Skills and Qualifications: Dr. Kadri has extensive international experience, having held executive leadership roles in Europe, the U.S., Middle East and Africa regions. In addition, as a chemical engineer, with a master’s degree in physics and chemistry, and a doctorate degree in Polymer Physics and Chemistry, Dr. Kadri brings a unique perspective on manufacturing, research and development, with a focus on sustainability and water technology that are directly applicable to our industry. Her extensive experience as a sitting chief executive officer, as well as a board member at L’Oréal brings unique perspectives. She also has extensive digital/e-commerce, cybersecurity, sustainability, merger/acquisition/divestitures/IPO experiences that benefit our company. Dr. Kadri also brings gender and ethnic diversity to our Board. |

  5. NOMINEES – CLASS A COMMON STOCK

    | CHRISTOPHER L. MAPES Retired Executive Chairman, Lincoln Electric Holdings, Inc. | | | | Director since: 2023 Age: 63 Committee: • Audit (Currently) • Nominating and Governance, • Personnel and Compensation (Starting after the Annual Meeting) | Director Biography: Mr. Mapes served as executive chairman of Lincoln Electric Holdings, Inc., a global manufacturer of welding, cutting and joining products, from January 2024 until his retirement on December 31, 2024. Previously, Mr. Mapes served as chairman, president and chief executive officer from December 2013 to December 2023 and had been president and chief executive officer from December 2012 to December 2013, after serving as chief operating officer beginning in 2011. From 2004 to 2011, Mr. Mapes served as executive vice president of A. O. Smith Corporation and president of A. O. Smith Electrical Products Company until the divestiture of this division in 2011. Mr. Mapes serves as a director of The Timken Company, where he is on its Audit and Nominating and Governance Committees; Nordson Corporation, where he is on its Audit Committee and RPM International Inc., where he is on its Compensation Committee. | Skills and Qualifications: Mr. Mapes has extensive experience leading manufacturing and distribution companies. He understands the challenges of global growth and the complexity of managing international operations. His broad experience includes cybersecurity. In addition to his management experience, Mr. Mapes has both an MBA and a law degree, as well as public company director experience. |

  6. NOMINEES – CLASS A COMMON STOCK

    | MARK D. SMITH Retired Business Manager, Strattec Security Corporation | | | | Director since: 2001 Age: 63 Committees: • Nominating and Governance • Personnel and Compensation | Director Biography: Mr. Smith served as a product business manager for Strattec Security Corporation from 1997 until his retirement in 2019. Strattec Security Corporation designs, develops, manufactures and markets automotive access control products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches and related access control products for major automotive manufacturers. In 2019, Mr. Smith was appointed one of three trustees of the Smith Family Voting Trust, which holds a controlling position in the stock of our company. Mr. Smith is also a first cousin of Robert L. Smith and Bruce M. Smith, who are trustees of the Smith Family Voting Trust. | Skills and Qualifications: Mr. Smith is experienced in managing the operations of a manufacturing business, both at Strattec and previously with our company. Further, an important aspect of his position at Strattec was managing key customer relationships, and he brings this orientation to his service on our Board. Based on his long service to our company, both as a director and as an employee early in his career, Mr. Smith is knowledgeable of company history and culture, and understands our long-term strategic and tactical plans. Mr. Smith is also a member of the Smith family, which holds a controlling interest in the stock of our company. |

  7. NOMINEES – CLASS A COMMON STOCK

    | KEVIN J. WHEELER Chairman and Chief Executive Officer, A. O. Smith Corporation | | | | Director since: 2017 Age: 65 | Director Biography: Mr. Wheeler became chairman of our company in 2020 and president and chief executive officer of our company in 2018. From 2017 to 2018, he was president and chief operating officer of our company. From 2013 to 2017, Mr. Wheeler held the position of senior vice president of A. O. Smith Corporation and president and general manager of its North America, India, Europe Water Heating and Export business, which was then the company’s largest operating unit. Mr. Wheeler previously served as managing director of our company’s European operations, where he had responsibility for water heater business in Europe and the Middle East, and upon his return to the United States from the Netherlands, served as vice president-international, with responsibility for all European and Asian operations, including China. Mr. Wheeler joined the company in 1994 as a regional sales manager and has held positions of increasing responsibility. Mr. Wheeler also serves on the board of Graco Inc., where he is a member of the Governance Committee and the Management Organization and Compensation Committee. | Skills and Qualifications: Mr. Wheeler has extensive sales, manufacturing and international experience in various executive positions with our company, most recently as our chief executive officer, and brings to the Board a thorough understanding of our people, products and markets worldwide. Mr. Wheeler has cybersecurity experience. Further, Mr. Wheeler has experience as a director of another publicly traded company, which brings a different perspective to our Board. |

  8. NOMINEES – COMMON STOCK

    NOMINEES – COMMON STOCK

  9. NOMINEES – COMMON STOCK

    | TODD W. FISTER Chief Financial Officer, Owens Corning | | | | Director since: 2024 Age: 50 Committee: • Audit | Director Biography: Mr. Fister became chief financial officer of Owens Corning, a global manufacturer of building and composite material systems, in September 2023. Since joining Owens Corning in 2014, Mr. Fister has held several executive-level positions, including president of Owens Corning’s insulation segment from 2019 to 2023; vice president of global insulation and strategy, and managing director of Foamglas and European insulation. He also serves as a member of Owens Corning’s Executive Committee. Prior to joining Owens Corning, Mr. Fister spent seven years at MeadWestvaco in roles of increasing responsibility. | Skills and Qualifications: Mr. Fister is a seasoned executive with broad financial, operational and strategic experience at Fortune 500 companies. He brings both a global and customer perspective. Further, with his strong financial background, the Board has determined that Mr. Fister is qualified as an audit committee financial expert under SEC regulations. |

  10. NOMINEES – COMMON STOCK

    | MICHAEL M. LARSEN Senior Vice President and Chief Financial Officer, Illinois Tool Works, Inc. | | | | Director since: 2021 Age: 56 Committee: • Audit (Chair) | Director Biography: Since 2013, Mr. Larsen has served as senior vice president and chief financial officer of Illinois Tool Works, Inc., a publicly traded, global, multi-industrial manufacturing leader. He previously served as president and chief executive officer of Gardner Denver, Inc. from 2012 to 2013, and its vice president and chief financial officer from 2010 to 2013. Prior to that, Mr. Larsen was chief financial officer at General Electric (“GE”) Water and Process Technologies from 2009 to 2010 and held a number of global finance leadership roles of increasing responsibility at GE from 1995 to 2009. Mr. Larsen was a director of Gardner Denver, Inc. from 2012 until its acquisition by KKR & Co. Inc. in 2013. | Skills and Qualifications: Mr. Larsen has extensive executive, financial and operating experience at companies with worldwide manufacturing operations, like our company. He has a thorough knowledge and understanding of generally accepted accounting principles and auditing standards and how they apply to budgeting and financial reporting systems. He has significant experience with mergers and acquisitions, information technology, including cybersecurity, global sourcing and sustainability. The Board has determined that Mr. Larsen is qualified as an audit committee financial expert under SEC regulations. |

  11. NOMINEES – COMMON STOCK

    | LOIS M. MARTIN Chief Financial Officer, Mortenson Companies, Inc. | | | | Director since: 2024 Age: 62 Committee: • Audit | Director Biography: Since 2017, Ms. Martin has been the chief financial officer of Mortenson Companies, Inc., a $6B privately held conglomerate of development, real estate, corporate private equity and construction entities spanning the renewable energy, technology, commercial and infrastructure industries. Ms. Martin has more than 30 years of financial experience. Prior to Mortenson Companies, she was executive vice president and chief financial officer at Ceridian Corporation from 2012 to 2017; chief financial officer at Capella University from 2004 to 2008; executive vice president and chief financial officer at World Data Products from 2002 to 2004; and senior vice president and chief financial officer at Deluxe Corporation from 2000 to 2001. Ms. Martin joined Deluxe in 1993 and served as chief financial officer from 1993 to 2001, along with various executive positions. Ms. Martin has been a director of Donnelley Financial Solutions, Inc. since 2016 and serves as chair of its Audit Committee. She previously served as a director of Raven Industries, Inc. from 2018 to 2021, ADC Telecommunications from 2004 to 2010 and MTS Systems from 2006 to 2010. Ms. Martin began her career in public accounting as an auditor at PricewaterhouseCoopers LLP. | Skills and Qualifications: Ms. Martin brings extensive executive-level financial experience to our company. With her extensive financial experience, including at publicly traded companies, the Board has determined that she qualifies as an audit committee financial expert under SEC regulations. In addition, Ms. Martin brings gender diversity to our Board. |

