FLOWSERVE 2.0
TRANSFORMATION — Our Purpose, Values and Behaviors

In the second quarter of 2018, we launched and committed resources to our Flowserve 2.0 Transformation, a program designed to transform our business model to drive operational excellence, reduce complexity, accelerate growth, improve organizational health and better leverage our existing global platform. A significant launching point for our Flowserve 2.0 Transformation was to put a foundation in place for our organization by establishing our purpose and six core values. In 2019, we expanded this foundation to include our seven behaviors. Our purpose, values and behaviors were all created by a cross-functional, global group of employees.

2021 PROXY STATEMENT 7

FLOWSERVE 2.0
TRANSFORMATION — Our Focus

We have approached the Flowserve 2.0 Transformation with a focus on four key areas that are integral to our success — People, Process & Technology, Customer, and Finance.

	~~Base~~People The most significant focus area in 2020 was working to keep our people safe from COVID-19 while performing essential operations. During 2020, safety improved to a record low total recordable incident rate ranking Flowserve among top decile for safety among manufacturing companies. Additionally, based on the results of our annual employee engagement survey, employee engagement modestly increased in 2020 despite the challenges presented by COVID-19 and the subsequent market volatility. We reaffirmed our commitment to diversity, equity and inclusion and strengthened our leadership team with minimal organizational disruption with the hiring of our new CFO and President of our Flowserve Pumps Division.

	Process ~~Salary~~&Technology Our globalized operations leverage our common processes and systems. We continue to make progress in our technology delivery and product innovation. During 2020, we improved upon our ZeroDefect quality program, manufacturing planning and Flowserve Lean Systems to increase productivity and first pass yield. We also continued to focus on innovation, including product enhancements and design to value product development in order to provide our customers with high quality, cost-effective product solutions, resulting in the launch of 21 new products in 2020.

	~~Fixed cash compensation based on responsibilities~~Customer We are committed to providing quality products and services to our customers. We have significant aftermarket capabilities to serve our customers across industries and geographies, and we are leveraging the breadth of our portfolio of mission-critical products to deliver pure-play options and provide enhanced value to our customers. These capabilities were especially important in 2020 as our products were used by customers to continue to deliver essential products and services to the world. For example, we have supplied and are continuing to supply mechanical mixer seals, ball values and pumps to support North American and European production of a COVID-19 vaccine.

	Finance Despite the market and COVID-19 headwinds faced in 2020 that led to a decrease in bookings, we were able to produce solid results in revenue, operating income, and earnings per share. We took swift action following the onset of the ~~position~~
	~~Annual~~~~Incentive~~~~Opportunity~~	~~Annual cash incentive for achievement~~pandemic to reduce SG&A expenses, capital expenditures and other discretionary spending in the second quarter and bolster our balance sheet by refinancing our debt structure in the third quarter of ~~financial performance metrics~~
*~~Long-Term~~~~Incentives~~***	~~Restricted~~~~Stock~~~~Units~~	~~Vests ratably over a three-year period~~
	~~Contingent~~~~Performance~~~~Units~~	~~Cliff vests at end of a three-year period based on financial performance metrics~~
*~~Retirement~~*	~~Qualified~~~~Pension~~~~Plan~~	~~Qualified pension plan, available to all salaried U.S. employees~~
	~~Senior~~~~Management~~~~Pension~~~~Plan~~	~~Partially-funded, non-qualified defined benefit restoration plan, available to certain U.S. employees based on salary level~~
	~~Supplemental~~~~Executive~~~~Pension~~~~Plan~~	~~Partially-funded, non-qualified supplemental defined benefit plan, available to eligible U.S. executives~~2020. These efforts, among others, helped to maintain ~~competitive total retirement benefits~~
	~~401(k)~~~~Plan~~	~~Qualified 401(k) plan available to all U.S. employees~~
*~~Other~~*	~~Severance~~~~Plan~~	~~Sets standard benefits for senior executives~~strong free cash flow and end the year with approximately $1.1 billion in ~~the event of severance~~
	~~Change-in-Control~~~~Plan~~	~~Sets standard benefits for senior executives upon a change-in-control~~
	~~Other~~~~Benefits~~	~~Physical exam, enhanced vacation; no other perquisites offered~~
		cash.

~~- 2019~~2021 PROXY STATEMENT 8

~~2018 Executive Total Compensation Mix~~CORPORATE SOCIAL RESPONSIBILITY

Our Sustainability Program

Guided by our values, we aim to create extraordinary flow control solutions to make the world better for everyone. One of the ways we strive to make the world a better place is through our commitment to environmental, social and governance (ESG) issues, both in our own operations as well as in the operations of our customers who rely on our products to improve the world around us.

We operate through governance practices that are consistent with our high standards of ethics, integrity and transparency in all our stakeholder relationships, including attracting and retaining world-class leadership talent by investing in their professional development and providing them with challenging and rewarding opportunities for personal growth, obtaining high standards of corporate citizenship by protecting the health and safety of our employees, and safeguarding the environment and communities where we do business. With executive-level participation and Board oversight of the program, sustainability has top-down support and is a company-wide priority.

During 2020, in an effort to increase transparency for our stakeholders regarding our sustainability program, we published our 2019 Sustainability Report with the SASB Industrial Machinery and Goods Reporting Standard and the TCFD Reporting Format.

ProtectingthePlanet

Flowserve is committed to reducing the Company’s environmental footprint and delivering environmentally responsible solutions that help customers become more sustainable in the marketplace. We do this by providing our customers with innovative and high-quality products, which reduce emissions, minimize leaks and enhance efficiency. For example, our customers have used our products across the world in the development of carbon capture technology, concentrated solar power projects and flare gas recovery.

In 2020, we set an ambitious target to reduce carbon emission intensity by 40% by 2030, using 2015 as a baseline. We also signed the WASH Pledge, committing to implement access to safe water, sanitation and hygiene in all of our facilities and to encourage our supply chain and communities to do the same.

ValuingOurPeople

We live our values through programs like safety week, integrity & compliance week, providing enterprise leadership development and empowerment training, investing in research and development, and committing to improved diversity, equity and inclusion.

During 2020, our “people first” philosophy drove our response to the COVID-19 pandemic, as we developed a comprehensive pandemic response plan that included safety precautions to prevent spread and contact tracing procedures to isolate affected personnel. We implemented a work from home policy for all associates who were able to do so to promote the safety of all employees. We continue to diligently monitor the local and global impacts of the virus and continue to keep our employees informed of critical updates and changes on an internal website dedicated to the COVID-19 pandemic. Additionally, we continue to make operating decisions that prioritize the safety of our people.

~~2018 Executive Compensation Summary (page 40)~~

Name and
Principal Position
Salary
($)
Bonus
($)
Stock
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Change in Pension
Value and Non-
Qualified Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
R. Scott Rowe
President and CEO
1,126,654
—
5,944,049
1,250,832
227,180
153,754
8,702,469
Lee S. Eckert
Senior VP and CFO
563,327
—
1,666,626
390,885
75,861
35,951
2,732,650
David Wilson
President, FPD
459,087
—
1,118,009
281,524
61,781
160,802
2,081,203
Keith E. Gillespie
Senior VP and Chief Sales Officer
485,000
—
1,077,752
406,042
84,258
44,976
2,098,028
Elizabeth L. Burger
Senior VP and CHRO
330,865
100,000
935,972
198,077
38,347
65,371
1,668,632

~~- 2019~~2021 PROXY STATEMENT 9

Our Global Community Impact Program

PromotingOperationalExcellence

Our executive leadership, together with our Board of Directors, creates the operating structure, establishes strategic direction and develops a roadmap of risks and opportunities facing Flowserve. With that foundation, the entire Flowserve team diligently implements the strategic plan, seizing opportunity to build value through efficiency and continuous improvement.

As part of our strategy, in 2020 we launched TargetZero, a program that unifies our goals and initiatives to drive continuous improvement by striving for zero accidents, defects, delays, emissions and waste.

SupportingourCommunity

Flowserve Cares is our community impact program that takes a global approach to the way we serve our communities, including through monetary donations, in-kind contributions and volunteerism supporting local organizations in the communities where our associates and customers live and work. Flowserve Cares focuses on at-risk youth, STEM programs and education, disaster recovery and local community-related issues.

In addition to these programs and focus areas, our associates around the globe responded to the COVID-19 pandemic by helping in their communities. For example, in Coimbatore, India, our associates distributed over 2,000 “family kits” to residents of the community near our facility, providing food, medicine and safety equipment to approximately 10,000 people. In Bangalore and Chennai, India, in partnership with other charitable organizations, our associates helped to distribute family kits, hygiene kids, and other personal protective equipment to thousands of residents.

In Bali, we also partnered with Social Impakt to distribute ceramic water filters to residents of Bali, Indonesia in order to help ease the impact of COVID-19 in two communities especially hard hit by COVID-19.

2021 PROXY STATEMENT ~~FOR THE 2019 ANNUAL MEETING OF SHAREHOLDERS~~

~~Flowserve~~~~Corporation~~
~~5215 N. O’Connor Blvd., Suite 2300~~
~~Irving, Texas 75039~~

~~Solicitation~~

We are providing these proxy materials in connection with the solicitation by the Board of Directors (the “Board”) of Flowserve Corporation, a New York corporation (the “Company” or “Flowserve”), of proxies to be voted at the 2019 Annual Meeting of Shareholders (the “Annual Meeting”), which will be held on Thursday, May 23, 2019, and at any adjournments or postponements of this scheduled meeting. The use of “we,” “us” or “our” in this proxy statement refers to the Company.

~~IMPORTANT~~~~NOTICE~~OF~~ELECTRONIC~~~~AVAILABILITY~~OF~~MATERIALS~~~~FOR~~~~THE~~~~SHAREHOLDER~~~~MEETING~~TOBE~~HELD~~ON~~MAY~~~~23,~~~~2019~~

Pursuant to Securities and Exchange Commission (“SEC”) rules, we may furnish proxy materials, including this proxy statement and the Company’s annual report for the year ending December 31, 2018, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them. Instead, a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”), which was mailed to most of our shareholders, will explain how you may access and review the proxy materials and how you may submit your proxy on the Internet. If you would like to receive a paper or electronic copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability. Shareholders who requested paper copies of proxy materials or previously elected to receive proxy materials electronically did not receive the Notice of Internet Availability and are receiving the proxy materials in the format requested.

~~This proxy statement and the Company’s annual report for the year ending December 31, 2018 are available electronically on our hosted website at~~ ~~www.proxyvote.com.~~

~~To access and review the materials made available electronically:~~

~~Go to~~ ~~www.proxyvote.com~~ ~~and input the 16-digit control number from the Notice of Internet Availability or proxy card.~~

~~Click the “2019 Proxy Statement” in the right column.~~

~~Have your proxy card or voting instructions available.~~

We encourage you to review all of the important information contained in the proxy materials before voting. If you would like to attend the Annual Meeting in person, please refer to the inside back cover of this proxy statement or ~~www.proxyvote.com~~ ~~for directions to the meeting. We will also broadcast the Annual Meeting as a live audio webcast at www.flowserve.com under the “Investors—Events & Presentations” section.~~

~~The Notice of Internet Availability and the proxy materials are first being made available to our shareholders on or about April 11, 2019.~~

~~Cost of Proxy Solicitation~~

The solicitation of proxies is made by our Board and will be conducted primarily by mail. Brokerage firms and other custodians, nominees and fiduciaries are reimbursed by the Company for reasonable out-of-pocket expenses that they incur to send proxy materials to shareholders and solicit their votes. In addition to this mailing, proxies may be solicited, without extra compensation, by our officers and employees, by mail, telephone, facsimile, electronic mail and other methods of communication. The Company bears the full cost of soliciting proxies. The Company has also retained Alliance Advisors to aid in the solicitation of proxies by mail, telephone, facsimile, e-mail and personal solicitation and will request brokerage houses and other nominees, fiduciaries and custodians to forward soliciting materials to beneficial owners of the Company’s common stock, par value $1.25 per share (“common stock”). For these services, the Company will pay Alliance Advisors a fee of $9,000 plus reimbursement for reasonable out-of-pocket expenses.

~~Shareholders Sharing an Address~~

To reduce the expenses of delivering duplicate proxy materials, we deliver one Notice of Internet Availability and, if applicable, annual report and proxy statement, to multiple shareholders sharing the same mailing address unless otherwise requested. We will promptly send a separate annual report and proxy statement to a shareholder at a shared address upon request at no cost. Shareholders with a shared address may also request that we send a single copy in the future if we are currently sending multiple copies to the same address. Requests related to delivery of proxy materials may be made by calling Investor Relations at (972) 443-6500 or writing to Flowserve Corporation, Attention: Investor Relations, 5215 N. O’Connor Blvd., Suite 2300, Irving, Texas 75039. Shareholders who hold shares in “street name” (as described below) may contact their brokerage firm, bank, broker-dealer or similar organization to request information about this “householding” procedure.

~~- 2019 PROXY STATEMENT~~ 10

~~Voting~~Engagement with Shareholders

~~Who May Vote~~Flowserve routinely engages with our shareholders to better understand their views, carefully considering the feedback we receive and ~~Number of Votes~~

~~If you are a shareholder of record at~~taking action when appropriate. We review the ~~close of business on March 29, 2019 (the “Record Date”), you may vote on the matters proposed in this proxy statement. You have one vote for each share you own.~~

~~Quorum for the Meeting~~

~~A majority~~results of the ~~outstanding shares of common stock entitled to vote at the Annual Meeting and represented in person or by proxy constitutes a quorum. A quorum is necessary to conduct business at the Annual Meeting.~~ ~~You~~~~are~~~~part~~of~~the~~~~quorum~~if~~you~~~~have~~~~voted.~~ ~~Shares that a shareholder abstains from voting on a particular proposal are counted as present at the meeting for purposes of determining a quorum.~~

Broker non-votes are also counted as present for purposes of determining a quorum. A “broker non-vote” occurs when a broker holding shares in “street name” for a beneficial owner is represented in person or by proxy at the meeting but does not vote on a particular proposal because the broker has not received voting instructions from the beneficial owner and cannot or chooses not to vote the shares in its discretion for that particular proposal.

~~Counting of Votes~~

The voting standards required to elect directors and approve the other proposals, as well as the treatment of abstentions and broker non-votes, are described with each proposal under the respective “Required Vote and Recommendation” heading.

Only “votes cast” count in the voting results, and abstentions are not considered votes cast. If your shares are held through a broker, your vote instructs the broker how you want your shares to be voted. If you vote on each proposal, your shares will be voted in accordance with your instructions. Under the rules of the New York Stock Exchange (“NYSE”), brokers may vote shares they hold in “street name” on behalf of beneficial owners who have not voted with respect to certain discretionary matters. The proposal to ratify the appointment of PricewaterhouseCoopers LLP (Proposal Three) is considered a discretionary matter, so brokers may vote shares on this matter in their discretion if no voting instructions are received. However, the election of directors (Proposal One), theannual advisory vote on executive compensation ~~(Proposal Two),~~in making determinations about the ~~approval~~structure of Flowserve’s pay program, or whether any changes to the ~~Company’s 2020 Long-Term Incentive Plan (Proposal Four) and the shareholder proposals (Proposal Five and Proposal Six) are~~ ~~NOT~~ ~~considered discretionary matters, so brokers have no discretion to vote shares for which no voting instructions are received, and no vote will~~program should be ~~cast if you do not vote on those items.~~ We~~therefore~~~~urge~~~~you~~to~~vote~~on~~ALL~~~~voting~~~~items.~~considered.

~~The advisory vote on executive compensation is non-binding, meaning that our Board will not be obligated to take any compensation actions, or to adjust our executive compensation programs or policies,~~In 2019, as a result of the ~~vote. Notwithstanding~~majority shareholder vote in favor of adopting written consent, we reached out to shareholders representing approximately 80% of our outstanding shares to discuss the ~~advisory nature~~vote and received feedback on the implementation of written consent. The feedback we received was considered and incorporated into the changes proposed in our 2020 proxy to implement the right of shareholders to act by less than unanimous written consent. Promptly following the approval of this proposal by almost 90% of the ~~vote,~~outstanding shares at our 2020 Annual Meeting, we amended our Certificate of Incorporation and By-Laws to implement this right for our shareholders.

As in other areas of our business during 2020, the ~~resolution will be considered passed~~COVID-19 pandemic had a significant impact on our shareholder outreach efforts. On the one hand, the principal negative impact was that we engaged in less in-person interaction with shareholders as work-from-home policies were implemented around the ~~affirmative vote~~globe. On the other hand, the COVID-19 pandemic had a positive impact on our ability to reach more of our shareholders as a ~~majority~~result of the ~~votes cast at the Annual Meeting.~~

~~There are no dissenters’ rights~~widespread adoption of ~~appraisal with respect~~virtual meetings. During 2020, members of management were able to participate and present in more electronic investor conferences and meetings than in past years due to the ~~matters~~absence of travel. Fortunately, in February 2020 before the pandemic limited our ability to ~~be acted upon at~~travel, our Chief Executive Officer was able to meet with five of our top shareholders in person. Thereafter, once the ~~meeting.~~

~~At the close of business on the Record Date, 131,101,071 shares of common stock~~financial community adopted virtual conferences and meetings, we were ~~issued and outstanding (excluding treasury shares) that may be voted at the Annual Meeting.~~

~~How~~able to ~~Vote~~

~~Voting by Proxy Holders for Shares Registered in the Name of a Brokerage Firm or Bank~~

If your shares are held by a broker, bank or other nominee (i.e., in “street name”), you will receive instructions from your nominee, which you must follow in order to have your shares voted. “Street name”provide our shareholders ~~who wish to vote at the meeting will need to obtain a proxy from the broker, bank or other nominee that holds their shares to confirm their shareholder status for entry into the Annual Meeting.~~

~~Voting by Proxy Holder for Shares Registered Directly in the Name of Shareholder~~

If you hold your shares in your own name as a holder of record, you must vote your shares in person at the Annual Meeting or instruct the proxy holders named on the proxy card how to vote your shares by either (i) using the Internet website or the toll-free telephone number set forth below or (ii) if you received paper copies of the proxy materials, signing, dating and mailing the enclosed proxy cardwith even more access to our ~~independent proxy tabulation firm, Broadridge Investor Communications Services (“Broadridge”),~~chief executive officer and chief financial officer.

As a result, members of our executive management team were able to interact with more of our shareholders than in previous years. Additionally, our CEO or CFO participated in five investor conferences during the ~~enclosed envelope. Each of~~year. We value the views and perspectives that our shareholders and the financial community provide us during these ~~voting methods is described below:~~interactions, and we formally communicate the information and feedback that we obtain to the Board and its Committees on a regular basis.

•

~~Vote~~by~~Internet.~~ ~~You have the option to vote via the Internet at the address of~~ ~~www.proxyvote.com~~ by following the on-screen instructions that will direct you how to vote your shares. Internet voting is available 24 hours a day, 7 days a week, until 11:59 p.m., Eastern Time, on May 22, 2019. Have your proxy card available when you access the Internet website. IF YOU VOTE BY INTERNET, YOU DO NOT NEED TO RETURN A PROXY CARD.

~~- 2019~~2021 PROXY STATEMENT 11

~~Voting by Participants in the Flowserve Corporation Retirement Savings Plan~~

•

~~Vote~~by~~Telephone.~~ ~~If you hold your shares in your name as a holder~~PROPOSAL ONE:
ELECTION OF DIRECTORS

The Company’s Board of ~~record, you may vote~~Directors (the “Board”) currently consists of ten directors. All the director nominees listed below were previously elected by ~~telephone by calling toll-free to 1-800-690-6903 from~~shareholders at the United States and Canada and following the series of voice instructions that will direct you how to vote your shares. Have your proxy card available when you place your telephone call. Telephone voting is available 24 hours a day, 7 days a week, until 11:59 p.m., Eastern Time, on May 22, 2019. IF YOU VOTE BY TELEPHONE, YOU DO NOT NEED TO RETURN A PROXY CARD.

•

~~Vote~~by~~Mail.~~ If you received paper copies of the proxy materials, you may mark the enclosed proxy card, sign and date it and return it to Broadridge in the enclosed envelope as soon as possible before the Annual Meeting. Your signed proxy card must be received by Broadridge prior to the date of the2020 Annual Meeting, ~~for your vote to be counted at the Annual Meeting.~~

•

~~Vote~~in~~Person.~~ ~~If you are a registered shareholder and attend the Annual Meeting in person, you may deliver a completed proxy card or vote by ballot at the Annual Meeting.~~

~~If you are a participant in the Flowserve Corporation Retirement Savings Plan, your vote serves as a voting instruction to the trustee for this plan.~~

•

To be timely, if you vote your shares in the Flowserve Corporation Retirement Savings Plan by telephone or Internet, your vote must be received by 11:59 p.m., Eastern Time, on May 22, 2019. If you do not vote by telephone or Internet, please return your proxy card as soon as possible.

•

~~If you vote in a timely manner, the trustee will vote the shares as you have directed.~~

•

~~If you do not vote, or if you do not vote in a timely manner, the trustee will vote your shares in the same proportion as the shares voted by participants~~other than Carlyn R. Taylor, who ~~timely return their cards to the trustee.~~

~~Changing Your Vote~~

~~You may revoke your proxy at any time before it has been exercised at the Annual Meeting by:~~

•

~~timely mailing in a revised proxy dated later than the prior submitted proxy;~~

•

~~timely notifying the Corporate Secretary in writing that you are revoking your proxy;~~

•

~~timely casting a new vote by telephone or the Internet; or~~

•

~~if you are a holder of record, appearing in person and voting by ballot at the Annual Meeting.~~

~~Vote Tabulations~~

~~Tabulation of voted proxies will be handled by Broadridge, an independent firm. Broadridge is the inspector of elections for the Annual Meeting.~~

~~Shareholder Proposals and Nominations~~

Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the “Exchange Act”), certain shareholder proposals may be eligible for inclusion in our 2020 proxy statement. These shareholder proposals must comply with the requirements of Rule 14a-8, including a requirement that shareholder proposals be received by the Corporate Secretary no later than December 13, 2019. We strongly encourage any shareholder interested in submitting a proposal to contact the Corporate Secretary in advance of this deadline to discuss the proposal. Submitting a shareholder proposal does not guarantee that we will include it in our proxy statement. The Corporate Governance and Nominating Committee reviews all shareholder proposals and makes recommendationswas appointed to the Board ~~for action on such proposals.~~

In order for an eligible shareholder or group of shareholders to nominate a director nominee for election at our 2020 annual meeting of shareholders pursuant to the proxy access provision of our By-laws, the shareholder must submit notice of such nomination and other required information in writing between November 13, 2019 and December 13, 2019. If, however, the 2020 annual meeting is held more than 30 days before or more than 60 days after the anniversary of the 2019 annual meeting, the shareholder must submit any such notice and other required information between (i) 150 calendar days prior to the 2020 annual meeting and (ii) the later of 120 calendar days prior to the 2020 annual meeting or 10 days following the date on which the date of the 2020 annual meeting is publicly announced.August 2020. The ~~nomination and supporting materials must also comply with the requirements set forth in our By-laws for inclusion of director nominees in the proxy statement.~~

Alternatively, under the Company’s By-laws, if a shareholder does not want to submit a proposal for inclusion in our proxy statement but wants to introduce it at our 2020 annual meeting, or intends to nominate a person for election to the Board directly (rather than by inclusion in our proxy statement or by recommending such person as a candidate to our Corporate Governance and Nominating Committee as described below under “Board of Directors—Committees of the Board—Corporate Governance and Nominating Committee”), the shareholder must submit the proposal or nomination in writing between January 24, 2020 and February 23, 2020. If, however, the 2020 annual meeting is held more than 30 days before or more than 60 days after the anniversary of the 2019 Annual Meeting, the shareholder must submit any such proposal between (i) 120 calendar days prior to the 2020 annual meeting and (ii)

~~- 2019 PROXY STATEMENT 12~~

~~the later of 90 calendar days prior to the 2020 annual meeting or 10 days following the date on which the date of the 2020 annual meeting is publicly announced.~~

The shareholder’s submission must be made by a registered shareholder on his or her behalf or on behalf of a beneficial owner of the shares, and must include detailed information specified in our By-laws concerning the proposal or nominee, as the case may be, and detailed information as to the shareholder’s interests in Company securities. At the 2020 annual meeting, we will not entertain any proposals or nominations that do not meet these requirements other than shareholder nominations eligible to be included in our 2020 proxy statement as described above.

