DEF 14A of CSW Industrials, Inc., Jul 14, 2023

DEF 14A of CSW Industrials, Inc.

Filed Jul 14, 2023 · FY20230001308179-23-000912

Open on EDGAR

  1. Proposal One: Election of Directors

    Proposal One: Election of Directors The Company’s Board currently consists of eight directors. The Board has nominated Joseph Armes, Michael Gambrell, Bobby Griffin, Terry Johnston, Linda Livingstone, Anne Motsenbocker, Robert Swartz, and Kent Sweezey, whose terms of office are expiring at this 2023 Annual Meeting, to serve a one-year term that will expire at the 2024 annual meeting of shareholders. All nominees were elected by shareholders at the 2022 annual meeting. Biographical information regarding the nominees is provided on the following pages.

  2. Nominee Biographies

    Nominee Biographies

  3. Nominee Biographies

    | | Joseph B. Armes Chairman, CEO & President, CSW Industrials | Age 61 Director since: September 2015 | | | CSWI Board Committee(s): • None | Other Public Company Directorships: • Switchback Energy Acquisition Corp. (2019-2021) • RSP Permian, Inc. (2013-2018) • Capital Southwest Corporation (2013-2017) | | Professional Highlights: | | | | Mr. Armes has served as Chief Executive Officer and Chairman of the Board of Directors of the Company since September 2015, and as President of the Company since February 2018. Prior to the Company’s spin-off in September 2015 from Capital Southwest Corporation, Mr. Armes served as the Chief Executive Officer and President of Capital Southwest Corporation from June 2013 to September 2015, and as Chairman of the Board from January 2014 through August 2017. | | | | Key Skills and Qualifications: | | | | We believe Mr. Armes is well qualified to serve as a director due to his position as the Company’s Chief Executive Officer, which provides the Board with knowledge of the Company’s day-to-day operations. Mr. Armes also has broad executive and board leadership experience, finance and accounting expertise, compliance and governance expertise, and corporate development experience, all of which support the Company’s strategic growth plans. | | |

  4. Nominee Biographies

    | | Michael R. Gambrell Former EVP, The Dow Chemical Company | Age 69 Director since: September 2015 INDEPENDENT | | | CSWI Board Committee(s): • Compensation & Talent Development • Nominating & Corporate Governance (Chair) | Other Public Company Directorships: • TRW Automotive Inc. (2007-2015) | | Professional Highlights: | | | | Mr. Gambrell had a 37-year career at The Dow Chemical Company, a publicly traded chemicals company (now Dow, Inc.), most recently serving as an Executive Vice President and an advisor to the Chairman and CEO of Dow. During his time at Dow, Mr. Gambrell served on the company’s Executive Leadership Committee, Strategy Board, Sustainability Team, and Geographic Leadership Council, and he was an ex officio member of the board’s Environment, Health and Safety Committee. In 2012, Mr. Gambrell founded GamCo, LLC, a privately-held company providing advisory services to public, private equity, and start-up companies as well as non-profit organizations. He served as Chairman of the Campbell Institute from 2012 to 2015, and as a director and member of the Executive Committee and Strategic Planning Committee of the National Safety Council from 2011 to 2015. | | | | Key Skills and Qualifications: | | | | We believe Mr. Gambrell is well qualified to serve as a director due to his executive and board leadership experience and his extensive knowledge of the chemicals industry, which provide a global perspective and deep understanding of the Company’s products, customers, end markets, competitive landscape, and operational challenges and opportunities. In addition, Mr. Gambrell has extensive corporate development experience and integration expertise, as well as knowledge and experience in addressing health, safety and environmental issues, which provides the Board unique insight into the Company’s strategic growth plans. | | |

  5. Nominee Biographies

    | | │ 2023 Proxy Statement | 15 |

  6. Nominee Biographies

    | | Bobby Grifffin Chief Diversity, Equity & Inclusion Officer, Rockwell Automation | Age 56 Director since: December 2021 INDEPENDENT | | | CSWI Board Committee(s): • Compensation & Talent Development • Nominating & Corporate Governance | | | Professional Highlights: | | | | Mr. Griffin has served as Chief Diversity, Equity & Inclusion Officer of Rockwell Automation, Inc. since February 2021. Prior to that role and beginning in 2017, Mr. Griffin served as Vice President of Diversity and Inclusion at CBRE Group, Inc., and prior to that served as Global Director of Diversity and Inclusion at Flowserve Corporation. Additionally, Mr. Griffin held various human resources and business partner leadership positions in Fortune 100 companies, including Coca-Cola Enterprises and Merck & Co. | | | | Key Skills and Qualifications: | | | | We believe Mr. Griffin is well qualified to serve as a director due to his notable expertise in corporate culture, organizational health, diversity & inclusion, talent management, leadership development, and compensation and benefits, which provides the Board a valuable perspective on the Company’s core values and employee-centric culture. His experience also provides strategic insight into the Company’s leadership development, human capital management, and organizational design opportunities in support of the Company’s strategic growth plans. | | |

  7. Nominee Biographies

    | | Terry L. Johnston Former EVP & COO, Commercial Segment, Lennox International | Age 65 Director since: January 2017 INDEPENDENT | | | CSWI Board Committee(s): • Audit • Nominating & Corporate Governance | | | Professional Highlights: | | | | Mr. Johnston was Executive Vice President and Chief Operating Officer of the Commercial Segment of Lennox International Inc., a leading international provider of heating and cooling systems and technologies for residential and commercial applications, from 2013 until October 2019. Before assuming that position, Mr. Johnston held roles of increasing responsibility with Lennox International from the time he joined the company in 2001. Prior to his time with Lennox International, Mr. Johnston spent 20 years with General Electric Company, serving primarily in marketing and commercial leadership roles. | | | | Key Skills and Qualifications: | | | | We believe Mr. Johnston is well qualified to serve as a director due to his executive leadership experience and extensive knowledge of the Company’s served industrial markets. In addition, Mr. Johnston has extensive strategic planning experience and operational and commercial expertise, which provides the Board with a global perspective and positions him well to support the Company’s growth strategy and manufacturing optimization focus. | | |

  8. Nominee Biographies

    | | │ 2023 Proxy Statement | 16 |

  9. Nominee Biographies

    | | Linda A. Livingstone, Ph.D. President, Baylor University | Age 63 Director since: September 2015 INDEPENDENT | | | CSWI Board Committee(s): • Compensation & Talent Development • Nominating & Corporate Governance | | | Professional Highlights: | | | | Dr. Livingstone is President of Baylor University, a position she has held since June 2017. From August 2014 through May 2017, she served as Dean of The George Washington University School of Business, and she previously served as Dean of the Graziadio School of Business and Management at Pepperdine University for twelve years. Dr. Livingstone began her academic career at Baylor University, where she served for eleven years as an Assistant and then Associate Professor of Management, which included serving for four years as Associate Dean for Graduate Programs. Dr. Livingstone currently serves on the Board of Directors and as a member of the Executive Committee for each of the American Council on Education and the Big 12 Conference. She also serves on the NCAA Board of Governors and the NCAA Division 1 Board of Directors, as well as the Board of Directors of Independent Colleges and Universities of Texas. | | | | Key Skills and Qualifications: | | | | We believe Dr. Livingstone is well qualified to serve as a director due to her extensive executive leadership experience, as well as experience as an administrator and educator in the field of business administration, which provides the Board a valuable perspective on organizational development, corporate governance, information security, executive compensation and leadership development matters. | | |

  10. Nominee Biographies

    | | Anne B. Motsenbocker Former Managing Director, J.P. Morgan Chase | Age 61 Director since: June 2022 INDEPENDENT | | | CSWI Board Committee(s): • Audit • Compensation & Talent Development | Other Public Company Directorships: • U.S. Physical Therapy, Inc. (2022-Present) | | Professional Highlights: | | | | Ms. Motsenbocker is a former Managing Director of J.P. Morgan Chase, a global financial services company. She retired from J.P. Morgan Chase in February 2021 after a 36-year career with the firm, serving most recently as Managing Director and functional CEO of the Southwest Region of the Commercial Bank. Prior to that position, she held roles of increasing responsibility at J.P. Morgan Chase, including National Head of Multinational Corporations, President of Dallas Region Middle Market Bank, and Head of the Dallas Region of the Private Bank. From 2016 to 2022, Ms. Motsenbocker was a director of Children’s Health System of Texas, where she served as the chair of the HR and Compensation Committee and as a member of the Audit Committee. She also serves on the boards of the National Kidney Foundation, United Way Foundation of Metropolitan Dallas, NACD North Texas Chaper, and Economic Mobility Systems. | | | | Key Skills and Qualifications: | | | | We believe Ms. Motsenbocker is well qualified to serve as a director due to her executive and board leadership experience and her strategic and financial acumen. Ms. Motsenbocker’s extensive experience in advising companies in the development and implementation of capital strategies, managing risk, achieving operational excellence, and growing organically and inorganically positions her well to support the Company’s strategic growth plans. | | |

  11. Nominee Biographies

    | | │ 2023 Proxy Statement | 17 |

  12. Nominee Biographies

    | | Robert M. Swartz Former EVP & COO, Glazer’s, Inc. | Age 71 Director since: September 2015 INDEPENDENT | | | CSWI Board Committee(s): • Audit (Chair) • Nominating & Corporate Governance | Other Public Company Directorships: • Resolute Energy Corporation (2009-2015) | | Professional Highlights: | | | | From January 2011 until June 2016, Mr. Swartz served as the Executive Vice President and Chief Operating Officer for Glazer’s, Inc., a privately-held distributor of wines and spirits, prior to Glazer’s combination with Southern Wine and Spirits. For the remainder of 2016, Mr. Swartz oversaw the integration of the combined company, Southern Glazer’s Wine and Spirits of America. Since January 2017, Mr. Swartz has served as a member of the board of managers of Glazer’s Beer & Beverage, LLC. Since 2018, Mr. Swartz has been a partner in Northaven Capital Partners, a lower middle market private equity firm focused on businesses headquartered in the southwestern U.S. Additionally, Mr. Swartz served in various executive positions at Centex Corporation from 1999 to 2007. Mr. Swartz has served as the Company’s Lead Independent Director since September 2015. | | | | Key Skills and Qualifications: | | | | We believe Mr. Swartz is well qualified to serve as a director due to his experience and expertise in corporate development, finance, and accounting. Mr. Swartz also has extensive executive and board leadership experience as well as deep operational expertise that provides the Board with insight into the Company’s operations and leadership development opportunities. | | |

