Letter from Our Independent Chair
 | Clorox delivered a year of strong financial performance and meaningful progress on our integrated ESG goals to drive long-term value for our shareholders and other stakeholders, under the | |
Table of ContentsRobust Board Oversight
To Our Fellow Shareholders
In February 2021, I assumed the role of Independent Chair and it has been my honor to work with theThe Board managementis highly engaged in overseeing Clorox’s business and the Clorox stakeholder community at this important time for our companykey risks the Company faces. Clorox’s ESG goals are embedded in how we operate and our world. This past year,efforts are focused on the company delivered strong progress againstareas of greatest impact to the IGNITE strategy for long-term growth even as we all continue to navigate the unprecedented challengesCompany. As part of the pandemic. Through it all, we have been guided by our commitment to putting people at the center of everythinglead with transparency and accountability, we do, and bycontinued to evolve our new company purpose: we champion peopleapproach to be well and thrive every single day.
As stewards ofESG governance this past year, including reorganizing our company, the Board plays a critical role in guiding and overseeing the IGNITE strategy, including the integrated environmental, socialESG operating and governance (ESG) goals. Thestructure and hiring our first full-time head of sustainability to lead ESG work. This new structure, along with related processes, will further integrate our IGNITE ESG goals into business units, streamline decision-making authority, allocate resources, and drive continued accountability.
A Diverse and Engaged Board has continued to be agile, adapting to changing circumstances in order to continue to oversee and guide management, provide appropriate risk oversight and ensure the company continues to serve the interest of its shareholders and broader stakeholders.
Our Board representspossesses a diverse set of relevant skills, experiences and perspectives to provide robust risk and strategic oversight of the right combinationCompany. We are also committed to building a diverse and inclusive workplace as we fundamentally believe it leads to better outcomes for our business. This commitment starts at the top—we are proud that our Board is 50% women and 25% people of broadcolor.
As part of our efforts to continuously strengthen the overall effectiveness of the Board and deep experienceits committees, we conduct annual board and individual director evaluations. The Board enhanced its process in strategy development, operational excellence, innovation, human capitalfiscal year 2023 by engaging a third-party corporate governance expert to conduct its annual assessment, in line with leading governance practice.
Our Board is also focused on its engagement with the workforce, including meeting with employees at a Clorox Home Care plant in fiscal year 2023, receiving regular company highlights covering employee resource group activities, community events, company-wide communications, and culture, the consumer packaged goods industry,employee features, as well as other important areasspending additional time at the Company’s facilities.
Ongoing Shareholder Engagement
We are also committed to ongoing engagement with shareholders to better understand the issues that are most important to you. Over the years, I have participated in some of these conversations and greatly enjoy the opportunity to directly relevant to the Company’s strategic priorities. In addition to bringing important skills, this year’s Board nominees also represent a wide range of backgrounds and experiences, which we believe are reflective of our global operations and diverse consumer base. Our director nominee slate includes four women and three people of color. Of our 11 director nominees, 10 are independent. We are proud of the continuing evolution of our Board and our track record on refreshment.
We also remain committed to inclusion and diversity across our workforce. To foster transparency and accountability with our stakeholders, we published EEO-1 data in 2020 along the same categories under which we report to the U.S. Equal Employment Opportunity Commission (EEOC). This year, we also published our latest U.S. Consolidated EEO-1 Report that we submitted to the EEOC.
We have a long-standing practice of regular engagementengage with our shareholders and hear your perspectives. We always consider our shareholders’ and other stakeholders’ input as we continue to discussevolve our strategy, directionpractices and practices. Regularpolicies. For example, this year, in response to shareholder feedback, informswe have disclosed individual director skill attributes to demonstrate how each of our directors’ skills and experiences support effective oversight of the Board’s thinkingCompany’s strategy and allows usrisk management.
While the macroeconomic challenges are expected to continue broadening our perspective. Topersist in fiscal year 2024, the Board is confident that end, we hope that you will read this proxy statementClorox is taking the right steps to drive long-term, profitable growth and vote either by proxy or at the Annual Meeting. Your vote is very important.
Finally, oncreate shareholder value. On behalf of the Board, I would likewant to thank Pamela Thomas-Graham for her distinguished service to the Company. Pamela, who is not standing for election this year, joined the Board in 2005 and served as lead independent director from 2016 to 2021. She has been a wise and important voice on our Board, and we will miss her contributions.
On behalf of the Board, thank you for your continuing trust andcontinued investment in the Company, and the confidence you place in the Board to oversee your interests in Clorox. We look forward to receiving your input at this year’s annual meeting and in the years to come.
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| Matthew J. Shattock | |
| Independent Chair |
Matthew ShattockIndependent Chair
| THE CLOROX COMPANY - 2023 Proxy Statement | i |
In the secondLetter from Our Chief Executive Officer
 | Fiscal year 2023 represented a milestone for Clorox. We started the year determined to maintain top-line growth while rebuilding margin amid a challenging operating environment. Our team not only delivered on those goals, but we continued to make progress against our IGNITE strategy. Our actions and investments to develop consumer-inspired innovation, strengthen our advantaged portfolio of superior brands, transform our company, and build a more sustainable and inclusive world are reinforcing our competitive advantage and positioning us to deliver long-term, profitable growth. |
Here are some highlights from this past fiscal year:
| • | Fueling growth: We achieved our highest fiscal year sales on record, reflecting growth in three of four reportable business segments, supported by both a resilient consumer and improved supply chain performance, and also delivered record annual cost savings. We continue to be laser-focused on rebuilding margin back to pre-pandemic levels to fuel reinvestment in our brands. |
| • | Innovating experiences: We launched innovation across all our major brands, positioning us to drive ongoing growth in the years ahead. We are also increasing our investment in advertising and sales promotion to ensure we have strong brands that resonate with consumers. We have nearly met our 2025 goal to know 100 million consumers, resulting in an all-time high return on investment on marketing spend. Together, these initiatives will enhance our brands’ value superiority at a time when consumers’ wallets are stretched. |
| • | Reimagining work: We are investing in our digital transformation and new operating model to create a more consumer-obsessed, faster and leaner company, and enhance our ability to grow and operate more efficiently. Over time, we expect that these initiatives will support our efforts to get administrative costs as a percentage of sales down to 13%. |
| • | Evolving our portfolio: Our superiority rating from a brand perspective remains above pre-pandemic levels, a testament to our trusted brands and the value they deliver to consumers. We see great opportunities to strengthen our core and expand our business and our brands by continuing to invest in our portfolio of superior brands. |
This past fiscal year, of the pandemic, we delivered strong salesalso continued to advance our integrated ESG goals to generate long-term, profitable growth and bolsteredcreate value for our position with global consumers. Our performance as a company demonstrated the resilience of our categoriesshareholders and the strengths of our people, brands and products, and I’m extremely proud of our team, who worked tirelessly to supply consumers with products across our portfolio. While the industry environment remains dynamic, we are laser focused on managing the factors within our control, including strong execution to rebuild margin and manage ongoing inflationary pressures. We are also accelerating our IGNITE strategy to take advantage of the strong customer loyalty we have built, respond to the changing consumer behaviors, and set the company up to deliver sustainable long-term growth. We will continue to invest in our brands, innovate and digitally transform our business. other stakeholders.
| • | Fostering a workplace culture that prioritizes safety and total well-being: We continue to take a holistic approach to supporting our team’s physical, mental and financial health, backed by a combination of benefits, programs and resources tailored to their diverse needs. Importantly, we maintained our strong safety standards with a total recordable incident rate significantly below our target and the industry average. |
| • | Advancing efforts on inclusion, diversity, equity and allyship, or IDEA: We are making strides on our journey to embed IDEA into our business, including through inclusive leadership training, IDEA programming, diverse representation and advancement efforts, and more inclusive, purpose-driven brands. We know that creating a workplace where people can be their best selves, do their best work, and play an active role in helping us innovate and grow will make Clorox a stronger company and accelerate our IGNITE journey. |
| • | Taking climate action and addressing plastic and other waste: We are executing on our climate action plan to advance our long-term environmental sustainability goals. In addition to maintaining 100% renewable electricity in our U.S. and Canada operations, we also achieved 88% of our goal to have 100% recyclable, reusable or compostable packaging by 2025. We are also engaging our high-impact and strategic suppliers to understand where we can align on climate action to realize our ambitious scope 3 science-based targets. |
I inviteencourage you to read more about our results and plans to accelerateprogress against our IGNITE strategy in our 2021 Integrated Annual Report.2023 integrated annual report.
The last year exemplified our purpose and values in action. We champion peopleWhile we expect the environment to be well and thrive every single day by doing the right thing, putting people at the center, and playing to win. We embraced our role as a health and wellness company, taking care of our teammates around the world, focusing on serving public health and consumer needs, and leading with our values. I’m particularly proud that, despite the demands of this past year, we achieved our best safety score in recorded history, which is significantly lower than the industry average.
We continue to make progress on our ESG goals, which are an integral part of our IGNITE strategy. This past year, we achieved our goal of 100% renewable electricityremain challenging in the U.S. and Canada, and 56% of our plants have achieved zero-waste-to-landfill status. We also received approval of our 2030 science-based targets to reduce greenhouse gas emissions and recently announced our commitment to reach net-zero emissions across our operations and our value chain (Scopes 1, 2 and 3) by 2050. Our ESG efforts this year continued to be recognized, as we were again named to Barron’s Most Sustainable Companies list, 2021 Bloomberg Gender-Equality Index, and the Human Rights Campaign’s 2021 Corporate Equality Index, among others.
We also renewed The Clorox Company Foundation’s mission to align even more closely to our corporate purpose. Now focused on health security in the communities in which we live and work, the Foundation continued to support COVID relief efforts, racial justice initiatives and community building through nearly $20 million in product donations, cause marketing and grants to charitable organizations.
Moving forward, with our focus on strong execution of our strategy and the key investments we are making to strengthen our capabilities, our people, and our global portfolio of trusted brands,ahead, I am confident in our abilitywe are taking the right steps to deliverbuild a stronger, more resilient company, create long-term value for our stakeholders, and generate strong shareholder returns. Clorox has navigated through many economic cycles over our 110-year history, and we will continue to allevolve and innovate to create an enduring, sustainable company for ourselves and our stakeholders.
Thank you, fellow shareholders, for your continued support of our company.
Linda RendleDirector and Chief Executive Officer
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| Linda Rendle | |
| Director and Chief Executive Officer |
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Notice of Annual Meeting of Shareholders
The 2021 Annual Meeting of Shareholders (the Annual Meeting) of The Clorox Company (Clorox or the Company) will be held at 9:00 a.m. Pacific time on Wednesday, November 17, 2021, for the following purposes:
Annual Meeting Information Virtual Meeting URL Record Date Agenda 1. | To elect the | |
2. | To hold an advisory vote to approve executive compensation; | |
3. | To hold an advisory vote on the frequency of future advisory votes to approve executive compensation; and 4. To ratify the selection of Ernst & Young LLP as the | |
Shareholders will also consider and | How to Vote Telephone Mail During the Annual Meeting How to Attend the Annual Meeting |
| If you are a beneficial owner (you own shares through a broker, bank or other holder of record) and plan on attending, voting or asking questions at the Annual |
Due to concerns relating toYou may also vote online and examine our shareholder list during the coronavirus (COVID-19) pandemic, and to support the health and well-being of our employees and shareholders, this year’s Annual Meeting will be virtualby following the instructions provided on the meeting website during the Annual Meeting.
On or about October 5, 2023, we began mailing a Notice of Internet Availability of Proxy Materials (the Notice) to our shareholders informing them that our proxy statement, 2023 integrated annual report – executive summary, and will be held entirely online via live webcast at https://meetnow.global/MNGZAZQ. There willvoting instructions are available on the Internet.
Your vote is very important. Whether or not be an optionyou plan to attend the meeting in person.
Shareholders also will consider and act upon such other business as may properly come before thevirtual Annual Meeting, or any adjournment or postponement.
Shareholders of record at the close of business on September 24, 2021, are entitledwe encourage you to vote atand submit your proxy in advance of the Annual Meeting and any adjournment or postponement.
meeting by one of the methods described on pg 96-98. While you will not be able to attend the Annual Meeting at a physical location, we have designed the virtual Annual Meeting to ensure that our shareholders are given the same rights and opportunities to actively participate in the Annual Meeting as they would at an in-person meeting, using online tools to facilitate shareholder access and participation.
How to Attend the 2021 Virtual Annual Meeting. This year’s Annual Meeting will be virtual and held online via live webcast. In order to attend and participate in the Annual Meeting, you will need to visit https://meetnow.global/MNGZAZQ, and you will be required to enter the 15-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card (if you received a printed copy of the proxy materials), or on the
instructions that accompanied your proxy materials to access the meeting. If you are the beneficial owner of shares held in “street name” (that is, you hold your shares through a broker, bank or other holder of record), you must register in advance to gain access to the Annual Meeting and to vote your shares or ask questions during the Annual Meeting. Please see the Attending the Virtual Annual Meeting section of the proxy statement for more information. Whether or not you plan to attend the virtual Annual Meeting, we encourage you to vote and submit your proxy in advance of the meeting by one of the methods described on pages 83-84. You may also vote online and examine our shareholder list during the Annual Meeting by following the instructions provided on the meeting website during the Annual Meeting. To vote at the meeting, visit https://meetnow.global/MNGZAZQ and log in using the aforementioned information.
On or about October 6, 2021, we began mailing a Notice of Internet Availability of Proxy Materials to our shareholders informing them that our Proxy Statement, 2021 Integrated Annual Report – Executive Summary, and voting instructions are available on the Internet as of the same date.
Your vote is very important. Even if you plan to attend the virtual Annual Meeting, we hope that you will read the proxy statement and vote your proxy by telephone, via the Internet, or by signing, dating, and returning the proxy card in the envelope provided.
By Order of the Board of Directors,
Iké Adeyemi
Vice President – Corporate Secretary &
Associate General Counsel
The Clorox Company
1221 Broadway
Oakland, California 94612
October 6, 20215, 2023
| THE CLOROX COMPANY - 2023 Proxy Statement | iii |
Important Notice Regarding the AvailabilityTable of Proxy Materials for The Clorox Company Shareholders Meeting to be Held on November 17, 2021: Contents
| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE CLOROX COMPANY 2023 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 15, 2023 |
| The Notice of Annual Meeting, proxy statement, and 2023 integrated annual report – executive summary will be available at www.edocumentview.com/CLX. |
Pursuant to rules adopted by the United States Securities and Exchange Commission (the SEC), we are furnishing proxy materials to our shareholders primarily over the Internet. We believe that this process expedites shareholders’ receipt of these materials, lowers the costs of our Annual Meeting and reduces the environmental impact of mailing printed copies. Accordingly, on or about October 5, 2023, we began mailing the Notice to our shareholders informing them that our proxy statement, 2023 integrated annual report – executive summary, and voting instructions are available on the Internet. The Notice also contains instructions on how to receive a paper copy of the proxy materials and a proxy card or voting instruction form. If you received the Notice by mail or our proxy materials by e-mail, you will not receive a printed copy of the proxy materials unless you request one. If you received paper copies of our proxy materials, you may also view these materials on our website at www.envisionreports.com/CLX. |
ELECTRONIC DELIVERY OF PROXY MATERIALS
We encourage our shareholders to enroll in voluntary e-delivery of future proxy materials. We believe that this process expedites shareholders’ receipt of these materials, lowers the costs of our Annual Meeting Proxy Statement, and 2021 Integrated Annual Report – Executive Summary will be available at www.edocumentview.com/CLX.
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Tablereduces the environmental impact of Contentsmailing printed copies.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWNIf you are a Registered Shareholder (you own shares in your own name through our transfer agent, Computershare Trust Company, N.A.): visit www.computershare.com and log into your account to enroll.
If you are a Beneficial Owner (you own shares through a broker, bank or any other account): If you hold shares beneficially, please follow the instructions provided to you by your broker, bank, trustee or nominee.
If you have questions about how to vote your shares, or need additional assistance, please contact Innisfree M&A Incorporated, who is assisting us in the solicitation of proxies:
501 Madison Avenue, 20th Floor
New York, New York 10022
Shareholders may call toll-free at (877) 750-9499
Banks and brokers may call collect at (212) 750-5833
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Table of Contents
Frequently Requested Information
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| Proxy Summary |
This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. Please review the entire proxy statement before voting.
Proposals to be Voted on and Board Voting Recommendations
| Voting Matters and Voting Recommendations |
| More information | Board’s voting recommendation | |||||||
| PROPOSAL 1 | Election of Directors | Page | FOR EACH NOMINEE | |||||
| PROPOSAL 2 | Advisory Vote to Approve Executive Compensation | Page | FOR | |||||
| PROPOSAL 3 | Advisory Vote on the Frequency of Future Advisory Votes to Approve Executive Compensation | Page 91 | ONE YEAR | |||||
| PROPOSAL 4 | Ratification of Independent Registered Public Accounting Firm | Page 92 | FOR |
For more information on how to vote before and during the Annual Meeting, see Information About the Virtual Annual Meeting—Voting Information on pg 96 of this proxy statement.
What’s New This Year
We continued to enhance our governance, compensation and ESG disclosures and practices. Since our 2022 Annual Meeting of Shareholders, Clorox has:
| Welcomed our first full-time head of sustainability and reorganized our ESG governance and organizational structure to support our ESG goals and further enhance oversight and governance – see ESG Governance on pg 37 of this proxy statement. |
| • | Made further enhancements to our enterprise risk management program to facilitate greater connectivity and coordination across the organization – see Enterprise Risk Management on pg 34 of this proxy statement. |
| • | Upgraded the director skills matrix to disclose individual director skill attributes, which can be found in Director Skills & Experience on pg 26 of this proxy statement. |
| • | Enhanced disclosure around the board of directors’ (Board) risk oversight (pg 33), and the Board and director evaluation process (pg 30), including use of a third-party evaluation facilitator in fiscal year 2023. |
| • | Expanded the information available on our ESG Data Hub, which can be accessed at clorox.metrio.net. |
Proxy Summary
Our Director Nominees
The following table provides summary information about each director nominee as of the date of the Annual Meeting.
| Name | Age | Director Since | Principal Occupation | Independent | Committee Memberships | |||||
| Amy Banse | 62 | 2016 | Senior Adviser to the Executive Committee, Comcast Corporation | ✓ | ●AC | |||||
| Richard H. Carmona | 71 | 2007 | Chief of Health Innovations, Canyon Ranch | ✓ | ●NGCRC ●MDCC | |||||
| Spencer C. Fleischer | 68 | 2015 | Chairman, FFL Partners, L.P. | ✓ | ●MDCC (Chair) | |||||
| Esther Lee | 62 | 2013 | Former Executive Vice President – Global Chief Marketing Officer, MetLife Inc. | ✓ | ●NGCRC (Chair) | |||||
| A. D. David Mackay | 66 | 2016 | Former President and Chief Executive Officer, Kellogg Company | ✓ | ●AC ●MDCC | |||||
| Paul Parker | 58 | 2020 | Senior Vice President, Strategy and Corporate Development, Thermo Fisher Scientific Inc. | ✓ | ●AC | |||||
| Linda Rendle | 43 | 2020 | Chief Executive Officer, Clorox | |||||||
| Matthew J. Shattock | 59 | 2018 | Former Non-Executive Chairman, Beam Suntory Inc. | ✓ | ●NGCRC | |||||
| Kathryn Tesija | 58 | 2020 | Former Executive Vice President and Chief Merchandising and Supply Chain Officer, Target Corporation | ✓ | ●MDCC ●NGCRC | |||||
| Russell J. Weiner | 53 | 2017 | Chief Operating Officer, Domino’s Pizza, Inc. President, Domino’s US | ✓ | ●MDCC | |||||
| Christopher J. Williams | 63 | 2015 | Chairman, Siebert, Williams, Shank & Co. LLC | ✓ | ●AC (Chair) |
| Name | Age | Director Since | Principal Occupation | Independent | Committee Memberships | Other Public Company Directorships | ||||||||
| Amy L. Banse | 64 | 2016 | Venture Partner, Mastry, Inc. |  | • MDCC | • Adobe, Inc. • Lennar Corporation • On Holding AG | ||||||||
| Julia Denman | 52 | 2022 | Corporate Vice President and Head of Internal Audit, Enterprise Risk and Compliance, Microsoft Corporation |  | • AC | • N/A | ||||||||
| Spencer C. Fleischer | 70 | 2015 | Chairman, FFL Partners, L.P. | | • MDCC (Chair) | • Levi Strauss & Co. | ||||||||
| Esther Lee | 64 | 2013 | Former Executive Vice President – Global Chief Marketing Officer, MetLife Inc. | | • NGCRC (Chair) | • Pearson plc • Experian plc | ||||||||
| A. D. David Mackay | 68 | 2016 | Former President and Chief Executive Officer, The Kellogg Company | | • AC • MDCC | • Fortune Brands Home and Security | ||||||||
| Paul Parker | 60 | 2020 | Senior Vice President, Strategy and Corporate Development, Thermo Fisher Scientific Inc. | | • AC • NGCRC | • N/A | ||||||||
| Stephanie Plaines | 56 | 2022 | Chief Financial Officer, JC Penney | | • AC | • N/A | ||||||||
| Linda Rendle | 45 | 2020 | Chief Executive Officer, Clorox | • Visa Inc. | ||||||||||
| Matthew J. Shattock | 61 | 2018 | Former Non-Executive Chairman, Beam Suntory Inc. | | • NGCRC | • VF Corporation • Domino’s Pizza Group plc (UK) | ||||||||
| Kathryn Tesija | 60 | 2020 | Former Executive Vice President and Chief Merchandising and Supply Chain Officer, Target Corporation | | • MDCC • NGCRC | • Woolworth’s Group Limited | ||||||||
| Russell J. Weiner | 55 | 2017 | Chief Executive Officer, Domino’s Pizza, Inc. | | • MDCC | • Domino’s Pizza, Inc. | ||||||||
| Christopher J. Williams | 65 | 2015 | Chairman, Siebert Williams Shank & Co., LLC | | • AC (Chair) | • Ameriprise Financial, Inc. • Union Pacific Corporation |
| AC | Audit Committee | |
| NGCRC | Nominating, Governance and Corporate Responsibility Committee | |
| MDCC | Management Development and Compensation Committee |
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Proxy Summary
IGNITE Strategy and ESG Highlights
In fiscal year 2020, we introduced our IGNITE strategy to guide us to deliver purpose-driven growth. IGNITE embeds environmental, social and governance (ESG) priorities into our decision-making because we believe in the strategic link between our societal impact and long-term value creation for all our stakeholders, including shareholders, consumers, customers, employees, the communities where we operate and our planet.
ESG Pillars
We are a health and wellness company at heart with our choices guided by a company purpose: We champion people to be well and thrive every single day. To fulfill that purpose, we have established ESG goals that are organized around the pillars of Healthy Lives, Clean World, and Thriving Communities, and are supported by Strong Governance.
ESG Highlights
Less than two years after launching our IGNITE strategy, we have made significant progress on our ESG goals – even in the face of an unprecedented public health crisis that significantly impacted our operations.
In fiscal year 2021, we achieved our goal of 100% renewable electricity in our U.S. and Canada operations, and we are committed to maintaining this, going forward, through a virtual power purchase agreement. We also embedded ESG further into our business units. For example, Brita and Glad each established their own sustainability goals, demonstrating that environmental and social responsibility are core to their purpose. Brita committed to provide 500,000 people access to clean water in vulnerable U.S. communities with poor quality tap water by 2024, and one million people by 2030. Glad committed to reduce virgin plastic across its trash business by 50% by 2030 and help 100,000 households that are currently without recycling options gain access over the next three years. These are just two examples
of the work being done by our business units to establish their own sustainability priorities specific to their business and stakeholders.
As part of our climate strategy, we have also received approval of our science-based targets from the Science-Based Targets initiative (a partnership between the UN Global Compact and other environmental non-governmental organizations) and recently announced our commitment to reach net zero emissions across our operations and value chain by 2050.
Inclusion and diversity has continued to be core to who we are.
As of the Annual Meeting date, women comprise 36% of our director nominees and 46% of our executive committee. Additionally, our CEO is one of 41 women leading a Fortune 500 company. People of color comprise 27% of our director nominees and 23% of our executive committee. Each year, our directors and officers self-identify their gender (male, female or non-binary) and whether they are lesbian, gay, bisexual, transgender or queer (LGBTQ). In fiscal year 2021, two of our executive committee members identified as LGBTQ.
As part of our continued commitment to transparency and progress in our inclusion and diversity commitments and based on feedback from internal and external stakeholders, in 2020, we published our U.S. demographic representation data, or EEO-1 data, along the same categories under which we report to the EEOC. This year, we also published our latest U.S. Consolidated EEO-1 Report that we submitted to the EEOC. This EEO-1 information is available on the Company’s website at https://www.thecloroxcompany.com. Please note that information on or accessible through this website is not part of, or incorporated by reference into, this proxy statement. To provide even greater insight into our representation, we further enhanced our disclosures by including representation data by Clorox job category over a three-year period in our 2021 Integrated Annual Report.
In 2021, we earned recognition from third parties for our inclusion and diversity initiatives. We were included in the Bloomberg Gender-Equality Index, which tracks the performance of public companies committed to supporting gender equality through policy development, representation and transparency. We also maintained our 100% score on the Human Rights Campaign’s Corporate Equality Index and were named by Parity.org to its list Best Companies for Women to Advance.
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Proxy Summary
Corporate Governance Strengths
Board Structure and Independence
Board Structure and | üAll of our director nominees are independent, except for our CEO | |||
üIndependent chair ü 100% independent board committee members | ||||
| Board Composition | ü Diverse Board with effective mix of skills, experiences, and perspectives ü Diverse Board committee leadership ü Active Board refreshment – average Board tenure is approximately 5.5 years (as of the Annual Meeting date) ü Effective annual Board, Board committee, and individual director evaluation process – which was conducted by a third-party facilitator in fiscal year 2023 ü Majority voting and director resignation policy in uncontested director elections | |||
| Board Oversight | ü Robust processes for overseeing key enterprise risks, including enhancements in fiscal year 2023 to enterprise risk assessment process ü Board receives regular updates on key ESG topics from management and internal and external experts and consultants ü Strong Board and management succession planning process | |||
| Shareholder Rights and Accountability | ü Annual election of all directors ü Special meeting right for shareholders ü Proxy access right for shareholders ü Proactive shareholder engagement | |||
| Good Governance Practices | üRobust code of conduct applicable to directors, officers and employees |
Board Oversight
Director and Executive Compensation
üRigorous stock ownership guidelines for directors and executives | ||
üDirectors and officers prohibited from hedging our stock, and Section 16 insiders are prohibited from pledging our stock under our insider trading policy | ||
üBoth our annual and long-term incentive plans include clawback provisions ü ESG achievements are a component of the holistic assessment of our executives’ performance in relation to compensation |
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Shareholder Rights and AccountabilityTable of Contents
Proxy Summary
Board Composition
| Clorox delivered on our commitments and | ||
Business Performance and Executive Compensation Highlights
| • | Our incentive plan results reflect Company performance. |
| • | The Company |
| Performance share units from our long-term incentive |
| • | The Management Development and Compensation Committee continues to evolve our program.As we look ahead to fiscal year |
Please refer toFor more information, see the Compensation Discussion and Analysissection inof this proxy statement for further details.statement.
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Proxy Summary
What We Pay: Components of Our Compensation Program
A substantial portion of our target total direct compensation for our executives is variable, with 87%88% of target compensation at risk for our CEO and 80%78% of target compensation at risk on average for our other named executive officers (NEOs).NEOs. Base salary is the only fixed component of direct compensation.
| Component and Rationale | CEO Proportion(1) | NEO(2) Proportion(1) | Performance Measures | Performance Period | Characteristics | |||||||
Base Salary Fixed pay to attract and retain talent, based on role, level of responsibilities, and individual performance. |   |   | N/A | Fixed cash | ||||||||
Annual Incentives Variable pay to incent and recognize performance in areas of short-term strategic importance. |   |   | • Annual net sales (50%) • Net earnings (30%) • Gross margin (20%) • Individual performance goals | One Year | Performance-based cash | |||||||
Long-Term Incentives Equity-based pay to incent and recognize performance in areas of long-term strategic importance, promote retention and stability, and align executives with shareholders. |   |   | • Economic profit •Variation in underlying stock price due to overall business results | Three Years | Performance |
| (1) | Proportion represents the actual base salary, target annual incentive award, and grant date fair market value of actual long-term incentive awards granted in fiscal year |
| (2) | Represents the average of all NEOs active on June 30, |
Additional elements of our executive compensation program include retirement plans, post-termination compensation, and perquisites as appropriate to support our executive compensation philosophy.
Please refer toFor more information, see theCompensation Discussion and Analysis section of this proxy statement.
| THE CLOROX COMPANY - 2023 Proxy Statement | 5 |
| Our Company |
Snapshot
Clorox is a leading multinational manufacturer and marketer of consumer and professional products with fiscal year 2023 net sales of $7.4 billion and approximately 8,700 employees worldwide as of June 30, 2023. About 80% of the Company’s sales are generated from brands that hold the No. 1 or No. 2 market share positions in their categories, and our products are in nine out of 10 U.S. homes.
| 80% of Portfolio is #1 or #2 Share Brands | $7.4 Billion FY23 NET SALES | ~8,700 Employees | 25 Country/ | 100+Markets |
| 9 out of 10 Homes Have Our Product |
Our Corporate Purpose and Values, IGNITE Strategy and Integrated ESG Approach
| 6 | THE CLOROX COMPANY - 2023 Proxy Statement |
Our Company
| Corporate Purpose and Values |
Clorox is led by our purpose: We champion people to be well and thrive every single day. We believe this helps us drive long-term value for our shareholders and other stakeholders. At the heart of our business success is a resolve to do this work while operating ethically, putting people—our employees, customers, consumers and communities—at the center of our decision-making, doing the right thing and always maintaining a competitive edge, which are encapsulated in our corporate values.
Regardless of the external forces impacting our business, our corporate purpose and values guide our decision-making and are foundational in our relationship with our shareholders and other stakeholders.
Our philosophy to operate ethically and do the right thing is reflected in our code of conduct—which applies to our Board members, employees and contractors—and our business partner code of conduct—which applies to our direct suppliers and other business partners. For more information on these codes and how we certify and monitor compliance, see the Codes of Conduct section of this proxy statement.
| IGNITE Strategy and Integrated ESG Approach |
Clorox’s IGNITE strategy—our long-term strategic plan to drive growth and create positive value for our brands, people, communities, shareholders and other stakeholders—includes both financial goals, as well as integrated ESG goals that are organized into three pillars—Healthy Lives, Thriving Communities, and Clean World—supported by strong governance. See the ESG Governance section of this proxy statement for information regarding our ESG governance structure and recent enhancements.
Our integrated annual report has been developed in alignment with voluntary third-party frameworks—specifically, Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-Related Financial Disclosures (TCFD). We also disclose how our ESG priorities support specific U.N. Sustainable Development Goals. We encourage you to visit our ESG Data Hub at clorox.metrio.net and Clorox’s website at thecloroxcompany.com/responsibility/, and to review our integrated annual report for more detailed disclosures on our ESG progress in accordance with these frameworks, especially around our water stewardship and deforestation efforts and progress.
This past fiscal year, we enhanced our ESG governance structure and processes to further details.integrate our IGNITE ESG goals into business units, streamline decision-making and drive continued accountability. In fiscal year 2023, we engaged a third party in an ongoing stakeholder listening approach, which built on our materiality assessments, to ensure we were directing resources effectively, given how quickly the ESG space and stakeholder expectations are evolving. We also engaged in industry collaborations to address some of the biggest challenges facing consumer packaged goods companies, such as reducing plastic and other waste and tackling climate action.
Below are a few highlights from this past fiscal year.
Healthy Lives FY23 Highlights
Improving people’s health and well-being
| • | Ingredient transparency: We were the first company to add user-friendly ingredient definitions to SmartLabel for our cleaning and disinfecting products to help consumers better understand the function of their ingredients. |
| • | Product innovations:We launched product innovations to help our consumers be well and thrive, including our Clorox Free & Clear product line, which offers the effectiveness our consumers expect without dyes, bleach or ammonia, making it safer to use around kids, pets and food. |
| • | Industry recognition:We were recognized again as an Environmental Protection Agency Safer Choice Partner of the Year for our commitment to safer ingredients. |
| THE CLOROX COMPANY - |
Our Company
Thriving Communities FY23 Highlights
Investing in our people and communities to contribute to a more equitable world
| • | Employee diversity & inclusion: Clorox made strides on its journey to becoming a more diverse and inclusive company. We continued integrating IDEA into our company culture – including through a week-long series of programming called IDEAcon where employees could dive deeper into IDEA strategy elements and engage on how we can continue to embed IDEA into our work and teams. |
| • | Board diversity: As of June 30, 2023, our Board was comprised of 50% women and 25% people of color (compared to 30% and 22%, respectively, for Fortune 500 companies in 2022). |
| • | Foundation initiatives: The Clorox Company Foundation expanded its Healthy Parks Project to other communities where our employees live and work—Durham, NC and Atlanta, GA. The foundation launched this initiative in fiscal year 2022 to advance environmental justice through investment in community parks to help provide better access to green spaces in underserved communities, starting in Oakland, CA. |
| • | Biodiversity & economic development: Through Burt’s Bees’ support of the SheKeeper initiative, 900 women have been trained and over 1,200 new jobs created in shea-producer communities in Ghana. The SheKeeper initiative is just one of many of Burt’s Bees’ impactful initiatives supporting biodiversity and economic empowerment in communities where we source ingredients. |
| • | Industry Recognition: We were ranked No. 2 on Forbes’ 2022 list of The World’s Top Female-Friendly Companies. |
Clean World FY23 Highlights
Taking climate action and reducing plastic and other waste
| • | Plastics & packaging: We made progress on our 2025 circular economy goal for 100% recyclable, reusable or compostable packaging by rolling out more products that enable consumers to easily remove non-recyclable labels that reduce recyclability of packaging – currently putting us at 88% recyclable, reusable or compostable packaging. |
| • | Energy/Scope 1 & 2 emissions: We maintained 100% electricity from renewable energy for U.S. and Canada operations, which helped us accomplish our 2030 Scopes 1 and 2 science-based targets. |
| • | Scope 3 emissions: We continue to make progress on our efforts to engage our high-impact and strategic suppliers around climate action. In November 2022, we joined the Supplier Leadership on Climate Transitions collaborative, a third-party managed program that educates and provides support to suppliers for measurement, reporting, and setting emissions reduction targets. In fiscal year 2023, we invited nearly 50 suppliers to participate in this program and plan to continue facilitating participation by our other suppliers in the future. |
| • | Deforestation: We continued to combat deforestation by working to increase the percentage of recycled or responsibly sourced certified virgin fiber used in purchased packaging – which is currently at 99%, just short of our 100% goal. |
| • | Waste: We achieved 80% of our goal for 100% zero-waste-to-landfill plants by 2025 – with two additional zero-waste-to-landfill plants: our Burt’s Bees plant in Morrisville, NC and our cleaning plant in San Juan, Argentina. |
| • | Water: Water stewardship continues to be a priority, and we continue to seek ways to realize our water conservation goals while also reducing costs, meeting consumers’ needs and growing our business. We decreased our water withdrawals by 14% per case of product sold between 2022 and our 2018 baseline. | |
| • | Industry Recognition: We were ranked, for the first time, No. 1 on Barron’s 100 Most Sustainable U.S. Companies. |
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Board of Directors
Proposal 1: |
The Board, upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee (NGCRC), has nominated the 1112 people listed below for election at the Annual Meeting to serve until the 20222024 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified. All of the director nominees currently serve on the Board.
TheAs part of our ongoing, proactive efforts to implement effective corporate governance practices, the NGCRC examines the overall composition of the Board on an annual basis (or more frequently, if needed) to assess the skills and characteristics that are currently represented on the Board, and in incumbent Board members, as well as voting results in recent director elections, legislative and regulatory developments, corporate governance trends, and the skills and characteristics
that the Board may find valuable in the future in light of the Company’s strategic and anticipated business needs, on an annual basis, or more frequently, if needed.needs.
Pamela Thomas-Graham, who has served onUnless otherwise directed, the Board since 2005, is not standing for re-election when her term expirespersons named in the proxy as proxyholders intend to vote all proxies FOR the election of each of the nominees, as listed below. If, at the Annual Meeting. We would like to thank Ms. Thomas-Graham for her many years of service, including nearly five years as our lead independent director, and substantial contributions to the Board, Clorox and our shareholders.
Who We Are: Our Director Nominees
We invite you to read about our director nominees below. Our director nominees represent diverse perspectives and experiences and bring core strategic, operating, financial and governance skills as well as consumer product expertise to our Board. Eachtime of the director nominees has agreed to be named in this proxy statement andAnnual Meeting, any nominee is unable or declines to serve as a director, if elected.
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Shareholder Outreach and Communications
We maintain active, year-round engagement with our shareholders and aimthe discretionary authority provided in the enclosed proxy will be exercised to meet with our larger institutional shareholders in-person (conditions permitting), via conference calls, virtually (via video) or at investor conferences. We also routinely respondvote for a substitute candidate designated by the Board, unless the Board chooses to inquiries and consider feedback received from individual shareholders and other stakeholders throughout the coursereduce its own size. The Board has no reason to believe that any of the fiscal year.nominees will be unable or will decline to serve if elected. Proxies cannot be voted for more than 12 persons since that is the total number of nominees.
Board’s Recommendation
DuringThe Board unanimously recommends a vote FOR each of the past fiscal year, our corporate secretary team, managementBoard’s 12 nominees for director listed below. The Board believes that each nominee listed below is highly qualified and investor relations team, in additionhas the background, skills, experience, and attributes that qualify each nominee to our NGCRC chair and independent chair, met with manyserve as a director of our investors to discuss key corporate governance, executive compensation, corporate responsibility, culture and other important ESG topics. These meetings enable two-way dialogue between our shareholdersthe Company. See each nominee’s biographical information and the CompanyDirector Nomination and provide a forum for our leadership to listen to our shareholders’ perspectives, answer any questions and engage in dialogue on any feedback they may have. Through these engagements, we seek to ensure our corporate governance framework remains responsive to the priorities of our stakeholders, while also enabling our business and strategic priorities.
The Board considers shareholder feedback from these meetings, along with emerging best practices, market standards, and policies at other companies in its deliberations and decision-making as well as our disclosures and commitments.
For example, after a comprehensive review and consideration of feedback from shareholders, in conjunction with our strategic and business priorities, our Board has effected changes in key areas relating to the Company’s compensation plan design and metrics, including by updating our executive compensation clawback policy and by expanding the factors considered in executive compensation award determinations. In February 2021, the MDCC updated its clawback policy to allow for recoupment of incentive compensation granted to current and former executive officers if the executive engages in conduct that is materially detrimental to Clorox. See Executive Compensation Governance Evaluationin the Compensation Discussion and Analysis section of this proxy statement for more information. Further, for fiscal year 2022The Board’s recommendation is based on its carefully considered judgment that the background, skills, experience, and onwards, certain ESG components of our IGNITE scorecard – such as management of environmental risks and human capital, including diversity and inclusion –
will be embedded in each executive’s fiscal year priorities, and those scorecard results will be factored into the MDCC’s evaluationattributes of each executive’s performance for their annual incentive awards. Seeof the IGNITE Strategy Guided by ESG Principles section of this proxy statement for more information aboutnominees make them the IGNITE scorecard.
In 2020, we also expanded our disclosures regarding diversity and inclusion by providing EEO-1 data along the same categories that we reportbest candidates to the EEOC on an annual basis. This year, in response to further shareholder feedback, we have elected also to provide the EEO-1 report that we submitted to the EEOC in December 2020. This EEO-1 information is availableserve on the Company’s website at https://www.thecloroxcompany.com. We also further enhanced our disclosures by including representation data by Clorox job category over a three-year period in our 2021 Integrated Annual Report.Board.
In September 2021, we announced new science-based targets as part of our climate strategy, which will put the Company on a path to net zero emissions across Scopes 1, 2 and 3 by 2050. These targets underscore our ongoing commitment to climate action, as we accelerate our IGNITE strategy for long-term value creation for all of our stakeholders. This is also an important priority for our shareholders, and shareholder and stakeholder feedback factored into the development of our commitment.
Shareholder Recommendations and Nominations of Director Candidates
The NGCRC considers recommendations from many sources, including shareholders, regarding possible candidates for director. Such recommendations, together with biographical and business experience information (similar to that required to be disclosed under the applicable Securities and Exchange Commission (SEC) rules and regulations) regarding the candidate, should be submitted to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The NGCRC evaluates all candidates for the Board in the same manner, including those suggested by shareholders.
In addition, our bylaws permit a shareholder or group of up to 20 shareholders who have owned at least 3% of the outstanding shares of the Company’s common stock for at least three years to submit director nominees
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(up to 20% of the Board) for inclusion in the Company’s proxy statement and form of proxy used in connection with the Annual Meeting (proxy materials) if the shareholder(s) provide(s) timely written notice of such nomination(s) and the shareholder(s) and the nominee(s) satisfy the requirements specified in the Company’s Bylaws. Shareholders who wish to nominate directors for inclusion in the Company’s proxy materials or directly at an annual meeting of shareholders in accordance with the procedures in our Bylaws should follow the instructions under the Shareholder Proposals and Director Nominations for the 2021 Annual Meeting section of this proxy statement.
Director Communications
Shareholders and interested parties may direct communications to individual directors, including the independent chair, to a Board committee, to the independent directors as a group, or to the Board as a whole, by addressing the communications to the appropriate party and sending them to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The Corporate Secretary will review all communications so addressed and will forward to the addressee(s) all communications determined to bear substantively on the business, management, or governance of the Company.
How We Identify, Evaluate and Nominate Our Directors
The NGCRC engages in continuous Board succession planning and evaluation of Board composition, working closely with our Board in determining the skills, experiences, and characteristics desired for the Board as a whole and for its individual members, and also screening and recommending candidates for nomination by the full Board.
While the Board has not established any specific minimum qualifications that a potential nominee must possess, director candidates, including incumbent directors, are assessed based upon criteria established by the NGCRC in light of the Company’s long-term strategy, the skills and backgrounds currently represented on the Board, and any specific needs identified in the NGCRC’s evaluation of Board composition.
Criteria include:
The Board also adopted a Board Diversity Policy during fiscal year 2020, which requires the NGCRC to include, and to have any search firm they engage include, diverse candidates who meet the Board membership criteria set forth in the Governance Guidelines, in any pool from which the NGCRC selects director candidates. See Board Diversity Policy below for more information.
The NGCRC focuses on achieving the right balance of tenure of our directors to obtain a Board with a combination of fresh perspectives and the institutional memory of longer-tenured directors who have seen issues arise over time and have worked with different CEOs and management teams to guide the Company.
The ability of incumbent directors to continue to contribute to the Board and the Company’s evolving needs is also carefully considered in connection with the renominating process. Further, under the Governance Guidelines, non-management directors whose personal circumstances change in a manner that affects their ability to contribute to the Company, including a change in their principal position, primary job responsibilities, or situation, must offer their resignation for the Board’s consideration, to ensure that the individual is still qualified to perform their duties as a director of the Company.
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Director Skills & Experience
The following experience and skills, among others, have been specifically identified by the NGCRC as being important in creating a diverse and well-rounded Board:
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Director Continuing Education and New Director Orientation
To enhance and expand on the key skills and experiences relevant to the Company’s industry, we provide our directors with continuing education and presentations developed by both internal and external expert speakers. Additionally, we encourage our directors to participate in external continuing director education programs. New directors also participate in comprehensive orientation sessions that provide them with a thorough understanding of their fiduciary duties as well as a robust overview of the Company’s business and strategies, which allows new directors to begin making contributions to the Board at the start of their service.
Diverse Backgrounds & Experiences
Our director nominees represent diverse perspectives and experiences, and we regularly assess our Board to ensure that we have a mix of tenures balancing fresh perspectives with institutional memory of longer-tenured directors who have seen issues arise over time and have worked with different CEOs and management teams to guide the Company.
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As highlighted in our Governance Guidelines, the Board values diversity and recognizes the importance of having unique and complementary backgrounds and perspectives in the boardroom. The Board also actively seeks refreshment of the Board with directors who can add strong and unique value to our ever-evolving business through skills highly relevant to our corporate strategy.
The Board believes that setting the tone at the top – that people of all backgrounds are welcome and empowered – helps the Company attract and retain the best talent and also helps lead to a better business strategy and execution. The Board endeavors to bring together diverse skills, professional experience, perspectives, age, race, ethnicity, gender, sexual identity and orientation, and cultural backgrounds that reflect the Company’s diverse
stakeholders. The NGCRC assesses the effectiveness of these efforts by examining the overall composition of the Board, assessing how individual director candidates, including incumbent directors, can contribute to the overall success of the Board, and reviewing individual, committee, and Board evaluation results. Furthermore, we are very proud that our commitment to diversity does not end with just representation; diverse directors hold key leadership roles on our Board – our NGCRC chair is an Asian woman, and our Audit Committee Chair is Black.
Clorox’s commitment to inclusion and diversity also forms a key part of our IGNITE strategy. As of June 30, 2021, people of color represent 38% of our nonproduction employees and 31% of our nonproduction managers in the US, and women represent 52% of our nonproduction
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employees and 46% of our nonproduction managers globally. We are committed to inclusion and diversity because we fundamentally believe that diversity leads to better outcomes for our business. We have also seen the value of diversity during times of uncertainty when different ways of thinking enables us to be nimble, creative, and step up to meet challenges.
Board Diversity Policy
The Board regards diversity as an important consideration for determining the optimal Board composition and adopted a Board diversity policy during fiscal year 2020, formalizing and reinforcing the NGCRC’s long-existing practice of considering diversity as an important factor in the director selection process in accordance with our Board membership criteria.
The NGCRC has oversight of the implementation and delivery of the Board Diversity Policy, which guides and
helps drive the Board’s commitment to actively seek out diverse director candidates. This policy requires that women and people of color who meet the Board membership criteria set forth in the Company’s Corporate Governance Guidelines (Governance Guidelines) are included in each slate of potential directors the Board considers in director searches. The policy recognizes that in considering director candidates for the Board, the NGCRC considers many forms of diversity, such as, diversity of skills, professional experience, perspective, age, race, ethnicity, gender, sexual identity and orientation and cultural backgrounds, and considers whether the diversity of the Board is appropriately reflective of the diversity of the Company’s stakeholders.
The Board believes this policy supports the Company’s commitment to inclusion and diversity and its ability to adapt to ever-changing business and policy environments.
As part of our ongoing, proactive efforts to implement effective and progressive corporate governance practices, the NGCRC regularly reviews the leadership structure of the Board, taking into account the Company and its needs, market practices, board skills and experiences, investor feedback, and corporate governance perspectives, among other things. The Board believes it is in the best interests of the Company and its shareholders for the Board to have flexibility in determining the Board leadership structure of the Company based on these factors. Accordingly, over the years, the Board has had a variety of leadership structures.
