UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
WASHINGTON, D.C. 20549
SCHEDULE 14A14 A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Definitive Additional Materials | ||||
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Soliciting Material under |
FORTUNE BRANDS INNOVATIONS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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520 Lake Cook Road, Deerfield, Illinois 60015
NOTICE OF ANNUAL MEETINGNotice of Annual Meeting
AND PROXY STATEMENTand Proxy Statement
March 21, 202222, 2024
Dear Fellow Stockholders:
We are pleased to invite you to the 20222024 Annual Meeting of Stockholders (“Annual Meeting”) of Fortune Brands Home & Security,Innovations, Inc. ("Fortune Brands" or "the Company") on Tuesday, May 3, 20227, 2024 at 8:00 a.m. (CDT) at the Renaissance Chicago North Shore Hotel, 933 Skokie Boulevard, Northbrook,520 Lake Cook Road, Deerfield, Illinois.* The following matters will be considered at the Annual Meeting:
Proposal 1: | Election of the three director nominees identified in this Proxy Statement for a three-year term expiring at the | |
Proposal 2: | Ratification of the appointment by the Company’s Audit Committee of PricewaterhouseCoopers LLP as our independent registered public accounting firm for | |
Proposal 3: | Advisory vote to approve the compensation paid to the Company’s named executive officers (see page | |
Proposal 4: | Advisory vote to approve the frequency of voting on the |
such other business as may properly come before the Annual Meeting.
Stockholders of record at the close of business on March 4, 2022,8, 2024, the record date for the Annual Meeting, are entitled to vote. For information about attending our Annual Meeting online and for voting instructions, please see pages 55-59.64-68.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE. This Notice of Annual Meeting and Proxy Statement and accompanying proxy are first being distributed on or about March 21, 2022.22, 2024.
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Executive Vice President, |
Important Notice Regarding the Availability of Proxy Materials
for the 20222024 Annual Meeting of Stockholders to be Held on Tuesday, May 3, 2022.7, 2024.
This Notice of Annual Meeting and Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 202130, 2023 (“Form 10-K”) are available at www.proxyvote.com.
Table Of Contents
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Compensation Committee Consultant | 22 |
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| PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 59 | |
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| PROPOSAL 3 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION | 60 | |
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| PROPOSAL 4 – ADVISORY VOTE TO APPROVE THE FREQUENCY OF VOTING ON NAMED EXECUTIVE OFFICER COMPENSATION | 61 | |
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Annual Meeting Information
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Tuesday, May at 8:00 a.m. (CDT) |
520 Lake Cook Road, Deerfield, Illinois |
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Agenda and Voting Recommendations
This Proxy Summary highlights selected information in this Proxy Statement and does not contain all of the information that you should consider in deciding how to vote. Please read the complete Proxy Statement carefully before voting. The following table summarizes the items that will be voted on at our 2024 Annual Meeting of Stockholders (the "Annual Meeting"), along with the Board’s voting recommendations.recommendations of the Board of Directors (the "Board").
Proposal
| Description of Proposal | Board Recommendation
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| Description of Proposal | Board | Page | |||||||||
1 | Election of three Class II Directors Susan S. Kilsby, Amit Banati and Irial Finan
| FOR each Nominee | 6-11 | Election of three Class I Directors | FOR | 7-12 | |||||||||
2 | Ratify the appointment of the independent auditor Pricewaterhouse Coopers
| FOR | 45 | Ratify the appointment of the independent auditor Pricewaterhouse Coopers LLP for fiscal year 2024 | FOR | 59 | |||||||||
3 | Advisory vote to approve named executive officer compensation
| FOR | 46 | Advisory vote to approve named executive officer compensation | FOR | 60 | |||||||||
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| Approval of the Fortune Brands Home & Security, Inc. 2022 Long-Term Incentive Plan
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| Advisory vote to approve the frequency of voting on named executive officer compensation |
| ONE YEAR | 61 |
See pages 64-68 for instructions on how to vote your shares.
Business and Operational Highlights
Fortune Brands is a brand, innovation and channel leader focused on growth opportunities in the home, security and commercial building markets. We operate in the large and proven growth categories of water, outdoors and security, which are powered by strong secular tailwinds and are underpinned by our leading brands.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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Proxy Summary |2 |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Throughout 2021,
Proxy Summary |3 |
Over the past two years, the Company saw an increased demand forand its management team executed several significant transformative initiatives in the face of a challenging external environment. In 2022, we successfully executed the separation of our products. We believe this increased demandCabinets business, which represented approximately 40% of the Company's net sales, into its own publicly traded company, MasterBrand, Inc., through a tax-free spin-off (the “Separation”). The Separation enabled us to focus on and invest in Fortune Brands’ unique growth opportunities and unlock greater shareholder value. In 2022, we also rebranded from Fortune Brands Home & Security, Inc., to Fortune Brands Innovations, Inc., to reflect our evolution as a business focused on driving accelerated growth in our categories through brands and innovation. Finally, we reorganized the Company from a decentralized structure of separate businesses to a more aligned and efficient operating model designed to support our focus on brands, innovation and channel leadership and enable accelerated growth.
While 2022 was driven by demographics that support long-term sustainable housing growth, as well as an underbuilt housing supplya year of transformation, 2023 was a year of execution, refinement and an aged housing stock requiring repair and remodel investments. The Company delivered strong 2021 results despite facing numerous external headwinds, including supply chain disruptions, labor and freight constraints and increased inflation. We achieved strong year-over-year sales and earnings per share
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growth, andintegration of the significant actions taken in 2022. In 2023, we continued to improveprioritize long-term sales growth, margin preservation, and cash generation amid a challenging external environment.
Importantly, we also made key investments in brand-building and innovation, our on-going digital transformation and in long-term margin progress, while investing in our leading brands to drive innovation and expand capacity. In addition, we made progress oncapacity additions. Today, our Fortune Brands Advantage capabilities a common setare more effectively deployed across the organization, allowing us to advance our growth and margin journeys, and enabling growth in supercharged categories, such as connected products, luxury, and outdoor living & material conversion. Our organization’s aligned structure and the work we conducted in 2023 to streamline internal planning processes and systems enabled us to deploy capital more effectively to the internal priorities with the highest potential rate of capabilities in category management, globalreturn. Our businesses are now more appropriately supported by best-in-class centers of excellence, which have generated cohesive branding strategies and accelerated new product developments. Our centralized supply chain excellenceorganization is more effectively leveraging the full scale of our Company, which has improved our strategic sourcing and complexity reductionplanning, increased efficiency, and continuedresulted in our 2023 working capital efficiency performance. These are just some of the ways in which we are harnessing the power of our newly aligned organizational structure, and we believe more is yet to leveragecome.
During 2023, we also completed the strategic acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business and the U.S. and Canadian Yale and August residential smart locks business (the "Emtek and Yale Business"). These brands are strong additions to our connected products and luxury portfolios, which we believe have the potential to be key accelerants for growth. Our recently established Transformation Management Office has enabled us to rapidly integrate these capabilities to offset challenges.newly acquired businesses. We also established a connected products group in support of our growing connected products portfolio.
In 2023, we made great progress transforming Fortune Brands into an even more growth-focused, highly innovative company. We believe that Fortune Brands is uniquely positioned – now more than ever – to deliver on our teams’ strong performance was a significant drivercommitment of both incrementallong-term growth and margin expansion during 2021sustained value creation.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary |4 |
Board of Directors
2024 Director Nominees | |||||
Name and Principal Occupation | Age | Director Since | Independent | Board Committees | Other Public |
Amee Chande Strategy Consultant | 50 | 2023 | ✓ | Audit Nominating, Environmental, Social & Governance | Air Canada Algonquin Power & Utilities Corp. |
Ann F. Hackett Former Strategy Consulting Partner and Co-Founder, Personal Pathways LLC | 70 | 2011 | ✓ | Compensation Nominating, Environmental, Social & Governance | Capital One Financial Corp. MasterBrand, Inc. |
Jeffery S. Perry Founder and Chief Executive Officer, Lead Mandates LLC | 58 | 2020 | ✓ | Audit Nominating, Environmental, Social & Governance | MasterBrand, Inc. Equitable Funds |
BOARD SUCCESSION AND REFRESHMENTMr. Ronald V. Waters and that we are well-positioned to continue outperforming a strong housing market in the future.
Please refer to the Appendix A for a reconciliation of earnings per share on a before charges/gains basis to GAAP earnings per share.
BOARD OF DIRECTORS
In 2021, Susan Kilsby was appointed as the Company’s first female Chair ofMr. John G. Morikis will retire from the Board of Directors.Directors following the end of their term and immediately following the Annual Meeting. Mr. Waters is retiring in accordance with the Board’s retirement age policy after twelve years of dedicated service to the Company, during which time he served as the Chairman of the Audit Committee. Mr. Morikis has decided not to stand for re-election at the Annual Meeting after twelve years of service to the Company. We thank both Mr. Waters and Mr. Morikis for their valuable contributions and years of dedicated service to the Company and to the Board.
During 2023, the Board appointed two new Board members as part of its long-term succession planning process. Ms. Kilsby’s appointment,Stephanie Pugliese was appointed in March 2023 in anticipation of Mr. David Thomas' retirement in May 2023. In anticipation of Mr. Waters' retirement in May 2024, the Board appointed Amee Chande in June 2023. Ms. Chande's experience as wella strategic business leader with large, global, technology retailers like ChargePoint, a leading provider of networked charging solutions for electronic vehicles, Waymo, an autonomous driving technology subsidiary of Google, and Alibaba Group, one of the world's largest e-commerce companies, brings a valuable perspective to our Board as the Company becomes an increasingly digitally enabled company. Ms. Chande is serving on our Audit Committee and Nominating, Environmental, Social and Governance Committee (the "NESG Committee").
Both appointments were made following a thoughtful and comprehensive board succession planning process led by our NESG Committee. With the additions of Jeffery PerryMs. Chande and Amit BanatiMs. Pugliese to our Board of Directors in 2020 reflectsduring 2023, our Board’sBoard continues to show its commitment to increasing Board diversity. Since 2019, the Board has added 4 new members, demonstrating our Board’s commitment to refreshmentFollowing Mr. Waters' and proactive succession planning. Below are key highlights ofMr. Morikis' retirements from our Board composition:in May 2024, our Board composition will be:
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2021 Director Nominees – Class II – Term Expiring 2025 | ||||||||||
Name and Principal Occupation | Age | Director Since | Independent | Board Committees | Other Public Company Boards | |||||
Susan S. Kilsby Non-Executive Chair, Fortune Brands; Retired Managing Director of European Mergers and Acquisitions, Credit Suisse | 63 | 2015 | ✓ | Compensation Executive (Chair) Nominating, Environmental, Social & Governance | Diageo plc Unilever plc | |||||
Amit Banati Senior Vice President and Chief Financial Officer, Kellogg Company | 53 | 2020 | ✓ | Audit Compensation | None | |||||
Irial Finan Retired Executive Vice President, The Coca-Cola Company and President, Coca-Cola Bottling Investments Group | 64 | 2019 | ✓ | Compensation Nominating, Environmental, Social & Governance | Coca-Cola Bottlers Japan Holdings, Inc. Smurfit Kappa Group plc |
CORPORATE GOVERNANCE HIGHLIGHTS
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary |5 |
Corporate Governance Highlights
Our Board is committed to maintaining a strong corporate governance program designed to promote the long-term interests of our stockholders and strengthen Board and management accountability. As a company, we’rewe are committed to core values that reflect a strong culture of integrity and accountability. These practices are reflected in our corporate governance policies, which are described in more detail on pages 12-1913-24 of the Proxy Statement and highlighted below:
• Independent Board (90%), except our CEO | • Independent Chair of the Board | ||
• Women represent 44% of directors and | • Regular executive sessions of non-management directors • | ||
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• Six new Board members added since 2019 demonstrating the Board’s commitment to Board refreshment and succession planning | • Proxy access bylaw allows for 3% stockholders to nominate the greater of two directors or 20% of the board | ||
• The Board has a policy that it generally will not re-nominate a director for election following her or his 72nd birthday | • Majority vote in uncontested director elections, with a resignation policy | ||
• Annual Board and | • Board oversight of ESG programs and related risks and publication of ESG report | ||
• Robust stock ownership guidelines for directors and executives and prohibition on hedging and pledging of Company |
• Active engagement and oversight by Board of Company strategies and |
In 2021,Environmental, Social and Governance Highlights
We continue to be driven by our culture of doing the Board adopted a by-law amendment providing stockholders with proxy access. This amendment allows stockholders who own 3% ofright thing, as evidenced by our shares for at least 3 years to nominate the greater of 2 directors or 20%safety records, Environmental, Social and Governance ("ESG") programs and our focus on innovating products that help address some of the Board after meeting certain requirements. This action demonstrates the Board’s commitment to maintaining a strong corporate governance program.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS
world’s most pressing sustainability and safety issues. Our Board of Directors is committed to overseeing our environmental, social, and governance (“ESG”)ESG initiatives throughout Fortune Brands. We dedicate significant resources toward developing innovative products that positively impact the lives of our consumers, and to produce these products using increasingly sustainable methods. We are committed to being a good corporate citizen by ensuring extremely high safety standards for our associates, fostering an inclusive culturesculture and giving back to our larger communities. We believe that the high standards by which we conduct our business will help us to build on our strengths and continually improve how we measure and monitor our progress on our ESG-related initiatives.
Our philosophy is to have a holistic ESG program, integrated throughout our businesses, that focuses on what matters to our Company and its stakeholders, with the goal of continual improvement. |
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To build a stronger ESG foundation, we took the following key actions throughout 2021:
ESG Steering Committee A cross-functional management committee was formed in 2021 to support the Company’s on-going ESG commitments. This committee assists the Company’s leadership team in setting our ESG strategy; implementing and monitoring initiatives based on that strategy; and overseeing ESG related communications and reporting. Among other process improvements during 2021, the steering committee developed ways to further incorporate the analysis of climate change risk and opportunities into our business processes and plans in alignment with TCFD. The steering committee also determined ways in which the Company could set and implement carbon and energy reduction goals. The ESG Steering Committee reports directly to the CEO and also provides regular progress updates to the NESG Committee and Board.
Safety Safety is integral to Company culture and one of our core values, asis reflected in our goal of zero safety incidents and through our efforts to create an injury-free workplace. In 2021, we supplementedTwo of our enhanced COVID-19primary safety protocols by implementing a mandatory mask mandate whenmeasures are the Total Recordable Incidence Rate ("TRIR") and Lost Time Rate ("LTR"). For 2023 our facilities hit a positivity rate of 1% or more. We also offered over 40 onsite vaccine clinicsTRIR was 0.99, compared to employees, implemented flexible leave policies1.16 for 2022, and our LTR was 0.31, compared to allow people to get vaccinated0.45 for 2022 (excludes the Emtek and offered educational opportunities on the safety and efficacy of vaccines.Yale Business).
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary |6 |
Diversity, Equity & Inclusion (“DEI”)We continued to advance our DEI strategy and initiatives during 2021. We joined the W.K. Kellogg Foundation Expanding Equity program, a program that has helped the Company to create a comprehensive equity strategy to increase representation of underrepresented associates.2023. Recent additions to the Company’s Board of Directors and leadership team shows the Board’s and management’sour continued commitment to increasing representation of professionals of color and women. In addition, we continued unconscious bias learning programs throughoutover the organization, launched an organization-wide employee engagement survey andpast year we expanded our employee resource groups during 2021.groups. In 2023, the Company made its employment data publicly available to our stakeholders by posting its EE0-1 report on its website.
Please see the resources available on our website at https://www.fbhs.com/www.fbin.com/corporate-responsibility/esg-reporting. Our 2021 ESG Report will be available next quarter and will cover our sustainability, safety and DEI progress. Information provided on the Company’s website is not incorporated by reference into this Proxy Statement.
COMPENSATION HIGHLIGHTSCompensation Highlights
PAYFOR PERFORMANCEPay for PerformanceOur executive compensation program is designed to reward named executive officers (“NEOs”) for the achievement of both strategic and operational goals that lead tosupport the creation of long-term stockholder value. The vast majority of each NEO’s annual target compensation is at-risk because most compensation paid to our NEOs is and dependent upon Company performance and/or stock price. In 2021:
2023:
87%•
77%•
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Over the past five years, our stockholders have overwhelmingly supported our executive compensation program, with an average approval of
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• Long-term focus and stockholder alignment through equity compensation | • No problematic pay practices and historically strong stockholder support for say on pay | |
• Robust stock ownership guidelines | • Prohibition on hedging and pledging of Company | |
• Executive compensation subject to a mandatory clawback policy | • No single trigger change in control severance arrangements | |
• Limited perquisites | • No excise tax gross ups |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 7 |
Proposal 1 – Election of Directors
Summary of Qualification of Directors
The Board has identified certain qualifications that are required of all directors. Additionally, the Board seeks to maintain a diverse set of skills, knowledge, experiences, backgrounds and viewpoints represented on our Board as a whole, but not necessarily by each individual director.
Qualifications Required of All Directors
Experience | Personal Attributes | |||||||||
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Extensive executive leadership experience or business management experience | • Excellent business judgment and high level of integrity and ethics | |||||||||
• Knowledge about issues affecting, or that may in the future affect, the Company | • Strong commitment to the Company’s goal of maximizing stockholder value | |||||||||
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Specific Qualifications, Expertise and Key Skills Represented on the Board
Qualifications, Expertise and Key Skills |
• Consumer products expertise • Financial and/or accounting expertise • Public company experience as a chief executive, chief operating or chief financial officer • Public company board experience • Diversity of skill, background, race, gender and viewpoint |
Election of Directors
The Board currently consists of teneleven members and is divided into three classes, each having three-year terms that expire in successive years. Mr. BanatiMs. Amee Chande was appointed by the Board to serve as a Class III Director effective in September 2020, and was first identified as a candidate by Spencer Stuart, a third-party search firm.June 2023. The term of each director currently serving in Class II (Ms. Susan KilsbyI (Mses. Amee Chande and Ann F. Hackett and Messrs. Amit BanatiJohn G. Morikis, Jeffery S. Perry and Irial Finan)Ronald V. Waters) expires at the 2022 Annual Meeting of Stockholders.Meeting. The Board has nominated Ms. KilsbyMses. Chande and Messrs. BanatiHackett and FinanMr. Perry for a new term of three years expiring at the 20252027 Annual Meeting of Stockholders and until their successors are duly elected and qualified. In accordance with our retirement age policy, Mr. Waters will not stand for re-election and will retire immediately following the Annual Meeting. Mr. Morikis has decided not to stand for re-election and will also retire immediately following the Annual Meeting. Following the retirements of Messrs. Morikis and Waters, the number of directors will be reduced from eleven to nine members.
Each of the nominees has consented to be named as a nominee and to serve as a director, if elected. If any of them should become unavailable to serve as a director (which is not now expected), the Board may designate a substitute nominee. In that case, the persons named in the enclosed proxy card will vote for the substitute nominee designated by the Board. Shares cannot be voted for more than the number of nominees proposed for re-election.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 8 |
The names of the nominees (Class I) and the current Class III and Class III directors, along with their present positions, their principal occupations and employment during the last five years, any directorships held with other public companies or registered investment firms during the past five years, their ages and the year first elected as a director of the Company, are set forth below. Each director’s individual qualifications and experiences that contribute to the Board’s effectiveness as a whole are also described in the following paragraphs.
