Watsco, Inc.

2665 South Bayshore Drive, Suite 901

Miami, Florida 33133

NOTICE OF THE 20202023 ANNUAL MEETING OF SHAREHOLDERS

By order of the Board of Directors,

BARRY S. LOGAN

Executive Vice President and Secretary

April 24, 202028, 2023

This is an important meeting, and all shareholders of record as of April 3, 20206, 2023 are invited to attend the meeting and vote in person. We respectfully urge those shareholders who are unable to attend the meeting in person to execute and return the enclosed proxy card as promptly as possible in the enclosed return envelope. No postage is required if mailed in the United States. Any shareholder who executes a proxy card may nevertheless attend the meeting, revoke his or her proxy and vote his or her shares in person.

NOTICE: Brokers are not permitted to vote on Proposals 1 or 2any of the proposals contained in this Proxy Statement (other than proposal no. 4) without instructions from the beneficial owner of shares entitled to vote at the meeting. Therefore, if you hold your shares through a broker, bank or other nominee and you do not vote your shares in one of the ways described in this Proxy Statement, then your shares will not be voted in respect of Proposals 1 or 2any proposal contained in this Proxy Statement.Statement (other than, in the discretion of your nominee, proposal no. 4).

TABLE OF CONTENTS

WATSCO, INC.

2665 South Bayshore Drive, Suite 901

Miami, Florida 33133

PROXY STATEMENT

The Company’s 20192022 Annual Report and this Proxy Statement are available at:

www.watsco.com

You are receiving this Proxy Statement because you owned shares of Watsco, Inc. Common stock or Class B common stock as of April 3, 2020,6, 2023, which entitles you to vote those shares at our 20202023 annual meeting of shareholders.shareholders (which we refer to as our annual meeting). Our Board of Directors (referred to as the Board), is soliciting proxies from shareholders who wish to vote their shares at the meeting. By using a proxy, you can vote even if you do not attend the meeting. This Proxy Statement describes and provides information about the matters on which you are being asked to vote so that you can make an informed decision. Watsco, Inc. is referred to in this document as Watsco, we, us, our, and the Company.

This Proxy Statement and the enclosed form of proxy are first being mailed to our shareholders on or about April 24, 2020.28, 2023. Shareholders should review the information contained in this Proxy Statement together with our 20192022 Annual Report which accompanies this Proxy Statement.

Our Internet website and the information contained therein or linked thereto are not incorporated by reference or otherwise made a part of this Proxy Statement.

Please note that, as part of our concern regarding the health and safety of our shareholders, directors, officers, employees, and meeting attendees in light of the current coronavirus (COVID-19) outbreak, we may elect to change the date, time or location of the Annual Meeting. If we decide to make such a change, we will provide you notice promptly after making such determination via a press release and a filing with the Securities and Exchange Commission, as well as a posting on the investor relations section of our website,www.watsco.com.

INFORMATION ABOUT OUR ANNUAL MEETING

When and where is the annual meeting?

The annual meeting will be held on Monday, June 1, 2020,5, 2023, at 9:10:00 a.m., Eastern Daylight Time at the Watsco, Inc. Corporate Office, 2665 SouthS. Bayshore Drive, Suite 901, Miami, Florida 33133.

Who may attend the annual meeting?

Shareholders of record as of April 3, 20206, 2023 (which we refer to as the record date), or their duly appointed proxies, and our invited guests are permitted to attend the annual meeting. To gain admittance, you must bring valid photo identification to the meeting, and we will verify your name against our shareholder list. If a broker or other nominee holds your shares and you plan to attend the meeting, you must bring (1) a brokerage statement evidencing your share ownership as of the record date, (2) a legal proxy from the broker to vote the shares that are held for your benefit, and (3) valid photo identification.

What is the purpose of the annual meeting?

Our 2020 annual meeting will be held for the following purposes:

Who may vote?

The Board set April 3, 20206, 2023 as the record date for the annual meeting. Holders of Watsco Common stock or Class B common stock at the close of business on the record date are entitled to vote their shares at the annual meeting, or any postponements or adjournments of the annual meeting.

There were 32,756,08233,421,233 shares of our Common stock and 5,592,8865,534,059 shares of Class B common stock issued and outstanding as of the record date, all of which are entitled to be voted at the annual meeting.

A list of shareholders will be available at our corporate office at 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133 during the ten days immediately preceding the annual meeting, and this list will be available at the annual meeting itself for examination by any shareholder entitled to attend the annual meeting.

What are the voting rights of Watsco shareholders?

Holders of our Common stock are entitled to one (1) vote per share, and holders of our Class B common stock are entitled to ten (10) votes per share on each matter that is submitted to shareholders for approval, except with respect to the election of directors as described below.

Election of Directors

Holders of our Common stock vote separately to elect 25% of our number of directors (rounded up to the next whole number), which is presently three (3) directors. Holders of our Class B common stock vote separately to elect 75% of our number of directors (rounded down to the next whole number), which is presently six (6) directors.

Other Matters

Other than with respect to the election of directors, holders of our Common stock and our Class B common stock vote on a combined basis on all other matters or as otherwise required by applicable law.

How do I vote?

Shareholders of Record.You are a shareholder of record if you are registered as a shareholder with our transfer agent, American Stock Transfer & Trust Company, LLC. ToShareholders of record may vote their shares by mail, simply mark, sign and date your proxy card, and return it in the enclosed, postage-paid envelope.internet, telephone, or by mail. To vote in person, you must attend our annual meeting, bring valid photo identification, and deliver your completed proxy card in person.

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Beneficial Shareholders.You are a beneficial shareholder if a brokerage firm, bank, trustee or other agent, referred to as a “nominee,” holds your shares. This is often called ownership in “street name” because your name does not appear on the list of our registered shareholders maintained by our transfer agent. If you hold shares in street name, you will receive voting instructions from your brokerage firm, bank, trustee or other nominee. If you are a beneficial shareholder and would like to vote in person, then you must attend our annual meeting, bring valid photo identification, bring a brokerage statement validating your share ownership as of the record date, and obtain a legal proxy from your broker, bank or other nominee to vote the shares that are held for your benefit, attach it to your completed proxy card and deliver it in person.

If less than a majority of the outstanding shares of common stock is represented at the annual meeting, a majority of the shares so represented may adjourn the annual meeting to another date, time or place. Notice need not be given of the new date, time or place if announced at the annual meeting before an adjournment is taken, unless the Board, after adjournment, fixes a new record date for the annual meeting (in which case a notice of the adjourned meeting will be given to shareholders of record on such new record date, each of whom would be entitled to vote at the adjourned meeting).