  12. NOMINEES – COMMON STOCK

    | ADRIAN I. PEACE President, Performance Technologies, Modine Manufacturing Company | | | | Director Nominee Age: 57 Committee: • Audit (Starting after the Annual Meeting) | Director Biography: Mr. Peace is president, performance technologies at Modine Manufacturing Company, a manufacturer of engineered heat transfer systems and heat transfer components for use in on- and off-highway original equipment manufacturer (OEM) vehicular applications. At Modine, Mr. Peace is responsible for overseeing Modine’s powertrain cooling solutions, advanced thermal solutions and stationary power cooling solutions. He has held this position since 2022 and before that was vice president, commercial industrial solutions at Modine from 2021 to 2022. From 2019 to 2021, Mr. Peace served as a strategy advisor for AIP LLC, working with various private equity firms supporting their investment thesis. Mr. Peace served as senior vice president, emerging business operations, at Republic Services, which provides nonhazardous waste management services for commercial, industrial, municipal and residential customers, from 2017 to 2019, where he also led Republic’s sustainability initiatives driving forward environmental, social and governance issues. Mr. Peace held various leadership roles at W.W. Grainger from 2013 to 2017, the last of which was vice president, specialty brands, M&A and Brazil operations. Mr. Peace joined General Electric in 1990 and served for 23 years in a number of roles, culminating in becoming president and CEO for Latin America, consumer and industrial business in 2005, and subsequently being promoted to president of chemicals and monitoring solutions business for GE Water in 2008 where he served until 2013. Mr. Peace has been a director of Essentra plc since 2021, where he serves on the Nomination, ESG, and Audit & Risk Committees. A third-party search firm recommended Mr. Peace to the Nominating and Governance Committee, which considered Mr. Peace and recommended to the Board that Mr. Peace be nominated as a director. | Skills and Qualifications: Mr. Peace is a seasoned executive with extensive experience leading global manufacturing and commercial operations. He is knowledgeable about complex international operations and also has extensive experience in sustainability and mergers/acquisitions that benefit our company. Mr. Peace also brings racial diversity to our Board. |

  13. NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

    NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

  14. NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

    | Pay Element | Committee | 2024 Amount | 2025 Amount | | Board Cash Retainer | | $103,500 | $103,500 | | Board Equity Retainer | | $140,000 | $150,000 | | Committee Chair Cash Retainers | Audit Committee | $20,000 | $25,000 | | | Personnel and Compensation Committee | $15,000 | $20,000 | | | Nominating and Governance Committee | $15,000 | $20,000 | | Presiding Independent Director Cash Retainer | | $30,000 | $30,000 |

  15. Director Compensation

    Director Compensation

  16. Director Compensation

    | Name(1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3)(4) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($)(5) | Total ($) | | Ronald D. Brown | $141,000 | $140,064 | — | — | — | — | $281,064 | | Todd W. Fister | 77,625 | 140,064 | — | — | — | — | 217,689 | | Victoria M. Holt | 118,500 | 140,064 | — | — | — | — | 258,564 | | Dr. Ilham Kadri | 103,500 | 140,064 | — | — | — | — | 243,564 | | Michael M. Larsen | 118,500 | 140,064 | — | — | — | — | 258,564 | | Christopher L. Mapes | 103,500 | 140,064 | — | — | — | — | 243,564 | | Lois M. Martin | 77,625 | 140,064 | — | — | — | — | 217,689 | | Ajita G. Rajendra | 103,500 | 140,064 | — | — | — | — | 243,564 | | Mark D. Smith | 103,500 | 140,064 | — | — | — | — | 243,564 | | Idelle K. Wolf(6) | 38,375 | — | — | — | — | — | 38,375 |

  17. Director Compensation

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

  18. Director Compensation

    | 2 | Includes amounts earned during 2024, even if deferred. |

  19. Director Compensation

    | 3 | Reflects the grant date fair value of stock awards calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 12 to our 2024 Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Directors receive a stock award of Common Stock as part of their annual retainer. On April 9, 2024, each then serving director except for Mr. Wheeler received a stock award worth $140,064, or 1,626 shares valued at $86.14 per share, which was the adjusted average of the high and low prices on the grant date rounded up to the next whole share. Mr. Brown has deferred his receipt of 72,550 shares until his separation from service as a director. Ms. Holt has deferred her receipt of 8,296 shares until her separation from service as a director. Mr. Larsen has deferred his receipt of 8,296 shares until his separation from service as a director. Deferred stock holdings include dividends on deferred stock which are paid in the form of restricted stock units. |

  20. Director Compensation

    | 4 | Each director as of December 31, 2024, owned the following aggregate number of shares or restricted stock units in connection with service as a director: Mr. Brown, 72,550; Mr. Fister, 1,626; Ms. Holt, 8,306; Dr. Kadri, 18,849; Mr. Larsen, 19,721; Mr. Mapes, 13,809; Ms. Martin, 1,626; Mr. Rajendra, 9,771 and Mr. Smith, 116,174. Please see the “Security Ownership of Directors and Management” Table for additional information. |

  21. Director Compensation

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

  22. Director Compensation

    | 6 | Ms. Wolf did not stand for re-election at the April 2024 Annual Meeting of Stockholders. Reflects compensation paid to her prior to her retirement. |

  23. Director Compensation

    The Board requires that every new director participate in a detailed orientation, including visits to our key operations. This encompasses a review of business and financial operations, meetings with business executives and others, and an overview of our corporate governance policies and procedures. New directors receive no additional compensation for their participation in orientation matters. The stock ownership requirement for directors is five times the applicable cash retainer received by the director in the last year. Each director is required to acquire beneficial ownership of A. O. Smith Corporation Common Stock having an aggregate value equal to this stock ownership requirement within five years of his or her election as a new director. All directors have met this requirement. Certain directors have elected to defer receipt of Common Stock shares under the A. O. Smith Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan allows directors to defer all or a portion (not less than 25%) of their fees until a later date, but not later than the year in which the director ceases service as a director. Payments can be made in a lump sum or in not more than 10 annual installments. This is handled as a bookkeeping entry, with gains and losses credited to the director’s account each month based on the director’s crediting election. The crediting election is used to designate the investment fund(s) as the basis for calculating the rate of return equivalent for the director’s account. Mr. Brown, Ms. Holt and Mr. Larsen have deferred receipt of their stock awards in 2024, which consequently are treated as restricted stock units. Dividends on stock which have been deferred as restricted stock units are also received in the form of restricted stock units based on the average of the high and low price of our Common Stock on the date of the dividend.

  24. Compensation Philosophy

    Our long-term incentive opportunities link a significant portion of executive compensation to our performance through restricted stock unit and performance stock awards. Executive officers also are expected to comply with established stock ownership guidelines which require acquisition and retention of specific levels of our Common Stock. Our view is that this stock ownership aligns the interests of our management team with our stockholders and encourages executive performance but discourages executives from taking undue risk. We believe executive total compensation opportunity should increase commensurate with responsibility and capacity to influence our results. Additionally, as responsibility and accountability increase, so should the portion of compensation which is at risk. Therefore, not only do base salaries increase with position and responsibility, but short-term and long-term incentive opportunities as a percentage of total compensation increase as well. Our executive compensation package is designed to strike a balance between short-term cash compensation in the form of fixed salaries and variable annual incentive plans and long-term compensation in the form of cash-based performance units and equity awards with three-year vesting periods. For the chairman and chief executive officer, approximately 14% of 2024 total target compensation was comprised of base salary, with the remaining 86% being variable compensation dependent on our company performance. The variable compensation was divided so that approximately 18% of total target compensation was attributable to annual incentive bonus and approximately 68% was long-term incentive compensation. For the other named executive officers, approximately 20-35% of total target compensation was comprised of base salary, with the remaining 65-80% being based on our company performance. The variable compensation is structured so that approximately 14-21% of total target compensation represents annual incentive bonus, with roughly 47-65% attributable to long-term incentive compensation.