Amee Chande | ||
| Director since: 2023 Independent Age: 50 Committees: Audit; NESG | |
Biography: Strategy consultant from 2020 to present. Senior advisor and strategy consultant of ChargePoint, a leading provider of networked charging solutions for electric vehicles, from 2020 to 2022. Chief Commercial Officer for Waymo, an autonomous driving technology subsidiary of Google LLC during 2019. Managing Director of Alibaba Group Holding Limited, an e-commerce company, prior thereto. Current Public Company Boards: Air Canada and Algonquin Power & Utilities Corp. Former Public Company Boards: Signature Aviation plc | ||
Skills & Qualifications: | ||
Ms. Chande has extensive experience in leading large, global companies through technological disruption and leading them to embrace technology driven innovation that meets consumers' needs. Her experience is particularly helpful to the Board as Fortune Brands becomes an increasingly digitally enabled company. Ms. Chande led ChargePoint's efforts to build its fleet business’ electric vehicle charging infrastructure and has experience in implementing global strategy efforts in her roles as Chief Commercial Officer of Waymo and Managing Director at Alibaba Group. She also has experience as an executive of large, global retailers, including Chief Executive Officer for NutriCentre, Chief Executive Officer for Staples UK and Vice President of New Business at Wal-Mart USA. Ms. Chande began her career as a strategy consultant with McKinsey & Company. She also serves on the boards of Air Canada and Algonquin Power & Utilities Corp. |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 9 |
Ann Fritz Hackett | ||
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| Director since: 2011 Independent Age: 70 Committees: Compensation; NESG |
Biography: Retired since January 2020. Strategy Consulting Partner and Co-founder of Personal Pathways, LLC, a company providing web-based enterprise collaboration platforms, from 2015 through January 2020. Prior to her role at Personal Pathways, she was President of Horizon Consulting Group, LLC, a strategy consulting firm founded by Ms. Hackett in 1996. Current Public Company Boards: Capital One Financial Corporation and MasterBrand, Inc. | ||
Skills & Qualifications: | ||
Ms. Hackett has extensive experience in leading companies that provided strategy and human capital consulting services to boards of directors and senior management teams in consumer products and services companies, as well as other industries. She brings to our board insights and experience from leading strategy development, change initiatives, risk management, talent management and succession planning and in creating performance-based compensation programs. Ms. Hackett also has significant technology and international experience and experience with large scale transformations. In addition, she brings extensive public company board experience, including serving as chair of compensation committees. Currently she serves as the lead independent director and chair of the governance and nominating committee of Capital One Financial Corporation. |
Jeffery S. Perry | ||
| Director since: 2020 Independent Age: 58 Committees: Audit; NESG | |
Biography: Founder and CEO of Lead Mandates LLC, a business and leadership advisory firm; EY Global Client Service Partner for major consumer product accounts of Ernst & Young LLP, a leading global professional services firm, from 2014 until his retirement in 2020. Current Public Company and Registered Investment Company Boards: MasterBrand, Inc. and Equitable Funds | ||
Skills & Qualifications: | ||
Mr. Perry has extensive experience as a strategic, operational and financial advisor helping boards of directors and management teams. He held several senior positions with Ernst & Young and A.T. Kearney Inc. and is the founder and Chief Executive Officer of Lead Mandates LLC. Mr. Perry brings to our Board relevant experience and perspective in advising on mergers, acquisitions, integrations, divestitures, business transformations of consumer products companies. He serves as chair of the nominating committee of MasterBrand, Inc. and as a Board member of the Chicago Chapter of the National Association of Corporate Directors and other non-profit organizations. |
The Board of Directors recommends that you vote FOR the election of |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 10 |
CLASS II DIRECTORS – TERM EXPIRING 2025
Amit Banati | ||
| Director since: 2020 Independent Age: 55 Committees: Audit; Compensation | |
Biography: Vice Chair and Chief Financial Officer of Kellanova (formerly Kellogg Company), a leader in global snacking, international cereal, noodles and frozen foods, from January 2023 to Present; Senior Vice President and Chief Financial Officer of Kellogg Company from July 2019 to January 2023; President - Asia Pacific, Middle East, Africa of Kellogg Company prior thereto. | ||
Skills & Qualifications | ||
Mr. Banati has extensive executive leadership and operations experience in leading consumer products companies and also brings significant financial management and accounting expertise to our Board. He brings to our Board the perspective of a leader with significant domestic and international experience in the consumer products industry. His financial and accounting expertise, global operations leadership and management experience, as well as his experience executing transformational public company initiatives brings valuable insight to our Board. |
Irial Finan | ||
| Director since: 2019 Independent Age: 66 Committees: Compensation; NESG | |
Biography: Retired since April 2018; Consultant to the CEO of The Coca-Cola Company, a beverage company, from January 2018 to March 2018; Executive Vice President of The Coca-Cola Company and President of Coca-Cola Bottling Investments Group, a bottling operations company, prior thereto. Current Public Company Boards: Smurfit Kappa Group plc Former Public Company Boards: Coca-Cola European Partners plc and Coca-Cola Bottlers Japan Holdings, Inc. | ||
Skills & Qualifications | ||
Mr. Finan’s extensive operations and strategy experience with The Coca-Cola Company and its worldwide bottling operations for more than 30 years, brings to our Board the perspective of a leader with significant international executive and operational experience in a consumer products industry. Mr. Finan's board experience, including serving as Chair of Smurfit Kappa Group plc., provides him with valuable insight into board operations. He also serves on multiple non-profit boards. |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 11 |
Susan S. Kilsby |
| Director since: 2015 Independent, Non-Executive Chair Age: Committees:Compensation; | |
Biography:
Retired since May 2014; Senior Advisor at Credit Suisse AG, an investment banking firm, prior thereto. Current Public Company Boards: Diageo plc and Unilever plc Former Public Company Boards: Shire plc, | ||
Skills & Qualifications | ||
Ms. Kilsby has a distinguished global career in investment banking and brings extensive |
CLASS III DIRECTORS – TERM EXPIRING 2026
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Committees: Executive |
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Chief Executive Officer of Fortune Brands Current Public Company Boards: Constellation Brands, Inc. | ||
Skills & Qualifications | ||
Mr. Fink’s leadership as Chief Executive Officer of the Company and his significant international and consumer brand and business operating experience, as well as his mergers and acquisitions and strategy expertise provide him with intimate knowledge of our operations, the opportunities for growth and the challenges faced by the Company. He joined the Company as Senior Vice President, Global Growth & Corporate Development in June |
Proposal 1 – Election of Directors | 12 |
A.D. David Mackay | ||
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| Director since: 2011 Independent Age: Committees: Audit, Compensation (Chair); Executive | |
Biography:
Retired since January 2011; President and Chief Executive Officer of Kellogg Company, a packaged foods manufacturer, prior thereto. Current Public Company Boards: The Clorox Company | ||
Skills & Qualifications | ||
Mr. Mackay held various key executive positions with Kellogg Company including Chief Executive Officer and Chief Operating Officer, bringing to our Board the perspective of a leader who faced a similar set of external economic, social and governance issues to those that face our Company. Mr. Mackay also has significant international business experience, as well as extensive board experience. His prior Board experience serving as both an executive Chairman (Kellogg Co.) and non-executive Chairman (Beam, Inc.) on public company boards and his previous leadership roles provide him with expertise in board operations, executive compensation and succession planning matters. Mr. Mackay also serves on the boards of several non-profit organizations. |
Stephanie Pugliese | ||
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Restaurants, a privately-held restaurant business. |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 13 |
Corporate Governance
Fortune Brands is committed to maintaining strong corporate governance practices that are good for our stockholders and our business.Company. We are dedicated to maintaining these practices and upholding high standards of conduct.
Corporate Governance Principles
The Board adoptedmaintains a set of Corporate Governance Principles which describe our corporate governance practices and assist the Board in exercising its responsibilities. The Corporate Governance Principles address corporate governance issuesmatters such as Board composition, Board performance and responsibilities, Board meeting and Board committee procedures, the establishmentoversight of Board committees,the management succession planning process and review of Company risks. The Corporate Governance Principles are availablealso include a Director Code of Conduct. A copy of the Corporate Governance Principles can be found at https://ir.fbhs.com/ir.fbin.com/governing-high-standards.
The Company’s Corporate Governance Principles provide that a majority of the members of the Board shall be independent directors. New York Stock Exchange requirements, as well as the Company’s committee charters, require that each member of the Audit, Compensation and NESG Committees be independent. The Board applies the | ||
definition of independence found in the New York Stock Exchange Listed Company Manual in determining which directors are independent. When determining each director’s independence, the Board also considered charitable contributions made by the Company to organizations with which each director is affiliated. | The Company's Corporate Governance Principles require that each independent director promptly discloses to the Board any existing or proposed relationships or transactions that could impact his or her independence. |
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Applying that definition, Messrs. Banati, Finan, Mackay, Morikis, Perry, Thomas, Waters and Mses. Chande, Hackett, Kilsby and KilsbyPugliese were affirmatively determined by the Board to be independent. Due to Mr. Fink’s employment with the Company, he is not considered independent.
Policies with Respect to Transactions with Related Persons
The Board adopted a Code of Business ConductRefreshment and Ethics which sets forth various policiesSuccession
BOARD COMPOSITION* | ||||
Since 2019 | ||||
+6 | -5 | 44% | 33% | 5.7 yrs |
Members Added | Members Retired | Female | Racial/Ethnic Diversity | Average Tenure |
*Represents composition following Messrs. Morikis and procedures intended to promoteWaters retirements after the ethical behavior of allconclusion of the Company’s employees, officers and directors (the “Code of Conduct”). The Board has established a Compliance Committee (comprised of management) which is responsible for administering and monitoring compliance with the Code of Conduct (other than monitoring director compliance which is the responsibility of the NESG Committee). The Compliance Committee periodically reports on the Company’s compliance efforts to the Audit Committee and the Board.Annual Meeting.
The Board has also established a Conflicts of Interest Committee (comprised of management) which is responsible for administering, interpreting and applying the Company’s Conflicts of Interest Policy, which describes the types of relationships that may constitute a conflict of interest with the Company. Under the Conflicts of Interest Policy, directors and executive officers are responsible for reporting any potential related person transaction (as defined in Item 404 of Regulation S-K) to the Conflicts of Interest Committee in advance of commencing a potential transaction. The Conflicts of Interest Committee will present to the Audit Committee any potential related party transaction. The Audit Committee will evaluate the transaction, determine whether the interest of the related person is material and approve or ratify, as the case may be, the transaction. In addition, the Company’s executive officers and directors annually complete a questionnaire on which they are required to disclose any related person transactions and potential conflicts of interest. The General Counsel reviews the responses to the questionnaires, and, if a related person transaction is reported by a director or executive officer, submits the transaction for review by the Audit Committee. The Conflicts of Interest Committee also reviews potential conflicts of interest and reports findings involving any director of the Company to the NESG Committee. The NESG Committee will review any potential conflict of interest involving a member of the Board to determine whether such potential conflict would affect that director’s independence.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 14 |
Certain Relationships and Related Transactions
Since January 1, 2021, the Company did not participate in any transactions in which any of its directors or executive officers, any immediate family member of any of its directors or executive officers, or any beneficial owner of more than 5% of the Company’s common stock, had a direct or indirect material interest.
Anti-Hedging and Anti-Pledging Policy
The Company has a policy prohibiting directors and executives from hedging or pledging Company stock, including Company stock held indirectly, and from engaging in any derivative transactions designed to offset the decrease or increase in the market value of the Company’s stock.
The Board believes that Board refreshment and director succession are important to ensuring that Board composition is aligned with the needs of the Company and the Board. The Board also believes that continuity is critical to the effectiveness of the Board as a group over time and allows directors to develop a deeper understanding of the Company. The NESG Committee assesses the composition of the Board and aims to strike a balance between Board members with longer term service and newer members who bring a fresh perspective. Since 2019, four new directors
As part of the Board's succession planning process and in anticipation of Mr. Waters' retirement from the Board following the Annual Meeting, the Board appointed Amee Chande as a Class I director. The Board's strong commitment to succession and refreshment have been addeddemonstrated over the last five years by adding six directors. The majority of the director appointments over this period of time also demonstrates the Board's commitment to increasing racial and gender diversity. As a result of the Board's succession planning process, the Board's gender diversity has increased to 44% and ethnicity/racial diversity has increased to 33% when taking into account Messrs. Morikis' and Waters' retirements immediately following the Annual Meeting.
Board Leadership Structure
The Board of Directors has determined that is in the best interests of our stockholders to have an independent, non-executive chair serve as the Company’s Board Chair at this time. This leadership structure aids the Board’s oversight of management and allows our Chief Executive Officer ("CEO") to focus primarily on his management responsibilities. The non-executive Chair has the responsibility of presiding over all meetings of the Board, consulting with the CEO on Board meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the CEO and advising him or her on the efficiency of Board meetings, facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that are more fully described in the Company’s Corporate Governance Principles. In addition, the Company’s non-executive Chair facilitates the Board’s annual performance assessment of the CEO.
The Board does not believe that a single leadership structure is right at all times, so the Board periodically reviews its leadership structure to determine, based on the circumstances at the time, whether other leadership structures might be appropriate for the Company. The Board has been and remains committed to maintaining strong corporate governance practices and appropriate independent oversight of management. If, in the future, the Board appoints an executive chair or any other non-independent director as chair, the Board will elect an independent director to serve as the Lead Director. The duties of the Chair of the Board and Lead Director are further described in our Corporate Governance Principles.
Executive Sessions
Pursuant to the Board.Company’s Corporate Governance Principles, non-management directors of the Board are required to meet on a regularly scheduled basis without the presence of management and are led by the Non-Executive Chair. During 2023, Ms. Kilsby led these sessions. In addition, Board committees also met in executive session periodically throughout the year, as deemed appropriate by such committee.
The NESG Committee is responsible for, among other things, screening potential director candidates, recommending qualified candidates to the Board for nomination, and assessing director independence.independence and evaluating whether the Board and its committees are functioning effectively. The nomination process is designed to ensure that the NESG Committee fulfills its responsibility to recommend candidates that are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established under the Company’s Corporate Governance Principles. The NESG Committee uses the following process when recommending candidates:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 15 |
When identifying director candidates, the NESG Committee determinesevaluates the composition of the Board to determine whether there are any evolving needs that require an expert in a particular field or other specific skills or experiences. When evaluating director candidates, the NESG Committee first considers a candidate’s management experience and then considers issues of judgment, background, stature, leadership, conflicts of interest, integrity, ethics, original thinking and commitment to the goal of maximizing stockholder value, as well as diversity of background and experiences of the Board as a whole. To align with the Company’s DEI initiatives, the NESG Committee seeks (and instructed its search firm when conducting its last search) to include a diverse slate of candidates by including individuals that are diverse in gender and race when searching for new directors. The Committee also focuses on education, professional experience and differences in viewpoints and skills. In consideringThe NESG Committee engaged a search firm to assist in identifying and evaluating potential director candidates during 2023. To align with the Board’s intent to increase diverse representation, the search firm was instructed to include a slate of candidates by including individuals who are diverse in gender and race when searching for new director candidates during 2023. Ms. Pugliese was identified as a potential director candidate through a third-party search firm and Ms. Chande was first identified as a potential director candidate by a non-management director. Both candidates, along with other potential candidates, underwent a rigorous background check and interview process led by the Board,search firm before being presented to the NESG Committee considers the entirety of each candidate’s credentials in the context of these standards.for consideration.
With respect to the nomination of continuing directors for re-election, the individual’s contributions to the Board are considered. The Board generally will not re-nominate a director at the annual meeting of stockholders following his or her 72nd72nd birthday; however, the Board has the discretion to re-nominate a director after reaching age 72 if it believes that nomination is in the best interest of the Company’s stockholders.
In connection with future director elections, or any time there is a vacancy on the Board, the NESG Committee may retain a third-party search firm to assist in identifying qualified candidates who meet the needs of the Board at that time.The Board is committed to the inclusion of diverse candidates when conducting a director candidate search; however, in considering candidates for the Board, the NESG Committee considers the entirety of each candidate’s credentials in the context of these standards.
It is the NESG Committee’s policy to consider director candidates recommended by stockholders, if such recommendations are properly submitted to the Company. Stockholders that wish to recommend an individual as a director candidate for consideration by the NESG Committee can do so by writing to the Secretary of Fortune Brands at 520 Lake Cook Road, Deerfield, Illinois 60015. Recommendations must include the recommended candidate’s name, biographical data and qualifications, as well as other information that would be required if the stockholder were actually nominating the recommended candidate pursuant to the procedures for such
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nominations provided in our Bylaws. The NESG Committee will consider the candidate and the candidate’s qualifications in the same manner in which it evaluates nominees identified by the NESG Committee. The NESG Committee may contact the stockholder making the recommendation to discuss the qualifications of the candidate and the stockholder’s reasons for making the recommendation. Members of the NESG Committee may then interview the candidate if the committee deems the candidate to be appropriate. The NESG Committee may use the services of a third-party search firm to provide additional information about the candidate prior to making a recommendation to the Board. For a stockholder to directly nominate a candidate for director, such stockholder must follow the procedures set forth in the Company’s bylaws.Bylaws.
The nomination process is designed to ensure that the NESG Committee fulfills its responsibility to recommend candidates that are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established under the Company’s Corporate Governance Principles.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Board and Committee Evaluation Process
To increase the effectiveness and provide an opportunity to improve processes and effectiveness, the NESG and the Chair of the Board facilitate an annual Board evaluation. The evaluation typically includes both an interview of each director and a questionnaire with a range of questions related to topics including oversight, responsibilities and resources. In 2021, the NESG Committee and Chair of the Board led this process, the results of which were discussedand its committees.
Review of Evaluation Process Annually, in December, the NESG Committee reviews the process used for the annual evaluation of the Board and its committees. It considers whether to make adjustments to the approach used to facilitate meaningful feedback and the topics to cover during the evaluation. In 2024, the NESG Committee adjusted its typical approach by including feedback from the Company's management team about 2023 Board and committee process. |
Feedback Following the executive session discussion, the Board aligns on how to incorporate feedback throughout the coming year and works with the management team to implement changes, if any. | ||
Conduct Board and Committee Evaluations The evaluation typically includes an interview of each director covering topics relating to the function, culture and performance of the Board and its committees, Board oversight, responsibilities and resources. The Chair of the Board (who also serves as the Chair of the NESG Committee) leads this process. In 2024, Ms. Kilsby interviewed each board member and certain members of the management team relating to 2023 Board and committee evaluations. | |||
Summary of Evaluations After interviewing each Board member and certain members of management, the Chair summarizes the feedback received. | |||
Review Results in Executive Session The independent members of the Board of Directors meet to discuss the summary of the results of the evaluation. | |||
Director Orientation and Continuing Education
New directors participate in comprehensive orientation sessions that are designed to familiarize them with the Board.Company’s strategic plans, operations, financial information and governance, board and committee operations, among other relevant topics. This orientation program is considered an essential part of the director onboarding process. New director orientation is tailored to complement the background of the new director.
The Board is briefed regularly on a variety of topics such as industry updates, corporate governance developments, the Company’s regulatory environment, applicable federal securities and state corporate laws, financial principles and standard accounting procedures. In addition, eachthe Corporate Governance Principles provide for the Company to make external continuing education opportunities available to directors and reimburse costs incurred while furthering their education. These activities are designed to ensure that the Board remains knowledgeable about the most important issues affecting our Company and its businesses.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 17 |
In 2023, management brought in a third-party advisor to provide education to our Board on artificial intelligence, including the risks and opportunities it provides to our Company and our industry. In addition, severaldirectors participated in external continuing education focused on a variety of topics, including corporate governance, ESG developments, leadership succession planning, the lead director function, audit committee functions, and enterprise risk management process and innovation. Ms. Chande obtained a third-party certification in cyber-security oversight in 2023.
Policies with Respect to Transactions with Related Persons
The Board adopted a Code of Business Conduct and Ethics which sets forth various policies and procedures intended to promote the ethical behavior of all of the Company’s employees, officers and directors (the “Code of Conduct”). The Board has established a Compliance Committee (comprised of management) which is responsible for administering and monitoring compliance with the Code of Conduct (other than monitoring director compliance which is the responsibility of the NESG Committee). The Compliance Committee meets quarterly and periodically reports on the Company’s compliance efforts to the Audit Committee and the Board.
The Board has also established a Conflicts of Interest Committee (comprised of management) which is responsible for administering, interpreting and applying the Company’s Conflicts of Interest Policy, which describes the types of relationships that may constitute a conflict of interest with the Company. Under the Conflicts of Interest Policy, directors and executive officers are responsible for reporting any potential related person transaction (as defined in Item 404 of Regulation S-K) to the Conflicts of Interest Committee in advance of commencing a potential transaction. The Conflicts of Interest Committee will present to the Audit Committee any potential related party transaction. The Audit Committee will evaluate the transaction, determine whether the interest of the related person is material and approve or ratify, as the case may be, the transaction. In addition, the Company’s executive officers and directors annually complete a questionnaire on which they are required to disclose any related person transactions and potential conflicts of interest. The Company's Chief Legal Officer reviews the responses to the questionnaires, and, if a related person transaction is reported by a director or executive officer, submits the transaction for review by the Audit Committee. The Conflicts of Interest Committee also reviews potential conflicts of interest and reports findings involving any director of the Company to the NESG Committee. The NESG Committee will review any potential conflict of interest involving a member of the Board to determine whether such potential conflict would affect that director’s independence.
Since January 1, 2023, the Company did not participate in any transactions in which any of its directors or executive officers, any immediate family member of any of its directors or executive officers, or any beneficial owner of more than 5% of the Company’s Stock, had a performance evaluation.direct or indirect material interest.
The Board and management encourage communication from the Company’s stockholders. Stockholders who wish to communicate with the Company’s management should direct their communication to the Chief Executive OfficerCEO or the Secretary of Fortune Brands at 520 Lake Cook Road, Deerfield, Illinois 60015. Stockholders, or other interested parties, who wish to communicate with the non-management directors or any individual director should direct their communication c/o the Secretary at the address above. The Secretary will forward communications intended for the Board to the Chairman of the Board, or, if intended for an individual director, to that director. If multiple communications are received on a similar topic, the Secretary may, in his or her discretion, forward only representative correspondence. Any communications that are abusive, in bad taste or present safety or security concerns may be handled differently.
Beginning in 2021, the Board determined that having an independent director serve as Chair of the Board is in the best interests of our stockholders at this time and appointed Susan Kilsby to serve as the Company’s independent, non-executive Chair. This leadership structure aids the Board’s oversight of management and allows our Chief Executive Officer to focus primarily on his management responsibilities. The non-executive Chair has the responsibility of presiding over all meetings of the Board, consulting with the Chief Executive Officer on Board meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chief Executive Officer and advising him or her on the efficiency of Board meetings, facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that are more fully described in the Company’s Corporate Governance Principles. In addition, the Company’s non-executive Chair facilitates the Board’s annual performance assessment of the Chief Executive Officer.
The Board does not believe that a single leadership structure is right at all times, so the Board periodically reviews its leadership structure to determine, based on the circumstances at the time, whether other leadership structures might be appropriate for the Company. The Board has been and remains committed to maintaining strong corporate governance and appropriate independent oversight of management.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 18 |
Pursuant to the Company’s Corporate Governance Principles, non-management directors of the Board are required to meet on a regularly scheduled basis without the presence of management and are led by the Non-Executive Chair. During 2021, Ms. Kilsby led these sessions. In addition, Board committees also meet in executive session periodically as deemed appropriate by such committee.
The responsibility for the day-to-day management of risks lies with the Company’s management team; however, the Board has an active role, as a whole and also at the committee level, in overseeing the strategy and process for managing the Company’s risks. Management regularly reviews information regarding the Company’s business strategy, resource allocation, credit, liquidity and operations, talent development, succession and DEI, as well as the risks associated with each, with the full Board. The Company’s overall risk management program consists of periodic management discussions analyzing and mitigating risks, an annual review of risks associated with each of the Company’s operating businesses and an annual review of risks related to the Company’s compensation programs and practices.