How many votes are needed for the proposals to pass?

Election of Directors

Under our Second Amended and Restated By-Laws (referred to as our By-Laws), if a quorum is present, to be elected as a director, a nominee must receive a majority of the votes of Common stock and Class B common stock, voting as separate classes to the extent they are entitled to vote on a nominee, cast in favor of such nominee’s election.

A properly executed proxy marked “WITHHOLD VOTE” with respect to the election of a director nominee will have the effect of a vote AGAINST the election of such nominee. Shareholders do not have the right to cumulate their votes for directors.

A broker is entitled to vote shares held for a beneficial owner on “routine” matters without instructions from the beneficial owner of those shares, which include the proposal to ratify KPMGDeloitte as our independent public accounting firm for the 20202023 fiscal year. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on “non-routine”“non-routine” matters, which include Proposal No. 1, Proposal No. 2, and Proposal No. 23 described in this Proxy Statement.

If you hold your shares in street name, it is critical that you provide your broker, bank, or other nominee with instructions on how to cast your vote if you want it to count in the election of directors (Proposal No. 1) and with respect to the non-binding advisory resolution (Proposal No. 2)resolutions (Proposals Nos. 2 and 3) described in this Proxy Statement. If you hold your shares in street name, and you do not instruct your broker, bank, or other nominee how to vote, then it will not be voted for the election of directors or with respect to the non-binding advisory resolutions.

If any other routine matters are properly brought before the annual meeting in addition to Proposal No. 3,4, then brokers holding shares in street name may vote those shares in their discretion for any such routine matters.

Who tabulates the votes?

Prior to the annual meeting, we will select one or more inspectors of election for the meeting. Such inspector(s) will determine the number of shares of Common stock and Class B common stock represented at the meeting, the existence of a quorum and the validity and effect of proxies, and shall receive, count and tabulate ballots and votes and determine the results thereof.

Who pays the cost of this proxy solicitation?

We pay the cost of soliciting your proxy, and we reimburse brokerage firms and others for forwarding proxy materials to you. In addition to solicitation by mail, we may also solicit proxies by letter, facsimile, e-mail, telephone, or in person. Our directors, officers, and employees may participate in the solicitation of proxies without additional consideration.

DIRECTORS & EXECUTIVE OFFICERS

Directors & Executive Officers

Our Amended and Restated Articles of Incorporation and our By-laws provide that our Board shall consist of no fewer than three nor more than nine members, and that it shall be divided, as nearly as possible into three equal divisions, each of which serves for a three-year term. We refer to directors elected by holders of our Common stock as Common Directors and we refer to directors elected by holders of our Class B common stock as Class B Directors.

The names of our directors, executive officers and director nominees and their respective ages, positions (including designation as a Common Director or Class B Director), biographies and, in the case of directors, their qualifications to serve as directors, are set forth below.

J. Michael Custerjoined has been a valued member of our Board of Directors since 2018. As the Board in December 2018. Mr. Custer currently leadsleader of the tax services practice as a Principal at Kaufman Rossin, one of the nation’s top 100 accounting firms, whichMike brings a wealth of expertise to our Board. With more than 30 years of experience advising companies across various industries, he joinedoffers proficiency in 2001. Prior to his tenure at Kaufman Rossin, Mr. Custer wasaccounting, financial and tax matters, leadership development, management skills, and corporate governance. As a partner at Deloitte, which he joined in 1985. Mr. Custer brings financial,member of the Audit Committee, Mike’s knowledge of audit, accounting, and tax skills along with leadership developmentplays an essential role in our acquisition-related activities and management expertise tolong-term planning. Present Roles: Mike is the Board. Mr. Custer is a Certified Public Accountant. Mr. Custer isCompany’s Lead Independent Director, Chair of the Nominating & Governance Committee, and a member of the Audit Committee.

Barry S. Logan has served joined Watsco in 1992 and serves as ourthe Executive Vice President Planning & Strategy since September 2019Secretary, responsible for leading the Company’s strategic initiatives and previously servedbusiness development efforts. He has held various leadership roles during his career, including serving as a Watsco director from 2011 to 2018. Mr. Logan served as Senior Vice President from 2003 to 2019, as Vice President of Finance and Chief Financial Officer from 1997 to 2003, as Treasurer from 1996 to 1998 and in other capacities beginning in 1992. Mr. Logan is a certified public accountant. Mr. Logan2003. Barry was Watsco’s fourth corporate employee and is an integral participant in the Company’s business development initiatives, financial, and other strategic activities during his 28-year career.activities. He is also the principal contact with the institutional shareholder community and, as such, is the principal contact for engagement with our shareholders.

John A. Macdonald joined our Board of Directors in 2021 after serving as a member of our Advisory Board since 2019. As the first employee and long-term CEO of Enercare, Inc., John demonstrated his entrepreneurial

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Ana M. Menendez joined Watsco in 1998 and has served as our Chief Financial Officer and Treasurer since 2003, as Treasurer since 1998, and as Assistant Secretary since 1999. Ms. Menendez is1999, and as Treasurer since 1998. As a certified public accountant. Ms. Menendez supervisesaccountant, Ana oversees all financial and accounting aspects of theour Company, including taxes, risk management, benefits, treasury and cash management, the Company’s system of internal control, and other compliance activities. SheAna also is the leaderprovides strategic guidance and principal contact for thedirection to our Company’s banking relationshipsoperations and, actively participates at a senior level in a variety of strategic activities. Ms. Menendez served on the Advisory Board of the College of Education at Florida International University from 2013 through 2015.over her career, has established important partnerships with our primary financial institutions. She is a former member and former board chair of the Miami branch of the Federal Reserve Bank of Atlanta.

