It is the policy of the Board of Directors that each non-employee director must retire at the annual general meeting immediately following their 75th birthday. An exception to the director retirement policy was made in 2022 for Mr. Bruton and Mr. White who were asked to remain members of the Board of Directors until the 2023 Annual General Meeting in order to provide continuity after the Company’s CEO succession. They along with Mr. Cohon, who turned age 75 prior to the 2023 Annual General Meeting, are retiring at the 2023 Annual General Meeting in accordance with our Corporate Governance Guidelines.
Audit Committee | | Key Functions | | | |
Audit Committee Meetings in 2020: 2022: 9 April Miller Boise Myles P. Lee April Miller Boise
Richard J. Swift
Melissa N. Schaeffer | | Key Functions •Review annual audited and quarterly financial statements, as well as the Company’s disclosures under “Management’s Discussion and Analysis of Financial Conditions and Results of Operations,” in the Company’s Annual Report on Form 10-K with management and the independent auditors. •Obtain and review periodic reports, at least annually, from management assessing the effectiveness of the Company’s internal controls and procedures for financial reporting. •Review the Company’s processes to assure compliance with all applicable laws, regulations and corporate policy. •Recommend the public accounting firm to be proposed for appointment by the shareholders as our independent auditors and review the performance of the independent auditors. •Review the scope of the audit and the findings and approve the fees of the independent auditors. •Approve in advance, subject to and in accordance with applicable laws and regulations, permitted audit and non-audit services to be performed by the independent auditors. •Satisfy itself as to the independence of the independent auditors and ensure receipt of their annual independence statement. •Discuss with management and the independent auditors the Company’s policies with respect to risk assessment and risk management, including the review and approval of a risk-based audit plan. •Oversee the Company’s cybersecurity programs and risks. •Review the Company’s internal audit organization and the objectives and scope of the internal audit function and examinations. •Review and discuss with management and the Sustainability, Corporate Governance and Nominating Committee and the Human Resources and Compensation Committee, as appropriate, the “Human Capital Management” disclosure to be included in the Company’s Annual Report on Form 10-K.
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| | The Board of Directors has determined that each member of the Audit Committee is “independent” for the purposes of the applicable rules and regulations of the SEC,Securities and Exchange Commission (the “SEC”), as defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines, and has determined that all members other than twoone meet the qualifications of an “audit committee financial expert,” as that term is defined by rules of the SEC. In addition, each member of the Audit Committee qualifies as an independent director, meets the financial literacy and independence requirements of the Securities & Exchange Commission (the “SEC”)SEC and the NYSE applicable to audit committee members and possesses the requisite competence in accounting or auditing in satisfaction of the requirements for audit committees prescribed by the Companies Act 2014. |
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| | A copy of the charter of the Audit Committee is available on our website, www.tranetechnologies.com, under the heading “Company—“About Us—Corporate Governance – Board Committees and Charters.” |
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Human Resources and Compensation Committee Mark R. George John A. Hayes Linda P. Hudson | | •Establish our executive compensation strategies, policies and programs. •Review and approve the goals and objectives relevant to the compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance against those goals and objectives and set the Chief Executive Officer’s compensation level based on this evaluation. The Human Resources and Compensation Committee Chair presents all compensation decisions pertaining to the Chief Executive Officer to the full Board of Directors (other than Michael W. Lamach)Mr. Regnery). •Approve compensation of all other elected officers. •Review and approve executive compensation and benefit programs. •Review and assess the appropriateness of the material risks, if any, arising from or related to the Company’s compensation programs or arrangements. •Administer the Company’s equity compensation plans. •At least annually, review and discuss with the Sustainability, Corporate Governance and Nominating Committee and the Audit Committee, as appropriate, the Company’s “Human Capital Management” disclosure for the Company’s Annual Report on Form 10-K. •Set, review and approve annual ESG factors for purposes of the Company’s Annual Incentive Matrix. •Review, at least annually and discuss with management, key human resource management initiatives related to leadership talent recruitment/retention, diversity and inclusion, pay equity and hourly wages. •Review and recommend significant changes in principal employee benefit programs. •Approve and oversee Human Resources and Compensation Committee consultants. |
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| | For a discussion concerning the processes and procedures for determining NEO (Named Executive Officer) and director compensation and the role of executive officers and compensation consultants in determining or recommending the amount or form of compensation, see “Compensation Discussion and Analysis” and “Compensation of Directors,” respectively. The Board of Directors has determined that each member of the Human Resources and Compensation Committee is “independent” as defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines. In addition, the Board of Directors has determined that each member of the Human Resources and Compensation Committee qualifies as a “Non-Employee Director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. |
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| | A copy of the charter of the Human Resources and Compensation Committee is available on our website, www.tranetechnologies.com, under the heading “Company—“About Us—Corporate Governance – Board Committees and Charters.” |
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Sustainability, Corporate Governance and Nominating Committee Meetings in 2020: 2022: 5 Mark R. George John A. Hayes Tony L. White | | •Identify individuals qualified to become directors and recommend the candidates for all directorships. •Recommend individuals for election as officers. •Oversee the Company’s sustainability efforts including the development and implementation of policies relating to environmental, social and governanceESG issues. •Monitor the Company’s performance against its sustainability and ESG objectives including the impacts of climate change. •Review the Company’s Corporate Governance Guidelines and make recommendations for changes. •Consider questions of independence of directors and possible conflicts of interest of directors as well as executive officers. •Take a leadership role in shaping the sustainability efforts and corporate governance of the Company. •Evaluate social and environmental trends and issues in connection with the Company’s business activities and make recommendations to the Board regarding those trends and issues.
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| | The Board of Directors has determined that each member of the Sustainability, Corporate Governance and Nominating Committee is “independent” as defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines. |
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| | A copy of the charter of the Sustainability, Corporate Governance and Nominating Committee is available on our website, www.tranetechnologies.com, under the heading “Company—“About Us—Corporate Governance – Board Committees and Charters.” |
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Table of Contents
CORPORATE GOVERNANCE
Meetings in 2020: 2022: 5 April Miller Boise Myles P. Lee April Miller Boise
Melissa N. Schaeffer John P. Surma Richard J. Swift
| | •Consider and recommend for approval by the Board of Directors (a) issuances of equity and/or debt securities; or (b) authorizations for other financing transactions, including bank credit facilities. •Consider and recommend for approval by the Board of Directors the repurchase of the Company’s shares. •Review cash management policies. •Review periodic reports of the investment performance of the Company’s employee benefit plans. •Consider and recommend for approval by the Board of Directors the Company’s external dividend policy. •Consider and approve the Company’s financial risk management activities, including the areas of foreign exchange, commodities, and interest rate exposures, insurance programs and customer financing risks. |
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| | The Board of Directors has determined that each member of the Finance Committee is “independent” as defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines. |
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| | A copy of the charter of the Finance Committee is available on our website, www.tranetechnologies.com, under the heading “Company—“About Us—Corporate Governance – Board Committees and Charters.” |
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Executive Meetings in 2020: 2022: None Ann C. Berzin (Chair of the Finance Committee) Gary D. Forsee ( (Lead Independent Director and Chair of the Sustainability,
Corporate Governance and Nominating Committee) John P. Surma (Chair of the Audit Committee) Richard J. Swift
(Lead Director)
Tony L. White (Chair of the Human Resources and Compensation Committee) | | •Aid the Board in handling matters which, in the opinion of the Chairman of the BoardChair or Lead Independent Director, should not be postponed until the next scheduled meeting of the Board (except as limited by the charter of the Executive Committee). |
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The Board of Directors has determined that each member of the Executive Committee (other than Michael W. Lamach)Mr. Regnery) is “independent” as defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines. A copy of the charter of the Executive Committee is available on our website, www.tranetechnologies.com, under the heading “Company—“About Us—Corporate Governance – Board Committees and Charters.”
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CORPORATE GOVERNANCE
Technology and Innovation CommitteeLinda P. Hudson Karen B. Peetz
Richard J. Swift
Tony L. White
| | •Review the Company’s technology and innovation strategy and approach, including its impact on the Company’s performance, growth and competitive position. •Review with management technologies that can have a material impact on the Company, including product and process development technologies, manufacturing technologies and practices, and the utilization of quality assurance programs. •Assist the Board in its oversight of the Company’s investments in technology and innovation, including through acquisitions and other business development activities. •Review technology trends that could significantly affect the Company and the industries in which it operates. •Assist the Board in its oversight of the Company’s technology and innovation initiatives.initiatives, and support, as requested, the Sustainability, Corporate Governance and Nominating Committee in its review of the Company’s environment, health and safety policies and practices, and the Audit Committee in its review of the Company’s information technology and cybersecurity policies and practices. •Oversee the direction and effectiveness of the Company’s research and development operationsoperations. •Assist the Board in its oversight of the Company’s responses to certain environmental matters including climate change, greenhouse gas emissions, energy-efficient and low-emissions products and product life cycle and materials, and support as needed, the Sustainability, Corporate Governance and Nominating Committee in its review of environmental and sustainability practices. |
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| | The Board of Directors has determined that each member of the Technology and Innovation Committee is “independent” as defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines. A copy of the charter of the Technology and Innovation Committee is available on our website, www.tranetechnologies.com, under the heading “Company—“About Us—Corporate Governance – Board Committees and Charters.” |
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There were five meetings of the Board of Directors in
2020.2022. All directors attended at least 75% or more of the total number of meetings of the Board of
Directors andDirectors. With the exception of Ms. Hudson, all directors also attended at least 75% of meetings of the committees on which
he or shethey served during the year.
Ms. Hudson did not attend one meeting of the Technology and Innovation Committee, which met twice during 2022. The Company’s non-employee directors held five independent director meetings without management present during the fiscal year
2020.2022. It is the Board’s general practice to hold independent director meetings in connection with regularly scheduled Board meetings.
The Company expects all Board members to attend the annual general meeting, but from time to time other commitments prevent all directors from attending the meeting. All of the members of our Board standing for re-election at the
20202022 Annual General Meeting on June
4, 20202, 2022 attended
that meeting by telephone due to COVID travel restrictions.the meeting.
Human Resources and Compensation Committee Interlocks and Insider Participation
Our
Human Resources and Compensation Committee is
composedcomprised solely of independent directors. During fiscal
2020,2022, no member of our
Human Resources and Compensation Committee was an employee,
or officer or former officer of the Company or had any relationships requiring disclosure under Item 404 of Regulation S-K. None of our executive officers has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our
BoardHuman Resources and Compensation Committee or our
Compensation CommitteeBoard during fiscal
2020.2022.Table of Contents
Compensation of Directors
Our director compensation program is designed to compensate non-employee directors fairly for work required for a company of our size and scope and to align their interests with the long-term interests of our shareholders. The program reflects our desire to attract, retain and use the expertise of highly qualified people serving on the Company’s Board of Directors. Employee directors do not receive any additional compensation for serving as a director. Our
20202022 director compensation program for non-employee directors consisted of the following
elements:components: |
* |
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ANNUAL RETAINER | | |
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| ■Paid in Cash $142,500 (47%) ■Paid in Restricted Stock Units* $162,500 (53%) * The number of restricted stock units granted is determined by dividing the grant date value of the award, $162,500, by the closing price of the Company’s common stock on the date of grant. A director who retires, resigns or otherwise separates from the Company for any reason receives a pro-rata cash retainer payment for the quarter in which such event occurs based on the number of days elapsed since the end of the immediately preceding quarter and immediately vests in any unvested restricted stock units. |
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ANNUAL CASH RETAINER FOR COMMITTEE CHAIRS AND MEMBERS, LEAD INDEPENDENT DIRECTOR AND OTHER ELEMENTS |
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The Sustainability, Corporate Governance and Nominating Committee periodically reviews the compensation level of our non-employee directors in consultation with the Human Resources and Compensation Committee’s independent compensation consultant, Korn Ferry, and makes recommendations to the Board of Directors. The current compensation program was established in 2018. Under our
2018 Incentive Stock Plan
of 2018, the aggregate amount of stock-based and cash-based awards which may be granted to any non-employee director in respect of any calendar year, solely with respect to
his or hertheir service as a member of the Board of Directors, is limited to $1,000,000.
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COMPENSATION OF DIRECTORS
Share Ownership Requirement
To align the interests of directors with shareholders, the Board of Directors has adopted a share ownership requirement of five times the annual cash retainer paid to the directors. A director cannot sell any shares of Company stock until
he or she attainsthey attain such level of ownership, and any sale thereafter cannot reduce the total number of holdings below the required ownership level. A director is required to retain this minimum level of Company share ownership until
his or hertheir resignation or retirement from the Board.
2020
2022 Director Compensation
The compensation paid or credited to our non-employee directors for the year ended December 31,
2020,2022, is summarized in the table below.
Name | Fees Earned or Paid in Cash ($)(a) | Equity / Stock Awards ($) | All Other Compensation ($) | Total ($) |
K. E. Arnold | 142,500 | 162,514 | — | 305,014 |
A. C. Berzin | 165,000 | 162,514 | — | 327,514 |
J. Bruton | 150,000 | 162,514 | — | 312,514 |
J. L. Cohon | 150,000 | 162,514 | — | 312,514 |
G. D. Forsee | 157,500 | 162,514 | — | 320,014 |
L. P. Hudson | 142,500 | 162,514 | — | 305,014 |
M. P. Lee | 150,000 | 162,514 | — | 312,514 |
A. Miller Boise(b) | 9,294 | — | — | 9,294 |
K. B. Peetz | 145,714 | 162,514 | — | 308,228 |
J. P. Surma | 172,500 | 162,514 | — | 335,014 |
R. J. Swift | 200,000 | 162,514 | 2,240 | 364,754 |
T. L. White | 162,500 | 162,514 | — | 325,014 |
(a) | The amounts in this column represent the following: annual cash retainer, the Committee Chair retainers, the Audit Committee member retainer, the Lead Director retainer, and the Board, Committee and other meeting or session fees. |
Name | Cash Retainer ($) | Committee Chair Retainer ($) | Audit Committee Member Retainer ($) | Lead Director Retainer Fees ($) | Board, Committee and Other Meeting or Session Fees ($) | Total Fees Earned or Paid In Cash ($) |
K. E. Arnold | 142,500 | — | — | — | — | 142,500 |
A. C. Berzin | 142,500 | 15,000 | 7,500 | — | — | 165,000 |
J. Bruton | 142,500 | — | 7,500 | — | — | 150,000 |
J. L. Cohon | 142,500 | 7,500 | — | — | — | 150,000 |
G. D. Forsee | 142,500 | 15,000 | — | — | — | 157,500 |
L. P. Hudson | 142,500 | — | — | — | — | 142,500 |
M. P. Lee | 142,500 | — | 7,500 | — | — | 150,000 |
A. Miller Boise | 9,294 | — | — | — | — | 9,294 |
K. B. Peetz | 142,500 | — | 3,214 | — | — | 145,714 |
J. P. Surma | 142,500 | 30,000 | — | — | — | 172,500 |
R. J. Swift | 142,500 | — | 7,500 | 50,000 | — | 200,000 |
T. L. White | 142,500 | 20,000 | — | — | — | 162,500 |
(b) | Ms. Miller Boise joined the Board on December 8. |
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(c) | Represents RSUs awarded in 2020 as part of each director’s annual retainer. The amounts in this column reflect the aggregate grant date fair value of RSU awards granted for the year under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 and do not reflect amounts paid to or realized by the directors. For a discussion of the assumptions made in determining the ASC 718 values see Note 15, “Share-Based Compensation,” to the Company’s consolidated financial statements contained in its 2020 Form 10-K. |
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Name | Fees Earned or Paid in Cash ($) (a) | Equity / Stock Awards ($) (c) | All Other Compensation ($) (d) | Total ($) |
K. E. Arnold | 142,500 | | 162,621 | | 30,330 | | 335,451 | |
A. C. Berzin | 165,000 | | 162,621 | | 1,066 | | 328,687 | |
A. Miller Boise | 150,000 | | 162,621 | | 22,635 | | 335,256 | |
J. Bruton | 150,000 | | 162,621 | | 1,282 | | 313,903 | |
J. L. Cohon | 150,000 | | 162,621 | | 25,807 | | 338,428 | |
G. D. Forsee | 207,500 | | 162,621 | | 27,389 | | 397,510 | |
M. R. George (b) | 31,753 | | — | | — | | 31,753 | |
L. P. Hudson | 142,500 | | 162,621 | | — | | 305,121 | |
M. P. Lee | 150,000 | | 162,621 | | 94 | | 312,715 | |
K. B. Peetz (b) | 37,974 | | — | | — | | 37,974 | |
M. N. Schaeffer (b) | 33,424 | | — | | — | | 33,424 | |
J. P. Surma | 172,500 | | 162,621 | | 33,577 | | 368,698 | |
T. L. White | 162,500 | | 162,621 | | — | | 325,121 | |
(a)The amounts in this column represent the following, as shown in the table below: annual cash retainer, the Committee Chair retainers, the Audit Committee member retainer, the Lead Independent Director retainer, and the Board, Committee and other meeting or session fees.
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Name | Cash Retainer ($) | Committee Chair Retainer ($) | Audit Committee Member Retainer ($) | Lead Independent Director Retainer Fees ($) | Board, Committee and Other Meeting or Session Fees ($) | Total Fees Earned or Paid In Cash ($) |
K. E. Arnold | 142,500 | | — | | — | | — | | — | | 142,500 | |
A. C. Berzin | 142,500 | | 15,000 | | 7,500 | | — | | — | | 165,000 | |
A. Miller Boise | 142,500 | | — | | 7,500 | | — | | — | | 150,000 | |
J. Bruton | 142,500 | | — | | 7,500 | | — | | — | | 150,000 | |
J. L. Cohon | 142,500 | | 7,500 | | — | | — | | — | | 150,000 | |
G. D. Forsee | 142,500 | | 15,000 | | — | | 50,000 | | — | | 207,500 | |
M. R. George | 31,753 | | — | | — | | — | | — | | 31,753 | |
L. P. Hudson | 142,500 | | — | | — | | — | | — | | 142,500 | |
M. P. Lee | 142,500 | | — | | 7,500 | | — | | — | | 150,000 | |
K. B. Peetz | 37,974 | | — | | — | | — | | — | | 37,974 | |
M. N. Schaeffer | 31,753 | | — | | 1,671 | | — | | — | | 33,424 | |
J. P. Surma | 142,500 | | 30,000 | | — | | — | | — | | 172,500 | |
T. L. White | 142,500 | | 20,000 | | — | | — | | — | | 162,500 | |
(b)Ms. Peetz resigned from the Board in April 2022. Mr. George and Ms. Schaeffer were elected to the Board on October 11, 2022.
(c)Represents RSUs awarded in 2022 as part of each director’s annual retainer. The amounts in this column reflect the aggregate grant date fair value of RSU awards granted for the year under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and do not reflect amounts paid to or realized by the directors. For a discussion of the assumptions made in determining the ASC 718 values see Note 14, “Share-Based Compensation,” to the Company’s consolidated financial statements contained in its 2022 Form 10-K.
(d)Includes (i) benefits in kind (spousal travel, meals, non-board related activities and gifts in connection with the June 2022 Board meeting) and (ii) payment of Irish taxes on benefits in kind. For Mr. Surma, the amount shown also includes rebates on Company products purchased during 2022.
Table of Contents
COMPENSATION OF DIRECTORS
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Name | Benefits in Kind ($) | Payment of Taxes on Benefits in Kind ($) | Total ($) |
K. E. Arnold | 15,772 | | 14,558 | | 30,330 | |
A. C. Berzin | 554 | | 512 | | 1,066 | |
A. Miller Boise | 11,770 | | 10,865 | | 22,635 | |
J. Bruton | 667 | | 615 | | 1,282 | |
J. L. Cohon | 13,420 | | 12,387 | | 25,807 | |
G. D. Forsee | 14,242 | | 13,147 | | 27,389 | |
M. R. George | — | | — | | — | |
L. P. Hudson | — | | — | | — | |
M. P. Lee | 49 | | 45 | | 94 | |
K. B. Peetz | — | | — | | — | |
M. N. Schaeffer | — | | — | | — | |
J. P. Surma | 21,190 | | 12,387 | | 33,577 | |
T. L. White | — | | — | | — | |
For each non-employee director, the following table reflects all unvested RSU awards at December 31,
2020:2022:Name | Number of
Unvested RSUs | | | | |
Name | Number of Unvested RSUs |
K. E. Arnold | 1,7011,167 | |
A. C. Berzin | 1,7011,167 | |
J. BrutonA. Miller Boise | 1,7011,167 | |
J. Bruton | 1,167 | |
J. L. Cohon | 1,7011,167 | |
G. D. Forsee | 1,7011,167 | |
M. R. George | — | |
L. P. Hudson | 1,7011,167 | |
M. P. Lee | 1,7011,167 | |
A. Miller BoiseM. N. Schaeffer | — | |
K. B. Peetz | 1,701 |
J. P. Surma | 1,7011,167 | |
R. J. Swift | 1,701 |
T. L. White | 1,701 |
381,167 | |
Table of Contents
Compensation Discussion and Analysis
The Compensation Discussion and Analysis (“CD&A”) set forth below provides an overview of our executive compensation philosophy and underlying programs, including the objectives of such programs, as well as a discussion of how awards are determined for our Named Executive Officers (“NEOs”). These NEOs include our
ChairmanChair and Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”), and our three most highly compensated executive officers for the
20202022 fiscal year other than the
Chair and CEO and CFO.
In addition, our former CFO is also an NEO for 2020. The
2022 NEOs
are:are as follows: | | | | | |
Named Executive Officers | Title |
Mr. Michael W. LamachDavid S. Regnery | ChairmanChair and Chief Executive Officer |
Mr. Christopher J. Kuehn(1) | SeniorExecutive Vice President and Chief Financial Officer |
Mr. David S. Regnery | President and Chief Operating Officer |
Ms. Marcia J. Avedon, Ph.D. | Executive Vice President, Chief Human Resources, Marketing and Communications Officer |
Mr. Paul A. Camuti | Executive Vice President and Chief Technology and StrategySustainability Officer |
Ms. Susan K. Carter(2)Mr. Evan M. Turtz | Former Senior Vice President, General Counsel and Chief Financial OfficerSecretary |
(1)Mr. Raymond D. Pittard | Mr. Kuehn became SeniorExecutive Vice President Supply Chain, Engineering and Chief Financial Officer on March 1, 2020. |
(2) | Ms. Carter retired on April 1, 2020.Information Technology |
I. Executive Summary
On February 29, 2020 we successfully completed the separation of our Industrial segment businesses, approximately 20% of 2019 net revenue, through a Reverse Morris Trust (“RMT”) transaction. Through this transaction,
Throughout 2022, Trane Technologies
transformed intodisplayed continued strong financial performance placing us in the top quartile of leading industrial companies while making significant progress toward advancing our purpose to boldly challenge what’s possible for a
focused climate innovation company, working with our customerssustainable world. We continued to
address their sustainability challenges through heating, coolingsee robust and
transport refrigeration solutions.2020 presented significant challenges. COVID-19 impacted the company’s ability to deliver target levels of revenue and EBITDA. A broad contraction of global markets resulted in decreasedbroad-based demand for products. There was disruptionour innovative products and services and have maintained strong employee engagement with year-over-year improvement in our employee engagement score. Our dynamic business operating system and uplifting culture enable us to continue to overcome supply chain challenges and inflation concerns and deliver strong performance for our people, customers, communities, shareholders and the planet.
In 2022, we continued our efforts to achieve our 2030 Sustainability Commitments to reduce one gigaton of carbon emissions from our customers’ footprints, to reimagine our supply chain and
pressureoperations to have a restorative impact on
costs as the
Company,environment and to uplift our
supplierspeople, culture and
our customers took actions necessary to manage their respective businesses, implement safetycommunities through an inclusive approach and
personal protective equipment protocols and maintain financial stability through the crisis. COVID-19 negatively impacted transactional volume relative to plan with decreased demand and cancelled and delayed orders, all of which impacted EBITDA due to a
lower revenue base to absorb fixed costs.As the COVID-19 pandemic expanded globally, the Company prioritized caring for the wellbeing and safety of employees, maintaining a balanced focus on education and career development. Specific to compensation, we continued to link annual leader short-term performanceincentive compensation to achievement of specific emissions and long-term business opportunities,greenhouse gas reduction and diversity progress, as well as financial goals.
In 2022, we also continued to activate our Employee Value Proposition (“EVP”) and employer brand, with a focus on our service technicians and manufacturing hourly team members. This work highlights our efforts to connect people to purpose with a focus on uplifting others, making an
emphasis on margin, cash flowimpact and
working capital management to provide liquidity. The Company effectively executedthriving at work and
delivered on these priorities.The Committee considered the effectiveness of the Company’s response to COVID-19 in addition to other performance achievements in making compensation decisions. The Company minimized disruption to operations from COVID-19 safely and quickly. Transformation commitments coming out of the RMT transaction were achieved and exceeded. There was significant investment in innovation at an accelerated pace across all businesses including the launch of a cold storage solution in support of COVID-19 vaccine distribution. In addition, the company achieved market share growth across the regions. These achievements delivered value to shareholders as reflected by Total Shareholder Return of 43.51% for the year, significantly outperforming the S&P 500 and the S&P 500 Industrials indices.
Followinghome.
Below are additional financial,
environmental and
non-financial performancesocial sustainability highlights taken into consideration in making compensation decisions.
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
2020 Financial Results
2022 Performance Highlights
The following
graphic documentsgraphics show the enterprise financial results realized in
20202022 relative to our executive incentive compensation performance targets established for the period and
shows other significant
non-financial accomplishments that weESG performance highlights achieved in
2020.
2022.(1) | We report our financial results | | | | | | | | | | | | | | | | | | | |
| FINANCIAL PERFORMANCE HIGHLIGHTS | | |
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Annual Revenue $15.992 BILLION | 3-Year Adjusted Cash Flow Return on Invested Capital (CROIC) (2020–2022)(a) 29.0% Ranks at the 80th percentile of the companies in our annual report on Form 10-K and our quarterly reports on Form 10-Qthe S&P 500 Industrials Index 3-Year Total Shareholder Return (TSR) (2020-2022)(a) 57.17% Ranks at the 78th percentile of the companies in accordance with United States generally accepted accounting principles (“GAAP”). Our financial results described above for the S&P 500 Industrials Index |
| | Increase of 13% from 2021 |
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Adjusted EBITDA and Adjusted EBITDA Margin have been adjusted to exclude the impact(a) $2.694 BILLION |
| | Increase of certain non-routine and other items as described in our earnings releases and are non-GAAP14% from 2021 |
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Free Cash Flow(a) $1.566 BILLION |
| | Increase of 9.4% from 2021 |
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The three core financial measures. These metrics and the related performance targets and results are relevant only to our executive compensation program and should not be used or applied in other contexts. For a description of how the metrics laid out above are calculated fromfurther modified (up to +/-20%) by our GAAP financial statements, please see “Annual Incentive Matrix (“AIM”) - Determination of Payout” with respectachievement relative to AIM payments and “Long Term Incentive Program (‘LTI’) – 2018 - 2020 Performance Share Units Payout” with respect to Performance Share Program (“PSP”) awards. our equally-weighted environmental & social objectives—ESG Modifier |
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(a)We report our financial results in our Annual Report on Form 10-K and our quarterly reports on Form 10-Q in accordance with United States generally accepted accounting principles (“GAAP”). Our financial results described above for Adjusted EBITDA and Free Cash Flow have been adjusted to exclude the impact of certain items as shown in Appendix A to this Proxy Statement. These metrics and the related performance targets and results are relevant only to our executive compensation program and should not be used or applied in other contexts. For a description of how the metrics above are calculated from our GAAP financial statements, please see “Annual Incentive Matrix (‘AIM’)” with respect to AIM payments and “Long Term Incentive Program (‘LTI’) – 2020-2022 Performance Share Units Payout” with respect to Performance Share Program (“PSP”) awards.
Based on our 20202022 results for Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow and progress against our ESG goals, achievement under the Annual Incentive Matrix (“AIM”) financial score was 74.8%146.88% of target for the Enterprise. In consideration
A 3-year CROIC average of
the Company’s effectiveness in response to the COVID-19 pandemic, achievement of commitments to restructure the Company, streamline processes29.0% and
reduce costs following the RMT transaction, and strong financial performance relative to peers, the NEOs received AIM payouts at 100% of target levels, see section V - Compensation Program Descriptions and Compensation Decisions for additional details.Based on our CROIC of 26.5% anda 3-year TSR of 101.73% during the 2018 - 2020 performance period,57.17% resulted in a 200% Performance Share UnitsUnit (“PSUs”PSU”) payout under our PSP achievement was 194.5% of target.
