DEF 14A of Rockwell Automation, Inc
Filed Dec 20, 2024 · FY20240001308179-24-000829
BLAKE D. MORET
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE | | 54 | | OPTION EXERCISES AND STOCK VESTED TABLE | | 55 | | PENSION BENEFITS TABLE | | 56 | | NON-QUALIFIED DEFERRED COMPENSATION | | 58 | | POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL | | 60 | | RATIO OF ANNUAL COMPENSATION FOR THE CEO TO OUR MEDIAN EMPLOYEE | | 63 | | PAY VERSUS PERFORMANCE | | 64 | | AUDIT MATTERS | | 68 | | ITEM 3. | PROPOSAL TO APPROVE THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 68 | | AUDIT COMMITTEE REPORT | | 70 | | STOCK OWNERSHIP INFORMATION | | 71 | | OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY | | 71 | | OTHER INFORMATION | | 73 | | SUPPLEMENTAL FINANCIAL INFORMATION | | 73 | | OTHER MATTERS | | 78 | | ANNUAL REPORT | | 78 | | GENERAL INFORMATION ABOUT THE MEETING AND VOTING | | 79 | | DISTRIBUTION AND ELECTRONIC AVAILABILITY OF PROXY MATERIALS | | 79 | | SHAREOWNERS SHARING THE SAME ADDRESS | | 79 | | QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | 80 | | EXPENSES OF SOLICITATION | | 82 | | IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON FEBRUARY 4, 2025 | | 83 |
Shareowner Rights
| | | | | 2024 Total Target Direct Compensation Mix | | | Element | Form of Award | Description | Period | CEO | Other NEOs | | Base Salary | Cash | Competitive pay based on scope, experience, individual performance, and internal alignment. | One year | | | | Annual Incentive (ICP) | Cash | Plan performance is based on four key financial goals with plus or minus adjustment up to 10% of target incentive for performance against strategic goals on our four cultural tenets. We also have payout modifiers based on performance to segment, team, or individual goals. Actual payouts can range from zero to 200% of target incentive. | One year | | | | Long-Term Incentive (LTI) | Performance Shares (40%) | Realized value based on TSR (total shareowner return) performance relative to S&P 500 Selected GICS Groups (Capital Goods, Software & Services, Technology, Hardware & Equipment). Payout can range from zero to 200% of target. | Vest after three years | | | | | Stock Options (30%) | Realized value based on appreciation in stock price relative to original grant price. Appreciation can be realized during the ten-year life of the award. | Vest over three years in three equal annual installments | | | | | Restricted Stock Units (30%) | Realized value based on our stock price performance. | Vest over three years in three equal annual installments | | |
Jim Keane
| Compensation and Talent Management Committee | Current Members | | ROLES AND RESPONSIBILITIES: ● Evaluate the performance of our senior executives, including the CEO. ● Make recommendations to the Board with respect to executive compensation plans. ● Review and approve salaries, incentive compensation, equity awards, and other compensation of officers. ● Review the salary plan for the CEO and other executives who directly report to the CEO. ● Oversee succession and development plans for senior management. ● Review and discuss with the Company’s management strategies and initiatives relating to talent management and employee engagement. ● Review and approve corporate goals and objectives. ● Oversee the design and competitiveness of the Company’s overall compensation programs and benefits. ● Oversee the work and independence of any advisor retained by the Compensation and Talent Management Committee. | Patricia A. Watson (Chair) Lisa A. Payne Timothy M. Knavish Thomas W. Rosamilia Number of Meetings in Fiscal 2024: Four | | INDEPENDENCE: ● All members of the Compensation and Talent Management Committee are independent directors as defined by the NYSE and are not eligible to participate in any of our compensation plans or programs, except our 2020 Long-Term Incentives Plan for annual retainer fees in the form of equity awards and Directors Deferred Compensation Plan. | |
Jim Keane
| Technology Committee | Current Members | | ROLES AND RESPONSIBILITIES: ● Review and assess our innovation and technology matters, including investments in technology, research and development, technology initiatives, and our strategy and approach to technical talent management. ● Assist in oversight of risks associated with technology, information security, product and service security, software, emerging technologies, and technical talent. ● Review and assess practices with respect to customer needs for technology development and messaging and marketing of our technologies. ● Periodically review our intellectual property strategy and activities. | Thomas W. Rosamilia (Chair) William P. Gipson Pam Murphy Robert W. Soderbery Patricia A. Watson Number of Meetings in Fiscal 2024: Four | | INDEPENDENCE: ● All members of the Technology Committee are independent directors as defined by the NYSE. | |
Jim Keane
BOARD PROCESSES BOARD PROCESSES BOARD AND COMMITTEE EVALUATIONS The Board and its Committees conduct self-assessments annually at their fall meetings. The Board Composition and Corporate Governance Committee annually reviews the style and manner in which the evaluations will be conducted to ensure they are effective for the Company and its strategy. The Board will vary its evaluation approach based on the needs of the Board at any given time and change it from time to time to enable different forms of feedback. The Board uses different approaches for its evaluations, including written questionnaires and in-depth confidential interviews with individual directors conducted by the Chair of the Board Composition and Corporate Governance Committee, meetings with certain members of management, and use of a third-party facilitator as determined by the Board. The Chair of the Board Composition and Corporate Governance Committee oversees the Board evaluation process, including the evaluation of the Lead Independent Director. This year’s annual evaluation process, which was led by a third-party facilitator, is summarized below.
Jim Keane
| FY24 ACTION | DESCRIPTION | | APPROACH | The Board Composition and Corporate Governance Committee discussed the format for this year’s annual evaluations and after a robust review chose a knowledgeable and experienced third-party facilitator to conduct the Board, individual director, and Lead Independent Director evaluations. Committee evaluations were led by the applicable committee chair. | | | | | PREPARATION | Each director received materials for the annual evaluation of (i) the Board’s performance and contributions of individual directors, (ii) his or her Committees, and (iii) Lead Independent Director performance. The materials included the descriptions of key parameters for Board effectiveness to guide the individual director discussions with the third-party facilitator, the Board and Committee self-assessment process, Committee charters, suggested topics for discussion, and information on attendance, Committee composition, and meeting agenda items. | | | | | PERFORMANCE REVIEW | Each director was asked to consider a list of high-level questions to assist with the evaluation of the Board, individual directors, and Committees. As part of the evaluation process, directors were asked to provide feedback on the performance of other directors, including the Lead Independent Director. | | | | | EVALUATION REPORT | The third-party facilitator prepared a written report summarizing the annual evaluation of Board performance, including findings and recommendations. The report was reviewed and discussed with the Chairman and CEO, the Lead Independent Director, and the Board Composition and Corporate Governance Committee. The full Board also received the report for consideration and discussion in executive session. The Committee Chairs reported to the Board on their Committee evaluations, noting any actionable items. Past evaluations have identified a wide range of topics for Board focus such as strategy, continuing education, Board communications, risk management, acquisitions, and succession planning. | | | | | ACTIONABLE ITEMS | The Board and Committees address areas of focus and any actionable items throughout the year. | | | | | CORPORATE GOVERNANCE REVIEW | In coordination with the evaluation process, the Board reviewed its Guidelines on Corporate Governance, including the guidelines for determining director independence, to ensure they promote effective board functioning. They also received an update from the Chief Legal Officer on recent governance developments, regulations, and best practices. Each Committee conducted a self-assessment and reviewed its charter to confirm compliance with all charter requirements. In addition, the Board Composition and Corporate Governance Committee conducted its annual review of the Board Membership Criteria. | | | |
Jim Keane
RELATED PERSON TRANSACTIONS DIRECTOR EDUCATION Our Board believes in continuous improvement of Board effectiveness and functioning as well as development of individual skills and knowledge. All new directors are required to participate in our director orientation program to familiarize them with the Company’s business, strategic plans, significant financial, accounting, and risk management issues, ethics and compliance programs, corporate governance practices, sustainability strategy, principal officers, and internal and independent auditor. Our directors participate in our annual ethics training. In addition, we provide the Board with regular presentations and memoranda on key business, ESG, and other important topics intended to help directors stay current on practices and emerging issues and in carrying out their responsibilities, with a focus in fiscal 2024 on global regulatory changes, cybersecurity, innovative technology, and sustainability. Directors from time to time tour Company facilities and attend our trade shows and investor events. Directors also receive presentations and reports from our auditors, consultants, and other outside advisors and participate in outside continuing education programs to increase their knowledge and understanding of the duties and responsibilities of directors and the Company, regulatory developments, emerging trends, and best practices. RELATED PERSON TRANSACTIONS The Board has a written policy regarding how it will review and approve related person transactions (as defined below). The Board Composition and Corporate Governance Committee is responsible for administering this policy. The policy is available on our website at https://www.rockwellautomation.com/en-us/company/investor-relations/governance/governance-documents.html. The policy defines a related person transaction as any transaction in which the Company is or will be a participant, in which the amount involved exceeds $120,000, and in which any Related Person or any of their immediate family members has or will have a direct or indirect material interest. Related Persons include directors, director nominees, executive officers, and shareowners who own more than 5% of the Company’s securities. The policy sets forth certain transactions, arrangements, and relationships not reportable under SEC rules that do not constitute related person transactions. Under this policy, each director, director nominee, and executive officer must report each proposed or existing transaction between us and that individual or any of that individual’s immediate family members to our Chief Legal Officer. Our Chief Legal Officer will assess and determine whether any transaction reported to her, or of which she learns, constitutes a related person transaction. If our Chief Legal Officer determines that a transaction constitutes a related person transaction, she will refer it to the Board Composition and Corporate Governance Committee. If a reported transaction involves the Chief Legal Officer or any immediate family member, the assessment and determination will be made by the Chief Financial Officer and referred to the Board Composition and Corporate Governance Committee, as appropriate. The Board Composition and Corporate Governance Committee will approve or ratify a related person transaction only if it determines that the transaction is in, or is not inconsistent with, the best interests of the Company and its shareowners. In determining whether to approve or ratify a related person transaction, the Board Composition and Corporate Governance Committee will consider factors it deems appropriate, including:
Jim Keane
| ● | The fairness to the Company; | | ● | Whether the terms of the transaction would be on the same basis if a related person was not involved; | | ● | The business reasons for the Company to participate in the transaction; | | ● | Whether the transaction may involve a conflict of interest; | | ● | The nature and extent of the related person’s and our interest in the transaction; and | | ● | The amount involved in the transaction. |
Jim Keane
There are no related person transactions to report in this proxy statement. CORPORATE GOVERNANCE DOCUMENTS CORPORATE GOVERNANCE DOCUMENTS You will find current copies of the following corporate governance documents on our website at https://www.rockwellautomation.com/en-us/company/investor-relations/governance/governance-documents.html:
Jim Keane
| ● | Certificate of Incorporation | | ● | By-laws | | ● | Board of Directors Guidelines on Corporate Governance | | ● | Audit Committee Charter | | ● | Board Composition and Corporate Governance Committee Charter | | ● | Compensation and Talent Management Committee Charter | | ● | Technology Committee Charter | | ● | Lead Independent Director Charter | | ● | Code of Conduct | | ● | Hiring Policy for Employees of Outside Auditor | | ● | Related Person Transactions Policy | | ● | Executive Compensation Recoupment Policy | | ● | Shareowner Communications to the Board and Ombudsman |
Jim Keane