Director Nominees

Cesar L. Alvarez rejoined has been a part of our Board since 1997, excluding a brief hiatus between 2015 and 2017. Cesar is the Board in 2017 after having previously served as a Watsco director from 1997 to 2015. Mr. Alvarez is Senior Chairman of the international law firm of Greenberg Traurig, P.A. (“Greenberg”). He previously served as Greenberg’s Executive Chairman beginning in 2012 and as Greenberg’s Chief Executive Officer from 1997 until his election as Executive Chairman. During his 15-year tenure as Chief Executive Officer and Executive Chairman,, an international law firm that he led the firm to becomehelped build into one of the top ten law firms in the United States by leading its growth from 260 lawyers to approximately 1,850 lawyers in more than 36 locations in the United States, Europe, Asia and Latin America. Mr. Alvarez holdsU.S. With degrees in law as well as a Master in Business Administration. Heand an MBA from the University of Florida, Cesar brings significant entrepreneuriallegal expertise managementto our Board, including experience in securities laws, mergers and knowledge from his many years ofacquisitions, and corporate governance experience, both counseling and servinglaw. He serves on the boards of directors oftwo other publicly traded companies. Mr. Alvarez serves on the boards of Mednax, Inc. (chairman of the board and member of the executive committee), Intrexon Corporation n/k/apublic companies, including Precigen, Inc. (chair of the nominating and governance committee), a clinical stage pharmaceutical company and The St. Joe Company (member of the audit, compensation and governance committee). He also served ascommittees), a directorlong-standing Florida-based land development company. His entrepreneurial spirit and extensive experience in corporate governance make him a vital member of Fairholme Funds, Inc. until his retirement from its board early this year. Mr. Alvarezour Board. Present Roles: Cesar serves as our Co-Vice Chairman of the Board and is a member of the Strategy Committee.

Dr. Denise Dickins, Ph.D., has served as a Board member since 2007. Since 2006, she has been employed byAs Professor Emeritus at East Carolina University, where she is a Professor of AccountingDenise brings extensive auditing, accounting, and Auditing, teaching courses in Auditing and Corporate Governance. From 2002corporate governance expertise to 2006, while earning her Ph.D., she was an instructor of various accounting courses at Florida Atlantic University.our Board. Prior to that,her educational career, she servedworked in varying capacities withfor Arthur Andersen LLP, from 1983 to 2002, including Partner in Charge of the South Florida Audit Division. Dr. Dickins is a certified public accountant and certified internal auditorDivision and has served on the board of several publicly traded companies. Dr. Dickins brings auditing, accounting,She currently serves on the board of NV5 Global, Inc. (member of the audit committee and corporate governancechair of the compensation committee). Her experience as an instructor, certified public accountant, and certified internal auditor has equipped her with invaluable skills to the Board. Shein chairing our Audit and Compensation Committees. Present Roles: Denise serves as chairChair of the Audit Committee and Compensation Committee and isCommittee.

Ana Lopez-Blazquez was recommended for nomination to our Board as a member of theCommon Director by our Nominating & Governance Committee.

Brian E. Keeley was appointed to the BoardCommittee in 2018. Mr. Keeley is theApril 2023. As Executive Vice President, and Chief ExecutiveStrategy & Transformation Officer offor Baptist Health, South Florida, Inc. (“Baptist Health”), the largest not-for-profit healthcare organizationAna has displayed strong leadership and expertise in South Florida, with 10 hospitals, a network of more than 50 outpatient facilitiesstrategy and one of the nation’s largest international programs. Under his leadership,business transformation. Her entrepreneurial background, established over her 35-year career at Baptist Health implemented transformational technologies throughout its organization and has been rated among Fortune’s “100 Best Companies to Work For” in America. Mr. Keeley is a former member and board chairher deep understanding of the Miami Branch of the Federal Reserve Bank of Atlanta. He is a member of the Audit Committee and the Strategy Committee. Mr. Keeley brings significant management, operational, financial and technology execution skillsregulatory matters make her an essential addition to our Board. She has participated on Watsco’s Advisory Board since 2021.

Director Skills & Experience and Experience MatrixDemographic Background

The table below details the skills and experience each director and director nominee brings to our Board:

The charts below depict the diversity of our directors and director nominees, excluding Mr. Moss whose term expires at the annual meeting, based on gender, ethnicity, independence, and age:

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CORPORATE GOVERNANCE

Overall Role of the Board

Our business and affairs are managed under the direction of our Board, which is the Company’s ultimate decision-making body, except with respect to those matters reserved to our shareholders. The Board’s mission is to maximize long-term shareholder value. Our Board oversees our business strategy and risk management process, establishes our overall corporate policies, selects and evaluates our executive management team, and acts as an advisor and counselor to executive management.

Watsco is a “controlled company” as defined by the New York Stock Exchange (referred to as the NYSE) because, as a group, our Chairman & CEO and our President maintain effective voting control of 51.7%controlled 52.6% of the combined voting power of our outstanding common stock as of April 3, 2020,6, 2023, the record date for the annual meeting. Our Chairman & CEO, our President, and director Valerie F. Schimel, who is the daughter of our Chairman & CEO, controlled 53.4% of the combined voting power of our outstanding common stock as of the record date. Our Chairman & CEO’s effective voting control has decreased from 62.0% in 2005 to 49.4%47.2% as of the record date. As a controlled company, Watsco is not required to comply with certain corporate governance policies required of other publicly traded companies that are not controlled companies. For example, the Board is not required to be composed of a majority of independent directors, and the Company is not required to have a Compensation Committee or a Nominating & Governance Committee. However, because the Board strives to establish policies and procedures that it believes are in the best interests of the Company’s shareholders, and thereforethe Company generally complies with the corporate governance policies applicable to all publicly traded NYSE-listed companies that are not controlled companies.

Board Leadership Structure

Role of Chairman & CEO. Our Board regularly reviews its structure and composition taking into consideration the Company’s performance and expectations for the future. Under the leadership of Albert H. Nahmad, Watsco’s annual total shareholder returns (the measurement of stock appreciation, including the reinvestment of dividends) on a compounded basis in comparison to the S&P 500400 Industrials Index for each of the respective time periods were:

The Board believes this track record of successthe Company’s performance reflects Mr. Nahmad’s effective leadership and creativity in devising and executing the Company’s strategic initiatives and in confronting its challenges. As Chairman and CEO, he facilitatesMr. Nahmad fosters a strong collaboration between management and the independent members of the Board. The Board believes that the Company and its shareholders are best served by having Mr. Nahmad continue to serve as Chairman and CEO.

Co-Vice Chairman of the Board.Currently Messrs.Mr. Alvarez and MossAaron J. Nahmad serve as the Co-Vice Chairmen of the Board. The primary responsibility of this role is to preside at all Board meetings at which the Chairman is not present, including regularly scheduled mandatory executive sessions of the independent directors held at least once a year, and apprise the Chairman of the issues considered. The development of more senior members of the Board as Vice Chairs is considered an important element of succession planning at the Board level.present.