If the shareholder does not comply with the requirements of Rule 14a-4(c)(1) under the Exchange Act, we may exercise discretionary voting authority under proxies that we solicit to vote in accordance with our best judgment on any such shareholder proposal or nomination. The Company’s By-laws are posted on our website at ~~www.flowserve.com~~ under the “Investors — Corporate Governance” caption. To make a submission or to request a copy of the Company’s By-laws, shareholders should contact our Corporate Secretary at the following address:

~~Flowserve Corporation~~
~~5215 N. O’Connor Blvd., Suite 2300~~
~~Irving, Texas 75039~~

~~Attention: Corporate Secretary~~

~~We strongly encourage shareholders to seek advice from knowledgeable legal counsel and contact the Corporate Secretary before submitting a proposal or a nomination.~~

~~- 2019 PROXY STATEMENT 13~~

Required Vote and ~~Recommendation~~Recommendation:

~~PROPOSAL ONE:~~

~~ELECTION OF DIRECTORS~~

The Company’s Board currently consists of eleven directors. Leif E. Darner will retire from the Board effective as of the Annual Meeting and is therefore not nominated for reelection. Upon Mr. Darner’s retirement, the Board will reduce the number of directors to ten. Accordingly, the Board has nominated ~~the following~~all ten directors: R. Scott Rowe, Ruby R. Chandy, Gayla J. Delly, Roger L. Fix, John R. Friedery, John L. Garrison, Joe E. Harlan, Michael C. McMurray, Rick J. Mills and David E. Roberts, whose terms of office as members of the Board are expiring at this Annual Meeting,existing directors to serve a one-year term ~~expiring at~~until the ~~2020 annual meeting~~2022 Annual Meeting of ~~shareholders.~~shareholders or until their successors have been elected and qualified. Biographical information for each nominee is provided below under the ~~headings~~heading “Board of Directors—Biographical Information—Nominees to Serve an Annual Term Expiring at the ~~2020~~2022 Annual Meeting of Shareholders.” In addition to the ten director nominees listed below, during 2020, two board members, Joe E. Harlan and Rick J. Mills, served on our Board until our 2020 Annual Meeting, when Mr. Mills retired from the Board and Mr. Harlan decided not to stand for re-election to the Board.

•

Our ~~By-laws require~~By-Laws mandate that ~~in an uncontested election,~~ each director ~~will~~ be elected byunder a ~~vote of the~~ majority ~~of the votes cast.~~voting standard in uncontested elections. A majority ofvoting standard requires that each director receive more votes ~~cast means that the number of shares cast~~ “for” ~~a director’s~~his or her election ~~exceeds the number of~~than votes ~~cast~~ “against” that director. We will not treat any share as having cast a vote on this proposal and will therefore have no effect on the proposal (a) where the ballot is marked as abstained, (b) if it is otherwise present at the Annual Meeting but there is an abstention or (c) where a shareholder gives no authority or direction. In a contested election, the directors willto be ~~elected by a plurality of the votes cast, meaning the directors receiving the largest number of “for” votes will be elected to the open positions.~~elected.

•

In an uncontested election, any incumbent nominee for director who ~~duly holds office as a director under the By-Laws and~~ does not receive an affirmative vote of a majority of the votes cast in favor of or against such nominee must promptly offer to resign. The resignation is ~~required~~reviewed by the Corporate Governance and Nominating (“CG&N”) Committee, who determines whether to ~~tender his~~accept or ~~her~~reject such resignation, ~~promptly after such election. The independent directors of the Board,~~ giving due consideration to the best interests of the Company and ~~our shareholders,~~its shareholders. Plurality voting will ~~then evaluate the relevant facts and circumstances and make a decision, within 30 days after the election, on whether~~apply to accept the tendered resignation. Any director whose resignation is under consideration is prohibited from participating in the Board’s decision. The Board will promptly disclose publicly its decision and, if applicable, the reasons for rejecting the tendered resignation. The Board may fill any vacancy resulting from a director’s accepted resignation, as provided in our By-laws.contested elections.

~~Broker non-votes will not be considered to have voted on this proposal and will therefore have no effect on the proposal.~~

The ~~individuals named as proxies on~~table below summarizes the ~~enclosed proxy card will vote your proxy “FOR” the election~~key qualifications and areas of expertise that led our Board to nominate these nominees unless you instruct otherwise or you abstain for any one or more of them. If any director is unable to stand for re-election, the Board may reduce the number of directors or choose a substitute. The nominees have indicated their willingness to serve as directors, and we have no reason to believe any nominee will not be able to stand for re-election.individuals.

	Fix	Rowe	Chand	Chandy	Delly	Friedery	Garrison	McMurray	Roberts	Taylor
Manufacturing / Operations	●	●	●	●	●	●	●		●
Industry / Product Knowledge	●	●	●				●		●
Multinational Operations	●	●	●	●	●	●	●		●	●
Financial / Accounting			●		●			●	●	●
Product Innovation / R&D			●	●
Energy / Alternative Energy Markets		●	●	●		●	●	●	●	●
Supply Chain		●		●	●	●	●	●		●
HR / Talent Development		●		●	●		●	●	●	●
Mergers & Acquisitions	●	●		●	●	●	●	●		●
Corporate Strategy / Governance	●	●	●	●	●	●	●	●	●	●

	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance


✔		The Board recommends that you vote “FOR” the election of all nominees to serve as directors.

~~The Board recommends that you vote~~ “~~FOR~~” ~~the election of all nominees to serve as directors.~~

~~- 2019~~2021 PROXY STATEMENT 14 12

Board of Directors — Biographical Information

Nominees to Serve an Annual Term Expiring at the ~~2020~~2022 Annual Meeting of Shareholders

R.~~Scott~~~~Rowe,~~ age 48, has served as a director and as President and Chief Executive Officer of Flowserve since April 2017. Mr. Rowe previously served as President of the Cameron Group of Schlumberger Ltd, a position he assumed in April 2016 following the merger between Schlumberger Ltd. and Cameron International Corporation (“Cameron”). Prior to this position, he served as President and Chief Executive Officer of Cameron from October 2015 to April 2016. From October 2014 to September 2015, Mr. Rowe served as President and Chief Operating Officer of Cameron, from March 2014 to September 2014, Mr. Rowe served as Chief Executive Officer of OneSubsea, a joint venture established by Cameron and Schlumberger, from August 2012 to February 2014, Mr. Rowe served as President of the Subsea Systems division of Cameron, and from April 2010 to August 2012, Mr. Rowe served as President of the Engineered and Process Valves division of Cameron.

We believe Mr. Rowe is well qualified to serve as a director due to his position as the Company’s President and Chief Executive Officer, which enables him to provide the Board with intimate knowledge of the Company’s day to day operations.

~~Ruby~~R.~~Chandy,~~ age 57, has served as a director since May 2017 and serves as a member of the Finance Committee and Organization and Compensation Committee. Ms. Chandy was the President of the Industrial Division of Pall Corporation, a leading supplier of filtration, separation, and purification technologies, from April 2012 to November 2015. Previously, she was Managing Director, Vice President of Dow Plastics Additives, a unit of The Dow Chemical Company, a multinational chemical corporation, from 2011 to April 2012. Ms. Chandy is currently a director of AMETEK, Inc., a manufacturer of electronic instruments and electromechanical devices, serving since May 2013. She served as a director of IDEX Corporation, a designer and manufacturer of fluidics systems and specialty engineered products, from April 2006 until April 2013.

We believe Ms. Chandy is well qualified to serve as a director due to her executive management experience, marketing and strategy skills, relevant experience in industrial companies, extensive engineering and management education, broad international business and financial experience and enterprise risk oversight experience.
Roger L. Fix
Independent Chair since:
May 2017
Director since:
Apr. 2006
Age: 67
Board Committees:
• N/A
Current Public Company Directorships:
• Thermon Group Holdings, Inc.
• Commercial Vehicle Group, Inc.
Past Public Company Directorships:
• Standex International Corporation
• Outboard Marine Corporation
Employment History
•Standex International Corporation,publicly traded diversified manufacturing company | President and Chief Executive Officer (2003 — retirement in 2014)
•Standex International Corporation | Chief Operating Officer (2001 — 2002)
•Outboard Marine Corporation,marine manufacturing company | Chief Executive Officer and President (2000 — 2001)
•Outboard Marine Corporation | Chief Operating Officer and President (during 2000)
•John Crane Inc., global manufacturer of mechanical seals for pump and compressor applications | Chief Executive Officer (1998 — 2000)
•John Crane Inc. | President — North America (1996 — 1998)
•Xomox Corporation, manufacturer of process control valves and actuators | President (1993 – 1996)
•Reda Pump Company,manufacturer of electrical submersible pump systems for oil production | most recently as Vice President and General Manager/Eastern Division (1981 – 1993)
   Other Public Company Directorships
•Thermon Group Holdings, Inc., global industrial process heating solutions provider | Director (2019 — Present)
•Commercial Vehicle Group, Inc.,global supplier of cab systems in heavy-duty truck, construction and agricultural markets | Director (2014 — Present)
•Standex International Corporation | Director (2001 — 2017)
•Standex International Corporation | Non-Executive Board Chairman (2014 — 2016)
   Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve
We believe that Mr. Fix is well qualified to serve as a director due to his executive leadership experience, including with John Crane Inc. and other competitor companies, which provides extensive knowledge of the Company’s products and valuable insight into the competitive landscape for flow control products. In addition to his board experience, Mr. Fix also has international operations experience and corporate development expertise.

~~Gayla~~J.~~Delly,~~ age 59, has served as a director since January 2008 and serves as Chair of the Audit Committee and as a member of the Corporate Governance and Nominating Committee. From January 2012 to September 2016, Ms. Delly served as President and Chief Executive Officer of Benchmark Electronics Inc., a company that provides contract manufacturing, design, engineering, test and distribution services to manufacturers of computers, medical devices, telecommunications equipment and industrial control and test instruments. Ms. Delly is a certified public accountant. At Benchmark Electronics Inc., she previously served as President from 2006 to December 2011, Executive Vice President and Chief Financial Officer from 2001 to 2006, and as Corporate Controller and Treasurer from 1995 to 2001. Ms. Delly currently serves as a director and member of the audit committee and nominating and corporate governance committee of Broadcom Ltd., a designer, developer and global supplier of semiconductor devices, being appointed in December 2017. From March 2005 to October 2008, Ms. Delly also served as a member of the board of directors for Power One, a provider of power conversion and management solutions.

We believe that Ms. Delly is well qualified to serve as a director due to her international manufacturing experience, with specific focus on engineering and technology in emerging markets, including Asia and Latin America, which provides valuable insight into the Company’s operations and assists in identifying product portfolio opportunities. In addition to her board experience, Ms. Delly has valuable executive leadership experience and financial expertise gained from her time with Benchmark Electronics Inc.
R. Scott Rowe
Director since:
Apr. 2017
Age: 50
Board Committees:
• N/A
Current Public Company Directorships:
• None
Past Public Company Directorships:
• None
Employment History
•Flowserve Corporation | President, Chief Executive Officer (2017 — Present)
•Cameron Group of Schlumberger Ltd.,an oilfield services co. | President (2016 — 2017)
•Cameron International Corporation,an oilfield services co. | President, Chief Executive Officer (2015 — 2016)
•Cameron International Corporation | President, Chief Operating Officer (2014 — 2015)
•OneSubsea, a joint venture established by Cameron and Schlumberger | Chief Executive Officer (2014)
•Subsea Systems, a division of Cameron | President (2012 — 2014)
•Cameron International Corporation | President of the Engineered and Process Valves division (2010 — 2012)
Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve
We believe that Mr. Rowe is well qualified to serve as a director due to his position as the Company’s President and Chief Executive Officer, which enables him to provide the Board with intimate knowledge of the Company’s day to day operations.

	Manufacturing/Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

~~Roger~~L.~~Fix,~~ age 65, has served as a director since April 2006 and serves as the Chairman of the Board. Mr. Fix served as the President and Chief Executive Officer of Standex International Corporation (“Standex”), a publicly traded diversified manufacturing company, from 2003 to January 2014 and as a director for Standex from 2001 to October 2017. Mr. Fix served as the non-executive chairman of the Standex board of directors from January 2014 to October 2016. He was Standex’s Chief Operating Officer from 2001 to 2002. Before joining Standex, he was employed by Outboard Marine Corporation, a marine manufacturing company, as Chief Executive Officer and President from 2000 to 2001 and Chief Operating Officer and President during 2000. He also served as a member of its board of directors from 2000 to 2001. He served as Chief Executive of John Crane Inc., a global manufacturer of mechanical seals for pump and compressor applications in the process industry, from 1998 to 2000 and as its President — North America from 1996 to 1998. He was President of Xomox Corporation, a manufacturer of process control valves and actuators, from 1993 to 1996. He was also employed by Reda Pump Company, a manufacturer of electrical submersible pumping systems for oil production, from 1981 to 1993, most recently as Vice President and General Manager/Eastern Division. Since June 2014, Mr. Fix has served as a director of Commercial Vehicle Group, Inc., a global supplier of complete cab systems in the heavy-duty truck, construction and agricultural markets including the specialty and military transportation markets.

We believe that Mr. Fix is well qualified to serve as a director due to his executive leadership experience, including with John Crane Inc., Xomox Corporation and other competitor companies, which provides extensive knowledge of the Company’s products and valuable insight into the competitive landscape for flow control products. In addition to his board experience, Mr. Fix also has international operations experience and corporate development expertise.

~~- 2019~~2021 PROXY STATEMENT 13

Sujeet Chand

Director since: Dec. 2019 Age: 63 Board Committees: • Audit • Finance & Risk Current Public Company Directorships: • Proto Labs, Inc. Past Public Company Directorships: • None				Employment History •Rockwell Automation, Inc.,industrial automation manufacturer \| Senior Vice President and Chief Technology Officer (2005 – Present) •Rockwell Automation, Inc. \| Other senior leadership roles (2001 – 2005) •XAP Corporation, an education technology company \| Chief Operating Officer (2000 – 2001) •Rockwell Scientific Company,a subsidiary of Rockwell International \| Head of research and development (1988 – 2000)
				Other Public Company Directorships •Proto Labs, Inc.,global digital manufacturer \| Director (2017 – Present) Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve We believe that Mr. Chand is well qualified to serve as a director due to his technology and innovation experience as well as his electrical engineering background. Additionally, Mr. Chand has valuable multinational executive leadership and manufacturing experience from Rockwell Automation and XAP Corporation.


Ruby R. Chandy

Director since: May 2017 Age: 59 Board Committees: • Finance & Risk — Chair • Organization & Compensation Current Public Company Directorships: • DuPont de Nemours, Inc. • AMETEK, Inc. Past Public Company Directorships: • IDEX Corporation				Employment History •Pall Corporation, a leading supplier of filtration, separation, and purification technologies \| President of the Industrial Division (2012 – retirement in 2015) •The Dow Chemical Company,a multinational chemical corporation \| Managing Director, Vice President of Dow Plastics Additives unit (2011 – 2012)
				Other Public Company Directorships •DuPont de Nemours, Inc.,a multinational chemical corporation \| Director (2019 – Present) •AMETEK, Inc., a manufacturer of electronic instruments and electromechanical devices \| Director (2013 – Present) •IDEX Corporation, a designer and manufacturer of fluidics systems and specialty engineered products \| Director (2006 – 2013) Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve We believe that Ms. Chandy is well qualified to serve as a director due to her executive management experience, marketing and strategy skills, relevant experience in industrial companies, extensive engineering and management education, broad international business and financial experience and enterprise risk oversight experience.

	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

2021 PROXY STATEMENT 14

Gayla J. Delly

Director since: Jan. 2008 Age: 61 Board Committees: • Organization & Compensation • Corporate Governance & Nominating Current Public Company Directorships: • National Instruments, Inc. • Broadcom Inc. Past Public Company Directorships: • Power One, Inc.				Employment History •Benchmark Electronics Inc.,a contract provider of manufacturing, design, engineering, test and distribution to computer, medical device, telecommunications equipment and industrial control manufacturers \| President and Chief Executive Officer (2012 – retirement in 2016) •Benchmark Electronics Inc. \| President (2006 – 2011) •Benchmark Electronics Inc. \| Vice President and Chief Financial Officer (2001 – 2006) •Benchmark Electronics Inc. \| Corporate Controller and Treasurer (1995 – 2001) • Ms. Delly is a certified public accountant.
				Other Public Company Directorships •National Instruments, Inc.,a leader in software-defined automated test and automated measurement systems \| Director (2020 – Present) •Broadcom Inc., a designer, developer and global supplier of semiconductor devices \| Director (2017 – Present) •Power One, Inc., a designer and manufacturer of power conversion products \| Director (2005 – 2008) Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve We believe that Ms. Delly is well qualified to serve as a director due to her international manufacturing experience, with a specific focus on engineering and technology in emerging markets, including Asia and Latin America, which provides valuable insight into the Company’s operations and assists in identifying product portfolio opportunities. In addition to her board experience, Ms. Delly has valuable executive leadership experience and financial expertise gained from her time with Benchmark Electronics Inc.


John R. Friedery

Director since: Aug. 2007 Age: 64 Board Committees: • Corporate Governance & Nominating — Chair • Audit Current Public Company Directorships: • None Past Public Company Directorships: • None				Employment History • Since 2010, Mr. Friedery has provided strategic and management consulting services to the packaging and other manufacturing industries. •Ball Corporation, a provider of metal and plastic packaging for beverages, foods and household products, and of aerospace and other technologies services \| Senior Vice President; President, Metal Beverage Packaging, Americas and Asia (2008 – 2010) •Ball Corporation \| Chief Operating Officer, Packaging Products Americas (2004 – 2007) •Ball Corporation \| President, Metal Beverage Container operations (2000 – 2004) •Ball Corporation \| Other senior leadership roles (1988 – 2000) •Dresser/Atlas Well Services \| Field operations (prior to 1988) •Nondorf Oil and Gas \| In operations, exploration and production (prior to 1988)
				Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve We believe that Mr. Friedery is well qualified to serve as a director due to his extensive operational experience with an international industrial manufacturing focus, which provides a global business perspective and a deep understanding of the Company’s industry, end-markets and strategic focus. Mr. Friedery also has experience with renewables and sustainability expertise gained from his service with Ball Corporation.

	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

2021 PROXY STATEMENT 15

~~John~~R.~~Friedery,~~ age 62, has served as a director since August 2007 and serves as Chair of the Corporate Governance and Nominating Committee and as a member of the Organization and Compensation Committee. From January 2008 to January 2010, Mr. Friedery served as Senior Vice President; President, Metal Beverage Packaging, Americas and Asia, for Ball Corporation, a provider of metal and plastic packaging for beverages, foods and household products, and of aerospace and other technologies services. From January 2004 to December 2007, he served as Ball Corporation’s Chief Operating Officer, Packaging Products Americas, and from April 2000 to May 2004 as the President, Metal Beverage Container operations, as well as other leadership roles in Ball Corporation since 1988. Prior to his employment with Ball Corporation, he served in field operations for Dresser/Atlas Well Services and in operations, exploration and production for Nondorf Oil and Gas. Mr. Friedery is currently providing strategic and management consulting services to the packaging and other manufacturing industries.

We believe that Mr. Friedery is well qualified to serve as a director due to his extensive operational experience with an international industrial manufacturing focus, which provides a global business perspective and a deep understanding of the Company’s industry, end-markets and strategic focus. In addition to his board experience, Mr. Friedery also has experience with renewables and sustainability expertise gained from his service with Ball Corporation.
John L. Garrison
Director since:
Oct. 2018
Age: 60
Board Committees:
• Organization & Compensation
• Corporate Governance & Nominating
Current Public Company Directorships:
• Terex Corporation
Past Public Company Directorships:
• Azurix Corporation
Employment History
•Terex Corporation, a worldwide manufacturer of lifting and material handling solutions | President and Chief Executive Officer (2015 – Present)
•Bell Helicopter, a segment of Textron, Inc., and an aerospace manufacturer | President and Chief Executive Officer (2009 – 2015)
   Other Public Company Directorships
•Terex Corporation | Chairman of the Board (2018 – Present)
•Azurix Corporation, a water services company | Director (2000 – 2002)
   Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve
We believe that Mr. Garrison is well qualified to serve as a director due to his strong manufacturing, international operations and leadership experience gained through his various executive and board leadership roles. In addition, Mr. Garrison is currently leading an operational transformation at Terex Corporation that began in 2016 and has similar elements to the Company’s Flowserve 2.0 Transformation program. This experience provides Mr. Garrison with unique insights into the current climate the Company faces and the significant focus required by the Company to implement the Flowserve 2.0 Transformation.

~~John~~L.~~Garrison,~~ age 58, has served as a director since October 2018 and serves as a member of the Organization and Compensation Committee and Corporate Governance and Nominating Committee. Since November 2015, Mr. Garrison has served as the President and Chief Executive Officer of Terex Corporation, a worldwide manufacturer of lifting and material handling solutions, and since August 2018 has served as the Chairman of the Board of Terex Corporation. Previously, he was President and Chief Executive Officer of Bell Helicopter, a segment of Textron, Inc., since 2009.