In February 2021, our executive chair and former CEO Benno Dorer stepped down from his role, and Matthew Shattock was appointed to the role of independent chair. Mr. Shattock brings strong board and executive leadership experience to the role having previously served as a non-executive board chair and as a former public company CEO. Mr. Shattock leads the Board in its fundamental role of advising and overseeing management.
In this role, the independent chair:
As CEO, Ms. Rendle is responsible for developing and overseeing the Company’s business strategy and culture as well as managing the day-to-day operations of the Company and the Company’s relationships with stakeholders.
Lastly, the Board is guided by strong, independent committee chairs, with Ms. Lee leading the NGCRC, Mr. Fleischer leading the MDCC, and Mr. Williams serving as the Audit Committee chair.
Other than Ms. Rendle, all of the Company’s directors are “independent” as defined by the NYSE rules. The Board believes that this structure promotes effective governance and that the leadership structure described above is in the best interests of the Company and its shareholders, in light of current circumstances.
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Annual Board and Director Evaluation Process
In addition to regularly reviewing its leadership structure, the Board, the Board committees and each individual director conduct an annual self-assessment of their performance, a process that is overseen by the NGCRC.
The NGCRC chair meets with each director to gather feedback on the Board and to discuss each director’s self-assessment and peer evaluation. Directors have the opportunity to provide feedback on a number of issues designed to assess Board performance, including Board composition, structure, information received, accountability, oversight, and effectiveness, among other topics. The NGCRC chair then summarizes the results and any related recommendations, and the Board reviews and discusses the findings. Each Board committee also conducts a separate self-evaluation that is designed to assess committee performance and effectiveness.
This multi-step evaluation process generates robust comments and discussion at all levels of the Board, and these evaluations have led to changes designed to increase Board effectiveness and efficiency, including, for example:
The Company’s Bylaws require each director to be elected by a majority of the votes cast with respect to such director in uncontested elections—the number of shares voted FOR a director must exceed the number of shares voted AGAINST that director.
| THE CLOROX COMPANY - 2023 Proxy Statement | 9 |
Proposal 1: Election of Directors
The people designated in the proxy and voting instruction card intend to vote your shares represented by proxy FOR the election of each of these nominees, unless you include instructions to the contrary. In the event any director nominee is unable to serve or for good cause will not serve, the personsindividuals named as proxies may vote for a substitute nominee recommended by the Board, or the Board may reduce the size of the Board or leave a vacancy.
Under the Company’s Bylaws, any director who fails to be elected by a majority of the votes cast in an uncontested election must tender their resignation to the Board. The NGCRC would then make a recommendation to the Board as to whether to accept or reject the resignation, or whether other action should be taken. The Board would act on the NGCRC’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. A director who tenders their resignation would not participate in the Board’s decision.
The Board unanimously recommends a vote FOR eachOur Director Nominees
We invite you to read about our director nominees below. Each of the Board’s 11director nominees for director listed above. The Board believes that each nominee listed above is highly qualifiedhas agreed to be named in this proxy statement and has the background, skills, experience, and attributes that qualify each nominee to serve as a director, if elected.
We believe that our directors should satisfy a number of qualifications, including demonstrated integrity, a record of personal accomplishments, a commitment to participation in Board activities, and other attributes discussed below in the Director Candidate Evaluation and Nomination section. We also endeavor to have a Board that represents diverse perspectives and experiences and a range of qualifications, skills, and depth of experience in areas that are relevant to and contribute to the Board’s oversight of the Company. See each nominee’s biographical informationCompany’s strategy and business. Each director biography includes the
How We Identify, Evaluate key experiences and Nominatequalifications the director nominee brings to the Board that we believe are important to our Directors section above for more information. The Board’s recommendation is based on its carefully considered judgmentbusinesses and structure and that the background, skills, experience, and attributes of the nominees make them the best candidatesBoard considered in determining to serve on the Board.recommend that they be nominated for election.
10 | THE CLOROX COMPANY - |
Proposal 1: Election of Directors
Amy L. Banse Age: 64 Independent Director Since: 2016 Committees: MDCC | Skills and Qualifications Amy L. Banse’s experience in starting, investing in and building businesses provides her with significant strategic and financial expertise, and her executive leadership roles contribute to her management and operational knowledge. Banse’s deep expertise in media and technology also enables her to contribute valuable insights into digital media and online business. Experience Highlights Mastry, Inc., an early-stage venture capital firm • Venture Partner (March 2021 to present) Comcast Corporation, a global media and technology company • Senior adviser to the executive committee (September 2020 to December 2021) • Executive vice president, Comcast Corporation (January 2020 to September 2020) • Managing director and head of funds, Comcast Ventures LLC (August 2011 to September 2020) ○ Under her leadership, Comcast Ventures grew the size and diversity of its portfolio, making it one of the country’s most active corporate venture arms. • President, Comcast Interactive Media, a division of Comcast responsible for developing online strategy and operating the company’s digital properties • Served in various positions, including content development, programming investments and overseeing the development and acquisition of Comcast’s cable network portfolio Earlier in her career, Banse was an associate at Drinker, Biddle & Reath LLP. Other Public Company Boards • Adobe, Inc. (May 2012 to present) • Lennar Corporation (February 2021 to present) • On Holding AG (September 2021 to present) Nonprofit/Other Boards • Domestika Inc. |
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Proposal 1: Election of Directors
Julia Denman Age: 52 Independent Director Since: 2022 Committees: Audit | Skills and Qualifications Julia Denman’s operational and risk management leadership, as well as her experience in executing transformation strategies enable her to provide valuable perspective on the Company’s growth strategy and capital allocation framework, as well as important contributions to the Board’s oversight of risk and compliance. She also brings notable financial and accounting expertise, having served as divisional chief financial officer of a publicly traded company, as well as highly relevant knowledge of the consumer packaged goods industry. Experience Highlights Microsoft Corporation, a global technology company • Corporate vice president and head of internal audit, enterprise risk and compliance (December 2019 to present) ○ Leading a team that provides independent and objective assessments of the company’s business strategies and operations, oversight of its governance and strategy for global risk management and compliance and leading investigations related to business conduct • Corporate vice president and chief financial officer of worldwide marketing and consumer business (August 2016 to November 2019) • Corporate vice president and chief financial officer of devices business The Procter & Gamble Company, a global consumer goods company • Various leadership roles, including assistant treasurer and divisional finance director ○ During her 20-year tenure, oversaw the most strategic and central elements of treasury, including capital markets, cash management and risk management; developed product and marketing innovation strategies and cost savings initiatives, resulting in higher profits; and led the turnaround of a $3 billion division |
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Proposal 1: Election of Directors
Spencer C. Fleischer Age: 70 Independent Director Since: 2015 Committees: MDCC (Chair) | Skills and Qualifications Spencer Fleischer brings to the Board more than 40 years of financial and operational expertise as well as deep international experience. His significant experience in both private equity and investment banking enables him to contribute valuable insights to the Company on strategy, mergers and acquisitions and operations. His leadership role at FFL Partners, L.P. also allows him to provide significant experience in compensation matters. Experience Highlights FFL Partners, L.P., a private equity firm • Chairman (March 2021 to present) • Managing Partner (April 1998 to March 2021) Morgan Stanley & Company, an investment management and financial services company • Various leadership roles, including head of investment banking in Asia, head of corporate finance for Europe, and member of worldwide investment banking operating committee Other Public Company Boards • Levi Strauss & Co. (July 2013 to present) • Banner Corporation (October 2015 to December 2016) Nonprofit/Other Boards • Americans for Oxford, Inc. |
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Proposal 1: Election of Directors
Esther Lee Age: 64 Independent Director Since: 2013 Committees: NGCRC (Chair) | Skills and Qualifications Esther Lee brings to the Company significant executive and marketing expertise. Her marketing expertise has been focused on developing customer strategies to drive growth, customer-centric innovation and business transformation, and consumer engagement programs including branding, digital marketing and customer experience design. As a senior executive, she has helped define and drive company purpose, strategy, operating models and corporate culture, and build high-performing teams. Lee’s executive leadership and marketing experience enable her to provide valuable contributions to the Company’s business strategies. Experience Highlights MetLife Inc., an insurance, annuities and employee benefits company • Executive vice president – global chief marketing officer (January 2015 to June 2021) AT&T Corporation, a global telecommunications company • Senior vice president – brand marketing, advertising and sponsorships Euro RSCG Worldwide, a French advertising agency • Chief executive officer of North America and president of global brands The Coca Cola Company, a global beverage company • Global chief creative officer Earlier in her career, Lee worked in several leadership positions in the advertising industry, including as co-founder of DiNoto Lee, where she worked with several consumer packaged goods companies, including Procter & Gamble, Unilever and Nestle. Other Public Company Boards • Pearson plc (February 2022 to present) • Experian plc (March 2023 to present) |
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Proposal 1: Election of Directors
A.D. David Mackay Age: 68 Independent Director Since: 2016 Committees: Audit | Skills and Qualifications David Mackay brings significant strategic leadership and operational experience to the Board. His extensive consumer products background and his international experience allow him to contribute valuable insights regarding the Company’s industry, operations and international businesses. In addition, his previous leadership roles provide him with expertise in executive compensation and succession planning matters. Experience Highlights The Kellogg Company, a food and manufacturing company • President and chief executive officer (December 2006 to January 2011) • President and chief operating officer (September 2003 to December 2006) • Executive vice president (November 2000 to September 2003) • Senior vice president and President of Kellogg USA (July 2000 to November 2000) • Served in various leadership positions, including at Kellogg Australia and Kellogg United Kingdom and Republic of Ireland Sara Lee Corporation, a food and manufacturing company • Managing director, Australia Mars, Incorporated, a multinational confections company • Various positions Other Public Company Boards • Fortune Brands Home and Security, Inc. (September 2011 to present) • Keurig Green Mountain, Inc. (December 2012 to March 2016) Nonprofit/Other Boards • FSHD Global Research Foundation Ltd. |
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Proposal 1: Election of Directors
Paul Parker Age: 60 Independent Director Since: 2020 Committees: Audit | Skills and Qualifications Paul Parker brings strategic expertise and financial experience to the Board based on 35 years working in the banking and finance industries, as well as his experience leading strategy, corporate development and sustainability efforts for a major multinational public company. His extensive experience in investment banking and expertise in mergers and acquisitions enable him to provide important insights to the Company on strategy and growth. Experience Highlights Thermo Fisher Scientific Inc., a global supplier of scientific instrumentation, clinical trials and pharmaceutical development and manufacturing services • Senior vice president, strategy and corporate development (April 2020 to present) ○ Responsible for corporate strategy, mergers and acquisitions, integration management, strategic capital, corporate social responsibility and government relations Goldman Sachs & Co., an investment bank and financial services company • Co-chairman of global mergers and acquisitions group (August 2014 to March 2020) ○ Served on the firm’s partnership committee and investment banking senior leadership council Barclays PLC, an investment bank and financial services company • Chairman and head of global mergers and acquisitions, member of executive committee for investment banking division and Americas management committee • Head of global corporate finance Lehman Brothers Holdings Inc., an investment bank and financial services company • Chairman and head of global mergers and acquisitions • Head of U.S. mergers and acquisitions and member of executive committee for investment banking division |
| 16 | THE CLOROX COMPANY - 2023 Proxy Statement |
Proposal 1: Election of Directors
Stephanie Plaines Age: 56 Independent Director Since: 2022 Committees: Audit | Skills and Qualifications Stephanie Plaines brings extensive financial and accounting expertise gained from over 30 years of financial experience, including as chief financial officer of a publicly traded company. Her executive leadership experience across a wide variety of consumer, e-commerce and financial services companies also enables her to contribute unique insights to Clorox on strategy and growth. She also has experience with transformation agendas and leveraging consumer and data insights to drive growth, which provides valuable perspective for the Company’s brand-building, marketing and digital transformation efforts. Experience Highlights JCPenney (Penney OpCo LLC), a department store chain • Chief financial officer (August 2022 to present) Jones Lang LaSalle Inc., a global real estate services company • Chief financial officer (March 2019 to November 2020) Starbucks Corporation, a global chain of coffee houses • Chief financial officer of U.S. retail division (April 2017 to December 2018) Walmart, Inc. and Sam’s Club, a chain of department stores and retail warehouse clubs • Chief financial officer of e-commerce business Koninklijke Ahold N.V., a retail and wholesale company • Chief financial officer of Stop & Shop division • Vice president of finance – business planning and performance for Ahold USA • Vice president of group treasury for Ahold Delhaize Catalina Marketing, a media company • Head of international finance PepsiCo, Inc., a global beverage company • Worked in global planning and analysis for Tropicana business and in corporate development Plaines started her career in investment banking and mergers and acquisitions at UBS. Other Public Company Boards • KKR Acquisition Holdings I Corp. (January 2022 to December 2022) • Nielsen Holdings plc (April 2021 to October 2022) |
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Proposal 1: Election of Directors
Linda Rendle Age: 45 Director Since: 2020 | Skills and Qualifications Linda Rendle’s long tenure at the Company and deep understanding of the consumer packaged goods industry, the Company’s businesses and her instrumental role in developing the Company’s IGNITE strategy enable her to provide valuable contributions with respect to strategy, growth and long-range plans. Additionally, her tenure and leadership across many of the Company’s business units provides her with a diverse perspective on global sales, product innovation and business strategy. Experience Highlights The Clorox Company • Chief executive officer (September 2020 to present) • President (May 2020 to September 2020) • Executive vice president – Cleaning, international, strategy and operations (July 2019 to May 2020) • Executive vice president – strategy and operations (January 2019 to July 2019) • Executive vice president – Cleaning, Professional Products and strategy (June 2018 to January 2019) • Senior vice president and general manager – Cleaning and Professional Products (April 2017 to May 2018) • Senior vice president and general manager – Cleaning (August 2016 to April 2017) • Vice president and general manager – Home Care • Vice president of sales – Cleaning • Various positions in sales planning and supply chain Earlier in her career, Rendle worked for Procter & Gamble, where she held several positions in sales management. Other Public Company Boards • Visa Inc. (November 2020 to present) Nonprofit/Other Boards • Vice chair (2022 to present); Chair (effective January 2024) of Consumer Brands Association |
| 18 | THE CLOROX COMPANY - 2023 Proxy Statement |
Proposal 1: Election of Directors
Matthew J. Shattock Independent Chair Age: 61 Independent Director Since: 2018 Committees: NGCRC | Skills and Qualifications Matthew J. Shattock brings significant operational and executive leadership experience in the consumer packaged goods industry to the Board. His current and prior leadership roles, including overseeing the successful growth, integration and strategic transformation of a global spirits company as CEO, enable him to provide valuable insights to the Company’s business. Shattock has a strong track record of driving growth through innovation, brand communication and operational excellence. Experience Highlights Beam Suntory Inc., a global premium spirits company •Non-executive chairman of the board (April 2019 to December 2020) • Chairman and chief executive officer (April 2014 to April 2019) • President and chief executive officer, Beam, Inc. (October 2011 to April 2014) • President and chief executive officer, Beam Global Spirits and Wine, Inc. (March 2009 to October 2011) During his tenure, Shattock led the company’s successful growth strategy transformation and subsequent integration of the Beam and Suntory spirits businesses following Beam’s acquisition by Suntory in 2014. Cadbury plc, an international confectionary manufacturer • Regional president, where he led its businesses first in The Americas and then in the Europe, Middle East and Africa region Unilever plc, an international manufacturer of food, home care and personal care products • Chief operating officer, Unilever Best Foods North America • Various leadership roles Other Public Company Boards • VF Corporation (February 2013 to present) • Chairman of Domino’s Pizza Group plc (UK) (March 2020 to present) Nonprofit/Other Boards • Cooler Screens Inc. • Tropicale Foods Inc. • Kendra Scott Design, Inc. • The Boys and Girls Club of Lake County, Illinois |
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Proposal 1: Election of Directors
Kathryn Tesija Age: 60 Independent Director Since: 2020 Committees: MDCC | Skills and Qualifications Kathryn Tesija brings to Clorox large-scale global merchandising and supply chain experience as well as operational and strategic planning expertise. Her tenure as a retail industry executive allows her to provide insights into customer and consumer behavior. This experience, together with her expertise in digital, innovation and marketing, allows her to provide valuable perspective on the Company’s strategic priorities to innovate brand and shopping experiences. Experience Highlights Target Corporation, a department store chain • Strategic advisor (July 2015 to March 2016) • Executive vice president and chief merchandising and supply chain officer (October 2012 to July 2015) • Oversaw all functions of product design and development, sourcing, merchandising, presentation, inventory management, operations, and global supply chain for Target.com and nearly 1,800 retail stores. • Executive vice president, merchandising (May 2008 to September 2012) • Numerous positions of responsibility, including director of merchandise planning and senior vice president, merchandising Other Public Company Boards • Woolworths Group Limited (May 2016 to present) • Verizon Communications (December 2012 to May 2020) |
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Proposal 1: Election of Directors
Russell J. Weiner Age: 55 Independent Director Since: 2017 Committees: MDCC | Skills and Qualifications Russell J. Weiner’s executive leadership experience in the food and consumer packaged goods industries enables him to contribute his extensive knowledge of brand building, marketing, operations and consumer insights. His experience in digital innovation allows him to offer valuable contributions to the Company as it transforms data into insights to build personalized brands and enhance consumer shopping experiences. Experience Highlights Domino’s Pizza, Inc., a restaurant chain • Chief executive officer (May 2022 to present) • President of Domino’s U.S. (July 2020 to April 2022) • Chief operating officer (July 2018 to April 2022) • President of the Americas (July 2018 to June 2020) • President of Domino’s USA (September 2014 to June 2018) • Executive vice president, chief marketing officer PepsiCo, Inc., a global beverage company • Vice president of marketing, Colas at Pepsi-Cola North America • Various leadership roles in marketing and brand management Other Public Company Boards • Domino’s Pizza, Inc. (April 2022 to present) |
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Proposal 1: Election of Directors
Christopher J. Williams Age: 65 Independent Director Since: 2015 Committees: Audit (Chair) | Skills and Qualifications Christopher Williams brings a wealth of financial, accounting, and strategic expertise to the Board with his years of experience in investment banking and finance, and as the former chair of the audit committee of a Fortune 100 company. He also contributes important executive management and leadership experience as the chairman and chief executive officer of an investment management firm. As a current and former director of several public and private companies, he brings a valuable perspective for the Company’s strategy and operations as well as extensive customer insights. Experience Highlights Siebert Williams Shank & Co., LLC, an investment banking and financial services company, formed from the merger of The Williams Capital Group, L.P. and Williams Capital Management, LLC, with Siebert Cisneros Shank • Chairman (November 2019 to present) The Williams Capital Group, L.P. and Williams Capital Management, LLC, an investment banking and financial services firm • Chairman and chief executive officer (1994 to 2019) Jeffries & Company, an investment bank • Managed derivatives and structured finance division Lehman Brothers Holdings Inc., an investment bank and financial services company • Managed groups in corporate debt capital markets and derivatives structuring and trading Other Public Company Boards • Ameriprise Financial, Inc. (September 2016 to present) • Union Pacific Corporation (November 2019 to present) • Caesars Entertainment Corporation (April 2008 to March 2019) • Wal-Mart Stores Inc. (June 2004 to June 2014) Nonprofit/Other Boards: • Cox Enterprises Inc. |
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Proposal 1: Election of Directors
Shareholder Engagement
We maintain active, year-round engagement with our shareholders. Through in-person and virtual meetings, we aim to engage with shareholders representing at least one-third of our total shares outstanding, annually.
Who meets with shareholders | How we interact with shareholders |
•Corporate secretary and ESG team •Investor Relations team •NGCRC chair •Independent chair •Management, including CEO | •In-person or virtual meetings •Investor conferences •Annual shareholder meeting •Shareholder proposals •Written correspondence with investors throughout the year |
These interactions enable two-way dialogue between our shareholders and the Company and provide an important channel for the Board and management to understand our shareholders’ perspectives and learn about emerging areas of interest. Below are highlights of our engagement with shareholders and the broader investor and corporate governance community in fiscal year 2023.
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Proposal 1: Election of Directors
These engagements also inform and improve our disclosures, decision-making and commitments. The Board also considers shareholder feedback from these meetings in its deliberations and decision-making. The table below sets forth changes we made after considering shareholder feedback, along with market standards and emerging leading practices, in conjunction with our strategic and business priorities.
Executive compensation | Diversity disclosures |
Executive compensation clawback policy In fiscal year 2021, we implemented an executive compensation clawback policy to allow us to recoup incentive compensation granted to current and former executive officers if they engage in conduct that is materially detrimental to Clorox, or in the event of a financial restatement. We plan on updating this policy to comply with new SEC and New York Stock Exchange (NYSE) requirements. Expanded the factors considered in executive compensation award determinations Starting in fiscal year 2022, certain ESG-related goals from our IGNITE scorecard will be factored into the MDCC’s evaluation of each executive’s performance for their annual incentive awards. | Expanded our disclosures regarding diversity and inclusion Our EEO-1 information is available on the Company’s website at thecloroxcompany.com/company/inclusion-diversity/. We also further enhanced our disclosures by including representation data by Clorox job category starting in our 2021 integrated annual report. |
Third-party board and director evaluator | ESG Data Hub |
In fiscal year 2023, we engaged a third-party facilitator for our Board and director evaluations in line with leading practice, in order to add external perspective and insight to our process. We plan to continue to engage a third-party facilitator periodically for future evaluations. | Last year, we launched the ESG Data Hub which provides a centralized, user-friendly information source to our stakeholders. Over the past fiscal year, we expanded the disclosures and information on the hub. The ESG Data Hub can be found at clorox.metrio.net/. |
Climate action | Director skill disclosures |
In September 2021, we announced our science-based targets as part of our climate strategy, which will put the Company on a path to net zero emissions across scopes 1, 2 and 3 by 2050. | In this year’s proxy statement, we have disclosed individual director skills and expertise in the interest of transparency and to demonstrate how each director nominee contributes to the Board’s ability to effectively oversee the Company’s strategy and risks. |
Shareholder Recommendations and Nominations of Director Candidates
Shareholders may recommend possible director candidates by sending the candidate’s biographical and business experience information (similar to that required to be disclosed under applicable SEC rules and regulations) to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The NGCRC evaluates all candidates for the Board in the same manner, including those recommended by shareholders.
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Proposal 1: Election of Directors
In addition, the Company’s Amended and Restated Bylaws (the Bylaws) permit a shareholder or group of up to 20 shareholders who have owned at least 3% of the outstanding shares of the Company’s common stock for at least three years to submit director nominees (up to 20% of the Board) for inclusion in the Company’s proxy statement and form of proxy used in connection with the Annual Meeting. Notice of the nomination must be timely, and the shareholder and the nominee must satisfy the requirements specified in the Bylaws. Shareholders who wish to nominate directors for inclusion in the Company’s proxy materials or directly at an annual meeting of shareholders in accordance with the procedures in our Bylaws should follow the instructions under the Shareholder Proposals and Director Nominations for the 2024 Annual Meeting section of this proxy statement.
Director Communications
Shareholders and interested parties may direct communications to individual directors, including the independent chair, to a Board committee, to the independent directors as a group, or to the Board as a whole, by addressing the communications to the appropriate party and sending them to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The corporate secretary will review these communications and will forward any communications that they determine bears substantively on the business, management, or governance of the Company.
Director Candidate Evaluation and Nomination
The NGCRC engages in continuous Board succession planning and evaluation of Board composition, working closely with our Board in determining the skills, experiences, and characteristics desired for the Board as a whole and for its individual members, and also screening and recommending candidates for nomination by the full Board.
While the Board has not established any specific minimum qualifications that a potential nominee must possess, director candidates, including incumbent directors, are assessed based on criteria established by the NGCRC in light of the Company’s long-term strategy, the skills and experience currently represented on the Board, legislative and regulatory developments, corporate governance trends, and any specific needs identified in the NGCRC’s evaluation of Board composition.
Criteria include:
 Broad-based leadership and relevant business skills and experiences Prominence and reputation in their professions Global business and social perspective Ability to effectively represent the long-term interests of our shareholders and other stakeholders | Ability to devote sufficient time to the Company’s affairs Personal integrity and judgment Diversity of thought, background and experience |
The Board’s approach to refreshment is robust, combining experience and continuity with fresh perspectives. The Board strongly believes that its composition should include longer-tenured directors—who have institutional memory and have worked with different CEOs and management teams, middle-tenured directors, and newer directors.
The NGCRC focuses on achieving the right balance of director experience, diversity and tenure in evaluating new director candidates and current directors for nomination. Further, the NGCRC carefully considers the ability of incumbent directors to continue to contribute to the Board and the Company’s evolving needs, as part of the renomination process.
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Proposal 1: Election of Directors
The Company’s Corporate Governance Guidelines (Governance Guidelines) also provide that non-management directors whose personal circumstances change in a manner that affects their ability to contribute to the Company, including a change in their principal position, primary job responsibilities, or personal circumstances, must offer their resignation for the Board’s consideration, to ensure that current directors are still qualified and have the capacity to perform their duties as a director, in light of other commitments.
The Board also adopted a Board Diversity Policy during fiscal year 2020, which requires the NGCRC and any search firm they utilize to include diverse candidates who meet the Board membership criteria set forth in the Governance Guidelines in any director candidate pool. See the Board Diversity Policy section of this proxy statement for more information.
Director Skills & Experience
The following graphic summarizes certain notable attributes and experiences of each director nominee, as well as how each skill supports the components of our IGNITE strategy. These attributes have been specifically identified by the NGCRC as being important in creating a diverse and well-rounded Board and aligned with the needs of the Company’s IGNITE strategy. This high-level summary is not intended to be an exhaustive list of each director nominee’s contributions to the Board.
Please see additional information on each director’s qualifications in our director biographies in the Our Director Nominees section of this proxy statement.
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Proposal 1: Election of Directors Govern
| Brand-Building/Marketing Contributes important perspectives on growing organic sales and market share (including through innovation), building brand awareness and marketing to consumers in an ever-changing digital landscape |
| RISK OVERSIGHT Supports the Board in oversight of the various risks facing the Company, including mechanisms to mitigate and manage those risks |
 | RETAIL/CUSTOMER Provides insight on consumer and industry trends and customer engagement to support growth, innovation and expansion |
| FINANCIAL/ACCOUNTING Supports the Board’s ability to oversee the Company’s financial reporting and compliance |
| SUPPLY CHAIN Provides insights to continue to successfully develop and efficiently and cost-effectively manufacture products for our customers to satisfy consumer demand and preferences |
| CPG/RELEVANT INDUSTRY Provides market and industry insights to advance all aspects of our IGNITE strategy |
| INNOVATION/DIGITAL/TECH Contributes knowledge and perspective on emerging technologies, the disruptive forces in our industry (including digital and e-commerce) and delivering on our strategic goal of innovating products and consumer experiences |
| STRATEGIC TRANSFORMATION/M&A Provides perspective on the Company’s strategic transformation initiatives, including digital transformation, new operating model, and M&A |
| OPERATIONAL Contributes strategic, operational and market insights that are critical to all aspects of the IGNITE strategy |
| HUMAN CAPITAL/CULTURE Provides valuable perspective in talent acquisition, development and retention and fostering a corporate culture that helps to drive our IGNITE strategy |
 | ESG EXPERIENCE Provides insights and perspective in executing toward our ESG goals as an integrated part of our IGNITE strategy |  | REGULATORY Provides insight into navigating regulatory environments both in the U.S. and globally, especially in health and wellness and other relevant regulated sectors |
 | CYBERSECURITY Supports effective oversight of our cybersecurity risk management |  | INTERNATIONAL Supports key strategic decision-making and maximizing growth opportunities in our international markets |
Director Continuing Education and New Director Orientation
To enhance and expand on the key skills and experiences relevant to the Company’s industry, we provide our directors with continuing education and presentations from both internal and external experts. In addition to the regular ESG updates it receives at each meeting, the full Board hosted a cybersecurity expert in fiscal year 2023 and engaged in discussions around the current landscape of global cybersecurity risks and the emerging regulatory environment for data protection, data privacy and cybersecurity in general, among other topics.
Additionally, we encourage our directors to participate in external continuing director education programs. New directors also participate in comprehensive orientation sessions that provide them with a thorough understanding of their fiduciary duties as well as a robust overview of the Company’s business and strategies, which allows new directors to begin making contributions to the Board at the start of their service.
Director Diverse Backgrounds & Experiences
Our director nominees represent a diverse mix of perspectives and experiences. We regularly assess our Board to ensure that we balance fresh perspectives with the institutional memory of longer-tenured directors who have seen issues arise over time and have worked with different CEOs and management teams.
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Proposal 1: Election of Directors
Average Director Tenure
5.5 Years*
3 Directors | 4 Directors | 5 Directors | ||
0-2 years | 3-6 years | 7+ years |
* As of the Annual Meeting
As highlighted in our Governance Guidelines, the Board recognizes the importance of diversity for the varied perspectives it can bring to the boardroom. It actively seeks refreshment of the Board with directors from different backgrounds who can add unique value through skills highly relevant to our corporate strategy.
The Company and the Board both have a long-standing commitment to IDEA. This comes to life by increasing representation across the Company and fostering an inclusive environment where everyone can be their true self and do their best work. We believe this helps the Company attract and retain the best talent and leads to better development and execution of our business strategy. The Board considers the following attributes that reflect the Company’s diverse stakeholders.
•Diverse skills and perspectives •Professional experience •Age •Race | •Ethnicity •Gender •Sexual identity and orientation •Cultural backgrounds |
The NGCRC assesses the effectiveness of these efforts by examining the overall composition of the Board, assessing how individual director candidates, including incumbent directors, can contribute to the overall success of the Board, and reviewing individual, committee, and Board evaluation results.
Clorox’s commitment to IDEA is a key part of our IGNITE strategy. As of June 30, 2023, people of color represent 42% of our employees and 34% of our managers in the U.S., and women represent 36% of our employees and 49% of our managers globally.[1] We fundamentally believe that diversity leads to better outcomes for our business. We have also seen the value of different backgrounds, experience and perspectives during times of uncertainty when they have enabled us to be nimble and creative, and to step up to meet challenges.
Board Diversity Policy
The Board views diversity as an important consideration in determining our optimal composition. We adopted a policy in fiscal year 2020, formalizing and reinforcing the NGCRC’s long-standing practice of considering diversity as an important factor in the director selection process, making it a formal part of our overall Board membership criteria.
1 | “Manager” is defined as an employee at Grade 26 through 31 for U.S. employees and Grade 25 through 31 for employees outside of the United States with regards to the Company’s compensation structure. Prior to fiscal year 2023, “manager” was defined as an employee at Grade 27 through 31 for U.S. employees and Grade 26 through 31 for employees outside of the United States. This change was made to expand the Company’s focus on building diverse talent pipelines for management roles. |
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Proposal 1: Election of Directors
The NGCRC has oversight of the implementation and delivery of the Board Diversity Policy, which guides and helps drive the Board’s commitment to actively seek out diverse director candidates. This policy requires that our director candidate pools include women and people of color who meet the Board membership criteria set forth in our Governance Guidelines. The policy recognizes that in evaluating director candidates for the Board, the NGCRC considers many forms of diversity and whether the diversity of the Board is appropriately reflective of the diversity of the Company’s stakeholders.
The Board believes this policy supports the Company’s commitment to IDEA and its ability to adapt to ever-changing business and policy environments.
Board Leadership Structure
The Company’s Governance Guidelines provide the Board with the flexibility to determine the appropriate Board leadership structure of the Company. The NGCRC regularly reviews the leadership structure of the Board, taking into account the Company’s current circumstances and anticipated needs, as well as market practices and investor feedback, among other things. Accordingly, over the years, the Board has had a variety of leadership structures. Currently, we have separate board chair and CEO roles, supported by strong independent committee chairs. The Board is committed to continuously evaluating this leadership structure to ensure that it continues to promote effective governance and addresses the Company’s needs.
Independent Chair | Independent Committee Chairs | |||||||
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Matthew J. Shattock | Esther Lee | Christopher J. Williams | Spencer C. Fleischer | |||||
NGCRC Chair | Audit Committee Chair | MDCC Chair | ||||||
Responsibilities of the independent chair
Matthew Shattock has served as independent chair since February 2021 and brings strong board and executive leadership experience to the role having previously served as a non-executive board chair and as a former public company CEO. An overview of the independent chair’s responsibilities is below.
• | Presides at all meetings of the Board and all executive sessions of independent directors; |
• | Has the authority to call additional meetings of the independent directors; |
• | Reviews and approves meeting agendas and schedules to ensure sufficient time for discussion of all agenda items; |
• | Reviews and approves Board meeting materials and advises the CEO and other members of management accordingly; |
• | Available for consultation and direct communication with major shareholders, if requested; and |
• | Together with the members of the MDCC and the other independent directors, monitors and evaluates the CEO’s performance. |
While the independent chair facilitates the Board’s oversight of management, promotes communication between management and our Board, and leads our Board’s consideration of key governance matters, Linda Rendle, as our CEO, is responsible for developing and overseeing the Company’s business strategy, as well as managing the day-to-day operations of the Company and the Company’s relationships with stakeholders.
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Proposal 1: Election of Directors
Annual Board and Director Evaluation Process
In addition to regularly reviewing its leadership structure, the Board, the Board committees and each individual director conduct an annual self-assessment of their performance, a process that is overseen by the NGCRC.
In these discussions, each director has the opportunity to provide feedback on the effectiveness of the Board, its committees and individual directors, with the objective of identifying areas of strength as well as areas for continuous improvement.
In fiscal year 2023, the Board engaged a third-party facilitator to conduct the Board, committee and director evaluation process, in line with leading practice and in order to gain additional external perspective and insight on Board culture and individual director performance. The third-party facilitator selected was a governance expert with significant experience in leading board effectiveness reviews across a number of public companies.
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Proposal 1: Election of Directors
The facilitator worked with the NGCRC chair to develop a tailored set of questions designed to stimulate consideration of Board, committee and individual director effectiveness in an open-ended and fluid discussion. The facilitator met one-on-one with each director to gather their feedback, reviewed and analyzed the findings in conjunction with the NGCRC chair and then provided the Board with overall feedback, and each individual director with detailed individual feedback. The NGCRC Chair and the facilitator also provided any applicable areas of feedback for management. All directors participated fully and thoughtfully in the evaluation process and found the feedback to be actionable and helpful to enhancing their effectiveness.
The Board plans to continue engaging a third-party evaluation facilitator periodically in the future to continue to leverage external perspective and governance insights.
Topics Covered in the Scope of the Board Self-Evaluation
In fiscal year 2023, the Board self-evaluation included an assessment of the following topics, among others:
Board | Board and Committees | |
Effectiveness/enhancement areas Oversight of risk Culture Refreshment Succession planning | Leadership Structure Meeting agendas Processes | |
Management | Directors | |
Content and format of information Engagement and relationship | Personal performance assessment Feedback for other directors | |
Company Strategy | ||
Key strategic focus areas for the Company and the Board in the near-, mid- and long-term | ||
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Proposal 1: Election of Directors
Ongoing Enhancements Based on Self-Evaluation Feedback
This multi-step evaluation process generates robust comments and discussion among the Board, and these evaluations have led to new and evolved practices designed to increase Board effectiveness and efficiency, including, for example:
Board meeting format and materials •Adjusting the Board meeting format to facilitate continued deep engagement on key strategic areas •Revising the format and focus of Board materials Board and committee engagement •Increased engagement of committees in certain topics to facilitate deeper engagement, with periodic reporting to the full Board •Providing additional Company and industry updates to the Board between board meetings to increase connectivity to the Company •Tailored Board session to review fiduciary obligations and oversight duties of directors, in the context of a changing external risk landscape | Board meeting agenda items •Adding regular cyber and data security updates to each quarterly Audit Committee meeting agenda, starting in 2016 •Providing additional updates on key strategic topics, including the Company’s digital transformation and portfolio review •Adding new topics or devoting more time to particular topics of interest •Incorporating external speakers when helpful and appropriate •Providing directors with additional opportunities to engage with business general managers through deep-dive reviews of strategic business units |
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| Corporate Governance and Board Matters |
The Clorox Company Governance Guidelines
The Board has adopted Governance Guidelines to reflect the Board’s views and the Company’s policies regarding significant corporate governance matters, which the Board believes are bestleading practice. The Governance Guidelines present a framework for the governance of the Company by setting forth the Board’s and the Board committees’ responsibilities, qualifications, and operational matters and describing key matters. The NGCRC reviews the Governance Guidelines on an annual basis and recommends changes to the Board based on current corporate governance best practices.leading practices and the Company’s needs.
The Governance Guidelines can be found in the Corporate Governance section on the Company’s website at https://www.thecloroxcompany.com/who-we-are/ thecloroxcompany.com/company/corporate-governance/governance-guidelines/, and are available in print to any shareholder who requests them from The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.
Board Risk Oversight
Our Corporate Governance Process
We believe that a critical component of meaningful corporate governanceThe Board is a robust annual process that includes active and transparent shareholder engagement.
Our annual engagement process typically includes the following:
The Board’s Role in Risk Management and Culture Oversight
While the Company’s management is responsible for the day-to-day risk management process, the Board has ultimate responsibility for the oversight of the Company’s risk management, shaping effective corporate governance, and setting the right tone for integrity, ethics and culture,enterprise risks, including matters around inclusion and diversity. The Board exercises direct oversight of strategic risks to the Company and the risk management process to ensure that it is properly designed, well-functioningfunctioning effectively and consistent with our overall corporate strategy,strategy. The Board is also focused on ensuring that the overall risk management approach is effective in strengthening our corporate governance and also delegates certainsetting the right tone for integrity, ethics and culture.
In executing its risk areas to eachoversight function, the Board considers the likelihood, magnitude and immediacy of the Board committees,risks facing the Company, which are informed by regular reports by management as further described below.
Enterprise Risk Management. The Company has instituted a robust, comprehensive enterprise risk management program, which involves Board oversight, and anwell as the Company’s Enterprise Risk Management risk assessment process (see Enterprise Risk Management further below). The Board may adjust the frequency and manner of its oversight to reflect the nature of the risks facing the Company. The Board also draws on the judgment, backgrounds and experiences of its directors in considering these risks. See the Director Skills & Experience section of this proxy statement for more information on our director nominees’ skill attributes.
Risk Oversight by Board Committees
The Board implements its risk oversight function both as a full Board and also through its committees. The committees have been charged with overseeing risks within their areas of responsibility as detailed below. These committees report regularly to the full Board to facilitate appropriate risk oversight by the full Board. See Board Committees for additional information on the risk oversight and management responsibilities of each committee.
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Corporate Governance and Board Matters
Enterprise Risk Management
The Board has overall responsibility for risk oversight and ensuring that the Company is designing policies and procedures to identify, assess and manage risk.
The Company’s Enterprise Risk Management (ERM) Steering Committee (ERM Committee), which consists of a cross-functional team of key executives and senior leaders and key executives. The ERM Committeethat oversees the annualEnterprise Risk Assessment (ERA) key risk identification process, which identifiesoccurs at least annually.
The ERA process results in our enterprise risk radar, which sets out the top risks thatkey and emerging risk areas faced by the Company, faces with respect to its business, operations, strategy, and other factors, including cybersecurity and climate-related risks, as well as key mitigation strategies and designated risk owners. Our
The Board is highly engaged with management reports and discusses identifiedon the annual refresh of the enterprise risk radar. This is supplemented by quarterly Board updates on top enterprise risks and mitigation strategies, as well as regular deep dive risk mitigationreviews on key subject areas for the Company, such as product safety, cybersecurity, ESG and management efforts with the Board, at minimum, on an annual basis and typically in connection with the Board’s annual strategy meeting.strategic transactions.
Cybersecurity Risk Management and Preparedness. The Company’s cyber preparedness team, led by our chief information and enterprise analytics officer and overseen by our information security officer, leverages various frameworks from the National Institute of Standards and Technology (NIST) for managing cybersecurity risks and seeks to employ cybersecurity best practices, including implementing new technologies to proactively monitor new vulnerabilities and reduce risk, enhancing governance, risk and compliance management, maintaining security policies and standards, continuously updating our response planning and protocols, and has a cybersecurity insurance policy in place. Additionally, the Company’s internal audit function performs a cybersecurity program maturity assessment every two years and conducts regular phishing and cyber hygiene training of all of its employees that have access to company email and connected devices.
| THE CLOROX COMPANY - |
Corporate Governance and Board Matters
Proposal 1: Election of Directors
Additionally, our chief information and enterprise analytics officer, information security officer and chief legal officer report to the Audit Committee regularly, and at least quarterly, on topics related to information security and cyber risks and readiness. Additional information security and cybersecurity risks are presented to the full Board at least annuallyIn fiscal year 2023, as part of our new operating model, we further enhanced our ERM program by making structural changes to enable greater coordination and connectivity among risk functions and leveraging technology and processes to facilitate a broader set of inputs into the full Board’s oversight of enterprise risk management. The Audit Committee includes directors with knowledge, skills and experience in security, privacy, IT governance, and cyber risk, and management consults regularly with external specialists and advisors on enhancements and opportunities for regular and continued strengthening of our cyber practices and policies.
ESG Matters. Although the NGCRC has oversight over ESG matters, the Board also reviews ESG issues, as it has a standing agenda item at each quarterly meeting to hearERA process from the key executives that have oversight of these matters. This review and discussion of ESG initiatives, challenges and opportunities, in addition to priorities and progress fosters appropriate Board oversight of ESG matters.
Culture. In overseeing culture, the Board also receives information through a number of channels, including updates from the chief people officer and the vice president for inclusion and diversity on data and metrics from periodic pulse surveys, our annual employee engagement survey which gauges employee perception ofacross the Company as a place to work as well as their sense of inclusion, as well as the activities of our employee resource groups. The chief legal officer also updates the Board on any significant compliance, discrimination and harassment complaints.externally.
Reporting Protocol and Crisis Management.
The Company also has formalizedformal governance structure and reporting channel policies that require management to notify the Board of among other things, any instances of significant threatened or actual litigation, significant governmental or regulatory inquiry or proceeding, and any events or occurrencescertain matters (among others):
• | significant threatened or actual litigation, | |
• | significant governmental or regulatory inquiry or proceeding, | |
• | any incidents that could materially impact the Company’s reputation, including cybersecurity-related issues that could involve the significant misappropriation of personal or sensitive or valuable Company data, or | |
• | any incidents that may have significant operational, financial, or legal impacts. |
This reporting protocol is a key component of the Board’s oversight of the Company’s reputation,crisis management program.
Oversight of Key Risks
Cybersecurity Risk Management and Preparedness
The Company’s cyber preparedness team is led by our chief information and data officer and our chief information security officer. Some key features of our cybersecurity risk management program:
| • | Structure that leverages various frameworks from the National Institute of Standards and Technology (NIST) for managing cybersecurity risks. |
| • | Focus on cybersecurity leading practices, including implementing new technologies to proactively monitor new vulnerabilities, emerging threats and reducing risk. |
| • | Enhance governance, risk and compliance management, maintain security policies and standards, and continuously update our response planning and protocols. |
| • | Cybersecurity insurance policy to cover costs relating to a data breach. |
| • | Program maturity assessments performed every two years by our internal audit function. |
| • | Regular phishing and cybersecurity awareness and engagement training for all employees who have access to company email and connected devices. |
| • | Regular consultation by management with external specialists and advisors on enhancements and opportunities for regular and continued strengthening of our cyber practices and policies. |
The Board, through the Audit Committee, is responsible for oversight of data privacy, cybersecurity and information technology (IT) risks. In order to fulfill its duties, the Audit Committee receives regular updates from our chief information and data officer, chief information security officer and chief legal officer, including any cybersecurity-related issues that could involve the significant misappropriation of personal or sensitive/valuable Companyquarterly updates on topics related to information security and cybersecurity risks and readiness. The Board and Audit Committee include directors with knowledge, skills and experience in data or that may have significant operational, financial, legal or reputational impacts.security, privacy, IT governance, and cyber risk.
Risk OversightInformation security and cybersecurity risks are also reviewed by Board Committees
As part of executing its risk oversight responsibility, the Board delegates specific oversight duties to each Board committee based on expertise, as set forth below. These committees report on risk exposure on these delegated areas during its regular reports to the full Board as part of the Board’s oversight of enterprise risks. The Board also engages in various activities to facilitate proper riskstay abreast of the evolving cyber landscape, including a presentation by a cybersecurity expert during fiscal year 2023.
The Board has provided oversight with respect to management’s investigation of and response to the cyber attack disclosed by the full Board.Company on August 14, 2023, including, but not limited to, public disclosures, the operational and financial impact, and the Company’s remediation efforts.
| THE CLOROX COMPANY - 2023 Proxy Statement | 35 |
Corporate Governance and Board Matters
Audit CommitteeESG, Climate and Sustainability
The Board actively oversees ESG risks and issues, including climate change and environmental sustainability policies, programs, goals and progress. See the ESG Governance section of this proxy statement for more information about Board oversight of our ESG matters and overall ESG governance structure.
Human Capital Management and Corporate Culture
To aid its responsibility for oversight of the Company’s corporate culture, the Board receives information through a number of channels, including:
• | Updates from the | |
• | ||
NGCRC
MDCC
Our annual employee engagement survey which assesses employee perception of the Company as a | ||
• | Engagements with employees such as site visits and townhalls – for instance, this this past fiscal year, the Board visited our Home Care manufacturing facility in Fairfield, CA, | |
• | Curated Company and industry updates between Board meetings on, at least, a monthly basis, covering ERG activities, town halls, community events, employee features, financial coverage, and Company-wide communications, and | |
• | Updates from the chief legal officer on any significant compliance and hotline matters, and discrimination and harassment complaints. |
As part of its oversight of the Company’s corporate culture, the Board also evaluates management’s ongoing efforts to align corporate culture with the Company’s values and strategy.
Executive Compensation
The MDCC periodicallyregularly reviews the Company’s compensation policies and programs to ensure thatour compensation design offers performance incentives to employees and executives, while mitigating excessive risk-taking. The overallOur executive compensation program contains various provisions thatto mitigate against excessive risk-taking, including:
|
Tableincluding balancing cash and equity compensation, capping payments under incentive plans, using different financial metrics and stock ownership guidelines. Please refer to the Compensation Discussion and Analysis section of Contentsthis proxy statement for further details on the design of our executive compensation program.
Proposal 1: ElectionWe also instituted a clawback policy in fiscal year 2021 that allows the recapture of Directorscompensation paid to current and former executives, including in the event of a restatement of the Company’s financial statements or if the individual engages in conduct materially detrimental to the Company, which serve as a deterrent to inappropriate risk-taking activities. We intend to update our clawback policy to include provisions that will comply with the SEC’s and NYSE’s new requirements regarding recovery of executive compensation prior to the adoption deadline for compliant policies under those rules.