The Audit Committee oversees management of the Company’s financial and operational risks. In addition, the Audit Committee oversees the enterprise risk management program, which identifies both external risks (i.e., economic) and internal risks (i.e., strategic, operational, financial and compliance), assesses and ranks these risks according to the likelihood of occurrence and the potential monetary impact. It also assesses the Company’s plans to mitigate such risks. Annually, management identifies and assesses the enterprise risk management program, which the Audit Committee reviews. Cybersecurity-related risks and certain climate-related risks, such as physical risk to our operations and supply chains and commodity price volatility resulting from severe weather events caused climate change and new regulations designed to protect the environment, are some of the external risks assessed in the enterprise risk management program. Management also provides the Audit Committee with quarterly updates on the Company’s risks. The Company has a comprehensive enterprise-wide cybersecurity program aligned to the U.S. Department of Commerce National Institute of Standards and Technology Cybersecurity Framework industry standards and maintains security risk insurance coverage to defray the costs of potential information security breaches. The Company conducts automated online training twice a year for its employees and mock phishing campaigns on a regular basis throughout the year. The Company’s cybersecurity team provides regular updates to our senior executives and typically reports twice a year to the Audit Committee on the status of the Company’s security posture and our efforts to identify and mitigate cybersecurity risks. In 2021, the Company’s chief information officer also reported to the full Board on the Company’s cybersecurity programs and risk mitigation efforts.
The Compensation Committee is responsible for overseeing the management of risks relating to the compensation paid to the Company’s executives and the Company’s compensation plans. Annually, the Compensation Committee’s independent compensation consultant conducts an assessment of the risks associated with the Company’s executive compensation policies and practices. The compensation consultant conducts a more extensive review of all of the Company’s broad-based compensation incentive arrangements every few years. In 2021, the compensation consultant conducted the broader review of all compensation arrangements. For more information about that assessment see “Compensation Risks” below.
The NESG Committee manages risks associated with the independence of the Board, potential conflicts of interest of Board members and the Company’s corporate governance structure. In addition, the NESG Committee oversees the Company’s ESG programs, initiatives and related risks, which include the Company’s environmental, health and safety, DEI, philanthropy, global citizenship and other social and governance programs and policies. Management reports to the NESG Committee several times a year on the Company’s safety programs and statistics as well as the Company’s DEI strategy and goals.
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While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about all of the risks described above.below. The Board’s assignment of responsibility for the oversight of specific risks to its committees enables the entire Board, under the leadership of the Chair and the Chief Executive Officer,CEO, to better monitor the risks of the Company and more effectively develop strategic direction, taking into account the magnitude of the various risks facing the Company.
BOARD OF DIRECTORS The Board is responsible for overseeing the strategy and process for managing the Company's risks, including risks relating to the Company’s business strategy, resource allocation, credit, liquidity and operations, talent development and succession programs and practices. | |||
AUDIT Oversees management of the Company’s financial and operational risks and the Enterprise Risk Management ("ERM") program. Oversees cybersecurity-related risks and certain climate-related risks, such as physical risk to our operations and supply chains and commodity price volatility resulting from severe weather events caused by climate change and regulations designed to protect the environment. Annually review the ERM program. Review ERM and Cybersecurity updates on a quarterly basis, if applicable. | COMPENSATION Oversees management of risks relating to the compensation paid to the Company’s executives and the Company’s compensation plans. Annually, the Compensation Committee’s independent compensation consultant conducts an assessment of the risks associated with the Company’s executive compensation policies and practices. | NESG Oversees management of risks associated with the independence of the Board, potential conflicts of interest of Board members and the Company’s corporate governance structure. Oversees the Company’s ESG programs, initiatives and related risks, which include the Company’s environmental, health and safety, DEI, philanthropy, global citizenship and other social and governance programs and policies. | |
MANAGEMENT Management is responsible for identifying, assessing, mitigating and managing risks. The Company’s overall ERM program identifies both external risks (i.e., economic) and internal risks (i.e., strategic, operational, financial and compliance, including climate-related), assesses and ranks these risks according to the likelihood of occurrence and the potential monetary impact. It also assesses the Company’s plans to mitigate such risks. Management regularly reviews and discusses risks and mitigation efforts associated with each of the Company’s businesses with the Board of Directors. | |||
Corporate Governance | 19 |
Cybersecurity Risks
The Company has a comprehensive enterprise-wide cybersecurity program informed by the U.S. Department of Commerce National Institute of Standards and Technology Cybersecurity Framework and maintains security risk insurance coverage to defray the costs of potential information security breaches. The Company conducts automated online training annually for its employees and mock phishing campaigns throughout the year. The Company’s cybersecurity team provides regular updates to our senior executives and the chief information officer typically reports twice a year to the Audit Committee on the status of the Company’s data security positions, results for third-party assessments, our incident response plan, and any material cybersecurity threats and developments. In 2023, the Company’s chief information officer reported to the full Board on the Company’s cybersecurity programs and risk mitigation efforts. Beginning in 2024, cybersecurity updates are scheduled to be provided to the Audit Committee on a quarterly basis. For more information on cybersecurity oversight, please refer to Item 1C, "Cybersecurity" in our most recent Annual Report on Form 10-K.
Compensation Risks
The Compensation Committee’s compensation consultant, conductsWillis Towers Watson ("WTW") conducted an annual assessment of the risks associated with the compensation policies and practices used to compensate the Company’s executives and reports on the assessment to the Compensation Committee. In 2021,2023, the Company’s compensation consultant analyzed the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk taking and whether incentive designs include appropriate risk-mitigation provisions. In addition, the compensation consultant assessed all of the Company’s incentive programs, including sales incentives and incentive plan awards at all levels. After reviewing the compensation consultant’s analysis, the Compensation Committee concluded that none of the Company’s compensation arrangements encourage excessive risk taking and are consistent with the structure and design of other companies of similar size and industry sector. The Company utilizes the following risk-mitigating design features:
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As described in our CD&A, compensation decisions are made using a combination of objective and subjective considerations designed to mitigate excessive risk taking by executives.
Each director attended 100% of the total meetings of the Board and committees of the Board of which the director was a member during 2021. The Board and its committees held the following number of meetings during 2021:
Pursuant to the Company’s Corporate Governance Principles, all directors are encouraged to attend the Annual Meeting of Stockholders. Our 2021 Annual Stockholder Meeting was held virtually and all of the directors attended.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 20 |
Meeting Attendance Each director nominee and continuing director attended more than 90% of the total meetings of the Board and committees of the Board of which the director was a member during 2023. Pursuant to the Company’s Corporate Governance Principles, all directors are encouraged to attend the Annual Meeting of Stockholders. All of the Company's then-serving directors attended our 2023 Annual Stockholder Meeting, with the exception of Mr. Thomas, who retired immediately following the meeting. Board Committees The Board has established an Audit Committee, a Compensation Committee, an Executive Committee and a NESG Committee. A list of current Committee memberships may be found on the Company’s website at https://ir.fbin.com/committees-and-charters. The Committee memberships as of the date of this Proxy Statement are set forth below: |
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Amit Banati | • | • |
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Amee Chande | • |
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Irial Finan |
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Nicolas I. Fink |
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Ann F. Hackett |
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Susan S. Kilsby |
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A. D. David Mackay | • | « |
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John G. Morikis | • | • |
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Jeffery S. Perry | • |
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Stephanie Pugliese | • |
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Ronald V. Waters, III | « |
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2023 Meetings | 10 | 5 | 4 | 0 |
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The Board has established an Audit Committee, a Compensation Committee, an Executive Committee and a NESG Committee. A list of current Committee memberships may be found on the Company’s website at https://ir.fbhs.com/committees-and-charters. The Committee memberships as of the date of this Proxy Statement are set forth below:
Corporate Governance | 21 |
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10 Chair Ronald Waters Members Amit Banati Amee Chande A.D. David Mackay John Morikis Jeffery Perry Stephanie Pugliese |
| Roles and Responsibilities The Audit Committee’s primary function is to assist the Board in overseeing the (i) integrity of the Company’s financial statements, the financial reporting process and the Company’s system of internal controls; (ii) the Company’s compliance with legal and regulatory requirements; (iii) independence and qualifications of the Company’s external auditors; (iv) performance of the Company’s external and internal auditors; and (v) the Company’s enterprise risk management program, which includes oversight of cybersecurity and climate related risks. Each member of the Audit Committee is financially literate. In addition, Messrs. Banati, Mackay and Waters each have accounting or financial management expertise and is an audit committee financial expert as defined in Item 407(d)(5)(ii) and (iii) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each Audit Committee member has also been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual. |
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2023 Meetings 5 Chair A. D. David Mackay Members Amit Banati Irial Finan Ann Hackett Susan Kilsby John Morikis |
| Roles and Responsibilities The Compensation Committee’s primary function is to assist the Board in attracting and retaining high quality leadership by (i) developing and critically reviewing the Company’s executive compensation program design and pay philosophy; and (ii) setting the compensation of the Company’s executive officers in a manner that is consistent with competitive practices and Company, business and individual performance. Each member of the Compensation Committee has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual. |
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 22 |
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| Compensation Committee Interlocks and Insider Participation None of the members of the Compensation Committee has (i) served as one of the Company’s officers or employees, or (ii) had a relationship requiring disclosure under Item 404 of Regulation S-K. Compensation Committee Procedures The Compensation Committee directs management to prepare financial data to be used by the Compensation Committee in determining executive compensation. In addition, members of the Company’s human resources department assist in the preparation of executive compensation tally sheets and historical information describing compensation paid to executives, program design and plan provisions, and the Compensation Committee’s independent consultant provides market data for use in determining executive compensation. The Compensation Committee is presented with recommendations from management and from the Committee’s independent compensation consultant as to the level and type of compensation and related program designs provided to the Company’s executive officers. Members of the Company’s legal department provide the Compensation Committee with general advice on laws applicable to executive compensation. The CEO attends meetings of the Compensation Committee, except for portions of meetings where his performance or compensation is being discussed. The CEO’s feedback on each officer’s performance is essential in the Compensation Committee’s determination of the officer’s salary, target annual incentive and long-term -equity compensation determinations. See pages 27-42 of this Proxy Statement for more information about how the Compensation Committee determined executive officer compensation in 2023. Compensation Committee Consultant WTW has served as the Compensation Committee's independent compensation consultant since 2020. In 2023, WTW received fees of approximately $261,000 for executive compensation related services provided to the Compensation Committee. In their capacity as independent compensation consultant, WTW reported directly to the Compensation Committee and provided the following services and information to the Compensation Committee: • Made recommendations as to best practices for structuring executive pay arrangements and executive compensation (including the amount and form of compensation) consistent with the Company’s business needs, pay philosophy, market trends and latest legal, regulatory and governance considerations; • Performed an assessment of the Company’s compensation peers; • Made recommendations as to non-employee director and executive compensation best practices, pay arrangements, short and long term incentive program design, and equity compensation; • Provided market data (including compiling compensation data and related performance data) as background for decisions regarding the compensation of the CEO and other executive officers; • Performed an assessment of risks associated with the Company’s compensation structure and design; and • Attended Compensation Committee meetings (including executive sessions without the presence of management) and summarized alternatives for compensation arrangements that may have been considered in formulating final recommendations, as well as the consultant’s rationale for supporting or opposing management’s proposals. WTW was also engaged separately by management to provide certain human capital, benefits and corporate risk and brokering services to the Company for which WTW received approximately $1.38 million in 2023. While these fees for WTW services are reviewed annually by the Compensation Committee as part of the Committee’s review of WTW’s independence, the Committee does not approve these additional services provided by WTW to the Company because they are of the type directly secured by management in the ordinary course of business. | |||||||||
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An “X” indicates membership on the committee.
A “C” indicates that the director serves as the chair of the committee.
The Audit Committee’s primary function is to assist the Board in overseeing the (i) integrity of the Company’s financial statements, the financial reporting process and the Company’s system of internal controls; (ii) the Company’s compliance with legal and regulatory requirements; (iii) independence and qualifications of the Company’s external auditors; (iv) performance of the Company’s external and internal auditors; and (v) the Company’s enterprise risk management program, which includes oversight of cybersecurity related risks.
Each member of the Audit Committee (Messrs. Banati, Mackay, Morikis, Perry, Thomas and Waters), is financially literate. In addition, Messrs. Banati, Mackay, Perry, Thomas and Waters each have accounting or financial management expertise and is an audit committee financial expert as defined in Item 407(d)(5)(ii) and (iii) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As required by its charter, each Audit Committee member has also been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.
The Compensation Committee’s primary function is to assist the Board in attracting and retaining high quality leadership by (i) developing and critically reviewing the Company’s executive compensation program design and pay philosophy; and (ii) setting the compensation of the Company’s executive officers, which includes the presidents of the Company’s principal business segments, in a manner that is consistent with competitive practices and Company, business segment and individual performance.
As required by its charter, each member of the Compensation Committee (Messrs. Banati, Finan, Mackay and Morikis and Mses. Hackett and Kilsby) has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has (i) served as one of the Company’s officers or employees, or (ii) had a relationship requiring disclosure under Item 404 of Regulation S-K.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 23 |
NESG COMMITTEE | |||||
2023 Meetings
Chair Susan Kilsby Members Amee Chande Irial Finan Ann Hackett Jeffery Perry Stephanie Pugliese Ronald Waters | Roles and Responsibilities The NESG Committee’s primary functions are to (i) provide recommendations to the Board with respect to the organization and function of the Board and its committees; (ii) recruit, identify and recommend qualified potential director candidates and nominees; (iii) review the qualifications and independence of directors and provide recommendations to the Board regarding composition of the committees; (iv) develop and recommend to the Board a set of corporate governance principles; (v) oversee the process of the evaluation of the Board and management; and (vi) oversee the Company’s environmental, social and governance programs, policies and related risks. The NESG Committee also makes recommendations to the Board regarding the level and composition of compensation for non-employee directors and grants annual equity awards to non-employee directors. Each member of the NESG Committee has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual. | ||||
Compensation Committee Procedures
The Compensation Committee directs management to prepare financial data to be used by the Compensation Committee in determining executive compensation. In addition, members of the Company’s human resources department assist in the preparation of executive compensation tally sheets and historical information describing compensation paid to executives, program design and plan provisions, and the Compensation Committee’s independent consultant provides market data for use in determining executive compensation. The Compensation Committee is presented with recommendations from management and from the Committee’s independent compensation consultant as to the level and type of compensation and related program designs provided to the Company’s executive officers. Members of the Company’s legal department provide the Compensation Committee with general advice on laws applicable to executive compensation.
The Chief Executive Officer attends meetings of the Compensation Committee, except for portions of meetings where his performance or compensation is being discussed. The Chief Executive Officer’s feedback on each officer’s performance is essential in the Compensation Committee’s determination of the officer’s salary, target annual incentive and long-term equity compensation determinations. See pages 22-32 of this Proxy Statement for more information about how the Compensation Committee determined the executive officers’ compensation in 2021.
Compensation Committee Consultant
The Compensation Committee engages an outside compensation consultant. Willis Towers Watson (“WTW”) has served as the Compensation Committee consultant since 2020. In 2021, WTW received fees of approximately $179,000 for executive compensation related services provided to the Compensation Committee. WTW also provided certain human capital, benefits and corporate risk and brokering services to the Company for which WTW received approximately $850,000. The Compensation Committee did not review or approve these additional services provided by WTW to the Company because they are of the type directly secured by management in the ordinary course of business. In their capacity as outside compensation consultant, WTW reported directly to the Compensation Committee and provided the following services and information to the Compensation Committee:
Made recommendations as to best practices for structuring executive pay arrangements and executive compensation (including the amount and form of compensation) consistent with the Company’s business needs, pay philosophy, market trends and latest legal, regulatory and governance considerations;
Performed an assessment of the Company’s compensation peers;
Provided market data (including compiling compensation data and related performance data) as background for decisions regarding the compensation of the Chief Executive Officer and other executive officers;
Performed an assessment of risks associated with the Company’s compensation structure and design; and
Attended Compensation Committee meetings (including executive sessions without the presence of management) and summarized alternatives for compensation arrangements that may have been considered in formulating final recommendations, as well as the consultant’s rationale for supporting or opposing management’s proposals.
EXECUTIVE COMMITTEE | ||
Role The purpose of the Executive Committee is to act in lieu of the full Board, when and if necessary. The Executive Committee has the same authority of the full Board, with the exception of specific powers that are required by Delaware law to be exercised by the full Board. In 2023, there were no actions that required the Executive Committee to meet in place of the full Board.
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The Executive Committee has all the authority of the full Board, except for specific powers that are required by law to be exercised by the full Board. The Executive Committee may not amend the Company’s charter, adopt an agreement of merger, recommend actions for stockholder approval, amend or repeal the Bylaws, elect or appoint any director or remove an officer or director, amend or repeal any resolutions of the Board, fix the Board’s compensation, and unless expressly authorized by the Board, declare a dividend, authorize the issuance of stock or adopt a certificate of merger.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Nominating, Environmental, Social and Governance Committee
The NESG Committee’s primary functions are to (i) provide recommendations to the Board with respect to the organization and function of the Board and its committees; (ii) recruit, identify and recommend potential director candidates and nominees; (iii) review the qualifications and independence of directors and provide recommendations to the Board regarding composition of the committees; (iv) develop and recommend changes to the Company’s corporate governance framework including the Company’s corporate governance principles; (v) oversee the process of the evaluation of the Board and management; and (vi) oversee the Company’s environmental, social and governance programs, policies and related risks. The NESG Committee also makes recommendations to the Board regarding the level and composition of compensation for non-employee directors and grants annual equity awards to non-employee directors.
As required by its charter, each member of the NESG Committee (Messrs. Finan, Perry, Thomas and Waters and Mses. Hackett and Kilsby) has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Director Compensation |25 |
Director Compensation
Fortune Brands is committed to attracting and retaining qualified and experienced directors to contribute to the Board’s effectiveness and the Company’s goal of maximizing stockholder value. To accomplish this, the Company maintains a non-employee director compensation program that consists of cash retainers and Company stock. equity retainers.
During 2022 and in connection with the Separation and establishment of a new compensation peer group, the NESG Committee assessed the Board's compensation program, elements of compensation and amounts paid. Based on this assessment and with the assistance of WTW, the Board modified the non-employee director compensation program, effective January 1, 2023, to (i) eliminate committee membership fees; (ii) increase the value of the annual cash retainer from $100,000 to $120,000; and (iii) increase the value of the annual equity retainer from $145,000 to $160,000.
Compensation Elements
Below is a description of the 2021 2023 non-employee director compensation program.
Compensation Element* | Compensation Amount | ||||
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Equity Retainer | $160,000 in Company Stock | ||||
Committee Chair Fee | $15,000 for service as Chair of the Audit Committee, Compensation Committee or the NESG Committee | ||||
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Board Chair Fee | $200,000 | ||||
Stock Ownership | Ownership of |
* Directors may elect to convert cash retainers into Company Stock, defer receipt of cash or equity retainers, or defer Company Stock received as a result of a cash conversion program under the Company's Non-Employee Director Deferred Compensation Plan and the Stock Election Program. Receipt of any deferral made under the Company's Non-Employee Deferred Compensation Plan is made in the January following the year in which the individual ceases serving as a director of the Company. ** Cash compensation elements are pro-rated to reflect the portion of the year the director served on |
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In February 2021, after analyzing peer company director compensation and receiving input from WTW, the Board approved an annual retainer for the non-executiveor committee, or as Chair of $200,000; increaseda committee.
*** All of our directors currently meet the annual cash retainer from $90,000multiple or fall within the five-year time period allowed to $100,000; and added an annual cash fee for members ofmeet the NESG Committee of $7,500. The increase inmultiple under the annual cash retainer was pro-rated from the effective date of the change.Stock Ownership Guidelines.
In 2021, after analyzing peer company director compensation and receiving input from WTW, the Board approved an increase in the dollar value of the 2021 annual stock grant from $135,000 to $145,000. In May 2021, each non-employee director received an annual stock grant that was determined by dividing the dollar value of the annual stock grant ($145,000) by the closing price of the Company’s stock on the grant date $107.73, rounded to the nearest share. Accordingly, 1,346 shares of Company stock were granted to each of the non-employee directors.
Director Stock Ownership Guidelines
To further align the Board’s interests with those of our stockholders, the Board maintains Stock Ownership Guidelines for non-employee directors. The guidelines encourage non-employee directors to own Company stockStock with a fair market value equal to five times the annual cash feeretainer ($500,000)600,000) and allow directors five years from the date of election to meet the guidelines. Shares owned directly by a director, the director’s spouse, minor children sharing the same home and any shares held in trust in whichfor the benefit of the director is a trustee with voting and investment power,or his/her family, as well
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as any shares that have been granted to a director, but receipt has been deferred pursuant to the Company’s Deferred Compensation Plans, are counted towards ownership. For information about the beneficial ownership of the Company’s securities held by directors and executive officers, see “Certain Information Regarding Security Holdings” on pages 53-54.62-63.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Director Compensation | 26 |
Anti-Hedging and Anti-Pledging Policy
The Company has a policy prohibiting directors and executives from hedging or pledging Company Stock, including Company Stock held indirectly, and from engaging in any derivative transactions designed to offset the decrease or increase in the market value of the Company’s stock.