We believe that Mr. Garrison is well qualified to serve as a director due to his strong manufacturing, international operations and leadership experience gained through his various executive and board leadership roles. In addition, Mr. Garrison is currently leading an operational transformation at Terex Corporation which began in 2016 and has similar elements to the Company’s Flowserve 2.0 Transformation program. This experience provides Mr. Garrison with unique insights into the current climate the Company faces and the significant focus required by the Company to implement the Flowserve 2.0 Transformation.
Michael C. McMurray
Director since:
Oct. 2018
Age: 56
Board Committees:
• Audit—Chair
• Finance & Risk
Current Public Company Directorships:
• None
Past Public Company Directorships:
• None
Employment History
•LyondellBasell, a global plastics, chemicals and refining company | Executive Vice President and Chief Financial Officer (2019 – Present)
•Owens Corning, a global manufacturer of insulation, roofing and fiberglass composites | Senior Vice President and Chief Financial Officer (2012 – 2019)
•Owens Corning | Vice President and Finance Leader of Owens Corning’s Building Materials Group (2011 – 2012)
•Owens Corning | Vice President, Investor Relations and Treasurer (2008 – 2011)
•Royal Dutch Shell | various leadership roles (1987 – 2008)
Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve
We believe that Mr. McMurray is well qualified to serve as a director due to his extensive knowledge of global industrial manufacturing, the Company’s end markets and the financial markets, which provides valuable insight into the strategic decisions to capitalize on the Company’s growth opportunities. Additionally, Mr. McMurray has valuable multinational executive leadership and financial expertise at LyondellBasell, Owens Corning, and Royal Dutch Shell.

~~Joe~~E.~~Harlan,~~ age 59, has served as a director since August 2007 and serves as a member of the Audit Committee and the Corporate Governance and Nominating Committee. From September 2011 to August 2017, Mr. Harlan served in various executive positions at Dow Chemical Company, a global specialty chemical, advanced materials, agrosciences and plastics company, including most recently as Vice Chairman and Chief Commercial Officer from October 2014 to August 2017. From 2008 to August 2011, he served as Executive Vice President of the Consumer and Office Business of the 3M Company, a diversified consumer products and office supply provider. From 2005 to 2008, Mr. Harlan served as 3M Company’s Executive Vice President of the Electro and Communications Business. He served as President and Chief Executive Officer of Sumitomo 3M Ltd., a diversified technology and products manufacturer, from 2003 to 2004. Prior to his career with 3M Company, he spent 20 years with General Electric Company, holding a number of leadership positions including serving as Vice President of Finance and Chief Financial Officer for GE Lighting Group (Global). Mr. Harlan has served as a director of Hitachi, Ltd., a global information technology company headquartered in Japan, since June 2018.

We believe that Mr. Harlan is well qualified to serve as a director due to his strong international experience and familiarity with emerging markets, including Asian markets, gained through his various executive leadership roles. In addition to his board experience, Mr. Harlan also has experience in engineering and technology service from his positions with General Electric and 3M Company.
Manufacturing/ Operations
Industry/Product Knowledge
Multinational
Operations
Financial/Accounting
Product
Innovation/R&D
Energy/Alternative Energy Markets
Supply Chain
HR/Talent
Development
Mergers & Acquisitions
Corporate Strategy/ Governance

~~Michael~~C.~~McMurray,~~ age 54, has served as a director since October 2018 and serves as a member of the Audit Committee and Finance Committee. Since August 2012, Mr. McMurray has served as the Senior Vice President and Chief Financial Officer of Owens Corning, a global manufacturer of insulation, roofing and fiberglass composites. Prior to this role, he served in the roles of Vice President, Investor Relations and Treasurer of Owens Corning and Vice President and Finance Leader of Owens Corning’s Building Materials Group. Prior to joining Owens Corning in 2008, he had over two decades of finance experience at Royal Dutch Shell.

We believe that Mr. McMurray is well qualified to serve as a director due to his extensive knowledge of global industrial manufacturing, the Company’s end markets and the financial markets, which provides valuable insight into the strategic decisions to capitalize on the Company’s growth opportunities. Additionally, Mr. McMurray has valuable multinational executive leadership and financial expertise at both Owens Corning and Royal Dutch Shell.

~~Rick~~J.~~Mills,~~ age 71, has served as a director since May 2007 and serves as a member of the Audit Committee and the Finance Committee. He served as a Vice President of Cummins Inc., a manufacturer of large diesel engines, and President of the Components Group at Cummins Inc., from 2005 to March 2008. He was Vice President and President — Filtration Business from 2000 to 2005 and held other key management positions with Cummins Inc. from 1970 to 2000, including Corporate Controller and Chief Accounting Officer from 1996 to 2000. From February 2005 to April 2009, Mr. Mills served as a director for Rohm & Haas, a specialty chemicals company, which was sold to Dow Chemical in April 2009. From 2008 to 2010, Mr. Mills served as a director and member of the audit committee of GERDAU Ameristeel, the second largest mini-mill steel producer in North America, which was acquired by GERDAU, SA in 2010. Since January 2012, Mr. Mills has served as a director and member of the audit committee of Commercial Metals Company, a global manufacturer, recycler and marketer of steel and metal products and related materials. From October 2013 to May 2018, Mr. Mills served as director and member of the audit committee of Masonite International, a global manufacturer of interior and exterior doors, door components and door entry systems. Mr. Mills intends to retire from the Board at the 2020 annual meeting of shareholders.

~~We believe that Mr. Mills is well qualified to serve as a director due to his extensive knowledge of industrial manufacturing and cyclical~~

~~- 2019~~2021 PROXY STATEMENT 16

end-markets, which provides a deep familiarity with the Company’s industrial challenges and opportunities. Additionally, Mr. Mills has valuable corporate governance and compliance expertise through his board of directors and audit committee experience.
David E. Roberts
Director since:
Nov. 2011
Age: 60
Flowserve’s Board Committees:
• Organization & Compensation—Chair
• Finance & Risk
Current Public Company Directorships:
• None
Past Public Company Directorships:
• Penn West Exploration
Employment History
•Gavilan Resources, LLC,a private company formed in partnership with Blackstone focused on oil and natural gas development and production opportunities in South Texas | Chief Executive Officer (2017 – 2020). Gavilan filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in May 2020.
•Penn West Exploration,a Canadian oil and gas exploration and production company | President and CEO (2013 – 2016)
•Marathon Oil Corporation,an independent upstream company with international operations in exploration and production, oil sands mining and integrated gas | Executive Vice President and Chief Operating Officer (2011 – 2012)
•Marathon Oil Corporation | other key management positions, including Executive Vice President in charge of Marathon’s worldwide upstream operations and Senior Vice President of business development (2006 – 2011)
•BG Group, an integrated natural gas company | various leadership roles (2003 – 2006)
•Chevron Corporation | advisor to the Vice Chairman (2001 – 2003)
   Other Public Company Directorships
•Penn West Exploration | Director (2013 – 2016)
   Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve

~~David~~E.~~Roberts,~~ age 58, has served as a director since November 2011 and serves as Chair of the Organization and Compensation Committee and as a member of the Finance Committee. Since February 2017, Mr. Roberts has served as the Chief Executive Officer of Gavilan Resources, LLC, a private company formed in partnership with Blackstone that is focused on oil and natural gas development and production opportunities in South Texas. Prior to this role, Mr. Roberts served as President and CEO of Penn West Exploration, a Canadian oil and gas exploration and production company, from June 2013 to October 2016. He served as Executive Vice President and Chief Operating Officer of Marathon Oil Corporation, an independent upstream company with international operations in exploration and production, oil sands mining and integrated gas, from 2011 through December 2012. He held other key management positions with Marathon from 2006 through 2011, including Executive Vice President in charge of Marathon’s worldwide upstream operations and Senior Vice President of business development. Prior to his time at Marathon, Mr. Roberts held leadership roles at BG Group, an integrated natural gas company, and served as advisor to the Vice Chairman of Chevron Corporation from 2001 to 2003.
We believe that Mr. Roberts is well qualified to serve as a director due to his executive leadership experience, strong international operations background, business development experience and extensive knowledge of and experience in the energy industry. This provides Mr. Roberts with a unique insight into the Company’s operational challenges and opportunities and its end-markets and customer needs.


Carlyn R. Taylor

Director since: Aug. 2020 Age: 52 Board Committees: • Audit • Corporate Governance & Nominating Current Public Company Directorships: • None Past Public Company Directorships: • None				Employment History •FTI Consulting, Inc.,a global business advisory firm \| Corporate Finance Global Co-Leader and global leaders of Business Transformations and Transactions practice (2016 – present) •FTI Capital Advisors,an investment banking subsidiary of FTI Consulting \| Chairperson (2017 – present) •FTI Consulting, Inc. \| various roles of increasing responsibility (2002 — 2016) •PwC, a global accounting firm \| various roles, including partner, senior manager and staff consultant (1990 — 2002)
				Specific Experience, Qualifications, Attributes and Skills Relevant to Flowserve We believe that Ms. Taylor is well qualified to serve as a director due to her extensive background in corporate strategy, finance and accounting, most notably leveraging her expertise in capital allocation strategies and capital markets to help businesses spearhead transformative initiatives, as well as her experience serving on the board of directors of various privately-owned startups.

	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

2021 PROXY STATEMENT 17

Role of the Board; Corporate Governance Matters

THE BOARD AND COMMITTEES

The Board ~~has a duty to oversee~~oversees the ~~Chief Executive Officer~~CEO and other senior management in the competent and ethical operation of the Company on a day-to-day basis and to help ~~ensure~~confirm that our shareholders’ best interests are served. In its efforts to satisfy this duty, ~~the~~our Board has ~~established internal guidelines designed to promote effective oversight of the Company’s vital business affairs that the Board monitors, which it updates as it deems appropriate.~~

The guidelines set parameters for the director recruiting process and the composition of Board committees. They also determine the formal process for review and evaluation of the Chief Executive Officer, individual directors and the Board’s performance. The guidelines further establish targets for director equity ownership and require a director to offer his or her resignation when such director’s principal occupation changes during a term of office. Under such circumstances, the Corporate Governance and Nominating Committee of the Board will review whether it is appropriate for the director to continue serving on the Board. Finally, these guidelines establish age limits for directors, which may be waived by the Board if deemed appropriate.

~~Further, the Board has~~ adopted ~~formal~~ Corporate Governance Guidelines (“Guidelines”)~~, which, among~~. Our Guidelines, as well as other things, contain a prescribed set of qualification standards with respect to the determination of director independence, which either meet or exceed the independence requirements of the NYSE. Under the Guidelines, only those directors who have no material relationship with the Company (except in his or her role as a director) are deemed independent. The Guidelines specify the criteria by which the independence of our directors will be determined, including strict guidelines for directors and their immediate family members with respect to past employment or affiliation with the Company or its independent registered public accounting firm.

The Board has determined that, other than R. Scott Rowe, the Company’s President and Chief Executive Officer, each member of the Board, including all persons nominated for re-election, meet the independence standards set forth in the applicable rules of the SEC and the NYSE corporate governance ~~listing standards.~~

~~The Board’s Guidelines, and Code of Ethics, as well~~documents, such as the Company’s Code of ~~Ethics~~Conduct for employees and directors and an additional Code of ~~Business Conduct,~~Ethics for directors, are available on the Company’s website at www.flowserve.com under the ~~“Investors —~~ “Investors—Corporate Governance” caption. The table below highlights some of the Company’s investor friendly governance practices.

Director Elections	Board Operations	Shareholder Rights
✓ Annual elections for full Board by majority vote (in uncontested elections) ✓ Resignation policy if a majority vote is not received (in uncontested elections) ✓ Director retirement age policy of 72	✓ Stock ownership requirements for directors (5x annual cash retainer) ✓ Independent board chair ✓ Annual Board and Committee evaluations ✓ Board committees composed of 100% independent directors	✓ Right to call a special meeting ✓ Right to act by written consent ✓ Proxy access right ✓ No poison pill ✓ Annual “Say on Pay” vote

The Board, through the CG&N Committee, regularly reviews developments in corporate governance and best practices and modifies the Guidelines, committee charters and key practices as necessary.

The Board also works with management to develop the Company’s long-term strategy. The Board dedicates one full meeting per year solely to our long-term strategy, in which the Board receives updates from management and discusses the progress made, challenges encountered and future plans to continue implementing our strategic priorities. At each quarterly meeting of the Board, management also provides additional updates on our strategic priorities based on particular focus areas, including our business platforms, culture and organizational health, regulatory and legal risk, operations, and climate change and sustainability.

Our approximately 16,000 associates around the global are a critical component of our ability to execute on our strategy. Accordingly, the Board continually monitors and assesses our human capital management, principally in the areas of workplace health and safety, employee engagement, compensation and benefits and training, development and ethics. Each year, our associates complete an annual ethics training on our Code of Conduct and participate in “Integrity & Compliance Week” and “Safety Week” to help further emphasize the ongoing training that our associates receive. We also conduct annual employee engagement surveys to solicit feedback and input directly from our associates and, based on the results of our surveys, management and the Board work together to create additional action plans as appropriate.

Board Operations

Board Leadership Structure and Risk Oversight

~~The~~We have separated the positions of Chairman of the Board and ~~Chief Executive Officer have been separated at the Company~~CEO since 2005. Roger L. Fix, the Company’s current Non-Executive Chairman of the Board, presides over the meetings of the Board, including executive sessions of the Board where only non-employee directors are present. He reviews and approves the agendas for Board meetings, among his other duties as Chairman of the Board. He also serves as an alternate member for all Board committees. Mr. Fix strives to attend as many committee meetings as possible.

We ~~currently~~ believe that separating the positions of Chairman of the Board and ~~Chief Executive Officer~~CEO is ~~most~~ appropriate for the Company at this time because it places an independent director in a position of leadership on the Board. We believe this independent leadership and the Non-Executive Chairman’s authority to call meetings of the non-employee directors adds value to our shareholders by facilitating a more efficient exercise of the Board’s fiduciary duties and best enables the Board to effectively manage our businesses, risks, opportunities and affairs in the ~~current structure.~~best interests of our shareholders. We also believe the Non-Executive Chairman further enhances independent oversight by being responsible for establishing the Board’s annual schedule and collaborating with the ~~Chief Executive Officer~~CEO on the agendas for all Board meetings. The separation of Chairman and ~~Chief Executive Officer~~CEO also allows the Non-Executive Chairman to provide support and advice to the ~~Chief Executive Officer,~~CEO, reinforcing the reporting relationship and accountability of the ~~Chief Executive Officer~~CEO to the Board.

The Company’s Chief Executive Officer and other members of senior management are responsible for the ongoing assessment and management of the risks the Company faces, including risks relating to capital structure, liquidity and credit, financial reporting, information technology, cybersecurity and public disclosure, operations and governance. The Board and each of the Board’s four committees (the Audit Committee, Finance Committee, Corporate Governance and Nominating Committee and Organization and Compensation Committee)

The Board and its Committees exercise their risk oversight function by carefully evaluating the reports they receive from management and by making inquiries of management with respect to areas of particular interest to the Board. The Board and its Committees oversee senior management’s policies and procedures in assessing and addressing ~~these and other risks~~risk areas that fall within the scope of the Board’s and the ~~committees’~~Committees’ respective areas of oversight ~~responsibility. For example,~~responsibility, as further detailed in the Board ~~directly oversees risk~~Committees section below. The Board and management ~~relating to strategic planning,~~frequently discuss the Finance Committee directly oversees risk management relating to capital structure and liquidity, the Corporate Governance and Nominating Committee directly oversees risk management relating to director independence and corporate governance and the Organization and Compensation Committee directly oversees risk management relating to employee compensation and succession planning. Additionally, the Audit Committee directly oversees risk management relating to financial reporting and public disclosure and legal and regulatory compliance and, in accordance with provisionslong-term strategy of the ~~NYSE Listed Company Manual, reviews and discusses, in a general manner, the process by which the Board and its committees oversee senior management’s exercise of risk management responsibilities.~~Company. The Board is regularly informed through ~~committee~~Committee reports of each ~~committee’s~~Committee’s activities in overseeing risk ~~management within their respective areas of oversight responsibility.~~management.

~~The Board held nine regular meetings and one special meeting in 2018.~~ during the year ended December 31, 2020. Executive sessions of non-employee directors are normally held at each regular Board ~~meeting. Any non-employee director may request that additional executive sessions be scheduled. Shareholders may communicate with the Company’s non-employee directors~~meeting and are presided over by ~~following the instructions set forth under “—Shareholder Communications with the Board” below. Board members customarily have attended the Company’s annual meetings~~our independent Chairman of ~~shareholders. All Board members attended the Company’s 2018 annual meeting of shareholders with the exception of John L. Garrison and Michael C. McMurray as they joined~~ the Board, ~~after~~or, in the ~~annual meeting. In 2018,~~Chairman’s absence, by the Chairman of the CG&N Committee. During the year ended December 31, 2020, each ~~director~~Director nominee attended at least ~~75%~~92% of the total number of meetings of the Board and of each of the Board committees on which he or she served ~~during the period for which~~while he or she has been a ~~director.~~director or committee member.

Shareholders and other interested parties may communicate with the Board directly by writing to: Non-Executive Chairman of the Board, c/o Flowserve’s Corporate Secretary, Flowserve Corporation, 5215 N. O’Connor Blvd., Suite 2300, Irving, Texas 75039. All such communications will be delivered to our ~~chairman, Mr. Fix.~~

The Board maintains an Audit Committee, a Finance Committee, a Corporate Governance and Nominating Committee (“CG&N Committee”) and an Organization and Compensation Committee (“O&C Committee”). Only independent directorschairman. These communications are eligible to serve on Board committees. Each committee is governed by a written charter. The charters of the Audit Committee, Finance Committee, CG&N Committee and O&C Committee are available on the Company’s website at ~~www.flowserve.com~~ ~~under the “Investors — Corporate Governance — Documents & Charters” caption.~~

~~The following table identifies the current members of each of the Board’s committees and the number of meetings held in 2018:~~

~~The Audit Committee directly engages the Company’s independent auditors, pre-approves the scope of the annual external audit and pre-approves all audit and non-audit services to be provided~~reviewed by the independent auditor. The Audit Committee further approves and directly reviews the results of the Company’s internal audit plan. The Audit Committee also meets with management and the independent auditorsCorporate Secretary to review the quality and accuracy of the annual and quarterly financial statements and considers the reports and recommendations of independent internal and external auditors pertaining to audit results, accounting practices, policies and procedures and internal controls. The Audit Committee also reviews and discusses, in a general manner, the process by which the Board and the other Board committees oversee senior management’s exercise of risk management responsibilities.

The Audit Committee meets regularly with the external and internal auditors in executive sessions to discuss their reports on a confidential basis. In addition, the Audit Committee prepares and issues the “Report of the Audit Committee” included in this proxy statement.

The Finance Committee advises the Board on all corporate financing and related treasury matters regarding capital structure and major corporate transactions. The Finance Committee also approves major capital expenditures, including acquisitions, made by the Company and also advises the Board on the Company’s pension fund performance, information technology and cybersecurity risks.

~~The CG&N Committee~~determine whether it is ~~responsible~~appropriate for ~~making recommendations~~presentation to the Board ~~for the positions~~or such director. The purpose of ~~Chairman of~~this screening is to avoid having the Board ~~President~~consider irrelevant or inappropriate communications (such as advertisements, solicitations, and Chief Executive Officer. The CG&N Committee is also responsible for recommending candidates for membership to the Board. Prior to considering director nominee candidates, the CG&N Committee assesses the appropriateness of the Board’s current size and composition and whether any vacancies on the product inquiries).

The identification and evaluation of director candidates begins with the Guidelines, which establish the criteria for Board membership. As a starting point under the Guidelines, all prospective Board members must, ~~possess~~for example, adhere to the highest ~~professional~~standards of integrity and ~~personal ethics. Board members should have varied professional expertise in fields~~ethics, exercise diligent and constructive oversight of ~~accounting~~the Company’s business, risk profile and ~~finance, engineering, industrial sales, manufacturing, international operations, human resources~~strategy, demonstrate relevant and ~~field service. Additionally, all existing and prospective Board members should have a broad strategic view, possess~~successful career experience, display a global business perspective, and ~~demonstrate relevant and successful career experience. A Board member’s service on~~possess the ~~boards of other public companies should be limited to a number that permits them, given their individual circumstances,~~time to responsibly perform all director duties and effectively represent the interests of the shareholders. In addition, we believe that Board members should have varied professional expertise in areas relevant to the Company. In this regard, our director nominees bring a wide array of qualifications, skills and attributes to our Board of Directors that support its oversight role on behalf of the shareholders. The table on page 12 summarizes the key qualifications and areas of experience that led our Board to nominate these individuals.

The Guidelines further articulate the Board’s firm belief that ~~underlying the aforementioned criteria,~~ the Board’s members should also have a diversity of backgrounds, which ~~is viewed in comprehensive terms.~~we view holistically. In evaluating diversity of backgrounds, the Board considers individual qualities and attributes, such as educational background, professional skills, business experience and cultural viewpoint, as well as more categorical diversity metrics, such as race, age, gender and nationality. This consideration is implemented through the selection process for director nominees, and the Board assesses its effectiveness in promoting diversity through an annual self-assessment process that solicits feedback concerning the appropriateness of the Board’s diversity, among other critical performance factors.

The CG&N Committee considers various potential director candidates who may come to the attention of the CG&N Committee through current Board members, professional search firms, shareholders or other persons. The CG&N Committee generally retains a national executive-recruiting firm to research, screen and contact potential candidates regarding their interest in serving on the Board, although the CG&N Committee may also use less formal recruiting methods. Carlyn R. Taylor was recommended to the Board by a third-party search firm. All identified candidates, including shareholder-recommended candidates, are evaluated by the CG&N Committee using generally the same

methods and criteria, although those methods and criteria may vary from time to time depending on the CG&N Committee’s assessment of the Company’s needs and current situation.

We believe that a robust Board evaluation and feedback process helps to promote the effectiveness of our Board and Committees and encourages our Board members, individually and collectively, to continually improve in their roles and responsibilities. Our Board evaluation process is led by an independent member of the Board, the Chair of the CG&N Committee, who engages independent external advisors each year to assist in compiling the results of the evaluations submitted by the members of the Board and to provide additional perspective on effectively responding to the evaluations and feedback received.

Our annual evaluation process begins with a self-assessment in which each independent member of the Board provides a performance rating for a series of questions in several key categories, including the structure, process and resources of the Board, effectiveness of the Committees of the Board, and management of the Company. The self-evaluation concludes with several open-ended questions in order to encourage members of the Board to freely discuss their own performance, priorities for the upcoming year, and any other comments that the applicable member of the Board deems important.