  25. EXECUTIVE COMPENSATION MIX

    | Compensation Component | CEO | Other NEOs | | Salary | 14% | 20-35% | | Annual Incentives & Bonus | 18% | 14-21% | | Long-Term Incentives | 68% | 47-65% |

  26. EXECUTIVE COMPENSATION MIX

    The Personnel and Compensation Committee (“PCC”) approved a long-term incentive plan for 2024 which targeted 65% of the chairman and chief executive officer’s long-term incentives, or approximately 44% of total compensation, as equity-based awards. The PCC targeted 65% of the long-term incentives, or approximately 30-42% of total target compensation, as equity-based awards for the other named executive officers.

  27. EXECUTIVE CASH / EQUITY MIX

    EXECUTIVE CASH / EQUITY MIX

  28. EXECUTIVE CASH / EQUITY MIX

    | Compensation Component | CEO | Other NEOs | | Cash-Based Compensation | 56% | 58 - 70% | | Equity-Based Compensation | 44% | 30 - 42% |

  29. EXECUTIVE CASH / EQUITY MIX

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

  30. Outside Consultants

    | Service | Fees | | Management Compensation Surveys and Benchmarking | $19,205 | | Benefits Consulting Services | $366,892 in U.S. and Canadian health and welfare plan consulting paid through credits against commissions earned as broker for life and disability group insurance plans; $15,642 for retirement benefits consulting in Canada. | | Health Plan program fees | $115,000 for participation in Rx Collaborative, WTW’s pharmacy purchasing coalition and $97,380 for the Custom Care Management Unit, which provides personalized care for families with a member having a serious health condition. |

  31. Benchmarking

    Benchmarking We endeavor to benchmark our executive compensation against similarly situated executives in comparably sized organizations. We believe we compete for executive resources with other nonfinancial institutions across multiple industrial segments. With that in mind, our consultants utilize broad-based, general industry salary surveys and regress their data to organizations with revenues similar to A. O. Smith. We believe market median is an appropriate target for our total compensation program. We attempt to design both short-term and long-term incentives to produce rewards in excess of median market levels when company performance is better than target. The PCC authorized WTW to perform a detailed analysis of our executive compensation levels in 2024, as we do each year. As we describe below, the PCC asked WTW to provide input on marketplace trends in executive compensation, and overall compensation and components of compensation for 13 executive positions. We utilize WTW because we believe its survey resources ensure consistent and statistically valid data that is representative of the market in which we compete for executive talent. Its database includes a broad array of over 800 companies. We did not rely on a specific subgroup of peer companies within that database. In working with WTW, we played no role in selecting the companies for which the data was obtained. For 2024 compensation, WTW performed a regression analysis to reflect base pay levels of an organization with $3.75 billion in revenue and reported its findings to the PCC in October 2023. Its comparison focused on overall compensation, as well as base salary, annual incentive bonus, equity awards and each of the other compensation elements discussed below. We believe its methodology provides appropriate comparisons by utilizing industrial companies of comparable size and referencing databases with comparable executive officer positions. For 2024, the PCC generally targeted our overall compensation and benefits programs and each element of compensation at the median level of the surveyed companies. Since a number of variables can influence the relationship of an individual executive’s pay components to the survey median data, the PCC considers a range of 80% to 120% of median generally to be appropriate when reviewing total compensation. Although the PCC generally attempts to have each component of compensation in this target range, the PCC puts greater emphasis on achieving the target at the total compensation level. Variables considered include, but are not limited to, education, position tenure, previous experience, level of performance, additional responsibilities and, as appropriate, recruitment considerations, and as described further below in the discussion of individual compensation elements, the PCC will set compensation outside of its typical target range in special circumstances to the extent it believes such an action is appropriate based on these variables and the expected future contributions of an individual executive to our company. For 2025, we compared ourselves to the market median of other companies with revenues of $3.85 billion, which represents our reported revenues in 2023.

  32. Compensation Elements

    | • | Short-Term – annual incentive bonus |

  33. Compensation Elements

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

  34. Annual Incentive Compensation

    Annual Incentive Compensation Each year, the PCC reviews and approves our financial objectives for both the company and its business units. The executive annual incentive bonus is tied to achieving those objectives. The better we perform relative to these objectives, the higher the incentive bonus payment. The annual target incentive bonus typically is calculated as a percent of annual base pay for the performance year. The target percent for incentive compensation, like base salary, is determined through periodic benchmarking and review of the median level survey data provided by WTW. Annual incentive compensation represents an “at risk” component of the executive compensation package. Actual incentive bonus amounts are dependent upon performance against specific measurements and may vary from 0% to 200% of targeted amounts. As a general principle, the portion of an executive’s compensation tied to incentive compensation increases with the executive’s level of responsibility. Thus, the chairman and chief executive officer’s annual incentive opportunity is greater than that of the other named executive officers. We targeted an annual incentive opportunity for the chairman and chief executive officer at 125% of base pay in 2024 based upon WTW survey data for comparably situated executives. The relationship of our incentive targets to market median comparisons as of year end is illustrated in the following table. Mr. Shafer joined A. O. Smith in March 2024. His annual incentive compensation target was set at a level above our target range to reflect his unique skill set and expected future contributions to the company.

  35. Annual Incentive Compensation

    | Name | 2024 Target % of Base Salary | Target Incentive % to Market Median | | Kevin J. Wheeler | 125% | 100% | | Charles T. Lauber | 80% | 100% | | Stephen M. Shafer | 100% | 118% | | James F. Stern | 70% | 100% | | Stephen D. O’Brien | 60% | 92% | | Mark A. Petrarca | 65% | 100% |

  36. Annual Incentive Compensation

    For 2024, the PCC again aligned our incentives with our focus on improving growth of stockholder value through profitable revenue growth. Our 2024 annual incentive plan for corporate executives was based on achieving a combination of two financial measures, corporate EBIT of $799.1 million and corporate net sales of $4.0258 billion. The goal of the plan was to keep our management focused on providing value to stockholders by incorporating both a profitability measure and a growth measure. Eighty percent (80%) of the incentive opportunity was based on EBIT and twenty percent (20%) on net sales. EBIT is calculated by subtracting our cost of goods sold and operating expenses from revenue before interest and taxes. Net sales is calculated by subtracting returns, allowances and discounts from gross sales. The PCC took into account market practice in the choice and number of measures, and we believe that limiting the net sales measure to twenty percent (20%) of the total incentive opportunity mitigates the risk of executives focusing on growth at the expense of profitability. We expect to use these financial measures for 2025. We followed a similar approach for our business unit executives. As a business unit executive, seventy percent (70%) of Mr. O’Brien’s annual incentive for 2024 was based on two business unit-based measures: business unit PEBIT weighted at eighty percent (80%) and business unit net sales weighted at twenty percent (20%) of this portion. The balance of Mr. O’Brien’s annual incentive was linked to our corporate EBIT and corporate net sales goals. We achieved 68.1% of the corporate EBIT incentive bonus target and 72.7% of the corporate net sales incentive bonus target, for an overall corporate bonus achievement of 69.0%. The North America Water Heating business unit achieved 74.6% of its PEBIT incentive bonus target and 74.5% of its net sales incentive target, with an overall achievement of 74.5%. Accordingly, the named executive officers were awarded incentive compensation bonuses set forth in the table below.