40 | |
Performance Share Program for the 2020-2022 performance period. Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | |
NON-FINANCIAL | | ESG PERFORMANCE HIGHLIGHTS |
| | |
| Business |
Environmental • | Successfully completedFirst in our RMT transaction. We now operate as Trane Technologies, a focused climate innovation company. |
| • | For the eighth consecutive year, recognized by Fortune Magazine asindustry, and one of the world’s most-admired companies.first 11 companies worldwide, to have our net zero carbon emissions targets approved by the Science Based Targets initiative (“SBTi”), a coalition of the Carbon Disclosure Project, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature•Pledged to procure, specify or stock 50% net-zero steel by 2030 and 100% net-zero steel by 2050 as a member of SteelZero. Announced contracts to purchase low-carbon steel to further reduce the carbon emissions throughout the Company’s supply chain •Named to S&P Dow Jones Sustainability World Index for second consecutive year and North America Index for 12th consecutive year •Recognized for corporate environmental transparency by the Climate Disclosure Project, securing a place on its annual A-list, one of 283 companies out of 15,000 •Began an initiative to accelerate the decarbonization of our facilities by 25% by the year 2025 and to achieve our carbon-neutral operations goal early |
| | |
| Social •Continued broad approach to Human Capital Management |
• | Renewed our membership in the CEO Action for Diversity and Inclusion pledge, focusing on our commitment to advance across engagement, development, diversity and inclusion in the workplace. |
| inclusion: • | Renewed our commitment to the Paradigm for Parity Coalition, a pledge to bring gender parity to our corporate leadership structure by 2030. We were the first in our industry to enter the coalition. |
| • | Became a Founding Member of the OneTen coalition, committed to hiring, retaining and advancing one million Black Americans over the next ten years. |
| • | Second Consecutive Year: Forbes, Best Employers for Diversity. |
| | •Listed on numerous Forbes Indices over the years including being named as one of the world’s best employers, Americas’ best employers for women and best large employer. |
| • | Maintained strong employee engagement as we sought meaningful wayswith year-over-year improvement in our employee engagement score•Our Employee Value Proposition (“EVP”), which connects team members to enhance the working livesour Company’s purpose, strategies and leadership principles, is representative of our employees, who remain committedentire employee population, inclusive of every role in the organization •Through Trane Technologies University, we provide our team members with comprehensive learning and development solutions designed to support them as they grow in their careers •Launched The Inclusive Culture Learning Experience to all people leaders •Supported employee well-being with the launch of a mental health hub and improvements to certain local paid time off programs •Shifted our core values and mission. Our overall employee engagement score positions us well into the top quartile of all companies globally. |
| tuition support approach from offering tuition reimbursement to offering tuition advancement • | For the fourth consecutive year, awarded a perfect score in workplace equalityRanked 18th on the Human Rights Campaign Foundation’s equality index. |
| | |
| Sustainability |
• | We met our 2020 sustainability commitments that were set in 2013 in 2018, two years early, and launched bold new 2030 sustainability commitments. |
| • | Listed on the Dow Jones Sustainability North America Index for 10 consecutive years. |
| • | We are one of 615 companies worldwide with science-based targets and one of only 47 companies to have its targets verified by SBTi twice (once in 2014 and again in early 2021). |
| • | Earned recognition for our performance in addressing climate change, engaging employees, stewarding the environment and advancing human rights and citizenship. Examples include: |
| • | Named2023 JUST 100 list, named first in the Thomson Reuters Global DiversityBuilding Materials & Construction industry and Inclusion Indexranked as the best company in industry for leading the way in embedding diversitycommunities and inclusion into company strategy; |
| • | Received a gold medal award from the World Environmental Center for our work in integrating sustainability into the coreworkers. Recognized as one of our business; |
| • | Named on America’s Most JUST Companies report, which recognizes American companies who are committed to fair pay, treating customers with respect, producing quality products and minimizing environmental impact; |
| • | Ranked among the top 100 “Best Corporate Citizens for 2019” by Corporate Responsibility Magazine; |
| • | Named to the Corporate Knights Global 100 Most Sustainable Corporation Index for the second consecutive year; |
| • | For the sixth consecutive year named•Received wide recognition as an employer of choice: •Forbes World’s Best Employers 2022, second consecutive year •Disability Equality Index (“DEI”), top scorer (100%) •Great Place to the FTSE4Good equity index, which measures companiesWork® (Belgium, Ireland, USA) •Fortune World’s Most Admired Companies 2022, 11th consecutive year •Fortune Best Workplaces in Manufacturing and Production 2022, top ten •Military Times 2022 Best for Vets Employers List •Expanded Sustainable Futures, our corporate citizenship strategy, through a partnership with strongDiscovery Education to provide STEM and sustainability tools to teachers in at-risk districts •Continued Operation Possible, our innovation initiative to source social and environmental stewardship, human rights and corporate governance.impact ideas from employees. Our ideas were put into practice to fight food loss by developing a cooling cart for street vendors
|
| | Governance •Developed compliance controls for ESG metrics and process to be maintained quarterly and annually •Completed non-financial materiality assessment refresh •Conducted Task Force on Climate-related Financial Disclosures (“TCFD”) Climate Scenario Analysis to identify risks and opportunities •Continued to reinforce leadership accountability for 2030 Commitments with ESG modifier for annual incentive program for executives and senior leaders, with progress towards greenhouse gas reduction and diverse representation •Conducted ESG training with the Board with a focus on sustainability disclosure and emerging regulatory requirements •Continued to develop next generation of talent and conducted ongoing leadership succession planning sessions with the Board |
|
| | |
For more information regarding our Company’s commitment to leadership in environmental, social and governanceESG matters and our achievements in these areas, please also see our 20202022 Annual Report to Shareholders included in these proxy materials and our 2020 ESG Report available on our website located at www.tranetechnologies.com under the heading “Sustainability.” |
|
| | |
www.tranetechnologies.com/ESG. Our 2022 ESG Report is expected to be available on or around April 26, 2023. |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
2020 Say on Pay
| | | | | |
2022 Say-on-Pay Vote In undertaking this review, the The Committee considers the viewsresults of shareholders as reflected in theirthe annual advisory vote on our executive compensation proposal. Shareholdersin making determinations about the structure of Trane Technologies’ pay program or whether any changes to the program should be considered. In 2022, 92% of shareholders voted 91% in favor of “Say-on-Pay.” In addition to shareholder feedback, the Company’s Advisory ApprovalCommittee reviews information provided by its independent compensation consultant regarding general compensation practices within our Compensation Peer Group, as well as third-party survey data to assess relevant market conditions. As a result of the Compensation of our NEOs proposal at our 2020 annual general meeting. Based on the Committee’s review and the support our executive compensation programs received from shareholders,this analysis, the Committee determined it would bewas appropriate to maintain the core elementscomponents of our executive compensation programs.program and no program modifications were made. | | |
Executive Compensation Program Overview
The Committee
has adoptedseeks to provide reasonable and competitive executive compensation programs
with a strong link between paywhich are structured to attract and
performanceretain best-in-class leaders, incentivize and
reward the achievement of
short-termshort and long-term Company
goals.goals and align the interests of executives with shareholders to provide sustainable value. The
table below reflects the primary
elementscomponents of
theour executive compensation
programs are:program and the proportion of each component relative to target total direct compensation (“TDC”): | |
(1) | See Section V, “Compensation Program Descriptions and Compensation Decisions”, for additional discussion of these elements of compensation. |
(a)See Section V, “Compensation Program Descriptions and Compensation Decisions”, for additional discussion of these components of compensation.
As illustrated, the Committee places significant emphasis on variable compensation (AIM and LTI) so that a substantial percentage of
the six NEOs’each NEO’s target
total direct compensation (“TDC”)TDC is contingent on the successful achievement of the Company’s short-term and long-term performance goals.
Good Compensation Governance Practices
| | | | | |
What We Do | | What We Don’t Do |
Diversified metrics for our AIM and Performance Share Programs (“PSP”)PSP to align with business strategies and shareholder interests, Incentive including ESG matters
Capped incentive awards tied to the achievement of rigorous, pre-determined and measurable performance objectives
Significant emphasis on variable compensation in designing our compensation mixprograms
Regular competitive benchmarking and compensation reviews
Commitment to fair and competitive pay for our employees and the avoidance of discrimination against any protected class or individual
Annual shareholder advisory vote on executive compensation
Independent compensation consultant to advise the Committee Claw-back
Clawback / recoupment policy
Robust stock ownership requirements for our executives
Reasonable limits on full-value awards
Annual review of risk in executive compensation plans
Limit of $1M$1 million dollars on non-employee directorsdirectors’ annual compensation | |
No tax gross-ups for any change-in-control agreement entered into after May 2009 (only 2 of 16 officers have a tax gross-up provision in an agreement entered into with such officer prior to May 2009)
No dividends on unvested restricted stock and no dividend equivalents on unvested restricted stock units or performance units until the underlying awards vest
No liberal share recycling practices for options
No “Single-trigger” vesting for any cash payments upon a change in control
No “Single-trigger” vesting for any time-based equity awards upon a change in control
No hedging or pledging of Company stock by directors and executive officers
No re-pricing of equity awards |
42 | |
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COMPENSATION DISCUSSION AND ANALYSIS
II. Compensation Philosophy and Design Principles
Our executive compensation programs are designed to
attract, retain and focusalign the
talent and energycompensation of
executive officers (including our
NEOs) who are capable of meetingexecutives with the Company’s
currentperformance and
future goals, including the creation ofstrategy, and to create sustainable shareholder value.
As we operate in an ever-changing environment, ourThe Committee makes
compensation decisions
with consideration ofconsidering economic, technological, regulatory, investor and competitive factors, as well as our executive compensation principles. The Committee regularly reviews
and assesses the philosophy, objectives and
elementscomponents of our executive compensation programs in relation to our short and long-term business objectives and has
determinedconcluded that
there is no undueour compensation programs are designed with the appropriate balance of risk
in the compensation programs.and reward and do not encourage excessive or unnecessary risk-taking behavior.
The design principles that govern our executive compensation programs are:
| | | | | | | | | | | | | | | | | |
| DESIGN PRINCIPLES AND RATIONALE | | | HOW THIS IS APPLIED TO TRANE TECHNOLOGIES PRACTICE | |
| | | |
| Business Strategy Alignment Our executive compensation programs provide allow flexibility to align with changing Company or business strategies. The programs allow forfocus individuals within the Company’s businesses to focusstrategic business units on specific financial measures to meet the short and long-term plansperformance goals of the particular business for which they are accountable. | | It is not only possible but also desirable for certain leaders to earn substantial awards in years when their business outperforms against our Annual Operating Plan (“AOP”).Plan. Conversely, if a business fails to meet its performance goals, that business’ leader may earn a lesser award than their peers in that year. To provide a balanced incentive, all executives have a significant portion of their compensation tied to Company performance. |
| | | | | |
| Pay for Performance A strong alignment between pay forand performance culture is paramount to our success. As a result,Accordingly, each executive’s target total direct compensation (“TDC”)TDC is tied to Company, business and individual performance against set goals. | | Company and business performance are measured against pre-established
financial, operational and strategic objectives as set by the Committee. Individual performance is measured against pre-established individual goals
as well as demonstrated leadership competencies and behaviors consistent with our
leadership principles. In addition, a portion of the long-term incentive is earned based upon Company cash flow return on invested capitalCROIC and shareholder value performanceTSR relative to peer companies. |
| Shareholder Alignment Our executive compensation programs align the interests of our executives with those of shareholders by incorporating key financial targets such as revenueRevenue growth, Adjusted EBITDA, Free Cash Flow, CROIC and cash flow.TSR as well as proactively addressing ESG issues. | | Financial targets should correlate with both share price appreciation over time and the generation of cash flow for the Company. Company, with an ESG modifier that ties incentive compensation to the Company’s 2030 sustainability goals. In addition, our long-term incentives are tied to total shareholder returns increases in value as share price increases, and the effective use of assets to generate cash flow. Other program requirements, including share ownership guidelines for executives and vesting schedules on equity awards further align executives’ and shareholders’ interests. |
| | | | | |
| Mix of Short and Long-Term Incentives A proper mix betweenof short and long-term incentives is important to encourage decision makingconsistent behavior and performance that mitigates risk and balancessupport the need to meet our AOPachievement of the Company’s annual financial objectives while also taking into account promoting the long-term interestssustainability of the Companyour business and its shareholders.maximizing shareholder value. | | The mix of pay including short and long-term incentives, is determined by consideringwith a focus on the Company’s pay for performance compensation philosophy and strategic objectives as well as what is deemed competitive market practice.within the market. |
| Internal Parity Each executive’s target TDC opportunity is proportionate with the responsibility, scope and complexity of their role within the Company.Company, as well as their skills and experience. | | Comparable jobs are assigned similarcomparable target compensation opportunities. An annual review of pay equity by gender is completed for the Company globally. In the U.S., an additional review of pay equity by race/ethnicity is conducted annually. |
| | | | | |
| Market Competitiveness Compensation opportunities must serve to attract and retain high performing executives in a competitive environment for talent.talent market. | | Target TDC levels are set referencingusing applicable market compensation benchmarks with
consideration of retention and recruiting demands in the industries and
markets where we compete for business and executive talent. Each executive’s target TDC may be above or below the market benchmark reference based on their level of experience, proficiency, performance and potential in performing growth relative to the duties required of their position in addition to the competitive market for that individual. |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
III.
Factors Considered inAnalysis to Support the Determination of Target Total Direct Compensation
Our
The Committee reviews and evaluates our executive compensation levels and practices against
thosepeer companies of comparable revenue, industry and/or business fit with which we compete for executive
talent.talent (the “Compensation Peer Group”). During
2020,2022, these reviews were conducted throughout the year using a variety of methods
such as:• | The direct analysis of the proxy statements of other global manufacturers and service providers (refer to peer group below); |
• | A review of compensation survey data of other global, diversified industrial companies of similar size published by independent consulting firms; |
• | A review of customized compensation survey data provided by independent consulting firms; and |
• | Feedback received from external constituencies. |
The Committee does not rely on a single sourceand multiple sources of information when making executivesuch as:
•The direct analysis of the Proxy Statements of other global manufacturers and service providers (refer to peer group below);
•A review of compensation decisions. survey data of other global industrial companies of similar size and revenue published by independent consulting firms;
•A review of customized compensation survey data provided by independent consulting firms; and
•Feedback received from external constituencies.
Many of the companies included in these compensation surveys are also included in the
S&PStandard & Poor’s 500 Industrials Index referred to in our
20202022 Form 10-K under the caption “Performance Graph.”
The Committee, with the assistance of its independent advisor,
developsevaluates the Compensation Peer Group annually to ensure alignment and reasonableness, while seeking to avoid significant changes to ensure a
peer group that it useslevel of consistency year-over-year. The median 2022 revenue of the 2022 Compensation Peer Group was $16.1 billion, and the median market cap of the 2022 Compensation Peer Group as of the end of 2022 was $35.4 billion, as compared to
evaluate executive compensation programs and levels. In 2019, the Committee approved a peer group to reflect the Company’s post-transaction size and business as a climate-focused engineered manufacturer and service provider2022 revenue for the
global commercialCompany of $16.0 billion and
residential construction and transportation market
sectors.cap for the Company at the end of 2022 of $38.5 billion. This peer group is comprised of the following sixteen global
companies.companies and remains unchanged from 2021.Ametek | Dover | Honeywell International | Otis Worldwide | | | | | | | | |
CarrierAmetek, Inc. | Dover Corporation | Honeywell International Inc. | Otis Worldwide Corporation |
Carrier Global Corporation | Eaton Corporation plc | Illinois Tool Works Inc. | Parker Hannifin CorpParker-Hannifin Corporation |
Cummins Inc. | Emerson Electric Co. | Johnson Controls Inc.International plc | Rockwell Automation, Inc. |
Danaher CorpCorporation | Fortive Corporation | Lennox International Inc. | TE Connectivity Ltd. |
Ametek, Carrier, Otis Worldwide and Lennox International were added and 3M, Paccar Inc., PPG Industries, Stanley Black & Decker and Textron were removed from the peer group in consideration of the RMT transaction.
In assessing the relationship of CEO compensation to compensation of other executive officers (including our NEOs), the Committee considers overall organization structure and scope of responsibility and also reviews the NEOs’ compensation levels relative to the CEO and to one another. This ensures that the target TDC levels are set in consideration of internal pay equity as well as market references and each executive’s experience, proficiency, performance and potential
in performinggrowth relative to the duties
required of their
role. In addition, the long tenure of our CEO (11 years) coupled with the strong performance of the company over this period, are taken into consideration by the Committee when evaluating CEO compensation.44 | |
position.Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
IV. Role of the Committee, Independent Advisor and Committee Actions
Our
The Committee, which is composed solely of independent directors, oversees our compensation plans and policies
administers ourand equity-based programs and reviews and approves all forms of compensation relating to our executive officers, including the NEOs.
The Committee
exclusivelysolely and independently decides the compensation
elementscomponents and the amounts to be awarded to our
Chair and CEO. Our
Chair and CEO does not make any recommendations regarding his own compensation and is not informed of these awards until the decisions have been finalized. Our
Chair and CEO makes compensation recommendations related to our other NEOs and executive officers. The Committee considers these recommendations when approving the compensation
elementscomponents and amounts to be awarded to our other NEOs.
Our
The Committee is responsible for reviewing and approving amendments to our executive compensation and benefit plans. In addition,
ourthe Committee is responsible for reviewing our principal broad-based employee benefit plans and making recommendations to our Board of Directors for significant amendments to, or termination of, such plans. The Committee’s
duties are described incharter and annual agenda incorporates a broader range of human capital issues, beyond compensation, including corporate culture, diversity and inclusion and pay-equity—many of the
topics which would fall under the social aspect of ESG issues. The Committee’s Charter
which is available on our website at
www. tranetechnologies.com.Ourwww.tranetechnologies.com.
The Committee has the authority to retain an independent advisor for the purpose of reviewing and providing guidance related to our executive compensation and benefit programs. The Committee is directly responsible for the compensation and oversight of the independent advisor. For
2020,2022, the Committee continued
to engageits engagement with Korn Ferry to serve as its independent compensation advisor.
The services that Korn Ferry provides
the following services to the Committee
among others:• | include: •Review and analysis of executive compensation benchmarking data for the CEO and other top executives as needed; |
• | Review and analysis of the public company peer group used to benchmark the Company’s executive pay levels; |
• | Preparation of ad hoc analyses for the Committee to support decision-making around the executive compensation program; and |
• | Review and analysis of and advisement on management proposals regarding key elements of the executive compensation program. |
Korn Ferry also provided the Sustainability, Corporate Governance and Nominating Committee with advice on director compensation matters including benchmarking data for the Chair and market trends. CEO and other top executives as needed;
•Review and analysis of the Compensation Peer Group used to benchmark the Company’s executive pay levels;
•Preparation of ad hoc analyses for the Committee to support decision-making around the executive compensation program; and
•Review and analysis of and advisement on management proposals regarding key components of the executive compensation program.
The Committee determined that Korn Ferry is independent and does not have a conflict of interest. In making this determination, the Committee considered the factors adopted by the NYSE with respect to independence and conflicts of interest.
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
V. Compensation Program Descriptions and Compensation Decisions
The following table provides a summary of the
elements,components, objectives, risk mitigation factors and other key features of our
TDCexecutive compensation program.
Each of these elements is described in detail below:Element | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Compensation Component | | | Component Objective of Element Including
Risk Mitigation Factors | | | Key Features Relative to NEOs | |
| | | | | |
| | | | | | | | |
| Base Salary | To provide
| Provides a sufficient and stable source of cash compensation.To avoid encouragingcompensation that rewards the skill and expertise that our executive officers contribute to the Company on a day-to-day basis.
| | Avoids the encouragement of excessive risk-taking by ensuring that an appropriate level of cash compensation is not variable. | Adjustments are determined by the Committee based on an evaluation of the NEO’s proficiency in fulfilling their responsibilities, as well as performance against key objectives and behaviors.
In 2020, base salary represents 10% of the CEO’s target total direct compensation and 22%, on average, for the other NEOs. at risk. |
| | | | | | | | |
| | | | | | | | |
| Annual Incentive Matrix (“AIM”) Program | To serve
| Serves as an annual cash award tied
to the achievement of pre-established financial, operational, and strategic
performance objectives. Structured to take into consideration the unique needs of the various businesses.
Amount of compensationcash award earned cannot exceed a maximum payout of 200% of individual target levels and is also subject to a claw back in the event of a financial restatementclawback in accordance with our clawback policy. | | Each NEO has an AIM target expressed as a percentage of base salary. Targets are set based on the compensation levels of similar jobs in comparable companies, as well as on the NEO’s experience and proficiency level in performing the duties of the role.Actual AIM payouts are dependent on business, segment and enterprise financial performance, performance relative to established ESG objectives and individual performance. The financial metrics used to determine the awards for 2020 were Revenue, Adjusted EBITDA, and Cash Flow, modified (up or down) based on Adjusted EBITDA Margin performance. In 2020, AIM represents 17% of the CEO’s target total direct compensation and 21%, on average, for the other NEOs.
|
| | | | | | | | |
| | | | | | | | |
| Long-Term Incentive Program (“LTI”) | | Incentivizes executives to achieve sustainable performance results and maximize growth, efficiency and long-term shareholder value creation. | | Mix of stock options, RSUs and PSUs places a substantial portion of compensation at risk and effectively links equity compensation to shareholder value creation and financial results. |
| | | | | | | | |
| •LTI: Performance Share Program (“PSP”) | To serve as a long-term incentive to outperform, on a relative basis, companies in the S&P 500 Industrials Index.
To promote long-term strategic focus and discourage an overemphasis on attaining short-term goals.
| Structured to align management’s interests with shareholder interests.those of shareholders. Amount earned cannot exceed a maximum payout of 200% of the individual target shares granted and is also subject to a claw back in the event of a financial restatementclawback in accordance with our clawback policy. | Performance share units (“PSUs”)
| PSUs granted under the PSP are earned overor forfeited following the conclusion of a 3-yearthree-year performance period.The number of PSUs earned isperiod based on relative TSR and relative CROIC compared to companies within the S&P 500 Industrials Index (with equal weight given to each metric).
Actual value of the PSUs earned depends on our share price at the time of payment. PSUs represent 36.5% of the CEO’s target total direct compensation and 28.5%, on average, for the other NEOs. |
| | | | | | | | |
| •LTI: Stock Options / Restricted Stock Units (“RSUs”) | | Aligns themanagement’s interests with those of the NEOsshareholders and shareholders.Awards provide a balance between performance andbolsters retention.
Awards are subject to a claw back in the event of a financial restatementclawback in accordance with our clawback policy. | | Stock options and RSUs are granted annually, with stock options having an exercise price equal to the fair market value of ordinary shares on the date of grant. Both stock options and RSUs typically vest ratably over three years, at a rate of one-thirdone third per year. Stock options expire on the day immediately preceding the 10th anniversary of the grant date (unless employment terminates sooner). In 2020, a balanced mix of stock options and RSUs represents 36.5% of the CEO’s target total direct compensation and 28.5%, on average, for the other NEOs.
|
46 | |
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COMPENSATION DISCUSSION AND ANALYSIS
The table below reflects the
2022 base salary adjustments for
the NEOs between 2019 and 2020.our NEOs. When determining base salary adjustments, each NEO is evaluated based on their
positionpositioning relative to the market for their
job and onrole, the results achieved and
the behaviors demonstrated.(Dollar Amounts Annualized) | 12/31/2019 ($) | 12/31/2020 ($) |
Mr. Michael W. Lamach | 1,410,000 | 1,410,000 |
Mr. Christopher J. Kuehn | 510,000 | 680,000 |
Mr. David S. Regnery | 775,000 | 850,000 |
Ms. Marcia J. Avedon, Ph.D. | 685,000 | 710,000 |
Mr. Paul A. Camuti | 570,000 | 590,000 |
Ms. Susan K. Carter | 775,000 | 775,000 |
Ms. Carter retired on April 1, 2020.
In responsetheir performance relative to the worsening global Coronavirus crisis, the Company made the decision to delay base salary increases for all salaried employees in the U.S. and Puerto Rico who were scheduled to receive an increase on April 1, 2020. As a result, the merit increases for Ms. Avedon and Mr. Camuti included in their respective base salaries above were delayed until October 1, 2020. Mr. Kuehn received a portion of his base salary increase effective March 1, 2020 in conjunction with his promotion to Chief Financial Officer, but the remaining portion of his base salary increase was delayed until October 1, 2020. Mr. Regnery received an increase effective January 1, 2020 coincident with his promotion to President and Chief Operating Officer. Mr. Lamach, our CEO, did not receive a 2020 base salary increase.
leadership principles.
| | | | | | | | |
(Dollar Amounts Annualized) | 12/31/2021 ($) | 12/31/2022 ($) |
Mr. David S. Regnery | 1,200,000 | | 1,250,000 | |
Mr. Christopher J. Kuehn | 725,000 | | 775,000 | |
Mr. Paul A. Camuti | 615,000 | | 640,000 | |
Mr. Evan M. Turtz | 575,000 | | 600,000 | |
Mr. Raymond D. Pittard | 565,000 | | 587,500 | |
Annual Incentive Matrix (“AIM”)
Program
The AIM program is an annual cash incentive program designed to reward NEOs for Revenue growth, increases in Adjusted EBITDA, the delivery of strong
Free Cash Flow,
performance against ESG objectives and individual contributions to the Company. We believe that our AIM
program design provides participants with clarity as to how they can earn a cash incentive based on strong performance relative to each metric. The Committee establishes a target award for each NEO that is expressed as a percentage of base salary. Individual AIM payouts are calculated as the product of a financial performance score,
which may be adjusted up or down by an ESG modifier, and an individual performance score,
bothall of which are based on achievement relative to pre-established performance objectives
adoptedset by the Committee. Individual AIM awards are calculated by multiplying individual AIM targets by an AIM Payout Percentage calculated as illustrated below:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| × | | = | | × | | = | |
Financial Score: Core Financial Metrics | Modifier (Up to +/- 20%) | Adjusted AIM Score | Individual Performance Score (0% to 150%) | AIM Payout Percentage (0% to 200%) |
| | | | |
| | | | |
1/3 Revenue 1/3 Adjusted EBITDA 1/3 Free Cash Flow | ESG Modifier | Financial Score × Modifier | Performance against Individual Objectives | Financial Score × ESG Modifier × Individual Performance Score |
| | | | |
The AIM incentive opportunity is tied to pre-established financial goals for three equally-weightedequally weighted performance metrics (“Core Financial Metrics”): Revenue, Adjusted EBITDA and Free Cash Flow. These metrics align with our objectives to profitably grow the businesses and improve margins through operational efficiency. Threshold performance for each metric must be achieved in order for any incentive to be payable for that metric. The financial AIM payoutscore is the weighted sum of the calculated payout percentage for each metric, adjusted bymetric.
To more closely align the annual short-term incentive compensation of our leaders to the value that we, as a Company, place on environmental sustainability and employee diversity and inclusion, we utilize an
Adjusted EBITDA Margin percentage multiplier (“Multiplier”).TheESG modifier as a component of Trane Technologies’ annual incentive program. This strategic modifier may adjust AIM payout isamounts upward or downward by up to 20% based on performance against four equally weighted environmental sustainability and diversity and inclusion objectives: internal greenhouse gas reduction, external carbon emissions reduction, increase in gender representation and increase in racial/ethnic diversity representation in the U.S., in conjunction with the Committee’s holistic review of the Company’s key accomplishments and actions taken during the year to advance our ESG performance and progress towards our 2030 sustainability commitments. The Committee will not apply the ESG Modifier to increase an annual cash incentive payout above the overall cap of 200% of the total target payout opportunity under the program.
Individual performance scores are based on each NEO’s performance measured against their individual performance objectives.
Individual AIM awards are determined by multiplying the NEO’s target award by the financial performance score and
ESG modifier and then multiplying that result by the individual performance score. AIM payouts cannot exceed 200% of the target award. If the overall AIM payout score is less than 30%, no award is payable.
For 2020 AIM purposes, Mr. Lamach, Mr. Kuehn, Ms. Avedon, Mr. Camuti and Ms. Carter were measured on Enterprise financial metrics. Mr. Regnery was measured on a combination of Enterprise and regional segment metrics (50% Enterprise, 20% Americas segment, 15% EMEA segment and 15% Asia segment).
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COMPENSATION DISCUSSION AND ANALYSIS
20202022 AIM Revenue, Adjusted EBITDA and Free Cash Flow performance goals were set based on 20202022 financial plans and are summarized with performance relative to those goals in the following table:
| | Metric | | Threshold Performance | | Target Performance | | Maximum Performance | | 2020 Adjusted Performance |
Enterprise | | Revenue(2) | | $ | 12,917.40 | | | $ | 13,597.30 | | | $ | 14,277.20 | | | $ | 12,478.80 | |
| | Adjusted EBITDA(2) | | $ | 1,906.70 | | | $ | 2,118.60 | | | $ | 2,330.50 | | | $ | 1,924.30 | |
| | Cash Flow(2) | | $ | 1,017.60 | | | $ | 1,272.00 | | | $ | 1,526.40 | | | $ | 1,713.30 | |
| | Adjusted EBITDA Margin Multiplier(3) | | | 14.76 | % | | | 15.58 | % | | | 16.32 | % | | | 15.42 | % |
Americas Segment | | Revenue(2) | | $ | 9,898.90 | | | $ | 10,419.90 | | | $ | 10,940.90 | | | $ | 9,728.30 | |
| | Adjusted EBITDA(2) | | $ | 1,678.80 | | | $ | 1,865.30 | | | $ | 2,051.80 | | | $ | 1,676.80 | |
| | Cash Flow(2) | | $ | 1,397.20 | | | $ | 1,746.50 | | | $ | 2,095.80 | | | $ | 1,737.70 | |
| | Adjusted EBITDA Margin Multiplier(3) | | | 16.96 | % | | | 17.90 | % | | | 18.75 | % | | | 17.24 | % |
EMEA Segment | | Revenue(2) | | $ | 1,768.00 | | | $ | 1,861.00 | | | $ | 1,954.10 | | | $ | 1,633.50 | |
| | Adjusted EBITDA(2) | | $ | 273.10 | | | $ | 303.40 | | | $ | 333.70 | | | $ | 268.10 | |
| | Cash Flow(2) | | $ | 222.20 | | | $ | 277.70 | | | $ | 333.20 | | | $ | 283.00 | |
| | Adjusted EBITDA Margin Multiplier(3) | | | 15.45 | % | | | 16.30 | % | | | 17.08 | % | | | 16.41 | % |
Asia Segment | | Revenue(2) | | $ | 1,250.60 | | | $ | 1,316.40 | | | $ | 1,382.20 | | | $ | 1,117.00 | |
| | Adjusted EBITDA(2) | | $ | 174.00 | | | $ | 193.30 | | | $ | 212.60 | | | $ | 190.00 | |
| | Cash Flow(2) | | $ | 144.50 | | | $ | 180.60 | | | $ | 216.70 | | | $ | 217.70 | |
| | Adjusted EBITDA Margin Multiplier(3) | | | 13.91 | % | | | 14.68 | % | | | 15.38 | % | | | 17.01 | % |
(1) | 2020 Performance reflects adjustments as summarized below. | | | | |
(2)52 | Financial metrics generate payout of 30% at Threshold performance, 100% at Target performance and 200% at Maximum performance. Results are interpolated between performance levels. |
(3) | The Adjusted EBITDA Margin Multiplier is 75% up to Threshold performance, 100% at Target performance and 150% at Maximum performance. Results are interpolated between performance levels. |
COMPENSATION DISCUSSION AND ANALYSIS
| | | | | | | | | | | | | | | | | |
| Metric | Threshold Performance ($M) | Target Performance ($M) | Maximum Performance ($M) | 2022 Adjusted Performance ($M)(a) |
Enterprise | Revenue(b) | 14,502.00 | | 15,265.20 | | 16,028.50 | | 16,133.32 | |
Adjusted EBITDA(b) | 2,370.10 | | 2,633.40 | | 2,896.80 | | 2,698.68 | |
Free Cash Flow(b) | 1,329.40 | | 1,661.70 | | 1,994.00 | | 1,600.13 | |
(a)2022 Performance reflects adjustments as summarized below.