Each independent member of the Board is also required to complete a peer evaluation of each other independent member of the Board (other than the Chairman, who is evaluated separately), which solicits feedback on how the applicable director adds value to the Board and its Committees, what the applicable director could do to increase effectiveness, and any other commentary that the evaluating member of the Board deems pertinent. In 2020, due to the unique challenges presented by the COVID-19 pandemic and the necessity to hold meetings by video conference instead of in person, the peer evaluation process was temporarily changed to take into account the impact of the pandemic.

Each member of the Board is also required to complete a Chairman evaluation to provide feedback on the performance and contributions of the Chairman of the Board. The Chairman evaluation requires each member of the Board to rate the Chairman’s performance in a dozen key areas and also provides an opportunity to provide open feedback on the performance of the Chairman of the Board.

Each member of the Board is also required to complete an evaluation of our Chief Executive Officer’s performance. While our Chief Executive Officer is a member of the Board, his evaluation is focused on his performance as a member of management and not as a member of the Board.

Once the evaluations are complete, the results are compiled by an independent external advisor, anonymized (other than for the self-evaluation), and provided to the CG&N Chair, who then conducts individual interviews with members of the Board in advance of the Board’s February meetings. The results of the process are discussed by the CG&N Committee, and the full Board, at their February meeting and considered by the CG&N Committee and the Board when engaging in director recruitment, director development, strategy, and governance.

We believe that all members of the Board (other than our CEO) should be independent under the New York Stock Exchange (“NYSE”) listing standards. Under these standards, only those directors who have no material relationship with the Company (except in his or her role as a director) are deemed independent. The Board has determined that each of Roger L. Fix, Sujeet Chand, Ruby R. Chandy, Gayla J. Delly, John R. Friedery, John L. Garrison, Michael C. McMurray, David E. Roberts, and Carlyn R. Taylor (all of our current directors other than R. Scott Rowe, the Company’s President and Chief Executive Officer) meet the independence standards set forth in the NYSE corporate governance listing standards. In addition, Joe E. Harlan and Rick J. Mills, each of whom served as a director until our 2020 Annual Meeting, were independent during the period they served on the Board.

A shareholder desiring to recommend a candidate for election to the Board should submit a written notice, as required by the Company’s ~~By-laws,~~By-Laws, including the candidate’s name and qualifications, to our Corporate Secretary, who will refer the recommendation to the CG&N Committee. The CG&N Committee may require any shareholder-recommended candidate to furnish such other information as may reasonably be required to determine the eligibility of such

recommended candidate or to assist in evaluating the recommended ~~candidate. The CG&N Committee may require the submission of~~candidate, including a ~~fully completed~~Director and ~~signed Questionnaire for Directors and Executive Officers on the Company’s standard form and a written consent by the shareholder-recommended candidate to serve as a director, if so elected.~~Officer Questionnaire.

Under the proxy access provisions of our ~~By-laws,~~By-Laws, eligible shareholders and/or shareholder groups also are permitted to include shareholder-nominated director candidates in our proxy materials. Additional details about the ~~process to include~~requirements for including shareholder-nominated director candidates in our proxy materials are set forth under “—“General Voting and Meeting Information—Shareholder Proposals and Nominations” ~~above~~below.

The Board maintains an Audit Committee, a Finance and ~~in Article II, Section 9 of~~Risk Committee (“F&R Committee”), a Corporate Governance and Nominating Committee, and an Organization and Compensation Committee (“O&C Committee”). Only independent directors are eligible to serve on Board committees. Each committee has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities and is governed by a written charter, which is available on the Company’s ~~By-laws.~~website at www.flowserve.com under the “Investors—Corporate Governance—Documents & Charters” caption.

Our executive compensation program is administered by the CG&N Committee using generally the same methods and criteria, although those methods and criteria may vary from time to time depending on the CG&N Committee’s assessment of the Company’s needs and current situation.

The CG&N Committee also oversees the annual Board and committee self-evaluation process. The performance evaluations solicit anonymous input from the directors regarding the performance and effectiveness of the Board, the Board committees and individual directors, and provide an opportunity for directors to identify areas for improvements. The CG&N Committee reviews the results and feedback from the evaluation process and makes recommendations for improvements as appropriate. The Board has successfully used this process to evaluate Board and committee effectiveness and identify opportunities to strengthen the Board.

The CG&N Committee is also responsible for preparing materials for the Chief Executive Officer’s annual performance review conducted by the Board. Further, the CG&N Committee reviews and recommends, as deemed appropriate, changes to the Company’s corporate governance policies consistentO&C Committee. Consistent with ~~SEC rules and~~ the NYSE corporate governance listing ~~standards.~~standards, the O&C Committee is composed entirely of independent, non-employee members of the Board. In addition, the Non-Executive Chairman of the Board generally attends the meetings of the O&C Committee.

for approving the compensation of our other executive officers, including the other Named Executive Officers. The O&C Committee is ~~responsible for establishing executive compensation for officers,~~also charged with overseeing the organizational design of the Company, including the ~~Chief Executive Officer~~development and other corporate officers. As further discussed under “Executive Compensation,” decisions regarding compensation are made by the O&C Committee in a manner that is intended to be internally equitable, externally competitive and an incentive for effective performance in the best interestsretention of our shareholders, while adhering to and promoting the Company’s risk management objectives. The O&C Committee is the administrator of the Company’s various equity and incentive compensation plans for key employees. The O&C Committee may, under certain circumstances, delegate routine or ministerial activities under these plans to management.

The O&C Committee also reviews the recommendations of the Chief Executive Officer and the Senior Vice President, Chief Human Resources Officer, regarding adjustments to the Company’s executive compensation programs. The O&C Committee has retained and regularly meets with its independent executive compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”). FW Cook has assisted the O&C Committee in evaluating the Company’s compensation programs and adherence to the philosophies and principles stated below under “Executive Compensation—Compensation Discussion and Analysis.”

The O&C Committee is also responsible for reviewing the management succession ~~plans~~plan and for recommending changes in director compensation to the CG&N Committee and to the Board. On matters pertaining to director compensation, the O&C Committee also receives data and advice from F.W. Cook. The O&C Committee periodically reviews the organizational design, management development plans and managerial capabilities of the Company. The O&C Committee also prepares and issues the ~~“Organization~~Organization and Compensation Committee ~~Report”~~Report included in this proxy statement.

The O&C Committee’s process of reviewing the executive compensation program and setting compensation levels for our Named Executive Officers involves several components. During the first quarter of each year, the O&C Committee reviews each Named Executive Officer’s total compensation. The O&C Committee members also meet regularly with the Named Executive Officers at various times during the year, both formally within Board meetings and informally outside of ~~Directors~~Board meetings, which allows the O&C Committee to assess directly each Named Executive Officer’s performance. The O&C Committee also solicits input from all non-employee members of the Board as to the CEO’s performance during the year.

The O&C Committee generally considers the results of the CG&N Committee’s process for reviewing the CEO’s performance with all independent Board members. The CG&N Committee’s process includes the independent Board members individually and collectively presenting their assessment of the CEO’s performance, as well as the CEO presenting his self-assessment of his performance. The O&C Committee uses these results when determining the CEO’s recommended compensation, which is subject to the independent Board members’ approval.

In addition, the CEO annually presents an evaluation of each other Named Executive Officer’s performance to the O&C Committee, which includes a review of each officer’s contributions over the past year, and his or her strengths, weaknesses, development plans and succession potential. The CEO also presents compensation recommendations for each Named Executive Officer for the O&C Committee’s consideration. Following this presentation and a benchmarking review for pay, the O&C Committee makes its own assessments and formulates compensation amounts for each Named Executive Officer with respect to each of the elements in the Company’s executive compensation program as described below.

The O&C Committee has the authority to retain outside advisors as it deems appropriate. The O&C Committee has engaged F.W. Cook as its compensation consultant to provide advice and information. F.W. Cook has assisted and advised the O&C Committee on all aspects of our executive compensation program, and they provide no other services to the Company. The services they provide include:

ProgramOverview.Our director compensation program is established by the Board after review of data prepared by the O&C Committee’s independent consultant regarding competitive director compensation levels for peer companies and the Company’s compensation peer group, which is discussed under “Executive Compensation.” In 2020, our non-employee director compensation ~~for~~program consisted of the fiscal year ended December 31, 2018. Compensation information for Mr. Rowe is set forth below under “Executive Compensation—Summary Compensation Table.” Mr. Rowe did not receive any compensation solely for service as a director.following:

~~In 2018,~~Additionally, non-employee directors received, as applicable: (a) an annual cash retainer of $85,000; (b) an annual cash committee service fee of $7,500 (per committee); (c) an annual cash committee chairman service fee of $20,000 for the Audit Committee chairman, $15,000 for the O&C Committee chairman and $10,000 for the Finance and CG&N Committee chairman; (d) an annual cash retainer for services as Non-Executive Chairman of the Board of $125,000; and (e) equity compensation with a target value of $125,000. Directors are also eligible to receive special additional compensation when performing ~~services that have been determined by the Board to be well above and beyond the normal director service requirements.~~certain special services. The Board has set a compensatory rate of $3,500 per day for such services, though no compensation was paid for this purpose in 2018. The compensation elements and amounts were established by the Board after review of data prepared by the O&C Committee’s independent consultant, showing competitive director compensation levels for peer companies and the Company’s compensation peer group, which is discussed under “Executive Compensation.”2020.

~~Pursuant to the Company’s cash and stock director deferral plans and equity compensation plans, directors~~CompensationDeferral. Directors may elect to defer all or a portion of their annual cash ~~compensation~~ and equity compensation. The annual cash compensation may be deferred in the form of cash or in ~~the form of~~phantom shares, which reflect an equivalent value of Company common stock. Compensation deferred in the form of cash accrues interest ~~while deferred~~ at rates that do not exceed market rates or constitute preferential earnings. If a director elects to defer cash compensation in the form of ~~Company common stock,~~phantom shares, the director receives a 15% premium on the amount deferred.

EquityCompensation.The equity portion of non-employee director compensation is ~~provided~~granted on the date of the Annual Meeting of shareholders in the form of restricted ~~common stock of the Company having a $125,000 fair market valuation at the time of grant, which is established on the date of the annual meeting of shareholders of the applicable year. Voting~~stock. The restricted shares have voting rights ~~accompany such restricted common stock, which~~and fully vest after the earlier of one year from the date of grant, the termination of the director’s service due to death or disability or a change in control.

In May 2020, in recognition of the unfolding COVID-19 pandemic, the Board approved a change to their equity compensation for 2020 by reducing the size of the annual equity grant to a number of shares that the Board would have received had the grant been made at the same time that equity grants were made to members of management on February 20, 2020, prior to the date on which the COVID-19 pandemic began to have a material impact on the U.S. economy and the trading price of companies listed on the NYSE. On February 20, 2020, the date on which the Company made its annual equity grant to members of management, the price per share of the Company’s common stock was $47.56, and on May 22, 2020, the date on which the Company made its annual equity grant to the Board, the price per share of the Company’s common stock was $25.20. By approving the annual equity grant to members of the Board in an amount equal to the number of shares that would have been granted at the stock price on February 20, 2020, the dollar value of the annual equity grant to Board members was reduced from the target of $125,000 to $66,225.60.

StockOwnershipGuidelines. Under ~~the Guidelines,~~our stock ownership guidelines, all non-employee directors must own shares of Company common stock with a value of at least five times his or her annual cash retainer (currently ~~valued at~~ $425,000) by his or her fifth anniversary of Board service. If the stock ownership requirement is not met, the director will receive all future Board compensation in the form of Company common stock until the requirement is satisfied. For ~~2018,~~2020, all non-employee directors met their stock ownership requirements.

~~During 2018, the members of the O&C Committee included Ms. Chandy,~~The following table sets forth our non-employee director compensation for 2020. Mr. ~~Darner, Mr. Friedery, Mr. Garrison and Mr. Roberts. None of the members of the O&C Committee were at~~Rowe did not receive any ~~time during 2018 an officer or employee of the Company or were formally an officer of the Company. None of our executive officers serve~~compensation for his service as a ~~member of the board of directors or a~~director. His compensation ~~committee of any entity that has one or more executive officers serving as a member of our Board or O&C Committee.~~is set forth below under “Executive Compensation—Summary Compensation Table.”

The following sets forth certain information regarding the Company’s executive officers. Information pertaining to Mr. Rowe, who is both a director and executive officer of the Company, is presented above under “Board of Directors—Biographical Information—Nominees to Serve an Annual Term Expiring at the 2020 Annual Meeting of Shareholders.”

~~Elizabeth~~L.~~Burger~~ has served as Senior Vice President, Chief Human Resources Officer since joining Flowserve in April 2018. Before joining the Company, she was Chief Human Resources Officer with Hanesbrands Inc., a global manufacturer and marketer of everyday basic apparel. Prior to joining HanesBrands Inc., she worked at Monsanto Company in various roles of increasing responsibility, and most recently served as its Senior Vice President, Global Business Operations.

~~Lee~~S.~~Eckert~~ has served as Senior Vice President, Chief Financial Officer since joining Flowserve in October 2017. Before joining the Company, he was Senior Vice President and CFO of CHC Group LLC, a global commercial helicopter service provider to the offshore oil and gas industry, from July 2015 to September 2017. CHC Group LLC and certain of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in May 2016. Prior to CHC Group LLC, Mr. Eckert served as chief financial officer of the U.S. division of National Grid Plc. from June 2011 to September 2014, and, from June 2006 to June 2011, Mr. Eckert served in various executive capacities as MeadWestvaco Corporation, including as Vice President, Operations, Healthcare from November 2010 to June 2011, and chief financial officer, packaging resource group from June 2006 to October 2010.

~~Keith~~E.~~Gillespie~~ has served as Senior Vice President, Chief Sales Officer since October 2016. In this capacity, he has responsibility for selling and commercial operations activities of the Company. Prior to this role, he served as Chief Strategy Officer of the Company from May 2015 to October 2016 with responsibility for corporate strategy, research and development, corporate development and marketing at the Company. Before joining the Company, he was Managing Director at AlixPartners from 2002 to 2015, where he was responsible for leading the firm’s Business and Consumer Services Practice and the firm’s Growth and Strategy Practice, as well as business improvement efforts at global companies across multiple sectors. Prior to AlixPartners, he served in various senior executive roles at McKinsey & Company, i2 Technologies, and TenFold Corporation.

~~John~~R.~~Lenander~~ has served as President, Flow Control Division since February 2017. He has served in various roles since joining the Company in June 2006, most recently as Interim President, Flow Control Division from November 2015 to February 2017, as Vice President & General Manager, Oil & Gas Sector from 2008 to 2015 and Vice President, Business Development, Flow Control Division from 2006 to 2008. He was employed previously with Dresser, Inc., where he held several management positions, most recently as Vice President, Global Sales, Flow Solutions Division from 2002 to 2005.

~~Lanesha~~T.~~Minnix~~ has served as Senior Vice President, Chief Legal Officer and Corporate Secretary since joining Flowserve in June 2018. Prior to joining Flowserve, Ms. Minnix served as Senior Vice President, General Counsel for BMC Stock Holdings, Inc., a leading provider of diversified building products and services. Prior to this role, Ms. Minnix was Vice President, Deputy General Counsel and Chief Compliance Officer for ABM Industries Incorporated, a Fortune 500 facility solutions company. Before her tenure with ABM Industries Incorporated, Ms. Minnix held roles with increasing responsibility at both Royal Dutch Shell/Shell Oil Company and Sprint Corporation. Ms. Minnix began her career as a corporate associate at the law firm of K&L Gates.

~~Kirk~~R.~~Wilson~~ has served as President of Aftermarket Services & Solutions, a component of our Flowserve Pumps Division, since September 2015. He has served in various roles since joining the Company in 1987, most recently as President, Services and Solutions Operations from January 2012 to September 2015, as Vice President and General Manager, Integrated Solutions Group from 2008 to 2011 and Vice President, Marketing for the Pump Division from 2004 to 2008.

~~David~~J.~~Wilson~~ has served as President of the Flowserve Pumps Division since July 2018 and as President of the Industrial Product Division since September 2017. He was employed previously with SPX Flow, Inc., a manufacturer and supplier of engineered products, as President, Industrial until January 2017. Prior to SPX Flow, Inc.’s spin-off from SPX Corporation, Mr. Wilson served as President, Flow Technology – Industrial, of SPX Corporation. Prior to his most recent position at SPX Corporation, he held various senior positions within that company from 1998 to 2013.

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation ~~program and policies~~principles and the ~~material compensation decisions~~pay program we have made for our principal executive officer and our other executive officers named in the “Summary Compensation Table” on page 41. To guide the discussion and analysis, we have organized our CD&A into the following sections:

~~We refer to this group of executive officers collectively as our “Named Executive Officers” throughout this document. During 2018,~~ our Named Executive Officers (“NEOs”) for 2020.

For more information on the Named Executive Officers currently serving as executive officers, see “Executive Officers” on page ~~22.~~26.

Flowserve is one of the world’s leading providers of fluid motion and ~~Organizational Transformation~~control products and services with a significant global presence in ~~2018~~the manufacturing of pumps, valves and seals. We have approximately 16,000 employees in more than 50 countries who are focused on our purpose and strong company values.

~~Fiscal 2018~~While Flowserve continued to make substantial progress on our transformation initiatives, 2020 was a challenging year for Flowserve and its customers given the COVID-19 pandemic and general economic challenges around the globe. In the first quarter of 2020 the onset of the pandemic coupled with extreme volatility in global markets and commodity prices led to unexpectedly reduced capital budgets by our customers and resulting declines in demand for our products and new bookings. In addition, these impacts also caused our customers to defer spending in their repair and maintenance budgets, which led to reduced levels of activity in our aftermarket business.

These global challenges disrupted the meaningful progress our management team and the Company made through our significant ~~improvement~~efforts in the Flowserve 2.0 Transformation and resulted in declining revenue, profitability, and share price performance. Despite these unprecedented challenges, the process improvements made as part of our Flowserve 2.0 Transformation allowed management and the O&C Committee to swiftly respond to the market disruption by:

The O&C Committee took additional compensation actions in the first quarter of 2021 revising our incentive programs to address the continued uncertainty facing the Company, and to strengthen the retentive value of our compensation system, as well as motivate our key employees to continue to execute on our strategic transformation during this critical juncture for the Company. These additional actions include:

In addition to executing on the short-term imperatives in 2020, our associates continued to drive significant transformation for Flowserve. ~~Mr. Rowe continued the implementation~~We accelerated certain of ~~a new transformational business strategy called~~our Flowserve 2.0 initiatives, improved upon our previous progress, and ~~fully established his executive team.~~drove solid results given the disruption caused in the market. Refer to the “Flowserve 2.0 Transformation” beginning on page 7 for additional information about the transformation and accomplishments during 2020.

FLOWSERVE 2.0 — Implementing our Transformative Business Strategy

Our compensation programs are aligned with our company strategy and the goal to create long-term shareholder value. Quantitative measurements for our key strategies are established and embedded in our annual and long-term incentive plan designs as shown in the table below. The measurement of the improvement of organizational health is included in the yearly performance assessment of our NEO’s.

The ~~highlights~~alignment of pay and performance is one of the key components of our ~~2018 progress towards~~compensation philosophy as shown on the following page. The Company is committed to a rigorous target setting process, the careful selection of key performance measures aligned with our ~~new strategic initiatives include:~~

~~Our major end markets include oil~~strategy and ~~gas, chemical, power and general industries. In 2018, most~~the creation of our major end markets have improved from the cyclical downturns experienced in recent years. Over the past several years, our customers delayed large capital projects, including regular maintenance and upgrades. This conservative approach in their capital planning had an effect on our financial performance over the last few years. However, in 2018 we saw an increase in project opportunities and capital expenditures in the oil and gas market, as well as a majority of our other end markets.

The following charts illustrate the ~~directional relationship between our Company~~ performance ~~and~~payouts under our various incentive plan components: ~~the~~The Company’s annual incentive plan ~~(AIP)~~(“AIP”) and contingent performance ~~shares (PSUs)~~share units (“PSUs”).

The O&C Committee maintains a thoughtful approach to corporate governance practices for executive compensation. Below is a summary of those practices.

Our Compensation Philosophy is aligned with building long-term shareholder value and to achieve the following objectives:

Our core executive compensation elements are aligned with our executive compensation philosophy. These elements provide competitive market-based compensation that emphasize pay for performance and alignment with shareholders through heavy weighting of short- and long-term incentive compensation.

Our executive compensation program emphasizes performance-based compensation that is determined each year by the O&C Committee. As shown below, for 2020, the significant majority of our 2020 target total executive compensation (i.e., base salary, target annual incentive, and grant date value of RSUs and PSUs at target) was at-risk (86.3% for our President and CEO and an average of 68.9% for other Named Executive Officers other than Mr. Roueche, as noted below). See “Elements of the Executive Compensation Program” for additional details.

At our 2020 Annual Meeting of Shareholders, over 95% of our shareholders voted to approve our Named Executive Officer compensation. Although our O&C Committee believes this affirms our shareholders’ overall support of our executive compensation program, we are constantly seeking to improve our program.

To achieve our program objectives and support the implementation of our ~~Flowserve 2.0 transformational~~ strategy, we ~~adopted the~~assess our compensation programs on an annual basis. The following compensation program design ~~for 2019.~~features were adopted in recent years:

ANNUAL INCENTIVE PLAN (“AIP”):

Design Feature

Rationale

~~Design Feature~~	~~Rationale~~
• ~~Maintained emphasis~~ • Emphasis on operating income and working capital efficiency		• Critical to execute our strategy
• Changed PWC calculation from a year-end to quarterly measurement		• To reward continuous and sustained ~~improvement~~
• ~~Changed on-time delivery calculation~~	• ~~Ensure balance across our aftermarket and original equipment business~~
• ~~Focused on stretch goals~~	• ~~Reward year-over-year~~ improvement

•

Rebalanced on-time delivery calculation

•

~~2019-2021~~~~CONTINGENT~~Ensure balance across our aftermarket and original equipment business

PERFORMANCE ~~SHARES:~~SHAREUNITS(“PSUs”):

Design Feature

Rationale

~~Design Feature~~	~~Rationale~~
• ~~Maintained total shareholder return (TSR) metric measured against a performance peer group~~	• ~~Aligned with shareholder interests~~ • Total Shareholder Return (“TSR”) metric measured against a performance peer group		• Drives shareholder returns
• Return on Invested Capital (“ROIC”) metric with improvement targets aligned with the 2022 financial targets		• Encourage effective capital deployment and alignment with shareholders
• ~~Maintained ROIC metric with improvement targets aligned with the 2022 financial targets communicated to investors at December 13, 2018 analyst day~~

In light of the unprecedented challenges of the world-wide COVID-19 pandemic and the volatility of commodity prices as a result of the pandemic and disputes between the members of the Organization of Petroleum Exporting Companies, the O&C Committee approved certain changes to AIP in July 2020, including bifurcating the 2020 program for the first and second halves of the year, in order to provide focus on and reward the achievement of the Company’s evolving strategic priorities during an unprecedented period of global economic uncertainty and to help drive operational improvement. Additional discussion of the changes approved by the O&C Committee and the rationale for such changes is included below in “Elements of the Executive Compensation Program—Annual Incentive Opportunity.”