Lead Independent Director. To facilitate and strengthen the Board’s independent oversight of the Company’s strategies, performance and succession planning, and to uphold effective governance standards, the Board has developed the role of a lead independent director. The position of lead independent director is currently held by Mr. Moss.Custer. As Lead Independent Director, Mr. MossCuster has the following duties and responsibilities:

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Codes of Ethics and Conduct.The Board has adopted codes of ethics and conduct that are designed to ensure that directors, officers, and employees of the Company are aware of their ethical responsibilities and avoid conduct that may pose riskrisks to the Company. We maintain (i) an Employee Code of Business Ethics and Conduct that is applicable to all employees, and (ii) a Code of Conduct for Executives that is applicable to members of our Board, our NEOs, and other senior operating and financial personnel. There were no amendments or waivers from either code of conduct in 2019.2022. Oversight of investigations of known or potential violations under either code of conduct is the responsibility of the Audit Committee. To obtain copies of our Codes of Ethics and Conduct, please see “Corporate Governance Documents” below.

Board Meetings and Board Attendance.The Board meets regularly during the year, and it holds special meetings and acts by unanimous written consent whenever circumstances require. During 2019,2022, the Board held six meetings and acted by unanimous written consent six times and held four meetings.times. In 2019,2022, all directors attended 100% of the aggregate number of meetings of the Board and the respective committees on which the directors served. Independent directors meet at regularly scheduledhold formal executive sessions without management present.present at least annually and communicate independently on an ad hoc basis. All of our directors are encouraged to attend our annual meeting of shareholders, and all did attendattended our annual meeting in 2019.2022.

Board Committees.During 2019, 2022,the Board maintained an Audit Committee, a Compensation Committee, and a Nominating & Governance Committee, each of which is composed entirely of directors meeting the applicable independence guidelines of the NYSE. Additionally, the Board maintained a Strategy Committee, originally established in March 2018, which is composed of both non-management directors and management directors. The focus of our Board-level activities is primarily long-term strategy, while the focus of our committee-level activities is primarily risk management and compliance. Board members are assigned to committees based on their independence, qualifications, experience, and availability. While our goal is to rotate Board members among committees, including chairmanships, we will never sacrifice independence, qualifications, experience, and availability for rotation.

Audit Committee.The Audit Committee’s functions include overseeing the preparation, presentation, and integrity of our financial statements and internal control over financial reporting, the qualifications of our independent registered public accounting firm, compliance with legal and regulatory requirements, and the performance of our internal audit function and controls regarding finance, accounting, legal compliance, and ethics that management and our Board have established. The Audit Committee’s responsibilities additionally include, but are not limited to:

All Audit Committee members possess the required level of financial literacy as defined in our Audit Committee charter, and all Audit Committee members qualify as “audit committee financial experts” as defined by applicable Securities & Exchange Commission (referred to as the SEC) rules and regulations and meet the current standard of requisite financial management expertise and independence as required by the NYSE and applicable SEC rules and regulations.

Nominating & Governance Committee.We have elected to apply the exemption related to a controlled company provided by the NYSE that allows a company that has more than 50% of the voting power held by a group (our Chairman & CEO and President controlled 52.6% of the combined voting power of our outstanding common stock as of the record date) to be exempted from complying with rules requiring that only independent directors comprise our Nominating & Strategy Committee.

Our Nominating & Governance Committee’s purpose is to assist the Board in identifying individuals qualified to become members of our Board consistent with the criteria set forth in our Corporate Governance Guidelines, to help in the evaluation of the effectiveness of our Board and its individual members, and to review and update our corporate governance principles. The Board may assume, change or add additional activities from time-to-time to assure the effective operation of the Board. The Nominating & Governance Committee’s activities include, but are not limited to:

Strategy Committee.Committee. The Strategy Committee is responsible for the oversight of Watsco’s strategic initiatives and confers with the Board regarding major opportunities, threats, and other policy matters. The Strategy Committee focuses primarily on long-term matters rather than day-to-day operations.

The following summarizes stock option awards outstanding for each non-management director as of December 31, 2019:2022:

Minimum Stock Ownership Requirement for Directors and Officers.To align the interests of our directors and NEOs with those of our shareholders, each director and NEO is required to meet the following minimum stock ownership requirements:

Our directors and NEOs have two years from the date they became directors or NEOs to comply with these ownership requirements. Compliance with the minimum stock ownership level will be determined on the date when the grace period set forth above expires, and annually on each December 31 thereafter, by multiplying the

Shareholder ProposalsProposals; Universal Proxy Card.Shareholders interested in submitting a proposal for inclusion in our proxy materials for our 20212024 annual meeting of shareholders may do so by following the procedures set forth in Rule 14a-8 promulgated by the SEC under the Exchange Act. To be eligible for inclusion in such proxy materials, our Corporate Secretary must receive shareholder proposals no later than December 25, 2020.30, 2023. Any shareholder proposal submitted other than for inclusion in the proxy materials, or to nominate a person for election as a director, for that meeting must be delivered to us no sooner than February 6, 2024 and no later than March 3, 2021,17, 2024, or such proposal will be considered untimely. Any such proposal must contain all of the information required by our By-laws.

If a shareholder proposalmatter is received afterproperly brought before our 2024 annual meeting of shareholders, and we did not have notice of such matter prior to March 3, 2021,14, 2024, then we may vote in our discretion as to the proposal all of the shares for which we have received proxies for the 20212024 annual meeting of the shareholders.

In addition, for shareholder nominees for directors to be considered timely for inclusion on a universal proxy card pursuant to Rule 14a-19 under the Exchange Act, shareholders must provide notice to us no later than April 6, 2024, containing the information required by Rule 14a-19 under the Exchange Act.

Shareholder Engagement.The Board and management consider institutional shareholders as partners in our business and actively engage and communicate with them throughout the year. This engagement is accomplished through a combination of events, including an annual investor daydays (during which directors, officers, and a variety of leaders attend and participate), investor meetings, analyst conferences, non-deal road shows, telephone conferences, headquarter visits, and fieldtrips to our business units. Our overall philosophy is to provide consistent access and build relationships with a long-term time horizon in mind. This engagement is not just held with investment decision-makers, but also with institutional shareholders’ corporate governance leaders. In 2019,2022, we met with many of the institutions with investments in our Company and communicated with the primary proxy advisory services to discuss the Company’s track record, cultural foundations, and our unique use of restricted shares with long-term, cliff-vesting as part of our compensation philosophy. More information can be found atwww.watsco.com in the Investor Relations section.

Communications with the Company and the Board.Interested parties may communicate with the Company by letter addressed to Investor Relations, Watsco, Inc., 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133, or by e-mail to Investor Relations,info@watsco.com.