* Although Mr. Fink serves as member of the Board, he does not receive any additional compensation for such service. Mr. David M. Thomas retired from the Board in May 2023. Ms. Pugliese and Ms. Chande were appointed to the Board effective March 6, 2023 and June 1, 2023, respectively.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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This CD&A describes the Fortune Brands’ executive compensation program and explains how the Compensation Committee made compensation decisions for the following NEOs in 20212023*:
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Nicholas I. Fink | David V. Barry | Cheri M. Phyfer | Hiranda S. Donoghue | Sheri R. Grissom | ||||||||
Chief Executive Officer | Executive Vice President & Chief Financial Officer |
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| Executive Vice President, Chief Legal Officer & Secretary | Executive Vice President & Chief Transformation Officer |
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This CD&A is divided into the following sections:
Section | Page Number | |
27 | ||
30 | ||
30 | ||
36 |
EXECUTIVE SUMMARY1Executive Summary
Business and Operational Highlights
The Company delivered strong 2021 results growing Net Sales 26% and EPS 41% (or 37% on a before charges/gains basis), despite facing numerous external challenges including supply chain disruptions and inflation. While demand for our products remained strong throughoutAs discussed in the year, it was our teams’ efforts that allowedProxy Summary above, the Company and its management team executed several significant transformative initiatives in the face of a challenging external environment over the past two years. In 2022, we successfully completed the Separation of our Cabinets business, which represented approximately 40% of the Company's net sales and rebranded our Company to combat these challengesreflect our evolution as a business focused on driving accelerated growth through brands and deliver above market performance forinnovation. We also reorganized the Company from a decentralized structure of separate businesses to a more aligned and efficient operating model designed to support our stockholders. During 2021, we advanced our Fortune Brands Advantage capabilities, continued investing in ourfocus on brands, to drive innovation and expandchannel leadership.
While 2022 was a year of transformation, 2023 was a year of execution, refinement and integration of the significant actions taken in 2022. During 2023, our first full year post-Separation, we prioritized long-term sales growth, margin preservation and cash generation, all while continuing to prioritize key investments, including brand building, thoughtful capacity additions, meaningful innovation, and fulfill our service commitmentsdigital transformation amid a challenging external environment. We also executed on the strategic acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business and the U.S. and Canadian Yale and August residential smart locks business (the "Emtek and Yale Business").
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |28 |
These brands are strong additions to our customers. Despiteconnected products and luxury portfolios and we believe that they have the challenging environment, wepotential to be key accelerants for growth.
Our teams have implemented and led through this period of immense change, overseeing our day-to-day operations while also continued to advanceexecuting on our ESG initiatives. In addition togrowth strategy and continuing to make safety a priority throughout the Company, we are advancing our DEI strategy and our water conservation and recycling efforts and we have set carbon emission reduction and renewable energy goals.
implement transformative initiatives. We believe that the actions taken by the leadership team in 20212023 have positioned the Company to continue to grow and create long-term value for our stockholders. We also believe that our compensation program and the goals used within our program continue to incentivize and reward performance. The following graphics highlight our three-year growth and performance on key metrics used in our compensation program:
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20212023 Compensation Highlights
The Company’s compensation programs and practices are designed to pay for performance and to align management’s interests with those of the Company’s stockholders while attracting, motivating and retaining superior talent to lead our Company. The Compensation Committee believes that our compensation program incentivizes highstrong performance by (i) providing a significant amount of compensation asin the form of Company equity, (ii) utilizing both short-term and long-term incentives tied to Company performance and (iii) balancing fixed (base salary) and variable (annual cash incentive and equity) compensation. The material components of our 2023 executive compensation program are summarized in the following chart:
Pay Element | Purpose / Metrics* |
Base Salary | Fixed level of cash compensation designed to attract and retain talent |
| Variable cash compensation designed to recognize annual financial and operating performance. Metrics were: |
• Earnings Per Share (“EPS”) (weighted 60%) | |
• Operating Income Margin Percent (“OIMP”) (weighted 20%) | |
• Working Capital Efficiency (“WCE”) (weighted 20%) | |
Long-Term Incentive Plan (“LTI”) | Variable stock compensation composed of three equity vehicles, each designed to focus management on delivering long-term stockholder value. |
• Performance Share Awards (“PSAs”) granted with a three-year performance cycles. Metrics for the 2023-2025 performance period were: o EBITDA Margin Percent (weighted 75%) o Return On Invested Capital ("ROIC") (weighted 25%) | |
• Restricted Stock Units (“RSUs”) subject to vesting in three annual installments | |
• Stock Options with a ten-year exercise period and subject to vesting in three annual installments |
*All references to metrics used to determine incentive compensation are shown in this CD&A on an unaudited and before charges/gains basis. See Appendix A for definitions and a description of the methodology of these non-GAAP measures used to determine incentive compensation.
To support our restructured, centralized organization, the Compensation Committee approved changes to the metrics used in our 2023 annual incentive plan, as compared to our 2022 annual incentive plan, to align the performance metrics for all NEOs. Historically, the annual incentive plan design utilized varying metrics with performance metrics for corporate-based NEOs being based on overall Company financial results while NEOs serving in business unit roles had annual incentive performance metrics tied to specific business unit financial and operating results. Beginning in 2023, the annual incentive award performance metrics for all of the Company's executive officers, including all of the NEOs, were based on EPS (weighted 60%), WCE (weighted 20%) and OIMP (weighted 20%). In addition to establishing a unified set of performance metrics for the NEOs, the Compensation Committee replaced the use of return on net tangible assets ("RONTA"), which was a performance metric under the 2022 annual incentive plan award plan, with OIMP. The
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |29 |
change in this metric was made to further focus management on delivering the appropriate incremental or decremental margins, which the Compensation Committee believes will drive value creation over time.
2021The Compensation Committee also approved changes to the metrics used in our PSAs. Beginning with the 2023-2025 performance period, the performance goals were based on three-year cumulative EBITDA Margin Percent (weighted 75%) and ROIC (weighted 25%). The change from the use of EBIDTA to EBITDA Margin Percent was made to further focus management on delivering long-term incremental margin growth. In addition, in order to energize and retain our most critical senior leaders and in recognition of their essential role in leading the business through the Company’s strategic transformation following the Separation and to drive further growth over the next several years, the Compensation Committee approved an increase in the payout opportunity for the 2023 PSAs. The Company's PSAs are generally structured to provide payouts ranging from 0% to 200% of the target award. For one performance cycle (the 2023-2025 performance period), however, the Compensation Committee modified the structure to provide for the potential to earn up to 300% of the target award for the achievement of stretch goals relating to 3-year EBITDA Margin Percent and ROIC, which if achieved would represent a significant increase in sales growth as well as strong operating income performance over the course of the performance period. The Compensation Committee believes that this long-term opportunity will incentivize management to deliver strong performance during this period of strategic transformation and require that the Company deliver exceptional performance in order to receive the maximum payout level of the stretch goals. The maximum payout level has reverted back to 200% of target beginning with the 2024-2026 performance period.
2023 NEO Annual Total Target Compensation
The following chart summarizes annual total target compensation awarded to each NEO in 2021:2023:
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Summary of 2023 NEO Annual Total Target Compensation | |||||||||||||||||||||
Named Executive Officer |
| 2023 Annual | 2023 Annual | 2023 Long- | 2023 Total Target | ||||||||||||||||
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Nicholas I. Fink |
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| $ | 1,250,000 |
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| $ | 1,625,000 |
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| $ | 8,000,000 |
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| $ | 10,875,000 |
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David V. Barry |
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| $ | 620,000 |
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| $ | 427,293 |
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| $ | 1,350,000 |
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| $ | 2,397,293 |
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Cheri M. Phyfer |
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| $ | 765,000 |
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| $ | 726,750 |
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| $ | 2,225,000 |
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| $ | 3,716,750 |
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Hiranda S. Donoghue |
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| $ | 525,000 |
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| $ | 393,750 |
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| $ | 1,000,000 |
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| $ | 1,918,750 |
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Sheri R. Grissom |
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| $ | 525,000 |
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| $ | 393,750 |
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| $ | 1,000,000 |
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| $ | 1,918,750 |
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Patrick D. Hallinan |
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| $ | 700,000 |
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| $ | 630,000 |
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| $ | 0 |
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| $ | 1,330,000 |
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Summary of 2021 NEO Annual Total Target Compensation | ||||||||||||||||||||
Named Executive Officer | 2021 Annual Base Salary(1) | 2021 Annual Incentive Target Value | 2021 Long- Term Incentive Award Target Value(2) | 2021 Total Target Compensation | ||||||||||||||||
Nicholas I. Fink |
| $1,160,000 |
| $1,450,000 |
| $6,150,000 |
| $8,760,000 | ||||||||||||
Patrick D. Hallinan |
| $680,000 |
| $544,000 |
| $1,900,000 |
| $3,124,000 | ||||||||||||
R. David Banyard, Jr. |
| $740,000 |
| $592,000 |
| $2,150,000 |
| $3,482,000 | ||||||||||||
Cheri M. Phyfer |
| $630,000 |
| $504,000 |
| $1,575,000 |
| $2,709,000 | ||||||||||||
Brett E. Finley |
| $600,000 |
| $480,000 |
| $1,375,000 |
| $2,455,000 | ||||||||||||
Robert K. Biggart |
| $570,000 |
| $427,500 |
| $1,200,000 |
| $2,197,500 |
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Results of the 2023 Say on Pay Vote
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RESULTS OF THE 2021 SAY ON PAY VOTE
![]() | The Compensation Committee and Board value the input of our stockholders. The Compensation Committee interpreted the high level of stockholder support as endorsement of the Company's executive compensation program and did not make any changes to the Company’s executive compensation program in response to the 2023 Say on Pay vote. |
Over the past five years, our stockholders have overwhelmingly supported our executive compensation program, with an average approval of |
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PHILOSOPHY AND PROCESS FOR AWARDINGPhilosophy and Process for Awarding NEO COMPENSATIONCompensation
Philosophy of the Executive Compensation Program
Our executive compensation program is designed to reward NEOs for the achievement of both short-term and long-term financial, strategic and operational goals that lead to the creation of long-term stockholder value. The 2023 executive compensation program iswas designed to:
Compensation Decision-Making
As illustrated in the table below, all NEOs undergo an annual performance assessment. For Mr. Fink, the Board conducted a formal evaluation of his performance against certain financial, operational, business strategy (which included advancing the Company’s ESG and DEI strategies) and personal development objectives established at the beginning of the year. Progress on such objectives is regularly reviewed throughout the year with the Board. At the end of each year, the Board discusses the CEO’s accomplishments and achievement of the goals with the CEO and in executive session without the presence of the CEO. Following the annual performance review, the Compensation Committee utilizes the market data described below that is provided by WTW to set the CEO’s annual total target compensation based on the results of the performance assessment. For the other NEOs, the CEO reviews and evaluates each of their performance against strategic, financial and operational goals established at the beginning of the year and then presents his evaluations to the Compensation Committee. The Compensation Committee reviews the CEO’s recommendations and market data from WTW and then independently sets each of the other NEO’s annual total target compensation. The CEO does not make any recommendation concerning his own compensation.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |31 |
While the Compensation Committee considers the input of our CEO and management in the compensation decision-making process, the Compensation Committee is responsible for overseeing our executive compensation program, which includes our annual incentive and long-term incentive programs. The Compensation Committee considers all elements of the Company’s executive compensation program in total, as well as individual performance, Company-wide performance and internal equity and market compensation considerations, when making executive compensation-related decisions.
MARKET REVIEW Performed by independent compensation consultant
Provides competitive market positioning for executive roles Influences program design | INTERNAL REVIEW CEO evaluates performance CEO and CHRO review market data and internal comparable roles CEO and CHRO recommend to the Compensation Committee pay adjustments for NEOs (other than himself) CEO, CFO and CHRO recommend to the Compensation Committee program changes to align with business objectives, including performance metrics and targets | PAY DECISIONS Compensation Committee carefully considers historical and current market practices, performance, internal pay equity and market trends Compensation Committee approves program, performance targets and pay levels for the applicable fiscal year | |
2023 Compensation Peer Group and Market Data
The Compensation Committee uses compensation data from a group of similarly sized peer companies to evaluate our compensation arrangements (the “Peer Group”).arrangements. With the help of the Compensation Committee’s consultant, each year the Compensation Committee reviews the Peer Group and decides whether any changes should be made. As recommended by WTW,
In anticipation of the Committee’s compensation consultant,Separation in late 2022, the Compensation Committee decided notdetermined that the existing peer group would need to changebe adjusted to align with the Company's market and projected revenue following completion of the Separation. In selecting the Peer Group for 2021, other than to replace Ingersoll Rand Plcbe used when setting 2023 compensation (the “2023 Peer Group”), the Compensation Committee focused on including companies that were more closely aligned with Trane Technologies, Inc. following its spin-off. The 2021our industry and our business strategies, such as companies that manufacture household products and provide specialized consumer services, including security and alarm services, and companies with strong brand recognition and technology enabled products. Based on this criteria, the 2023 Peer Group consistedexcluded eight prior peer group businesses with less relevance to our Company's business strategies following the Separation (specifically, Ball Corp., Borgwarner Inc., Dover Corp., JELD-WEN Holding, Inc., Parker-Hannifin Corp., Pentair plc, RPM International and The Sherwin-Williams Company). The criteria used to evaluate and select the 2023 Peer Group also included the Company's projected revenue size following the Separation. With the assistance of WTW, the Compensation Committee approved the following companies:2023 Peer Group for use in connection with 2023 compensation decisions:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |32 |
2023 Peer Group | ||||
• Allegion plc | • A.O. Smith Corporation • ADT Inc. • Church & Dwight Co., Inc. • Leggett & Platt, Incorporated • Lennox International Inc. • Masco Corporation | |||
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| Mohawk Industries, Inc. | • | ||
| Newell Brands Inc. | • Owens Corning • Resideo Technologies, Inc. • Roper Technologies, Inc. • Snap-On Incorporated • Stanley Black & Decker, Inc. | ||
| • Tempur Sealy International Inc. | • The Clorox Company • Trane Technologies | ||
plc • | Whirlpool Corporation | |||
• | Xylem Inc. • | |||
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Zurn Elkay Water Solutions Corporation |
WTW provided the Compensation Committee with market data to use in setting each element ofwhen considering 2023 NEO compensation of the NEOs for 2021.adjustments. This market data primarily consisted of revenue size adjusted general industry data received from WTW, supplemented with peer group proxy data.data described above.
The Compensation Committee believes that compensation decisions are complex and require a deliberate review of Company performance, peer compensation levels, experience and impact of individual executives, and individual performance. In determining executive compensation, the Compensation Committee considers all forms of compensation and uses tools – such as tally sheets and market data – to review the value delivered by each component of compensation. When evaluating total target compensation, the Compensation Committee generally strives to set NEO compensation around the 50th percentile of the market data. The Compensation Committee may, however, determine that it is appropriate for total target compensation or any particular element of compensation to exceed or fall below the 50th percentile of the market data for an NEO. The factors that might influence the amount of compensation awarded include market competition for a particular position, the strategic importance of the position, requirements of the position relative to benchmark norms, retention considerations, an individual’s performance, possession of a unique skill or knowledge set, proven leadership capabilities and internal pay equity.
Evaluating NEO Performance2024 Compensation Peer Group and Market Data
All NEOs undergo an annual performance appraisal. For the evaluation of our CEO,In 2023, the Compensation Committee in conjunctiondetermined that the peer group to be used when evaluating 2024 compensation decisions should be refined to more closely align with the ChairCompany's business focus and to take into account the size of the Board, conducted a formal evaluationbusiness following the acquisition of the CEO’sEmtek and Yale Business and the Company's projected revenue and market capitalization following the completion of the Separation. WTW reassessed the 2023 Peer Group using the same industry and business criteria as in the prior year, with comparably-sized companies with revenues of 0.5 to 2.5 times the Company and a market capitalization of 0.5 to 4.0 times the Company. With the assistance of WTW, the Compensation Committee refined the 2023 Peer Group to remove Trane Technologies and to add Griffon Corporation and Pentair plc (the “2024 Peer Group”). The 2024 Peer Group approved for use in connection with 2024 compensation decisions is:
2024 Peer Group | ||||
• Allegion plc • A.O. Smith Corporation • ADT Inc. • Church & Dwight Co., Inc. • Griffon Corporation • Leggett & Platt, Incorporated • Lennox International Inc. | • Masco Corporation • Mohawk Industries, Inc. • Newell Brands Inc. • Owens Corning • Pentair plc • Resideo Technologies, Inc. • Roper Technologies, Inc. | • Snap-On Incorporated • Stanley Black & Decker, Inc. • Tempur Sealy International Inc. • The Clorox Company • Whirlpool Corporation • Xylem Inc. • Zurn Elkay Water Solutions Corporation |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |33 |
Target Setting Process
Our executive compensation program is designed to create and reinforce a pay for performance culture and incentivize performance without encouraging excessive risk, while recognizing the cyclical nature of our business. In addition, a significant element of our executive compensation program is delivered in the form of equity to align the interests of our executive officers with our stockholders through the risks and rewards of equity ownership.
Beginning in 2023, our Compensation Committee made a fundamental design change to our executive compensation program to align all members of senior management around common performance goals. The Compensation Committee selects performance goals that it believes are core drivers of the Company’s performance and success and are aligned with the interests of our various stakeholders, including employees, customers, and stockholders. By using performance goals under the Company’s incentive programs that are based on EPS, WCE, OIMP, EBITDA Margin and ROIC, the Compensation Committee believes that the program reflects an appropriate balance with respect to incentivizing top-line growth, profitability and efficiency.
The Committee recognizes the importance of achieving an appropriate balance between rewarding executives for strong performance over both the short-term and long-term and establishing realistic but rigorous targets that continue to attract, motivate and retain executives. In 2023, the Compensation Committee dedicated time to assessing the robustness and rigor of our incentive design, considering the following:
In addition, when establishing the performance goals, the Compensation Committee seeks to establish goals that measure the Company’s operating results and the success of our management team in achieving our annual operating plan and long-term growth plan. As a result, the key financial measures in our annual and long-term incentive plans are measured on a non-GAAP basis. The Committee may make certain adjustments when calculating these results, such as for the impact of foreign currency exchange rate fluctuations and other significant unusual and/or infrequent events that do not impact the Company’s on-going earnings and cash generation including changes in laws, regulations, and accounting principles, actuarial gains/losses related to defined benefit plan accounting, impairment and restructuring related charges/gains and discontinued operations. For 2023, no adjustments were made to the results.
Once goals have been established and in order to drive performance against certain financial, operational, business strategy (including advancingprogram goals, when communicating the Company’s ESG and DEI strategies) and personal development goals established atto the beginningsenior management team, the Company includes communications on what members of senior management, together with their teams, can do to impact achievement of these goals. We believe this understanding of the year. Progress against these goals, including those relating to ESGlink between individual/team performance and DEI initiatives, are regularly reviewed throughout the year with the NESG Committee and the Board. At the end of the year, the Board discusses the CEO’s accomplishments and achievement of the Company’s performance goals withhelps the entire organization focus on those actions that have the greatest potential to drive top-line growth, profitability and efficiency.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |34 |
Leadership Succession and Talent Management
The Board and the Compensation Committee recognize that retention of highly-qualified leadership talent is critical to our continued strong performance and to successful succession planning. The Board is responsible for the succession planning of the CEO and inthe Company's executive session without the presenceofficers and oversees talent development of the CEO. Following the annual
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As part of this process, succession candidates for senior leadership positions are considered, taking into account demonstrated performance, review,leadership qualities, institutional knowledge, and potential to take on more complex responsibilities. The Board and the Compensation Committee utilizes market data provided byconsider various succession-related factors, including: (i) the compensation consultant to setpotential retention risk regarding incumbent senior executives and the CEO’s annual total target compensation based onidentified succession candidates; (ii) the resultsimportance of the performance assessment. Forrole within the other NEOs,organization and the CEO reviewsinstitutional knowledge of each executive; (iii) the competitive landscape for executive talent; (iv) the specific succession planning time horizon for each senior executive position; and evaluates each(v) the extent of their performance against strategic, financialdisruption likely to be caused by unplanned attrition. In addition, in administering the Company’s executive compensation program, the Compensation Committee is mindful of our unique operating structure, history as well as the growth strategy of our Company and operational goals established atits businesses. Although the beginningCompany is smaller in size following the successful Separation in 2022, we are cognizant that to attract and retain the superior talent deemed necessary to operate and grow our businesses, we often have to compensate our executives with a view to the scope and complexity of the year and then presents his evaluationsbusiness we expect them to manage, rather than the Compensation Committee. The Compensation Committee reviews the CEO’s recommendations and market data from the compensation consultant and then independently sets eachsize of the other NEO’s annual total target compensation.business they currently manage; this became particularly true following the Separation.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |35 |
Maintaining Best Practices
The Compensation Committee maintains policies to protect the interests of our stockholders and followfollows commonly viewed compensation best practices in corporate governance.practices. The chart below summarizes these policies.
What We Do | |||||
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25% is made in stock options that vest in three annual installments, each subject to continued employment. | ✓ |
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What We Don’t Do | |||||
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |36 |
Types and Amounts of NEO COMPENSATION AWARDED IN 2021Compensation Awarded in 2023
Pay-at-Risk Compensation2
As part of 20212023 annual target compensation, the Company provided both fixed (base salary) and variable (annual bonus, PSAs, RSUs and stock options) compensation to the NEOs. The vast majority of annual target compensation is at riskpay-at-risk because the compensation that is actually paid is dependent upon the Company’s performance or stock price. As a result, the amount of compensation actually paid to an NEO may significantly vary from the NEO’s target compensation.
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The following charts show each element of 20212023 annual target compensation, including the mix of short-term and long-term incentives, as well as the amount of pay-at-risk for the CEO and the average for the other continuing NEOs. These charts illustrate annual target compensation.*
* Mr. Hallinan has been excluded from the Other NEO calculations of Pay-at-Risk compensation as his resignation from the Company was effective in March 2023 and he did not receive any equity awards under the Company's long-term incentive program during 2023.
As shown in the charts above, a significant portion of the compensation granted to our NEOs was made in the form of equity awards and pay-at-risk. Equity grantsawards represented 70%74% of Mr. Fink’s 2023 annual total target compensation and 60%55% (on average) of the other continuing NEOs’ 2023 annual total target compensation. 87%89% of Mr. Fink’s 2023 annual total target compensation was pay-at-risk and 77%75% (on average) of the other continuing NEOs’ 2023 annual total target compensation was pay-at-risk.