  13. Nominee Biographies

    | | J. Kent Sweezey Founding Partner, Turnbridge Capital, LLC | Age 70 Director since: December 2016 INDEPENDENT | | | CSWI Board Committee(s): • Audit • Compensation & Talent Development (Chair) | | | Professional Highlights: | | | | Mr. Sweezey is a founding partner of Turnbridge Capital, LLC, an energy services, equipment and infrastructure-focused private equity firm, which was founded in 2008. He currently serves as a member of the board of directors of Impact Selector, Inc., a privately-held company. Prior to co-founding Turnbridge Capital, Mr. Sweezey served as the Managing Partner of Centre Southwest Partners, LLC, a middle-market private equity firm focused primarily on energy services and equipment-related investments. Prior to his time with Centre Southwest Partners, Mr. Sweezey was with Donaldson, Lufkin & Jenrette (“DLJ”) and its successor firm, Credit Suisse First Boston, where he focused on transactions in the energy sector, as well as in the consumer products, building products, and manufacturing sectors. Mr. Sweezey was also involved in DLJ’s early principal investing activities through its investments in Seven-Up Company, Dr Pepper/Seven-Up Companies, and Dr Pepper Bottling Company of Texas, where he served on the board of directors from 1989 to 1999. | | | | Key Skills and Qualifications: | | | | We believe Mr. Sweezey is well qualified to serve as a director due to his executive leadership experience, strategic acquisition and financial expertise, and governance expertise. His extensive experience in corporate development matters positions him well to support the execution of the Company’s growth strategy and capital allocation plans. | | |

  14. Nominee Biographies

    | | │ 2023 Proxy Statement | 18 |

  15. Board of Directors Compensation

    Board of Directors Compensation

  16. 2023 Director Compensation Elements

    2023 Director Compensation Elements The following table shows the fiscal 2023 non-employee director compensation elements, which were unchanged from fiscal 2022:

  17. 2023 Director Compensation Elements

    | Director Fee Element | Fees ($) | | Annual Cash Retainer | 75,000 | | Equity Compensation (annual target value) | 100,000 | | Lead Independent Director Retainer (annual) | 25,000 | | Audit Committee Chair Retainer (annual) | 20,000 | | Compensation Committee Chair Retainer (annual) | 15,000 | | N&CG Committee Chair Retainer (annual) | 10,000 | | Non-Chair Committee Member Retainer (annual) | 5,000 |

  18. 2023 Director Compensation Elements

    The equity portion of non-employee director compensation is provided in the form of restricted stock of the Company having a target value of $100,000 on the date of grant. This equity grant value was established in fiscal 2022 and was based on competitive benchmarking and market analysis in consultation with NFP. The Company typically makes annual non-employee director equity grants upon the directors’ reelection each year (grant values are prorated if a director joins the Board mid-year). The restricted stock, which fully vests on the earliest of one year from the date of grant, the termination of the director’s service due to death or disability, or a change in control, has full voting rights and is eligible to receive dividends (if any) from the date of grant. Directors are also eligible to receive special additional compensation when performing services that are determined by the Board to be well above and beyond the normal director service requirements. The Board has not set a compensatory rate for these services, and no fees were paid for this purpose in fiscal 2023.

  19. 2023 Director Compensation Elements

    | | │ 2023 Proxy Statement | 28 |

  20. 2023 Director Compensation Table

    2023 Director Compensation Table The following table sets forth certain information with respect to our non-employee director compensation for the fiscal year ended March 31, 2023. Compensation information for Mr. Armes is set forth below under “Executive Compensation—Summary Compensation Table.” Mr. Armes did not receive any additional compensation for his service as a director.

  21. 2023 Director Compensation Table

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Total ($) | | Michael Gambrell | 90,000 | 100,107 | 190,107 | | Bobby Griffin | 85,000 | 100,107 | 185,107 | | Terry Johnston | 85,000 | 100,107 | 185,107 | | Linda Livingstone | 85,000 | 100,107 | 185,107 | | Anne Motsenbocker(3) | 61,209 | 100,107 | 161,316 | | Robert Swartz | 120,802 | 100,107 | 220,909 | | Kent Sweezey | 95,000 | 100,107 | 195,107 | | Debra von Storch (former director)(4) | 44,293 | – | 44,293 |

  22. 2023 Director Compensation Table

    | (1) Eligible non-employee directors received an annual equity grant of 783 shares of restricted stock on August 30, 2023. The amounts shown in this column reflect the grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, “Compensation — Stock Compensation,” and are calculated using a price per share of $127.85, the closing market price of the Company’s common stock as quoted by NASDAQ on the date of grant. Equity grant valuations are discussed in Note 5 to the Company’s audited consolidated financial statements for the year ended March 31, 2023, in the Annual Report on Form 10-K filed with the SEC on May 25, 2023. | | (2) The current non-employee directors each had 783 shares of restricted stock outstanding at March 31, 2023. The non-employee directors did not have any stock option awards outstanding at March 31, 2023. | | (3) Ms. Motsenbocker joined the Board in June 2022. Cash fees were prorated based on her term of service. | | (4) Ms. von Storch retired from the Board in August 2022; compensation amounts shown are through the date of retirement. |

  23. The 2022 Say on Pay Vote and Shareholder Engagement

    | What We Heard | | How We Responded | | Shareholders have been highly supportive of our CEO and ensuring his leadership of the Company continues in light of strong performance. However, certain shareholders expressed concerns about the size, structure, and/or rationale of the long-term, special equity grant made to Mr. Armes in fiscal 2022, which was focused on retention and succession planning. Shareholders expressed a variety of views regarding Mr. Armes’ special equity grant: • Some shareholders supported the grant’s rationale and structural elements (in particular the majority performance-driven structure and retention-based focus), but opposed the size of the grant • Other shareholders did not object to the size of the grant, but opposed the grant’s rationale and/or structural elements • Some shareholders simply opposed special equity grants outside of the Long Term Incentive Program in any amount for any reason, as it can indicate that the program is not serving its intended purpose | | The Compensation Committee acknowledged and appreciated shareholder feedback regarding Mr. Armes’ equity award and the sensitivity regarding special equity grants outside of our Long Term Incentive Program. Responding to this feedback, the Compensation Committee fully adhered to our existing Long Term Incentive Program in fiscal 2023, and no special equity grants were made to any NEO. The Compensation Committee confirms that it will not make any future special equity grants to Mr. Armes, and it has committed to not making future special equity grants to any other executive officer absent compelling and extraordinary circumstances, such as a new hire or promotion. Additionally, if a special equity grant is considered in the future under appropriate circumstances, it will include pre-set performance criteria aligned with shareholder value creation, such as those that currently exist within our Performance Share awards. | | Separate from the special equity grant made in fiscal 2022, shareholders are highly supportive of our executive compensation program, including our compensation objectives, program principles, target compensation elements, and pay practices. | | The Compensation Committee has maintained and continues to adhere to the philosophy, objectives, principles, and foundational compensation elements of our executive compensation program. In fiscal 2023, annual target compensation elements and amounts for NEOs were evaluated and adjusted by the Compensation Committee in a manner wholly consistent with our compensation objectives and principles. |

  24. Overview of the Executive Compensation Program

    | Pay Element | Form | | Compensation Objective Addressed | | Description & Rationale | | Base Salary | Cash | | | Reward Current Performance | Fixed cash compensation aligned with responsibilities of the position and market benchmarks | | | | | | Attract and Retain | | | Annual Incentive | Performance Cash Opportunity | | | Shareholder Alignment | Annual cash incentive tied to achievement of short-term performance metrics aligned with the Company’s strategy. Payout ranges from 0% to 200% of target. | | | | | | Reward Current Performance | | | | | | | Attract and Retain | | | Long-Term Equity Incentive | Performance Shares | target grant value | | Shareholder Alignment | Cliff vest at end of a three-year period at 0% to 200% of award value based on TSR performance against the Russell 2000 Index No voting rights and not eligible to receive dividends (if any) until vesting | | | | | | Drive Future Performance | | | | | | | Attract and Retain | | | | Restricted Stock | target grant value | | Shareholder Alignment | Vests ratably over a three-year period Has voting rights and is eligible to receive dividends (if any) from date of grant | | | | | | Drive Future Performance | | | | | | | Attract and Retain | | | Other | Health, Welfare and Retirement Programs | | | Attract and Retain | Executives participate in the same benefit programs as other employees, including: • Employee Stock Ownership Plan, through which approximately 4% of our Company is owned by our employees, aligning our collective interests • Qualified 401(k) Plan | | | Severance Benefits | | | Shareholder Alignment | Standardized benefits in the event of termination without cause by the Company or for good reason by the executive | | | | | | Attract and Retain | | | | Change-in-Control Benefits | | | Shareholder Alignment | Standardized “double trigger” severance benefits for executive officers in the event of termination following a change in control | | | | | | Attract and Retain | | | | Other Benefits | | | | No perquisites offered, other than those generally provided to all employees |

  25. Pay for Performance Alignment

    | * 2022 CEO Total Compensation figure excludes the fiscal 2022 impact of the one-time special equity grant, which was not part of Mr. Armes’ annual target compensation. |

  26. Annual Incentive Plan Updates

    Annual Incentive Plan Updates Performance Metrics. For fiscal 2023, the Compensation Committee transitioned the AIP’s primary financial metric from operating income to EBITDA. This update is applicable for all executives at the corporate and business unit levels, and the weighting of the metric within the AIP remained the same. The rationale for this transition was to support our primary compensation objective - “Align Long Term Executive and Shareholder Interests”. EBITDA is the primary metric the Company uses to communicate its financial objectives and performance with the investing public, and the Compensation Committee, with the support of NFP and the executive team, believes that utilizing EBITDA as the primary financial metric better aligns management’s financial performance goals with the interests of our shareholders. Additionally, EBITDA is a commonly used financial metric within annual incentive programs among members of the Company’s compensation peer group and across the broader market. Target Setting for Performance Metrics. At the beginning of fiscal 2021, the Company utilized a quarterly target-setting process for the AIP’s financial metrics on a temporary basis as the Company

  27. Annual Incentive Plan Updates

    | | │ 2023 Proxy Statement | 39 |

  28. Annual Incentive Plan Updates

    and our served end markets adapted to the COVID-19 pandemic. In fiscal 2022, the Company transitioned to a semi-annual financial target-setting process for the AIP, which the Compensation Committee believed was appropriate and supported by then-present uncertainty and volatility within our served end markets and overall business environment. This was further supported by the added operational and financial complexity resulting from the TRUaire acquisition and integration activities, as well as the formation of the Shell & Whitmore Reliability Solutions joint venture. The Compensation Committee again utilized a semi-annual target-setting process for AIP performance metrics in fiscal 2023. The Compensation Committee, with the support of NFP and management, believed this approach remained appropriate based on continued uncertainty in overall business conditions, particularly in light of the unprecedented inflationary environment and significant volatility in actual and forecasted input costs, including freight. Our AIP target-setting processes used in fiscal 2021 and 2022 demonstrated that utilizing more frequent target setting intervals has a limiting effect on AIP payouts. It mitigates the risk of inflated payouts resulting from targets being set too conservatively in the face of significant uncertainty. It also makes achieving “maximum” payout levels for the full year more difficult, as “maximum” performance must be achieved over more than one measurement period. As the Compensation Committee did over the last two years, it continued to adhere to our compensation objectives and principles in fiscal 2023, including ensuring that performance targets for all financial metrics used in our AIP are set at objective, challenging levels that require significant effort and achievement by our NEOs for a target payout to occur.