(b)Financial metrics generate payout of 30% at Threshold performance, 100% at Target performance and 200% at Maximum performance. Results are interpolated between performance levels.
The Committee retains the authority to adjust the Company’s reported financial results for the impact of changes in accounting principles, extraordinary items, and unusual or non-recurring gains or losses, including significant differences from the assumptions contained in the financialoperating plan upon which the incentive targets were established, based on its own review and on recommendations by the Chair and CEO. Revenue results are also adjusted to reflect the foreign exchange rate used at the time the incentive targets were established. Adjustments to reported financial results are intended to better reflect an executive’s actual performance results, align award payments with decisions which support the plan and strategies, avoid unintended inflation or deflation of awards due to unusual or non-recurring items in the applicable period, and emphasize the Company’s preference for long-term and sustainable growth. The
Before approving annual cash incentive payouts for the 2022 performance year, the Committee reviewed with management key accomplishments and highlights for 2022 that could impact the Company’s financial performance target attainment. Following that review, the Committee approved adjustments to
20202022 financial performance results for
AIM purposes
atof the
enterprise and segment levelsAnnual Incentive Matrix (“AIM”) plan to (a)
reflect reallocation of costs across businesses due to post-RMT transaction restructuring, and (b) offset
the favorable cash flow impact of a change in interest rate assumption methodology used to calculate Pension Benefit Guaranty Corporation (“PBGC”) premiums after the annual targets were set, and (c) adjust for separation-related impacts resultingcontributions from
the RMT transaction thattwo acquisitions completed during 2022, which were not contemplated when
the annual performance
objectivesmeasures were
set.set: Tozour Energy Systems which closed in the second quarter, and the AL-KO acquisition which closed in the fourth quarter, and (b) adjust for the capital expenditures required to rebuild the Arecibo, Puerto Rico manufacturing facility damaged by a tornado in May 2022. These adjustments,
including restructuringboth positive and
transformation costs,negative, equated to a net 3% increase to payout amounts and were reviewed with the Audit Committee prior to approval by the Committee.
One-time expenses directly associated
In accordance with the RMT transaction were excluded fromAIM plan design, the year-end 2020 AIM financials, as these items are unusual or infrequent in nature. Performance targets are established andfinancial performance results are measuredthen adjusted upward or downward by an ESG modifier. The ESG modifier can have a positive or negative impact of up to 20% based on the Company’s performance against four equally weighted diversity and inclusion and environmental sustainability objectives.
Our annual diversity objectives are set to help cultivate a workforce that reflects the communities where we live and work and to create a glide path that will allow us to meet our 2030 Sustainability Commitments for gender parity and racial and ethnic diversity. In 2022, representation of women in management roles increased from 23.1% at the end of 2021 to 24.2% at the end of 2022 and we increased our racially or ethnically diverse representation from 18.4% to 19.6% of our U.S. salaried population.
Our environmental sustainability goals are science-based targets. These annual targets align us with our 2030 commitments toward a sustainable future by reducing greenhouse gas emissions in our worldwide operations, transportation fleets, and product manufacturing processes, and inspiring the transition to advanced technologies that reduce emissions from product use. In 2022, our internal greenhouse gas emissions decreased by 32,000 metric tons of CO2e and our external carbon emissions, which are mostly tied to customer product use, decreased by 40.3 million metric tons of CO2e.
Based on the Company’s quantitative achievement against its established ESG targets and in conjunction with the holistic review of the Company’s key accomplishments and actions taken during the year to advance our ESG performance toward attainment of our 2030 sustainability commitments, the Committee determined that an ESG modifier of +7% appropriately rewarded 2022 performance and, as a result, a multiplier of 107% was applied to the financial
metrics that have been adjusted from our GAAP results as described below.payout score.
The calculated AIM financial score,
unadjusted for any COVID-19 considerations,inclusive of the +7% ESG modifier, was
74.8%146.88% for the NEOs
fully aligned to Enterprise
performance and 64.8% for Mr. Regnery, who has a portion of his award tied to segment performance.
2020 Considerations in Light of COVID-19:
COVID-19 created challenges in the Company’s ability to deliver target levels of revenue and EBITDA. A broad contraction of global markets resulted in decreased demand for products, challenged the supply chain and increased pressure on costs for the Company, all of which negatively impacted EBITDA due to a lower revenue base. The company took actions necessary to implement safety protocols, provide support to our employees and maintain financial stability through the crisis, all while successfully transforming
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COMPENSATION DISCUSSION AND ANALYSIS
to the new Trane Technologies. The Committee does not believe that the calculated AIM payout levels reflect the quality of 2020 performance in light of COVID-19, noting the performance results and achievements despite COVID-19 disruption to the global markets and the 2020 business plan.
The Company was effective in its response to the global COVID-19 pandemic, focusing on caring for the wellbeing and safety of employees while maintaining balanced attention on short-term performance and long-term business opportunities. There was significant investment in personal protection equipment and safety measures to bring facilities and all manufacturing plants quickly and safely back to operation. Actions were also taken globally to reduce cost, including delaying merit increases and implementing furloughs or temporary pay reductions in a manner to preserve benefit continuity. In lieu of pay reductions, Mr. Lamach contributed $500,000 to the Helping Hand Fund to support employees, and members of the Enterprise Leadership Team and the Board of Directors contributed approximately $315,000 in aggregate.
The Company focused on cash flow and working capital management and delivered Free Cash Flow of $1.71B, or 158% of net earnings. This provided significant liquidity and allowed the Company to operate from a position of strength to continue investing in the business, maintain its dividend, deploy capital to two acquisitions and resume share repurchases ($250 million) in the year. The company also delivered strong profitability and cost control in 2020, driving Enterprise EBITDA Margin improvement of approximately 20 basis points and achieving operating leverage of 13%, well within gross margin targets. In 2020, the Company delivered strong shareholder value with 43.5% Total Shareholder Return (TSR), which significantly outperformed the S&P 500 Index (18.4%) and the S&P 500 Industrial Index (11.1%).
In addition, the Company delivered on 2020 commitments to transform the company, streamline processes and reduce costs following the RMT transaction. Notably, the Company pursued its structural and commercial transformation plan without disruption and exceeded financial expectations with $143M EBITDA improvement as well as achieving $100M annual operational fixed cost savings targets one year ahead of plan with an additional $40M savings projected in 2021.
If financial results were adjusted to completely offset the estimated impact of COVID-19, AIM payout for each of the NEOs would have been approximately 154% of Target. The Committee applied its judgement and approved 20202022 AIM payout levels for NEOs, inclusive of the NEOs at 100% asadjustments laid out above, are summarized in the following table.
Name | | AIM Target ($) | | AIM Achievement For 2020 | | AIM Award For 2020 ($) |
Mr. Michael W. Lamach | | 2,397,000 | | 100% | | 2,397,000 |
Mr. Christopher J. Kuehn | | 680,000 | | 100% | | 680,000 |
Mr. David S. Regnery | | 850,000 | | 100% | | 850,000 |
Ms. Marcia J. Avedon, Ph.D. | | 603,500 | | 100% | | 603,500 |
Mr. Paul A. Camuti | | 501,500 | | 100% | | 501,500 |
Ms. Susan K. Carter | | 194,809 | | 100% | | 194,809 |
Ms. Carter retired on April 1, 2020
| | | | | | | | | | | |
Name | AIM Target ($) | AIM Achievement For 2022(a) | AIM Award For 2022 ($) |
Mr. David S. Regnery | 1,875,000 | | 161.57 | % | 3,029,377 | |
Mr. Christopher J. Kuehn | 775,000 | | 161.57 | % | 1,252,143 | |
Mr. Paul A. Camuti | 544,000 | | 146.88 | % | 799,021 | |
Mr. Evan M. Turtz | 420,000 | | 146.88 | % | 616,891 | |
Mr. Raymond D. Pittard | 440,625 | | 161.57 | % | 711,903 | |
(a)AIM achievement percentages are inclusive of each NEO’s individual performance score and therefore theESG modifier of 107%.
COMPENSATION DISCUSSION AND ANALYSIS
2023 AIM
Target and Award are prorated.In addition to 2020 AIM awards, special bonuses were awarded in March 2020 to recognize individuals whose contributions were critical to the successful completion of the RMT transaction. This transaction encompassed a tax-free spinoff of approximately 20% of the pre-transaction revenue in businesses in over 45 countries and was accomplished on an accelerated 10-month timeline and created significant shareholder value. The Committee approved the payment of $500,000 for Mr. Lamach, $200,000 each for Ms. Avedon and Ms. Carter, and $150,000 each for Messrs. Camuti, Kuehn and Regnery based on its evaluation of their contributions.
2021 AIM PROGRAM CHANGES
For
2021,2023, the AIM program design
has been updatedis not changing as the Committee believes that the current program effectively connects employees to
replace the
Company’s ESG commitments while appropriately focusing on Revenue, Adjusted EBITDA
multiplier with an Environmental, Social and
Governance (“ESG”) modifier with a range of +/- 20%. This design change was made in recognition of strong margin improvements in 2020 and the desire to align management incentives with our commitment to and strategic focus on sustainability and diversity. Performance relative to ESG objectives will be determined based on established targets and the Committee’s judgement of performance relative to four components:1) | Internal Greenhouse Gas Emissions Reduction |
2) | External / Customers Carbon Emissions Reduction |
3) | Gender Representation in Management |
4) | Racial/Ethnic Minority Representation (for U.S.-based employees only) |
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COMPENSATION DISCUSSION AND ANALYSIS
Long-Term Incentive Program (“LTI”)
Our long-term incentive program is comprised of stock options, RSUs and PSUs. This mix of equity-based awards
aligns executive interests with the interestsplaces a substantial portion of
our shareholders from the perspectives of stock price appreciationcompensation at risk and
relative performance. This approach enables useffectively links equity compensation to
developlong-term shareholder value creation and
implement long-term strategies that we believe are in the best interest of shareholders.financial results.
Stock Options/Restricted Stock Units
We grant our NEOs an equal mix of stock options and RSUs.
OurThe Committee believes that this mix provides an effective balance between performance and retention for our NEOs, and conserves share usage under our incentive stock plan. Stock options are considered “at risk” since there is no value unless the stock price appreciates during the term of the option period. RSUs, on the other hand, provide stronger retentive value because they have value even if our stock price does not grow during the restricted period.
OurThe Committee reviews our equity mix and grant policies annually to ensure they are aligned with our pay for performance philosophy, our executive compensation objectives and the interests of our shareholders.
Stock option and RSU targets are expressed in dollars. The dollar target is converted to a number of shares based on the fair market value of the Company’s shares on the date that the award is granted.
Both stock options and RSUs generally vest ratably, one third per year, over a three-year period following the grant. Dividend equivalents are accrued on outstanding RSU awards at the same time and at the same rate as dividends paid to shareholders. Dividend equivalents on RSUs are only payable if the underlying RSU award has vested. At the time of vesting, one ordinary share is issued for each RSU, and any accrued dividend equivalents are paid in cash.
Performance Share Program (“PSP”) Our PSP is an equity-based incentive compensation program that provides our NEOs and other key executives with an opportunity to earn PSUs based on our performance relative to the companies in the S&P 500 Industrials Index. PSUs granted in
20202022 are earned
overor forfeited following a
3-yearthree-year performance period based equally on our relative average CROIC and relative TSR as compared to the companies within the S&P 500 Industrials Index. The actual number of PSUs earned
for grants made in 2020or forfeited (which can range from 0% to 200% of target)
for grants made in 2022 is based on the following thresholds:
| | | | | |
Company Performance Relative to the Companies
within the S&P 500 Industrials Index | | 20202022 – 20222024 Measurement Period
% of Target PSUs Earned* |
< 25th Percentile | 0 | 0%% |
25th Percentile | 25 | 25%% |
50th Percentile | 100 | 100%% |
≥> 75th Percentile | 200 | 200%% |
* | Results are interpolated between percentiles achieved. |
* Results are interpolated between percentiles achieved.
PSP target awards for NEOs are expressed as a dollar amount and set in consideration of competitive long-term incentive market values for executives in our peer group with similar roles and responsibilities and our mix of long-term incentives. The dollar target is converted to share equivalent PSUs based on the fair market value of our shares on the date that the award is granted. The number
•TSR is measured as the total stock price appreciation and dividends earned during the three years of PSUs earnedthe performance cycle. To prevent an anomalous short-term change in stock price from having an inappropriate and outsized impact on payout levels, a 30-day average stock price at the beginning and ending periods is based on relativeused. TSR provides a tool for measuring performance among peers.
•CROIC is measured by dividing Free Cash Flow by gross fixed assets (Property, Plant & Equipment) plus Working Capital (Accounts and relativeNotes Receivable plus Inventory less Accounts and Notes Payable). CROIC comparedis calculated in accordance with GAAP, subject to companies withinadjustments for unusual or infrequent items; the S&P 500 Industrials Index (with equal weight given to each metric).• | TSR is measured as the total stock price appreciation and dividends earned during the three years of the performance cycle. To prevent an anomalous short-term change in stock price from having an inappropriate and outsized impact on payout levels, a 30-day average stock price at the beginning and ending periods is used. TSR provides a tool for measuring performance among peers. |
• | CROIC is measured by dividing Free Cash Flow by gross fixed assets (Plant, Property & Equipment) plus Working Capital (Accounts and Notes Receivable plus Inventory less Accounts and Notes Payable). CROIC is calculated in accordance with GAAP, subject to adjustments for unusual or infrequent items; the impact of any change in accounting principles; goodwill and other intangible asset impairments; and gains or charges associated with discontinued operations or through the acquisition or divestiture of a business. As a result, expense for outstanding PSP awards is recorded using the fixed accounting method. |
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impact of any change in accounting principles; and gains or charges associated with discontinued operations or through the acquisition or divestiture of a business. As a result, expense for outstanding PSP awards is recorded using the fixed accounting method. Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Our
The Committee retains the authority and discretion to make downward adjustments to the calculated PSP award payouts or not to grant any award payout regardless of actual performance.
Dividend equivalents are accrued on outstanding PSU awards at the same time and at the same rate as dividends paid to shareholders. Dividend equivalents are only paid upon vesting on the number of PSUs actually earned and vested. Dividend equivalents are payable in cash at the time the shares associated with vested PSUs are distributed unless the NEO elected to defer the shares into our executive deferred compensation plan, in which case the dividend equivalents are also
deferred.2020deferred and subsequently settled in shares of our stock.
In
2020,2022, the Committee approved the stock option, RSU and target value of PSU awards based on its evaluation of market competitiveness and each NEO’s sustained individual performance and demonstrated potential to impact future business results. The values in the table below reflect equity-based awards approved by the Committee. The target values for the PSU awards differ from the corresponding values reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table due to different methodologies used in assigning the economic value of equity-based awards required for accounting and
proxy statementProxy Statement reporting purposes. The Committee makes equity award decisions based on grant date expected value while the accounting and
proxy statementProxy Statement values are determined in accordance with GAAP requirements. The PSU awards are earned, in part, based on TSR performance relative to the S&P 500 Industrials Index over a three-year performance period, which requires valuations to take into account the expected payout distribution from 0-200% of target for accounting and
proxy statementProxy Statement purposes.
Name | | Stock Option Award ($) | | RSU Award ($) | | Target Value 2020-2022 PSU Award ($) |
Mr. Michael W. Lamach | | 2,500,000 | | 2,500,000 | | 5,000,000 |
Mr. Christopher J. Kuehn | | 450,000 | | 450,000 | | 900,000 |
Mr. David S. Regnery | | 650,000 | | 650,000 | | 1,300,000 |
Ms. Marcia J. Avedon, Ph.D. | | 420,000 | | 420,000 | | 840,000 |
Mr. Paul A. Camuti | | 375,000 | | 375,000 | | 750,000 |
Ms. Susan K. Carter | | N/A | | N/A | | N/A |
Ms. Carter retired on April 1, 2020.
2018 – 2020
| | | | | | | | | | | |
Name | Stock Option Award ($) | RSU Award ($) | Target Value 2022-2024 PSU Award ($) |
Mr. David S. Regnery | 2,000,000 | | 2,000,000 | | 4,000,000 | |
Mr. Christopher J. Kuehn | 625,000 | | 625,000 | | 1,250,000 | |
Mr. Paul A. Camuti | 375,000 | | 375,000 | | 750,000 | |
Mr. Evan M. Turtz | 350,000 | | 350,000 | | 700,000 | |
Mr. Raymond D. Pittard | 196,875 | | 196,875 | | 375,000 | |
2020-2022 Performance Share Units Payout
As discussed above, PSUs for the three-year
2018 - 20202020-2022 performance period were earned based on the Company’s CROIC and TSR performance relative to the companies in the S&P 500 Industrials Index.
• | CROIC is measured as the average of the annual CROIC in each of the three years of the performance cycle. CROIC was 26.5% for the 2018 - 2020 period, which ranked at the 72nd percentile of the companies in the S&P 500 Industrials Index. |
• | TSR is measured as the total stock price appreciation plus dividends earned during the three years of the performance cycle. To account for stock price volatility, a 30-day average stock price at the beginning and ending periods is used. TSR was 101.73% for the 2018 - 2020 period, which ranked at the 95th percentile of the companies in the S&P 500 Industrials Index. |
•CROIC is measured as the average of the annual CROIC in each of the three years of the performance cycle. CROIC was 29.0% for the 2020-2022 period, which ranked at the 80th percentile of the companies in the S&P 500 Industrials Index.
•TSR is measured as the total stock price appreciation plus dividends earned during the three years of the performance cycle. To account for stock price volatility, a 30-day average stock price at the beginning and ending periods is used. TSR was 57.17% for the 2020-2022 period, which ranked at the 78th percentile of the companies in the S&P 500 Industrials Index. For purposes of the TSR calculation, the Reverse Morris Trust transaction in Q1 2020 was treated as a dividend of $28.93 per share.
PSUs for the
2018 - 20202020-2022 performance cycle achieved
194.5%200% of target levels as summarized in the table below.
Performance Metric | | Company Performance | | Percentile Rank | | Metric Payout | | Weighting | | Payout Level |
Relative CROIC | | 26.5% | | 72nd | | 189% | | 50% | | 94.5% |
Relative TSR | | 101.73% | | 95th | | 200% | | 50% | | 100% |
| | | | Total Award Payout Percentage: | | 194.5% |
| | | | | | | | | | | | | | | | | |
Performance Metric | Company Performance | Percentile Rank | Metric Payout | Weighting | Payout Level |
Relative CROIC | 29.0% | 80th | 200% | 50% | 100% |
Relative TSR | 57.17% | 78th | 200% | 50% | 100% |
| | Total Award Payout Percentage: | 200% |
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COMPENSATION DISCUSSION AND ANALYSIS
VI. Other Compensation and Tax Matters
Retirement Programs and Other Benefits
We maintain qualified and nonqualified defined benefit pension plans for our employees, including the NEOs, to provide for fixed benefits upon retirement based on the individual’s age, compensation and number of years of service. These plans include the Pension Plan, the Supplemental Pension Plans and our supplemental executive retirement plans (the Elected Officer Supplemental Pension (“EOSP”) or the Key Management Supplemental Pension (“KMP”) programs). Refer to the Pension Benefits table and accompanying narrative for additional details on these programs.
We offer a qualified defined contribution (401(k)) plan called the Trane Technologies Employee Savings Plan (the “ESP”) to our salaried and non-union hourly U.S. workforce, including the NEOs. The ESP is a plan that provides a dollar-for-dollar Company match on the first six percent of the employee’s eligible compensation that the employee contributes to the ESP. The ESP has several investment options and is an important component of our U.S. retirement program.
We also have a nonqualified defined contribution plan. The Trane Technologies Supplemental Employee Savings Plan (the “Supplemental ESP”) is an unfunded plan that makes up employer contributions that cannot be made to the ESP due to the Internal Revenue Code
(“the Code”) limitation on the amount of compensation
taken into accountconsidered under the ESP or due to a deferral election under another
non-qualifiednonqualified plan. Supplemental ESP balances are deemed to be invested in the funds selected by the NEOs, which are the same funds available in the ESP, except for a self-directed brokerage account, which is not available in the Supplemental ESP.
We maintain qualified and nonqualified defined benefit pension plans for our employees hired before July 1, 2012, including our NEOs, to provide for fixed benefits upon retirement based on the individual’s age, compensation and years of service. These plans include the Trane Technologies Pension Plan Number One (“Pension Plan”), the Trane Technologies Supplemental Pension Plan (the “Supplemental Pension Plan I”) and the Trane Technologies Supplemental Pension Plan II (“Supplemental Pension Plan II” and, together with the Supplemental Pension Plan I, the “Supplemental Pension Plans”) and our supplemental executive retirement plan (the Key Management Supplemental Program (“KMP”)). In 2022, the Committee elected to close the KMP to new entrants; however, current participants continue to accrue benefits. Refer to the Pension Benefits table and accompanying narrative for additional details on these programs.
In June 2012, our Board of Directors approved significant changes to our broad-based, qualified retirement programs with the intent to move employees from a combined defined benefit/defined contribution approach to a fully defined contribution plan approach over time. Employees active prior to July 1, 2012 were given a choice between continuing to participate in the defined benefit plan until December 31, 2022 or
discontinuing their participation in the defined benefit plan and moving to an enhanced version of the ESP effective January 1, 2013. Employees hired or rehired on or after July 1, 2012 were automatically covered under the enhanced version of the ESP. Under the enhanced version of the ESP, employees
will receive a basic employer contribution equal to two percent of eligible compensation in addition to the Company’s matching
contribution while ceasing to accrue benefits under the defined benefit plan.contribution. Effective as of December 31, 2022, accruals in the
tax-qualified defined benefit plan will ceasePension Plan and the Supplemental Pension Plans have ceased for all employees.
The Committee approved corresponding changes to the applicable nonqualified defined benefit and contribution pension plans. Additional details on the changes can be found in the narrative accompanying the Pension Benefits table.
Our Trane Technologies Executive Deferred Compensation Plan (the “EDCP I”) and the Trane Technologies Executive Deferred Compensation Plan II (the “EDCP II” and, together with the EDCP I, the “EDCP”) allow eligible employees to defer receipt of a
partportion of their annual salary, AIM award and/or PSP award in exchange for deemed investments in our ordinary shares or in the same funds available in the ESP, except for a self-directed brokerage account. Refer to the Nonqualified Deferred Compensation table for additional details on the EDCP.
We provide an enhanced, long-term disability plan to certain executives. The plan supplements the broad-based group plan and provides an additional monthly maximum benefit if the executive elects to purchase supplemental coverage under the group plan. It has an underlying individual policy that is portable when the executive terminates.
In light of the enactment of Section 409A of the Code as part of the American Jobs Creation Act of 2004, “mirror plans” for several of our nonqualified plans, including the Trane Technologies Supplemental Pension Plan
(the “Supplemental Pension Plan I”)I and the EDCP I, were created. The mirror plans are the Trane Technologies Supplemental Pension Plan II
(“Supplemental Pension Plan II” and, together with the Supplemental Pension Plan I, the “Supplemental Pension Plans”) and the EDCP II. The purpose of these mirror plans is not to provide additional benefits to participants, but merely to preserve the tax treatment of the plans that were in place prior to December 31, 2004.
In the case ofFor the Supplemental Pension Plans, the mirror plan benefits are calculated by subtracting the original benefit value to avoid
double-countingdouble counting the benefit. For the EDCP plans, balances accrued through December 31, 2004 are maintained separately from balances accrued after that date.
We provide our NEOs with other benefits that we believe are consistent with prevailing market practice and those of our peer companies. These other benefits and their incremental cost to the Company are reported in “All Other Compensation” shown in the Summary Compensation Table.
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COMPENSATION DISCUSSION AND ANALYSIS
In connection with external recruiting of certain officers, we generally enter into employment arrangements that provide for severance payments upon certain termination events other than in the event of a change in control (which is covered by separate agreements with the officers). Mr. Lamach and Ms. Avedon haveRegnery has such arrangementsan arrangement in theirhis employment agreements.agreement. In 2019 we amended our Major Restructuring Severance Plan, originally adopted in 2012, to provide certain employees, including our NEOs, with certain benefits in the event of a termination of employment without cause or for good reason under a Major Restructuring (as defined in the Post-Employment Section below). Although we do not have a formal severance policy for our executives (other than in the event of a Major Restructuring), we do have guidelines that in most cases would provide for severance in the event of termination without cause.
The severance payable under
the employment
agreementsagreement for Mr.
Lamach and Ms. AvedonRegnery and the benefits available in connection with a Major Restructuring and under the severance guidelines are further described in the
Post-Employment Benefits“Post-Employment Benefits” section of
the proxy statement.this Proxy Statement.
Change-in-Control Provisions
We have entered into change-in-control agreements with our NEOs. Payments are subject to a “double
trigger”,trigger,” meaning that payments would be received only if an officer is terminated without cause or resigns for
“good reason”good reason within two years following a change in control. We provide change-in-control agreements to our NEOs to focus them on the best interests of shareholders and assure continuity of management in circumstances that reduce or eliminate job security and might otherwise lead to accelerated departures. Under the
2018 Incentive Stock Plan
of 2018 (“2018 Plan”), time-based awards will only vest and become exercisable or payable, as applicable, on a change in control if they are not assumed, substituted, or otherwise replaced in connection with the change in control. If the awards are assumed or continued after the change in control, the Committee may provide that such awards will be subject to automatic vesting acceleration upon a participant’s involuntary termination within a designated period following the change in control.
Further,Furthermore, under the 2018
Incentive Stock Plan, PSUs will automatically vest upon a change in control of
ourthe Company based on
(a)(i) the target level prorated to reflect the period the participant was in service during the performance period or
(b)(ii) the actual performance level attained,
in each case, as determined by the Committee.
Our 2013 Incentive Stock Plan provides for the accelerated vesting of outstanding time-based awards in the event of a change in control of the Company only for awards issued through June 7, 2018. Outstanding PSUs would be prorated based on the target for the actual days worked during the applicable performance period. Refer to the
Post-Employment Benefits“Post-Employment Benefits” section of this
proxy statementProxy Statement for a more detailed description of the change-in-control provisions.
Tax and Accounting Considerations
Although we consider the tax and accounting consequences of our compensation programs, the forms of compensation we utilize are determined primarily by their effectiveness in creating maximum alignment with our key strategic objectives and the interests of our shareholders.
The Committee generally grants our regular annual equity awards after the annual earnings release. The grant date is never selected or changed to increase the value of equity awards for executives.
In 2020, the grants were delayed until after the close of the RMT transaction to allow for awards to be granted as stock of Trane Technologies.Claw-Back/
Clawback/Recoupment Policy
To further align the interests of our employees and our shareholders, we have a
claw-back/clawback/recoupment policy to ensure that any fraud or intentional misconduct leading to a restatement of our financial statements would be properly addressed. The policy provides that if it is found that an employee committed fraud or engaged in intentional misconduct that resulted, directly or indirectly, in a need to restate our financial statements, then
ourthe Committee has the discretion to direct the Company to recover all or a portion of any cash or equity incentive compensation paid or value realized, and/or to cancel any stock-based awards or AIM award granted to an employee on or after February 2, 2010, the effective date of the policy.
OurThe Committee may also request that the Company seek to recover any gains realized on or after the effective date of the policy for equity or cash awards made prior to that date (including AIM, stock options, PSUs and RSUs). Application of the
claw-back/clawback/recoupment policy is subject to a determination by
ourthe Committee that: (i) the cash incentive or equity compensation to be recouped was calculated on, or its realized value affected by, the financial results that were subsequently restated; (ii) the cash incentive or equity award would have been less valuable than what was actually awarded or paid based on the application of the correct financial results; and (iii) the employee to whom the policy applied engaged in fraud or intentional misconduct.
ThisThe Committee will review this policy
in 2023, and will
be revised if required underrevise it as necessary to ensure that it aligns with the
Dodd-Frank Act if and when final
regulations implementing the claw-backclawback policy requirements of
that law have been adopted.the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable NYSE listing standards.Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Share-Ownership
Share Ownership Requirements
We impose share ownership requirements on each of our officers. These share ownership requirements are designed to
emphasizeencourage share ownership by our officers and to further align their interests with our shareholders. Each officer must achieve and maintain ownership of ordinary shares or ordinary share equivalents at or above a prescribed level.