Based on its review and the analysis provided by its independent compensation consultant, Frederic W. Cook & Co., Inc. (FW Cook), the MDCC has determined that the risks arising from the Company’s compensation policies and practices for its employees, including executive officers, are not reasonably likely to have a material adverse effect on the Company.
| 36 | THE CLOROX COMPANY - 2023 Proxy Statement |
Corporate Governance and Board Matters
ESG Governance
Board Meeting Attendance
The Board held eight meetings during fiscal year 2021. All incumbent directors attendedClorox’s ESG governance starts at least 75%the top—with robust oversight of the meetings ofour ESG strategy from the Board and committeesimplementation of which they were members duringour strategy through a cross-functional approach that allows us to drive accountability for and execute toward our ESG priorities. In line with our commitment to continuously strengthening our governance practices, we continue to evolve our ESG governance to ensure we are well-positioned to execute against our IGNITE strategy and drive long-term growth and value creation for our shareholders and other stakeholders.
This past fiscal year, 2021 during the period in which they served on the Board. All members ofwe made changes to our operating model to support and drive our ESG priorities while also enhancing oversight, governance and accountability. While the Board, are expectedthrough the NGCRC, continues to attendoversee our ESG strategy, a new ESG Executive Committee, reporting to the Annual Meeting. EachCEO, provides management direction and oversight for the enterprise ESG goals. The ESG Executive Committee is led by our chief legal officer and includes the group presidents—which helps to embed business unit ownership of our ESG goals—as well as our chief people and corporate affairs officer. It oversees the 12 membersESG Steering Team, which is led by our vice president—head of sustainability and works with the business units to drive towards our enterprise ESG goals, as well as measure and track our progress.
The graphic below reflects our new ESG governance structure.
| THE CLOROX COMPANY - 2023 Proxy Statement | 37 |
Corporate Governance and Board atMatters
Recent Enhancements to ESG Governance
In addition to the timeoperating model changes described above, in recent years, we have made a number of enhancements to further evolve governance of the Company’s 2020 Annual MeetingESG progress and activities.
New head of Shareholders attendedsustainability. In February 2023, our first full-time head of sustainability, Niki King, joined the Company. In addition to bringing a fresh external perspective, Ms. King also adds valuable experience from the consumer packaged goods industry and through her work in procurement organizations, which is particularly important as we continue to engage with our supply chain on our ESG priorities. She leads the ESG Steering Team and drives sustainability initiatives, including reporting and execution toward our ESG goals.
Board committee charters. In fiscal year 2022, we refreshed our Board committee charters to provide further clarity on each committee’s roles and responsibilities around ESG oversight and to ensure coordinated coverage of ESG issues across the Board and committees. We updated the NGCRC charter to explicitly include oversight of the Company’s climate change and environmental policies, programs, goals and progress, formally memorializing the NGCRC’s historic oversight of the Company’s sustainability policies. We also expanded the MDCC’s scope and responsibilities to explicitly include oversight of the Company’s consideration of ESG matters in its compensation programs, as well as its key human capital policies and practices below the executive level. See the Board Committees section of this proxy statement for more information about each Board committee’s current scope, responsibilities and duties.
Director ESG education and ESG shareholder engagement. Our directors had additional opportunities in fiscal year 2023 to continue to deepen their knowledge base on ESG topics relevant to the Company. In addition to the regular ESG updates it reviews at each meeting, the full Board regularly engages in deep-dive discussions and training on certain ESG and risk topics, such as an engagement in fiscal year 2023 with an external cybersecurity expert. The NGCRC also led a deep-dive session with the full Board on multiple ESG topics in fiscal year 2022.
We also have regular in-depth discussions regarding our ESG priorities and progress with our shareholders during our annual outreach as well as ad hoc shareholder engagement opportunities. See the Shareholder Engagement section of this proxy statement for more information.
ESG Disclosure Committee. In fiscal year 2023, we updated the charter of the ESG Disclosure Committee to provide for evaluation of the committee’s charter and performance, at least on an annual basis, and to allow for the expansion of the committee’s responsibilities in the future, to ensure that meeting.
Director Independencethe committee continues to be effective in its oversight of our ESG disclosures, in light of ever-evolving regulations.
The committee was formed in fiscal year 2022 to enhance the processes around review of our ESG reporting and disclosures, including our SEC filings, and monitoring of regulatory changes, as well as trends and leading practices in ESG disclosure and reporting, including ESG disclosure controls and procedures. The committee meets at least quarterly and includes participants from our legal, internal audit, corporate communications, finance, financial reporting controls and human resources functions, as well as executives who have oversight of ESG matters.
Codes of Conduct
The Company has adopted a code of conduct, which sets forth the ethical and legal standards of behavior and business practices that are required of all our directors, executives and global employees and can be found in the Corporate Governance section of the Company’s website, thecloroxcompany.com/company/policies-and-practices/codes-of-conduct, or can be obtained in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.
We require that all employees complete training and, with our Board members, certify compliance with the code of conduct annually. We also perform an annual audit of internal compliance with our code of conduct.
| 38 | THE CLOROX COMPANY - 2023 Proxy Statement |
Corporate Governance and Board Matters
We also have established a separate business partner code of conduct outlining our standards and expectations of our direct suppliers and other business partners, including distributors, service providers, consultants, licensees and joint ventures. The business partner code of conduct can also be found at thecloroxcompany.com/company/policies-and-practices/codes-of-conduct.
Our business partners must certify compliance with the business partner code of conduct. As a method of assessing and validating compliance with the code, Clorox conducts annual and periodic assessments to identify suppliers that are at a higher risk for social and environmental sustainability issues. Certain suppliers are also required to complete a questionnaire or conduct an audit in accordance with standards set forth by Sedex, a global membership organization dedicated to driving improvements in ethical and responsible business practices in global supply chains.
Director Independence
Under the Governance Guidelines, provide that a substantial majority of the Board must consist of a substantial majority of independent directors. The Board determines, in the exercise of its business judgment, in light of all facts and circumstances, whether individual
Board members are independent, as defined by the New York Stock Exchange (NYSE). The Board has adoptedNYSE and in accordance with the director independence standards which are set forth in the Governance Guidelines, to assist it in assessing the independence of directors.Guidelines. The Board makes an affirmative determination regarding the independence of each director annually, based upon the recommendation of the NGCRC.
The Board has determined that each of our directors (Messrs. Fleischer, Mackay, Parker, Shattock, Weiner, and Williams, Mmes. Banse, Lee, and Tesija, and Dr. Carmona) aredirector nominees is independent under the NYSE listing standards and the independence standards set forth in the Governance Guidelines, except for Ms.Linda Rendle since she is an employee of the Company. The Board considered the impact of tenure on a director’s independence, particularly with respect to directors with 10 or more years of Board service, and the Board concluded that such longer-tenured directors have demonstrated their independence from management, based on their communications and interactions with management, their decisions, and their adherence to their fiduciary duties to shareholders.
100% of our director nominees is | • Amy L. Banse • Julia Denman • Spencer C. Fleischer • Esther Lee • A. D. David Mackay • Paul Parker | • Stephanie Plaines • Matthew J. Shattock • Kathryn Tesija • Russell J. Weiner • Christopher J. Williams |
The independent directors generally meet in executive session at each regularly scheduled Board meeting without the presence of management directors or employees of the Company to discuss various matters related to the oversight of the Company, the management of the Board’s affairs, and the CEO’s performance. The independent chair presides over the independent executive sessions.
Related Person Transaction and Conflict of Interest Policies and Procedures
The Company has a written policy regarding Audit Committee review and approval of any Interested Transactions (as defined below) by the Audit Committee.Transactions. An “Interested Transaction” is any transaction, arrangement, or relationship or series of similar transactions, arrangements, or relationships (including any debt or guarantee of debt) in which:
| • | the aggregate amount will or may be expected to exceed $120,000, |
| • | the Company or any of its subsidiaries is a participant, and |
| • | any executive officer, director or director nominee; beneficial owner of 5% or more of our stock; or any immediate family member of the foregoing individuals |
| THE CLOROX COMPANY - 2023 Proxy Statement | 39 |
Corporate Governance and Board Matters
The policy also contains categories of preapproved transactionsInterested Transactions that the Board has identified as not having a significant potential for an actual or potential conflict of interest or improper benefit.
|
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Proposal 1: Election of Directors
In reviewing any Interested Transaction, the Audit Committee will consider whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction. There have been no transactions considered to be an Interested Transaction (excluding any pre-approved transactions) since the beginning of the Company’s 20202023 fiscal year.
Additionally, the Company’s Codecode of Conduct has a detailed provision prohibitingconduct prohibits its directors, officers, and employees from entering into transactions that are an actual or potential conflict of interest and is available on the Company’s website at https://www.thecloroxcompany.com/who-we-are/ corporate-governance/codes-of-conductthecloroxcompany.com/company/policies-and-practices/codes-of-conduct. .
CodeThe Governance Guidelines require the directors to adhere to the code of Conductconduct.
Board Meeting Attendance
The Company has adopted a Code of Conduct, which sets forth the ethical and legal standards of behavior and business practices that are required of all ourBoard held 10 meetings during fiscal year 2023. All incumbent directors executives and global employees and can be found in the Corporate Governance sectionattended at least 75% of the meetings of the Board and committees of which they were members during fiscal year 2023. All members of the Board are expected to attend the Annual Meeting. Each of the 12 director nominees attended the Company’s website, https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct, or can be obtained in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.
We require that all Board members and employees complete training and certify compliance with the Code2022 Annual Meeting of Conduct annually. We also perform an annual audit of internal compliance with our Code of Conduct.Shareholders.
We also have established a separate Business Partner Code of Conduct outlining our standards and expectations of our suppliers and other business partners, which can also be found at https://www. thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct.
The Board has established three standing committees: the Audit Committee, the NGCRC, and the MDCC. Each of these committees consists only of non-management directors whom the Board has determined are independent under the NYSE listing standards and the Board’s independence standards set forth in the Company’s Governance Guidelines. Directors who serve on the Audit Committee and the MDCC must meet additional, heightened independence and
qualification criteria applicable to directors serving on these committees under the NYSE listing standards.
The charters for these committees are available in the Corporate Governance section of the Company’s website at https://www.thecloroxcompany.com/who-we-are/ thecloroxcompany.com/company/corporate-governance/committee-charters, or in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.
The table below indicates the current members of each standing Board committee as of the date of the Annual Meeting:
| Director | Audit | NGCRC | MDCC | ||
| Amy Banse | ● | ||||
| Richard H. Carmona | ● | ● | |||
| Spencer C. Fleischer | Chair | ||||
| Esther Lee | Chair | ||||
| A.D. David Mackay | ● | ● | |||
| Paul Parker | ● | ||||
| Linda Rendle | |||||
| Matthew J. Shattock | ● | ||||
| Kathryn Tesija | ● | ● | |||
| Russell J. Weiner | ● | ||||
| Christopher J. Williams | Chair | ||||
| Number of meetings in fiscal year 2021 | 10 | 5 | 7 |
40 | THE CLOROX COMPANY - |
Proposal 1: Election of Directors
Audit Committee. The Audit Committee is the principal link between theCorporate Governance and Board and the Company’s independent registered public accounting firm. The Audit Committee has the functions and duties set forth in its charter, including:Matters
Audit Committee Current Committee Members Christopher J. Williams (Chair) | Primary Responsibilities The Audit Committee is the principal connection between the Board |
| and the Financial statements; internal control over financial reporting • Integrity of the Company’s financial | |
• The Company’s systems of disclosure controls and procedures and internal control over financial reporting that management has | |
| established Independent registered public accounting firm; internal audit • The independent registered public accounting firm’s qualifications, independence, and performance • The performance of the Company’s internal audit function Risk management and oversight • The Company’s compliance with legal and regulatory requirements relating to accounting and financial reporting | |
• The Company’s framework and guidelines with respect to risk assessment and risk | |
• The Company’s material financial policies and The Board has determined that, with respect to fiscal year 2023, there were five audit committee financial experts, as defined by SEC rules: Christopher J. Williams, Julia Denman, A.D. David Mackay, Stephanie Plaines and Paul Parker, and each member of the Audit Committee is financially literate, as defined by NYSE rules. |
| 41 |
The Board has determined that, with respect to fiscal year 2021, director Mr. Williams is an audit committee financial expert, as defined by SEC rules, and each memberTable of the Audit Committee is financially literate, as defined by NYSE rules.Contents
Nominating,Corporate Governance and Corporate Responsibility Committee. The NGCRC has the functions and duties set forth in its charter, including:Board Matters
Nominating, Governance and Corporate Responsibility Committee Met 4 times in FY23. Current Committee Members Esther Lee (Chair) | Primary Responsibilities The NGCRC has the functions and duties set forth in its charter, including: Board and corporate governance matters • Identifying and recruiting individuals qualified to become Board members |
• Recommending individuals to be selected as director nominees • Performing a leadership role in shaping the | |
• Reviewing and recommending to the Board changes in the Governance Guidelines and the | |
Risk management and oversight; ESG matters • Overseeing corporate responsibility (including corporate citizenship, charitable giving, political participation, issue advocacy and lobbying) and governance of the Company’s • Shareholder and • The Company’s compliance | |
• Supporting the Board in | |
Management Development and Compensation Committee Met 4 times in FY23. Current Committee Members Spencer C. Fleischer (Chair) | Primary Responsibilities The MDCC has the |
Management Development and Compensation Committee. The MDCC has the functions and duties set forth in its charter, including:
Executive compensation • Assisting the Board in discharging its responsibilities relating to compensation of the CEO and other executive | |
• Reviewing, approving and | |
• Evaluating, making recommendations and taking appropriate action in response to the shareholders’ advisory Management succession planning; Human capital management • Overseeing the Company’s management development and succession planning processes below the CEO level • Reviewing and discussing with management the Company’s IDEA initiatives and key metrics and review these matters with the Board at least annually Risk management and oversight • Considering the risks arising from the Company’s compensation plans, policies and practices, and periodically evaluate the risks arising from the Company’s compensation practices and policies • Approving any clawback policy allowing the Company to recoup compensation paid to employees |
| 42 | THE CLOROX COMPANY - 2023 Proxy Statement |
Table of ContentsHow Our Directors Are Paid
Corporate Governance and Board Matters
Director Compensation
Only our non-employee directors receive compensation for their service as directors. The Company’sdirectors in the form of:
| • | cash compensation, and |
| • | an annual grant of deferred stock units. |
As part of its oversight of non-employee director compensation, program is comprised of cash compensation and an annual grant of deferred stock units.
The MDCC has the responsibility for making recommendations regarding non-employee director compensation. The MDCC reviews the form and amount of compensation of non-employee directors at least once a yearannually to ensure that the Company’s non-employee directors are compensated appropriately relative to peer companies. The MDCC retains the services of an independent compensation consulting firm to assist
it in the performance of its duties. During fiscal year 2021,2023, the MDCC used the services of Frederic W.worked with FW Cook & Co., Inc. (FW Cook). FW Cook’s work with the MDCC includedfor data analysis, and guidance and recommendations regarding compensation levels relativeas compared to our compensation peer group (see discussion regarding the peer groupas defined in the Compensation Discussion and Analysissection below)of this proxy statement, as well as trends and recent developments in the area of non-employee director compensation. Clorox generally aims to compensate non-employee directors at or near the median of the compensation peer group.
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Proposal 1: Election of Directors
The following table sets forth information regarding compensation for each of the Company’s non-employee directors during fiscal year 2021.2023.
| Name | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Total ($) | |||
| Amy Banse | 103,000 | 157,000 | 260,000 | |||
| Richard H. Carmona | 112,375 | 157,000 | 269,375 | |||
| Spencer C. Fleischer | 123,000 | 157,000 | 280,000 | |||
| Esther Lee | 108,625 | 157,000 | 265,625 | |||
| A. D. David Mackay | 103,000 | 157,000 | 260,000 | |||
| Robert W. Matschullat(1) | 39,185 | 39,250 | 78,435 | |||
| Paul Parker | 63,815 | 78,500 | 142,315 | |||
| Matthew J. Shattock | 168,625 | 157,000 | 325,625 | |||
| Kathryn Tesija | 103,000 | 157,000 | 260,000 | |||
| Pamela Thomas-Graham | 134,250 | 157,000 | 291,250 | |||
| Russell J. Weiner | 103,000 | 157,000 | 260,000 | |||
| Christopher J. Williams | 128,000 | 157,000 | 285,000 |
| Name | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Total ($) | |||||
| Amy L. Banse | 103,000 | 157,000 | 260,000 | |||||
| Richard H. Carmona(1) | 38,625 | 39,250 | 77,875 | |||||
| Julia Denman | 103,000 | 157,000 | 260,000 | |||||
| Spencer C. Fleischer | 123,000 | 157,000 | 280,000 | |||||
| Esther Lee | 118,000 | 157,000 | 275,000 | |||||
| A. D. David Mackay | 103,000 | 157,000 | 260,000 | |||||
| Paul Parker | 103,000 | 157,000 | 260,000 | |||||
| Stephanie Plaines | 103,000 | 157,000 | 260,000 | |||||
| Matthew J. Shattock | 278,000 | 157,000 | 435,000 | |||||
| Kathryn Tesija | 103,000 | 157,000 | 260,000 | |||||
| Russell J. Weiner | 103,000 | 157,000 | 260,000 | |||||
| Christopher J. Williams | 128,000 | 157,000 | 285,000 |
| (1) |
| (2) | The amounts reported in the |
| (3) | The amounts reported reflect the grant-date fair value for financial statement reporting purposes of the annual grant of deferred stock units. Deferred stock units are shares of the Company’s common stock that the director receives only upon terminating their service with the Company. Awards are granted on an annual basis at the end of each calendar year. Refer to Note |
Cash Compensation
Directors receive cash compensation, which consists of:
| • | annual cash retainer amounts, and |
| • | any special assignment fees. |
| THE CLOROX COMPANY - 2023 Proxy Statement | 43 |
Corporate Governance and any special assignment fees. Board Matters
The following table lists the various retainers paid for Board service and service in the positions set forth below during fiscal year 2021.2023.
| Annual director retainer | $ | 103,000 | |||
| Independent chair retainer | $ | 175,000 | |||
| Committee chair retainers: | |||||
| Nominating, Governance and Corporate Responsibility Committee | $ | 15,000 | |||
| Audit Committee | $ | 25,000 | |||
| Management Development and Compensation Committee | $ | 20,000 | |||
Directors who serve as a Board member, independent chair, lead independent director, or committee chair for less than the full fiscal year receive pro-rated retainer amounts based on the number of days they served in such position during the fiscal year. In fiscal year 2021, Matthew Shattock began receiving a retainer for his service as independent chair, and Pamela Thomas-Graham stopped receiving a retainer for her service as lead independent director, beginning on February 15, 2021. In addition to the retainer amounts, each non-
employeenon-employee director is entitled to receive a fee of $2,500 per day for any special assignment requested by the Board. No special assignment fees were paid in fiscal year 2021.2023.
Payment Elections.Under the Company’s Independent Directors’ Deferred Compensation Plan, a director may annually elect to receive all or a portion of their cash compensation in the form of cash, common stock, deferred cash, or deferred stock units.
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Proposal 1: Election of Directors
Payment in Stock.Directors who elect to receive cash compensation amounts in the form of common stock are issued shares of common stock based on the fair market value of the common stock as determined by the closing price of the common stock on the last trading day of the quarter for which the fees were earned.
Elective Deferral Program: Deferred Cash.For directors who elect deferred cash, the amount deferred is credited to an unfunded cash account that is credited with interest at an annual interest rate equal to Wells Fargo Bank, N.A.’s prime lending rate in effect on January 1 of each year. Upon termination of service as a director, the amounts credited to the director’s deferred cash account are paid out in five annual cash installments or in one lump-sum cash payment, as elected by the director.
Elective Deferral Program: Deferred Stock Units.For directors who elect deferred stock units, the amount deferred is credited to an unfunded account in the form of units equivalent to the fair market value of the common stock on the last trading day of the quarter for which the fees were earned. When dividends are declared, additional deferred stock units are allocated to the director’s deferred stock unit account in amounts equivalent to the dollar amount of common stock dividends paid by the Company divided by the fair market value of the common stock on the date the dividends are paid. Upon termination of service as a director, the amounts credited to the deferred stock unit account, which include any elective deferrals and the annual deferred stock unit grants described above, are paid out in shares of common stock in five annual installments or in one lump sum, as elected by the director. Deferred stock units may only be settled in shares of common stock.
Equity Compensation
Each non-employee director receives a majority of their annual compensation in the form of deferred stock units. Deferred stock units are shares of the Company’s common stock that the director receives only upon terminating their service with the Company. Each non-employee director receives an annual grant of deferred stock units. The aggregate value of the deferred stock unit award amount earned by a non-employee director serving for the full fiscal year 20212023 was $157,000. Awards are made as of the last business day in the calendar year and represent payment for services provided during such calendar year.
The Company believes that the use of deferred stock units provides a stronger alignment between directors and the Company’s shareholders compared to outright stock ownership since directors have no ability to sell the deferred stock units while they remain on the Board. The Company has maintained the deferred stock unit program for its directors for over 20 years.
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Corporate Governance and Board Matters
Directors who serve as non-employee Board members for less than the full calendar year receive pro-rated awards based on the number of full fiscal quarters they served as a non-employee Board member during the calendar year. Deferred stock units accrue dividend equivalents,, and the balance of a director’s deferred stock unit account is paid out in common stock only following the director’s termination of service, as described in greater detail under Payment Elections above.
Fiscal Year 20222024 Compensation Changes
As discussed above, the MDCC reviews the form and amount of compensation of non-employee directors at least once a year to ensure that the Company’s non-employee directors are being compensated appropriately relative to peer companies. The MDCC again reviewed non-employee director compensation in September 2021.2023. As part of its review, the MDCC considered the data provided by FW Cook as well as its guidance and recommendations regarding compensation levels relative to our compensation peer group as well as trends and recent developments in the area of non-employee director compensation. After taking all of this information into account, the MDCC recommended, and the Board agreed, not to increase the annual director cash retainer from $103,000 to $105,000, and the annual compensation or makein the form of deferred stock units from $157,000 to $165,000, effective as of October 2023. No other changes were made to the director compensation program. In addition, if approved by the shareholders (see Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan of this proxy statement), the amended and restated SIP will cap the cash and equity compensation payable in a fiscal year to each of our non-employee directors.
Stock Ownership Philosophy and Guidelines for Directors
The Board believes that the alignment of directors’ interests with those of shareholders is strengthened when Board members are also shareholders. The Board therefore requires that each non-employee director, within five years of first being elected, own common stock or deferred stock units that are settled only in common stock having a market value of at least five times their annual cash retainer. This program is designed to ensure that directors acquire a meaningful and significant ownership interest in the Company during their tenure on the Board. Furthermore, as directors must hold the deferred stock units until termination of their service on the Board, they have aligned interests and appropriate incentives to promote long-term value for shareholders during their service as a director. As of August 31, 2021,2023, each non-employee director was in compliance with the guidelines, and in fact, the majority of our directors held common stock or deferred stock units with value far in excess of this amount.
| THE CLOROX COMPANY - |
Clorox is a leading multinational manufacturer and marketer of consumer and professional products with fiscal year 2021 net sales of $7.3 billion and about 9,000 employees worldwide as of June 30, 2021. Clorox sells its products primarily through mass retailers; grocery outlets; warehouse clubs; dollar stores; home hardware centers; drug, pet stores, and military stores; third-party and owned e-commerce channels; and distributors. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products; Pine-Sol® cleaners; Liquid-Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags and wraps; Kingsford® grilling products; Hidden Valley® dressings, dips, seasonings and sauces; Brita® water-filtration systems and filters; Burt’s Bees® natural personal care products; and RenewLife®, Rainbow Light®, Natural Vitality® and NeoCell® vitamins, minerals and supplements. The Company also markets industry-leading products and technologies for professional customers, including those sold under the CloroxPro™ and Clorox Healthcare® brand names. More than 80% of the Company’s sales are generated from brands that hold the No. 1 or No. 2 market share positions in their categories. The Company was founded in Oakland, California, in 1913 and is incorporated in Delaware.
Purpose
As a health and wellness company at heart, our purpose — we champion people to be well and thrive every single day — reflects our belief that we make a meaningful and positive impact on the world around us.
Championing people starts with the health and safety of our employees. It means building workplace culture that celebrates diversity and enables everyone to stretch, grow and do their best work. We have built a culture where everyone can bring their authentic, whole self to work every day.
Championing people to be well and thrive applies to the consumers we serve. Our products make the world around us and the spaces inside and outside our homes healthier, cleaner and safer. They strengthen bodies and minds, and help people care for themselves and the people and pets they love. Our brands bring people together and make life a little more joyful. It’s why people love us. When our consumers are well and thriving, we are.
Our purpose drives us to champion the people in our communities. It’s why we’re committed to bringing our communities together, to raise them up by supporting equality, equal opportunity and equal justice. And we want to make the planet healthier for everyone, in every corner of the world, with clean air, pure water, and unpolluted places where we live, work and play.
Values
As a company, we are guided by beliefs that represent who we are, how we conduct our business, and our expectations for our people and business partners. Our values also reinforce our focus on delivering growth and inform how we treat and care for our employees.
Do the Right Thing. It’s bigger than any one of us, yet it starts with each of us. We lead with integrity, and we earn trust – in every moment and with every choice. We are hungry to grow our business and believe that winning only counts if it’s done in the right way.
Put People at the Center. We genuinely care about people. So, we understand the impact of our words and actions and feel a responsibility to deliver for our consumers, customers, teammates and communities. We meet our commitments, put health and safety first, and strive for a just and inclusive world.
Play to Win. We set the pace for growth in each of our categories. We reimagine the game and are each hungry to do more, think bigger, and execute better. It feels like a punch to the gut when we lose. We have high aspirations and the grit to take on big challenges, so we move forward together with courage and resilience in the face of obstacles.
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Our Company
In fiscal year 2021, Clorox delivered net sales growth of 9% in a macroeconomic environment that continued to be dominated by elevated demand for essential household products, especially cleaning and disinfecting products, as a result of COVID-19. Diluted net earnings per share decreased by 24% in a challenging environment that included high levels of competition in select categories and macroeconomic factors relating to supply challenges, uncertainty related to the global pandemic, persistently high manufacturing and logistics costs, and rising commodity costs.
Our focus on taking care of our employees, consumers and other stakeholders continued to earn us high marks among rankings and ratings organizations in fiscal year 2021. We were included on Barron’s Most Sustainable Companies list, 2021 Bloomberg Gender-Equality Index, the Human Rights Campaign’s 2021 Corporate Equality Index and the 2021 Parity.org Best Places for Women to Advance list, among others.
IGNITE Strategy Guided by ESG Principles
Our IGNITE strategy has the objective of maximizing economic profit while maintaining a commitment to purpose-driven growth. Under IGNITE, we laid out four strategic choices integrated with our ESG goals to sustain that growth. Regardless of the forces impacting our business – such as the global pandemic, shifting consumer preferences, or changing economic conditions – our IGNITE strategy guides our decision-making and allows us to make the right choices that will position us for success over the long term.
IGNITE Strategic Choices
IGNITE is centered around four strategic choices and integrated ESG pillars, which are intended to collectively drive purpose-driven growth.
More information regarding these strategic choices is available at https://www.thecloroxcompany.com/company/ignite-strategy/.
We measure achievement against our IGNITE strategy and ESG goals through a scorecard of metrics overseen by the Board, which is updated annually to reflect progress to date and near-term areas of focus. The IGNITE scorecard highlights progress toward objectives that support our IGNITE strategy at each Board meeting and provides a balanced picture of accomplishments and areas of opportunity.
IGNITE ESG Pillars
Our ESG pillars are organized around our most strategic opportunities in order to make a positive societal impact. Refreshed in fiscal year 2021, these pillars—Healthy Lives, Clean World and Thriving Communities—are supported by a foundation of Strong Governance. They are integrated with the four strategic choices described above to guide the Company in pursuing innovative ways to meet consumer needs, address some of the planet’s most pressing environmental challenges and society’s pervasive inequities, and create value for all stakeholders.
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Our Company
Healthy Lives: Improving people’s health and well-being.
Employee health and well-being. Putting people at the center of everything we do starts with keeping our employees safe and investing in their total well-being. In fiscal year 2021, we continued to support our employees through programs to promote occupational safety and physical, mental and financial health and well-being. In fiscal year 2021, our recordable incident rate was 0.26, which is significantly lower than the 3.3 average for U.S. manufacturing companies and our goal of less than 1.0.
Ingredient management. We know consumers care about what is in their products – and what is not in their products. In December 2020, we publicly disclosed a restricted substances list (RSL) for our domestic retail cleaning products and committed to disclosing restricted substances information for additional products by the end of fiscal year 2022.
Clean World: Taking climate action and reducing plastic and other waste.
Virgin packaging reduction. As of the end of calendar year 2020, we achieved a combined reduction in virgin plastic and fiber packaging of 21% compared to our goal of 50% by 2030. The reduction was due primarily to the transitioning of Glad products to 100% post-consumer recycled cartons and selling more cleaning products with less packaging.
Zero waste to landfill. 44% of our plants are currently zero waste to landfill, with a goal of 100% of global plants achieving zero-waste-to-landfill status by 2025 and 100% of global facilities by 2030.
Renewable energy. As part of our IGNITE strategy, we committed to achieving 100% renewable electricity in our operations in the US and in Canada, which we achieved in January 2021.
Greenhouse gas emission reduction. We have set science-based targets for reducing greenhouse gases – approved by the Science Based Targets initiative (SBTi) – and committed to achieving net zero emissions by 2050. By 2030, we aim to reduce emissions across our operations (Scopes 1 and 2) by 50 percent and reduce value chain emissions (Scope 3) from purchased goods and services and use of sold products by 25 percent, all on an absolute basis against a 2020 baseline. Our Scopes 1 and 2 targets are consistent with reductions required to keep warming to 1.5 degrees Celsius, the most ambitious goal of the Paris Agreement. Our Scope 3 target meets the SBTi’s criteria for ambitious value chain goals, meaning they are in line with current best practice.
Sustainability reporting. As part of our commitment to trust and transparency, in our integrated annual report we have chosen to report our ESG performance in alignment with voluntary frameworks and standards – namely, the Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD), the United Nations Sustainable Development Goals (SDGs) and the United Nations Global Compact’s (UNGC) Ten Principles.
Our Company
Thriving Communities: Investing in our people and communities to contribute to a more equitable world.
Inclusion and diversity. One of our corporate values is to put people at the center. We understand that our people are critical to our efforts to drive growth and deliver value for shareholders. One of the ways we put people at the center is by continuing to work toward a more inclusive and diverse workplace where each person feels respected, valued and seen and can be the best version of themselves – from women and people of color to LGBTQ+ and veterans, among others. We believe that fostering diversity at all levels of the organization is the right thing to do and also ultimately helps us better address consumer needs.
We took a number of proactive steps in fiscal year 2021 to achieve greater diversity and inclusive leadership among our global workforce. For example, we continued to expand our unconscious bias education to better recognize, acknowledge and minimize any potential blind spots we each may have. Our neuroscience-backed “Breaking Bias” and “Courageous Conversations” programming aims, collectively, to lessen the influence of bias in order to consider diverse perspectives and make better people- and business-related decisions, and also to equip our employees with practical tools for difficult conversations and managing conflict while building trust and putting people at the center of everything we do.
Our board and executive committee are also highly diverse by race, ethnicity, gender and other protected categories. Our CEO is one of only 41 women serving in that role among the Fortune 500, and two of our three Board committee chairs are people of color. As of the Annual Meeting date, women comprise 36% of our director nominees and 46% of our executive committee, and 27% of our director nominees and 23% of our executive committee are people of color. Two of our executive committee members openly identify as LGBTQ.
Our approximately 9,000 employees come from diverse backgrounds – as of June 30, 2021, 31% of our nonproduction managers and 38% of our nonproduction employees in the U.S. are people of color, and globally 46% of our nonproduction managers and over half of our nonproduction employees are women. In 2021, Clorox was named
to Parity.org’s Best Companies for Women to Advance list and Diversity MBA magazine’s 50 Out Front list of the Best Places for Women and Diverse Managers to Work.
As part of our continued commitment to transparency and progress in our inclusion and diversity efforts, in 2020, we published EEO-1 data in our annual report, and this year, we have shared this data, along with our latest EEO-1 report that we submitted to the EEOC. This EEO-1 information is available on the Company’s website at https://www.thecloroxcompany.com.We also disclose representation by Clorox job category over a three-year period in our 2021 Integrated Annual Report.
Employee engagement. We have implemented an ongoing listening strategy that includes an annual engagement survey and periodic pulse surveys. During fiscal year 2021, we again had high employee engagement – 87% of our employees reported that they have pride in the Company, intend to stay, get intrinsic motivation from their work and would refer to the Company as a good place to work, putting us at the top quartile for Fortune 500 companies according to our engagement survey provider Perceptyx.
Community investment. During fiscal year 2021, Clorox donated approximately $20 million foundation and corporate cash grants, U.S. product donations, and U.S. cause marketing, supporting COVID-19 relief, racial justice initiatives and community building where we have facilities and our employees live and work.
Standing up for justice. As the U.S. experienced social upheaval in 2020, we made a number of commitments to create a more just and inclusive world. In fiscal year 2021, we delivered on those commitments and more, including $2.5 million in grants focusing on racial justice, with a focus on Oakland and Atlanta, where we have the most employees. We have also developed guidelines to determine when and how we speak out as a company on social issues, in consultation with our Board and senior management. It is important to us that when Clorox or our brands choose to take a public stance on a social issue, it demonstrates one of our values, Do the Right Thing, is undertaken with our strategic goals in mind and is impactful to our business interests.
Our Company
Strong Governance: Enhancing our leadership in ESG through an unwavering commitment to strong corporate governance and ESG performance overseen by the Board.
We believe that this structure reflects our long-standing values and commitment to best practices in ESG.
Our Governance Guidelines, Code of Conduct and other company policies, consistent with our focus on purpose-driven growth, also establish a framework to guide our decisions and lead with our actions. Our governance profile includes these features:
Board Structure and Independence
Board OversightTable of Contents
DirectorInformation about our Executive Officers
The names, ages, year first appointed executive officer and Executive Compensationcurrent titles of each of the executive officers of the Company are set forth below.
| Name | Age | Year First Appointed | Title | |||||
| Linda Rendle | 45 | 2016 | Chief Executive Officer | |||||
| Stacey Grier | 60 | 2019 | Executive Vice President and Chief Growth and Strategy Officer | |||||
| Angela Hilt | 51 | 2020 | Executive Vice President and Chief Legal Officer | |||||
| Kevin B. Jacobsen | 57 | 2018 | Executive Vice President and Chief Financial Officer | |||||
| Kirsten Marriner | 51 | 2016 | Executive Vice President and Chief People and Corporate Affairs Officer | |||||
| Eric Reynolds | 53 | 2015 | Executive Vice President and Chief Operating Officer |
Shareholder Rights and Accountability
Board Composition
| THE CLOROX COMPANY - |
| Stock Ownership Information |
Beneficial Ownership of Voting Securities
The following table shows the holdings of common stock (as of August 31, 2021,2023, except as indicated below) by (i) any entity or person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of common stock, (ii) the NEOsnamed executive officers (NEOs) named in the Summary Compensation Table, and (iii) all directors and executive officers of the Company as a group.
As discussed in the
Director Compensation section of this proxy statement, the majority of director compensation is delivered in the form of deferred stock units, which are paid out in common stock following a director’s termination of service. Because the directors cannot dispose of those shares while they serve on the Board, they are not reflected in this table. See footnote 2 below.| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1)(2) | Percent of Class(3) | ||
| The Vanguard Group, Inc.(4) 100 Vanguard Blvd. Malvern, PA 19355 | 15,320,366 | 12.48 | ||
| BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055 | 11,996,765 | 9.77 | ||
| State Street Corporation(6) One Lincoln Street Boston, MA 02111 | 7,426,780 | 6.05 | ||
| Amy Banse(2) | 0 | * | ||
| Richard H. Carmona(2) | 0 | * | ||
| Benno Dorer(7) | 327,482 | * | ||
| Spencer C. Fleischer(2) | 944 | * | ||
| Kevin Jacobsen | 59,370 | * | ||
| Esther Lee(2) | 0 | * | ||
| A. D. David Mackay(2) | 1,600 | * | ||
| Kirsten Marriner | 47,485 | * | ||
| Tony Matta | 9,647 | * | ||
| Paul Parker | 68 | * | ||
| Linda Rendle | 90,837 | * | ||
| Eric Reynolds | 68,803 | * | ||
| Matthew J. Shattock(2) | 0 | * | ||
| Kathryn Tesija(2) | 0 | * | ||
| Pamela Thomas-Graham(2)(8) | 1,778 | * | ||
| Russell J. Weiner(2) | 0 | * | ||
| Christopher J. Williams(2) | 0 | * | ||
| All directors and executive officers as a group (23 persons)(9) | 717,962 | * |
The address of each individual listed below is 1221 Broadway, Oakland, California 94612-1888.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1)(2) | Percent of Class(3) | ||||
| The Vanguard Group, Inc.(4) 100 Vanguard Blvd. Malvern, PA 19355 | 15,151,580 | 12.23 | ||||
| BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055 | 9,267,422 | 7.48 | ||||
| State Street Corporation(6) One Lincoln Street Boston, MA 02111 | 8,844,196 | 7.14 | ||||
| Amy L. Banse | — | * | ||||
| Julia Denman | — | * | ||||
| Spencer C. Fleischer | 1,305 | * | ||||
| Stacey Grier | 38,413 | * | ||||
| Kevin Jacobsen | 108,737 | * | ||||
| Esther Lee | — | * | ||||
| A. D. David Mackay | 600 | * | ||||
| Kirsten Marriner | 84,134 | * | ||||
| Paul Parker | 527 | * | ||||
| Stephanie Plaines | — | * | ||||
| Linda Rendle | 218,367 | * | ||||
| Eric Reynolds | 138,860 | * | ||||
| Matthew J. Shattock | — | * | ||||
| Kathryn Tesija | — | * | ||||
| Russell J. Weiner | — | * | ||||
| Christopher J. Williams | — | * | ||||
| All directors and executive officers as a group (17 persons)(7) | 627,638 | * |
| * | Does not exceed 1% of the outstanding shares. |
| (1) | Unless otherwise indicated, each beneficial owner listed has sole voting and dispositive power concerning the shares indicated. These totals include the following numbers of shares of common stock that such persons have the right to acquire through stock options exercisable within 60 days of August 31, |
| THE CLOROX COMPANY - | 47 |
Stock Ownership Information
shared voting or dispositive power: Ms. Grier – 31,721; Mr. Jacobsen – 93,435 options and shared voting and dispositive power with respect to 3,145 shares held in family trust; Ms. Marriner – 63,345 options; Ms. Rendle – 188,148 options; Mr. Reynolds – 124,053 options; and all directors and executive officers as a group – 526,879 options. The numbers in the table above do not include the following numbers of shares of common stock that the executive officers have the right to acquire at a later date that were deferred at the executive officers’ election: Ms. Grier – 1,578; Mr. Jacobsen – 15,679; Ms. Rendle – 27,937; Mr. Reynolds – 14,711; and all executive officers as a group – 59,905.
| (2) | The numbers in the table above do not include the following numbers of shares of common stock that the non-management directors have the right to acquire upon the termination of their service as directors pursuant to deferred stock units granted under the Independent Directors’ Stock-Based Compensation Plan: Ms. Banse – |
| (3) | On August 31, |
| (4) | Based on information contained in a report on Schedule 13G/A filed with the SEC on February |
| (5) | Based on information contained in a report on Schedule 13G/A filed with the SEC on January |
| (6) | Based on information contained in a report on Schedule |
| Pursuant to Rule 3b-7 of the Securities Exchange Act of 1934, as amended (Exchange Act), executive officers include the Company’s CEO and all executive vice |
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act and SEC regulations require the Company’s directors, certain officers, and holders of more than 10% of the Company’s common stock to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC. The reporting directors, officers, and 10% shareholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports they file. Based solely on its review of copies of such reports received and written representations from its directors and such covered
| 48 | THE CLOROX COMPANY - |
| Executive Compensation |
| Proposal 2: Advisory Vote to Approve Executive Compensation |
We are seeking a non-binding, advisory vote from our shareholders to approve the compensation of our NEOs that are listed in the Compensation Discussion and Analysissection of this proxy statement. This proposal gives our shareholders the opportunity to express their views on the Company’s executive compensation and is commonly referred to as a “say-on-pay” proposal. This vote is only advisory and will not be binding upon the Company or the Board. However, the MDCC, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareholders and encourages all shareholders to vote their shares on this matter.
As discussed in the Compensation Discussion and Analysissection of this proxy statement, which begins on page 37,pg 51, the Company’s compensation programs are designed to align pay with short-performance, by delivering the majority of executive pay through “at-risk” incentive awards that help ensure realized pay is tied to attaining operation goals and long-term financial and strategic objectives to buildsustainable appreciation in shareholder value, while
providing a competitive level of compensation to recruit, retain, and motivate talented executives.value. The Board urges you to consider the factors discussed in the Compensation Discussion and Analysissection when deciding how to vote on this Proposal 2.
At our 20202022 Annual Meeting of Shareholders, our shareholders overwhelmingly approved our executive compensation policies, with approximately 91%93% of votes cast in favor of our proposal. We value this positive endorsement by our shareholders and believe that the outcome signals our shareholders’ support of our compensation program,, and we continued our general approach to compensation for fiscal year 2021.2023. We provide our shareholders the opportunity to vote on the compensation of our named executive officersNEOs every year. It is expectedyear and expect that the next vote on executive compensation will be at the 20222024 Annual Meeting of Shareholders.
The Board unanimously recommends a vote FOR the advisory vote to approve executive compensation. The Company is asking its shareholders to support the compensation of the named executive officersNEOs as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officersNEOs in fiscal year 20212023 and the philosophy, policies, and practices underlying that compensation, which are described in this proxy statement. The Board believes that the Company’s overall compensation process effectively implements its compensation philosophy and achieves its goals.
Accordingly, the Board recommends a vote FOR the adoption of the following advisory resolution, which will be presented at the Annual Meeting:
“RESOLVED, that the shareholders of The Clorox Company approve, on an advisory basis, the compensation of the named executive officers, as disclosed in The Clorox Company’s Proxy Statementproxy statement for the 20212023 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure.”
| THE CLOROX COMPANY - 2023 Proxy Statement | 49 |
Proposal 2: Advisory Vote to Approve Executive Compensation
Vote Required
The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote on the matter is required to approve this proposal.
This vote is advisory, and therefore not binding on the Company, the Board, or the MDCC. However, the Board and the MDCC value the opinions of the Company’s shareholders and, to the extent there is any significant vote against the named executive officers’NEOs’ compensation
as disclosed in the proxy statement, we will consider such shareholders’ concerns, and the MDCC will evaluate whether any actions are necessary to address thoseshareholder concerns.
The people designated in the proxy and voting instruction card will vote your shares FOR approval unless you include instructions to the contrary.
| THE CLOROX COMPANY - |
| Compensation Discussion and Analysis |
Introduction
This Compensation Discussion and Analysis (CD&A) describes our executive compensation philosophy and program, the compensation decisions made under this program, and the specific factors we considered in making those decisions. This CD&A focuses on the compensation of our “named executive officers” (NEOs)NEOs for fiscal year 2021,2023, who were:
| Name | Title |
| Linda Rendle | Chief Executive Officer |
| Executive Vice President and Chief Financial Officer | |
| Eric Reynolds | Executive Vice President and Chief Operating Officer |
| Executive Vice President and Chief Growth & Strategy Officer | |
| Kirsten Marriner | Executive Vice President and Chief People & Corporate Affairs Officer |
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Table of Contents
| THE CLOROX COMPANY - |
Compensation Discussion and Analysis
Fiscal 2023 Net Sales $7,389M +4% from FY22 Fiscal 2023 Net Earnings Attributable to Clorox3 $149M -68% from FY22 Fiscal 2023 Gross Margin 39.4% +360 basis points from FY22 |
• | Clorox |
• | Our incentive plan results reflect |
• | The |
• |
• | The |
Fiscal 2021 Net SalesOur Company
$7,341M
+9% from prior fiscal year
Fiscal 2021 Net Earnings Attributable to Clorox
$710M
-24% from prior fiscal year
Fiscal 2021 Gross Margin
43.6%
-200 basis points from prior fiscal year
Three-Year Total Shareholder Return1
14.1%
Clorox is a leading multinational manufacturer and marketer of consumer and professional products with about 9,0008,700 employees worldwide as of June 30, 2021.2023. Clorox markets some of the most trusted and recognized consumer brand names, including itsour namesake bleach, cleaning, and cleaningdisinfecting products; Pine-Sol® and Tilex cleaners; Liquid-Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags and wraps; Kingsford® grilling products; Hidden Valley® dressings, dips, seasonings, and sauces; Brita® water-filtration systems and filters; Burt’s Bees® natural personal care products; Brita water-filtration products; and Natural Vitality, RenewLife,®, NeoCell, and Rainbow Light®, Natural Vitality® and NeoCell® vitamins, minerals and supplements. CloroxWe also marketsmarket industry-leading products and technologies for professional
customers, including those sold under the CloroxPro™CloroxPro and Clorox Healthcare brand names. More thanAbout 80% of Clorox’sour net sales are generated from brands that holdholding the No. 1 or No. 2 market share positions in their categories.
In fiscal year 2021, the COVID-19 pandemic caused massive economic and societal disruptions. Throughout this time of extreme uncertainty, Clorox remained guided by itsOur ongoing IGNITE strategy and focused onaccelerates innovation in key areas to drive growth and deliver value for bothall our shareholdersstakeholders. Since launching in 2019, IGNITE focuses on four strategic priorities aimed at fueling long-
| 3 | Includes non-cash impairment charge of $445M. |
| 4 | Adjusted EPS excludes interest income, interest expense, income taxes and other significant items that are nonrecurring or unusual (such as asset impairments, charges related to the streamlined operating model, charges related to the digital capabilities and productivity enhancements investment, significant losses or gains related to acquisitions and other nonrecurring or unusual items impacting comparability). Refer to Appendix B on pg B-1 for a reconciliation to the most directly comparable GAAP financial measure. |
| 52 | THE CLOROX COMPANY - 2023 Proxy Statement |
Compensation Discussion and society.Analysis
term, profitable growth; innovating consumer experiences; reimagining how the company and its people work; and continuously evolving the product portfolio. Integrated goals for environmental, social and governance (ESG) performance promote healthy lives, a clean world, thriving communities and strong corporate governance. See the Our Corporate Purpose and Values, IGNITE Strategy Guided byand Integrated ESG Principles Approachsection of this proxy statement for more information. With a strong commitment to creating value for all stakeholders, Clorox is well positioned for the future.
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Table of Contentsinformation about IGNITE.