Interested parties may also communicate with our Board by calling (800) 4WATSCO in the United States and leaving a message for the Lead Independent Director, or by e-mailing our Lead Independent Director atpresidingdirector@watsco.com (which can also be accessed via our website atwww.investors.watsco.com, under the caption “Lead Director” within the Governance section). presidingdirector@watsco.com. Regardless of the method used, the Lead Independent Director will be able to view your unedited message and determine whether to relay your message to other members of the Board.

Corporate Governance Documents.To that end, we are partnering with OEMs and suppliers to invest in more tools, technology and training for our customers to capitalize on this important opportunity. Our website is atwww.watsco.com.industry has much to contribute to this endeavor – and as a leader we are committed to doing our part. Please visit our website at www.watsco.com/environment for information related to our impact on the environment.

Diversity and Inclusion

We value and foster the diversity and inclusion of the people with whom we work. Our commitment includes providing equal access to, and participation in, employment and advancement opportunities without regard to race, color, religion, national origin, age, disability, veteran or military status, pregnancy status, sex, gender identity, sexual orientation, or marital status. Diverse teams facilitate contributions from people of different backgrounds and varied points of view. Furthermore, we believe that well managed diverse teams make better decisions faster and outperform less diverse teams. We also believe that employees who feel valued, understood, and inspired benefit the Company as a whole. Inclusive leadership leads to innovative solutions and an inclusive environment is a critical foundation for us, as high performing, engaged teams join together to help us implement our strategies. You can find our human rights policy on our investor relations website atwww.investors.watsco.comhttps://investors.watsco.com under the section captioned “Governance”“Governance.”

Health and Safety

We continuously strive to improve all aspects of our work practices. We actively support a culture of safety and wellness for the following:benefit of our employees and their families along with our customers. Providing a safe and healthy work environment is a business priority and is core to our values. Health and safety are an essential part of a broader workforce strategy that reduces the risk of harm to employees and helps them remain healthy, engaged, and productive.

To build and sustain a culture based on these principles, our commitment to safety and wellness is incorporated into the incentive structure of our key operational leaders. For wellness, employees are incentivized to complete annual physicals and health assessments to help ensure that our philosophical values are put into action. For safety, we measure and carefully evaluate incidents related to workers compensation, vehicle accidents and injuries to third parties, and we continuously seek to improve safety measures intended to reduce the number of such incidents. You can find our health and safety policies on our investor relations website at https://investors.watsco.com under the section captioned “Governance.”

These materials may alsoBy-Laws can be requested in print by writing to our Investor Relations Department at Watsco, Inc., 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133.

Environmental and Social Policies. Please visitfound on our investor relations website atwww.investors.watsco.comhttps://investors.watsco.com under the section captioned “Governance” for“Governance.”

For more information on our ESG efforts, please read our 2022 Annual Report on Form 10-K or visit the following:Corporate Responsibility section of our website at www.watsco.com.

Advisory Board.In March 2019, the Boardwe formed an Advisory Board to provide thoughts, advice, and non-binding recommendations to ourthe Board. The Advisory Board is viewed as a resource that supports the Board by providingprovides expert insight whichthat complements the knowledge, understanding, and strategic thinking of the Board.Board members. The Advisory Board is not a Board committee or otherwise a part of the Board.

The Board may appoint up to six members to the Our Chairman & CEO has sole discretion over Advisory Board with termsmembership, including the number of three years. Advisory Board members, receive compensation for their services as determined by the Board in its sole discretion. term of service, and compensation.

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Members of the Advisory Board may include possiblepotential future Board members, former Board members, and other individuals whom the Board determines may be able to provide valuable insight. MembersThe following persons comprise the current membership of the Advisory Board include:Board:

Matt Ehrlichman

Mr. Ehrlichman was appointed to the Advisory Board in March 2020. He is the co-founder, CEO and Chairman of Porch Group, Inc., a consumervertical software and social internet marketplace that connects homeowners with local home service professionals.insurance company focused on helping make homeownership simple. Prior to Porch, Mr. Ehrlichman was the co-founder and CEO of Thriva until it was acquired by Active Network in 2007, where he served as the Chief Strategy Officer from 2007 tountil 2012. Mr. Ehrlichman received options to purchase 3,000 shares of Common stock upon his appointment to the Advisory Board. Our subsidiary Watsco Ventures, LLC, has invested $2,500,000 in Porch in connection with itsthe goal of helping contractor customers grow and become more profitable. In connection with Porch’s initial public offering in 2020, we received cash as well as shares of Porch Group, Inc. common stock, of which we had 64,377 shares as of December 31, 2022.

John MacdonaldBrian E. Keeley

Mr. MacdonaldKeeley was appointed to the Advisory Board in September 2019.April 2022. He ispreviously served as a Watsco director from 2018 to 2022. Mr. Keeley was the former PresidentChief Executive Officer of Baptist Health South Florida, Inc. (“Baptist Health”), the largest not-for-profit healthcare organization in South Florida, with 12 hospitals, a network of more than 100 outpatient facilities and CEO of Enercare, Inc.,physician practices, and one of the nation’s largest home service companiesinternational programs from 1986 to 2022. Under his leadership, Baptist Health implemented transformational technologies throughout its organization and has been rated among Fortune’s “100 Best Companies to Work For” in North America. Mr. Macdonald retired from Enercare in 2018 after it was acquired by Brookfield Infrastructure. He presently serves as ChairmanKeeley is a former member and board chair of the BoardMiami Branch of Parity, Inc., a Toronto-based computer software company using AI to reduce carbon emissions for multi-tenant buildings.the Federal Reserve Bank of Atlanta. Upon his appointment, Mr. MacdonaldKeeley received optionsan option grant to purchase 3,0001,000 shares of Common stock upon his appointmentstock.

Ana Lopez-Blazquez

Ms. Lopez-Blazquez was appointed to the Advisory Board.Board in March 2021. She is Executive Vice President, Chief Strategy & Transformation Officer for Baptist Health and Chief Executive Officer of Baptist Health Enterprises, a subsidiary of Baptist Health. In her role as Chief Strategy Officer for Baptist Health, Ms. Lopez-Blazquez is responsible for strategy development and execution with particular emphasis on driving the growth agenda and brand management of Baptist Health across South Florida. As Chief Transformation Officer, Ms. Lopez-Blazquez provides overall strategic leadership and direction for all aspects of business transformation including implementation strategies. Ms. Lopez-Blazquez joined Baptist Hospital of Miami in 1987 as Director of Planning and has led their strategic planning and business/market development functions since that time.