  29. Market-Competitive Pay

    Market-Competitive Pay The Compensation Committee annually reviews relevant market compensation survey data to evaluate and benchmark our compensation program’s market competitiveness, consistent with our compensation program objectives and principles. This specifically furthers our “Attract and Retain Key Leaders” objective and enables the achievement of our other objectives. The Compensation Committee uses data provided by NFP to benchmark all elements of our NEOs’ compensation. These compensation levels are set using the 50th percentile of benchmarked compensation data as a reference point, which helps ensure compensation levels are market competitive. The fiscal 2023 evaluation revealed a considerable negative deviation between benchmarked market data and our NEO’s compensation levels. This primarily affected base salaries (where our NEOs were on average below the 25th percentile of market data) and long-term incentive opportunities. This deviation occurred primarily due to changes in practices among peer companies and within the markets in which we compete for executive talent, but it was also affected by the Company’s significant growth over the last two years. With NFP’s assistance and consistent with each NEO’s performance, the Compensation Committee began making larger, market-based adjustments to base salaries and other compensation elements, as appropriate, to bring NEO target compensation levels into better alignment with market benchmarks and our compensation objectives. This incremental approach will continue into fiscal 2024 as needed, which the Compensation Committee believes will appropriately mitigate compensation program risk and ensure our compensation structure remains performance-focused at market competitive levels.

  30. Executive Compensation Practices

    | What We Do | | | | Promote a strong pay for performance plan design | | | Regularly benchmark executive compensation against peers of comparable size, complexity, and industry | | | Maintain meaningful stock ownership guidelines for our directors and executive officers | | | Have double trigger requirements on cash payments following a change in control | | | Conduct an annual compensation risk review | | | Provide reasonable and standardized benefits upon severance or change in control | | | Engage an independent compensation consultant | | | Maintain an incentive compensation “clawback” policy |

  31. Executive Compensation Practices

    | What We Don’t Do | | | | No hedging, pledging, or short sales of stock permitted | | | No change in control excise tax gross-ups | | | No option repricing without shareholder approval | | | No perquisites offered, other than those generally provided to all employees | | | No dividends paid and no voting rights on unvested performance-based equity awards | | | No duplication of metrics in annual and long-term incentive plans | | | No supplemental executive retirement plans |

  32. Roles and Responsibilities

    | Compensation Committee | CEO and Management | NFP | | • Oversees the Company’s compensation and benefit programs, including the AIP and LTIP • Administers the executive compensation program • Evaluates NEO performance and sets target compensation levels for all NEOs • Approves incentive plan performance metrics and targets • Oversees the assessment of compensation program risks • Oversees management’s leadership development and succession planning programs • Engages the independent compensation consultant • Oversees stock ownership guidelines and clawback policy • Recommends changes in Board member compensation for Board approval • Composed entirely of independent, non-employee Board members, per NASDAQ requirements | • CEO evaluates other NEO performance and makes recommendations to the Compensation Committee on compensation levels in light of performance and market benchmarks • Other members of the executive team, as appropriate, advise the Compensation Committee on compensation program elements, market practices, and compliance matters • No member of management participates in discussions concerning his or her compensation | • Engaged by, and reports to, the Compensation Committee • Assists and advises the Compensation Committee on aspects of compensation program objectives, principles and design • Advises the Compensation Committee on selection of competitive market benchmarking data, including the Compensation Peer Group • Analyzes competitive market data in the context of the Company’s program and provides recommendations to the Compensation Committee • Provides compensation program risk assessment • Provides no services to the Company |

  33. Market Competitiveness and External Benchmarking

    Market Competitiveness and External Benchmarking The Compensation Committee regularly reviews relevant market compensation survey data to evaluate the market competitiveness of our executive compensation program. This specifically furthers our “Attract and Retain Key Leaders” compensation program objective and enables the achievement of our other objectives. The Compensation Committee uses survey data provided by NFP, which consists of compensation data for comparable executive positions within a group of peer companies (the “Compensation Peer Group”). The data also includes data from comparably-sized companies within the broader market, as candidates for executive roles, as well as market opportunities for our current executives, are not limited to companies in our industry sectors. The process for selecting the members of the Compensation Peer Group is shown below.

  34. Market Competitiveness and External Benchmarking

    | Initial Criteria | Financial Metric Filter | Final List Produced | | | | | | • Industrial equipment, building products, and reliability products industry classifications • Publicly-traded on a U.S. exchange • U.S.-based with international presence; diversified products • Similar executive leadership positions • Well-designed executive compensation program | • Revenues = 0.5x-3.0x of CSWI • EBITDA = 0.5x-3.0x of CSWI • Market Cap = 0.5x-3.0x of CSWI • Enterprise Value = 0.5x-3.0x of CSWI • Assets = 0.5x-3.0x of CSWI • Comparable gross margin and operating margin profiles | Finalized Compensation Peer Group is shown below |

  35. Market Competitiveness and External Benchmarking

    The Compensation Peer Group used to evaluate executive compensation in fiscal 2023 is as follows:

  36. Market Competitiveness and External Benchmarking

    | AAON, Inc. Armstrong World Industries, Inc. Barnes Group Inc. Columbus McKinnon Corp. EnPro Industries, Inc.* ESCO Technologies Inc. Franklin Electric Co., Inc. GCP Applied Tech. Inc. | Gibraltar Industries, Inc. Helios Technologies, Inc.* Innospec Inc. Livent Corporation Mueller Water Products, Inc. PGT Innovations, Inc. SPX Corporation* Standex International Corp. |

  37. Market Competitiveness and External Benchmarking

    | * New for fiscal 2023 |

  38. Market Competitiveness and External Benchmarking

    Compared to fiscal 2022, only incremental updates were made to the Compensation Peer Group. One company, Quaker Houghton (formerly Quaker Chemical Corp.), was removed due its revenues and market capitalization rising above the metric filter’s 3.0x maximum level. This position was replaced with an industrial equipment company, and two other industrial equipment companies were added, better aligning the group’s industry representation with the Company’s and increasing the size of the data set for statistical purposes. All compensation elements for our NEOs are generally set using the 50th percentile of benchmarked compensation data as a reference point. This includes base salaries, annual incentive opportunities, total target cash compensation, long-term incentive compensation and total target compensation. This approach helps the Compensation Committee balance a performance-focused structure with the need to maintain market-competitive target and realized compensation. Actual benchmarked percentile rankings for our NEOs target compensation levels varies and can be above or below the 50th percentile reference point for a variety of reasons, including individual performance, experience, succession potential, and scope of responsibilities.

  39. Market Competitiveness and External Benchmarking

    | | │ 2023 Proxy Statement | 42 |

  40. Executive Compensation Program Risk Assessment

    | | Compensation elements are balanced | We provide a balanced mix of base salary, annual cash incentive compensation and long-term equity incentives. This balanced mix provides the incentive to perform at high levels and maximize Company performance. At the same time, it does not encourage singular focus on compensation performance metrics to the detriment of other important business metrics or overlooking how goals are accomplished. | | | Performance metrics balance short term and long term goals | Our incentive compensation metrics are balanced between short- and long-term business and financial objectives. The metrics for our short- and long-term plans do not overlap, which prevents executives from focusing on one goal at the expense of others. All the performance goals are aligned with shareholder interests. | | | Individual performance is emphasized | We emphasize individual, non-financial performance metrics in determining individual compensation amounts. The Compensation Committee strongly believes this effectively encourages and rewards behaviors that are consistent with our business objectives and core values, and discourages behaviors that are not. | | | Incentive programs have performance thresholds and are capped | Both the AIP opportunity and performance shares have threshold payout levels and/or performance contingencies, which ensure that incentive compensation is reduced or eliminated if minimum performance levels are not achieved. They also have maximum payout levels, which helps avoid excessive total compensation and reduces the incentive to engage in unnecessarily risky behavior. | | | Compensation is benchmarked | The Compensation Committee benchmarks compensation against both our Compensation Peer Group and the broader market to ensure our programs are performance-based, competitive, equitable, and generally consistent with industry and comparator company practices. | | | Executives have equity ownership guidelines | Our officers have robust equity ownership guidelines, which encourage a long-term focus on sustainable performance and further align our officers’ interests with those of our shareholders. Executives are prohibited from pledging stock and engaging in transactions designed to hedge against the value of the Company’s stock. |

  41. Total Compensation Should be Performance-Based, With a Majority “At Risk”

    | (1) Calculated by dividing (i) the sum of the annual incentive opportunity and target long-term incentive opportunity by (ii) the sum of the annual incentive opportunity, target long-term incentive opportunity and base salary. |

  42. Incentive Compensation Should Balance Short-Term and Long-Term Performance

    Incentive Compensation Should Balance Short-Term and Long-Term Performance Executive compensation should be linked to building long-term shareholder value while remaining consistent with our business objectives. The Base Salary and Annual Incentive compensation elements emphasize short-term financial and individual performance, as well as the achievement of annually-defined business and financial objectives. The Long-Term Equity Incentive compensation element emphasizes long-term financial performance and strategic plan execution by tying a meaningful portion of compensation to the performance of the Company’s common stock.

  43. Compensation Should be Market Competitive and Reflect Individual Performance

    Compensation Should be Market Competitive and Reflect Individual Performance Achievement of our compensation objectives requires our compensation program, and the compensation elements within it, to be market competitive. If we are unable to attract and retain top executive talent within the markets in which we compete, we will hinder our ability to create long-term shareholder value. As discussed above, the Compensation Committee utilizes the Compensation Peer Group and relevant market compensation survey data, with the assistance of NFP, to ensure our compensation program is benchmarked and that each NEO’s total target compensation is appropriately tailored for the leadership roles in which they serve. At the same time, a critical aspect of our culture examines how the Company succeeds, which is reinforced through our ACT. RISE. core values. We seek to attract and retain executive leaders who exemplify our values in how they lead and accomplish business objectives. Compensation programs that are overly focused on market benchmarking, or incentive plans that are purely formulaic, are limited in their ability to account for qualitative performance assessments. This creates program risk and can work against the Company’s and shareholders’ long-term interests. Accordingly, the Compensation Committee retains an element of discretion to ensure an executive’s realized compensation reflects individual, qualitative performance, consistent with our culture and values.

  44. Performance-Based Metrics Should be Externally Benchmarked

    Performance-Based Metrics Should be Externally Benchmarked Measuring how the Company performs against internally-developed targets is an important aspect of incentive compensation, as it sets expectations and motivates performance. However, internal performance metrics alone do not create a full picture of Company performance. As such, the performance-based elements of our executive compensation program should also evaluate the Company’s performance relative to external benchmarks. Since inception, the performance shares granted under our LTIP have used an external benchmark for measuring Company performance, and since 2017, that benchmark has been the Russell 2000 Index, of which the Company is a member. This shows, on a relative basis, how well we deliver results that directly create long-term shareholder value. Additionally, AIP performance metric targets are set in reference to how the Company is expected to perform both compared to the prior year and relative to forecasted market growth rates. Base Salary The Compensation Committee reviews and establishes NEO base salaries consistent with the process described above under “The Compensation Decision Making Process”. For each NEO, the Compensation Committee considers our NEOs scope of responsibilities, experience, and individual performance and then balances these factors against competitive salary practices, including internal pay equity. The Compensation Committee does not assign any relative or specific weights to these factors. The base salaries established for fiscal 2023 are presented in the following table.

