DEF 14A of Watsco Inc, Apr 24, 2026

DEF 14A of Watsco Inc

Filed Apr 24, 2026 · FY20250001193125-26-174970

Open on EDGAR

  1. Directors & Executive Officers

    Directors & Executive Officers Our Amended and Restated Articles of Incorporation and our By-Laws provide that our Board shall consist of no fewer than three nor more than nine members, and that it shall be divided, as nearly as possible, into three equal divisions, each of which serves for a three-year term. We refer to directors elected by holders of our Common stock as Common Directors, and we refer to directors elected by holders of our Class B common stock as Class B Directors. The names of our directors, executive officers and director nominees and their respective ages, positions (including designation as a Common Director or Class B Director), biographies and, in the case of directors, their qualifications, are set forth below.

  2. Directors & Executive Officers

    | Name | Age | Position | Expiration of Term | | J. Michael Custer | 63 | Class B Director | 2028 | | Barry S. Logan | 63 | Executive Vice President & Secretary and Common Director | 2027 | | Ana M. Menendez | 61 | Chief Financial Officer & Treasurer | | | Aaron J. Nahmad | 44 | President, Co-Vice Chairman, and Class B Director | 2027 | | Albert H. Nahmad | 85 | Chairman & Chief Executive Officer and Class B Director | 2027 | | Valerie F. Schimel | 47 | Class B Director | 2028 | | Gary L. Tapella | 82 | Common Director | 2028 | | Director Nominees (1) | | | | | Cesar L. Alvarez | 78 | Class B Director and Co-Vice Chairman | 2029 | | Denise Dickins | 64 | Class B Director | 2029 | | Ana Lopez-Blazquez | 68 | Common Director | 2029 |

  3. Directors & Executive Officers

    (1) Each nominee has a current term that expires on the date of the annual meeting, and, if elected at the annual meeting, will have a term expiring on the date of our annual meeting of shareholders to be held in 2029. Each nominee has been reviewed and recommended for nomination by our Nominating & Governance Committee and has consented to serve as a director if elected. J. Michael Custer has been a valued member of our Board since 2018. As the leader of the tax services practice at Kaufman Rossin, one of the nation’s top 100 accounting firms, Mike brings a wealth of financial and tax expertise to our Board. With more than 40 years of experience advising companies across various industries, he offers proficiency in accounting, financial and tax matters, leadership development, management skills and corporate governance. As a member of the Audit Committee, Mike’s knowledge of audit, accounting and tax plays an essential role in our acquisition-related activities and long-term planning. Present Roles: Mike is the Company's Lead Independent Director, Chair of the Nominating & Governance Committee and a member of the Audit Committee. Barry S. Logan joined Watsco in 1992 and serves as the Executive Vice President & Secretary, responsible for leading the Company's strategic initiatives and business development efforts. He has held various leadership roles during his career, including serving as Chief Financial Officer from 1997 to 2003. Mr. Logan joined our Board in March 2024 and previously served as a Watsco director from 2011 to 2018. Barry was Watsco’s fourth corporate employee and is an integral participant in the Company’s business development initiatives, financial, and other strategic activities. He is also the principal contact for engagement with our shareholders. He is a certified public accountant. Ana M. Menendez joined Watsco in 1998 and has served as our Chief Financial Officer since 2003, as Assistant Secretary since 1999, and as Treasurer since 1998. As a certified public accountant, Ana oversees all financial and accounting aspects of our Company, including taxes, risk management, benefits, treasury and cash management, internal controls and other compliance activities. Ana also provides strategic guidance and direction to our Company’s operations and, over her career, has established important partnerships with our primary financial institutions. She is a current board member of the Federal Reserve Bank of Atlanta. Aaron J. (A.J.) Nahmad joined Watsco in 2005 and has been our President since 2016 and a director since 2011. Under A.J. Nahmad’s leadership, Watsco has developed and scaled the industry’s most advanced technology platforms that have transformed the customer experience and resulted in meaningful market share gains, while also improving operating efficiencies and modernizing various internal processes into digital, data-driven processes. With a team of approximately 300 technologists, the Company continues to invest in technology adoption and use by customers, leaders, and managers throughout the marketplace. A.J. holds a B.A. from the University of Pennsylvania and an M.B.A. from New York University’s Leonard N. Stern School of Business. He is the son of Albert H. Nahmad, our Chairman & CEO. Present Roles: A.J. serves as our Co-Vice Chairman and is a member of the Strategy Committee. Albert H. Nahmad is our visionary founder, and has been our leader, Chairman, and CEO since 1972. He has been instrumental in shaping Watsco’s entrepreneurial culture, expanding our business through acquisitions and fostering strategic business relationships. Under his leadership, Watsco has grown from a market capitalization of $22 million in 1989 to $13.7 billion at the end of 2025, generating a compounded annual growth rate of total shareholder return (referred to as TSR) of 17%. As an industry leader, Watsco now serves more than 130,000 active contractor customers through a network of 695 locations. Present Roles: Albert is our Chairman & CEO and Chairs our Strategy Committee. Valerie F. Schimel joined our Board in 2022 after serving as a member of our Advisory Board since 2019. Valerie is a successful entrepreneur who has started two businesses. She is the founder and CEO of Munchkin Fun LLC, Florida's largest digital parenting publication, and the founder of Joju LLC, a producer and marketer of fashion-forward sun protective clothing. Additionally, Valerie is the President of the Albert H. and Jane D. Nahmad Family Foundation, which supports youth and education initiatives across South Florida. She is the daughter of Albert H. Nahmad. Her entrepreneurial background, technology expertise and social/community involvement make her an important member to our Board. Valerie’s presence on the Board also represents an important component of the Company’s next-generation succession planning. Present Roles: Valerie is a member of the Strategy Committee. Gary L. Tapella joined our Board in 2025. Mr. Tapella has served on Watsco’s Advisory Board since February 2022 and previously served as a Watsco director from 2006 to 2010. Mr. Tapella retired in 2005 after a 36-year career with Rheem Manufacturing Company, one of the Company’s principal suppliers, at which he served in various leadership capacities, ultimately as President and Chief Executive Officer. Presently, he serves as an Operating Partner of One Rock Capital Partners, LLC, a value-oriented, operationally focused private equity firm. Prior to joining One Rock, he was an Operating Partner at Ripplewood Holdings, LLC from 2005 to 2009. Gary’s long-standing involvement in our industry, leadership and management skills and financial acumen make him an important addition to our Board. Present Roles: Gary is a member of the Compensation Committee and the Nominating & Governance Committee.