Terry MyersonMatthew A. Love

Mr. MyersonLove was appointed to the Advisory Board in November 2021. He is President and Chief Executive Officer of Nicklaus Children’s Health System, parent organization of Nicklaus Children’s Hospital, a nationally recognized nonprofit pediatric specialty hospital based in Miami. Mr. Love possesses more than 25 years of experience in financial and operational oversight in both adult and pediatric healthcare systems. He is a fellow in the American College of Healthcare Executives.

LeShelle May

Ms. May was appointed to the Advisory Board in June 2019. He was previously a member of the Senior Leadership Team at Microsoft Corporation, leading2021. She is an accomplished computer engineer recognized for her leadership and innovation in the development of Windows, Surface, Xboxsoftware and Microsoft Exchange over his 21-year career there. Mr. Myersonweb applications. Ms. May joined CNN in 1996 as a senior system/software developer and is currently part of a team responsible for migrating all of CNN’s legacy content to the cloud. Previously, she led several advanced projects, including CNNgo, the NewsApps Portal, and MS2, a video content management system that enables online viewers to

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watch live news coverage, which won CNN a Technology & Engineering Emmy Award in 2000. Prior to CNN, she worked in various technology positions for Indus International and BellSouth Corp.

Alan H. Potamkin

Mr. Potamkin was appointed to the Advisory Board in November 2022. He previously served as a Watsco director from 1994 to 2000. Mr. Potamkin is President and Chairman of Potamkin Companies, one of America’s largest privately held auto dealerships. He has various real estate holdings, and previously was the owner of several broadcast licenses. Presently, the majority of Mr. Potamkin’s time is spent working with Kristi House, Miami-Dade County’s Children’s Sexual Abuse Center. Upon his appointment, Mr. Potamkin received an option grant to purchase 1,000 shares of Common stock.

Troy Rice

Mr. Rice was appointed to the Advisory Board in June 2021. He is President of FPL Energy Services, a subsidiary company of NextEra Energy, Inc., a leading clean energy company and a provider of value residential, commercial and public-sector products and services. NextEra Energy is the parent company of Florida Power & Light, the largest rate-regulated utility in the United States as measured by retail electricity produced and sold. Mr. Rice joined NextEra in 2002 and has held a number of leadership positions throughout his career.

Gary L. Tapella

Mr. Tapella was appointed to the Advisory Board in February 2022. He previously served as a Watsco director from 2006 to 2010. He is an Operating Executive with The Carlyle Group,Partner of One Rock Capital Partners, LLC, a leadingvalue-oriented, operationally focused private equity firm assisting portfolio companieswith $5 billion of capital commitments. Prior to joining One Rock he was an Operating Partner at Ripplewood Holdings, LLC from 2005 to 2009. Mr. Tapella retired from Rheem Manufacturing Company in 2005 as President and Chief Executive Officer following a 36-year career with the designcompany. His experience there included managing Rheem’s Canadian and execution of their technology strategies. He is also a Venture Partner at Madrona Venture Capital, the Pacific Northwest’s leading venture capital group, whereSingapore based pan-Asian companies and he works with entrepreneurs on the next generation of innovation.served as Senior Vice President International and Chief Operating Officer. Upon his appointment, Mr. MyersonTapella received optionsan option grant to purchase 3,0001,000 shares of Common stock upon his appointment to the Advisory Board.

The charts below depict the diversity of our Advisory Board Ms. Wilson received options to purchase 3,000 shares of Common stock.based on gender, ethnicity, independence, and age:

Valerie Schimel

Ms. Schimel was appointed to the Advisory Board in March 2019. She is founder and Chief Executive Officer of Munchkin Fun LLC, a digital media company launched in 2012 to help Florida families spend quality time together. Ms. Schimel also serves as President of the Albert H. and Jane D. Nahmad Foundation, which supports education and youth development in Miami-Dade County, Florida. She is the daughter of Albert H. Nahmad.

Certain Relationships and Related Person Transactions

Our Audit Committee continuously monitors relationships and transactions in which the Company and our directors or NEOs or their immediate family members are participants to determine whether such persons have a direct or indirect material interest and may use outside legal counsel to assist in such determination. As required under SEC rules, transactions in which we are a participant and that involve an amount in excess of $120,000 and in which any related person had or will have a direct or indirect material interest are disclosed in this Proxy Statement. In addition, as set forth in the Audit Committee charter, the Audit Committee has established a formal process whereby it must pre-approve all related party transactions.

The Audit Committee considers the following factors, among others, in determining whether to approve transactions:

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Pursuant to its related-party transaction policy, the Audit Committee reviewed and approved the following transaction using the criteria set forth above:

Greenberg Traurig, P.A. serves as our principal outside counsel for compliance and acquisition-related legal services. Greenberg Traurig, P.A. has annual revenues in excess of $1 billion. Mr. Alvarez, a director, is the Senior Chairman of Greenberg Traurig, P.A. Greenberg Traurig, P.A. has annual revenues in excess of $2 billion. We paid Greenberg Traurig approximately $187,000$186,000 for services performed in 20192022, and we anticipate this arrangement will continue. Mr. Alvarez has indicated this amount wasdid not material to Greenberg Traurig, P.A., nor did Mr. Alvarez have a material direct or indirect interest in such payments.

STOCK OWNERSHIP

The following table sets forth information regarding the beneficial ownership of our Common stock and Class B common stock by (i) each shareholder known by us to beneficially own more than 5% of either class of our voting securities, (ii) each of our directors and director nominees, (iii) each of our named executive officers, and (iv) our directors and executive officers as a group.

The table also contains, in the final column, the combined voting power of the voting securities on all matters presented to the shareholders for their approval, except for the election of directors and for such separate class votes as aremay be required by Florida law. Holders of our Common stock are entitled to one (1) vote per share on each matter that is submitted to shareholders for approval and holders of our Class B common stock are entitled to ten (10) votes per share on each matter that is submitted to shareholders for approval. All information is as of the record date, April 3, 2020.6, 2023. As of the record date, we had 32,756,08233,421,233 shares of Common stock and 5,592,8865,534,059 shares of Class B common stock issued and outstanding.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC reports of ownership of, and transactions in, our equity securities. To our knowledge, based solely on a review of copies of such reports that we received, our records and written representations received from our directors, executive officers and certain of those persons who own greater than 10% of any class of our equity securities, for the year ended December 31, 2019,2022, all applicable Section 16(a) filing requirements were complied with on a timely basis, except that a Form 4 in respect of 5,000 restricted shares of Class B common stock granted to Mr. Rush on April 1, 2019 and a Form 4 in respect of 837 shares of Common stock purchased by Mr. Keeley in December 2019 were not timely filed.basis.