We will provide printed copies of any of these documents to any shareowner upon written request to Rockwell Automation Shareowner Relations, 1201 South Second Street, Milwaukee, WI 53204, USA. ELECTION OF DIRECTORS BOARD OF DIRECTORS INTRODUCTION Our certificate of incorporation provides that the Board will consist of three classes of directors serving staggered three-year terms that are as nearly equal in number as possible. One class of directors is elected each year with terms extending to the third succeeding Annual Meeting after election. The Board has nominated four current directors, upon the recommendation of the Board Composition and Corporate Governance Committee, for election as directors at this Annual Meeting with terms expiring at the 2028 Annual Meeting. Proxies properly submitted will be voted at the meeting, unless authority to do so is withheld, for the election of the four nominees specified below, subject to applicable NYSE regulations. If for any reason any of these nominees is not a candidate when the election occurs (which is not expected), proxies and shares properly authorized to be voted will be voted at the meeting for the election of a substitute nominee. Alternatively, the Board may decrease the number of directors. The Board has adopted Guidelines on Corporate Governance that contain general principles regarding the responsibilities and function of our Board and Board Committees. The Guidelines on Corporate Governance set forth the Board’s governance practices with respect to leadership structure, Board meetings and access to senior management, director compensation, director qualifications, Board performance, management development and succession planning, director stock ownership, and enterprise risk management. The Guidelines on Corporate Governance are available on our website at https://www.rockwellautomation.com/en-us/company/investor-relations/governance/governance-documents.html. DIRECTOR INDEPENDENCE Our Guidelines on Corporate Governance require that a substantial majority of the members of the Board be independent directors. For a director to be independent, the Board must affirmatively determine that the director has no direct or indirect material relationship with the Company. The Board has established guidelines, which are contained in our Guidelines on Corporate Governance, to assist it in determining director independence in conformity with the NYSE listing requirements. These guidelines are available on our website at https://www.rockwellautomation.com/en-us/company/investor-relations/governance/governance-documents.html. After considering these guidelines and the independence criteria of the NYSE, the Board has determined that none of the current directors, other than Mr. Moret (who is a current employee of the Company), have a material relationship with the Company and each of the directors, other than Mr. Moret, is independent. There were no transactions, relationships, or arrangements that required review by the Board for purposes of determining director independence. NOMINATION PROCESS The Board Composition and Corporate Governance Committee is responsible for screening potential director candidates and recommending qualified candidates to the full Board. The Committee will consider director candidates recommended by shareowners. Shareowners can recommend director candidates by writing to the Corporate Secretary at Rockwell Automation, 1201 South Second Street, Milwaukee, Wisconsin 53204, USA. The recommendation must include the candidate’s name, biographical data and qualifications, and any other information required by the SEC to be included in a proxy statement with respect to a director nominee. Any shareowner recommendation must be accompanied by a written statement from the candidate indicating his or her willingness to serve if nominated and elected. The recommending shareowner also must provide evidence of being a shareowner of record of our common stock at that time. In addition to recommending director candidates to the Committee, shareowners may nominate candidates for election to the Board directly at the Annual Meeting by following the procedures and providing the information set forth in our by-laws. See “Shareowner Proposals for 2026 Annual Meeting” set forth later in this proxy statement. Eligible shareowners may also use our proxy access by-law to nominate candidates for election to our Board provided the shareowners and nominees satisfy specified requirements. The Committee, the Chairman and CEO, or other members of the Board may identify a need to add new members to the Board or fill a vacancy on the Board. In that case, the Committee will initiate a search for qualified director candidates, seeking input from senior management and Board members, and to the extent it deems it appropriate, outside search firms. The Committee will evaluate qualified candidates and then make its recommendation to the Board. DIRECTOR QUALIFICATIONS In making its recommendations to the Board concerning director candidates, the Committee considers various criteria outlined in our Board Membership Criteria (see Exhibit A to the Committee’s Charter). Specifically, our Board Membership Criteria provides that our directors should (i) have a variety of experience and backgrounds, (ii) have high-level managerial experience or be accustomed to dealing with complex problems, and (iii) represent the balanced best interests of all shareowners, considering the overall composition and needs of the Board and factors such as diversity, age, and specialized expertise in the areas of corporate governance, finance, industry, international operations, technology, and risk management. The Board Membership Criteria highlight the importance of directors’ experience, ability to collaborate, integrity, ability to provide constructive and direct feedback, lack of bias, and independence. Directors must also have sufficient time available to devote to the affairs of the Company. To this end, the Board recently updated its Corporate Governance Guidelines to clarify the Board’s requirement that directors must continue to meet the Board’s Membership Criteria throughout their tenure, including having sufficient time available to devote to the affairs of the Company to carry out their responsibilities as a director. The Committee will evaluate properly submitted shareowner recommendations under substantially the same criteria and in substantially the same manner as other potential candidates. BOARD SKILLS, QUALIFICATIONS, AND EXPERIENCE The Board has determined that all of the Company’s directors are deeply experienced in risk oversight, financially literate, and possess the skills, judgment, experience, reputation, and commitment to make a constructive contribution to the Board. In addition, there are seven distinct sets of skills or experience described below that we believe should be represented on our Board to enable the Board to effectively fulfill its governance responsibilities and provide guidance to the management team on the Company’s strategy and execution of that strategy. The Board Composition and Corporate Governance Committee strives to ensure that our directors have an appropriate balance of these talents.
Jim Keane
| Skills and Experience | Relevance to Rockwell Automation’s Strategy | No. of Directors | | Relevant Technology and Innovation, including experience in leveraging software technology to solve customer issues, proficiency in commercializing disruptive innovations and developing innovative business models, and knowledge of digitization, mobility, artificial intelligence, cybersecurity, data management and analysis, and integrated software/hardware. | Rockwell Automation is committed to enabling the next generation of smart manufacturing and The Connected Enterprise®. As a company focused on technology and innovation, we value directors with technology experience and knowledge, who can provide important insights on our innovation strategy and execution of that strategy. | | | Sales and Marketing, including experience growing market share/revenue through innovative marketing and effective selling, a history of building brand awareness and equity, knowledge of how to enhance enterprise reputation and image, an understanding of the voice of the customer and the power of differentiating a brand in a way that is compelling to target customers, and experience in building durable and profitable as-a-service revenue streams. | Rockwell Automation seeks to grow market share and build brand awareness. Directors with experience in marketing and selling provide effective oversight of this aspect of our growth and performance strategy. | | | Industry/Operational/Manufacturing, including experience in industrial automation and information, knowledge of markets and vertical market segments, exposure to operational technology and information technology and familiarity with operational processes across end markets (discrete, hybrid, continuous process), and experience in overseeing manufacturing operations or in developing, marketing, and delivering services/solutions to address manufacturing needs. | Experience in industrial automation and manufacturing industries is key to providing guidance on our growth and performance strategy. Directors with this type of experience provide insight on marketplace dynamics and key performance indicators to drive our strategic plan and business operations. | | | Financial/Accounting, including an understanding of finance and financial reporting processes for public companies, and awareness of strategies to ensure accurate and compliant reporting and robust financial controls. Directors with a financial/accounting background may meet regulatory requirements to be deemed a “Financial Expert”. | Rockwell Automation’s business involves complex financial transactions and reporting. Directors with a high level of financial literacy assist in evaluating our financial position, capital structure, financial strategy, and financial reporting. | |
Jim Keane
| Skills and Experience | Relevance to Rockwell Automation’s Strategy | No. of Directors | | Risk and Governance Oversight, including experience serving on other public company boards and/or committees; a history of overseeing, managing, and mitigating risks, including cybersecurity, product security, regulatory compliance, intellectual property, and customer management; and an understanding of how to assess and develop strategies to address ESG matters, including corporate culture, sustainability, climate change, corporate responsibility, and social issues. | Rockwell Automation prioritizes corporate governance and responsibility. In the ordinary course of business we face various risks, including operating, regulatory compliance, information security, financial, and customer management. An understanding of these matters, and experience addressing them, is important for oversight of enterprise risk management and risk mitigation. Directors who have experience with ESG matters support our goals to evolve our culture with employees who can and want to do their best work and to contribute to the communities where we live and work. | | | Global Business, including a track record of growing market share and revenue in markets around the world; an understanding of how to drive growth in both mature and emerging markets, as well as regulated and free markets; and insight into the talent needs of diverse geographic markets. | Rockwell Automation does business in more than 100 countries. Our global presence is important to our competitive advantage. Directors who understand global business opportunities and challenges and global talent needs provide guidance on how to drive growth in markets around the world. | | | Public Company CEO or Executive Leadership, including hands-on responsibility for strategic and operational planning, financial reporting, compliance, risk management and mitigation, human capital management, a track record of success in a complex multinational organization, and in delivering organic and inorganic growth strategies. Specific attributes include: ability to manage complexity, ethical approach to conducting business, ability to resolve conflict and build consensus, and ability to lead high-functioning teams. | Rockwell Automation is a large global public company with complex organizational, operational, and business processes. Directors with experience leading large companies provide unique insights on strategy and operations needed to drive strong results and achieve enterprise goals. | |
Jim Keane
BOARD REFRESHMENT, TENURE, AND DIVERSITY A continuing priority of the Board is ensuring the Board is composed of directors who bring diverse perspectives and viewpoints and have a variety of skills, experiences, and backgrounds to enable the Board to effectively fulfill its governance responsibilities and represent the long-term interests of shareowners. The Board recognizes the value of a diverse Board and thus has included diversity as a factor that is taken into consideration in its Board Membership Criteria. The Board believes that it is important that its members reflect diverse viewpoints so that, as a group, the Board includes a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to shareowners. The Board believes that tenure should be discussed and evaluated by the Board from time to time and depends on the Board’s current situation and the needs of the Company. The Board believes that it contains an ideal balance of newer and longer-tenured directors, so we get the benefit of both fresh perspectives and extensive experience. The Board’s average tenure for continuing directors is seven years, with five directors added to the Board in the past five years. The Board believes its current tenure mix is appropriate for the Board at this time and recognizes the merits of a board with balanced tenure. Our directors with longer service are highly valued for their experience and Company-specific knowledge. They have a deep understanding of our business, provide historical context as the Board reviews and evaluates the Company’s strategy, and enhance Board dynamics and the Board’s relationship with management. The Board regularly reviews director succession and the mix of Board composition, diversity, and experience, especially when adding a new member. As part of this process, the Board evaluates the contributions and tenure of current Board members and compares them to the skills that might benefit the Company in light of emerging needs. The Board seeks people with a variety of occupational and personal backgrounds to ensure that the Board benefits from a range of perspectives and to increase its diversity in such areas as experience, geography, race, gender, and ethnicity. The Board also conducts annual self-assessments and director evaluations. The Board believes it is in the best position to determine the appropriate length of service for a director and overall board tenure, with its current mix providing for a highly effective and functioning Board. In addition to director refreshment, the Board considers refreshment of continuing directors at the Board Committee level by regularly evaluating and rotating Committee Chairs and members. In February 2020, the Board updated its Guidelines on Corporate Governance to implement formal term limits for directors in order to ensure proper Board refreshment and alignment of director attributes and skills with the Company’s evolving strategy. A non-management director will not be nominated for re-election to the Board after he or she has served on the Board for 15 years or, if earlier, attained age 72, subject to limited exceptions for up to one additional three-year term. The Board also recently updated its Corporate Governance Guidelines to clarify the Board’s requirement that directors must continue to meet the Board’s Membership Criteria throughout their tenure, including having sufficient time available to devote to the affairs of the Company to carry out their responsibilities as a director. SHAREOWNER ALIGNMENT Our director compensation program is designed to align director compensation directly with the interests of shareowners by paying a meaningful portion of director compensation in shares of our common stock. To further align their interests with shareowners, directors can defer cash fees to restricted stock units that are paid out in shares. In addition, directors are subject to stock ownership requirements. They are required to own shares of our common stock equal in value to five times the portion of the annual retainer payable in cash (with the cash retainer for fiscal 2024 at $107,500) and may not sell any shares of our common stock until their stock ownership requirements are met. None of our directors receive compensation for their Board service from any source other than the Company. We seek to maintain a Board with experienced leaders who are familiar with governance issues and compliance with the laws and regulations applicable to our business. Our Board monitors shareowner views and considers shareowner feedback and perspectives in establishing and evaluating Company policies and practices. In November 2022, the Board updated its Guidelines on Corporate Governance to implement a policy requiring directors to notify the Board before accepting a leadership position on another public company board. In addition, the Board recently reduced the number of public company boards on which our directors may serve. Both of these requirement allow the Board to evaluate any increased responsibilities and confirm that our directors can continue to commit the time necessary to fulfill their responsibilities to our shareowners.
