Use these links to rapidly review the documentTABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ý☒
Filed by a Party other than the Registrant o☐
Check the appropriate box:o Preliminary Proxy StatementoConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))ý Definitive Proxy Statemento Definitive Additional Materialso Soliciting Material Pursuant to § 240.14a-12
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to § 240.14a-12 |
AVERY DENNISON CORPORATION
(Name of Registrant as Specified Inin Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
| ☒ | ||||||
No fee required. | ||||||
Fee paid previously with preliminary materials. | ||||||
Fee computed on table in exhibit required by Item 25(b) per Exchange Act | ||||||
Section III 2022 Notice and Proxy Statement Avery Dennison Corporation | 2022 Proxy Statement SECTION III
Table of ContentsNOTICE OF ANNUAL
Table of ContentsMEETING OF STOCKHOLDERS
Notice of 2019 Annual Meeting of Stockholders
To Our Stockholders:
We cordially invite you to attend our 2019 Annual Meeting of Stockholders at 207 Goode Avenue, Glendale, California 91203 on Thursday, April 25, 2019 at 1:30 p.m. Pacific Time. At the meeting, we will conduct the following items of business:
| RECORD DATE | February 28, 2022 | ||
| MEETING DATE | April 28, 2022 | ||
| MEETING TIME | 1:30 p.m. Eastern Time | ||
| MEETING FORMAT | Virtual, at www.virtualshareholdermeeting.com/AVY2022 | ||
MEETING AGENDA
 | Elect the | |
 | Approve, on an advisory basis, our executive | |
 | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year | |
 | Transact any other business properly brought before the meeting or any adjournment or postponement | |
Our Board recommends that you voteFOR each of theour 8 director nominees in Item 1 andFOR Items 2 and 3.
Stockholders of record as of February 25, 201928, 2022 are entitled to notice of, and to vote at,in connection with, the meeting and any adjournment or postponement thereof. This notice and our proxy materials are being mailed or made available to stockholders on or about March 15, 2022.
We want your shares to be represented and voted. We encourage you to vote promptly as this will save us the time and expense of additional proxy solicitation. As shown on the right, you can vote online, by telephone, by mail or, in certain circumstances, during the meeting.
On behalf of our Board of Directors, management and team members worldwide, thank you for your investment in us and our company. We look forward to engaging with you during the virtual Annual Meeting.
Vikas Arora
Vice President, Associate General Counsel and
Corporate Secretary
March 10, 2022
Online
You can vote online at www.proxyvote.com by 11:59 p.m. Eastern Time on April 27, 2022. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.
By Telephone
In the U.S. and Canada, you can vote by calling 1.800.690.6903 by 11:59 p.m. Eastern Time on April 27, 2022. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.
By Mail
You can vote by mail by completing, dating and signing your proxy card and returning it in the postage-paid envelope or otherwise to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.
During Meeting
Unless your shares are held through our Employee Savings Plan, you can vote during the Annual Meeting. Beneficial holders must contact their broker or other nominee to be able to vote during the meeting.
Avery Dennison Corporation | 2022 Proxy Statement | Table of Contents |
This proxy summary includes key messages related to this proxy statement and does not contain all the information you should consider before voting. We strongly encourage you to read the entire proxy statement before voting.
DISTRIBUTION OF PROXY MATERIALS
We will mail our Notice of Internet Availability of Proxy Materials, which includes instructions on how to access these materials on the Internet,online, on or beforeabout March 11, 2019.15, 2022. If you previously elected to receive a paper copy of our proxy materials, on or about the same date, we will mail you our 2019 proxy statement; 2018 annual2021 integrated report, which includes lettersa letter to stockholders from our Chairman and our Chairman-Elect, President and Chief Executive Officer;Officer (CEO); our 2021 annual report; our notice and proxy statement for the 2022 Annual Meeting of Stockholders (the “Annual Meeting”); information regarding our businesses, financial performance and strategic achievements, including our continued progress as it relates to environmental, social and governance (ESG) matters; and a proxy card on or about March 11, 2019.
We want your shares to be represented and voted. You can vote as shown in the chart below.
 |
| |
 |
| |
 |
| |
 |
| |
On behalf of the Board of Directors, management and employees of Avery Dennison, thank you for your continued support.
 |
TABLE OF CONTENTS
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
Avery Dennison Corporation| 2019 Proxy Statement |Table of Contents
This section summarizes information described in greater detail in other parts of this proxy statement and does not contain all the information you should consider before voting. We encourage you to read the entire proxy statement before voting.
TIME, DATE AND LOCATIONFORMAT OF ANNUAL MEETING
The Annual Meeting will take place at 1:30 p.m. PacificEastern Time on April 25, 2019 at 207 Goode Avenue, Glendale, California 91203. Parking28, 2022. Due to continued public health concerns about large, indoor in-person gatherings given the coronavirus/COVID-19 pandemic (“COVID-19”), the meeting will be available next door at 127 Burchett Street, Glendale, California 91203. Attendantsheld virtually, with attendance via the internet. To attend the virtual Annual Meeting, you will be availableneed to provide assistance with directions and parking tickets will be validated atlog in to www.virtualshareholdermeeting.com/AVY2022 using the 16-digit control number on your Notice of Internet Availability of Proxy Materials or proxy card.
Online access to the live audio webcast of the Annual Meeting.Meeting will open at 1:15 p.m. Eastern Time to allow time for you to log in and test your device’s audio system. We encourage you to access the meeting in advance of its designated start time as we plan to begin conducting the meeting promptly. For additional instructions on how to attend the virtual Annual Meeting, please refer to the Voting and Meeting Q&A section of this proxy statement.
ITEMS BEING VOTED ON ATDURING ANNUAL MEETING
You are being asked to vote on the items of business shown below atduring the Annual Meeting. Our Board of Directors (our "Board"“Board”) recommends that you vote FOR each of the 11our 8 director nominees and FOR the other two2 items being brought before the stockholder vote.
Item | Board Recommendation | Vote Required | Discretionary Broker Voting | Page Reference | ||||||||
| 1 | Election of directors |  | FOR each nominee | Majority of votes cast | No | 39 | ||||||
| 2 | Advisory vote to approve executive compensation | | FOR | Majority of shares represented and entitled to vote | No | 49 | ||||||
| 3 | Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for FY 2022 | | FOR | Majority of shares represented and entitled to vote | Yes | 89 | ||||||
VOTING PRIOR TO OR DURING ANNUAL MEETING
You may vote your shares by submitting a proxy in advance of the Annual Meeting or, in certain circumstances, voting during the meeting. You may not vote during the meeting if your shares are held through our Employee Savings Plan. Beneficial holders may only vote during the meeting if they properly request and receive a legal proxy in their name from the broker, bank or other nominee that holds their shares. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting by following the instructions contained in the Voting and Meeting Q&A section of this proxy statement.
ASKING QUESTIONS DURING ANNUAL MEETING
We have designed the virtual Annual Meeting to ensure that you have the same rights and opportunities to participate as you would at an in-person meeting, using easy-to-use online tools that allow you to attend, vote andask questions. After the business portion of the Annual Meeting concludes and the meeting is adjourned, our Chairman/CEO will lead a Q&A session during which we intend to answer all questions submitted on the day of or during
Avery Dennison Corporation | 2022 Proxy Statement | 1 |
the meeting that are pertinent to our company and the items being brought before stockholder vote. Answers to questions not addressed during the meeting, if any, will be posted promptly after the meeting on the investors section of our website. For information on how to submit questions during the Annual Meeting, please refer to the Voting and Meeting Q&A section of this proxy statement.
OUR COMPANY
We are a global materials science company specializing in the design and manufacture of a wide variety of labeling and functional materials. Our products and solutions, which are used in nearly every major industry, include pressure-sensitive materials for labels and graphic applications; tapes and other bonding solutions for industrial, medical and retail applications; tags, labels and embellishments for apparel; and radio-frequency identification (RFID) solutions serving apparel and other markets. We have approximately 36,000 employees in more than 50 countries.
Our company is comprised of the following businesses: Label and Graphic Materials (LGM), Retail Branding and Information Solutions (RBIS) and Industrial and Healthcare Materials (IHM).
STRATEGY OVERVIEW
We are committed to ensuring the continuing success of all our stakeholders – our employees, customers, investors and communities. In 2021, we continued to invest in the long-term success of our company and advance our ESG priorities. To mitigate the challenges presented by the continued impact of COVID-19, we focused on ensuring the safety and well-being of our employees; managing a dynamic supply/demand environment and supply chain pressures to deliver for our customers; minimizing the impact of pandemic-related effects for our stockholders; and supporting our communities. Our key strategies and 2021 achievements are shown below and on the following page. Our overriding focus remains the long-term success of all of our stakeholders, and we have a clear set of objectives and strategies to deliver for them.
1 | ||||
Drive outsized growth in high-value categories
We seek to increase the proportion of our portfolio in high-value products and solutions, both organically and through acquisitions; high-value categories serve markets that are growing faster than GDP, represent large pools of potential profit and leverage our core capabilities. These products and solutions include our specialty and durable label materials, graphics and reflective solutions, industrial tapes, Intelligent Labels that use RFID tags and inlays, external embellishments, and, with our recent acquisition of CB Velocity Holdings, LLC (“Vestcom”), shelf-edge pricing, productivity and consumer engagement solutions.
In 2021, we achieved organic sales change in high-value product categories that outpaced that of our base businesses by a high-single digit rate driven by growth in specialty labels, external embellishments and Intelligent Labels; added to our capabilities and expanded our position in high-value product categories through our acquisition of Vestcom; and more than tripled the size of our Intelligent Labels platform over the last five years, reaching net sales of $0.7 billion in 2021
2 | ||||
Grow profitability in our base businesses
We strive to grow profitability in our base businesses by carefully balancing volume, price and mix, reducing complexity and tailoring our go-to-market strategies
In 2021, we heightened our focus on material reengineering to drive productivity and mitigate the impact of rising input costs
3 | ||||
Focus relentlessly on productivity
We employ product reengineering and enterprise lean sigma to expand our margins, enhance our competitiveness (particularly in our base businesses) and provide a funding source for reinvestment
In 2021, we continued expanding operating margins, with approximately $65 million in savings from restructuring, net of transition costs
2 | 2022 Proxy Statement | Avery Dennison Corporation |
| 4 | |||||||||
| ||||||||||
| ||||||||||
BUSINESS STRATEGY OVERVIEW
Allocate capital effectively
We strive to create superior long-term, sustainable value forbalance our customers, employees and investors and improve the communities in which we operate. To realize the business aspects of this vision, we are focused on executing the following key strategies:
•Driving outsized growth in high value product categorieswith higher growth and margin potential (e.g., specialty labels, graphics, industrial tapes and radio-frequency identification (RFID));•Growing profitably in our base businessthrough tailored go-to-market strategies and disciplined execution;•Maintaining our relentless focus on productivitythrough continued operational excellence and enterprise lean sigma; and•Deploying capital effectivelyby balancinginvestments in organic growth, productivity, and acquisitions and venture investments, whilereturningcontinuing to return cash tostockholders.
In 2021, leveraging our strong balance sheet, we invested $272.1 million in fixed and information technology (IT) capital expenditures to support organic growth; completed three acquisitions and made three venture investments for a total of $1.48 billion; increased our quarterly dividend rate by ~10%; and repurchased $180.9 million in shares of our common stock
5 | ||||
Lead in an environmentally and socially responsible manner
We aim to deliver innovations that advance the circular economy and reduce the environmental impact of our operations; build a more diverse workforce and inclusive and equitable culture; maintain operations that promote health and safety; and support our communities through contributions from the Avery Dennison Foundation (ADF), supplemented by contributions from our company
In 2021, we continued to make progress toward our 2025 sustainability goals, reducing the environmental impact of our operations and investing in strategic innovation platforms focused on material circularity and waste reduction/elimination; driving sustainable change in diversity, equity and inclusion (DE+I), with a sharpened focus on increasing workforce racial/ethnic diversity, as well as representation from other underrepresented communities such as LGBTQ+, veteran or disabled individuals; and using the $10 million we contributed to ADF in 2020 to significantly increase grant-making in our communities, resulting in over $6 million of charitable contributions from ADF and our company in 2021. We also announced more ambitious 2030 sustainability goals.
FINANCIAL PERFORMANCE HIGHLIGHTS
COVID-19 Response
Our top priority in 2021 as the COVID-19 pandemic continued to evolve and impact our global teams was to safeguard the safety and well-being of our employees by continually adapting our world-class safety protocols. We also were highly focused on delivering for our customers, leveraging our global scale to manage elevated lead times caused by constrained raw material, freight and labor availability and persistent inflation. To minimize the effects of the pandemic on our investors, we maintained a strong balance sheet to ensure financial flexibility. We also more than doubled our financial support for communities in 2021 compared to the prior year.
Strong 20182021 Performance and Execution of Strategic Priorities. Fiscal year 2018 marked
In 2021, by consistently executing our seventhstrategies, we delivered our tenth consecutive year of strong top-linetop- and bottom-line growth, expanded operating margin expansion,margins and double-digit adjusted earnings per share (EPS) growth.achieved record free cash flow, despite the continued impact of COVID-19 and related supply chain, labor, freight and inflationary challenges. These results reflected the extraordinary efforts undertaken by our leaders and teams globally to respond to the difficult macroeconomic environment and mitigate its impacts on our company. Our performance reflects our rigorous scenario planning, which has enabled us to be prepared for a wide range of financial situations. We exceededadvanced our key strategies and delivered strong performance, while continuing to deliver for all of our stakeholders.
Our fiscal year 2021 performance reflects the strength of our markets, our industry-leading positions, the strategic foundations we have laid and our talented team. Our key financial goalsachievements for the year with the accomplishments shownare described below and on the following page.
•AchievedReported net sales of
approximately $7.2$8.41 billionan increase, up ~21%, reflecting volume growth across our businesses and recovery from the prior-year impact of8.2% over prior yearCOVID-19.•Excluding the impact of currency, sales
grew by 6.9%. Onincreased ~19%; sales on an organic basissales grewincreased by5.5%,~16% driven by continued strong demand for consumer packaged goods and the accelerated shift to e-commerce in LGM, as well as significant organic growth inhigh value product categories and salesIntelligent LabelsReported earnings per share (EPS) increased ~34% from $6.61 in
emerging markets.Avery Dennison Corporation|2019 Proxy Statement|i•Reported EPS significantly increased from $3.132020 to $8.83 in2017 to $5.282021, in2018part due to thecombined effects of 2017 tax charges related to the enactment of the U.S. Tax Cuts and Jobs Act (TCJA) and a net tax benefit from a discrete foreign tax planning action, the combined effect of volume and mix, and benefits from productivity initiatives. These benefits were partially offset by settlement charges resulting from the 2018 termination of our U.S. pension plan, higher restructuring charges, higher employee-related costs, growth investments, and the netprior-year impact ofpricing and raw material inflation.COVID-19•
Avery Dennison Corporation | 2022 Proxy Statement
3
Adjusted EPS increased ~25% from $5.00$7.10 to $6.06 due to$8.91, driven by strong growth and operating margin expansion; adjusted EPS for the combined effect of volume and mix, as well as benefits from productivity initiatives, partially offset byyear was substantially higher employee-related costs, growth investments, andthan the net impact of pricing and raw material inflation. Adjusted EPS exceeded the hightop end of the $5.70$7.65 to $5.95$8.05 annual guidance range we gaveprovided to our stockholdersinvestors in January 2018.
Withreportednet cash provided by operating activities of $457.9$1,046.8 million, delivered record free cash flow of $429.2 million.
Onreported net income of $467.4$740.1 million, achieved return on total capital (ROTC) including acquisition amortization of 18.6%.~18% and ROTC excluding acquisition amortization of ~19%
Sales change excluding the impact of currency (sales change ex. currency,currency), organic sales change, adjusted EPS, free cash flow and ROTC both including and excluding acquisition amortization – as well as adjusted EBITDA margin, which is used later in this proxy summary – are supplementalnon-GAAP financial measures that we provide to assist investors in assessing our performance and operating trends. TheyThese measures are defined, in theCompensation Discussion and Analysis section of this proxy statementqualified and reconciled from generally accepted accounting principles in the United States of America (GAAP) inAppendix A the last section of this proxy statement. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to the comparable financial measures under GAAP.
Delivering Financial Targets. Our five-year financial goals through 2018 included an organic sales growth target of 4% to 5% and a GAAP operating margin target of 9% to 10% in 2018. We also targeted double-digit adjusted EPS growth and ROTC of at least 16% in 2018. The combination of our growth and ROTC targets is a proxy for growth in economic value added (EVA), one of the performance objectives used in our long-term incentive (LTI) compensation program. As shown below, we achieved or exceeded our five-year commitments through 2018.
For the 2014-2018 period, on a five-year compound annual basis (with 2013 as the base period), GAAP reported net sales, reported EPS and reported net income grew by 3.1%, 19.9% and 17.0%, respectively.
 |  |  | |||||
Avery Dennison Corporation| 2019 Proxy Statement |ii
Table of ContentsDelivering Financial Targets
Our objective is to deliver GDP+ growth and top-quartile returns on capital to create superior value over the long term. In March 2017, we announced five-year goalsfinancial targets through 2021, targeting continued solid organic sales growth, GAAP operating margin of at least 11% in 2021, double-digit adjusted EPS growth on a compound annual basis, and ROTC of at least 17% in 2021. As shown below, based onwe exceeded each of these commitments we made to our results forinvestors.
This is the first two yearsthird set of this five-year period,long-term financial targets we have delivered. Our consistently strong performance reflects the strength of our industry-leading market positions, the strategic foundations we have laid, and our agile and talented workforce. Given the diversity of our end markets, strong competitive advantages and resilience as an organization, we are on trackconfident in our ability to deliver these targets.continue delivering for you through a wide range of business cycles.
For the 2017-20182017-2021 period, on a two-yearfive-year compound annual basis (with 2016 as the base period), GAAP reported net sales, reported EPS and reported net income and EPS increased by 8.5%6.7%, 22.1%18.2% and 20.7%20.1%, respectively.
| 2017-2021 Targets | 2017-2021 Results(1) | ||||||||||
Sales Growth(2) | 5%+ ex. currency(3) 4%+ organic | 4.6% organic | |||||||||
GAAP Operating Margin | 11%+ in 2021 | ||||||||||
Adjusted EPS Growth(2) | 10%+ | ||||||||||
ROTC incl. Acquisition Amortization | 17%+ in 2021 | ||||||||||
(1) | Results for non-GAAP measures are reconciled from GAAP in | ||||||||||
(2) | Percentages for targets and results reflect five-year compound annual growth rates, with 2016 as the base period. | ||||||||||
(3) | Target for sales growth ex. currency reflects the impact of completed acquisitions as of March 2017 of approximately | ||||||||||
4 | 2022 Proxy Statement | Avery Dennison Corporation |
In March 2021, we announced five-year financial targets through 2025. As shown below, based on the first year of this five-year period, we are on track to achieve these commitments.
In 2021 (with 2020 as the base period), GAAP reported net sales, net income and EPS increased by 20.6%, 33.1% and 33.6%, respectively.
|
| 2021-2025 Targets | 2021 Results(1) | ||
Sales Growth(2) | 5%+ ex. currency(3) | 18.6% ex. currency
15.6% organic | ||
Adjusted EBITDA Margin | 16%+ in 2025 | 15.6% in 2021 | ||
Adjusted EPS Growth(2) | 10% | 25% | ||
ROTC excl. Acquisition Amortization | 18%+ in 2025 | 19.1% in 2021 | ||
| ON TRACK TO ACHIEVE 2021-2025 FINANCIAL TARGETS | ||||
(1) Results for non-GAAP measures are reconciled from GAAP in the last section of this proxy statement. (2) Percentages for targets reflect five-year compound annual growth rates, with 2020 as the base period. Percentages for results reflect one-year annual growth rates, with 2020 as the base period. (3) Target for sales growth ex. currency reflects the impact of completed acquisitions as of March 10, 2021, which represents (0.2)%. | ||||
DisciplinedEffective Capital Allocation.Allocation
We have been consistently executeddisciplined in executing our disciplined approach to capital allocation strategy, balancing our investments in organic growth, productivity, and acquisitions whileand venture investments with continuing to return cash to stockholders through dividends and share repurchases.In 2018,2021, we delivered ROTC of nearly 19% and invested $256.6$272.1 million in fixed and IT capital expenditures to support future growth and further productivity improvement made $3.8 million in equity investments,and allocated $1.48 billion to acquisitions and venture investments; we also paid $175.0$220.6 million in dividends and repurchased $392.9$180.9 million in shares of our common stock.stock.