  45. Performance-Based Metrics Should be Externally Benchmarked

    | Named Executive Officer | Fiscal 2023 Annual Base Salary | Fiscal 2022 Annual Base Salary | | Joseph B. Armes | $700,000 | $600,000 | | James E. Perry | $450,000 | $380,000 | | Donal J. Sullivan | $450,000 | $400,000 | | Luke E. Alverson | $375,000 | $325,000 | | Danielle R. Garde | $375,000 | N/A |

  46. Performance-Based Metrics Should be Externally Benchmarked

    As previously discussed, the Compensation Committee’s fiscal 2023 compensation evaluation revealed a considerable deviation between existing base salaries and market benchmarks, where our NEOs were below the 25th percentile of benchmark on average, and in some individual cases were the lowest among benchmarked data. This occurred primarily due to changes in practices among the Compensation Peer Group and the broader market, but it was also affected the Company’s significant growth in fiscal 2021 and 2022. The Compensation Committee determined this deviation conflicted with our compensation objectives and potentially created unnecessary retention risk, in addition to being inconsistent with the executive team’s strong performance. Market-based base salary adjustments were approved to improve competitive market alignment, recognizing that, in some cases due to the size of the deviation on both a percentage and absolute basis, adjustments over two or more years may be necessary and prudent. Mr. Armes’ base salary and other compensation components in fiscal 2023 are discussed below in further detail under “—Additional Executive Compensation Information—Chief Executive Officer Compensation in 2023.” Annual Incentive Program Our AIP exists to provide employees with a short-term, performance-based cash incentive that promotes achievement of our annual operating budget and the financial metrics that we believe most strongly correlate to long-term shareholder value creation. This incentive most directly supports our “Align Long-Term Executive and Shareholder Interests” and “Reward Current Performance” compensation objectives.

  47. AIP Target Opportunities

    AIP Target Opportunities The Compensation Committee establishes an AIP target opportunity for each NEO consistent with the process described above under “The Compensation Decision Making Process”. The Compensation Committee also approves the AIP’s financial performance metrics at that same time. Our NEO’s AIP target opportunities are expressed as a percentage of base salary. AIP target opportunities established for fiscal 2023 are presented in the following table.

  48. AIP Target Opportunities

    | Named Executive Officer | Fiscal 2023 AIP Target in $ | Fiscal 2023 AIP Target % of Base Salary | Fiscal 2022 AIP Target % of Base Salary | | Joseph B. Armes | $910,000 | 130% | 130% | | James E. Perry | $337,000 | 75% | 75% | | Donal J. Sullivan | $337,000 | 75% | 75% | | Luke E. Alverson | $206,250 | 55% | 55% | | Danielle R. Garde | $206,250 | 55% | N/A |

  49. AIP Target Opportunities

    | | │ 2023 Proxy Statement | 45 |

  50. AIP Target Opportunities

    The Compensation Committee did not make any changes to AIP target percentages for fiscal 2023. The Compensation Committee determined that, as adjusted for the market-driven base salary increases for fiscal 2023 discussed above, the AIP targets and resulting total target cash compensation for each NEO were within acceptable proximity to market benchmarks and provided incentives consistent with our objectives.

  51. AIP Performance Metrics

    AIP Performance Metrics The Compensation Committee, working with management and NFP, evaluates and approves the Company’s AIP performance metrics for each fiscal year when AIP target opportunities are established. The Compensation Committee weights performance metrics for each NEO—including business unit leaders—in proportions that ensure performance metrics are heavily weighted toward the Company’s consolidated performance. We believe it is important for all NEOs to be primarily focused on setting the strategic direction of the Company (rather than only at the business unit level) and achieving overall Company results. The Compensation Committee also believes that AIP payouts should reflect individual, non-financial performance metrics. This serves to mitigate the risks that objective factors can have on incentive pay when overused. Importantly, non-formulaic metrics provide the Compensation Committee with discretion to adjust compensation upward or downward based on how an executive accomplished objectives and goals, thereby rewarding behaviors that are consistent with our business objectives and ACT. RISE. core values. The Company’s fiscal 2023 AIP performance metrics are set forth below. The Compensation Committee selected these performance metrics, with input from management and NFP, because they support the key strategies that we believe drive sustainable and profitable Company growth and create shareholder value.

  52. AIP Performance Metrics

    | Corporate Executive AIP Metrics | OPERATING EXECUTIVE AIP METRICS | | | |

  53. AIP Performance Metrics

    | Consolidated EBITDA | Consolidated Operating Cash Flow | Business Unit EBITDA | Business Unit Operating Cash Flow | Individual Performance | | Why we use it: Measures and supports both our revenue and profitability growth objectives, aligning our interests with the interests of our shareholders | Why we use it: Measures and supports our strategic objective of delivering strong cash flow from operations to fund growth and returns to shareholders, aligning our interests with the interests of our shareholders | Why we use it: Measures and supports both our revenue and profitability growth objectives at the segment/operating company level, which are in direct control of the executive | Why we use it: Measures and supports our strategic objective of delivering strong cash flow from operations to fund growth and returns to shareholders, aligning our interests with the interests of our shareholders | Why we use it: Emphasizes individual performance and qualitative achievement of goals to promote and reward behaviors consistent with our business objectives and core values | | How we measure it: U.S. GAAP net income, plus interest, taxes, depreciation and amortization | How we measure it: U.S. GAAP (net cash provided by operating activity) | How we measure it: U.S. GAAP net income, plus interest, taxes, depreciation and amortization | How we measure it: U.S. GAAP (net cash provided by operating activity) | How we measure it: Board and CEO assessment of individual performance against predetermined goals and objectives | | Payout range: 0% — 200% | Payout range: 0% — 200% | Payout range: 0% — 200% | Payout range: 0% — 200% | Payout range: 0% — 200% |

  54. AIP Performance Calculation and Payout

    AIP Performance Calculation and Payout When the Compensation Committee approves AIP performance metrics for the year, it also establishes a payout matrix for the AIP, which determines the percentage of AIP target that is paid for performance achieved. Achievement of financial-based performance metrics is objective and calculated as appropriate. Payout percentages for each NEO’s qualitative individual performance metric are determined by the Compensation Committee based on individual performance assessments, as discussed previously.

  55. AIP Performance Calculation and Payout

    | | │ 2023 Proxy Statement | 46 |

  56. AIP Performance Calculation and Payout

    Fiscal 2023 AIP Payout Matrix and Performance Measurement Payout Matrix. The fiscal 2023 payout matrix established for all AIP metrics was 0% to 200% of the target award opportunity, which was unchanged from fiscal 2022. The actual AIP payout percentage is calculated by comparing actual financial metric performance against the established targets. Payouts for each of the financial metrics are calculated on a straight-line basis between the applicable performance levels (“threshold,” “target,” and “maximum”). Target Setting. In fiscal 2023, the Compensation Committee, with the support of NFP, continued to use a semi-annual target setting process for both our EBITDA and Operating Cash Flow (“OCF”) financial metrics. The Compensation Committee believed this approach remained appropriate based on continued uncertainty in overall business conditions, particularly in light of the unprecedented inflationary environment and significant volatility in actual and forecasted freight costs present at the outset of fiscal 2023. First fiscal half (“1H”) performance metric targets were established in early May 2022 (in the first quarter of fiscal 2023), and second fiscal half (“2H”) performance metric targets were established in mid-November 2022 (in the third quarter of fiscal 2023). As fiscal 2021 and 2022 demonstrated, utilizing more frequent financial target setting intervals has a limiting effect on AIP pay out levels, as it mitigates the risk of overpayment resulting from annual targets being set too conservatively in the face of significant uncertainty. As the Compensation Committee has always done, it continued to adhere to our compensation objectives and principles, including ensuring that performance targets for the AIP’s financial metrics are set at objective, challenging levels that require significant effort and achievement by our NEOs for a target payout to occur. Financial Performance Adjustments. For all financial metrics, the Compensation Committee may exercise its judgment, within parameters it establishes at the beginning of the year, about whether to exclude the effect of certain developments in measuring performance. These developments may include unanticipated changes in accounting principles or extraordinary, unusual or unplanned events, such as the effects of restructurings, impairments, reorganizations, acquisitions, or dispositions. Any adjustments approved by the Compensation Committee in measuring financial metric performance are fully disclosed below. Concerning acquisitions in particular, the Compensation Committee has consistently applied a policy to exclude the impact of acquisitions consummated during a performance period on AIP financial metrics, ensuring AIP payouts never benefit from acquired, unbudgeted profitability and cash flow. Performance Measurement and Payout. The following graphics show the fiscal 2023 AIP’s performance metrics, targets, payout matrixes, performance results, and percentage payouts.

  57. Business Unit Operating Cash Flow

    Business Unit Operating Cash Flow These results are used in calculating Mr. Sullivan’s Business Unit OCF metric payout percentage. The Company has chosen not to disclose the Threshold, Target, Maximum and Measured Performance data for the Business Unit OCF metric used for Mr. Sullivan. This metric corresponds to financial data that is not publicly disclosed and is used primarily to assess compensation. The Company believes that disclosing such information would cause competitive harm to the Company without adding meaningfully to the understanding of its business. The Compensation Committee believes that all performance targets for all financial metrics used in our AIP are set at definitive, challenging, and objective levels that require significant effort and achievement by our NEOs for a target payout to occur. Despite the inherent challenges of establishing performance targets in fiscal 2023 due to continued uncertainty in overall business conditions, particularly in light of the unprecedented inflationary environment and significant volatility in actual and forecasted freight costs, the Compensation Committee believes the AIP target-setting approach used in fiscal 2023 ensured these intentions were met. While AIP results for any given year will vary, the Compensation Committee believes that appropriate performance target setting, when combined with strong Company and individual NEO performance, should result in AIP financial metric payouts that average close to target levels over a five-year period. For additional context, the following table summarizes the Company’s actual financial metric payout percentages under the AIP over the last five years. Historical AIP Financial metric Payouts

  58. Individual Performance

    | | Target AIP Award | Consolidated EBITDA | Consolidated Operating Cash Flow | Business Unit EBITDA | Business Unit Operating Cash Flow | Individual Performance | FY2023 AIP Award | | Joseph B. Armes | $910,000 | $690,690 (126.5% Payout) | $101,010 (74.0% Payout) | — | — | $432,250 (190% Payout) | $1,223,950 (134.5% Payout) | | James E. Perry | $337,000 | $256,163 (126.5% Payout) | $37,463 (74.0% Payout) | — | — | $130,781 (155% Payout) | $424,406 (125.8% Payout) | | Donal J. Sullivan | $337,000 | $149,428 (126.5% Payout) | $24,975 (74.0% Payout) | $78,638 (116.5% Payout) | $29,700 (88.0% Payout) | $168,750 (200% Payout) | $451,491 (133.8% Payout) | | Luke E. Alverson | $206,250 | $156,544 (126.5% Payout) | $22,894 (74.0% Payout) | — | — | $64,453 (125% Payout) | $243,891 (118.3% Payout) | | Danielle R. Garde | $206,250 | $156,544 (126.5% Payout) | $22,894 (74.0% Payout) | — | — | $64,453 (125% Payout) | $243,891 (118.3% Payout) |

  59. LTIP Award Structure

    LTIP Award Structure Our LTIP consists of two components: restricted stock and performance shares, as shown below. In fiscal 2023, all NEOs received their long-term incentive awards in these forms. The Compensation Committee believes these equity award forms and the 50%/50% target weighting appropriately balances ensuring executives have meaningful, long-term equity ownership, promoting stock price-based and financial-based achievements, and aligning the interests of the NEOs with the Company’s risk profile and the interests of our shareholders.