Given significant share price growth since 2017 whenIn October 2022, to align our share ownership requirements
were last assessed,with prevalent market practice, we moved from a
market benchmark reviewfixed-share approach to a multiple of
share ownership requirement trends and practices was performed in 2020 to ensure that our guidelines were competitively positioned. Based on this review, the Committee updated share ownership requirements effective in 2021.base salary approach.
The
new requirements are as follows:
Position | | 2020 Individual Ownership Requirement (Shares and Equivalents) | | 2021 Individual Ownership Requirement (Shares and Equivalents) |
Chairman and Chief Executive Officer | | 120,000 | | 75,000 |
President and Chief Operating Officer | | 50,000 | | 30,000 |
Chief Financial Officer, Executive Vice Presidents and Senior Vice Presidents | | 30,000 | | 20,000 |
Strategic Business Unit Presidents and Chief Accounting Officer | | 15,000 | | 10,000 |
| | | | | | | | | | | |
Position | Number of Active Participants as of the Record Date | Individual Ownership Requirement (Multiple of Base Salary) | Average Actual Multiple of Base Salary(a) |
Chair and Chief Executive Officer | 1 | 6 | 15.0 |
Chief Financial Officer | 1 | 4 | 13.1 |
Executive Vice Presidents and Senior Vice Presidents | 7 | 3 | 12.1 |
Strategic Business Unit Presidents and Chief Accounting Officer | 7 | 2 | 3.6 |
(a)Based on the closing price on the record date of $166.58, these share ownership requirements equate to the following as a multiple of average base salary:Position | | 2020 Guideline
Average Multiple of
Base Salary | | 2021 Guideline
Average Multiple of
Base Salary |
Chairman and Chief Executive Officer | | 14x | | 9x |
President & Chief Operating Officer | | 9x | | 6x |
Chief Financial Officer, Executive Vice Presidents and Senior Vice Presidents | | 8x | | 6x |
Strategic Business Unit Presidents and Chief Accounting Officer | | 5x | | 3x |
$170.68.
These ownership requirements have been met by all the NEOs who continue to be employed by the Company as of the record date.
Our
CEO owns shares valued at over 41 times base salary, our President & COO owns shares valued at over 12 times base salary and our CFO, EVPs and SVPs own shares valued at over 14 times their individual base salary, on average.Our share-ownershipshare ownership program requires the accumulation of ordinary shares (or ordinary share equivalents) over a five-year period following the date the person becomes subject to share-ownershipshare ownership requirements at the rate of 20% of the required level each year. Executives who are promoted and have their ownership requirement increased have five years to achieve the new level from the date of promotion. Ownership credit is given for actual ordinary shares owned, deferred compensation that is invested in ordinary shares within our EDCP Plan, ordinary share equivalents accumulated in our qualified and nonqualified employee savings plans as well as unvested RSUs. Stock options and unvested PSUs do not count toward meeting the share-ownershipshare ownership target. If executives fall behind their scheduled accumulation level during their applicable accumulation period, or if they fail to maintain their required level of ownership after their applicable accumulation period, their right to exercise stock options will be limited to “buy and hold” transactions, and any shares received upon the vesting of RSU and PSU awards must be held until the required ownership level is achieved.
54 | |
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Human Resources and Compensation Committee Report
We have reviewed and discussed with management the
Compensation“Compensation Discussion and
AnalysisAnalysis” contained in this Proxy Statement. Based on our review and discussion, we recommended to the Board of Directors that the
Compensation“Compensation Discussion and
AnalysisAnalysis” be included in this Proxy Statement as well as the Company’s Annual Report on Form 10-K for the year ended December 31,
2020.2022.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
| | | | | |
Tony L. White(Chair) | Mark R. George |
Kirk E. Arnold | John A. Hayes |
Jared L. Cohon | Linda P. Hudson |
Gary D. Forsee | |
Kirk E. Arnold | | Linda P. Hudson | |
Jared L. Cohon | | | |
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The following table provides summary information concerning compensation paid by the Company or accrued on behalf of our NEOs for services rendered during the years ended December 31,
2020, 20192022, 2021 and
2018.2020.
Summary Compensation Table
Name and Principal Position | | Year | | | Salary ($)(a) | | | Bonus ($)(b) | | | Stock Awards ($)(c) | | | Option Awards ($)(d) | | | Non-Equity Incentive Plan Compensation ($)(e) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(f) | | | All Other Compensation ($)(g) | | | Total ($) | |
M. W. Lamach | | | 2020 | | | | 1,410,000 | | | | 500,000 | | | | 9,262,869 | | | | 2,500,012 | | | | 2,397,000 | | | | 11,591,666 | | | | 445,939 | | | | 28,107,486 | |
Chairman and Chief | | | 2019 | | | | 1,390,000 | | | | — | | | | 7,957,970 | | | | 2,540,028 | | | | 2,775,000 | | | | 8,960,127 | | | | 594,003 | | | | 24,217,128 | |
Executive Officer | | | 2018 | | | | 1,350,000 | | | | — | | | | 8,181,039 | | | | 2,592,247 | | | | 2,900,000 | | | | — | | | | 562,199 | | | | 15,585,485 | |
C. J. Kuehn | | | 2020 | | | | 642,742 | | | | 150,000 | | | | 1,667,489 | | | | 450,012 | | | | 680,000 | | | | 445,140 | | | | 88,607 | | | | 4,123,990 | |
Senior Vice President and Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
D. S. Regnery | | | 2020 | | | | 850,000 | | | | 150,000 | | | | 2,408,938 | | | | 650,009 | | | | 850,000 | | | | 3,735,597 | | | | 119,679 | | | | 8,764,223 | |
President and Chief | | | 2019 | | | | 761,250 | | | | — | | | | 1,887,911 | | | | 642,630 | | | | 856,177 | | | | 2,693,861 | | | | 159,876 | | | | 7,001,705 | |
Operating Officer | | | 2018 | | | | 730,000 | | | | — | | | | 1,678,263 | | | | 531,745 | | | | 971,398 | | | | — | | | | 106,602 | | | | 4,018,008 | |
M. J. Avedon | | | 2020 | | | | 691,250 | | | | 200,000 | | | | 1,556,448 | | | | 420,004 | | | | 603,500 | | | | 2,547,784 | | | | 100,288 | | | | 6,119,274 | |
Executive Vice President, | | | 2019 | | | | 671,250 | | | | — | | | | 1,337,076 | | | | 426,735 | | | | 712,034 | | | | 1,785,641 | | | | 125,019 | | | | 5,057,755 | |
Chief Human Resources, | | | 2018 | | | | 643,750 | | | | — | | | | 1,409,821 | | | | 446,663 | | | | 736,527 | | | | 216,578 | | | | 102,458 | | | | 3,555,797 | |
Marketing and Communications Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
P. A. Camuti | | | 2020 | | | | 575,000 | | | | 150,000 | | | | 1,389,663 | | | | 375,008 | | | | 501,500 | | | | 814,644 | | | | 77,655 | | | | 3,883,470 | |
Executive Vice President | | | 2019 | | | | 557,500 | | | | — | | | | 955,008 | | | | 304,818 | | | | 521,625 | | | | 609,446 | | | | 103,530 | | | | 3,051,927 | |
and Chief Technology and Strategy Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
S. K. Carter | | | 2020 | | | | 196,686 | | | | 200,000 | | | | 298 | | | | — | | | | 194,809 | | | | 628,837 | | | | 159,471 | | | | 1,380,101 | |
Former Senior Vice | | | 2019 | | | | 761,250 | | | | — | | | | 2,132,808 | | | | 680,732 | | | | 948,963 | | | | 760,722 | | | | 186,901 | | | | 5,471,376 | |
President and Chief Financial Officer | | | 2018 | | | | 735,000 | | | | — | | | | 2,248,810 | | | | 712,536 | | | | 939,504 | | | | 261,347 | | | | 179,074 | | | | 5,076,271 | |
(a) | Pursuant to the EDCP II, a portion of a participant’s annual salary may be deferred into a number of investment options. In 2020, no NEOs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary ($)(a) | Bonus ($) | Stock Awards ($)(b) | Option Awards ($)(c) | Non-Equity Incentive Plan Compensation ($)(d) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(e) | All Other Compensation ($)(f) | Total ($) | | D. S. Regnery Chair and Chief Executive Officer | 2022 | 1,237,500 | | — | | 6,082,088 | | 2,000,006 | | 3,029,377 | | — | | 421,224 | | 12,770,195 | | 2021 | 1,037,500 | | — | | 5,173,935 | | 1,500,036 | | 2,224,399 | | 2,695,010 | | 257,638 | | 12,888,518 | | 2020 | 850,000 | | 150,000 | | 2,408,938 | | 650,009 | | 850,000 | | 3,735,597 | | 119,679 | | 8,764,223 | | C. J. Kuehn Executive Vice President and Chief Financial Officer | 2022 | 762,500 | | — | | 1,900,662 | | 625,024 | | 1,252,143 | | — | | 172,830 | | 4,713,159 | | 2021 | 713,750 | | — | | 1,783,728 | | 600,003 | | 1,205,682 | | 191,069 | | 121,536 | | 4,615,768 | | 2020 | 642,742 | | 150,000 | | 1,667,489 | | 450,012 | | 680,000 | | 445,140 | | 88,607 | | 4,123,990 | | P. A. Camuti Executive Vice President and Chief Technology and Sustainability Officer | 2022 | 633,750 | | — | | 1,140,634 | | 375,015 | | 799,021 | | — | | 103,565 | | 3,051,985 | | 2021 | 608,750 | | — | | 1,300,297 | | 412,530 | | 827,942 | | 210,898 | | 78,125 | | 3,438,542 | | 2020 | 575,000 | | 150,000 | | 1,389,663 | | 375,008 | | 501,500 | | 814,644 | | 77,655 | | 3,883,470 | | E. M. Turtz Senior Vice President and General Counsel | 2022 | 593,750 | | — | | 1,064,548 | | 350,035 | | 616,891 | | — | | 91,407 | | 2,716,631 | | 2021 | 563,750 | | — | | 891,952 | | 300,016 | | 637,488 | | 564,580 | | 67,668 | | 3,025,454 | | R. D. Pittard Executive Vice President Supply Chain, Engineering and Information Technology | 2022 | 581,875 | | — | | 579,764 | | 196,893 | | 711,903 | | — | | 104,907 | | 2,175,342 | |
(a)Pursuant to the EDCP II, a portion of a participant’s annual salary may be deferred into a number of investment options. For 2022, Mr. Turtz elected to defer 10% of his annual salary into the EDCP II. Amounts shown in this column are not reduced to reflect deferrals of annual salary into the EDCP II. (b)The amounts in this column reflect the aggregate grant date fair value of PSU awards and any RSU awards granted for the year under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 and do not reflect amounts paid to or realized by the NEOs. For a discussion of the assumptions made in determining the ASC 718 values see Note 14, “Share-Based Compensation,” to the Company’s consolidated financial statements contained in its 2022 Form 10-K. The ASC grant date fair value of the PSU award is spread over the number of months of service required for the grant to become non-forfeitable, disregarding any adjustments for potential forfeitures. In determining the aggregate grant date fair value of the PSU awards, the awards are valued assuming target level performance achievement. The table below includes the maximum grant date value of the 2022-2024 PSU awards for the persons listed. If the maximum level performance achievement is assumed, the aggregate grant date fair value of the PSU awards would be as follows: | | | | | | (b)Name | Completion recognition bonuses were awarded in March 2020 to recognize individuals whose contributions were critical to the successful completion of the RMT transaction. | (c) | The amounts in this column reflect the aggregate grant date fair value of PSU awards and any RSU awards granted for the year under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 and do not reflect amounts paid to or realized by the NEOs. For a discussion of the assumptions made in determining the ASC 718 values see Note 15, “Share-Based Compensation,” to the Company’s consolidated financial statements contained in its 2020 Form 10-K. The ASC grant date fair value of the PSU award is spread over the number of months of service required for the grant to become non-forfeitable, disregarding any adjustments for potential forfeitures. In determining the aggregate grant date fair value of the PSU awards, the awards are valued assuming target level performance achievement. The table below includes the maximum grant date value of the 2020-2022 PSU awards for the persons listed. If the maximum level performance achievement is assumed, the aggregate grant date fair value of the PSU awards would be as follows: |
Name | | Maximum Grant Date
Value of PSU Awards
($) | | M. W. LamachD. S. Regnery | 8,163,892 | | 13,525,057 | | C. J. Kuehn | 2,551,152 | | 2,434,584 | | D. S. Regnery | | | 3,516,748 | | M. J. Avedon | | | 2,272,260 | | P. A. Camuti | 1,530,964 | | 2,028,773 | | S. K. CarterE. M. Turtz | 1,428,946 | | R. D. Pittard | N/A765,653 | |
Amounts
(c)The amounts in this column also includereflect the incrementalaggregate grant date fair value of certain modificationsstock option grants for financial reporting purposes for the year under ASC 718 and do not reflect amounts paid to or realized by the NEOs. For a discussion of the assumptions made in determining the ASC 718 values see Note 14, “Share-Based Compensation,” to outstanding stock awardsthe Company’s consolidated financial statements contained in connection with the RMT transaction.56 | |
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EXECUTIVE COMPENSATION
(d) | The amounts in this column reflect the aggregate grant date fair value of stock option grants for financial reporting purposes for the year under ASC 718 and do not reflect amounts paid to or realized by the NEOs. For a discussion of the assumptions made in determining the ASC 718 values see Note 15, “Share-Based Compensation,” to the Company’s consolidated financial statements contained in its 2020 Form 10-K. Please see “2020 Grants of Plan-Based Awards” and “Outstanding Equity Awards at December 31, 2020” for additional detail. Amounts in this column also include the incremental fair value of certain modifications made to outstanding stock awards in connection with the RMT transaction. | (e) | This column reflects the amounts earned as annual awards under the AIM program. Unless deferred into the EDCP II, AIM program payments are made in cash. In 2020, Mr. Kuehn and Mr. Regnery elected to defer a percentage (15% and 60% respectively) of their AIM awards into the EDCP II. Amounts shown in this column are not reduced to reflect deferrals of AIM awards into the EDCP II. | (f) | Amounts reported in this column reflect the aggregate increase in the actuarial present value of the benefits under the qualified Trane Technologies Pension Plan Number One (the “Pension Plan”), Supplemental Pension Plans, the KMP and EOSP, as applicable. The change in pension benefits value is attributable to the additional year of service and age, the annual AIM award and any annual salary increase. | | | | Other external factors, outside the influence of the plan design, also impact the values shown in this column. Examples of these factors include changes to mortality tables as well as interest and discount rates. For all the NEOs, the amounts in this column for 2020 were impacted by decreasing lump sum interest rates (down from 2.25% to 1.00%) and discount rates (down from 2.96% to 2.08%) which cause the value of the lump sum distribution under the EOSP and the KMP to increase. For Mr. Lamach, the majority of the change in the pension value is due to these required actuarial valuation changes. | | | | There was no above market interest earned by the NEOs in any year. | | | (g) | The following table summarizes the components of this column for fiscal year 2020: |
Name | | Company Contributions ($)(1) | | | Company Cost For Life Insurance ($) | | | Company Cost For Long Term Disability ($) | | | Retiree Medical Plan ($)(2) | | | Tax Assistance ($)(3) | | | Other Benefits ($)(4) | | | Total ($) | | M. W. Lamach | | | 251,100 | | | | 6,966 | | | | 1,285 | | | | — | | | | 119,747 | | | | 66,841 | | | | 445,939 | | C. J. Kuehn | | | 82,718 | | | | 828 | | | | 1,496 | | | | — | | | | — | | | | 3,565 | | | | 88,607 | | D. S. Regnery | | | 102,371 | | | | 3,689 | | | | 1,456 | | | | 600 | | | | — | | | | 11,563 | | | | 119,679 | | M. J. Avedon | | | 84,197 | | | | 3,225 | | | | 1,824 | | | | — | | | | — | | | | 11,042 | | | | 100,288 | | P. A. Camuti | | | 65,798 | | | | 2,632 | | | | 1,911 | | | | — | | | | — | | | | 7,314 | | | | 77,655 | | S. K. Carter | | | 91,652 | | | | 1,888 | | | | 566 | | | | — | | | | — | | | | 65,365 | | | | 159,471 | |
(1) | Represents Company contributions under the Company’s ESP and Supplemental ESP plans. | (2) | For Mr. Regnery, represents the estimated year-over-year increase in the value of the retiree medical plan, calculated based on the methods used for financial statement reporting purposes. Mr. Regnery is the only NEO eligible for the subsidized retiree medical plan upon retirement. | (3) | The amount for Mr. Lamach represents tax equalization payments related to Irish taxes owed on $335,000, which is the portion of his income that is allocated to his role as a director of the Company. Without these payments, Mr. Lamach would be subject to double taxation on this amount since he is already paying U.S. taxes on this income. | (4) | For Mr. Lamach, this amount includes the incremental cost to the Company of personal use of the Company aircraft (whether leased or owned) by the CEO. For security and safety reasons and to maximize his availability for Company business, the Board of Directors requires the CEO to travel on Company-provided aircraft for business and personal purposes, unless commercial travel is deemed a minimal security risk by the Company. The incremental cost to the Company of personal use of the aircraft is calculated: (i) by taking the hourly average variable operating costs to the Company (including fuel, maintenance, on board catering and landing fees) multiplied by the amount of time flown for personal use in the case of leased aircraft; and (ii) by multiplying the flight time by a variable fuel charge and the average fuel price per gallon and adding any ground costs such as landing and parking fees as well as crew charges for travel expenses in the case of the Company owned aircraft. Both methodologies exclude fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries, management fees and training, hangar and insurance expenses. We impose an annual limit of $150,000 on the CEO’s non-business use of Company-provided aircraft. For 2020, the amount for Mr. Lamach was $58,453 for personal use of Company-provided aircraft. Under the Company’s aircraft use policy, the Compensation Committee has determined that business use includes travel that is related to the Company’s business or benefits the Company, such as travel to meetings of other boards on which the CEO sits. In 2020, Mr. Lamach did not incur any charges for such business-related travel. | | | | These amounts also include: (i) the following incremental cost of financial counseling services, which may include tax preparation and estate planning services: Mr. Lamach, $8,340; Mr. Kuehn, $750; Ms. Carter $5,750; Mr. Regnery, $9,000; Ms. Avedon, $8,340; and Mr. Camuti $4,775; (ii) the following costs for medical services provided through an on-site physician under the Executive Health Program: Mr. Lamach, $48; Mr. Kuehn, $2,315; Ms. Carter, $0; Mr. Regnery, $2,463; Ms. Avedon $2,602 and Mr. Camuti, $2,439; (iii) a payment made to Ms. Carter in the amount of $59,615 for unused vacation at the time of her retirement, and (iv) product rebates and company-branded items that do not exceed $500 in value. |
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EXECUTIVE COMPENSATION
2020its 2022 Form 10-K. Please see “2022 Grants of Plan-Based Awards” and “Outstanding Equity Awards
at December 31, 2022” for additional detail. (d)This column reflects the amounts earned as annual awards under the AIM program. Unless deferred into the EDCP II, AIM program payments are made in cash. For 2022, Mr. Regnery, Mr. Kuehn and Mr. Turtz elected to defer a percentage (60%, 15% and 10% respectively) of their AIM awards into the EDCP II. Amounts shown in this column are not reduced to reflect deferrals of AIM awards into the EDCP II. (e)This column represents the change in pension value for our NEOs under the Pension Plan, Supplemental Pension Plans, and the KMP, as applicable. The amounts reported in this column vary with a number of factors, including the discount rate applied to determine the present value of pension benefits. Because interest rates increased, the change in the value of pension benefits for our NEOs is negative. As Mr. Pittard became an NEO during 2022, the amount shown represents the difference between his Pension Benefit Table amount as of December 31, 2022 and the amount that would have been reported as of December 31, 2021 if he had been an NEO at that time. For the changes in pension value that are negative, those changes are included in the table below: | | | | | | Name | Change in Pension Value ($) | D. S. Regnery | (589,239) | | C. J. Kuehn | (106,837) | | P. A. Camuti | (70,294) | | E. M. Turtz | (517,364) | | R. D. Pittard | (1,488,957) | |
Other external factors, outside the influence of the plan design, also impact the values shown in this column. Examples of these factors include changes to mortality tables as well as interest and discount rates. There was no above market interest earned by the NEOs in any year. (f)The following table summarizes the components of this column for fiscal year 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Company Contributions ($)(1) | Tax Assistance ($)(2) | Personal use of Aircraft ($)(3) | Company Cost For Life Insurance/LTD ($) | Executive Health Program ($)(4) | Financial Planning ($) | Other Benefits ($)(5) | Total ($) | D. S. Regnery | 207,714 | | 100,810 | | 72,008 | | 10,613 | | 5,830 | | 9,269 | | 14,980 | | 421,224 | | C. J. Kuehn | 157,455 | | — | | — | | 3,483 | | 3,889 | | 2,850 | | 5,153 | | 172,830 | | P. A. Camuti | 87,702 | | — | | — | | 6,386 | | 5,460 | | 3,600 | | 417 | | 103,565 | | E. M. Turtz | 73,874 | | — | | — | | 3,901 | | 2,743 | | 10,740 | | 149 | | 91,407 | | R. D. Pittard | 77,195 | | — | | 6,787 | | 4,154 | | 4,430 | | 9,000 | | 3,341 | | 104,907 | |
(1)Represents Company contributions under the Company’s ESP and Supplemental ESP plans. (2)The amount for Mr. Regnery represents tax equalization payments related to Irish taxes owed on $335,000, which is the portion of his income that is allocated to his role as a Director of the Company and $13,910 of benefits in kind primarily due to spousal travel to the June 2022 Board meeting. Without these payments, Mr. Regnery would be subject to double taxation on this amount since he is already paying U.S. taxes on this income. (3)For Mr. Regnery, this amount includes the incremental cost to the Company of personal use of the Company aircraft (whether leased or owned) by the Chair and CEO. For security and safety reasons and to maximize his availability for Company business, the Board of Directors requires the Chair and CEO to travel on Company-provided aircraft for business and personal purposes, unless commercial travel is deemed a minimal security risk by the Company. The incremental cost to the Company of personal use of the aircraft is calculated: (i) by taking the hourly average variable operating costs to the Company (including fuel, maintenance, on board catering and landing fees) multiplied by the amount of time flown for personal use in the case of leased aircraft; and (ii) by multiplying the flight time by a variable fuel charge and the average fuel price per gallon and adding any ground costs such as landing and parking fees as well as crew charges for travel expenses in the case of the Company owned aircraft. Both methodologies exclude fixed costs that do not change based on usage, such as pilots’ and other employees’ salaries, management fees and training, hangar and insurance expenses. We impose an annual limit of $150,000 on the Chair and CEO’s non-business use of Company-provided aircraft. Under the Company’s aircraft use policy, the Human Resources and Compensation Committee has determined that business use includes travel that is related to the Company’s business or benefits the Company, such as travel to meetings of other boards on which the Chair and CEO sits. In 2022, Mr. Regnery did not incur any charges for such business-related travel. For Mr. Pittard, this amount represents bereavement use of the Company aircraft. (4)The amount includes medical services provided through an on-site physician under the Executive Health Program for all NEOs. For Mr. Regnery and Mr. Pittard, the amount also includes the estimated year-over-year increase in the value of the retiree medical plan, calculated based on the methods used for financial statement as they are the only NEOs eligible for the subsidized retiree medical plan upon retirement. (5)These amounts include: (i) product rebates and Company-branded items, (ii) fitness reimbursement, (iii) spousal travel to the June 2022 board meeting along with meals and entertainment and (iv) rewards/recognition.
2022 Grants of Plan-Based Awards The following table shows all plan-based awards granted to the NEOs during fiscal 2020. In March 2020, we adjusted the numbers of our outstanding stock option, RSU and PSU awards to preserve the intrinsic value of the awards in connection with the RMT transaction as described in the footnotes to the table.2022. This table is supplemental to the Summary Compensation Table and is intended to complement the disclosure of equity awards and grants made under non-equity incentive plans in the Summary Compensation Table. Share information reflects the number of shares granted on a post-RMT transaction basis. For additional information regarding outstanding awards, and the impact of modifications made in connection with the RMT transaction, please see the “Outstanding Equity Awards at December 31, 2020”2022” table. | | | | | | | | | | | | | | | | | | | | | | All Other Stock Awards: Number of | | | All Other Option Awards: Number of | | | Exercise or Base | | | Grant Date Fair Value | | | | | | Estimated Future Payouts Under Non-Equity Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | Shares of Stock or | | | Securities Underlying | | | Price of Option | | | of Stock and Option | | Name | | Grant Date | | Threshold ($)(a) | | | Target ($)(a) | | | Maximum ($)(a) | | | Threshold (#)(b) | | | Target (#)(b) | | | Maximum (#)(b) | | | Units (#)(c) | | | Options (#)(c) | | | Awards ($/Sh)(d) | | | Awards ($)(e)(f) | | M. W. Lamach | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AIM | | 2/4/2020 | | | 719,100 | | | | 2,397,000 | | | | 4,794,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | PSUs (2020-2022) | | 3/9/2020 | | | — | | | | — | | | | — | | | | 11,874 | | | | 47,493 | | | | 94,986 | | | | — | | | | — | | | | — | | | | 6,762,528 | | Options | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 149,791 | | | | 105.28 | | | | 2,500,012 | | RSUs | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,747 | | | | — | | | | — | | | | 2,500,084 | | Awards prior to 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PSUs (2018-2020) | | 2/6/2018 | | | — | | | | — | | | | — | | | | 17,357 | | | | 69,427 | | | | 138,854 | | | | — | | | | — | | | | — | | | | 88 | | PSUs (2019-2021) | | 2/5/2019 | | | — | | | | — | | | | — | | | | 15,830 | | | | 63,320 | | | | 126,640 | | | | — | | | | — | | | | — | | | | 85 | | RSUs | | 2/6/2018 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11,572 | | | | — | | | | — | | | | 73 | | RSUs | | 2/5/2019 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 21,107 | | | | — | | | | — | | | | 11 | | C. J. Kuehn | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AIM | | 2/4/2020 | | | 204,000 | | | | 680,000 | | | | 1,360,000 | | | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | PSUs (2020-2022) | | 3/9/2020 | | | — | | | | — | | | | — | | | | 2,138 | | | | 8,549 | | | | 17,098 | | | | — | | | | — | | | | — | | | | 1,217,292 | | Options | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 26,963 | | | | 105.28 | | | | 450,012 | | RSUs | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,275 | | | | — | | | | — | | | | 450,072 | | Awards prior to 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PSUs (2018-2020) | | 2/6/2018 | | | — | | | | — | | | | — | | | | 980 | | | | 3,918 | | | | 7,836 | | | | — | | | | — | | | | — | | | | 26 | | PSUs (2019-2021) | | 2/5/2019 | | | — | | | | — | | | | — | | | | 1,030 | | | | 4,117 | | | | 8,234 | | | | — | | | | — | | | | — | | | | 63 | | RSUs | | 2/6/2018 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 653 | | | | — | | | | — | | | | 10 | | RSUs | | 2/5/2019 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,510 | | | | — | | | | — | | | | 26 | | D. S. Regnery | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AIM | | 2/4/2020 | | | 255,000 | | | | 850,000 | | | | 1,700,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | PSUs (2020-2022) | | 3/9/2020 | | | — | | | | — | | | | — | | | | 3,088 | | | | 12,349 | | | | 24,698 | | | | — | | | | — | | | | — | | | | 1,758,374 | | Options | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38,946 | | | | 105.28 | | | | 650,009 | | RSUs | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,175 | | | | — | | | | — | | | | 650,104 | | Awards prior to 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PSUs (2018-2020) | | 10/3/2017 | | | — | | | | — | | | | — | | | | 3,572 | | | | 14,287 | | | | 28,574 | | | | — | | | | — | | | | — | | | | 94 | | PSUs (2018-2020) | | 2/6/2018 | | | — | | | | — | | | | — | | | | 3,561 | | | | 14,242 | | | | 28,484 | | | | — | | | | — | | | | — | | | | 99 | | PSUs (2019-2021) | | 2/5/2019 | | | — | | | | — | | | | — | | | | 3,641 | | | | 14,564 | | | | 29,128 | | | | — | | | | — | | | | — | | | | 88 | | RSUs | | 10/3/2017 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,287 | | | | — | | | | — | | | | 25 | | RSUs | | 2/6/2018 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,375 | | | | — | | | | — | | | | 72 | | RSUs | | 2/5/2019 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,342 | | | | — | | | | — | | | | 83 | |
58 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Grant Date | Estimated Future Payouts Under Non-Equity Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(c) | All Other Option Awards: Number of Securities Underlying Options (#)(c) | Exercise or Base Price of Option Awards ($/Sh)(d) | Grant Date Fair Value of Stock and Option Awards ($)(e) | Threshold ($)(a) | Target ($)(a) | Maximum ($)(a) | Threshold (#)(b) | Target (#)(b) | Maximum (#)(b) | D. S. Regnery | | | | | | | | | | | | | AIM | — | | 562,500 | | 1,875,000 | | 3,750,000 | | | — | | — | | — | | — | | — | | — | | — | | PSUs (2022-2024) | 2/1/2022 | — | | — | | — | | | 5,982 | | 23,927 | | 47,854 | | — | | — | | — | | 4,081,946 | | Options | 2/1/2022 | — | | — | | — | | | — | | — | | — | | — | | 55,726 | | 167.18 | | 2,000,006 | | RSUs | 2/1/2022 | — | | — | | — | | | — | | — | | — | | 11,964 | | — | | — | | 2,000,142 | | C. J. Kuehn | | | | | | | | | | | | | AIM | — | | 232,500 | | 775,000 | | 1,550,000 | | | — | | — | | — | | — | | — | | — | | — | | PSUs (2022-2024) | 2/1/2022 | — | | — | | — | | | 1,870 | | 7,477 | | 14,954 | | — | | — | | — | | 1,275,576 | | Options | 2/1/2022 | — | | — | | — | | | — | | — | | — | | — | | 17,415 | | 167.18 | | 625,024 | | RSUs | 2/1/2022 | — | | — | | — | | | — | | — | | — | | 3,739 | | — | | — | | 625,086 | | P. A. Camuti | | | | | | | | | | | | | AIM | — | | 163,200 | | 544,000 | | 1,088,000 | | | — | | — | | — | | — | | — | | — | | — | | PSUs (2022-2024) | 2/1/2022 | — | | — | | — | | | 1,122 | | 4,487 | | 8,974 | | — | | — | | — | | 765,482 | | Options | 2/1/2022 | — | | — | | — | | | — | | — | | — | | — | | 10,449 | | 167.18 | | 375,015 | | RSUs | 2/1/2022 | — | | — | | — | | | — | | — | | — | | 2,244 | | — | | — | | 375,152 | | E. M. Turtz | | | | | | | | | | | | | AIM | — | | 126,000 | | 420,000 | | 840,000 | | | — | | — | | — | | — | | — | | — | | — | | PSUs (2022-2024) | 2/1/2022 | — | | — | | — | | | 1,047 | | 4,188 | | 8,376 | | — | | — | | — | | 714,473 | | Options | 2/1/2022 | — | | — | | — | | | — | | — | | — | | — | | 9,753 | | 167.18 | | 350,035 | | RSUs | 2/1/2022 | — | | — | | — | | | — | | — | | — | | 2,094 | | — | | — | | 350,075 | | R. D. Pittard | | | | | | | | | | | | | AIM | — | | 132,188 | | 440,625 | | 881,250 | | | — | | — | | — | | — | | — | | — | | — | | PSUs (2022-2024) | 2/1/2022 | — | | — | | — | | | 561 | | 2,244 | | 4,488 | | — | | — | | — | | 382,826 | | Options | 2/1/2022 | — | | — | | — | | | — | | — | | — | | — | | 5,486 | | 167.18 | | 196,893 | | RSUs | 2/1/2022 | — | | — | | — | | | — | | — | | — | | 1,178 | | — | | — | | 196,938 | |
(a)The target award levels established for the AIM program are established annually in February and are expressed as a percentage of the NEO’s base salary. Refer to “Compensation Discussion and Analysis” under the heading “Annual Incentive Matrix Program” for a description of the Human Resources and Compensation Committee’s process for establishing AIM program target award levels. The amounts reflected in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns represent the threshold, target and maximum amounts for awards under the AIM program that were paid in February 2023, based on performance in 2022. Thus, the amounts shown in the “threshold,” “target” and “maximum” columns reflect the range of potential payouts when the target award levels were established in February 2022 for all NEOs. The AIM program pays $0 for performance below threshold. The actual amounts paid pursuant to those awards are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. (b)The amounts reflected in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns represent the threshold, target and maximum amounts for PSU awards. The PSP pays $0 for performance below threshold. For a description of the Human Resources and Compensation Committee’s process for establishing PSP target award levels and the terms of PSU awards, please refer to “Compensation Discussion and Analysis” under the heading “Long-Term Incentive Program” and the “Post-Employment Benefits” section below.