20212023 Compensation
Base Salary
Base salaries provide a fixed level of cash compensation and are paid in ordernecessary to attract and retain our NEOs. The Compensation Committee sets each NEO’s base salary to be appropriate and commensurate with the NEO’s position, experience, and performance.
For 2021,2023, the Compensation Committee increased the annual base salaries for each continuing NEO, to better align with the competitive market data, and in recognition of each individual’s prior year performance.performance, and for Ms. Phyfer and Ms. Grissom, to recognize changes in the scope of their roles. Ms. Phyfer was promoted to the role of Group President in September 2022. Ms. Grissom assumed the additional role of Transformation Officer in November 2022. In connection with Mr. Barry's promotion to the role of Chief Financial Officer in March 2023, Mr. Barry's base salary was increased to be commensurate with market data for a chief financial officer position. Below are the 20212023 and 20202022 annual base salaries for each NEO:NEO, effective as of December 31st of the applicable year:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Named Executive Officer | 2021 | 2020 | ||||||
Nicholas I. Fink |
| $1,160,000 |
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| $1,100,000 |
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Patrick D. Hallinan |
| $680,000 |
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| $635,000 |
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R. David Banyard, Jr. |
| $740,000 |
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| $720,000 |
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Cheri M. Phyfer |
| $630,000 |
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| $590,000 |
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Brett E. Finley |
| $600,000 |
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| $587,000 |
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Robert K. Biggart |
| $570,000 |
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| $552,000 |
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Compensation Discussion and Analysis |37 |
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Named Executive Officer |
| December 31, 2022 | December 30, 2023 | ||||||||
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Nicholas I. Fink |
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| $ | 1,200,000 |
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| $ | 1,250,000 |
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David V. Barry |
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| $ | 447,200 |
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| $ | 620,000 |
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Cheri M. Phyfer |
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| $ | 725,000 |
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| $ | 765,000 |
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Hiranda S. Donoghue |
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| $ | 500,000 |
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| $ | 525,000 |
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Sheri R. Grissom |
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| $ | 505,000 |
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| $ | 525,000 |
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The Compensation Committee believes that annual cash incentive awards (“bonus”) reinforce a pay for performance culture because the payment is based on the achievement of the Company’s financial and operational results. Each year, the Compensation Committee sets a percentage of base salary to determine each NEO’s bonus payout at 100% of target.
The Compensation Committee adjustedincreased the percentage of base salary used to determine the 20212023 bonus awards for Ms. Phyfer andall continuing NEOs (other than Mr. Finley. TheFink) from the percentage of their base salary was increased from 75%used to 80%determine their 2022 bonus awards. For Mses. Phyfer, Donoghue and Grissom, the increases were made to better align with market data. For Mr. Barry, the target bonus opportunity was increased in connection with his promotion to bring his compensation in line with market data and for internal pay equity purposes.a chief financial officer position (from 50% of base salary). The Committee did not make adjustment to any other NEO’starget annual bonus opportunities for each of the NEOs in 2023, reflected as a percentage of base salary. The percentages in 2021 for each NEOsalary, were:
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| 130% | ||
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| 75% | ||
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| 95% | ||
| 75% | |||
Sheri R. Grissom | 75% | |||
Patrick D. Hallinan | 90% |
The bonus payouts areCompensation Committee approved changes to the metrics used in our annual incentive plan by aligning the performance metrics for all NEOs to support our restructured centralized organization. Historically, the annual incentive performance metrics for corporate-based NEOs were based on overall Company financial results while NEOs serving in business unit roles had annual incentive performance metrics tied to specific business unit financial and operating results. Beginning in 2023, the achievementannual incentive award performance goals for all of the performance goalsCompany's executive officers, including all of the NEOs, were based on EPS (weighted 60%), OIMP (weighted 20%) and can range from 0%WCE (weighted 20%). In addition, the Compensation Committee replaced the use of RONTA with OIMP. The change in this metric was made to 200% of target. focus management on delivering the appropriate incremental or decremental margins, which the Compensation Committee believes will drive value creation over time.
To establish challenging performance goals under the annual cash incentive program, the Compensation Committee reviewed the target performance goals and actual results for awards paid in 2020, and2022, as well as the 20212023 expected market growth rate in the home products market and the Company’s three yearannual operating plan and key assumptions relating to share gains, pricing, material inflation and productivity. For 2021,plan.In addition, the Compensation Committee approved the following performance metrics and weighting for bonus awards:2023 annual
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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Compensation Discussion and Analysis |38 |
incentive targets reflect the impact of the Separation, with the EPS and WCE targets set below last year’s actual performance to reflect the reduced size and scale of the Company immediately following the Separation. Bonus payouts under the annual cash incentive awards were based on the achievement of applicable performance goals and could have ranged from 0% to 200% of target.
The Compensation Committee believes that the performance measures chosen for the 2021 bonus awards focus executives on maximizing sales and profitability for the Company. The following table sets forth the performance metrics at minimum (0% payout), target (100% payout) and maximum (200% payout) financial, as well as the weighting of each metric, as approved by the Compensation Committee for the 2023 annual cash incentive award:
Performance Metric |
| Metric |
| Threshold | Target |
| Maximum |
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| Actual Payout |
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EPS (1) |
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| 60% |
| $ | 2.96 |
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| $ | 3.70 |
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| $ | 4.43 |
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| $ | 3.91 |
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OIMP |
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| 20% |
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| 15.4 | % |
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| 16.5 | % |
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| 17.4 | % |
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| 16.0 | % |
| 121.4 | % |
WCE |
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| 20% |
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| 26.7 | % |
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| 26.7 | % |
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| 21.5 | % |
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| 21.8 | % |
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The bonus awards for each NEO were subject entirely to the satisfaction of corporate performance results,metrics described above and reflect a payout percent of 121.4% of target. The following table sets forth the percentage payouttarget bonus amount and the amount actually paid to each NEO for the 20212023 annual cash incentive awards:
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Named Executive Officer |
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| Bonus Payout Amount |
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Nicholas I. Fink |
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| $ | 1,625,000 |
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| $ | 1,972,750 |
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David V. Barry (1) |
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| $ | 427,293 |
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| $ | 518,734 |
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Cheri M. Phyfer |
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| $ | 726,750 |
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| $ | 882,275 |
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Hiranda S. Donoghue |
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| $ | 393,750 |
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| $ | 478,013 |
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Sheri R Grissom |
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| $ | 393,750 |
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| $ | 478,013 |
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Patrick D. Hallinan(2) |
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| $ | 630,000 |
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| $ | 140,421 |
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2021 Annual Cash Incentive Performance Goals and Results
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Performance and Goals(1) | Results and Awards | |||||||||||||
Named Executive Officer | Performance Metric | Minimum Performance Measure | Target Performance Measure | Maximum Performance Measure | Actual Performance(2) | % of Payout | Amount Paid(3) | |||||||
Nicholas I. Fink | EPS(60%) RONTA(20%) WCE(20%)
| $4.27 45.4% 17.4%
| $4.95 52.0%
| $5.63 58.6%
| $5.74 57.0%
| 174.8% | $2,534,600 | |||||||
Patrick D. Hallinan | EPS(60%) RONTA(20%) WCE(20%)
| $4.27 45.4%
| $4.95 52.0%
| $5.63 58.6%
| $5.74 57.0%
| 174.8% | $950,912 | |||||||
R. David Banyard, Jr. | OI(60%) OM(20%) WCE(20%)
| $260.7 10.9%
| $308.5 11.8%
| $356.3 12.6%
| $292.3 10.2%
| 77.8% | $460,576 | |||||||
Cheri M. Phyfer | OI(60%) SALES(20%) WCE(20%)
| $462.9 1.1% 17.4%
| $521.9 3.1% 16.0%
| $580.9 5.1% 14.8%
| $626.4 12.1% 15.6%
| 183.3% | $923,832 | |||||||
Brett E. Finley | OI(60%) OM(20%) WCE(20%)
| $255.7 14.3% 20.6%
| $301.3 15.5% 18.9%
| $346.9 16.5% 17.5%
| $305.4 15.0% 19.7%
| 92.1% | $442,080 | |||||||
Robert K. Biggart | EPS(60%) RONTA(20%)
| $4.27 45.4% 17.4%
| $4.95 52.0%
| $5.63 58.6%
| $5.74 57.0%
| 174.8% | $747,270 |
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Long-Term Equity Awards
The Compensation Committee believes that equity compensation reinforces a pay for performance culture and aligns the interests of management with those of our stockholders. Annually, the Compensation Committee sets a target equity award value and determines the types of equity to award.
The 20212023 annual equity award for NEOs consisted of 50% performance share awards (“PSAs”),PSAs, 25% restricted stock units (“RSUs”)RSUs and 25% stock options.
In setting 20212023 target long-term equity award values, the Compensation Committee considered competitive market data, and the individual performance of each NEO.NEO and for Ms. Phyfer and Ms. Grissom, the expansion of their roles. The Compensation Committee adjustedincreased the target long-term equity award values granted to all continuing NEOs from the 2022 target long-term equity award values. The award values for Mr. Fink and Ms. Phyfer were increased in recognition of prior year performance. In addition, the award values for Messrs. Finkperformance and Hallinan and Ms. Phyfer were increased to better align with market data for similar positions. For Mr. Barry, the increase was made in connection with his promotion to bring his compensation in line with market data for a chief financial officer position. The increase in the award value for Ms. Donoghue was in recognition of prior year performance. The increase in the award value for Ms. Grissom was in recognition of prior year performance and the increased scope of her role. Below are the target equity award values for 20212023 and 20202022 for each continuing NEO:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Named Executive Officer | 2021 Target Equity Award Value | 2020 Target Equity Award Value | ||
Nicholas I. Fink | $6,150,000 | $5,525,000 | ||
Patrick D. Hallinan | $1,900,000 | $1,700,000 | ||
R. David Banyard, Jr. | $2,150,000 | $2,000,000 | ||
Cheri M. Phyfer | $1,575,000 | $1,350,000 | ||
Brett E. Finley | $1,375,000 | $1,300,000 | ||
Robert K. Biggart | $1,200,000 | $1,150,000 |
Compensation Discussion and Analysis |39 |
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Named Executive Officer |
| 2022 Target | 2023 Target | ||||||||
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Nicholas I. Fink |
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| $ | 7,150,000 |
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| $ | 8,000,000 |
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David V. Barry |
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| $ | 400,000 |
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| $ | 1,350,000 |
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Cheri M. Phyfer |
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| $ | 2,000,000 |
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| $ | 2,225,000 |
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Hiranda S. Donoghue |
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| $ | 900,000 |
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| $ | 1,000,000 |
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Sheri R. Grissom |
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| $ | 900,000 |
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| $ | 1,000,000 |
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In anticipation of Mr. Biggart’sAs an incentive to retain Ms. Grissom to continue service beyond her originally intended retirement, histhe Compensation Committee granted her equity award was granted solely in all three forms of equity, but with the RSUs that were scheduled to vestand stock options vesting on December 27, 2021,2023, subject to hisher continued employment through such date.
Performance Share Awards: PSAs awarded to the NEOs in 2021 will2023 were awarded to be settled in shares of the Company’s common stockCompany Stock based on earnings before interest, taxes, depreciation and amortization (“EBITDA”)the Company's EBITDA Margin Percent (weighted 75%) and return on invested capital (“ROIC”)ROIC (weighted 25%) performance for the three yearthree-year performance period from January 1, 20212023 to December 31, 2023. Payouts may2025, with payouts that could range from 0% to 200%300% of the target award based on performance. IfThe Compensation Committee approved a change in the use of EBITDA to EBITDA Margin Percent, which was made to focus management on delivering long-term incremental margin growth. Under the terms of the PSAs, if the Company fails to achieve the minimum performance threshold, none of the PSAs will vest. PSAs will be settled following completion of the performance period and certification of the performance results by the Compensation Committee (in early 2024).
The Compensation Committee based the performance goals on EBITDA Margin Percent and ROIC because it believes that these metrics incentivize management to grow earnings and aligns the interests of management with our stockholders. The Compensation Committee believes that awarding PSAs with a cumulative three yearthree-year performance goalgoals drives long-term sustained growth and, as a result, management is rewarded if the long-term growth goals are exceeded. In establishing performance goals for PSAs, the Compensation Committee considered the Company’s strategic operating plan, and the expected three yearthree-year compound market growth rate,rate.
For one performance cycle (the 2023-2025 performance period), the Compensation Committee modified the structure of the PSAs to provide for the potential to earn up to 300% of the target award for the achievement of stretch goals relating to 3-year EBITDA Margin Percent and ROIC, which if achieved would represent a significant increase in sales growth as well as key assumptions relatingstrong operating income performance over the course of the performance period. Payments above 200% of target will only be made if revenue growth exceeds industry peers, to share gains, pricing, material inflationencourage not only margin improvement but also top-line revenue growth. The potential for an increased maximum payout was instituted to provide an increased incentive for management to focus on the potential benefits of the organizational transformation. The Compensation Committee believes that this long-term opportunity will incentivize management to deliver strong performance during this period of strategic transformation following the Separation and productivity.requires the Company to deliver exceptional long-term performance in order to receive the maximum payout level of the stretch goals. The maximum payout level has reverted back to 200% of target beginning with the 2024-2026 performance period.
At the time of the Separation, three outstanding PSA cycles were converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period had the Separation not occurred. The converted RSUs will continue to vest in accordance with the original vesting schedule. At that time and based on results through September 30, 2022, the Compensation Committee approved a 200% achievement of the January 2021-December 2023 performance period. Based on the approved achievement, the following number of RSUs were awarded:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |40 |
Named Executive Officer | RSUs | |
Nicholas I. Fink | 80,053 | |
David V. Barry | 3,254 | |
Cheri M. Phyfer | 20,502 | |
Sheri R. Grissom | 10,621 | |
Patrick D. Hallinan | 24,732 |
RSUs and Stock Options: The Compensation Committee believes that both RSUs and stock options incentincentivize NEOs to increase stockholder returns and align thealigns their interests of NEOs with our stockholders. Other than with respect to Ms. Grissom's RSU grant as described above, RSUs granted to the NEOs generally vest in three equal annual installments, assuming the NEO remains employed through each annual vesting date. RSUs serve as a long-term retention tool in a cyclical business because the NEO must remain employed with the Company through each of the three annual vesting dates to receive all of the shares. As noted above, Mr. Biggart’s 2021 RSU grant vested on December 27, 2021, subject to his continued employment through such date. The Compensation Committee believes that RSUs represent at-risk compensation since their value is linked directly to share price.
Stock options allow an NEO to purchase a specific number of shares of Company stockStock at a fixed price (i.e., the share price set on the grant date). The 2021Other than with respect to Ms. Grissom's stock option grant as described above, the 2023 stock options generally vest in three equal annual installments, assuming the NEO remains employed through each vesting date, and expire ten years from the grant date. The Compensation Committee believes that stock options are performance-based and at-risk because the NEO only realizes value to the extent the Company’s stock price increases after the grant date.
2019-2021 Performance Share Awards PayoutBenefits
In 2019, the Compensation Committee awarded NEOs with PSAs to be settled in early 2022 if the Company achieved certain EBITDA and ROIC goals during the cumulative performance period from January 1, 2019 through December 31, 2021, with EBITDA weighted 75% and ROIC weighted 25%. The Compensation Committee certified a payout level of 200% of target. The threshold, target and maximum goals and the Company’s actual results were as follows:Retirement
2019-2021 PSA Target EBITDA and ROIC Goals and Results | ||||||||||
Metric | Threshold | Target | Maximum | Actual Performance | % of Payout | |||||
EBITDA (75%)(1) | $2,700 | $2,850 | $3,000 | $3,245.8 | 200.0% | |||||
ROIC (25%) | 12.6% | 13.5% | 14.3% | 14.6% |
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Based on the achievement of these results, the NEOs received the following number of shares of Company stock pursuant to the terms of the 2019-2021 PSAs:
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Benefits
Retirement
All of the NEOs are eligible for retirement benefits through the Fortune Brands Home & SecurityInnovations Retirement Savings Plan (the “Qualified Savings Plan”), a tax-qualified defined contribution 401(k) plan. The Compensation Committee believes that the Qualified Savings Plan benefits are consistent with competitive pay practices and are an important element in attracting and retaining talent in a competitive market.
In addition to the Qualified Savings Plan, the Company provides non-qualified retirement benefits for contributions that would have been made under the tax-qualified plan but for limitations imposed by the Internal Revenue Code (the “Code”). Please see the narratives and the “2021“2023 Nonqualified Deferred Compensation” table on page 3847 of this Proxy Statement for further information regarding these retirement benefits.
The Company froze pension plan benefit accruals in 2016 and as a result none of the NEOs are entitled to a benefit under these plans, with the exception of Mr. Hallinan who retains a retirement benefit that accrued while he was an employee of MasterBrand Cabinets from 2005 through 2008.Severance
Severance
The Company has Agreements for the Payment of Benefits Following Termination of Employment (the “Severance Agreements”) with each NEO. Under the terms of the Severance Agreements, each NEO is entitled to severance benefits upon a “qualifying termination of employment” (i.e., termination by the Company without “cause” or by the NEO for “good reason”) or in the event of a qualifying termination of employment following a change in control. See the “2021 Potential Payments Upon Termination or Change in Control” table on page 39 below.
The Compensation Committee believes that it is appropriate to provide NEOs with the protections afforded under these Severance Agreements and that doing so helps the Company remain competitive with market practices and attract and retain superior talent. The Compensation Committee also believes that these Severance Agreements promote management independence and keep management focused on the Company’s business in the face of any potential change in control events.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |41 |
All of the Severance Agreements contain “double-trigger” change in control provisions, which means that there must be both a change in control of the Company (or applicable business) and a qualifying termination of employment (i.e., termination by the Company without “cause” or by the NEO for “good reason”) before any enhanced benefits can be paid following a change in control. The NEOs are not entitled to any tax gross ups under the Severance Agreements, including those related to the change-in-control related excise taxes imposed under the Code.
|
Mr. Hallinan was not eligible to receive severance benefits under his Severance Agreement in connection with his resignation from the Company. See the "2023 Potential Payments Upon Termination or Change in Control" table on page 48 below for further details regarding the Severance Agreements.
Perquisites
All NEOs were provided with a cyber-security privacy protection service benefit and an executive health service program that provides all NEOs with annual medical examinations. The Company also provides certain broad-based plans, which are generally available to employees, such as matching on charitable contributions and company product purchase programs. In 2021,2023, the Company provided a limited number of perquisites to the NEOs, which included limited use of Company aircraft by Messrs.Mr. Fink Hallinan and Biggart (the costs of which were reimbursed to the Company based on the cost of a first classfirst-class airplane ticket for each passenger on a personal flight). and to Ms. Phyfer.
Policies
Clawback Policy
The Company hasIn 2023, the Compensation Committee approved a policy that allows itrevised Clawback Policy designed to recoup all or part of annual cash incentives or PSAs if there is: (1) a significant or material restatementbe compliant with New York Stock Exchange listing standards implementing Section 954 of the Company’sDodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The policy requires that the Company recoup erroneously awarded incentive-based compensation received by current and former executive officers following certain financial statements coveringrestatements, and applies to any of the three fiscal years preceding the grantincentive-based compensation received by a covered executive on or payment; or (2) a restatement of the Company’s financial statements for any year which results from fraud or willful misconduct committed by an award holder. An executive’s unvested RSUs and PSAs and both unvested and vested but unexercised stock options are forfeited and cancelled in the event an executive’s employment is terminated for cause under the terms and conditions of these awards.after October 2, 2023.
Executive Stock Ownership Guidelines
The Company maintains stock ownership guidelines for NEOs and other Company executives, which require them to hold a number of shares equal to a multiple of their annual base salary. The ownership guidelines are as follows:
Position | Stock Ownership | |
|
| |
|
| |
|
| |
| 3 | |
|
|
Executives have five years from the date of hire or date of promotion to acquire the requisite amount of Company stock and are required to hold 50% of net shares acquired from the vesting of PSAs and RSUs until the ownership guidelines are met. Shares owned directly by an executive, the executive’s spouse, children sharing the same home and any shares held in trust for the benefit of the executive or his/her family, as well as any unvested, time-based RSUs, shares that are held in the Company's employee stock purchase plan, 401(k) plan, or any shares that have been deferred pursuant to the Company’s Deferred Compensation Plan, are counted towards ownership. All of the continuing NEOs currently meet thetheir applicable multiple threshold or fall within the time period allowed to meet the multiple threshold under the stock ownership guidelines.
Compensation Discussion and Analysis |42 |
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.30, 2023.