Jim Keane
| ITEM 1. | DIRECTOR NOMINEES AND CONTINUING DIRECTORS |
Jim Keane
COMMITTEE MEMBERSHIP AND BACKGROUND The following chart highlights Board composition and certain key attributes of our director nominees and continuing directors on the Board. Additional information about each director’s experience and qualifications is set forth in their profiles.
Jim Keane
| | | | | | | | | | | | | | | WILLIAM P. GIPSON | ALICE L. JOLLA | JAMES P. KEANE | TIMOTHY KNAVISH | BLAKE D. MORET | PAM MURPHY | DONALD R. PARFET | LISA A. PAYNE | THOMAS W. ROSAMILIA | ROBERT W. SODERBERY | PATRICIA A. WATSON | | Committee Membership | | | | | | | | | | | | | Audit | | | | | | | | | | | | | Compensation and Talent Management | | | | | | | | | | | | | Board Composition and Corporate Governance | | | | | | | | | | | | | Technology | | | | | | | | | | | | | Lead Independent Director | | | | | | | | | | | | | Governance Information | | | | | | | | | | | | | Independent | | | | | | | | | | | | | Tenure | 4 | 2 | 13 | 1 | 8 | 5 | 16 | 9 | 8 | 3 | 7 | | Other Public Company Boards | 1 | 0 | 1 | 1 | 0 | 1 | 2 | 1 | 0 | 0 | 1 | | Term Expiring | 2026 | 2027 | Nominee | 2027 | Nominee | 2026 | 2026 | 2027 | Nominee | 2026 | Nominee | | Demographics | | | | | | | | | | | | | Age | 67 | 59 | 65 | 59 | 62 | 51 | 72 | 66 | 63 | 58 | 58 | | Race/Ethnicity | | | | | | | | | | | | | African-American/Black | | | | | | | | | | | | | Gender | | | | | | | | | | | | | Female | | | | | | | | | | | | | Male | | | | | | | | | | | |
Jim Keane
Chair
Jim Keane
| AGE | TENURE | GENDER AND ETHNICITY | | | | |
Jim Keane
| DIRECTOR EXPERIENCE | ATTENDANCE RATE PER DIRECTOR IN FY24 | | | 9 directors attended every meeting 2 directors each missed one committee meeting |
Jim Keane
NOMINEES FOR ELECTION AS DIRECTORS WITH TERMS EXPIRING IN 2028
Jim Keane
| James P. Keane | | | Age 65 Director since: 2011 Lead Independent Director INDEPENDENT KEY QUALIFICATIONS: ● Sales & Marketing ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Retired President and Chief Executive Officer, Vice Chair, Steelcase Inc. (office furniture) | | | CAREER HIGHLIGHTS: Mr. Keane served as President and Chief Executive Officer of Steelcase Inc. from March 2014 to October 2021. He held several leadership roles after joining Steelcase in 1997. He served as Senior Vice President and Chief Financial Officer from 2001 through 2006. He was named President of the Steelcase Group in 2006, where he had responsibility for the sales, marketing, and product-development activities of certain brands-primarily in North America. In 2011, he assumed leadership of the Steelcase brand across the Americas and Europe, the Middle East, and Africa. From November 2012 to April 2013, he served as Chief Operating Officer, responsible for the design, engineering and development, manufacturing, sales, and distribution of all brands in all countries for Steelcase. From April 2013 to March 2014, Mr. Keane served as President and Chief Operating Officer. | | | OTHER LEADERSHIP POSITIONS: Mr. Keane has been a director at Newell Brands Inc. (global consumer goods) since February 2024 where he serves on the Audit Committee and as the chair of the Compensation and Human Capital Committee. He previously served as Vice Chair until January 2022 and as a director of Steelcase from April 2013 until his retirement in January 2022. He also serves as a director or trustee of a number of civic and charitable organizations. | | | KEY EXPERIENCE: As retired President and Chief Executive Officer and retired Vice Chair of the board of a global public company, Mr. Keane brings significant business experience and knowledge to the Board. Through his executive roles at Steelcase, he has extensive leadership experience and a comprehensive understanding of business operations, processes, and strategy, as well as risk management, sales, marketing, and product development. In addition, he has a high level of financial literacy and accounting experience, having served as CFO of Steelcase. His understanding of financial statements, accounting principles, internal controls, and audit committee functions provides the Board with expertise in addressing the complex financial issues that the Company manages. Mr. Keane received his Bachelor of Science degree in Accounting from the University of Illinois and holds a master’s degree in management from the Kellogg School of Management, Northwestern University. | | | COMMITTEES: None |
Jim Keane
| Blake D. Moret | | | Age 62 Director since: 2016 KEY QUALIFICATIONS: ● Technology & Innovation ● Sales & Marketing ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Chairman of the Board, President and Chief Executive Officer | | | CAREER HIGHLIGHTS: Mr. Moret became our President and Chief Executive Officer in July 2016, and Chairman of the Board in January 2018. He served as Senior Vice President, Control Products and Solutions, from April 2011 until July 2016. | | | OTHER LEADERSHIP POSITIONS: Mr. Moret serves as Vice Chair of the board of the National Association of Manufacturers (NAM), as a director on the boards of the Business Roundtable and FIRST Robotics, and as a director or member of a number of business, civic, and community organizations. Mr. Moret previously served on the board of PTC, Inc. from July 2018 to August 2023. | | | KEY EXPERIENCE: As our Chairman and CEO, Mr. Moret has proven leadership skills and deep knowledge of the Company and its business operations and strategy. Mr. Moret is accelerating the Company strategy by focusing on understanding customer needs and their best opportunities for productivity, combining our technology and domain expertise to deliver positive business outcomes, and simplifying our customers’ experience. He began his career as a sales trainee with the Company in 1985, serving in senior positions across the organization, including marketing, solutions, services, product groups, and international assignments in Europe and Canada. In his previous role, he served as Senior Vice President, Control Products and Solutions, one of the Company’s two previous business segments. Mr. Moret contributes his risk and governance oversight skills gained through his experience serving on a public company board. He has a deep understanding of the Company’s values, culture, people, technology, and customers. He understands how to drive change and growth in a changing global economy. Mr. Moret brings valuable insights to the Board regarding our operations, technology, culture, industry trends, competitive positioning, and strategic direction. Mr. Moret received his Bachelor of Science degree in mechanical engineering from the Georgia Institute of Technology. | | | COMMITTEES: None |
Jim Keane
| Thomas W. Rosamilia | | | Age 63 Director since: 2016 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Sales & Marketing ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Retired Senior Vice President, IBM (technology) | | | CAREER HIGHLIGHTS: Mr. Rosamilia most recently served as Senior Vice President at IBM until his retirement in June 2023. In his 30-plus years with IBM he held a series of leadership positions. Mr. Rosamilia held the position of Senior Vice President, IBM Software where he directed IBM’s product design and investment strategy, expert labs, global software product development, marketing and field operations across the company’s vast software portfolio. During his career Mr. Rosamilia was also the Senior Vice President of IBM Systems and Technology Group and Integrated Supply Chain, General Manager of IBM’s WebSphere software division, General Manager of IBM Systems and Technology Group, and Vice President of IBM Corporate Strategy. In November 2015, he was appointed Economic Advisor to the Governor of Guangdong Province of the People’s Republic of China. Mr. Rosamilia led the global IBM Systems business and acted as a local representative of IBM Corporate Headquarters in Beijing, China from 2017 to 2018. | | | OTHER LEADERSHIP POSITIONS: Mr. Rosamilia has served on the boards of several charitable and business organizations. | | | KEY EXPERIENCE: Mr. Rosamilia brings a high level of technological, strategic, and global business experience to the Board. Through his leadership experience at IBM, he has a deep understanding of technology development, operations, risk management, cybersecurity, sustainability, and strategy. He led IBM’s semiconductor, servers, storage, and system software business; all of IBM’s supply chain; and IBM’s Global Business Partners organization. During that time, he oversaw the transformation of IBM’s Systems & Technology Group business to better address clients’ higher-value, data-driven IT requirements, which included making major investments in strategic businesses and initiatives while exiting businesses that were not aligned with client demands. In 2013, Mr. Rosamilia helped to lead the creation of the OpenPOWER Foundation, a collaboration around open server product design and development. Mr. Rosamilia has also overseen many acquisitions and significant divestitures. As General Manager of IBM Systems & Technology Group’s System z and Power Systems, he was responsible for all facets of both businesses, including strategy, marketing, sales, operations, technology development, and overall financial performance. He has extensive cybersecurity experience, including overseeing IBM’s cybersecurity program, CISO organization, and security software portfolio. Mr. Rosamilia received his Bachelor of Science degree, with majors in computer science and economics, from Cornell University. He also completed the IBM Strategic Leadership Forum at Harvard Business School. | | | COMMITTEES: Compensation and Talent Management, Technology (Chair) |
Jim Keane