Compensation Discussion and Analysis
Fiscal Year 20212023 Business Highlights
• | Guided by our IGNITE strategy and underpinned by our enduring values, Clorox remained focused on making significant investments in our strong brands, strategic digital capabilities, and streamlined operating model to drive long-term value creation while supporting category growth and launching innovation across all our major brands. We maintained market share in aggregate following multiple rounds of cost-justified pricing, reflecting the superior value of our brands. |
| • | In fiscal year |
| • | Despite macroeconomic headwinds in fiscal year 2023, Clorox | |
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| • | Diluted net EPS decreased 68% compared to the prior fiscal year, largely driven by a |
| • | Clorox |
• | We continued our decades-long commitment to providing value to shareholders through regular dividends. During fiscal year 2023, Clorox paid $583 million in dividends to shareholders. In |
| • | Our transformation efforts continued throughout fiscal year 2023. As announced in August 2021, we |
| We began implementing a streamlined operating model in the first quarter of fiscal year |
| THE CLOROX COMPANY - 2023 Proxy Statement | 53 |
Compensation Discussion and Analysis
| • | We continued to make progress on |
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With a business that is significantly larger than before the pandemic and a portfolio of trusted brands, we are accelerating our strategyFor fiscal year 2024, Clorox plans to take advantage of the strong consumer loyalty we have built during the last eighteen months. We will emphasize innovation, create personalized experiences with ourcontinue to invest in brands and drive ourcapabilities to build a stronger, more resilient company delivering consistent, profitable growth runways—all with the goal of growing market share.
In fiscal year 2022, we anticipate ongoing challenges that may impact sales and margins, including continued uncertainty relatedover time. By playing to the COVID-19 pandemic, elevated commodity costs, and high manufacturing and logistics costs. We are laser-focused on a holistic approach to rebuilding our margins over time.
We are also laying the groundwork for our future through planned investments of approximately $500 million over the next five years to enhance our digital capabilities and transform our culture to significantly improve the Clorox experience for our employees. With the replacement of our global enterprise resource planning system at the heart of this investment,win, we expect to enhancegrow our supply chainhousehold penetration and market share and drive more net sales from innovation over the long term. As we embrace our new operating model, we plan to better position Cloroxcontinue to meet customer needs, generateadopt new ways of working. And we plan to leverage end-to-end thinking as we drive toward greater efficiencies and supportcost savings. We plan to achieve these improvements through focus on our digital commerce, innovation,three priorities for fiscal year 2024: Drive Growth, Enhance Margin, and brand-building efforts.Deliver Transformation.
Finally, we will continue to advance our integrated ESG goals because we believe our societal impact is connected to long-term value creation.
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Compensation Discussion and Analysis
Our Executive Compensation Program
Executive Compensation Philosophy
A core principle of our compensation philosophy is to align pay with performance. We do so by delivering the majority of executive pay through “at-risk” incentive awards that help ensure realized pay is tied to attainment of critical operational goals and sustainable appreciationgrowth in shareholder value. This approach is designed to accomplish the following:
| Objective | How we achieve this | |
| Pay for Performance | We reward performance that drives achievement of Clorox’s short- and long-term goals and, ultimately, shareholder value. | |
| Align Management and Shareholder Interests | We provide long-term, equity-based incentives and encourage a culture of ownership with stock retention guidelines. We reward executive officers for sustained | |
| Attract, Retain, and Motivate Talented Executives | We maintain | |
| Address Risk-Management Considerations | We motivate our executives to create long-term shareholder value and discourage behavior that could lead to unnecessary or excessive risk-taking by providing a balance of fixed and at-risk pay, with short-term and long-term performance horizons, using a variety of metrics tied to key drivers of sustainable value creation. | |
| Support Financial Efficiency | We ensure that cash- and equity-based incentive payouts are appropriately |
| 54 | THE CLOROX COMPANY - 2023 Proxy Statement |
Compensation Discussion and Analysis
How We Make Compensation Decisions
Roles and Responsibilities in Setting Executive Compensation
| Roles and Responsibilities in Setting Executive Compensation | ||
| Management Development and Compensation Committee | The MDCC regularly reviews the design and implementation of our executive compensation program and reports on its discussions and actions to the Board. The MDCC oversees our executive compensation program; approves the performance goals and strategic objectives for our NEOs and evaluates results against those targets each year; determines and approves the compensation of our CEO (after consulting with the other independent members of the Board), our other NEOs, and other The MDCC makes its determinations regarding executive compensation The MDCC evaluates individual performance based on the performance of the business or operations for which the executive is responsible, including the individual’s contribution to achieving ESG-related goals (as described in the Fiscal Year 2023 Compensation of Our Named Executive Officers section of this proxy statement), the individual’s skill set relative to industry peers, overall experience and time in the position, the In determining the compensation package for each of our NEOs other than our CEO, the MDCC receives input and recommendations from our CEO and our Executive Vice President and Chief People & Corporate Affairs Officer. | |
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Compensation Discussion and Analysis
| Board of Directors | The independent members of the Board undertake a thorough process The MDCC, after evaluating input from the Board and its independent compensation consultant, makes a final determination on our CEO’s compensation. The Board’s feedback and observations are shared in aggregate with our CEO. Our CEO does not have a role in her own compensation determination other than participating in a discussion with the Board regarding her performance relative to specific targets and strategic objectives set at the beginning of the fiscal year, which the Board considers in both its compensation determination and when setting performance targets for the upcoming fiscal year. |
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Compensation Discussion and Analysis
| Roles and Responsibilities in Setting Executive Compensation | ||
| Independent Compensation Consultant | The MDCC retains the services of an independent compensation consulting firm to assist it in the performance of its duties. During fiscal year FW Cook has provided the MDCC with appropriate assurances and confirmation of its independent status in accordance with the MDCC’s charter and other considerations, including factors specified in the NYSE listing standards. The MDCC believes | |
| Chief Executive Officer | Our CEO makes compensation recommendations to the MDCC for all executive officers other than herself. In making these recommendations, our CEO evaluates the performance of the executive officers and considers their responsibilities as well as the compensation analysis provided by the independent compensation consultant. | |
| Other Members of Management | Senior human resources management provides analyses regarding competitive practices and pay ranges, | |
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Compensation Discussion and Analysis
Say-on-Pay Vote and Shareholder Engagement
At our 20202022 Annual Meeting of Shareholders, we asked our shareholders to approve, on an advisory basis, our fiscal year 20202022 compensation awarded to our NEOs, commonly referred to as a “say-on-pay” vote. Our shareholders overwhelmingly approved the compensation to our NEOs, with approximately 91%93% of votes cast in favor of our proposal. We believe this outcomeproposal, which signals our shareholders’ support of our compensation program. We continued our general approach to compensation for fiscal year 2021,2023, specifically our pay-for-performance philosophy and our efforts to attract, retain, and motivate our NEOs. We value the opinions of our shareholders and will continue to consider the results from advisory votes on executive compensation, as well as feedback received from our shareholders throughout the year, when making compensation decisions for our NEOs.
Use of Market Data
The MDCC uses a peer group of consumer products companies (the compensation peer group) to help determine competitive compensation rates for our
executive officers, including the NEOs. The compensation peer group was selected by the MDCC, with input from FW Cook. The compensation peer group is used to evaluate both the levels of executive compensation and compensation practices within the consumer products industry.
| 56 | THE CLOROX COMPANY - 2023 Proxy Statement |
Compensation Discussion and Analysis
The MDCC reviews and adjusts the compensation peer group annually, and makes adjustments as needed, to ensure the companies included continue to meet relevant criteria. To determine the compensation peer group for each year, the MDCC considers companies that:
| • | Hold leadership positions in branded consumer products. |
| • | Are of reasonably similar size based on market capitalization and revenue. |
| • | Compete with Clorox for executive talent. |
| • | Have executive positions similar in breadth, complexity, and scope of responsibility to those of Clorox. |
For fiscal year 2021,2023, the compensation peer group was composed of the following 18 companies:
| CPB | Campbell Soup Company | |||||
| CHD | Church & Dwight Co., Inc. | Kellogg Company | ||||
| CL | Colgate-Palmolive Company | KDP | Keurig Dr Pepper Inc. | |||
| CAG | Conagra Brands, Inc. | MKC | McCormick & Company, Inc. | |||
| EPC | Edgewell Personal Care Company | NWL | Newell Brands Inc. | |||
| The Estée Lauder Companies Inc. | Post Holdings, Inc. | |||||
| GIS | General Mills, Inc. | REV | Revlon, Inc. | |||
| HSY | The Hershey Company | REYN | Reynolds Consumer Products Inc. | |||
| HRL | Hormel Foods Corporation | (private) | S.C. Johnson & Son Inc. | |||
AsAt the time of June 30, 2021,our peer group review in May 2023, Clorox was at the 35th33rd percentile for revenue and 58th47th percentile for market capitalization compared with the compensation peer group in effect for the fiscal year 20212023 compensation analysis. During that review, the MDCC agreed to remove Revlon from our compensation peer group for fiscal year 2024 because of its bankruptcy. An extensive analysis was conducted to identify potential replacements, and the MDCC concluded that steady state was preferable based on the pool of potential additions. The MDCC intends to review the peer group again next year, taking into consideration changes in our position versus the overall group based on revenue, market capitalization, and other factors.
Management engaged Aon Hewitt to obtain and aggregate compensation data for the compensation peer group in fiscal year 2021.2023. This data was used to advise the MDCC on setting target compensation for our NEOs for fiscal year 2021.2023. FW Cook reviewed this information
and performed an independent compensation analysis of the compensation peer group data to advise the MDCC. Although each individual component of executive compensation is reviewed, particular emphasisour overall goal is placed on targetingto target total direct compensation competitive with the median target total direct compensation of the compensation peer group. Other factors, such as an executive’s level of experience or scope of role, may result in target total direct compensation for individual NEOs being set above or below this median range.
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Compensation Discussion and Analysis
Executive Compensation Governance
We are focused on creating an effective compensation program that successfully aligns our key strategic objectives with the interests of our shareholders. We believe our executive pay isprovides reasonable and provides appropriate incentives to our executive officers to achieve our financial and strategic goals without encouraging them to take excessive risks in their business decisions. To reinforce this, we have adopted policies that guide our compensation practices as summarized below.
| We Do… | We Do Not… | |||
 |  | |||
| Focus on financial measures relevant to shareholder | | ||
| Require meaningful | | ||
| Operate clawback | | ||
| Use a | | Benefits and perquisites are limited, reflecting market benchmarks. | |
| Engage with | | ||
| | Encourage inappropriate | ||
Tally Sheets.To help ensure our executive compensation design is aligned with our overall compensation philosophy of pay for performance and total compensation levels are appropriate, the MDCC annually reviews compensation tally sheets for each of our NEOs. These tally sheets outline current target total compensation, the potential wealth creation of long-term incentive awards granted to our officers under various potential stock prices, and the potential value of payouts under various termination scenarios. These tally sheets help provide the MDCC with a comprehensive understanding of all elements of our compensation program and enable the MDCC to consider changes to
our compensation program, arrangements, and plans considering bestleading practices and emerging trends.
Stock Award Granting Practices.Clorox typically grants long-term incentive awards each September at a regularly-scheduledregularly scheduled MDCC meeting, which typically occurs during the third week of the month.meeting. The meeting date, or a later date as determined by the MDCC at the September meeting, is the effective grant date for the awards, and the exercise/grant price is equal to the closing price of our common stock on thatthe grant date.
The MDCC may also occasionally grant stock options and other equity-based awards at other times to recognize, retain, or recruit executive officers.
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Compensation Discussion and Analysis
Executive Stock Ownership Guidelines.To maintain alignment of the interests of our executive officers and our shareholders, all executive officers are expected to build and maintain a significant level of direct stock ownership. Ownership levels may be achieved over time in a variety of ways, such as by retaining stock received upon the exercise of stock options or the vesting of stock awards or by purchasing stock in the open market. At a minimum,
executive officers are expected to establish and maintain direct ownership of common stock having a value equal to a multiple of each executive officer’s annual base salary: six times base salary for the CEO, three times base salary for NEOs and non-NEO members of the Clorox Executive Committee, and two times base salary for other executives.
The following table reflects the guidelines and our NEOs’ ownership requirement status, as of August 31, 2021:September 15, 2023:
| Name | Ownership Guideline (Salary Multiple) | Guideline Met | ||||
| 6x | No | |||||
| 3x | Yes | |||||
| 3x | Yes | |||||
| 3x | No | |||||
| 3x | Yes | |||||
| (1) | Ms. Rendle became subject to a higher ownership |
| (2) |
Ownership levels are based on shares of common stock owned by the NEO or held pursuant to Clorox plans, including vested performance share units that have vested and been(PSUs) deferred for settlement. Unexercised stock options and shares that haveunits not yet vested due to time or performance restrictions are excluded from the ownership calculations.
Retention Requirements.Executive officers are required to retain a certain percentage of shares obtained upon either the exercise of stock options or the release of restrictions on performance share unitsPSUs and restricted stock units.units (RSUs). All executive officers are expected to retain 75% of net shares acquired after tax withholding until the minimum ownership level is met. After attaining the minimum ownership level, our CEO must retain 50% of net shares acquired after tax withholding until retirement or termination, and other executive officers must retain 25% of net shares acquired after tax withholding for one year after receipt.
Securities Trading Policy and Prohibition on Hedging and Pledging.To ensure alignment of the interests of our shareholders with all of our directors, officers, employees, and consultants, our Insider Trading Policy does not permit any director, officer, employee, or consultant of Clorox either (1) to trade in the stock or other securities of any company when aware of material nonpublic information about that company, including Clorox as well as any customers or suppliers of Clorox or firms with
which Clorox may be negotiating a major transaction, or (2) to engage in short-term or speculative transactions or derivative transactions involving Clorox stock. This policy includes prohibitions on options trading and hedging and restrictions and cautions on pledging Clorox stock as collateral.
The Insider Trading Policy’s prohibition on engaging in hedging transactions in Clorox securities covers the purchase of a financial transaction instrument, or otherwise engaging in a transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of Clorox’s equity securities that were granted as part of the individual’s compensation or that the individual holds directly or indirectly. The following transactions are expressly prohibited by this policy:
| • | Short sales (selling Clorox securities you do not own). |
| • | Transactions involving publicly traded options or other derivatives whose value is tied to Clorox securities, including trading in or writing puts or calls on Clorox securities. |
| • | Pre-paid forward contracts. | |
| • | Collars. |
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Compensation Discussion and Analysis
Directors, executive officers, the principal accounting officer, and 10% beneficial owners of Clorox common stock are also prohibited from borrowing against the value of any Clorox stock that they own using a margin account or other pledge of Clorox stock as collateral.
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Compensation Discussion and Analysis
Trading of Clorox’s securities by directors, executive officers and certain other employees who are so designated from time to time (collectively, Insiders) is permitted only during announced trading periods or in accordance with a previously established trading plan that meets SEC requirements. At all times, including during announced trading periods, Insiders are required to obtain preclearance from our Chief Legal Officerchief legal officer or corporate secretary prior to executing any transactions in Clorox securities, unless those sales occur in accordance with a previously established trading plan that meets SEC requirements.
Clawback Provisions. Effective February 9, 2021, the MDCC adoptedapproved a Clawback Policy related to incentive compensation granted, promised, or paid to certain current and former executive officers (and others as the MDCC may determine) on or after the effective date. Under the terms of the Clawback Policy:
| • | In the event a covered individual engages in conduct materially detrimental to Clorox (including, but not limited to, the name, business interests, or corporate, brand, business, or other reputation of Clorox), |
| • | In the event of a restatement of Clorox financial statements, |
Certain of our existing compensation plans and agreements, including the AIPAnnual Incentive Plan (AIP) and our long-term incentive plan award agreements, contain a provision providing for clawback of the incentive compensation following a restatement of Clorox financial statements. The Clawback Policy incorporates such existing clawback provisions without any material changes, to includeconsolidate all clawbackclawback-related provisions for covered individuals ininto a single policy.
We intend to update our Clawback Policy to comply with the Clawback Policy.listing standards adopted by the NYSE implementing the SEC’s recently finalized Exchange Act Rule 10-D-1.
Tax Deductibility Limits on Executive Compensation.Section 162(m) of the Internal Revenue Code (IRC) limits the federal income tax deductibility of compensation paid to our covered employees to $1 million per year. In setting executive compensation, the MDCC does not take this limit on deductibility into account.
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Compensation Discussion and Analysis
Executive Compensation Framework
A substantial portion of our target total direct compensation for our executives is variable, with 87%88% of target compensation at risk for our CEO and 80%78% of target compensation at risk on average for our other NEOs. Base salary is the only fixed component of direct compensation.
| Component and Rationale | CEO Proportion(1) | NEO(2) Proportion(1) | Performance Measures | Performance Period | Characteristics | ||||||
Base Salary Fixed pay to attract and retain talent, based on role, level of responsibilities, and individual performance. |   |  | N/A | Fixed cash | |||||||
Annual Incentives Variable pay to incent and recognize performance in areas of short-term strategic importance. |  |  | • Annual net sales (50%) • Net earnings (30%) • Gross margin (20%) • Individual performance goals | One Year | Performance-based cash | ||||||
Long-Term Incentives Equity-based pay to incent and recognize performance in areas of long-term strategic importance, promote retention and stability, and align executives with shareholders. |  |  | • Economic profit • Variation in underlying stock price due to overall business results | Three Years |
| (1) | Proportion represents the actual base salary, target annual incentive award, and grant date fair market value of actual long-term incentive awards granted in fiscal year |
| (2) | Represents the average of all NEOs active on June 30, |
Additional elements of our executive compensation program include retirement plans, post-termination compensation, and perquisites as appropriate to support our executive compensation philosophy.
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| Compensation Discussion and Analysis |
Fiscal Year 20212023 Compensation of Our Named Executive Officers
The MDCC generally seeks to establish base salaries for our NEOs competitive with the median of the compensation peer group. Salaries vary in relation to each executive’s specific role, level of experience, and
performance over time. ForBased on company performance during fiscal year 2021, base salary changes within this target pay range2022, NEO salaries were approved by the MDCC in September 2020 and went into effect in September 2020.held at their fiscal year 2022 level, with no increases for fiscal year 2023.
| Name | FY23 Base Salary(1) | Increase in FY23(2) | ||||
| Linda Rendle | $ | 1,125,000 | — | |||
| Kevin Jacobsen | $ | 740,000 | — | |||
| Eric Reynolds | $ | 740,000 | — | |||
| Stacey Grier | $ | 675,000 | — | |||
| Kirsten Marriner | $ | 650,000 | — | |||
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Compensation Discussion and Analysis
| Name | FY 2021 Base Salary(1) | Increase in FY 2021(2) | ||||
| Ms. Rendle(3) | $ | 1,075,000 | 34.4 | % | ||
| Mr. Dorer | $ | 1,230,000 | — | |||
| Mr. Jacobsen(4) | $ | 700,000 | 16.7 | % | ||
| Mr. Reynolds | $ | 700,000 | — | |||
| Mr. Matta(5) | $ | 625,000 | — | |||
| Ms. Marriner(6) | $ | 625,000 | 17.9 | % | ||
| (1) | Annualized salary as of June 30, |
| (2) | Increase relative to salary as of June 30, | |
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In addition to his annual salary, Mr. Matta received a one-time cash sign-on bonus of $500,000 as part of his hire, subject to clawback upon resignation or termination for cause prior to completing one year of employment, to compensate for a portion of expected cash compensation he would otherwise have received from his former employer had he not terminated his employment there to join Clorox.
Clorox provides annual incentive awards to our NEOs under the Annual Incentive Plan (AIP).AIP. Payouts under the AIP are based on the level of achievement of company performance goals set annually by the MDCC, subject to shareholder-approved maximums. These performance goals are tied to Board-approved corporate financial performance goals and individual objectives.
The AIP balances financial performance with the individual performance of each of our NEOs. The amounts paid under the AIP are based on the following factors:
| (1) | A target value for each NEO, which is base salary multiplied by an annual incentive target (Target Award). |
| (2) | Clorox’s performance measured against pre-established corporate financial goals (Company Multiplier). The Company Multiplier can range from 0% to 200% based on an objective assessment of company performance versus goals established by the MDCC at the beginning of the year. |
| (3) | Performance of the operations or functions under the NEO’s responsibility (Individual Multiplier). The Individual Multiplier can range from 0% to 150%. The Individual Multiplier is determined by the MDCC |
and typically has a narrow range, which makes its impact on the total payout significantly smaller than the Company Multiplier: Over the past three years, the range for Individual Multipliers for the NEOs was |
Target Award. Award. Each year, the MDCC sets an annual incentive target level for each NEO as a percentage of their base salary, based on an assessment of median bonusshort-term incentive targets in the compensation peer group and other factors such as individual experience. The annual incentive target level is typically set near the median of bonusshort-term incentive targets for comparable positions in the compensation peer group.
Company Multiplier. Multiplier. At the beginning of each fiscal year, the MDCC sets financial goals for the AIP based on targets approved by the Board. At the end of the year, the MDCC reviews Clorox’s results against the goals set at the beginning of the year and approves the final Company Multiplier.
For fiscal year 2021,2023, the MDCC established goals for net sales, net earnings, and gross margin to drive sustainable, profitable growth and short- and long-term total shareholder returns.return. This combination of metrics effectively balances a focus on both top-line and bottom-line performance. FiscalConsistent with our standard practice for over a decade, fiscal year 2021 goals2023 targets for net sales, net earnings, and gross marginour AIP metrics were set above the prior year’s actual results, in spite of our breakout results in fiscal year 2020, reflecting our focus on strategic business choices and a drive toward operational efficiencies.equal to
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Compensation Discussion and Analysis
our Board-approved fiscal year 2023 budget. Setting targets equal to budget aligns the AIP with the Board’s approval of an appropriate expected outcome for the year and Clorox’s financial outlook as communicated to investors at the beginning of each fiscal year.
Consistent with our Board-approved fiscal year 2023 budget, fiscal year 2023 targets for net sales and net earnings were slightly lower in absolute terms than fiscal year 2022 results, due to normalization of demand in parts of the portfolio that experienced the most significant surge over the last two years due to pandemic-related demand, and continued volatility in the business environment driven by significant inflation and supply chain challenges. The fiscal year 2023 target for gross margin was higher than fiscal year 2022 results, reflecting our expectation for the combined benefit of cost-justified pricing, cost savings, and supply chain optimization, partially offset by continued cost inflation. The MDCC believes these targets were set at challenging levels, maintaining the same level of rigor as in prior years. The targets were based on guidance provided to shareholders at the beginning of fiscal year 2023.
The team delivered exceptional results despite major headwinds, reflecting strong execution against our priorities to rebuild margin and drive topline growth amid a challenging operating environment, while also undergoing major digital and operational transformation efforts to further position our business for long-term profitable growth. Results in net sales and net earnings during the fiscal year exceeded established targets, while delivering gross margin recovery above expectations, as illustrated in the table further below.
In fiscal year 2023, we recognized a non-cash impairment charge in our VMS business. Under the terms of the AIP, the MDCC has discretion to consider the impacts of an impairment on the AIP and adjust the final AIP funding amount as it determines appropriate. The MDCC considered the impact of the impairment on the Company’s core business initiatives, the extent to which the impairment was related to a business acquisition made over seven years ago, and the successful efforts of the current leadership team in delivering strong financial and operational results for Clorox overall in fiscal year 2023. Balancing these factors, the MDCC determined that factoring the impairment into AIP funding would result in a payout unreflective of the current leadership team’s performance in fiscal year 2023, and therefore the impairment should not reduce the final AIP funding amount. Instead, the impairment should be treated as an adjustment consistent with the MDCC’s longstanding principles. Without the adjustment, which impacted only the Net Earnings metric at 30% weighting, the final funding amount still would have been above target.
Fiscal year 20212023 financial goals for the AIP, the potential range of payouts for achieving those goals, and the actual results as determined by the MDCC were as follows:
| 2021 Annual Incentive Financial Goals (in millions) | Weight | Threshold (0%) | Target (100%) | Maximum (200%) | Actual(1) | |||||||||
| Net Sales | 50% | $ | 6,558 | $ | 6,977 | $ | 7,395 | $ | 7,300 | |||||
| Net Earnings | 30% | $ | 852 | $ | 969 | $ | 1,085 | $ | 684 | |||||
| Gross Margin | 20% | 41.7% | 45.7% | 49.7% | 43.6% | |||||||||
| 2023 AIP Financial Goals | Weight | Threshold (0%) | Target (100%) | Maximum (200%) | Actual(1) | Result(2) | |||||||||||||||||||||
| Net Sales (in millions) | 50 | % | $ | 6,618 | $ | 7,040 | $ | 7,463 | $ | 7,422 | 189 | % | |||||||||||||||
| Net Earnings (in millions) | 30 | % | $ | 343 | $ | 418 | $ | 493 | $ | 543 | 200 | % | |||||||||||||||
| Gross Margin | 20 | % | 34.1 | % | 38.1 | % | 42.1 | % | 39.5 | % | 125 | % | |||||||||||||||
| Company Multiplier | 179 | % | |||||||||||||||||||||||||
| (1) | Results exclude the fiscal year |
| (2) | Due to the |
Individual Multiplier. Multiplier. Consistent with our pay-for-performance philosophy, AIP payouts are determined by the Company Multiplier and an Individual Multiplier. Based on its evaluation of individual performance, the MDCC reviewed and approved the Individual Multiplier for each NEO to reflect the officer’s individual
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Compensation Discussion and Analysis
contributions in fiscal year 2021.2023. In determining the multiplier for individual performance, the MDCC carefully evaluates several performance factors against objectives established at the beginning of the year.
Individual performance for each of our NEOs is evaluated holistically and for 20212023 included how each executive addressed continuing challenges posed by COVID-19;contributions to company operations and strategy, position-specific business outcomes, and ESG-related achievements such as management of human capital including diversity and inclusion andIDEA or management of environmental risks; contributionsrisks.
As part of the holistic performance review of each member of the Clorox Executive Committee (including NEOs), the MDCC assesses our executives’ annual performance in part based on each executive’s contribution toward certain ESG-related metrics from our IGNITE scorecard for the applicable fiscal year. The IGNITE scorecard is an internal list of metrics (both ESG-related and otherwise) approved annually by the Board, reflecting areas we plan to company operationsprioritize during the year, and strategy;is intended to help align our near-term focus and position-specific business outcomes. facilitate progress toward our long-term strategic objectives. The IGNITE scorecard measures progress toward objectives through quantitative and qualitative key performance indicators supporting our IGNITE strategy, and, while our IGNITE scorecard is not publicly available, our progress on many of these objectives is reported publicly on the ESG Data Hub, which can be accessed at clorox.metrio.net. Clorox has integrated ESG into our IGNITE strategy because we believe in the strategic link between our societal impact and value creation. We strive to maintain top-third ESG leadership among our peer companies by driving continued progress against our goals while considering emerging stakeholder expectations. See Our Corporate Purpose and Values, IGNITE Strategy and Integrated ESG Approach in this proxy statement for more information about IGNITE.
We hold ourselves accountable by ensuring ESG components of our IGNITE scorecard link to executive compensation. The full Board assesses the Company’s performance on the IGNITE scorecard, including our ESG accomplishments. At the beginning of fiscal year 2023, goals related to ESG metrics from the IGNITE scorecard relevant to each NEO’s role and responsibilities were embedded in each NEOs’ fiscal year 2023 priorities. Scorecard results, and the executive’s role in achieving such results, informed the MDCC’s assessment of individual performance and the Individual Multiplier for each executive. We expect the MDCC’s philosophy on the incorporation of ESG-related metrics into the assessment of individual performance will evolve over time as we consider ways to best align the compensation of our NEOs with our long-term goals.
A performance summary for each NEO for fiscal year 20212023 is provided in the table below.
Name | Individual | Performance Summary | |||
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| Kevin Jacobsen | 100% | Kevin continued to guide the Company through persistently elevated inflation and volatility in the midst of significant organizational transformation. Financial results exceeded targets, with top-line growth at 4% and over 350 bps of gross margin improvement, and we improved our cash position through reduced working capital, early debt refinancing, credit facility extension and asset sales. In addition to supporting the company’s transformation broadly, Kevin drove significant change to streamline our real estate portfolio and make his organization leaner and faster. We are also tracking well toward our enterprise resource planning implementation. Kevin continued to serve as | |||
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| THE CLOROX COMPANY - 2023 Proxy Statement |
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Beginning in fiscal year 2022, as part of the holistic assessment of each NEO's performance, the MDCC will leverage ESG-related metrics from our IGNITE scorecard. The ESG metrics from the IGNITE scorecard that are relevant to each NEO's role will be embedded in the
NEOs' fiscal year 2022 priorities, and those scorecard results will be factored into the MDCC's evaluation of each individual's performance. See the IGNITE Strategy Guided by ESG Principles section of this proxy statement for more information about the IGNITE scorecard.
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Compensation Discussion and Analysis
| Name | Individual Multiplier | Performance Summary | |||
| Eric Reynolds | 100% | Eric led significant gains in operational performance, with service generally back to pre-pandemic levels. Our financial results for the year were very strong, both top- and bottom-line as we made significant progress to drive growth and rebuild margin through record cost-justified cost savings, pricing, and other targeted actions. In parallel, Eric led organizational transformation to a business unit-led operating model with significant new capabilities being built. In addition to providing excellent leadership for our organizational transformation, Eric is leading Elevate, our $500 million digital transformation with progress on track and value delivery ahead of schedule in fiscal year 2023. Under his leadership, we transitioned two more plants to zero waste to landfill. Eric is an executive sponsor for two ERGs, PRIDE and Interfaith. | |||
| Stacey Grier | 100% | Stacey provided significant enterprise leadership for our organizational transformation as well as driving both savings and new ways of working to become more consumer-obsessed, faster and leaner in our growth functions. She led the commercial pillar of our Elevate program, which delivered value ahead of schedule in fiscal year 2023. Stacey contributed to short- and long-term growth with excellent results from personalization, including strong ROI on advertising and superior consumer value overall across the portfolio with sustainable innovation comprising 35% of significant launches for fiscal year 2023 and projected at over 40% for fiscal year 2024 based on the current pipeline, all in the midst of four rounds of cost-justified pricing. Stacey is an executive sponsor for our SHOW (women’s) ERG. | |||
| Kirsten Marriner | 100% | Kirsten continued to lead our people agenda as well as leading our organizational transformation initiative, which is on track to deliver ongoing annual savings of $75-100 million and began to hit the bottom line in fiscal year 2023. During our digital and organizational transformation, our engagement and inclusion index results have both increased while voluntary turnover has significantly decreased and retention actions have resulted in better retention of key talent. In support of transformation and the desired culture change, core elements of the talent model were updated during the fiscal year. The company continued to deliver on our commitment to fair and equitable pay, resulting in continued achievement of pay equity globally and Kirsten sponsors our CelebrAsia ERG. |
Final AIP payouts. payoutsWe. The AIP funded the AIP at a 98%179% Company Multiplier, reflecting our achievement on each of the three performance metrics.
| NEO | Base Salary | Annual Incentive Target (% of Salary) | Company Multiplier | Individual Multiplier | Final Annual Incentive Plan Payout | ||||||||||
| Ms. Rendle(1) | $ | 1,075,000 | 150 | % | 98 | % | 100 | % | $ | 1,526,132 | |||||
| Mr. Dorer(2) | $ | 1,230,000 | 150 | % | 98 | % | 100 | % | $ | 1,139,351 | |||||
| Mr. Jacobsen | $ | 700,000 | 90 | % | 98 | % | 100 | % | $ | 617,400 | |||||
| Mr. Reynolds | $ | 700,000 | 100 | % | 98 | % | 105 | % | $ | 720,300 | |||||
| Mr. Matta(3) | $ | 625,000 | 85 | % | 98 | % | 95 | % | $ | 364,509 | |||||
| Ms. Marriner(1) | $ | 625,000 | 75 | % | 98 | % | 110 | % | $ | 489,992 | |||||
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| NEO | Base Salary | Annual | Company Multiplier | Individual Multiplier | Final Annual Incentive Plan Payout | |||||||||||
| Linda Rendle | $ | 1,125,000 | 155 | % | 179 | % | 100 | % | $ | 3,121,313 | ||||||
| Kevin Jacobsen | $ | 740,000 | 95 | % | 179 | % | 100 | % | $ | 1,258,370 | ||||||
| Eric Reynolds | $ | 740,000 | 105 | % | 179 | % | 100 | % | $ | 1,390,830 | ||||||
| Stacey Grier | $ | 675,000 | 90 | % | 179 | % | 100 | % | $ | 1,087,425 | ||||||
| Kirsten Marriner | $ | 650,000 | 85 | % | 179 | % | 100 | % | $ | 988,975 | ||||||
We provide long-term, equity-based incentive compensation to our NEOs, which aligns CloroxClorox’s performance and executive officer compensation with the interests of our shareholders. These incentive awards also support the achievement of our long-term corporate financial goals. Equity awards are granted under Clorox’s 2005 Stock Incentive Plan.
The MDCC annually reviews the costs of, and potential shareholder dilution attributable to, our long-term incentive program to ensure that the overall program
is financially efficient and aligned with thoseappropriate in context of our compensation peer group. The MDCC also seeks to calibrate the long-term incentive program design to drive performance and deliver awards that are competitive with the median of the compensation peer group. Actual long-term incentive award targets for individual NEOs may vary from the median based on a variety of factors, such as the NEO’s performance over time, individual experience, critical nature of their role, and expected future contributions.
| Name | Target Value | ||
| Ms. Rendle | $ | 5,000,000 | |
| Mr. Dorer(1) | $ | 500,000 | |
| Mr. Jacobsen | $ | 1,700,000 | |
| Mr. Reynolds | $ | 2,100,000 | |
| Mr. Matta(2) | $ | 2,500,000 | |
| Ms. Marriner | $ | 1,200,000 | |
| |
|
Compensation Discussion and Analysis
| Name | Target Value | ||
| Linda Rendle | $ | 7,000,000 | |
| Kevin Jacobsen | $ | 2,200,000 | |
| Eric Reynolds | $ | 2,500,000 | |
| Stacey Grier | $ | 1,600,000 | |
| Kirsten Marriner | $ | 1,500,000 | |
For fiscal year 2023, NEOs received 60% of the value of their total annual long-term incentive award in PSUs, 20% in stock options, and 20% in RSUs. This equity mix balances reinforcement of long-term company performance with retention value and alignment to peers’ weighting of equity types.
Like annual incentive awards, actual long-term incentive award payouts vary from the target based on how Clorox performs against pre-established targets. The value of payouts also variesperformance targets (for PSUs) and based on changes in the market price of our common stock.
For fiscal year 2021, the MDCC determined that our NEOs would receive 60% of the value of their total annual long-term incentive award granted in performance share units, 20% in stock options, and 20% in restricted
stock units, as opposed to the prior fiscal year’s 50/50 split between performance share units and stock options. This new(for all equity mix provides balance in the long-term incentive program, improving retention value and aligning to peers’ weighting for stock options while continuing to reinforce long-term company performance.types).
From time to time, we grant additional time-based restricted stock unitsRSUs for special purposes for both executive and non-executive officers, such as in
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Compensation Discussion and Analysis
connection with a promotion or as a replacement for compensation forfeited at a prior employer by an externally recruited executive at a prior employer, asexecutive. No NEOs received such additional RSUs in the case of Mr. Matta’s fiscal year 2021 one-time restricted stock unit award.2023.
Performance share units (PSUs). PSUs align the interests of our NEOs with the interests of our shareholders because the number of shares earned and the shares’ potential value are tied to the achievement of performance targets, as well as changes in Clorox stock price. PSUs pay out after a three-year performance period only if Clorox meets pre-established financial performance goals.
The performance targetmetric for the fiscal year 2023 awards, granted in September 20202022, is a three-year annual economic profit (EP) growth rateEP during the performance period of July 20202022 through June 2023.2025. This metric directly supports our corporate strategy and long-term financial goals and correlates to stock price performance. EP performance is measured relative to a three-year average
annual growth rate that is established atover the beginning of the cycle and held constant. long term.
Solely for purposes of the PSU performance metric, EP is defined as earnings before interest and taxes, adjusted for non-cash restructuring charges, times one minus the tax rate, less capital charge. This internal calculation of EP for the PSU performance metric differs from, and therefore may not reconcile with, the external calculation of EP used in our press releases and SEC filings.
The EP target for the first year of the performance period was set as a base dollar value, with EP growth rate targets set for the second and third years. Performance against target (whether dollar value or growth rate) will be measured for each year, generating three annual payout percentages. The three annual payout percentages will be averaged to determine the final payout percentage for the fiscal year 2023 awards. The payout percentage ranges from 0%, if the threshold EP value or growth target is not achieved, to a maximum of 200% of the target number of shares. A payout percentage is calculated for each
For the fiscal year 2021 awards, granted in September 2020, the performance metric was EP growth during the performance period of July 2020 through June 2023. EP performance was measured relative to an annual growth rate target established at the beginning of the cycle and held constant throughout the three annual payout percentages are averaged to determine the final payout percentage.
For the awards granted in September 2018, thethree-year period. The MDCC approved payout levels tied to a 2.7%4% average annual EP growth target for the three-year performance period from July 20182020 through June 2021. 2023.
In August 2021,2023, the MDCC certified a final payout for the 2018 awards of 94%2020 PSUs at 86% of target, based on the average of the annual payout percentages for the three fiscal years in the performance period.
| Annual EP Growth | Adjusted(1) Actual EP Growth | Payout | |||||||||||||
| Performance share units | Threshold (0%) | Target (100%) | Maximum (200%) | ||||||||||||
| FY2019 Economic Profit Growth Rate | -7.3 | % | 2.7 | % | 10.2 | % | -2.8 | % | 45 | % | |||||
| FY2020 Economic Profit Growth Rate | -7.3 | % | 2.7 | % | 10.2 | % | 17.9 | % | 200 | % | |||||
| FY2021 Economic Profit Growth Rate | -7.3 | % | 2.7 | % | 10.2 | % | -3.7 | % | 36 | % | |||||
| Three-Year Average Annual Economic Profit Growth Rate | -7.3 | % | 2.7 | % | 10.2 | % | 94 | % | |||||||
| 66 | THE CLOROX COMPANY - 2023 Proxy Statement |
Compensation Discussion and Analysis
| Performance share units | Annual EP Growth | Adjusted(1) | |||||||||
| Threshold (0%) | Target (100%) | Maximum (200%) | Actual EP Growth | Payout | |||||||
| FY21 Economic Profit Growth Rate | -11.0% | 4.0% | 11.5% | -2.3% | 58% | ||||||
| FY22 Economic Profit Growth Rate | -11.0% | 4.0% | 11.5% | -56.0% | 0% | ||||||
| FY23 Economic Profit Growth Rate | -11.0% | 4.0% | 11.5% | 49.1% | 200% | ||||||
| Three-Year Average Annual Economic Profit Growth Rate | 4.0% | 86% | |||||||||
| (1) | In accordance with predetermined criteria established by the MDCC at the time initial awards were approved, annual growth rates were adjusted for the impacts of the following Events (as defined in the |
Stock options. options. Stock options align the interests of our NEOs with those of our shareholders because the options only have value if the price of Clorox stock increases after the stock options are granted. Stock options vest in 25% increments over a four-year period, beginning one year from the date of grant, and expire ten years from the date of grant.
Restricted stock units (RSUs). RSUs align the interests of our NEOs with those of our shareholders because the value of RSUs increases or decreases as the price of Clorox stock changes. RSUs vest in 25% increments over a four-year period, beginning one year from the date of grant.
Our NEOs participate in the same tax-qualified retirement benefit programs available to all other United States-basedU.S.-based salaried and hourly employees, not subject to
collective bargaining agreements.plus an additional executive-only plan. Our retirement plans are designed to provide replacement income upon retirement and to be competitive with programs offered by our peers.
Because the Internal Revenue Code (IRC)IRC limits the benefit value that may be contributed to and paid from a tax-qualified retirement plan, Clorox also provides our executive officers, including our NEOs, with additional retirement benefits intended to restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRC did not have limits on includable compensation and maximum benefits. We call these plans “restoration plans” because they restore total executive retirement benefits to the same percentage level provided to our salaried employees who are not limited by IRC restrictions.
|
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Compensation Discussion and Analysis
Below are brief descriptions of each of our retirement programs. Each of our NEOs participates in these retirement programs, except for the Clorox Company Pension Plan and the Supplemental Executive Retirement Plan.
The Clorox Company Pension Plan. Plan. The Clorox Company Pension Plan (the Pension Plan) is a cash balance pension plan that was frozen effective June 30, 2011. This freeze did not affect benefits previously accrued under the Pension Plan, which remain fully funded.
In fiscal year 2023, we began to transition administration of the Pension Plan to an insurance company specializing in pension fund management. All benefits earned under the Pension Plan will be protected during this change, meaning it will not impact the value of individual plan participants’ benefits. This transition is regulated by the Internal Revenue Service (IRS) through a standard pension plan termination process and typically takes 18 to 24 months.
The Clorox Company 401(k) Plan. Plan. After the Pension Plan was frozen in June 2011, theThe Clorox Company 401(k) Plan (the 401(k) Plan) became the primary retirement plan for Clorox. Clorox makes an annual fixed contribution of 6% of eligible pay and a matching contribution of up to 4% of eligible pay to eligible employees.
| THE CLOROX COMPANY - 2023 Proxy Statement | 67 |
Compensation Discussion and Analysis
Nonqualified Deferred Compensation Plan. Plan. Under the Nonqualified Deferred Compensation Plan (the NQDC), eligible employees may voluntarily defer receipt of up to 50% of base salary and up to 100% of their annual incentive awards. In fiscal year 2021, deferredDeferred amounts couldcan be invested in a manner that generally mirroredmirrors the funds available in the 401(k) Plan. The NQDC permits Clorox to contribute amounts that exceed the IRC compensation limits in the tax-qualified plan through a 401(k) restoration provision for those employees deferring at required levels in the plan.
Supplemental Executive Retirement Plan. The Supplemental Executive Retirement Plan (the SERP), a defined benefit plan, was closed to new participants. Only certain senior-level executives participate in April 2007 and, effective June 30, 2011, was frozen for pay and offsets, while still accruing age and service credits. Benefits under the SERP have historically been calculated as an annuity based on a percentage of average compensation adjusted by age and years of service and offset by the annuity value of Clorox contributions to the tax-qualified retirement plans and by Social Security. Effective July 1, 2011, the SERP was replaced by the Executive Retirement Plan (the ERP), described below. Moving from the SERP to the ERP created a defined-contribution structure that is more closely aligned with the benefits provided by our compensation peer group. In March 2018, the SERP was amended to provide that designated participants whose service as an executive of Clorox is succeeded by service as a consultant or advisor will be entitled to receive age and service credits while serving as a consultant or advisor for purposes of accruing an early retirement benefit under the SERP, provided that they have attained a minimum of 25 years of service and are at least 50 years
old at the time that service as a consultant or advisor commences. Except for Mr. Dorer, none of our NEOs is eligible for the SERP.
Executive Retirement Plan. Our executive officers participate in the ERP.(ERP). Under the ERP, Clorox makes an annual contribution of 5% of an eligible participant’s base salary and annual incentive award into the plan.
Further details about the provisions of the Pension Plan, NQDC, SERP, and ERP are provided in the Overview of Pension Benefitsand the Overview of the Nonqualified Deferred Compensation Planssections below.
Clorox has a severance plan (the Severance Plan) that provides our NEOs with post-termination payments if the NEOs’ employment is terminated by Clorox other than for cause. These payments are intended to provide a measure of financial security following the loss of employment, which is important to attract and retain executives. The severance benefits are designed to be competitive with the compensation peer group and external market practices.
Clorox also has an Executive Change in Control Severance Plan (the CIC Plan), which provides severance benefits to certain eligible executives of Clorox, including all NEOs, if their employment with Clorox is involuntarily terminated in connection with a change in control of Clorox. In addition to helping mitigate the financial impact associated with termination after a change in control, these benefits further align the interests of our executive officers with the interests of our shareholders by providing incentives for retention, for business continuity purposes. Under the CIC Plan, NEOs are eligible for change in control severance benefits if their employment is terminated in connection with a change in control, either by Clorox without cause or by the NEO for good reason. See the Potential Payments Upon Termination or Change in Controlsection for additional information.
We provide our NEOs and other executives with other limited benefits competitive with theour compensation peer group and consistent with our overall executive compensation program: an annual executive physical exam, reimbursement fora health club membership allowance, a car allowance or company car, or car allowance, paid parking at our headquarters, and financial planning services. These perquisites are market-competitive and beneficial to Clorox by enabling our NEOs to proactively manage their health, work more efficiently, and optimize the value received from our compensation and benefits programs.
We also provide security services to our CEO, which are based on an assessment of risk and which we believe are for the Company’s benefit. SEC rules require that certain security costs be reported as perquisites, and the aggregate incremental cost of these services is included in the “All Other Compensation” column of the Summary Compensation Table.
68 | THE CLOROX COMPANY - |
| Compensation Discussion and Analysis |
Compensation Discussion and Analysis
The Management Development and Compensation Committee Report
As detailed in its charter, the Management Development and Compensation Committee of the Board oversees Clorox’s executive compensation program and policies. As part of this function, the MDCC discussed, and reviewed with management, the CD&A. Based on this review and discussion, we have recommended to the Board that the CD&A be included in the proxy statement.
THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE as of June 30, 2023
 |  |  |  |  |
| Spencer C. Fleischer, Chair | Amy L. Banse | A.D. David Mackay | Kathryn Tesija | Russell J. Weiner |
Spencer C. Fleischer, ChairRichard H. CarmonaDavid MackayKathryn TesijaRussell J. Weiner
Compensation Committee Interlocks and Insider Participation
Dr. Carmona, Messrs. Fleischer, Mackay, and Weiner, Dr. Carmona and Ms.Mses. Banse and Tesija each served as a member of the MDCC during partall or allpart of fiscal year 2021.2023. None of the members was an officer or employee of Clorox or any of its subsidiaries during fiscal year 20212023 or in any prior fiscal year. No executive officer of Clorox served on the Board or compensation committee of any other entity that has or had one or more executive officers who served as a member of the Board or MDCC during fiscal year 2021.2023.
| THE CLOROX COMPANY - | 69 |
| Compensation Discussion and Analysis Tables |
Summary Compensation TableSUMMARY COMPENSATION TABLE – Fiscal Year 2021FISCAL YEAR 2023
The following table sets forth the compensation earned, paid, or awarded to our NEOs for the fiscal years ended June 30, 2021, 2020,2023, 2022, and 2019.2021.