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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table contains information as of December 31, 20192022, with respect to compensation plans (including individual compensation arrangements) under which any of our equity securities are authorized for issuance.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Our executive compensation program is grounded in the principle that compensation should be highly dependent onlong-term shareholder returns. This key tenet of our compensation philosophy has driven the unique design of our program for many years and has enabled our executive leadership team to remain solidly focused on long-term performance. Watsco’s entry into the HVAC/R distribution industry began in 1989 and, since1989. Since that time, we have generated an 18%cumulative total shareholder return of 21,739% (18% compounded annual growth rate of total shareholder return.rate).

Our approach to long-term incentives is unique in comparison to other companies.unique. Unlike most companies, that awardwhich grant their officers and employees restricted shares that vest over a period of a few years, our restricted share awards cliff-vest toward the end of an employee’s career (usually age(age 62 or older). For employees extending their careers beyond age 62, vesting may occur even later. If, for any reason other than death or disability, a holder of restricted shares leaves the Company, 100% of his or her restricted shares are forfeited. This means our key leaders do not know and cannot realize the value of their restricted share awards until they have spent their respectiveentire careers with the Company. Restricted share awards are subject to significant market, performance, and forfeiture risks. During the vesting period, shares of restricted stock include the right to vote and the right to receive dividends.

The Company began granting restricted shares in 1997. As of the record date, 89137 of the Company’s key leaders, including the NEOs, hold restricted share awards that cliff-vest between 20202023 and 2045. If, for any reason other than death or disability, a holder of restricted shares leaves the Company, his or her restricted shares are forfeited.2054.

We believe granting long-duration restricted shares that vest at retirement age balances strategic risk-taking and long-term performance,value creation, creates an ownership culture, and aligns the interests of high-performing leaders with the interests of our shareholders. Additionally, we believe these awards help build a sustainable future by ensuring that our executives make the right long-term business decisions that will survive well past their retirement.

As it relates to our NEOs,97% of their restricted share awards have not yet vested.On a weighted-average basis, our NEO’s respective restricted share awards have been outstanding for approximately 13 years12 years. Unvested restricted stock awards for our Chairman & CEO vest in 2024 (at age 84), 2028 (at age 88) and willin 2029 (at age 89). Unvested restricted stock awards for our President do not begin to vest until 2022 for the Chairman & CEO and not until 2043 for the President.(at age 62). This long-term vesting demonstrates the program’s distinct nature and the long-term perspective that is at the core of the Company’s unique compensation philosophy, which is unique to Watsco.philosophy.

This compensation discussion and analysis (referred to as CD&A) explains ourthe executive compensation program for our NEOs listed below.NEOs. It also describes the Compensation Committee’s process for making paycompensation decisions in 2019.2022.

20192022 Business Performance. Watsco produced another year of record performance. As compared to 2018:2021:

Philosophy, Culture & Performance

Executive Compensation Philosophy.We measure success by our ability to create shareholder returns over significantly long periods of time.The vision and leadership of our entrepreneurial business leaders are at the core of our performance, and it is their continued commitment to drive sustainable growth that we believe will contribute to our ongoing success. To this end, we must attract, motivate, andretain high-caliber talent.

Pay-For-Performance & Ownership Culture. For employees throughout Watsco, including our NEOs, we maintain a pay-for-performanceperformance-based culture that provides for a variety of potential rewards. Our equity-based plans include 401(k) matching contributions to eligible employees, a voluntary employee stock purchase plan, and the granting of stock options and restricted stock awards based on individual merit and performance. The equity-based compensation plans are intended to promote long-term performance and foster an “ownership culture” whereby management and employees think and act as owners of the Company. As described above, our restricted stock program is unique because an employee’s restricted shares vest entirely toward the end of his or her career (age 62 or later), subjecting such awards to significant market, performance, and forfeiture risks.

Concentrated Use of Long-Term Incentives Using Restricted Stock. For our Chairman & CEO, the President, and other NEOs, the primary component of long-term incentive compensation is restricted stock that cliff-vests at retirement. Long-term incentive compensation grants of restricted stock are subject to significant market, performance, and forfeiture risks, which means thatour key leaders do not know and cannot realize the value of their restricted share awards until they have spent their respective careers with the Company. This methodcompensation strategy has been consistent over the Company’s history and is rooted in the principle that long-term, equity-based compensation is the most effective method to balance the management of long-term opportunities along with long-term risks and to align the interests of executives with those of our shareholders. Due to the unusually long vesting periods and risks of forfeiture, and as supported by independent valuations obtained by the Company, the Compensation Committee believes the present value of such awards is likely significantly less than the “face value” when issued asthat is reported in the Summary Compensation Table below. As of the record date, 89 of the Company’s key leaders, including the NEOs, hold restricted share awards that cliff-vest between 2020 and 2045.

The Company believes this balance of risk and reward over long periods is more effective than more conventional equity-based programs that provide considerably shorter-term vesting and payouts, and effectively aligns the development ofemployee a leader’s wealthand with shareholder wealth.wealth. The program also serves as an important method to retain key leaders for the duration of their careers.

incentive awards. Based on data provided by FactSet Research Systems Inc. (referred to as FactSet), the Company’s compounded annual growth rate (referred to as CAGR) in comparison to a variety of public-company market indices as of December 31, 20192022, was as follows:

Our 5-year, 10-year, 15-year, 20-year,and 20-year25-year TSR, and our 25-year30-year TSR of 18.3%18.0%, demonstrates the sustained level of performance of our Company over long periods of time. These results are also important in assessing the Company’s business strategy, quality of leadership, culture and the relative effectiveness of our compensation practices.

Based on further analysis of data from FactSet, the Company’s performance ranks as follows:

Governance, Compensation Actions & Summary of Details

Compensation Governance Practices.We believe that our executive compensation program promotes sound governance standards and includes many shareholder-friendly features, such as:

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Peer Comparisons. Given the uniqueness and concentration ofour unique compensation related to thestructure that focuses primarily on equity awards with long-term vesting periods ofunder our restricted stock program, the Compensation Committee has determined that neither base salary nor any other element of executive compensation is directly comparable to peer group or compensation survey data. Instead, reasonable judgment is used to set a base salary that, when combined with all other compensation elements, results in a competitive pay package intended to align with the executive compensation philosophy of the Company of long-term TSR, while retaining high-performing executives. This unique philosophy is regularly discussed and evaluated through extensive institutional shareholder engagement. The Compensation Committee believes the program’s philosophy and effectiveness have been accepted and validated over the years.