| Patricia A. Watson | | | Age 58 Director since: 2017 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Industry/Operations/ Manufacturing ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Retired Chief Information and Technology Officer, NCR Atleos (software corporation) | | | CAREER HIGHLIGHTS: Ms. Watson previously served as Chief Information and Technology Officer at NCR Atleos since the company’s corporate reorganization in October 2023. In this role she led the company’s information and technology team and technology leadership council. Prior to the corporate reorganization she served as the Chief Information Officer at NCR Corporation from October 2022 until October 2023. She previously held the role of President, Cloud Collaboration from September 2020 to June 2022 at Intrado Corporation and Co-President, Enterprise Collaboration upon joining the company in January 2020 until September 2020. She is the former Senior Executive Vice President and Chief Information Officer of Total System Services (TSYS) (financial services), a role she held from 2015 until 2019 when Global Payments, Inc. acquired TSYS. Before joining TSYS, she served as Vice President and Global Chief Information Officer for The Brink’s Company. Previously Ms. Watson worked with Bank of America for more than fourteen years in technology positions of increasing responsibility and spent ten years in the United States Air Force as executive staff officer, flight commander, and director of operations. | | | OTHER LEADERSHIP POSITIONS: Ms. Watson has been a director at Southwest Airlines Co. (domestic airline), since November 2024, where she serves on the Nominating and Corporate Governance Committee and Safety and Operations Committee. She previously served as a director of USAA Federal Savings Bank from September 2020 until February 2023 and as a director for Texas Capital Bancshares from February 2016 to September 2020. | | | KEY EXPERIENCE: Ms. Watson brings extensive technology and executive experience to the Board. She has strong strategic leadership, business, financial oversight, and technical skills. As a recently retired information and technology executive, Ms. Watson brings extensive experience in managing the alignment of an organization's technology to its strategy, including oversight of cybersecurity, digital transformations, and system infrastructure. As President of Intrado’s Cloud Collaboration Ms. Watson was responsible for delivering Unified Collaboration as a Service (Ucaas) for enterprise and mid-market clients leveraging cloud-based technologies. She has experience setting company enterprise technology strategy to enable future global growth. Her background and expertise in information technology and cybersecurity give her critical insights into new technologies, business models, risk identification and management, and talent and strategy. She has valuable experience and knowledge in the areas of audit and control and compliance. Ms. Watson is also experienced in human capital management through her oversight of the human resources function in a prior role and has strong cybersecurity experience having managed and having responsibility for information security at multiple large organizations. She also brings the benefits of her board experience at USAA Federal Savings Bank and Texas Capital Bancshares. Ms. Watson holds a Bachelor of Science degree in mathematics from St. Mary’s College at Notre Dame and an M.B.A. from the University of Dayton. | | | COMMITTEES: Compensation and Talent Management (Chair), Technology |
Jim Keane
| | ITEM 1: THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION AS DIRECTORS OF THE FOUR NOMINEES DESCRIBED ABOVE. |
Jim Keane
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2026
Jim Keane
| William P. Gipson | | | Age 67 Director since: 2020 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Retired President Enterprise Packaging Transformation and Chief Diversity and Inclusion Officer, The Procter & Gamble Company (consumer goods company) | | | CAREER HIGHLIGHTS: Mr. Gipson served as President Enterprise Packaging Transformation and Chief Diversity and Inclusion Officer of Procter & Gamble from 2017 until his retirement in 2019. He joined Procter & Gamble in 1985 and held management positions of increasing responsibility including serving as Senior Vice President of Research and Development, Asia Innovation Centers in Singapore, Japan and China from 2015 to 2017, and Beauty Care Sector Senior Vice President for R&D from 2011 to 2015. | | | OTHER LEADERSHIP POSITIONS: Mr. Gipson has been a director of ManpowerGroup, a global workforce solutions company, since November 2020 where he serves on the People, Culture and Compensation committee. He previously served on several not-for-profit Boards, including CityLink and University of Alabama STEM Pathway to an MBA, the Executive Leadership Council, The United Negro College Fund, and The National Action Council for Minorities in Engineering. | | | KEY EXPERIENCE: Mr. Gipson brings extensive leadership, innovation, business transformation, and global business experience to the Board. He leverages his experience as a former top executive for a global public company to guide the Company in the areas of product, packaging, and process innovation and market expansion. He also concurrently served as Chief Diversity and Inclusion Officer for eight years until his retirement, which adds robust and knowledgeable experiences to draw from in the Board’s role in oversight of Company culture and diversity and inclusion initiatives. Mr. Gipson has international management experiences having served in leadership roles in South America and Singapore supporting Procter & Gamble’s business in each region, in particular creating a half billion dollar business for a product new to South America. Mr. Gipson received his Bachelor of Science degree in Chemical Engineering from the University of Alabama. | | | COMMITTEES: Board Composition and Corporate Governance (Chair), Technology |
Jim Keane
| Pam Murphy | | | Age 51 Director since: 2019 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Sales & Marketing ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Former Chief Executive Officer, Imperva, Inc. (cybersecurity and software services provider) | | | CAREER HIGHLIGHTS: Ms. Murphy served as the Chief Executive Officer of Imperva, Inc., a cybersecurity software and services provider, from January 2020 to August 2024. Before assuming that role, she served as Chief Operating Officer for Infor, Inc., a global leader in business cloud software products for industry-specific companies and markets, having joined the company in 2010. Prior to Infor, Ms. Murphy spent 11 years at Oracle Corporation, with responsibility for global sales operations, consulting operations in Europe, Middle East, Africa, Australia and New Zealand, and field finance for Oracle’s global business units. Before Oracle, she provided strategy, direction, and counsel to clients at Andersen Consulting and Arthur Andersen. | | | OTHER LEADERSHIP POSITIONS: Ms. Murphy has been a director of Visa, Inc., a world leader in digital payment technology, since April 2023, where she serves on the Nominating and Governance and Finance Committees. Ms. Murphy was previously a director of MeridianLink, Inc., a leading provider of cloud-based software solutions for financial institutions from July 2021 until March 2023. | | | KEY EXPERIENCE: As a former Chief Executive Officer, Ms. Murphy brings strong leadership and operational experience to the Board. She has extensive cybersecurity, technology, business development and strategy, global business, and finance experience. Her background and expertise in leading technology companies include a wide range of responsibilities for global operational and financial functions, which aids in the provision of Board oversight in these areas. Ms. Murphy’s experience with leading and building teams to sell to the manufacturing industry, go-to-market solutions, and leading sales and marketing functions brings additional depth to her role on the Board. Ms. Murphy is a Fellow of the Institute of Chartered Accountants in Ireland and received her Bachelor of Commerce in Accounting and Finance from the University of Cork, Ireland. | | | COMMITTEES: Audit, Technology |
Jim Keane
| Donald R. Parfet | | | Age 72 Director since: 2008 INDEPENDENT KEY QUALIFICATIONS: ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● CEO/Executive Leadership | Managing Director, Apjohn Group, LLC (business development); General Partner, Apjohn Ventures Fund LP (venture capital fund) | | | CAREER HIGHLIGHTS: Mr. Parfet has served as Managing Director of Apjohn Group since 2001. Before that, he served as Senior Vice President of Pharmacia Corporation (pharmaceuticals). | | | OTHER LEADERSHIP POSITIONS: Mr. Parfet has been a director of Kelly Services, Inc. since 2004, where he also previously served as non-executive Chairman of the Board, and a director of Masco Corporation since 2012, where he serves on the Corporate Governance and Nominating and Compensation and Talent Committees. From 2003 until November 2019, Mr. Parfet served as a director of Sierra Oncology, Inc. He also serves as a director or trustee of a number of business, civic, and charitable organizations. | | | KEY EXPERIENCE: Mr. Parfet brings extensive finance and industry experience to the Board. He has served as General Partner of a venture capital fund since 2003. In this role, he is an active investor in early stage pharmaceutical companies, which requires evaluating financial and development risk associated with emerging medicines. During his years at The Upjohn Company and its successor, Pharmacia & Upjohn, he had extensive financial and corporate staff management responsibilities and ultimately senior operational responsibilities for multiple global business units. He is experienced in leading business development, strategic planning, risk assessment, human resource planning, and financial planning and control, as well as the manufacturing of pharmaceuticals, chemicals, and research instruments. Mr. Parfet has board oversight and corporate governance experience from his current service on other boards. Mr. Parfet received his Bachelor of Arts degree in Economics from the University of Arizona and holds an M.B.A. from the University of Michigan. | | | COMMITTEES: Audit, Board Composition and Corporate Governance |
Jim Keane
| Robert W. Soderbery | | | Age 58 Director since: 2022 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Executive Vice President and General Manager, Flash Business, Western Digital Corporation (computer storage) (October 2021-January 1, 2025) | | | CAREER HIGHLIGHTS: Mr. Soderbery is Executive Vice President and General Manager, Flash Business for Western Digital Corporation, a position he has held since October 2021. In this role he is responsible for all aspects of the flash memory business, including all portfolio strategy, product development and business results, and engineering and product management teams. Mr. Soderbery is leaving his position at Western Digital effective January 2, 2025. Before joining Western Digital, he was President at Uplift, Inc., a fintech company, from 2017 until 2021, where he was responsible for all business, engineering, and operations functions. Prior to joining UpLift, Mr. Soderbery was Senior Vice President and General Manager, Enterprise Products and Solutions, at Cisco Systems. | | | KEY EXPERIENCE: Mr. Soderbery brings strong technology, business development, global business and operational experience to the Board. His experience in previous roles leading technology companies includes building cloud-based platforms, IoT software and hardware solutions, engagement with global customers, manufacturers, and suppliers, and leadership of global innovation teams. Mr. Soderbery’s extensive technology experience provides a breadth of knowledge to draw from in the Board’s role of oversight of the Company’s innovations, technology roadmap, and product portfolio. He also brings great depth of knowledge in the review of technology acquisitions, which strengthens the Board’s ability to provide such oversight. Mr. Soderbery received his Master of Science in computer science from Stanford University and Bachelor of Science in electrical engineering from the California Institute of Technology. | | | COMMITTEES: Board Composition and Corporate Governance, Technology |
Jim Keane
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2027
Jim Keane