  4. Director Nominees

    Director Nominees Cesar L. Alvarez has served on our Board since 1997, excluding a brief hiatus between 2015 and 2017. Cesar holds degrees in law and an MBA from the University of Florida, and is a Senior Chairman of Greenberg Traurig, P.A., an international law firm that he has helped build over his more than 53 years with the firm into one of the top ten law firms in the United States. During his tenure at the law firm, Cesar also served as CEO and Executive Chairman. He serves on boards of two other public companies: Precigen, Inc. (chair of the nominating and governance committee), a clinical stage pharmaceutical company and The St. Joe Company (member of the audit, compensation and governance committees), a long-standing Florida-based land development company. His successful track record of building and growing a large law firm, entrepreneurial spirit, business-building skills and extensive corporate governance experience make him a vital member of our Board. Present Roles: Cesar serves as our Co-Vice Chairman and as a member of the Strategy Committee. Denise Dickins, Ph.D., has served as a Board member since 2007. As Professor Emeritus at East Carolina University, Denise brings extensive auditing, accounting and corporate governance expertise to our Board. Prior to her academic career, she worked in varying capacities for Arthur Andersen LLP, including Partner in Charge of the South Florida Audit Division and has served on the board of several publicly traded companies. Her experience as an academic, certified public accountant, and certified internal auditor has equipped her with invaluable skills in chairing our Audit and Compensation Committees. Present Roles: Denise serves as Chair of the Audit Committee and Compensation Committee and is a member of the Nominating & Governance Committee. Ana Lopez-Blazquez joined our Board of Directors in 2023 after serving as a member of our Advisory Board since 2021. As Executive Vice President, Chief Strategy & Transformation Officer for Baptist Health, Ana has displayed strong leadership and expertise in strategy development and execution as well as business transformation. Her entrepreneurial background, established over her 37-year career at Baptist Health and her deep understanding of financial and regulatory matters make her an essential addition to our Board. Present Roles: Ana is a member of the Audit Committee and Compensation Committee.

  5. Board Leadership Structure

    | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | Cesar L. Alvarez | — | $157,642 | $157,642 | | J. Michael Custer | $5,000(1) | — | $5,000 | | Denise Dickins | $50,000(2) | — | $50,000 | | Ana Lopez-Blazquez | — | — | — | | Valerie F. Schimel | — | — | — | | Gary L. Tapella | — | $256,962 | $256,962 |

  6. COMPENSATION DISCUSSION AND ANALYSIS

    | | Year Established | Number of Participants | Equity Value at 12/31/25 | | Watsco’s 401k Plan | 1984 | 4,156 | $48 million | | Restricted Stock Program | 1997 | 156 | $251 million | | Stock Option Program | 1983 | 209 | $70 million | | Watsco’s Employee Stock Purchase Plan | 1996 | 990 | $16 million |

  7. COMPENSATION DISCUSSION AND ANALYSIS

    Our executive compensation program is an extension of this ownership culture, fortifying the principle that compensation should be aligned entirely with generating long-term shareholder value. We believe Watsco’s strong performance has been driven by this culture. Since entering the HVAC/R distribution industry in 1989, Watsco has built the largest company in its industry and has generated cumulative TSR of 31,819% (17% compounded annual growth rate over a 36-year period). Our Unique Use of Restricted Stock with Long-Term Vesting. Our approach to long-term equity-based compensation is unique. Recipients of restricted stock include our named executive officers (NEOs) as well an additional 156 key employees working throughout Watsco’s network. Whereas most companies grant equity with three-to-four-year vesting periods, Watsco’s restricted share grants cliff-vest at the end of an employee’s career (age 62 or older). This philosophy provides the opportunity for equity awards to appreciate in value over considerably longer periods and enable wealth-building in direct alignment with our shareholders. The direct result of our unique use of restricted stock means our key leaders do not know and cannot realize the value of their restricted share awards until they have spent their entire careers with the Company. Restricted share awards are subject to significant market, performance and forfeiture risks. During the vesting period, shares of restricted stock include the right to vote and the right to receive dividends. If an employee that holds restricted shares leaves the Company (other than by death or long-term disability), the employee forfeits 100% of his or her restricted shares. We believe awarding restricted shares that vest at retirement age balances strategic risk-taking and long-term value creation, sustains the ownership culture over generations of leaders and aligns their interests with the interests of our shareholders. Additionally, we believe these awards help build a sustainable future by ensuring that our executives make the right long-term business decisions that will survive well past their retirement. The Company began granting restricted shares to its NEOs and other key employees in 1997. Since inception, approximately 92% of the restricted shares awarded have either vested or remain unvested with only 8% forfeited by former employees. We believe this performance over a nearly 30-year period, especially when matched with the Company’s financial performance, is a testament to the effectiveness and value of our ownership culture. Incentive compensation potentially earned by our NEOs consists solely of awards of restricted stock. On a weighted-average basis, our NEO’s respective restricted share awards have been outstanding for approximately 13 years. Unvested restricted stock awards for our Chairman & CEO vest between 2026 (at age 86) and 2032 (at age 92). Unvested restricted stock awards for our President do not begin to vest until 2043 (at age 62). This long-term vesting demonstrates the program’s unique nature and the long-term focus of the Company’s compensation philosophy. Watsco’s Named Executive Officers (NEOs). This compensation discussion and analysis (referred to as CD&A) explains the executive compensation program for our NEOs. It also describes the Compensation Committee’s process for making compensation decisions in 2025. Our NEOs are as follows:

  8. Philosophy & Performance

    Philosophy & Performance Executive Compensation Philosophy. We measure success by our ability to create shareholder returns over long periods of time. The vision and leadership of our entrepreneurial business leaders (our NEOs as well as our business unit leadership) are at the core of our performance, and it is their continued commitment to drive sustainable growth that we believe will contribute to our ongoing success. To this end, we must attract, motivate and retain high-caliber talent. Concentrated Use of Long-Term Restricted Stock. As noted above, the only incentive compensation that may be awarded to our NEOs is awards of restricted stock, which cliff-vest at retirement age or later. Given the long time periods until vesting, the awards are subject to significant market, performance and forfeiture risks, which means that our key leaders do not know and cannot realize the value of their restricted share awards until they have spent their respective careers with the Company. The Company believes this balance of risk and reward over long periods is more effective than more conventional equity-based programs that provide considerably shorter-term vesting or annual cash payouts and effectively aligns the development of a leader’s wealth with shareholder wealth. The program also serves as an important method to retain leaders for the duration of their careers. Communication & Engagement with Institutional Shareholders Regarding Ownership Culture. The Company actively engages with its shareholders to educate and solicit feedback about its ownership culture and its unique use of Watsco restricted stock. This communication is provided through formal communication of relevant data included in our investor materials (e.g. as found on www.watsco.com). Watsco’s senior leaders met with approximately 225 institutions during 2025 through attendance at 13 industry conferences, hosting an Investor Day in Miami, collaboration with the investment analyst community, and through informal investor inquiries. In addition, we communicate and receive feedback from the primary proxy advisory services and other key stakeholders of the Company. Based on these discussions, Watsco believes its unique philosophy is well-known, well-accepted and most importantly, well-respected by the Company’s various stakeholders. Overall Performance. TSR measures share price appreciation including the reinvestment of dividends. The Company views TSR as the most fundamental measure of long-term value creation for shareholders and considers it as a metric in determining long-term incentive awards. Based on data provided by FactSet Research Systems Inc. (referred to as FactSet), the Company’s compounded annual growth rate (referred to as CAGR) in comparison to a variety of public-company market indices as of December 31, 2025, was as follows: *30-year period data not available. Our 10-year, 15-year, 20-year, 25-year, 30-year, and 35-year TSR (18.2%), demonstrate the sustained level of performance of our Company over widely varying periods of time, which we believe is the direct result of, among other things previously discussed, our ownership culture and emphasis of restricted share-based incentives with our NEOs and other members of our leadership team of stock that does not vest until an employee’s retirement age or later. Based on further analysis of data from FactSet, the Company’s performance ranks as follows:

  9. Governance, Compensation Actions & Summary of Details

    Governance, Compensation Actions & Summary of Details Compensation Governance Practices. We believe that our executive compensation program promotes sound governance and includes many shareholder-friendly features, such as: Clawback policy. • Prohibition on short sales, hedging, and pledging of our common stock. • No significant perquisites. • No severance agreements. • No employment agreements, other than with our Chairman & CEO. • Minimum stock ownership requirement for Directors and Officers. • Cap on the value of equity compensation that may be earned by our Chairman & CEO and President. • No defined benefit program or supplemental executive retirement plans. • No backdating or repricing of equity-based awards. • Routine consultation with independent compensation advisors. • Annual independence assessment of advisors to the Compensation Committee. • Annual risk assessment by the Compensation Committee related to the Company’s compensation policies. Mitigation of Compensation-Related Risk. Watsco’s Compensation Committee, in concert with management, has examined the compensation policies, plans, and practices to determine if they create incentives or encourage behavior that is reasonably likely to have a material adverse effect on Watsco. In conducting this examination, the Compensation Committee and management have reviewed the compensation programs and evaluated the impact of such programs in terms of business risk and the mitigating controls in place to manage those risks. Such controls include: • Approval by our Board of Directors and the Compensation Committee of significant compensation plans and programs; • Oversight by the Compensation Committee of compensation programs for NEOs, including approval of incentive plan goals, review of actual performance against goals, and approval of award payouts; • Regular scrutiny of performance and compliance with policies and procedures by the NEOs; • Monitoring by the Audit Committee of specific asset areas and by internal audit and finance department personnel; and • Considerably longer than typical vesting periods for equity-based compensation to encourage long-term thinking. Furthermore, as discussed below, the Compensation Committee regularly consults with outside advisors who specialize in executive compensation to obtain third-party analysis and perspective on Watsco’s compensation philosophy and any associated risks. Because of the controls in place, we have concluded that there are minimal unmitigated risks created by our compensation policies, plans and practices that motivate or encourage behavior that is reasonably likely to have a material adverse effect on Watsco. Determination of Executive Compensation. The Board has delegated to our Compensation Committee the responsibility for determining the compensation structure of our Chairman & CEO and our President. For our other NEOs, our Chairman & CEO determines their compensation after review and consultation with the Compensation Committee. The Compensation Committee currently consists of three independent directors appointed by the Board. The Board and Compensation Committee have the opportunity to meet with the NEOs during the year, which provides an independent evaluation of individual performance. The Compensation Committee has engaged Pearl Meyer, an independent compensation consulting firm, to periodically provide advice, relevant market data, various peer group comparisons and best practices with respect to the compensation of our Chairman & CEO and President. The Compensation Committee assessed the independence of Pearl Meyer based on the specific criteria under applicable SEC and NYSE rules and determined that no conflict of interest is raised by its work for the Compensation Committee. Elements of Executive Compensation. We believe that executive compensation should be entirely aligned with the Company’s performance, particularly over long periods of time. As such, the Company’s executives are rewarded when the Company creates shareholder value. The result of this philosophy is a compensation structure that consists of base salaries and restricted stock-based incentives that do not vest until an employee’s retirement age or later. Therefore, the value realized by our NEOs is highly dependent on shareholder returns over a very long time. As required by the applicable rules, restricted stock grants are shown at grant date fair value in the Summary Compensation Table. Base Salary. Base salary is designed to reasonably compensate the NEOs for their day-to-day performance. When considering the level of each NEO’s salary, the executive’s roles and responsibilities, experience, potential and performance are considered. These factors are not weighted. Salaries paid to the NEOs in 2025 did not change from the prior year given the Company’s philosophy to emphasize use of long-term equity awards as the primary means to reward performance over the long term:

  10. Governance, Compensation Actions & Summary of Details

    Dividends & Voting. During the vesting period for restricted stock awards, recipients receive cash dividends at the same rate as unrestricted shares of common stock, ensuring alignment with all shareholders. Given these cash dividends, we do not pay any cash compensation to our NEOs other than their base salaries. Annual dividend payments are evaluated and declared by the Board and are contingent upon the Company’s performance, financial position and the effectiveness of managing risks over time. Accordingly, our NEOs are motivated, both on a short-term and long-term basis, to achieve performance that sustains and grows our dividends, consistent with our objective of creating long-term shareholder value. Restricted stockholders vote their shares on matters that our shareholders are entitled to vote. Restricted Stock Awards. Our restricted stock program is administered through the 2021 Plan. Awards may be in either shares of Common stock or Class B common stock, none of which may be sold or disposed of prior to vesting, and which may be forfeited in the event of termination of employment prior to the end of the restriction period. Generally, restricted shares of Class B common stock are awarded to our NEOs as Watsco’s Board considers generational continuity, stability and cultural consistency as critical factors to the Company’s future success. This philosophy has proven rewarding for the Company’s long-term shareholders as evidenced by the Company’s TSR track record. The Company believes other stakeholders, including our largest OEM partners, have also been similarly rewarded over decades, and have cemented long-term commitments to the Company, based on the stability and generational continuity of our leadership and management. As described in the Company’s most recently filed Annual Report on Form 10-K, Watsco’s strategic OEM relationships include Carrier Global, Rheem Manufacturing, Daikin Industries, Mitsubishi Electric, Pentair plc, Gree Electric Appliances, Lennox International, and Bosch Group. Overall, the Company’s top ten suppliers accounted for 85% of its purchases, including 62% from Carrier (a supplier since 1997) and 8% from Rheem (a supplier since 1989). The stability and consistency achieved by our ownership culture have been important to our OEM relationships, and we believe critical to our future performance. The following table summarizes the restricted stock awards held by our NEOs as of the record date. As shown, the full holding period of restricted shares held by our NEOs on a weighted average basis ranges from 14.6 years up to 23.7 years, demonstrating considerably longer vesting periods as compared to typical vesting periods of three to four years. The data also summarizes the number of years since shares were granted, averaging more than 15 years ago:

  11. Governance, Compensation Actions & Summary of Details

    Comparator Group Compensation. In evaluating the Company’s compensation program, the Compensation Committee considered comparisons to three groups of companies: (a) 15 “industry” comparators, representing companies with which Watsco may compete for executive talent (b) 26 “30-Year High Performance” comparators representing highly-successful, entrepreneurial companies that have achieved long-term TSR growth rates similar to the Company and (c) the S&P 500. As described above, the Company’s 30-year TSR ranks #61 out of 1,698 public companies. In formulating the 30-Year High- Performance Group, the businesses with market capitalizations between $5.1 billion and $24.4 billion as of December 31, 2025 were included given that their “mid-cap” characteristics are similar to the Company. Data related to the 30-Year High-Performance Group is considered relevant given the sustained outperformance of these companies. Comparator group statistics for the groups of companies are as follows:

  12. Governance, Compensation Actions & Summary of Details

    The Committee relied on Pearl Meyer, its 2025 independent compensation consultant, to provide benchmark data for the comparator groups. The role of management in selecting the comparator groups was limited to providing general comments on the relevance of each company in the group. The comparative companies for the industry and 30-year high performance are listed below:

  13. Governance, Compensation Actions & Summary of Details

    Comparator benchmark data is used by the Compensation Committee as part of its annual analysis and overall assessment of executive compensation. Weight is also given to our unique compensation structure that focuses entirely on the use of restricted stock with longer vesting periods than other comparative companies. The comparator group benchmark data serves as only one reference point used by us when making compensation decisions. We believe that analyzing pay and performance information is an important component of our executive compensation decision-making process. Use of Objective Performance Measures to Determine Share-Based Compensation. The Compensation Committee has instituted two annual performance measures to determine the potential amount of share-based compensation that may be awarded to the Chairman & CEO and President. The Compensation Committee believes the use of annual measures, matched with long-term vesting, provides an effective balance that rewards both short-term performance and long-term shareholder returns. We believe these criteria create a balance of the short-term (i.e. the amount of the award is determined using annual criteria) and the long-term (i.e. the vesting periods stretch into the future). Criteria used to determine annual grants are as follows: (i) the increase in annual earnings per share (referred to as EPS) and; (ii) an increase in Watsco’s stock price. If either measure increases, then restricted stock is awarded for that year. If neither measure increases, then no restricted stock is awarded for that year. For example, no awards were granted to our Chairman & CEO in 2025, 2008, or 2007 due to EPS and stock price performance during those years. We believe these are objective criteria, fundamentally understood and require no interpretation. The Compensation Committee recognizes that external factors can influence our stock price in the short term, with equal probability that such external factors can be positive or negative. A greater consideration is that the ultimate value of an award under our cliff-vesting program is not known on the date of the award – but rather only on the date on which it vests, which can be years or even decades after an award. Short-term external factors become irrelevant over such a long period of vesting, and solely the Company’s long-term performance determines the ultimate value of the restricted stock awards. Common stock price is the closing date price of Watsco’s shares as reported by the NYSE. EPS is defined as diluted EPS calculated in accordance with U.S. generally accepted accounting principles (referred to as GAAP). Generally, we do not consider any “non-GAAP” adjustments to EPS that have the effect of increasing EPS; however, in 2022, the Company received an unusual tax benefit associated with the vesting of 975,622 shares of restricted stock. In accordance with GAAP, this benefit had the effect of increasing EPS for 2022 by $1.21 per share. We excluded such benefit in determining the change in 2022’s diluted EPS for purposes of assessing the performance of the Chairman & CEO and President and for purposes of measuring EPS growth for 2023 versus 2022. Please see the Appendix on page A-1 for information regarding non-GAAP measures. Compensation & Long-Term Incentive for Our Chairman & CEO. The Chairman & CEO’s compensation is composed of base salary and a potential award of long-term restricted shares. Consistent with our view that long-term performance should drive the vast majority of NEO compensation, our Chairman & CEO is not eligible for short-term cash incentive awards. Mr. Nahmad’s 2025 base salary was $600,000, which was unchanged from 2024. In terms of his long-term restricted share award, the Compensation Committee determines annual performance measures within the first 90 days of each calendar year and formalizes such factors in an amendment to the Chairman & CEO’s employment agreement (such agreement and amendments are referred to together as the Employment Agreement). The 2025 amendment to the Employment Agreement was filed with the SEC as Exhibit 10.1(bb) to our Annual Report on Form 10-K on February 28, 2025. We refer to this amendment as the 2025 Amendment. The 2025 performance award, if any: (a) shall be made through a grant of restricted Class B common shares with a cliff-vest date of October 15, 2032, subject to forfeiture prior to this date as set forth in the restricted stock agreement; (b) is subject to his employment for the entire year unless the Compensation Committee specifically determines otherwise; (c) is subject to a maximum annual grant value of $20 million; and (d) shall use the following performance factors to determine the amount of the award: EPS growth (i) No incentive is earned if 2025 EPS did not exceed $13.30(1), or (ii) $43,500 in value is awarded for each one cent of EPS growth in 2025 (if less than $13.97(2)), or (iii) $65,000 in value is awarded for each one cent of EPS growth in 2025 (if equal to or greater than $13.97(2)), plus Common stock price growth (i) No incentive is earned if the price of Watsco’s Common stock did not exceed $473.89(3) on December 31, 2025, or (ii) $1,200 in value awarded for each one cent of increase in the price of Watsco’s Common stock over the prior year (if less than $568.67(4)), or (iii) $1,800 in value is awarded for each one cent of increase in the price of Watsco’s Common stock over the prior year (if equal to or greater than $568.67(4)) (1) Represents 2024 EPS. (2) Represents a 5% increase over 2024’s EPS. (3) Represents the closing price of Watsco’s Common stock at December 31, 2024. (4) Represents a 20% increase in the closing price of Watsco’s Common stock versus December 31, 2024. Watsco’s 2025 EPS was $12.25 per share and the price of its Common stock was $336.95 as of December 31, 2025, therefore no long-term incentive award was earned for 2025. The Compensation Committee reviews all terms of the compensation program annually, in light of the Company’s performance, financial position and other factors. Compensation & Restricted Stock Awards for Our President. Our President’s 2025 compensation program included (a) a base salary of $600,000, which was unchanged from 2024 and (b) a potential long-term incentive award in the form of restricted Class B common stock, which cliff-vest on October 17, 2043, based on the same performance criteria as our Chairman & CEO as described above, and was limited to a maximum annual grant value of $10 million. No long-term incentive award was earned for 2025. Our President’s Three-Year Performance Award for 2024 (referred to as the 2024 RSUs) was $1.4 million. The conversion of the 2024 RSUs into shares of Class B restricted stock is subject to the achievement of the following three-year growth targets for the period ending December 31, 2026:

  14. Governance, Compensation Actions & Summary of Details

    | Average Annual Three-Year Increase in Watsco’s Share Price (2024 through 2026) | RSU Conversion Factor | | 0% | 0% | | 10% | 100% | | 20% (maximum) | 200% |

  15. Governance, Compensation Actions & Summary of Details

    Our President’s Three-Year Performance Award for 2023 (referred to as the 2023 RSUs) was $2.5 million. The average stock price performance growth over the three-year period ended December 31, 2025 was 18%. The Compensation Committee determined an RSU conversion factor based on 89% of the value that would have been earned if the three-year average stock price growth had been 20%. Accordingly, the 2023 RSUs were converted into 13,955 shares of restricted Class B common stock with a gross value of $4.7 million that cliff-vest on October 17, 2043. $98 in cash was also paid in lieu of a fractional share. Restricted shares of Class B common stock issued upon conversion of the RSUs are subject to the terms, conditions and risks of forfeiture described above and contained within the related restricted stock agreements. Valuation of Restricted Shares. Restricted shares granted in 2025 are presented in the Summary Compensation Table at grant date fair value, calculated in accordance with FASB ASC Topic 718; however, due to the unusually long vesting periods (18 years for new grants to our President) and associated market and forfeiture risks, the present value of such awards is likely significantly less. Awards to Our Other NEOs. The Chairman & CEO considers and recommends restricted share awards to our other NEOs, which are subject to the review and approval of the Compensation Committee. The decision to grant restricted stock awards to our other NEOs is based on the subjective weighting of the following criteria: • The Company’s performance and the individual’s personal contribution toward such performance. • The current level of equity held by the NEO. • The NEO’s role and tenure with the Company. • The NEO’s prospective retirement age (which is generally when vesting occurs). No new awards were made to our EVP or CFO in 2025. Based on the closing market prices of Watsco’s shares on December 31, 2025, our EVP held 43,037 unvested restricted shares with a value of $14.6 million and our CFO held 80,037 unvested restricted shares with a value of $27.0 million, representing the cumulative share awards granted to them during their tenure with the Company (net of shares previously vested). In addition, our EVP and CFO received cash dividends of $11.70 per share during 2025 attributable to their respective restricted stock grants. Benefits Programs. Our NEOs are eligible to participate in our health and welfare plans (medical, dental, vision, life and other insurance), a 401(k) plan, employee stock purchase plan and other programs that are generally available to all employees. NEOs are eligible for a comprehensive annual executive physical. Personal Aircraft Usage. Pursuant to his employment agreement, our Chairman & CEO has limited access to our corporate aircraft for personal use (up to 90 hours during 2025), of which 25 hours were approved by the Compensation Committee to be allocated to the President for personal use. We review the aircraft flight logs and categorize the flights as business-related or non-business-related to determine personal use of the aircraft. The value of personal use of the Company aircraft is determined according to the Internal Revenue Service guidelines and is included in annual compensation, which may be different than the Company’s incremental variable operating cost of such use. In terms of providing this perquisite, the Compensation Committee has considered the tangible benefits of achieving time-savings, efficiency and effectiveness given the extensive travel demands of the Company’s business. Employment Agreements. There are no employment agreements with our NEOs, except for our Chairman & CEO. Severance Plan. We do not have severance agreements with any of our NEOs, except for the established termination provisions set forth in our Chairman & CEO’s Employment Agreement. Insider Trading Policy. We have adopted an insider trading policy that governs the purchase, sale and/or any other dispositions of the Company’s securities by the Company and its directors, officers and employees and is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable exchange listing standards. A copy of our Insider Trading Policy was filed with the SEC as Exhibit 19 to our 2024 Annual Report on Form 10-K. Clawback Policy. The Company maintains a clawback policy whereby the Company requires that NEOs reimburse the Company for all or any portion of any incentive or equity-based compensation in the event of a material restatement, whether intentional or not, of the Company’s consolidated financial statements or if the NEOs engaged in fraud or criminal misconduct related to the Company or its business. Our Executive Clawback Policy was filed with the SEC as Exhibit 97.1 to our 2023 Annual Report on Form 10-K. This policy describes the circumstances under which Executives of the Company, as defined therein, inclusive of our NEOs, will be required to repay or return erroneously awarded compensation to the Company. Stock Option Backdating & Repricing. We do not backdate or reprice, and have never backdated or repriced, stock option awards. Hedging and Pledging of Shares Prohibited. Directors and NEOs are prohibited from entering into hedging transactions related to Watsco shares or pledging shares as collateral for any loans. Policies and Practices Related to the Grant of Certain Equity Awards. In response to Item 402(x)(1) of Regulation S-K, we have not granted new awards of stock options, stock appreciation rights, or similar option-like instruments within four business days before or one business day after the release of a Quarterly Report on Form 10-Q, Annual Report on Form 10-K, or Current Report on Form 8-K that discloses material nonpublic information. Accordingly, we have no specific policy or practice on the timing of awards of such options in relation to the disclosure of material nonpublic information by us. In the event that we determine to grant new awards of such options, the Board will evaluate the appropriate steps to take in relation to the foregoing. Certain Tax Considerations. For 2025, Internal Revenue Code (“IRC”) section 162(m) limited our deduction to $1.0 million for annual compensation paid to covered employees, as defined in IRC section 162(m). The Committee believes that the Company’s interests are best served by maintaining flexibility to design compensation programs that recognize a full range of criteria important to our success, even where compensation payable under the programs may not be fully deductible under the IRC. Risk Considerations in our Compensation Programs. The Compensation Committee has overall responsibility for overseeing the Company’s management of risks related to compensation. including our equity-based compensation plans. We have reviewed our compensation structures and policies as they pertain to risk and have determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company. See “Mitigation of Compensation Related Risk” above.