We have invested in our businesses to support organic growth and pursued targeted acquisitions that supportcomplementary and synergistic acquisitions. Our fixed and IT capital spending in 2021 was nearly 25% higher than in 2020, reflecting our strategy of increasingcontinued investment in high-value categories, including our exposure to high value product categories.We increased our spending onfast-growing Intelligent Labels platform, and lower-than-planned capital expenditures in 2018 by over 13% compared2020 to priormitigate the impact of COVID-19. During the year, to enable the future growthwe acquired Vestcom, an Arkansas-based provider of our businesses, improve our profitabilityshelf-edge pricing, productivity and expand our operating margins. In addition, during 2018, we continued integrating the following acquisitions we made in 2017: (i) Hanita Coatings Rural Cooperative Association Limited, an Israel-based pressure-sensitive manufacturer of specialty filmsconsumer engagement solutions for retailers and laminates; (ii) Yongle Tape Ltd.consumer packaged goods companies, for $1.47 billion, as well as ZippyYum, LLC (“ZippyYum”), a China-based manufacturerCalifornia-based developer of specialty tapes and related products used in a variety of industrial markets; and (iii) Finesse Medical Limited, an Ireland-based manufacturer of healthcaresoftware products used in the managementfood service and food preparation industries, and JDC Solutions, Inc. (“JDC”), a Tennessee-based manufacturer of wound care and skin conditions. Wepressure-sensitive specialty tapes, collectively for approximately $43 million. During 2021, we also made equitythree venture investments in two start-up companies developing innovative technological solutions and negotiated a further investment in a small company in whichthat we first invested in 2016, for which payment was made in early 2019.believe have the potential to advance our businesses.
In 2018,2021, we deployed approximately $568$401.5 million to (i)pay dividends of $2.66 per share and repurchase nearly four0.9 million shares at an aggregate cost of nearly $393 million and (ii) pay an annual dividend of $2.01 per share for an aggregate amount of $175 million.our common stock. We have paid quarterly dividends for decades and most recentlyraised our quarterly dividend rate by 16%approximately 10% in April 20182021. Given the lower price of our common stock in the second half of the year, as well as our substantially decreased use of capital for acquisitions and equity investments, we repurchased a significantly greater dollar amount in shares in 2018 compared to prior years.
As shown in the graph on the following page,below, over the last five years, we have allocated over $2 billion to acquisitions and venture investments and nearly $2 billion to dividends and share repurchases.
Avery Dennison Corporation | 2022 Proxy Statement | 5 |
Avery Dennison Corporation| 2019 Proxy Statement |iii
Table of ContentsTotal Stockholder Return (TSR) Outperformance
By generating substantial economic value added (EVA), we drove strong TSR in 2021 despite the continued uncertain macroeconomic environment as a result of
COVID-19Capital Allocated to Dividends,Share Repurchases and Acquisitions*
* Amounts for acquisitions include investments in unconsolidated businesses.
Three-related supply chain, labor, freight and Five-Year Cumulativeinflationary challenges. Our TSR Outperformance. As shown below,despite negative total stockholder return (TSR) in 2018, we delivered cumulative TSR for the 2016-2018 three-year period and the 2014-2018 five-year period that significantlyof over 40% outperformed the S&P 500®500 and the median of the S&P 500 Industrials and Materials subsets, (we are a member of the Materials subset, but share many characteristics with members of the Industrials subset; investors have informed us that they look at both subsets in evaluating two comparator groups we use to assess our relative performance, as we do internally). TSR measures the return we have provided to our stockholders, including stock price appreciation and dividends paid (assuming reinvestment of dividends).
performance. We believe that our longer-term TSR is a more meaningful measure of our performance than our one-year TSR, which can be significantly impacted by short-term market volatility that may be unrelated to our underlying performance. For example, althoughBoth our three-year and five-year TSR substantially outperformed these two comparator groups. We focus on TSR because it measures the value we delivered strong performance in 2018 — exceedingcreate for our stockholders, including stock price appreciation and dividends paid (assuming reinvestment of dividends). We compare ourselves to the high end of our adjusted EPS guidance for the year — our 2018 TSR was negative.
1-, 3- and 5-YEAR TSR | ||||||||||||||
| 2014 | 2015 | 2016 | 2017 | 2018 | 3-Year TSR | 5-Year TSR | ||||||||
| | | | | | | | | | | | | | | |
AVY | 6.2% | 23.8% | 14.6% | 66.7% | (20.3)% | 52.3% | 100.2% | |||||||
| | | | | | | | | | | | | | | |
S&P 500 | 13.7% | 1.4% | 12.0% | 21.8% | (4.4)% | 30.4% | 50.3% | |||||||
| | | | | | | | | | | | | | | |
S&P 500 Indus. & Mats.* (median) | 11.8% | (4.5)% | 20.0% | 26.9% | (15.5)% | 35.2% | 48.9% | |||||||
*Based on companies in subsets as of December 31, 2018.
Avery Dennison Corporation| 2019 Proxy Statement |iv
We continued our longstanding practice of ongoing engagement and open dialogue with stockholders in 2018. Our engagement program takes place throughout the year and — with respect to governance, sustainability and executive compensation matters — generally as shown in the graphic below.
ENGAGEMENT PROCESS
In advancemedian of the 2018 Annual Meeting,S&P 500 Industrials and Materials subsets because we contacted our 35 largest institutional stockholders, representing over 55%are a member of our then-outstanding shares. Board members, including our Lead Independent Director,the Materials subset, and management were made available to answer questions and address concerns regarding the items being brought before the Annual Meeting. While we received responses from stockholders representing over 28% of our then-outstanding shares, none of them desired to substantively engage at that time.
In the summer and fall, without the time pressures associated with proxy season, we contacted our 41 largest institutional stockholders, representing nearly 60% of our then-outstanding shares, to request a meetingalso share many characteristics with members of the Industrials subset; investors have indicated that they also look at both subsets in evaluating our Board and/or management. Proposed topics for these meetings included our business strategy and financial performance executive compensation matters, Board composition and succession planning, and progress towards achieving our sustainability goals. We received responses from stockholders representing nearly 30%relative to that of our then-outstanding sharespeers.
5-Year Cumulative TSR
1-, 3- and spoke with stockholders representing over 25%5-YEAR TSR
| AVY | S&P 500 | S&P Indus. & Mats.* | ||||
2017 | 67% | 22% | 28% | |||
2018 | (20)% | (4)% | (14)% | |||
2019 | 49% | 32% | 34% | |||
2020 | 21% | 18% | 17% | |||
2021 | 41% | 29% | 24% | |||
3-Year TSR | 154% | 100% | 94% | |||
5-Year TSR | 237% | 133% | 122% | |||
| * | Based on median of companies in both subsets as of December 31, 2021 |
ESG GOVERNANCE
We have been consistently focused on advancing our ESG profile, establishing our priorities, setting ambitious goals and making consistent progress toward their achievement. Our sustained progress reflects the commitment and passion of our then-outstanding shares. We substantively engaged with every stockholder who requested to do somanagement and included our Lead Independent Director in engagements upon stockholder request.
Avery Dennison Corporation| 2019 Proxy Statement |v
The graphics below show the results of our 2018 stockholder engagement on governance, sustainability and executive compensation matters.
STOCKHOLDER FEEDBACK DURING 2018 ENGAGEMENT
Governance and Sustainability Matters
With respect to matters related to governance, we discussed several topics related to our Board composition, skills and succession planning and refreshment processes. We also discussed our business strategies and related risks, diversity and inclusion initiatives, and sustainability priorities.
Executive Compensation Matters
With respect to executive compensation, we discussed our approach to human capital management, including our leadership development and succession planning processes,employees, as well as the linkage betweenrobust engagement and oversight of our incentive compensationBoard. Our ESG governance structure is shown on the following page.
6 | 2022 Proxy Statement | Avery Dennison Corporation |
ESG GOVERNANCE STRUCTURE
We believe that strong data governance ensures consistency and accuracy of information in support of our ESG priorities and enhances transparency to our stakeholders. Our ESG data is organized and indexed to the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) frameworks to facilitate stakeholder usage and comparability with other companies. We have also responded to Carbon Disclosure Project (CDP) Climate, Water and Forests since 2010, 2015 and 2016, respectively. The volume of ESG information we disclose has significantly increased in recent years and our scores from ESG rating agencies have continued to improve.
During 2021, we evolved our ESG data governance program by establishing an ESG Program Management Office to assess our reporting in accordance with frameworks such as the Task Force on Climate-Related Financial Disclosures (TCFD); engage with targeted ESG rating agencies; manage our data collection and reporting processes; create assurance guidance and controls, and provide reports, data and information for publication. In addition, we engaged an independent third party to review our energy and GHG emissions data; requested our Internal Audit team to perform walkthroughs of key metrics and provide ongoing advisory engagement; and formalized our processes for data owner sign-off, ESG Disclosure Committee review and senior management approval.
Our March 2022 ESG Download, published concurrently with this proxy statement on our ESG website at esg.averydennison.com, reflects the organizational focus we have on these matters. It includes 120 categories covering our policies, goals, strategies, risks, outcomes/metrics and certifications. This information comes from multiple data owners and sources, including our enterprise-wide Sustainability Council, the sustainability teams in our businesses, and representatives from corporate and business strategies. We also reviewed the robust oversight providedfunctions such as EHS, Operations/Supply Chain, Procurement, HR and Law. The ESG Download and other information on our website are not and should not be considered part of, nor are they incorporated by our Board's Compensation and Executive Personnel Committee (the "Compensation Committee").reference into, this proxy statement.
Our Board and management believe that regular stockholder engagement fosters a deeper understanding of investors' evolving expectations on governance, sustainability and executive compensation matters. We look forward to continuing our longstanding practice of engaging in dialogue with our stockholders to ensure our programs continue to align with best practices.
Avery Dennison Corporation | 2022 Proxy Statement 7Avery Dennison Corporation| 2019|vi
ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
Sustainability is one of our core values and has long been partintegral to our way of our approach to doing business. Our aim is to improve the sustainability of our products and processes while helping toTo create shared value for all of our stakeholders. Keystakeholders, we aim to advance our progress has been integratingstrategic innovation platforms on material circularity and waste reduction/elimination, build a more diverse workforce and inclusive and equitable culture, maintain operations that promote health and safety, and support our communities. Integrating sustainability into our underlying business strategies has helped us deliver sustained strong financial performance and engagingengage employees at all levels.
We publicly report on our sustainability progress every two years. In September 2017, we issuedthe first six years of the 10-year horizon for our 2014-2016 Sustainability Report, summarizing our achievements against our 2015 sustainability goals and providing details on the 2025 sustainability goals, we set in 2015, which are shown on the following page. In the first three years of the 10-year horizon for our new goals, we have made meaningful progress. We expect to issue our 2016-2018 Sustainability Reportsubstantial progress, as shown in the fall of 2019, describing our continued progress towards achieving our 2025 sustainability goals. We encourage you to review these reports, which contain greaterscorecard below. You can find additional information on the highlights summarizedour ESG progress in theSustainability section of this proxy statement,our 2021 integrated sustainability and annual report, as well as on our ESG website at esg.averydennison.com. The 2021 integrated sustainability and annual report and other information on our website atwww.averydennison.com/sustainability.are not and should not be considered part of, nor are they incorporated by reference into, this proxy statement.
| 2021 SCORECARD OF PROGRESS TOWARD 2025 SUSTAINABILITY GOALS | |||||||||||
 | Focus Area | Goal(s) | Baseline Year | Highlights of Progress | |||||||
Greenhouse Gas Emissions
| Achieve at least 3% absolute reduction year-over-year and at least | 2015 | Reduced absolute GHG emissions by ~7% in 12 months through Q3 2021 compared to | ||||||||
 | Paper
| Source 100% certified paper, of which at least 70% | 2015 | Of total volume of paper procured in 2021, ~91% was certified, with ~81% of face stock Forest Stewardship Council®-certified | |||||||
 | Films
| Ensure that 70% of | N/A | ~97% of 2021 film volume conformed to LGM’s restricted substance list (RSL) | |||||||
 | Chemicals
| Ensure that 70% of | N/A | ~96% of 2021 chemical volume conformed to LGM’s RSL | |||||||
 | Products and Solutions
| Through innovation, deliver above-average growth in sales from sustainability-driven products and Ensure that 70% of our products and solutions conform to, or enable end products to conform to, our environmental and social guiding | 2015 | ~55% and ~50% of RBIS Apparel and LGM sales, respectively, in 2021 came from sustainability-driven products that are responsibly sourced, enable recyclability, contain recycled content or use less material, without compromising performance | |||||||
 | Waste
| Be 95% landfill-free, with at least 75% of our waste reused, repurposed or Eliminate 70% of the matrix and liner waste from our value | 2015 | Diverted ~94% of solid waste from landfills and recycled ~67% of waste as of Q3 2021, our most recently available data | |||||||
 | |||||||||||
 | People
| Continue to cultivate Continue to invest in our employees and the communities in which they live and | 2015 | Increased female representation at level of manager and above by ~3% from baseline year, reaching 35% at YE 2021 Continued world-class safety record, with 2021 RIR of 0.21, substantially better than manufacturing industry average of 3.1 in 2020 (most recently available data) | |||||||
Transparency
| Commit to goals publicly and be transparent in reporting progress | N/A | Continued to enhance transparency by providing more frequent and comprehensive ESG disclosures, including by launching ESG website and making new commitments to external standards (e.g., Science Based Targets initiative) in 2021 | ||||||||
8 | 2022 Proxy Statement | Avery Dennison Corporation |
After updating our materiality assessment in 2020 to better understand the environmental and social sustainability challenges facing our company and our stakeholders, we reframed our eight 2025 goals into three broader goals that we are aiming to achieve by 2030. Within each of these goals, we have specific targets related to environmental and social sustainability. We show our progress against the targets shown below in our 2021 integrated annual and sustainability report.
Avery Dennison Corporation| 2019 Proxy Statement |vii
Table of Contents2030 SUSTAINABILITY GOALS AND TARGETS
GOALS | TARGETS | |
Deliver innovations that advance the circular economy | Satisfy the recycling, composting or reuse requirements of all single-use consumer packaging and apparel with our products and solutions RBIS: 100% within our core product categories (printed fabric labels, woven labels, paper, interior heat-transfer labels, packaging and RFID) will meet our third-party verified Sustainable ADvantage Standard LGM: 100% of our standard label products will contain recycled or renewable content; all of our regions will have labels that enable circularity of plastics | |
Reduce the environmental impact in our operations and supply chain | Reduced our Scope 1 and 2 GHG emissions by 70% from our 2015 baseline. Work with our supply chain to reduce our 2018 baseline Scope 3 GHG emissions by 30%, with an ambition of net zero by 2050 | |
Source 100% of paper fiber from certified sources focused on a deforestation-free future | ||
Divert 95% of our waste away from landfills, with a minimum of 80% of our waste recycled and the remainder either reused, composted or sent to energy recovery | ||
Deliver a 15% increase in water efficiency at our sites that are located in high or extremely high risk countries as identified in the World Resources Institute Aqueduct Tool | ||
Make a positive social impact by enhancing the livelihood of our people and communities | Foster an engaged team and an inclusive workplace. • Inclusion Index: 85% • Employee Engagement: 82% • Females in manager level or above positions: 40% • Safety: 0.2 RIR | |
Support the participation of employees in Avery Dennison Foundation grants and foster the well-being of the communities in which we and our supply chain operate. |
DIVERSITY, EQUITY AND INCLUSION (DE+I)
Diversity is one of our core values, reflecting our commitment to ensuring an inclusive and equitable environment for people of all backgrounds and orientations and our belief that we gain strength from diverse ideas and teams. We are holding ourselves accountable for DE+I progress, with quantitative targets for employee engagement, inclusion and workforce gender diversity in our 2030 sustainability goals. Over the past several years, we have made consistent progress in our DE+I journey, as shown on the following page. Our 2021 EEO-1 statistics, which we collect as required by the U.S. Equal Opportunity Commission and reflect the voluntary self-identification by our U.S. employees, can be found in our March 2022 ESG Download.
Avery Dennison Corporation | 2022 Proxy Statement | 9 |
| HIGHLIGHTS OF DE+I JOURNEY | ||
2015
| • Established 2025 goal of 40%+ female at manager level and above • Employees established Northeast Ohio Chinese Employee Resource Group (ERG) | |
2016
| • Launched unconscious bias training for managers globally • Released DE+I Talkabout Toolkit • Initiated Women.Empowered development program • Expanded flexible work arrangements • Added inclusion index to employee engagement survey | |
2017
| • Employees established Elevate, women’s ERG • Began requiring gender diverse hiring slate goals globally • Joined CEO Action for Diversity & Inclusion • Formally added Diversity as one of our company values | |
2018
| • Established Regional DE+I Councils • Employees established BERG, our Black ERG • Launched Men as Allies program • Reviewed director+ level gender pay equity, making adjustments where appropriate | |
2019
| • Employees established Veterans ERG and UNITE, our LGBTQ+ ERG • Launched North America iBelong employee engagement campaign • Expanded gender pay equity review, making adjustments where appropriate | |
2020
| • Employees established Voz Latina ERG • Launched regional DE+I town halls • Began enhancing DE+I transparency with increased ESG reporting • Started to recruit for enterprise-wide DE+I leader • Continued expanding gender pay equity review and began evaluating U.S. racial/ethnic pay equity, making adjustments where appropriate | |
2021
| • Engaged third party expert to assess our baseline and help us establish our global DE+I priorities • Established DE+I infrastructure with global leader and dedicated regional resources • Developed global DE+I strategy with four pillars and supporting regional focus areas • Increased DE+I transparency, including by publishing EEO-1 data and committing to do so annually • Further enhanced pay equity review by engaging third party expert to analyze racial/ethnic equity • Invested to further develop ERG leaders • Employees established ERGs focused on mental awareness, single parenting and young employees • Sponsored 50+ diverse leaders in externally-facilitated leadership academies • Ensured more equitable benefits for LGBTQ+ employees and their families, resulting in 100% score on Human Rights Campaign Foundation’s 2022 Corporate Equality Index | |
10 | 2022 Proxy Statement | Avery Dennison Corporation |
STOCKHOLDER ENGAGEMENT
In addition to our extensive investor relations program through which our CEO, Chief Financial Officer (CFO), business leaders and Investor Relations team engage with our investors throughout the year, we have a longstanding practice of semiannual engagement with stockholders to further discuss and solicit their feedback on our strategies, performance, executive compensation and ESG matters.
Summary of 2021 Engagement Feedback
Our Board and management believe that regular stockholder engagement fosters a deeper understanding of our investors’ evolving expectations on ESG matters and helps us ensure our programs continue to align with best practices. The objectives of our stockholder engagement program are to maintain thoughtful dialogue and further strengthen our relationships with our top investors; gather feedback on the prior proxy season and identify potential improvement opportunities based on evolving expectations; and discuss our company strategies, Board matters, executive compensation, and ESG progress.
In 2021, we contacted our top 30 investors in the spring and the fall. Board members, in particular our Lead Independent Director, and management were made available to answer questions and address concerns. We engaged with every stockholder who accepted our invitation to meet, and our Lead Independent Director led the majority of our off-season engagements.
We discussed the process, results and feedback from our 2021 engagement with the Talent and Compensation Committee (the “Compensation Committee”) and the Governance Committee of our Board, and also shared highlights with the full Board to supplement the reports from those Committee Chairs.
A summary of the results from our 2021 stockholder engagement is shown on the following page.
Avery Dennison Corporation | 2022 Proxy Statement | 11 |
| 2021 ENGAGEMENT RESULTS | ||||
 |  |  |
Governance Feedback
With respect to governance, our 2021 engagements focused primarily on the matters described below.