| Alice L. Jolla | | | Age 59 Director since: 2023 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Chief Accounting Officer and Corporate Vice President, Corporate Finance and Services, Microsoft Corporation (technology and software) | | | CAREER HIGHLIGHTS: Ms. Jolla is the Chief Accounting Officer and Corporate Vice President, Corporate Finance and Services at Microsoft Corporation. She joined Microsoft Corporation in 2007 and has held management positions of increasing responsibility, most recently serving as the Corporate Controller from 2014 until July 2020. Before joining Microsoft Corporation, Ms. Jolla completed a two-year industry fellowship with the Financial Accounting Standards Board. She also held accounting management positions at Dow Chemical Company and Union Carbide Corporation. | | | OTHER LEADERSHIP POSITIONS: Ms. Jolla serves as the vice chair of the board and chair of the Committee on Corporate Reporting for Financial Executives International, and a corporate advisory board member for the National Association of Black Accountants, Inc. She also served on the board of several civic and charitable organizations. | | | KEY EXPERIENCE: Ms. Jolla brings to our Board extensive expertise in financial processes, including those specific to SaaS business models, leading world-class, diverse global teams, and risk management. In her role, Ms. Jolla oversees teams responsible for corporate accounting, financial reporting, shared services, business intelligence, controls and compliance, and controllership of multiple operating subsidiaries of Microsoft. She also leads the special development of all managers within the Microsoft finance organization adding strong human capital management experience to the Board. Ms. Jolla’s previous experience serving as the Microsoft Corporate Controller responsible for the Corporate Accounting function gives her critical insight into public company financials, financial reporting, and internal controls. Her leadership, financial experience, and commitment to diversity, equity and inclusion further strengthen the Board’s governance capacity. Ms. Jolla holds a Bachelor of Science in accounting from Louisiana State University and a Master of Business Administration from the University of Charleston. | | | COMMITTEES: Audit, Board Composition and Corporate Governance |
Jim Keane
| Timothy M. Knavish | | | Age 59 Director since: 2024 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Sales & Marketing ● Industry/Operations/ Manufacturing ● Financial/Accounting ● Risk & Governance ● Global Business ● CEO/Executive Leadership | Chairman of the Board and Chief Executive Officer, PPG Industries, Inc. (specialty materials) | | | CAREER HIGHLIGHTS: Mr. Knavish is Chairman of the Board and Chief Executive Officer of PPG, a role he has held since 2023. Prior to this role, he served as Chief Operating Officer from March 2022 through December 2022, and Executive Vice President from October 2019 through February 2022. He began his career at PPG in 1987 as an engineer and has since held roles of increasing responsibility, including several executive leadership positions in the United States, Europe and Asia Pacific region. | | | OTHER LEADERSHIP POSITIONS: Mr. Knavish is Chairman of the Board for PPG Industries and is a director on the boards of several professional associations. | | | KEY EXPERIENCE: Mr. Knavish’s executive leadership roles and board service with a global public company brings to our Board extensive international business and governance experience. He has global experience having lived in the Asia Pacific region and operated several international businesses, including in EMEA and Latin America. Mr. Knavish is well versed in overseeing the enhancement of business sales capabilities and digital offerings and acquisition strategy, having led international acquisitions and integrations. He also brings to our Board valuable global supply chain knowledge having led the global supply management function at his company. In addition, Mr. Knavish’s leadership and operational experience give him comprehensive knowledge of business strategy, operations, sales, financial, and risk management oversight. Mr. Knavish received his Bachelor of Science degree in Mechanical Engineering and Master of Business Administration degree from the University of Pittsburgh. | | | COMMITTEES: Audit, Compensation and Talent Management |
Jim Keane
| Lisa A. Payne | | | Age 66 Director since: 2015 INDEPENDENT KEY QUALIFICATIONS: ● Technology & Innovation ● Financial/Accounting ● Risk & Governance ● CEO/Executive Leadership | Former Vice Chairman and Chief Financial Officer, Taubman Centers, Inc. (real estate investment trust) | | | CAREER HIGHLIGHTS: Ms. Payne served as Vice Chairman and Chief Financial Officer of Taubman Centers, Inc. from 2005 to 2016. She joined Taubman in 1997, serving as the Executive Vice President and Chief Financial and Administrative Officer until 2005. Before joining Taubman, she was an investment banker with Goldman Sachs & Co. for ten years. Ms. Payne also served as Chairman of the Board of Soave Enterprises LLC and President of Soave Real Estate Group (property management) from 2016 through March 2017. | | | OTHER LEADERSHIP POSITIONS: Ms. Payne has been a director of Masco Corporation since 2006, where she serves as Chair of the Board. Ms. Payne is also a director of Leaf Home Solutions, where she serves as Chair of the Audit Committee. Ms. Payne served as a director of Taubman from 1997 until March 2016 and J.C. Penney, Inc. from 2016 until December 2020. She is a former trustee of Munder Series Trust and Munder Series Trust II, two open-end management investment companies. She also serves as a director or trustee of several educational and charitable organizations. | | | KEY EXPERIENCE: Ms. Payne brings strong leadership, operational, and finance experience to our Board. During her tenure at Taubman, she led the company through key operational and strategic initiatives. Her executive experience and leadership roles give her critical insights into company operations, growth strategy, competition, compensation plans, employee engagement, diversity and inclusion initiatives, and information technology that assists our Board in its oversight function. Her past experience as a CFO and investment banker provide the Board with financial, accounting, and corporate finance expertise. She has a high level of financial literacy and accounting experience that provides the Board with expertise in understanding and overseeing financial reporting and internal controls. In addition, her board and board committee experience at Taubman, Masco, and J.C. Penney give her significant insight into the governance, compensation, risk management, and compliance-related matters of public companies. Ms. Payne received her Bachelor of Science degree in Biology from Elizabethtown College and holds an M.B.A. from the Fuqua School of Business Administration, Duke University. | | | COMMITTEES: Audit (Chair) Compensation and Talent Management |
Jim Keane
ANNUAL DIRECTOR COMPENSATION DIRECTOR COMPENSATION Our director compensation program is designed to attract and retain qualified directors, fairly compensate directors for the time they spend in fulfilling their duties, and align their compensation directly with the interests of shareowners. The Board Composition and Corporate Governance Committee determines the form and amount of director compensation, with discussion and approval by the full Board. The Committee relies on Willis Towers Watson to provide input on director compensation trends. The Committee benchmarks its director compensation on an annual basis relative to proxy data available for companies of similar size ($5-18 billion revenue range) resulting in a broad group of over 400 companies, the S&P 500, and our Compensation Peer Group used for our NEOs (as defined below in the Peer Group section of the Compensation Discussion and Analysis). The market data analysis is a significant factor in our compensation determinations. The Board believes that a meaningful portion of director compensation should be in the form of our common stock to further align the economic interests of directors and shareowners. Employees who serve as directors do not receive any compensation for their director service. ANNUAL DIRECTOR COMPENSATION The elements of our director compensation program include: an annual retainer of $307,500, delivered in both cash and equity awards, and leadership fees for our Lead Independent Director and Committee Chairs. The following table describes each element of director compensation for fiscal 2024.
Jim Keane
DIRECTOR STOCK OWNERSHIP REQUIREMENT ANNUAL LIMIT Share-based compensation to non-employee directors is delivered under the 2020 Long-Term Incentives Plan effective February 5, 2020 and includes an annual limit of $750,000 on total compensation of each non-employee director, including cash-and share-based compensation. DEFERRAL ELECTION Under the terms of our Directors Deferred Compensation Plan, directors may elect to defer all or part of the cash payment of Board retainer or Committee fees until such time as the director specifies, with interest on deferred amounts accruing quarterly at 120% of the federal long-term rate set each month by the Secretary of the Treasury. In addition, each director has the opportunity each year to defer all or any portion of the annual grants of common stock, cash retainer, and Committee fees by electing to instead receive restricted stock units valued, in the case of cash deferrals, at the closing price of our common stock on the NYSE on the date each payment would otherwise be made in cash. OTHER BENEFITS We reimburse directors for transportation, lodging, and other expenses actually incurred in attending Board and Committee meetings. We also reimburse directors for similar travel, lodging, and other expenses for their spouses to accompany them to a limited number of Board meetings held as retreats to which we invite spouses for business purposes. From time to time and when available, directors and their spouses are permitted to use our Company aircraft for travel to Board meetings. In fiscal 2024, we hosted one in-person Board retreat and spouses were invited to attend. Directors are eligible to participate in a matching gift program under which we match donations made to eligible educational, arts, or cultural institutions. Gifts are matched up to an annual calendar year maximum of $10,000. DIRECTOR STOCK OWNERSHIP REQUIREMENT Non-employee directors are subject to stock ownership requirements and may not sell any shares of our common stock until the requirement is met. To further align directors’ and shareowners’ economic interests, our Guidelines on Corporate Governance provide that non-management directors are required to own, within five years after joining the Board, shares of our common stock (including restricted stock units) equal in value to five times the portion of the annual retainer that is payable in cash. All directors met the requirements as of September 30, 2024, except for Mr. Knavish and Ms. Jolla, who joined the Board in February 2024 and February 2023, respectively, and both are within the five-year compliance window. DIRECTOR COMPENSATION TABLE DIRECTOR COMPENSATION TABLE The following table shows the total compensation earned by each of our non-employee directors during fiscal 2024.