  37. 2024 Annual Incentive Awards

    2024 Annual Incentive Awards

  38. 2024 Annual Incentive Awards

    | Name | Amount | | Kevin J. Wheeler | $966,000 | | Charles T. Lauber | 360,000 | | Stephen M. Shafer(1) | 491,000 | | James F. Stern | 313,000 | | Stephen D. O’Brien | 206,000 | | Mark A. Petrarca(2) | 169,000 |

  39. 2024 Annual Incentive Awards

    | 1 | Mr. Shafer joined the company on March 18, 2024; his annual incentive was prorated for the portion of the year he worked for A. O. Smith. |

  40. 2024 Annual Incentive Awards

    | 2 | Mr. Petrarca retired from the company on September 3, 2024; his annual incentive was prorated for the portion of the year prior to his retirement. |

  41. Long-Term Incentive Compensation

    Long-Term Incentive Compensation Long-term incentive compensation consists of restricted stock units, performance cash and performance stock, all of which are focused on ensuring sustained performance or achievement of strategic goals over a multi-year period. We believe strongly that equity-based long-term incentives effectively link the interests of senior management to the interests of our stockholders. The allocation of total value between each of the long-term incentive components may vary from year-to-year based on our focus, as determined by the PCC. The long-term incentive portion of an executive’s compensation is “at risk” and is dependent upon corporate performance and growth in stock value. The stated purpose of the Combined Incentive Compensation Plan, which is the vehicle for awarding long-term incentives, is to provide compensation as an incentive to induce key employees to remain in our employ and to encourage them to secure or increase their stock ownership in our company or to otherwise align their interests with our stockholders. The Combined Incentive Compensation Plan motivates behavior through growth-related incentives to achieve long-range revenue and profitability goals. The total target value of all long-term incentive components is compared to comparable positions in the marketplace. Again, the PCC utilizes WTW to assist in benchmarking against the median level of surveyed companies to determine market competitive long-term incentive targets for executive positions. Based upon the analysis that WTW provided in October 2023 for the existing executives and in early 2024 for Mr. Shafer who joined A. O. Smith in March 2024, the long-term incentive grants to our named executive officers were valued in the aggregate at 118% of market median and 104% excluding Mr. Shafer. We set Mr. Shafer’s long-term incentive target above our typical target range relative to market median to reflect the unique skills he brings to the role and his anticipated future contributions. Mr. O’Brien’s long-term incentive target reflects his recent promotion to his role. The following table shows long-term incentive grants to named executive officers in 2024, and compares such grants to market median.

  42. Long-Term Incentive Compensation

    | Name | 2024 Long-Term Incentives Target Value | Projected Market Median | | Kevin J. Wheeler | $5,350,000 | 111% | | Charles T. Lauber | 1,375,000 | 103% | | Stephen M. Shafer(1) | 3,000,000 | 194% | | James F. Stern | 1,020,000 | 111% | | Stephen D. O’Brien | 660,000 | 86% | | Mark A. Petrarca | 770,000 | 109% |

  43. Long-Term Incentive Compensation

    | 1 | In addition to the annual grant amount shown in the table, Mr. Shafer also received a special one-time grant of $2,000,000 in restricted stock units to account for equity awards he forfeited to join the company in March 2024. The restricted stock units will vest on March 18, 2027 |

  44. Emphasis on Performance-Based Awards

    Emphasis on Performance-Based Awards Our approach is to structure our awards so that restricted stock units represent 50% of our long-term incentive awards, performance cash 35% and performance stock 15%. All three components have a financial or strategic performance metric associated with them. Restricted stock units entitle the executive to receive a share of Common Stock for each unit when the restricted stock unit vests. Restricted stock units are time-based but have a minimum performance threshold based on average Return on Equity that must be achieved in order to vest. The average Return on Equity is calculated by dividing net income by stockholder equity, adjusted to exclude certain extraordinary and nonrecurring items, averaged over the three-year vesting period. We use average Return on Equity because we believe it represents a sound measure of our performance that is easily recognized and readily used by investors and that links executive performance to stockholder interest over the three-year performance period of the award. The value to the executive of restricted stock units is dependent upon the value of our Common Stock at the time of vesting. Restricted stock units are used to provide a combination of retention value and incremental performance incentives. For 2024, the minimum average Return on Equity for restricted stock unit payouts was 5%. Performance cash is valued at $100 per unit at the time of grant. The value to the executive is dependent upon return on invested capital (or ROIC) performance over a three-year vesting period. [We calculate ROIC by taking net operating profit after taxes and dividing it by total capital.] The 2024 performance cash award uses ROIC to measure how effectively executives manage capital. The goal for achieving 100% of target is based on an average of the company’s last five years of ROIC achievement. The threshold and maximum performance levels are based on a market reference point: the five-year average of median ROIC for the S&P 500 Industrials Index. The threshold for achieving any payout is 125% of this reference point, and the maximum payout is achieved at 225% of the reference point. Target value payouts will be earned at 30.8% performance over the course of the measurement period and a maximum payout of 200% of target will be earned should we return 36.5% ROIC as a percent of the Cost of Capital between January 1, 2024, and December 31, 2026. As with annual incentive compensation objectives, the PCC sets targets at levels that are difficult to achieve, but with the expectation they are attainable.

  45. Emphasis on Performance-Based Awards

    | ROIC Achieved | 2024 Plan Payout | | 20.3% | 0% – Minimum | | 30.8% | 100% – Target | | 36.5% | 200% – Maximum |

  46. Emphasis on Performance-Based Awards

    | Water Savings — millions of gallons | 2024 Plan Payout | | 0 | 0% | | 16 | 100% – Target | | 20 | 150% – Maximum |

  47. Emphasis on Performance-Based Awards

    Through December 2024, the performance stock we granted in 2024 had an estimated value of approximately 150.0% of shares granted. At target, the combined value of the three components of executive long-term incentives (restricted stock units, performance cash and performance stock) should represent long-term incentive awards levels within a range around market median consistent with the WTW survey, subject to limited exceptions for special circumstances. Based upon the PCC’s October 2024 analysis, target long-term incentives for our named executive officers compared to market median are reflected on the table in the Long-Term Incentive Compensation discussion above.

  48. 2025 Long-Term Incentive Award

    2025 Long-Term Incentive Award In 2025, the PCC will follow the same structure for the long-term incentive award as in 2024. The restricted stock unit and performance cash components of the 2025 long-term incentive award will comprise 50% and 35% of the award, respectively, with performance criteria set following the process outlined for the 2024 award. The 2025 performance stock will again have a three-year performance period based on a strategic ESG goal and will constitute 15% of the total long-term incentive. The 2025 award will be a waste reduction goal based on achievement of a landfill diversion target. This target, defined as reducing 525,000 pounds of waste at our seven largest North American plants through landfill diversion by year-end 2027 from the baseline set in 2024. Landfill diversion will be achieved through waste reduction, recycling or energy recovery. Achieving the target of 525,000 pounds diverted provides 100% of the target shares, and a diversion of 787,500 pounds will provide the maximum number of shares at 150% of target.

  49. Payout of 2022-2024 Performance Cash

    Payout of 2022-2024 Performance Cash Performance cash awarded in February 2022 for the period 2022-2024 was paid in February 2025. This award was based upon ROIC as a percent of the Cost of Capital for the three-year period (2022-2024). The cash units originally were valued at $100 per unit. Based upon our performance during the measurement period, our ROIC exceeded the Cost of Capital by 479.5%, which resulted in the performance cash being paid out at 115.9% of the target value.

  50. Consideration of Risk in Executive Compensation Plans

    Consideration of Risk in Executive Compensation Plans We believe our total compensation package mitigates unreasonable risk-taking by our senior executives. In this regard, we strike a balance between short-term and long-term cash and equity awards. A significant portion of our executives’ pay is linked to the achievement of financial goals directly aligned to stockholder interests: EBIT, net sales, ROIC and return on equity beginning with 2023 awards. The competitive annual incentive plan rewards executives for achieving short-term performance targets, which keeps them focused on day-to-day business fundamentals. On the other hand, our long-term cash and equity awards incent executives to take a long-term view of our company and to assume reasonable risks to develop new products, explore new markets and expand existing businesses. Further, our executives are stockholders with established share ownership guidelines requiring them to acquire and hold A. O. Smith stock. Their stock grants vest over three-year periods so they are incented to build stockholder value over time. Their performance cash awards also are subject to vesting over a three-year period, and their payout is tied to ROIC over the same period of time. Our performance-based pay components are tied to company-wide results. We have implemented caps on our annual cash incentive plan, long-term performance cash and performance stock. Our equity programs limit and define the number of shares, but the value of the award is determined by the stock market at the time they vest or are exercised, which we believe provides a strong connection with stockholder interests. The PCC reviewed the company’s annual and long-term incentive plans at the PCC’s July 2024 meeting. As a result of its review, the PCC concluded that our program is unlikely to place the company at material risk. In this regard, several of our current practices effectively mitigate risk and promote performance. As part of this process, the PCC reviewed the risk assessment process conducted by WTW at the PCC’s direction and discussed with WTW any changes over the last year that could impact risk. The PCC concluded that no plan changes were implemented in 2024 that would affect the existing risk profile of any of the plans. In addition, we maintain a Recoupment Policy for Incentive Compensation, which complies with the SEC’s and the NYSE’s clawback policy requirements and requires us to recover from executive officers incentive compensation erroneously awarded in the event of a material accounting restatement. We believe this policy, discussed in greater depth in the section of the Compensation Discussion and Analysis entitled, “Clawbacks – Recoupment Policy for Incentive Compensation,” mitigates the risk of a financial restatement by helping to ensure that our executive officers monitor and maintain the accuracy of our reported financial results and adhere to our Guiding Principles.