Elements of the Executive Compensation Program

Overview

Consistent with our philosophy, the primary elements of the Company’s executive compensation program in 2020 are discussed below:

•

~~Encourage effective capital deployment and alignment with shareholders~~
ELEMENT
FORM OF COMPENSATION
PRIMARY OBJECTIVES
Base Salary
Cash
•
Based on responsibilities of the position and performance
•
Provide stable source of income
•
Set at levels approximating the market median to attract and retain executive talent

Annual Incentive Opportunity

Cash

•

~~2018 Say-on-Pay Vote~~Rewards for company achievement for pre-determined key operational and financial performance measures

•

Motivate and reward company and individual performance

Long-Term Incentive Compensation

•

Restricted Stock Units
(RSUs)

•

Performance Share Units (PSUs)

•

Ensure alignment of executive with shareholders

•

RSUs help retain executive talent through three-year ratable vesting schedule

•

PSUs rewards long-term company performance based on set targets aligned with shareholder value creation over three-year performance period

2021 PROXY STATEMENT 35

Competitive Market-Based Compensation Approach

ELEMENT

FORM OF COMPENSATION

PRIMARY OBJECTIVES

Other Compensation

Retirement Benefits;
Perquisites; Severance Benefits

•

Provide market competitive benefits

ATTRACT & RETAIN

REINFORCE OUR

~~Management and the O&C Committee are attentive to the outcome of the shareholder “Say on Pay” vote. At the Company’s 2018 annual shareholder meeting,~~STRATEGY

COMPETITIVE AND

MARKET-BASED

ALIGN PAY AND

PERFORMANCE

ALIGN WITH

SHAREHOLDERS

Aligned with our competitive and market-based executive compensation philosophy, the O&C Committee establishes a benchmark “compensation peer group” (“CPG”) on an annual basis. In addition, AON and Willis Towers Watson (“WTW”) Executive Compensation Survey Data is utilized to set compensation elements for positions that are not adequately covered by the CPG data. The CPG, AON Survey and WTW Survey are each considered in setting target executive compensation levels.

For 2020, our CPG consisted of the following companies, which includes one addition over 2019:

COMPENSATION PEER GROUP (CPG)


2020 COMPENSATION PEER GROUP (18 Companies)

Ametek, Inc.		Pentair plc

Colfax Corporation		Regal Beloit Corporation

Crane Co.		Rockwell Automation, Inc.

Donaldson Company, ~~received 94% of votes cast in favor of the Say on Pay resolution. While our shareholders expressed strong support in favor of our~~ Inc.		Snap-on Incorporated

Dover Corporation		Terex Corporation
Fortive Corporation*		Trinity Industries

IDEX Corporation		Wabtec Corporation

Lincoln Electric Holdings, Inc.		Woodward, Inc.

Nordson Corporation		Xylem Inc.



*New for 2020

Elements of Compensation in Detail

Base Salary

The O&C Committee reviews and approves base salaries annually during the first quarter with a general goal to approximate the market median of companies within the CPG and the broader market as reflected in the AON Survey and WTW Survey. The base salaries paid to the Named Executive Officers during 2020 are shown below. In response to the onset of the COVID-19 pandemic and the downturn in markets generally, including the oil and gas markets, the Board elected not to implement any increases to base salary during 2020 other than a performance increase in base salary of 15% for Ms. Minnix in recognition of her high performance and the peer benchmark data for her position.

2021 PROXY STATEMENT 36

Named Executive ~~Officers’ compensation at~~Officer	2020 Salary ($)
R.ScottRowe	1,133,000
*Amy*B.Schwetz⁽¹⁾	562,500
*JohnE.(Jay)Roueche,III***	343,757
*Lanesha*T.Minnix⁽²⁾	463,785
*Keith*E.Gillespie	485,000
*Elizabeth*L.Burger	478,950
(1) Ms. Schwetz’s base salary reflects the ~~2018 Annual Meeting, we are constantly seeking to improve our compensation program as demonstrated by~~period commencing February 17, 2020, the ~~changes made since~~first date of her employment, through December 31, 2020. Ms. Schwetz assumed the ~~end~~role of ~~2017.~~ ~~Executive Compensation Program Objectives~~Senior Vice President and ~~Principles~~Chief Financial Officer on February 24, 2020. (2) ~~Compensation Governance Practices~~ ~~The O&C Committee maintains~~Ms. Minnix’s base salary reflects a ~~thoughtful approach to corporate governance practices for executive compensation. Below is a summary of those practices.~~15% performance increase in base salary effective November 2020. ~~- 2019 PROXY STATEMENT 25~~

Annual Incentive Opportunity

During the first quarter of each year, the O&C Committee also establishes each Named Executive Officers’ annual cash incentive opportunity under our Annual Incentive Plan (the “AIP”). When setting annual incentive opportunities, the O&C Committee approves: (i) the Company performance measures under the AIP; and (ii) an AIP target opportunity for each Named Executive Officer. Each NEO’s overall annual AIP target opportunity for 2020 remained unchanged from 2019 levels as a percentage of base salaries.

In response to the unfolding COVID-19 pandemic, the O&C Committee re-convened in July 2020 to review the 2020 AIP program and determined that it would be appropriate to measure the 2020 AIP as two separate performance periods: H1 (measured from January 1 through June 30, 2020) and H2 (measured from July 1 through December 31, 2020), which we refer to in this proxy statement as the H1 Plan and the H2 Plan respectively. The H1 Plan was determined based on the performance measures established in February 2020, and the H2 Plan was determined based on new performance measures established in July 2020 that aligned more closely to the Company’s evolving priorities and objectives. The final payout was determined by adding the overall attainment for each performance period, weighted 50% each.

In doing so, the O&C Committee considered the economic environment, the unanticipated impact that the reduction in our customers’ capital budgets had on our business, and the motivational aspect of the original 2020 AIP program. Using a set of guiding principles, the O&C Committee balanced our internal needs with external shareholder expectations. The O&C Committee considered a design for the H2 plan that:

•

Motivated associates during an extremely challenged time;

•

Set realistic goals in light of the rapidly evolving business environment;

•

Provided line of sight to metrics that aligned with the Company’s focus on successfully navigating the downturn;

•

Provided opportunity for reasonable AIP payouts; and

•

Utilized metrics that could be focused on by all levels within the Company.

In establishing this bifurcated approach, the O&C Committee sought to balance pay for performance considerations with retention and motivation factors, in an effort to maintain an AIP program that provided focus on and rewarded the achievement of the Company’s evolving strategic priorities during an unprecedented period of global economic uncertainty and to continue to drive operational improvement.

2021 PROXY STATEMENT 37

The following table illustrates the 2020 AIP target opportunities and payouts for each NEO:

Named Executive Officer
2020 Salary
Target
AIP (% of
Salary)
Target AIP
($ Amount)
H1 Plan
Payout
Percentage
(weighted
50%)
H2 Plan
Payout
Percentage
(weighted
50%)
Overall
Payout
Percentage
2020
AIP
Payout
R. Scott Rowe
$1,133,000
120%
$1,359,601
7.8%

123.7%
65.8%
$ 894,260
Amy Schwetz⁽¹⁾
$566,530
  75%
$   424,898
7.8%

123.7%
65.8%
$ 279,471
John E. (Jay) Roueche, III
$343,757
  50%
$   171,879
7.8%

123.7%
65.8%
$ 113,051
Lanesha T. Minnix
$525,000⁽²⁾
  65%
$   341,250
7.8%

123.7%
65.8%
$ 224,453
Keith E. Gillespie
$485,000
  65%
$   315,250
0.0%

105.7%
52.9%
$ 166,625
Elizabeth L. Burger
$478,950
  65%
$   311,318
7.8%

123.7%
65.8%
$ 204,765
(1)
This reflects Ms. Schwetz’s annual bonus opportunity based on the period from February 17, 2020, the first date of her employment, through December 31, 2020. Ms. Schwetz assumed the role of Senior Vice President and Chief Financial Officer on February 24, 2020.
(2)
This reflects Ms. Minnix’s 2020 base salary in effect as of December 31, 2020, which is used for determining her 2020 AIP payout.

Rigorous Performance Measures

The O&C Committee, working with its compensation consultant and members of management, evaluates and approves the Company’s AIP performance measures. The O&C Committee also sets the weighting of each executive’s individual performance measures to be consistent with our business strategy and to tie to the achievement of important strategic objectives within each executive’s area of control.

The O&C Committee selects performance measures, with input from management, that support key strategies that we believe drive sustainable and profitable Company growth. The performance metrics were reviewed for the H1 Plan and the H2 Plan to ensure their importance in remaining successful during the downturn, our current strategic operational focus and alignment across the organization at all levels.

The H1 performance metrics were aligned with the Company’s historical focus on margin expansion through operating income, growth through revenue and bookings, capital efficiency through a focus on primary working capital as a percentage of sales and customer satisfaction through on-time delivery. We believe these metrics align our associate’s actions with outcomes that drive the success of the Company and align with shareholders’ interests.

Because our business outlook was impacted by the unanticipated reduction in our customers’ capital spending during 2020, we narrowed the focus of the H2 plan to metrics that were critical to managing the Company through the downturn. The O&C Committee approved performance measures that focused associates on maintaining the Company’s margin through the downturn with an increased focus on operating income, preserving liquidity and generating cash flow through primary working capital reduction and focusing on delivering on our past-due backlog to our customers in the back half of the year, except for Keith Gillespie, our Chief Sales Officer, who continued to focus on bookings instead of delivery of past-due backlog under the H2 plan.

The Company’s 2020 AIP performance measures for the H1 Plan as weighted for each executive were as follows:

2021 PROXY STATEMENT 38

~~Principles that Guide our Compensation Programs~~

~~What We Do~~
H1 2020 Performance
Measures & Weighting
Consolidated
Adjusted
Operating
Income
Consolidated
Revenue or
Bookings
Adjusted PWC
as % of Sales
Customer
On-time
Delivery
Total
R. Scott Rowe
50%
15%
20%
15%
100%
Amy Schwetz
50%
15%
20%
15%
100%
John E. (Jay) Roueche, III
50%
15%
20%
15%
100%
Lanesha T. Minnix
50%
15%
20%
15%
100%
Keith E. Gillespie ⁽¹⁾
30%
50%
20%
—
100%
Elizabeth L. Burger
50%
15%
20%
15%
100%
(1)
Only Mr. Gillespie had a Consolidated Bookings target. The other Named Executive Officers had a Consolidated Revenue target.

The Company’s 2020 AIP performance measures for the H2 Plan as weighted for each executive were as follows:

H2 2020 Performance Measures & Weighting	Consolidated Adjusted Operating Income	Consolidated Bookings	PWC Reduction	Past Due Backlog	Total
R. *Scott* *Rowe*	55%	—	25%	20%	100%
*Amy* *Schwetz*	55%	—	25%	20%	100%
*John* E. *(Jay)* *Roueche,* *III*	55%	—	25%	20%	100%
*Lanesha* T. *Minnix*	55%	—	25%	20%	100%
*Keith* E. *Gillespie*	30%	50%	20%	—	100%
*Elizabeth* L. *Burger*	55%	—	25%	20%	100%

Achievement of the metrics was evaluated using pre-defined internal criteria, as adjusted by the O&C Committee within parameters it established at the beginning of each performance period, to exclude the effect of certain specified developments that occurred during the year and described further below.

H1 Plan Calculations

Performance Metric

How It was Calculated for H1 2020

Consolidated Adjusted Operating Income

~~What We Don’t Do~~

✔

~~Target the market median for all elements of pay~~

✔

~~Balance compensation programs~~

✔

~~Cap incentive program payments~~

✔

~~Maintain a clawback policy~~

✔

~~Provide 50% of long-term incentives in the form of performance-based compensation~~

✔

~~Maintain stock ownership requirements~~

✔

~~Fully disclose incentive plan targets and results~~

✔

~~Utilize an independent compensation consultant~~

✗

~~No hedging or pledging stock~~

✗

~~No excise tax gross-ups for executives~~

✗

~~No employment agreements with Named Executive Officers~~

✗

~~No option repricing without stockholder approval~~

✗

~~No excessive perquisites~~

Our key executive compensation objectives are to attract and retain key leaders, reward current performance, drive future performance and align the long-term interests of our executives with those of our shareholders. In pursuing these objectives, the O&C Committee uses certain guiding principles in designing the specific elements of the executive compensation program, as outlined below:

~~Compensation Principles~~	~~How We Make Our Principles A Reality~~
~~Reinforce~~~~Our~~~~Strategy~~	• ~~Ensure compensation programs reflect the Company’s business vision and the key strategies for accomplishing that vision: People, Process and Technology, Customer, and Finance.~~
~~Reinforce~~~~Our~~~~Strategy~~	• ~~Consider our key strategies and risk tolerance when identifying the appropriate incentive measures and when assigning individual goals and objectives to the Named Executive Officers.~~
~~Align~~~~Pay~~~~and~~~~Performance~~	• Use a variety of performance-based compensation vehicles that promote our annual operating plan and long-term business strategy, build long-term shareholder value and avoid encouraging excessive risk-taking.
~~Align~~~~Pay~~~~and~~~~Performance~~	• Ensure strong correlation between executive pay and Company performance through incentive arrangements that offer an opportunity for above target compensation when our performance exceeds our goals balanced by the risk of below target compensation when it does not.
~~Maintain~~~~Competitive~~~~Market~~~~Strategy~~	• Use multiple sources of benchmarking data including: (i) the Compensation Peer Group (“CPG”), (ii) the manufacturing industry portion of the AON Hewitt Associates’ Total Compensation Measurement survey (the “AON Survey”) and (iii) the General Industry Willis Towers Watson Survey (the “WTW Survey”). The data from the AON Survey and WTW Survey is being utilized for positions that are not adequately covered by the CPG data.
~~Maintain~~~~Competitive~~~~Market~~~~Strategy~~	• ~~Set target compensation at levels approximating the market median to maintain market competitive compensation.~~
~~Review~~~~Programs~~~~Annually~~~~for~~~~Effectiveness~~	• ~~Review annually major elements of our executive compensation program along with supplemental elements like health and welfare benefits, retirement income, perquisites, and severance.~~
	• Stay abreast of evolving market practices in the general industry, external regulatory requirements, the competitive market for executives, our risk management objectives and our executive compensation philosophy.
~~Measure~~~~Performance~~ona~~Relative~~~~Basis~~	• Evaluate the Company’s performance relative to organizations in the CPG and other high performance cyclical industrial manufacturers for the performance-based element of our executive compensation program.
~~Measure~~~~Performance~~ona~~Relative~~~~Basis~~	• ~~Assess how well we deliver results that build long-term shareholder value to better establish the performance expectations of senior management.~~
~~Grant~~~~Majority~~of~~Compensation~~~~“At~~~~Risk”~~	• ~~Ensure majority of total compensation is “at risk” and should increase in line with the scope and level of the executive’s business responsibilities.~~
	• Maintain higher percentage of “at risk” compensation for the CEO compared to the other Named Executive Officers in light of the position’s strategic focus, global governance and management responsibilities and accompanying risks.
~~Balance~~~~Short-Term~~~~and~~~~Long-Term~~~~Performance~~	• Provide each Named Executive Officer with a competitive amount of cash compensation each year (with the opportunity to increase that amount if annual incentive objectives are exceeded), complemented by an opportunity to earn a substantial amount of additional compensation if the executive is successful in achieving the Company’s long-term objectives.
~~Balance~~~~Stock-~~~~and~~~~Financial-Based~~~~Achievements~~	• ~~Use multiple long-term incentive vehicles and metrics based on both the Company stock price and pre-established financial metrics.~~
	• Maintain flexibility in our compensation process to adjust the current mix of award types, adjust vesting conditions or approve different types of awards as part of our overall long-term incentive program.

~~- 2019 PROXY STATEMENT 26~~

~~Compensation Framework Supports Pay and Performance Alignment~~

Each year, the O&C Committee, which is made up entirely of independent directors, determines the total amount and appropriate mix of compensation for our executive officers, including the Named Executive Officers. We believe that our compensation program is designed so that pay is commensurate with the level of performance generated, with incentive compensation representing the majority of total compensation. As shown below, for 2018, the President and CEO had 85.8% of his pay “at risk” or “variable” and dependent upon Company and stock price performance, as well as his individual performance. The other Named Executive Officers had on average 71.7% of their pay “at risk” or “variable.”

~~Elements of the Executive Compensation Program~~

~~Overview~~

~~Compensation Objectives and Core Elements~~

We provide executive compensation and benefits that are market-competitive and in which a large portion of the total opportunity is variable and tied to our performance and changes in shareholder value over a multi-year period.

~~Consistent with these principles, the core elements of our executive compensation program consist of:~~

•

~~cash compensation,~~Our reported operating income was adjusted to remove the effects of reduced allocations, and profit and loss adjustments incurred, resulting in ~~the form~~Consolidated Adjusted Operating Income of ~~market competitive base salary and an annual incentive opportunity payable upon achievement~~approximately $180.6 million compared to reported Operating Income of ~~performance goals; and~~approximately $159.4 million from January 1, 2020 to June 30, 2020.

Consolidated Revenue or Bookings⁽¹⁾

•

~~long-term equity compensation, in the form of RSUs that vest over time and contingent performance shares that vest, if at all, based on the achievement of benchmarked financial performance metrics.~~

~~The primary elements of the Company’s executive compensation program in 2018 are shown in the following table and are discussed in detail below:~~

~~Category~~	~~Compensation Element~~	~~Description~~
*~~Cash~~*	~~Base~~~~Salary~~	~~Fixed cash compensation based on responsibilities of the position and set at levels approximating the market median~~
	~~Annual~~~~Incentive~~~~Opportunity~~	~~Annual cash incentive for Company achievement of pre-determined financial performance metrics; payment ranges from 0% to 200% of target award~~
*~~Long-Term~~~~Incentives~~***	~~Restricted~~~~Stock~~~~Units~~ ~~(50%~~of~~total~~~~grant~~~~value)~~	~~Vests ratably over a three-year period~~
	~~Contingent~~~~Performance~~~~Units~~ ~~(50%~~of~~total~~~~grant~~~~value)~~	~~Cliff vests at end of a three-year period at 0% to 200% of award value based on absolute ROIC targets and relative TSR against the Performance Peer Group (“PPG”)~~
*~~Retirement~~*	~~Qualified~~~~Pension~~~~Plan~~	~~Qualified pension plan, available to all salaried U.S. employees~~
	~~Senior~~~~Management~~~~Pension~~~~Plan~~	~~Partially-funded, non-qualified defined benefit restoration plan, available to executive officers and other U.S. employees based on salary level~~
	~~Supplemental~~~~Executive~~~~Pension~~~~Plan~~	~~Partially-funded, non-qualified supplemental defined benefit plan, available to eligible U.S. executives to maintain competitive total retirement benefits~~
	~~401(k)~~~~Plan~~	~~Qualified 401(k) plan available to all U.S. employees; Company matches 75% of pre-tax contributions up to 6% of salary~~
*~~Other~~*	~~Executive~~~~Officer~~~~Severance~~~~Plan~~	~~Sets standard benefits for senior executives in the event of severance~~
	~~Change-in-Control~~~~Plan~~	~~Sets standard benefits for senior executives upon a change-in-control~~
	~~Other~~~~Benefits~~	~~Physical exam, enhanced vacation, relocation benefits~~

~~- 2019 PROXY STATEMENT 27~~

~~Back~~No adjustments were made to ~~Contents~~

~~The Flowserve Corporation Equity and Incentive Compensation Plan (“EICP”) is our shareholder-approved equity and cash compensation plan that allows Flowserve~~reported revenue or bookings measured from January 1, 2020 to provide equity compensation in compliance with any applicable shareholder-approval requirements of the New York Stock Exchange. In addition, the shareholder-approved performance criteria in the EICP allow us to provide equity and cash compensation that may be tax-deductible under IRC 162(m) to our Named Executive Officers. In 2009, shareholders approved the EICP, and the Company reserved 8,700,000 shares of common stock (as adjusted for the Company’s three-for-one forward stock split effected on June 21, 2013) for distribution. In 2015, shareholders re-approved the performance criteria under the EICP to allow Flowserve to continue to provide compensation that may be tax-deductible for purposes of Section 162(m) of the IRC. The Annual Incentive Plan (“AIP”) and the Long-Term Incentive Plan (“LTIP”) were two Board-approved Flowserve compensation plans that are adopted under, and have the same expiration date as, the EICP, but which are maintained separate from the EICP. Awards granted under the AIP and LTIP that are intended to comply with the requirements of IRC 162(m) must use one or more of the EICP’s shareholder-approved performance criteria, and are dependent on fulfilling such performance criteria. In addition, equity awards provided under the LTIP are subject to the limitations of the EICP including the 8,700,000 shares of common stock that are reserved for distribution under the EICP. The Board most recently reviewed and approved the AIP and the LTIP on December 20, 2016.

~~Base Salary~~

During the first quarter of each year, the O&C Committee reviews and establishes the base salaries of the Named Executive Officers. The O&C Committee has established and maintains base salary market reference points for the Company’s various executive positions indicated by the market compensation survey data compiled and prepared by management and independently reviewed by the O&C Committee’s compensation consultant. For each Named Executive Officer, the O&C Committee considers the scope of his or her responsibilities, experience and individual performance and then balances these factors against competitive salary practices. The O&C Committee did not assign any relative or specific weights to these factors. Because we are committed to a pay-for-performance philosophy, the O&C Committee generally establishes base salary levels to approximate the market median of companies within the CPG and the broad market taken from the AON Survey and WTW Survey.

The base salaries paid to the Named Executive Officers during 2018 are shown below and in the “Summary Compensation Table” under the “Salary” column. Mr. Rowe’s base salary and other compensation components in 2018 are discussed below in further detail under “—Additional Executive Compensation Information—Chief Executive Officer Compensation in 2018.”

~~Named Executive Officer~~	~~2018 Salary~~ ~~($)~~
R.~~Scott~~*~~Rowe~~⁽¹⁾***	~~1,126,654~~
*~~Lee~~*S.~~Eckert~~	~~563,327~~
*~~David~~*J.~~Wilson~~	~~459,087~~
*~~Keith~~*E.~~Gillespie~~	~~485,000~~
*~~Elizabeth~~*L.~~Burger~~	~~330,865~~
~~(1)~~ ~~See “Chief Executive Officer Compensation in 2018” on page 34 for further detail.~~30, 2020.

~~Annual Incentive Opportunity~~

During the first quarter of each year, the O&C Committee establishes an annual cash incentive opportunity for each Named Executive Officer under the AIP. At that time, the O&C Committee approves: (i) the overall Company performance measures for the fiscal year; and (ii) an AIP target opportunity for each Named Executive Officer.