(c)The amounts in these columns reflect the stock option and RSU awards. For a description of the Human Resources and Compensation Committee’s process for determining stock option and RSU awards and the terms of such awards, see “Compensation Discussion and Analysis” under the heading “Long-Term Incentive Program” and the “Post-Employment Benefits” section below. (d)Stock options were granted under the Company’s 2018 Plan, which requires options to be granted at an exercise price equal to or greater than the fair market value of the Company’s ordinary shares on the date of grant. The fair market value is defined in the 2018 Plan as the closing price of the Company’s ordinary shares listed on the NYSE on the grant date. (e)Amounts in this column include the grant date fair value of the equity awards calculated in accordance with ASC 718. The Company cautions that the actual amount ultimately realized by each NEO from the stock option awards will likely vary based on a number of factors, including stock price fluctuations, differences from the valuation assumptions used and timing of exercise or applicable vesting. For a description of the assumptions made in valuing the equity awards see Note 14, “Share-Based Compensation” to the Company’s consolidated financial statements contained in its 2022 Form 10-K. For PSUs, the grant date fair value has been determined based on achievement of target level performance, which is the performance threshold the Company believes is the most likely to be achieved under the grants. Table of Contents
EXECUTIVE COMPENSATION | | | | | | | | | | | | | | | | | | | | | | All Other Stock Awards: Number of | | | All Other Option Awards: Number of | | | Exercise or Base | | | Grant Date Fair Value | | | | | | Estimated Future Payouts Under Non-Equity Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | Shares of Stock or | | | Securities Underlying | | | Price of Option | | | of Stock and Option | | Name | | Grant Date | | Threshold ($)(a) | | | Target ($)(a) | | | Maximum ($)(a) | | | Threshold (#)(b) | | | Target (#)(b) | | | Maximum (#)(b) | | | Units (#)(c) | | | Options (#)(c) | | | Awards ($/Sh)(d) | | | Awards ($)(e)(f) | | M. J. Avedon | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AIM | | 2/4/2020 | | | 181,050 | | | | 603,500 | | | | 1,207,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | PSUs (2020-2022) | | 3/9/2020 | | | — | | | | — | | | | — | | | | 1,995 | | | | 7,979 | | | | 15,958 | | | | — | | | | — | | | | — | | | | 1,136,130 | | Options | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 25,165 | | | | 105.28 | | | | 420,004 | | RSUs | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,990 | | | | — | | | | — | | | | 420,067 | | Awards prior to 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PSUs (2018-2020) | | 2/6/2018 | | | — | | | | — | | | | — | | | | 2,991 | | | | 11,964 | | | | 23,928 | | | | — | | | | — | | | | — | | | | 104 | | PSUs (2019-2021) | | 2/5/2019 | | | — | | | | — | | | | — | | | | 2,660 | | | | 10,639 | | | | 21,278 | | | | — | | | | — | | | | — | | | | 75 | | RSUs | | 2/6/2018 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,995 | | | | — | | | | — | | | | 40 | | RSUs | | 2/5/2019 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,547 | | | | — | | | | — | | | | 33 | | P. A. Camuti | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 Awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AIM | | 2/4/2020 | | | 150,450 | | | | 501,500 | | | | 1,003,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | PSUs (2020-2022) | | 3/9/2020 | | | — | | | | — | | | | — | | | | 1,781 | | | | 7,124 | | | | 14,248 | | | | — | | | | — | | | | — | | | | 1,014,386 | | Options | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,469 | | | | 105.28 | | | | 375,008 | | RSUs | | 3/9/2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,562 | | | | — | | | | — | | | | 375,007 | | Awards prior to 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PSUs (2018-2020) | | 2/6/2018 | | | — | | | | — | | | | — | | | | 1,923 | | | | 7,692 | | | | 15,384 | | | | — | | | | — | | | | — | | | | 63 | | PSUs (2019-2021) | | 2/5/2019 | | | — | | | | — | | | | — | | | | 1,900 | | | | 7,599 | | | | 15,198 | | | | — | | | | — | | | | — | | | | 110 | | RSUs | | 2/6/2018 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,283 | | | | — | | | | — | | | | 30 | | RSUs | | 2/5/2019 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,534 | | | | — | | | | — | | | | 66 | | S. K. Carter | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | AIM | | 2/4/2020 | | | 58,443 | | | | 194,809 | | | | 389,618 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Awards prior to 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PSUs (2018-2020) | | 2/6/2018 | | | — | | | | — | | | | — | | | | 4,772 | | | | 19,085 | | | | 38,170 | | | | — | | | | — | | | | — | | | | 86 | | PSUs (2019-2021) | | 2/5/2019 | | | — | | | | — | | | | — | | | | 4,243 | | | | 16,971 | | | | 33,942 | | | | — | | | | — | | | | — | | | | 94 | | RSUs | | 2/6/2018 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,182 | | | | — | | | | — | | | | 90 | | RSUs | | 2/5/2019 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,657 | | | | — | | | | — | | | | 28 | |
(a) | The target award levels established for the AIM program are established annually in February and are expressed as a percentage of the NEO’s base salary. Refer to Compensation Discussion and Analysis under the heading “Annual Incentive Matrix Program” for a description of the Compensation Committee’s process for establishing AIM program target award levels. The amounts reflected in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” columns represent the threshold, target and maximum amounts for awards under the AIM program that were paid in February 2021, based on performance in 2020. Thus, the amounts shown in the “threshold,” “target” and “maximum” columns reflect the range of potential payouts when the target award levels were established in February 2020 for all NEOs. The AIM program pays $0 for performance below threshold. Ms. Carter retired on April 1, 2020 and therefore the 2020 AIM amounts reflect prorated levels. The actual amounts paid pursuant to those awards are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. | (b) | The amounts reflected in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns represent the threshold, target and maximum amounts for PSU awards. The PSP pays $0 for performance below threshold. For a description of the Compensation Committee’s process for establishing PSP target award levels and the terms of PSU awards, please refer to Compensation Discussion and Analysis under the heading “Long-Term Incentive Program” and the “Post-Employment Benefits” section below. There were no equity-based awards to Ms. Carter in 2020 due to her impending retirement. | (c) | The amounts in these columns reflect the stock option and RSU awards. For a description of the Compensation Committee’s process for determining stock option and RSU awards and the terms of such awards, see Compensation Discussion and Analysis under the heading “Long-Term Incentive Program” and the “Post-Employment Benefits” section below. There were no new equity-based awards to Ms. Carter in 2020 due to her impending retirement. | (d) | Stock options were granted under the Company’s Incentive Stock Plan of 2018 (the “2018 Plan”), which requires options to be granted at an exercise price equal to or greater than the fair market value of the Company’s ordinary shares on the date of grant. The fair market value is defined in the 2018 Plan as the closing price of the Company’s ordinary shares listed on the NYSE on the grant date. The closing price on the NYSE of the Company’s ordinary shares was $105.28 on the March 2020 grant date. |
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EXECUTIVE COMPENSATION
(e) | Amounts in this column include the grant date fair value of the equity awards, as well as the incremental fair value for awards that were modified during fiscal 2020 (see footnote (f)), calculated in accordance with ASC 718. The Company cautions that the actual amount ultimately realized by each NEO from the stock option awards will likely vary based on a number of factors, including stock price fluctuations, differences from the valuation assumptions used and timing of exercise or applicable vesting. For a description of the assumptions made in valuing the equity awards see Note 15, “Share-Based Compensation” to the Company’s consolidated financial statements contained in its 2020 Form 10-K. For PSUs, the grant date fair value has been determined based on achievement of target level performance, which is the performance threshold the Company believes is the most likely to be achieved under the grants. | (f) | In connection with the RMT transaction, certain adjustments were made to outstanding equity awards held by our employees, including the NEOs as described in the narrative disclosure preceding the “Outstanding Equity Awards at December 31, 2020” table. The adjustments were designed to preserve the intrinsic value of each form of equity award. Although these adjustments were intended to preserve the intrinsic value of each type of award, in some cases, they constituted a modification under ASC Topic 718, which requires a comparison of fair values immediately before and after the RMT transaction. In certain instances, the fair value of the equity awards calculated in accordance with ASC 718 immediately after the RMT transaction was higher. As a result, the adjustment resulted in incremental compensation costs for these awards which are reported in this column. |
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EXECUTIVE COMPENSATION
Outstanding Equity Awards at December 31, 2020 In connection with2022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(a) | Number of Securities Underlying Unexercised Options (#) Unexercisable(a) | Option Exercise Price ($) | Option Expiration Date(b) | | Number of Shares or Units of Stock That Have Not Vested (#)(c) | Market Value of Shares or Units of Stock That Have Not Vested ($)(d) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(e) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(d) | D. S. Regnery | 2/3/2015 | 17,585 | | — | | 52.28 | | 2/2/2025 | | — | | — | | — | | — | | | 2/10/2016 | 29,450 | | — | | 38.99 | | 2/9/2026 | | — | | — | | — | | — | | | 2/7/2017 | 22,497 | | — | | 62.53 | | 2/6/2027 | | — | | — | | — | | — | | | 2/6/2018 | 43,778 | | — | | 70.22 | | 2/5/2028 | | — | | — | | — | | — | | | 2/5/2019 | 48,091 | | — | | 78.97 | | 2/4/2029 | | — | | — | | — | | — | | | 3/9/2020 | 25,964 | | 12,982 | | 105.28 | | 3/8/2030 | | 2,059 | | 346,097 | | 12,349 | | 2,075,743 | | | 2/8/2021 | 8,772 | | 17,544 | | 148.98 | | 2/7/2031 | | 3,491 | | 586,802 | | 8,727 | | 1,466,921 | | | 7/1/2021 | 6,478 | | 12,956 | | 186.20 | | 6/30/2031 | | 2,578 | | 433,336 | | 9,130 | | 1,534,662 | | | 2/1/2022 | — | | 55,726 | | 167.18 | | 1/31/2032 | | 11,964 | | 2,011,029 | | 23,927 | | 4,021,889 | | C. J. Kuehn | 2/6/2018 | 8,025 | | — | | 70.22 | | 2/5/2028 | | — | | — | | — | | — | | | 2/5/2019 | 13,591 | | — | | 78.97 | | 2/4/2029 | | — | | — | | — | | — | | | 3/9/2020 | 17,975 | | 8,988 | | 105.28 | | 3/8/2030 | | 1,425 | | 239,528 | | 8,549 | | 1,437,001 | | | 2/8/2021 | 6,747 | | 13,496 | | 148.98 | | 2/7/2031 | | 2,686 | | 451,490 | | 6,713 | | 1,128,388 | | | 2/1/2022 | — | | 17,415 | | 167.18 | | 1/31/2032 | | 3,739 | | 628,489 | | 7,477 | | 1,256,809 | | P. A. Camuti | 2/7/2017 | 23,687 | | — | | 62.53 | | 2/6/2027 | | — | | — | | — | | — | | | 2/6/2018 | 23,640 | | — | | 70.22 | | 2/5/2028 | | — | | — | | — | | — | | | 2/5/2019 | 22,810 | | — | | 78.97 | | 2/4/2029 | | — | | — | | — | | — | | | 3/9/2020 | 14,979 | | 7,490 | | 105.28 | | 3/8/2030 | | 1,188 | | 199,691 | | 7,124 | | 1,197,473 | | | 2/8/2021 | 4,639 | | 9,279 | | 148.98 | | 2/7/2031 | | 1,846 | | 310,294 | | 5,035 | | 846,333 | | | 2/1/2022 | — | | 10,449 | | 167.18 | | 1/31/2032 | | 2,244 | | 377,194 | | 4,487 | | 754,220 | | E. M. Turtz | 2/6/2018 | 1,926 | | — | | 70.22 | | 2/5/2028 | | — | | — | | — | | — | | | 2/5/2019 | 4,182 | | — | | 78.97 | | 2/4/2029 | | — | | — | | — | | — | | | 3/9/2020 | 5,992 | | 2,996 | | 105.28 | | 3/8/2030 | | 475 | | 79,843 | | 2,375 | | 399,214 | | | 2/8/2021 | 3,374 | | 6,748 | | 148.98 | | 2/7/2031 | | 1,343 | | 225,745 | | 3,357 | | 564,278 | | | 2/1/2022 | — | | 9,753 | | 167.18 | | 1/31/2032 | | 2,094 | | 351,980 | | 4,188 | | 703,961 | | R. D. Pittard | 8/1/2019 | 15,813 | | — | | 94.91 | | 7/31/2029 | | — | | — | | — | | — | | | 3/9/2020 | 7,190 | | 3,595 | | 105.28 | | 3/8/2030 | | 570 | | 95,811 | | 2,280 | | 383,245 | | | 2/8/2021 | 2,227 | | 4,454 | | 148.98 | | 2/7/2031 | | 887 | | 149,096 | | 1,611 | | 270,793 | | | 2/1/2022 | — | | 5,486 | | 167.18 | | 1/31/2032 | | 1,178 | | 198,010 | | 2,244 | | 377,194 | |
(a)These columns represent stock option awards. These awards generally become exercisable in three equal annual installments beginning on the RMT transaction, certain adjustments were madefirst anniversary after the date of grant, subject to outstanding equity awards held by our employees, includingcontinued employment or retirement. (b)All options granted to the NEOs expire on the tenth anniversary (less one day) of the grant date. (c)This column represents unvested RSUs. RSUs generally become vested in three equal annual installments beginning on the first anniversary after the date of grant, subject to continued employment or retirement. (d)The market value was computed based on $168.09, the closing market price of the Company’s ordinary shares on the NYSE at December 30, 2022. (e)This column represents the target number of unvested and unearned PSUs. PSUs vest upon the completion of a three-year performance period. The actual number of shares an NEO will receive, if any, is subject to achievement of the performance goals as described below:certified by the Human Resources and Compensation Committee, and continued employment. • | Vested stock options - Outstanding stock options that were vested and exercisable at the time of the RMT transaction were converted into vested and exercisable stock options of the Company. The number of underlying shares and exercise price for each award was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction. | | | | | •64 | Unvested stock options - Unvested stock options held at the time of the RMT transaction were converted into unvested stock options of the participants’ employer following the separation. The number of underlying shares and exercise price for each award was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction. | • | Restricted stock units - Outstanding RSUs held at the time of the RMT transaction were converted into RSUs of the participants’ employer company following the separation. The number of underlying shares was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction. | • | Performance share units - Active and outstanding PSU awards held at the time of the RMT transaction were converted into active and outstanding PSUs of the Company. Post-transaction, the Company’s employees will continue to participate in the plan at target levels with payout based on actual performance at the end of the respective three-year performance period for each award. The number of underlying shares was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction. |
| | Option Awards(a) | | | Stock Awards(a) | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable(b) | | | Number of Securities Underlying Unexercised Options (#) Unexercisable(b) | | | Option Exercise Price ($) | | | Option Expiration Date(c) | | | Number of Shares or Units of Stock That Have Not Vested (#)(d) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(e) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(f) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(e) | | M. W. Lamach | | 2/6/2018 | | | 142,280 | | | | 71,140 | | | | 70.22 | | | | 2/5/2028 | | | | 11,572 | | | | 1,679,792 | | | | 69,427 | | | | 10,078,023 | | | | 2/5/2019 | | | 63,361 | | | | 126,726 | | | | 78.97 | | | | 2/4/2029 | | | | 21,107 | | | | 3,063,892 | | | | 63,320 | | | | 9,191,531 | | | | 3/9/2020 | | | — | | | | 149,791 | | | | 105.28 | | | | 3/8/2030 | | | | 23,747 | | | | 3,447,115 | | | | 47,493 | | | | 6,894,084 | | C. J. Kuehn | | 2/6/2018 | | | 8,025 | | | | 4,013 | | | | 70.22 | | | | 2/5/2028 | | | | 653 | | | | 94,789 | | | | 3,918 | | | | 568,737 | | | | 2/5/2019 | | | 4,530 | | | | 9,061 | | | | 78.97 | | | | 2/4/2029 | | | | 1,510 | | | | 219,192 | | | | 4,117 | | | | 597,624 | | | | 3/9/2020 | | | — | | | | 26,963 | | | | 105.28 | | | | 3/8/2030 | | | | 4,275 | | | | 620,559 | | | | 8,549 | | | | 1,240,973 | | D. S. Regnery | | 2/25/2014 | | | 14,651 | | | | — | | | | 46.64 | | | | 2/24/2024 | | | | — | | | | — | | | | — | | | | — | | | | 2/3/2015 | | | 17,585 | | | | — | | | | 52.28 | | | | 2/2/2025 | | | | — | | | | — | | | | — | | | | — | | | | 2/10/2016 | | | 29,450 | | | | — | | | | 38.99 | | | | 2/9/2026 | | | | — | | | | — | | | | — | | | | — | | | | 2/7/2017 | | | 22,497 | | | | — | | | | 62.53 | | | | 2/6/2027 | | | | — | | | | — | | | | — | | | | — | | | | 10/3/2017 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 14,287 | | | | 2,073,901 | | | | 2/6/2018 | | | 29,185 | | | | 14,593 | | | | 70.22 | | | | 2/5/2028 | | | | 2,375 | | | | 344,755 | | | | 14,242 | | | | 2,067,369 | | | | 2/5/2019 | | | 16,029 | | | | 32,062 | | | | 78.97 | | | | 2/4/2029 | | | | 5,342 | | | | 775,445 | | | | 14,564 | | | | 2,114,110 | | | | 3/9/2020 | | | — | | | | 38,946 | | | | 105.28 | | | | 3/8/2030 | | | | 6,175 | | | | 896,363 | | | | 12,349 | | | | 1,792,581 | | M. J. Avedon | | 2/7/2017 | | | 20,781 | | | | — | | | | 62.53 | | | | 2/6/2027 | | | | — | | | | — | | | | — | | | | — | | | | 2/6/2018 | | | 24,515 | | | | 12,258 | | | | 70.22 | | | | 2/5/2028 | | | | 1,995 | | | | 289,594 | | | | 11,964 | | | | 1,736,694 | | | | 2/5/2019 | | | 10,645 | | | | 21,290 | | | | 78.97 | | | | 2/4/2029 | | | | 3,547 | | | | 514,883 | | | | 10,639 | | | | 1,544,357 | | | | 3/9/2020 | | | — | | | | 25,165 | | | | 105.28 | | | | 3/8/2030 | | | | 3,990 | | | | 579,188 | | | | 7,979 | | | | 1,158,232 | | P. A. Camuti | | 2/7/2017 | | | 23,687 | | | | — | | | | 62.53 | | | | 2/6/2027 | | | | — | | | | — | | | | — | | | | — | | | | 2/6/2018 | | | 15,760 | | | | 7,880 | | | | 70.22 | | | | 2/5/2028 | | | | 1,283 | | | | 186,240 | | | | 7,692 | | | | 1,116,571 | | | | 2/5/2019 | | | 7,603 | | | | 15,207 | | | | 78.97 | | | | 2/4/2029 | | | | 2,534 | | | | 367,835 | | | | 7,599 | | | | 1,103,071 | | | | 3/9/2020 | | | — | | | | 22,469 | | | | 105.28 | | | | 3/8/2030 | | | | 3,562 | | | | 517,060 | | | | 7,124 | | | | 1,034,120 | | S. K. Carter | | 2/25/2014 | | | 19,420 | | | | — | | | | 46.64 | | | | 2/24/2024 | | | | — | | | | — | | | | — | | | | — | | | | 2/3/2015 | | | 42,860 | | | | — | | | | 52.28 | | | | 2/2/2025 | | | | — | | | | — | | | | — | | | | — | | | | 2/7/2017 | | | 57,851 | | | | — | | | | 62.53 | | | | 4/1/2025 | | | | — | | | | — | | | | — | | | | — | | | | 2/6/2018 | | | 39,108 | | | | 19,554 | | | | 70.22 | | | | 4/1/2025 | | | | 3,182 | | | | 461,899 | | | | 14,314 | | | | 2,077,820 | | | | 2/5/2019 | | | 16,980 | | | | 33,963 | | | | 78.97 | | | | 4/1/2025 | | | | 5,657 | | | | 821,170 | | | | 7,077 | | | | 1,027,297 | |
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EXECUTIVE COMPENSATION (a) | In March 2020, we adjusted the numbers of our outstanding stock option, RSU and PSU awards to preserve the intrinsic value of the awards in connection with the RMT transaction. | (b) | These columns represent stock option awards. These awards generally become exercisable in three equal annual installments beginning on the first anniversary after the date of grant, subject to continued employment or retirement. | (c) | All options granted to the NEOs expire on the tenth anniversary (less one day) of the grant date. | (d) | This column represents unvested RSUs. RSUs generally become vested in three equal annual installments beginning on the first anniversary after the date of grant, subject to continued employment or retirement. | (e) | The market value was computed based on $145.16, the closing market price of the Company’s ordinary shares on the NYSE at December 31, 2020. | (f) | This column represents the target number of unvested and unearned PSUs. PSUs vest upon the completion of a three-year performance period. The actual number of shares an NEO will receive, if any, is subject to achievement of the performance goals as certified by the Compensation Committee, and continued employment. |
2020
2022 Option Exercises and Stock Vested The following table provides information regarding the amounts received by each NEO upon exercise of stock options, the vesting of RSUs or the vesting of PSUs during the fiscal year ended December 31, 2020: | | Option Awards | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(a) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($) | | M. W. Lamach(b) | | | 232,115 | | | | 19,098,190 | | | | 140,434 | | | | 20,285,289 | | C. J. Kuehn(c) | | | 11,718 | | | | 782,838 | | | | 11,490 | | | | 1,601,187 | | D. S. Regnery(d) | | | 14,167 | | | | 1,223,156 | | | | 26,160 | | | | 3,456,699 | | M. J. Avedon(b) | | | 39,549 | | | | 2,932,124 | | | | 22,459 | | | | 3,243,590 | | P. A. Camuti(b) | | | 15,815 | | | | 1,245,748 | | | | 14,558 | | | | 2,102,255 | | S. K. Carter(b) | | | — | | | | — | | | | 35,388 | | | | 5,110,659 | |
(a) | This column reflects the aggregate dollar amount realized by the NEO upon the exercise of the stock options by determining the difference between the market price of the Company’s ordinary shares at exercise and the exercise price of the stock options. | (b) | Reflects the value of the RSUs that vested on February 5, 2020, February 6, 2020, and February 7, 2020 and PSUs that vested on February 18, 2020, based on the fair market value of the Company’s ordinary shares on the vesting date as determined in accordance with the relevant plan. | (c) | Reflects the value of the RSUs that vested on January 3, 2020, February 5, 2020, February 6, 2020 and February 7, 2020 and PSUs that vested on February 18, 2020, based on the fair market value of the Company’s ordinary shares on the vesting date. | (d) | Reflects the value of the RSUs that vested on February 5, 2020, February 6, 2020, February 7, 2020 and October 3, 2020 and PSUs that vested on February 18, 2020, based on the fair market of the Company’s ordinary shares on the vesting date. |
20202022:
| | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(a) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | D. S. Regnery | 14,651 | | 861,785 | | | 36,891 | | 7,448,778 | | C. J. Kuehn(b) | — | | — | | | 3,522 | | 559,512 | | P. A. Camuti | — | | — | | | 18,575 | | 3,189,107 | | E. M. Turtz(c) | — | | — | | | 3,143 | | 488,126 | | R. D. Pittard | 5,019 | | 121,010 | | | 10,567 | | 1,782,905 | |
(a)This column reflects the aggregate dollar amount realized by the NEO upon the exercise of the stock options by determining the difference between the market price of the Company’s ordinary shares at exercise and the exercise price of the stock options. (b)Mr. Kuehn elected to defer the shares acquired upon the vesting of his PSU award on March 1, 2022 into the Company’s EDCP II. Mr. Kuehn deferred 8,234 shares having a value of $1,252,062. Mr. Kuehn’s cash dividends of $50,494 that had accrued on the deferred PSU award were also deferred under the EDCP II. Please see “2022 Nonqualified Deferred Compensation” for more information about the terms of the Company’s EDCP Plans. (c)Mr. Turtz elected to defer a portion of the shares acquired upon the vesting of his PSU award on March 1, 2022 into the Company’s EDCP II. Mr. Turtz deferred 888 shares having a value of $135,029. Mr. Turtz’s cash dividends of $5,445 that had accrued on the deferred PSU award were also deferred under the EDCP II. Please see “2022 Nonqualified Deferred Compensation” for more information about the terms of the Company’s EDCP Plans. The NEOs participate in one or more, but not in all, of the following defined benefit plans: • | the Pension Plan; | • | the Supplemental Pension Plans; and | • | the EOSP or the KMP. |
•the Pension Plan; •the Supplemental Pension Plans; and • the KMP. The Pension Plan is a funded, tax qualified, non-contributory (for all but a small subset of participants) defined benefit plan that covers the majority of the Company’s salaried and non-union hourly U.S. employees who were hired or re-hiredrehired prior to June 30,July 1, 2012. The Pension Plan provides for normal retirement at age 65. The65 and the formula to determine the lump sum benefit under the Pension Plan is: 5%is five percent of final average pay (the five consecutive years with the highest compensation out of the last ten years of eligible compensation) multiplied by years of credited service (as defined in the Pension Plan). A choice for distribution between an annuity and a lump sum option is available. The Pension Plan was closed to new participants after June 30, 2012 and no further benefits will accrue to any Pension Plan participant for service performed after December 31, 2022. In addition, any employee who was a Pension Plan participant on June 30, 2012 was provided the option to waive participation in the Pension Plan effective January 1, 2013, and in lieu of participation in the Pension Plan, receive an annual non-elective employer contribution equal to 2%two percent of eligible compensation in the ESP. 62 | |
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The Supplemental Pension Plans are unfunded, nonqualified, non-contributory defined benefit restoration plans. The Supplemental Pension Plans restore what is lost in the Pension Plan due to limitations under the Internal Revenue Code (the “Code”) on the annual compensation and benefits recognized when calculating benefits under the qualified Pension Plan. The Supplemental Pension Plans cover all employees of the Company who participate in the Pension Plan and who are impacted by the Code compensation and benefits limits. A participant must meet the vesting requirements of the qualified Pension Plan to vest in benefits under the Supplemental Pension Plans. Benefits under the Supplemental Pension Plans are available only as a lump sum distribution after termination and paid in accordance with Section 409A of the Code. As a result of the 2012 changes to the Pension Plan, the Supplemental Pension Plans were closed to employees hired on or after June 30, 2012, and no further benefits will accrue to any Supplemental Plan participant for service performed after December 31, 2022. The EOSP, which was closed to new participants effective April 2011, is an unfunded, nonqualified, non-contributory defined benefit plan designed to replace a percentage of an officer’s final average pay based on his or her age and years of service at the time of retirement. Final average pay is defined as the sum of the officer’s current annual base salary plus the average of his or her three highest AIM awards during the most recent six years. No other elements of compensation (other than base salary and AIM awards) are included in final average pay. The EOSP provides a benefit pursuant to a formula in which 1.9% of an officer’s final average pay is multiplied by the officer’s years of service (up to a maximum of 35 years) and then reduced by the value of other retirement benefits the officer will receive from the Company under certain qualified and nonqualified retirement plans as well as Social Security. If additional years of service were granted to an officer as part of his or her employment agreement, those additional years of service are reflected in the Pension Benefits table below. Vesting occurs, while the officer is employed by the Company, at the earlier of the attainment of age 55 and the completion of 5 years of service or age 62. Unreduced benefits under the EOSP are available at age 62 and benefits are only available as a lump sum after termination and paid in accordance with Section 409A of the Code. Mr. Lamach and Ms. Avedon participate in the EOSP.