Board oversight of ESG matters, including the allocation of responsibilities among Board Committees and our full Board
Board composition, with investors noting that the diversity of skills, qualifications and demographic backgrounds on our Board was appropriate given our company’s strategies and ESG priorities
Board refreshment, including actions underway to mitigate the risk from upcoming concentrated director retirements and the skills and backgrounds we would seek in any new director to complement those of our existing directors
Board leadership structure, including our rationale for maintaining a combined Chairman/CEO with a robust Lead Independent Director role
Director commitments, given the lower level of stockholder support at the 2021 Annual Meeting received by one of our current directors whose board memberships do not comply with certain of our investors’ voting policies
Our shareholder rights profile
Environmental Sustainability Feedback
Investors uniformly commended our significantly expanded ESG transparency with the disclosures contained in our integrated annual and sustainability reports, proxy statements and ESG Downloads and on our ESG website at esg.averydennison.com. Environmental sustainability was a key area of focus for many of our investors in 2021. During our conversations, we primarily discussed the matters described below.
The 2019strong linkage between ESG and our company strategies, as well as the ways in which our environmental and social sustainability creates market opportunity and provides competitive advantage
Our reframed sustainability framework, progress toward our 2025 goals and our new 2030 goals, reviewing the step-change advancement between these sets of goals, including our more objective and ambitious 2030 targets, including those related to Scope 1, 2 and 3 GHG emissions reduction and water to address evolved stakeholder expectations
Our launch of strategic innovation platforms focused on waste reduction/elimination and material circularity
The approval by the Science Based Targets initiative of our 2030 Scope 1 and 2 GHG emissions reduction targets as consistent with reductions required to keep warming to no more than 1.5 degrees Celsius, and our ambition to achieve net zero GHG emissions by 2050
Executive Compensation Feedback
The stockholders with whom we spoke sought information regarding the consideration of ESG matters in our executive compensation program, seeking to ensure that the Compensation Committee is discussing evolving expectations regarding ESG-executive compensation linkage. We discussed our current approach of establishing performance objectives for our annual incentive program based on quantitative financial metrics, supplemented by a qualitative individual assessment of executives that includes consideration of their ESG-related goals. We also explained our Board’s view that our financial success in recent years has been inextricably linked to our ESG focus and progress and that we have made substantial ESG progress as part of our commitment to deliver for all our stakeholders. Investors noted the need to be thoughtful and objective if we were to add ESG performance objectives, cautioning against setting targets without sufficient time and data to assess their appropriateness. To provide additional perspective on the Compensation Committee’s views on the linkage between ESG and executive compensation, we have included additional disclosure in the Compensation Discussion and Analysis section of this proxy statement.
12 | 2022 Proxy Statement | Avery Dennison Corporation |
Social Sustainability and Talent Management Feedback
Social sustainability and talent management continued to be significant areas of investor focus in 2021. In addition to the general feedback on our ESG program noted above, discussions related to these topics included the following:
Training and development opportunities we provide our employees with a view to ensuring an informed and ethical workforce
Our efforts to attract team members from underrepresented communities and ensure diverse hiring slates
The programs we offer to make our company an attractive place to work
Employeeretention and attrition
DE+I continued to be a key topic of engagement. The matters described below were areas of DE+I focus.
The ways in which DE+I aligns with our business strategies, allowing us to recruit and retain an engaged workforce committed to advancing their success and ours
Given our focus on building a more diverse workforce and inclusive and equitable culture, sharing our quantitative achievements, as well as information related to our qualitative efforts to continuously improve
The Compensation Committee’s discussion of our DE+I initiatives and progress at each of its regular meetings in 2021, with supplemental engagement on these matters by our full Board with our CEO, Chief Human Resources Officer (CHRO), business leaders and DE+I leaders
Ourdisclosure of EEO-1 data for the first time in 2021, with investors expressing their interest in learning more about the demographics of our workforce, what drives employee engagement and how our company plans to ensure the continued success of this key stakeholder group
We also candidly discussed our projected inability to achieve our goal of 40%+ women at the manager level and above by 2025, including the challenges we experienced, our key learnings and the organizational enhancements we have made in recent years to ensure we can deliver this renewed goal by 2030.
2022 DIRECTOR NOMINEES (ITEM 1)
Our Board has provided our management and company with strong oversight, with the following notable accomplishments in recent years:
•Successful execution of our Board-aligned business strategies, which has delivered seven consecutive years of strong organic sales growth, operating margin expansion, and double-digit adjusted EPS growth, as well as TSR over the most recent three- and five-year periods of over 52% and 100%, respectively, in each case significantly outperforming the S&P 500;•The closing and integration of five acquisitions and the completion of equity investments in five other companies, in each case consistent with our disciplined approach to acquisitions through which we target companies that can enhance our existing capabilities and increase our exposure to high value product categories;•Orderly executive leadership development and succession planning, with experienced leaders promoted to CEO and CFO and effectively transitioning into their roles; and•Thoughtful Board refreshment and succession planning, with four new independent directors appointed to our Board in the last six years, three of whom increased the racial, ethnic or gender diversity on our Board.
BOARD REFRESHMENT AND SUCCESSION
Appointment of New Independent DirectorDirector’s Decision Not to Stand for Reelection
As part of its efforts to ensure regular Board refreshment, our Board's Governance and Social Responsibility Committee (the "Governance Committee") oversaw our Board's search for a new independent director during 2018. The Committee engaged Spencer Stuart, an executive search firm, to assist it in identifying and evaluating potential candidates. Spencer Stuart identified a number of potential candidates (including Mark Barrenechea) who were initially evaluated by the Governance Committee and our Chairman, with input from other Board members and senior management.
The Governance Committee and other members of our Board interviewed Mr. Barrenechea, uniformly supporting his candidacy based on the deep technology industry expertise he could bring to our Board as we continue refining our go-to market strategies in our high value product category of Intelligent Labels. Upon the recommendation of the Governance Committee, our Board unanimously appointed Mr. Barrenechea to our Board effective September 10, 2018, recognizing his senior leadership experience, technology industry experience, global exposure and public company board experience.
Departure of Current Chairman; Post-Annual Meeting Board Leadership Structure
In February 2019, our Chairman, Dean Scarborough,2022, Director Mark Barrenechea notified our Board of Directors of his intentiondecision not to stand for reelection at the 20192022 Annual Meeting so that he maycan focus on other endeavors. Mr. Scarborough's membership on,
Matrix of Director Nominee Skills, Qualifications and chairmanship of, our Board will end on the date of the Annual Meeting.
In light of Mr. Scarborough's upcoming departure, the Governance Committee evaluated our Board leadership structure and recommended to our Board that Mitch Butier, our President and CEO, be elected as Chairman, noting that he has successfully led our company for the last three years and, with Mr. Scarborough's departure, is best positioned to lead our Board in overseeing our strategies to drive long-term value creation for our key stakeholders. The committee further noted that Mr. Butier has articulated and worked to realize the long-term vision for our company and that we could best continue our progress towards achieving our 2021 financial and 2025 sustainability goals with combined leadership in the boardroom at this time. Upon the recommendation of the Governance Committee, our Board unanimously elected Mr. Butier (with him and Mr. Scarborough abstaining) to serve as our Chairman, effective immediately after the Annual Meeting subject to his reelection.
Avery Dennison Corporation| 2019 Proxy Statement |viii
Table of ContentsDemographic Backgrounds
The Governance Committee also recommended that Mr. Pyott (with him abstaining) continue serving as Lead Independent Director. Retaining Mr. Pyott as Lead Independent Director will provide Mr. Butier valuable mentorship, independent guidance and leadership continuity as he transitions into the Chairman role. In addition, Mr. Pyott has significantly contributed to our executive compensation and governance programs through his strong, independent leadership of our Board. Upon the recommendation of the Governance Committee, our independent directors unanimously selected Mr. Pyott (with him abstaining) to continue serving as our Lead Independent Director, effective immediately after the Annual Meeting subject to his reelection.
DIRECTOR NOMINEES
Our director nominees have demonstrated their commitment to diligently executing their fiduciary duties on behalf of our stockholders, and we recommend that our stockholders elect each of the nominees shown in the chart below at the Annual Meeting.
| NAME | AGE | DIRECTOR SINCE | PRINCIPAL OCCUPATION | INDEPENDENT | AC | CC | GC | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Bradley A. Alford | 62 | 2010 | Retired Chairman & CEO, Nestlé USA |  | M | M | ||||||||
| Anthony K. Anderson | 63 | 2012 | Retired Vice Chair & Managing Partner, Ernst & Young LLP | | M | M | ||||||||
| Peter K. Barker | 70 | 2003 | Retired Chairman of California, JPMorgan Chase & Co. | | M | | C | |||||||
| Mark J. Barrenechea | 54 | 2018 | Vice Chair, CEO & CTO, OpenText Corporation | | ||||||||||
| Mitchell R. Butier | 47 | 2016 | Chairman-Elect, President & CEO, Avery Dennison Corporation |  | | | | |||||||
| Ken C. Hicks | 66 | 2007 | Chairman & CEO, Academy Sports + Outdoors | | M | M | ||||||||
| Andres A. Lopez | 56 | 2017 | President & CEO, Owens-Illinois, Inc. | | M | | | |||||||
| David E. I. Pyott (LID) | 65 | 1999 | Retired Chairman & CEO, Allergan, Inc. | | M | M | ||||||||
| Patrick T. Siewert | 63 | 2005 | Managing Director & Partner, The Carlyle Group | | C | | | |||||||
| Julia A. Stewart | 63 | 2003 | Former Chairman & CEO, Dine Brands Global, Inc. | | C | M | ||||||||
| Martha N. Sullivan | 62 | 2013 | President & CEO, Sensata Technologies Holding PLC | | M | M | |
AC = Audit & Finance Committee CC = Compensation & Executive Personnel Committee GC = Governance & Social Responsibility CommitteeM = Member C = Chair LID = Lead Independent Director
Our director nominees bring a balance of skills, qualifications and demographic backgrounds in overseeingto their roles of providing oversight of our company, as highlighted below and shown in greater detailby individual in the matrix on the following page, which we have modified slightly from prior year to conform with the areas of industry expertise by which we now classify directors given our evolved strategic profile. This matrix reflects information received from each of our directors in their responses to our annual director questionnaire. At least annually, the Governance Committee evaluates and reports to our Board Matrix includedon the skills, qualifications and demographic backgrounds desirable for our Board to best advance our business strategies and serve the interests of all our stakeholders.
Avery Dennison Corporation | 2022 Proxy Statement | 13 |
BOARD MATRIX
|
| Governance Guidelines Criteria | ||||||||||||||||
Independent | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| ✓ | ||||||||
Senior Leadership Experience(1) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| ||||||||
Industry Experience(2) | ✓ |
| ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||
Global Exposure(3) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||
Board Experience(4) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| ✓ | ||||||||
Financial Expertise(5) |
| ✓ |
|
|
|
| ✓ | ✓ | ||||||||
| Industry Expertise | ||||||||||||||||
Software/Digital/Cybersecurity(6) |
|
|
|
|
|
|
|
| ||||||||
Retail/Dining |
|
|
| ✓ | ✓ |
|
|
| ||||||||
Packaging | ✓ |
|
|
|
|
| ✓ |
| ||||||||
Consumer Goods |
|
| ✓ |
| ✓ |
|
| ✓ | ||||||||
Industrial Goods |
|
|
|
|
| ✓ | ✓ |
| ||||||||
Materials Science |
|
|
|
|
|
| ✓ |
| ||||||||
| Demographic Background | ||||||||||||||||
Tenure (years) | 5 | 9 | 12 | 19 | 14 | 9 | 5 | 16 | ||||||||
Gender |
|
|
|
|
|
|
|
| ||||||||
Female |
|
|
| ✓ |
| ✓ |
|
| ||||||||
Male | ✓ | ✓ | ✓ |
| ✓ |
| ✓ | ✓ | ||||||||
Non-Binary Gender |
|
|
|
|
|
|
|
| ||||||||
Age | 59 | 66 | 65 | 66 | 69 | 65 | 50 | 66 | ||||||||
Mandatory Retirement Year | 2035 | 2028 | 2029 | 2028 | 2025 | 2029 | 2044 | 2028 | ||||||||
Race/Ethnicity |
|
|
|
|
|
|
|
| ||||||||
Black or African American |
| ✓ |
|
|
|
|
|
| ||||||||
Hispanic or Latino | ✓ |
|
|
|
|
|
|
| ||||||||
White | ✓ |
| ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||
Asian (including South Asian) |
|
|
|
|
|
|
|
| ||||||||
Native Hawaiian or Pacific Islander |
|
|
|
|
|
|
|
| ||||||||
Native American or Alaska Native |
|
|
|
| ✓ |
|
|
| ||||||||
LGBTQ+ | ||||||||||||||||
Veteran |
|
|
|
| ✓ |
|
|
| ||||||||
Lives/Has Lived Abroad | ✓ |
| ✓ |
|
|
| ✓ | ✓ | ||||||||
| (1) | Service as president, chief executive officer or in similar senior executive positions. |
| (2) | Experience in the software/digital/cybersecurity, retail/dining, packaging, consumer goods, industrial goods or materials science industries. |
| (3) | Seniority in a global enterprise or significant experience in international markets. |
| (4) | Prior or concurrent service on other U.S. public company boards. |
| (5) | Expertise in accounting, auditing, tax, banking, insurance or investments. |
| (6) | Departing director Mark Barrenechea had this expertise, which is among the skills the Governance Committee and our Board will seek in new directors. |
14 | 2022 Proxy Statement | Avery Dennison Corporation |
Board Performance Highlights
Our Board provides strong oversight of our management team and company, with highlights of its notable accomplishments in recent years described below.
Supported management in navigating our evolving response to COVID-19, including related labor, freight and inflationary challenges in 2021 by ensuring we protected employee safety and well-being, delivered for our customers, mitigated supply chain risk, maintained a strong balance sheet to provide financial flexibility and supported our communities, while continuing to invest in our company’s future growth and further productivity
Oversaw consistent execution of our business strategies, which delivered significant operating margin expansion and double-digit compound adjusted EPS growth and exceeded our 2017-2021 financial targets, as well as 2017-2021 TSR of 237%, substantially outperforming the S&P 500 and the median of the S&P 500 Materials and Industrials subsets
Acquired 10 companies through year-end 2021 that added new capabilities and expanded our position in high-value product categories that serve markets that are growing faster than GDP, represent large pools of potential profit and leverage our core capabilities
Advanced Board and management focus on advancing ESG priorities, with consistent progress toward achieving our 2025 sustainability goals, more ambitious 2030 goals and increased transparency with more frequent and comprehensive disclosures, resulting in improved scores with key ESG rating agencies
Implemented thoughtful Board refreshment and succession planning, adding 3 new directors in theItem 1 — Election last 6 years, transitioning Patrick Siewert into Lead Independent Director role and appointing new Chairs for the Audit and Governance Committees, and proactively working to mitigate the impact of Directors sectionupcoming concentrated retirements under our mandatory retirement policy and further enhance Board diversity
Conducted regular executive leadership development and succession planning, resulting in several experienced leaders promoted to senior executive positions, including our new President and Chief Operating Officer (COO), new leaders of this proxy statement.our RBIS Apparel Solutions and IHM businesses, and our CHRO and Chief Legal Officer (CLO) in 2020 who effectively transitioned into their roles during 2021
Board Governance Highlights
Avery Dennison Corporation| 2019 Proxy Statement |ix
Our governance program reflects our company values and facilitates our Board'sensures independent Board oversight of our company. The highlightsHighlights of our program, which we believe is generallyconsistent and aligned with the Investor Stewardship Group'sGroup’s Corporate Governance Principles for U.S. Listed Companies, are shown below.
Stockholder Rights | ✓ Market-standard proxy access ✓ No supermajority voting requirements ✓ No poison pill ✓ No exclusive forum or fee-shifting bylaws | |
Board Governance | ✓ Annual election of directors ✓ Majority voting in director elections ✓ Single class of outstanding voting stock ✓ Current directors 89% independent; director nominees 88% independent ✓ Robust Lead Independent Director role ✓ Regular director succession planning and Board refreshment ✓ Continuous executive succession planning and leadership development ✓ Annual Board evaluations ✓ Mandatory director retirement policy at age 72 with no exemptions or waivers allowed or granted ✓ Governance Guidelines ✓ Strong Committee governance ✓ Direct access to management and experts |
✓Annual Election of Directors✓Majority Voting in Director Elections✓Single Class of Outstanding Voting Stock✓Market-Standard Proxy Access✗No Supermajority Voting Requirements✗No Poison Pill✗No Exclusive Forum or Fee Shifting Bylaws
✓Current Directors 83% Independent✓Robust Lead Independent Director Role✓Ongoing Director Succession Planning and Board Refreshment✓Executive Succession Planning and Leadership Development✓Annual Board Evaluations✓Mandatory Director Retirement Policy✓Governance Guidelines✓Strong Committee Governance✓Direct Access to Management and Experts
APPROVAL OF EXECUTIVE COMPENSATION (ITEM 2)
COMPENSATION DESIGN
The Compensation Committee designsoversees our executive compensation program, to motivate our executives to execute our business strategies and deliver long-term stockholder value. The programwhich delivers pay for performance, with realized compensation dependent on our company achieving challenging annual and long-term financial performancetargets and value creation objectives that advance the interests of our stockholders.
PERFORMANCE-BASED COMPENSATION
Avery Dennison Corporation | 2022 Proxy Statement
| 15 |
Election of President and COO
In late 2021 and early 2022, during Board meetings and executive sessions with our Chairman/CEO, but no other members of management present, and further one-on-one conversations between our Chairman/CEO and each director, our Board conducted leadership planning, among other things, discussing the potential election of Deon M. Stander, the Vice President and General Manager of our RBIS business, as President and COO. As a result of this thorough planning and these robust discussions, in February 2022, Mr. Stander was elected by our Board as our President and COO, effective March 1, 2022. Mr. Butier served as our President through the end of February 2022 and now serves only in the roles of Chairman and CEO.
Performance-Based Compensation
Target total direct compensation (TDC) for our executivescorporate Named Executive Officers (NEOs) is comprised of the following three components:elements shown below.
•Base salary;ELEMENTS OF TARGET TDC FOR CORPORATE NEOs•Performance-based annual cash incentive under our Annual Incentive Plan (AIP); and•Long-term incentives delivered in performance-based equity awards, consisting 50% of performance units (PUs) and 50% of market-leveraged stock units (MSUs).
The Compensation Committee establishesapproves the target TDC of our Named Executive Officers (NEOs)NEOs to incent economicstrong operational and financial performance and stockholder value creation, giving consideration to creation. As shown below, the market median, role responsibilities, individual performance, tenure, retention and succession. Thesubstantial majority of this compensation is performance-based, meaning that our executives ultimately may not realize somethe value of thesethe at-risk components of TDC if we fail to achieve our strategic, financial and ESG objectives. Our business NEO’s 2021 AIP award and PUs had different performance objectives than those of our corporate NEOs.
16 | 2022 Proxy Statement | Avery Dennison Corporation |
Avery Dennison Corporation| 2019 Proxy Statement |x
Table of ContentsPay for Performance
As shown in the charts showngraph below, in 2018, approximately 86% and 70% of the TDC ofrecent years, our CEO and average of our other NEOs, respectively, was performance-based.
2018 Target Total Direct Compensation Mix
PAY-FOR-PERFORMANCE
Over the past five years,CEO’s compensation increased commensurate with our cumulative TSR, increasedwith his 2021 pay reflecting the longer-term approach to CEO compensation approved by 100% while the total compensationCompensation Committee in 2021. See the Compensation Discussion andAnalysis section of our CEO decreased by approximately 28%. In the graph below, CEO pay reflects the compensation of our former CEO, Mr. Scarborough,this proxy statement for 2014 and 2015, and the compensation of our current CEO, Mr. Butier, from 2016 to 2018.more information.