  60. LTIP Award Structure

    | | │ 2023 Proxy Statement | 50 |

  61. LTIP Target Opportunities

    LTIP Target Opportunities Target Opportunities. The Compensation Committee establishes a target opportunity for each NEO under the Company’s LTIP consistent with the process described above under “The Compensation Decision Making Process”. Our NEOs LTIP target opportunities are expressed as a percentage of base salary. The LTIP target opportunities established for fiscal 2023 are set forth in the table below.

  62. LTIP Target Opportunities

    | Named Executive Officer | 2023 LTIP Target In $ | 2023 LTIP Target as % of Base Salary | 2022 LTIP Target as % of Base Salary | | Joseph B. Armes | $2,275,000 | 325% | 300% | | James E. Perry | $787,500 | 175% | 175% | | Donal J. Sullivan | $787,500 | 175% | 175% | | Luke E. Alverson | $431,250 | 115% | 100% | | Danielle R. Garde | $431,250 | 115% | N/A |

  63. LTIP Target Opportunities

    In reviewing the NEO’s LTIP target opportunities for fiscal 2023, the Compensation Committee determined that Mr. Armes’ and Mr. Alverson’s LTIP targets were not within acceptable proximity to market benchmarks. As such, their LTIP targets were increased modestly to improve competitive market alignment on both a percentage and absolute basis. The Compensation Committee determined that the LTIP targets for other NEOs were within acceptable proximity to market benchmarks and provided incentives consistent with our objectives. Burn Rates and Dilution. The Compensation Committee also evaluates the impact of LTIP target opportunities and actual awards on “burn rates,” which measures the annual dilutive effect on our common stock resulting from shares awarded under our LTIP or otherwise. Generally, the Compensation Committee targets a Company-wide “burn rate” of 1.0% or less for all annual grants of equity awards to all participants. Our equity granting practices have stayed well below this target every year since the Company’s inception, and the fiscal 2023 LTIP target opportunities established by the Compensation Committee ensured this “burn rate” performance continued. Equity Grant Timing and Valuation. The Compensation Committee grants equity awards to NEOs at two points during the year: performance shares are granted near the beginning of our fiscal year, and restricted stock is granted on or about October 1 (the middle of our fiscal year). The Compensation Committee does not grant equity awards to NEOs or other LTIP participants in anticipation of the release of material nonpublic information. Additionally, the Company does not time the release of material nonpublic information based on the grant date of equity awards. The difference in performance share and restricted stock grant dates, and the typical differences in base salary levels and target LTIP opportunities at the time grant amounts are calculated (given when annual compensation adjustments occur), causes the actual award values of the restricted stock and performance shares to be slightly different. The material terms and conditions of these equity awards are determined under the provisions of our existing equity compensation plan, which is available on the Company’s website at www.cswindustrials.com under the caption “Investors — Financial Reports and Filings.” The grant date fair value of the performance share and restricted stock awards granted to the NEOs during fiscal 2023, calculated in accordance with U.S. GAAP pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, “Compensation — Stock Compensation,” are shown in the “Summary Compensation Table” under the “Stock Awards” column and the accompanying footnotes. The actual award values of the equity awards at grant differ from the “grant date fair value” disclosed in the Summary Compensation Table due to the required accounting methodology, as discussed in footnote 2. Additional information on the awards granted in fiscal 2023 is shown in the “2023 Grants of Plan-Based Awards” table.

  64. Restricted Stock Awards

    Restricted Stock Awards Award Design. Restricted stock awards in fiscal 2023 maintained all of the design characteristics of the prior year and were otherwise unchanged. The awards vest ratably over a three-year period, delivering a meaningful long-term incentive that balances risk and potential reward. These awards help executives build ownership in the Company, aligning their interests with shareholders, and serve as an effective retention tool, encouraging our executive officers to remain with the Company and perform at high levels. Restricted stock awards are variable compensation, and the Compensation Committee considers them to be “at risk” - no compensation is realized when awards are made, the awards are subject to forfeiture based on employment status, and their future value to the executive is directly determined by the Company’s stock price. Valuation and Other Terms. For the fiscal 2023 restricted stock awards, the reported value shown in the “Summary Compensation Table” was computed based on the “grant date fair value”, or the price of our common stock on the date of grant multiplied by the number of shares granted. Subject to limited exceptions, restricted stock awards are only earned if the individual continues to be employed by the Company through the vesting date. Unvested restricted stock has voting rights and earns dividends, if any, on the same basis as the Company’s outstanding unrestricted common stock.

  65. Performance Share Awards

    Performance Share Awards Award Design and Performance Metric. Performance share awards in fiscal 2023 maintained all of the design characteristics of the prior year and were otherwise unchanged. The awards cliff vest at the end of a three year performance period, and they have one performance metric – total shareholder return relative to the members of the FTSE Russell 2000 Index. The Compensation Committee believes using TSR as the sole performance metric supports the Company’s strategic objective of emphasizing growth in excess of market levels and unquestionably aligns our executives’ interests with those of our

  66. Performance Share Awards

    | | │ 2023 Proxy Statement | 51 |

  67. Performance Share Awards

    shareholders. The Compensation Committee believes the use of the Russell 2000 Index for TSR benchmarking is highly relevant, as the Company is a member of the index and competes with other index members for investor capital. Additionally, comparison to a broad index, rather than individually selected companies, better suits the highly diversified nature of the Company’s business and, as a fully objective standard, mitigates risk in the program. Vesting Matrix. The Compensation Committee establishes a vesting matrix for performance shares when they are granted. This vesting matrix calculates the number of performance shares that vest relative to the number of shares originally granted. Like the AIP, this vesting matrix has an established upper limit and a minimum below which no shares will vest. For fiscal 2023, the vesting matrix established was 0% to 200% of the award value, unchanged from fiscal 2022. The vesting percentage is calculated using the Company’s TSR percentile ranking among the Russell 2000 Index members, and then multiplying the number of performance shares granted by the applicable interpolated vesting percentage, as set forth below: Performance Share Vesting Matrix

  68. Performance Share Awards

    | * If the Company’s TSR is negative for the performance period, 100% is the maximum vesting percentage possible. |

  69. Performance Share Awards

    As noted, the established vesting matrix features a limit on the number of shares that will vest if the Company’s TSR is negative for the performance period. If that occurs, the maximum amount of performance shares that can vest is 100%, even if the Company’s TSR performs above the 50th percentile of the Russell 2000 Index. Valuation and Other Terms. For the fiscal 2023 performance share awards, the reported value shown in the “Summary Compensation Table” was computed based on the probable outcome of the performance conditions based on a Monte Carlo simulation and the grant date estimate of compensation cost to be recognized over the performance period, which was 141% of target, or $160.57 per share. This “grant date fair value” (i.e., 141% of the target amount) is reported in the “Summary Compensation Table” for the NEOs’ performance share awards. This reported amount is higher than the actual granted award value (i.e., 100% of the target amount) due to the accounting methodology for determining this amount, as discussed in footnote 2 to the table. Performance shares are subject to forfeiture if the executive’s employment is terminated by the Company for cause or by the executive without good reason before the end of the three-year performance period. Until vesting, holders of performance shares do not have voting rights. They also do not receive dividends but are entitled to receive dividend accrual units that vest, if at all, at the same percentage as the underlying award.

  70. Employment Agreement

    Employment Agreement On October 1, 2015, the Company entered into an employment agreement with Mr. Armes. The employment agreement provides that Mr. Armes will serve as Chief Executive Officer of the Company and that the Board will nominate Mr. Armes for election to the Board during the term of the agreement. The employment agreement had an initial term of two years, but the term automatically extends for additional one-year periods unless Mr. Armes’ employment is terminated as provided in the employment agreement.

  71. AIP Target and Fiscal 2023 Award

    AIP Target and Fiscal 2023 Award During fiscal 2023, Mr. Armes’ target AIP opportunity was maintained at 130% of base salary. After performance results for the fiscal year were confirmed, the Compensation Committee approved a total AIP payout of $1,223,950 or 134.5% of target, broken down as follows:

  72. AIP Target and Fiscal 2023 Award

    | Metric | Amount ($) | Weight | Payout | | Consolidated EBITDA | 690,690 | 60% | 126.5% | | Consolidated Operating Cash Flow | 101,010 | 15% | 74.0% | | Individual Performance | 432,250 | 25% | 190.0% |

  73. LTIP Target and Fiscal 2023 LTIP Awards

    LTIP Target and Fiscal 2023 LTIP Awards Annual LTIP Awards. During fiscal 2023, Mr. Armes’ target LTIP opportunity was increased to 325% of base salary from 300% of base salary, based on an analysis of comparative market data and to maintain alignment of his LTIP opportunity with our stated executive compensation objectives and principles. This increase also served to increase the percentage of Mr. Armes’ total target compensation that is “at risk” and performance-based. Accordingly, Mr. Armes received an award of 7,581 performance shares on April 1, 2022 ($900,000 target award value), and an award of 8,629 shares of restricted stock on October 1, 2022 ($1,137,500 target award value, as adjusted following annual compensation changes). Mr. Armes did not receive any special equity awards outside of the LTIP. The award value for the performance shares differs from the “grant date fair value” reported in the “Summary Compensation Table” below due to the accounting methodology for determining such amount, as discussed in footnote 2 to the table.

  74. Benefits Upon Termination

    Company pays AIP cash incentives; (4) a prorated AIP cash payment related to the then-current fiscal year, if the date of termination is before the end of a fiscal year; and (5) continued medical and dental insurance for him and his dependents for 24 months following the date of termination. Additionally, and with certain exceptions related to Mr. Armes’ Special Equity Grant, all of Mr. Armes’ unvested equity-based awards will immediately vest in full, except for performance-based awards, which will vest when and only to the extent that the performance conditions have been satisfied. If Mr. Armes’ employment is terminated by the Company for “cause” or by Mr. Armes without “good reason,” Mr. Armes will receive only his base salary and any unpaid benefits through the date of termination. Additionally, Mr. Armes participates in the Company’s Executive Change in Control and Severance Benefit Plan (the “CIC and Severance Plan”). To the extent the provisions of the CIC and Severance Plan are more beneficial to Mr. Armes than the terms set forth in his employment agreement, such provisions would apply in the applicable termination scenario. The employment agreement also provides that Mr. Armes will not engage in activities that are competitive with the Company’s business or solicit any key employees of the Company to leave or accept employment with another company for 24 months following the date of termination.

  75. Executive Change in Control and Severance Benefit Plan

    Executive Change in Control and Severance Benefit Plan The Company maintains the CIC and Severance Plan. This plan is publicly filed, and its features are described more fully under “―Potential Payments upon Termination or Change-In-Control―CSW Industrials, Inc. Executive Change in Control and Severance Benefit Plan” below. The Compensation Committee believes that this plan benefits shareholders in providing consistency and transparency in severance benefits if an executive officer’s employment is terminated, and also supports alignment between executive interests and shareholder interests should a transformative transaction arise that is in shareholders’ best interests.