Compensation Committee
A.D. David Mackay, Chair
Amit Banati
Irial Finan
Ann F. Hackett
Susan S. Kilsby
John G. Morikis
Compensation Committee |
A.D. David Mackay, Chair |
Irial Finan |
Ann F. Hackett |
Susan S. Kilsby |
John G. Morikis |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
|
2023 Executive Compensation |
|
2023 SUMMARY COMPENSATION TABLE | |||||||||||||||||||||||||||||||||
Name and Principal | Year | Salary | Bonus | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
| A | B | C | D | E | F | G | H | I | ||||||||||||||||||||||||
Nicholas I. Fink | 2023 |
| 1,239,423 |
|
|
| 0 |
|
|
| 6,000,036 |
|
|
| 1,999,996 |
|
|
| 1,972,750 |
|
|
| 0 |
|
|
| 275,234 |
|
|
| 11,487,439 |
|
|
CEO | 2022 |
| 1,192,308 |
|
|
| 0 |
|
|
| 5,362,469 |
|
|
| 1,787,499 |
|
|
| 900,120 |
|
|
| 0 |
|
|
| 357,601 |
|
|
| 9,599,997 |
|
|
| 2021 |
| 1,148,462 |
|
|
| 0 |
|
|
| 4,612,510 |
|
|
| 1,537,493 |
|
|
| 2,534,600 |
|
|
| 0 |
|
|
| 337,316 |
|
|
| 10,170,381 |
|
|
David V. Barry | 2023 |
| 586,769 |
|
|
| 0 |
|
|
| 1,012,539 |
|
|
| 337,498 |
|
|
| 518,734 |
|
|
| 0 |
|
|
| 80,956 |
|
|
| 2,536,496 |
|
|
Executive Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cheri M. Phyfer | 2023 |
| 756,539 |
|
|
| 0 |
|
|
| 1,668,719 |
|
|
| 556,247 |
|
|
| 882,275 |
|
|
| 0 |
|
|
| 109,604 |
|
|
| 3,973,384 |
|
|
Executive Vice President, | 2022 |
| 655,000 |
|
|
| 0 |
|
|
| 1,274,964 |
|
|
| 425,001 |
|
|
| 212,086 |
|
|
| 0 |
|
|
| 95,559 |
|
|
| 2,662,610 |
|
|
Group President | 2021 |
| 623,077 |
|
|
| 0 |
|
|
| 1,181,260 |
|
|
| 393,757 |
|
|
| 923,832 |
|
|
| 0 |
|
|
| 69,466 |
|
|
| 3,191,392 |
|
|
Hiranda S. Donoghue | 2023 |
| 519,712 |
|
|
| 0 |
|
|
| 749,982 |
|
|
| 250,002 |
|
|
| 478,013 |
|
|
| 0 |
|
|
| 78,996 |
|
|
| 2,076,705 |
|
|
Executive Vice President, | 2022 |
| 500,000 |
|
|
| 0 |
|
|
| 675,016 |
|
|
| 225,004 |
|
|
| 201,950 |
|
|
| 0 |
|
|
| 61,204 |
|
|
| 1,663,174 |
|
|
Sheri R. Grissom | 2023 |
| 520,769 |
|
|
| 0 |
|
|
| 749,982 |
|
|
| 250,002 |
|
|
| 478,013 |
|
|
| 0 |
|
|
| 75,857 |
|
|
| 2,074,623 |
|
|
Executive Vice President and Chief Transformation Officer | 2022 |
| 502,115 |
|
|
| 0 |
|
|
| 899,964 |
|
|
| 0 |
|
|
| 203,970 |
|
|
| 0 |
|
|
| 104,613 |
|
|
| 1,710,662 |
|
|
Patrick D. Hallinan | 2023 |
| 156,154 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 140,421 |
|
|
| 0 |
|
|
| 71,382 |
|
|
| 367,957 |
|
|
Former Executive Vice | 2022 |
| 696,154 |
|
|
| 0 |
|
|
| 1,499,998 |
|
|
| 499,994 |
|
|
| 363,510 |
|
|
| 0 |
|
|
| 156,341 |
|
|
| 3,215,997 |
|
|
Chief Financial Officer | 2021 |
| 671,346 |
|
|
| 0 |
|
|
| 1,424,973 |
|
|
| 474,993 |
|
|
| 950,912 |
|
|
| 0 |
|
|
| 128,554 |
|
|
| 3,650,778 |
|
|
|
The amounts included in this column for the PSAs granted during 2023 are calculated based on the probable outcome at the time of the grant, which was that the target performance level would be achieved. Assuming the highest level of achievement was achieved with respect to the 2023 PSAs, the maximum value of the awards as of the grant date would be as follows: $12,000,072 for Mr. Fink, $2,025,078 for Mr. Barry, $3,337,500 for Ms. Phyfer, $1,499,964 for Ms. Donoghue, and $1,499,964 for Ms. Grissom.
|
(3) Option Awards: The amounts listed in column E for 2023 reflect the aggregate grant date fair values calculated in accordance with FASB ASC Topic 718 for stock options granted in 2023. For assumptions used in determining these values, see note 13 to the consolidated financial statements contained in the Company’s Form 10-K. (4) Non-Equity Incentive Plans: Column F lists amounts earned under the annual cash incentive plan. Please see the CD&A for further details regarding these awards. (5) Change in Actuarial Value of Pension Benefits: The Summary Compensation Table previously included the aggregate change in actuarial valueof the tax-qualified and non-qualified defined benefit pension plan benefits previously accrued by Mr. Hallinan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options Vesting by Year | ||||||||||||
Name | 2022 | 2023 | 2024 | |||||||||
Nicholas I. Fink |
| 86,864 |
|
| 64,544 |
|
| 20,877 |
| |||
Patrick D. Hallinan |
| 33,692 |
|
| 21,986 |
|
| 6,450 |
| |||
R. David Banyard, Jr. |
| 24,066 |
|
| 24,067 |
|
| 7,299 |
| |||
Cheri M. Phyfer |
| 25,155 |
|
| 17,716 |
|
| 5,347 |
| |||
Brett E. Finley |
| 24,428 |
|
| 15,649 |
|
| 4,668 |
|
|
Number of RSUs Vesting by Year | ||||||||||||
Name | 2022 | 2023 | 2024 | |||||||||
Nicholas I. Fink |
| 20,826 |
|
| 15,581 |
|
| 5,880 |
| |||
Patrick D. Hallinan |
| 8,173 |
|
| 5,385 |
|
| 1,817 |
| |||
R. David Banyard, Jr. |
| 20,332 |
|
| 5,834 |
|
| 2,056 |
| |||
Cheri M. Phyfer |
| 10,441 |
|
| 4,348 |
|
| 1,506 |
| |||
Brett E. Finley |
| 5,885 |
|
| 3,794 |
|
| 1,315 |
|
|
|
Number of PSA Outstanding By Performance Period
| ||||||||
Name | 2020-2022 | 2021-2023 | ||||||
Nicholas I. Fink | 40,010 | 35,278 | ||||||
Patrick D. Hallinan | 12,311 | 10,899 | ||||||
R. David Banyard, Jr. | 14,483 | 12,333 | ||||||
Cheri M. Phyfer | 9,776 | 9,035 | ||||||
Brett E. Finley | 9,414 | 7,887 | ||||||
Robert K Biggart | 8,328 | 0 |
|
|
|
|
|
|
Legacy Tax-Qualified and Non-Qualified Pension Benefits
The Company maintains legacy tax-qualified pension plans and supplemental non-qualified pension plans. Benefit accruals under these plans were frozen in 2016 and employees who were hired or transferred (as applicable) after the date the plans were frozen were not eligible to receive a benefit. As a result, none of our NEOs participate in our legacy tax-qualified defined benefit pension plans or supplemental non-qualified pension plans, except for Mr. Hallinan. Mr. Hallinan retains an accumulated benefit that accrued while he was employed by MasterBrand Cabinets from 2005 through 2008 during which time he accumulated a pension benefit under the MasterBrand Cabinets Inc. Pension Plan (“MBCI Plan”)(negative values for 2022 and a supplemental pension benefit under2021 of $37,000 and $3,000, respectively). Because the liability of the MasterBrand Cabinets Pension Plan remained with MasterBrand at the time of the Separation, the Company is not responsible for any amounts due to Mr. Hallinan under the plan and does not administer the plan, no change in value is reported during 2023 with respect to the MasterBrand Cabinets Pension Plan.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 44 |
for 2023: $135,716 for Mr. Fink; $28,934 for Mr. Barry, $47,897 for Ms. Phyfer, $29,375 for Ms. Donoghue, $29,605 for Ms. Grissom, and $15,487 for Mr. Hallinan. These amounts were credited to the executives’ Supplemental Plan accounts in early 2024.
2023 GRANTS OF PLAN-BASED AWARDS |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
| Estimated Future Payouts Under |
| Estimated Future Payouts Under |
| All Other |
| All Other |
| Exercise |
| Grant |
| ||||||||||||||||||||||||||||||||||||
Name and |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| or Units |
| Options |
| Awards |
| Awards |
| ||||||||||||||||||||||||||||
Nicholas I. Fink |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 1,625,000 |
|
|
| $ | 3,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 98,039 |
|
|
| $ | 60.80 |
|
|
| $ | 1,999,996 |
| ||||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 32,473 |
|
|
|
|
|
|
|
|
|
|
| $ | 2,000,012 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 64,946 |
|
|
|
| 194,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 4,000,024 |
| ||||||
David V. Barry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 427,293 |
|
|
| $ | 854,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,544 |
|
|
| $ | 60.80 |
|
|
| $ | 337,498 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,480 |
|
|
|
|
|
|
|
|
|
|
| $ | 337,513 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 10,960 |
|
|
|
| 32,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 675,026 |
| ||||||
Cheri M. Phyfer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 726,750 |
|
|
| $ | 1,453,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 27,267 |
|
|
| $ | 60.80 |
|
|
| $ | 556,247 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,031 |
|
|
|
|
|
|
|
|
|
|
| $ | 556,219 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 18,063 |
|
|
|
| 54,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,112,500 |
| ||||||
Hiranda S. Donoghue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 393,750 |
|
|
| $ | 787,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,255 |
|
|
| $ | 60.80 |
|
|
| $ | 250,002 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,059 |
|
|
|
|
|
|
|
|
|
|
| $ | 249,994 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 8,118 |
|
|
|
| 24,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 499,988 |
| ||||||
Sheri R. Grissom |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 393,750 |
|
|
| $ | 787,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,255 |
|
|
| $ | 60.80 |
|
|
| $ | 250,002 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,059 |
|
|
|
|
|
|
|
|
|
|
| $ | 249,994 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 8,118 |
|
|
|
| 24,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 499,988 |
| ||||||
Patrick D. Hallinan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 630,000 |
|
|
| $ | 1,260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END |
| ||||||||||||||||||||||||||||||||
| Option Awards |
| Stock Awards |
| |||||||||||||||||||||||||||||
Name | Number of | Number of | Equity | Option | Option |
| Number | Market | Equity | Equity |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Nicholas I. Fink |
| 0 |
|
|
|
| 98,039 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 173,228 |
|
| $ | 13,189,580 |
|
|
| 64,946 |
|
| $ | 4,944,988 |
|
|
| 26,061 |
|
|
|
| 52,123 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 47,370 |
|
|
|
| 23,686 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 24,784 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 111,463 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 75,977 |
|
|
|
| 0 |
|
|
|
|
| $ | 41.42 |
|
| 3/5/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 32,074 |
|
|
|
| 0 |
|
|
|
|
| $ | 55.98 |
|
| 2/26/28 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 30,930 |
|
|
|
| 0 |
|
|
|
|
| $ | 51.31 |
|
| 2/27/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 31,314 |
|
|
|
| 0 |
|
|
|
|
| $ | 44.27 |
|
| 2/28/26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
David V. Barry |
| 0 |
|
|
|
| 16,544 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 16,640 |
|
| $ | 1,266,970 |
|
|
| 10,960 |
|
| $ | 834,494 |
|
|
| 0 |
|
|
|
| 9,394 |
|
|
|
|
| $ | 53.38 |
|
| 6/29/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 1,457 |
|
|
|
| 2,916 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 1,925 |
|
|
|
| 963 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 4,539 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 1,659 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.30 |
|
| 2/21/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cheri M. Phyfer |
| 0 |
|
|
|
| 27,267 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 44,089 |
|
| $ | 3,356,936 |
|
|
| 18,063 |
|
| $ | 1,375,317 |
|
|
| 6,196 |
|
|
|
| 12,393 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 12,131 |
|
|
|
| 6,066 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 9,913 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 27,234 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 8,441 |
|
|
|
| 0 |
|
|
|
|
| $ | 41.42 |
|
| 3/5/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Hiranda S. Donoghue |
| 0 |
|
|
|
| 12,255 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 14,362 |
|
| $ | 1,093,523 |
|
|
| 8,118 |
|
| $ | 618,105 |
|
|
| 3,280 |
|
|
|
| 6,561 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sheri R. Grissom |
| 12,255 |
|
|
|
| 0 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 11,543 |
|
| $ | 878,884 |
|
|
| 8,118 |
|
| $ | 618,105 |
|
|
| 6,547 |
|
|
|
| 3,274 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 6,196 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 15,131 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 17,431 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.30 |
|
| 2/21/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 16,838 |
|
|
|
| 0 |
|
|
|
|
| $ | 55.98 |
|
| 2/26/28 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 15,465 |
|
|
|
| 0 |
|
|
|
|
| $ | 51.31 |
|
| 2/27/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 13,728 |
|
|
|
| 0 |
|
|
|
|
| $ | 44.27 |
|
| 2/28/26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 13,047 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.20 |
|
| 2/23/25 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Patrick D. Hallinan |
| 21,869 |
|
|
|
| 0 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
| 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
|
| 21,952 |
|
|
|
| 0 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 6,196 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 34,296 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 39,846 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.30 |
|
| 2/21/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 36,082 |
|
|
|
| 0 |
|
|
|
|
| $ | 55.98 |
|
| 2/26/28 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 5,860 |
|
|
|
| 0 |
|
|
|
|
| $ | 57.66 |
|
| 7/3/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 18,277 |
|
|
|
| 0 |
|
|
|
|
| $ | 51.31 |
|
| 2/27/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 9,644 |
|
|
|
| 0 |
|
|
|
|
| $ | 44.27 |
|
| 2/28/26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 2,906 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.20 |
|
| 2/23/25 |
|
|
|
|
|
|
|
|
|
|
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 46 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Number of Options Vesting by Year | ||||||||||||||
Name |
| 2024 |
| 2025 |
| 2026 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nicholas I. Fink |
|
| 82,426 |
|
|
|
| 58,741 |
|
|
|
| 32,681 |
|
|
David V. Barry |
|
| 12,632 |
|
|
|
| 11,670 |
|
|
|
| 5,515 |
|
|
Cheri M. Phyfer |
|
| 21,350 |
|
|
|
| 15,286 |
|
|
|
| 9,090 |
|
|
Hiranda S. Donoghue |
|
| 7,364 |
|
|
|
| 7,366 |
|
|
|
| 4,086 |
|
|
Sheri R. Grissom |
|
| 3,274 |
|
|
|
| 0 |
|
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Number of RSUs Vesting by Year | |||||||||||||
Name |
| 2024 |
| 2025 |
| 2026 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nicholas I. Fink |
|
| 143,771 |
|
|
|
| 18,632 |
|
|
|
| 10,825 |
|
|
David V. Barry |
|
| 10,711 |
|
|
|
| 4,102 |
|
|
|
| 1,827 |
|
|
Cheri M. Phyfer |
|
| 36,211 |
|
|
|
| 4,867 |
|
|
|
| 3,011 |
|
|
Hiranda S. Donoghue |
|
| 10,672 |
|
|
|
| 2,336 |
|
|
|
| 1,354 |
|
|
Sheri R. Grissom |
|
| 11,543 |
|
|
|
| 0 |
|
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
2023 OPTION EXERCISES AND STOCK VESTED |
|
| ||||||||||||||||||
| Option Awards |
| Stock Awards | |||||||||||||||||
Name |
| Number of |
| Value |
| Number of |
| Value | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Nicholas I. Fink |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 116,276 |
|
|
| $ | 7,309,902 |
|
|
David V. Barry |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 5,909 |
|
|
| $ | 363,149 |
|
|
Cheri M. Phyfer |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 33,903 |
|
|
| $ | 2,131,915 |
|
|
Hiranda S. Donoghue |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 4,484 |
|
|
| $ | 314,194 |
|
|
Sheri R Grissom |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 13,791 |
|
|
| $ | 873,440 |
|
|
Patrick D. Hallinan |
|
| 6,000 |
|
|
| $ | 176,513 |
|
|
|
| 76,415 |
|
|
| $ | 4,736,181 |
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 47 |
Fortune Brands maintains a tax-qualified defined contribution plan (the "Qualified Savings Plan") and each of our businesses make either a matching contribution, a qualified non-elective contribution (“QNEC”) or a profit sharing contribution under the Qualified Savings Plan. In 2023, the eligible profit sharing contribution amount was equal to 6% of compensation up to the Social Security wage base limit, plus 7.5% for amounts above the Social Security wage base, for each NEO. A portion of the amount of the profit sharing contribution, up to the limitations imposed by the Code, was made to the Qualified Savings Plan. Profit sharing contributions in excess of the limitations imposed by the Code were contributed to the Fortune Brands Supplemental Plan (the "FBIN SERP") on behalf of each NEO. Messrs. Fink and Barry and Ms. Phyfer retain accounts under the Water Innovations SERP ("WI SERP") holding supplemental non-qualified profit sharing contributions made to each of them while they were previously employed by Moen.
FBIN SERP and WI SERP profit sharing accounts are credited with interest monthly, using the Citigroup US Broad Investment-Grade (USBIG) Bond Index. The FBIN SERP and the WI SERP pay any defined contribution benefits, in the form of a lump sum following termination of employment, subject to any delay required under Section 409A of the Code.
|
(1) Amounts listed in this column were reported as compensation |
|
Tax Qualified and Non-Qualified Defined Contribution Benefits
Fortune Brands maintains a tax-qualified defined contribution plan (the “Savings Plan”) and each of our businesses make either a matching contribution, a qualified non-elective contribution (“QNEC”) or a profit sharing contribution under the Savings Plan. In 2021,last fiscal year in the eligible profit sharing contribution amount was equal to 6% of adjusted compensation, plus 7.5% for amounts above the Social Security wage base limit, for Messrs. Fink, Hallinan and Biggart, 5% for Ms. Phyfer and 3% for Mr. Finley. A portion“All Other Compensation” column of the amount of the profit sharing contribution, up to the limitation imposed by the Code, was made to the Savings Plan. Profit sharing contributions in excess of the limitation imposed by the Code were contributed to the FBHS SERP on behalf of Messrs. Fink, Hallinan and Biggart, to the Global Plumbing Group Supplemental Plan (the “GPG SERP”) on behalf of Ms. Phyfer and to the Therma-Tru Corp. Supplemental Executive Retirement Plan (the “Therma-Tru SERP”) on behalf of Mr. Finley. Mr. Banyard does not receive a profit sharing contribution under the Savings Plan. Messrs. Fink and Hallinan retain accounts under the GPG SERP holding supplemental non-qualified profit sharing contributions made to each of them while they were previously employed by Moen.
FBHS SERP and GPG SERP profit sharing accounts are credited with interest monthly, using the Citigroup US Broad Investment-Grade (USBIG) Bond Index. The FBHS SERP and the GPG SERP pay any defined contribution2023 Summary Compensation Table.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 48 |
2023 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (1)(2) |
| |||||||||||||||||||||||||||||||||||||||
|
| By NEO |
| By Employer |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
| For | Without | For | Without | Death | Disability(3) | Retirement | Involuntary |
| |||||||||||||||||||||||||||||||
Cash Severance |
| |||||||||||||||||||||||||||||||||||||||
| Fink |
| $ | 6,095,826 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 6,095,826 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 9,143,739 |
|
| Barry |
| $ | 1,670,136 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,670,136 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 2,226,848 |
|
| Phyfer |
| $ | 2,365,266 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 2,365,266 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 3,153,688 |
|
| Donoghue |
| $ | 1,474,817 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,474,817 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,966,422 |
|
| Grissom |
| $ | 1,477,770 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,477,770 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,970,360 |
|
Health and Related Benefits(4) |
| |||||||||||||||||||||||||||||||||||||||
| Fink |
| $ | 28,125 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 28,125 |
|
|
| $ | 1,250,000 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 42,188 |
|
| Barry |
| $ | 29,941 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 29,941 |
|
|
| $ | 620,000 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 39,921 |
|
| Phyfer |
| $ | 21,438 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 21,438 |
|
|
| $ | 765,000 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 28,584 |
|
| Donoghue |
| $ | 27,536 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 27,536 |
|
|
| $ | 525,000 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 36,715 |
|
| Grissom |
| $ | 20,973 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 20,973 |
|
|
| $ | 525,000 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 27,964 |
|
Options(5) |
| |||||||||||||||||||||||||||||||||||||||
| Fink |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,503,918 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,503,918 |
|
| Barry |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 467,592 |
|
|
| $ | 213,807 |
|
|
| $ | 0 |
|
|
| $ | 467,592 |
|
| Phyfer |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 418,276 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 418,276 |
|
| Donoghue |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 187,992 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 187,992 |
|
| Grissom |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
RSUs |
| |||||||||||||||||||||||||||||||||||||||
| Fink |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 13,567,386 |
|
|
| $ | 11,065,016 |
|
|
| $ | 0 |
|
|
| $ | 13,567,386 |
|
| Barry |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,295,188 |
|
|
| $ | 872,899 |
|
|
| $ | 0 |
|
|
| $ | 1,295,188 |
|
| Phyfer |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 3,452,464 |
|
|
| $ | 2,756,535 |
|
|
| $ | 0 |
|
|
| $ | 3,452,464 |
|
| Donoghue |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,108,230 |
|
|
| $ | 804,467 |
|
|
| $ | 0 |
|
|
| $ | 1,108,230 |
|
| Grissom |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 912,324 |
|
|
| $ | 912,324 |
|
|
| $ | 912,324 |
|
|
| $ | 912,324 |
|
Performance Share Awards |
| |||||||||||||||||||||||||||||||||||||||
| Fink |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 5,004,739 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 5,004,739 |
|
| Barry |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 844,578 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 844,578 |
|
| Phyfer |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,391,935 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,391,935 |
|
| Donoghue |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 625,573 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 625,573 |
|
| Grissom |
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 625,573 |
|
|
| $ | 618,105 |
|
|
| $ | 618,105 |
|
|
| $ | 625,573 |
|
Total Potential Payments |
| |||||||||||||||||||||||||||||||||||||||
| Fink |
| $ | 6,123,951 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 6,123,951 |
|
|
| $ | 21,326,043 |
|
|
| $ | 11,065,016 |
|
|
| $ | 0 |
|
|
| $ | 29,261,970 |
|
| Barry |
| $ | 1,700,077 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,700,077 |
|
|
| $ | 3,227,358 |
|
|
| $ | 1,086,706 |
|
|
| $ | 0 |
|
|
| $ | 4,874,127 |
|
| Phyfer |
| $ | 2,386,704 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 2,386,704 |
|
|
| $ | 6,027,675 |
|
|
| $ | 2,756,535 |
|
|
| $ | 0 |
|
|
| $ | 8,444,947 |
|
| Donoghue |
| $ | 1,502,353 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,502,353 |
|
|
| $ | 2,446,795 |
|
|
| $ | 804,467 |
|
|
| $ | 0 |
|
|
| $ | 3,924,932 |
|
| Grissom |
| $ | 1,498,743 |
|
|
| $ | 0 |
|
|
| $ | 0 |
|
|
| $ | 1,498,743 |
|
|
| $ | 2,062,897 |
|
|
| $ | 1,530,429 |
|
|
| $ | 1,530,429 |
|
|
| $ | 3,536,221 |
|
| ||||||||||||
|
|
|
|
|
|
|
|
Termination of Employment and Change in Control Arrangements. To protect the Company’s interests in retaining its top talent, the Company has entered into Severance Agreements with each NEO. Under the terms of the Severance Agreements, each NEO is entitled to severance benefits upon a qualifying termination of employment (i.e., termination by the Company without “cause” or by the NEO for “good reason”). In 2021, the severance benefitsBenefits under the Severance Agreements consist of:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 49 |
•
•
The Severance Agreements contain various restrictive covenants, including a one year non-solicitation provision, a non-disparagement provision, and a one year non-competition restriction. NEOs are also required to sign a release of legal claims against the Company to receive any severance payments.