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3)(4) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | |||||||||
| Linda Rendle(7) Chief Executive Officer | 2021 | 1,006,250 | — | 3,999,753 | 1,000,180 | 1,526,132 | 833 | 366,161 | 7,899,309 | |||||||||
| 2020 | 523,965 | — | 600,194 | 600,006 | 291,182 | 1,572 | 144,820 | 2,161,739 | ||||||||||
| 2019 | 435,923 | — | 563,379 | 312,577 | 271,900 | 1,401 | 117,181 | 1,702,362 | ||||||||||
| Benno Dorer Former Executive Chair of the Board and Chief Executive Officer | 2021 | 1,014,750 | — | 499,943 | — | 1,139,351 | — | 712,166 | 3,366,210 | |||||||||
| 2020 | 1,269,231 | — | 2,949,972 | 2,950,287 | 3,690,000 | 1,161,950 | 402,459 | 12,423,899 | ||||||||||
| 2019 | 1,166,346 | — | 2,874,521 | 2,874,816 | 1,206,000 | 859,528 | 381,504 | 9,362,715 | ||||||||||
| Kevin Jacobsen Executive Vice President and Chief Financial Officer | 2021 | 654,038 | — | 1,361,356 | 340,450 | 617,400 | 7,423 | 277,187 | 3,257,854 | |||||||||
| 2020 | 609,615 | — | 699,930 | 700,059 | 1,020,000 | 5,999 | 154,644 | 3,190,247 | ||||||||||
| 2019 | 536,539 | — | 649,918 | 649,958 | 331,650 | 4,612 | 122,077 | 2,294,753 | ||||||||||
| Eric Reynolds(8) Executive Vice President and Chief Operating Officer | 2021 | 700,000 | — | 1,679,713 | 420,084 | 720,300 | 2,245 | 286,907 | 3,809,250 | |||||||||
| 2020 | 601,923 | — | 649,846 | 650,049 | 1,028,350 | — | 110,378 | 3,040,546 | ||||||||||
| 2019 | 462,788 | — | 450,587 | 450,016 | 231,071 | 3,120 | 119,035 | 1,716,617 | ||||||||||
| Tony Matta Executive Vice President and Chief Growth Officer | 2021 | 432,692 | 500,000 | 2,299,792 | 199,951 | 364,509 | — | 26,500 | 3,823,443 | |||||||||
| Kirsten Marriner Executive Vice President and Chief People and Corporate Affairs Officer | 2021 | 587,885 | — | 959,958 | 240,048 | 489,992 | — | 250,310 | 2,528,192 | |||||||||
| Name and Principal Position | Year | Salary ($)(1) | Bonus | Stock Awards ($)(2)(3) | Option Awards ($)(2) | Non-Equity | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | |||||||||||
| Linda Rendle Chief Executive Officer | 2023 | 1,168,269 | — | 5,599,719 | 1,399,981 | 3,121,313 | 1,293 | 359,076 | 11,649,650 | |||||||||||
| 2022 | 1,111,538 | — | 4,919,815 | 1,229,989 | 843,750 | 1,098 | 428,618 | 8,534,808 | ||||||||||||
| 2021 | 1,006,250 | — | 3,999,753 | 1,000,180 | 1,526,132 | 833 | 366,161 | 7,899,309 | ||||||||||||
| Kevin Jacobsen Executive Vice President and Chief Financial Officer | 2023 | 768,462 | — | 1,759,750 | 439,988 | 1,258,370 | 6,051 | 196,330 | 4,428,950 | |||||||||||
| 2022 | 729,231 | — | 1,599,869 | 399,996 | 333,000 | — | 231,809 | 3,293,904 | ||||||||||||
| 2021 | 654,038 | — | 1,361,356 | 340,450 | 617,400 | 7,423 | 277,187 | 3,257,854 | ||||||||||||
| Eric Reynolds Executive Vice President and Chief Operating Officer | 2023 | 768,462 | — | 1,999,819 | 499,974 | 1,390,830 | 2,869 | 192,340 | 4,854,294 | |||||||||||
| 2022 | 729,231 | — | 1,839,792 | 459,998 | 370,000 | 1,844 | 239,785 | 3,640,651 | ||||||||||||
| 2021 | 700,000 | — | 1,679,713 | 420,084 | 720,300 | 2,245 | 286,907 | 3,809,250 | ||||||||||||
| Stacey Grier Executive Vice President and Chief Growth & Strategy Officer | 2023 | 700,962 | — | 1,279,895 | 319,989 | 1,087,425 | — | 170,061 | 3,558,332 | |||||||||||
Kirsten Marriner | 2023 | 675,000 | — | 1,199,920 | 299,984 | 988,975 | — | 191,513 | 3,355,392 | |||||||||||
| 2022 | 643,269 | — | 1,039,776 | 259,989 | 260,000 | — | 204,913 | 2,407,947 | ||||||||||||
| 2021 | 587,885 | — | 959,958 | 240,048 | 489,992 | — | 250,310 | 2,528,192 |
| (1) | Reflects actual salary earned for fiscal years |
| (2) |
| |
The amounts reflected in these columns are the values determined under FASB ASC Topic 718 for the awards granted in the fiscal years ended June 30, |
|
Compensation Discussion and Analysis Tables
The grant date fair value of the PSU awards reflected in this column is the target payout based on the probable outcome of the performance-based conditions, determined as of the grant date. The maximum potential payout of the PSU awards would be 200% of the target shares awarded on the grant date. The maximum value of the PSU award for |
| Linda Rendle | Kevin Jacobsen | Eric Reynolds | Stacey Grier | Kirsten Marriner | |||||||
| Maximum PSU Value | 8,399,720 | 2,639,767 | 2,999,799 | 1,919,984 | 1,799,879 |
| Linda Rendle | Benno Dorer | Kevin Jacobsen | Eric Reynolds | Tony Matta | Kirsten Marriner | ||||||||||||
| Maximum PSU Value | $ | 5,999,735 | — | $ | 2,042,246 | $ | 2,519,676 | $ | 1,199,873 | $ | 1,439,936 | ||||||
THE CLOROX COMPANY - 2023 Proxy Statement |
Compensation Discussion and Analysis Tables
| (4) | Reflects annual incentive awards earned for fiscal years |
(5) | The amounts reflect the aggregate change in the present value of accumulated benefits during fiscal years 2023, 2022, and 2021 |
| Linda Rendle | Benno Dorer | Kevin Jacobsen | Eric Reynolds | Tony Matta | Kirsten Marriner | ||||||||||||||
| The Pension Plan | $ | 833 | $ | 843 | $ | 2,196 | $ | 1,629 | — | — | |||||||||
| SERP | — | (18,035 | ) | — | — | — | — | ||||||||||||
| Cash Balance Restoration Benefit | — | 11,542 | 5,227 | 616 | — | — | |||||||||||||
| Total | $ | 833 | $ | (5,650 | ) | $ | 7,423 | $ | 2,245 | $ | 0 | $ | 0 | ||||||
| Linda Rendle | Kevin Jacobsen | Eric Reynolds | Stacey Grier | Kirsten Marriner | |||||||
| The Pension Plan | 1,293 | 3,410 | 2,529 | — | — | ||||||
| Cash Balance Restoration | — | 2,641 | 340 | — | — | ||||||
| Total | 1,293 | 6,051 | 2,869 | — | — |
(6) | The amounts shown in the All Other Compensation column represent (i) actual |
| Linda Rendle | Benno Dorer | Kevin Jacobsen | Eric Reynolds | Tony Matta | Kirsten Marriner | |||||||||||||
| The Clorox Company 401(k) Plan | $ | 30,088 | $ | 26,683 | $ | 27,483 | $ | 18,123 | $ | 0 | $ | 28,702 | ||||||
| Nonqualified Deferred Compensation Plan | 300,977 | 658,865 | 220,334 | 227,035 | 6,010 | 184,160 | ||||||||||||
| Company Paid Perquisites | 35,097 | 26,618 | 29,370 | 41,749 | 20,490 | 37,449 | ||||||||||||
| Total | $ | 366,161 | $ | 712,166 | $ | 277,187 | $ | 286,907 | $ | 26,500 | $ | 250,310 | ||||||
| Linda Rendle | Kevin Jacobsen | Eric Reynolds | Stacey Grier | Kirsten Marriner | |||||||
| The Clorox Company 401(k) Plan | 30,500 | 31,775 | 30,500 | 30,677 | 30,890 | ||||||
| Nonqualified Deferred Compensation Plan | 264,882 | 130,382 | 136,250 | 104,125 | 106,020 | ||||||
| Health Savings Account Contribution | — | 1,000 | 1,000 | — | 2,000 | ||||||
| Company-Paid Perquisites | 63,694 | 33,173 | 24,590 | 35,260 | 52,603 | ||||||
| Total | 359,076 | 196,330 | 192,340 | 170,061 | 191,513 |
The following table sets forth the perquisites provided to our NEOs and the cost to Clorox for providing these perquisites during fiscal year 2021. The amounts shown in the Other Perquisites row consist of paid parking at our Oakland headquarters, health club reimbursement, and an annual executive physical.2023.
| Linda Rendle | Kevin Jacobsen | Eric Reynolds | Stacey Grier | Kirsten Marriner | |||||||
| Executive Automobile Program | 19,156 | 6,754 | 13,200 | 13,200 | 13,200 | ||||||
| Basic Financial Planning | 17,490 | 17,490 | 5,750 | 16,420 | 28,913 | ||||||
| Paid Parking at Oakland Headquarters | 4,200 | 3,360 | 4,200 | 4,200 | 4,200 | ||||||
| Annual Executive Physical | — | 4,129 | — | — | 4,850 | ||||||
| Health Club Allowance | 1,440 | 1,440 | 1,440 | 1,440 | 1,440 | ||||||
| Personal Security | 21,408 | — | — | — | — | ||||||
| Total | 63,694 | 33,173 | 24,590 | 35,260 | 52,603 |
| Linda Rendle | Benno Dorer | Kevin Jacobsen | Eric Reynolds | Tony Matta | Kirsten Marriner | |||||||||||||
| Executive Automobile Program | $ | 13,200 | $ | 8,800 | $ | 6,219 | $ | 13,200 | $ | 9,900 | $ | 13,200 | ||||||
| Basic Financial Planning | 16,627 | 12,499 | 16,627 | 20,875 | 6,510 | 15,719 | ||||||||||||
| Other Perquisites | 5,270 | 5,319 | 6,524 | 7,674 | 4,080 | 8,530 | ||||||||||||
| Total | $ | 35,097 | $ | 26,618 | $ | 29,370 | $ | 41,749 | $ | 20,490 | $ | 37,449 | ||||||
| THE CLOROX COMPANY - | 71 |
Compensation Discussion and Analysis Tables
Grants of Plan-Based AwardsGRANTS OF PLAN-BASED AWARDS – Fiscal Year 2021FISCAL YEAR 2023
This table shows grants of plan-based awards to the NEOs during fiscal year 2021.2023.
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Possible Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||
| Linda Rendle | ||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 1,557,278 | 4,671,833 | |||||||||||||||||||
| Performance Share Units(2) | 9/22/2020 | — | 14,125 | 28,250 | 2,999,868 | |||||||||||||||||
| Restricted Stock Units(3) | 9/22/2020 | 4,708 | 999,885 | |||||||||||||||||||
| Stock Options(4) | 9/22/2020 | 32,316 | 212.38 | 1,000,180 | ||||||||||||||||||
| Benno Dorer | ||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 1,162,603 | 3,487,808 | |||||||||||||||||||
| Performance Share Units(2) | — | — | — | — | ||||||||||||||||||
| Restricted Stock Units(3) | 9/22/2020 | 2,354 | 499,943 | |||||||||||||||||||
| Stock Options(4) | — | — | ||||||||||||||||||||
| Kevin Jacobsen | ||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 630,000 | 1,890,000 | |||||||||||||||||||
| Performance Share Units(2) | 9/22/2020 | — | 4,808 | 9,616 | 1,021,123 | |||||||||||||||||
| Restricted Stock Units(3) | 9/22/2020 | 1,602 | 340,233 | |||||||||||||||||||
| Stock Options(4) | 9/22/2020 | 11,000 | 212.38 | 340,450 | ||||||||||||||||||
| Eric Reynolds | ||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 700,000 | 2,100,000 | |||||||||||||||||||
| Performance Share Units(2) | 9/22/2020 | — | 5,932 | 11,864 | 1,259,838 | |||||||||||||||||
| Restricted Stock Units(3) | 9/22/2020 | 1,977 | 419,875 | |||||||||||||||||||
| Stock Options(4) | 9/22/2020 | 13,573 | 212.38 | 420,084 | ||||||||||||||||||
| Tony Matta | ||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 391,524 | 1,174,571 | |||||||||||||||||||
| Performance Share Units(2) | 10/5/2020 | — | 2,869 | 5,738 | 599,937 | |||||||||||||||||
| Restricted Stock Units(3) | 10/5/2020 | 8,129 | 1,699,855 | |||||||||||||||||||
| Stock Options(4) | 10/5/2020 | 6,072 | 209.11 | 199,951 | ||||||||||||||||||
| Kirsten Marriner | ||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 454,538 | 1,363,613 | |||||||||||||||||||
| Performance Share Units(2) | 9/22/2020 | — | 3,390 | 6,780 | 719,968 | |||||||||||||||||
| Restricted Stock Units(3) | 9/22/2020 | 1,130 | 239,989 | |||||||||||||||||||
| Stock Options(4) | 9/22/2020 | 7,756 | 212.38 | 240,048 | ||||||||||||||||||
| Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Possible Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | |||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||
| Linda Rendle | ||||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 1,743,750 | 5,231,250 | |||||||||||||||||||||
| Performance Share Units(2) | 9/21/2022 | — | 29,723 | 59,446 | 4,199,860 | |||||||||||||||||||
| Restricted Stock Units(3) | 9/21/2022 | 9,907 | 1,399,859 | |||||||||||||||||||||
| Stock Options(4) | 9/21/2022 | 51,928 | 141.30 | 1,399,981 | ||||||||||||||||||||
| Kevin Jacobsen | ||||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 703,000 | 2,109,000 | |||||||||||||||||||||
| Performance Share Units(2) | 9/21/2022 | — | 9,341 | 18,682 | 1,319,883 | |||||||||||||||||||
| Restricted Stock Units(3) | 9/21/2022 | 3,113 | 439,867 | |||||||||||||||||||||
| Stock Options(4) | 9/21/2022 | 16,320 | 141.30 | 439,988 | ||||||||||||||||||||
| Eric Reynolds | ||||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 777,000 | 2,331,000 | |||||||||||||||||||||
| Performance Share Units(2) | 9/21/2022 | — | 10,615 | 21,230 | 1,499,900 | |||||||||||||||||||
| Restricted Stock Units(3) | 9/21/2022 | 3,538 | 499,919 | |||||||||||||||||||||
| Stock Options(4) | 9/21/2022 | 18,545 | 141.30 | 499,974 | ||||||||||||||||||||
| Stacey Grier | ||||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 607,500 | 1,822,500 | |||||||||||||||||||||
| Performance Share Units(2) | 9/21/2022 | — | 6,794 | 13,588 | 959,992 | |||||||||||||||||||
| Restricted Stock Units(3) | 9/21/2022 | 2,264 | 319,903 | |||||||||||||||||||||
| Stock Options(4) | 9/21/2022 | 11,869 | 141.30 | 319,989 | ||||||||||||||||||||
| Kirsten Marriner | ||||||||||||||||||||||||
| Annual Incentive Plan(1) | — | 552,500 | 1,657,500 | |||||||||||||||||||||
| Performance Share Units(2) | 9/21/2022 | — | 6,369 | 12,738 | 899,940 | |||||||||||||||||||
| Restricted Stock Units(3) | 9/21/2022 | 2,123 | 299,980 | |||||||||||||||||||||
| Stock Options(4) | 9/21/2022 | 11,127 | 141.30 | 299,984 | ||||||||||||||||||||
| (1) | Represents estimated possible payouts of annual incentive awards for fiscal year |
| (2) | Represents possible future payouts of Clorox common stock underlying PSUs awarded in fiscal year |
|
Compensation Discussion and Analysis Tables
| (3) | Represents RSUs awarded to each of our |
| (4) | Represents stock options awarded to each of our |
| 72 | THE CLOROX COMPANY - 2023 Proxy Statement |
Outstanding Equity Awards at Fiscal Year-EndTable of Contents
Compensation Discussion and Analysis Tables
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END – 20212023
The following equity awards granted to our NEOs were outstanding as of the end of fiscal year 2021.2023.
| Option Awards | Stock Awards | ||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options- Exercisable (#) | Number of Securities Underlying Unexercised Options- Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||
| Linda Rendle | |||||||||||||||||||
| Stock Options(2) | 1,697 | — | 72.11 | 9/11/2022 | |||||||||||||||
| 2,935 | — | 84.45 | 9/17/2023 | ||||||||||||||||
| 7,850 | — | 89.82 | 9/17/2024 | ||||||||||||||||
| 12,360 | — | 111.60 | 9/15/2025 | ||||||||||||||||
| 14,560 | — | 123.09 | 9/13/2026 | ||||||||||||||||
| 15,352 | 5,118 | (3) | 135.57 | 9/12/2027 | |||||||||||||||
| 9,520 | 9,520 | (4) | 151.85 | 9/18/2028 | |||||||||||||||
| 3,466 | 3,466 | (5) | 154.88 | 1/7/2029 | |||||||||||||||
| 12,488 | 37,467 | (6) | 155.54 | 9/17/2029 | |||||||||||||||
| — | 32,316 | (7) | 212.38 | 9/22/2030 | |||||||||||||||
| Performance Share Units(2) | 2,632 | (10) | 473,523 | ||||||||||||||||
| 1,062 | (11) | 191,100 | |||||||||||||||||
| 6,429 | (12) | 1,156,641 | |||||||||||||||||
| 14,125 | (13) | 2,541,229 | |||||||||||||||||
| Restricted Stock Units(2) | 4,708 | (15) | 847,016 | ||||||||||||||||
| Benno Dorer | |||||||||||||||||||
| Stock Options(2) | 42,990 | — | 135.57 | 2/15/2026 | |||||||||||||||
| 128,800 | — | 151.85 | 2/15/2026 | ||||||||||||||||
| 147,367 | — | 155.54 | 2/15/2026 | ||||||||||||||||
| Performance Share Units(2) | 15,817 | (10) | 2,845,705 | ||||||||||||||||
| 10,537 | (12) | 1,895,712 | |||||||||||||||||
| Restricted Stock Units(2) | 2,354 | (15) | 423,508 | ||||||||||||||||
| Name | Option Awards | Stock Awards | |||||||||||||||||||||
| Number of Securities Underlying Unexercised Options- Exercisable (#) | Number of Securities Underlying Unexercised Options- Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||
| Linda Rendle | |||||||||||||||||||||||
| Stock Options(2) | 12,360 | — | 111.60 | 9/15/2025 | |||||||||||||||||||
| 14,560 | — | 123.09 | 9/13/2026 | ||||||||||||||||||||
| 20,470 | — | 135.57 | 9/12/2027 | ||||||||||||||||||||
| 19,040 | — | 151.85 | 9/18/2028 | ||||||||||||||||||||
| 6,932 | — | 154.88 | 1/7/2029 | ||||||||||||||||||||
| 37,466 | 12,489 | (3) | 155.54 | 9/17/2029 | |||||||||||||||||||
| 16,158 | 16,158 | (4) | 212.38 | 9/22/2030 | |||||||||||||||||||
| 13,806 | 41,418 | (5) | 163.77 | 9/21/2031 | |||||||||||||||||||
| — | 51,928 | (6) | 141.30 | 9/20/2032 | |||||||||||||||||||
| Performance Share Units(2) | 12,148 | (7) | 1,931,938 | ||||||||||||||||||||
| 22,531 | (8) | 3,583,330 | |||||||||||||||||||||
| 29,723 | (9) | 4,727,146 | |||||||||||||||||||||
| Restricted Stock Units(2) | 2,354 | (10) | 374,380 | ||||||||||||||||||||
| 5,633 | (11) | 895,872 | |||||||||||||||||||||
| 9,907 | (12) | 1,575,609 | |||||||||||||||||||||
| Kevin Jacobsen | |||||||||||||||||||||||
| Stock Options(2) | 2,458 | — | 135.57 | 9/12/2027 | |||||||||||||||||||
| 5,580 | — | 128.69 | 4/2/2028 | ||||||||||||||||||||
| 29,120 | — | 151.85 | 9/18/2028 | ||||||||||||||||||||
| 26,226 | 8,742 | (3) | 155.54 | 9/17/2029 | |||||||||||||||||||
| 5,500 | 5,500 | (4) | 212.38 | 9/22/2030 | |||||||||||||||||||
| 4,489 | 13,470 | (5) | 163.77 | 9/21/2031 | |||||||||||||||||||
| — | 16,320 | (6) | 141.30 | 9/20/2032 | |||||||||||||||||||
| Performance Share Units(2) | 4,135 | (7) | 657,611 | ||||||||||||||||||||
| 7,327 | (8) | 1,165,286 | |||||||||||||||||||||
| 9,341 | (9) | 1,485,593 | |||||||||||||||||||||
| Restricted Stock Units(2) | 747 | (10) | 118,803 | ||||||||||||||||||||
| 1,768 | (11) | 281,183 | |||||||||||||||||||||
| 3,113 | (12) | 495,092 | |||||||||||||||||||||
| Eric Reynolds | |||||||||||||||||||||||
| Stock Options(2) | 15,210 | — | 111.60 | 9/15/2025 | |||||||||||||||||||
| 15,470 | — | 123.09 | 9/13/2026 | ||||||||||||||||||||
| 16,380 | — | 135.57 | 9/12/2027 | ||||||||||||||||||||
| 13,440 | — | 151.85 | 9/18/2028 | ||||||||||||||||||||
| 5,942 | — | 154.88 | 1/7/2029 | ||||||||||||||||||||
| 24,352 | 8,118 | (3) | 155.54 | 9/17/2029 | |||||||||||||||||||
| 6,786 | 6,787 | (4) | 212.38 | 9/22/2030 | |||||||||||||||||||
| 5,163 | 15,490 | (5) | 163.77 | 9/21/2031 | |||||||||||||||||||
| — | 18,545 | (6) | 141.30 | 9/20/2032 | |||||||||||||||||||
| Performance Share Units(2) | 5,102 | (7) | 811,346 | ||||||||||||||||||||
| 8,426 | (8) | 1,340,071 | |||||||||||||||||||||
| 10,615 | (9) | 1,688,210 | |||||||||||||||||||||
| Restricted Stock Units(2) | 937 | (10) | 149,020 | ||||||||||||||||||||
| 2,032 | (11) | 323,169 | |||||||||||||||||||||
| 3,538 | (12) | 562,684 | |||||||||||||||||||||
| THE CLOROX COMPANY - | 73 |
Compensation Discussion and Analysis Tables
| Option Awards | Stock Awards | ||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options- Exercisable (#) | Number of Securities Underlying Unexercised Options- Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||
| Kevin Jacobsen | |||||||||||||||||||
| Stock Options(2) | — | 2,458 | (3) | 135.57 | 9/12/2027 | ||||||||||||||
| 2,790 | 2,790 | (8) | 128.69 | 4/2/2028 | |||||||||||||||
| 14,560 | 14,560 | (4) | 151.85 | 9/18/2028 | |||||||||||||||
| 8,742 | 26,226 | (6) | 155.54 | 9/17/2029 | |||||||||||||||
| — | 11,000 | (7) | 212.38 | 9/22/2030 | |||||||||||||||
| Performance Share Units(2) | 4,023 | (10) | 723,814 | ||||||||||||||||
| 4,500 | (12) | 809,595 | |||||||||||||||||
| 4,808 | (13) | 865,007 | |||||||||||||||||
| Restricted Stock Units(2) | 1,602 | (15) | 288,216 | ||||||||||||||||
| Eric Reynolds | |||||||||||||||||||
| Stock Options(2) | 15,210 | — | 111.60 | 9/15/2025 | |||||||||||||||
| 15,470 | — | 123.09 | 9/13/2026 | ||||||||||||||||
| 12,285 | 4,095 | (3) | 135.57 | 9/12/2027 | |||||||||||||||
| 6,720 | 6,720 | (4) | 151.85 | 9/18/2028 | |||||||||||||||
| 2,971 | 2,971 | (5) | 154.88 | 1/7/2029 | |||||||||||||||
| 8,117 | 24,353 | (6) | 155.54 | 9/17/2029 | |||||||||||||||
| — | 13,573 | (7) | 212.38 | 9/22/2030 | |||||||||||||||
| Performance Share Units(2) | 1,861 | (10) | 334,848 | ||||||||||||||||
| 910 | (11) | 163,704 | |||||||||||||||||
| 4,178 | (12) | 751,664 | |||||||||||||||||
| 5,932 | (13) | 1,067,226 | |||||||||||||||||
| Restricted Stock Units(2) | 1,977 | (15) | 355,682 | ||||||||||||||||
| Tony Matta | |||||||||||||||||||
| Stock Options(2) | — | 6,072 | (9) | 209.11 | 10/5/2030 | ||||||||||||||
| Performance Share Units(2) | 2,869 | (14) | 516,162 | ||||||||||||||||
| Restricted Stock Units(2) | 7,173 | (16) | 1,290,494 | ||||||||||||||||
| 956 | (15) | 171,994 | |||||||||||||||||
| Kirsten Marriner | |||||||||||||||||||
| Stock Options(2) | — | 6,143 | (3) | 135.57 | 9/12/2027 | ||||||||||||||
| 9,520 | 9,520 | (4) | 151.85 | 9/18/2028 | |||||||||||||||
| 5,932 | 17,796 | (6) | 155.54 | 9/17/2029 | |||||||||||||||
| — | 7,756 | (7) | 212.38 | 9/22/2030 | |||||||||||||||
| Performance Share Units(2) | 2,632 | (10) | 473,523 | ||||||||||||||||
| 3,053 | (12) | 549,265 | |||||||||||||||||
| 3,390 | (13) | 609,895 | |||||||||||||||||
| Restricted Stock Units(2) | 1,130 | (15) | 203,298 | ||||||||||||||||
| Name | Option Awards | Stock Awards | |||||||||||||||||||||
| Number of Securities Underlying Unexercised Options- Exercisable (#) | Number of Securities Underlying Unexercised Options- Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||
| Stacey Grier | |||||||||||||||||||||||
| Stock Options(2) | 2,930 | — | 135.57 | 9/12/2027 | |||||||||||||||||||
| 2,150 | — | 151.85 | 9/18/2028 | ||||||||||||||||||||
| 3,961 | — | 154.88 | 1/7/2029 | ||||||||||||||||||||
| 9,366 | 3,122 | (3) | 155.54 | 9/17/2029 | |||||||||||||||||||
| 1,939 | 1,939 | (4) | 212.38 | 9/22/2030 | |||||||||||||||||||
| 1,795 | 5,388 | (5) | 163.77 | 9/21/2031 | |||||||||||||||||||
| 726 | 2,181 | (13) | 127.62 | 3/14/2032 | |||||||||||||||||||
| — | 11,869 | (6) | 141.30 | 9/20/2032 | |||||||||||||||||||
| Performance Share Units(2) | 1,458 | (7) | 231,833 | ||||||||||||||||||||
| 2,930 | (8) | 465,987 | |||||||||||||||||||||
| 1,410 | (14) | 224,246 | |||||||||||||||||||||
| 6,794 | (9) | 1,080,518 | |||||||||||||||||||||
| Restricted Stock Units(2) | 283 | (10) | 45,008 | ||||||||||||||||||||
| 732 | (11) | 116,417 | |||||||||||||||||||||
| 353 | (15) | 56,141 | |||||||||||||||||||||
| 2,264 | (12) | 360,067 | |||||||||||||||||||||
| Kirsten Marriner | |||||||||||||||||||||||
| Stock Options(2) | 6,143 | — | 135.57 | 9/12/2027 | |||||||||||||||||||
| 19,040 | — | 151.85 | 9/18/2028 | ||||||||||||||||||||
| 17,796 | 5,932 | (3) | 155.54 | 9/17/2029 | |||||||||||||||||||
| 3,878 | 3,878 | (4) | 212.38 | 9/22/2030 | |||||||||||||||||||
| 2,918 | 8,755 | (5) | 163.77 | 9/21/2031 | |||||||||||||||||||
| — | 11,127 | (6) | 141.30 | 9/20/2032 | |||||||||||||||||||
Performance Share Units(2) | 2,915 | (7) | 463,665 | ||||||||||||||||||||
| 4,762 | (8) | 757,348 | |||||||||||||||||||||
| 6,369 | (9) | 1,012,926 | |||||||||||||||||||||
Restricted Stock Units(2) | 565 | (10) | 89,858 | ||||||||||||||||||||
| 1,191 | (11) | 189,417 | |||||||||||||||||||||
| 2,123 | (12) | 337,642 | |||||||||||||||||||||
| (1) | Represents the unvested “target” number of PSUs under the 2005 Stock Incentive Plan multiplied by the closing price of our common stock on June 30, |
|
Compensation Discussion and Analysis Tables
| (2) | Awards were granted under the 2005 Stock Incentive Plan. |
| (3) | Represents the unvested portion of stock options |
| (4) | Represents the unvested portion of stock options |
| (5) | Represents the unvested portion of |
| (6) | Represents the unvested portion of stock options |
| Represents the actual number of PSUs that were paid out under our 2005 Stock Incentive Plan. The awards |
Compensation Discussion and Analysis Tables
| (8) | Represents the “target” number of PSUs that can be earned under our 2005 Stock Incentive Plan. The awards |
| (9) | Represents the “target” number of PSUs that can be earned under our 2005 Stock Incentive Plan. The awards |
| (10) | Represents unvested portion of RSUs granted on September 22, 2020, which vest in four equal installments on September 22, 2021 and September 13, 2022, 2023, and 2024. |
| (11) | Represents unvested portion of RSUs granted on September 21, 2021, which vest in four equal installments on October 5th following the |
| (12) | Represents unvested portion of RSUs granted on September 20, 2022, which vest in four equal installments on October 5th following the first, second, third, and fourth anniversaries of the grant date. |
| (13) | Represents unvested one-time off-cycle stock option award |
| (14) | Represents unvested one-time off-cycle PSU award granted to Ms. Grier when she was promoted to Executive Vice President and Chief Growth & Strategy Officer, effective March 21, 2022. These PSUs vest at the end of a three-year performance period (fiscal years |
| (15) | Represents unvested | |
| THE CLOROX COMPANY - | 75 |
Compensation Discussion and Analysis Tables
Option Exercises and Stock VestedOPTION EXERCISES AND STOCK VESTED – Fiscal Year 2021FISCAL YEAR 2023
This table shows stock options exercised and stock vested for the NEOs during fiscal year 2021.2023.
| Option Awards | Stock Awards | |||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||
| Linda Rendle | — | — | 5,112 | (4,5) | 952,376 | |||||
| Benno Dorer | 467,220 | (3) | 36,772,432 | 26,268 | (6) | 5,996,984 | ||||
| Kevin Jacobsen | 35,282 | (3) | 3,244,819 | 1,505 | (6) | 286,951 | ||||
| Eric Reynolds | — | — | 2,495 | (6) | 569,609 | |||||
| Tony Matta | — | — | — | — | ||||||
| Kirsten Marriner | 65,367 | (3) | 5,371,426 | 3,758 | (7) | 857,951 | ||||
| Name | Option Awards | Stock Awards | ||||||||
Number of | Value | Number of Shares | Value Realized on Vesting ($)(4) | |||||||
| Linda Rendle | 10,785 | 734,689 | 9,449 | (5) | 1,430,798 | |||||
| Kevin Jacobsen | — | — | 5,499 | (6) | 850,309 | |||||
| Eric Reynolds | — | — | 5,391 | (7) | 828,938 | |||||
| Stacey Grier | — | — | 2,203 | 315,305 | ||||||
| Kirsten Marriner | — | — | 3,681 | 525,017 | ||||||
| (1) | The number of shares represents the exercise of nonqualified stock options granted in previous years under Clorox’s 2005 Stock Incentive Plan. |
| (2) | The dollar value realized reflects the difference between the market price of Clorox common stock upon exercise and the stock option exercise price. |
| (3) | The number of shares represents the vesting of RSUs, PSUs, and dividend equivalent units granted through participation in Clorox’s 2005 Stock Incentive Plan. |
| (4) | The dollar value realized reflects the market value of the vested shares and dividend equivalent units based on the closing price of Clorox common stock on the vesting date. For deferred shares, the dollar value realized reflects the market value of the vested shares and dividend equivalent units based on the closing price of Clorox common stock on June 30, |
| (5) |
| (6) | ||
| (7) | 4,065 of these shares have been deferred and will be distributed over five annual installments starting five years after the vesting date. |
| 76 | THE CLOROX COMPANY - 2023 Proxy Statement |
Pension BenefitsTable of Contents
Compensation Discussion and Analysis Tables
PENSION BENEFITS – Fiscal Year 2021FISCAL YEAR 2023
| Name(1) | Plan Name | Number of Years of Credited Service (#)(2) | Present Value of Accumulated Benefit ($)(3) | Payments During Last Fiscal Year ($) | ||||
| Linda Rendle | The Clorox Company Pension Plan(4) | 18 | 53,435 | — | ||||
| Benno Dorer | The Clorox Company Pension Plan(4) | 16 | — | 59,168 | ||||
| Supplemental Executive Retirement Plan(5) | 16 | 4,604,358 | — | |||||
| Cash Balance Restoration(6) | 16 | 182,769 | — | |||||
| Kevin Jacobsen | The Clorox Company Pension Plan(4) | 25 | 141,008 | — | ||||
| Cash Balance Restoration(6) | 25 | 58,154 | — | |||||
| Eric Reynolds | The Clorox Company Pension Plan(4) | 22 | 104,581 | — | ||||
| Cash Balance Restoration(6) | 22 | 2,591 | — | |||||
| Tony Matta | The Clorox Company Pension Plan(4) | — | — | — | ||||
| Kirsten Marriner | The Clorox Company Pension Plan(4) | — | — | — |
| Name(1) | Plan Name | Number of Years of Credited Service (#)(2) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||
| Linda Rendle | The Clorox Company Pension Plan(3) | 20 | 55,826 | — | ||||||
| Kevin Jacobsen | The Clorox Company Pension Plan(3) | 27 | 147,317 | — | ||||||
| Cash Balance Restoration(4) | 27 | 50,975 | — | |||||||
| Eric Reynolds | The Clorox Company Pension Plan(3) | 24 | 109,260 | — | ||||||
| Cash Balance Restoration(4) | 24 | 2,625 | — | |||||||
| Stacey Grier | The Clorox Company Pension Plan(3) | — | — | — | ||||||
| Kirsten Marriner | The Clorox Company Pension Plan(3) | — | — | — |
| (1) | Only |
| (2) | Number of years of credited service is rounded down to the nearest whole number. |
| The Pension Plan was frozen effective |
|
Compensation Discussion and Analysis Tables
| The cash balance restoration provision in the NQDC was eliminated effective |
Overview of Pension Benefits
Historically, pensionPension benefits have beenmay be paid to the NEOs under the following plans: (1) the Pension Plan (2)or the cash balance restoration provision inof the NQDC, and (3) the SERP.NQDC. Effective June 30, 2011, the Pension Plan and the cash balance restoration provision under
the NQDC were frozen. The SERP was also frozen as of June 30, 2011, for pay and offsets, while still allowing age and service credits, as most recently amended in March 2018, as described in the Retirement Plans section
In fiscal year 2023, we began to transition administration of the CD&A.Pension Plan to an insurance company specializing in pension fund management. All benefits earned under the Pension Plan will be protected during this change, meaning it will not impact the value of individual plan participants’ benefits. This transition is regulated by the IRS through a standard pension plan termination process and typically takes 18 to 24 months.
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Nonqualified Deferred Compensation Discussion and Analysis Tables
NONQUALIFIED DEFERRED COMPENSATION – Fiscal Year 2021FISCAL YEAR 2023
The following table provides information regarding the accounts of the NEOs under the NQDC and ERP in fiscal year 2021.2023.
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Balance at Last FYE ($)(4)(5) | ||||
| Linda Rendle | 93,981 | 300,977 | 295,265 | 1,323,915 | ||||
| Benno Dorer | 180,905 | 658,865 | 69,484 | 5,508,013 | ||||
| Kevin Jacobsen | 297,923 | 220,334 | 239,559 | 1,892,213 | ||||
| Eric Reynolds | 60,027 | 227,035 | 176,966 | 972,548 | ||||
| Tony Matta | 11,538 | 6,010 | 1,284 | 18,832 | ||||
| Kirsten Marriner | 45,890 | 184,160 | 177,213 | 766,571 |
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Balance at Last FYE ($)(4)(5) | |||||
| Linda Rendle | 78,750 | 264,882 | 280,813 | 2,199,820 | |||||
| Kevin Jacobsen | 85,669 | 130,382 | 325,869 | 3,130,846 | |||||
| Eric Reynolds | 103,031 | 136,250 | 194,693 | 1,572,505 | |||||
| Stacey Grier | 138,955 | 104,125 | 103,525 | 821,461 | |||||
| Kirsten Marriner | 26,000 | 106,020 | 153,575 | 1,089,339 |
| (1) | Amounts represent the annual base salary and incentive award that each executive deferred during fiscal year |
| (2) | Represents that portion of the |
| (3) | Earnings are based on an array of investment options that generally mirror the 401(k) Plan. Earnings vary based on participant investment elections. |
| (4) | Reflects aggregate balances under the restoration provision of the NQDC |
| (5) | The executive and registrant contribution total amounts in the table below are also reported as compensation in the Summary Compensation Table in the years indicated: |
| Fiscal Year | Linda Rendle | Benno Dorer | Kevin Jacobsen | Eric Reynolds | Tony Matta | Kirsten Marriner | |||||||||||||
| 2021 | $ | 394,957 | $ | 839,770 | $ | 518,257 | $ | 287,062 | $ | 17,548 | $ | 230,049 | |||||||
| 2020 | 104,278 | 334,391 | 98,548 | 83,960 | |||||||||||||||
| 2019 | $ | 83,562 | $ | 329,899 | $ | 68,694 | $ | 63,278 | |||||||||||
| Fiscal Year | Linda Rendle | Kevin Jacobsen | Eric Reynolds | Stacey Grier | Kirsten Marriner | |||||||
| 2023 | 343,632 | 216,051 | 239,281 | 243,080 | 132,020 | |||||||
| 2022 | 468,714 | 814,687 | 376,651 | 176,628 | ||||||||
| 2021 | 394,957 | 518,257 | 287,062 | 230,049 | ||||||||
Overview of Nonqualified Deferred Compensation Plans
Executive Retirement Plan
Our executive officers are eligible for participation in the ERP. The ERP provides that Clorox will make an annual contribution of 5% of an eligible participant’s base salary plus annual incentive payment into the ERP.
Clorox contributions vest over a three-year period and individuals are considered retirement-eligible under the ERP upon attainment of age 62 with 10 years of service with Clorox. An eligible participant may elect distribution in a lump sum or up to 15 annual installments upon a qualifying payment event.
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Compensation Discussion and Analysis Tables
Nonqualified Deferred Compensation Plan
Under the NQDC, participants may voluntarily defer the receipt of up to 50% of their base salary and up to 100% of their annual incentive award. In addition, the NQDC offers a 401(k) restoration provision for those who defer at a required level. All Clorox retirement401(k) contributions are made in the form of (i) a fixed 6% employer annual contribution and (ii) an employer match of up to 4% of pay into the 401(k) Plan, subject to IRC limits. Contributions on eligible compensation that exceed the IRC limits are contributed into a participant’s NQDC account under the 401(k) restoration provision.
Participants in the NQDC may elect to receive benefits from the NQDC either in a lump sum or up to 15 annual payments upon a qualifying payment event. Participants may choose from an array of investment crediting rates that generally mirror the investment fund options available in the 401(k) Plan. The NQDC uses the same benefit formulas, types of compensation to determine benefits, and vesting requirements as the 401(k) Plan. The responsibility to pay benefits under the NQDC is an unfunded and unsecured obligation of Clorox.
Potential Payments Upon TerminationExecutive Retirement Plan
Our executive officers are eligible for participation in the ERP. The ERP provides that Clorox will make an annual contribution of 5% of an eligible participant’s base salary plus annual incentive payment into the ERP.
Clorox contributions vest over a three-year period and individuals are considered retirement-eligible under the ERP upon attainment of age 62 with 10 years of service with Clorox. ERP participants may elect distribution in a lump sum or Change in Controlup to 15 annual installments upon a qualifying payment event.
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Compensation Discussion and Analysis Tables
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL – Fiscal Year 2021FISCAL YEAR 2023
The following table reflects the estimated amount of compensation payable to each of our NEOs upon termination of the NEO’s employment under various scenarios. The amounts exclude earned amounts such as vested or accrued benefits.
The amounts shown are calculated using an assumed termination date effective as of and the closing trading price of our common stock of $179.91 on, the last business day of fiscal year 20212023 (June 30, 2021)2023) and the closing price of our common stock on that date ($159.04). Although the calculations are intended to provide reasonable estimates of the potential compensation
payable upon termination, they are based on assumptions outlined in the footnotes of the table and may not represent the actual amount the NEO would receive if an eligible termination event were to occur.