~~Setting the AIP Target Opportunity~~

Each year, the O&C Committee establishes an AIP target opportunity for each Named Executive Officer, expressed as a percentage of the executive’s base salary. The O&C Committee sets these targets in consultation with its compensation consultant and in adherence to our stated executive compensation objectives and principles. The target annual incentive opportunity for each Named Executive Officer in 2018 is set forth in the following table:

~~Named Executive Officer~~	~~2018 AIP Target %~~
R.~~Scott~~*~~Rowe~~*	~~120%~~
*~~Lee~~*S.~~Eckert~~	~~75%~~
*~~David~~*J.~~Wilson~~	~~65%~~
*~~Keith~~*E.~~Gillespie~~	~~65%~~
*~~Elizabeth~~*L.~~Burger~~	~~65%~~

~~Setting Company Performance Measures and Rigorous Goals~~

The O&C Committee, working with its compensation consultant and the CEO, evaluates and approves the Company’s AIP performance measures for each fiscal year. The O&C Committee sets each Named Executive Officer’s AIP performance measures that are consistent with our business strategy and tied to the achievement of important strategic objectives. The Company’s AIP performance measures and targets, unadjusted for extraordinary events, established for 2018 were as follows:

~~- 2019 PROXY STATEMENT 28~~

Fiscal 2018 Performance
Measures & Weighting
Consolidated
Adjusted
Operating
Income
Business Unit
Operating
Income
Revenue or
Bookings⁽¹⁾
Adjusted PWC
as % of Sales
Customer
On-time
Delivery
Total
R. Scott Rowe
50%
–
15%
20%
15%
100%
Lee S. Eckert
50%
–
15%
20%
15%
100%
David J. Wilson⁽²⁾
25%
25%
15%
20%
15%
100%
Keith E. Gillespie
40%
–
60%
–
–
100%
Elizabeth L. Burger
50%
–
15%
20%
15%
100%
(1)
Only Mr. Gillespie has a Consolidated Bookings target. The other Named Executive Officers have a Consolidated Revenue target.
(2)
Mr. Wilson received a business unit target for each of Revenue, Adjusted PWC as % of Sales and Customer On-time Delivery. These metrics were calculated only for IPD operations for the first half of 2018 and for combined IPD and EPD operations for the second half of 2018.

The metrics presented in the table above were evaluated using pre-defined internal criteria. The O&C Committee selected these performance metrics, with input from management, because they support the key strategies that we believe drive sustainable and profitable Company growth (as discussed under “—Executive Compensation Program Objectives and Principles” above).

Adjusted ~~primary working capital~~PWC as % of Sales

•

Adjusted PWC is calculated by adding net receivables and total inventory less accounts payable, accrued deferred revenue and accrued progress billings. ~~The adjusted primary working capital~~

•

Adjusted PWC as a percentage of sales ~~metric is calculated by dividing adjusted primary working capital as of December 31, 2018 by total sales in 2018.~~

~~Customer on-time delivery~~ is calculated by dividing the ~~number~~aggregate of ~~customer~~adjusted PWC as of the last day of Q1 (March 31, 2020) and Q2 (June 30, 2020) of 2020 divided by total sales as of Q2 (June 30, 2020) multiplied by 2.

Customer On-time Delivery

•

Customer on-time delivery is measured as the blended average of line items shipped on-time byand order values shipped on-time, and is measured from January 1, 2020 to June 30, 2020.

(1)

Only Mr. Gillespie had a Consolidated Bookings target. The other Named Executive Officers had a Consolidated Revenue target.

2021 PROXY STATEMENT 39

~~Measuring Performance and Establishing Payout~~

H2 Plan Calculations

Performance Metric

How It was Calculated for H2 2020

Consolidated Adjusted Operating Income

•

Our reported operating income was adjusted to remove the ~~total number~~effects of ~~customer items shipped.~~

Additionally, the O&C Committee may exercise its judgment, within parameters it establishes at the beginning of the year, whether to exclude the effect of certain specified developments that occur during the yearreduced allocations, and profit and loss adjustments incurred, resulting in determining the extent to which the performance objectives are met. Such developments may include unanticipated changes in accounting principles or extraordinary, unusual or unplanned events that have been reported in our public filings. For 2018, the impacts of transformation and restructuring activity and the divestiture of two Industrial Product Division locations and related product lines in the third quarter of 2018 were excluded when determining whether the performance objectives were met for the AIP. In addition, the impact of certain accounting changes due to the implementation of the new revenue recognition standard were excluded when determining whether the adjusted primary working capital metrics were met. As a result of these exclusions, for 2018 our (i)Consolidated Adjusted Operating Income ~~metric was~~of approximately ~~$376.2~~$186.1 million compared to the reported Operating Income of approximately ~~$247.5~~$206.6 million ~~(ii) our Revenue metric was approximately $3,804.3 million compared~~from July 1, 2020 to December 31, 2020.

Bookings⁽¹⁾

•

No adjustments were made to reported ~~Revenue~~bookings measured from July 1, 2020 to December 31, 2020.

PWC Reduction

•

Adjusted PWC is calculated by adding net receivables and total inventory less accounts payable, accrued deferred revenue and accrued progress billings.

•

PWC Reduction is measured by calculating the difference of ~~approximately $3,832.7 million~~adjusted primary working capital at the end of Q2 (June 30, 2020) and ~~(iii) our Bookings metric was approximately $3,996.5 million compared~~Q4 (December 31, 2020).

Past Due Backlog Reduction

•

Past due backlog reduction is measured by calculating the difference between past due backlog at the end of Q2 (June 30, 2020) and Q4 (December 31, 2020). No adjustments were made to reported backlog during that period. 

(1)

Only Mr. Gillespie had a Consolidated Bookings of approximately $4,020 million. These exclusions also caused (a) the Consolidated Adjusted PWC metric to reduce by 50 basis points, (b) the Business Unit Operating Income metric to increase by $28.8 million, (c) the Business Unit Revenue metric to decrease by $28.4 million and (d) the Business Unit Adjusted PWC metric to reduce by 90 basis points.target.

Where applicable, AIP awards are paid in March or April for the prior year’s performance based upon the O&C Committee’s assessment of actual performance against the pre-established AIP performance objectives. A more in-depth description of the O&C Committee’s decisions with respect to the annual incentive awards paid to each Named Executive Officer for 2018 follows.

The 2018 payout range established for each Named Executive Officer was 0% to 200% of his or her respective target award opportunity. The actual payout percentage is determined using a matrix that compares the Company’s actual performance against the established performance targets for the year (referred to as “plan”). The following tables show the percentage of target award that is paid at different levels of Company performance against plan, as well as actual performance and payout percentages for 2018.

Fiscal 2018 Financial
Metric Performance
Threshold
(50% Payout)
Target
(100% Payout)
Maximum
(200% Payout)

Measured
Performance

Percentage
Payout
Consolidated Adjusted Operating Income
$293.8
$367.2
$440.6
$376.2
(102.4% of Target)
112%
Consolidated Revenue
$3,481.0

$3,763.2

$4,139.5

$3,804.3
(101.1% of Target)
111%
Consolidated Bookings⁽¹⁾
$3,553.3

$3,841.4

$4,225.5

$3,996.5
(104% of Target)
140%
Consolidated Adjusted
PWC as % of Sales
26.4%

24%

21.6%

26.4%
(90% of Target)
50%
Consolidated Customer
On-Time Delivery
*
*
*
*
(95.8% of Target)
62.5%
Business Unit Revenue
*
*
*
*
(99.8% of Target)
98%⁽²⁾
Business Unit Adjusted
PWC as % of Sales
*
*
*
*
(114% of Target)
12.5%⁽²⁾
Business Unit Customer
On-Time Delivery
*
*
*
*
(94.1% of Target)
22.5%⁽²⁾

~~- 2019 PROXY STATEMENT 29~~

Measuring Performance and Establishing Payouts

In Q1 2020, the O&C Committee had set performance targets for financial metrics used in our AIP at definitive, challenging and objective levels that required significant effort and achievement by our Named Executive Officers for any payout to occur. The 2020 payout range under the AIP was 0% to 200% of each executive’s respective target award opportunity for both the H1 Plan and the H2 Plan for the respective time periods.

For fiscal 2020, the O&C Committee established an additional “stretch” opportunity for consolidated adjusted operating income, consolidated bookings, consolidated adjusted primary working capital as % of sales (H1 Plan only), primary working capital reduction (H2 Plan only), and past due backlog (H2 Plan only), which would result in a 115% payout. This provided the opportunity to achieve challenging goals and reward attainment accordingly.

For consolidated revenue and consolidated customer on-time delivery for the H1 Plan, no stretch goal was established for the 115% payout level.

The actual payout percentage was determined using a matrix that compares the Company’s actual performance against the established performance targets for the year (referred to as “plan”). The following tables show the percentage of target award that is paid at different levels of Company performance against plan, as well as actual performance and payout percentages for 2020.

The following sets forth the H1 Plan and H2 Plan performance metrics applicable to Mr. Rowe, Ms. Schwetz, Mr. Roueche, Ms. Minnix and Ms. Burger:

2021 PROXY STATEMENT 40

2020 H1 Plan Performance Measures & Weighting	Threshold (50% Payout)	Target (100% Payout)	Stretch (115% Payout)	Maximum (200% Payout)	Measured Performance	Weighted Payout Percentage
*Consolidated* *Adjusted* *Operating* *Income* *(50%)*	$ 180.9	$202.2	$212.8	$234.1	$180.6	0.0%
*Consolidated* *Revenue* *(15%)*	$1,910.1	$2,010.6	—	$2,060.9	$1,819.4	0.0%
*Consolidated* *Adjusted* *PWC* as % of *Sales* *(20%)*	29.1%	28.1%	27.6%	26.5%	29.5%	0.0%
*Consolidated* *Customer* *On-Time* *Delivery* *(15%)*	*	*	—	*	* (97.8% of Target)	7.8%
*Total* *Payout*						7.8%
* Not disclosed for competitive reasons as discussed below.

2020 H2 Plan Performance Measures & Weighting	Threshold (50% Payout)	Target (100% Payout)	Stretch (115% Payout)	Maximum (200% Payout)	Measured Performance	Weighted Payout Percentage
*Consolidated* *Adjusted* *Operating* *Income* *(55%)*	$140.2	$157.7	$175.2	$192.7	$186.1	92.2%
*Consolidated* *PWC* *Reduction* *(25%)*	$1,094.8	$1,086.3	$1,082.0	$1,073.5	$1,113.6	0.0%
*Consolidated* *Past* *Due* *Backlog* *(20%)*	*	*	*	*	* (107.5% of Target)	31.5%
*Total* *Payout*						123.7%
* Not disclosed for competitive reasons as discussed below.

The following sets forth the H1 Plan and H2 Plan performance metrics applicable to Mr. Gillespie:

2020 H1 Plan Performance Measures & Weighting	Threshold (50% Payout)	Target (100% Payout)	Stretch (115% Payout)	Maximum (200% Payout)	Measured Performance	Weighted Payout Percentage
*Consolidated* *Adjusted* *Operating* *Income* *(30%)*	$180.9	$202.2	$212.8	$234.1	$180.6	0.0%
*Consolidated* *Bookings* *(50%)*	$2,024.8	$2,134.3	$2.189.0	$2,243.7	$1,783.5	0.0%
*Consolidated* *Adjusted* *PWC* as % of *Sales* *(20%)*	29.1%	28.1%	27.6%	26.5%	29.5%	0.0%
*Total* *Payout*						0.0%
	* Not disclosed for competitive reasons as discussed below.

2020 H2 Plan Performance Measures & Weighting	Threshold (50% Payout)	Target (100% Payout)	Stretch (115% Payout)	Maximum (200% Payout)	Measured Performance	Weighted Payout Percentage
*Consolidated* *Adjusted* *Operating* *Income* *(30%)*	$140.2	$157.7	$175.2	$192.7	$186.1	50.3%
*Consolidated* *Bookings* *(50%)*	$1,426.9	$1,510.8	$1,678.7	$1,762.6	$1,631.5	55.4%
*Consolidated* *PWC* *Reduction* *(20%)*	$1,094.8	$1,086.3	$1,082.0	$1,073.5	$1,113.6	0.0%
*Total* *Payout*						105.7%
* Not disclosed for competitive reasons as discussed below.

2021 PROXY STATEMENT 41

Individual Personal Performance Adjustment

The Company has chosen not to disclose the Threshold, Target, Stretch, Maximum and Measured Performance data for the consolidated customer on-time delivery and the consolidated past due backlog metrics for all Named Executive Officers, as these metrics correspond to financial data that is not otherwise publicly disclosed and is used primarily to assess compensation for these Named Executive Officers. As such, the Company believes that the disclosure of such information would cause competitive harm to the Company without adding meaningfully to the understanding of its business.

The O&C Committee may exercise judgment in assessing the personal performance factor for our annual incentive awards to determine annual cash incentive compensation payments. The O&C Committee considered individual performance of our executive officers and determined not to make any adjustments to their final annual incentive plan payouts for 2020.

Long-Term Incentives

~~Not disclosed for competitive reasons as discussed below.~~
Form of Award
% of Annual
Target Opportunity
Key Terms
~~(1)~~
~~Only Mr. Gillespie has a Consolidated Bookings target. The other Named Executive Officers have a Consolidated Revenue target.~~
~~(2)~~
~~Represents Fiscal 2018 payout percentage for Mr. Wilson, based on the results of IPD for the first half of the year and the blended results of EPD and IPD for the second half of the year.~~

RestrictedStockUnits(“RSUs”)

50%

•

The Company has chosen not to disclose the Threshold, Target, Maximum and Measured Performance data for the consolidated customer on-time delivery metrics for all Named Executive Officers and the business unit operating income, revenue, adjusted primary working capital as a percentageRatable vesting over three years on each anniversary date of sales and customer on-time delivery metrics used for Mr. Wilson, as these metrics correspond to financial data that is not otherwise publicly disclosed and is used primarily to assess compensation for these Named Executive Officers. As such, the Company believes that the disclosure of such information would cause competitive harm to the Company without adding meaningfully to the understanding of its business. Additionally, like all performance targets for financial metrics used in our AIP, the O&C Committee has set performance goals at definitive, challenging and objective levels that require significant effort and achievement by our Named Executive Officers for payout to occur.grant

•

After the end of 2018, the O&C Committee reviewed the Company’s actual performance against each of the performance measures established at the beginning of the year. The O&C Committee noted that the Company remained resilient in 2018 in the context ofContingent on continued uncertainty in its end markets. They noted, among other things, sales of $3.83 billion, operating income of $247.5 million, gross margins of 31%, and cash flows from operations of $190.8 million. Consistentemployment with the principle of aligning awards with performance, the O&C Committee calculated the AIP percentage payout for each Named Executive Officer in accordance with the AIP formula and the achievement of the performance measures, with certain adjustments for the impact of restructuring expenses, divestitures and accounting adjustments (as described above). As a result, the calculated AIP percentage payout for the CEO and all other Named Executive Officers, other than Mr. Gillespie and Mr. Wilson, was 92% of their target annual incentive opportunity. The calculated AIP percentage payout for (i) Mr. Gillespie was 128.8% of his target annual incentive opportunity and (ii) Mr. Wilson was 93.9% of his target annual incentive opportunity.

~~Individual Performance Adjustment~~

At the same time that the O&C Committee sets AIP performance metrics for a given year, it establishes a payout range for all AIP awards. The payout range ultimately determines the percentage of the target incentive to be paid, with an established upper limitation and a minimum below which no payment will be made. Additionally, the O&C Committee may modify an individual AIP award upward or downward based on an individual’s contribution to our performance, as well as individual performance in relation to any extraordinary events or transactions. For 2018, no individual performance adjustments were made for annual incentive awards to Named Executive Officers.

~~Long-Term Incentives~~

Our long-term incentive program rewards the Named Executive Officers for the Company’s performance over a multi-year period. Our long-term incentive program consists of two components: (1) restricted stock units (“RSUs”) that vest over time and (2) contingent performance share awards (“PSAs”). In 2018, all Named Executive Officers received their long-term incentive awards in these forms, other than the options described below. The O&C Committee may also award one-time grants of RSUs in its discretion based on performance or other factors.

~~Determining the Structure of Awards~~

As discussed above, the O&C Committee believes that long-term incentive compensation is essential to retaining and motivating executives. The O&C Committee further believes that providing our executives with long-term incentives will encourage them to operate the Company’s business with a view towards building long-term shareholder value. Based on these considerations, the O&C Committee determined that for 2018, an equity award combination, the value of which consists of approximately one-half of RSUs, which vest ratably over a three-year period, and one-half of PSAs, which cliff vests at the end of a three-year period, would best serve the 2018 goals. The awards are granted subject to a pre-approved total target pool of RSUs and contingent performance share awards available to employees eligible to participate in the long-term incentive program. The only options that have been awarded since 2007 are options that have been granted to R. Scott Rowe as part of his one-time sign on compensation. Additional information regarding Mr. Rowe’s compensation is set forth under “—Chief Executive Officer Compensation in 2018.”

~~Restricted Stock Unit Awards~~

~~The O&C Committee grants RSU awards that vest ratably over a three-year period to deliver a meaningful long-term incentive that balances risk and potential reward. These awards also serve as an~~

~~- 2019 PROXY STATEMENT 30~~

effective incentive for our superior executive performers to remain with the Company and continue such performance. Target RSU grants to the Named Executive Officers in 2018 represented one-half of the executives’ total target long-term incentive opportunity. Target grants were determined by dividing this portion of the executive’s long-term incentive opportunity by the price of the Company’s common stock, which was calculated by taking an average of closing prices reported on the NYSE during the last twenty trading days of 2017.

~~RSU awards are only earned if the individual continued to be employed by~~ the Company until the ~~applicable~~ vesting ~~dates~~date of the awards, except pursuant to special end of service vesting as discussed ~~below~~ under ~~“—End~~“End of Service ~~Benefits.” Until vesting, holders~~Benefits”

PerformanceSharesUnits(“PSUs”)

50%

•

Three-year cliff vest contingent on attainment of ~~RSU awards do not have voting rights on the units, but the units are entitled to receive dividend accruals, if any.~~

The grant date fair value of the RSU awards granted to the Named Executive Officers during 2018, calculated in accordance with accounting principles generally accepted in the United States (“GAAP”) pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, “Compensation — Stock Compensation,” are shown in the “Summary Compensation Table”ROIC targets and relative TSR metrics as described under ~~the “Stock Awards” column and the accompanying footnotes. Additional information on the awards granted in 2018 is shown in the “2018 Grants of Plan-Based Awards” table.~~

~~Contingent~~“Contingent Performance Share ~~Awards~~Units”

Contingent performance shares are RSUs that vest, if at all, based on the Company’s achievement of pre-determined financial metrics, measured over a three-year performance period. In 2018, these represented one-half of the executives’ total target long-term incentive opportunity. For the 2016-2018 performance period, the O&C Committee changed the bookings component in order to benchmark it to the Company’s target bookings growth under its operating plan. When coming to this determination, the O&C Committee noted that the Company’s operating plan incorporated expected macro-economic conditions, such as expected OECD GDP growth, along with expected conditions in the Company’s end markets other than GDP growth. As a result, the O&C Committee recognized that the operating plan provided a closer alignment to expected market conditions in the industry. Therefore, for the 2016-2018 performance period, contingent performance shares are based on: 1) RONA performance compared to that of the PPG and 2) the Company’s bookings growth compared to targeted bookings growth under the Company’s operating plan.

For the 2017-2019 performance period, the O&C Committee determined the contingent performance share award measures should be based on: 1) three-year average ROIC performance relative to the three-year average of WACC and compared to that of the PPG and 2) relative TSR compared to that of the PPG. The O&C Committee shifted to the ROIC metric because it believed that shareholder value is maximized through generating a ROIC that exceeds the Company’s WACC, which we refer to as economic return. In addition, the O&C Committee believed that relative TSR compared to that of the PPG is an appropriate performance metric primarily because it is objectively determinable, provides rewards that are aligned to relative performance through varying economic cycles and reflects the delivery of value to shareholders over the three-year performance period. The importance of achieving economic return and TSR goals has been emphasized by making a substantial component of each executive officer’s compensation dependent on the Company’s achievement of these goals, with executives maximizing their annual incentive compensation opportunity if the Company achieves its economic return and TSR goals.

For 2018 grants, which cover the 2018-2020 period, the vesting percentage range established for each Named Executive Officer was 0% to 200% of his or her respective target long-term incentive opportunity allocated to the contingent performance shares. In order to achieve a target (100%) vesting percentage for the grants, the Company must, over the three-year performance period, achieve: 1) ROIC improvement goals which closely correlate to the compounded annual share price growth rate of the S&P Industrial Machinery Index over a 10-year period and 2) an average relative TSR equivalent to the 50th percentile three-year relative TSR average among the members of the PPG. The O&C Committee curently believes that the ROIC and TSR measures are well correlated to shareholder value creation.

~~As such, the Company’s contingent performance share award measures established for 2018-2020 were as follows:~~

~~2018 Performance Measures~~	~~Weighting~~
~~ROIC~~	~~50.0%~~
~~TSR~~	~~50.0%~~

•

~~On the basis of the foregoing performance metrics, we use the following formula to calculate the PSAs for the 2018-2020 period:~~

The O&C Committee believes that these performance-based awards provide a stronger incentive for our executives to achieve specific performance goals over the performance period that advance our business strategies, build long-term shareholder value and encourage executive retention.

~~These performance-based awards are subject to forfeiture~~Forfeiture if the executive’s employment terminates ~~for any reason other than death, disability, special end of service or reduction-in-force~~ before the end of the three-year performance period, ~~or if the performance goals are not reached. Until~~except pursuant to special end of service vesting ~~holders~~discussed under “End of ~~contingent performance share units~~Service Benefits”

Setting the Target Opportunity

Each year, the O&C Committee establishes a target dollar value of the long-term incentive package for each Named Executive Officer. In doing so, the committee considers individual performance, as well as data from the Company’s CPG and, for positions that are not adequately covered by the CPG data, the AON Survey and WTW Survey. For 2020, these target values were set at levels that approximate the market median of both the CPG and the broader market taken from the AON Survey and WTW Survey.

In addition, the O&C Committee considers the package’s potential dilutive effect on the Company’s outstanding shares in determining aggregate award values.

Named Executive Officer	2020 LTI Target
R.ScottRowe	$5,750,000
*AmySchwetz***	$1,550,000
*JohnE.(Jay)Roueche,III***	$ 354,070
*Lanesha*T.Minnix	$ 650,000
*Keith*E.Gillespie	$ 600,000
*Elizabeth*L.Burger	$ 750,000

The share amount is determined by dividing each executive’s total long-term incentive value by the average closing price of the Company’s common stock reported on the NYSE during the last twenty trading days of prior to the grant date of February 20, 2020. Until vesting, holders of RSU and PSU awards do not have voting rights on the units, but the units are entitled to receive dividend equivalent accruals, if any, that payout only if and to the extent the underlying units vest.