  76. Annual Incentive Plan Changes

    Annual Incentive Plan Changes Payout Matrix Update. For fiscal 2024, the Compensation Committee has approved modifying the AIP’s payout matrix for the EBITDA financial metric so that: (1) threshold (or 50% payout) performance will begin at 80% of target (increased from 75%), and (2) maximum (or 200% payout) performance will be achieved at 120% of target (reduced from 125%). The prior AIP payout matrix had been in place since fiscal 2018, and since that time, the Company has grown significantly, which prompted the Compensation Committee to reevaluate the payout matrix to ensure continued alignment with our compensation program objectives and principles. Raising the threshold performance level appropriately increases the rigor of the AIP and is viewed to be necessary given the Company’s strong performance history and meaningfully increased absolute value of the primary financial metric target. Additionally, lowering the maximum performance level maintains symmetry within the AIP payout matrix, but more importantly ensures that achievement of maximum performance remains a realistic probability to motivate overperformance for shareholders’ benefit.

  77. Annual Incentive Plan Changes

    | | │ 2023 Proxy Statement | 55 |

  78. Long-Term Incentive Program Changes

    Long-Term Incentive Program Changes Weighting of LTIP Awards. For fiscal 2024, the Compensation Committee has approved modifying the weighting of LTIP awards for our CEO to increase the percentage allocated to performance shares. Since the Company’s inception, target LTIP awards for all NEOs have been weighted 50% to performance shares and 50% to restricted stock. Primarily focusing on our “total compensation should be primarily performance-based, with a majority ‘at risk’” compensation principle, the Compensation Committee desired to increase the performance share weighting of our CEO’s target LTIP awards considering the responsibilities of the leadership position. As such, target LTIP award values for our CEO in fiscal 2024 will be approximately 57% weighted to performance shares, and 43% weighted to restricted stock. Timing of LTIP Awards. Additionally, the Compensation Committee approved a change in the timing of approving performance share grants under our LTIP such that performance share grants will be made after the Compensation Committee has reviewed and approved NEO target compensation levels for the new fiscal year. Historically, performance share grants to our NEOs have been approved on or around the beginning of our fiscal year, which occurs on April 1 and comes before the Compensation Committee reviews and approves target compensation levels for our NEOs for the new fiscal year. This timing necessitated the use of prior year target compensation levels in determining target grant values for performance share awards, generally resulting in lower target values than restricted stock grants, which are made later in the fiscal year after current fiscal year compensation is approved. Going forward, LTIP performance share grants will occur after target NEO compensation levels are approved for the current fiscal year, so grant values will be determined using the same target compensation levels as restricted stock grants.

  79. Long-Term Incentive Program Changes

    | | │ 2023 Proxy Statement | 56 |

  80. Summary Compensation Table

    Summary Compensation Table The following table sets forth compensation information for our NEOs — the individuals who served during fiscal 2023 as principal executive officer and principal financial officer of the Company, and the other most highly compensated executive officers of the Company serving at the end of fiscal 2023.

  81. Summary Compensation Table

    | Name and Principal Position | Year(1) | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Joseph B. Armes Chairman, CEO and President | 2023 | 700,000 | — | 2,251,035(6) | 1,223,950 | — | 101,502 | 4,276,487 | | | 2022 | 600,000 | — | 15,314,974 | 1,029,990 | — | 98,133 | 17,043,097 | | | 2021 | 580,672 | — | 1,775,967 | 1,200,000 | 4,664 | 78,559 | 3,639,862 | | James E. Perry Executive VP, CFO | 2023 | 450,000 | — | 927,762(7) | 424,407 | — | 77,719 | 1,879,888 | | | 2022 | 380,000 | — | 851,357 | 376,343 | — | 74,200 | 1,681,900 | | | 2021 | 311,077 | — | 873,821 | 400,000 | — | 31,221 | 1,616,119 | | Donal J. Sullivan Executive VP, GM, Contractor Solutions | 2023 | 450,000 | — | 1,086,290(8) | 451,491 | — | 76,705 | 2,064,486 | | | 2022 | 400,000 | 11,050 | 942,822 | 388,950 | — | 75,038 | 1,817,860 | | | 2021 | 366,593 | 52,470 | 583,908 | 347,530 | — | 62,095 | 1,412,596 | | Luke E. Alverson Senior VP, General Counsel and Secretary | 2023 | 375,000 | — | 436,848(9) | 243,891 | — | 78,308 | 1,134,047 | | | 2022 | 325,000 | — | 384,882 | 236,039 | — | 74,167 | 1,020,088 | | | 2021 | 299,601 | — | 327,317 | 250,000 | — | 62,976 | 939,894 | | Danielle R. Garde(10) Senior VP, Chief People Officer | 2023 | 178,125 | — | 194,046(11) | 243,891 | — | 12,624 | 628,686 |

  82. Summary Compensation Table

    | (1) The Company’s fiscal year begins April 1 and ends March 31. | | (2) Represents the grant date fair value of long-term equity incentive awards under the Company’s LTIP computed in accordance with FASB ASC 718 “Compensation — Stock Compensation,” including the impact of forfeitures. The incentive awards are granted in the form of restricted stock, which generally vest ratably over a three-year period, and performance shares. The performance criteria for the performance share awards is based on the Company’s TSR over a three-year period compared to the TSR of the Company’s applicable benchmark group for the same period, as described in further detail under “—Elements of the Executive Compensation Program—Long-Term Incentives—Performance Share Awards” above. The reported value of the performance unit awards is computed based on the probable outcome of the performance conditions based on a Monte Carlo simulation and the grant date estimate of compensation cost to be recognized over the performance period, which was 141% of target, or $160.57 per share. Payout for the performance share awards can range from 0% to a maximum of 200%. Assumptions used in the valuations are discussed in Note 6 to the Company’s audited consolidated financial statements for the year ended March 31, 2023, in the Annual Report. | | (3) The amounts in this column include an annual cash incentive bonus for fiscal 2023 under the Company’s AIP that was earned in fiscal 2023 but paid in fiscal 2024. | | (4) Reflects the annualized change in pension value under the Restoration Plan. No value is shown for fiscal 2023; however, the change in value for fiscal 2023 decreased by $13,961. See “Pension Benefits Table.” There are no above-market or preferential earnings on compensation deferred under the Restoration Plan. | | (5) The components of this column for fiscal 2023 are set forth in the table below, calculated at the aggregate incremental cost to the Company: |

  83. Summary Compensation Table

    | Name | Retirement Plan Contributions(A) | ESOP Contributions(B) | Insurance Premiums(C) | Dividends Paid(D) | Total | | Joseph B. Armes | 27,450 | 24,400 | 15,868 | 33,784 | 101,502 | | James E. Perry | 28,500 | 24,300 | 20,718 | 4,201 | 77,719 | | Donal J. Sullivan | 28,089 | 24,300 | 19,536 | 4,780 | 76,705 | | Luke E. Alverson | 27,883 | 24,300 | 23,916 | 2,208 | 78,308 | | Danielle R. Garde | 5,625 | — | 6,443 | 556 | 12,624 |

  84. Summary Compensation Table

    | (A) Includes matching and discretionary Company contributions to the NEOs under the Company’s 401(k) retirement plan, which is generally available to all the Company’s U.S. employees. | | (B) Includes Company contributions to the Employee Stock Ownership Plan for fiscal 2023, which is generally available to all the Company’s U.S. employees. These amounts were accrued in fiscal 2023 but contributed in fiscal 2024. | | (C) Includes annual premiums for group term life insurance, the Company’s portion of annual premiums for medical, dental and vision benefits and the Company’s portion of disability premiums. | | (D) Includes dividends paid on outstanding, unvested restricted stock awards, which are entitled to voting and dividend rights at grant. Additionally, amounts for dividends paid on outstanding, unvested restricted stock awards were inadvertently omitted in the “All Other Compensation” amounts for each NEO in fiscal years 2022 and 2021. The associated “All Other Compensation” and “Total” amounts for each NEO reported for fiscal years 2022 and 2021 have been adjusted to correct this inadvertent omission. |

  85. Summary Compensation Table

    | | │ 2023 Proxy Statement | 57 |

  86. Summary Compensation Table

    | (6) Includes annual grants of 8,629 shares of restricted stock ($1,033,754) and 7,581 shares of performance units ($1,217,281) made under the Company’s LTIP. Restricted stock award values were calculated using a price per share of $119.80, the closing market price of the Company’s common stock as reported by NASDAQ on October 1, 2022, the date of grant. Performance unit award values were calculated using a fair value of $160.57 per share as determined by the Monte Carlo simulation. The maximum potential value of the performance units at grant date, assuming the highest level of performance conditions, was $1,800,000. | | (7) Includes annual grants of 3,793 shares of restricted stock ($454,401) and 2,948 shares of performance units ($473,360) made under the Company’s LTIP. Restricted stock award values were calculated using a price per share of $119.80, the closing market price of the Company’s common stock as reported by NASDAQ on October 1, 2022, the date of grant. Performance unit award values were calculated using a fair value of $160.57 per share as determined by the Monte Carlo simulation. The maximum potential value of the performance units at grant date, assuming the highest level of performance conditions, was $700,000. | | (8) Includes annual grants of 4,552 shares of restricted stock ($545,330) and 3,369 shares of performance units ($540,960) made under the Company’s LTIP. Restricted stock award values were calculated using a price per share of $119.80, the closing market price of the Company’s common stock as reported by NASDAQ on October 1, 2022, the date of grant. Performance unit award values were calculated using a fair value of $160.57 per share as determined by the Monte Carlo simulation. The maximum potential value of the performance units at grant date, assuming the highest level of performance conditions, was $800,000. | | (9) Includes annual grants of 1,636 shares of restricted stock ($195,993) and 1,500 shares of performance units ($240,855) made under the Company’s LTIP. Restricted stock award values were calculated using a price per share of $119.80, the closing market price of the Company’s common stock as reported by NASDAQ on October 1, 2022, the date of grant. Performance unit award values were calculated using a fair value of $160.57 per share as determined by the Monte Carlo simulation. The maximum potential value of the performance units at grant date, assuming the highest level of performance conditions, was $356,190. | | (10) Ms. Garde’s employment with the Company began on October 11, 2022. | | (11) Includes annual grant of 1,636 shares of restricted stock ($194,046) made under the Company’s LTIP. Restricted stock award values were calculated using a price per share of $118.61, the closing market price of the Company’s common stock as reported by NASDAQ on October 11, 2022, the date of grant. |

  87. Summary Compensation Table

    | | │ 2023 Proxy Statement | 58 |

  88. 2023 Grants of Plan-Based Awards

    2023 Grants of Plan-Based Awards The following table sets forth certain information with respect to plan-based awards granted to the NEOs for the year ended March 31, 2023.