All of the Severance Agreements contain provisions which provide for enhanced benefits in the event of a qualifying termination (i.e., termination by the Company without “cause” or by the NEO for “good reason”) following a change in control. The Severance Agreements contain “double triggers,” which means that there must be both a change in control of the Company (or applicable business) and a qualifying termination of employment before any enhanced benefits are paid. In the event Mr. Fink is terminated within 2 years following a change in control, his multiple would increase from 2 years to 3 years. In the event of termination of any of the other NEOs within 2 years following a change in control, the multiple is increased from 1.5 years to 2 years. The Severance Agreements do not allow for excise tax gross ups on these amounts.
Treatment of Equity Awards Following a Termination of Employment (other than in the event of a Change in Control). If a NEO’s employment terminates with or without cause, all unvested PSAs, RSUs and stock options are forfeited. If a NEO dies, becomes disabled or retires, his or her outstanding equity awards vest or are paid as follows:
Treatment of Equity in the Event of Death, Disability or Retirement | ||||||
Event | Performance Share Awards (including PSAs converted to RSUs at Separation) (1) | Restricted Stock Units | Stock Options | |||
| ||||||
Death | Shares paid at the end of the performance period based on actual Company performance. | Outstanding RSUs fully vest. | Unvested stock options fully vest. | |||
Disability | Shares paid at the end of the performance period based on actual Company performance. | Outstanding RSUs continue to vest according to the vesting schedule. | Unvested stock options continue to vest according to the vesting schedule. | |||
Retirement | Shares paid at the end of the performance period based on actual Company performance. | Outstanding RSUs fully vest. | Unvested stock options fully vest. |
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
|
2023 Executive Compensation | 50 |
Treatment of Equity Awards Following a Change in Control and Termination of Employment. In the event a NEO is terminated by the Company without cause or by the NEO for good reason within two (2) years of a change in control, his or her equity awards vest or are paid as follows:
Treatment of Equity In the Event of a Termination Following a Change In Control* | ||
Award | Treatment | |
PSAs | Shares are paid assuming that target performance was achieved. | |
RSUs | Outstanding RSUs fully vest. | |
Stock Options | Unvested stock options fully vest. |
|
* The Board has the ability to exercise its discretion to accelerate outstanding awards in the event of a change in control.
CEO Pay Ratio | 51 |
CEO Pay Ratio
The Securities and Exchange Commission (“SEC”) adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the annual total compensation of Mr. Fink, the Company’s chief executive officer.CEO. To understand this disclosure, we think it is important to give context to our operations.operations and recent changes in our employee base. Our corporate headquarters are located in Deerfield, Illinois and we operate 56Illinois. As of December 30, 2023, approximately 60% of our employees were involved in manufacturing our products at 16 manufacturing facilities and 7142 distribution centers and warehouses worldwide. As a consumer products manufacturer, approximately 77% of our employees are involved in manufacturing our products. In addition, theThe majority of our manufacturing and assembly plant locations are located in rural areas while our corporate offices are generally located in urban areas. We strive to create a compensation program that is competitive in terms of both the position and the geographic location in which our employees are located. Accordingly, our pay structures vary amongst employees based on business unit, position and geographic location.
Identification of Median Employee
As permitted under the SEC executive compensation disclosure rules, we have concluded that it is no longer appropriate to use the originally identified 2020 median employee because of a change in the employee’s circumstances that would cause such employee’s compensation to no longer accurately reflect our median pay. As permitted under the SEC disclosure rules, we are electing to use another employee whose 2020 compensation was substantially similar to the original median employee’s 2020 compensation based on the same compensation measure used to select the original median employee. Since October 1, 2020 (the date used to select the 2020 median employee), there have been no material changes in the Company’s employee population or employee compensation arrangements that we believe would significantly impact the pay ratio disclosures.
We selected October 1, 20202023 as the date on which to determine our median employee. As of that date, the Company had approximately 25,74211,570 employees (15,885(6,993 in the United States and 9,8574,577 outside of the United States). For purposes of identifying the median employee, we used 20202023 taxable year-to-date compensation and applied a de minimis exemption which allowed us to exclude non-US employees in countries that make up 5% or less of our employee population. The Company excluded 4281 employees in Guatemala, 4South Africa and 29 employees in Hong Kong and 1,037 employees in China.South Korea. After applying this exemption,these exemptions, the Company used a total of 24,697 11,260employees (15,885(6,993 in the United States and 8,8124,267 outside of the United States) to identify the median employee. In addition, approximately 1,200 employees of Larson Manufacturing were excluded from the calculation because that company was acquired in late 2020, and we have determined that including such employees in the employee population for determining median employees would not significantly impact the pay ratio disclosure.
|
Using this methodology, we determined that our median employee was a full-time, hourly employee working for our plumbing groupMoen business in a production role. We then determined the median employee’s 20212023 annual total compensation by calculating the employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required pursuant to SEC executive compensation disclosure rules. Under these requirements, the median employee’s 20212023 total compensation included base and overtime pay, bonus, matching contributions to the Company’s 401(k), a profit sharing contribution and a change in the year-over-year actuarial value of the employee’s pension benefit.
20212023 CEO Pay Ratio
CEO Pay Ratio | ||||||
Nicholas I. Fink | $ | 10,170,381 | 201:1 | |||
Median Employee | $ | 50,540 |
|
| Total Compensation |
|
| CEO Pay Ratio | |
Nicholas I. Fink |
| $ | 11,487,439 |
|
| 199:1 |
Median Employee |
| $ | 57,603 |
|
|
|
Pay versus Performance
PAY VERSUS PERFORMANCE | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Value of Initial Fixed $100 |
|
|
|
|
|
| |||
Year(1) |
| Summary Compensation Table Total for Fink ($)(2) |
| Summary Compensation Table Total for Klein ($)(2) |
| Compensation Actually Paid to Fink ($)(3) |
| Compensation Actually Paid to Klein($)(3) |
| Average Summary Compensation Table Total for Non-PEO NEOs ($)(2) |
| Average Compensation Actually Paid to Non-PEO NEOs ($)(3) |
| Total Shareholder Return ($) (4) |
| Peer Group Total Shareholder Return ($)(5) |
| Net Income ($) |
| EPS ($)(7) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
| $11,487,439 |
|
| N/A |
|
| $17,521,908 |
|
| N/A |
|
| $2,205,833 |
|
| $3,014,265 |
|
| $143.94 |
|
| $159.19 |
|
| $404.5 |
|
| $3.91 |
2022 |
| $9,599,997 |
|
| N/A |
|
| ($3,200,386) |
|
| N/A |
|
| $2,576,333 |
|
| ($427,618) |
|
| $106.43 |
|
| $118.74 |
|
| $686.7 |
|
| $6.32 |
2021 |
| $10,170,381 |
|
| N/A |
|
| $15,780,518 |
|
| N/A |
|
| $3,078,513 |
|
| $4,880,126 |
|
| $167.58 |
|
| $154.73 |
|
| $772.4 |
|
| $5.73 |
2020 |
| $9,615,974 |
|
| $4,694,510 |
|
| $15,223,407 |
|
| $10,711,850 |
|
| $3,354,840 |
|
| $5,368,120 |
|
| $132.96 |
|
| $114.17 |
|
| $553.1 |
|
| $4.19 |
2023: Nicholas I. Fink served as the Company's PEO for the entirety of 2023. The Company's other NEOs were: David V. Barry, Cheri M. Phyfer, Hiranda S. Donoghue, Sheri R. Grissom and Patrick D. Hallinan.
2022:Nicholas I. Fink served as the Company’s PEO for the entirety of 2022 and the Company’s other NEOs were: Patrick D. Hallinan, Cheri M. Phyfer, Sheri R. Grissom, Hiranda S. Donoghue, R. David Banyard, Jr. and Brett E. Finely.
2021:Nicholas I. Fink served as the Company’s PEO for the entirety of 2021, and the Company’s other NEOs were: Patrick D. Hallinan; R. David Banyard, Jr.; Cheri M. Phyfer; Brett E. Finley; and Robert K. Biggart.
2020:Christopher J. Klein served as the Company’s PEO until January 6, 2020 and Nicholas I. Fink served as the Company’s PEO from January 6, 2020. The Company’s other NEOs for 2020 were: Patrick D. Hallinan; R. David Banyard, Jr.; Cheri M. Phyfer; and Brett E. Finley.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Pay Versus Performance | 53 |
CAP ADJUSTMENTS |
| |||||||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total |
| (Minus) |
| Plus |
| (Minus) |
| Plus |
| Plus/(Minus) |
| Plus |
| Plus/(Minus) |
| (Minus) |
| Plus |
| Plus |
| Equals |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Nicholas I. Fink |
| |||||||||||||||||||||||||||||||||||
2023 | $ | 11,487,439 |
| $ | — |
| $ | — |
| $ | 7,923,071 |
| $ | 10,110,614 |
| $ | 3,201,936 |
| $ | — |
| $ | 286,927 |
| $ | — |
| $ | 358,063 |
| $ | — |
| $ | 17,521,908 |
|
2022 | $ | 9,599,997 |
| $ | — |
| $ | — |
| $ | 7,149,968 |
| $ | 4,485,181 |
| $ | (2,656,391 | ) | $ | — |
| $ | (7,752,601 | ) | $ | — |
| $ | 273,395 |
| $ | — |
| $ | (3,200,386 | ) |
2021 | $ | 10,170,381 |
| $ | — |
| $ | — |
| $ | 6,150,003 |
| $ | 6,425,887 |
| $ | 3,575,673 |
| $ | — |
| $ | 1,608,290 |
| $ | — |
| $ | 150,290 |
| $ | — |
| $ | 15,780,518 |
|
2020 | $ | 9,615,974 |
| $ | — |
| $ | — |
| $ | 6,524,966 |
| $ | 9,038,159 |
| $ | 2,854,850 |
| $ | — |
| $ | 435,205 |
| $ | 303,243 |
| $ | 107,428 |
| $ | — |
| $ | 15,223,407 |
|
Christopher J. Klein |
| |||||||||||||||||||||||||||||||||||
2023 | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| ||||||||||||
2022 | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| ||||||||||||
2021 | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| ||||||||||||
2020 | $ | 4,694,510 |
| $ | 674,000 |
| $ | — |
| $ | 1,500,003 |
| $ | — |
| $ | 4,211,891 |
| $ | 1,862,267 |
| $ | 3,507,389 |
| $ | 1,516,215 |
| $ | 126,011 |
| $ | — |
| $ | 10,711,850 |
|
Other NEOs (Average) |
| |||||||||||||||||||||||||||||||||||
2023 | $ | 2,205,833 |
| $ | — |
| $ | — |
| $ | 1,104,268 |
| $ | 1,280,015 |
| $ | 318,312 |
| $ | 251,236 |
| $ | 61,662 |
| $ | 36,211 |
| $ | 37,686 |
| $ | — |
| $ | 3,014,265 |
|
2022 | $ | 2,576,333 |
| $ | — |
| $ | — |
| $ | 1,549,996 |
| $ | 878,223 |
| $ | (696,306 | ) | $ | 96,699 |
| $ | (1,853,880 | ) | $ | — |
| $ | 62,643 |
| $ | 58,667 |
| $ | (427,618 | ) |
2021 | $ | 3,078,513 |
| $ | — |
| $ | — |
| $ | 1,639,989 |
| $ | 1,462,788 |
| $ | 1,031,620 |
| $ | 286,563 |
| $ | 616,027 |
| $ | — |
| $ | 44,604 |
| $ | — |
| $ | 4,880,126 |
|
2020 | $ | 3,354,840 |
| $ | 18,000 |
| $ | — |
| $ | 2,074,991 |
| $ | 2,824,874 |
| $ | 1,165,802 |
| $ | — |
| $ | 238,581 |
| $ | 168,986 |
| $ | 46,000 |
| $ | — |
| $ | 5,368,120 |
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Pay Versus Performance | 54 |
Relationship Between Pay and Performance
The following is a list of financial performance measures, which we believe represent the most important financial performance measures used by the Company to link compensation actually paid to the NEOs for 2023. Please see the CD&A for a further description of these metrics and how they are used in the Company’s executive compensation program, including the Annual Incentive Plan and 2023 PSAs.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Equity Compensation Plan Information | 55 |
EQUITY COMPENSATION PLAN INFORMATION | |||||||||
Plan Category |
| Number of |
| Weighted |
| Number of | |||
Equity compensation plans approved by security holders |
| 3,681,811 |
|
| $58.68 |
|
| 4,241,192 |
|
Equity compensation plans not approved by security holders |
| 0 |
|
| n/a |
|
| 0 |
|
Total |
| 3,681,811 |
|
|
|
|
| 4,241,192 |
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Audit Committee Matters | 56 |
Audit Committee Matters
Report of the Audit Committee
The Audit Committee is composed of fiveseven directors thatwho are “independent” as defined under the New York Stock Exchange Listed Company Manual and Rule 10A-3 of the Exchange Act. The Audit Committee has a written charter that has been approved by the Board. A copy of the Audit Committee charter is available on the Company’s website at https://ir.fbhs.com/committees-and-charters.ir.fbin.com/committees-and-charters.
The Audit Committee is responsible for the selection, retention, compensation and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for 2022.2024.
The Audit Committee annually evaluates the independent registered public accounting firm’s qualifications, performance and independence when assessing whether or not to continue to retain or change accounting firms. Factors such as independence, industry knowledge, communication and fees are considered. A performance survey is completed by the Company at the end of each year to evaluate performance of the independent registered public accounting firm in multiple areas including quality of services, sufficiency of audit firm resources, communication and interaction as well as independence, objectivity and professional skepticism. Results are shared with the Audit Committee. Additionally, the independent registered public accounting firm presents to the Audit Committee at the beginning of each year a commitment letter outlining specific areas of focus for continued high quality client service. At the end of each year the independent registered public accounting firm presents to the Audit Committee and the Company, a self-assessment against those commitments which is reviewed and discussed during the Audit Committee meeting.
TheDuring 2023, the Company and the Audit Committee is also involved inmanaged the selectionroutine transition of the independent public accounting firm’s lead audit partner auditing the Company, who is limited by SEC rules to no more than five consecutive years in that role before the position must be rotated. A transition process was developed a year in advance of this transition, which took effect in March 2024. The lead audit partnertransition process was most recently changed in early 2019.executed to mutual satisfaction of the Audit Committee, the independent public accounting firm and the Company.
Management has the responsibility for the Company’s financial statements and overall financial reporting process, including the Company’s systems of internal controls. The independent registered public accounting firm has the responsibility to conduct an independent audit in accordance with generally accepted auditing standards and to issue an opinion on the accuracy of the Company’s financial statements and the effectiveness of the Company’s internal controls. The Audit Committee’s responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has reviewed and discussed the audited financial statements and the Company’s quarterly and annual reports to the SEC with management and the independent registered public accounting firm. Management has confirmed to the Audit Committee that the Company’s financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has met with the independent registered public accounting firm and discussed matters required to be discussed pursuant to the applicable requirements of the Public Company Accounting Oversight Board.Board and the Securities and Exchange Commission. The independent registered public accounting firm has provided an unqualified opinion regarding the Company’s financial statements for the year ended December 31, 2021.30, 2023.
The Company’s independent registered public accounting firm has also provided the Audit Committee with the written disclosures and letter required by the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Audit Committee Matters | 57 |
Committee has discussed with the independent registered public accounting firm that firm’s independence. The Audit Committee has also reviewed non-audit services provided by the independent registered public accounting firm and has considered the compatibility of these services with maintaining the auditor’s independence.
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Based upon the review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 202130, 2023 for filing with the SEC.
Audit Committee
Audit Committee | |
Ronald V. Waters, III, Chair | |
Amit Banati | |
Amee Chande | |
A.D. David Mackay | |
John G. Morikis Jeffery S. Perry | |
Stephanie L. Pugliese |
Ronald V. Waters, III, Chair
Amit Banati
A.D. David Mackay
John G. Morikis
Jeffrey S. Perry
David M. Thomas
Fees of Independent Registered Public Accounting Firm
PwC served as the Company’s independent registered public accounting firm during the year ended December 31, 2021.30, 2023. All PwC services were approved in advance by the Audit Committee. The aggregate fees billed by PwC during 20212023 and 20202022 are set forth in the table below:
Type of Fee | Year Ended December 31, 2021 | Year Ended December 31, 2020 | ||||||
Audit Fees(1) | $ | 4,314,000 | $ | 4,657,000 | ||||
Audit-Related Fees | $ | 0 | $ | 0 | ||||
Tax Fees (2) | $ | 341,000 | $ | 429,000 | ||||
All Other Fees(3) | $ | 3,000 | $ | 2,000 |
Type of Fee | Year Ended | Year Ended | ||||||||
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|
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| ||
Audit Fees(1) | $ |
| 5,645,000 |
|
| $ |
| 6,013,000 |
|
|
Audit-Related Fees(2) | $ |
| — |
|
| $ |
| 5,859,000 |
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|
Tax Fees(3) | $ |
| 375,000 |
|
| $ |
| 458,000 |
|
|
All Other Fees(4) | $ |
| 3,000 |
|
| $ |
| 3,000 |
|
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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Approval of Audit and Non-Audit Services
The Audit Committee has adopted policies and procedures for the pre-approval of all audit and permissible non-audit services provided by our independent registered public accounting firm. The Audit Committee annually reviews the audit and non-audit services to be performed by the independent registered public accounting firm during the upcoming year. The Audit Committee considers, among other things, whether the provision of specific non-audit services is permissible under existing law and whether it is consistent with maintaining the auditor’s independence. The Audit Committee then approves the audit services and any permissible non-audit services it deems appropriate for the upcoming year. The Audit Committee’s pre-approval of non-audit services is specific as to the services to be provided and includes pre-set spending limits. The provision of any additional non-audit services during the year, or the provision of services in excess of pre-set spending limits, must be pre-approved by either the Audit Committee or by the Chairman of the Audit Committee, who has been delegated authority to pre-approve such services on behalf of the Audit Committee. Any pre-approvals granted by the Chairman of the Audit Committee must be reported to the full Audit Committee at its next regularly scheduled meeting. All of the fees described above under audit fees, tax fees and all other fees for 20212023 were pre-approved by the Audit Committee pursuant to its pre-approval policies and procedures.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 2 - Ratification of Appointment of Indpendent Registered Public Accounting Firm | 59 |
Proposal 2 – RATIFICATIONOF APPOINTMENTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMRatification of Appointment of Independent Registered Public Accounting Firm
After evaluating PwC’s prior year performance, the Audit Committee appointed PwC as our independent registered public accounting firm for the year ending December 31, 2022.28, 2024. The Committee has retained PwC as the Company’s independent registered public accounting firm since 2011 and believes that the continued retention of PwC is in the best interest of the Company and its stockholders. Therefore, the Audit Committee and the Board recommend that you ratify this appointment. In line with this recommendation, the Board intends to introduce the following resolution at the Annual Meeting:
“RESOLVED, that the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for this Company for the year ending December 31, 2022 is ratified.”
A representative of PwC will attend the Annual Meeting to make a statement if he or she desires and respond to appropriate questions that may be asked by stockholders. In the event the stockholders fail to ratify the appointment of PwC, the Audit Committee may appoint another independent registered public accounting firm or may decide to maintain its appointment of PwC. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change should be made.
The Board of Directors and the Audit Committee recommend
The Board of Directors recommends that you vote FOR Proposal 2. |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 3 – Advisory Vote to Approve Named Executive Officer Compensation | 60 |
Proposal 2.
PROPOSAL 3 – ADVISORY VOTETO APPROVE NAMED EXECUTIVE OFFICER COMPENSATIONAdvisory Vote to Approve Named Executive Officer Compensation
As required pursuant to Section 14A of the Exchange Act, the Company is providing stockholders with a vote to approve the compensation of the named executive officers as disclosed in this Proxy Statement, on an advisory, non-binding basis, which is commonly referred to as a “Say on Pay” vote. The Board has decided the advisory vote on executive compensation will be held on an annual basis until the next non-binding stockholder vote on the frequency of the advisory vote.vote, which will occur at this Annual Meeting (see Proposal 4). Because your vote is advisory, it will not be binding on the Board. However, the Board and the Compensation Committee will review the results of the vote and consider the results when making future decisions regarding executive compensation.