Five-Year CEO Pay and Cumulative TSR
Executive Compensation Best Practices
Avery Dennison Corporation| 2019 Proxy Statement |xi
COMPENSATION BEST PRACTICES
As summarized below and described in further detail in theCompensation Discussion andAnalysissection of this proxy statement, our executive compensation program aligns with our financial goals and business strategies and reflects best practices.
| Pay-for-Performance | ✓ 88% of CEO 2021 target TDC tied to company performance ✓ 71% of CEO 2021 target TDC equity-based to incent delivery of long-term stockholder value ✓ Rigorous stock ownership policy; requires CEO to own ~6x base salary, 50%+ of which must be vested shares; does not count unvested PUs and only counts 50% of unvested MSUs | |
Compensation Best Practices | ✓ Double-trigger equity vesting requires termination of employment after change of control ✓ YE 2021 three-year average burn rate of 0.58%, in line with 50th percentile of S&P 500 companies ✓ Compensation clawback in event of accounting restatement ✓ Independent compensation consultant retained and serving at direction of Compensation Committee ✓ Annual Compensation Committee evaluation and charter review ✓ Periodic formal risk assessment of compensation policies and practices ✓ Releases from liability and restrictive covenants for departing executives ✓ Compensation Committee review of NEO tally sheets reflecting all compensation components | |
✓ No NEO employment contracts ✓ No guaranteed AIP awards; NEO AIP awards based on company, business and ESG performance ✓ No excise tax gross-ups on change of control severance benefits ✓ No tax gross-ups on perquisites ✓ No above-market interest rates for deferred compensation ✓ No re-pricing of stock options without stockholder approval ✓ No payout of MSU dividend equivalents until vesting ✓ No grant of stock options below fair market value ✓ No supplemental retirement benefits |
Avery Dennison Corporation | 2022 Proxy Statement | 17 |
What We Do
✓Pay for performance — 86% of our CEO's 2018 target TDC was tied to company performance✓Emphasize long-term performance — 68% of our CEO's 2018 target TDC was equity-based and tied to delivering long-term stockholder value✓Use double-trigger change of control vesting provisions — vesting requires a qualifying termination of employment within 24 months✓Manage share usage conservatively — our three-year average burn rate at the end of fiscal year 2018 of 0.8% was at the 50thpercentile of companies in the S&P 500✓Maintain rigorous stock ownership policy — 6x base salary for our CEO and 3x base salary for our other NEOs; requires holding 50% of minimum ownership level in vested shares✓Able to clawback compensation✓Rely on the advice of an independent compensation consultant retained directly by, and serving at the direction of, the Compensation Committee✓Annually evaluate the Compensation Committee and review its charter✓Periodically assess risks related to our compensation policies and practices✓Following termination, obtain releases from liability from and impose restrictive covenants on our departing executives✓Review tally sheets for our NEOs reflecting all compensation components
What We Don't Do
✗No employment contracts with our NEOs✗No guaranteed AIP awards and generally no individual modifiers for our NEOs✗No excise tax gross-ups on change of control severance benefits✗No hedging or pledging of company stock by directors and officers✗No tax gross-ups on perquisites✗No above-market interest rates in our only deferred compensation plan currently available for deferrals✗No re-pricing of stock options without stockholder approval✗No payout of accrued dividends unless performance conditions are met and underlying equity awards vest✗No granting of stock options below fair market value✗No supplemental retirement benefits for executive officers
RATIFICATION OF APPOINTMENT OF PwC (ITEM 3)
Our Board'sBoard’s Audit and Finance Committee has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for fiscal year 2019,2022 and our Board is seeking stockholder ratification of the appointment. PwC is very well qualifiedwell-qualified to actcontinue serving as our independent registered public accounting firm, and has a deep understanding of our operations and accounting practices.practices, and maintains rigorous procedures to ensure auditor independence. The Audit and Finance Committeecommittee considered the qualifications, performance and independence of PwC, the quality of its discussions with PwC, and the fees charged by PwC for the level and quality of services provided by the firm during 2018,2021 – as well as considerations regarding PwC’s tenure as our independent auditor – and determined that the reappointment of PwC iswas in the best interest of our company and stockholders.
18 | 2022 Proxy Statement | Avery Dennison Corporation |
Avery Dennison Corporation| 2019 Proxy Statement |xii
|
We produce pressure-sensitive materials and a variety of tickets, tags, labels and other converted products. We sell most of our pressure-sensitive materials to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting. We sell other pressure-sensitive materials in converted form as tapes and reflective sheeting. We also manufacture and sell a variety of other converted products and items not involving pressure-sensitive components, such as fasteners, tickets, tags, radio-frequency identification (RFID) inlays and tags, and imprinting equipment and related solutions, which serve the apparel and other end markets.
Under theWith oversight offrom our Board, of Directors (our "Board"), we have designed our governance program to comply with applicable laws and regulations —– including the rules of the Securities and Exchange Commission (SEC) and the listing standards of the New York Stock Exchange (NYSE) —– and to reflect best practices as informed by the practices of other large public companies, recommendations from our outside advisors, the voting guidelines of our stockholders and the policies of proxy advisory firms. The key features of our program are noteddescribed in theBoard Governance Highlights section of the Proxy Summary; together they form a program that we believe is consistent and aligned with the Investor Stewardship Group's Corporate Governance Principles for U.S. Listed Companies.proxy summary.
We encourage you to visit the Corporate Governanceinvestors section of our website atwww.averydennison.com/corporategovernance,under Corporate Governance, where you can reviewview and download the following documents:current versions of the documents shown below and referenced in this proxy statement.
•Amended and Restated Certificate of
Incorporation;•- Incorporation
Amended and Restated Bylaws (our
"Bylaws"“Bylaws”);•Corporate Governance Guidelines (our
"Governance Guidelines"“Governance Guidelines”);•Charters for our
Board'sBoard’s Audit and Finance Committee (the"Audit Committee"“Audit Committee”),CompensationTalent andExecutive PersonnelCompensation Committee (the"Compensation Committee"“Compensation Committee”),and Governanceand Social ResponsibilityCommittee(the "Governance Committee");•Code of
Conduct;•- Conduct
Code of Ethics for the
Chief Executive Officer (CEO)CEO and Senior FinancialOfficers; and•- Officers
Audit Committee Complaint Procedures for Accounting and Auditing
Matters.MattersYou can access these documents on our website using the links contained in this proxy statement, but should note that informationInformation on our website is not and should not be considered part of, nor is it incorporated by reference into, this proxy statement. You canalsoreceive copies of these documents, without charge, by writing to our Corporate Secretary atAvery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.8080 Norton Parkway, Mentor, Ohio 44060.Avery Dennison Corporation|2019 Proxy Statement|1Table of ContentsVALUES AND ETHICSCODE OF ETHICSWe have adopted a Code of Ethics that requires our CEO, Chief Financial Officer (CFO) and Chief Accounting Officer (CAO) to act professionally and ethically in fulfilling their responsibilities.•Our CEO, CFO and CAO mustavoid actual or apparent conflicts of interestand disclose any material transaction or relationship that could reasonably be expected to raise a conflict of interest to the Governance Committee.•In addition, they must:•Ensure that our SEC filings are complete and accurateand contain understandable information;•Respect the confidentiality of informationacquired in the course of the performance of their responsibilities;•Employ corporate assets responsibly; and•Report violationsof our Code of Ethics to the Chair of either the Audit Committee or the Governance Committee.
Supporting the principles reflected in our Code of Ethics, our controllership and internal audit functions ensure that we maintain a robust internal control environment, with the leaders of these functions regularly reporting to, and periodically meeting in executive session with, the Audit Committee.Our Code of Ethics is available on our website atwww.averydennison.com/codeofethics. Only the Audit Committee or the Governance Committee can amend or waive the provisions of the Code of Ethics, and any amendments or waivers must be posted promptly on our website or timely filed with the SEC on a Current Report on Form 8-K. We last amended our Code of Ethics in April 2014.CODE OF CONDUCTOur Code of Conduct applies to all of our directors, officers and
employees.employees and reflects our values of Integrity, Courage, External Focus, Diversity, Sustainability, Innovation, Teamwork and Excellence. The Code includes leadership messages, detailed information regarding higher risk areas, and case studies to provide guidance on situations that raise complex ethical questions. It has been translated into over 30 languages and our leaders affirm their commitment to complying with it when they first join our company andannually thereafter.thereafter as part of our compliance certification process. We regularly train employees ontheCodeof Conduct at least biannually,topics in instructor-led sessions held in person or virtually, in addition to our online training program generally consisting of four courses per yearcovering specific risk areas from the Code of Conductthatdesignatedour computer-based employees are required to complete.To ensure that the policies and principles encompassed in our Code of Conduct reach all our employees, we develop and launch three
"Talkabout" toolkits“Talkabout” Toolkits (also in over 30 languages) globally each year, which managers are required to use to engage in meaningful discussion with their teams regarding topics from the Code of Conduct. These toolkits consist of presentation slidesa leader discussion guideand an introductory subtitled video, which includes messages from our Chief Compliance Officer and other companyleadership.leaders.Recent Code UpdatesAvery Dennison Corporation | 2022 Proxy Statement
19
In 2017, we refreshed our Code of Conduct, which is available on our website atwww.averydennison.com/codeofconduct, with updated leadership messages, additional guidance on certain higher risk areas, and case studies to provide additional guidance on more complex ethical situations. We introduced the updated Code of Conduct with manager and employee communications and created a pocket version for distribution to all employees. In 2018, we further updated our Code of Conduct to reflect our updated values of Integrity, Courage, External Focus, Diversity, Sustainability, Innovation, Teamwork and Excellence. These values will shape our culture and guide our behavior as we continue to grow. Our "Values in Action" campaign during the year provided our employees around the world the opportunity to demonstrate how they are living our values and helping maintain our values-based culture.
Avery Dennison Corporation| 2019 Proxy Statement |2
Ethics-Based Corporate Culture and Policies
Reflecting the culture of our company, since its inception, the ethics-based corporate policies and other matters discussed in our Code of Conduct are shown below. Our global supplier standards extend our commitment to many of these principles to our third party service providers, establishing our expectation that they also do business in an ethical manner.
Business Conduct GuideLine
Our Business Conduct GuideLine (the “GuideLine”) is a whistleblower hotline available at all hours for employees or third parties to report potential violations of our Code of Conduct or applicable laws, anonymously if they so choose.
The GuideLine may be reached by (i) calling 800.461.9330 toll-free in the United States, 720.514.4400U.S., +1.720.514.4400 direct with applicable charges from any location, or toll-free outside of the United StatesU.S. using the country-specific toll-free numbers found in our Code of Conduct or (ii) visitingaverydennison.com/ www.averydennison.com/guidelinereport(averydennison.com/www.averydennison.com/guidelinereport-eu in Europe). The hotline is operated by an independent third party and accepts reports in any language to accommodate the needs of our global workforce and customer/supplier base. All reportsReports are investigated under the direction of our Chief Compliance Officer, in consultation with our law department and senior management and with oversight from the Governance Committee. We prohibit retaliation for good-faith reporting.
Avery Dennison Corporation| 2019 Proxy Statement |3
TableFinancial Code of ContentsEthics
We have adopted a Code of Ethics that requires our CEO, CFO and Controller/Chief Accounting Officer (CAO) to act professionally and ethically in fulfilling their responsibilities. Only the Audit Committee or the Governance Committee can amend or waive the provisions of our Code of Ethics, and any amendments or waivers must be posted promptly on our website or timely filed with the SEC on a Current Report on Form 8-K. We last amended our Code of Ethics in April 2014 and we have made no exemptions or granted any waivers since its inception.
Code of Ethics Responsibilities |
• Avoidactual or apparent conflicts of interest • Ensure complete and accurate SEC filings • Respect confidentiality of financial and other information • Employ corporate assets responsibly • Report Code of Ethics violations to Chair of Audit or Governance Committees |
Supporting fulfillment of these responsibilities, our controllership and internal audit functions ensure that we maintain a robust internal control environment, with the leaders of these functions regularly reporting to, and periodically meeting in executive session with, the Audit Committee.
20 | 2022 Proxy Statement | Avery Dennison Corporation |
COMPLAINT PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS
The Audit Committee has adopted procedures for the confidential, anonymous submission of complaints related to accounting, accounting standards, internal accounting controls and audit practices.
These procedures relate to complaintsreports of (i) fraud or deliberate error in the preparation, evaluation, review or audit of our financial statements or other financial reports; (ii) fraud or deliberate error in the recording or maintenance of our financial records; (iii) deficiencies in, or noncompliance with, our internal accounting controls; (iv) misrepresentation or false statement to or by a senior officer or accountant regarding any matter contained in our financial records, statements or other reports; or (v) deviation from full and fair reporting of our financial condition. Any person, including third parties, may submit a good faith complaint regarding accounting and auditing matters and employees may do so without fear of dismissal or other retaliation. The Audit Committee oversees these procedures, which are available on our website atwww.averydennison.com/auditprocedures. Investigations arewith investigations conducted under the direction of our internal audit department in consultation with our Corporate Secretary, Chief ComplianceLegal Officer law department and senior management to the extent appropriate under the circumstances.
Stockholders and other interested parties interested in communicating regarding these matters may make a confidential, anonymous report by contacting the Business Conduct GuideLine as described on the previous page or writing to the Audit and Finance Committee Chair, c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.8080 Norton Parkway, Mentor, Ohio 44060.
Our stock ownership policy requires that non-employee directors acquire and maintain a minimum ownership interest in our company equal toof $500,000 and our CEO, Level 2 executives and other NEOsLevel 3 executives acquire and maintain a minimum ownership interest in our company equal to 6x, 3x and 3x2x their annual base salary, respectively.respectively, at least 50% of which must be held in vested shares.
The values of the following shares/units are considered in measuring compliance with our stock ownership policy: (i) shares beneficially owned or deemed to be beneficially owned, directly or indirectly, under federal securities laws; (ii)for officers, shares or units held in qualified and non-qualified employee benefit plans; (iii)plans, unvested RSUsrestricted stock units (RSUs) subject only to time-based vesting;vesting, and (iv) 50% of the value of unvested MSUs at the target payout level.level; and, for non-employee directors, deferred stock units (DSUs). Neither stock options nor unvested PUs nor stock options are considered in measuring compliance.
If
Until a director or officer fails to achieve or make reasonable progress towards achievingachieves his or her respective ownership level,requirement, he or she is required to retain shares acquired, net of taxes, from the exercise of stock options or vesting of stock awards until such levelthe requirement is met. ExecutivesThese individuals are not allowed to transact in company stock until they certify that they will remain in compliance with our stock ownership policy after giving effect to the transaction they plan to effectuate.
The Compensation Committee and the Governance Committee reviewed the stock ownership of our non-employee directors in December 2018November 2021 and February 2019,2022, respectively. Both Committees noteddetermined thatall of our non-employee directors have exceeded the minimum ownership level required by the policy, except for Messrs. Barrenechea and Lopez who became directors in September 2018 and February 2017, respectively, and have five years to reach the minimum ownership level. The Committee noted that, because they had made reasonable progress towards meeting the applicable level, Messrs. Barrenechea and Lopez were also in compliance with the policy. Onpolicy, with average ownership of 12x the ownership of our non-employee directors was approximately 6x the minimum ownership level, aligningrequirement, helping ensure their interests remain aligned with those of our stockholders and further incenting their focus on long-term stockholder value creation. The relatively high average ownership level by our non-employee directors is largely due to the inclusion of DSUs for purposes of our stock ownership policy; DSUs represent annual cash retainers deferred at a director’s election. DSUs are included as owned under the policy because they are earned upon receipt and would be paid out to a director upon his or her separation from our Board.
The Compensation Committee reviewed officerexecutive stock ownership in December 2018November 2021 and determined that all of our executive officers, including all NEOs, were in compliance with our stock ownership policy.policy. The compliance of our directors and NEOs with our stock ownership policy as of year-end 2021 is shown on the following page.
Avery Dennison Corporation | 2022 Proxy Statement | 21 |
| STOCK OWNERSHIP POLICY COMPLIANCE | ||||||||||||||||
|
| Minimum Requirement(1) | Shares(2) as of 2021 FYE (#) | Requirement Achieved | Policy Compliance | ||||||||||||
Non-Employee Directors | $ | 500,000 |
|
|
|
|
|
|
|
|
| |||||
Bradley Alford |
|
|
| 42,930 | 18x | ✓ | ||||||||||
Anthony Anderson |
|
|
| 16,069 | 6x | ✓ | ||||||||||
Mark Barrenechea |
|
|
| 6,892 | 2x | ✓ | ||||||||||
Ken Hicks |
|
|
| 43,810 | 18x | ✓ | ||||||||||
Andres Lopez |
|
|
| 8,390 | 3x | ✓ | ||||||||||
Patrick Siewert |
|
|
| 16,842 | 7x | ✓ | ||||||||||
Julia Stewart |
|
|
| 63,471 | 27x | ✓ | ||||||||||
Martha Sullivan |
|
|
| 28,727 | 12x | ✓ | ||||||||||
Chairman & CEO |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Mitchell Butier | $ | 7,200,000 | 269,668 | 8x | ✓ | |||||||||||
Level 2 NEOs |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gregory Lovins | $ | 1,983,780 | 46,051 | 5x | ✓ | |||||||||||
Deon Stander | $ | 1,707,021 | 35,663 | 4x | ✓ | |||||||||||
Level 3 NEOs(3) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deena Baker-Nel | $ | 832,000 | 4,005 | 1x | ✓ | |||||||||||
Ignacio Walker | $ | 850,750 | 6,948 | 1x | ✓ | |||||||||||
| (1) | Minimum requirements for CEO, Level 2 NEOs and Level 3 NEOs reflect 6x, 3x and 2x, respectively, of their respective base salary as of year-end 2021. |
| (2) | Reflects shares/units considered in measuring compliance with our stock ownership policy rather than vested shares, based on the average closing price of our common stock from October 1 to December 31, 2021. |
| (3) | Minimum requirements for Ms. Baker-Nel and Mr. Walker increased from 1x to 2x their respective base salaries in connection with their promotions in September 2020. |
Avery Dennison Corporation| 2019 Proxy Statement |4
| COMPLIANCE WITH STOCK OWNERSHIP POLICY | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
| | SHARES AS OF 2018 FYE (#) | MINIMUM GUIDELINE | % OF GUIDELINE | COMPLIANCE | ||||||||
NON-EMPLOYEE DIRECTORS | | | $ 500,000 | | | | | |||||
Bradley Alford | 35,020 | 625% |  | |||||||||
Anthony Anderson | 14,246 | 254% | | |||||||||
Peter Barker | 58,666 | 1047% | | |||||||||
Mark Barrenechea | 880 | 16% | | |||||||||
Ken Hicks | 38,609 | 689% | | |||||||||
Andres Lopez | 4,050 | 72% | | |||||||||
David Pyott | 67,165 | 1199% | | |||||||||
Dean Scarborough | 47,177 | 842% | | |||||||||
Patrick Siewert | 14,640 | 261% | | |||||||||
Julia Stewart | 55,321 | 988% | | |||||||||
Martha Sullivan | 13,933 | 249% | | |||||||||
PRESIDENT & CEO | | | 6x Base Salary | | | | | |||||
Mitchell Butier | 189,312 | $6,798,000 | 249% | | ||||||||
OTHER NEOs | | | 3x Base Salary* | | | | | |||||
Gregory Lovins | 25,239 | $1,800,000 | 125% | | ||||||||
Georges Gravanis | 21,746 | $1,883,907 | 103% | | ||||||||
Susan Miller | 37,467 | $1,692,374 | 198% | | ||||||||
Deon Stander | 20,175 | $1,077,920 | 167% | | ||||||||
*Mr. Stander's minimum guideline in 2018 was 2x base salary. As an NEO, his guideline increased to 3x base salary for 2019, which he exceeded at year-end 2018.
INSIDER TRADING POLICY
Our insider trading policy prohibits our directors,Board members, officers and employees from (i) engaging in transactions in our company'scompany’s stock while in the possession of material non-public information; (ii) engaging in transactions in the stock of other companies while in possession of material non-public information that they become aware of in performing their duties; and (iii) disclosing material non-public information to unauthorized persons outside our company.
Limited Trading Windows
Our insider trading policy restricts trading for directors andby Board members, officers (including allour NEOs) and director-level employees during blackout periods, which generally begin two weeks before the end of each fiscal quarter and end two business days after the release of earnings for the quarter. Additional blackout periods may be imposed with or without notice, as the circumstances require.
ProhibitionProhibitions on Hedging and Pledging
Our insider trading policy expressly prohibits our directors, officers (including our NEOs) and employees from purchasing financial instruments (such as prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of shares of our common stock they hold, directly or indirectly. In addition, directors and officers are expressly prohibited from —– and our non-officer employees are strongly discouraged from —– pledging anyshares of their shares ofour common stock to secure personal loans or other obligations, including by holding such shares in a margin account.
To our knowledge based on our review of their written representations in our annual director and officer questionnaire, all of our directorsBoard members and executive officers complied with our insider trading policy during 2018,2021, and none of them has hedged or pledged shares of our common stock.