  89. 2023 Grants of Plan-Based Awards

    | Name | Grant Date | 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 (#) | Grant Date Fair Value of Stock and Option Awards ($)(2) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Joseph B. Armes | 5/4/2022(3) | 455,000 | 910,000 | 1,820,000 | | | | | | | | 4/1/2022 | | | | 3,791 | 7,581 | 15,162 | | 1,217,281(4) | | | 10/1/2022 | | | | | | | 8,629(5) | 1,033,754 | | James E. Perry | 5/4/2022(3) | 168,500 | 337,000 | 674,000 | | | | | | | | 4/1/2022 | | | | 1,474 | 2,948 | 5,896 | | 473,360(4) | | | 10/1/2022 | | | | | | | 3,793(5) | 454,401 | | Donal J. Sullivan | 5/4/2022(3) | 168,500 | 337,000 | 674,000 | | | | | | | | 4/1/2022 | | | | 1,698 | 3,396 | 6,792 | | 540,960(4) | | | 10/1/2022 | | | | | | | 4,552(5) | 545,330 | | Luke E. Alverson | 5/4/2022(3) | 103,125 | 206,250 | 412,500 | | | | | | | | 4/1/2022 | | | | 750 | 1,500 | 3,000 | | 240,855(4) | | | 10/1/2022 | | | | | | | 1,636(5) | 195,993 | | Danielle R. Garde | 10/11/2022(3) | 103,125 | 206,250 | 412,500 | | | | | | | | 10/11/2022 | | | | | | | 1,636(5) | 194,046 |

  90. 2023 Grants of Plan-Based Awards

    | (1) The number of shares listed represents long-term equity incentive awards in the form of performance shares under the Company’s LTIP. The performance criteria for these awards is based on the Company’s TSR from April 1, 2022 through March 31, 2025 compared to the TSR performance of the members of the Russell 2000 Index for the same period, as described in further detail under “—Elements of the Executive Compensation Program—Long-Term Incentives—Performance Share Awards” above. | | (2) These amounts represent the fair value, as determined under FASB ASC Topic 718, of the awards based on the grant date fair value estimated by the Company for financial reporting purposes. | | (3) Under the AIP, the primary performance measures are internally defined metrics based on operating income, cash flow from operations, and achievement of individual performance objectives. See “Elements of the Executive Compensation Program—Annual Incentive Program” above. Actual amounts payable under the AIP, if any, can range from 50% (Threshold) to 200% (Maximum) of the target amounts for the NEOs based upon the extent to which performance under the foregoing criteria meets, exceeds or is below the target. | | (4) Represents the fair value on the date of grant, as described in footnote (2), of the performance units awarded, which values were calculated using a fair value of $160.57 per share determined by using the Monte Carlo simulation. The actual value may be more or less depending on the Company’s TSR performance during the applicable three-year performance period. | | (5) The amounts shown reflect the numbers of shares of restricted stock granted to each NEO pursuant to the Company’s 2015 Equity and Incentive Compensation Plan. The shares vest ratably over a three-year period on each anniversary of the date of grant. |

  91. 2023 Grants of Plan-Based Awards

    | | │ 2023 Proxy Statement | 59 |

  92. Outstanding Equity Awards at Year-End 2023

    Outstanding Equity Awards at Year-End 2023 The following table sets forth certain information with respect to outstanding equity awards held by the NEOs as of March 31, 2023.

  93. Outstanding Equity Awards at Year-End 2023

    | Name | Option Awards | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(1) | | Joseph B. Armes | — | — | — | — | 16,946(2) | 2,354,308 | 27,853(3) | 7,739,235 | | | | | | | 31,496(4) | 4,375,739 | 12,553(5) | 3,071,163 | | | | | | | 19,685(6) | 2,734,837 | 6,222(7) | 1,728,845 | | | | | | | | | 7,627(8) | 2,119,238 | | James E. Perry | — | — | — | — | 6,932(9) | 963,063 | 7,395(5) | 1,809,229 | | | | | | | | | 2,681(7) | 744,943 | | | | | | | | | 2,966(8) | 824,133 | | Donal J. Sullivan | — | — | — | — | 7,600(10) | 1,055,868 | 4,021(5) | 983,761 | | | | | | | | | 3,066(7) | 851,919 | | | | | | | | | 3,390(8) | 941,945 | | Luke E. Alverson | — | — | — | — | 3,151(11) | 437,768 | 2,319(5) | 567,357 | | | | | | | | | 1,151(7) | 319,817 | | | | | | | | | 1,510(8) | 419,569 | | Danielle R. Garde | — | — | — | — | 1,636(12) | 227,289 | — | — |

  94. Outstanding Equity Awards at Year-End 2023

    | (1) Calculated using a price per share of $138.93, the closing market price of the Company’s common stock as reported by NASDAQ on March 31, 2023, the last trading day before the end of the Company’s last completed fiscal year. | | (2) Mr. Armes’ shares of restricted stock (all of which are part of the annual LTIP and not part of the fiscal 2022 CEO retetion and succession arrangement) vest as follows: 8,880 shares on October 1, 2023; 5,190 shares on October 1, 2024; and 2,876 shares on October 1, 2025. | | (3) These shares represent long-term equity incentive awards in the form of performance shares under the Company’s LTIP granted as part of the fiscal 2022 CEO retention and succession arrangement. The performance measure set for these shares was based on the Company’s TSR over the period from April 1, 2021 through each of March 31, 2025, 2026, and 2027, compared to the TSRs of the members of the Russell 2000 Index for the same periods. Payouts range from 0% to a maximum of 200% of the shares granted. The reported value associated with the shares assumes vesting at 200%. | | (4) These shares represent shares of restricted stock under the Company’s LTIP granted as part of the fiscal 2022 CEO retention and succession arrangement. These shares cliff vest on April 26, 2026. | | (5) These shares represent long-term equity incentive awards in the form of performance shares under the annual LTIP, including accrued dividend equivalent units. The performance measure set for this plan was based on the Company’s TSR over the period from April 1, 2020 through March 31, 2023 compared to the TSRs of the members of the Russell 2000 Index for the same period. Payouts ranged from 0% to a maximum of 200% of the shares granted. The number of shares reported vested at 176.1% of target effective April 1, 2023, and the associated value reported reflects this vesting percentage. | | (6) These shares represent restricted stock units under the Company’s LTIP granted as part of the fiscal 2022 CEO retention and succession arrangement. 40% of the shares will vest (not earlier than April 2025) after a successor CEO is successfully recruited and hired, and 60% of the shares will vest upon the successful first employment anniversary of the successor CEO. The amount shown assumes full satisfaction of the associated performance conditions. | | (7) These shares represent long-term equity incentive awards in the form of performance shares under the annual LTIP, including accrued dividend equivalent units. The performance measure set for this plan is based on the Company’s TSR over the period from April 1, 2021 through March 31, 2024 compared to the TSRs of the members of the Russell 2000 Index for the same period. Payouts can range from 0% to a maximum of 200% of the shares granted. The reported value associated with the shares assumes vesting at 200%. | | (8) These shares represent long-term equity incentive awards in the form of performance shares under the annual LTIP, including accrued dividend equivalent units. The performance measure set for this plan is based on the Company’s TSR over the period from April 1, 2022 through March 31, 2025 compared to the TSRs of the members of the Russell 2000 Index for the same period. Payouts can range from 0% to a maximum of 200% of the shares granted. The reported value associated with the shares assumes vesting at 200%. | | (9) Mr. Perry’s shares of restricted stock vest as follows: 3,548 shares on October 1, 2023; 2,120 shares on October 1, 2024; and 1,264 shares on October 1, 2025. | | (10) Mr. Sullivan’s shares of restricted stock vest as follows: 3,665 shares on October 1, 2023; 2,418 shares on October 1, 2024; and 1,517 shares on October 1, 2025. | | (11) Mr. Alverson’s shares of restricted stock vest as follows: 1,642 shares on October 1, 2023; 964 shares on October 1, 2024; and 545 shares on October 1, 2025. | | (12) Ms. Garde’s shares of restricted stock vest as follows: 545 shares on October 1, 2023; 546 shares on October 1, 2024; and 545 shares on October 1, 2025. |

  95. Outstanding Equity Awards at Year-End 2023

    | | │ 2023 Proxy Statement | 60 |

  96. 2023 Option Exercises and Stock Vested

    2023 Option Exercises and Stock Vested The following table sets forth certain information with respect to stock option exercises and restricted stock vesting during the fiscal year ended March 31, 2023, with respect to the NEOs.

  97. 2023 Option Exercises and Stock Vested

    | Name | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | Joseph B. Armes | 10,800 | 1,164,760 | 38,394 | 4,448,982 | | James E. Perry | — | — | 2,285 | 273,743 | | Donal J. Sullivan | — | — | 9,554 | 1,110,665 | | Luke E. Alverson | — | — | 7,084 | 819,639 | | Danielle R. Garde | — | — | — | — |

  98. 2023 Option Exercises and Stock Vested

    | (1) The number of shares reported includes shares that were surrendered during the fiscal year ended March 31, 2023, to satisfy taxes upon the vesting of restricted stock awards. | | (2) Reflects the gross number of shares acquired on vesting multiplied by the closing market price of the Company’s common stock on the vesting date. Includes the value of shares surrendered to satisfy taxes upon the vesting of restricted stock awards. |

  99. 2023 Pension Benefits

    2023 Pension Benefits The following table sets forth certain information as of March 31, 2023, with respect to pension benefits attributable to our NEOs. Please refer to “—Elements of the Executive Compensation Program—Legacy Pension Plans” above for a narrative description of our pension plans.

  100. 2023 Pension Benefits

    | Name | Plan Name(1) | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | Joseph B. Armes | Restoration Plan | 2.25 | 94,385 | — | | James E. Perry | — | — | — | — | | Donal J. Sullivan | — | — | — | — | | Luke E. Alverson | — | — | — | — | | Danielle R. Garde | — | — | — | — |

  101. 2023 Pension Benefits

    | (1) The pension plans listed represent legacy plans assumed from CSWC in connection with the Spin-Off. The plans listed were frozen on October 1, 2015, and no benefits have accrued to any plan participant following that date. The plans listed were subsequently terminated in September 2019. The present value of accumulated benefit shown is an actuarial present value derived from the plans’ provisions, which is influenced by credited service and based on the mortality and discount rate assumptions used for financial reporting purposes (but excluding pre-retirement mortality). Assumptions used in the valuations are discussed in Note 14 to the Company’s audited consolidated financial statements for the year ended March 31, 2023 in the Annual Report. |

  102. Potential Payments upon Termination or Change-In-Control

    Potential Payments upon Termination or Change-In-Control The information below describes compensation that would have been paid under existing plans and contractual arrangements to the NEOs in the event of a termination of the executive’s employment with the Company or change in control of the Company, assuming these events occurred on March 31, 2023. Amounts shown therefore include amounts earned through such time and are estimates of the amounts that would have been paid out to the executives based upon their respective compensation and service levels as of such date and the closing price of the Company’s common stock on March 31, 2023, of $138.93. The actual amounts to be paid can only be determined at the time of a change in control or the executive’s termination of employment with the Company. Upon any termination of employment, each of the NEOs would also be entitled to the vested amounts, if any, shown in the “2023 Pension Benefits” table above.