  51. Severance Plan

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

  52. Summary Compensation Table

    Summary Compensation Table The Summary Compensation Table reflects information concerning compensation awarded to, earned by or paid to our chairman and chief executive officer, chief financial officer and other named executive officers during fiscal years 2024, 2023 and 2022.

  53. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Kevin J. Wheeler Chairman and Chief Executive Officer | 2024 2023 2022 | $1,120,000 1,076,500 1,035,000 | $0 0 146,000 | $3,477,378 3,146,180 1,517,977 | $0 0 1,518,003 | $2,779,000 3,889,000 2,122,000 | $0 0 42,393 | $289,794 236,976 258,674 | $7,666,172 8,348,656 6,640,047 | | Charles T. Lauber Executive Vice President and Chief Financial Officer | 2024 2023 2022 | 651,000 626,000 602,000 | 0 0 49,000 | 893,651 825,486 395,832 | 0 0 396,043 | 833,000 1,263,000 574,000 | 0 0 0 | 132,955 115,753 119,842 | 2,510,606 2,830,239 2,136,717 | | Stephen M. Shafer President and Chief Operating Officer(6) | 2024 2023 2022 | 712,500 | 0 | 3,950,213 | 0 | 491,000 | 0 | 432,523 | 5,586,236 0 0 | | James F. Stern Executive Vice President, General Counsel and Secretary | 2024 2023 2022 | 646,000 621,000 597,000 | 0 0 47,000 | 663,149 597,882 288,891 | 0 0 288,783 | 658,000 979,000 491,000 | 174,388 613,108 0 | 101,861 100,126 94,454 | 2,243,398 2,911,116 1,807,128 | | Stephen D. O’Brien Senior Vice President, President and General Manager – North America Water Heating | 2024 2023 2022 | 470,000 | 0 | 429,001 | 0 | 305,000 | 0 | 55,096 | 1,259,097 0 0 | | Mark A. Petrarca Sr. Vice President – Human Resources and Public Affairs(7) | 2024 2023 2022 | 374,663 537,000 516,000 | 0 0 37,000 | 500,299 455,209 218,339 | 0 0 218,303 | 402,000 777,000 348,000 | 658,330 644,160 0 | 73,525 85,964 81,299 | 2,008,817 2,499,333 1,418,941 |

  54. Summary Compensation Table

    | 1 | Includes amounts earned in 2024, even if deferred. |

  55. Summary Compensation Table

    | 2 | The amounts included in the “Stock Awards” column are the aggregate grant date fair value of stock awards granted during a year calculated in accordance with FASB ASC Topic 718. For 2022, the values reflect the grant date fair value of restricted stock units. For 2023 and 2024, the values reflect the grant date fair value of restricted stock units and the grant date fair value of performance stock at target performance, which, for 2024 respectively, for each named executive officer are as follows: Mr. Wheeler, $2,674,875 and $802,503; Mr. Lauber, $687,455 and $206,196; Mr. Shafer, $3,499,997 ($1,499,999 for his annual grant and $1,999,998, for a special grant upon joining the company) and $450,216; Mr. Stern, $510,021 and $153,128; Mr. O’Brien, $330,157 and $98,844 and Mr. Petrarca, $384,845 and $115,454. With respect to the 2024 performance stock grant, the maximum performance level values at the grant date fair value are: Mr. Wheeler, $1,203,755; Mr. Lauber, $309,294; Mr. Shafer, $675,324 Mr. Stern, $229,692; Mr. O’Brien, $148,266 and Mr. Petrarca, $173,181. For a discussion of valuation assumptions, see Note 12 to our 2024 Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. See the Grants of Plan-Based Awards Table for more information on stock awards granted in 2024. |

  56. Summary Compensation Table

    | 3 | The amounts shown for 2024 reflects the annual incentive bonus for 2024 and performance cash for the period 2022 to 2024, which, respectively, for each named executive officer are as follows: Mr. Wheeler, $966,000 and $1,813,000; Mr. Lauber, $360,000 and $473,000; Mr. Shafer $491,000 and $—; Mr. Stern, $313,000 and $345,000; Mr. O’Brien, $206,000 and $99,000 and Mr. Petrarca, $169,000 and $233,000. Mr. Shafer joined the company in 2024 and was not eligible for a 2022 performance unit award. |

  57. Summary Compensation Table

    The amounts shown for 2023 in the Summary Compensation Table in last year’s Definitive Proxy Statement on Schedule 14A filed on February 29, 2024 for Mr. Wheeler, Mr. Lauber, Mr. Stern and Mr. Petrarca were overstated due to an error in the calculation of the payout percentage for the performance units for the period 2021 to 2023. The payout percentage was originally calculated as 164.9%, but the correct payout percentage was 136.3%. The amounts shown for 2023 in the table above have been reduced by the following amounts to reflect the amounts ultimately retained by the executive officers based on the correct payout percentage: Mr. Wheeler, ($408,000); Mr. Lauber, ($107,000); Mr. Stern, ($74,000); and Mr. Petrarca, ($61,000).

  58. Summary Compensation Table

    | 4 | The 2024 amounts reflect the net change in the actuarial present value of the pension benefit for Messrs. Stern and Petrarca who participate in the Executive Supplemental Pension Plan. Messrs Wheeler, Lauber, Shafer and O’Brien do not participate in a pension plan. Mr. Petrarca retired in September 2024 and will receive his Executive Supplemental Pension benefit in March 2025. |

  59. Summary Compensation Table

    | 5 | Additional information regarding other compensation as provided in the “Components of 2024 All Other Compensation” Table below. |

  60. Summary Compensation Table

    | 6 | Mr. Shafer Joined the company on March 18, 2024. |

  61. Summary Compensation Table

    | 7 | Mr. Petrarca retired on September 3, 2024. |

  62. Components of 2024 All Other Compensation

    | 1 | Amounts shown are company 401(k) plan matching contribution and contribution to the A. O. Smith Non-qualified Deferred Compensation Plan. For 2024, Messrs. Wheeler, Lauber, Stern, O’Brien and Petrarca received a $12,075 company 401(k) plan matching contribution; Mr. Shafer did not contribute to the 401(k) plan in 2024 and therefore did not receive a matching contribution. Each officer received a $10,350 company 401(k) plan nonmatching contribution and the following Non-qualified Deferred Compensation Plan contributions: Mr. Wheeler, $108,635; Mr. Lauber, $38,113; Mr. Shafer, $0; Mr. Stern, $10,535; Mr. O’Brien, $14,132 and Mr. Petrarca, $1,038. |

  63. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The table below reflects the plan-based awards made under the Combined Incentive Compensation Plan to each of the named executive officers during 2024.