2021 PROXY STATEMENT 42

Contingent Performance Share Units (PSUs)

Aligned with our compensation objectives, these performance-based awards provide a strong incentive for our executives to achieve specific performance goals over the relevant performance periods that advance our business strategies, build long-term shareholder value and encourage executive retention. Contingent performance share units, or PSUs, are RSUs that vest, if at all, based on the Company’s achievement of pre-determined financial metrics, measured over a three-year performance period.

Rigorous Performance Measures and Targets

During the first quarter of each year, the O&C Committee, working with its compensation consultant and members of management, evaluates and approves the Company’s LTI performance measures consistent with our business strategy. The O&C determines performance goals at definitive, challenging and objective levels that require significant effort and achievement by our Named Executive Officers for payout to occur.

The O&C Committee believes that ROIC and TSR measures reward the progress towards Flowserve’s strategic focus on Growth, Margin Expansion and Capital Efficiency. ROIC and TSR are further directly correlated to Flowserve’s shareholder value creation.

The following table shows the performance measures for the 2018, 2019 and 2020 PSU grants:

Performance Period

and measure

Detail

2018-2020

50% TSR

50% ROIC

•

Relative TSR compared to ~~receive dividend accruals, if any.~~

Prior to the granting of contingent performance share awards each year, the O&C Committee establishes a vesting percentage range around each executive’s target long-term incentive opportunity allocated to the contingent performance shares. This vesting percentage range has an established upper limitation and a minimum below which no shares will vest. Similar to AIP awards, the percentage vesting range determines the amount of contingent performance shares that ~~vest relative to the original award amount.~~

~~- 2019 PROXY STATEMENT 31~~

~~Setting the Target Opportunity~~

~~The following tables illustrate the performance scores~~ of the ~~contingent performance share metrics at different levels of Company performance for PSAs for the 2018-2020 period:~~

~~ROIC Performance v.~~ ~~Target~~ ~~(50% weight)~~	~~% Performance Score~~
~~<80% of Target ROIC~~	0%
~~80% of Target ROIC~~	~~50%~~
~~Target ROIC~~	~~100%~~
~~>120% of Target ROIC~~	~~200%~~

~~TSR Performance v.~~ ~~Percentile of PPG TSR Performance~~ ~~(50% weight)~~	~~% Performance Score~~
~~<PPG TSR Averages 25~~^th ~~Percentile~~	0%
~~PPG TSR Averages 25~~^th ~~Percentile~~	~~50%~~
~~PPG TSR Averages 50~~^th ~~Percentile~~	~~100%~~
~~PPG TSR Averages 75~~^th ~~Percentile~~	~~200%~~

~~Each year, the O&C Committee establishes~~PPG measured over a target long-term incentive opportunity amount for each Named Executive Officer. The O&C Committee first sets the target dollar value of the long-term incentive package for each Named Executive Officer and, in doing so, considers data from the Company’s CPG and, for positions that are not adequately covered by the CPG data, the AON Survey and WTW Survey, as previously described. For reasons described above under “Executive Compensation Program Objectives and Principles”, we generally provide, and in 2018 did provide, long-term incentive awards at target levels that approximate an average of the 50^th~~percentile of both the CPG and broad market taken from the AON Survey and WTW Survey.~~

~~Determining the Award Amounts~~

During the first quarter of each year, the O&C Committee determines the aggregate equivalent dollar value of the long-term incentive award for each Named Executive Officer and then makes annual grants of restricted common stock and contingent performance shares. The O&C Committee determines this dollar value by dividing this portion of the executive’s long-term incentive opportunity by the price of the Company’s common stock, which is calculated by taking an average of closing prices reported on the NYSE during the last twenty trading days of 2017. The equity awards are made after the O&C Committee has had an opportunity to evaluate the Company’s operating results for the prior year and at the same time that the Company is making its major compensation decisions for the current fiscal year.

The O&C Committee has the discretion to increase or decrease a Named Executive Officer’s long-term incentive award based on an assessment of the officer’s individual contribution to the Company’s results. Similar to potential AIP award adjustments, these adjustments must be based on individual performance relative to the Company’s key strategies. These adjustments, along with adjustments that may be made to the RSU awards of other plan participants, will not exceed the pre-approved total target pool available for RSU awards by more than 10% without specific O&C Committee consideration. In 2018, the O&C Committee did not adjust the long-term incentive award for any Named Executive Officer based on individual contribution.

The O&C Committee considers both the target dollar value of the long-term incentive package and the package’s potential dilutive effect on the Company’s outstanding shares of common stock in determining the aggregate equivalent dollar value available for individual long-term incentive awards, and the aggregate amount of total awards available for our executives.

The O&C Committee evaluates shareholder dilution based on equity compensation “burn rates,” which refers to the annual rate at which shares are awarded under our shareholder approved stock compensation plans compared to the total amount of the Company’s outstanding common stock. The O&C Committee then compares the rate to those of the companies in the CPG, guidelines used by certain institutional shareholder advisory services and the advice of its compensation consultant. Generally, the O&C Committee targets a maximum Company-wide “burn rate” of 1.0% of the Company’s outstanding common stock for each annual grant of long-term incentive awards for all Company employees. Based on projections of equity awards to be made to employees during the balance of 2018, the O&C Committee determined that the proposed awards to the Named Executive Officers and the projected additional awards to employees would enable the Company to remain comfortably within the annual “burn rate” of 1.0% of the Company’s outstanding common stock.

In past years, the O&C Committee has established the practice of annually approving and granting equity awards to long-term incentive plan participants at the O&C Committee’s meeting held in the first quarter of the year. Based on the criteria described above, the O&C Committee met on February 28, 2018 and approved the target long-term incentive opportunities for our Named Executive Officers as set forth in the table below:

~~Named Executive Officer~~	~~2018 LTI Target~~
R.~~Scott~~*~~Rowe~~*	~~$ 5,500,000~~
*~~Lee~~*S.~~Eckert~~	~~$ 1,500,000~~
*~~David~~*J.~~Wilson~~	~~$ 700,000~~
*~~Keith~~*E.~~Gillespie~~	~~$ 970,000~~
*~~Elizabeth~~L.~~Burger~~⁽¹⁾*	~~$ 700,000~~
~~(1)~~ ~~The O&C Committee determined Ms. Burger’s target long-term incentive opportunity separately as part of her hiring evaluation.~~

~~- 2019 PROXY STATEMENT 32~~

~~Competitive Benchmarking~~

~~Other Share Awards~~

On December 19, 2018, Mr. Wilson received a special contingent performance share award of 8,590 shares that will fully vest, if at all, on December 31, 2020. The award was granted in relation to the consolidation of the Industrial Product Division and Engineered Product Division into the Flowserve Pumps Division (“FPD”) which is being led by Mr. Wilson. These contingent performance shares are only earned if Mr. Wilson continues to be employed by the Company through the vesting date and specified financial targets are met related to: 1) the Company’s operating income growth, 2) FPD’s operating income growth and 3) FPD’s revenue growth. The respective performance periods for measurement of these specified financial targets are January 1, 2019 to December 31, 2019 and January 1, 2020 to December 31, 2020.

The material terms and conditions of these equity awards are determined under the provisions of our equity compensation plans that our shareholders previously approved. These plans are included as exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on February 20, 2019 (the “Annual Report”), which can be found on the Company’s website at ~~www.flowserve.com~~ ~~under the “Investors — Financial Information — SEC Filings” caption.~~

The O&C Committee believes that the use of internal (or absolute) performance metrics alone yields an incomplete picture of Company performance. Accordingly, the performance-based element of our executive compensation program also emphasizes and evaluates the Company’s performance relative to organizations in a benchmark “performance peer group” (“PPG”) of cyclical industrial manufacturers. This evaluation serves as a means to assess, on a comparative basis, how well we deliver results that build long-term shareholder value, which in turn enables us to better establish the performance expectations of senior management in leading the Company. The O&C Committee strives to reevaluate the PPG every year, and a detailed process is followed in identifying and evaluating organizations appropriate for inclusion.

~~For the 2017-2019 and 2018-2020 performance periods, our PPG consists of the following companies:~~

~~Colfax Corp.~~	~~ITT Inc.~~	~~Pentair plc~~	~~Weir Group plc~~
~~Crane Co.~~	~~KSB Aktiengesellschaft~~	~~Rotork plc~~
~~Donaldson Company~~	~~Lincoln Electric Holdings Inc.~~	~~Sulzer AG~~
~~Dover Corp.~~	~~Metso Corp.~~	~~Terex Corp.~~

The process for establishing the PPG for the 2017-2019 and 2018-2020 performance periods began by compiling an initial sample of potential comparable organizations from all publicly traded companies. We then used a top-down, multi-stage filtering approach to distill the comparable sample and establish the PPG. The first filter narrowed the list to publicly-traded companies that are industrial equipment manufacturers. The second filter focused on direct business peers of the Company. The next filter considered the financial comparative appropriateness and statistical validity (such as correlation between business results and crude oil prices) of the peer group. The process resulted in the final PPG identified above.

Aligned with our competitive market based executive compensation strategy, the O&C Committee also established a benchmark “compensation peer group” (“CPG”). The CPG, the AON Survey and WTW Survey are used to set target executive compensation levels. The data from the AON Survey and WTW Survey is utilized to set levels for positions that are not adequately covered by the CPG data. For 2018 our CPG consists of the following companies:

~~Ametek Inc.~~	~~IDEX Corp.~~	~~Rockwell Automation Inc.~~	~~Woodward Inc.~~
~~Colfax Corp.~~	~~Lincoln Electric Holdings Inc.~~	~~Snap-on Inc.~~	~~Xylem Inc.~~
~~Crane Co.~~	~~Nordson Corp.~~	~~Terex Corp.~~
~~Donaldson Company~~	~~Pentair plc~~	~~Trinity Industries Inc.~~
~~Dover Corp.~~	~~Regal Beloit Corp.~~	~~Westinghouse Air Brake Technologies Corp.~~

The process for establishing the CPG for 2018 began by compiling all US publicly traded companies with a revenue and market cap between one-third to three times of the Company’s. The first filter narrowed the list to public companies within the industrial machinery, electrical components and equipment, construction machinery and heavy trucks industry with similar business operations compared to the Company. The second filter considered reverse peer companies and peer companies identified by proxy advisors as well as companies with larger market caps within the specified revenue range. The process resulted in the final CPG identified above.

~~- 2019 PROXY STATEMENT 33~~

~~Chief Executive Officer Compensation in 2018~~

The compensation of the CEO was set in a manner consistent with our compensation philosophy and the general compensation objectives and principles discussed above. The key results influencing the O&C Committee’s decisions on Mr. Rowe’s compensation are set forth below.

~~2018 Performance Highlights~~

~~KEY~~~~ACCOMPLISHMENTS~~

	~~PEOPLE~~&~~CULTURE~~
	✔ ~~Continued the Flowserve 2.0 transformation of the Company to focus on operational excellence~~ ✔ ~~Built a leadership team to support the Company’s new growth strategy~~ ✔ ~~Introduced new purpose statement, values and people-first culture to drive higher employee engagement~~ ✔ ~~New safety campaign to drive improvements at all levels of organization~~
	~~PROCESS~~&~~TECHNOLOGY~~
	✔ ~~Implemented global system upgrades to improve manufacturing productivity and enable business to operate more efficiently~~ ✔ ~~Continued investments in innovative products and future enabling technology~~ ✔ ~~Improvements to supply chain centralization, selling productivity and finance shared services~~
	~~CUSTOMER~~
	✔ ~~Systematically improved customer lead time, on-time delivery and quality~~ ✔ ~~Focused on aftermarket services and LifeCycle Advantage agreements~~ ✔ ~~Implemented enterprise-wide strategic account management~~ ✔ ~~Led efforts to change the Company’s culture to emphasize speed, agility, accountability and a test-and-learn approach~~
	~~FINANCE~~
	✔ ~~2018 Bookings of $4.0 billion, resulting in 5.7% growth year over year~~ ✔ ~~2018 Earnings Per Share of $0.91, up from $.02 in 2017~~ ✔ ~~Return to profitability of IPD business~~ ✔ ~~Improvement in working capital efficiency due to increased focus on operations and delivery~~

~~Compensation Decisions~~

~~Base~~~~Salary~~

In February 2018, Mr. Rowe’s base salary was increased from $1,100,000 to $1,133,000 for 2018. In setting Mr. Rowe’s base salary, the Board primarily considered external market practices consistent with our compensation objectives, Mr. Rowe’s leadership and contribution to overall Company performance, and his performance during the year against his individual objectives.

~~Annual~~~~Incentive~~~~Opportunity~~

To recognize Mr. Rowe’s performance during 2018, the O&C Committee approved a cash award under the Annual Incentive Plan of $1,250,832. As discussed under “—Elements of the Executive Compensation Program—Annual Incentive Opportunity—Measuring Performance and Establishing Payout” above, the actual payout represented 92% of Mr. Rowe’s target annual incentive opportunity.

~~Long-Term~~~~Incentives~~

In accordance with the principles and practices set forth earlier, the O&C Committee approved a long-term incentive award to Mr. Rowe for 2018 consisting of 65,990 shares of RSUs, which vest ratably over three years, and 65,990 contingent performance units at the same time 2018 long-term incentive awards were made to key managers, including the Named Executive Officers.

~~Oversight of the Executive Compensation Program~~

Our executive compensation program is administered by the O&C Committee. Consistent with the NYSE corporate governance listing standards, the O&C Committee is composed entirely of independent, non-employee members of the Board. In addition, the Non-Executive Chairman of the Board generally attends the meetings of the O&C Committee.

As reflected in its charter, the O&C Committee has overall responsibility for setting the compensation for our CEO, which is approved by the full Board, and for approving the compensation of our other executive officers, including the other Named Executive Officers. The O&C Committee also oversees the alignment of organizational design and management development in support of achieving our operational objectives and strategic plans and monitors the policies, practices and processes designed to develop our core organizational capabilities and managerial competencies.

The O&C Committee is also responsible for reviewing the management succession plan and for recommending changes in director compensation to the Board. On matters pertaining to director compensation, the O&C Committee also receives data and advice from FW Cook. The O&C Committee periodically reviews the organizational design, management development plans and managerial capabilities of the Company. The O&C Committee also prepares and issues the Organization and Compensation Committee Report included in this proxy statement.

~~- 2019 PROXY STATEMENT 34~~

~~Independent Compensation Consultant~~

The O&C Committee’s process of reviewing the executive compensation program and setting compensation levels for our Named Executive Officers involves several components. During the first quarter of each year, the O&C Committee reviews each Named Executive Officer’s total compensation. The O&C Committee members also meet regularly with the Named Executive Officers at various times during the year, both formally within Board meetings and informally outside of Board meetings, which allows the O&C Committee to assess directly each Named Executive Officer’s performance. The O&C Committee also solicits input from all non-employee members of the Board as to the CEO’s performance during the year.

Except in years of CEO transition where the incumbent officer has completed less than one year of service in this capacity, the O&C Committee considers the results of the CG&N Committee’s process for reviewing the CEO’s performance with all independent Board members. The CG&N Committee’s process includes the independent Board members individually and collectively presenting their assessment of the CEO’s performance, as well as the CEO presenting his self-assessment of his performance. The O&C Committee uses these results when determining the CEO’s recommended compensation, which is subject to the independent Board members’ approval.

The O&C Committee has the authority to retain outside advisors as it deems appropriate. The O&C Committee has engaged FW Cook as its compensation consultant to provide advice and information. FW Cook has assisted and advised the O&C Committee on all aspects of our executive compensation program, and they provide no other services to the Company. The services they provide include:

•

~~providing and analyzing competitive market compensation data;~~three-year period

•

~~analyzing~~ROIC improvement goals aligned with Flowserve’s long-term ROIC targets

2019-2021

50% TSR

50% ROIC

•

Relative TSR compared to that of the ~~effectiveness of executive compensation programs and making recommendations, as appropriate;~~PPG measured over a three-year period

•

~~analyzing the appropriateness~~ROIC improvement goals aligned with Flowserve’s long-term ROIC targets

2020-2022

50% TSR

50% ROIC

•

Relative TSR compared to that of the PPG ~~and CPG; and~~measured over a three-year period

•

~~evaluating how well our compensation programs adhere to the philosophies and principles stated below under “—Executive Compensation Program Objectives and Principles.”~~ROIC absolute target aligned with Flowserve’s annual operating plan

~~Additional Executive Compensation Information~~

Other benefits are provided to the Named Executive Officers that are generally consistent with those provided to other employees of the Company, including health plans and retirement benefits. These elements of our compensation program are outlined in more detail below:


~~Retirement~~	~~Qualified~~~~Pension~~~~Plan~~	~~Qualified pension plan, available to all salaried U.S. employees~~
	~~Senior~~~~Management~~~~Pension~~~~Plan~~	~~Partially-funded, non-qualified defined benefit restoration plan, available to executive officers and other U.S. employees based on salary level~~
	~~Supplemental~~~~Executive~~~~Pension~~~~Plan~~	~~Partially-funded, non-qualified supplemental defined benefit plan, available to eligible U.S. executives to maintain competitive total retirement benefits~~
	~~401(k)~~~~Plan~~	~~Qualified 401(k) plan available to all U.S. employees; Company matches 75% of pre-tax contributions up to 6% of salary~~
~~Other~~	~~Executive~~~~Officer~~~~Severance~~~~Plan~~	~~Sets standard benefits for senior executives in the event of severance~~
	~~Change-in-Control~~~~Plan~~	~~Sets standard benefits for senior executives upon a change-in-control~~
	~~Other~~~~Benefits~~	~~Physical exam, enhanced vacation, relocation benefits~~

~~Flowserve Corporation Pension Plans~~

We provide pension benefits to U.S. salaried employees under the Flowserve Corporation Pension Plan (the “Qualified Plan”), which is a tax-qualified pension plan, subject to funding requirements, vesting rules and maximum benefit limitations of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Named Executive Officers participate in the Qualified Plan on the same terms as the rest of our U.S. salaried employees. Because the Internal Revenue Code of 1986, as amended (the “Code”), limits the pension benefits (based on an annual compensation limit) that can be accrued under a tax-qualified pension plan, we established and maintain a partially funded, non-qualified defined benefit restoration pension plan, the Senior Management Retirement Plan (the “SMRP”), for our executives, including the Named Executive Officers, to compensate these individuals for the reduction in their pension benefit resulting from this limitation. The SMRP is purely a restoration plan to provide comparable level retirement benefits to those provided to other U.S. employees based on a comparable benefit formula. In addition, we also established and maintain a second partially-funded, non-qualified supplemental defined benefit pension plan, the Supplemental Executive Retirement Plan (the “SERP”), for our eligible U.S. executives, including the Named Executive Officers, to maintain a

~~- 2019 PROXY STATEMENT 35~~

~~Flowserve Corporation Officer Severance Plan~~

total retirement benefit level that is competitive with general industry companies similar in size. These programs are designed to provide eligible U.S. executives with income following retirement and to help ensure that we are able to attract and retain executive talent by providing comprehensive retirement benefits.

Participants in the Qualified Plan and the SMRP accrue contribution credits based on age and years of service at the rate of 3% to 7% for eligible earnings up to the Social Security wage base, and at the rate of 6% to 12% for eligible earnings in excess of the Social Security wage base. Participants in the SERP accrue contribution credits at the rate of 5% of all eligible earnings. Eligible earnings include base salary and annual incentive award. SERP participants also earn interest on the accrued cash balance based on the rate of return on 10-year Treasury bills.

Our Qualified Plan also confers competitive post-employment benefits to the executive officers upon a change-in-control. The additional years of credited service and additional age credit for purposes of determining an individual’s benefits under the Qualified Plan compensate that individual upon his or her early termination from the plan.

The actuarial present value of the accumulated pension benefits of the Named Executive Officers as of the end of 2018, as well as other information about the Company’s defined benefit pension plans, is shown in the “2018 Pension Benefits” table below. For a discussion regarding the valuation method and assumptions used in quantifying the present value of the current accrued pension benefits, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Pension and Postretirement Benefits Obligations — Accrual Accounting and Significant Assumptions” in the Company’s Annual Report.

On November 2, 2018, the Board and the O&C Committee approved, and the Company adopted, an amended and restated severance plan for the Company’s senior executive officers and other corporate officers (the “Officer Severance Plan”) to maintain consistency with market practice and the Company’s other compensation plans and arrangements. The November 2, 2018 amendment revised the Officer Severance Plan’s eligibility and participation requirements (not affecting the Company’s executive officers), reduced the number of eligible key employees and provided for certain other administrative changes. The O&C Committee currently believes that having an Officer Severance Plan is a competitive compensation element in the current executive labor market and is more beneficial to the Company and its shareholders than conducting individual negotiations with each executive officer in the event of a termination of employment.

In addition, to protect the Company’s competitive position, each executive is required to sign an agreement with the Company that requires the executive to forfeit the proceeds from a portion of the executive’s long-term incentive awards if the executive engages in conduct that is detrimental to the Company. Detrimental conduct includes working for certain competitors, soliciting customers or employees after employment ends and disclosure of confidential information in a manner that may result in competitive harm to the Company.

Detailed information concerning the Officer Severance Plan and the November 2, 2018 amendment, including the events that trigger benefits and the severance benefits provided upon the occurrence of such events, is discussed below under “—Potential Payments Upon Termination or Change-in-Control—Flowserve Corporation Officer Severance Plan.”

~~Flowserve Corporation Change-in-Control Severance Plan~~

On November 2, 2018, to maintain consistency with market practice and the Company’s other compensation plans and arrangements, the O&C Committee adopted the Flowserve Corporation Change-in-Control Severance Plan (the “CIC Plan”), which amended and consolidated the Company’s prior Change-in-Control Severance Plan (the “Prior CIC Plan”). The CIC Plan provides certain specified severance benefits to the Named Executive Officers to promote financial protection and security of their long-term incentive compensation arrangements in the event of the loss of their positions following a transaction that involves a change in the ownership or control of the Company. The benefits under the CIC Plan, if payable, are in lieu of severance benefits payable to executive officers under the Officer Severance Plan described above.

The O&C Committee believes that it is in the best interests of the Company and its shareholders to offer such a plan to its Named Executive Officers and other executives. The O&C Committee believes that these change-in-control benefits are in the best interest of the Company and its shareholders because the Company competes for executives in a highly competitive market in which companies routinely offer similar benefits to senior employees. The O&C Committee views these amounts as reasonable and appropriate for the Named Executive Officers, who may not be in a position to obtain comparable employment following a change-in-control. The O&C Committee also believes that these benefits are important to encourage executives to support change-in-control transactions the Board deems to be in the best interest of our shareholders.