The table does not include compensation or benefits provided under plans or arrangements that are generally available to all salaried employees. Amounts reflected for change in control assume that each NEO is involuntarily terminated by Clorox without cause or voluntarily terminates for good reason within two years after a change in control.
| Name and Benefits | Involuntary Termination Without Cause ($) | Involuntary Termination After Change In Control ($) | Resignation or Retirement ($) | Disability or Death ($) | ||||||||
| Linda Rendle | ||||||||||||
| Cash Payment | 6,181,250 | (1) | 9,675,000 | (2) | — | (3) | — | (4) | ||||
| Stock Options | 4,180,879 | (5) | 5,674,743 | (6) | — | 5,879,968 | (7) | |||||
| Restricted Stock Units | — | 847,016 | (8) | — | 847,016 | (8) | ||||||
| Performance Share Units | — | 4,545,288 | (9) | — | 4,545,288 | (10) | ||||||
| Retirement Plan Benefits | — | — | — | — | ||||||||
| Health & Welfare Benefits | 36,720 | (11) | 55,080 | (12) | — | — | ||||||
| Financial Planning | — | 16,500 | (13) | — | — | |||||||
| Total Estimated Value | 10,398,849 | 20,813,626 | — | 11,272,272 | ||||||||
| Kevin Jacobsen | ||||||||||||
| Cash Payment | 2,030,000 | (14) | 3,290,000 | (15) | — | (3) | — | (4) | ||||
| Stock Options | 2,866,651 | (5) | 2,866,651 | (6) | 2,866,651 | (5) | 2,866,651 | (7) | ||||
| Restricted Stock Units | 288,216 | (16) | 288,216 | (8) | 288,216 | (16) | 288,216 | (8) | ||||
| Performance Share Units | 1,675,754 | (17) | 2,544,395 | (9) | 1,675,754 | (17) | 2,544,395 | (10) | ||||
| Retirement Plan Benefits | — | — | — | — | ||||||||
| Health & Welfare Benefits | 37,944 | (11) | 37,944 | (12) | — | — | ||||||
| Financial Planning | — | 16,500 | (13) | — | — | |||||||
| Total Estimated Value | 6,898,565 | 9,043,705 | 4,830,621 | 5,699,261 | ||||||||
| Name and Benefits | Involuntary | Involuntary | Resignation or | Disability or | |||||||||||||
| Linda Rendle | |||||||||||||||||
| Cash Payment | 6,609,375 | (1) | 10,350,000 | (2) | — | (3) | — | (4) | |||||||||
| Stock Options | 6,221,095 | (5) | 6,221,095 | (6) | 6,221,095 | (5) | 6,221,095 | (7) | |||||||||
| Restricted Stock Units | 2,956,995 | (8) | 2,956,995 | (9) | 2,956,995 | (8) | 2,956,995 | (9) | |||||||||
| Performance Share Units | 6,548,531 | (10) | 11,026,136 | (11) | 6,548,531 | (10) | 11,026,136 | (12) | |||||||||
| Health & Welfare Benefits | 31,848 | (13) | 47,771 | (14) | — | — | |||||||||||
| Financial Planning | — | 17,490 | (15) | — | — | ||||||||||||
| Total Estimated Value | 22,367,844 | 30,619,488 | 15,726,622 | 20,204,227 | |||||||||||||
| Kevin Jacobsen | |||||||||||||||||
| Cash Payment | 2,183,000 | (16) | 3,589,000 | (17) | — | (3) | — | (4) | |||||||||
| Stock Options | 2,638,921 | (5) | 2,638,921 | (6) | 2,638,921 | (5) | 2,638,921 | (7) | |||||||||
| Restricted Stock Units | 930,074 | (8) | 930,074 | (9) | 930,074 | (8) | 930,074 | (9) | |||||||||
| Performance Share Units | 2,148,809 | (10) | 3,569,705 | (11) | 2,148,809 | (10) | 3,569,705 | (12) | |||||||||
| Health & Welfare Benefits | 31,795 | (13) | 31,795 | (14) | — | — | |||||||||||
| Financial Planning | — | 17,490 | (15) | — | — | ||||||||||||
| Total Estimated Value | 7,932,599 | 10,776,985 | 5,717,805 | 7,138,700 | |||||||||||||
| Eric Reynolds | |||||||||||||||||
| Cash Payment | 2,257,000 | (16) | 3,811,000 | (17) | — | (3) | — | (4) | |||||||||
| Stock Options | 3,924,575 | (5) | 3,924,575 | (6) | 3,924,575 | (5) | 3,924,575 | (7) | |||||||||
| Restricted Stock Units | 1,075,951 | (8) | 1,075,951 | (9) | 1,075,951 | (8) | 1,075,951 | (9) | |||||||||
| Performance Share Units | 2,533,407 | (10) | 4,153,653 | (11) | 2,533,407 | (10) | 4,153,653 | (12) | |||||||||
| Health & Welfare Benefits | 11,436 | (13) | 11,436 | (14) | — | — | |||||||||||
| Financial Planning | — | 16,500 | (15) | — | — | ||||||||||||
| Total Estimated Value | 9,802,369 | 12,993,115 | 7,533,933 | 9,154,179 | |||||||||||||
| Stacey Grier | |||||||||||||||||
| Cash Payment | 1,805,625 | (16) | 3,172,500 | (17) | — | (3) | — | (4) | |||||||||
| Stock Options | 1,110,592 | (5) | 1,110,592 | (6) | 1,110,592 | (5) | 1,110,592 | (7) | |||||||||
| Restricted Stock Units | 616,613 | (8) | 616,613 | (9) | 616,613 | (8) | 616,613 | (9) | |||||||||
| Performance Share Units | 1,140,972 | (10) | 1,140,972 | (11) | 1,140,972 | (10) | 1,140,972 | (12) | |||||||||
| Health & Welfare Benefits | 22,396 | (13) | 22,396 | (14) | — | — | |||||||||||
| Financial Planning | — | 17,490 | (15) | — | — | ||||||||||||
| Total Estimated Value | 4,696,198 | 6,080,563 | 2,868,177 | 2,868,177 | |||||||||||||
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Compensation Discussion and Analysis Tables
| Name and Benefits | Involuntary Termination Without Cause ($) | Involuntary Termination After Change In Control ($) | Resignation or Retirement ($) | Disability or Death ($) | ||||||||
| Eric Reynolds | ||||||||||||
| Cash Payment | 2,100,000 | (14) | 3,500,000 | (15) | — | (3) | — | (4) | ||||
| Stock Options | 4,540,372 | (5) | 4,540,372 | (6) | 4,540,372 | (5) | 4,540,372 | (7) | ||||
| Restricted Stock Units | 355,682 | (16) | 355,682 | (8) | 355,682 | (16) | 355,682 | (8) | ||||
| Performance Share Units | 1,448,184 | (17) | 2,434,004 | (9) | 1,448,184 | (17) | 2,434,004 | (10) | ||||
| Retirement Plan Benefits | — | — | — | — | ||||||||
| Health & Welfare Benefits | 13,284 | (11) | 13,284 | (12) | — | — | ||||||
| Financial Planning | — | 16,500 | (13) | — | — | |||||||
| Total Estimated Value | 8,457,522 | 10,859,842 | 6,344,238 | 7,330,058 | ||||||||
| Tony Matta | ||||||||||||
| Cash Payment | 1,648,438 | (14) | 2,452,885 | (15) | — | (3) | — | (4) | ||||
| Stock Options | — | — | (6) | — | 32,248 | (7) | ||||||
| Restricted Stock Units | — | 1,462,488 | (8) | — | 1,462,488 | (8) | ||||||
| Performance Share Units | — | 525,716 | (9) | — | 525,716 | (10) | ||||||
| Retirement Plan Benefits | — | — | — | — | ||||||||
| Health & Welfare Benefits | 26,274 | (11) | 26,274 | (12) | — | — | ||||||
| Financial Planning | — | 16,500 | (13) | — | — | |||||||
| Total Estimated Value | 1,674,712 | 4,483,863 | — | 2,020,451 | ||||||||
| Kirsten Marriner | ||||||||||||
| Cash Payment | 1,601,563 | (14) | 2,656,250 | (15) | — | (3) | — | (4) | ||||
| Stock Options | 411,694 | (5) | 1,384,894 | (6) | — | 1,519,452 | (7) | |||||
| Restricted Stock Units | — | 203,298 | (8) | — | 203,298 | (8) | ||||||
| Performance Share Units | — | 1,729,829 | (9) | — | 1,729,829 | (10) | ||||||
| Retirement Plan Benefits | — | — | — | — | ||||||||
| Health & Welfare Benefits | 36,960 | (11) | 36,960 | (12) | — | — | ||||||
| Financial Planning | — | 16,500 | (13) | — | — | |||||||
| Total Estimated Value | 2,050,217 | 6,027,731 | — | 3,452,579 | ||||||||
| Name and Benefits | Involuntary | Involuntary | Resignation or | Disability or | |||||||||||||
| Kirsten Marriner | |||||||||||||||||
| Cash Payment | 1,714,375 | (16) | 2,957,500 | (17) | — | (3) | — | (4) | |||||||||
| Stock Options | 343,360 | (5) | 561,515 | (6) | 343,360 | (5) | 1,135,051 | (7) | |||||||||
| Restricted Stock Units | — | 641,368 | (9) | — | 641,368 | (9) | |||||||||||
| Performance Share Units | — | 2,414,034 | (11) | — | 2,414,034 | (12) | |||||||||||
| Health & Welfare Benefits | 31,795 | (13) | 31,795 | (14) | — | — | |||||||||||
| Financial Planning | — | 16,500 | (15) | — | — | ||||||||||||
| Total Estimated Value | 2,089,530 | 6,622,711 | 343,360 | 4,190,452 | |||||||||||||
| (1) | This amount reflects two times Ms. Rendle’s current base salary plus two times 75% of her target AIP award. In addition, the amount includes 100% of her current year target AIP award. Since the assumed termination date for purposes of this table is June 30, 2023, the amount of the current year target AIP award |
| (2) | This amount |
| (3) | Ms. Rendle and Messrs. Jacobsen and Reynolds are eligible for retirement, including a |
| (4) | NEOs whose termination is the result of disability or death are eligible to receive a |
| (5) | For Mses. Rendle and Grier and Messrs. Jacobsen and Reynolds, who are retirement-eligible under the terms of their equity awards, this amount represents the expected value of |
| (6) | For Mses. Rendle and Grier and Messrs. Jacobsen and Reynolds, who are retirement-eligible under the terms of their equity awards, this amount represents the expected value of |
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Compensation Discussion and Analysis Tables
| (7) | For Mses. Rendle and Grier and Messrs. Jacobsen and Reynolds, who are retirement-eligible under the terms of their equity awards, this amount represents the expected value of |
| (8) | Mses. Rendle and Grier and Messrs. Jacobsen and Reynolds are retirement-eligible under the terms of their equity awards and all unvested RSUs held longer than six months will continue to vest after termination. This amount represents the expected value of the continued vesting of such RSUs. |
| (9) | This amount represents the value of |
(10) | Mses. Rendle and Grier and Messrs. Jacobsen and Reynolds are eligible for retirement under the terms of their equity awards and are entitled to receive a pro rata portion of all PSUs | |
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| (11) | PSUs will vest based on actual performance through the date of the change in control. This amount assumes a prorated target payout and is valued at the closing price of Clorox common stock on June 30, 2023 of $159.04. |
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Compensation Discussion and Analysis Tables
| (12) | This amount represents the value of accelerated vesting of PSUs upon death or disability, assuming a target payout and valued at the closing price of Clorox common stock on June 30, 2023 of $159.04. Upon termination for death or disability, the entire PSU award will vest immediately. The actual payout will be determined after the end of the performance period, based on actual performance. |
| (13) | This amount represents the estimated cost to Clorox of providing welfare benefits, including medical, dental, and vision, for the two-year period following termination. |
(14) | This amount represents the estimated cost to Clorox of providing welfare benefits, including medical, dental, and vision, for the two-year period (three-year period for Ms. Rendle) following a qualifying termination after a change in control. |
(15) | This amount represents the cost of providing financial planning for the year of termination. Value reflects vendor fee or reimbursement limit, based on which benefit each NEO chose for fiscal year 2023. |
(16) | This amount reflects two times the NEO’s current base salary. In addition, for Ms. Rendle and Messrs. Jacobsen and Reynolds, who are eligible for retirement, this amount includes 100% of their current year target AIP award, |
(17) | This amount represents two times the | |
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Retirement Payments to Former NEO
On February 15, 2021, Mr. Dorer retired from employment with Clorox. As a result, Mr. Dorer received benefits consistent with a retirement as described below. The value of benefits received due to such separation, calculated as of February 15, 2021, in a manner consistent with the calculations for resignation in the “Potential Payments” table, was $18,573,973.
Potential Payments Upon Termination
Severance Plan
Under the terms of the Severance Plan, our NEOs are eligible to receive benefits if their employment is terminated by Clorox without cause, other than in connection with a change in control. No benefits are payable under the terms of the Severance Plan if Clorox terminates the employment of the NEO for cause or if the NEO voluntarily resigns.
Regardless of the nature of any NEO’s termination, NEOs retain amounts earned over the course of their employment prior to the termination event, such as balances under the NQDC, vested and accrued retirement benefits, and previously vested stock
options, except as outlined below under Termination for Misconduct. For further information about amounts previously earned, see the Summary Compensation Table and Outstanding Equity Awards at Fiscal 2020 Year-End Table, , Option Exercises and Stock Vested Table, , Pension Benefits, Table, and Nonqualified Deferred Compensation Table. tables.
Under the Severance Plan, each NEO agrees to return and not to use or disclose proprietary information of Clorox and, for two years following any such termination, the NEO is also prohibited from soliciting for employment any employee of Clorox.
Termination benefits under the Severance Plan for our NEOs are as follows:
InvoluntaryInvoluntary Termination Without Cause.If Clorox terminates the employment of a NEO other than the CEO without cause, the Severance Plan entitles the NEO to receive a lump-sum severance payment after termination equal to two times the NEO’s then-current base salary. In the case of the CEO, the severance amount is equal to the sum of (i) two times the CEO’s base salary and (ii) two times the CEO’s target annual bonus short-term incentive for that fiscal year,, multiplied by 75%.
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Compensation Discussion and Analysis Tables
Under the Severance Plan, NEOs other than the CEO are also entitled to an amount equal to 75% of their AIP awards for the fiscal year in which they are terminated.terminated, prorated to the date of termination. The CEO is entitled to an amount equal to 100% of her AIP award for the fiscal year in which she was terminated.terminated, prorated to her date of termination. In each case, the AIP award calculation uses the actual Company Multiplier for the fiscal year in which the executive is terminated assumes an Individual Multiplier of 100%, and is proratedpaid after the end of the fiscal year at the same time AIP awards are paid to the date of termination.active employees.
NEOs who are retirement-eligible under the terms of the AIP are eligible for either the treatment under the Severance Plan (75%) for NEOs or 100% for the CEO) or retirement treatment (100%)(an Individual Multiplier determined at the discretion of Clorox) for purposes of the AIP award payout. The MDCC decides which treatment to apply; in either case, the AIP award payout would remain prorated to the date of termination.
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Compensation Discussion and Analysis Tables
The Severance Plan provides thatNEOs with a NEO is entitled to continue to participatelump-sum cash payment in lieu of continued participation in our medical, vision, and dental insurance programs for up to two years followingprograms. The cash payment represents the value of the monthly employer contribution toward those benefits in which the NEO was enrolled at termination, on the same terms as active employees.times 24 months. In addition, at the end of this coverage, a NEONEOs will be eligible to participate in any combination of our medical, vision, and dental plans offered to former employees who retire at age 55 or older having completed at least 10 years of service, on the same terms as such other former employees, provided the NEO has completed at least 10 years of service.employees. Where applicable, this coverage continues until the NEO turns age 65. Thereafter, the NEO may participate in our general retiree health plan as it may exist in the future, if otherwise eligible. If the NEO will be age 55 or older and will have completed at least 10 years of service at the end of, and including, the two-year period following termination, the NEO will be deemed to be age 55 and to have 10 years of service under any pre-65 retiree health plan as well as the SERP.plan.
Severance-related benefits are provided only if the NEO executes a general release prepared by Clorox.
Termination Due to Retirement. Under Clorox’s policy applicable to all employees, upon retirement NEOs are entitled to their salary through the last day of employment and are eligible for a pro-rata portion of the AIP award for the fiscal year in which their retirement occurs. Based on the provisions of the respective plans, they also will be eligible to receive SERP, ERP, and other benefits under applicable Clorox retirement plans. In addition to the amounts that the NEO has earned or accrued over the course of their employment under our qualified and nonqualified plans, a NEO who is at least age 55 with 10 years of service or who has 20 years of service
regardless of age on the date of termination is eligible to receive retirement-related benefits as described in the Termination Due to Retirement section below.
Severance-related benefits are provided only if the NEO executes a general release prepared by Clorox.
Termination Due to Retirement. Under Clorox’s policies applicable to all employees, upon retirement, NEOs are eligible for benefits under the long-term incentive program. Stock options held for longer than six months will vestAIP, LTI, ERP, 401(k), and other applicable Clorox benefit plans, including our retiree health plan as it may exist in full in accordance with the original vesting schedule and remain exercisable for five years following the NEO’s retirement or until the expiration date, whichever is sooner, and PSUs will be paid out on a pro-rata basis at the end of the relevant performance periodfuture, if otherwise eligible based on the actual levelprovisions of performance achieved during that period. Beginningthe respective plans.
A NEO who, on the date of termination, is at least age 55 with 10 years of service, has 20 years of service regardless of age, or is at least age 65 regardless of service is eligible to receive a pro rata portion of the AIP award for the fiscal year 2021 awards, RSUs held for longer than six months will vest in full in accordancewhich retirement occurs.
A NEO who is at least age 55 with 10 years of service or who has 20 years of service regardless of age on the original vesting schedule.date of termination is eligible to receive retirement-related treatment of unvested LTI awards:
| • | RSUs and stock options held for at least six months will continue to vest in accordance with the original vesting schedule. Vested stock options will remain exercisable for five years following the NEO’s retirement or until the expiration date, whichever is earlier. |
| • | PSUs will be paid out on a pro rata basis at the end of the relevant performance period based on the actual level of performance achieved during that period. |
Termination Due to Disability or Death.If a NEO begins to receive benefits under our long-term disability plan, Clorox may terminate the NEO’s employment at any time, in which case the NEO will receive their salary through the date of their termination and will also be entitled to a pro-ratapro rata portion of their actualthe AIP award and a pro rata portion of the NEO’s 6% annual contribution to the 401(k) plan for the fiscal year of termination. Stock options and RSUs will vest in full, and all vested options will remain exercisable for an additionalone year following the NEO’s disability or until the expiration date, whichever is earlier, and allearlier. All PSUs will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period.
Under Clorox’s policy applicable to all employees, if a NEO’s employment is terminated due to death, the NEO’s beneficiary or estate is entitled to (i) the NEO’s salary through the date of death, (ii) a pro-ratapro rata portion of the NEO’s actual AIP award for the fiscal year of death, (iii)(ii) a pro-ratapro rata portion of the NEO’s 6% annual contribution to the 401(k) plan for the fiscal year of death, and (iv)(iii) benefits pursuant to our life insurance plan. Stock options and RSUs will vest in full, and all vested options will remain exercisable for an additionalone year following the NEO’s death or until the expiration date, whichever is earlier, and allearlier. All PSUs will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period.
Termination for Misconduct. Misconduct. Clorox may terminate a NEO’s employment for misconduct at any time without notice. Upon the NEO’s termination for misconduct, the NEO is entitled to their salary through the date of their termination but is not entitled to any AIP award for the fiscal year in which their termination for misconduct occurs. “Misconduct” under the Severance Plan means any act or omission of the NEO through which the NEO: (i) willfully neglects significant duties he or she is required to perform or willfully violates a material Clorox policy, and, after being warned in
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Compensation Discussion and Analysis Tables
writing, continues to neglect such duties or continues to violate the specified Clorox
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Compensation Discussion and Analysis Tables
policy; (ii) commits a material act of dishonesty, fraud, misrepresentation or other act of moral turpitude; (iii) acts (or omits to act) with gross negligence in the course of employment; (iv) fails to obey a lawful direction of the Board or, for NEOs other than the CEO, a corporate officer to whom he or she reports, directly or indirectly; or (v) acts in any other manner inconsistent with Clorox’s best interests and values.
All unvested and outstanding stock options, RSUs, and RSUs awardsPSUs are forfeited upon a termination for misconduct. In addition, any retirement-related benefits a NEO would normally receive related to PSUslong-term incentive awards are also forfeited upon a termination for misconduct.
Voluntary Termination. Termination. A NEO may resign from employment at any time. Upon a NEO’s voluntary resignation, theother than when such NEO is entitled to their salary througheligible for retirement as described above, the date of termination butNEO is not entitled to any AIP award for the fiscal year of termination. All unvested outstanding stock options, RSUs, and PSUs are forfeited upon voluntary termination. Previously vested stock options will remain exercisable for 90 days after resignation or until the expiration date, whichever is earlier.
Potential Payments Upon Change in Control
Executive Change in Control Severance Plan
Under the CIC Plan, executives are eligible for change in control severance benefits, subject to the execution of a waiver and release, if they are terminated without cause or resign for good reason as defined under the CIC Plan during (i) the two-year period following a change in control or (ii) a period of up to one year prior to the change in control in limited circumstances where the executive’s termination is directly related to or in anticipation of a change in control.
The severance benefits under the CIC Plan include (i) a lump-sum severance payment equal to two times—or, in the case of the CEO, three times—the sum of (a) the executive’s base salary and (b) average AIP award for the three completed fiscal years prior to termination, (ii) a lump-sum amount equal to the difference between the actuarial equivalent of the benefit the NEO would have been entitled to receive if their employment had continued until the second anniversary of the date of termination and the actuarial equivalent of the aggregate benefits paid or payable as of the date of termination under the qualified and nonqualified retirement plans, (iii) a payment equal to the cost of applicable healthcare benefits for a maximum of two—or, in the case of the CEO, three—years following a severance-qualifying
termination, (iv) continued financial planning services for the year of termination, (v) vesting of all outstanding equity awards granted prior to the change in control, and (vi) an amount equal to the average AIP award for the three completed fiscal years preceding termination, prorated for the number of days employed in the fiscal year during which termination occurred.
In addition, the CIC Plan provides for an excise tax cutback such that the excise tax under Sections 280G and 4999 of the IRC would not apply, unless the executive would receive a greater amount of severance benefits on an after-tax basis without a cutback, in which case the cutback would not apply. The CIC Plan permits the MDCC to make changes to the CIC Plan that are adverse to covered executives with 12 months’ advance notice. If a change in control of Clorox occurs during that 12-month period, then such changes would not become effective. Each participant under the CIC Plan is subject to certain restrictive covenants including confidentiality and non-disparagement provisions and a non-solicitation and non-diversion of business provision during the term of their employment and for two years thereafter.
“Cause” is generally defined as (i) willful and continued failure to substantially perform duties upon written demand or (ii) willfully engaging in illegal conduct or gross misconduct that is materially and demonstrably injurious to Clorox. A termination for cause requires a vote of 75% of the Board at a meeting after notice to the executive has been given and the executive has had an opportunity to be heard.
“Good Reason” is generally defined as (i) an assignment of duties inconsistent in any material respects with the executive officer’s position (including offices and reporting requirements), authority, duties, or responsibilities (ii) any failure to substantially comply with, or any reduction by Clorox in, any of
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Compensation Discussion and Analysis Tables
the material provisions of compensation plans, programs, agreements, or arrangements as in effect immediately prior to the change in control, including any material reduction in base salary, cash incentive compensation target bonus opportunity, equity compensation opportunity in the aggregate, or employee benefits or perquisites in the aggregate, (iii) relocation of principal place of employment that increases the executive officer’s commuting distance by more than 35 miles, (iv) termination of employment by Clorox other than as expressly permitted by the CIC Plan, or (v) failure of a successor company to assume the CIC Plan.
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| Compensation Discussion and Analysis Tables |
Compensation Discussion and Analysis Tables
Fiscal Year 2021 CEO2023 PEO Pay Ratio
Under rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), we are required to disclose the ratio of the annual total compensation of our CEOPrincipal Executive Officer (PEO) to the annual total compensation of our median compensated employee. We calculated annual total compensation for that employee using the same methodology we use for our NEOs as set forth in the Summary Compensation Table in this proxy statement.
• | Total compensation for our median compensated employee was |
• | Our |
The pay ratio reported here is a reasonable estimate calculated in a manner consistent with SEC rules.
To identify our median employee for purposes of this disclosure, we first determined the pool of all individuals employed by us, other than the CEO, on June 20, 2019, and reviewed total cash compensation earned by each such individual during fiscal year 2019. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation and no exclusions were used during this process. We selected our median
employee from that pool in accordance with the SEC rules as explained in our proxy statement for fiscal year 2019. We believe there has been no change to our employee population and compensation arrangements, or the circumstances of the median compensated employee used in fiscal years 2019 and 2020year 2022, that we believe would result in a significant change to our pay ratio disclosure. Accordingly, as permitted under SEC rules, we are using the same median employee to calculate our fiscal year 2021 CEO2023 PEO pay ratio.
To identify our median compensated employee for purposes of this disclosure, we first determined the pool of all individuals employed by us, other than the PEO, on June 30, 2022. Subsequently, we reviewed the total cash compensation earned by each such individual during fiscal year 2022. All employees (full-time, part-time, and temporary) other than the PEO were included in this analysis. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation and no exclusions were used during this process. Finally, we selected our median compensated employee from that pool in accordance with the SEC rules as explained in our proxy statement for fiscal year 2022.
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies, including our compensation peer group, may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
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| Compensation Discussion and Analysis Tables |
Fiscal Year 2023 Pay Versus Performance
Under rules adopted by the SEC under the Dodd-Frank Act (the pay versus performance or PVP rules), we are providing the following information about the relationship between the SEC’s specified definition of pay, referred to as Compensation Actually Paid (CAP), and certain performance measures as defined by the SEC.
The MDCC does not use CAP as the basis for making compensation decisions, nor does it use the performance measures prescribed by the SEC to assess performance under Clorox’s short-term or long-term incentive plans. The dollar amounts for “compensation actually paid” in the Pay Versus Performance Table below do not reflect the actual amount of compensation earned, realized, or received by the PEO or any individual NEO during the applicable fiscal years. A significant portion of the value reflected in the table remains subject to forfeiture if underlying vesting conditions for equity awards are not achieved. For information regarding the decisions made by the MDCC regarding executives’ compensation for each fiscal year, see the Compensation Discussion and Analysis section in this proxy statement and the tables and narrative explanations reporting compensation for the fiscal years covered in the table.
Refer to the Executive Compensation Philosophy and Fiscal Year 2023 Compensation of Our Named Executive Officers sections of the CD&A for additional details on how we align pay with performance.
The information in this Pay Versus Performance section shall not be deemed to be incorporated by reference into any filing by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this section by reference in such filing.
Most Important Financial Performance Measures Linking Pay and Performance During FY23
In accordance with the PVP rules, we have listed below the most important financial measures we used to link pay to performance for fiscal year 2023.
Individual Performance Considerations
While our performance relative to these measures determines our AIP funding and PSU payouts under our long-term incentive plan, the MDCC also considers other factors when determining compensation for our NEOs, such as job responsibilities, tenure, experience, external market positioning, performance over time, and retention risk.
The MDCC completes a rigorous performance assessment for each NEO and holistically considers strategic, operational, and financial achievements during the year—including achievements toward ESG goals—when making individual pay decisions. See the Annual Incentives section of the CD&A for additional details on the individual performance considerations the MDCC used to determine fiscal year 2023 compensation.
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Compensation Discussion and Analysis Tables
| Pay Versus Performance Table – Fiscal Year 2023 | |||||||||||
| Year(1,2) | Summary Compensation Table Total for PEO (Rendle) | Compensation Actually Paid(3) to PEO (Rendle) | Summary Compensation Table Total for PEO (Dorer) | Compensation Actually Paid(3) to PEO (Dorer) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid(3) to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based on: | ||||
| Total Shareholder Return(4) | Peer Group Total Shareholder Return(5) | Net Income ($M) | Economic Profit(6) ($M) | ||||||||
| FY23 | 11,649,650 | 19,409,637 | — | — | 4,049,242 | 5,532,135 | 78.61 | 125.81 | 161 | 397 | |
| FY22 | 8,534,808 | 7,087,568 | — | — | 3,199,457 | 2,503,718 | 67.49 | 118.44 | 471 | 282 | |
| FY21 | 7,899,309 | 4,551,818 | 3,366,210 | -1,467,203 | 3,354,685 | 1,964,538 | 83.75 | 112.34 | 719 | 672 | |
| (1) | Ms. Rendle was PEO for the entirety of fiscal years 2023 and 2022. Ms. Rendle succeeded Mr. Dorer as PEO on September 14, 2020; each was a PEO for part of fiscal year 2021. | ||||||||||
| (2) | Non-PEO NEOs were Messrs. Jacobsen and Reynolds and Mses. Grier and Marriner for fiscal year 2023; Messrs. Jacobsen and Reynolds and Mses. Marriner and Rebecca Dunphey for fiscal year 2022; and Messrs. Jacobsen, Reynolds, and Tony Matta and Ms. Marriner for fiscal year 2021. | ||||||||||
| (3) | See following table for additional details about the calculation of the CAP value. | ||||||||||
| (4) | Total Shareholder Return (TSR) assumes an initial $100 investment in Clorox stock beginning on June 30, 2020. TSR is cumulative, with the value determined at the end of each applicable fiscal year, calculated in accordance with Item 201(e) of Regulation S-K, as modified by the PVP rules. | ||||||||||
| (5) | The peer group represents a composite index composed of the Standard & Poor’s Household Products Index and the Standard & Poor’s Housewares & Specialties Index, which is used by Clorox for purposes of compliance with Item 201(e) of Regulation S-K. Peer group TSR is calculated in accordance with Item 201(e) of Regulation S-K, as modified by the PVP rules. | ||||||||||
| (6) | The SEC requires disclosure of a company-selected measure, representing the most important financial measure linking CAP for the current fiscal year to company performance. The company-selected measure for fiscal year 2023 is Economic Profit, a non-GAAP financial measure. Refer to pg A-79 of Appendix A for a reconciliation to the most directly comparable GAAP financial measure. | ||||||||||
The following table provides additional information on how CAP for each reporting year was determined, starting with Summary Compensation Table (SCT) total compensation and applying each of the required adjustments in accordance with PVP rules.
| SCT Total Compensation | Value of Pension Benefits from SCT | Value of Equity from SCT | Value of Pension Benefits per CAP Definition(1) | Fair Value of Equity Granted During the Fiscal Year | Fair Value of Equity Forfeited During the Fiscal Year | Change in Fair Value of Unvested Equity(2) | Change in Fair Value of Equity Vested During the Fiscal Year(2) | Value of Dividends Accrued or Paid on Stock Awards(3) | CAP | ||||||||||||
| PEO (Rendle) | |||||||||||||||||||||
| FY23 | 11,649,650 | -1,293 | -6,999,700 | — | 13,043,389 | — | 1,264,886 | -39,637 | 492,341 | 19,409,637 | |||||||||||
| FY22 | 8,534,808 | -1,098 | -6,149,804 | -6,321 | 6,410,785 | — | -1,526,595 | -395,494 | 221,287 | 7,087,568 | |||||||||||
| FY21 | 7,899,309 | -833 | -4,999,933 | — | 3,447,150 | — | -1,746,565 | -176,841 | 129,531 | 4,551,818 | |||||||||||
| PEO (Dorer) | |||||||||||||||||||||
| FY21 | 3,366,210 | — | -499,943 | — | 423,508 | -2,444,751 | 141,924 | -5,150,182 | 251,279 | -1,467,203 | |||||||||||
| Average of Non-PEO NEOs | |||||||||||||||||||||
| FY23 | 4,049,242 | -2,230 | -1,949,830 | — | 2,934,644 | — | 365,472 | -3,378 | 138,215 | 5,532,135 | |||||||||||
| FY22 | 3,199,457 | -461 | -2,024,840 | -11,336 | 2,117,397 | — | -600,710 | -235,939 | 60,151 | 2,503,718 | |||||||||||
| FY21 | 3,354,685 | -2,417 | -1,875,338 | — | 1,358,936 | — | -889,755 | -42,468 | 60,895 | 1,964,538 | |||||||||||
| (1) | Over the last three fiscal years, service cost has been zero and there has been only one prior service credit for The Clorox Company Pension Plan. The prior service credit represents the decrease in the benefit obligation measured as of June 30, 2022 relating to the change in the plan’s cash balance interest crediting rate and annuity conversion following the plan’s termination effective September 30, 2022. |
| (2) | The change in fair values for unvested stock and option awards were calculated on each of the required measurement dates using assumptions based on criteria consistent with those used for grant date fair value calculations and in accordance with the methodology used for financial reporting purposes. The fair values of RSUs were determined based on the closing price of Clorox common stock on the measurement dates. Prior to the final measurement date, the fair values of unvested PSUs were determined based on the probable outcome of performance-based vesting |
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Compensation Discussion and Analysis Tables
conditions and the closing price of Clorox common stock on each measurement date. On the final measurement date, the fair value of PSUs was determined based on the approved payout factor and the closing price of Clorox common stock on that date. The fair values of stock options were determined using a Black-Scholes option pricing model with corresponding assumptions (risk-free interest rate, dividend yield, expected volatility factor, and expected option life) as of the measurement dates.
| (3) | These amounts represent the dollar value of any dividends or other earnings accrued or paid on stock awards during the applicable fiscal year, or prior to the vesting date for awards vested during the fiscal year, not otherwise reflected in the fair value of such awards or included in any other component of total compensation for the applicable fiscal year. |
The charts below reflect the relationship between the PEO and Average NEO CAP, Clorox TSR, and TSR for our peer group. We do not use TSR as a metric in our incentive plans. However, our PSU metric—growth in EP during a three-year performance period—is a key driver of changes in shareholder value and a principal determinant of TSR.
 |  |
Relationship Between CAP and Net Income (GAAP)
The charts below reflect the relationship between the PEO and Average NEO CAP and Clorox’s GAAP net income. We do not use net income as a metric in our incentive plans.
 |  |
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Compensation Discussion and Analysis Tables
Relationship Between CAP and Economic Profit (our Company-Selected Measure)
The charts below reflect the relationship between the PEO and Average NEO CAP and EP. We consider EP to be the most important financial measure linking pay to performance in fiscal year 2023 because awards under our long-term incentive plan are the largest component of NEO compensation, PSUs make up 60% of long-term incentive plan awards, and EP is the basis of our PSU measure (growth in EP). EP is a measure we commonly evaluate and communicate as a key indication of our business performance and is substantially correlated with our stock price performance, and therefore to CAP. Unlike our PSU measure, EP is a single-year measure, meeting the SEC’s rules for the PVP table.
 |  |
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| Equity Compensation Plan Information |
The following table sets out the number of shares of common stock to be issued upon exercise of outstanding options, warrants, and rights, the weighted-average exercise price of outstanding options, warrants, and rights, and the number of securities available for future issuance under equity compensation plans as of June 30, 2021.2023.
| [a] | [b] | [c] | |||||
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (in thousands) | Weighted-average exercise price per share of outstanding options, warrants, and rights | Number of securities remaining for future issuance under non-qualified stock-based compensation programs (excluding securities reflected in column [a]) (in thousands) | ||||
| Equity compensation plans approved by security holders | 4,862 | $ | 139 | 7,888 | |||
| Equity compensation plans not approved by security holders | — | — | — | ||||
| Total | 4,862 | $ | 139 | 7,888 | |||
| [a] | [b] | [c] | |||||||
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights (in thousands) | Weighted-average exercise price per share of outstanding options, warrants, and rights | Number of securities remaining for future issuance under non-qualified stock-based compensation programs (excluding securities reflected in column [a]) (in thousands) | ||||||
| Equity compensation plans approved by security holders | 5,115 | $ | 147 | 3,616 | |||||
| Equity compensation plans not approved by security holders | — | — | — | ||||||
| Total | 5,115 | $ | 147 | 3,616 | |||||
Column [a] includes the following outstanding equity-based awards (in thousands):
| 4,075 stock options |
| 544 restricted stock awards |
| • | 368 performance shares and deferred shares |
| 128 deferred stock units for non-employee directors | ||
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| Proposal 3: Advisory Vote on the Frequency of Future Advisory Votes to Approve Executive Compensation |
In accordance with SEC rules, this proposal gives our shareholders the opportunity to indicate how frequently (every year, every two years, or every three years) they want to vote on an advisory basis to approve the compensation of our NEOs, as disclosed pursuant to the SEC’s compensation disclosure rules, such as the one in Proposal 2 above, which are commonly referred to as “say-on-pay” votes. Shareholders last voted on the frequency of say-on-pay votes at the 2017 Annual Meeting of Shareholders, at which time shareholders overwhelmingly voted for an annual say-on-pay vote.
By voting on this Proposal 3, shareholders may indicate whether they would prefer an advisory vote to approve NEOs compensation once every one, two, or three years. Alternatively, you may abstain from voting.
Board’s Recommendation
The Board recommends a vote for the option of ONE YEAR for the frequency of future advisory votes to approve executive compensation. The Board continues to believe that shareholders should vote on NEOs compensation every year so that they may provide the Company with their direct input annually. Setting a one-year period for holding this advisory shareholder vote will enhance shareholder communication by providing a clear, simple means for the Company to obtain information on investor sentiment about our executive compensation philosophy, policies, and practices. In addition, an annual advisory vote to approve executive compensation is consistent with the Company’s policy of seeking input from, and engaging in discussions with, its shareholders on corporate governance matters and its executive compensation program.
Accordingly, the Board recommends a vote for the option of ONE YEAR as the frequency with which shareholders are provided a say-on-pay vote.
Vote Required
While the Board is making a recommendation with respect to this proposal, shareholders are being asked to vote on the choices specified above, and not whether they agree or disagree with the above recommendation.
The option of one, two, or three years that receives the affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting by the shareholders will be the frequency for say-on-pay votes that has been selected by the shareholders. In the event that no option receives a majority of the votes, the Board will consider the option that receives the most votes cast to be the option selected by the shareholders. However, because this vote is advisory and not binding on the Board or the Company in any way, the Board may decide that it is in the best interests of the Company’s shareholders and the Company to hold a say-on-pay vote more or less frequently than the option selected by the shareholders.
The people designated in the proxy and voting instruction card will vote your shares represented by proxy for the option of ONE YEAR unless you include instructions to the contrary.
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| Audit Committee Matters |
| Proposal 4: Ratification of Independent Registered Public Accounting Firm |
The Audit Committee has the authority to appoint, retain, compensate, and oversee the Company’s independent registered public accounting firm, and the Company’s shareholders must ratify the Audit Committee’s selection and appointment. The Audit Committee has selected
Ernst & Young LLP (E&Y)(EY) as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2022. E&Y2024. EY has been engaged since February 15, 2003.
The Board unanimously recommends that shareholders vote FOR the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2022. 2024. While we are not required by law to obtain such ratification from our shareholders, the Board believes it is good practice to do so. The Audit Committee and the Board
believe that the continued retention of E&YEY as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders.
Representatives of E&YEY are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement should they desire to do so.
The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote on the matter is required to ratify the appointment of E&Y.EY. If shareholders fail to ratify the appointment of E&Y,EY, the Audit Committee will reconsider the appointment.
The people designated in the proxy and voting instruction card will vote your shares represented by proxy FOR ratification unless you include instructions to the contrary.
| THE CLOROX COMPANY - |
| Audit Committee Report |
The Audit Committee assists the Board in its oversight of corporate governance by overseeing the quality and integrity of the accounting, auditing, and financial reporting practices of the Company, including:
The Audit Committee operates in accordance with a written charter, which was adopted and is periodically updated by the Board. Each member of the Audit Committee is “independent,” as required by the applicable listing standards of the NYSE and the rules of the SEC.
While the Company’s management has primary responsibility for the financial statements, the reporting process and the Company’s internal control over financial reporting, the independent registered public accounting firm is responsible for performing an integrated audit of the Company’s financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (the PCAOB). The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or the Company’s independent registered public accounting firm.Company.
The Audit Committee is responsible for the appointment, retention, compensation, and oversight of the Company’s independent registered public accounting firm, including the review of their qualifications, independence and performance, and approval of the audit fee. In this regard, the Audit Committee appointed Ernst & Young LLP (E&Y)(EY) to audit the Company’s financial statements as of and for the year ended June 30, 2021,2023, and the effectiveness of the Company’s internal control over financial reporting as of June 30, 2021. E&Y2023. EY has served as the Company’s independent registered public accounting firm since February 2003. The Audit Committee considered several factors in selecting E&YEY as the Company’s independent registered public accounting firm for the year ended June 30, 2021,2022, including the firm’s independence and
internal quality controls, the overall depth of talent, their experience with the Company’s industry, and their familiarity with the Company’s businesses and internal control over financial reporting. In determining whether to reappoint E&YEY as the Company’s independent registered public accounting firm for the year ending June 30, 2022,2024, the Audit Committee again took those factors into consideration along with its evaluation of the past performance of E&YEY and determined that the continued retention of E&YEY as the Company’s independent registered public accounting firm is in the Company’s best interests.
The Audit Committee has a policy that requires it to consider and approve, in advance, any audit and permissible non-audit services to be performed by the independent registered public accounting firm. Among the assurance and related services provided by E&YEY in fiscal year 2021, E&Y2023, EY has issued reports on its review of certain corporate responsibility and sustainability metrics and information provided in the Company’s 2021 Integrated Annual Report – Executive Summary.2023 integrated annual report. The Audit Committee obtained from E&YEY the written disclosures and the letter required by the applicable requirements of the PCAOBPublic Company Accounting Oversight Board (PCAOB) regarding https://www.thecloroxcompany.com/who-we-are/ corporate-governance/committee-charters communications with the Audit Committee concerning independence of the auditors and discussed with the auditors their independence. In evaluating E&Y’sEY’s independence, the Audit Committee considered whether the firm’s provision of any non-audit services impaired or compromised the firm’s independence and concluded that they did not.
Further, in conjunction with the mandated rotation of the auditing firm’s coordinating partner, the Audit Committee and its chairperson oversee and are directly involved in the selection of E&Y’sEY’s new coordinating partner. The Audit Committee periodically considers rotation of the registered independent public accounting firm.
In fulfilling its oversight responsibilities, the Audit Committee meets regularly with management and E&YEY to discuss, prior to their release to the public, the Company’s financial statements and earnings releases and, as appropriate, other Company public communications containing Company financial information or performance measures. The Audit Committee’s meetings with the independent registered public accounting firm, which are both with and without management present, include discussions about the results of the independent registered public accounting firm’s examinations and evaluations of the quality of the Company’s financial statements and the Company’s internal control over financial reporting.
|
Audit Committee Report
In this regard, the Audit Committee reviewed and discussed with management the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2021.2023. This review included a discussion of the quality and the acceptability of the Company’s financial reporting and system of internal controls, including the clarity of disclosures in the financial statements, reasonableness of significant contingency accruals, reserves, allowances and other judgments, critical accounting policies and estimates, and risk assessment. In addition, the Audit Committee reviewed and discussed with the Company’s independent registered public accounting firm the scope and plans for their
| THE CLOROX COMPANY - 2023 Proxy Statement | 93 |
Audit Committee Report
audit, the audited financial statements of the Company for the fiscal year ended June 30, 2021,2023, the independent registered public accounting firm’s judgments as to the quality and acceptability of the Company’s financial reporting, E&Y’sEY’s discussion about critical audit matters in its report on the audited financial statements for the fiscal year
ended June 30, 2021,2023, the Company’s critical accounting policies and estimates, the effectiveness of the Company’s internal control over financial reporting and such other matters as are required to be discussed by the applicable requirements of the PCAOB and SEC.
In addition to the regular meetings with the independent registered public accounting firm and management noted above, the Audit Committee meets periodically with the internal audit team to discuss the scope, plans and results of their audits and holds private sessions with each of the Company’s chief legal officer, chief financial officer, and vice president of internal audit.
Based upon the review and discussions referred to above, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021,2023, for filing with the SEC.
THE AUDIT COMMITTEE as of June 30, 20212023
 |  |  |  |  | ||||
| Christopher J. Williams, Chair | Julia Denman | A.D. David Mackay | Paul Parker | Stephanie Plaines |
Christopher J. Williams, ChairAmy BanseA.D. David MackayPaul Parker
Fees of the Independent Registered Public Accounting Firm
The table below includes fees related to fiscal years 20212023 and 20202022 of the Company’s independent registered public accounting firm, Ernst & Young LLP:EY:
| 2021 | 2020 | |||||
| Audit Fees(1) | $ | 5,751,000 | $ | 6,187,000 | ||
| Audit-Related Fees(2) | 149,000 | 114,000 | ||||
| Tax Fees(3) | 182,000 | 63,000 | ||||
| All Other Fees(4) | 3,000 | 145,000 | ||||
| Total | $ | 6,085,000 | $ | 6,509,000 | ||
| 2023 | 2022 | ||||||
| Audit Fees(1) | $ | 5,550,000 | $ | 5,425,000 | |||
| Audit-Related Fees(2) | 195,000 | 184,000 | |||||
| Tax Fees(3) | 133,000 | 187,000 | |||||
| All Other Fees(4) | 3,000 | 3,000 | |||||
| Total | $ | 5,881,000 | $ | 5,799,000 | |||
| (1) | Consists of fees for professional services rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, included in the Company’s Annual Reports on Form 10-K for each of the fiscal years ended June 30, |
| (2) | Consists of fees for assurance and related services (including sustainability assurance, the Company’s employee benefit |
| (3) | Consists of fees for tax compliance, tax advice and tax planning for the fiscal years ended June 30, |
| (4) | Consists of fees for all other services not included in the three categories set forth above and are primarily related to |
The Audit Committee has established a policy that requires it to approve all services provided by the Company’s independent registered public accounting firm before services are provided. The Audit Committee has pre-approved the engagement of the independent
registered public accounting firm for audit services, and certain specified audit-related services and tax services within defined limits.limits for the fiscal years ended June 30, 2023 and 2022. The Audit Committee has not pre-approved engagement of the independent registered public accounting firm for any other non-audit services.
| THE CLOROX COMPANY - |
The Company’s 2005 Stock Incentive Plan, as amended and restated (the Plan), provides for the grant of incentive stock options (within the meaning of Section 422 of the IRC), non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based awards to employees, directors and consultants of the Company (collectively, the participants). The Plan, as amended and restated, was adopted by the Board on September 21, 2021 and will become effective on the date that it is approved by shareholders.
The primary amendments reflected in the amended and restated version of the Plan:
Additionally, amendments to Section 162(m) of the IRC (Section 162(m)), which removed the “qualified performance-based compensation” exemption from the $1 million per year compensation deduction limitation for certain executive officers, became effective in 2018. As a result, the amendment and restatement removes language that was intended to ensure performance-based awards qualified for this exemption, since it is no longer relevant. However, although no longer required by Section 162(m), the Company has not eliminated (or increased) the per-participant limits on awards in the Plan discussed below.
The closing price of a share of the Company’s common stock on October 1, 2021 was $164.52.
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
Summary of Key Equity Compensation Plan Data
Share Usage
The following table sets forth information regarding stock-settled, time-vested equity awards granted, performance-based equity awards earned/vested, and stock-settled deferred stock units granted under the Plan over each of the last three fiscal years.
| FY2021(1) | FY2020 | FY2019 | ||||||
| Stock options/stock appreciation rights (SARs) granted | 451,000 | 1,031,000 | 863,000 | |||||
| Stock-settled, time-vested restricted stock units granted | 147,000 | 142,000 | 139,000 | |||||
| Stock-settled performance share units earned/vested(1) | 105,000 | 209,000 | 330,000 | |||||
| Stock-settled deferred stock units granted | 11,000 | 14,000 | 13,000 | |||||
| Weighted-average basic shares of common stock outstanding | 125,570,000 | 125,828,000 | 127,734,000 | 3-Year Average | ||||
| Share usage rate | 0.6% | 1.1% | 1.1% | 0.9% |
Overhang as of June 30, 2021
The following table sets forth certain information as of June 30, 2021, unless otherwise noted, with respect to the Company’s outstanding equity awards.
Dilution and Expected Duration
The Company recognizes the impact of dilution on our shareholders and has evaluated the proposed new share reserve under the Plan carefully in the context of our need to attract and retain talented employees, executives and directors and to motivate and reward key personnel for achieving our business objectives and strategic priorities. The total fully-diluted overhang as of June 30, 2021, inclusive of the proposed new Plan reserve, would be 7.4%. In this context, fully-diluted overhang is calculated as the sum of grants outstanding and shares available for future awards (numerator) divided by the sum of the numerator and basic shares of common stock outstanding, with all data effective as of June 30, 2021. The Company believes that the proposed share reserve represents a reasonable amount of potential equity dilution to accommodate our long-term strategic priorities.
We expect that the proposed share reserve under the Plan will provide an adequate number of shares of common stock to fund our equity compensation needs for approximately five years. Expectations regarding future share usage could be impacted by a number of factors such as award type mix, hiring and promotion activity, particularly at the executive level, the rate at which shares are returned to the Plan’s reserve under permitted addbacks, the future performance of our stock price, and other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations.
Why You Should Vote to Approve the Plan
The Board recommends that the Company’s shareholders approve the Plan because it believes that the Company’s ability to grant equity-based awards continues to be crucial in promoting short- and long-term financial growth and stability, thereby enhancing shareholder value.
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
Promotion of Good Corporate Governance Practices
The Plan has been designed to include a number of provisions that the Company believes promote best practices by reinforcing the alignment between equity compensation arrangements for employees, directors and consultants and shareholders’ interests. These provisions include, but are not limited to, the following:
No Discounted Options. Stock options may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.
No Repricing without Shareholder Approval. The Company will not, without the approval of shareholders, reduce the exercise price of an outstanding option or the grant price of an outstanding stock appreciation right (SAR). In addition, at any time when the exercise price of an outstanding option or the grant price of an outstanding SAR is above the fair market value of a share of common stock, no amendment will provide that any such outstanding option or outstanding SAR be cancelled and re-granted or exchanged for either cash or a new award with a lower (or no) exercise price, without the approval of shareholders.
No Dividends on Unvested Awards. The Plan prohibits the current payment of dividends or dividend equivalent rights on unvested awards. Such payments may be accumulated but will remain subject to vesting requirement(s) to the same extent as the applicable award and shall only be paid at the time or times such vesting requirement(s) are satisfied.
Minimum Vesting Requirement. The Plan imposes a one-year minimum vesting period on all new awards granted under the Plan after the effective date, subject to certain limited exceptions.
No Evergreen Provision. There is no “evergreen” feature pursuant to which the shares authorized for issuance under the Plan can be automatically replenished.
No Automatic Grants. The Plan does not provide for automatic grants to any participant.
No Tax Gross-ups. The Plan does not provide for any tax gross-ups.
Cap on Director Compensation. The Plan provides a cap of $750,000 per fiscal year on the compensation payable in cash and equity to a non-employee director (other than any non-employee director serving in the position of executive chair of the Board).
Limits on Participant Awards. The Plan contains limits on the number of Shares that may be granted to a participant in any 36-month period and a dollar cap on compensation payable pursuant to performance units in any one year.
Plan Summary
The following paragraphs provide a summary of the principal features of the Plan. This summary does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of the Plan, which is attached to this proxy statement as Appendix A.
Background and Purpose. The purposes of the Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to employees, directors or consultants of the Company or its subsidiaries and to optimize the profitability and growth of the Company through incentives that are consistent with the Company’s goals and that link the interests of participants in the Plan with those of the Company’s shareholders. The Plan permits the grant of the following types of incentive awards: (1) incentive and non-qualified options, (2) SARs, (3) restricted stock, (4) restricted stock units, (5) performance shares, (6) performance units, and (7) other stock-based awards.
Shares Subject to the Plan. The Plan as amended and restated provides that the maximum number of shares which may be issued under the Plan pursuant to awards that are granted after November 17, 2021 will be 5 million, less the aggregate number of shares granted between June 30 and November 17, 2021, including the 2021 annual awards (the “Share Reserve”). Under the Plan, the following shares will not be considered as having been issued under the Plan and may be added to the Share Reserve under the Plan: (i) shares that are potentially deliverable under an award that expires or is canceled, forfeited, settled in cash or otherwise settled without the delivery of shares, in each case after June 30, 2021, (ii) shares that are held back or tendered, in each case after June 30, 2021, to cover the exercise price or tax withholding obligations with respect to an award, (iii) shares that are issued pursuant to awards that are assumed, converted or substituted in connection with a merger, acquisition, reorganization or similar transaction, and (iv) shares that are repurchased in the open market with option proceeds from options exercised after June 30, 2021. For the avoidance of doubt, the issuance of shares by the Company in settlement of awards that were outstanding as of June 30, 2021 will not reduce the Share Reserve.