  16. Summary Compensation Table

    Summary Compensation Table The following table sets forth the compensation earned by the NEOs for services rendered for the years ended December 31, 2025, 2024, and 2023.

  17. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Restricted Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total Compensation ($) | | Albert H. Nahmad Chief Executive Officer | 2025 | $600,000 | — | — | — | $233,620 | $833,620 | | | 2024 | $600,000 | — | $5,450,010 | $390 | $327,431 | $6,377,831 | | | 2023 | $600,000 | — | $9,999,807 | $193 | $458,336 | $11,058,336 | | Aaron J. Nahmad President | 2025 | $600,000 | — | $4,728,652 | $98 | $140,415 | $5,469,165 | | | 2024 | $600,000 | — | $9,357,044 | $756 | $15,125 | $9,972,925 | | | 2023 | $600,000 | — | $12,499,848 | $152 | $14,750 | $13,114,750 | | Barry S. Logan Executive Vice President | 2025 | $435,000 | — | — | — | $14,025 | $449,025 | | | 2024 | $435,000 | — | — | — | $13,025 | $448,025 | | | 2023 | $435,000 | — | — | — | $14,515 | $449,515 | | Ana M. Menendez Chief Financial Officer | 2025 | $350,000 | — | — | — | $8,750 | $358,750 | | | 2024 | $350,000 | — | — | — | $8,625 | $358,625 | | | 2023 | $350,000 | — | — | — | $8,250 | $358,250 |

  18. Summary Compensation Table

    (1) The amounts in this column represent the aggregate grant date fair value of awards computed in accordance with FASB ASC Topic 718. Compensation expense related to restricted stock awards is recognized over the relevant vesting period for each NEO. The annual expense for the 2025 restricted stock award to be included in the Company’s annual financial results is approximately $249,000 for Aaron J. Nahmad’s restricted stock award (vesting date is October 17, 2043). Although the awards are presented in the Summary Compensation Table at grant date fair value computed in accordance with FASB ASC Topic 718, due to the unusually long vesting periods and associated risks of forfeiture, the present value of such awards is likely significantly less. Shares of restricted stock awarded include the right to vote and the right to receive dividends. For additional information, please refer to Note 10 to our consolidated financial statements, which are contained in our Annual Report to Shareholders, filed with the SEC as Exhibit 13 to our 2025 Annual Report on Form 10-K. (2) Represents the cash amount paid in lieu of a fractional share in connection with annual equity awards. For Albert H. Nahmad, “all other compensation” paid in 2025 includes (i) the 401(k) Plan matching contribution of $8,750, (ii) health insurance benefits, including a comprehensive annual physical, of $25,581, and (iii) incremental variable operating costs of $199,289 related to Mr. Nahmad’s personal use of our aircraft pursuant to his Employment Agreement. For Aaron J. Nahmad, “all other compensation” in 2025 includes (i) the 401(k) Plan matching contribution of $8,750, (ii) a comprehensive annual physical of $7,500, and (iii) incremental variable operating costs of $124,165 related to Mr. Nahmad’s personal use of our aircraft. For Mr. Logan, “all other compensation” in 2025 comprises $7,500 for a comprehensive annual physical and the 401(k) Plan matching contribution. For Ms. Menendez, “all other compensation” in 2025 comprises the 401(k) Plan matching contribution.

  19. 2025 Grants of Plan-Based Awards

    2025 Grants of Plan-Based Awards This table provides information with respect to grants of plan-based awards to our NEOs for 2025.

  20. 2025 Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) (1) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Aaron J. Nahmad | 12/31/23 | — | — | — | — | — | — | 13,955(2) | $4,728,652 |

  21. 2025 Grants of Plan-Based Awards

    (1) The grant date fair value of the restricted stock award represents the total amount of share-based compensation expense that will be recognized over the vesting period, October 17, 2043. The annual expense to be included in the Company’s financial results in prospective years is approximately $249,000 for Aaron J. Nahmad’s restricted stock award. Although such awards are presented in the above table at grant date fair value calculated in accordance with FASB ASC Topic 718, due to the unusually long vesting periods and associated risks of forfeiture, the present value of such awards is likely significantly less. Shares of restricted stock awarded provide the recipient with the right to vote and the right to receive dividends on such shares. Represents our President’s 2023 Three-Year Performance Award. For further information, see the discussion in the CD&A above.

  22. Outstanding Equity Awards at December 31, 2025

    Outstanding Equity Awards at December 31, 2025 The following table summarizes stock awards outstanding at December 31, 2025 for the NEOs. All such awards represent restricted stock. There were no other equity awards outstanding for the NEOs at December 31, 2025.

  23. Outstanding Equity Awards at December 31, 2025

    | | Restricted Stock Awards | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3) | | Albert H. Nahmad | 1,502,391 | $509,085,190 | — | | Aaron J. Nahmad | 292,038 | $98,957,076 | $2,800,000 | | Barry S. Logan | 43,037 | $14,583,087 | — | | Ana M. Menendez | 80,037 | $27,044,537 | — |

  24. Outstanding Equity Awards at December 31, 2025

    (1) For Aaron J. Nahmad, excludes 13,955 shares earned for the 2023 Three-Year Performance Award, that was issued in 2026. (2) The market value is based on the respective closing market prices of our Common stock and Class B common stock on December 31, 2025, as reported by the NYSE. Shares vest upon dates specified in the restricted stock agreements or upon earlier death, disability or upon a change in control of the Company. See “CD&A – Governance, Compensation Actions & Summary of Details – Long-Term Share-Based Incentive Compensation” for additional information on the vesting dates of outstanding awards. Represents the maximum value of RSUs related to our President’s 2024 Three-Year Performance Award that are potentially convertible into shares of Class B restricted stock contingent upon the Company’s stock price performance for the three-year periods ending December 31, 2026. As of December 31, 2025, the achievement level with respect to these measures was estimated at the maximum. Accordingly, the value of the RSUs that are expected to convert into shares of Class B restricted stock reported in the table reflects the amount based on maximum performance. The actual number of RSUs that will convert to Class B restricted stock for the 2024 Three-Year Performance Award is not yet determinable.