  64. Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Kevin J. Wheeler | 2/12/2024(4) | 0 | $1,400,000 | $2,800,000 | | | | | | | | 2/12/2024(5) | 0 | 1,872,500 | 3,745,000 | | | | | | | | 2/12/2024 | | | | 0 | 9,905 | 14,858 | | $802,503 | | | 2/12/2024 | | | | | | | 33,015 | 2,674,875 | | Charles T. Lauber | 2/12/2024(4) | 0 | 520,800 | 1,041,600 | | | | | | | | 2/12/2024(5) | 0 | 481,500 | 963,000 | | | | | | | | 2/12/2024 | | | | 0 | 2,545 | 3,818 | | 206,196 | | | 2/12/2024 | | | | | | | 8,485 | 687,455 | | Stephen M. Shafer | 3/18/2024(5) | 0 | 712,500 | 1,425,000 | | | | | | | | 3/18/2024(6) | 0 | 1,050,000 | 2,100,000 | | | | | | | | 3/18/2024(7) | | | | 0 | 5,200 | 7,800 | | 450,216 | | | 3/18/2024 | | | | | | | 40,425 | 3,499,997 | | James F. Stern | 2/12/2024(4) | 0 | 452,200 | 904,400 | | | | | | | | 2/12/2024(5) | 0 | 357,000 | 714,000 | | | | | | | | 2/12/2024 | | | | 0 | 1,890 | 2,835 | | 153,128 | | | 2/12/2024 | | | | | | | 6,295 | 510,021 | | Stephen D. O’Brien | 2/12/2024(4) | 0 | 282,000 | 487,062 | | | | | | | | 2/12/2024(5) | 0 | 231,000 | 456,000 | | | | | | | | 2/12/2024 | | | | 0 | 1,220 | 1,830 | | 98,844 | | | 2/12/2024 | | | | | | | 4,075 | 330,157 | | Mark A. Petrarca | 2/12/2024(4) | 0 | 243,531 | 487,062 | | | | | | | | 2/12/2024(5) | 0 | 269,500 | 539,000 | | | | | | | | 2/12/2024 | | | | 0 | 1,425 | 2,138 | | 115,454 | | | 2/12/2024 | | | | | | | 4,750 | 384,845 |

  65. Grants of Plan-Based Awards

    | 1 | Amounts reflect the threshold, target and maximum number of shares of performance stock that each named executive officer can earn under the Combined Incentive Compensation Plan for the period 2024-26. The grant date fair value of these awards was $81.02 for the February 12, 2024, grant per share of performance stock, based upon the average of the highest and lowest price on the date of grant. Mr. Shafer joined the company on March 18, 2024, and the fair market value for his grants on that date was $86.58, based upon the average of the highest and lowest price on the date of the grant. No dividends are paid on unvested performance stock. The actual number of stock units vesting is dependent upon company performance on a water usage goal over the three-year vesting period as more fully explained under “Compensation Discussion and Analysis – Long-Term Incentive Compensation.” |

  66. Grants of Plan-Based Awards

    | 2 | Shows the number of restricted stock units granted to each named executive officer in 2024 under the Combined Incentive Compensation Plan. Restricted stock units vest on February 12, 2027, except in the event of dismissal or voluntary resignation prior to vesting, if not retirement eligible. The grant date fair value of these awards was $81.02 for the February 13, 2024, grant per restricted stock unit, based upon the average of the highest and lowest price on the date of grant. Mr. Shafer joined the company on March 18, 2024, and the fair market value for his grants on that date was $86.58, based upon the average of the highest and lowest price on the date of the grant. Mr. Shafer’s restricted stock units grant includes 17,325 units representing his regular annual grant and an additional 23,100 units to account for equity awards he forfeited to join A. O. Smith. Dividends on restricted stock units are credited to the named executive officer’s account in the A. O. Smith Non-qualified Deferred Compensation Plan. |

  67. Grants of Plan-Based Awards

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

  68. Grants of Plan-Based Awards

    | 4 | Amounts reflect the target and maximum awards that each named executive officer could have earned under the Combined Incentive Compensation Plan for annual incentive bonus for 2024. Mr. Shafer joined the company on March 18, 2024; his bonus values are prorated based on the portion of the year that he worked at A. O. Smith. Mr. Petrarca retired on September 3, 2024; his bonus values are prorated for the period of the year that he was an active employee. |

  69. Grants of Plan-Based Awards

    | 5 | Amounts reflect the target and maximum awards that each named executive officer can earn under the Combined Incentive Compensation Plan as performance cash units for the period 2024-2026. Performance cash units have a value of $100 per unit at time of grant. The actual value of performance cash units is dependent upon ROIC performance over the three-year vesting period, as more fully explained under “Compensation Discussion and Analysis – Long-Term Incentive Compensation.” |

  70. Outstanding Equity Awards at December 31, 2024

    Outstanding Equity Awards at December 31, 2024 The table below reflects all outstanding equity awards made under the Combined Incentive Compensation Plan to each of the named executive officers.

  71. Outstanding Equity Awards at December 31, 2024

    | | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Kevin J. Wheeler | 22,200 14,675 24,435 16,755 79,240 161,985 98,920 57,507 | 0 0 0 0 0 0 0 28,753 | | $31.670 50.160 61.760 57.465 49.420 42.390 60.820 74.265 | 02/08/26 02/13/27 02/12/28 09/01/28 02/11/29 02/10/30 02/08/31 02/07/32 | 20,440 36,045 33,015 | $1,685,074 2,971,550 2,721,757 | 16,223 14,858 | $1,337,383 1,224,852 | | Charles T. Lauber | 2,933 7,590 7,775 12,190 8,985 36,850 25,910 15,004 | 0 0 0 0 0 0 0 7,501 | 0 | 31.670 50.160 61.760 49.420 52.680 42.390 60.820 74.265 | 02/08/26 02/13/27 02/12/28 02/11/29 05/01/29 02/10/30 02/08/31 02/07/32 | 5,330 9,460 8,485 | 439,405 779,882 699,503 | 4,253 2,544 | 350,576 209,686 | | Stephen M. Shafer | 0 | 0 | 0 | | | 19,635 | 1,618,709 | 5,200 | 428,688 | | James F. Stern | 15,180 15,550 22,400 30,775 17,900 10,940 | 0 0 0 0 0 5,470 | 0 | 50.160 61.760 49.420 42.390 60.820 74.265 | 02/13/27 02/12/28 02/11/29 02/10/30 02/08/31 02/07/32 | 3,890 6,850 6,295 | 320,692 564,714 518,960 | 3,083 2,835 | 254,121 233,717 | | Stephen D. O’Brien | 3,127 | 1,563 | 0 | 74.265 | 02/07/32 | 1,100 1,930 2,905 4,075 | 90,684 159,109 239,488 335,943 | 1,305 1,830 | 107,584 150,865 | | Mark A. Petrarca | 10,215 14,780 20,250 14,840 8,270 | 0 0 0 0 4,135 | 0 | 61.760 49.420 42.390 60.820 74.265 | 02/12/28 02/11/29 02/10/30 02/08/31 02/07/32 | 2,940 5,215 4,750 | 242,374 429,925 391,590 | 2,348 2,138 | 193,528 176,216 |

  72. Outstanding Equity Awards at December 31, 2024

    | 1 | Mr. Wheeler will have the right to exercise an option for 28,753 shares at the exercise price of $74.265 on February 7, 2025. Mr. Lauber will have the right to exercise an option for 7,501 shares at the exercise price of $74.265 on February 7, 2025. Mr. Stern will have the right to exercise an option for 5,470 shares at the exercise price of $74.265 on February 7, 2025. Mr. O’Brien will have the right to exercise an option for 1,563 shares at the exercise price of $60.82 on February 8, 2024; 4,397 shares at the exercise price of $74.265 on February 7, 2024; and 4,396 shares at the exercise price of $74.265 on February 7, 2025. Mr. Petrarca will have the right to exercise an option for 4,135 shares at the exercise price of $74.265 on February 7, 2025. No stock options were granted in 2024. |

  73. Outstanding Equity Awards at December 31, 2024

    | 2 | Mr. Wheeler will vest in 20,440 restricted stock units on February 7, 2025; 36,045 restricted stock units on February 13, 2026; and 33,015 restricted stock units on February 12, 2027. Mr. Lauber will vest in 5,330 restricted stock units on February 7, 2025; 9,460 restricted stock units on February 13, 2026; and 8,485 restricted stock units on February 12, 2027. Mr. Shafer will vest in 40,425 restricted stock units on March 18, 2027. Mr. Stern will vest in 3,890 restricted stock units on February 7, 2025; 6,850 restricted stock |