A summary of restricted stock awards currently held by our NEOs, including the range of years during which such shares were granted, the range of cliff-vesting dates, and the weighted-average years remaining until the cliff-vesting date is reached as of December 31, 2019the record date, April 6, 2023 was as follows:

SEC as Exhibit 10.110.1(w) to the Quarterlyour Annual Report on Form 10-Q10-K for the quarteryear ended MarchDecember 31, 20192021 and is incorporated herein by reference. We refer to this amendment as the 20192022 Amendment.

The 20192022 Amendment providesprovided that a 20192022 performance award, if any: (a) shall be made through a grant of restricted Class B common shares with a cliff-vest date of October 15, 2028,2029 (at age 89), subject to forfeiture prior to this date as set forth in the restricted stock agreement; (b) is subject to his employment for the entire year unless the Compensation Committee specifically determines otherwise; (c) is subject to a maximum of $20$10 million; and (d) shall use the following performance factors to determine the amount of the award:

EPS growth

(i) No incentive is earned if 20192022 EPS did not exceed $6.49$10.78⁽¹⁾, or

(ii) $61,000$43,500 in value is awarded for each one cent of EPS growth in 20192022 (if less than $6.81$11.32⁽²⁾), or

(iii) $91,000$65,000 in value is awarded for each one cent of EPS growth in 20192022 (if equal to or greater than $6.81$11.32⁽²⁾),plus

(b) To recognizeencourage and reward the importancedevelopment of shareholder value over a longer period, 25% of the amount isaward was to be issued as restricted stock units (RSUs) that are potentially convertible into shares of Class B restricted stock contingent upon the Company’s stock price performance over the three-year period ending December 31, 2021, referred to as the2024 (the “Three-Year Performance Award.”Award”). Generally, RSUs will convert one-for-one if the average annual stock price increase is 10% or greater for the three-years and two-for-one if the average annual stock price increase is 20% or greater.

For 2019,2022, our President’s equity-based incentive used the following performance criteria factors:

EPS growth

(i) No incentive is earned if 20192022 EPS did not exceed $6.49$10.78⁽¹⁾, or

(ii) $26,000$43,500 in value is awarded for each one cent of EPS growth in 20192022 (if less than $6.81$11.32⁽²⁾), or

(iii) $39,000$65,000 in value is awarded for each one cent of EPS growth in 20192022 (if equal to or greater than $6.81$11.32⁽²⁾),plus

Our President’s Three-Year Performance Award for 2020 (the “2020 RSUs”) was valued at $2.5 million. The Compensation Committee determined an RSU conversion factor of 100% based on the average stock-price performance growth of 15% over the three-year period ended December 31, 2022. Accordingly, the 2020 RSUs were converted into 9,229 shares of restricted Class B common stock with a gross value of approximately $2.5 million that cliff-vest of October 17, 2043. $48.48 was also paid in cash in lieu of a fractional share.

As it relates to RSU awards to our President in general, the Compensation Committee has discretion to determine the final RSU conversion factor based on the achieved growth rates. Restricted shares of Class B common stock issued upon conversion of the RSUs, if any, issued pursuant to this award willshall cliff-vest on October 17, 2043, and are subject to the terms, conditions and risks of forfeiture contained in the related restricted stock agreements.

Our President’s Three-Year Performance Award with respect to 2017 was approximately $0.8 million. The Compensation Committee determined an RSU conversion factor of 50% based on the stock-price performance growth of 9% over the three-year period ended December 31, 2019. Accordingly, outstanding RSUs were converted into 2,138 shares of restricted Class B common shares that were issued to our President with a cliff-vest of October 17, 2043. $89 was also paid in cash in lieu of fractional shares.

Valuation of Restricted Shares. Although restricted shares granted in 20192022 are presented in the Summary Compensation Table at grant date fair value, calculated in accordance with FASB ASC Topic 718, due to the unusually long vesting periods and associated market and forfeiture risks,the present value of such awards is likely significantly less. Independent valuations obtained by the Company suggest that, collectively, the present value of such awards may be as much as 50% less than the grant date fair value.less.

Long-Term Incentives for our Other NEOs. For our other NEOs, the Chairman & CEO considers and recommends discretionary stock option awards and restricted share awards, which are subject to the review and approval of the Compensation Committee. The decision to grant stock options and/or restricted stock awards to our other NEOs is based on the subjective weighting of the following criteria, together with the overall performance of the Company:

Stock Option Backdating & Repricing.We do not backdate or reprice, and have notnever backdated or repriced, stock option awards.

Hedging and Pledging of Shares Prohibited.Directors and NEOs are prohibited from entering into hedging transactions related to Watsco shares or pledging shares as collateral for any loans.

Certain Tax Considerations. Under Section 162(m) of theFor 2022, Internal Revenue Code (referred(“IRC”) section 162(m) limited our deduction to as Section 162(m)), public companies may generally not take a tax deduction for nonperformance-based compensation, and, effective January 1, 2018, for performance-based compensation in excess of $1.0 million for annual compensation paid to named executive officers, includingcovered employees, as defined in IRC section 162(m). The Committee believes that the Chairman & CEO or any of the next three most highly compensated officers. However, performance-based compensation payable pursuant to contracts entered into prior to November 2, 2017 does not count against the $1.0 million deduction limit. Our policy with respect to Section 162(m) is to make reasonable efforts to ensure that compensation is deductible without limiting our ability to attract and retain qualified executives. The Compensation Committee has not adopted a policy that all compensation must be deductible, believing in the importance of retainingCompany’s interests are best served by maintaining flexibility to design compensation programs that recognize a full range of criteria important to our success, even where compensation payable under the programs may not be fully deductible. Our Compensation Committee monitorsdeductible under the tax impacts of our compensation policies and practices.IRC.

Risk Considerations in our Compensation Programs. We have reviewed our compensation structures and policies as they pertain to risk and have determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company.

COMPENSATION COMMITTEE REPORT

The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing.

The Compensation Committee has reviewed and discussed the CD&A contained in this Proxy Statement with management. Based on that review and discussion, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this Proxy Statement.

The following independent directors, who comprise the Compensation Committee, provide this report:

COMPENSATION TABLES

Summary Compensation Table

The following table sets forth the compensation earned by the NEOs for services rendered for the years ended December 31, 2019, 20182022, 2021, and 2017.2020.