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
Administration. The Plan will be administered by a committee of the Board (the “Committee”). The Board has currently designated the Management Development and Compensation Committee of the Board as the Committee for the Plan. Subject to the provisions of the Plan, the Committee has the authority to: (1) select the persons to whom awards are to be granted, (2) determine whether and to what extent awards are to be granted, (3) determine the size and type of awards, (4) approve forms of agreement for use under the Plan, (5) determine the terms and conditions applicable to awards, (6) establish performance goals for any performance period and determine whether such goals were satisfied, (7) amend any outstanding award in the event of termination of employment or an event resulting in a change in control of the ownership of the Company as defined in the Plan (“Change in Control”), (8) construe and interpret the Plan and any award agreement and apply its provisions, and (9) subject to certain limitations, take any other actions deemed necessary or advisable for the administration of the Plan. Subject to applicable law, the Committee may delegate its authority under the Plan.
Eligibility to Receive Awards. The Plan provides that awards may be granted to participants, except that incentive stock options may be granted only to employees. As of June 30, 2021, the approximate number of persons eligible to participate in the Plan is 11 directors and approximately 9,000 employees. Clorox has not historically issued, and does not currently issue, awards to any consultants.
Non-Employee Director Compensation Limit. The Plan provides that the maximum number of shares subject to awards granted under the Plan during a single fiscal year to any non-employee director, taken together with any cash fees paid during the fiscal year to such director, for the director’s service as a member of the Board during such year (including service as a member or chair of any committees of the Board), shall not exceed $750,000 in total value (calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes), subject to certain exceptions as may be approved by the independent members of the Board. This limit does not apply to any director serving in the position of executive chair of the Board.
No Dividends on Unvested Awards. The Plan prohibits the current payment of dividends or dividend equivalent rights on unvested awards. Such payments may be accumulated but will remain subject to vesting requirement(s) to the same extent as the applicable award and shall only be paid at the time or times such vesting requirement(s) are satisfied.
Minimum Vesting Requirement. The Plan imposes a one-year minimum vesting period on all new awards granted under the Plan after the effective date, subject to certain limited exceptions. These exceptions include (i) substitute awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction, (ii) shares delivered in lieu of fully vested cash obligations, (iii) awards to directors that vest on the earlier of the one-year anniversary of the date of grant and the next annual meeting of stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting, and (iv) any additional awards granted under the Plan, up to a maximum of five percent (5%) of the Share Reserve.
No Repricing. The Company will not, without the approval of shareholders, reduce the exercise price of an outstanding option or the grant price of an outstanding SAR. In addition, at any time when the exercise price of an outstanding option or the grant price of an outstanding SAR is above the fair market value of a share of common stock, no amendment will provide that any such outstanding option or outstanding SAR be canceled and re-granted or exchanged for either cash or a new award with a lower (or no) exercise price, without the approval of shareholders, except as provided in the Plan in the event of a change in capitalization or a change in control.
Terms and Conditions of Stock Options. Each option grant will be evidenced by an award agreement that will specify the exercise price, the term of the option, the conditions of exercise, and such other terms and conditions as the Committee will determine. The Committee sets the exercise price of the shares subject to each option, provided that, subject to limited exceptions, the exercise price cannot be less than 100% of the fair market value of the shares on the option’s grant date. In addition, the exercise price of an incentive stock option must be at least 110% of fair market value if, on the grant date, the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries (a “10% Shareholder”). The means of payment for shares issued upon exercise of an option is specified in each award agreement. Payment generally may be made by cash, with other shares of common stock owned by the participant, by any other method permitted by the Committee, or by a combination of the foregoing. Each award agreement will specify the term of the option and the date when the option is to become exercisable. The Plan provides that in no event will an option granted under the Plan be exercised more than ten years after the date of grant, provided that if on the last business day
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
of the term of a nonqualified stock option (i) its exercise is prohibited by applicable law or (ii) shares may not be purchased or sold by certain participants due to the “black-out period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, the Committee may provide that the term be extended but not beyond a period of thirty (30) days following the end of the legal prohibition, black-out period or lock-up agreement (unless the grant price of such option at the date the initial term would otherwise expire is above the fair market value or to the extent that an extension could result in any additional taxes under Section 409A of the Code). Moreover, in the case of an incentive stock option granted to a 10% Shareholder, the term of the option will be for no more than five years from the date of grant. Shares issued upon exercise will be subject to such continuing restrictions as will be provided in a recipient’s award agreement. The maximum number of shares which may be issued pursuant to incentive stock options under the Plan granted after June 30, 2021 shall be 5 million and only shares that are subject to an incentive stock option that expires or is cancelled, forfeited or settled in cash shall be treated as not having been issued for purposes of such limit.
Terms and Conditions of Stock Appreciation Rights. SAR grants may be either freestanding or in tandem with option grants. Each SAR grant will be evidenced by an award agreement that will specify the grant price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Committee will determine. The grant price of SARs may not be less than 100% of the fair market value of the shares subject to the award on the grant date. Tandem SARs may be exercised only with respect to the shares for which their related option is then exercisable. Upon exercise of a SAR, the holder of the SAR will be entitled to receive payment in an amount equal to the product of (i) the difference between the fair market value of a share on the date of exercise and the exercise price and (ii) the number of shares for which the SAR is exercised. At the discretion of the Committee, payment to the holder of a SAR may be in cash, shares or a combination thereof. To the extent that a SAR is settled in cash, the shares available for issuance under the Plan will not be diminished as a result of the settlement. SARs granted under the Plan expire as determined by the Committee, but in no event later than ten years from the date of grant, subject to a possible thirty (30) days extension in the event of a legal prohibition, black-out period or lock-up agreement as described above. No SAR may be exercised by any person after its expiration. Shares issued upon exercise will be subject to such continuing restrictions as will be provided in a participant’s award agreement.
Share Limit for Stock Options and SARs. No participant may be granted options and SARs to purchase more than 2,000,000 shares in any 36-month period.
Terms and Conditions of Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards. Each award will be evidenced by an agreement that will specify its terms. The Committee will have the discretion to determine the number of shares subject to the award and the conditions for vesting that must be satisfied. Shares issued at the settlement date of awards will be subject to such continuing restrictions as will be provided in a participant’s award agreement.
Share Limit for Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Other Stock-Based Awards. No participant will be granted, in the aggregate, more than 800,000 shares of restricted stock, restricted stock units, performance shares, or other stock-based awards in any 36-month period. No participant will be granted a performance unit award providing for a payment value of more than $10,000,000 in any one fiscal year valued either in cash or the fair market value of the shares on the grant date.
Performance-Based Awards. The Committee may grant awards which are subject to the attainment of performance measures which may include, without limitation, the following measures (collectively, the “Performance Measures”): total shareholder return, stock price, net customer sales, volume, gross profit, gross margin, operating profit, operating margin, management profit, earnings from continuing operations before income taxes, earnings from continuing operations, earnings per share from continuing operations, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, net operating profit after tax, net earnings, net earnings per share, return on assets, return on investment, return on equity, return on invested capital, cost of capital, average capital employed, cash value added, economic value added, economic profit, cash flow, cash flow from operations, working capital, working capital as a percentage of net customer sales, asset growth, asset turnover, market share, customer satisfaction, and employee satisfaction. Performance goals that are financial metrics may be calculated either based on generally accepted account principles (GAAP) or on a non-GAAP basis. The targeted level or levels of performance with respect to the Performance Measures may be established at such levels and on such terms as the Committee may determine, in its discretion, on a corporate-wide basis or with respect to one or more business units, divisions, subsidiaries, business segments or functions, and in either absolute terms or
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
relative to the current and/or historical performance of one or more companies or an index covering multiple companies. Unless otherwise determined by the Committee and reflected in the terms of an award at the time of grant, measurement of performance goals with respect to the Performance Measures listed above will exclude the impact of charges for restructurings, discontinued operations, extraordinary items, other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as determined in accordance with GAAP or identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or other filings with the SEC or as otherwise based on the Company’s accounting as set forth in its books and records (including business projections) and/ or in the annual budgets and/or long range plans of the Company pursuant to which such performance goals were established.
Non-Transferability of Awards. An award granted under the Plan which is an incentive stock option may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the recipient, only by the recipient. Other awards may be transferable to the extent provided in the award agreement and the rules of the SEC governing the registration of the Plan’s shares, but in no event may an award be transferred for consideration.
Adjustments Upon Changes in Capitalization. In the event of any merger, reorganization, consolidation, recapitalization, liquidation, stock dividend, split-up, spin-off, stock split, reverse stock split, share combination, share exchange, extraordinary dividend, or any change in the corporate structure affecting the shares, such adjustment will be made in the number and kind of shares or other securities or property that may be delivered under the Plan, the individual award limits set forth in the Plan, and, with respect to outstanding awards, in the number and kind of shares or other securities or property subject to outstanding awards, the exercise price, grant price or other price, if any, of shares subject to outstanding awards, any performance conditions relating to shares, the market price of shares, or per-share results, and other terms and conditions of outstanding awards, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights.
Change in Control. Except as otherwise provided in an award agreement, in the event of a Change in Control (as defined in the Plan), if the successor corporation does not assume, convert, continue or replace an award under the Plan with an equivalent award, the award will become fully vested. Awards that are so assumed, converted, continued, or replaced will not vest upon a Change in Control; provided, however, that in the event of a participant’s termination of employment without cause (or, if applicable, the resignation of the participant under circumstances in which the participant has been constructively terminated, which the Plan calls “good reason”) within twenty-four months following consummation of a Change in Control, any such assumed, converted, continued or replaced awards will become immediately vested (and any such stock options or stock appreciation rights will generally remain exercisable until the second anniversary of such termination). Awards with vesting provisions based on performance goals will generally vest at the end of the original performance period (or, if not assumed, converted, continued or replaced as described above, as of the Change in Control) based on the Company’s performance up to the date of the Change in Control (or, if higher, target performance). Any such award that continues after the date of the Change in Control after modification as described above will vest in full upon the termination of the participant by the Company without cause prior to the end of the performance period or, if applicable, the resignation of the participant for “good reason.”
Amendment, Suspensions and Termination of the Plan. The Board may amend, suspend or terminate the Plan at any time; provided, however, that shareholder approval is required for any amendment to the extent necessary to comply with the NYSE listing standards or applicable laws. In addition, no amendment, suspension or termination may materially adversely impact an award previously granted without the consent of the participant to whom such award was granted unless required by applicable law. Unless the Board or the Committee adopt resolutions providing for an earlier date, the Plan will automatically terminate on November 17, 2031.
Recoupment Policy. Awards granted under the Plan participants who are “Covered Employees” (as defined in the Recoupment Policy) are subject to recoupment in accordance with the terms of the Recoupment Policy and pursuant to any other policy the Company may adopt as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
Benefits to Be Received Upon Approval. It is not possible at this time to determine awards that will be made in the future in the event that the Plan is approved by shareholders. However, it is anticipated that awards generally will be similar to those granted under the Plan in prior years.
Prior Grants under the Plan. The following table shows information, as of June 30, 2021, regarding the grants of stock-based awards under the Plan since the Plan was
last approved by shareholders in November 2012 to the persons and groups identified below. No awards have been granted under the Plan to any nominee for election as a director prior to their election or to any associate of a non-employee director, nominee or executive officer.
| Stock options | Restricted stock units and Performance share units(1) | Deferred stock units | ||||
| Named executive officers | ||||||
| Linda Rendle | 169,353 | 43,908 | 0 | |||
| Benno Dorer | 1,143,285 | 162,273 | 0 | |||
| Kevin B. Jacobsen | 148,378 | 26,915 | 0 | |||
| Eric Reynolds | 136,815 | 29,377 | 0 | |||
| Tony A. Matta | 6,072 | 10,998 | 0 | |||
| Kirsten Marriner | 122,034 | 21,458 | 0 | |||
| Current executive officers as a group | 2,032,745 | 362,904 | 0 | |||
| Current non-executive directors as a group | 0 | 0 | 99,517 | |||
| Current non-executive officer employees as a group | 3,522,291 | 1,250,200 | 0 |
Federal Tax Aspects
The following paragraphs are a summary of the material U.S. federal income tax consequences under the IRC associated with awards granted under the Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside.
Incentive Stock Options. No taxable income is recognized when an incentive stock option is granted or exercised, although the spread on exercise is taken into account for alternative minimum tax purposes and may subject the participant to the alternative minimum tax. If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price generally will be taxed as long-term capital gain or loss. If these holding periods are not satisfied, the participant will recognize ordinary income at the time of sale or other disposition equal to the difference between the exercise price and the fair market value of the shares at the date of the option’s exercise.
Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income will be treated as long-term or short-term capital gain or loss, depending on the holding period.
Nonqualified Stock Options. No taxable income is recognized when a nonqualified stock option is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares at the time of exercise over the exercise price. Any additional gain or loss recognized upon later disposition of the shares is capital gain or loss, which may be long-term or short-term capital gain or loss depending on the holding period.
Stock Appreciation Rights. No taxable income is recognized when a SAR is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received.
Restricted Stock, Restricted Stock Units, Performance Shares, and Performance Units. A participant generally will not have taxable income upon grant of restricted stock, restricted stock units, performance shares, or performance units. Instead, the participant will recognize ordinary income at the time of vesting equal to the fair market value (on the vesting date) of the shares or cash
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Proposal 4: Approval of Amended and Restated 2005 Stock Incentive Plan
received minus any amount paid. For awards for which shares are issued at grant only, a participant instead may elect to be taxed at the time of grant.
Other Stock-Based Awards. A participant generally will recognize income upon receipt of the shares subject to award (or, if later, at the time of vesting of such shares).
Tax Effect for the Company. The Company generally will be entitled to a tax deduction subject to Section 162(m) of the Code in connection with an award under the Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option).
Other Tax Considerations. In the event of a Change in Control of the Company, certain payments in the nature of compensation to certain individuals, if contingent on the Change in Control, could be nondeductible to the Company and subject to a 20% excise tax to the recipient
in addition to income taxes. Awards under the Plan that are made or that vest or become payable in connection with a Change in Control may be required to be taken into account in determining whether these penalties apply.
Section 409A. Some awards granted under the Plan may be considered non-qualified deferred compensation that is subject to special rules and may trigger additional income tax under Section 409A of the Code. It is intended that the Plan and any awards granted thereunder will comply with the requirements of Section 409A of the Code, and the Committee will generally design and administer such awards to either be exempt from or avoid the imposition of additional taxation under Section 409A of the Code. However, there is no commitment or guarantee that any federal, state or local tax treatment will apply or be available to any participant. As a result, tax consequences for any particular participant may vary based on individual circumstances.
The Board unanimously recommends that the shareholders vote FOR the adoption of the following resolution, which will be presented at the Annual Meeting.
“RESOLVED, that the shareholders of the Company hereby approve and adopt the 2005 Stock Incentive Plan, as amended and restated, attached as Appendix A to the proxy statement for this meeting.”
The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote on the matter is required to approve the Plan.
The people designated in the proxy and voting instruction card will vote your shares represented by proxy FOR ratification unless you include instructions to the contrary.
James McRitchie has advised the Company that he intends to present the following shareholder proposal at the Annual Meeting and has appointed John Chevedden as his agent with respect to this proposal. Mr. McRitchie has indicated that the proposal meets all requirements of Rule 14a-8 of the Exchange Act, including the stock ownership requirement. Clorox will provide the address of the proponent promptly upon a shareholder’s oral or written request. The text of the shareholder proposal and supporting statement appear exactly as received
by the Company unless otherwise noted. All statements contained in the shareholder proposal and supporting statement are the sole responsibility of the proponent. The shareholder proposal may contain assertions about the Company or other matters that we believe are incorrect, but we have not attempted to refute all of those assertions.
The shareholder proposal will be voted on at the Annual Meeting only if properly presented by or on behalf of the proponent.
Proposal 5 - Add Value Through Worker Representation
Resolved: Clorox Company shareholders urge the board to empower its workers by establishing a ‘Policy’ of promoting significant representation of employee perspectives among directors. That Policy should require the Nominating, Governance, and Corporate Responsibility Committee to include (but not limit) its ‘Initial List’ of director candidates to current or past non-management employees. The Policy should provide that any third-party consultant asked to furnish an Initial List will be requested to include such candidates.
Whereas: Employees on corporate boards can contribute to long-term corporate sustainability. Having companies run exclusively to benefit shareholders contributes to “stagnant wages, runaway executive compensation, and underinvestment in research and innovation.”1 The Business Roundtable indicates investing in employees and communities offers “the most promising way to build long-term value.”2
The Council of Institutional Investors surveyed employee access to boards at S&P100 companies. They found growing support for explicit policies that encourage director interaction with employees as a way for boards to understand and oversee corporate culture. More than one-third (36%) of the companies detailed some process by which boards interact with employees.3
Employee representation grows long-term value in several ways. The National Bureau of Economic Research finds giving workers formal control rights increases female board representation and raises capital formation.4 Employees are also often more diverse than boards in terms of race, gender, and wealth. The German “co-determination” model of shared governance provides a check against short-term capital allocation practices.5
Proposal 5: Shareholder Proposal
The 2018 UK Corporate Governance Code encourages boards to establish methods for gathering workforce views. Options include a director appointed from the workforce, a formal workforce advisory panel, and designating a director to liaise with workers.6
Senators Baldwin and Warren introduced legislation codifying employee representation on corporate boards, noting corporate governance should include accountability to employees.7 Polling demonstrates bipartisan public support (53%) for employee representation.8 Firms with empowered workers produce nine percent higher returns for shareholders and invest twice as much as firms without workers on boards.9
The unique perspective of hourly workers could better equip corporate boards to respond to worker concerns, including workplace safety, compensation, benefits, and other issues. Shareholder benefits include reduced turnover, as employees are more empowered to influence firm-specific investments, better-informed decision-making because employees have specialized knowledge, better monitoring of management with increased information channels, and reduced myopia since employees often take a longer-term view.10
While our Board satisfies independence requirements and strives for a culture of participation, it lacks formal representation from non-management employees, who bring a different understanding of operations than typical directors. Shareholder rights and worker rights should work together.
The Policy we propose resembles the Rooney Rule, which requires National Football League teams to interview minority candidates for head coaching and senior operations openings.
Add Value through Employee RepresentationVote for Proposal 5
Board’s Statement in Opposition
The Board unanimously recommends a vote AGAINST this proposal for the following reasons:
Clorox is led by our purpose to champion people to be well and thrive every single day. We focus our efforts on a broad set of stakeholders – from our employees, consumers and communities to our shareholders. We’re also guided by our values: do the right thing, put people at the center and play to win. One of the ways we put people at the center is by continuing to work toward a more inclusive and diverse workplace where each person feels respected, valued and seen and can be the best version of themselves. With employees, management and directors representing the diversity of consumers we serve around the world, we are able to access stronger insights into different cultures and backgrounds, which ultimately helps us better address consumer needs. Our focus on putting people at the center, including our own employees, provides multiple channels for employee representation, input and dialogue with our Board.
Company employees have an important voice and are encouraged to express their views and concerns through these numerous channels. As part of the Board’s oversight of corporate culture and business strategies, the Board takes information communicated through these channels very seriously. Management regularly provides responses and updates on issues raised by employees in order to prioritize actions and activities that drive meaningful improvements in employee engagement and well-being.
The Board has existing open channels for employee voice and engagement.
Proposal 5: Shareholder Proposal
Clorox has robust corporate governance practices and procedures for considering and nominating Board members.
Clorox values its independent Board as a critical element of strong and effective corporate governance.
Given the breadth of existing open channels for employee input and engagement with the Board, the Board’s existing director selection process, and the importance of director independence, the Board believes that adoption of the policy requested by the proposal is unnecessary and not in the best interests of our shareholders.
Proposal 5: Shareholder Proposal
The Board unanimously recommends a vote AGAINST this stockholder proposal for the reasons stated above.
| Information About the Virtual Annual Meeting |
This proxy statement is furnished in connection with the solicitation of proxies by the Board of The Clorox Company, (Clorox or the Company), a Delaware corporation, for use at the Annual Meeting, to be held at 9:00 a.m. Pacific time on Wednesday, November 17, 2021.
The Annual Meeting will be virtual and held online via live webcast at https://meetnow.global/MNGZAZQM7GX29G. Please refer to the Attending the Virtual Annual Meeting section of this proxy statement for more information about procedures for attending the virtual Annual Meeting. There will not be an option to attend the meeting in person.
For purposes of the following sections, you are a registered shareholder if your shares are registered in your name with Computershare, and you are a beneficial owner if you hold your shares through a broker, bank or other holder of record.
Providing accessPursuant to rules adopted by the SEC, we are furnishing proxy materials via the Internet allows us to communicate with our shareholders inprimarily over the wayInternet. We believe that is most efficient and convenient for them and supports us inthis process expedites shareholders’ receipt of these materials, lowers the costs of our efforts to conserve natural resourcesAnnual Meeting and reduces the costsenvironmental impact of printing and distributing the proxy materials. Onmailing printed copies. Accordingly, on or about October 6, 2021,5, 2023, we began mailing athe Notice of Internet Availability of Proxy Materials (the Notice) to our shareholders (other than those shareholders who previously requested electronic or paper delivery of communications from us), informing them that our Proxy Statement, 2021 Integrated Annual Reportproxy statement, 2023 integrated annual report – Executive Summary,executive summary, and voting instructions
are available on the Internet as of the same date.
As a shareholder, you may access these materials and vote your shares via the Internet or by telephone; youtelephone. You may also request that a printed copy of the proxy materials be sent to you. You will not receive a printed copy of the proxy materials unless you request one in the manner described in the Notice.
The Notice of Annual Meeting, Proxy Statement,proxy statement, and 2021 Integrated Annual Report2023 integrated annual report – Executive Summaryexecutive summary are available at www.edocumentview.com/CLXCLX..
Electronic Delivery of Proxy Materials
We encourage our shareholders to enroll in voluntary e-delivery of future proxy materials. We believe that this process expedites shareholders’ receipt of these materials, lowers the costs of our Annual Meeting and reduces the environmental impact of mailing printed copies.
| Registered shareholders | Visit computershare.com and log into your account to enroll. |
| Beneficial owner | Please follow the instructions provided to you by your broker, bank, trustee or nominee. |
| THE CLOROX COMPANY - 2023 Proxy Statement | 95 |
Information About the Virtual Annual Meeting
Voting Information
Who Is Entitled to Vote
Only shareholders of record at the close of business on September 24, 202122, 2023 (the Record Date) are entitled to vote at the Annual Meeting. On that date, there were 122,854,512124,001,348 shares of common stock outstanding and entitled to vote. Holders of common stock as of the close of business on the Record Date are entitled to one vote per share on each matter submitted to a vote of shareholders.
How to Vote Before the Annual Meeting
Even if you plan to virtually attend the Annual Meeting, we strongly urge you to vote in advance. If you are a registered shareholder (i.e., your shares are registered in your name with Clorox’s transfer agent Computershare), you may vote via the Internet or by telephone by
following the instructions on your proxy card, voting instruction form or Notice or (if you received a printed copy of the proxy materials) by completing and returning a proxy card or voting instruction form by mail. If you are the beneficial owner of shares held in “street name” (that is, you hold your shares through a broker, bank or other holder of record), you must follow that nominee’s instructions to vote.
Please note that if you received a Notice, you cannot vote your shares by filling out and returning the Notice. Instead, you should follow the instructions contained in the Notice on how to cast your vote.
| Beneficial owner | You must follow your broker, bank or other holder of record’s instructions to vote. |
Information About the Virtual Annual Meeting
How to Vote During the Annual Meeting
You may vote your shares at the Annual Meeting if you attend the meeting virtually and vote electronically during the Annual Meeting. Shareholders may participate in the Annual Meeting by visiting https://meetnow.global/ MNGZAZQ and following the instructions on the website. To access and participate in the meeting you will need the 15-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card (if you received a printed copy of the proxy materials), or on the instructions that accompanied your proxy materials. If you vote by proxy and also attend the Annual Meeting, you do not need to vote again at the Annual Meeting unless you wish to change your vote.
| Registered shareholders | You will need the 15-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card (if you received a printed copy of the proxy materials), or on the instructions that accompanied your proxy materials. If you vote by proxy and also attend the Annual Meeting, you do not need to vote again at the Annual Meeting unless you wish to change your vote. |
| Beneficial owner | You may need register with Computershare by 5:00 p.m. Eastern Time on November 10, 2023 to gain access to the Annual Meeting and to vote your shares or ask questions during the Annual Meeting. Please see the Attending the Virtual Annual Meeting section on pg 101 of the proxy statement for more information. |
Voting Shares Held in the Clorox 401(k) Plan
You will receive a voting instruction card to direct Vanguard, as trustee of our 401(k) plan, how to vote the shares attributable to your individual account. Vanguard will vote shares as instructed by participants prior to 12:00 p.m. Eastern time on November 12, 2023. If you do not provide voting directions to Vanguard by that time, the shares attributable to your account will be voted pro rata in proportion to the shares for which Vanguard has received voting instructions. Shares held in our 401(k) plan cannot be voted electronically during the Annual Meeting – please ensure that you complete the voting instruction card to direct the 401(k) plan trustee how to vote the shares attributable to your account prior to 12:00 p.m. Eastern time on November 12, 2023. Information About the Virtual Annual MeetingIf you are a participant in our 401(k) plan, you will receive a voting instruction card to direct Vanguard, as trustee of our 401(k) plan, how to vote the shares attributable to your individual account. Vanguard will vote shares as instructed by participants prior to 11:59 p.m. Eastern time on November 16, 2021. If you do not provide voting directions to Vanguard by that time, the shares attributable to your account will not be voted. Shares held in our 401(k) plan cannot401(k) plan participants 96 THE CLOROX COMPANY - 2023 Proxy Statement – please ensure that you complete the voting instruction card to direct the 401(k) plan trustee how to vote the shares attributable to your account prior to 11:59 p.m. Eastern time on November 12, 2021.
How to Revoke Your Proxy or Change Your Vote
If you are a shareholder of record, you
| Registered shareholders | You may change your vote or revoke your proxy at any time before it is exercised at the Annual Meeting by taking any of the following actions:
Effect of Not Providing Voting Instructions to Your Broker
Quorum We must have a “quorum” to conduct the Annual Meeting. A quorum is a majority of the outstanding shares of common stock entitled to vote at the meeting, present in person or by proxy. Abstentions and broker non-votes (described above) will be counted for the purpose of determining a quorum.
Votes Required; Effect of Abstentions and Broker Non-Votes Proposal 1 (Election of Directors). A director nominee will be elected if he or she receives a majority of the votes cast in person or represented by proxy. A majority of the votes cast means that the number of shares voted FOR a director must exceed the number of shares voted AGAINST that director. An abstention or a broker non-vote on Proposal 1 will not have any effect on the election of directors and will not be counted in determining the number of votes cast. Your broker is not entitled to vote your shares on Proposal 1 unless you provide voting instructions. Proposals 2 (Advisory Vote on Executive Compensation) Proposal 3 (Frequency of Future Advisory Votes on Executive Compensation). The option of ONE, TWO, or THREE YEARS that receives the affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting will be the frequency for say-on-pay
Information About the Virtual Annual Meeting votes that has been selected by the shareholders. Abstentions will have the same effect as a vote against the proposal. Broker non-votes will have no effect and will not be counted. In the event that no option receives a majority of the votes under this voting standard, the Board will consider the option that receives the most votes cast to be the option selected by the shareholders. Board’s Recommendations The Board recommends that you vote:
Other Matters Management of the Company is not aware of any matters other than those described in this proxy statement that may be presented for action at the Annual Meeting. If any other matters are properly presented at the Annual Meeting for consideration, the proxy holders will have discretion to vote for you on those matters. Counting Votes; Vote Results Votes will be counted by Computershare Trust Company, N.A., our inspector of election appointed for the Annual Meeting. We will report final results in a filing with the SEC on Form 8-K, which will be filed within four business days following the Annual Meeting. Form 10-K, Financial Statements, and Integrated Annual Report – Executive Summary The following portions of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, has been filed with the SEC and posted on the Company’s website and a copy may be obtained, without charge, by calling Clorox Investor Relations at
We will pay for the entire cost of soliciting proxies on behalf of the Company. We will also reimburse additional compensation. We have retained Innisfree M&A Incorporated (Innisfree) to assist in soliciting proxies for the Annual Meeting at an estimated cost of $20,000 plus out-of-pocket expenses and have agreed to indemnify Innisfree against certain liabilities arising out of or in connection with their engagement.
Information About the Virtual Annual Meeting Shareholder Proposals and Director Nominations for the Shareholder Proposals for Inclusion in the Proxy Statement for the In the event that a shareholder wishes to have a proposal considered for presentation at the Director Nominations for Inclusion in the Proxy Statement for the The Board has adopted proxy access, which allows a shareholder or group of up to 20 shareholders who have owned at least 3% of the Company’s common stock for at least three years to submit director nominees (up to 20% of the Board) for inclusion in the Company’s proxy materials if the shareholder or group provides timely written notice of such nomination and the shareholder or group, and the nominee(s) satisfy the requirements specified in the Company’s Bylaws. To be timely for inclusion in the Company’s proxy materials, notice must be received by the Other Proposals and Director Nominations for Presentation at the Our Bylaws also establish an advance notice procedure for shareholders who wish to present a proposal, including the nomination of directors, before an annual meeting of shareholders but do not intend for the proposal to be included in our proxy statement. Under our Bylaws, if a shareholder, rather than seeking to include a proposal or director nomination in the proxy statement as discussed above, seeks to nominate a director or propose other business for consideration at that meeting, notice must be received by the In addition to satisfying the requirements of the Bylaws, including the earlier notice deadlines set out above and therein, to comply with universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also provide notice that sets forth the information required by Rule 14a-10 of the Exchange Act, no later than September 16, 2024. All notices of proposals or nominations, as applicable, must be addressed to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.
Information About the Virtual Annual Meeting Eliminating Duplicative Proxy Materials A single Notice of Annual Meeting and
The Annual Meeting will be held on Wednesday, November To attend the Annual Meeting, you must be a shareholder of the Company as of the close of business on the Record Date and have a 15-digit control number to access the virtual Annual Meeting. Please see You are a registered shareholder if your shares are registered in your name with Computershare. You are a beneficial owner if you hold your shares through a broker, bank or other holder of record.
Attending the Virtual Annual Meeting
Submitting Questions for the Virtual Annual Meeting We are committed to ensuring, to the extent possible, that shareholders will be afforded the ability to participate at the virtual meeting similarly to how they would participate at an in-person meeting. The question and answer session will include questions submitted in advance of and submitted live during the Annual Meeting.
Questions pertinent to meeting matters that comply with the meeting rules of conduct will be answered during the meeting, subject to time constraints. However, we reserve the right to exclude questions that are not pertinent to meeting matters, irrelevant to the business of the Company, derogatory or in bad taste, or relate to pending or threatened litigation, personal grievances or are otherwise inappropriate. Questions that are substantially similar may be grouped and answered once to avoid repetition. If there are any questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints, management will post answers to all questions on the A replay of the Annual Meeting will be made available at
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of The Clorox Company’s (the Company or Clorox) financial statements with a narrative from the perspective of management on the Company’s financial condition, results of operations, liquidity and certain other factors that may affect future results. In certain instances, parenthetical references are made to relevant sections of the Notes to Consolidated Financial Statements to direct the reader to a further detailed discussion. This section should be read in conjunction with the Consolidated Financial Statements and Supplementary Data included in this Annual Report on Form 10-K. The following sections are included herein:
EXECUTIVE OVERVIEW The Clorox Company is a leading multinational manufacturer and marketer of consumer and professional products with fiscal year The Company primarily markets its leading brands in midsized categories considered to be financially attractive. Most of the Company’s products, which can be found in about nine of 10 U.S. homes, compete with other nationally advertised brands within each category and with “private label” brands. About 80% of the Company’s sales are generated from brands that hold the No. 1 or No. 2 market share position in their categories.
Appendix The Company operates through strategic business units (SBUs)
Non-GAAP Financial Measures This Executive Overview, the succeeding sections of MD&A and Exhibit 99.2 may include certain financial measures that are not defined by accounting principles generally accepted in the United States of America (U.S. GAAP). These measures, which are referred to as non-GAAP measures, are listed below:
Appendix A taxes (calculated based on the Company’s effective tax rate excluding the identified U.S. GAAP items), and less after tax profit attributable to noncontrolling interests, and less a capital charge (calculated as average capital employed multiplied by a cost of capital rate).
For a discussion of these measures and the reasons management believes they are useful to investors, refer to “ Fiscal Year A detailed discussion of strategic goals, key initiatives and results of operations is included below. Key fiscal year
Strategic Goals and Initiatives
Continues on next page ►
Appendix A how the company and
Recent Events For the fiscal year ended June 30,
The For further discussion of the possible impacts of RESULTS OF OPERATIONS Unless otherwise noted, MD&A compares results of operations from fiscal year
Appendix A that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Exhibit 99.1 of the Company’s Annual Report on Form 10-K for the fiscal year ended CONSOLIDATED RESULTS
Net salesin fiscal year
Continues on next page ►
Appendix A
Gross margin Expenses
Selling and administrative expenses, as a percentage of net sales, Advertising costs, as a percentage of net sales,
Research and development costs, as a percentage of net sales, Goodwill, trademark and other asset impairments, Interest expense, Other expense (income)
Goodwill, trademark and other asset impairmentsof Interest expensewas
Appendix A prior year. See Notes to Consolidated Financial Statements for further information regarding the loss on the early extinguishment of debt recorded. Other Restructuring and related costs In the first quarter of fiscal year Once fully implemented, the Company expects annual cost savings to be approximately $75 to $100, with benefits of approximately $35 realized in fiscal year 2023. The benefits of the streamlined operating model are currently expected to increase future cash flows as a result of cost savings that will be generated primarily in the areas of selling and administration, supply chain, marketing and research and development. The Company incurred $60 of costs in fiscal year 2023 and anticipates incurring approximately $30 to $40 in fiscal year 2024 related to this initiative, approximately half of which are expected to include employee-related costs to reduce certain staffing levels such as severance payments, with the remainder for consulting and other costs. Costs incurred are expected to be settled primarily in cash. Of the restructuring and implementation related costs, net incurred in fiscal year 2023, $41 was related to employee-related costs and $19 was related to other costs. For further details on the streamlined operating model and restructuring, refer to the Notes to Consolidated Financial The effective tax rate on earnings Diluted net earnings per share
Diluted net earnings per share SEGMENT RESULTS Certain data from prior periods presented have been recast to reflect the changes in reportable segments noted above, and
Appendix A measurement of segment profitability disclosed to segment adjusted EBIT. The following presents the results of the Company’s reportable segments and
Health and Wellness
Appendix Fiscal year Fiscal year 2022 versus fiscal year 2021: Volume, net sales and segment adjusted EBIT decreased by 9%, 10% and 49%, respectively, during fiscal year 2022. The volume and net sales decreases were primarily due to lower shipments in the Household
Fiscal year
Fiscal year
Fiscal year Continues on next page ►
Appendix A Fiscal year 2022 versus fiscal year 2021: Volume and net sales increased by 2% and 3%, respectively, while segment adjusted EBIT decreased by 13% during fiscal year 2022. The volume and net sales increases were primarily driven by higher shipments of Brita water-filtration products due to expanded distribution and merchandising support and Natural Personal Care products primarily due to innovation and strong consumption. The decrease in segment adjusted EBIT was primarily due to unfavorable commodity costs and higher manufacturing and logistics costs, partially offset by net sales growth. International
Fiscal year 2023 versus fiscal year 2022: Volume and segment adjusted EBIT decreased by 5% and 8%, respectively, and net sales were essentially flat during fiscal year 2023. The volume decrease was primarily due to pricing actions. The variance between volume and net sales was mainly due to the benefit of price increases, Fiscal year 2022 versus fiscal year 2021: Volume and segment adjusted EBIT decreased by 1% and 18%, respectively, and net sales increased by 2% during fiscal year 2022. The variance between volume and net sales was mainly due to the
Argentina The business environment in Argentina continues to be challenging due to significant volatility in Argentina’s currency, high inflation, Effective July 1, 2018, under the requirements of U.S. GAAP, Argentina was designated as a highly inflationary economy and as a result, the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina. Consequently, gains and losses from non-U.S. dollar denominated monetary assets and liabilities of Clorox Argentina are recognized in Other (income) expense, net in the consolidated As of September 2019, the government of Argentina reinstated foreign exchange controls in response to further declines in the value of the Argentine peso, limiting the Company’s ability to convert Argentine pesos to U.S. dollars and transfer U.S. dollars outside of Argentina. As a result of these controls, the spread between the official Argentine government exchange rate and unofficial parallel rates has continued to broaden. As of June 30, Volatility in the exchange rate is expected to continue, which, along with competition, changes in the retail, labor and macro-economic environment, and implemented and future additional legal limitations
Appendix A instituted to restrict foreign exchange transactions, as well as government price controls, could have an adverse impact on Clorox Argentina’s liquidity, net sales, net earnings, cash flows and net monetary asset position. The Company is closely monitoring developments in Argentina and continues to take steps intended to mitigate the adverse conditions, but there can be no assurances that these actions will be able to mitigate these conditions as they may occur. Corporate and Other
Corporate and Other includes certain non-allocated administrative costs, Fiscal year Fiscal year 2022 versus fiscal year 2021: Net sales decreased by 9% due to lower net sales in the VMS business. The decrease in segment adjusted losses before interest and income taxes was primarily driven by lower employee incentive compensation FINANCIAL POSITION AND LIQUIDITY Management’s discussion and analysis of the Company’s financial position and liquidity describes its consolidated operating, investing and financing activities from The Company’s cash position includes amounts held by foreign subsidiaries and, as a result, the repatriation of certain cash balances from some of the Company’s foreign subsidiaries could result in additional tax costs. However, these cash balances are generally available without legal restriction to fund local business operations. In addition, a portion of the Company’s cash balance is held in U.S. dollars by foreign subsidiaries, whose functional currency is their local currency. Such U.S. dollar balances are reported on the foreign subsidiaries’ books, in their functional currency, with the impact from foreign currency exchange rate differences recorded in Other (income) expense, net.
The Company’s financial condition and liquidity remained strong as of June 30,
Operating Activities Net cash provided by operations was Continues on next page ►
Appendix A in working capital was Payment Terms Extension and Supply Chain Financing The Company initiated the extension of its payment terms with its suppliers in the second half of fiscal year 2020 in order to improve working capital as part of and to fund the IGNITE strategy and in keeping with evolving market practices. The Company’s current payment terms do not exceed 120 days in keeping with industry standards. The Company’s operating cash flows are directly impacted as a result of the extension of the payment terms with the suppliers. As part of those ongoing efforts, the Company has arranged for a global financial institution to offer a voluntary supply chain finance (SCF) program for the benefit of the Company’s suppliers. Leveraging the Company’s credit rating, the SCF program enables suppliers to directly contract with the financial institution to receive payment from the financial institution prior to the payment terms between the Company and the supplier, by selling the Company’s payables to the financial institution. All outstanding amounts related to suppliers participating in SCF are recorded within Accounts payable and accrued Investing Activities Net cash used for investing activities was Capital expenditures were Free cash flow
Appendix Financing Activities Net cash used for financing activities was Capital Resources and Liquidity The Company’s current liabilities may periodically exceed current assets as a result of the Company’s debt management policies, including the Company’s use of commercial paper borrowings which fluctuates depending on the amount and timing of operating and investing cash flows and payments for shareholder transactions such as dividends. The Company Global financial markets have experienced a significant increase in volatility due to heightened macroeconomic uncertainty
The Company may consider other transactions that require the issuance of additional long- and/or short-term debt or other securities to finance acquisitions, repurchase stock, refinance debt or fund other activities for general business purposes. Such transactions could require funds in excess of the Company’s current cash levels and available credit lines, and the Company’s access to or cost of such additional funds could be adversely affected by any decrease in credit ratings, which were the following as of June 30:
Credit Arrangements As of June 30, 2023, the Company maintained a $1,200 revolving credit agreement that matures in March 2027 (the Credit Agreement). There were no borrowings under the Credit Agreement as of June 30,
The Company was in compliance with all restrictive covenants and limitations in the Credit Agreement as of June 30, As of June 30, Continues on next page ►
Appendix A As of June 30, Short-term Borrowings The Company’s notes and loans payable primarily consist of U.S. commercial paper issued by the parent company and any borrowings under the Credit Agreement. These short-term borrowings have stated maturities of less than one year and provide supplemental funding for supporting operations. The level of U.S. commercial paper borrowings generally fluctuates depending upon the amount and timing of operating cash flows and payments for items such as dividends, income taxes, stock repurchases and pension contributions. The average balance of short-term borrowings outstanding was Long-term Borrowings Long-term borrowings, consisting of senior unsecured notes and debentures, were $2,477 and $2,474 as of June 30, 2023 and 2022, respectively. In May In November 2021, $300 of the Company’s senior notes with annual fixed interest rate of 3.80% became due and were repaid using commercial paper borrowings. Stock Repurchases and Dividend Payments As of June 30,
Dividends per share and total dividends paid to Clorox stockholders were as follows during the fiscal years ended June 30:
Appendix A On On July 12, 2022, the Company declared a 2% increase in the quarterly dividend, from $1.16 to $1.18 per share, payable on August 12, 2022 to common stockholders of record as of the close of business on July
The
CONTINGENCIES A summary of contingencies is contained in the Notes to Consolidated Financial Statements and is incorporated herein by reference. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a multinational company, the Company is exposed to the impact of changes in commodity prices, foreign currency fluctuations, interest-rate risk and other types of market risk. In the normal course of business, where available at a reasonable cost, the Company manages its exposure to market risk using contractual agreements and a variety of derivative instruments. The Continues on next page ►
Appendix A Company’s objective in managing its exposure to market risk is to limit the impact of fluctuations on earnings and cash flow through the use of derivative instruments, including exchange-traded futures and options contracts and over-the-counter swaps and forward purchase The Company uses different methodologies, when necessary, to estimate the fair value of its derivative contracts. The estimated fair values of the majority of the Company’s contracts are based on quoted market prices, exchange-traded market prices or broker price quotations, and represent the estimated amounts that the Company would pay or receive to terminate the contracts. See Notes to Sensitivity Analysis for Derivative Contracts For fiscal years The changes in the fair value of derivatives are recorded as either assets or liabilities in the consolidated balance sheets with an offset to Net earnings or Other comprehensive (loss) income, depending on whether or not, for accounting purposes, the derivative is designated and qualified as an accounting hedge. For those derivative instruments designated and qualifying as hedging instruments, the Company must designate the hedging instrument either as a
fair value hedge or as a cash flow hedge. The Company designates its commodity swaps and futures contracts for forecasted purchases of raw materials, foreign currency forward contracts for forecasted purchases of inventory, and interest rate contracts for forecasted interest payments as cash flow hedges. During the fiscal years ended June 30, Commodity Price Risk The Company is exposed to changes in the price of commodities used as raw materials in the manufacturing of its products. The Company uses various strategies, where available at a reasonable cost to manage cost exposures on certain raw material purchases with the objective of obtaining more predictable costs for these commodities, including long-term commodity purchase contracts and commodity derivative contracts. During fiscal years Based on a hypothetical decrease or increase of 10% in these commodity prices as of June 30, Foreign Currency Risk The Company seeks to minimize the impact of certain foreign currency fluctuations by hedging transactional exposures related to inventory purchases with foreign currency forward contracts. Based on a hypothetical decrease of 10% in the value of the U.S. dollar as of June 30,
Appendix A the estimated fair value of the Company’s then-existing foreign currency derivative contracts would decrease by Interest Rate Risk The Company can be exposed to interest rate volatility with regard to short-term borrowings, using commercial paper or under the Credit Agreement, in addition to potential changes in interest rates relating to anticipated future issuances of long-term debt. The Company RECENTLY ISSUED ACCOUNTING STANDARDS A summary of all recently issued accounting standards is contained in Note 1 of the Notes to Consolidated Financial Statements.
CRITICAL ACCOUNTING The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results the Company reports in its consolidated financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates or assumptions that are used. The most critical accounting
The Company’s critical accounting Revenue Recognition The Company’s revenue is primarily generated from the sale of finished products to customers. This revenue is reported net of certain variable consideration provided to customers, generally in the form of one-time and ongoing trade-promotion programs. These trade-promotion programs include shelf price reductions, in-store merchandising, consumer coupons and other trade-related activities. Amounts Continues on next page ►
Appendix A accrued for trade-promotions are based on various factors such as contractual terms and sales volumes, and also incorporate estimates that include customer participation rates, the rate at which customers will achieve program performance criteria, product availability and historical consumer redemption rates. The actual amounts remitted to customers for these activities may differ from the Company’s estimates, depending on how actual results of the programs compare to the estimates. If the Company’s trade promotion accrual estimates as of June 30, Goodwill and Other Intangible Assets The Company tests its goodwill and other indefinite-lived intangible assets for impairment annually in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired. Goodwill For fiscal year
In its evaluation of goodwill impairment, the Company has the option to first assess qualitative factors such as the maturity and stability of the reporting unit, the magnitude of the excess fair value over the carrying value from a prior period’s impairment testing, other reporting unit operating results,
During the third quarter of fiscal year
Appendix A No heightened risk of impairment Trademarks and Other Indefinite-Lived Intangible Assets For trademarks and other intangible assets with indefinite lives, the Company has the option to first assess qualitative factors, such as the maturity and stability of the trademark or other intangible asset, the magnitude of the excess fair value over carrying value from a prior period’s impairment testing, other specific operating results, as well as new events and circumstances impacting the significant inputs used to determine the fair value of the intangible asset. If the result of a qualitative test indicates that it is more likely During the third quarter of fiscal year No
Finite-Lived Intangible Assets Finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances occur that indicate that the carrying value of an asset (or asset group) may not be recoverable. The Company’s impairment review requires significant judgment by management, including estimating the future success of product lines, future sales volumes, revenue and expense growth rates, alternative uses for the assets and proceeds from the disposal of the assets. The Company reviews business plans for possible impairment indicators. The risk of impairment is initially assessed based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist. The asset (or asset group) is not recoverable when the carrying value of the asset exceeds the estimated future undiscounted cash flows generated by the asset. When impairment is indicated, an impairment charge is recorded for the difference between the asset’s (or asset group’s) carrying value and its estimated fair value. Depending on the asset, estimated fair value may be determined either by use of a DCF method or, if available, by reference to estimated selling values of assets in similar condition. These approaches require significant judgments in determining the assumptions utilized in the DCF or the selection of comparable assets, as applicable. Future changes in such estimates or the use of alternative assumptions could result in significantly different estimates of the fair values.