The KMP is an unfunded, nonqualified, non-contributory defined benefit plan available to certain key management employees on a highly selective basis. The KMP is designed to replace a percentage of a key employee’s final average pay based on his or hertheir age and years of service at the time of retirement. Final average pay is defined as the sum of the key employee’s current annual base salary plus the average of the employee’s three highest AIM awards during the most recent six years. No other elementscomponents of compensation (other than base salary and AIM awards) are included in final average pay. The KMP provides a benefit pursuant to a formula in which 1.7% of a key employee’s final average pay is multiplied by years of service (up to a maximum of 30 years) and then reduced by the value of other retirement benefits the key employee will receive that are provided by the Company under certain qualified and nonqualified retirement plans as well as Social Security.
Vesting occurs at the earlier of the attainment of age 55 and the completion of 5 years of service or age 65. For employees who beginbegan participating on or after June 2015, there is a minimum 5 year5-year service requirement from date of participation to date of retirement. Benefits are only available as a lump sum after termination and paid in accordance with Section 409A of the Code. Ms. CarterIn 2022, the Committee made the decision to close the KMP to new entrants effective immediately. Mr. Regnery, Mr. Kuehn, Mr. Camuti, Mr. Turtz and Messrs. Kuehn, Regnery and CamutiMr. Pittard participate in the KMP. The table below represents the estimated present value of defined benefits for the plans in which each NEO participates. Name | Plan Name | Number of Years Credited Service (#)(a) | Present Value of Accumulated Benefit ($)(b) | M. W. Lamach(c) | Pension Plan | 16.92 | 311,630 | | Supplemental Pension Plan II | 16.92 | 5,026,534 | | EOSP | 34 | 45,514,828 | C. J. Kuehn | KMP | 5.58 | 1,029,726 | S. K. Carter | KMP | 6.67 | 2,879,968 | D. S. Regnery(d) | Pension Plan | 35.42 | 663,518 | | Supplemental Pension Plan I | 19.42 | 512,936 | | Supplemental Pension Plan II | 35.42 | 2,167,179 | | KMP | 30 | 9,825,791 | M. J. Avedon(e) | Pension Plan | 13.92 | 274,633 | | Supplemental Pension Plan II | 13.92 | 1,207,027 | | EOSP | 14 | 8,371,027 | P. A. Camuti | Pension Plan | 9.42 | 181,319 | | Supplemental Pension Plan II | 9.42 | 486,422 | | KMP | 9.42 | 2,112,371 |
| | | | | | | | | | | | Name | Plan Name | Number of Years Credited Service (#)(a) | Present Value of Accumulated Benefit ($)(b) | D. S. Regnery(c) | Pension Plan | 37.42 | | 509,898 | | | Supplemental Pension Plan I | 19.42 | | 346,192 | | | Supplemental Pension Plan II | 37.42 | | 2,750,056 | | | KMP | 30 | | 11,669,049 | | C. J. Kuehn | KMP | 7.58 | | 1,113,958 | | P. A. Camuti | Pension Plan | 11.42 | | 164,923 | | | Supplemental Pension Plan II | 11.42 | | 504,600 | | | KMP | 11.42 | | 2,251,193 | | E. M. Turtz | Pension Plan | 18.58 | | 184,298 | | | Supplemental Pension Plan II | 18.58 | | 350,534 | | | KMP | 18.58 | | 2,126,293 | | R. D. Pittard(c) | Pension Plan | 32.67 | | 378,912 | | | Supplemental Pension Plan II | 32.67 | | 939,631 | | | KMP | 30 | | 4,057,502 | |
(a)Under the KMP, for officers covered prior to May 19, 2009, a full year of service is credited for any year in which they work at least one day. In the Pension Plan, the Supplemental Pension Plans as well as the KMP for officers covered on or after May 19, 2009, the number of years of credited service is based on elapsed time (i.e., credit is given for each month in which a participant works at least one day). The years of credited service used for calculating benefits under all plans are the years of credited service through December 31, 2022. The years of crediting service used for calculating benefits under the Supplemental Pension Plan I are the years of crediting service through December 31, 2004 and the benefits earned under this plan serve as offsets to the benefits earned under the Supplemental Pension Plan II. (b)The amounts in this column reflect the estimated present value of each NEO’s accumulated benefit under the plans indicated. The calculations reflect the value of the benefits assuming that each NEO was fully vested under each plan. The present value of the accumulated benefits is calculated under each plan using the following assumptions: (i) a discount rate of 5.52% for the Pension Plan; (ii) a discount rate of 5.46% for the Supplemental Pension Plan II and KMP; (iii) retirement at age 65 and (iv) the 2006 rates underlying the RP-2014 mortality tables projected to the 2014 base year using the MP-2017 projection scale and further projected generationally using the MP-2020 projection scale. For the Supplemental Pension Plan II and the KMP, additional assumptions include payment in a lump sum. (c)Under the provisions of the KMP, Mr. Regnery’s and Mr. Pittard’s service is capped at 30 years. Table of Contents
EXECUTIVE COMPENSATION (a) | Under the EOSP or the KMP, for officers covered prior to May 19, 2009, a full year of service is credited for any year in which they work at least one day. In the Pension Plan, the Supplemental Pension Plans as well as the EOSP and the KMP for officers covered on or after May 19, 2009, the number of years of credited service is based on elapsed time (i.e., credit is given for each month in which a participant works at least one day). The years of credited service used for calculating benefits under all plans are the years of credited service through December 31, 2020. The years of crediting service used for calculating benefits under the Supplemental Pension Plan I are the years of crediting service through December 31, 2004 and the benefits earned under this plan serve as offsets to the benefits earned under the Supplemental Pension Plan II. | (b) | The amounts in this column reflect the estimated present value of each NEO’s accumulated benefit under the plans indicated. The calculations reflect the value of the benefits assuming that each NEO was fully vested under each plan. The benefits were computed as of December 31, 2020, consistent with the assumptions described in Note 10, “Pensions and Postretirement Benefits Other than Pensions,” to the consolidated financial statements in the 2020 Form 10-K. | (c) | Mr. Lamach’s credited years of service exceed his actual years of service by 17 years pursuant to the provisions of his employment arrangement. Crediting additional years of service to a nonqualified pension program such as the EOSP was not uncommon in 2004 when Mr. Lamach joined the Company and was used to compensate him for benefits he was forfeiting at his prior employer. Mr. Lamach’s benefit under the EOSP is reduced by the pension benefit he received from his former employer in July 2013, updated with interest. The increase in present value of benefits due to those additional years of credited service is $25,206,210. | (d) | Under the provisions of the KMP, Mr. Regnery’s service is capped at 30 years. | (e) | Ms. Avedon, pursuant to the provisions of her employment arrangement, receives double credit for the first five years of employment (3.8% versus 1.9%) in determining her benefit. The increase in present value of benefits due to this provision is $2,645,447. |
2020
2022 Nonqualified Deferred Compensation The Company’s EDCP is an unfunded, nonqualified plan that permits certain employees, including the NEOs, to defer receipt of up to 50% of their annual salary and up to 100% of their AIM awards and PSP awards. Elections to defer generally must be made prior to the beginning of the calendar year or performance period, as applicable. The Company has established a nonqualified grantor trust with a bank as the trustee to hold certain assets as a funding vehicle for the Company’s obligations under the EDCP. These assets are considered general assets of the Company and are available to its creditors in the event of the Company’s insolvency. Amounts held in the trust are invested by the trustee using various investment vehicles. Participants are offered certain investment options (the same investment options available in the Employee Savings PlanESP other than the self-directed brokerage) , and can choose how they wish to allocate their cash deferrals among those investment options. Participants are 100% vested in all amounts deferred and bear the risk of any earnings and losses on such deferred amounts. Generally, deferred amounts may be distributed following termination of employment or at the time of a scheduled in-service distribution date chosen by the participant. If a participant has completed five or more years of service at the time of termination, or is terminated due to long-term disability, death or retirement, the distribution is paid in accordance with the participant’s election. If a participant terminates without meeting these requirements, the account balance for all plan years will be paid in a lump sum in the year following the year of termination. A participant can elect to receive distributions at termination over a period of 5,five, 10, or 15 annual installments, or in a single lump sum. A participant can elect to receive scheduled in-service distributions in future years that are at least two years after the end of the plan year for which they are deferring. In-service distributions can be received in two to five annual installments, or if no election is made, in a lump sum. For those participants who have investments in ordinary shares, the distribution of these assets will be in the form of ordinary shares, not cash. 64 | |
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EXECUTIVE COMPENSATION
The following table provides information regarding contributions, distributions, earnings and balances for each NEO under our nonqualified deferred compensation plans. Name | | Plan Name | | Executive Contributions in Last Fiscal Year ($)(a) | | Registrant Contributions in Last Fiscal Year ($)(b) | | Aggregate Earnings in Last Fiscal Year ($)(c) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance At Last Fiscal Year End ($)(d) | M. W. Lamach | | EDCP | | — | | — | | 3,672,331 | | — | | 12,321,660 | | | Supplemental ESP | | — | | 234,000 | | 1,555,129 | | — | | 6,557,689 | C. J. Kuehn | | EDCP | | 58,685 | | — | | 158,948 | | — | | 675,141 | | | Supplemental ESP | | — | | 59,918 | | 38,716 | | — | | 289,647 | D. S. Regnery | | EDCP | | 513,706 | | — | | 517,261 | | (135,466) | | 6,206,100 | | | Supplemental ESP | | — | | 85,271 | | 144,329 | | — | | 1,379,038 | M. J. Avedon | | EDCP | | — | | — | | 2,419,066 | | — | | 8,116,518 | | | Supplemental ESP | | — | | 67,097 | | 136,527 | | — | | 1,080,645 | P. A. Camuti | | EDCP | | — | | — | | 2,477,722 | | | | 8,313,297 | | | Supplemental ESP | | — | | 48,698 | | 66,418 | | — | | 551,569 | S. K. Carter | | Supplemental ESP | | — | | 68,852 | | 100,709 | | — | | 851,053 |
(a) | The annual deferrals (salary, AIM & | | | | | | | | | | | | | | | | | | | | | Name | Plan Name | Executive Contributions in Last Fiscal Year ($)(a) | Registrant Contributions in Last Fiscal Year ($)(b) | Aggregate Earnings in Last Fiscal Year ($)(c) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance At Last Fiscal Year End ($)(d) | D. S. Regnery | EDCP | 1,334,639 | | — | | (718,396) | | (850,092) | | 6,812,789 | | Supplemental ESP | — | | 189,414 | | (206,892) | | — | | 1,543,659 | | C. J. Kuehn | EDCP | 1,509,535 | | — | | (52,948) | | — | | 2,426,925 | | Supplemental ESP | — | | 133,055 | | (73,682) | | — | | 473,423 | | P. A. Camuti | EDCP | — | | — | | (1,804,784) | | — | | 9,925,859 | | Supplemental ESP | — | | 69,402 | | (95,464) | | — | | 621,714 | | E. M. Turtz | EDCP | 266,208 | | — | | (390,981) | | — | | 2,038,334 | | Supplemental ESP | — | | 55,574 | | (54,553) | | — | | 382,032 | | R. D. Pittard | EDCP | — | | — | | (3,611,374) | | — | | 17,410,664 | | Supplemental ESP | — | | 58,895 | | (159,917) | | — | | 823,452 | |
(a)The annual deferrals (salary, AIM and PSP) are all reflected in the Salary column, the Non-Equity Incentive Plan column and the Stock Awards column, respectively of the Summary Compensation Table. (b)All of the amounts reflected in this column are included in the All Other Compensation column of the Summary Compensation Table. (c)Amounts in this column include gains and losses on investments, as well as dividends on ordinary shares or ordinary share equivalents. None of the earnings or losses reported in this column are included in the Summary Compensation Table. (d)The following table reflects the amounts reported in this column as compensation to the NEOs in the Company’s Summary Compensation Table in Proxy Statements for prior years. Each of Mr. Regnery, Mr. Kuehn, Mr. Camuti, Mr. Turtz and Mr. Pittard first became NEOs and therefore had their compensation reported in the Company’s Proxy Statements beginning with fiscal years 2017 (Regnery), 2020 (Kuehn), 2019 (Camuti), 2021 (Turtz) and 2022 (Pittard). | | | | | | | | | Name | EDCP ($) | Supplemental ESP ($) | D. S. Regnery | 1,910,441 | | 372,864 | | C. J. Kuehn | 160,685 | | 148,218 | | P. A. Camuti | — | | 129,857 | | E. M. Turtz | 201,964 | | 38,685 | | R. D. Pittard | — | | — | |
| | | | | | (b)2023 Proxy Statement | All of the amounts reflected in this column are included in the All Other Compensation column of the Summary Compensation Table. | (c) | Amounts in this column include gains and losses on investments, as well as dividends on ordinary shares or ordinary share equivalents. None of the earnings or losses reported in this column are included in the Summary Compensation Table. | (d) | The following table reflects the amounts reported in this column as compensation to the NEOs in the Company’s Summary Compensation Table in proxy statements for prior years. Each of Messrs. Lamach, Kuehn, Regnery, Ms. Carter, Ms. Avedon and Mr. Camuti first became NEOs and therefore had their compensation reported in the Company’s proxy statements beginning with fiscal years 2004 (Lamach), 2020 (Kuehn), 2017 (Regnery), 2010 (Avedon), 2019 (Camuti) and 2014 (Carter).67 |
| Name | | EDCP ($) | | Supplemental ESP ($) | | M. W. Lamach | | 1,529,086 | | 2,036,325 | | C. J. Kuehn | | — | | — | | D. S. Regnery | | 1,400,441 | | 191,743 | | M. J. Avedon | | 376,016 | | 486,140 | | P. A. Camuti | | — | | 49,044 | | S. K. Carter | | — | | 542,703 |
The following discussion describes the compensation to which each active NEO would be entitled in the event of termination of such executive’s employment. Employment Arrangements and Severance Not in Connection with a Change in Control Mr. Lamach and Ms. Avedon areRegnery is entitled to severance in the event of theirhis involuntary termination without cause pursuant to the terms of theirhis employment agreements.agreement. Under the terms of his employment agreement, Mr. LamachRegnery is eligible for 24 months of base annual salary plus a prorated AIM award earned for the year of termination as determined and paid at the conclusion of the full performance year in accordance with the terms of the AIM program. Ms. Avedon is eligible for 12 months of base salary and an AIM award equal to her target.Table of Contents
EXECUTIVE COMPENSATION
Although the Company does not have a formal severance policy for officers, NEOs who do not have employment agreements providing for severance and who are terminated by the Company other than for cause will generally be considered for severance benefits of up to 12 months’ base salary. Depending on the circumstances and timing of the termination, they may also be eligible for a pro-rated portion of their AIM award earned for the year of termination as determined and paid at the conclusion of the full performance year in accordance with the terms of the AIM program. In addition, in general, the Company’s equity award agreements provide for the following treatment upon the occurrence of one of the specified events in the table below: | | Stocks Options | | RSUs | | PSUs | | | | | | Retirement | Stock Options | RSUs | PSUs | Retirement | Continue to vest on the same basis as active employees and remain exercisable for a period of up to five years following retirement. | | Continue to vest on the same basis as active employees. | | Vest pro-rata based on the time worked during the performance period and the achievement of performance goals through the end of the performance period.period unless full-time employment commences with another employer, in which case unvested awards are forfeited. | Group Termination | | Immediately vest in the portion of the awards that would have vested within twelve months of termination and remain exercisable for a period of up to three years following termination of employment. | | Immediately vest in the portion of the awards that would have vested within twelve months of termination. | | Vest pro-rata based on the time worked during the performance period and the achievement of performance goals through the end of the performance period. | Job Elimination | | Unvested awards are forfeited and vested awards remain exercisable for a period of up to one year following termination. | | Unvested awards are forfeited. | | Vest pro-rata based on the time worked during the performance period and the achievement of performance goals through the end of the performance period. | Death or Disability | | Immediately vest in unvested awards and vested awards remain exercisable for a period of up to three years following death or disability. | | Immediately vest in unvested awards. | | Vest pro-rata based on the time worked during the performance period and the achievement of performance goals at target performance unless termination occurs in the final quarter of the performance period in which case the awards vest based on actual performance. |
In the event of a change in control or termination due to a Major Restructuring, severance would be determined pursuant to the terms of the change-in-control agreements or the Major Restructuring Severance Plan described below in lieu of severance under the terms of the employment agreements or the severance guidelines described above.
The Company has entered into a change-in-control agreement with each NEO. The change-in-control agreement provides for certain payments if the employment is terminated by the Company without “cause” (as defined in the change-in-control agreements) or by the NEO for “good reason” (as defined in the change-in-control agreements), in each case, within two years following a change in control of the Company. For officers who first became eligible for a change-in-control agreement on or after May 19, 2009, including Messrs. Kuehn, Regnery and Camuti, the Company eliminated a severance payment based on outstanding PSP awards and eliminated a payment to cover the impact to the executive of certain incremental taxes incurred in connection with the payments made following a change in control.Following a change in control, each NEO is entitled to continue receiving his or hertheir current base salary and is entitled to an annual bonus in an amount not less than the highest annual bonus paid during the prior three full fiscal years. If an NEO’s employment is terminated “without cause” or by the NEO for “good reason” within two years following a change in control, the NEO is entitled to the following: • | any base salary and annual bonus for a completed fiscal year that had not been paid; | • | an amount equal to the NEO’s annual bonus for the last completed fiscal year pro-rated for the number of full months employed in the current fiscal year; | • | an amount equal to the NEO’s base salary pro-rated for any unused vacation days; | • | •any base salary and annual bonus for a completed fiscal year that had not been paid; •an amount equal to the NEO’s annual bonus for the last completed fiscal year pro-rated for the number of full months employed in the current fiscal year; •an amount equal to the NEO’s base salary pro-rated for any unused vacation days; •a lump sum severance payment from the Company equal to the three times (for the CEO) or two and one-half times (for other NEOs) the sum of: |
| • | the NEO’s annual salary in effect on the termination date, or, if higher, the annual salary in effect immediately prior to the reduction of the NEO’s annual salary after the change in control; and | | • | the NEO’s target AIM award for the year of termination or, if higher, the average of the AIM award amounts beginning three years immediately preceding the change in control and ending on the termination date; and |
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EXECUTIVE COMPENSATION
for Mr. Lamach and Ms. Avedon, a lump sum payment equal to three times for Mr. Lamach(for the Chair and CEO) or two and one-half times for Ms. Avedon(for other NEOs) the sum of: (a)
•the cash valueNEO’s annual salary in effect on the termination date, or, if higher, the annual salary in effect immediately prior to the reduction of the NEO’s annual salary after the change in control; and •the NEO’s target amountAIM award for the year of the most recent PSU award;termination or, (b) if higher, the average amounts of the lastAIM award amounts beginning three PSU awards granted and paid to the NEOyears immediately preceding termination. This payment isthe change in lieu of any rightscontrol and ending on the individual might have with respect to unvested PSU awards.termination date. A “change in control” is defined as the occurrence of any of the following events: (i) any person unrelated to the Company becomes the beneficial owner of 30% or more of the combined voting power of the Company’s voting stock; (ii) the directors serving at the time the change-in-control agreements were executed (or the directors subsequently elected by the shareholders of the Company whose election or nomination was duly approved by at least two-thirds of the then serving directors) fail to constitute a majority of the Board of Directors; (iii) the consummation of a merger or consolidation of the Company with any other corporation in which the Company’s voting securities outstanding immediately prior to such merger or consolidation represent 50% or less of the combined voting securities of the Company immediately after such merger or consolidation; (iv) any sale or transfer of all or substantially all of the Company’s assets, other than a sale or transfer with a corporation where the Company owns at least 80% of the combined voting power of such corporation or its parent after such transfer; or (v) any other event that the continuing directors determine to be a change in control; provided however, with respect to (i), (iii) and (v) above, there shall be no change in control if shareholders of the Company own more than 50% of the combined voting power of the voting securities of the Company or the surviving entity or any parent immediately following such transaction in substantially the same proportion to each other as prior to such transaction. In addition to the foregoing, the NEOs would also be eligible to participate in the Company’s welfare employee benefit programs for the severance period (three years for the Chair and CEO and two and one-half years for the other NEOs). For purposes of determining eligibility for applicable post-retirement welfare benefits, the NEO would be credited with any combination of additional years of service and age, not exceeding 10 years, to the extent necessary to qualify for such benefits. Mr. Regnery isand Mr. Pittard are the only active NEONEOs eligible for subsidized retiree medical benefits (only until age 65) due to histheir age and service as of January 1, 2003, when eligibility for the retiree medical benefit was frozen. The Company would also provide each NEO up to $100,000 of outplacement services. In the event of a change in control, participants in the EOSP and KMP would be immediately vested. A termination within two years following a change in control also triggers the payment of an enhanced benefit, whereby three years would be added to both age and service with the Company under the EOSP or KMP. In addition, the “final average pay” under the EOSP or KMP would be calculated as 33.33% of his or her severance benefit under the change-in-control agreement in the case of Mr. LamachRegnery and 40% of the severance benefit under the applicable change-in-control agreement in the case of the other NEOs. These percentages reflect an annualized value of severance payments that would be provided in accordance with their respective agreements. Under the Company’s 2018 Incentive Stock Plan of 2018 (“2018 Plan”), time-based awards will only vest and become exercisable or payable, as applicable, on a change in control (as defined in the 2018 Incentive Stock Plan) if they are not assumed, substituted or otherwise replaced in connection with the change in control. If the awards are assumed or continued after the change in control, the Committee may provide that such awards will be subject to automatic vesting acceleration upon a participant’s involuntary termination within a designated period following the change in control. Further, under the 2018 Incentive Stock Plan, PSUs will automatically vest upon a change in control of our Company, based on (a) the target level, pro-rated to reflect the period the participant was in service during the performance period or (b) the actual performance level attained, in each case, as determined by the Committee.