  74. Outstanding Equity Awards at December 31, 2024

    | units on February 13, 2026; and 6,295 restricted stock units on February 12, 2027. Mr. O’Brien will vest in 1,110 restricted stock units on February 7, 2025; 1,930 restricted stock units on April 1, 2025; 2,905 restricted stock units on February 13, 2026; and 4,075 restricted stock units on February 12, 2027. Mr. Petrarca will vest in 2,940 restricted stock units on February 7, 2025; 5,215 restricted stock units on February 13, 2026; and 4,750 restricted stock units on February 12, 2027. |

  75. Outstanding Equity Awards at December 31, 2024

    | 3 | Market value determined by the NYSE closing market price of $68.21 on December 31, 2024, the last trading day of the fiscal year. |

  76. Outstanding Equity Awards at December 31, 2024

    | 4 | The number of shares of performance stock shown in this column reflects the maximum performance level for the 2023-25 and 2024-2026 awards. At target, the number of units that would vest on December 31, 2025, are: Mr. Wheeler, 10,815; Mr. Lauber, 2,835; Mr. Stern, 2,055; Mr. O’Brien, 870 and Mr. Petrarca, 1,565. The number of units that would vest at target on December 31, 2026 are: Mr. Wheeler, 9,905; Mr. Lauber, 2,545; Mr. Shafer, 5,200; Mr. Stern, 1,890; Mr. O’Brien, 1,220 and Mr. Petrarca, 1,425. |

  77. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information related to options exercised and stock vested for each of the named executive officers during fiscal year 2024.

  78. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Kevin J. Wheeler | 19,220 | $988,196 | 22,790 | $1,829,467 | | Charles T. Lauber | 0 | 0 | 5,970 | 479,242 | | Stephen M. Shafer | 0 | 0 | 0 | 0 | | James F. Stern | 0 | 0 | 4,125 | 331,134 | | Stephen D. O’Brien | 0 | 0 | 3,455 | 276,314 | | Mark A. Petrarca | 0 | 0 | 3,420 | 274,541 |

  79. Option Exercises and Stock Vested

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

  80. Pension Benefits

    Pension Benefits

  81. Pension Benefits

    | Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | James F. Stern | Executive Supplemental Pension Plan | 16.59 | $3,258,485 | $0 | | Mark A. Petrarca | Executive Supplemental Pension Plan | 24.57 | 4,021,305 | 0 |

  82. Pension Benefits

    Executive retirement benefits are provided in one of two ways, depending on when the executive became eligible. Executives hired or promoted to a qualifying position after July 2010 participate in the defined contribution component under the A. O. Smith Non-qualified Deferred Compensation Plan that provides an annual contribution of 3% of pay (base salary plus annual bonus) based on compensation above the Internal Revenue Code limit that applies to qualified retirement plans. Messrs. Wheeler, Lauber, Shafer and O’Brien participate in this defined contribution restoration component. Executives hired or promoted into a qualifying executive position prior to July 2010, are covered by the A. O. Smith Corporation Executive Supplemental Pension Plan, a non-qualified supplemental executive retirement plan. This plan was intended to supplement a defined benefit plan that was closed to new entrants in 2010, stopped accruing benefits in 2014, and terminated in 2021. Mr. Stern is the only remaining active participant in the Executive Supplemental Pension Plan. Mr. Petraca retired in September 2024 and will receive his benefit in March 2025. The Executive Supplemental Pension Plan provides a benefit equivalent to 1.65% of the executive’s five-year final average pay times years of credited service up to a 40-year maximum, less the qualified plan benefit as calculated under the closed, and now terminated, A. O. Smith Retirement Plan, and also reduced by the amount of the monthly benefit that would have accrued under the A. O. Smith Retirement Plan had benefits not stopped accruing on December 31, 2014. The termination of the A. O. Smith Retirement Plan does not affect the amount, or timing of payment, of benefits under the A. O. Smith Corporation Executive Supplemental Pension Plan. To be eligible for benefits under the Executive Supplemental Pension Plan, the executive must remain employed until at least age 57 and must have 10 years of service. Mr. Stern is currently eligible for benefits once he retires; Mr. Petrarca retired on September 30, 2024, and the value of Mr. Petrarca’s benefit in the table above is the present value of the actual payment he will receive in March 2025. If the executive retires before age 65, then the benefit payable is reduced by 6.67% per year between the age at retirement and age 64 (also called the unreduced retirement age). The retirement benefit under the Executive Supplemental Pension Plan is paid as a single lump sum to the executive upon retirement. The lump-sum amount is calculated by determining the amount necessary (on an after-tax basis to the executive) to purchase a commercial annuity that will provide a monthly amount equivalent to the after-tax amount the executive would receive if the monthly pension would be paid directly by us. If an executive retires early, the single lump-sum amount to be paid from the Executive Supplemental Pension Plan is calculated based upon the unreduced benefit commencing at the unreduced retirement age discounted for interest between the unreduced retirement age and the executive’s age at early retirement using the after-tax yield on the Bloomberg Barclays Capital U.S. Corporate Index. To calculate the “Present Value of Accumulated Benefit” for the benefit under the Executive Supplemental Pension Plan, assumptions are made regarding the executive’s tax rate at retirement and post-retirement tax rate and an annuity purchase interest rate (currently 5.4%). As an offset to a portion of the lump-sum payment obligation to the executive, we may transfer life insurance policies to the executive valued at the cash surrender value of the life insurance policies. The “Present Value of Accumulated Benefit” set forth in the table above is based on assumptions and valuation dates that are the same as those used for the valuation of pension liabilities in the company’s most recent annual report. Retirement age under the Executive Supplemental Pension Plan is assumed to be the earliest age that an executive can retire with an unreduced benefit, which is age 64 for Mr. Stern. Post-retirement mortality rates are based on the Pri-2012 Retiree Mortality Table (white collar variant), including generational improvements using scale MP2021. The assumption is made that there is no probability of preretirement death or termination by any other cause. We do not have a policy to grant extra years of service. No current executive officer has additional service granted under a retirement plan.

  83. Non-qualified Deferred Compensation

    Non-qualified Deferred Compensation

  84. Non-qualified Deferred Compensation

    | Name | Executive Contributions in 2024 ($) | Registrant Contributions in 2024 ($)(1) | Aggregate Earnings in 2024 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at December 31, 2024 ($) | | Kevin J. Wheeler | $0 | $221,713 | $386,548 | $0 | $3,736,887 | | Charles T. Lauber | 205,500 | 67,566 | 44,363 | 0 | 643,568 | | Stephen M. Shafer | 0 | 39,617 | 0 | 0 | 39,617 | | James F. Stern | 0 | 31,986 | 557,434 | 0 | 5,414,560 | | Stephen D. O’Brien | 35,670 | 29,171 | 20,773 | 0 | 174,913 | | Mark A. Petrarca | 0 | 17,389 | 59,636 | 3,678 | 591,521 |

  85. Non-qualified Deferred Compensation

    | 1 | All registrant contributions under the A. O. Smith Non-qualified Deferred Compensation Plan in 2024 are also reported in the “Summary Compensation Table.” |

  86. Non-qualified Deferred Compensation

    Each executive has an account in the A. O. Smith Non-qualified Deferred Compensation Plan, which each year is credited with supplemental company contributions and notional dividend equivalents on restricted stock and restricted stock units. The executive’s account is a bookkeeping entry only. Amounts credited to the executive’s account are credited with gains and losses each month based on the executive’s crediting election. The crediting election is used to designate the investment fund(s) as the basis for calculating the rate of return equivalent for the executive’s account. The investment funds available under the Non-qualified Deferred Compensation Plan are similar to those available under our 401(k) plan. There are no above-market or preferential earnings under the Deferred Compensation Plan in 2024. The Non-qualified Deferred Compensation Plan also allows executives to defer payment of all or a part of their base salary, annual incentive bonus or restricted stock units to a future date. Deferred amounts are credited to the executive’s account in the Non-qualified Deferred Compensation Plan, and gains and losses on the deferred amounts are credited in the same manner as described above for supplemental company contributions and notional dividend equivalents, except that deferrals of restricted stock units are deemed invested in shares of our Common Stock for purposes of determining gains and losses, and dividend equivalents on such restricted stock units are credited in the form of additional restricted stock units. Executives are eligible to receive payment of amounts in their accounts under the Non-qualified Deferred Compensation Plan beginning upon termination of employment (six months after termination in the case of the amounts credited to accounts on or after January 1, 2005). They may also elect in-service distributions scheduled for a specific date or series of dates.