Income Taxes The Company’s effective tax rate is based on income by tax jurisdiction, statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which the Company operates. Significant judgment is required in determining the Company’s effective tax rate and in evaluating its tax positions. Continues on next page ►
Appendix A The Company maintains valuation allowances when it is likely that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change. In determining whether a valuation allowance is warranted, the Company takes into account In addition to valuation allowances, the Company
Venture Agreement Terminal Obligation The Company has a Venture Agreement with The estimated fair value of P&G’s interest may increase or decrease up until any such purchase by the Company of P&G’s interest. The Company uses the DCF method under the income approach to estimate the fair value of P&G’s interest. Under this approach, the Company estimates the future cash flows and discounts these cash flows at a rate of return that reflects its risk. The cash flows used are consistent with those the Company uses in its internal planning, which gives consideration to actual business trends experienced and the long-term business strategy. The other key assumptions and estimates used include, but are not limited to, net sales and expense growth rates, commodity prices, foreign exchange rates, discount rates, inflation and terminal growth rates. Fair value determination requires significant judgment, assumptions and market factors which are uncertain and subject to change. Changes in the judgments, assumptions and
SUMMARY OF NON-GAAP FINANCIAL MEASURES The non-GAAP financial measures that may be included in this MD&A and Exhibit 99.2 and the reasons management believes they are useful to investors are described below. These measures should be considered supplemental in nature and are not intended to be a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, these measures may not be the same as similarly named measures presented by other companies.
Appendix A Free cash flowis calculated as net cash provided by operations less capital expenditures. The Company’s management uses this measure and
EBITrepresents earnings before income taxes, interest income and interest expense. EBIT marginis the ratio of EBIT to net sales. The Company’s management believes these measures provide useful additional information to investors to enhance their understanding about trends in the Company’s operations and are useful for period-over-period comparisons. Adjusted earnings (losses) before interest and income taxes (adjusted EBIT) represents earnings (losses) before income taxes excluding interest income, interest expense and other significant items that are nonrecurring or unusual (such as asset impairments, charges related to the streamlined operating model, charges related to the digital capabilities and productivity enhancements investment, significant losses/(gains) related to acquisitions and other nonrecurring or unusual items impacting comparability). The Company uses this measure to assess the operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. Management believes that the presentation of adjusted EBIT is useful to investors to assess operating performance on a consistent basis by removing the impact of the items that management believes does not directly reflect the performance of each segment’s underlying operations. Adjusted EBIT margin is the ratio of adjusted EBIT to net sales.
Continues on next page ►
Appendix A
Due to the nonrecurring and unusual nature of these costs, the company’s management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company’s operations and is useful for period over period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management.
Due to the nature, scope and magnitude of this investment, these costs are considered by management to represent incremental transformational costs above the historical normal level of spending for information technology to support operations. Since these strategic investments, including incremental operating costs, will cease at the end of the investment period, are not expected to recur in the foreseeable future and are not considered representative of the company’s underlying operating performance, the company’s management believes presenting these costs as an adjustment in the non-GAAP results provides additional information to investors about trends in the company’s operations and is useful for period-over-period comparisons. It also allows investors to view underlying operating results in the same manner as they are viewed by company management. Of the total $500 million investment, approximately 65% is expected to represent incremental operating costs primarily recorded within selling and administrative expenses to be adjusted from reported Earnings (losses) before income taxes for purposes of disclosing adjusted EBIT over the course of the next five years. About 70% of these operating costs are expected to be related to the implementation of the ERP, with the remaining costs primarily related to the implementation of complementary technologies. During the fiscal years ended June 30, 2023 and 2022, the Company incurred approximately $100 and $61, respectively, of operating expenses related to its digital capabilities and productivity enhancements investment. The expenses relate to the following:
Economic profit (EP)is defined by the Company as earnings before income taxes, excluding
Appendix A Organic sales growth / (decrease) is defined as net sales growth / (decrease) excluding the effect of foreign exchange rate changes and any acquisitions and divestitures. Management believes that the presentation of organic sales growth / (decrease) is useful to investors because it excludes sales from any acquisitions and divestitures, which results in a comparison of sales only from the businesses that the Company was operating and expects to continue to operate throughout the relevant periods, and the Company’s estimate of the impact of foreign exchange rate changes, which are difficult to predict, and out of the control of the Company and management. The following table provides a reconciliation of organic sales growth / (decrease) (non-GAAP) to net sales growth / (decrease) (GAAP), the most comparable GAAP measure:
CAUTIONARY STATEMENT This Annual Report on Form 10-K (this Report), including the exhibits hereto and the information incorporated by reference herein, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, Continues on next page ►
Appendix A Report, as updated from time to time in the Company’s Securities and Exchange Commission filings. These factors include, but are not limited to:
Appendix A
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Appendix A The Company’s forward-looking statements in this Report are based on management’s current views, beliefs, assumptions and expectations regarding future events and speak only as of the date of this Report. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. In this Report, unless the context requires otherwise, the terms “the Company,” “Clorox,” “we,” “us,” and “our” refer to The Clorox Company and its subsidiaries.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management evaluated the effectiveness of the Company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Frameworkpublished in 2013. Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, The Company’s independent registered public accounting firm, Ernst & Young LLP, has audited the effectiveness of the Company’s internal control over financial reporting as of June 30,
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of The Clorox Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Clorox Company (the Company) as of June 30, We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30,
Appendix A
Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit The critical audit
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Appendix
/s/ Ernst & Young LLP We have served as the Company’s auditor since 2003. San Francisco, CA August 10,
Appendix REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of The Clorox Company Opinion on Internal Control Over Financial Reporting We have audited The Clorox Company’s internal control over financial reporting as of June 30, We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of The Clorox Company as of June 30, Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Appendix CONSOLIDATED STATEMENTS OF EARNINGS The Clorox Company
See Notes to Consolidated Financial Statements
Appendix CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME The Clorox Company
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Appendix CONSOLIDATED BALANCE SHEETS The Clorox Company
See Notes to Consolidated Financial Statements
Appendix CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY The Clorox Company
See Notes to Consolidated Financial Statements Continues on next page ►
Appendix CONSOLIDATED STATEMENTS OF CASH FLOWS The Clorox Company
See Notes to Consolidated Financial Statements
Appendix NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Clorox Company
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations and Basis of Presentation The Company is principally engaged in the production, marketing and sale of consumer products through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet and military stores, third-party and owned e-commerce channels, and distributors. The consolidated financial statements include the statements of the Company and its wholly owned and controlled subsidiaries. All significant intercompany transactions and accounts were eliminated in consolidation. Use of Estimates The preparation of these consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) requires management to reach opinions as to estimates and assumptions that affect reported amounts and related disclosures. Specific areas requiring the application of management’s estimates and judgments include, among others, assumptions pertaining to accruals for consumer and trade-promotion programs, Cash, Cash Equivalents and Restricted Cash Cash equivalents consist of highly liquid interest-bearing accounts, time deposits held by financial institutions and money market funds with an initial maturity at purchase of 90 days or less. The fair value of cash and cash equivalents approximates the carrying amount. The Company’s cash position includes amounts held by foreign subsidiaries and, as a result, the repatriation of certain cash balances from some of the Company’s foreign subsidiaries could result in additional withholding tax costs in certain foreign jurisdictions. However, these cash balances are generally available without legal restriction to fund local business operations. In addition, a portion of the Company’s cash balance is held in U.S. dollars by foreign subsidiaries whose functional currency is their local currency. Such U.S. dollar balances are reported on the foreign subsidiaries’ books in their functional currency, and the impact on such balances from foreign currency exchange rate differences is recorded in Other (income) expense, net. As of June 30, 2023, 2022, 2021 Inventories The Company values its inventories using both the First-In, First-Out (FIFO) and the Last-In, First-Out (LIFO) methods. The FIFO inventory is stated at the lower of cost or net realizable value, which includes any costs to sell or dispose. In addition, appropriate consideration is given to obsolescence, excessive inventory levels, product deterioration and other factors in evaluating net realizable value. The LIFO inventory is stated at the lower of cost or market. Continues on next page ►
Appendix NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Property, Plant and Equipment and Finite-Lived Intangible Assets Property, plant and equipment and finite-lived intangible assets are stated at cost. Depreciation and amortization expense are primarily calculated by the straight-line method using the estimated useful lives or lives determined by reference to the related lease contract in the case of leasehold improvements. The table below provides estimated useful lives of property, plant and equipment by asset classification.
Finite-lived intangible assets are amortized over their estimated useful lives, which range from Property, plant and equipment and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be fully recoverable. The risk of impairment is initially assessed based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist. Impairment occurs when the carrying value of the asset (or asset group) exceeds the estimated future undiscounted cash flows generated by the asset (or asset group). When impairment is indicated, an impairment charge is recorded for the difference between the carrying value of the asset (or asset group) and its estimated fair market value. Depending on the asset, estimated fair market value may be determined either by use of a discounted cash flow model or by reference to estimated selling values of assets in similar condition. Capitalization of Software Costs The Company capitalizes certain qualifying costs incurred in the acquisition and development of software for internal use, including the costs of the software, materials, consultants, interest and payroll and payroll-related costs for employees during the application development stage. Internal and external costs incurred during the preliminary project stage and post implementation-operation stage, mainly training and maintenance costs, are expensed as incurred. Once the application is substantially complete and ready for its intended use, qualifying costs are amortized on a straight-line basis over the software’s estimated useful life. Capitalized internal use software is included in Property, plant and equipment. Capitalized software as a service is included in Prepaid expenses and other current assets or Other assets and is amortized using the straight-line method over the term of the hosting arrangement which is typically no greater than Business Combinations The Company records acquired businesses within the consolidated financial statements using the acquisition method prospectively from the acquisition date. Under the acquisition method, once control is obtained, assets acquired and liabilities assumed, including amounts attributable to noncontrolling interests, are recorded at their respective fair values on the acquisition date. The Company’s estimates of fair value are inherently uncertain and subject to refinement. The excess of the total of the purchase consideration, fair value of the noncontrolling interest and fair value of the previously held equity interest
Appendix A NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) over the identifiable assets acquired and liabilities assumed is recorded as goodwill. Measurement period adjustments to the fair values of the identifiable assets acquired and liabilities assumed with the corresponding offset to goodwill, if applicable, are applied in the reporting period in which the adjustment amounts are determined based on new information obtained during the measurement period. In the event of a step acquisition, the Company records a gain or loss in Other income (expense), net on the consolidated statement of earnings as a result of remeasuring a previously held equity interest to fair value on the acquisition date. Transaction expenses are recognized separately from the business combination and are expensed as incurred.
Impairment Review of Goodwill and Indefinite-Lived Intangible Assets The Company tests its goodwill, trademarks with indefinite lives and other indefinite-lived intangible assets annually for impairment in the fiscal fourth quarter unless there are indications during a different interim period that these assets may have become impaired. With respect to goodwill, the Company has the option to first assess qualitative factors, such as the maturity and stability of the reporting unit, the magnitude of the excess fair value over carrying value from a previous period’s impairment testing, other reporting unit specific operating results, To determine the fair value of a reporting unit as part of its quantitative test, the Company uses the discounted cash flow (DCF) method under the income approach, as it believes that this approach is the most reliable indicator of the fair value of its businesses and the fair value of For trademarks and other intangible assets with indefinite lives, the Company has the option to first assess qualitative factors, such as the maturity and stability of the trademark or other intangible asset, the magnitude of the excess fair value over carrying value from a previous period’s impairment testing, other specific operating results, as well as new events and circumstances impacting the significant inputs used to determine the fair value of the intangible asset. If the result of a qualitative test indicates that it is more likely than not that the asset is impaired, a quantitative test is performed. When a quantitative test is performed, the estimated fair value of an asset is compared to its carrying value. If the carrying value of such asset exceeds its estimated fair value, an impairment charge is recorded for the difference between the carrying value and the estimated fair value. The Company uses the DCF method under the relief from royalty income approach to estimate the fair value of its trademarks and other intangible assets with indefinite lives. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows, as well as the appropriate discount and foreign exchange rates applied to those cash flows to determine fair value. Changes in such estimates or the use of alternative assumptions could produce different results. Continues on next page ►
Appendix A NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases The Company determines whether an arrangement contains a lease at inception by determining if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration and other facts and circumstances. Right-of-use (ROU) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are calculated based on the lease liability adjusted for any lease payments paid to the lessor at or before the commencement date and initial direct costs incurred by the Company and excludes any lease incentives received from the lessor. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. The lease term may include an option to extend or terminate the lease when it is reasonably certain that the Company will exercise that option as of the commencement date of the lease, and is reviewed in subsequent periods if a triggering event occurs. As the Company’s leases typically do not contain a readily determinable implicit rate, the Company determines the present value of the lease liability using its incremental borrowing rate at the lease commencement date based on the lease term and the currency of the lease on a collateralized basis. Variable lease payments are the portion of lease payments that are not fixed over the lease term.
Variable lease payments are expensed as incurred, and include certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease, as applicable. The Company elected to combine lease and non-lease components as a single lease component and to exclude short-term leases, defined as leases with an initial term of 12 months or less, from its consolidated balance sheet.
The Company incurs restructuring costs in connection with workforce reductions; consolidation or closure of The Company Stock-based Compensation The Company grants various nonqualified stock-based compensation awards to eligible employees, including stock options, restricted stock awards and performance shares. For stock options, the Company estimates the fair value of each award on the date of grant using the Black-Scholes valuation model, which requires management to make estimates regarding expected option life, stock price volatility and other assumptions. Groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The Company estimates stock option forfeitures based on historical data for each employee grouping. The total number of stock options expected to vest is adjusted by actual and estimated forfeitures. Changes to the actual and estimated forfeitures will result in a cumulative adjustment in the period of change. Compensation
Appendix A NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) expense is recorded by amortizing the grant date fair values on a straight-line basis over the vesting period, adjusted for estimated forfeitures. For restricted stock awards, the fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. Forfeitures are estimated based on historical data. The total number of restricted stock awards expected to vest is adjusted by actual and estimated forfeitures. Changes to the actual and estimated forfeitures will result in a cumulative adjustment in the period of change. Compensation expense is recorded by amortizing the grant date fair values on a straight-line basis over the vesting period, adjusted for estimated forfeitures. The Company’s performance shares provide for the issuance of common stock to certain managerial staff and executive management if the Company achieves specified performance targets. The number of shares issued is dependent upon the achievement of specified performance targets. The performance period is three years and the payout determination is made at the end of the three-year performance period. Performance shares receive dividends earned during the vesting period upon vesting. The fair value of each grant issued is estimated on the date of grant based on the current market price of the stock. The total amount of compensation expense recognized reflects estimated forfeiture rates and management’s assessment of the probability that performance goals will be achieved. A cumulative adjustment is recognized to compensation expense in the current period to reflect any changes in the probability of achievement of performance goals. Cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for stock-based payment arrangements (excess tax benefits) are classified as operating cash inflows. Employee Benefits The Company accounts for its retirement income and retirement health care plans using actuarial
and, therefore, the expectation is that the pattern of income and expense recognition should closely match the pattern of the services provided by the participants. The Company uses a market-related value method for calculating plan assets for purposes of determining the amortization of actuarial gains and losses. The differences between actual and expected returns are recognized in the net periodic benefit cost calculation over the average remaining service period or expected lifetime (for frozen plans) of the plan participants using the corridor approach. Under this approach, only actuarial gains (losses) that exceed 5% of the greater of the projected benefit obligation or the market-related value of assets are amortized to the Company’s net periodic benefit cost. In developing its expected return on plan assets, the Company considers the long-term actual returns relative to the mix of investments that comprise its plan assets and also develops estimates of future investment returns by considering external sources. The Company recognizes an actuarial-based obligation at the onset of disability for certain benefits provided to individuals after employment, but before retirement, that Continues on next page ►
Appendix A NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Environmental Costs The Company is involved in certain environmental remediation and ongoing compliance activities. Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been incurred and based upon a reasonable estimate of the liability. The Company’s accruals reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. These accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given the inherent uncertainties in evaluating environmental exposures. The accrual for environmental matters is included in Accounts payable and accrued liabilities and Other liabilities in the Company’s consolidated balance sheets on an undiscounted basis due to uncertainty regarding the timing of future payments. Revenue Recognition The Company’s revenue is primarily generated from the sale of finished product to customers. Revenue is recognized at the point in time when performance obligations under the terms of customer contracts are satisfied, which is when ownership, risks and rewards transfer, and can be on the date of shipment or the date of receipt by the customer, depending upon the particular customer arrangement. Shipping and handling activities are accounted for as contract fulfillment costs and included within Cost of products sold. After the completion of the performance obligation, there is an unconditional right to consideration as outlined in the contract. A right is considered unconditional if nothing other than the passage of time is required before payment of that consideration is due. The Company typically collects its customer receivables within two months. All performance obligations under the terms of contracts with customers have an original duration of one year or less. The Company has trade promotion programs, which primarily include shelf price reductions, in-store merchandising and consumer coupons. The costs of such activities, defined as variable consideration under ASC 606, “Revenue from Contracts with Customers,” are netted against sales and recorded when the related sales take place. Accruals for trade promotion programs are established based on the Company’s best estimate of the amounts necessary to settle existing and future obligations for products sold as of the balance sheet date. Amounts accrued for trade-promotions are based on various factors such as contractual terms and sales volumes, and also incorporate estimates that include customer participation rates, the rate at which customers will achieve program performance criteria, product availability and historical consumer redemption rates. The Company provides an allowance for doubtful accounts based on its historical experience and ongoing assessment of its customers’ credit risk and aging. Customer receivables are presented net of an allowance for doubtful accounts of
Cost of Products Sold Cost of products sold represents the costs directly related to the manufacture and distribution of the Company’s products and primarily includes raw materials, packaging, contract manufacturing fees, shipping and handling, warehousing, package design, depreciation, amortization, direct and indirect labor and operating costs for the Company’s manufacturing and distribution facilities, including salary, benefit costs and incentive compensation, and royalties and other charges related to the Company’s Glad Venture Agreement (See Note Costs associated with developing and designing new packaging, including design, artwork, films and labeling, are expensed as incurred and included within Cost of products sold.
Appendix A NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Selling and Administrative Expenses Selling and administrative expenses represent costs incurred by the Company in generating revenues and managing the business and include market research, commissions and certain administrative expenses. Administrative expenses include salary, benefits, incentive compensation, professional fees and services and other operating costs (such as software and licensing costs) associated with the Company’s non-manufacturing, non-research and development operations. Advertising and Research and Development Costs The Company expenses advertising and research and development costs in the period incurred. Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s income tax provision in the period of change. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet certain recognition thresholds or measurement standards. Amounts for uncertain tax positions are adjusted in quarters when new information becomes available or when positions are effectively settled. Per U.S. GAAP, foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion and determined that none of the undistributed earnings of its foreign subsidiaries are indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable. Foreign Currency Transactions and Translation Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of Other (income) expense, net. In addition, certain assets and liabilities denominated in currencies other than a foreign subsidiary’s functional currency are reported on the subsidiary’s books in its functional currency, with the impact from exchange rate differences recorded in Other (income) expense, net. Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the balance sheet date, while income and expenses are translated at the respective average monthly exchange rates during the year. Gains and losses on foreign currency translations are reported as a component of Other comprehensive (loss) income. The income tax effect of currency translation adjustments is recorded as a component of deferred taxes with an offset to Other comprehensive (loss) income where appropriate.
Effective July 1, 2018, under the requirements of U.S. GAAP, Argentina was designated as a highly inflationary economy, since it has experienced cumulative inflation of approximately 100 percent or more over a three-year period. As a result, beginning July 1, 2018, the U.S. dollar replaced the Argentine peso as the functional currency of the Company’s subsidiaries in Argentina (collectively, “Clorox Argentina”). Consequently, gains and losses from non-U.S. dollar denominated monetary assets and liabilities for Clorox Argentina are recognized in Other (income) expense, net in the consolidated statement of earnings. Continues on next page ►
Appendix A NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Derivative Instruments The Company’s use of derivative instruments, principally exchange-traded futures and options contracts, and over-the counter swaps The changes in the fair value (i.e., gains or losses) of a derivative instrument are recorded as either assets or liabilities in the consolidated balance sheets with an offset to Net earnings or Other comprehensive (loss) income depending on whether, for accounting purposes, it has been designated and qualifies as an accounting hedge and, if so, on the type of hedging relationship. The criteria used to determine if hedge accounting treatment is appropriate are: (a) formal designation and documentation of the hedging relationship, the risk management objective and hedging strategy at hedge inception; (b) eligibility of hedged items, transactions and corresponding hedging instrument; and (c) effectiveness of the hedging relationship both at inception of the hedge and on an ongoing basis in achieving the hedging objectives. For those derivative instruments designated and qualifying as hedging instruments, the Company must designate the hedging instrument either as a fair value hedge or as a cash flow hedge. The Company designates its commodity For derivative instruments designated and qualifying as cash flow hedges, gains or losses Recently Issued Accounting Standards Recently Issued Accounting Standards Not Yet Adopted In
Appendix
NOTE 2. BUSINESS ACQUIRED Saudi Joint Venture Acquisition On July 9, 2020, the Company increased its investment in each of the two entities comprising its joint venture in the Kingdom of Saudi Arabia (Saudi joint venture). The joint venture offers customers in the Gulf region a range of cleaning and disinfecting products. The Company had previously accounted for its 30 percent investment of $27 as of June 30, 2020, under the equity method of accounting. Subsequent to the closing of this transaction, the Company’s total ownership interest in each of the entities increased to 51 percent. The Company has consolidated this joint venture into The total purchase consideration of $111 consisted of $100 cash paid, which was sourced from operations, and $11 from the net effective settlement of preexisting arrangements between the Company and the joint venture. The assets and liabilities of the joint venture were recorded at their respective estimated fair value as of the acquisition date using generally accepted accounting principles for business combinations. The excess of the purchase price over the fair value of the net identifiable assets acquired As a result of this transaction, the carrying value of the Company’s previously held equity investment was remeasured to fair value, and resulted in an $85 The purchase price allocation was finalized during the second quarter of fiscal year 2021. The following table summarizes the final purchase price allocation for the fair value of the joint venture’s assets acquired and liabilities assumed and the related deferred income taxes as of the acquisition date. The
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Appendix NOTE
The Company incurred $60 of costs in fiscal year 2023 and anticipates incurring approximately $30 to $40 in fiscal year 2024 related to this initiative, of which approximately half are expected to include employee-related costs to reduce certain staffing levels such as severance payments, with the remainder for consulting and other costs. Costs incurred are expected to be settled primarily in cash. The total restructuring and related implementation costs, net associated with the Company’s streamlined operating model plan as reflected in the Consolidated Statements of Earnings and Comprehensive Income for the fiscal year ended June 30 were:
Employee-related costs primarily include severance and other termination benefits calculated based on salary levels, prior service and statutory requirements. Other costs primarily include consulting fees incurred for the organizational design and implementation of the streamlined operating model, related processes and other professional fees incurred. The Company may, from time to time, decide to pursue additional restructuring-related initiatives that involve costs in future periods. The following table reconciles the accrual for the streamlined operating model restructuring and related implementation costs discussed above, which are recorded within Accounts payable and accrued liabilities in the Consolidated Balance Sheets as follows for the fiscal years ended June 30:
Appendix A NOTE Inventories, net consisted of the following as of June 30:
(1) Non-current inventories, net is recorded in Other assets. The LIFO method was used to value approximately NOTE The components of property, plant and equipment, net, consisted of the following as of June 30:
Depreciation and amortization expense related to property, plant and equipment, net, was
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Appendix A NOTE The changes in the carrying amount of goodwill by reportable segment and Corporate and Other for the fiscal years ended June 30,
The changes in the carrying amount of trademarks and other intangible assets for the fiscal years ended June 30, 2023 and 2022 were as follows:
Amortization expense relating to the Company’s intangible assets was Fiscal Year 2023 Impairments During the third quarter of fiscal year 2023, management made a decision to narrow the focus on core brands and streamline investment levels in the VMS business. As a result, revisions were made to the internal financial projections and operational plans of the VMS business reflecting the Company’s current estimates regarding the future financial performance of these operations and macroeconomic
Appendix NOTE factors. The revised estimated future cash flows reflect lower sales growth expectations and lower investment levels. These revisions were considered a triggering event requiring interim impairment assessments to be performed as part of the preparation of the quarterly financial statements on the global indefinite-lived trademarks, other long-term assets and the VMS reporting unit. Based on the outcome of these assessments, the following pre-tax, noncash impairment charges were recorded during fiscal year 2023:
In connection with recognizing these impairment charges, the Company recognized tax benefits related to the impairments of $83 due to the partial tax deductibility of these charges. To determine the estimated fair values of the global indefinite-lived trademarks related to the VMS business, the Company used the DCF method under the relief from royalty income approach. This approach requires significant judgments in determining the royalty rates and the assets’ estimated cash flows as well as the appropriate discount rates applied to those cash flows to determine fair value. As a result of the interim impairment test, the Company concluded that the carrying value of the global indefinite-lived trademarks exceeded their estimated fair value, and recorded impairment charges of $139. In addition, the useful lives of the impaired trademarks, with a remaining net carrying value of $28 as of March 31, 2023, were changed from indefinite to finite beginning on April 1, 2023, which reflects the remaining expected useful lives of the trademarks based on the most recent financial and operational plans. The weighted-average estimated useful life of these trademarks is 20 years. After adjusting the carrying values of the global indefinite-lived trademarks and concluding that the carrying amounts of the other long-lived assets were recoverable, the Company completed a quantitative impairment test for goodwill and recorded a goodwill impairment charge of $306 in the VMS reporting unit. To determine the fair value of the VMS reporting unit, the Company used a DCF method under the income approach. In accordance with this approach, the Company estimated the future cash flows of the VMS reporting unit and discounted these cash flows at a rate of return that reflects its relative risk. The other key estimates and factors used in the DCF method include, but are not limited to, net sales and expense growth rates and a terminal growth rate. The decrease in projected cash flows due to the revisions adversely impacted key assumptions used in determining the fair value of the VMS reporting unit and assets contained therein, primarily projected net sales. There is no remaining goodwill associated with the impaired reporting unit. Fiscal Year 2021 Impairments During fiscal year 2021, as a result of lower than expected actual and projected net sales growth and operating performance for the VMS Continues on next page ►
Appendix A NOTE 6. GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS (Continued)
In connection with recognizing these impairment charges, The fiscal year 2021 impairment charges were a result of a higher level of competitive activity than originally assumed, accelerated declines in To determine the estimated fair values of the VMS related indefinite-lived trademarks, the Company To determine the fair value of the VMS reporting unit, the Company used the DCF method under the income approach. Under this approach, the Company estimated the future cash flows of the VMS reporting unit and discounted these cash flows at a rate of return that
Additionally, during fiscal year 2021, an impairment charge of $14 was recorded within Cost of products sold related to other intangible assets with finite lives that were no longer expected to be recoverable due to a pending exit from a Professional Products SBU supplier relationship. The remaining carrying value of these assets was $0 following the impairment charge. No other significant impairments were identified as a result of the Company’s impairment reviews during fiscal
Appendix NOTE Accounts payable and accrued liabilities consisted of the following as of June 30:
NOTE Short-term borrowings Notes and loans payable are borrowings that mature in less than one year, primarily consisting of U.S. commercial paper issued by the Company and borrowings under the Company’s revolving credit agreements. Notes and loans payable were
Long-term borrowings Long-term debt, carried at face value net of unamortized discounts, premiums and debt issuance costs, included the following as of June 30:
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Appendix A NOTE 8. DEBT (Continued) In May
The weighted average interest rates incurred on average outstanding long-term debt during the fiscal years ended June 30, 2023, 2022 and 2021, Long-term debt maturities as of June 30, Credit arrangements
The Company’s borrowing capacity under the revolving credit agreements and other financing arrangements as of June 30 was as follows:
Of the $35 of foreign and other credit lines as of June 30,
Appendix A NOTE Other liabilities consisted of the following as of June 30:
Venture Agreement The Company has an agreement with The Procter & Gamble Company (P&G) for the Company’s Glad bags and wraps business. In connection with this agreement, P&G provides research and development (R&D) support to the Glad business. As of June 30,
prior to January 31, 2025, to further extend the term of the agreement for another seven years or agree to take some other relevant action. The agreement can be terminated under certain circumstances, including at P&G’s option upon a change in control of the Company or, at either party’s option, upon the sale of the Glad business by the Company. Upon termination of the agreement, the Company is required to purchase P&G’s 20% interest for cash at fair value as established by predetermined valuation procedures. As of June 30, NOTE Financial Risk Management and Derivative Instruments The Company is exposed to certain commodity, foreign currency and interest rate risks related to its ongoing business operations and uses derivative instruments to mitigate its exposure to these risks. Commodity Price Risk Management The Company may use commodity Continues on next page ►
Appendix A NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued) As of June 30, Foreign Currency Risk Management The Company may also enter into certain over-the-counter derivative contracts to manage a portion of the Company’s forecasted foreign currency exposure associated with the purchase of inventory. These foreign currency contracts generally have The notional amounts of outstanding foreign currency forward contracts used by the Company’s subsidiaries to hedge forecasted purchases of inventory were Interest Rate Risk Management The Company may enter into over-the-counter interest rate contracts to fix a portion of the benchmark interest rate prior to the anticipated issuance of fixed rate debt. These interest rate contracts generally have The During fiscal year 2022, the Company
Commodity, Foreign Exchange and Interest Rate Derivatives The Company designates its commodity forward, futures and The effects of derivative instruments designated as hedging instruments on Other comprehensive (loss) income and Net earnings were as follows during the fiscal years ended June 30:
Appendix A NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued)
The estimated amount of the existing net gain (loss) in Accumulated other comprehensive net (loss) income as of June 30, Counterparty Risk Management and Derivative Contract Requirements The Company utilizes a variety of financial institutions as counterparties for over-the-counter derivative instruments. The Company enters into agreements governing the use of over-the-counter derivative instruments and sets internal limits on the aggregate over-the-counter derivative instrument positions held with each counterparty. Certain terms of these agreements require the Company or the counterparty to post collateral when the fair value of the derivative instruments exceeds contractually defined counterparty liability position limits. Of the over-the-counter derivative instruments in liability positions,
Certain terms of the agreements governing the Company’s over-the-counter derivative instruments require the Company’s credit ratings, as assigned by Standard & Poor’s and Moody’s to the Company and its counterparties, to remain at a level equal to or better than the minimum of an investment grade credit rating. If the Company’s credit ratings were to fall below investment grade, the counterparties to the derivative instruments could request full collateralization on derivative instruments in net liability positions. As of both June 30, Certain of the Company’s exchange-traded futures and options contracts used for commodity price risk management include requirements for the Company to post collateral in the form of a cash margin account held by the Company’s broker for trades conducted on that exchange. As of June 30, Trust Assets The Company holds interests in mutual funds and cash equivalents as part of trust assets related to its nonqualified deferred compensation plans. The participants in the nonqualified deferred compensation plans, who are the Company’s current and former employees, may select among certain mutual funds in which their compensation deferrals are invested in accordance with the terms of the Continues on next page ►
Appendix A NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued) for which the Company is considered the primary beneficiary, and, therefore, trust assets are consolidated and included in Other assets in the consolidated balance sheets. The gains and losses on the trust assets are recorded in Other (income) expense, net in the consolidated statements of earnings. The interests in mutual funds are measured at fair value using quoted market prices. The Company has designated these marketable securities as trading investments. As of June 30, Fair Value of Financial Instruments Financial assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets are required to be classified and disclosed in one of the following three categories of the fair value hierarchy: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. As of June 30,
All of the Company’s derivative instruments qualify for hedge accounting. The following table provides information about the balance sheet classification and the fair values of the Company’s derivative instruments:
Appendix A NOTE 10. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Continued) The following table provides information about the balance sheet classification and the fair values of the Company’s other assets and liabilities for which disclosure of fair value is required:
Furthermore, impairment charges of $445 were record during fiscal year 2023, of which $306 and $139 related to goodwill and certain indefinite-lived trademarks, respectively. Additionally, impairment charges of $343 were recorded during the fiscal year 2021, of which $228,
NOTE Contingencies The Company is involved in certain environmental matters, including response actions at various locations. The Company had recorded liabilities totaling $28 as of both June 30, One matter, which accounted for $12 and $14 of the recorded liability as of Continues on next page ►
Appendix A NOTE 11. OTHER CONTINGENCIES, GUARANTEES AND COMMITMENTS (Continued) evaluated various options for managing groundwater at the site and included estimates of the related costs. Another matter in Dickinson County, Michigan, at the site of one of the Company’s former operations for which the Company is jointly and severally liable, accounted for $10 and $9 of the recorded liability as of The Company’s estimated losses related to these matters are sensitive to a variety of uncertain factors, including the efficacy of any remediation efforts, changes in any remediation requirements and the future availability of alternative clean-up technologies. The Company is subject to various legal proceedings, claims and other loss contingencies, including, without limitation, loss contingencies relating to contractual arrangements (including costs connected to the transition and unwinding of certain supply and manufacturing relationships), product liability, patents and trademarks, advertising, labor and employment, environmental, health and safety and other matters. With respect to these proceedings, claims and other loss contingencies, while considerable uncertainty exists, in the opinion of management at this time, the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, either individually or in the aggregate, on the Company’s consolidated financial statements taken as a whole. Guarantees In conjunction with divestitures and other transactions, the Company may provide typical indemnifications (e.g., indemnifications for representations and warranties and retention of previously existing environmental, tax and employee liabilities) that have terms that vary in duration and in the potential amount of the total obligation and, in many circumstances, are not explicitly defined. The Company has not made, nor does it believe that it is probable that it will make, any material payments relating to its indemnifications, and believes that any reasonably possible payments would not have a material adverse effect, either individually or in the aggregate, on the Company’s consolidated financial statements taken as a whole. The Company had not recorded any material liabilities on the aforementioned guarantees as of both June 30, The Company was a party to
Appendix NOTE Commitments The Company is a party to certain purchase obligations, which are defined as purchase agreements that are enforceable and legally binding and that contain specified or determinable significant terms, including quantity, price and the approximate timing of the transaction. For purchase obligations subject to variable price and/or quantity provisions, an estimate of the price and/or quantity must be made. Examples of the Company’s purchase obligations include contracts to purchase raw materials, commitments to contract manufacturers, commitments for information technology and related services, advertising contracts, capital expenditure agreements, software acquisition and license commitments and service contracts. The Company enters into purchase obligations based on expectations of future business needs. Many of these purchase obligations are flexible to allow for changes in the Company’s business and related requirements. As of June 30,
NOTE The Company leases various property, plant and equipment, including office, warehousing, manufacturing and research and development facilities and equipment. These leases have remaining lease terms of up to Supplemental balance sheet information related to the Company’s leases as of June 30 was as follows:
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Appendix NOTE Components of lease cost were as follows for the fiscal years ended June 30:
Supplemental cash flow information and
Weighted-average remaining lease term and discount rate for the Company’s leases were as follows as of fiscal year ended June 30:
Appendix A NOTE 12. LEASES (Continued) Maturities of lease liabilities by fiscal year for the Company’s leases as of June 30,
Operating and finance lease payments presented in the table above exclude
NOTE On November 18, 2020 the Company retired 28 million shares of its treasury stock. These shares are now authorized but unissued. There was no effect on the Company’s overall equity position as a result of the retirement.
Dividends per share paid to Clorox stockholders during the fiscal years ended June 30 were as follows:
Accumulated Other Comprehensive Net (Loss) Income Changes in Accumulated other comprehensive net (loss) income attributable to Clorox by component were as follows for the fiscal years ended June 30:
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Appendix A NOTE 13. STOCKHOLDERS’ EQUITY (Continued)
Included in foreign currency translation adjustments are re-measurement losses on long-term intercompany loans where settlement is not planned or anticipated in the foreseeable future. There were
Appendix A NOTE The following is the reconciliation of the weighted average number of shares outstanding (in thousands) used to calculate basic net EPS to those used to calculate diluted net EPS for the fiscal years ended June 30:
Basic net earnings per share and Diluted net earnings per share are calculated on Net earnings attributable to Clorox.
NOTE In November Compensation cost and the related income tax benefit recognized for stock-based compensation plans were classified as indicated below for the fiscal years ended June 30:
Cash received during fiscal years Details regarding the valuation and accounting for stock options, restricted stock awards, performance shares and deferred stock units for non-employee directors follow. Continues on next page ►
Appendix A NOTE 15. STOCK-BASED COMPENSATION PLANS (Continued) Stock Options The fair value of each stock option award granted during fiscal years
The expected life of the stock options is based on historical exercise patterns. The expected volatility is based on implied volatility from publicly traded options on the Company’s stock at the date of grant, historical implied volatility of the Company’s publicly traded options and other factors. The risk-free interest rate is based on the implied yield on a U.S. Treasury zero-coupon issue with a remaining term equal to the expected term of the option. The dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.
Details of the Company’s stock option activities are summarized below:
The weighted-average fair value per share of each option granted during fiscal years Stock option awards outstanding as of June 30,
Appendix A NOTE 15. STOCK-BASED COMPENSATION PLANS (Continued) Restricted Stock Awards The fair value of restricted stock awards is estimated on the date of grant based on the market price of the stock and is amortized to compensation expense on a straight-line basis over the related vesting periods, which are generally 3 to 4 years. The total number of restricted stock awards expected to vest is adjusted by actual and estimated forfeitures. Restricted stock awards receive dividend distributions earned during the vesting period upon vesting. As of June 30, A summary of the status of the Company’s restricted stock awards is presented below:
The fair value of
As of June 30, A summary of the status of the Company’s performance share awards is presented below:
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Appendix A NOTE 15. STOCK-BASED COMPENSATION PLANS (Continued) The non-vested performance shares outstanding as of June 30, Deferred Stock Units for Nonemployee Directors Nonemployee directors receive annual grants of deferred stock units under the Company’s director compensation program and can elect to receive all or a portion of their annual retainers and fees in the form of deferred stock units. The deferred stock units receive dividend distributions, which are reinvested as deferred stock units, and are recognized at their fair value on the date of grant. Each deferred stock unit represents the right to receive one share of the Company’s common stock following the completion of a director’s service. During fiscal year
NOTE The major components of Other (income) expense, net, for the fiscal years ended June 30 were:
Appendix A NOTE The provision for income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
The components of Earnings before income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate on operations follows for the fiscal years ended June 30:
The Inflation Reduction Act (the “Act”) was signed into law on August 16, 2022. The Act introduces a new 15% corporate minimum tax for certain large corporations that becomes effective at the beginning of the Company’s fiscal 2024 and it imposes a 1% excise tax on the value of share repurchases, net of new Continues on next page ►
Appendix A NOTE 17. INCOME TAXES (Continued) share issuances, after December 31, 2022. These provisions, as well as the other corporate tax changes included in the Act, are not expected to have a material impact on the Company’s financial statements. Per U.S. GAAP, foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. The components of net deferred tax assets (liabilities) as of June 30 are shown below:
The net deferred tax assets and liabilities included in the consolidated balance sheet at June 30 were as follows:
Appendix A
NOTE The Company reviews its deferred tax assets for recoverability on a quarterly basis. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Valuation allowances have been provided to reduce deferred tax assets to amounts considered recoverable. Details of the valuation allowance were as follows as of June 30:
As of June 30, The Company files income tax returns in the U.S. federal and various state, local and foreign jurisdictions. The federal statute of limitations has expired for all tax years through June 30, 2015. Various income tax returns in state and foreign jurisdictions are currently in the process of examination. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of June 30,
The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits:
Included in the balance of unrecognized tax benefits as of June 30,
Appendix A NOTE Retirement Income Plans The Company has various retirement income plans for eligible domestic and international employees. As of June 30, The Company contributed $14, The Company has a domestic qualified pension plan (the Plan). The Plan is frozen for all participants. The Plan generally was frozen effective June 30, 2011 for all employees, except for certain collectively bargained employees, whose Plan freeze was effective January 1, 2019. As a result of the Plan freeze, no employees are eligible to commence participation in the Plan or accrue any additional benefits under the Plan. On May 17, 2022, the Company’s Board of Directors approved a resolution to terminate the Plan. The amendment will allow the settlement of the pension obligation with either a lump sum payout or a purchased annuity. It is expected to take 18 to 24 months to complete the termination from the date of the approved resolution to terminate the Plan. As of June 30, 2023, the Company recorded net unrealized losses of $136, net of tax, ($179 before taxes) in Accumulated other comprehensive net (loss) income on its consolidated balance sheet related to the Plan. These net unrealized losses will be recognized in the Company’s consolidated statement of income as payments are made to settle lump sum elections and to purchase group annuity contracts. Final settlement is dependent on market conditions, which could affect discount rates and returns on plan assets as well as final elections received from plan participants. Currently, there is not enough information available to determine the ultimate charge of the termination. Retirement Health Care Plans The Company provides certain health care benefits for employees who meet age, participation and length of service requirements at retirement. The plans pay stated percentages of covered expenses after annual deductibles have been met or stated reimbursements up to a specified dollar subsidy amount. Benefits paid take into consideration payments by Medicare for the domestic plan. The plans are funded as claims are paid, and the Company has the right to modify or terminate certain plans.
Appendix A
NOTE Benefit Obligation and Funded Status Summarized information for the Company’s retirement income and retirement health care plans as of and for the fiscal years ended June 30 is as follows:
For the retirement income plans, the benefit obligation is the projected benefit obligation (PBO). For the retirement health care plan, the benefit obligation is the accumulated benefit obligation (ABO).
The ABO for all retirement income plans was Continues on next page ►
Appendix A NOTE 18. EMPLOYEE BENEFIT PLANS (Continued) Retirement income plans with ABO or PBO in excess of plan assets as of June 30 were as follows:
Net Periodic Benefit Cost The net cost of the retirement income and health care plans for the fiscal years ended June 30 included the following components:
Service cost component of the net periodic benefit cost is reflected in employee benefit costs, and all other components are reflected in Other (income)
Items not yet recognized as a component of postretirement expense as of June 30,
Appendix A NOTE 18. EMPLOYEE BENEFIT PLANS (Continued) Net actuarial loss (gain) recorded in Accumulated other comprehensive net (loss) income for the fiscal year ended June 30,
The Company uses the straight-line amortization method for unrecognized prior service costs and benefits. Assumptions Weighted-average assumptions used to estimate the actuarial present value of benefit obligations were as follows as of June 30:
Weighted-average assumptions used to estimate the retirement income and retirement health care costs were as follows as of June 30:
The expected long-term rate of return assumption is based on Continues on next page ►
Appendix A
NOTE The actuarial benefit obligation Expected Benefit Payments Expected benefit payments for the Company’s retirement income and retirement health care plans as of June 30,
Expected benefit payments are based on the same assumptions used to measure the benefit obligations and include estimated future employee service. Plan Assets The target allocations and weighted average asset allocations by asset category of the investment portfolio for the Company’s domestic retirement income plans as of June 30 were:
The target asset allocation is determined based on the optimal balance between risk and return and, at times, may be adjusted to achieve the plan’s overall investment objective to generate sufficient resources to pay current and projected plan obligations over the life of the domestic retirement income plan.
Appendix A NOTE 18. EMPLOYEE BENEFIT PLANS (Continued) The following table sets forth the retirement income plans’ assets carried at fair value as of June 30:
Common collective trust funds are not publicly traded and were valued at a net asset value unit price determined by the portfolio’s sponsor based on the fair value of underlying assets held by the common collective trust fund on June 30, The common collective trusts are invested in various trusts that attempt to achieve their investment objectives by investing primarily in other collective investment funds that have characteristics consistent with each trust’s overall investment objective and strategy. Defined Contribution Plans The Company has various defined contribution plans for eligible domestic and international employees. The aggregate cost of the domestic defined contribution plans was Continues on next page ►
Appendix A NOTE During the fourth quarter of fiscal year 2023, the Company realigned its reportable segments following management’s decision to narrow the focus on core brands and streamline investment levels in the VMS business. As a result of this decision and the financial impact of the related impairment charges incurred in prior periods, the VMS operating segment, previously included in the Health and Wellness reportable segment, no longer meets the criteria to be presented as a reportable segment and is now combined with Corporate. In connection with this change, Corporate was renamed Corporate and Other. The Health and Wellness reportable segment is now comprised of the Cleaning and Professional Products operating segments. Additionally, beginning in the fourth quarter of fiscal year 2023, management changed its principle measure of segment profitability to segment adjusted earnings (losses) before interest and income taxes. Segment adjusted earnings (losses) before interest and income taxes is defined as earnings (losses) before income taxes excluding interest income, interest expense and other significant items that are nonrecurring or unusual (such as asset impairments, charges related to the streamlined operating model, charges related to the digital capabilities and productivity enhancements investment, significant losses/(gains) related to acquisitions and other nonrecurring or unusual items impacting comparability). The Company uses this measure to assess the operating results and performance of its segments, perform analytical comparisons, identify strategies to improve performance, and allocate resources to each segment. Management believes that the presentation of segment adjusted earnings (losses) before interest and income taxes excluding these items is useful to investors to assess operating performance on a consistent basis by removing the impact of the items that management believes do not directly reflect the performance of each segment’s underlying operations. All periods presented have been recast to reflect these changes. The Company operates through
Appendix A NOTE 19. SEGMENT REPORTING (Continued) Corporate and Other includes certain non-allocated administrative costs, various other non-operating income and expenses, as well as the results of the VMS business. Assets in Corporate and Other include cash and cash equivalents, prepaid expenses and other current assets, property and equipment, operating lease right-of-use assets, other long-term assets and deferred taxes, as well as the assets related to the VMS business.
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Appendix A NOTE 19. SEGMENT REPORTING (Continued)
All intersegment sales are eliminated and are not included in the Company’s reportable Net sales to the Company’s largest customer, Walmart Stores, Inc. and its affiliates, were 26%, 25%, and 25% of consolidated net sales for each of the fiscal years ended June 30, 2023, 2022 and 2021,
Appendix A
NOTE The following table provides Net sales as a percentage of the Company’s consolidated net sales, disaggregated by
The Company’s products are marketed and sold globally. The following table provides the Company’s global product lines, which were sold in the U.S.
Net sales and property, plant and equipment, net, by geographic area for and as of the fiscal years ended June 30 were as follows:
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Appendix A
NOTE The Company holds various equity investments with ownership percentages of up to 50% in a number of consumer products businesses, which operate both within and outside the United States. The equity investments, presented in Other assets and accounted for under the equity method, were Transactions with the Company’s equity investees typically represent payments for contract manufacturing and purchases of raw materials. Payments to related parties, including equity investees, for such transactions during the fiscal years ended June 30, 2023, 2022 and 2021
Appendix A
THE CLOROX COMPANY
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Appendix A
 GAAP to Non-GAAP Reconciliation of Adjusted EPS Reconciliation of Adjusted EPS (4)
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The To access the virtual meeting, you must have the information that is printed in the shaded bar The Notice of Annual Meeting,
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