The Company has adopted a Major Restructuring Severance Plan (the “Severance Plan”) that provides a cash severance payment in the event a participant’s employment is terminated due to an involuntary loss of job without Cause“cause” (as defined in the Severance Plan) or a Good Reason“good reason” (as defined in the Severance Plan), provided that the termination is substantially related to or a result of a Major Restructuring. The cash severance payment would be equal to two and one-half times (for the Chair and CEO) or two times (for other NEOs) (a) current base salary, and (b) current target AIM award. As of December 31, 2020,2022, the value of cash severance for NEOs was: Mr. Lamach, $9,517,500;Regnery, $7,812,500; Mr. Kuehn, $2,720,000; Mr. Regnery, $3,400,000; Ms. Avedon, $2,627,000; and$3,100,000; Mr. Camuti, $2,183,000.$2,368,000; Mr. Turtz, $2,040,000 and Mr, Pittard, $2,173,750. Participants would also receive a pro-ratedprorated portion of their target AIM award based on actual Company and individual performance during the fiscal year in which termination of employment occurred. Participants in the EOSP or KMP who are not vested in such plans would also receive a cash payment equal to the amount of the benefit to which they would have been entitled if they were vested. In addition, the Company’s equity awards provide that employees who terminate employment due to an involuntary loss of job without Cause“cause” (as defined in the applicable award agreement) or for Good Reason“good reason” (as defined in the applicable award agreement) within one year of completion of a Major Restructuring will, provided that the termination is substantially related to the Major Restructuring, (i) immediately vest in all unvested stock options and may exercise all vested stock options at any time within the following three-year period (five years if retirement eligible) or the remaining term of the stock option, if shorter, (ii) immediately vest in all RSUs, except that retirement eligible participants with at least five years of service would continue their existing vesting schedule, and (iii) receive a prorated payout of outstanding PSUs based on actual performance at the end of performance period. As of December 31, 2020,2022, the value of unvested equity awards was: Mr. Lamach, $46,394,492;Regnery, $9,995,004; Mr. Kuehn, $4,292,084;$4,765,883; Mr. Regnery, $12,935,506; Ms. Avedon, $7,868,646;Camuti, $3,557,502; Mr. Turtz, $1,993,461 and Mr. Camuti, $5,762,000.Table of Contents
EXECUTIVE COMPENSATION
A “Major Restructuring” is defined as a reorganization, recapitalization, extraordinary stock dividend, merger, sale, spin-off or other similar transaction or series of transactions, which individually or in the aggregate, has the effect of resulting in the elimination of all, or the majority of, any one or more of the Company’s business segments, so long as such transaction or transactions do not constitute a Change“change in Controlcontrol” (as defined in the applicable plan). 2020
2022 Post-Employment Benefits Table The following table describes the compensation to which each of the NEOs would be entitled in the event of termination of such executive’s employment on December 31, 2020,2022, including termination following a change in control. The potential payments were determined under the terms of our plans and arrangements in effect on December 31, 2020.2022. The table does not include the pension benefits or nonqualified deferred compensation amounts that would be paid to an NEO, which are set forth in the Pension Benefits table and the Nonqualified Deferred Compensation table above, except to the extent that the NEO is entitled to an additional benefit as a result of the termination. Name | | Voluntary Resignation/ Retirement ($) | | Involuntary Without Cause ($) | | Involuntary With Cause ($) | | Change in Control ($) | | Disability ($) | | Death ($) | M. W. Lamach | | | | | | | | | | | | | Severance(a) | | — | | 2,820,000 | | — | | 12,575,000 | | — | | — | Earned but Unpaid AIM Award(s)(b) | | — | | 2,397,000 | | — | | 2,397,000 | | — | | — | PSP Award Payout(c) | | 18,510,803 | | 18,510,803 | | — | | 46,292,309 | | 18,510,803 | | 18,510,803 | Value of Unvested Equity Awards(d) | | 27,883,689 | | 27,883,689 | | — | | 27,883,689 | | 27,883,689 | | 27,883,689 | Enhanced Retirement Benefits(e) | | — | | — | | — | | 9,876,850 | | — | | — | Outplacement(f) | | — | | 11,400 | | — | | 100,000 | | — | | — | Health Benefits(g) | | — | | — | | — | | 28,319 | | — | | — | Tax Assistance(h) | | — | | — | | — | | — | | — | | — | Total | | 46,394,492 | | 51,622,892 | | | | 99,153,167 | | 46,394,492 | | 46,394,492 | C. J. Kuehn | | | | | | | | | | | | | Severance(a) | | — | | 588,461 | | — | | 3,400,000 | | — | | — | Earned but Unpaid AIM Award(s)(b) | | — | | 680,000 | | — | | 680,000 | | — | | — | PSP Award Payout(c) | | — | | — | | — | | 1,380,907 | | 1,381,778 | | 1,381,778 | Value of Unvested Equity Awards(d) | | — | | — | | — | | 2,910,306 | | 2,910,306 | | 2,910,306 | Enhanced Retirement Benefits(e) | | — | | — | | — | | 1,826,327 | | — | | — | Outplacement(f) | | — | | 11,400 | | — | | 100,000 | | — | | — | Health Benefits(g) | | — | | — | | — | | 23,612 | | — | | — | Total | | — | | 1,279,861 | | — | | 10,321,152 | | 4,292,084 | | 4,292,084 | D. S. Regnery | | | | | | | | | | | | | Severance(a) | | — | | 850,000 | | — | | 4,250,000 | | — | | — | Earned but Unpaid AIM Award(s)(b) | | — | | 850,000 | | — | | 850,000 | | — | | — | PSP Award Payout(c) | | 6,149,994 | | 6,149,994 | | — | | 6,148,397 | | 6,149,994 | | 6,149,994 | Value of Unvested Equity Awards(d) | | 6,785,512 | | 6,785,512 | | — | | 6,785,512 | | 6,785,512 | | 6,785,512 | Enhanced Retirement Benefits(e) | | — | | — | | — | | 3,863,463 | | — | | — | Outplacement(f) | | — | | 11,400 | | — | | 100,000 | | — | | — | Health Benefits(g) | | — | | — | | — | | 86,612 | | — | | — | Total | | 12,935,506 | | 14,646,906 | | — | | 22,083,984 | | 12,935,506 | | 12,935,506 |
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No NEOs are entitled to payment in connection with an Involuntary Termination With Cause. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Termination Scenario | Severance ($)(a) | Earned but Unpaid AIM Awards ($)(b) | PSP Award Payout ($)(c) | Value of Unvested Equity Awards ($)(d) | Enhanced Retirement Benefits ($)(e) | Health Benefits ($)(f) | Outplacement ($)(g) | Total ($) | D. S. Regnery | | | | | | | | | | | Voluntary Resignation/Retirement | — | | 3,029,377 | | 5,416,364 | | 4,578,640 | | — | | — | | — | | 13,024,381 | | | Involuntary without Cause | 2,500,000 | | 1,875,000 | | 5,416,364 | | 4,578,640 | | — | | — | | 11,400 | | 14,381,404 | | | Change in Control | 9,853,776 | | 2,224,399 | | 5,417,541 | | 4,578,640 | | 11,447,472 | | 111,604 | | 100,000 | | 33,733,432 | | | Death/Disability | — | | 3,029,377 | | 5,416,364 | | 4,578,640 | | — | | — | | — | | 13,024,381 | | C. J. Kuehn | | | | | | | | | | | Voluntary Resignation/Retirement | — | | — | | — | | — | | — | | — | | — | | — | | | Involuntary without Cause | 700,481 | | — | | — | | — | | — | | — | | 11,400 | | 711,881 | | | Change in Control | 4,552,354 | | 1,205,682 | | 2,608,421 | | 2,157,799 | | 2,284,637 | | 67,276 | | 100,000 | | 12,976,169 | | | Death/Disability | — | | 1,252,143 | | 2,608,084 | | 2,157,799 | | — | | — | | — | | 6,018,026 | | P. A. Camuti | | | | | | | | | | | Voluntary Resignation/Retirement | — | | 799,021 | | 2,013,046 | | 1,544,456 | | — | | — | | — | | 4,356,523 | | | Involuntary without Cause | 640,000 | | 799,021 | | 2,013,046 | | 1,544,456 | | — | | — | | 11,400 | | 5,007,923 | | | Change in Control | 3,373,719 | | 827,942 | | 2,013,214 | | 1,544,456 | | 2,218,485 | | 45,878 | | 100,000 | | 10,123,694 | | | Death/Disability | — | | 799,021 | | 2,013,046 | | 1,544,456 | | — | | — | | — | | 4,356,523 | | E. M. Turtz | | | | | | | | | | | Voluntary Resignation/Retirement | — | | — | | — | | — | | — | | — | | — | | — | | | Involuntary without Cause | 600,000 | | — | | — | | — | | — | | — | | 11,400 | | 611,400 | | | Change in Control | 2,854,483 | | 637,488 | | 1,010,053 | | 983,576 | | 2,892,445 | | 66,470 | | 100,000 | | 8,544,515 | | | Death/Disability | — | | 616,891 | | 1,009,885 | | 983,576 | | — | | — | | — | | 2,610,352 | | R. D. Pittard | | | | | | | | | | | Voluntary Resignation/Retirement | — | | 711,903 | | 689,505 | | 758,827 | | — | | — | | — | | 2,160,235 | | | Involuntary without Cause | 587,500 | | 711,903 | | 689,505 | | 758,827 | | — | | — | | 11,400 | | 2,759,135 | | | Change in Control | 2,989,878 | | 704,701 | | 689,505 | | 758,827 | | 3,218,469 | | 107,858 | | 100,000 | | 8,569,238 | | | Death/Disability | — | | 711,903 | | 689,505 | | 758,827 | | — | | — | | — | | 2,160,235 | |
(a)For the “Involuntary without Cause” scenario, for those NEOs who do not have a formal separation agreement, the current severance guidelines permit payment of up to one year’s base salary provided that such termination was not eligible for severance benefits under the Major Restructuring Severance Plan. Because of his service, Mr. Kuehn’s severance is equal to 47 weeks rather than 52. For the amounts shown under in the “Change in Control” scenario, refer to the description of how severance is calculated in the section above, entitled Post-Employment Benefits. (b)For the “Voluntary Resignation/Retirement” scenario, the amount shown is only provided in the case of a voluntary retirement; for resignation, the NEO would not receive an AIM award. For the “Involuntary without Cause” scenario, the amount for Mr. Regnery represents the target AIM award pursuant to the terms of his employment Table of Contents
EXECUTIVE COMPENSATION Name | | Voluntary Resignation/ Retirement ($) | | Involuntary Without Cause ($) | | Involuntary With Cause ($) | | Change in Control ($) | | Disability ($) | | Death ($) | M. J. Avedon | | | | | | | | | | | | | Severance(a) | | — | | 710,000 | | — | | 3,529,441 | | — | | — | Earned but Unpaid AIM Award(s)(b) | | — | | 603,500 | | — | | 603,500 | | — | | — | PSP Award Payout(c) | | 3,153,601 | | 3,153,601 | | — | | 5,340,162 | | 3,153,601 | | 3,153,601 | Value of Unvested Equity Awards(d) | | 4,715,045 | | 4,715,045 | | — | | 4,715,045 | | 4,715,045 | | 4,715,045 | Enhanced Retirement Benefits(e) | | — | | — | | — | | 3,407,041 | | — | | — | Outplacement(f) | | — | | 11,400 | | — | | 100,000 | | — | | — | Health Benefits(g) | | — | | — | | — | | 23,612 | | — | | — | Tax Assistance(h) | | — | | — | | — | | — | | — | | — | Total | | 7,868,646 | | 9,193,546 | | — | | 17,718,801 | | 7,868,646 | | 7,868,646 | P. A. Camuti | | | | | | | | | | | | | Severance(a) | | — | | 590,000 | | — | | 2,745,936 | | — | | — | Earned but Unpaid AIM Award(s)(b) | | — | | 501,500 | | — | | 501,500 | | — | | — | PSP Award Payout(c) | | 2,197,722 | | 2,197,722 | | — | | 2,196,706 | | 2,197,722 | | 2,197,722 | Value of Unvested Equity Awards(d) | | 3,564,278 | | 3,564,278 | | — | | 3,564,278 | | 3,564,278 | | 3,564,278 | Enhanced Retirement Benefits(e) | | — | | — | | — | | 1,803,801 | | — | | — | Outplacement(f) | | — | | 11,400 | | — | | 100,000 | | — | | — | Health Benefits(g) | | — | | — | | — | | 23,612 | | — | | — | Total | | 5,762,000 | | 6,864,900 | | — | | 10,935,833 | | 5,762,000 | | 5,762,000 |
(a) | For the “Involuntary without Cause” column, for those NEOs who do not have a formal separation agreement, the current severance guidelines permit payment of up to one year’s base salary provided that such termination was not eligible for severance benefits under the Major Restructuring Severance Plan. Because of his service, Mr. Kuehn’s severance is equal to 45 weeks rather than 52. For the amounts shown under the “Change in Control” columns, refer to the description of how severance is calculated in the section above, entitled Post-Employment Benefits. | (b) | For the “Involuntary without Cause” column, these amounts represent the AIM awards earned by Mr. Lamach and Ms. Avedon in 2020 and paid pursuant to the terms of their employment agreements and (ii) prorated AIM awards (up to target) that may be paid to the other NEOs depending on the circumstances and timing of the termination. For the amounts under “Change in Control,” these amounts represent the actual award earned for the 2020 performance period, which may be more or less than the target award. | (c) | For the “Involuntary without Cause” column, these amounts represent the cash value of the prorated PSU award payout to the NEOs as a result of their retirement eligibility at December 31, 2020. For the “Change in Control” column for Mr. Lamach and Ms. Avedon, these amounts represent the cash value of the PSU award payout, based on the appropriate multiple. For the “Change in Control” column for Mr. Regnery, Mr. Kuehn and Mr. Camuti, these values represent what would be provided under the terms of the 2013 Plan, which provides a pro-rated payment for all outstanding awards at target, and the 2018 Plan, which provides for either a pro-rated payment for all outstanding awards at target or a payment based on actual performance, as determined by the Committee. For the “Retirement,” “Disability” and “Death” columns, amounts represent the cash value of the prorated portion of their PSUs that vest upon such events assuming performance at target. Amounts for each column are based on the closing stock price of the ordinary shares on December 31, 2020 ($145.16). | (d) | The amounts shown for “Retirement,” “Involuntary without Cause,” “Change in Control,” “Death” and “Disability” represent (i) the value of the unvested RSUs, which is calculated based on the number of unvested RSUs multiplied by the closing stock price of the ordinary shares on December 31, 2020 ($145.16), and (ii) the intrinsic value of the unvested stock options, which is calculated based on the difference between the closing stock price of the ordinary shares on December 31, 2020 ($145.16) and the relevant exercise price. However, only in the event of termination following a “Change in Control” or termination due to “Death” or “Disability” is there accelerated vesting of unvested awards. For “Retirement,” the awards do not accelerate but continue to vest on the same basis as active employees. Messrs. Lamach, Regnery, Camuti and Ms. Avedon are retirement eligible. | (e) | In the event of a change in control of the Company and termination of the NEOs, the present value of the pension benefits under the EOSP, KMP and Supplemental Pension Plan would be paid out as lump sums. While there is no additional benefit to the NEOs as a result of either voluntary retirement/ resignation and/or involuntary resignation without cause, there are differences (based on the methodology mandated by the SEC) between the numbers that are shown in the Pension Benefits Table and those that would actually be payable to the NEO under these termination scenarios. | (f) | For the “Involuntary without Cause” column, each NEO is eligible for outplacement services for a twelve month period, not to exceed $11,400. For the “Change in Control” column, the amount represents the maximum expenses the Company would reimburse the NEO for professional outplacement services. | (g) | Represents the Company cost of health and welfare coverage. The cost for “Change in Control” represents continued active coverage for the severance period. For Mr. Regnery, the value shown includes the cost for retiree coverage. | (h) | Pursuant to the change-in-control agreements for Mr. Lamach and Ms. Avedon, if any payment or distribution by the Company to these NEOs creates certain incremental taxes, they would be entitled to receive from the Company a payment in an amount sufficient to place them in the same after-tax financial position as if such taxes had not been imposed. There is no such incremental tax for a change in control as of December 31, 2020. Therefore, no value is shown in the table above. |
agreement; Mr. Camuti and Mr. Pittard are retirement eligible; therefore, under the terms of the AIM plan, they would be eligible to receive prorated AIM awards (up to target) depending on the circumstances and timing of the termination. For the amounts under the “Change in Control” scenario, these amounts represent the award paid in 2022 for the 2021 performance period based on the Change in Control agreements in place. (c)For the “Involuntary without Cause” scenario, these amounts represent the cash value of the prorated PSU award payout to the NEOs as a result of their retirement eligibility at December 31, 2022. For the “Change in Control” scenario for the NEOs, these values represent a pro-rated payment for all outstanding awards at target. However, under the terms of the 2018 Plan, this payment could also be made based on actual performance with the payment amount being determined by the Committee, For the “Retirement,” and “Death/Disability” scenarios, amounts represent the cash value of the prorated portion of their PSUs that vest upon such events assuming performance at target. Amounts for each scenario are based on the closing stock price of the ordinary shares on December 30, 2022 ($168.09). (d)The amounts shown for “Retirement,” “Involuntary without Cause,” “Change in Control,” and “Death/Disability” represent (i) the value of the unvested RSUs, which is calculated based on the number of unvested RSUs multiplied by the closing stock price of the ordinary shares on December 30, 2022 ($168.09), and (ii) the intrinsic value of the unvested stock options, which is calculated based on the difference between the closing stock price of the ordinary shares on December 30, 2022 ($168.09) and the relevant exercise price. However, only in the event of termination following a “Change in Control” or termination due to “Death/Disability” is there accelerated vesting of unvested awards. For “Retirement,” the awards do not accelerate but continue to vest on the same basis as active employees. Mr. Regnery, Mr. Camuti and Mr. Pittard are retirement eligible. (e)In the event of a “Change in Control” and termination of the NEOs, the present value of the pension benefits under the, KMP and Supplemental Pension Plan would be paid out as lump sums. While there is no additional benefit to the NEOs as a result of either “Voluntary Resignation/Retirement” and/or “Involuntary without Cause”, there are differences (based on the methodology mandated by the SEC) between the numbers that are shown in the Pension Benefits Table and those that would actually be payable to the NEO under these termination scenarios. (f)For the “Change in Control” scenario, these amounts represent the COBRA cost of Contents EXECUTIVE COMPENSATION
health and welfare coverage (for medical, dental and vision) along with the cost of basic life and AD&D, which is the cost for continued active coverage for the severance period. For Mr. Regnery and Mr. Pittard, the value shown includes the cost for retiree coverage. (g)For the “Involuntary without Cause” scenario, each NEO is eligible for outplacement services for a twelve-month period, not to exceed $11,400. For the “Change in Control” scenario, the amount represents the maximum expenses the Company would reimburse the NEO for professional outplacement services. The ratio of our CEO’s total compensation to our median employee’s total compensation (the “CEO Pay Ratio”) is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Due to the flexibility afforded by Item 402(u) in calculating the CEO Pay Ratio, the ratio may not be comparable to CEO pay ratios presented by other companies. We chose to maintain the same median employee for our CEO Pay Ratio calculation in 2022 as there were no changes to our employee population or employee compensation arrangements during 2021 or 2022 that would result in a significant change to our pay ratio disclosure. We identified our median employee using our global employee population as of October 31, 2020. We have employees in 58 countries including 12,679 non-U.S. employees. As part of our methodology, and in compliance with the pay ratio rule under Item 402(u), we employed the de minimis exemption for non-U.S. employees and excluded all employees in 34 countries totaling 1,038 employees (approximately 3.0% of our total workforce of 34,246). Employees in the following countries were excluded:Country | Number of Employees | | Country | Number of Employees | | Country | Number of Employees | Belgium | 89 | | Romania | 32 | | Lebanon | 12 | Colombia | 87 | | Switzerland | 29 | | Macao | 12 | Vietnam | 76 | | Qatar | 28 | | South Africa | 12 | Republic of Korea | 70 | | Greece | 26 | | Guam | 10 | Poland | 68 | | Portugal | 26 | | Finland | 9 | Sweden | 52 | | Saudi Arabia | 25 | | Slovakia | 8 | Turkey | 49 | | Austria | 24 | | Australia | 6 | Panama | 43 | | Costa Rica | 22 | | Croatia | 3 | Russian Federation | 42 | | Kuwait | 17 | | Denmark | 3 | Hungary | 40 | | Peru | 15 | | Luxembourg | 2 | Israel | 39 | | Dominican Republic | 14 | | | | Egypt | 34 | | Hong Kong | 14 | | | |
Our in-scope employees consisted of our full-time, part-time, seasonal and temporary employees and excluded independent contractors and leased workers. To determine our median employee, we used annual base salary (or actual earnings in the case of commission-based employees) as our consistently applied compensation measure for 2020 (the “2020 CACM”). For commission-based employees, actual earnings were considered their base salary. In identifying our median employee, we furtherand annualized pay for those full-time and part-time employees (but not seasonal and temporary employees) who commenced work during 2020. The median employee identified had anomalous total annual compensation related to a facility closure. We, therefore, substituted an employee with the next lowest annual base pay, which is a practice we will continue if future median employees work in a facility where closure has been announced.pay. We believe that annual base salary provides a reasonable estimate of annual compensation of our employees.
After identifying the median employee, we
We calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. Based on such calculation, our median employee’s total compensation was $57,867,$68,215, while our CEO’s compensation was $28,107,486.$12,770,195. Accordingly, our CEO Pay Ratio was 486:187:1.
Pay Versus Performance In accordance with the new requirements prescribed in Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (“CAP”) and our financial performance for the prior three fiscal years. For this purpose, CAP is determined in accordance with SEC rules by adjusting the amounts reported in the Summary Compensation Table by (a) subtracting the change in pension value, if any, for the year; (b) adding the pension service cost for the year; (c) subtracting the grant date fair value of equity awards granted during the year; (d) adding the year-end fair value of unvested equity awards granted during the year; (e) for awards granted in prior years that vested during the year, adding the difference between the vesting date fair value and the fair value at the immediately preceding year-end; and (f) for awards granted in prior years that remain outstanding or unvested at the end of the year, adding the difference between the year-end fair value and the fair value at the immediately preceding year-end. These adjustments are shown below. The table below provides CAP for our principal executive officer (“PEO”) (our CEO) and an average CAP for our non-PEO named executive officers (“NEOs”), as well as other financial information as required. Please see the Compensation Discussion & Analysis above for information regarding the decisions made by the Human Resources and Compensation Committee with respect to the compensation paid to our CEO and NEOs.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | Year | Summary Compensation Table Total for First PEO ($)(a) | Compensation Actually Paid to First PEO ($)(b) | Summary Compensation Table Total for Second PEO ($)(a) | Compensation Actually Paid to Second PEO ($)(b) | Average Summary Compensation Table Total for non-PEO NEOs ($)(a) | Average Compensation Actually Paid to non-PEO NEOs ($)(a)(b) | Total Shareholder Return ($)(c) | Peer Group Total Shareholder Return ($)(c) | Net Income ($M) (d) | Revenue ($M) (e) | 2022 | N/A | N/A | 12,770,195 | | 9,019,182 | | 3,164,279 | | 1,947,464 | | 171 | | 127 | | 1,756.5 | | 15,991.7 | | 2021 | 18,253,260 | | 46,032,830 | | 12,888,518 | | 20,449,001 | | 3,813,093 | | 8,590,730 | | 202 | | 134 | | 1,423.4 | | 14,136.4 | | 2020 | 28,107,486 | | 55,194,418 | | N/A | N/A | 4,854,212 | | 9,065,250 | | 144 | | 111 | | 854.9 | | 12,454.7 | |
(a)The First PEO represents our former CEO Mr. Lamach who became Executive Chair effective July 1, 2021 and retired December 31, 2021; the Second PEO represents Mr. Regnery who became CEO effective July 1, 2021. The non-PEO NEOs represent the following individuals: 2020: Mr. Kuehn, Ms. Carter, Mr. Regnery, Ms. Avedon, and Mr. Camuti; 2021: Mr. Kuehn, Ms. Avedon, Mr. Camuti and Mr. Turtz; 2022: Mr. Kuehn, Mr. Camuti, Mr. Turtz and Mr. Pittard. The amounts shown for each PEO are the amounts reported in the “Total” column of the Summary Compensation Table for the applicable year. The amounts shown for the non-PEO NEOs are the average of amounts reported in the “Total” column of the Summary Compensation Table for the applicable year for NEOs other than the PEO. (b)The following table provides the calculation required to determine CAP in accordance with SEC rules. The CAP amounts reflected do not reflect the actual amount of compensation earned by or paid to our NEOs. The fair values reflected in the Equity Compensation section are calculated in a manner consistent with the methodology used to account for share-based payments in our financial statements, as described in Note 14 to the 2022 10-K. To determine equity award fair values for purposes of calculating CAP in accordance with SEC rules, adjustments were made based on the stock price, updated Black-Scholes stock option assumptions, and estimated Performance Share Unit payouts as of the year-end and vesting measurement dates. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pension Compensation | | Equity Compensation | | | Fiscal Year (FY) | Summary Compensation Table (SCT) Total ($) | LESS SCT Aggregate Change in the Actuarial Present Value of All Defined Benefit and Actuarial Pension Plans ($)(1) | PLUS Service Cost and Prior Service Cost ($) | | LESS SCT Grant Date Fair Value of Equity Awards Granted in FY ($)(2) | PLUS Fair Value of Outstanding Equity Awards Granted in FY ($) | PLUS Change in Fair Value of Equity Awards from Prior Years That Vested in FY ($) | PLUS Change in Fair Value of Outstanding Equity Awards from Prior Years ($) | Compensation Actually Paid (CAP) Total ($) | First PEO M. W. Lamach | 2021 | | 18,253,260 | | 920,815 | | 2,165,012 | | | 11,417,703 | | 12,915,519 | | 1,898,863 | | 23,138,694 | | 46,032,830 | | 2020 | | 28,107,486 | | 11,591,666 | | 1,584,239 | | | 11,762,881 | | 19,402,771 | | 4,924,066 | | 24,530,403 | | 55,194,418 | | Second PEO D. S. Regnery | 2022 | | 12,770,195 | | — | | 479 | | | 8,082,094 | | 8,790,912 | | (3,480,220) | | (980,090) | | 9,019,182 | | 2021 | | 12,888,518 | | 2,695,010 | | 3,454 | | | 6,673,971 | | 9,239,470 | | 634,638 | | 7,051,902 | | 20,449,001 | | Average non-PEO NEOs | 2022 | | 3,164,279 | | — | | 287,386 | | | 1,558,144 | | 1,695,006 | | (1,305,293) | | (335,770) | | 1,947,464 | | 2021 | | 3,813,093 | | 309,031 | | 457,055 | | | 1,822,743 | | 3,002,913 | | 181,250 | | 3,268,193 | | 8,590,730 | | | 2020 | | 4,854,212 | | 1,634,400 | | 248,316 | | | 1,783,574 | | 2,941,593 | | 711,361 | | 3,727,742 | | 9,065,250 | |
(1) As reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” of the Summary Compensation Table for each applicable year. (2) As reported in the “Stock Awards” and “Option Awards” columns of the Summary Compensation Table for each applicable year. (c)Reflects the cumulative Total Shareholder Return for Trane Technologies and the Standard & Poor’s 500 Industrials Index, which is the peer group used in the Performance Graph required under Item 201(e) of Regulation S-K shown in Item 5 of our 2022 Form 10-K. Assumes an initial investment of $100 on December 31, 2019 (adjusted for our Reverse Morris Trust transaction that closed on February 29, 2020) and reinvestment of dividends. (d)As reflected in the Company’s Consolidated Statement of Earnings included in the Form 10-K for each fiscal year. (e)The Company Selected Measure (“CSM”) is Net Revenues for Products and Services (“Revenue”) as reported in the Company’s Consolidated Statement of Earnings included in the Company’s Annual Report on Form 10-K for each fiscal year. The revenue performance targets and results related to executive compensation within our AIM program are not the same as the Revenue listed for the CSM. Revenue results related to AIM are further adjusted for the impact of acquisitions and/or divestitures, foreign exchange, changes in accounting principles, extraordinary items, and unusual or non-recurring gains or losses, including significant differences from the assumptions contained in the financial plan upon which the incentive targets were established. All adjustments are reviewed and approved by the Human Resources and Compensation Committee. Relationships between Pay and Various Metrics In accordance with regulatory requirements, the graphs below reflect the relationships of PEO and Average Non-PEO CAP over the prior three fiscal years to (i) Company TSR and Peer Group TSR, (ii) Net Income, and (iii) Revenue, our Company Selected Measure.
CAP VS TT AND PEER GROUP TSR
Performance Measures We used the following unranked performance measures to link executive compensation actually paid to Company performance for the most recently completed fiscal year. | | | Financial Measures | Revenue | Adjusted EBITDA | Free Cash Flow | Relative 3-Year Total Shareholder Return Percentile Ranking | Relative Cash Flow Return on Invested Capital Percentile Ranking |
Additional information about the performance measures used to calculate PEO and NEO compensation can be found in the discussions of our short-term and long-term incentive programs in the “Compensation Discussion and Analysis” under the headings “Annual Incentive Matrix (‘AIM’) Program” and “Long-Term Incentive Program (‘LTI’)”. We believe the Company’s executive compensation program appropriately rewards our PEO and the Other NEOs for Company and individual performance, assists the Company in retaining our senior leadership team and supports long-term value creation for our shareholders. These values demonstrate alignment of interests of our PEO and the Other NEOs and our stockholders.
Equity Compensation Plan Information The following table provides information as of December 31, 2020,2022, with respect to the Company’s ordinary shares that may be issued under equity compensation plans:Plan Category | | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) | Equity compensation plans approved by security holders(1) | | 7,022,072 | | $ 70.53 | | 15,656,139 | Equity compensation plans not approved by security holders(2) | | 759,967 | | — | | — | Total | | 7,782,039 | | $ 70.53 | | 15,656,139 |
(1) | Consists of the 2007 Plan, the 2013 Plan and the 2018 Plan. | (2) | Consists of the EDCP, the Trane Technologies Directors Deferred Compensation Plan (the “DDCP I”), the Trane Technologies Directors Deferred Compensation and Stock Award Plan II (the “DDCP II” and, together with the DDCP I, the “DDCP”), and the Trane Deferred Compensation Plan (the “TDCP”). |
| | | | | | | | | | | | Plan Category | Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) | Equity compensation plans approved by security holders(a) | 5,054,163 | | $94.06 | | 12,955,860 | | Equity compensation plans not approved by security holders(b) | 532,008 | | — | — | Total | 5,586,171 | | | |
(a)Consists of the Incentive Stock Plan of 2007, the Incentive Stock Plan of 2013 and the 2018 Plan. (b)Consists of the EDCP, the Trane Technologies Directors Deferred Compensation Plan (the “DDCP I”), the Trane Technologies Directors Deferred Compensation and Stock Award Plan II (the “DDCP II” and, together with the DDCP I, the “DDCP”), and the Trane Deferred Compensation Plan (the “TDCP”). Plan participants acquire Company shares under these plans as a result of the deferral of salary or directors’ fees, AIM awards and PSUs.70 | |
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Information Concerning Voting and Solicitation Why Did I Receive This Proxy Statement? We sent you this Proxy Statement or a Notice of Internet Availability of Proxy Materials (“Notice”) because our Board of Directors is soliciting your proxy to vote at the Annual General Meeting. This Proxy Statement summarizes the information you need to know to vote on an informed basis. Why Are There Two Sets of Financial Statements Covering the Same Fiscal Period? U.S. securities laws require us to send you our 20202022 Form 10-K, which includes our financial statements prepared in accordance with GAAP. These financial statements are included in the mailing of this Proxy Statement. Irish law also requires us to provide you with our Irish Financial Statements for our 20202022 fiscal year, including the reports of our Directors and auditors thereon, which accounts have been prepared in accordance with Irish law. The Irish Financial Statements are available on the Company’s website at www. tranetechnologies.comwww.tranetechnologies.com under the heading “Investors – Irish Statutory Accounts” and will be laid before the Annual General Meeting. How Do I Attend the Annual General Meeting? In light of any COVID-19 measures that may be in place in Ireland and the United States on the date of the Annual General Meeting, we
We strongly encourage all shareholders not to attend the Annual General Meeting in person and instead to submit proxy forms to ensure they can vote and be represented at the Annual General Meeting without attending in person. Shareholders are encouraged to keep up-to-date with, and follow, the guidance from the Government of Ireland and the Department of Health (of Ireland) and other local health departments as circumstances may change at short notice. Taking into account the latest guidance from the Government of Ireland, particularly in relation to indoor public gatherings, it is possible the Annual General Meeting Annual General Meeting may be adjourned to a different time and/or venue, in each case notification of such adjournment will be given in accordance with Company’s constitution. Any announcements of changes or updates to the arrangements for the Annual General Meeting will be made available at www.tranetechnologies.com. Due to travel restrictions andand/or health concerns, the Directors may participate by telephone instead of attending in person, there may be significantly reduced attendance by companyCompany personnel, and the meeting will be conducted as efficiently as possible. In the event that the Annual General Meeting can proceed as normal,in order to be admitted, you must present a form of personal identification and evidence of share ownership. If you are a shareholder of record, evidence of share ownership will be either (1) an admission ticket, which is attached to the proxy card and must be separated from the proxy card and kept for presentation at the meeting if you vote your proxy by mail, or (2) a Notice. Shareholders in Ireland may participate in the Annual General Meeting remotely on June 3, 2021 at 1:00 p.m. (Dublin time) telephonically at the Arthur Cox Building, Ten Earlsfort Terrace, Dublin 2, D02 T380, Ireland, in order to be admitted, you must present a form of personal identification and evidence of share ownership.
If you own your shares through a bank, broker or other holder of record (“street name holders”), evidence of share ownership will be either (1) your most recent bank or brokerage account statement, or (2) a Notice. If you would rather have an admission ticket, you can obtain one in advance by mailing a written request,along with proof of your ownership of the Company’s ordinary shares,, to: Secretary Trane Technologies plc
170/175 Lakeview Dr.
Airside Business Park
Swords, Co. Dublin
Ireland
No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be
permitted at the Annual General Meeting.
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INFORMATION CONCERNING VOTING AND SOLICITATION You are entitled to vote if you beneficially owned the Company’s ordinary shares at the close of business on April 8, 2021,6, 2023, the Record Date. At that time, there were 239,108,880228,049,657 of the Company’s ordinary shares outstanding and entitled to vote. Each ordinary share that you own entitles you to one vote on all matters to be voted on a poll at the Annual General Meeting. Shareholders of record can cast their votes by proxy by: • | using the Internet and voting at www.proxyvote.com; | • | calling 1-800-690-6903 and following the telephone prompts; or | • | completing, signing and returning a proxy card by mail. |
•using the Internet and voting at www.proxyvote.com; •calling 1-800-690-6903 and following the telephone prompts; or •completing, signing and returning a proxy card by mail. If you received a Notice and did not receive a proxy card, you may request one at sendmaterial@proxyvote.com. The Notice is not a proxy card and it cannot be used to vote your shares. If you are a shareholder of record and you choose to submit your proxy by telephone by calling the toll-free number on your proxy card, your use of that telephone system and in particular the entry of your pin number/other unique identifier, will be deemed to constitute your appointment, in writing and under hand, and for all purposes of the Companies Act 2014, of the persons named on the proxy card as your proxy to vote your shares on your behalf in accordance with your telephone instructions. Subject to guidance from the Government of Ireland at the time of the Annual General Meeting, shareholders of record may also vote their shares directly by attending the Annual General Meeting and casting their vote in person or appointing a proxy (who does not have to be a shareholder) to attend the Annual General Meeting and casting votes on their behalf in accordance with their instructions. Street name holders must vote their shares in the manner prescribed by their bank, brokerage firm or nominee. Street name holders who wish to vote in person at the Annual General Meeting must obtain a legal proxy from their bank, brokerage firm or nominee. Street name holders will need to bring the legal proxy with them to the Annual General Meeting and hand it in with a signed ballot that is available upon request at the meeting. Street name holders will not be able to vote their shares at the Annual General Meeting without a legal proxy and a signed ballot. Taking the Company’s Covid-19 guidance about attending in person into consideration, even
Even if you plan to attend the Annual General Meeting, we recommend that you vote by proxy as described above so that your vote will be counted if you later decide not to attend the meeting. In order to be timely processed, your vote must be received by 11:59 p.m. Eastern Time on June 2, 2021May 31, 2023 (or, if you are a street name holder, such earlier time as your bank, brokerage firm or nominee may require). How May Employees Vote under Our Employee Plans? If you participate in the ESP, the Trane Technologies Company Employee Savings Plan for Bargained Employees, the Trane Technologies Retirement Savings Plan for Participating Affiliates in Puerto Rico, or the Trane 401(k) and Thrift Plan, then you may be receiving these materials because of shares held for you in those plans. In that case, you may use the enclosed proxy card to instruct the plan trustees of those plans how to vote your shares, or give those instructions by telephone or over the Internet. They will vote these shares in accordance with your instructions and the terms of the plan. The plan trustees will not disclose to the Company how any individual employee instructed the plan trustees to vote their shares.