22 | 2022 Proxy Statement | Avery Dennison Corporation |
Avery Dennison Corporation| 2019 Proxy Statement |5
ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
Sustainability is oneand Diversity are two of our core values and hashave long been part of our approach to doing business, driving us to work collaborativelywithin our company and across our entire value chain to address the environmental and social impacts of our products.Ourproducts and practices. We aim is to continually improve the environmental sustainability of our products and processes, to create shared valuebuild a more diverse, equitable and inclusive workforce, and provide meaningful support for all of our stakeholders.communities.
In 2018, leadership over ensuring meaningful progress towards achieving our 2025 sustainability goals transitioned fromWith strategic guidance and direction provided by Mitch Butier, our Chairman/CEO, responsibility over ensuring that we continue to make progress toward achieving our sustainability goals resides with Deon Stander, now our President and CEO, to Deon Stander, Vice President and General Manager of our Retail Branding and Information Solutions (RBIS) business.COO. Our enterprise-wide Sustainability Council, now led by Mr. Stander and comprised of an expandeda cross-divisional and cross-functional group of functional and business leaders to help drive broad accountability and continually accelerate our progress, meets bimonthlymet regularly during 2021 to develop our 2030 sustainability goals and updatestargets, as well as formulate our executive leadership team quarterly. The Council has the following four work streams to help focus its efforts, each of which is led by an internal leader from one of our businesses: operations; technology and innovation; products and solutions; and social impact and transparency. go-forward ESG strategy.
Board oversight over environmental sustainability and community investment is primarily conducted by the Governance Committee, which receives a report from management on each of these topics at least once a year. In addition, our full Board hears from ourengages with business leaders on ourtheir sustainability initiatives during its regular review of ourtheir business strategies. In July and October 2021, our full Board held strategy sessions focused on environmental sustainability, our innovation efforts to address the increasing need and demand for more sustainable products, our strategic innovation platforms focused on waste reduction/elimination and material circularity, and our overall ESG strategy, priorities and progress.
Board oversight over social sustainability is conducted primarily through the Compensation Committee, which reviewed our DE+I progress at each of its meetings in 2021 and regularly discusses other matters related to talent management. In December 2021, our full Board engaged with, and challenged, management on our DE+I progress,including by reviewing the four pillars of our enterprise DE+I strategy, as well as its supporting regional focus areas.
We seek to ensure that our sustainability efforts are consistent with the expectations of our stakeholders, as shown below.stakeholders. We regularly communicate with individuals and organizations interested in how we do business generally and our sustainability efforts in particular, and also conduct stakeholder interviews as part of our regular sustainabilitybiennial materiality assessments. These assessments help set our sustainability agenda, allowingfocusing us to focus on the areas in which we can have the most impact.
In 2020, we partnered with Environmental Resources Management to refresh our materiality assessment and reprioritize the sustainability topics most significant to our stakeholders. 
Avery Dennison Corporation| 2019 Proxy Statement |6
TableThe resulting materiality map showing the importance of Contents
ADVANCEMENTS TOWARDS 2025 SUSTAINABILITY GOALS
various ESG topics to our company and external stakeholders may be found in our March 2022 ESG Download. We publicly reporthave begun working on our sustainability progress every two years. In September 2017,next biennial materiality assessment, which we issuedplan to share with our 2014-2016 Sustainability Report, summarizing our achievements against our 2015 sustainability goals and providing details on the 2025 sustainability goals we setstakeholders in 2015. In the first three years of the 10-year horizon for our new goals, we have made meaningful progress, the key to which has been integrating sustainability into our underlying business strategies and engaging employees at all levels. We expect to issue our 2016-2018 Sustainability Report in the fall of 2019, describing our continued progress towards achieving our 2025 sustainability goals. We encourage you to review these reports, which contain greater information on the highlights summarized on the following page, on our website at www.averydennison.com/sustainability.March 2023.
Avery Dennison Corporation | 2022 Proxy Statement | 23 |
SUSTAINABILITY STAKEHOLDERS
Avery Dennison Corporation| 2019 Proxy Statement |7
 | 1 | |||||
 | ||||||
Industry
Trade Associations Cross-Industry Working Groups Conferences
 | ||||
 |
Customers and Brand Owners
Product Collaborations Surveys Site Audits Working Groups
 | 3 | |||
 |
Employees
Engagement Survey Works Councils Employee Resource Groups Intranet/Town Halls
Code of Conduct Training Business Conduct GuideLine
 | ||||
Investors
Annual Meetings Quarterly Earnings Calls Investor Meetings Stockholder Engagement Program
Non-Governmental Organizations
Consultations on Issues of Concern Specific Initiatives (e.g., responsibly sourcing paper, reducing GHG emissions)
| 6 | ||||
Policymakers and Regulators
Permitting Audits Certifications
| 7 | ||||
Communities
Foundation Grant-making Employee Volunteerism Civic Collaboration
| 8 | ||||
Suppliers
Supplier Standards Compliance Training Supplier Audits Joint Projects
PROGRESS TOWARD ACHIEVING OUR 2025 AND 2030 GOALS
We present our scorecard showing progress against our 2025 sustainability goals through 2021 in the proxy summary. We present our progress against our 2030 goals in our 2021 integrated annual and sustainability report. You can find additional information in our ESG Downloads available in the investors section of our website at investors.averydennison.com and on our ESG website at esg.averydennison.com. Our 2021 integrated sustainability and annual report, ESG Downloads and other information on our website are not and should not be considered part of, nor are they incorporated by reference into, this proxy statement.
24 | 2022 Proxy Statement |
We disclose our ESG metrics using the frameworks of the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI) and CDP Worldwide. We are a member of the United Nations Global Compact and have made commitments to the UN Sustainable Development Goals and the Science Based Targets initiative (SBTi), with our Scope 1 and 2 GHG emissions reduction targets having been approved by SBTias consistent with levels required to meet the goals of the Paris Agreement.
Avery Dennison Corporation| 2019 Proxy Statement |8
Table of ContentsDIVERSITY, EQUITY AND INCLUSION (DE+I)
Diversity is one of our core values, reflecting our desire to ensure an equitable and inclusive environment for people of all backgrounds and orientations and our recognition that we gain strength from diverse ideas and teams.The importance of DE+I to our company is evidenced by the engagement, inclusion and gender diversity-related targets included in our 2030 sustainability goals. Highlights of our DE+I journey are shown in the proxy summary.
Beginning in 2020, we redoubled our efforts on DE+I, engaging with our employees across the globe to gather information on areas where we most needed to focus. After listening and learning from our employees, our leaders regularly met to discuss areas of focus, and each of our business’ strategies include quantitative DE+I goals, with their leaders evaluated on the progress they make.
In 2021, we engaged a third party expert to help us perform DE+I baselining, which included an enterprise-wide inclusion assessment and pipeline analysis, provide external benchmarking and obtain independent anonymous and focus group feedback from our team members worldwide. With this information, we identified our DE+I priorities and developed our go-forward DE+I strategy,which includes the following four pillars: increasing the number of women who hold leadership positions; enhancing the experience of our shop floor employees; increasing DE+I for underrepresented groups; and making merit and transparency even more foundational to our employee experience. These pillars, as well as the supporting regional focus areas, have been communicated to our employees worldwide.
Each of our strategic pillars is sponsored by members of our Company Leadership Team. To ensure we achieve our goals, we have advanced our internal DE+I capability and leadership, with a Global DE+I Director and additional resources in each of our regions, together forming a global infrastructure of fully-dedicated resources. To keep ourselves accountable, we are committed to continuing to enhance external transparency into our DE+I journey through regular reporting and engagement with our stakeholders so they may critically assess our progress and provide feedback to help us achieve our goals.
SOCIAL RESPONSIBILITY
OTHER TALENT MANAGEMENT MATTERS
AVERY DENNISON FOUNDATIONSuccession Planning
The Compensation Committee and our full Board conduct executive succession planning at least semiannually, reviewing succession plans for our CEO and other senior executives. Consistent with this practice, in April 2021, the Compensation Committee discussed potential successors to the members of our Company Leadership Team, and aligned on a process and timeline to enhance focus on CEO succession planning as a matter of strong corporate governance. In October 2021, the Compensation Committee again reviewed talent that is ready – or, with continued development on their current trajectory with mentorship and coaching from our current leaders, will be ready – to fill senior executive positions in the event of a vacancy. These assessments were further discussed with our full Board. In addition, in July and December 2021, our full Board conducted CEO succession planning to ensure ready-now successors over multiple time horizons. The Compensation Committee also reviews executive new hires, promotions, transfers and departures in connection with each of its meetings to assist with executive succession planning and leadership development.
Leadership Development
The Compensation Committee oversees our company’s talent management programs to assist with identifying and developing our future leaders. We maintain a robust performance review process and provide leadership development opportunities for our employees. Senior management reports to the Compensation Committee or our full Board on leadership at executive levels of our organization by identifying high-potential talent and critical experts, cultivating the skills and capabilities to allow identified individuals to become our future leaders, and ensuring that they have appropriate development plans in place to progress them toward greater responsibility.Through regular reports from management, our Board has the opportunity to meet our business leaders and functional leaders in law, finance, information technology and human resources. In addition, Board members have freedom of access to all our employees, and are encouraged to visit our facilities to meet with local management and attend company events.
Avery Dennison Corporation | 2022 Proxy Statement | 25 |
With Board oversight from the Governance Committee, our social responsibilitycommunity investment efforts reflect our spirit of community and help strengthen the placescommunities around the world in which we do business.operate. We make most of our community investments through the Avery Dennison Foundation (the "Foundation")(ADF), which annually investsdistributes at least 5% of its assets from the prior year to advance women's empowerment, education and sustainability, and encourages employee engagement with a spirit of invention and innovation.The Foundation invests in communities by making grants to community-based organizations, promoting employee volunteerism and engagement, and awarding scholarships.
GLOBAL GRANTMAKING
The Foundation's global grantmaking initiative is itsyear. ADF’s grant-making, our primary means of giving. Grantmakinggiving, is also aided by our employees worldwide who help identify qualified NGOs. Grant decisions are guided by the priorities shown below, which are targeted to thedeserving nonprofit organizations serving communities in whichwhere our employees live and work.Historically, ADF has given to organizations advancing education, women’s empowerment and sustainability. In 2021, ADF continued to address these funding areas, while also responding to the COVID-19 pandemic, natural disasters and the call for greater DE+I worldwide.
In 2021, ADF and our company collectively made $6.3 million in grants and other financial contributions, more than double that of the prior year. In the discussion that follows, we provide an overview of this giving.
Beginning in 2020, ADF shifted its resources to support the response to EMPLOYEE ENGAGEMENTCOVID-19 in communities where our company has a presence. We continued that support in 2021. In a joint effort with the company, ADF provided grants to help fund COVID-19 relief efforts by nonprofit organizations in our global communities, including those described below.
India: A grant of $230,000 to support the American India Foundation in helping meet the acute shortage of portable hospital beds in the city of Gurgaon, where our company has facilities; a second grant of $235,000 to the American India Foundation helped source vaccines, supply diagnostic and medical emergency equipment, raise vaccination awareness and mitigate nutrition gaps in the city of Bangalore, where our company also has operations
Brazil: A grant of $100,000 supported Doctors Without Borders/Médecins Sans Frontières’ with vaccine coordination and the purchase and distribution of medical supplies
Sri Lanka: A grant of $50,000 helped the Rotary Club in the city of Kandy provide ICU beds at a rural hospital and purchase ventilators and other needed medical equipment
Vietnam: Two grants totaling $70,000 helped support the Red Cross Vietnam’s COVID-19 response in Long An and Bac Ninh
In 2021, ADF also continued to support the Employee Assistance Fund it launched in 2020, which provides financial assistance to our employees who have been significantly adversely impacted by COVID-19. The fund was designed to help provide for basic needs such as housing and utilities, medical care, dependent care and other pandemic-related expenses. The fund also provides support to families of employees who have died from COVID-19. Employee donations have significantly supplemented ADF funds for this effort. In all, more than $3.4 million was distributed in 2021 to more than 4,200 individuals in 27 countries. The fund is administered by Global Impact, an independent third party.
ADF also partnered with third-party nonprofit GlobalGiving to facilitate donations from our employees to disaster relief efforts, ensuring that their donations support legitimate and vetted nonprofit organizations in affected communities. All donations made through GlobalGiving are matched by ADF, and employees receive regular reports from the organizations they support describing accomplishments with the funding received. In 2021, our employees supported 43 charitable organizations through GlobalGiving, with donations totaling $60,000.
DE+I Support
Prompted in part by events in the U.S. in 2020, and in recognition of the role it can play in accelerating society’s journey toward greater equity, ADF made grants to organizations promoting DE+I globally. ADF worked with our regional DE+I councils and ERGs around the world to identify organizations most relevant to underrepresented communities in each region. A selection of these grants is described below.
Education: Included grants of $200,000 to World Vision Honduras to teach life skills to at-risk women; $132,000 to Associação Beneficente ABID to enhance foster care services in São Paulo, Brazil; $17,000 to Fundacion Leer to support literacy programs in Buenos Aires, Argentina; and $5,000 to Boys and Girls Club of Pasadena, California
26 | 2022 Proxy Statement | Avery Dennison Corporation
|
Sustainability: Included grants of $200,000 to Waste and Resource Action Program to support public-private partnerships aimed at reducing food waste in Indonesia and $50,000 to Lake-Geauga Habitat for Humanity to provide housing for low-income families in Painesville, Ohio
Women’s Empowerment: Included grants of $250,000 to UN Foundation Resilience Fund to support women in South and Southeast Asia; $124,000 to The Smile Foundation to support women’s empowerment in Delhi, India; $100,000 to Right to Play to provide educational opportunities for girls in refugee camps and underserved communities in Pakistan and Burundi; and $88,000 to Gesanghua Education Foundation to provide hygiene care packages for girls in Qinghai, China
DE+I: Included grants of $200,000 to HOLA Ohio to support a new Hispanic community center in Painesville; $50,000 to Youth Opportunities Unlimited to provide job readiness and training to African American youth in Cleveland, Ohio; $25,000 to the LGBT Community Center of Greater Cleveland to support LGBTQ+ awareness and programming in Northeastern Ohio; $25,000 to the Wounded Warrior Project to support veteran mental health; and $10,000 to Stichting – Women in Higher Technical Education to support gender diversity in STEM programs in the Netherlands
Employee Engagement
As the handsheart and hearthands of our company, our employees are critical to advancing the Foundation's efforts. Because they often have the best understanding of the needs ofour community investment efforts through both their communities, moregiving and volunteerism. More than 150 employee teams coordinate volunteerism locally at our global locations. Nearly 50%Examples of the Foundation's grantsemployee engagement in 2021 are enhanced with volunteer time from our employees.described below.
Employees in India supported The Smile Foundation’s “Health Cannot Wait” campaign to boost distribution of oxygen concentrators and ventilators to government health institutions
Team members in Ireland honored International Women’s Day by donating to Longford Women’s Link, an organization providing education and training opportunities for women
Our RBIS employees produced limited-edition, iron-on patches designed to celebrate healthcare and frontline workers and promote health and safety, with net proceeds benefiting Doctors Without Borders/Médecins Sans Frontières
Business partnerships with local organizations promoting DE+I, as well as our company hiring interns from community partners such as Esperanza, the National Society of Black Engineers and Black Professionals Charitable Foundation
ADF also engages employees through theits Granting Wishes program, which allows employees globally to recommend one-time grants to their local NGOs. Employees often have a connectionnon-governmental organizations (NGOs). Given increased need in 2021, employees were more engaged than ever in nominating charitable organizations for funding and volunteering to thesupport those organizations, they nominate through volunteerism or service on the organization's board.resulting in grants of $10,000 each to 80 NGOs in 33 countries. In the eight10 years since the FoundationADF launched Granting Wishes, more than 1,0002,000 of our employees have taken part, enablingsubmitted funding recommendations, resulting in grants to more than 280350 organizations.
SCHOLARSHIPSScholarship Programs
The Foundation providesADF continues to provide scholarships to the children of our U.S. employees in the U.S. More than 620To date, over 660 scholarships have been awardedawarded. This program is administered by Scholarship America, an independent third party.
ADF has also partnered with our company to develop a Children of Employees Scholarship Program outside the U.S. college students.Initial countries proposed for the program include Bangladesh, Mexico, Sri Lanka and Vietnam. This program, which is expected to launch in 2022, will be administered by the Institute for Internal Education, an independent third party.
In China and India, the Foundation'sADF’s InvEnt Scholarships have for more than a decade supported the next generation of innovators in science, technology, engineering and mathematics. By providingScholarships have provided undergraduates in China and India with tuition assistance, the opportunity to participate in an invention competition and professional development opportunities, the Foundation inspires the spirit of innovation in future engineers and technology workers. As part of their application, students submit ideas for an invention they then design during their scholarship year. Over 186opportunities. To date, scholarships have been awarded to Chineseover 100 students in China and Indiannearly 100 students in India who have demonstrated outstanding innovative spirit and strong practical competence.
Avery Dennison Corporation | 2022 Proxy Statement | 27 |
Avery Dennison Corporation| 2019 Proxy Statement |9
|
Our Board oversees, counsels and ensures management is serving the best interests of our company and stockholders, with the goal of maximizing the performance of our businesses to deliverand delivering long-term value.value for all our stakeholders.
PRIMARY BOARD RESPONSIBILITIES
Our Board's primary responsibilities include the following:
•Establishing aEstablish strong governance,program,witha Board andBoard/Committee structurethat ensuresand responsibilities providing independentoversight;•Conductingoversight
Review Board composition andconduct director succession planning to ensure we maintain an engaged and diverse Board with thebalance of skills, qualifications and demographic backgrounds to effectively oversee our company;
Oversee businesses, strategy execution, ESG priorities and progress, and risk mitigation
Approve annual operating plan and strategic decisions, including significant strategicfixed and operational actions, includingsignificant IT capital expenditures and acquisitions;
Maintain integrity of our financial statements;•Evaluating the
Evaluate performance of our senior leaders and determiningdetermine executive compensation; and
Conduct executive succession planningand ensure effective talent management
Our Board’s top priority in 2021 given the continuing public health crisis of COVID-19 was supporting management in protecting the health, safety and well-being of our employees, delivering for our CEOcustomers, minimizing the impact of the pandemic on our investors and other senior executives, and ensuring we have ahuman capital management program that is effectively developingsupporting our leaders.
2019 DIRECTOR NOMINEES2022 Director Nominees
Our Bylaws provide that our Board be comprised of between eight8 and 12 directors, with the exact number fixed from time to time by Board resolution. Our Board has fixed the current number of directors at 12, but plans9. In February 2022, director Mark Barrenechea notified our Board of his decision not to reducestand for reelection at the 2022 Annual Meeting so he can focus on other endeavors; as a result, our Board expects that it will fix the number of directors to 11 when Mr. Scarborough leaves the Boardat 8 in April 2019. The2022 assuming that all nominees for election at the Annual Meeting — and the year of their initial appointment or election, current or most recent principal occupation, independence status, and committee memberships —are reelected.