  25. Potential Payments upon Termination or Change of Control

    Potential Payments upon Termination or Change of Control Agreements for awards of restricted stock have provisions that provide for accelerated vesting due to a change in control of the Company, or upon the death or disability of the executive. If vesting is accelerated under these agreements, any unrecognized share-based compensation expense would be immediately recognized. There are no other agreements or arrangements with our NEOs that provide compensation or other benefits upon a change in control of the Company. The table below illustrates the value of the accelerated vesting of the equity awards for each NEO had Watsco experienced a change in control on December 31, 2025 (inclusive of share awards earned with respect to 2025), along with the amount of unrecognized share-based compensation that would be recognized in our consolidated statement of income. The amounts presented in the table below are estimates and do not necessarily reflect the actual value of the benefits that would be received by the NEOs, which would only be known at the time of a change in control.

  26. Potential Payments upon Termination or Change of Control

    | Name | Restricted Stock (1) | Unrecognized Share-Based Compensation (2) | | Albert H. Nahmad | $509,085,190 | $35,818,519 | | Aaron J. Nahmad | $103,685,728 | $57,489,619 | | Barry S. Logan | $14,583,087 | $851,532 | | Ana M. Menendez | $18,620,787 | $467,607 |

  27. Potential Payments upon Termination or Change of Control

    (1) This value is based on the respective closing prices on the NYSE for shares of our Common stock ($336.95) and Class B common stock ($338.85) on December 31, 2025, multiplied by the number of restricted shares of Common stock or Class B common stock, as applicable that would have been subject to accelerated vesting. The amount realized would be taxable compensation to the NEO and, subject to the provisions of Section 162(m), may result in tax benefits for the Company. Represents the amount of share-based compensation expense that would be immediately recognized in the event of accelerated vesting.

  28. PAY RATIO

    PAY RATIO As a result of the rules the SEC adopted as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure about the relationship of the total annual compensation of our CEO to the median total annual compensation of our employees for the year ended December 31, 2025. The methodology used to identify the median employee and the compensation measure used for this analysis are described below.

  29. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As a result of rules the SEC adopted as required by Dodd-Frank, we are providing the following: (1) tabular compensation and performance disclosures for 2025, 2024, 2023, 2022, and 2021 (Pay versus Performance Table); (2) an unranked list of four performance measures that we consider to be our most important measures used to align Compensation Actually Paid (referred to as CAP) to our NEOs for 2025 to Company performance; and (3) additional disclosure relative to the relationship between the CAP set forth in the Pay versus Performance Table and each of the performance measures set forth in the Pay versus Performance Table and between the Company’s and the Peer Group TSR, in each case over 2021-2025. For further information concerning our executive compensation philosophy and how executive compensation is aligned with the Company’s performance, refer to the CD&A.

  30. Pay versus Performance Table

    Pay versus Performance Table

  31. Pay versus Performance Table

    | | | | Average | | Value of initial fixed $100 investment based on: | | | | | Year | Summary compensation table total for CEO (1) | CAP to CEO (2) | summary compensation table total for non-CEO NEOs (3) | Average CAP to non-CEO NEOs (4) | Cumulative TSR (5) | S&P 400 Industrials Index Cumulative TSR (6) | Net income (7) | EPS (8) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2025 | $833,620 | $(272,073,148) | $2,092,313 | $(21,339,681) | $170.85 | $191.48 | $587,588,000 | $12.25 | | 2024 | $6,377,831 | $186,362,103 | $3,593,192 | $28,306,262 | $234.18 | $169.56 | $635,740,000 | $13.30 | | 2023 | $11,058,336 | $265,777,742 | $4,640,838 | $35,470,387 | $206.89 | $149.41 | $634,139,000 | $13.67 | | 2022 | $11,093,941 | $(80,040,484) | $3,869,292 | $(3,773,733) | $116.89 | $113.68 | $703,696,000 | $14.20 | | 2021 | $10,672,518 | $199,630,477 | $4,320,542 | $16,803,335 | $142.06 | $128.45 | $498,735,000 | $10.78 |

  32. Pay versus Performance Table

    (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Albert H. Nahmad, our CEO since 1972, and our principal executive officer, for each corresponding year in the total column of the Summary Compensation Table (“SCT”). (2) The dollar amounts reported in column (c) represent the amount of CAP to our CEO, 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 our CEO during the applicable year. The following adjustments were made to our CEO’s total compensation for each year as reported in the SCT to determine the CAP:

  33. Pay versus Performance Table

    | Year | Reported SCT total for CEO | Reported value of equity awards (a) | Year-end fair value of outstanding and unvested equity awards granted in the year (b) | Year-over-year change in fair value of outstanding unvested equity awards (c) | Fair value at vesting date of equity awards granted and vested in the year (d) | Year-over-year change in fair value of equity awards granted in prior years that vested in the same year (e) | Fair value at the end of the prior year of equity awards forfeited in the year (f) | Dividends paid on equity awards in current year prior to vesting (g) | CAP to CEO | | 2025 | $833,620 | — | — | $(290,457,743) | — | — | — | $17,550,975 | $(272,073,148) | | 2024 | $6,377,831 | $(5,450,010) | $5,450,010 | $164,361,895 | — | — | — | $15,622,377 | $186,362,103 | | 2023 | $11,058,336 | $(9,999,807) | $9,999,807 | $240,536,763 | — | — | — | $14,182,643 | $265,777,742 | | 2022 | $11,093,941 | $(9,999,901) | $9,999,901 | $(75,214,733) | — | $(34,234,576) | — | $18,314,885 | $(80,040,484) | | 2021 | $10,672,518 | $(9,999,877) | $9,999,877 | $170,971,417 | — | — | — | $17,986,542 | $199,630,477 |

  34. Pay versus Performance Table

    The equity award adjustments for each applicable year include the addition or subtraction, as applicable, of the following: (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Restricted Stock Awards” column in the SCT for the applicable year for our CEO. (b) The year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year. (c) The amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year. (d) For awards that are granted and vest in the same applicable year, the fair value as of the vesting date. (e) For awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value. For 2022, the decrease is due to a decline in Class B common stock price from $306.82 at December 31, 2021 to $271.73 at October 15, 2022, which impacted the fair value of vested restricted stock. (f) For awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year. (g) The dollar value of dividends paid on restricted stock in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. (3) The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (excluding Albert H. Nahmad, who has served as our CEO since 1972) in the total column of the SCT in each applicable year. The NEOs (excluding our CEO) used to calculate the average amounts in each applicable year are Aaron J. Nahmad, Mr. Logan, and Ms. Menendez. (4) The dollar amounts reported in column (e) represent the average amount of CAP to the NEOs as a group (excluding our CEO), 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 NEOs as a group (excluding our CEO) during the applicable year. The following adjustments were made to average total compensation for the NEOs as a group (excluding our CEO) for each year as reported in the SCT to determine the CAP, using the same methodology described above in footnote 2 immediately above:

  35. Pay versus Performance Table

    | Year | Average SCT total for non- CEO NEOs | Average reported value of equity awards | Year-end average fair value of outstanding and unvested equity awards granted in the year | Year-over-year average change in fair value of outstanding unvested equity awards | Average fair value at vesting date of equity awards granted and vested in the same year | Year-over-year average change in fair value of equity awards granted in prior years that vested in the year | Average fair value at the end of the prior year of equity awards forfeited in the year | Average dividends paid on equity awards in current year prior to vesting | Average CAP to non-CEO NEOs | | 2025 | $2,092,313 | $(1,576,217) | $1,576,217 | $(25,050,419) | — | — | — | $1,618,425 | $(21,339,681) | | 2024 | $3,593,192 | $(3,119,015) | $3,119,015 | $17,116,258 | — | $5,578,400 | — | $2,018,412 | $28,306,262 | | 2023 | $4,640,838 | $(4,166,616) | $4,205,393 | $29,037,720 | — | — | — | $1,753,052 | $35,470,387 | | 2022 | $3,869,292 | $(3,333,250) | $3,276,738 | $(9,026,173) | — | — | — | $1,439,660 | $(3,773,733) | | 2021 | $4,320,542 | $(3,742,765) | $3,750,159 | $11,281,327 | — | — | — | $1,194,072 | $16,803,335 |

  36. Pay versus Performance Table

    (5) Cumulative TSR is calculated by (i) dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment and (ii) the difference between the price of Watsco’s Common stock at the end and the beginning of the measurement period by the price of Watsco’s Common stock at the beginning of the measurement period. (6) Given our position as the largest and only publicly traded distributor of HVAC/R equipment, parts and supplies in North America, our unique, sole line of business, the nature of our customers (air conditioning and heating contractors), and the products and markets we serve, we cannot reasonably identify an appropriate peer group; therefore, the peer group used for this purpose is the S&P 400 Industrials Index, a published industry index, because it more closely relates to the industry in which we operate. (7) The dollar amounts reported represent the amount of net income reflected in our audited consolidated financial statements for the applicable year rounded to the nearest hundred thousand. (8) For 2022, amount represents Adjusted EPS, a non-GAAP measure, which is EPS excluding the impact of a $1.21 per share tax benefit resulting from our CEO’s vesting of 975,622 restricted shares of Class B common stock on October 15, 2022. See the Appendix on page A-1 for information regarding non-GAAP measures.

  37. Analysis of the Information Presented in the Pay Versus Performance Table

    Analysis of the Information Presented in the Pay Versus Performance Table While we use financial and non-financial performance measures to align executive compensation with our performance, not all of those performance measures are presented in the Pay Versus Performance Table. Moreover, we generally seek to incentivize long-term performance and therefore do not specifically align our performance measures with CAP (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. See discussion of the relationships between information presented in the Pay Versus Performance Table below.

  38. Compensation Actually Paid and Cumulative Total Shareholder Return

    Compensation Actually Paid and Cumulative Total Shareholder Return The CAP vs. Cumulative TSR graph below depicts the amount of CAP to our CEO and the average amount of CAP to our NEOs as a group (excluding our CEO) over the five years 2021-2025. The alignment of CAP with our cumulative TSR over the period presented is the result of a significant portion of the CAP to our NEOs being composed of restricted awards that cliff-vest at retirement, in particular CAP to our CEO, as he has served as our CEO since 1972 and holds a significant amount of restricted stock.

  39. Compensation Actually Paid and Net Income

    Compensation Actually Paid and Net Income As illustrated by the graph below, the CAP to our CEO and the average amount of CAP to our NEOs as a group (excluding our CEO) is generally aligned with the Company’s net income over the five years presented in the Pay Versus Performance Table, except for 2022. In 2022 the CAP to our CEO and our other NEOs declined due to a stock price decline comparing December 31, 2022, to December 31, 2021. Also, 2022 net income included a $49.0 million tax benefit resulting from our CEO’s vesting of 975,622 shares of Class B restricted stock on October 15, 2022. We do not use net income as a performance measure in our executive compensation program.

  40. Compensation Actually Paid and Earnings Per Share

    Compensation Actually Paid and Earnings Per Share As illustrated by the following graph, the CAP to our CEO and the average CAP to our NEOs as a group (excluding our CEO) is generally aligned with our EPS over the five years presented in the Pay Versus Performance Table. While we use several performance measures for the purpose of evaluating the performance of our NEOs, we have assessed and determined that EPS is the most important performance measure used to link NEO’s CAP to Company performance, followed by stock price. In support of this determination, 100% of the annual long-term incentive for our CEO and President have been linked to EPS and stock price performance. * For 2022, amount represents Adjusted EPS, a non-GAAP measure, which is EPS excluding the impact of a $1.21 per share tax benefit resulting from our CEO’s vesting of 975,622 shares of Class B restricted stock on October 15, 2022. See the Appendix on page A-1 for information regarding non-GAAP measures.

  41. PROPOSAL NO. 1 – ELECTION OF DIRECTORS

    PROPOSAL NO. 1 – ELECTION OF DIRECTORS The Nominating & Governance Committee recommended for nomination, and the Board of Directors nominated, the following persons for election as members of our Board of Directors at the annual meeting of shareholders.

  42. PROPOSAL NO. 1 – ELECTION OF DIRECTORS

    | Name | Term Expiring | | Common stock | | | Ana Lopez-Blazquez | 2029 annual meeting of shareholders | | Class B common stock | | | Cesar L. Alvarez | 2029 annual meeting of shareholders | | Denise Dickins | 2029 annual meeting of shareholders |

  43. PROPOSAL NO. 1 – ELECTION OF DIRECTORS

    The section titled “Directors & Executive Officers” beginning on page 5 of this Proxy Statement contains more information about the leadership skills and other experience that caused the Nominating & Governance Committee and the Board of Directors to determine that these nominees should serve as directors of the Company. We believe that each of these directors possesses the experience, skills, and qualities to fully perform his or her duties as a director and contribute to our success. Our directors have been nominated because they possess the highest standards of personal integrity, interpersonal and communication skills, are highly accomplished in their fields, understand the interests and issues that are important to our shareholders, and are able to dedicate sufficient time to fulfilling their obligations as directors. Our directors as a group complement each other with their respective experiences, skills, and qualities. While our directors make up a diverse group in terms of age, gender, ethnic background, and professional experience, together they comprise a cohesive body in terms of Board process and collaboration. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.