To allow plan administrators to properly process your vote, your voting instructions
must be received by 11:59 p.m. Eastern Time on May 28, 2021.26, 2023. If you do not provide voting instructions for shares held for you in any of these plans, the plan trustees will vote these shares in the same ratio as the shares for which voting instructions are provided. 72 | |
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INFORMATION CONCERNING VOTING AND SOLICITATION You may revoke your proxy at any time before it is voted at the Annual General Meeting in any of the following ways: • | by notifying the Company’s Secretary in writing: c/o Trane Technologies plc, 170/175 Lakeview Drive., Airside Business Park, Swords, Co. Dublin, Ireland; | • | by submitting another properly signed proxy card with a later date or another Internet or telephone proxy at a later date but prior to the close of voting described above; or | • | by voting in person at the Annual General Meeting. |
•by notifying the Company’s Secretary in writing: c/o Trane Technologies plc, 170/175 Lakeview Drive, Airside Business Park, Swords, Co. Dublin, Ireland; •by submitting another properly signed proxy card with a later date or another Internet or telephone proxy at a later date but prior to the close of voting described above; or •by voting in person at the Annual General Meeting. Merely attending the Annual General Meeting does not revoke your proxy. To revoke a proxy, you must take one of the actions described above. How Will My Proxy Get Voted? If your proxy is properly submitted, your proxy holder (one of the individuals named on the proxy card) will vote your shares as you have directed. If you are a street name holder, the rules of the NYSE permit your bank, brokerage firm or nominee to vote your shares on Items 3, 4, 5, 6 and 67 (routine matters) if it does not receive instructions from you. However, your bank, brokerage firm or nominee may not vote your shares on Items 1, 2 and 23 (non-routine matters) if it does not receive instructions from you (“broker non-votes”). Broker non-votes will not be counted as votes for or against the non-routine matters, but rather will be regarded as votes withheld and will not be counted in the calculation of votes for or against the resolution. If you are a shareholder of record and you do not specify on the proxy card you send to the Company (or when giving your proxy over the Internet or telephone) how you want to vote your shares, then the Company-designated proxy holders will vote your shares in the manner recommended by our Board of Directors on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting. What Constitutes a Quorum? The presence (in person or by proxy) of shareholders entitled to exercise a majority of the voting power of the Company on the Record Date is necessary to constitute a quorum for the conduct of business. Abstentions and broker non-votes are treated as “shares present” for the purposes of determining whether a quorum exists. What Vote is Required to Approve Each Proposal? A majority of the votes cast at the Annual General Meeting is required to approve each of Items 1, 2, 3, 4 and 4.5. A majority of the votes cast means that the number of votes cast “for” an Item must exceed the number of votes cast “against” that Item. Items 56 and 67 are considered special resolutions under Irish law and require 75% of the votes cast for approval. Although abstentions and broker non-votes are counted as “shares present” at the Annual General Meeting for the purpose of determining whether a quorum exists, they are not counted as votes cast either “for” or “against” the resolution and, accordingly, will not affect the outcome of the vote. Who Pays the Expenses of This Proxy Statement? We have hired Alliance Advisors, LLC to assist in the distribution of proxy materials and the solicitation of proxies for a fee estimated at $15,000$20,000 plus out-of-pocket expenses. Proxies will be solicited on behalf of our Board of Directors by mail, in person, by telephone and through the Internet. We will bear the cost of soliciting proxies. We will also reimburse brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to the persons for whom they hold shares. How Will Voting on Any Other Matter be Conducted? Although we do not know of any matters to be presented or acted upon at the Annual General Meeting other than the items described in this Proxy Statement, if any other matter is proposed and properly presented at the Annual General Meeting, the proxy holders will vote on such matters in accordance with their best judgment. Table of Contents
Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of the Record Date, the beneficial ownership of our ordinary shares by (i) each director of the Company, (ii) each executive officer of the Company named in the Summary Compensation Table below, and (iii) all directors and executive officers of the Company as a group: Name | | Ordinary Shares(1) | | Notional Shares(2) | | Options Exercisable Within 60 Days(3) | K. E. Arnold | | 3,506 | | — | | — | A. C. Berzin | | 31,373 | | 46,329 | | — | J. Bruton | | 11,237 | | — | | — | J. L. Cohon | | 25,744 | | — | | — | G. D. Forsee | | 30,086 | | — | | — | L. P. Hudson | | 6,625 | | — | | — | M. P. Lee | | 7,311 | | — | | — | A. Miller Boise | | — | | — | | — | K. B. Peetz | | 3,736 | | — | | — | J. P. Surma | | 10,883 | | — | | — | R. J. Swift | | 1,701 | | 86,357 | | — | T. L. White | | 29,543 | | 65,424 | | — | M. W. Lamach | | 182,582 | | 85,500 | | 646,079 | C.J. Kuehn | | 25,939 | | 2,382 | | 72,835 | D. S. Regnery | | 53,123 | | 1,150 | | 241,314 | M. J. Avedon | | 43,709 | | 56,320 | | 131,659 | P. A. Camuti | | 29,998 | | 57,686 | | 106,524 | All directors and executive officers as a group (20 persons)(4) | | 523,669 | | 426,934 | | 1,254,128 |
(1) | Represents (i) ordinary shares held directly; (ii) ordinary shares held indirectly through a trust; (iii) unvested shares, including any RSUs or PSUs, and ordinary shares and ordinary share equivalents notionally held under the TDCP that may vest or are distributable within 60 days of the Record Date; and (iv) ordinary shares held by the trustee under the ESP for the benefit of executive officers. No director or executive officer of the Company beneficially owns 1% or more of the Company’s ordinary shares. | (2) | Represents ordinary shares and ordinary share equivalents notionally held under the DDCP, and the EDCP that are not distributable within 60 days of the Record Date. | (3) | Represents ordinary shares as to which directors and executive officers had stock options exercisable within 60 days of the Record Date, under the Company’s Incentive Stock Plans. | (4) | The Company’s ordinary shares beneficially owned by all directors and executive officers as a group (including shares issuable under exercisable options) aggregated approximately 0.74% of the total outstanding ordinary shares. Ordinary shares and ordinary share equivalents notionally held under the DDCP, the EDCP and the TDCP and ordinary share equivalents resulting from dividends on deferred stock awards are not counted as outstanding shares in calculating these percentages because they are not beneficially owned; the directors and executive officers have no voting or investment power with respect to these shares or share equivalents. |
74 | |
| | | | | | | | | | | | Name | Ordinary Shares(a) | Notional Shares(b) | Options Exercisable Within 60 Days(c) | K. E. Arnold | 4,650 | | — | | — | | A. C. Berzin | 33,501 | | 47,805 | | — | | A. Miller Boise | 1,798 | | — | | — | | J. Bruton | 12,048 | | — | | — | | J. L. Cohon | 26,989 | | — | | — | | G. D. Forsee | 31,230 | | — | | — | | M. R. George | — | | | — | | J. A. Hayes | 30 | | | — | | L. P. Hudson | 7,769 | | — | | — | | M. P. Lee | 8,122 | | — | | — | | M. N. Schaeffer | — | | | — | | J. P. Surma | 12,027 | | — | | — | | T. L. White | 30,687 | | 67,508 | | — | | D. S. Regnery | 122,463 | | 542 | | 242,944 | | C.J. Kuehn | 34,236 | | 29,005 | | 67,879 | | P. A. Camuti | 40,709 | | 48,510 | | 95,367 | | E. M. Turtz | 15,196 | | 8,183 | | 25,095 | | R. D. Pittard | 11,957 | | 79,215 | | 9,877 | | All directors and executive officers as a group (21 persons)(d) | 416,304 | | 317,813 | | 470,395 | |
(a)Represents (i) ordinary shares held directly; (ii) ordinary shares held indirectly through a trust; (iii) unvested shares, including any RSUs or PSUs, and ordinary shares and ordinary share equivalents notionally held under the TDCP that may vest or are distributable within 60 days of the Record Date; and (iv) ordinary shares held by the trustee under the ESP for the benefit of executive officers. No director or executive officer of the Company beneficially owns 1% or more of the Company’s ordinary shares. (b)Represents ordinary shares and ordinary share equivalents notionally held under the DDCP, and the EDCP that are not distributable within 60 days of the Record Date. (c)Represents ordinary shares as to which directors and executive officers had stock options exercisable within 60 days of the Record Date, under the Company’s Incentive Stock Plans. (d)The Company’s ordinary shares beneficially owned by all directors and executive officers as a group (including shares issuable under exercisable options) aggregated approximately 0.39% of the total outstanding ordinary shares. Ordinary shares and ordinary share equivalents notionally held under the DDCP, the EDCP and the TDCP and ordinary share equivalents resulting from dividends on deferred stock awards are not counted as outstanding shares in calculating these percentages because they are not beneficially owned; the directors and executive officers have no voting or investment power with respect to these shares or share equivalents.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth each shareholder which is known by us to be the beneficial owner of more than 5% of the outstanding ordinary shares of the Company based solely on the information filed by such shareholder on Schedule 13D or filed by such shareholder in 20202022 for the year ended December 31, 20202022 on Schedule 13G under the Securities Exchange Act of 1934: Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class(1) | BlackRock, Inc.(2) | | 17,933,014 | | 7.5% | 55 East 52nd Street | | | | | New York, New York 10022 | | | | | Vanguard Group(3) | | 17,814,249 | | 7.4% | 100 Vanguard Blvd. | | | | | Malvern, PA 19355 | | | | |
(1) | | | | | | | | | | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(a) | BlackRock, Inc.(b) 55 East 52nd Street New York, NY 10055 | 19,614,853 | | 8.6 | % | JPMorgan Chase & Co.(c) 383 Madison Avenue New York, NY 10179 | 18,472,563 | | 8.1 | % | The Vanguard Group(d) 100 Vanguard Blvd. Malvern, PA 19355 | 18,594,004 | 8.2 | % |
(a)The ownership percentages set forth in this column are based on the Company’s outstanding ordinary shares on the Record Date and assumes that each of the beneficial owners continued to own the number of shares reflected in the table above on such date. (b)Information regarding BlackRock, Inc. and its stockholdings was obtained from a Schedule 13G/A filed with the SEC on February 8, 2023. The filing indicated that, as of December 31, 2022, BlackRock, Inc. had sole voting power as to 17,645,284 of such shares, shared voting power as to none of such shares, sole dispositive power as to 19,614,853 of such shares and shared dispositive power as to none of such shares. (c)Information regarding JPMorgan Chase & Co. and its stockholdings was obtained from a Schedule 13G/A filed with the SEC on January 27, 2023. The filing indicated that, as of December 30, 2022, JPMorgan Chase & Co. had sole voting power as to 16,546,980 of such shares, shared voting power as to 123,656 of such shares, sole dispositive power as to 18,334,563 of such shares and shared dispositive power as to 135,524 of such shares. (d)Information regarding the Vanguard Group and its stockholdings was obtained from a Schedule 13G/A filed with the SEC on February 9, 2023. The filing indicated that, as of December 30, 2022, the Vanguard Group had sole voting power as to none of such shares, shared voting power as to 334,034 of such shares, sole dispositive power as to 17,636,530 of such shares and shared dispositive power as to 957,474 of such shares. | | | | | | (2)80 | Information regarding BlackRock, Inc. and its stockholdings was obtained from a Schedule 13G filed with the SEC on February 1, 2021. The filing indicated that, as of December 31, 2020, BlackRock, Inc. had sole voting power as to 15,311,105 of such shares and sole dispositive power as to 17,933,014 of such shares. | (3) | Information regarding Vanguard Group Inc. and its stockholdings was obtained from a Schedule 13G filed with the SEC on February 10, 2021. The filing indicated that, as of December 31, 2020, Vanguard Group Inc. had sole voting power as to none of such shares and sole dispositive power as to 16,775,002 of such shares. |
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Certain Relationships and Related Person Transactions The Company does not generally engage in transactions in which its executive officers, directors or nominees for directors, any of their immediate family members or any of its 5% shareholders have a material interest. Pursuant to the Company’s written related person transaction policy, any such transaction must be reported to management, which will prepare a summary of the transaction and refer it to the Sustainability, Corporate Governance and Nominating Committee for consideration and approvalpre-approval by the disinterested directors. The Sustainability, Corporate Governance and Nominating Committee reviews the material terms of the related person transaction, including the dollar values involved, the relationships and interests of the parties to the transaction and the impact, if any, to a director’s independence. The Sustainability, Corporate Governance and Nominating Committee only approves those transactions that are in the best interest of the Company. In addition, the Company’s Code of Conduct, which sets forth standards applicable to all employees, officers and directors of the Company, generally proscribes transactions that could result in a conflict of interest for the Company. Any waiver of the Code of Conduct for any executive officer or director requires the approval of the Company’s Board of Directors. Any such waiver will, to the extent required by law or the NYSE, be disclosed on the Company’s website at www.tranetechnologies.com or on a current report on Form 8-K. No such waivers were requested or granted in 2020.2022. We have not made payments to directors other than the fees to which they are entitled as directors (described under the heading “Compensation of Directors”) and the reimbursement of expenses related to their services as directors. We have made no loans to any director or officer nor have we purchased any shares of the Company from any director or officer. Since June 2020, Ms. Peetz has served as chief administrative officer of Citigroup Inc. Citigroup or affiliates of Citigroup (“Citigroup”) have acted as Joint Lead Arranger, Joint Bookrunner and Syndication Agent in connection with our 2020 refinancing of our $1 billion revolving credit facility and with respect to our $1 billion revolving credit facility entered into in April 2018. As agent and lender, Citigroup provides other services under these facilities. There were no amounts outstanding under these facilities as of December 31, 2020. Citigroup was paid an arrangement fee of $250,000 in connection with the 2020 refinancing and approximately $668,000 in connection with portfolio management fees relating to upfront and undrawn fees on these facilities. In addition, Citigroup provides certain FX and derivatives services to the Company, which totaled approximately $850,000 during the fiscal year ended December 31, 2020 and certain treasury and trade solutions relating to cash/bank transactions and trade activity, which totaled approximately $935,000 during the fiscal year ended December 31, 2020. Our credit facilities were entered into in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lender and did not involve more than the normal risk at the time for comparable loans with persons not related to the lender and did not involve more than the normal risk of collectability or present other unfavorable features. Our other transactions with Citigroup were made in the ordinary course of business on standard terms and conditions. Ms. Peetz does not personally participate in or benefit from any aspect of our relationship with Citigroup.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who beneficially own more than ten percent of the Company’s ordinary shares, to file reports of ownership and reports of changes in ownership with the SEC and the NYSE. To the Company’s knowledge, based solely on its review of such forms received by the Company and written representations that no other reports were required, all Section 16(a) filing requirements were complied with for the year 2020.
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Shareholder Proposals and Nominations Any proposal by a shareholder intended to be presented at the 20222024 Annual General Meeting of shareholders of the Company must be received by the Company at its registered office at 170/175 Lakeview Drive, Airside Business Park, Swords, Co. Dublin, Ireland, Attn: Secretary, no later thanthan December 24, 2021,22, 2023, for inclusion in the proxy materials relating to that meeting. Any such proposal must meet the requirements set forth in the rules and regulations of the SEC, including Rule 14a-8, in order for such proposals to be eligible for inclusion in our 2022 proxy statement.2024 Proxy Statement. The Company’s Articles of Association set forth procedures to be followed by shareholders who wish to nominate candidates for election to the Board of Directors in connection with Annual General Meetings of shareholders or pursuant to written shareholder consents or who wish to bring other business before a shareholders’ general meeting. All such nominations must be accompanied by certain background and other information specified in the Articles of Association. In connection with the 20222024 Annual General Meeting, written notice of a shareholder’s intention to make such nominations or bring business before the Annual General Meeting must be given to the Secretary of the Company not later than March 5, 2022. 1, 2024. If the date of the 20222024 Annual General Meeting occurs more than 30 days before, or 60 days after, the anniversary of the 20212023 Annual General Meeting, then the written notice must be provided to the Secretary of the Company not later than the seventh day after the date on which notice of such Annual General Meeting is given. In addition, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide timely notice by the same deadline disclosed above ( March 1, 2024), as well as comply with the additional requirements of Rule 14a-19 of the Securities Exchange Act of 1934. In addition, the Company’s Articles of Association separately provide shareholders representing 3% or more of the voting power of the Company’s shares with the right, subject to certain terms and conditions, to nominate candidates for election to the Board of Directors and have such candidate included in our proxy materials for the applicable Annual General Meeting (“proxy access”). All such nominations must be accompanied by certain background and other information specified in the Articles of Association. In connection with the 20222024 Annual General Meeting, written notice of proxy access nominations must be given to the Secretary of the Company not earlier than November 24, 202123, 2023 and not later than later than December 24, 2021.22, 2023. If the date of the 20222024 Annual General Meeting occurs more than 30 days before, or 60 days after, the anniversary of the 20212023 Annual General Meeting, then the written notice must be provided to the Secretary of the Company not earlier than 120 days prior to the 20222024 Annual General Meeting and not later than the close of business on the later of (x) the 90th day prior to the 20222024 Annual General Meeting or (y) the 10th day following the day on which public announcement of the date of the 20222024 Annual General Meeting is first made. The Sustainability, Corporate Governance and Nominating Committee will consider all shareholder recommendations for candidates for Board membership, which should be sent to the Committee, care of the Secretary of the Company, at the address set forth above. In addition to considering candidates recommended by shareholders, the Committee considers potential candidates recommended by current directors, Company officers, employees and others. As stated in the Company’s Corporate Governance Guidelines, all candidates for Board membership are selected based upon their judgment, character, achievements and experience in matters affecting business and industry. Candidates recommended by shareholders are evaluated in the same manner as director candidates identified by any other means. In order for you to bring other business before a shareholder general meeting, timely notice must be received by the Secretary of the Company within the time limits described above. The notice must include a description of the proposed item, the reasons you believe support your position concerning the item, and other specified matters. These requirements are separate from and in addition to the requirements you must meet to have a proposal included in our Proxy Statement. The foregoing time limits also apply in determining whether notice is timely for purposes ofpursuant to rules adopted by the SEC relating to the exercise of discretionary voting authority. If a shareholder wishes to communicate with the Board of Directors for any other reason, all such communications should be sent in writing, care of the Secretary of the Company, or by email at board@tranetechnologies.com.
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SEC rules permit a single set of annual reports and proxy statementsProxy Statements to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure is referred to as householding. While the Company does not household in mailings to its shareholders of record, a number of brokerage firms with account holders who are Company shareholders have instituted householding. In these cases, a single proxy statementProxy Statement and annual report will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once a shareholder has received notice from his or her broker that the broker will be householding communications to the shareholder’s address, householding will continue until the shareholder is notified otherwise or until the shareholder revokes his or her consent. If at any time a shareholder no longer wishes to participate in householding and would prefer to receive a separate proxy statementProxy Statement and annual report, he or she should notify his or her broker. Any shareholder can receive a copy of the Company’s proxy statementProxy Statement and annual report by contacting the Company at its registered office at 170/175 Lakeview Drive, Airside Business Park, Swords, Co. Dublin, Ireland, Attention: Secretary or by accessing it on the Company’s website at www.tranetechnologies.com. Shareholders who hold their shares through a broker or other nominee who currently receive multiple copies of the proxy statementProxy Statement and annual report at their address and would like to request householding of their communications should contact their broker. Dated: April 23, 202178 | | 21, 2023
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TRANE TECHNOLOGIES PLC
170/175 LAKEVIEW DR.
AIRSIDE BUSINESS PARK
SWORDS, CO. DUBLIN
IRELAND
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time* on June 2, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote by mail, your proxy card must be received prior to the start of the Annual General Meeting of Shareholders for your vote to be counted*.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time* on June 2, 2021. Have your proxy card in hand when you call and then follow the instructions.
*Voting cut-off is 11:59 p.m. Eastern Time on May 28, 2021 for participants in the Trane Technologies Company Employee Saving Plan, the Trane Technologies Company Employee Saving Plan for Bargained Employees, the Trane Technologies Retirement Savings Plan for Participating Affiliates in Puerto Rico, or the Trane 401(k) and Thrift Plan to allow time for plan administrators to vote on your behalf.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | D51492-P53051-Z79488 | KEEP THIS PORTION FOR YOUR RECORDS | | DETACH AND RETURN THIS PORTION ONLY | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
TRANE TECHNOLOGIES PLC | | | | | | | 2023 Proxy Statement | 83 |
Appendix A TRANE TECHNOLOGIES PLC Reconciliation of GAAP to Non-GAAP UNAUDITED (in millions) | | | | | | | | | | | | | | | | For the year ended December 31, 2022 | For the year ended December 31, 2021 | Total Company | | | | | Adjusted EBITDA | | $ | 2,694.0 | | | $ | 2,363.7 | | Less: items to reconcile adjusted EBITDA to net earnings attributable to Trane Technologies plc | | | | | Depreciation and amortization(1) | | (323.2) | | | (299.4) | | Interest expense | | (223.5) | | | (233.7) | | Provision for income taxes | | (375.9) | | | (333.5) | | Restructuring | | (20.7) | | | (27.0) | | Transformation Costs | | (5.8) | | | (16.7) | | M&A transaction costs | | (3.6) | | | (1.8) | | Non-cash adjustments for contingent consideration | | 46.9 | | | — | | Insurance settlement on property claim | | 25.0 | | | — | | Settlement charge for retired executive | | (15.8) | | | — | | Acquisition inventory step-up and backlog amortization | | (1.2) | | | — | | Charges related to certain entities deconsolidated under Chapter 11 | | — | | | (7.2) | | Gain on release of a pension indemnification liability | | — | | | 12.8 | | Discontinued operations, net of tax | | (21.5) | | | (20.6) | | Net earnings from continuing operations attributable to noncontrolling interests | | (18.2) | | | (13.2) | | Net earnings from discontinued operations attributable to noncontrolling interests | | — | | | — | | Net earnings attributable to Trane Technologies plc | | $ | 1,756.5 | | | $ | 1,423.4 | |
(1)Depreciation and amortization excludes acquisition backlog amortization of $0.4 million which has been included in the acquisition inventory step-up and backlog amortization line. | | | | | | The Board of Directors recommends you vote FOR the following proposals:84 | | | | | | |
TRANE TECHNOLOGIES PLC Reconciliation of GAAP to Non-GAAP UNAUDITED (in millions) | | | | | | | | | | | | | | | | For the year ended December 31, 2022 | For the year ended December 31, 2021 | Cash flow provided by continuing operating activities | | $ | 1,698.7 | | | $ | 1,594.4 | | Capital expenditures | | (291.8) | | | (223.0) | | Cash payments for restructuring | | 17.9 | | 38.1 | Transformation costs paid | | 9.6 | | | 21.4 | | QSF funding (continuing operations component) | | 91.8 | | | — | | Compensation related payment to a retired executive | | 64.3 | | | — | | Insurance settlement on property claim in Q3 2022 | | (25.0) | | | — | | Free cash flow | | $ | 1,565.5 | | | $ | 1,430.9 | |
For purposes of our compensation programs, Cash Flow Return on Invested Capital (“CROIC”) is measured by dividing Free Cash Flow by gross fixed assets (Property, Plant & Equipment) plus Working Capital (Accounts and Notes Receivable plus Inventory less Accounts and Notes Payable). CROIC is calculated in accordance with GAAP, subject to adjustments for unusual or infrequent items; the impact of any change in accounting principles; and gains or charges associated with discontinued operations or through the acquisition or divestiture of a business. For purposes of our compensation programs, Total Shareholder Return (“TSR”) is measured as the total stock price appreciation plus dividends earned during the three years of the performance cycle. To account for stock price volatility, a 30-day average stock price at the beginning and ending periods is used. TSR was 57.17% for the 2020-2022 period, which ranked at the 78th percentile of the companies in the S&P 500 Industrials Index. For purposes of the TSR calculation, the Reverse Morris Trust transaction in Q1 2020 was treated as a dividend of $28.93 per share. | | | | | | | 1. 2023 Proxy Statement | Election of Directors | | For | | Against | | Abstain | | | | | | | | | | 1a. | | Kirk E. Arnold | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1b. | | Ann C. Berzin | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1c. | | John Bruton | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1d. | | Jared L. Cohon | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1e. | | Gary D. Forsee | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1f. | | Linda P. Hudson | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1g. | | Michael W. Lamach | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1h. | | Myles P. Lee | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1i. | | April Miller Boise | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1j. | | Karen B. Peetz | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1k. | | John P. Surma | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 1l. | | Tony L. White | | ☐ | | ☐ | | ☐85 |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2. | | Advisory approval of the compensation of the Company's named executive officers. | | ☐ | | ☐ | | ☐ | | | | | | | | | | 3. | | Approval of the appointment of independent auditors of the Company and authorization of the Audit Committee of the Board of Directors to set the auditors' remuneration. | | ☐ | | ☐ | | ☐ | | | | | | | | | | 4. | | Approval of the renewal of the Directors' existing authority to issue shares. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 5. | | Approval of the renewal of the Directors' existing authority to issue shares for cash without first offering shares to existing shareholders. (Special Resolution) | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | 6. | | Determination of the price range at which the Company can re-allot shares that it holds as treasury shares. (Special Resolution) | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| | | Signature [PLEASE SIGN WITHIN BOX] | | Date |
| | | Signature (Joint Owners) | | Date |
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IF YOU PLAN TO ATTEND THE ANNUAL GENERAL MEETING, PLEASE BRING,
IN ADDITION TO THIS ADMISSION TICKET, A PROPER FORM OF IDENTIFICATION.
ADMISSION TICKET
TRANE TECHNOLOGIES PLC
ANNUAL GENERAL MEETING OF SHAREHOLDERS
June 3, 2021
8:00 A.M., EDT
Trane Technologies plc
800-C Beaty Street
Davidson, NC 28036
Shareholders in Ireland may participate in the Annual General Meeting remotely on June 3, 2021 at
1:00 p.m. (Dublin time) telephonically at the Arthur Cox Building, Ten Earlsfort Terrace,
Dublin 2, D02 T380, Ireland.
THIS ADMISSION TICKET ADMITS ONLY THE NAMED SHAREHOLDER AND ONE GUEST.
NOTE: VIDEO, STILL PHOTOGRAPHY AND RECORDING DEVICES ARE NOT PERMITTED AT THE
ANNUAL GENERAL MEETING. YOUR COOPERATION IS APPRECIATED.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
Notice and Proxy Statement, Annual Report and Irish Statutory Accounts are available at www.proxyvote.com.
TRANE TECHNOLOGIES PLC
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS
The undersigned hereby appoint(s) MICHAEL W. LAMACH, CHRISTOPHER J. KUEHN and EVAN M.TURTZ, or any of them, each with full power of substitution, attorneys and proxies to vote, as indicated on the reverse hereof, all ordinary shares of Trane Technologies plc (the "Company") which the undersigned is entitled to vote at the Annual General Meeting of Shareholders to be held at 800-C Beaty Street, Davidson, NC 28036 on Thursday, June 3, 2021, at 8:00 A.M., EDT, or at any adjournments or postponements thereof, with all the powers the undersigned would possess, if then and there personally present, upon the matters described in the Notice of Annual General Meeting of Shareholders and Proxy Statement, receipt of which is hereby acknowledged, and upon any other business that may come before the meeting or any such adjournments or postponements.
Any shareholder entitled to attend and vote at the Annual General Meeting may appoint one or more proxies, who need not be a shareholder(s) of the Company. If you wish to appoint a person other than the designated officers of the Company, please contact the Company Secretary and also note that your nominated proxy must attend the Annual General Meeting in person in order for your votes to be voted. A proxy is required to vote in accordance with any instructions given to him or her. Completion of a form of proxy will not preclude a member from attending and voting at the meeting in person.
Please take into consideration the Company's guidance in the Proxy Statement in respect of attending the Annual General Meeting in person in light of any COVID-19 measures.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO CONTRARY SPECIFICATIONS ARE MADE ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED IN THE MANNER RECOMMENDED BY THE COMPANY'S BOARD OF DIRECTORS ON ALL MATTERS AND IN THE DISCRETION OF THE PROXIES UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL GENERAL MEETING OF SHAREHOLDERS.
This card also constitutes your voting instructions with respect to ordinary shares held in accounts under the Trane Technologies Company Employee Saving Plan, the Trane Technologies Company Employee Saving Plan for Bargained Employees, the Trane Technologies Retirement Savings Plan for Participating Affiliates in Puerto Rico, or the Trane 401(k) and Thrift Plan. If you do not vote, your proxy will be voted in accordance with the terms of the applicable plan.
Once received, your proxy will be forwarded to the Company's registered office electronically by Broadridge.
Continued and to be signed on reverse side
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