Jim Keane
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | William P. Gipson | 132,500 | 200,000 | 16,618 | 349,118 | | Alice L. Jolla | 107,500 | 200,000 | 0 | 307,500 | | Steven R. Kalmanson(4) | 37,802 | 70,138 | 0 | 107,940 | | James P. Keane | 147,500 | 200,000 | 0 | 347,500 | | Timothy M. Knavish(5) | 69,698 | 129,509 | 0 | 199,207 | | Pam Murphy(6) | 107,500 | 200,000 | 0 | 307,500 | | Donald R. Parfet | 107,500 | 200,000 | 20,810 | 328,310 | | Lisa A. Payne | 137,500 | 200,000 | 0 | 337,500 | | Thomas W. Rosamilia | 132,500 | 200,000 | 10,000 | 342,500 | | Robert W. Soderbery | 107,500 | 200,000 | 5,245 | 312,745 | | Patricia A. Watson | 132,500 | 200,000 | 5,863 | 338,363 |
Jim Keane
| (1) This column represents the amount of cash compensation earned in fiscal 2024 for Board and Committee Chair service (whether deferred and whether the directors elected to receive restricted stock units in lieu of cash fees). Includes the Lead Independent Director fee for Mr. Keane for the fiscal year. | | (2) Values in this column represent the grant date fair value of stock awards computed in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and were granted under the 2020 Long-Term Incentives Plan. On December 4, 2023, each director, except Messrs. Kalmanson and Knavish, received 716 shares, based on the closing price of our common stock on the NYSE on that date of $279.50, with an aggregate grant date fair value of $200,000 in payment of the common stock portion of the annual retainer. On December 4, 2023, a prorated amount of $70,138, which equated to 251 shares, was granted to Mr. Kalmanson, who retired effective February 6, 2024, based on the closing price of our common stock on the NYSE on December 4, 2023 of $279.50. The grant date for the annual retainer coincides with the date of the annual long-term incentive awards for our management team on the date of the Compensation and Talent Management Committee meeting in December. A prorated amount of $129,509 in payment of the common stock portion of the prorated annual retainer, which equated to 482 shares, was granted to Mr. Knavish, who was elected as a director on February 7, 2024, based on the closing price of our common stock on the NYSE on that date of $269.02. The amounts shown do not correspond to the actual value that may be realized by the directors. Directors may elect to defer the annual share awards by electing instead to receive the same number of restricted stock units. As of September 30, 2024, Messrs. Gipson, Parfet, and Soderbery had restricted stock units outstanding of 3,682, 2,162, and 1,374, respectively. These restricted stock units were granted under the 2020 Long-Term Incentives Plan and 2003 Directors Stock Plan as compensation for services as directors. | | (3) This column consists of cash dividend equivalents paid on restricted stock units for Messrs. Gipson, Parfet, and Soderbery of $16,618, $10,810, and $5,245, respectively, and the Company’s matching donations under the Company’s matching gift program for Messrs. Parfet and Rosamilia, and Ms. Watson, of $10,000, $10,000, and $5,863, respectively. This column does not include the perquisites and personal benefits provided to each director because the aggregate amount provided to each director was less than $10,000. | | (4) Mr. Kalmanson retired effective February 6, 2024. | | (5) Mr. Knavish was elected as a director on February 7, 2024. | | (6) Aggregate earnings in fiscal 2024 on the directors’ deferred cash compensation balance was $27,053 for Ms. Murphy. We do not pay “above market” interest on non-qualified deferred compensation; therefore, this column does not include these amounts. |
Management Committee
| ITEM 2. PROPOSAL TO APPROVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | 37 | | COMPENSATION DISCUSSION AND ANALYSIS | 38 | | NAMED EXECUTIVE OFFICERS (NEOS) | 38 | | EXECUTIVE SUMMARY | 38 | | ALIGNING PAY WITH PERFORMANCE | 41 | | COMPENSATION REVIEW PROCESS | 42 | | FISCAL 2024 COMPENSATION DECISIONS | 44 | | BASE SALARY | 44 | | ANNUAL INCENTIVE COMPENSATION | 44 | | LONG-TERM INCENTIVES (LTI) | 46 | | COMPENSATION RISK ASSESSMENT | 47 | | OTHER COMPENSATION POLICIES | 48 | | SUMMARY COMPENSATION TABLE | 50 | | ALL OTHER COMPENSATION TABLE | 51 | | GRANTS OF PLAN-BASED AWARDS TABLE | 52 | | OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE | 54 | | OPTION EXERCISES AND STOCK VESTED TABLE | 55 | | PENSION BENEFITS TABLE | 56 | | NON-QUALIFIED DEFERRED COMPENSATION | 58 | | POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL | 60 | | RATIO OF ANNUAL COMPENSATION FOR THE CEO TO OUR MEDIAN EMPLOYEE | 63 | | PAY VERSUS PERFORMANCE | 64 |
Management Committee
| ● | Attract, Retain, and Motivate High Caliber Executive Officers - Provide competitive compensation opportunities based on market data in areas where we compete for talent that allow us to attract, retain, and motivate a high caliber executive team | | ● | Pay for Performance - A significant portion of the executive’s compensation should be “at-risk” and linked to the executive’s individual contributions and to the Company’s performance, including delivery of financial results, culture evolution, and strategic objectives | | ● | Transparency - Promote transparency and understanding of our programs | | ● | Reinforce Succession Planning - Compensation programs support the objectives of the succession planning process for executives | | ● | Aligned with Company Goals and Shareowner Interests - Continual review of program offerings and designs to align and evolve with shareowner interests | | ● | Promotes Long-Term Growth - Compensation programs focused on long-term and sustainable growth while maintaining focus on profitability and shareowner value creation | | ● | Provide Limited Perquisites - Provide only limited perquisites and other personal benefits |
Management Committee
| | | | | 2024 Total Target Direct Compensation Mix | | | Element | Form of Award | Description | Period | CEO | Other NEOs | | Base Salary | Cash | Competitive pay based on scope, experience, individual performance, and internal alignment. | One year | | | | Annual Incentive (ICP) | Cash | Plan performance is based on four key financial goals with plus or minus adjustment up to 10% of target incentive for performance against strategic goals on our four cultural tenets. We also have payout modifiers based on performance to segment, team, or individual goals. Actual payouts can range from zero to 200% of target incentive. | One year | | | | Long-Term Incentive (LTI) | Performance Shares (40%) | Realized value based on TSR performance relative to S&P 500 Selected GICS Groups (Capital Goods, Software & Services, Technology, Hardware & Equipment). Payout can range from zero to 200% of target. | Vest after three years | | | | | Stock Options (30%) | Realized value based on appreciation in stock price relative to original grant price. Appreciation can be realized during the ten-year life of the award. | Vest over three years in three equal annual installments | | | | | Restricted Stock Units (30%) | Realized value based on our stock price performance. | Vest over three years in three equal annual installments | | |
Management Committee
| ● Compensation program design and annual benchmarking of executive pay levels based on data from nationally recognized compensation consulting firms and peers as explained below ● Rigorous executive stock ownership requirements ● Overseen by independent directors with significant experience and knowledge of the drivers of our long-term performance | ● Incentive compensation clawback policy for all our officers ● Annual assessment of compensation plan risk ● Incentive targets reward improved year-over-year and long-term financial performance ● Balanced use of absolute and relative performance incentive metrics | ● No employment agreements with officers ● Limited use of change of control agreements, including no excise tax gross-ups, with a double-trigger requirement for equity vesting ● Limited use of perquisites ● Annual review of compensation consultant independence and performance |
Management Committee
| ● | Achieve faster secular growth in traditional markets due to customer needs for resiliency (including cybersecurity), agility, sustainability, and mitigating impacts of labor shortages; | | ● | Grow share and create new ways to win through technology differentiation, industry focus, go to market acceleration, expanded offerings and new market; | | ● | Continue double-digit growth in annual recurring revenue (ARR); | | ● | Add 1% average annual growth from acquisitions; and | | ● | Deliver profitable growth within a disciplined financial framework. | | We believe: | | | ● | Our employees’ knowledge of our customers and their applications and our technology are key factors that make our long-term business strategy work. | | ● | It is important to align the compensation of our leadership with our long-term business strategy. Our short- and long-term incentive plans focus the management team’s efforts in the areas that are critical to the success of our long-term business strategy. | | ● | The quality of our leadership has a direct impact on our performance and success. | | ● | A significant portion of an executive’s compensation should be variable. The variable portions of our annual incentive plan (ICP) and long-term incentives (LTI) are directly linked to our performance and the creation of shareowner value. As shown in the charts below, 92% of the CEO’s target compensation, and approximately 82% of the other NEOs’ target compensation, was compensation at-risk in fiscal 2024: |
Management Committee
| JUNE OR JULY | | AUGUST OR SEPTEMBER | | OCTOBER OR NOVEMBER | | DECEMBER | | | Review market trends and practices. Review incentive plans to ensure they continue to align with the Company’s strategy. | | Review peer group and compensation risk. Approve changes to next fiscal year’s incentive design, if warranted. | | Review market data and tally sheets for the NEOs. Determine performance share payouts for performance period just ending. | | Finalize annual compensation decisions: base pay for the coming year, ICP payout for the performance period just ending, ICP targets set for next fiscal year, and target LTI awards for the performance period just beginning. | |
Management Committee
| ● | Review executive compensation strategy and programs and suggest changes to be considered to improve effectiveness; | | ● | Provide market data and trends and how they impact our executive compensation program; | | ● | Advise Company on setting CEO pay and other executive compensation; | | ● | Review materials and attend Committee meetings at the request of the Committee; and | | ● | Advise the Committee on best practices for governance of executive compensation as well as areas of possible concern or risks in the Company’s compensation program. |
Management Committee
During fiscal 2024, Willis Towers Watson was paid approximately $190,000 for executive compensation advice, other services to the Committee, director compensation advice, and other services to the Board Composition and Corporate Governance Committee. During such time, Willis Towers Watson was also paid approximately $2,985,000, of which $2,620,000, or 88%, was for core actuarial services and $365,000, or 12%, was for other human resources services to the Company and its benefit plans. The engagements for these other services were recommended by management and approved by the Committee. The Committee reviewed the Company’s relationship with Willis Towers Watson and concluded that Willis Towers Watson is independent and its relationship with the Company does not raise any conflict of interest. PEER GROUP The Committee believes it is important to clearly understand relevant compensation-related market pay practices for executive talent to inform its decision-making and to ensure that our executive compensation program supports our recruitment and retention needs. The compensation review process incorporates the prevalent market practice of using a defined peer group for benchmarking NEO pay levels and practices. Reflecting our growth in information technology and industrial operational technology software solutions, we incorporate specific industry sectors as part of the selection process for a relevant benchmark to our labor market for executive talent. Following an annual review of our Compensation Peer Group, led by Willis Towers Watson, the Committee removed Sanmina Corporation, NCR Corporation, and Xerox Holdings Corporation to better align our peer group with our size, operating model and relevant market for talent. Additions to the 2024 peer group include Eaton Corporation plc and Autodesk as direct competitors aligned with our business strategy, industry, and size. Our fiscal 2024 Compensation Peer Group included the following 19 companies:
Management Committee
| 2024 COMPENSATION PEER GROUP | | | | | AMETEK, Inc. Amphenol Corporation Autodesk Corning Incorporated Dover Corporation Eaton Corporation plc Emerson Electric Co. Fortive Corporation Intuit Inc. Keysight Technologies, Inc. | NetApp, Inc. Palo Alto Networks Parker-Hannifin Corporation Seagate Technology, PLC Synopsys, Inc. TE Connectivity Trimble Inc. VMware, Inc. Zebra Technologies Corporation | Peer Group Selection Criteria ● Revenue (approximately .5 to 2.0 times our revenue) ● Industry business focus: ● Industrial machinery, ● Electrical components and manufacturing services, and ● Technology hardware and software ● Market capitalization reviewed and considered Percentile Positioning Relative to Peers | | | | | 48th REVENUE | 45th MARKET CAPITALIZATION |
Management Committee
| Name | Annual Incentive Target % of Base Salary | | Blake D. Moret | 150% | | Scott A. Genereux | 80% | | Rebecca W. House | 80% | | Tessa M. Myers | 80% | | Nicholas C. Gangestad(1) | 100% |
PAYOUT TRIGGER: Adjusted EPS must be above $12.00 for any payout
PAYOUT TRIGGER: Adjusted EPS must be above $12.00 for any payout Organic ARR and sales growth, adjusted EPS, and free cash flow directly link incentive metrics to key Company financial goals with a balance between sales, earnings, and capital management. The Committee uses the Company’s annual operating plan as the basis for setting our financial goals under our incentive compensation plans. The ICP financial goals for fiscal 2024 are shown below. The Committee determined that meeting these goals would require significant effort and achievement on the part of the management team and all Company employees in the continued execution of our strategy. Target goals for adjusted EPS and organic sales growth were set above the midpoint of external guidance in November 2023. Moreover, the Committee determined that no payments would be made under the ICP if adjusted EPS was less than $12.00—regardless of performance against any of the other financial goals. On an annual basis the Committee evaluates whether any adjustments to the calculation of the ICP financial measures are appropriate for items such as acquisitions or legal settlements that were not anticipated at the time the goals were set. See Other Information and Supplemental Financial Information sections below for the reconciliation to our externally reported results. In recognition of the critical role that culture plays in the Company’s success, our fiscal 2024 ICP also included a possible adjustment based on strategic Company goal performance tied to the evolution of our culture. Our fiscal 2024 strategic goals were aligned to the four tenets of our culture:
PAYOUT TRIGGER: Adjusted EPS must be above $12.00 for any payout
| ● | Strengthen our commitment to integrity, diversity, and inclusion; | | ● | Be willing to compare ourselves to the best alternatives; | | ● | Increase the speed of decision making; and | | ● | Have a steady stream of fresh ideas. |
PAYOUT TRIGGER: Adjusted EPS must be above $12.00 for any payout
A positive or negative ten percent adjustment to the fiscal 2024 ICP payout based on financial measure performance could be made based on the CEO and Committee’s assessment of progress made on the strategic goals. Additionally, the Committee can adjust the NEO payout based on individual, team, or segment performance downwards to zero or upwards to two times the NEOs target annual incentive amount. 2024 PERFORMANCE AND PAYOUT RESULTS In light of our pay for performance philosophy and based on our adjusted EPS performance below our performance threshold level, there are no fiscal 2024 ICP award payouts to our NEOs or other plan participants. The following table shows the 2024 financial goals used to determine award payouts under our ICP for fiscal 2024 and our performance compared to those goals.