Our 2022 director nominees are shown in the chart below.
| NAME | AGE | DIRECTOR SINCE | PRINCIPAL OCCUPATION | INDEPENDENT | AC | CC | GC | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Bradley A. Alford | 62 | 2010 | Retired Chairman & CEO, Nestlé USA | | M | M | ||||||||
| Anthony K. Anderson | 63 | 2012 | Retired Vice Chair & Managing Partner, Ernst & Young LLP | | M | M | ||||||||
| Peter K. Barker | 70 | 2003 | Retired Chairman of California, JPMorgan Chase & Co. | | M | | C | |||||||
| Mark J. Barrenechea | 54 | 2018 | Vice Chair, CEO & CTO, OpenText Corporation | | ||||||||||
| Mitchell R. Butier | 47 | 2016 | Chairman-Elect, President & CEO, Avery Dennison Corporation | | | | | |||||||
| Ken C. Hicks | 66 | 2007 | Chairman & CEO, Academy Sports + Outdoors | | M | M | ||||||||
| Andres A. Lopez | 56 | 2017 | President & CEO, Owens-Illinois, Inc. | | M | | | |||||||
| David E. I. Pyott (LID) | 65 | 1999 | Retired Chairman & CEO, Allergan, Inc. | | M | M | ||||||||
| Patrick T. Siewert | 63 | 2005 | Managing Director & Partner, The Carlyle Group | | C | | | |||||||
| Julia A. Stewart | 63 | 2003 | Former Chairman & CEO, Dine Brands Global, Inc. | | C | M | ||||||||
| Martha N. Sullivan | 62 | 2013 | President & CEO, Sensata Technologies Holding PLC | | M | M | |
| Name | Age | Director Since | Principal Occupation | Independent | AC | CC | GC | |||||||||||||||||
Bradley A. Alford | 65 | 2010 | Retired Chairman & CEO, Nestlé USA | ✓ |
|
|
| ● | ● | |||||||||||||||
Anthony K. Anderson | 66 | 2012 | Retired Vice Chair & Managing Partner, Ernst & Young LLP | ✓ | ● |
|
|
| ● | |||||||||||||||
Mitchell R. Butier | 50 | 2016 | Chairman & CEO, Avery Dennison Corporation |
|
|
|
|
|
|
|
|
|
| |||||||||||
Ken C. Hicks | 69 | 2007 | Chairman, President & CEO, Academy Sports + Outdoors | ✓ |
|
|
| ● |
|
|
| |||||||||||||
Andres A. Lopez | 59 | 2017 | President & CEO, O-I Glass, Inc. | ✓ | ● |
|
|
|
|
|
| |||||||||||||
Patrick T. Siewert | 66 | 2005 | Managing Director & Partner, The Carlyle Group | ✓ | ● |
|
|
| ● | |||||||||||||||
Julia A. Stewart | 66 | 2003 | Chair & CEO, Alurx, Inc. | ✓ |
|
|
| ● | ● | |||||||||||||||
Martha N. Sullivan | 65 | 2013 | Retired CEO, Sensata Technologies Holding PLC | ✓ | ● |
|
|
|
|
|
| |||||||||||||
AC = Audit &and Finance Committee CC = Talent and Compensation & Executive Personnel Committee GC = Governance & Social Responsibility CommitteeM = Member C = Chair LID
= Lead Independent Director● = Chair ● = Member
The ages of our director nominees range from 4750 to 70,69, with an average age of 61.approximately 63. Their lengths of service range from less than one5 to 19 years, with an average tenure on our Board – after Mr. Barrenechea’s scheduled departure in April 2022 – of approximately nine111/2 years. None
Our director nominees bring a balance of skills, qualifications and demographic backgrounds in overseeing our directors serves on more than two other boards of SEC-reporting companies, except for Messrs. Andersoncompany, as shown by individual in the Board matrix included in the proxy summary.
28 | 2022 Proxy Statement | Avery Dennison Corporation |
Board Meetings and Pyott, who are both retired and serve on three such other boards.
Avery Dennison Corporation| 2019 Proxy Statement |10
Table of ContentsAttendance
APPOINTMENT OF NEW INDEPENDENT DIRECTOR
As part of its efforts to ensure regular Board refreshment, the Governance Committee oversaw our Board's search for a new independent director during 2018. The Committee engaged Spencer Stuart, an executive search firm, to assist it in identifying and evaluating potential candidates. Spencer Stuart identified a number of potential candidates (including Mark Barrenechea) who were initially evaluated by the Governance Committee and our Chairman, with input from other Board members and senior management.
The Governance Committee and other members of our Board interviewed Mr. Barrenechea, uniformly supporting his candidacy based on the deep technology industry expertise he could bring to our Board as we continue refining our go-to market strategies in our high value product category of Intelligent Labels. Upon the recommendation of the Governance Committee, our Board unanimously appointed Mr. Barrenechea to our Board effective September 10, 2018, recognizing his senior leadership experience, technology experience, global exposure and public company board experience.
DEPARTURE OF CURRENT CHAIRMAN
In February 2019, our Chairman, Dean Scarborough, notified our Board of his intention not to stand for reelection at the Annual Meeting so that he may focus on other endeavors. Mr. Scarborough's membership on, and chairmanship of, our Board will end on the date of the Annual Meeting. For information on our Board's leadership structure following Mr. Scarborough's departure, see theBoard Leadership Structure section of this proxy statement.
BOARD MEETINGS AND ATTENDANCE
Our Board met five times and acted twiceonce by unanimous written consent during 2018.2021. There were 2114 Board Committee meetings and one Committee action by unanimous written consent during the year.All of our directors attended at least 82%75% of the aggregate number oftheir respective Board and Committee meetings, of which he or she was a member during 2018; thewith average attendance of all 99%. In addition, our directors was 97%.regularly discussed matters of critical importance with our Chairman/CEO throughout the year outside of meetings, particularly with regard to our COVID-19 response; related supply chain, labor, freight and inflationary challenges; potential acquisitions; and ESG priorities and progress. Directors are strongly encouraged to attend our annual stockholder meetings under our Governance Guidelines andall of our directors attended the 2018virtual 2021 Annual Meeting.
Avery Dennison Corporation| 2019 Proxy Statement |11
Our Governance Guidelines provide the governance framework for our company and reflect the values of our Board, as highlighted below. They are reviewed at least annually and amended from time to time to reflect changes in regulatory requirements, evolving market practices, recommendations from our advisors and feedback from our stockholders. Our Governance Guidelines were most recently amended in December 2018.2021.
BOARD GOVERNANCE HIGHLIGHTS | ||
Board Composition | ✓ Reasonable Board size of 9 directors; after Annual Meeting, 8 directors ✓ Mandatory retirement after age 72 with no exemptions or waivers allowed or granted; no term limits ✓ On average, director nominee age of 63 years and tenure of 111/2 years ✓ 63% of director nominees are female or from underrepresented communities | |
Director Independence | ✓ Current directors and director nominees 89% and 88% independent, respectively ✓ Executive sessions of independent directors held at all five 2021 Board meetings | |
Board Leadership Structure | ✓ Annual review of Board leadership structure ✓ Robust Lead Independent Director role and independent Committee Chairs | |
Board Committees | ✓ 100% independent ✓ Annual composition review and periodic Chair/members rotation ✓ Act under annually reviewed charters reflecting best practices and stakeholder expectations ✓ Directors required to attend Board/Committee and stockholder meetings | |
Board Duties | ✓ Regular CEO/senior executive succession planning ✓ Ongoing review of long-term strategic plans, including key risks and mitigating strategies ✓ Directors entitled to rely on independent legal, financial or other advisors at our expense | |
Continuous Board Improvement | ✓ New directors participate in initial orientation to familiarize themselves with our company and after joining Board committees to understand their responsibilities ✓ Continuing education through meetings with management, visits to our facilities and participation in director education programs ✓ Annual evaluation process ensures Board, Committees, Chairman, Lead Independent Director and Committee Chairs are functioning effectively; includes peer evaluation | |
Director Qualifications | ✓ Regular review of Board composition (skills, qualifications, demographic backgrounds including with respect to gender, race and ethnicity, and board commitments) and director succession planning | |
Our Governance Guidelines Highlightsrequire that our Board be comprised of a majority of directors who satisfy the criteria for independence under NYSE listing standards and that our audit, compensation and nominating committees be comprised entirely of independent directors. An independent director is one who meets the independence requirements of the NYSE and who our Board affirmatively determines has no material relationship with our company, directly or indirectly as a partner, stockholder or officer of an entity with which we have a relationship.
Board Composition
✓Reasonable Board sizeAvery Dennison Corporation | 2022 Proxy Statement
29
Each year, our directors complete a questionnaire designed to solicit information that may have a bearing on our Board’s independence determination, including all relationships they have with our company, directly or indirectly through our company’s sale or purchase of 12 directorsproducts or services to or from the companies or firms by which they are employed. The Governance Committee reviews any relevant disclosures made in 2018
Director Independence
✓Current directors and director nominees 83% and 91% independent, respectively✓Executive sessions of non-management directors at every 2018 Board meeting,our Corporate Secretary, as well asone executive session forany transactions our company has with director-affiliated entities. In February 2022, after review of the facts and circumstances relevant to each director, the Governance Committee concluded that only Mr. Butier had a relationship that was disqualifying under NYSE listing standards, otherwise material or impairing of director independence. Upon the recommendation of the Governance Committee, our Board affirmatively determined the 8 current directors named below to be independent; as shown below, 88% of our director nominees are independent.Independent Directors
Bradley Alford
Anthony Anderson
Mark Barrenechea
Ken Hicks
Andres Lopez
Patrick Siewert
Julia Stewart
Martha Sullivan
Director Nominee Independence
For a discussion of the potential impact of tenure on director independence, see the Board Refreshment and Director Succession Planning section of this proxy statement.
Our Governance Guidelines give our Board – acting through its independent directors
only
Robust Lead Independent Director Role
Our robust Lead Independent Director role balances our combined Chairman/CEO role by exercising critical duties to ensure independent decision-making in the boardroom. Mr. Siewert began serving as our Lead Independent Director in April 2020 and was reelected by our independent directors for another one-year term in April 2021. Our Governance Guidelines clearly define his primary responsibilities, which are shown below.
LEAD INDEPENDENT DIRECTOR | PRIMARY RESPONSIBILITIES | |
Designee: Patrick Siewert | • Preside over executive sessions of independent directors and Board meetings where Chairman/CEO is not present • Serve as liaison between Chairman/CEO and independent directors | |
Selected annually by independent directors | • Approve Board meeting agendas and schedules • Call meetings of independent directors • Consult and meet with stockholders | |
Mr. Siewert also performed the activities described below and on the following page as Lead Independent Director in 2021.
Led majority of our off-season stockholder engagement discussions
Frequently engaged with Chairman/CEO to help guide strategic direction, including COVID-19 response and related supply chain, labor, freight and inflationary challenges, review of business strategies, mitigation of related risks, assessment of potential acquisitions and ESG progress
Consulted frequently with other independent directors and interviewed each of them as part of annual Board/Committee evaluation process
30 | 2022 Proxy Statement | Avery Dennison Corporation |
Provided feedback to Chairman/CEO based on discussions with independent directors
Met with members of senior management other than Chairman/CEO
Supplementing our Lead Independent Director in providing independent Board leadership are our Committee Chairs, all of whom are independent.
Board Leadership Structure
✓Annual review of Board leadership structure by the Governance Committee✓Robust Lead Independent Director role and independent Committee Chairs
Board Committees
✓100% independent✓Act under charters delineating Committee responsibilities✓Directors required to attend Board and Committee meetings
Board Duties
✓Directors entitled to rely on independent legal, financial or other advisors atDuring ourexpense✓Regular review of long-term strategic plans, including major risks and mitigating strategies✓Regular succession planning for our CEO and other senior leaders through the Compensation Committee
Continuous Board Improvement
✓All new directors participate in an initial orientation to familiarize themselves with our company and after joining a Committee to understand its responsibilities✓Directors continue their education through meetings with management, visits to our facilities and attendance at director education programs✓The Governance Committee oversees an annual evaluation process to ensure our Board, Committees, Chairman and Lead Independent Director are functioning effectively
Director Qualifications
✓The Governance Committee reviews the skills and characteristics of our Board members and recommends director nominees
Avery Dennison Corporation| 2019 Proxy Statement |12
Our Governance Guidelines require that our Board be comprised of a majority of directors who satisfy the criteria for independence under NYSE listing standards. These standards also require that our audit, compensation and nominating committees be comprised entirely of independent directors. An independent director is one who meets the independence requirements of the NYSE and who our Board affirmatively determines has no material relationship with our company, directly or indirectly as a partner, stockholder or officer of an entity with which we have a relationship.
Each year, our directors complete a questionnaire designed to solicit information that may have a bearing on the annual independence determination, including all relevant relationships they have with our company, directly or indirectly through our company's sale or purchase of products or services to or from the companies or firms by which they are employed. The Governance Committee reviews any relevant disclosures made in the questionnaires with our General Counsel/Corporate Secretary, as well as any transactions our company has with director-affiliated entities. In February 2019, the Governance Committee reviewed two relationships impacting the independence of our directors, namely Mr. Butier's service as our President and CEO and Mr. Scarborough's former service as our President and CEO.
After review and discussion of the relevant facts and circumstances, the Governance Committee concluded that only Messrs. Butier and Scarborough had relationships that were disqualifying under NYSE listing standards, otherwise material or impairing of director independence. Upon recommendation of the Governance Committee, our Board affirmatively determined the ten directors named below to be independent, representing 83% of our current directors and 91% of our director nominees.
 |  |
For a discussion of the potential impact of tenure on director independence, see theBoard Refreshment and Director Succession Planning of this proxy statement.
Our Governance Guidelines give our Board — acting through its independent directors — the discretion to separate or combine the roles of Chairman and CEO as it deems appropriate based on the needs of our company at any given time. To facilitate this decision-making, the Governance Committee annually reviews our Board leadership structure, providing its recommendation on the appropriate structure for the following one-year term to our independent directors. Our independent directors do not view any particular Board leadership structure as necessarily preferable; rather, they make an informed annual determination taking into account, among other things, our financial position, business strategies and any feedback received from our stockholders.
Avery Dennison Corporation| 2019 Proxy Statement |13
ROBUST LEAD INDEPENDENT DIRECTOR ROLE
Our Lead Independent Director balanced our non-independent Chairman and CEO roles in 2018, exercising critical duties in the boardroom to ensure effective and independent Board decision-making. Our Governance Guidelines clearly delineate these responsibilities, which are shown below. Mr. Pyott currently serves as our Lead Independent Director.
|
|
In addition to these responsibilities, Mr. Pyott performed the following activities as Lead Independent Director in 2018:
•Regularly consulted with each of the Chairman and CEO to help guide management's ongoing engagement with the Board on our strategic direction, including reviewing our business strategies and assessing acquisition opportunities;•Consulted regularly with our other independent directors;•Provided feedback to our Chairman and our CEO based on his discussions with our other independent directors; and•Met with members of senior management other than our CEO.
Supplementing our Lead Independent Director in providing independent Board leadership are our Committee Chairs, all of whom are independent.
PRE-ANNUAL MEETING LEADERSHIP STRUCTURE
Our Board currently has a Chairman, who as a recent former employee is not independent, a separate CEO, and a Lead Independent Director. The Governance Committee oversaw the evaluation of the performance of our Chairman and Lead Independent Director during the Board evaluation process conducted induring the fourth quarter of 2018, noting that2021, Messrs. ScarboroughButier and PyottSiewert each received uniformly positive feedback from our independent directors in their respective roles. Based on these evaluations, we believeroles as Chairman/CEO and Lead Independent Director, indicating that our pre-Annual Meetingcurrent Board leadership structure has providedis enabling effective independent oversight of our company. During our ongoing2021 engagement with stockholders, only one investor expressed a preference that the positions of Chairman and CEO be separated at our stockholders on governance matters, none of them expressed concerns with our pre-Annual Meeting Board leadership structure,company, which we believe reflects support for our robust and clearly delineated Lead Independent Director role.role and Mr. Siewert’s participation and strong engagement in the majority of our off-season meetings.
POST-ANNUAL MEETING LEADERSHIP STRUCTURE
In February 2019, in light of Mr. Scarborough's upcoming departure from our Board,2022, the Governance Committee evaluated our Board leadership structure and recommended to our Board that Mr. Butier be elected to continue serving as Chairman, noting that he has successfully led our company as CEO for the last threesix years and with Mr. Scarborough's departure, isremains best positioned to lead our Board in overseeing our strategies to drivedeliver long-term value creation for our key stakeholders.employees, customers, investors and communities. The committee further noted that Mr. Butier has articulated and worked to realize thea long-term vision for our company that has delivered top quartile TSR performance and exceeded our 2017-2021 financial targetsand that we couldcan best continue to advance our strategies and ESG progress towardstoward achieving our 2021 financial and 2025 sustainability goals – as well as our 2021-2025 financial targets and more ambitious 2030 sustainability goals – continuing with combined leadership in the boardroom at this time. Upon the recommendation of the Governance Committee, our Board unanimously elected Mr. Butier (with him and Mr. Scarborough abstaining) to serve as our Chairman, effective immediately after the Annual Meeting subject to his reelection.
Avery Dennison Corporation| 2019 Proxy Statement |14
TheAt that time, the Governance Committee also recommended that Mr. PyottSiewert (with him abstaining)not participating in the discussion) continue serving as Lead Independent Director. Retaining Mr. PyottHaving a long-serving director with financial expertise and substantial international experience serve as Lead Independent Director will providehas provided Mr. Butier valuable mentorship and guidance while ensuring robust independent guidanceBoard oversight of management. The committee also recognized Mr. Siewert’s valuable support and substantial effort with our stockholder engagement program. The Governance Committee determined that, in light of his demonstrated commitment, engagement and leadership continuity asin the second year in which he transitions intoserved in this capacity, Mr. Siewert should continue in the Chairman role. In addition, Mr. Pyott has significantly contributed to our executive compensation and governance programs through his strong,role of ensuring independent leadershipstewardship of our Board.Board in its oversight of our strategies to deliver long-term value for all our stakeholders. The committee’s decision took into account his significant contribution to the Board’s responsibilities as a member of the Audit Committee since joining our Board and as its Chair for five years, as the current Chair of the Governance Committee, and his extensive international experience in Asia, a region from which approximately 35% of our sales originated and approximately 58% of our employees were located in 2021. Upon the recommendation of the Governance Committee, our independent directors unanimously selected Mr. PyottSiewert (with him abstaining)abstaining from the vote) to continue servingserve as our Lead Independent Director, effective immediately after the Annual Meeting subject to his reelection.
Each of our Board committeesCommittees has a written charter that describes its purposes, membership and meeting structure, and responsibilities. These charters which may be found on the investors section of our website atwww.averydennison.com/corporategovernance,under Corporate Governance and are reviewed by the respective committee at least annually, with any recommended changes adopted upon approval by our Board. Amended charters are promptly posted on our website. The Charters forof the Audit, Compensation and Governance Committees were lastmost recently amended in December 2018, December 2018, and December 2016, respectively.February 2021.
Each of our Board committeesCommittees has the ability to form and delegate authority to subcommittees and may obtain advice and assistance from internal or external consultants, legal counsel or other advisors at our expense. In addition, each committee annually evaluates its performance. The primary responsibilities, current membership and 2021 meeting and attendance information for the three standing committees of our Board are summarized below and on the following page.pages.
Avery Dennison Corporation | 2022 Proxy Statement | 31 |
AUDIT FINANCE COMMITTEE | ||
|
| |
Current Members: Martha Sullivan (Chair) Anthony Anderson Andres Lopez Patrick Siewert 2021 meetings: 8 2021 average attendance: 100% Audit committee financial experts: Anderson and Siewert All members satisfy NYSE enhanced independence standards | • Oversee financial statement and disclosure matters, including
• Appoint and oversee
• Oversee
• Perform compliance oversight responsibilities, including overseeing
• Conduct finance oversight responsibilities, including reviewing
• Approve | |
Avery Dennison Corporation| 2019 Proxy Statement |15
|
| ||
Current Members: Julia Stewart (Chair) Bradley Alford Mark Barrenechea Ken Hicks 2021 meetings: 4 2021 average attendance: 100% All members satisfy NYSE enhanced independence standards and qualify as “non-employee directors” under Exchange Act Rule 16b-3 | • Review and approve corporate goals and
• Review andapprove senior executive compensation, including base salaries and incentive compensation • Oversee CEO succession planning and conduct succession and development planning for other senior executives; regularly review executive new hires, promotions and role changes, departures and open positions
• Review
• Review stockholder engagement process, results and feedback related to executive compensation and talent management • Approve
• Oversee stockholder approval of executive compensation matters, including
• Ensure no encouragement of excessive risk-taking in compensation policies/programs • Recommend non-employee director compensation | ||
32 | 2022 Proxy Statement |
|
|
| ||
Current Members: Patrick Siewert (Chair) Bradley Alford Anthony Anderson Julia Stewart 2021 meetings: 2 2021 average attendance: 100% All members satisfy NYSE independence standards | • Identify potential or incumbent Board members and recommend director nominees
• Recommend Board and Committee structure,
• Recommend
• Review andapprove related person transactions
• Oversee
• Review
• Review stockholder engagement process, results and feedback related to governance, environmental sustainability and community investment • Review stockholder proposals • Oversee | ||
Avery Dennison Corporation| 2019 Proxy Statement |16
Our Board believes it is important to have executive sessions withoutwith our Chairman/CEO, orwithout other members of management present, and without him, both of which wereare held at every regulareach Board meeting during 2018.meeting. Our non-managementindependent directors have robust and candid discussions at thesethe executive sessions that exclude Mr. Butier during which they critically evaluate the performance of our company, Chairman/CEO and management. As Chairman, Mr. Scarborough presided over five executive sessions of non-management directors during 2018. As required by NYSE rules, our Board also conducts at least one executive session per year without our non-independent Chairman and our CEO. As Lead Independent Director, Mr. Pyott Siewert presided over the onefive executive sessionsessions of independent directors held during 2018.2021.