  87. Pay versus Performance Disclosure Table

    Pay versus Performance Disclosure Table

  88. Pay versus Performance Disclosure Table

    | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for CEO ($) 1 | Compensation Actually Paid to CEO ($) 2 | Average Summary Compensation Table Total for Non-CEO NEOs 3 | Average Compensation Actually Paid to Non-CEO NEOs ($) 4 | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) 5 | Net Income (millions) ($) | Earnings before Interest and Taxes (millions)($) 6 | | 2024 | $7,666,172 | $6,403,781 | $2,721,631 | $2,337,627 | $157 | $176 | $534 | $708 | | 2023 | 8,348,656 | 12,789,490 | 2,541,754 | 3,125,876 | 186 | 150 | 557 | 746 | | 2022 | 6,640,047 | 180,882 | 1,691,156 | 577,901 | 127 | 127 | 236 | 233 | | 2021 | 6,897,982 | 14,651,874 | 2,094,815 | 3,447,584 | 187 | 135 | 487 | 630 | | 2020 | 5,174,751 | 6,941,943 | 2,558,990 | 2,825,096 | 117 | 111 | 345 | 451 |

  89. Pay versus Performance Disclosure Table

    | 1 | The dollar amounts reported in this column are the amounts of total compensation reported for Mr. Wheeler, our chairman and chief executive officer for each corresponding year in the “Total” column of the Summary Compensation Table. The dollar amount for 2023 reflects the correction described in footnote 3 to the Summary Compensation Table. |

  90. Pay versus Performance Disclosure Table

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

  91. Pay versus Performance Disclosure Table

    | Adjustments to Determine Compensation Actually Paid for CEO | 2024 | 2023 | 2022 | 2021 | 2020 | | Deduction for Change in the Actuarial Present Values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” Column of the SCT | — | — | $(42,393) | — | $(142,120) | | Increase for “Service Cost” for Pension Plans | — | — | — | — | — | | Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | (3,477,378) | (3,146,180) | (1,517,977) | (1,386,088) | (1,320,025) | | Deduction for Amounts Reported under the “Option Awards” Column in the SCT | — | — | (1,518,003) | (1,385,968) | (1,320,016) | | Increase for Fair Value of Awards Granted during Year that Remain Unvested as of Year End | 3,455,708 | 4,300,908 | 2,142,436 | 4,852,502 | 4,189,162 | | Increase/Deduction for Change in Fair Value from prior Year End to current Year End of Awards Granted Prior to Year that were Outstanding and Unvested as of Year End | (1,091,102) | 2,308,145 | (3,958,480) | 5,115,965 | 439,083 | | Increase/Deduction for Change in Fair Value from Prior Year End to Vesting Date of Awards Granted Prior to Year that Vested during Year | (149,619) | 977,961 | (1,564,747) | 557,481 | (78,893) | | Total Adjustments | $(1,262,391) | $4,440,834 | $(6,459,164) | $7,753,892 | $1,767,191 |

  92. Pay versus Performance Disclosure Table

    | 3 | The dollar amounts reported in this column represent the average of the amounts reported for the company’s named executive officers as a group (excluding Mr. Wheeler) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the named executive officers (excluding Mr. Wheeler) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2024, Messrs. Lauber, Shafer, Stern, O’Brien and Petrarca; (ii) for 2023, Messrs. Lauber, Stern, Petrarca and Warren; |

  93. Pay versus Performance Disclosure Table

    | (iii) for 2022, Messrs. Lauber, Stern, Petrarca and Warren; (iv) for 2021, Messrs. Lauber, Stern, Petrarca and Warren; and (v) for 2020, Messrs. Lauber, Stern, Petrarca, Warren and Rajendra. In addition, the dollar amounts for 2023 reflect the correction described in footnote 3 to the Summary Compensation Table. |

  94. Pay versus Performance Disclosure Table

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

  95. Pay versus Performance Disclosure Table

    | Adjustments to Determine Compensation Actually Paid for Non-CEO NEOs | 2024 | 2023 | 2022 | 2021 | 2020 | | Deduction for Average Change in the Actuarial Present Values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” Column of the SCT | (208,180) | (314,317) | — | $(206,124) | $(513,175) | | Increase for Average “Service Cost” for Pension Plans | 73,877 | 75,383 | 103,701 | 107,498 | 117,666 | | Deduction for Average Amounts Reported under the “Stock Awards” Column of the SCT | (1,287,263) | (589,909) | (283,785) | (260,766) | (432,802) | | Deduction for Average Amounts Reported under the “Option Awards” Column of the SCT | — | — | (283,812) | (260,710) | (432,818) | | Increase for Average Fair Value of Awards Granted during Year that Remain Unvested as of Year End | 1,166,180 | 806,408 | 387,072 | 912,834 | 1,373,554 | | Increase/Deduction for Average Change in Fair Value from prior Year End to current Year End of Awards Granted Prior to Year that were Outstanding and Unvested as of Year End | (150,061) | 432,757 | (711,758) | 961,004 | 220,982 | | Increase/Deduction for Average Change in Fair Value from Prior Year End to Vesting Date of Awards Granted Prior to Year that Vested during Year | (20,193) | 173,801 | (324,673) | 99,032 | (67,301) | | Total Adjustments | $(425,640) | $584,123 | $(1,113,255) | $1,352,768 | $266,106 |

  96. Pay versus Performance Disclosure Table

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

  97. Pay versus Performance Disclosure Table

    | 6 | We have determined that EBIT is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to our named executive officers, for the most recently completed fiscal year, to company performance. EBIT is calculated by subtracting our cost of goods sold and operating expenses from revenue before interest and taxes. The EBIT amount for 2023 has been corrected from a miscalculated amount reflected in the corr espondi ng disclosure in last year’s Definitive Proxy Statement on Schedule 14A filed on February 29, 2024. |

  98. PAY RATIO DISCLOSURE

    PAY RATIO DISCLOSURE Our philosophy is to pay our employees competitively with similar positions in the applicable labor market. We follow this approach worldwide, whether it be an executive level position or hourly job at a foreign plant. As such, we typically benchmark by position to the applicable labor market every year, and adjust compensation to match the applicable market. By doing so, we believe we maintain a high-quality, more stable workforce. The compensation we paid to the median employee identified below was benchmarked in accordance with this process to verify competitive compensation. As a result of rules the SEC adopted under the Dodd-Frank Act, we are providing the following disclosure about the ratio of the annual total compensation of our chairman and chief executive officer to the median annual total compensation of our employees. For the year ended December 31, 2024:

  99. PAY RATIO DISCLOSURE

    | • | the median of the annual total compensation of all employees of our company was reasonably estimated to be $50,022; |

  100. PAY RATIO DISCLOSURE

    | • | the annual total compensation of our chairman and chief executive officer was $7,666,172; and |

  101. PAY RATIO DISCLOSURE

    | • | based on this information, the ratio of the annual total compensation is estimated to be 153:1. |

  102. PAY RATIO DISCLOSURE

    We identified our median employee using a multi-step process that is permitted under the SEC rules. We first examined the annual cash compensation paid during 2024 to each individual who was employed by us or our subsidiaries on December 7, 2024, which we gathered from payroll data. Then, we excluded approximately 527 employees in India and approximately 14 employees in Bangladesh as allowed under the de minimis exception to the SEC rules. The total number of U.S. employees and non-U.S. employees were 5,498 and 7,214, respectively, before taking into account such exclusions and for purposes of calculating such exclusions. We annualized the total cash compensation paid to those employees who commenced work with us during 2024 and therefore did not work for us the entire calendar year. Using this annual cash compensation data, we identified 10 employees whose total cash compensation was closest to the median annual cash compensation, as we believed that our median employee was likely within such group since cash compensation reasonably reflects the total compensation for most of our employee population. We then examined the total compensation of each of the employees within such group, calculated the same way as we calculate total compensation for our named executive officers in the “Summary Compensation Table,” to select our median employee whose total compensation is disclosed above. The median employee is a Lead Equipment Engineer II at our Nanjing, China plant who in 2024 earned the U.S. dollar equivalent of $50,022, which is competitive pay for this position in China.