  103. Potential Payments upon Termination or Change-In-Control

    | | │ 2023 Proxy Statement | 61 |

  104. Quantification of Potential Payments

    Quantification of Potential Payments The following table sets forth the estimated value of the potential payments to each of the NEOs, assuming the executive’s employment had terminated on March 31, 2023. For the events of termination involving a change-in-control, we assumed that the change-in-control also occurred on that date. In addition to the payments set forth in the following table, Mr. Armes may receive certain payments upon his termination or a change-in-control pursuant to the legacy pension plans. Previously vested benefits under those plans for Mr. Armes are disclosed in the “2023 Pension Benefits” table.

  105. Quantification of Potential Payments

    | Triggering Event | Compensation Component | Payout ($) | | | | | | | | Joseph B. Armes(1) | James E. Perry | Donal J. Sullivan | Luke E. Alverson | Danielle R. Garde | | Death | Life insurance benefit (third party payment) | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | | | Pro-rata annual incentive award (greater of target or last year actual) | 1,029,990 | 376,343 | 388,950 | 236,039 | 206,250 | | | Health & welfare benefit | 15,868 | 20,718 | 19,536 | 23,916 | 23,916 | | | Immediate vesting of equity awards(2) | 14,267,694 | 2,774,988 | 2,511,438 | 1,129,640 | 227,289 | | | TOTAL | 15,363,552 | 3,222,049 | 2,969,924 | 1,439,595 | 507,455 | | Disability | Pro-rata annual incentive award (greater of target or last year actual) | 1,029,990 | 376,343 | 388,950 | 236,039 | 206,250 | | | Health & welfare benefit | 15,868 | 20,718 | 19,536 | 23,916 | 23,916 | | | Immediate vesting of equity awards(2) | 14,267,694 | 2,774,988 | 2,511,438 | 1,129,640 | 227,289 | | | TOTAL | 15,313,552 | 3,172,049 | 2,919,924 | 1,389,595 | 457,455 | | Termination Without Cause by the Company or For Good Reason by the Executive | Termination payment | 3,220,000 | 450,000 | 450,000 | 375,000 | 375,000 | | | Pro-rata annual incentive award (greater of target or last year actual) | 1,029,990 | 376,343 | 388,950 | 236,039 | 206,250 | | | Immediate vesting of certain equity awards(2)(3) | 17,031,984 | 1,520,311 | 1,067,816 | 550,302 | 75,717 | | | Health & welfare benefit | 31,736 | 20,718 | 19,536 | 23,916 | 23,916 | | | TOTAL | 21,313,710 | 2,367,372 | 1,926,302 | 1,185,257 | 680,883 | | Change-in-Control — Employment Continues | Immediate vesting of equity awards(2) | 17,031,984 | 2,774,988 | 2,511,438 | 1,129,640 | 227,289 | | | TOTAL | 17,031,984 | 2,774,988 | 2,511,438 | 1,129,640 | 227,289 | | Change-in-Control — Termination Without Cause by the Company | Termination payment | 4,830,000 | 1,575,000 | 1,575,000 | 1,162,500 | 1,162,500 | | | Pro-rata annual incentive award (greater of target or last year actual) | 1,029,990 | 376,343 | 388,950 | 236,039 | 206,250 | | | Immediate vesting of equity awards(2) | 17,031,984 | 2,774,988 | 2,511,438 | 1,129,640 | 227,289 | | | Health & welfare benefit | 31,736 | 41,436 | 39,072 | 47,832 | 47,832 | | | TOTAL | 22,923,710 | 4,767,767 | 4,514,460 | 2,576,011 | 1,643,871 |

  106. Quantification of Potential Payments

    | (1) Amounts shown for Mr. Armes are determined in accordance with the terms of his employment agreement, discussed under “Additional Executive Compensation Information — Chief Executive Officer Compensation in Fiscal 2023,” as well as the CIC and Severance Plan. Where benefits between the employment agreement and the CIC and Severance Plan overlap, the highest potential amount is shown. | | (2) These amounts are calculated assuming that the market price per share of the Company’s common stock on the date of the event was equal to the closing price of the Company’s common stock on March 31, 2023 ($138.93), the last trading day of fiscal 2023. Additionally, it assumes that, for performance shares that have not vested, the performance conditions are satisfied at target (100%) vesting at the time of termination. | | (3) Pursuant to Mr. Armes’ employment agreement, all unvested equity awards vest immediately in this termination scenario. For the other NEOs under the CIC & Severance Plan, the shares vesting within one year following termination automatically vest. |

  107. Quantification of Potential Payments

    | | │ 2023 Proxy Statement | 63 |

  108. CEO Pay Ratio

    CEO Pay Ratio

  109. Pay Ratio

    Pay Ratio For fiscal 2023, the ratio of CEO Compensation to the Median Annual Compensation was 335 to 1. For additional context, the ratio of CEO Compensation to the Median Annual Compensation among our North American employees was 55 to 1. This CEO Compensation to the Median Annual Compensation ratio is a reasonable good faith estimate calculated in a manner consistent with SEC regulations using the data and assumptions summarized above. The assumptions we used are specific to our Company and our employee population. Because the SEC’s regulations for identifying the Median Employee, calculating annual total compensation, and determining the pay ratio allow companies to use different methodologies, exemptions, estimates, and assumptions, the Company’s pay ratio disclosure may not be comparable to that reported by other companies. Additionally, our pay ratio is not an element that the Compensation Committee considers in setting CEO compensation, nor is CEO Compensation a material element that management considers in making compensation decisions for non-officer employees.

  110. Pay Ratio

    | | │ 2023 Proxy Statement | 64 |

  111. Pay Versus Performance Disclosure

    Pay Versus Performance Disclosure The following table sets forth required disclosures regarding our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. These required disclosures include a figure labeled “Compensation Actually Paid” (or “CAP”), which is calculated pursuant to SEC disclosure requirements. While CAP includes some compensation elements that are actually paid by the Company and received by the NEOs (namely, base salary and AIP payments), CAP includes amounts that the Company did not actually pay to the NEOs in the fiscal years below and that the NEOs did not receive from the Company. As such, CAP is not equivalent to realized pay. The Compensation Committee did not consider these disclosures in evaluating compensation decisions in any year shown. For a fulsome discussion of how the Compensation Committee does seek to align executive pay with Company performance when making compensation decisions, please refer to “The Compensation Decision Making Process” and “Executive Compensation Program” in the CD&A.

  112. Pay Versus Performance Disclosure

    | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(1)(2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2) ($) | Value of Initial Fixed $100 Investment based on(3): | | Net Income ($ Thousands) | EBITDA(4) ($ Thousands) | | | | | | | TSR ($) | Peer Group TSR ($) | | | | 2021 | 3,639,862 | 11,391,348 | 1,091,141 | 2,199,938 | $208.17 | $170.59 | $40,099 | $91,329 | | 2022 | 17,043,097 | 12,476,830 | 1,506,616 | 945,584 | $181.33 | $167.90 | $67,319 | $133,323 | | 2023 | 4,276,487 | 9,398,207 | 1,426,777 | 2,102,263 | $214.23 | $174.52 | $96,574 | $174,067 |

  113. Pay Versus Performance Disclosure

    | (1) The individuals comprising the PEO and Non-PEO NEOs for each year presented are listed below: |

  114. Pay Versus Performance Disclosure

    | | 2023 | 2022 | 2021 | | PEO: Non-PEO NEOs: | Joseph Armes James Perry Donal Sullivan Luke Alverson Danielle Garde | Joseph Armes James Perry Donal Sullivan Luke Alverson | Joseph Armes James Perry Donal Sullivan Craig Foster Luke Alverson Gregg Branning |

  115. Pay Versus Performance Disclosure

    | (2) The amounts shown for CAP have been calculated in accordance with Item 402(v) of Regulation S-K. To calculate CAP for the PEO and Non-PEO NEOs, the following adjustments were made to the Summary Compensation Table (“SCT”) Total in accordance with SEC methodology: |

  116. Pay Versus Performance Disclosure

    | | 2023 | | 2022 | | 2021 | | | Year | PEO | Non-PEO NEO Avg. | PEO | Non-PEO NEO Avg. | PEO | Non-PEO NEO Avg. | | SCT Total | 4,276,487 | 1,426,777 | 17,043,097 | 1,506,616 | 3,639,862 | 1,091,141 | | Less: Change in Actuarial Value of Pension Plan Value | 13,961 | – | 6,486 | – | (4,664) | – | | Less: GDFV of Equity Awards Reported in SCT Total Compensation | (2,251,035) | (661,237) | (15,314,974) | (726,354) | (1,775,967) | (420,831) | | Plus: Year End Fair Value of Equity Awards Granted in Covered Year | 2,982,181 | 866,910 | 12,266,848 | 593,743 | 3,980,706 | 963,571 | | Change in Fair Value of Equity Awards that Vested in Covered Year | (65,768) | (5,276) | (22,956) | (5,535) | 6,190 | (2,527) | | Change in Fair Value of Outstanding Unvested Equity Awards from Prior Years | 4,470,303 | 475,088 | (1,498,186) | (422,887) | 5,545,221 | 568,584 | | Calculated CAP | 9,398,207 | 2,102,263 | 12,476,830 | 945,584 | 11,391,348 | 2,199,938 |

  117. Pay Versus Performance Disclosure

    | The above equity award values are calculated in accordance with FASB ASC Topic 718. | | (3) The Peer Group TSR set forth in this table utilizes a custom peer group, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended March 31, 2023. The comparison assumes $100 was invested for the period starting April 1, 2020, through March 31 of the listed year in each of the Company and in the custom peer group, respectively. | | (4) We determined EBITDA to be the most important financial performance measure used to link Company performance to the calculated CAPs of our PEO and Non-PEO NEOs in fiscal 2023. This performance measure may not have been the most important financial performance measure for fiscal years 2021 and 2022, and we may determine a different financial performance measure to be the most important financial performance measure in future years. EBITDA is defined for purposes of the AIP as set forth above in the “Compensation Discussion and Analysis” section. See Exhibit A for GAAP reconciliation information. |

  118. Pay Versus Performance Disclosure

    | | │ 2023 Proxy Statement | 65 |

  119. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

  120. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    | The following chart sets forth the relationship between the CAP calculation of our PEO, the average CAP of our other NEOs, and the Company’s cumulative TSR over the three most recently completed fiscal years. | | |

  121. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    | The following chart sets forth the relationship between the calculated CAP of our PEO, the average CAP of our other NEOs, and the Company’s EBITDA over the three most recently completed fiscal years. | | |

  122. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    | The following chart sets forth the relationship between the calculated CAP of our PEO, the average CAP of our other NEOs, and the Company’s Net Income over the three most recently completed fiscal years. | | |

  123. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    | The following chart compares the Company’s TSR over the last three completed fiscal years to that of the Peer Group over the same period. | | |

  124. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    The following table presents the financial performance measures that the Company considers to have been the most important in linking the CAP of our PEO and other NEOs for fiscal 2023 to Company performance. The CAP calculation is heavily influenced by the year over year change in values of unvested equity awards, and equity awards constitute the majority of our NEO’s compensation. As such, TSR performance has an outsized effect on CAP figures when compared to SCT totals.

  125. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    | TSR | | EBITDA | | Cash Flow from Operations |

  126. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Performance

    | | │ 2023 Proxy Statement | 66 |