In 2021, implementing feedback from our annual Board evaluation process, our Board began starting each of its meetings with one of two executive sessions with our Chairman/CEO, but no other members of management, to discuss key focus areas and frame meeting discussions; the second such session at the end of the meeting provides time for the Board to reflect and align on key priorities, after which our independent directors meet in executive session without our Chairman/CEO.
Executive sessions wereare also generally scheduled for each regular meetingmeetings of the Audit, Compensation and Governance Committees held.Committees. These executive sessions generally excluded Mr. Scarborough, Mr. Butierexclude our Chairman/CEO and other members of management, unless the Committee requested Mr. Scarborough orrequests one or more members of managementthem to attend a portion of the session to provide additional information or perspective.
RISK OVERSIGHT
Management is responsible for managing the day-to-day risks confronting our businesses, butand our Board has responsibility for overseeing enterprise risk management (ERM).In performing its oversight role, our Board is responsible for ensuring that the ERM processes designed and implemented by management are functioning effectively, and that our culture promotes risk-adjusted decision-making. The teams leading our businesses have incorporated ERM into developing and executing their strategies, assessing the risks impacting their businesses, and identifying and implementing appropriate mitigating actions on an ongoing basis. In addition, in consultation with our headleader of risk managementRisk Management and senior management, these teams semiannually prepare a risk profile consisting of a heat map and a summary of their key risks and mitigating strategies, which are used to prepare a company risk profile based on identified business-specific risks as well as enterprise-wide risks.risks, including risks related to ESG matters such as climate change, GHG emissions and energy use; materials management; advancing the circular economy; DE+I; waste; and employee health and safety.
Avery Dennison Corporation | 2022 Proxy Statement | 33 |
We also have robust global processes that support aour strong internal control environment toand promote the early identification and continued managementmitigation of risks by our company'scompany’s leadership. Our legal and compliance functions report into our General CounselCLO to provide independent evaluation of the challenges facing our businesses and our Vice President of Internal Audit reports to the Audit Committee in the conduct of his operational responsibilities, ensuring his independence from management.
In performing its2021, we enhanced our already robust ERM program by meeting to prepare risk profiles with an expanded group of functional leaders for our RBIS and IHM businesses and each of the regions of our LGM business, in addition to the global risk profiles we have routinely prepared for each of our reportable segments and our company as a whole. We also prepared standalone compliance and information technology risk profiles to enable greater focus on these critical risk areas, and designated risk champions from our Law Department to partner with our Risk Management team in facilitating future ERM discussions with our business leadership teams. These advancements have embedded ERM deeper into our organization, allowing us to benefit from the engagement and critical thinking of a broader cross-section of corporate and business leaders. We plan to continue advancing our ERM program, with leadership from our ERM Steering Committee comprised of members of senior management and oversight role,by our Board is responsible for ensuring that the ERM processes designed and implemented by management are functioning effectively, and that our culture promotes risk-adjusted decision-making.Board.
Our Board as a whole oversees risks related to our company and business strategies and operations, exercising this responsibility by considering the risks related to its decisions. Each year, our Board receives reports on the ERM process and the strategic plans and risks facing our businesses and company as a whole. Thesewhole; these risks include financial risks, politicalgeopolitical risks, legal and regulatory risks, supply chain risks, competitive risks, compliance risks, ESG risks, information technology risks and other risks related to the wayways in which we do business.business. Employees who lead various risk areas —– such as law, information technology; environmental, healthtechnology, tax, compliance, sustainability, DE+I and safety; tax; sustainability; and corporate social responsibility —community investment – report periodically to Board Committees and occasionally to our full Board.
Our Board has delegated elements of its risk oversight functionresponsibility to its Committees to better coordinate with management to serve the long-term interests of all our company and stockholders.stakeholders. Our Board receives reports from itsthe Committee Chairs regarding topics discussed at Committeecommittee meetings, which includeincluding the areas of risk overseenthey primarily by the Committees.
Avery Dennison Corporation| 2019 Proxy Statement |17
Tableoversee, and engages with our leaders on these risk areas during its regular review of Contentsour business strategies.
Risk Oversight | ||||
Board of Directors • Business strategies • Annual operating plan and significant fixed and IT capital expenditures • Corporate governance • Acquisitions, divestitures and other significant transactions • Enterprise risk management |
| |
| ||
• Financial reporting processes and statements, and internal controls • Capital structure • Financing, including debt, liquidity, capital allocation and pension plan funding • Stockholder distributions (dividends and stock repurchases) • Information technology and cybersecurity • Certain legal, compliance and regulatory matters | • Executive compensation and CEO/senior executive succession planning • Annual and long-term incentive plans • Compensation plans and benefit programs • Non-employee director compensation • Social sustainability and talent management, including DE+I; leadership compensation plans, benefit programs, recruiting and retention strategies and development progress; and employee engagement | • Board and Committee structure and composition • Director succession planning • Values and Ethics/Code of Conduct • Conflicts of interest and related person transactions • Governance, environmental sustainability and community investment • Certain legal, compliance and regulatory matters | ||
Audit Committee
Compensation Committee
Governance CommitteeManagement • Day-to-day management of risks facing our businesses |
34 | 2022 Proxy Statement | Avery Dennison Corporation |
The Audit Committee oversees our internal control environment and evaluates the effectiveness of our internal controls at least annually. Supplementing these processes, the Audit Committee periodicallyregularly meets in executive session with each of our CEO, CFO, Controller/CAO, General Counsel, Vice President of Internal Audit and representatives of our independent registered public accounting firm.firm and meets as needed in executive session with other members of management such as our CEO and CLO. The Governance Committee also meets semiannually with our Chief Compliance Officer to discuss, among other things, the investigation of allegations reported to the GuideLine.
During 2021, our Business Conduct GuideLine.
During 2018,Board was particularly focused on the following risk areas weredescribed below.
2021 Risk Focus Areas | ||||
Impact of particular BoardCOVID-19– Prioritizing safety and Committee focus:
•- well-being of global team members, followed immediately by delivering for customers. Among other things,
Changes in tax laws andCOVID-19 response encompassed risks related to business continuity; governmental regulationsparticularly in the U.S.; •The termination of our U.S. pension plan;•Cybersecurityimpacting manufacturing operations; cybersecurity and information technology security in work-from-home environment for office-based employees; and finance matters such as cash management and collections
Delivering for customers – Managing constrained raw material, freight and labor availability and elevated lead times to continue providing high-quality service to customers
Inflation management – Offsetting impact of inflation through productivity and pricing
Intelligent Labels – Further accelerating primary long-term profitable growth driver, including the implementation of an enterprise resource planning system in our Label and Graphic Materials North America business;
Innovation – Advancing innovation through strategic innovation platforms on material circularity and
M&A – Being bolder to expand robust pipeline of acquisition opportunities, including evaluating risks related to our environmental, socialacquisitions and governance responsibilities, particularlyintegrations of Zippy Yum and JDC, as well as our venture investments, while maintaining our disciplined approach to capital allocation
ESG – Heightening focus on ESG matters, resulting in more frequent and comprehensive disclosures contained in our integrated sustainability and annual reports, proxy statements and ESG Downloads
Sustainability – Increasing focus on more sustainable packaging, including strategies and risks related to the areas of data privacy, sustainability, Valuesstrategic innovation platforms described above
DE+I – Raising the bar to drive sustainable change with new 2030 goals and Ethics,more robust global infrastructure
Risks Associated with Compensation Policies and diversity and inclusion.
Avery Dennison Corporation| 2019 Proxy Statement |18
Table of ContentsPractices
RISKS ASSOCIATED WITH COMPENSATION POLICIES AND PRACTICES
As described in theCompensation Discussion and Analysis section of this proxy statement, we maintain best practices in compensation that collectively encourage ongoing risk assessment and mitigation. The Compensation Committee annually discusses with management and its independent compensation consultant, WTW, whether our executive compensation programs are meeting the committee’s objectives. In addition, the Compensation Committee periodically reviewsengages WTW to undertake a more formal assessment of our compensation programs to ensure that they do not provide incentives that encourage our employees to take excessive risks in managing their respective businesses or functional areas andareas. The committee most recently conducted its most recent reviewthis evaluation in February 2018.2022.
Based on the advice of its independent compensation consultant, Willis Towers Watson, theThe Compensation Committee noted the risk-mitigating features of our compensation policies and practicesprogram described below and on the following page, which are substantially the same as what they were at thepage.
Avery Dennison Corporation | 2022 Proxy Statement | 35 |
Risk-Mitigating Compensation Features | ||||
Governance and Oversight | ✓ Compensation Committee has discretion to decrease Annual Incentive Plan (AIP) awards and long-term incentive (LTI) grants to penalize potentially risky actions ✓ Clawback policy deters fraud or other misconduct that results in financial restatement, providing means to recoup inappropriately received AIP and LTI awards ✓ Incentive compensation plan structure and targets are reviewed within context of market practices, tied to operating business plans and corporate goals, and approved by Compensation Committee ✓ Compensation Committee annually evaluates CEO/senior executive performance against challenging strategic, financial and ESG goals ✓ Rigorous stock ownership policy is consistent with best practices, with minimum ownership level of 6x for CEO; requires net shares acquired to be retained until compliance is achieved ✓ Officers prohibited from hedging or pledging company stock and required to engage in stock transactions only during limited trading windows | |
Pay Philosophy and Structure | ✓ Focus on incenting stockholder value creation, balanced by retention and other considerations ✓ Substantial majority of leadership compensation delivered in long-term equity or cash-based awards to motivate pursuit of superior performance and sustainable growth ✓ Executive severance plans consistent with market practices, with double-trigger change of control benefits and only for most senior NEOs ✓ Incentive compensation designed to incent strong annual financial performance and long-term economic and stockholder value creation, and balance growth and efficient capital deployment | |
Incentive Program Design | ✓ AIP and LTI awards incent annual profitable growth and long-term financial value creation, using multiple performance objectives ✓ AIP awards not guaranteed, with below-threshold performance resulting in zero payout, payments subject to overall cap of 200%, and NEO individual modifiers generally capped at 100% ✓ Equity awards use multiple performance objectives, vest over multiple time horizons and are subject to threshold and maximum payout opportunities • Performance units (PUs) cliff vest at end of three years with payout for relative total stockholder return (TSR) component capped at 100% of target if absolute TSR is negative • Market-leveraged stock units (MSUs) vest over one-, two-, three- and four-year performance periods (average performance period of 2.5 years), with threshold performance at absolute TSR of (15)% and target performance at absolute TSR of 10% |
Given low risk in each of the most recent review.
Governance and Oversight
•The Compensation Committee has discretion to decrease Annual Incentive Plan (AIP) awards and long-term incentive (LTI) grants based on individual performance, including as a result of excessive risk-taking.•Our clawback policy serves as a deterrent to fraud or other misconduct in connection with our financial statements.•The Compensation Committee annually evaluates the performance of our CEO and other senior executives in the context of our company and business goals and their individual contributions.•Our stock ownership policy is rigorous and consistent with best practices, with a minimum ownership level of 6x base salary for our CEO and a requirement that 50% of the ownership level be held in vested shares.•We prohibit our officers from hedging or pledging company stock and require them to engage in stock transactions only during limited trading windows.
Pay Philosophy and Structure
•Our programs prioritize incenting stockholder value creation, balanced by retention and other considerations.•The substantial majority of executive compensation is delivered in equity to motivate our company's pursuit of strong long-term performance and sustainable growth.•Our change of control and executive severance plans are reasonable and consistent with market practices, with change of control benefits provided on a double-trigger basis to mitigate the risk that such a transaction be pursued to advance personal interests rather than the best interests of our stockholders.•Our incentive compensation consists of short- and long-term performance objectives that cover different time periods and is balanced with objectives designed to incent strong annual financial performance and long-term economic and stockholder value creation, as well as between growth and efficient capital deployment.
Incentive Program Design
•Our AIP and LTI awards incent annual profitable growth balanced with long-term financial value creation, using multiple performance objectives and providing realized compensation based primarily on our company's performance.•AIP awards are not guaranteed, with below-threshold performance potentially resulting in zero payout, payments subject to an overall cap of 200%, and individual modifiers for our NEOs generally capped at 100%.•Our equity award vehicles are performance-based, use multiple performance objectives, are subject to threshold and maximum payout opportunities, and have the following additional features that limit potential risk-taking:•Our performance units (PUs) cliff vest at the end of three years with the payout for the relative total stockholder return (TSR) component capped at 100% of target for any three-year performance period in which absolute TSR is negative to prevent management from being unduly enriched when stockholders experience loss, while still incenting executives to deliver relatively strong performance during challenging economic periods; and
Avery Dennison Corporation| 2019 Proxy Statement |19
•Our market-leveraged stock units (MSUs) vest over one-, two-, three- and four-year performance periods (with an average performance period of 2.5 years), with challenging performance objectives, including a threshold performance level of absolute TSR of (15)% and a target performance level of absolute TSR of 10%.
Based on these categories and other factors, Willis Towers Watson determinedWTW advised the Compensation Committee that our compensation program strikes an appropriate pay-risk balance. balance and presents no risk-related concerns.
The Compensation Committee has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our company.
HUMAN CAPITAL MANAGEMENT
DIRECTOR EDUCATION
SUCCESSION PLANNINGInitial Orientation
The Compensation Committee and our full Board conduct executive succession planning semiannually, developing and refining succession plans for our CEO and senior executives. Consistent with this practice, in April and October 2018, the Compensation Committee reviewed talent that is ready — or, with continued development on their current trajectory with mentorship and coaching from our current leaders, will be ready — to fill senior executive positions in the event of a vacancy. Those reviews were then further discussed with our full Board. In addition, the Compensation Committee reviews executive new hires, promotions, transfers and departures at its regularly-scheduled meetings.
LEADERSHIP DEVELOPMENT
Our Board is actively involved in human capital management to identify and develop our future leaders. We maintain a robust performance review process and leadership development program for our employees. Senior management develops leadership at lower levels of our organization by identifying high potential talent and critical experts, cultivating the skills and capabilities to allow identified individuals to become our future leaders, and providing them with developmental opportunities. Through regular reports from management, our Board has the opportunity to meet business leaders and functional leaders in law, finance, information technology, compliance, and human resources. In addition, Board members have freedom of access to all employees, and are encouraged to visit our facilities to meet local management and attend company events.
DIVERSITY AND INCLUSION
Diversity is one of our core values, reflecting our efforts to create an inclusive and respectful environment for people of all backgrounds and orientations and our recognition that we gain strength from diverse ideas and teams. The importance of diversity and inclusion to our company is evidenced by the inclusion of diversity-related targets in our 2025 sustainability goals. Diversity and inclusion at our company are championed primarily by our cross-functional and cross-divisional Diversity and Inclusion Council, currently co-chaired by Anne Hill, our Senior Vice President and Chief Human Resources Officer, and Deon Stander, the Vice President and General Manager of our RBIS business. Board oversight is conducted primarily through the Compensation Committee.
In recent years, among other initiatives, we have focused on training our managers globally on unconscious bias, increasing the number of sites offering flexible work arrangements, and expanding our Women Empowered program that features interactive discussions among nominated participants to facilitate and enhance their development. We also evaluated our gender pay equity with positive results, developing plans to make identified adjustments to compensation for 2019. This year, we are formally launching employee resource groups, which are voluntary employee-led groups made up of individuals who join together based on common interests, backgrounds or demographic characteristics such as race, ethnicity or sexual orientation. In addition, we are establishing regional diversity and inclusion councils to provide leadership of initiatives that more strongly resonate with employees in their respective regions.
Avery Dennison Corporation| 2019 Proxy Statement |20
INITIAL ORIENTATION
Our initial director orientation generally covers (i) our strategies, performance and leadership; (ii) investor messaging; (iii) the strategies, risks and risksmitigating strategies, and ESG priorities of our businesses; (iv) finance matters, including our financial reporting policies and practices, internal control environment, internal audit deployment, tax planning and compliance, and capital structure;allocation; (v) legal and compliance matters, including our Board composition, governance policies and procedures, valuesValues and ethicsEthics program, and ERM; (vi) human capitalexecutive compensation and talent management matters, including executive compensation, succession planning, leadership development, DE+I and diversity and inclusion;community investment; and (vii) information technology and cybersecurity.
In connection with his initial appointment to our Board in 2018, we provided incoming independent director Mark Barrenechea with information regarding our businesses, strategic plans and risk-mitigating actions, competitors, non-employee director compensation policies and other matters. Our CEO then met with Mr. Barrenechea to discuss these matters to ensure a smooth onboarding process. In October and December 2018, Mr. Barrenechea joined as an observer in our Board's Audit, Compensation and Governance Committee meetings to better understand their respective responsibilities.
36 2022 Proxy Statement | Avery Dennison Corporation CONTINUING EDUCATION
Continuing Education
Our continuing director education program consists of periodic visits to our facilities and regular management presentations regarding our business operations, performance, strategies risks and values and ethics.risk mitigation activities. We provide updates on relevantthese topics of interest to our Board atduring and between meetings throughout the year, and provide access to a boardroom news resource platform for them to keep informed of emerging best practices. We also reimburse directors who attend continuing director education programs for fees and related expenses.
BOARD AND COMMITTEE EVALUATIONS
The Governance Committee oversees and conducts an annual performance evaluation of our Board, Chairman, Lead Independent Director and Board Committees, including the Committee Chairs. As part of this process, our directors evaluate the performance of their peers serving on the Board, providing candid feedback to enable continuous boardroom improvement and assist with director succession planning. Our Board views the evaluation process as integral to assessing its effectiveness and identifying improvement opportunities in the pursuit of continued excellence. Many of the improvements inWe have continually improved our governance practices and Board processes were identified and implemented as a result of thethis annual evaluation process.
Avery Dennison Corporation| 2019 Proxy Statement |21
In response to evaluation feedback received in recent years, our Board madeprocess, as shown below and on the following enhancementspage.
BOARD AND COMMITTEE EVALUATIONS
1 | ||||
Process
Written evaluations on Board/Committee
Composition, including diversity of skills, qualifications and demographic backgrounds
Meeting materials
Meeting mechanics and structure
Fulfillment of responsibilities
Meeting content and conduct
Overall performance
Effectiveness of Chairman, Lead Independent Director and Committee Chairs
One-on-one interviews with Governance Committee Chair to its membershipprovide additional perspectives and processes:discuss feedback
•
Verbal peer reviews to identify potential improvement opportunities for individual directors
2 | ||||
Identified the need for2021 Review of Resultsindependent directors
Discussion of evaluation results and feedback
Chairman/CEO, Lead Independent Director/Governance Committee Chair, Corporate Secretary, and CLO
Joint Governance Committee and Board discussion in executive session with packaging and technology expertiseChairman/CEO, aligning on improvement opportunities for implementation
3 | ||||
Recent Improvement Actions, culminating in the appointments of Messrs. Lopez and Barrenechea to our Board;
Sharpened focus on acquisitions, enhancedstrategic and risk oversight, highlighting one business group during each Board meeting, establishing mentorships between individual directors and key business leaders, and ensuring meeting discussions prioritize discussion of challenges and opportunities rather than presentation of information
Heightened focus on financial scenario planning, cybersecurity preparedness, ESG priorities and progress, and compliance matters
Enhanced discussion of M&A pipeline and potential targets actively under consideration,, as well as the integration and performance of acquired companies;companies and integration learnings
Expanded review of potential CEO successors and their development plans to ensure ready-now
Avery Dennison Corporation | 2022 Proxy Statement | 37 |
Increased engagement on these matters both with the Compensation Committee investor relations,stockholder engagement and our full Board and provided regular updates on executive new hires, promotions, transfers and departurescompetitive landscape to the Compensation Committee;
Conducted annualpost-investment reviews of the returnreturns on significant fixed capital expenditures, acquisitions and information technology investments.IT investments
Sharpened focus on director succession planning, selecting new Lead Independent Director, appointing new Chairs for Audit and Governance Committees and refreshing Committee memberships; proactively aligning on steps to mitigate impact of upcoming concentrated retirements; and focusing on software/digital/cybersecurity and materials science industry expertise and increased Board diversity for future directors
Increased Chairman/CEO engagement with directors between meetings, with frequent updates and one-on-one discussions between him and each director, which were important in 2021 as we continued responding to COVID-19, mitigated related supply chain, labor, freight and inflationary challenges, advanced ESG focus and transparency, and redoubled efforts to advance DE+I
Refined Board schedule and meeting process to maintain robust dialogue despite move to primarily virtual meetings given COVID-19, including establishing annual strategic discussion calendars, beginning each meeting in executive session with Chairman/CEO, but no other members of management, to discuss key focus areas and frame meeting discussions; holding another such executive session to reflect on the meeting and align on key priorities, after which our independent directors meet in executive session without our Chairman/CEO; and planning to hold certain Committee meetings off-cycle (not coincident with Board meetings) and future Board meetings as a mix of virtual and in-person meetings given equally high level of engagement and discussion in both formats
STOCKHOLDER ENGAGEMENT AND COMMUNICATIONS
We value stockholder feedback on our governance sustainability and executive compensation programs,program and we actively solicit input through stockholder engagement on these matters to ensure that we reflect not only our programs reflectevolving business strategies but also the changing business environment and stockholder expectations.