PAYOUT TRIGGER: Adjusted EPS must be above $12.00 for any payout
| (1) Adjusted EPS for ICP, organic sales growth, and free cash flow for ICP are non-GAAP measures, and organic ARR growth is a key metric. See Other Information and Supplemental Financial Information sections below for the reconciliation of these non-GAAP measures to our externally reported results. |
PAYOUT TRIGGER: Adjusted EPS must be above $12.00 for any payout
LONG-TERM INCENTIVES (LTI) The principal purpose of our long-term incentives is to reward management for creating shareowner value and to align the financial interests of management and shareowners. The creation of shareowner value is important not only in absolute terms, but also relative to the value created as compared to other investment alternatives available to our shareowners. The Committee approves annual LTI awards for the CEO and executive officers, including the other NEOs, by individual and the CEO recommends to the Committee the LTI awards for other employees in total as a group. As a critical element of our executive compensation program, at-risk long-term incentives make up the largest component of total pay for our NEOs. In fiscal 2024, the overall structure of our LTI program for executives continued to have three components with allocation of stock options, performance shares, and restricted stock to the following percentages of the total LTI value:
2024 LTI COMPONENTS/WEIGHTING
2024 LTI COMPONENTS/WEIGHTING The allocation of annual LTI awards is based on our review of market practices for our Peer Groups, our pay for performance philosophy, and strong emphasis on creating shareowner value and attracting and retaining talent. We generally make annual LTI awards near the beginning of each fiscal year at the same time the Committee performs its annual management performance evaluation and takes other compensation actions. Annual LTI awards for officers occur on the same date as annual LTI awards for our other professional and managerial employees and our Board of Directors. As the grant date for our annual LTI awards generally occurs on the day the Committee meets in the first quarter of our fiscal year, the grant date is set in advance when the schedule of Committee meetings is arranged. We do not grant LTI awards in anticipation of the release of material non-public information. Similarly, we do not time the release of information based on LTI award grant dates. We occasionally make LTI awards to new executives as they are hired or current executives when promoted or to address retention during the year. These awards are approved by the Committee, and the award date is the date the award is approved or, if later, the start date for a new executive or promotion. In determining the fiscal 2024 annual LTI awards for the NEOs, the following factors were considered:
2024 LTI COMPONENTS/WEIGHTING
| ● | Information on each NEO’s total compensation compared to the compensation for similar positions at the companies in the Peer Groups; | | ● | Internal comparisons with other officers; | | ● | Historical information regarding the NEOs’ long-term compensation opportunities; and | | ● | Individual past and expected future contributions to our long-term performance. |
2024 LTI COMPONENTS/WEIGHTING
The following table includes the aggregate grant date fair value of awards granted in fiscal 2024. These amounts were determined using the valuation method described in the Grants of Plan-Based Awards Table and may not correspond to the actual value that may be realized by the NEOs. The awards reflect the Committee’s assessment of leadership and competencies demonstrated and performance in the role and position to market benchmarks of our Peer Groups. Our annual LTI award components are explained below.
2024 LTI COMPONENTS/WEIGHTING
| Name | Fiscal Year 2024 LTI ($) | Award Information | | Blake D. Moret | 11,000,347 | Fiscal 2024 long-term incentive as described above | | Christian E. Rothe | 2,000,147 | Mr. Rothe was hired August 19, 2024, and his award was part of the one-time incentive to join the Company. The award was 50% stock options and 50% restricted stock units, as performance shares are only granted annually in December. | | Scott A. Genereux | 2,200,390 | Fiscal 2024 long-term incentive as described above | | Rebecca W. House | 2,200,390 | Fiscal 2024 long-term incentive as described above | | Tessa M. Myers | 2,200,390 | Fiscal 2024 long-term incentive as described above | | Nicholas C. Gangestad | 3,200,392 | Fiscal 2024 long-term incentive as described above; however, award was forfeited as his retirement on September 20, 2024, was before the one-year anniversary of the award date. |
2024 LTI COMPONENTS/WEIGHTING
STOCK OPTIONS We believe that stock options are an appropriate vehicle to reward management for increases in shareowner value, as they provide no value unless our share price increases above the grant date exercise price. The stock option grants vest in three equal increments one, two, and three years after the grant date, and have a 10-year life. The exercise price of all stock options is the fair market value of our stock at the close of trading on the date of the grant (the exercise price for stock options granted during fiscal 2024 was $279.50, the closing price on December 4, 2023). We do not reprice stock options, and it is prohibited by our long-term incentive plan. PERFORMANCE SHARES Performance shares are designed to reward management for our relative TSR performance compared to our benchmarks over a three-year period. The payouts of performance shares granted will be made in shares of our common stock or cash, as determined by the Committee, and will range from 0% to 200% of the target number of shares awarded. The unvested performance shares are not eligible for dividends. For performance shares, the relative performance benchmark group index includes companies that are aligned with the Company’s strategic direction as indicated below. The payout formula, as summarized below, aligns closely to our Compensation Peer Groups’ prevalent practices to ensure we can attract and retain talent. The number of shares earned will be interpolated for results between those percentiles. If performance shares are earned but absolute TSR is negative, the number of shares earned will be capped at target.