The Company’s compensation programs and practices are designed to pay for performance and to align management’s interests with those of the Company’s stockholders while attracting, motivating and retaining superior talent to lead our Company. Our executive compensation programs are designed to reward executives for the achievement of both short-term and long-term strategic and operational goals, as well as the creation of stockholder value. To accomplish this, the Compensation Committee has designed an executive compensation program that:
The Company asks that you indicate your approval of the compensation paid to our named executive officers, as described in this Proxy Statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation,” which includes the compensation tables and narratives. For the reasons discussed above, the Board intends to introduce the following resolution at the Annual Meeting:
“RESOLVED, that the compensation of the named executive officers of the Company, as disclosed in the Company’s Proxy Statement for the 20222024 Annual Meeting under the headings “Compensation Discussion and Analysis” and “Executive Compensation,” including the compensation tables and their accompanying narrative discussion, is approved.”
The Board of Directors recommends that you vote FOR Proposal 3. |
The Board of Directors recommends that you vote FOR FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
PROPOSAL 4 – Advisory Vote to Approve the Frequency of Voting on Named Executive Officer Compensation | 61 |
Proposal 3.
PROPOSAL 4 – APPROVALOF 2022 LONG-TERM INCENTIVE PLANAdvisory Vote to Approve the Frequency of Voting on Named Executive Officer Compensation
Pursuant to Section 14A of the Exchange Act, the Company is required to hold an advisory vote at least once every six years regarding the frequency with which the advisory vote to approve named executive officer compensation (“Say-on-Pay”) should be held. The Company last held such a vote at the 2018 Annual Meeting of Stockholders. After this year’s vote, it is expected that the next say-on-pay frequency vote will occur at the 2030 Annual Meeting of Stockholders.
The Board has adopted, subject to your approval, the Fortune Brands Home & Security, Inc. 2022 Long-Term Incentive Plan (the “2022 Plan”). The 2022 Plan will replace the Fortune Brands Home & Security, Inc. 2013 Long-Term Incentive Plan (the “2013 Plan”)determined that was approved by the Company’s stockholders on April 29, 2013. Upon approval of the 2022 Plan, no additional awards will be granted under the 2013 Plan, although shares authorized but not granted under the 2013 Plan will be transferred to the 2022 Plan to be used for future awards.
If the 2022 Plan is approved by our stockholders, we will continue to be able to make awards of long-term equity incentives, which we believe are critical for attracting, motivating, incentivizing and retaining a talented management team who will contribute to our long-term success. If the 2022 Plan is not approved by our stockholders, the Company will continue to operateshould hold the 2013 Plan pursuant to itsSay-on-Pay vote every year, which is our current provisions.frequency. The Board believes that holding an annual Say-on-Pay vote is the Company has used equity in a reasonable manner, as evidenced by the fact that the Company has not sought a new share authorization from stockholders since April 2013.
Certain Features of the 2022 Plan
The following features of the 2022 Plan are designed to reinforce alignment between the equity compensation arrangements to be awarded pursuant to the 2022 Plan and our stockholders’ interests:
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Purposes of the 2022 Plan
The purposes of the 2022 Plan are to (1) align the interests of the Company’s stockholders with the interests of 2022 Plan participants by increasing their proprietary interest in the Company’s growth and success, (2) advance the interests of the Company by attracting and retaining directors, officers, other employees and independent contractors, and (3) motivate 2022 Plan participants to act in the long-term best interests ofapproach for the Company and enhances shareholder communication by providing shareholders with a clear, simple and timely way to express their views about the compensation decisions made each year.
Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. While this vote is non-binding, the Board values the opinions of its stockholders. The Board believesshareholders and will consider the outcome of the vote when considering the frequency of future advisory votes on executive compensation. Assuming that the 2022 Plan will aidoption to hold Say-on-Pay votes every year is the Company in securing, retaining and incentivizing key employees of outstanding ability by offering themoption that receives the opportunity to receive a proprietary interest in the Company.
Description of the 2022 Plan
The following description is qualified in its entirety by reference to the plan document, a copy of which is attached as Appendix B and incorporated into this Proxy Statement by reference.
Administration
The 2022 Plan will be administered by the Compensation Committee of the Board, a subcommittee thereof, or other committee designated by the Board (the “Plan Committee”) with respect to awards granted to officers, other employees and independent contractors of the Company, while the Nominating, Environmental, Social and Governance Committee has been designated as the Plan Committee with respect to awards granted to non-employee directors. Each member of the Plan Committee is intended to be (1) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and (2) “independent” within the meaning of the rules of the NYSE. The Board may also serve as the Plan Committee.
The Plan Committee has authority to establish rules for administering the 2022 Plan and to decide questions of interpretation or application of any provision of the 2022 Plan. The Plan Committee may take any
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action such that (1) any or all outstanding options and SARs become exercisable in part or in full, (2) all or any portion of a restriction period on any outstanding stock award lapse, (3) all or a portion of any performance period applicable to any outstanding award lapse, and (4) any performance measures applicable to any outstanding award be deemed satisfied at the target, maximum or any other interim level.
The Plan Committee may delegate some or all of its power and authority under the 2022 Plan to the Board (or any member thereof), or, subject to applicable law, to a subcommittee of the Board, a member of the Board, the Chief Executive Officer or other executive officer of the Company as the Plan Committee deems appropriate, except that it may not delegate its power and authority to a member of the Board, the Chief Executive Officer or any executive officer with regard to awards to persons subject to Section 16 of the Exchange Act.
Eligible Participants
Eligible individuals are defined as officers, other employees, directors and independent contractors and persons expected to become officers, other employees, directors and independent contractors of the Company and its subsidiaries. Under the 2022 Plan, subsidiaries means any corporation, limited liability company, partnership, joint venture or similar entity in which the Company owns, directly or indirectly, an equity interest possessing more than 20% of the combined voting power of the total outstanding equity interests of such entity.
Non-employee directors are permitted to receive cash compensation and equity grants under the 2022 Plan, which have a total value not in excess of $1,000,000 during a single fiscal year to a single individual. As of March 4, 2022, approximately 28,000 employees and nine non-employee directors would be eligible to participate in the 2022 Plan; however, participation in 2021 under the 2013 Plan was limited to 430 employees and to all nine of our non-employee directors. While independent contractors are eligible to participate in the 2022 Plan, the Company does not have a practice of granting equity awards to its independent contractors, and at this time, does not foresee changing this practice.
Maximum Number of Shares Authorized
The Company is asking for a new authorization to grant awards covering up to3,300,000 shares of common stock under the 2022 Plan. Combined with the shares previously authorized under the 2013 Plan and transferred to the 2022 Plan (1,503,869 shares as of March 4, 2022), approximately 4,803,869shares will be available for awards under the 2022 Plan, subject to the adjustment provisions included in the 2022 Plan. To the extent that shares of common stock subject to an outstanding award granted under the 2022 Plan, the 2013 Plan or the Fortune Brands Home & Security, Inc. 2011 Long-Term Incentive Plan (the 2013 Plan and the 2011 Plan collectively, the “Prior Plans”), are not issued or delivered by reason of (1) the expiration, termination, cancellation or forfeiture of such award, (2) the settlement of such award in cash or (3) the use of shares to satisfy the withholding taxes related to an award other than an option or SAR, then such shares of common stock will again be available under the 2022 Plan. Shares of common stock subject to an award under the 2022 Plan or a Prior Plan will not be available again under the 2022 Plan if such shares were (a) subject to an option or SAR and were not issued or delivered upon the net settlement of such award, (b) delivered to or withheld by the Company to pay the exercise price relating to an option or the withholding taxes related to an option or SAR, or (c) repurchased by the Company on the open market with the proceeds of an option exercise.
As of March 4, 2022, there were approximately 1,203,331 full value awards (that is, granted but unvested awards other than options and SARs) issued and outstanding under the 2013 LTIP and approximately 2,225,142 stock options outstanding under the Prior Plans. As of that date, the weighted average exercise price of our outstanding stock options under the Prior Plans was $65.80, and the weighted average remaining contractual term for the outstanding stock options was6.90 years. On March 4, 2022, there were 132,346,750 shares of our common stock outstanding as of the close of business, and the closing sales price per share of our common stock as reported on the NYSE was $84.79.
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Types of Awards Available
Stock Options and SARs: The 2022 Plan permits the grant of incentive stock options, options not qualifying as incentive stock options under the Code (“nonqualified options”) and SARs. SARs may entitle recipients to receive payments in cash, shares or a combination, and in any case will entitle the recipient to a payment in an amount representing the appreciation in the market value of a specifiedhighest number of sharesvotes from shareholders, the date of grant until the date of exercise.
The 2022 Plan allows the Plan Committee to set the terms of each option or SAR at the time of grant, but the exercise price may not be less than 100% of the fair market value of Company common stock at the time of grant. The term of an option or SAR will be determined by the Plan Committee; provided, however, that no option or SAR (other than a nonqualified option or SAR exercisable by a holder’s executor, legal representative or similar person following the holder’s death, to the extent permitted in the award agreement) will be exercisable later than ten years after its date of grant. The 2022 Plan does not permit the re-pricing of an options or SARs without stockholder approval. The 2022 Plan also prohibits the payment of dividend equivalents with respect to options and SARs.
Performance Awards: The 2022 Plan authorizes the Plan Committee to grant performance awards in the form of performance shares and performance units. Performance awards may be payable in cash or shares of common stock, or a combination of cash and shares, at the end of the performance period, as determined by the Compensation Committee based on the achievement of performance criteria and objectives established with respect to such award. Performance awards are subject to forfeiture if the holder does not remain continuously employed by or in the service of the Company during the performance period or if the performance measures are not attained during the performance period.
Stock Awards: The 2022 Plan provides for the grant of stock awards. The Plan Committee may grant a stock award as a restricted stock award, restricted stock unit award or other stock-based award (awards that may pay out in restricted or unrestricted shares of common stock or “units” based on the value of the Company’s common stock). Restricted stock awards and restricted stock unit awards may be subject to forfeiture if the holder does not remain continuously employed by or in the service of the Company during the restriction period or if specified performance measures (if any) are not attained during the performance period.
Unless otherwise set forth in a restricted stock award agreement, the holder of shares of restricted stock has rights as a stockholder of the Company, including the right to vote and receive dividends with respect to shares of restricted stock and to participate in any capital adjustments applicable to all holders of the Company’s common stock.
Restricted stock units may be settled in shares of common stock, cash or a combination thereof, as determined by the Plan Committee. Prior to settlement of a restricted stock unit, the holder of a restricted stock unit has no rights as a stockholder of the Company.
Termination of Employment or Service
All of the terms relating to the treatment of an award upon a termination of employment or service of a participant, whether by reason of disability, retirement, death or any other reason, will be determined by the Plan Committee.
Dividends and Dividend Equivalents
The Plan Committee may, in its discretion, provide that any award other than awards of options or SARs may earn dividends or dividend equivalents. Any dividends or dividend equivalents accrued while an award is outstanding will only be payable upon vesting and subject to the same vesting and performance conditions that apply to the award. No dividends or dividend equivalents will be paid unless the underlying equity award is actually earned.
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Change in Control
In the event of a change in control of the Company, the Board (as constituted prior to such change in control) may, in its discretion, provide that (1) some or all outstanding options and SARs will become exercisable in full or in part either immediately or upon a subsequent termination of employment, (2) the restriction period applicable to some or all outstanding stock awards will lapse in full or in part either immediately or upon a subsequent termination of employment, (3) the performance period applicable to some or all outstanding awards will lapse in full or in part, and (4) the performance measures applicable to some or all outstanding awards will be deemed satisfied at the target, maximum or any other interim level. In addition, in the event of a change in control, the Board may, in its discretion, require that shares of stock of the company resulting from such change in control, or the parent thereof, or other property be substituted for some or all of the shares of Company common stock subject to outstanding awards as determined by the Board, and/or require outstanding awards, in whole or in part, to be surrendered to the Company in exchange for a payment of cash, other property, shares of capital stock in the company resulting from the change in control, or the parent thereof, or a combination of cash and shares.
Generally, a change in control is defined as:
certain acquisitions by a person or group of beneficial ownership of 50% or more of the total fair market value or total voting power of our outstanding voting stock;
a change in the composition of the Board that results in a majority of our current directors (or successor directors approved by our current directors) not being continuing directors;
a merger, consolidation or sale of substantially all the assets of the Company in a transaction unless (1) our stockholders immediately prior to the transaction own at least 60% of the voting power of the surviving, resulting or transferee entity; (2) no person beneficially owns 30% or more of the combined voting power of the entity, unless they owned such percentage of the Company before the transaction, and (3) a majority of the directors of the resulting company were directors of the Company before the transaction; or
stockholders approve a complete liquidation or dissolution of the Company.
Amendment and Termination
If approved by stockholders, the 2022 Plan will become effective as of the date of the Annual Meeting. Unless terminated earlier by the Board, the 2022 Plan will terminate as of date of the Company’s annual stockholder meeting held on or after the tenth anniversary of the effective date of the 2022 Plan. The Board may amend the 2022 Plan at any time, subject to stockholder approval (i) with respect to any amendment that seeks to modify the non-employee director compensation limit or the prohibition on repricing described above, or (ii) as required by applicable law, rule or regulation, including any rule of the NYSE, and provided that no amendment may be made which materially impairs the rights of a holder of an outstanding award without the consent of such holder.
Clawback of Awards
The awards granted and any cash payment or shares of common stock delivered pursuant to an award may be subject to forfeiture, recovery by the Company or other action pursuant to the applicable award agreement or any clawback or recoupment policy which the Company may adopt from time to time, including any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
Federal Tax Consequences
The following is a brief summary of certain federal income tax consequences generally arising with respect to awards under the 2022 Plan. This discussion does not address all aspects of the United States federal income tax consequences that may be relevant to participants in light of their personal investment or tax circumstances and does not discuss any state, local or non-United States tax consequences of participating in the 2022 Plan. Each
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participant is advised to consult his or her particular tax advisor concerning the application of the United States federal income tax laws to such participant’s particular situation, as well as the applicability and effect of any state, local or non-United States tax laws before taking any actions with respect to any awards.
Stock Options
The grant of a nonqualified stock option will not result in any immediate tax consequence to the Company or the participant. Upon exercise of a nonqualified stock option, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the market value of the stock at the time of exercise over the option price, and the Company (or the applicable employer) will generally be entitled to a deduction in the same amount, except to the extent the deduction limits of Section 162(m) of the Code (“Section 162(m)”) apply. A participant will not recognize income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date it was exercised, any gain or loss arising from a subsequent disposition of those shares will be taxed as long-term capital gain or loss, and neither the Company nor the applicable employer will be entitled to any deduction. If, however, those shares are disposed of within the above-described period, then in the year of that disposition the participant will recognize compensation taxable as ordinary income equal to the excess of the lesser of (1) the amount realized upon that disposition over the exercise price, and (2) the excess of the fair market value of those shares on the date of exercise over the exercise price, and the Company (or the applicable employer) will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
SARs
The grant of an SAR will not result in any immediate tax consequence to the Company or to the participant. Upon the exercise of an SAR, any cash received and the market value of any stock received will constitute ordinary income (and subject to income tax withholding in respect of an employee) to the participant. The Company (or the applicable employer) will generally be entitled to a deduction in the same amount and at the same time as the participant realizes such income, except to the extent the deduction limits of Section 162(m) apply.
Stock Awards
A participant will not recognize taxable income at the time an RSU is granted and neither the Company nor the applicable employer will be entitled to a tax deduction at that time. Upon settlement of RSUs, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of any cash paid by the Company, and the Company (or the applicable employer) will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
A participant will not recognize taxable income at the time restricted stock is granted and neither the Company nor the applicable employer will be entitled to a tax deduction at that time, unless the participant makes an election to be taxed at that time. If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of the grant in an amount equal to the excess of the fair market value for the shares at such time over the amount, if any, paid for those shares. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the restrictions constituting a substantial risk of forfeiture lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for those shares. The amount of ordinary income recognized by making the above-described election or upon the lapse of restrictions constituting a substantial risk of forfeiture is deductible by the Company (or the applicable employer) as compensation expense, except to the extent the deduction limits of Section 162(m) apply.
A participant who receives shares of common stock that are not subject to any restrictions under the Plan will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an
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employee) on the date of grant in an amount equal to the fair market value of such shares on that date, and the Company (or the applicable employer) will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Performance Awards
A participant will not recognize taxable income at the time performance awards are granted and neither the Company nor the applicable employer will be entitled to a tax deduction at that time. Upon settlement of performance awards, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) in an amount equal to the fair market value of any shares delivered and the amount of cash paid by the Company, and the Company (or the applicable employer) will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Tax Deductibility Limitation
Section 162(m) generally limits the allowable tax deduction that may be taken by the Company for compensation paid to any person who is, or who in any taxable year beginning after December 31, 2016 was, the Chief Executive Officer, the Chief Financial Officer or any of the next three highest paid executive officers other than the Chief Executive Officer or Chief Financial Officer. The limit is $1,000,000 per executive per year.
New Plan Benefits
As of the date of this Proxy Statement, it is not possible to determine future awards that will be granted by to our NEOs or others under the 2022 Plan. See the section entitled “2021 Executive Compensation — 2021 Grants of Plan-Based Awards” above for grants made to each of our NEOs under the 2013 Plan during 2021.
As discussed above, the 2022 Plan is being submitted for approval by our stockholders at the Annual Meeting. If our stockholders approve this proposal, the 2022 Plan will become effective on the date of the Annual Meeting and awards may be granted under the 2022 Plan. If our stockholders do not approve the 2022 Plan, it will not become effective and the Company will continue to grant awards under the 2013 Plan.
The Board intends to introduce the following resolution at the Annual Meeting (designated as Proposal 4):continue holding a Say-on-Pay vote annually.
“RESOLVED, that the Fortune Brands Home & Security, Inc. 2022 Long-Term Incentive Plan as shown in Appendix B of the Company’s Proxy Statement for the 2022 Annual Meeting, is approved.”
The Board of Directors recommends that you vote FOR Proposal 4.
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Certain Information Regarding Security Holdings
We have listed below, as of March 48, 2022 2024 (except as otherwise indicated), the beneficial ownership of the Company’s common stockStock by (a) each currently-serving director, (b) the named executive officers, (c) currently-serving directors and executive officers of the Company as a group, and (d) each person known by us to be the beneficial owner of more than five percent of our outstanding common stock.Company Stock. The table is based on information we received from the directors and executive officers, the Trustee of our defined contribution plan and filings made with the SEC.
Name |
| Amount and |
| Percentage |
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BlackRock, Inc.(2) |
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| 15,143,529 |
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| 12.04 | % |
The Vanguard Group(3) |
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| 12,387,513 |
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| 9.85 | % |
Amit Banati |
|
| 5,781 |
|
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| * |
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David V. Barry(4) |
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| 24,993 |
|
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| * |
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Amee Chande |
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| 2,440 |
|
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| * |
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Hiranda S. Donoghue |
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| 16,389 |
|
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| * |
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Irial Finan(5) |
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| 13,460 |
|
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| * |
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Nicholas I. Fink(6) |
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| 630,011 |
|
|
| * |
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Sheri R. Grissom(7) |
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| 186,058 |
|
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| * |
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Ann F. Hackett(8) |
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| 34,815 |
|
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| * |
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Patrick D. Hallinan(9) |
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| 339,328 |
|
|
| * |
| |
Susan S. Kilsby |
|
| 18,064 |
|
|
| * |
| |
A. D. David Mackay |
|
| 20,196 |
|
|
| * |
| |
John G. Morikis(10) |
|
| 48,843 |
|
|
| * |
| |
Jeffery S. Perry |
|
| 5,781 |
|
|
| * |
| |
Stephanie Pugliese |
|
| 2,910 |
|
|
| * |
| |
Cheri M. Phyfer |
|
| 117,290 |
|
|
| * |
| |
Ronald V. Waters, III(11) |
|
| 14,844 |
|
|
| * |
| |
Directors and executive officers as a group (19 persons)(12) |
|
| 1,242,648 |
|
|
| * |
|
Name | Amount and Nature of Beneficial Ownership(1) | Percentage of Class | ||||||
The Vanguard Group(2) | 14,577,112 | 11.01 | % | |||||
FMR, LLC(3) | 13,904,534 | 10.50 | % | |||||
BlackRock, Inc.(4) | 11,010,606 | 8.31 | % | |||||
JP Morgan Chase & Co.(5) | 7,735,655 | 5.84 | % | |||||
Amit Banati | 1,346 | * | ||||||
R. David Banyard, Jr.(6) | 52,839 | * | ||||||
Robert K. Biggart | 192,869 | * | ||||||
Irial Finan | 6,676 | * | ||||||
Nicholas I. Fink(7) | 315,700 | * | ||||||
Brett E. Finley | 113,718 | * | ||||||
Ann F. Hackett(8) | 35,215 | * | ||||||
Patrick D. Hallinan(9) | 163,538 | * | ||||||
Susan S. Kilsby | 13,629 | * | ||||||
A. D. David Mackay(10) | 23,761 | * | ||||||
John G. Morikis(11) | 44,408 | * | ||||||
Jeffery S. Perry | 1,346 | * | ||||||
Cheri M. Phyfer | 46,774 | * | ||||||
David M. Thomas(12) | 42,836 | * | ||||||
Ronald V. Waters, III(13) | 12,409 | * | ||||||
Directors and executive officers as a group (21 persons)(14) | 1,290,483 | * |