STOCKHOLDER ENGAGEMENT ON GOVERNANCE AND SUSTAINABILITY MATTERS IN 2018
We continued our longstanding practice of open dialogue with stockholders in 2018. In advance of the 2018 Annual Meeting, we contacted our 35 largest institutional stockholders, representing over 55%expectations of our then-outstanding shares. Boardstakeholders. In addition to our extensive investor relations program through which members includingof management engage with our Lead Independent Director,investors throughout the year, this supplemental engagement program is depicted – and management were made available to answer questions and address concerns regarding the items being brought before the Annual Meeting. Whilefeedback we received responses from stockholders representing over 28% of our then-outstanding shares, none of them desired to substantively engage at that time.on governance matters is described – in the proxy summary.
In the summer and fall, without the time pressures associated with proxy season, we contacted our 41 largest institutional stockholders, representing nearly 60% of our then-outstanding shares, to request a meeting with members of our Board and/or management. Proposed topics for these meetings included our business strategy and financial performance, executive compensation matters, Board composition and succession planning, and progress towards achieving our sustainability goals. We received responses from stockholders representing nearly 30% of our then-outstanding shares and spoke with stockholders representing over 25% of our then-outstanding shares. We substantively engaged with every stockholder who requested to do so and included our Lead Independent Director in engagements upon stockholder request.
With respect to matters related to governance, we discussed several topics related to our Board composition, skills and succession planning and refreshment processes. We also discussed our business strategies and related risks, diversity and inclusion initiatives, and sustainability priorities.
Our Board welcomes feedback from all our stockholders. We review correspondence submitted by stockholders, discussing any substantive feedback received with senior management and/or our Board as appropriate.
Stockholders and other interested parties may contact our Board, Chairman, Lead Independent Director, any Committee or Committee Chair, or any other individual director concerning business matters by writing to:to Board of Directors (or a particular Board subgroup or individual director), c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.
Avery Dennison Corporation| 2019 Proxy Statement |22
8080 Norton Parkway, Mentor, Ohio 44060.
38 | 2022 Proxy Statement | Avery Dennison Corporation |
ITEM 1 – ELECTION OF DIRECTORS
|
Our Bylaws provide for a Board of between eight8 and 12 directors, with the exact number fixed by a resolution of our Board. In September 2018, in conjunction with Mr. Barrenechea's appointment and uponOur Board has fixed the recommendation of the Governance Committee, our Board fixed thecurrent number of directors at 12.9. In April 2019,February 2022, director Mark Barrenechea notified our Board of his decision not to stand for reelection at the 2022 Annual Meeting so he can focus on other endeavors; as a result, our Board expects tothat it will fix the number of directors at 11 to reflect Mr. Scarborough's departure from the Board at the end of his current term.8 in April 2022 assuming that all nominees are reelected. All nominees are standing for election for a one-year term expiring at the 20202023 Annual Meeting.
In voting for the election of directors, each share has one vote for each position to be filled and there is no cumulative voting. Each of the 11our nominees is presently serving on our Board and has consented to being named in this proxy statement and serving if elected by our stockholders.
MAJORITY VOTING STANDARD; UNELECTED DIRECTOR RESIGNATION REQUIREMENTMajority Voting Standard; Unelected Director Resignation Requirement
Our Bylaws provide for the approval by a majority of votes cast for the election of directors in uncontested elections like this one and require that an incumbent director who is not re-electedreelected tender his or her resignation from our Board. Our Board, excluding the tendering director, is required to determine whether to accept the resignation —– taking into account the recommendation of the Governance Committee and any other factors it considers appropriate —– and publicly disclose its decision regarding the tendered resignation, including itsthe rationale for theits decision, within 90 days from the date election results are certified. In contested elections, plurality voting is the standard for the election of directors.
In voting for the electionRecommendation of directors, each share has one vote for each position to be filled and there is no cumulative voting.
RECOMMENDATION OF BOARD OF DIRECTORSBoard of Directors
Our Board of Directors recommends that you vote FOR each of theour 8 director nominees.nominees. The persons named as proxies will vote for thetheir election, of each of the 11 nominees, unless you specify otherwise. If any director nominee were to become unavailable prior to the Annual Meeting, your proxy would be voted for a substitute nominee designated by our Board or we would decrease the size of our Board.
SELECTION OF DIRECTOR NOMINEES
Director nominees are generally recommended by the Governance Committee for nomination by our Board and election by our stockholders. Director nominees may also be recommended by the Governance Committee for appointment to our Board, with their election by stockholders taking place at the next Annual Meeting. Our Board believes that our directorsdirector nominees reflect a balance and diversity of skills, qualifications and demographicsdemographic backgrounds, as shown in the Board matrix contained in the proxy summary, that allows them to effectively discharge their oversight responsibilities.
•Independence, to ensure that a majority of our Board remains independent;•Business and leadership experience, includingindustry experienceandglobal exposureand considering factors such as size, scope, and complexity;•Board experienceat another public company;•Experience in finance, accounting and/or executive compensation;•Time commitments, including other boards onGuidelines, whichthe nominee serves;•Potentialconflicts of interest;•Demographic characteristics(such as gender, race and ethnicity);•Ability to contribute to the oversight and governance of our company; and•Ability to represent the balanced interests of stockholders as a whole, rather than those of any special interest group.
In consideringevaluating whether to recommend a candidate as anew or incumbent director nominee, the Governance Committee primarily uses the following criteria set forth in our Governance Guidelines:
| • | Independence, to ensure substantial majority of Board remains independent |
| • | Business and leadership experience, including industry experience and global exposure and considering factors such as size, scope and complexity |
| • | Board service at other U.S. publicly-traded companies |
| • | Experience in finance, accounting and/or executive compensation |
| • | For incumbent directors, attendance and compliance with our stock ownership policy |
| • | Time commitments, including service on other boards; any new directors joining our Board who are executive officers of a public company may not serve on more than one other public company Board |
| • | Potential conflicts of interest |
| • | Demographic characteristics (including, without limitation, gender, race and ethnicity); when evaluating new nominees, the committee will seek to consider (and ask any search firm engaged to provide) candidates that include highly qualified women and individuals from underrepresented communities |
| • | Ability to contribute to oversight, governance and sustainability of our company |
| • | Ability to represent balanced interests of all stockholders, as well as the interests of our other stakeholders, rather than those of any special interest group |
Avery Dennison Corporation| 2019
Avery Dennison Corporation | 2022 Proxy Statement
| 39 |
For incumbent directors, the Governance Committee also evaluatesconsiders their contributions to our Board and Committees, attendance at Board and Committee meetings, compliance with our stock ownership policy, and mandatory retirement dates to assist with director succession planning.planning, and feedback received during our annual Board evaluation process. The Governance Committee does not assign specific weights to the criteria and no particular criterion is necessarily applicable to all nominees.
The Governance Committee reviews the skills, qualifications and demographic background of any candidate with those of our current directors in assessingto assess how our Board can most effectively fulfill its oversight responsibilities. Sources for identifying potential nominees include current Board members, senior management, executive search firms and our stockholders.investors.
STOCKHOLDER SUBMISSION OF DIRECTOR NOMINEESStockholder Submission of Director Nominees
Advance Notice Nominees
Stockholders may recommend director candidates by submitting the candidate'scandidate’s name, together with his or her biographical information, professional experience and written consent to nomination, to Governance and Social Responsibility Committee Chair, c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.8080 Norton Parkway, Mentor, Ohio 44060. To be considered at the 20202023 Annual Meeting, advance notice stockholder nominations must comply with the requirements described in the lastVoting and Meeting Q&A section of this proxy statement. The Governance Committee considers stockholder nominees on the same basis as it considers all other nominees.
Proxy Access Nominees
A stockholder, or a group of no more than 20 stockholders, owning at least 3% of our company'scompany’s stock continuously for at least three years is permitted to submit director nominees (up to 20% of the Board) for inclusion in our proxy materials, subject to the requirements specifieddescribed in our Bylaws. For further information on submitting proxy access nominees for the 2023 Annual Meeting, please refer to the lastVoting and Meeting Q&A section of this proxy statement.
Avery Dennison Corporation| 2019 Proxy Statement |24
Our director nominees bring abalance of skills, qualifications and demographic backgrounds in overseeing our company, as shown in the matrix below. The Governance Committee regularly evaluates the skills and qualifications desirable for our Board to best meet the changing needs of our business.
BOARD REFRESHMENT AND DIRECTOR SUCCESSION PLANNING
Our Board'sBoard’s ongoing director succession planning is designed to ensure an independent, well-qualified Board, with diversity in experienceskills, qualifications and background to effectively provide strong oversight.demographic backgrounds that enables effective independent oversight and aligns with our business strategies and ESG priorities.
NO TERM LIMITSNo Term Limits
Our Governance Guidelines reflect our Board'sBoard’s belief that directors should not be subject to term limits. While term limits could help facilitate fresh ideas andnew viewpoints being brought to the Board,boardroom, our Board believes they could also result in the premature loss of a director who over a period of time has become well-versed in our strategies, operations and risksgained valuable experience and is continuing to provide valuable contributionssignificantly contribute to Board deliberations.deliberations assessing our strategies, operations, risks and mitigating strategies, and ESG priorities and progress. We believe that our Board'sBoard’s decision not to establish term limits at this time is consistent with the prevailing practice among companies in the S&P 500. 500.
Our Board recognizes that certain governance stakeholders have suggested that longer-serving directors may have decreased independence and objectivity; however,objectivity. However, our Board believes that, except as required by our mandatory retirement policy arbitrarily removing knowledgeable directors and losing the oversight consistency they bring, — particularly during periods of either executive management change, such as our recent CEOnew President and CFO transitions, or Board change, such as Mr. Scarborough's April 2019 departure
Avery Dennison Corporation| 2019 Proxy Statement |25
fromCOO, the new leaders for our Board after having served as Chairman for the past nine years —RBIS Apparel Solutions and IHM businesses, and our CHRO and CLO elected in 2020 weighs against implementing term limits at this time. Ultimately, our Board believes that it is its responsibility to establishresponsible for establishing appropriate board refreshment policies in light of our strategies, leadership teamfinancial position and financial positionESG priorities at any particular time, exercising its discretion in the best interest of our company and stockholders. To assist in discharging this responsibility, in November 2021 and February 2022, the Governance Committee reviewed the skills, qualifications and demographic backgrounds of our Board members and conducted director succession planning to ensure that our Board continues to meet the needs of our businesses, align with our strategies and advance the interests of all our stakeholders.
POLICIES AND RECENT ACTIONS SUPPORTING REGULAR BOARD REFRESHMENT
40 | 2022 Proxy Statement | Avery Dennison Corporation
|
Policies and Events Supporting Regular Board Refreshment
Our Board has adopted the policies described below to facilitate regular refreshment of our Board and ensure that it continues to independently oversee and challenge our management.management team.
| Policy | Description | Events Occurring at or Since 2021 Annual Meeting | |||||||
Mandatory Resignation Policy | Incumbent directors | All incumbent directors standing for election were elected at the | |||||||
Mandatory Retirement Policy | Directors must retire on | ||||||||
| Resignation Tendered Upon Change in Principal Employment | Directors who change | ||||||||
| Prior Notice Requirement to Prevent | Directors must give prior notice before accepting another U.S. public company directorship so that | ||||||||
Upon the recommendation of the Governance Committee, Messrs. Barrenechea and Lopez were appointed to our Board as independent directors in September 2018 and February 2017, respectively. In connection with his becoming our CEO, transition, Mr. Butier joined our Board as a non-independent director in May 2016. Mr. Scarborough's service asBarker retired from our Chairman and director will end upon the expiration of his current termBoard in April 2019.2021 and Mr. Barrenechea will leave our Board in April 2022. We believe that this recent experience with both joining and departing directors demonstrates our Board'sBoard’s commitment to regular refreshment.
Both the Governance Committee and our full Board plan to regularly discuss director succession planning in 2022 to mitigate the impact of upcoming concentrated retirements, develop a candidate profile for one or more new directors that would both complement and advance the skills and qualifications currently represented on our Board, and further enhance Board diversity.
AGE AND TENUREDIRECTOR DIVERSITY
Our Board supports and reflects our values, recognizing the benefits of diversity in the boardroom, including the healthy debate that results from different viewpoints that may stem from diverse backgrounds.
Age and Tenure
The average age of our director nominees is 61,63, which we believe is comparable toconsistent with the average boarddirector age in the S&P 500 and within the 60-63 year60 to 63-year band in which the plurality of these companies fall. The average tenure of our director nominees is approximately nine111⁄2 years; were it not for our most recently appointed director’s decision not to stand for reelection, our average tenure of 101⁄2 years which we believe iswould have been comparable to the average tenure for companies in the S&P 500, and within the 6-10 year band in which the majority of these companies fall. The charts below show the age andwhich have average tenure of oursix to ten years. Our director nominees which we believe reflectsreflect a balance between newer directors who bring fresh ideas and insights and longer-serving directors with deep institutional knowledge of our Board and company.
| Director Nominee Age and Tenure | ||||
Avery Dennison Corporation| 2019
Avery Dennison Corporation | 2022 Proxy Statement
| 41 |
Demographic Background
Our Governance Guidelines reflect that the Governance Committee'sCommittee’s assessment of the qualifications of director candidates includes consideration of their demographic characteristics such asbackgrounds, including, without limitation, race, gender and ethnicity. Although neither the Governance Committee nor our Board has awe have no formal policy regarding the consideration of diversity in selecting director nominees, the Governance Committee seeks to recommend individuals with a broad diversity of experience, profession, skill, geographic representation and demographic background, including characteristics such as race, gender and ethnicity.background. While diversity is a consideration and area of focus in recommending future nominees, area given nominee would not be chosen or excluded solely or primarily on that basis; rather, the Governance Committee focuseswould focus on skills, experience and backgroundan overall candidate profile that canwould complement our existing Board in light of the diverse and global nature of our businesses and operations.
Our Board recognizesWhen evaluating new nominees, the benefitsGovernance Committee will seek to consider (and ask any search firm engaged to provide) candidates that include highly qualified women and individuals from underrepresented communities; 2 of our 4 most recently appointed independent directors increased the racial, ethnic andor gender diversity in the boardroom, including better reflectingon our global customer base and the healthy debate that results from different viewpoints that may stem from diverse backgrounds. The racial, ethnic and gender diversity of our 2019 director nominees is shown in the chart below.Board.
| Director Nominee Diversity | ||||
The following pages provide information on the directors nominated for election, at the Annual Meeting, including his or her age, board leadershipcurrent Board roles, and business experience during at least the past five years. We also indicate the name of any other U.S. public company board on which each nominee currently serves or has served during the past five years; for these purposes, "public company" means one that is required to file reports with the SEC.years.
In addition to the information presented regardingWe also present each nominee'snominee’s experience and qualifications that led our Board to conclude that he or she should serve as a director, — which includes senior leadership experience, industry experience,expertise, global exposure, financial sophistication, andU.S. public company board experience, — we believe that each of them has integrity and adheres to our high ethical standards. and/or financial expertise as defined in the Board matrix shown in the proxy summary. Each nominee also has demonstrated the ability to exercise sound judgment, fulfill the time commitments necessary to serve on our Board and is committed to servingadvance the long-term interests of our stockholders.
Avery Dennison Corporation|stockholders, as well as those of our other stakeholders 2019 Proxy Statement |27
.
42 | 2022 Proxy Statement | Avery Dennison Corporation |
| ANDRES A. LOPEZ | ||||
Age 59 Director since February 2017 Independent | RECENT BUSINESS EXPERIENCE
• President & •
• President, O-I Americas, from July 2014 to January 2015 • President, O-I Latin America, from April 2009 to July 2014
| |||
Current:
Past Five Years: None |
SELECT SKILLS AND QUALIFICATIONS Senior leadership experience • Oversees Industry • Leads • Led Latin America and Americas divisions, after having worked in positions of increasing responsibility throughout the region
U.S. public company board experience • Concurrent service on one other
|
Age 66 Director since December 2012 Independent |
Ernst & Young LLP, an assurance, tax, transaction and advisory services firm • Vice Chair, Managing Partner and Member of
| |||
Governance Committee Member
Current: AAR Corporation Exelon Corporation Marsh & McLennan Companies, Inc. Past Five Years: First American Financial Corporation |
SELECT SKILLS AND QUALIFICATIONS Senior leadership experience • Served on Financial •
• Substantial experience advising audit committees of large multinational corporations • Certified public accountant (now inactive)
U.S. public company board experience • Concurrent service on three other
|
Governance Committee Member
 Age 65 Director since April 2010 Independent |
Nestlé USA, a nutrition, health and wellness company • Chairman & Nestlé Brands Company, an operating unit of Nestlé USA • President & | |||
BOARD ROLES
Governance Committee Member
Current: Perrigo Company Past Five Years:
|
SELECT SKILLS AND QUALIFICATIONS Senior leadership experience • Led Industry •
• Knowledge of • Substantial M&A and integration experience
U.S. public company board experience • Concurrent service on one other
| |||
Avery Dennison Corporation| 2019 Proxy Statement |28
Avery Dennison Corporation | 2022 Proxy Statement |
|
|
| |||
 Age 66 Director since January 2003 Independent |
Alurx, Inc., a health and wellness company • Founder, Chair & CEO since January 2020 Dine Brands Global, Inc. (formerly DineEquity, Inc.), owner, operator and franchisor of IHOP and • Chairman &
| |||
Current:
Past Five Years: Dine Brands Global, Inc. |
SELECT SKILLS AND QUALIFICATIONS Senior leadership experience • Led
Industry expertise and global exposure • Substantial operational and marketing experience in • Expertise in brand positioning, risk assessment, financial reporting and governance
U.S. public company board experience •
|
Governance Committee Member
 Age 69 Director since July 2007 Independent |
Academy Sports + Outdoors, a sports and recreation retailer • Chairman, President & Foot Locker, Inc., a specialty athletic retailer • Executive Chairman from December 2014 to May 2015 • Chairman, President & • President | |||
Compensation Committee Member
Current:
Past Five Years:
Whole Foods Corporation |
SELECT SKILLS AND QUALIFICATIONS Senior leadership experience • Leads Industry •
U.S. public company board experience •
|
Avery Dennison Corporation| 2019 Proxy Statement |29
|
| |
|
| |
 Age 65 Director since February 2013 Independent |
Sensata Technologies Holding PLC, a supplier of sensors and controls • President & • President & COO from September 2010 to December 2012 •
Texas Instruments, Inc., • Vice President of Sensor Products from 1997 to 2006 | |||
BOARD ROLES
Current: Sensata Technologies Holding PLC Past Five Years:
|
SELECT SKILLS AND QUALIFICATIONS Senior leadership experience •
Industry •
• Strong technology background, including experience overseeing
U.S. public company board experience • Concurrent service on one other
|
Compensation Committee Member
44 | 2022 Proxy Statement | Avery Dennison Corporation |