2024 LTI COMPONENTS/WEIGHTING
| | Threshold | Target | Maximum | | Rockwell Automation TSR Performance Relative to S&P 500 Selected GICS Group (Capital Goods, Software & Services, Technology, Hardware & Equipment) over a Three-Year Period | 25th Percentile | 50th Percentile | 75th Percentile | | Percent of Target Shares Earned | 50% | 100% | 200% |
2024 LTI COMPONENTS/WEIGHTING
2022-2024 PERFORMANCE SHARE PAYOUT RESULTS For the performance period from October 1, 2021, to September 30, 2024, our three-year TSR was below the 25th percentile of the companies in the S&P 500 Selected GICS Groups including Capital Goods, Software & Services, Technology, Hardware & Equipment companies, resulting in no performance shares earned. We use the 20-trading day average trading price of our common stock ending September 30 to determine the starting and final price for the calculation of TSR. We believe the payout history of our long-term incentive plan demonstrates our pay for performance philosophy and our emphasis on long-term incentives that are aligned with the interest of shareowners. RESTRICTED STOCK UNITS We grant restricted stock units primarily to attract and retain high quality executives and to align with shareowner interests. We grant restricted stock units that vest in three equal increments at one, two, and three years after the grant date. The restricted stock units accrue dividend equivalents that are paid in cash upon vesting of the underlying shares. We believe this approach aligns to prevalent market practice and positions us to attract and retain talent. PERQUISITES During fiscal 2024, our officers received very limited perquisites that included personal liability insurance, annual physicals, and, if applicable, recreational activities at Board retreats, relocation assistance, expatriate benefits, and limited personal use of Company plane and entertainment suites. Upon retirement, officers may elect to continue the personal liability insurance coverage at their own expense. For more information on our NEO perquisites during fiscal 2024, see the All Other Compensation Table below. OTHER Our NEOs receive the same benefits as other eligible U.S. salaried employees. They participate on the same basis as other eligible U.S. salaried employees in our health and welfare plans, pension plan and 401(k) savings plan, and patent recognition program. Our non-qualified pension and savings plans use the same formulas as our qualified plans and provide benefits that may not be paid under our qualified plans due to limitations under the Internal Revenue Code of 1986, as amended (the “Code”). Our deferred compensation plan offers investment measurement options similar to those in our 401(k) savings plan and does not have any guaranteed rates of return. COMPENSATION RISK ASSESSMENT The Committee engages Willis Towers Watson annually to conduct a review of our executive compensation programs relative to the potential for incentives to motivate excessive risk-taking in a way that could materially affect the Company. Willis Towers Watson reviews the measures used in each program, the target-setting process, and the overall governance of our compensation plans. The 2024 review concluded that we have strong governance procedures and that our plans do not present a material risk to the Company or encourage excessive risk-taking by participants. Willis Towers Watson determined our executive compensation programs do not encourage our executives to take excessive risk due to, among many considerations, the following plan design elements:
2024 LTI COMPONENTS/WEIGHTING
| ● Our ICP provides a balance among organic sales and ARR growth, earnings, and cash flow performance, limiting the effect of over-performance in one area at the expense of others ● Payouts under our ICP are capped at twice the NEO’s ICP target, limiting excessive rewards for short-term results ● Our recoupment policy and clawback agreements mitigate against excessive risk taking | ● The Committee can reduce or withhold an incentive payment if it determines that the executive has caused the Company to incur excessive risk ● A majority of the total direct compensation for our NEOs is in the form of long-term incentives ● Our mix of equity award types appropriately motivates long-term performance | ● A majority of our equity awards vest over a period of several years, which encourages a long-term focus ● Our NEOs are subject to stock ownership requirements, which align their long-term interests with the interests of our other shareowners |
2024 LTI COMPONENTS/WEIGHTING
OTHER COMPENSATION POLICIES CHANGE OF CONTROL AND SEVERANCE We have change of control agreements with each of the NEOs and certain other officers. Our current agreements are effective if there is a change of control (as defined in the agreements) on or before September 30, 2025. These agreements are reviewed and renewed every three years. For a description of the purpose and value of the change of control agreements, see “Potential Payments Upon Termination or Change of Control.” We do not have severance agreements in place with the NEOs for terminations other than those covered by our change of control agreements. However, we have at times entered into severance agreements with executives in connection with the termination of their employment, with the terms and conditions depending upon the individual circumstances of the termination, the transition role we expect from the executive, and the Company’s best interests. STOCK OWNERSHIP POLICY We believe our focus on pay for performance is sharpened by aligning the long-term financial interests of our officers with those of our other shareowners. Accordingly, our stock ownership policy sets the following minimum ownership requirements for our officers. Our policy requires the following ownership requirements:
2024 LTI COMPONENTS/WEIGHTING
| | Common Stock Market Value (Multiple of Base Salary) | | Chief Executive Officer | 6 | | Senior Vice President Officers | 3 | | Vice President Officers | 1.5 |
2024 LTI COMPONENTS/WEIGHTING
Officers must meet the ownership requirement within five years. There is also a hold-until-met requirement that prohibits an officer below the ownership guideline from selling his or her shares of stock, except for sales to cover taxes, the exercise price of stock options, and transaction costs. In addition, the policy expressly encourages officers to use Rule 10b5-1 trading plans for transactions involving sales of Company common stock. Our stock ownership policy includes shares owned directly (including restricted shares and restricted stock units) or through our savings plans (including share equivalents under our non-qualified savings plans) when determining whether an officer meets the ownership requirements. We exclude stock options or performance share units when considering ownership. As of September 30, 2024, all NEOs met the stock ownership requirements or are on track to meeting the requirement within the required five-year period. OFFICER TRADING RESTRICTIONS Under our trading procedures, an officer may not engage in any transactions involving Company securities, including gifts and option exercises, without first obtaining pre-clearance of the transaction from our Chief Legal Officer or Assistant Secretary. Generally, trading is only permitted during announced trading periods. Employees subject to trading restrictions, including officers, may enter into a trading plan under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that would allow trades outside a trading period. Our policy on Rule 10b5-1 trading plans requires (i) plans to be entered into during an open trading window, (ii) trades to occur during a trading window unless the plan uses a limit price or is used to pay taxes on equity vesting outside a window, (iii) a minimum 90-day wait before the first trade can occur (unless the trade is to cover taxes on equity vesting before then), and (iv) Company approval. Plans can be amended only during an open trading window and cannot be terminated except in extraordinary circumstances, subject in both cases to approval by our Chief Legal Officer. We also have an anti-hedging policy that prohibits employees from engaging in any transaction that is designed or intended to hedge or otherwise limit exposure to decreases in the market value of Company stock, and an anti-pledging policy that prohibits officers from pledging Company securities. RECOUPMENT POLICY, CLAWBACKS, AND OTHER POST-EMPLOYMENT PROVISIONS Our updated recoupment (clawback) policy was adopted by our Board effective as of October 1, 2023, with changes made in accordance with the SEC rules adopted to implement requirements of the Dodd-Frank Act. The policy applies to current and former officers subject to Section 16 of the Exchange Act and includes a three-year lookback for incentive compensation from the time of a material restatement if a recoupment is required. Under the policy, in the event of a restatement of our consolidated financial statements, whether at fault or otherwise, the Committee will, if applicable, require reimbursement or payment to us of the excess amount of any incentive compensation received by the officer during the three fiscal years preceding the earlier to occur of (i) the date on which the Company determines, or reasonably should have determined, such restatement is required or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare such restatement, over the amount of incentive compensation that would have been received by the officer had it been based on the restated financial statements. The Committee believes that the Company’s clawback policy is in keeping with good standards of corporate governance and mitigates the potential for excessive risk taking by Company executives. Additionally, our equity award agreements contain certain post-employment restrictive covenants, including two-year non-competition and non-solicitation covenants, that give the Company the right, in the event of a breach, to recoup the gain on any shares of Company common stock acquired during the two years before the date of the officer’s retirement or other termination of employment. DEDUCTIBILITY The Tax Cuts and Jobs Act of 2017 enacted significant changes to Section 162(m) of the Code, including the repeal of the “performance-based” compensation exemption and the expansion of the definition of “covered employees”. As a result of these changes, we expect that compensation to NEOs in excess of $1 million will not be deductible by the Company unless it qualifies for limited transition relief that applies to certain arrangements in place as of November 2, 2017, that have not been materially modified. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE SUMMARY COMPENSATION TABLE The following table sets forth the total compensation of each of the NEOs for the fiscal years ended September 30, 2024, 2023, and 2022.
2024 LTI COMPONENTS/WEIGHTING
| Name and Principal Position | Year | Salary(2) ($) | Bonus(3) ($) | Stock Awards(4) ($) | Option Awards(5) ($) | Non-Equity Incentive Plan Compensation(6) ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(7) ($) | All Other Compensation(8) ($) | Total ($) | | Blake D. Moret President & Chief Executive Officer | 2024 | 1,210,456 | 0 | 7,700,286 | 3,300,061 | 0 | 4,196,718 | 23,283 | 16,430,804 | | | 2023 | 1,198,817 | 0 | 7,000,325 | 3,000,013 | 3,006,773 | 2,519,169 | 39,923 | 16,765,020 | | | 2022 | 1,163,900 | 0 | 6,300,606 | 2,700,018 | 748,970 | 0 | 74,210 | 10,987,703 | | Christian E. Rothe(1) Senior Vice President & Chief Financial Officer | 2024 | 95,019 | 500,000 | 1,000,069 | 1,000,078 | 0 | 0 | 37,475 | 2,632,641 | | Scott A. Genereux Senior Vice President, Chief Revenue Officer | 2024 | 644,280 | 0 | 1,540,343 | 660,047 | 0 | 0 | 97,442 | 2,942,112 | | | 2023 | 638,085 | 0 | 1,750,231 | 750,042 | 853,542 | 0 | 63,923 | 4,055,823 | | | 2022 | 614,569 | 0 | 1,400,519 | 600,082 | 212,612 | 0 | 71,451 | 2,899,234 | | Rebecca W. House Senior Vice President, Chief People & Legal Officer & Secretary | 2024 | 663,624 | 0 | 1,540,343 | 660,047 | 0 | 0 | 84,939 | 2,948,953 | | | 2023 | 657,243 | 0 | 2,100,434 | 900,004 | 879,169 | 0 | 57,270 | 4,594,120 | | | 2022 | 633,017 | 0 | 1,260,647 | 540,021 | 218,996 | 0 | 74,100 | 2,726,781 | | Tessa M. Myers Senior Vice President, Intelligent Devices | 2024 | 624,000 | 0 | 1,540,343 | 660,047 | 0 | 582,158 | 21,840 | 3,428,388 | | Nicholas C. Gangestad(1) Former Senior Vice President & Chief Financial Officer | 2024 | 899,177 | 0 | 2,240,348 | 960,044 | 0 | 0 | 139,753 | 4,239,322 | | | 2023 | 850,780 | 0 | 2,240,531 | 960,004 | 1,422,570 | 0 | 88,519 | 5,562,404 | | | 2022 | 819,425 | 0 | 2,240,235 | 960,008 | 354,354 | 0 | 92,870 | 4,466,892 |
2024 LTI COMPONENTS/WEIGHTING
| ● | Pension benefits under the Qualified Pension Plan and the Non-Qualified Pension Plan are payable to the participant’s beneficiaries upon the death of the participant. | | ● | The surviving spouse will receive a monthly lifetime benefit calculated as if the participant retired and elected the 50% surviving spouse option. | | ● | If the participant dies after starting to receive benefits, the benefit payments are processed in accordance with the benefit option selected. | | ● | If the retiree has started monthly pension benefit payments, the beneficiary is eligible for a lump-sum death benefit equal to $150 per year of credited service up to $5,250. | | ● | If the participant elects the lump sum payment option and the lump sum payment is made, no further benefits are provided to the beneficiary or surviving spouse upon death of the participant. |
2024 LTI COMPONENTS/WEIGHTING
| | | | Average Summary Compensation Table Total for Non-PEO NEOs(2) ($) | Average Compensation Actually Paid(2) to Non-PEO NEOs ($) | Value of Initial Fixed $100 Investment based on: | | | | | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid(3) to PEO ($) | | | Total Shareowner Return(4) ($) | Peer Group(5) Total Shareowner Return ($) | Net Income ($ millions) | Adjusted Earnings Per Share for ICP(6) ($) | | 2024 | 16,430,804 | 3,313,780 | 3,238,283 | 982,008 | 130.30 | 191.00 | 947.3 | 9.71 | | 2023 | 16,765,020 | 21,012,628 | 4,569,652 | 5,928,779 | 136.20 | 140.01 | 1,278.0 | 12.15 | | 2022 | 10,987,703 | 5,414,576 | 3,629,139 | 1,985,347 | 100.79 | 107.15 | 919.1 | 9.48 | | 2021 | 13,517,285 | 22,825,839 | 2,994,262 | 3,965,622 | 135.41 | 128.32 | 1,344.3 | 9.10 |
2024 LTI COMPONENTS/WEIGHTING
| (3) Following are the adjustments made to the summary compensation table to determine the amounts shown as compensation actually paid: |