The O&C Committee, in consultation with its compensation consultant, reviews the CIC Plan periodically to evaluate both its effectiveness and competitiveness and to determine the value of potential awards.

Detailed information concerning the CIC Plan and the Prior CIC Plan, including the events that trigger benefits and the severance benefits provided upon the occurrence of such events, is discussed below under “—Potential Payments Upon Termination or Change-in-Control—Flowserve Corporation Executive Officer Change-in-Control Severance Plan.” The only material change to the Prior CIC Plan reduced the potential severance payments to vice presidents of the Company.

~~- 2019 PROXY STATEMENT 36~~

~~End of Service Benefits~~

The Company’s long-term incentive program allows RSU awards and performance shares to continue to vest over the original vesting period for employees who retire at a minimum age of 55 years old and who have 10 years of continuous service with the Company. The O&C Committee believes that this encourages the participants to continue to focus on the Company’s performance through retirement.

~~Review and Assessment of Compensation Under Termination Scenarios~~

The O&C Committee also reviews each Named Executive Officer’s total compensation under several scenarios, including a change-in-control of the Company, termination of employment by management and resignation or retirement by the executive. Tally sheets setting forth all of the listed scenarios are prepared by management and reviewed by the O&C Committee with input from its compensation consultant. Based on the O&C Committee’s review of the tally sheets, the O&C Committee determined that the potential payments that would be provided to the Named Executive Officers were consistent with our executive compensation objectives and principles.

~~Employment Agreements~~

Consistent with its compensation philosophy, the Company generally does not enter into employment agreements with its Named Executive Officers, who are considered to serve at the will of the Company. No current executive has an employment agreement.

~~Other Benefits~~

As previously discussed, the O&C Committee strives to make our executive compensation program primarily performance-based and, as such, has eliminated perquisites for our executive officers, other than annual physical exams, enhanced vacation and standard relocation benefits. Our executive compensation program continues to provide these competitive and limited benefits in 2018:

•

~~Executive~~~~Physicals.~~ ~~All Named Executive Officers were eligible to receive an annual physical examination. This is a standard benefit provided by comparative companies.~~

•

~~Enhanced~~~~Vacation.~~ All Named Executive Officers are eligible to receive an enhanced vacation benefit. Each officer is eligible for a minimum of four weeks’ vacation and may receive more, if the officer’s years of service so qualify under the Company’s regular employee vacation award schedule.

•

~~Relocation~~~~Benefits~~. All Named Executive Officers are eligible to receive standard, market competitive relocation benefits pursuant to the Company’s executive relocation policy. These benefits include travel costs, home finding trip, broker assistance, home sale and buyout assistance, new residence assistance, reimbursement for transportation, moving expenses and other relocation expenses.

The aggregate incremental cost of providing these benefits to the Named Executive Officers is included in the “Summary Compensation Table” under the “All Other Compensation” column and related footnotes.

~~Stock Ownership Requirements and Anti-Hedging and Pledging~~

Our executive compensation program requires executives own a minimum amount of Company common stock equal in value to a multiple of their respective annual base salaries. The O&C Committee believes that this ownership requirement further encourages the alignment of executive and shareholder interests by requiring executives to acquire and maintain a meaningful stake in the Company, which promotes the Company’s objective of building long-term shareholder value. Additionally, under the Company’s Insider Trading Policy executives are prohibited from pledging stock and engaging in transactions (such as trading in options) designed to hedge against potential changes in the value of the Company’s common stock.

The stock ownership requirements are designed to maintain stock ownership at levels high enough to indicate management’s commitment to share value appreciation to our shareholders while satisfying an individual executive’s prudent needs for personal asset diversification. The stock ownership requirements are set by the O&C Committee as a result of a competitive analysis prepared by management and reviewed by its compensation consultant. Requirements are reviewed each year and updated as necessary. The requirements were last reviewed by the O&C Committee in 2019. The Company’s current stock ownership requirements for the Named Executive Officers and the number of shares required thereby are shown in the following table.

~~Named Executive Officer~~	~~Ownership Requirement~~	~~Required Ownership at 12/31/2018 (# of Shares)~~⁽¹⁾
R.~~Scott~~*~~Rowe~~*	~~5 x Annual Base Salary~~	~~130,051~~
*~~Lee~~*S.~~Eckert~~	~~3 x Annual Base Salary~~	~~39,015~~
*~~David~~*J.~~Wilson~~	~~3 x Annual Base Salary~~	~~30,992~~
*~~Keith~~*E.~~Gillespie~~	~~3 x Annual Base Salary~~	~~33,402~~
*~~Elizabeth~~*L.~~Burger~~	~~3 x Annual Base Salary~~	~~32,025~~
~~(1)~~ Based on an average price per share of $43.56, which is calculated using the average closing prices of our common stock between January 1st and June 31st of 2018, as reported by the NYSE. Shares have been rounded up to the nearest whole share.

The required stock ownership levels are expected to be achieved within five years from the date the guidelines are first applicable or within five years of the executive joining the Company. Recognizing the time required to achieve the ownership requirements, the O&C Committee approved the establishment of an interim retention requirement. Through this requirement, executives who do not meet the ownership requirement

~~- 2019 PROXY STATEMENT 37~~

~~Recoupment of Incentive Compensation Policy~~

must show that they have retained at least 60% of the vested RSUs and vested contingent performance shares from the time the ownership guidelines become applicable. The 60% retention level was established in recognition that executives may need to sell shares to satisfy tax obligations. As of December 31, 2018, all Named Executive Officers met their stock ownership requirements under these tests.

The O&C Committee annually reviews these stock ownership requirements and periodically monitors the executives’ progress toward meeting their respective target ownership levels. Shares held directly by an executive or shares held in the Flowserve Corporation Non-Qualified Deferred Compensation Plan also count toward satisfying the stock ownership requirements. Unvested contingent performance shares or unvested RSUs are not counted toward satisfying the stock ownership requirements.

Our Recoupment of Incentive Compensation Policy (the “Recoupment Policy”) reinforces our commitment to integrity and the highest standards of ethical conduct through our compensation program. Under the Recoupment Policy, the O&C Committee has the ability to recoup certain incentive compensation from an executive, within three years prior, if the Company is required to restate its financial statements or if the executive engages in misconduct. If a restatement occurs, the O&C Committee can require an executive to reimburse the Company for (1) compensation received under our AIP and (2) vested contingent performance shares, where the amount of compensation received, in either case, was greater than the amount the O&C Committee believes was actually earned based on the restated financial results. If an executive engages in misconduct, the O&C Committee can require the executive to repay the gross value of (1) all compensation received under the AIP during the calendar year(s) in which the misconduct occurred, (2) all vested RSUs granted during the calendar year(s) in which the misconduct occurred and (3) all vested contingent performance shares awarded to the executive for any performance period that includes the calendar year(s) in which the misconduct occurred.

~~Tax and Accounting Implications of Executive Compensation~~

~~Section 162(m) of the~~Code limits to $1.0 million per year the federal income tax deduction to public corporations for compensation paid for any fiscal year executive officers who are covered by Section 162(m) of the Code, including to the Company’s CEO or CFO, and the three other most highly-compensated executive officers as of the end of the fiscal year included in the “Summary Compensation Table.”

The AIP and the LTIP were adopted, and have the same expiration date as, the EICP, which was most recently approved by shareholders for Section 162(m) purposes at the 2015 annual meeting of shareholders. Prior to the U.S. tax law reform in December 2017, performance-based compensation under both the AIP and the LTIP that met the requirements of “qualified performance-based compensation” under IRC 162(m) was intended to be deductible for tax purposes because such compensation is dependent on fulfilling performance criteria approved by shareholders under the EICP.

Effective for tax years beginning after December 31, 2017, U.S. tax law changes expanded the definition of covered employees under Section 162(m) to include, among others, the Chief Financial Officer, and eliminated the performance-based compensation exception for taxable years beginning in 2018. We may be able to deduct in 2018 or thereafter certain compensation paid to “covered employees” to the extent it is eligible for transition relief under the newly modified Section 162(m) and any rules promulgated thereunder. However, there is no guarantee that any such compensation will be deductible, and the Company may determine that certain compensation cannot qualify for such transition relief or that it does not wish to take or refrain from taking steps necessary to qualify for such relief.

The O&C Committee has considered and will continue to consider tax deductibility in structuring executive compensation arrangements. However, the O&C Committee retains discretion to establish executive compensation arrangements that it believes are consistent with its principles described earlier and in the best interests of the Company and our shareholders, even if those arrangements are not fully deductible under Section 162(m).

The Company recognizes compensation expense in our financial statements for all equity-based awards pursuant to the principles set forth in FASB ASC 718, “Compensation — Stock Compensation”. The O&C Committee considered the GAAP accounting implications of the awards in setting the long-term incentive mix and further determined that the mix of time-vested restricted common stock and contingent performance shares was appropriate for 2018.

~~- 2019 PROXY STATEMENT 38~~

~~Annual Executive Compensation Program Review and Compensation Risk~~

It is the O&C Committee’s policy to regularly monitor and annually review our executive compensation program to determine, in consultation with its compensation consultant, whether the elements of the program are consistent with our stated executive compensation objectives and principles. Within this determination is an evaluation of whether the Company’s risk management objectives are being met with respect to the executive compensation program and our compensation programs as a whole. If the elements of the program are determined to be inconsistent with our objectives and principles, or if any incentives are determined to encourage risks that are reasonably likely to have a material adverse effect on us, the elements are adjusted as necessary.

Following the O&C Committee’s annual review of our executive and other compensation programs in 2018, in consultation with its compensation consultant, the O&C Committee concluded that no risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the O&C Committee noted that:

•

~~Compensation elements are balanced~~

•

~~Metrics balance short-term and long-term goals~~

•

~~Individual performance is emphasized~~

•

~~Incentive programs are capped~~

•

~~Incentives have performance thresholds~~

•

~~Compensation is benchmarked~~

•

~~Executives have ownership requirements~~

•

~~Compensation can be recouped~~

~~Organization and Compensation Committee Report~~

The Organization and Compensation Committee of the Board of Directors of the Company is currently comprised of five independent directors, David E. Roberts (Chairman), Ruby R. Chandy, Leif E. Darner, John R. Friedery and John L. Garrison.

The Organization and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis, set forth above in this proxy statement, with management. Based on this review and discussion, the Organization and Compensation Committee recommended to the Board of Directors that this Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2018.

~~David E. Roberts, Chairman~~
~~Ruby R. Chandy~~
~~Leif E. Darner~~
~~John R. Friedery~~
~~John L. Garrison~~

~~- 2019 PROXY STATEMENT 39~~

~~Summary Compensation Table~~

The following table sets forth compensation information for 2018, 2017 and 2016 for our Named Executive Officers — the individuals who served during 2018 as principal executive officer and principal financial officer of the Company and certain other highly compensated executive officers of the Company serving at the end of 2018.

Name and
Principal Position

Year

Salary
($)⁽²⁾

Bonus
($)

Stock
Awards
($)⁽³⁾

Option
Awards
($)

Non-Equity
Incentive
Plan
Compensation
($)⁽⁴⁾

Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
($)⁽⁵⁾

All Other
Compensation
($)⁽⁶⁾

Total
($)
R. Scott Rowe

2018

1,126,654

—

5,944,049
⁽⁷⁾
—

1,250,832

227,180

153,754

8,702,469
President and Chief Executive Officer (Principal Executive Officer)

2017

825,000

20,000

5,505,319

2,000,000

590,040

103,547

35,732

9,079,638

Lee S. Eckert

2018

563,327

—

1,666,626
⁽⁸⁾
—

390,885

75,861

35,951

2,732,650
Senior VP and Chief Financial Officer
(Principal Financial Officer)

2017

126,923

150,000

756,175

—

45,617

11,477

22,340

1,112,532

David J. Wilson

2018

459,087

—

1,118,009
⁽⁹⁾
—

281,524

61,781

160,802

2,081,203
President, Flowserve Pumps Division

Keith E. Gillespie

2018

485,000

—

1,077,752
⁽¹⁰⁾
—

406,042

84,258

44,976

2,098,028
Senior VP and Chief Strategy Officer

2017

485,000

—

1,011,786

—

140,917

67,604

45,085

1,750,392

2016

485,000

—

884,659

—

35,939

60,777

47,412

1,513,587
Elizabeth L. Burger⁽¹⁾

2018

330,865

100,000
⁽¹¹⁾
935,972
⁽¹²⁾
—

198,077

38,347

65,371

1,668,632
Senior VP and Chief Human Resources Officer

(1)
Ms. Burger was appointed as Senior Vice President, Chief Human Resources Officer effective April 16, 2018.
(2)
Salary reported for 2018 represents amounts earned by the Named Executive Officers in 2018.
(3)
Represents the grant date fair value of long-term equity incentive awards under the Company’s long-term incentive program computed in accordance with FASB ASC 718 “Compensation – Stock Compensation”, including the impact of forfeitures. The incentive awards are granted in the form of restricted stock units, which generally vest ratably over a three-year period, and contingent performance share units. The performance criteria for the 2018-2020 performance period for the contingent performance awards is based on: 1) three-year average ROIC improvement goals which closely correlate to the compounded annual share price growth rate of the S&P Industrial Machinery Index over a 10-year period and 2) relative TSR compared to that of the PPG. The performance criteria for the 2017-2019 performance period for the contingent performance awards is based on: 1) three-year average ROIC performance relative to the three-year average of WACC and compared to that of the PPG and 2) relative TSR compared to that of the PPG. The performance criteria for the 2016-2018 performance period for the contingent performance awards is based on: 1) the Company’s average RONA over a three-year period compared to the RONA averages of the Company’s PPG for the same period and 2) the Company’s bookings growth compared to targeted bookings growth under the Company’s operating plan. The performance criteria for these awards are described in further detail under “—Elements of the Executive Compensation Program—Long-Term Incentives—Contingent Performance Share Awards” above. The reported value of the contingent performance awards is computed based on the grant date estimate of compensation cost to be recognized over the three-year period, which was 100%, or “target”. Payout for the contingent performance awards can range from 0 shares to a maximum of 200% of target. Assumptions used in the valuations are discussed in Note 6 to the Company’s audited consolidated financial statements for the year ended December 31, 2018 in the Annual Report.
(4)
The 2018 amounts in this column represent an annual cash incentive bonus for 2018 under the Company’s Annual Incentive Plan.
(5)
There were no above-market or preferential earnings with respect to any deferred compensation balances.
(6)
The following table shows the components of this column for the Named Executive Officers for 2018, calculated at the aggregate incremental cost to the Company:

Name Retirement Plan
Contributions Insurance
Premiums(A) Dividends on
Restricted Stock Other Total
R. Scott Rowe $  12,375 $   27,341 $      —   $  114,038 ^(B) $  153,754
Lee S. Eckert 12,375 21,926 —   1,650 ^(C) 35,951
David J. Wilson 12,375 20,316 —   128,112 ^(D) 160,802
Keith E. Gillespie 12,375 22,784 5,700 4,117 ^(E) 44,976
Elizabeth L. Burger 12,375 16,055 —   36,941 ^(F) 65,371

~~- 2019 PROXY STATEMENT 40~~

~~(A)~~

~~Includes annual premiums for group term life insurance, the Company’s portion of annual premiums for medical, dental and vision benefits and the Company’s portion of disability premiums.~~

~~(B)~~

Includes $3,595 attributable to an annual physical exam, $12,631 attributable to personal commuting expenses during relocation period and $97,812 attributable to relocation expenses ($10,000 for a relocation allowance, $53,258 for relocation expenses, and $34,554 for tax gross-up costs related to the relocation expenses).

~~(C)~~

~~Includes $1,650 attributable to an annual physical exam.~~

~~(D)~~

Includes $11,392 attributable to an annual physical exam and $116,720 attributable to relocation expenses ($10,000 for a relocation allowance, $66,286 for relocation expenses, and $40,434 for tax gross-up costs related to the relocation expenses).

~~(E)~~

~~Includes $4,117 attributable to an annual physical exam.~~

~~(F)~~

Includes $8,099 attributable to personal commuting expenses during relocation period and $28,842 attributable to relocation expenses ($20,000 for a relocation allowance, $5,549 for relocation expenses, and $3,293 for tax gross-up costs related to the relocation expenses).

~~(7)~~

Calculated using a price per share of $41.20, the closing market price of the Company’s common stock as reported by the NYSE on March 1, 2018, the date of the grant. Includes 65,990 shares ($2,718,788) of restricted stock units and 65,990 contingent performance units ($3,225,261), which represents the target award. The contingent performance units include 32,995 shares with a TSR metric and fair value of $56.55 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 131,980 shares, or $6,450,523 at the date of grant.

~~(8)~~

Calculated using a price per share of $42.35, the closing market price of the Company’s common stock as reported by the NYSE on February 28, 2018, the date of the grant. Includes 18,000 shares ($762,300) of restricted stock units and 18,000 contingent performance units ($904,326), which represents the target award. The contingent performance units include 9,000 shares with a TSR metric and fair value of $58.1307 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 36,000 shares, or $1,808,653 at the date of grant.

~~(9)~~

Calculated using a price per share of $42.35 and $39.61, the closing market prices of the Company’s common stock as reported by the NYSE on February 28, 2018 and December 18, 2018, respectively, the date of the grants. Includes 8,400 shares ($355,740) of restricted stock units and 16,990 contingent performance units ($762,269), which represents the target award; 8,590 shares of the contingent performance units were one-time performance grants. The contingent performance units include 4,200 shares with a TSR metric and fair value of $58.1307 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 33,980 shares, or $1,524,538 at the date of grant.

~~(10)~~

Calculated using a price per share of $42.35, the closing market price of the Company’s common stock as reported by the NYSE on February 28, 2018, the date of the grant. Includes 11,640 shares ($492,954) of restricted stock units and 11,640 contingent performance units ($584,798), which represents the target award. The contingent performance units include 5,820 shares with a TSR metric and fair value of $58.1307 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 23,280 shares, or $1,169,595 at the date of grant.

~~(11)~~

~~Includes a $100,000 one-time executive transition bonus.~~

~~(12)~~

Calculated using a price per share of $45.96, the closing market price of the Company’s common stock as reported by the NYSE on April 16, 2018, the date of the grant. Includes 10,400 shares ($477,984) of restricted stock units and 8,400 contingent performance units ($457,988), which represents the target award; 2,000 shares of the restricted stock units were one-time sign-on grants. The contingent performance units include 4,200 shares with a TSR metric and fair value of $63.0847 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 16,800 shares, or $915,975 at the date of grant.

~~- 2019 PROXY STATEMENT 41~~

~~2018 Grants of Plan-Based Awards~~

~~The following table sets forth certain information with respect to 2018 plan-based awards granted to the Named Executive Officers for the year ended December 31, 2018.~~

Name
Grant Date

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards

Estimated Future Payouts
Under Equity Incentive Plan
Awards⁽¹⁾
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)

Grant Date
Fair Value
of Stock
and Option
Awards
($)⁽²⁾

Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
R. Scott Rowe
3/1/2018
⁽³⁾
679,800
1,359,600
2,719,200

—
—
—
—

—

3/1/2018

—
—
—

16,498
32,995
65,990
—

1,865,867
⁽⁴⁾
3/1/2018

—
—
—

16,498
32,995
65,990

1,359,394
⁽⁴⁾
3/1/2018

—
—
—

—
—
—
65,990
⁽⁵⁾

2,718,788

Lee S. Eckert
2/28/2018
⁽³⁾
212,438
424,875
849,750

—
—
—
—

—

2/28/2018

—
—
—

4,500
9,000
18,000
—

523,176
⁽⁴⁾
2/28/2018

—
—
—

4,500
9,000
18,000
—

381,150
⁽⁴⁾
2/28/2018

—
—
—

—
—
—
18,000
⁽⁵⁾

762,300
David J. Wilson
2/28/2018
⁽³⁾
149,906
299,813
599,625

—
—
—
—

—

2/28/2018

—
—
—

2,100
4,200
8,400
—

244,149
⁽⁴⁾
2/28/2018

—
—
—

2,100
4,200
8,400
—

177,870
⁽⁴⁾
12/18/2018

—
—
—

4,295
8,590
17,180
—

340,250
⁽⁴⁾
2/28/2018

—
—
—

—
—
—
8,400
⁽⁵⁾

355,740

Keith E. Gillespie
2/28/2018
⁽³⁾
157,625
315,250
630,500

—
—
—
—

—

2/28/2018

—
—
—

2,910
5,820
11,640
—

338,321
⁽⁴⁾
2/28/2018

—
—
—

2,910
5,820
11,640
—

246,477
⁽⁴⁾
2/28/2018

—
—
—

—
—
—
11,640
⁽⁵⁾

492,954

Elizabeth L. Burger
4/16/2018
⁽³⁾
151,125
302,250
604,500

—
—
—
—

4/16/2018

—
—
—

2,100
4,200
8,400
—

264,956
⁽⁴⁾
4/16/2018

—
—
—

2,100
4,200
8,400
—

193,032
⁽⁴⁾
4/16/2018

—
—
—

—
—
—
8,400
⁽⁵⁾

386,064

4/16/2018

—
—
—

—
—
—
2,000
⁽⁶⁾

91,920

(1)
The number of shares listed represents long-term equity incentive awards in the form of contingent performance share units under the Company’s long-term incentive program. The performance criteria for these awards is based on: 1) three-year average ROIC improvement goals which closely correlate to the compounded annual share price growth rate of the S&P Industrial Machinery Index over a 10-year period and 2) relative TSR compared to that of the PPG for the period ending December 31, 2020 as described in further detail under“—Elements of the Executive Compensation Program—Long-Term Incentives—Contingent Performance Share Awards” above.
(2)
These amounts represent the fair value, as determined under FASB ASC Topic 718, of the stock awards based on the grant date fair value estimated by the Company for financial reporting purposes.
(3)
Under the Annual Incentive Plan, the primary performance measures are internally defined metrics based on operating income, sales and primary working capital. Actual amounts payable under the Annual Incentive Plan, if payable, can range from 50% (Threshold) to 200% (Maximum) of the target amounts for the Named Executive Officers based upon the extent to which performance under the foregoing criteria meets, exceeds or is below the target and can be further increased or decreased based on individual performance. These amounts represent amounts payable if the Named Executive Officer is employed for the full calendar year. Any Named Executive Officers who were not employed for the full calendar year were eligible for a pro-rated amount based on their time of employment. Actual payout for 2018 was 92% of the target amount for all Named Executive Officers other than Mr. Wilson and Mr. Gillespie. For Mr. Wilson the actual payout for 2018 was 93.9% of the target amount. For Mr. Gillespie the actual payout for 2018 was 128.8% of the target amount.
(4)
Represents the fair value on the date of grant, as described in footnote (2), of the “target” award for the contingent performance shares. During the performance period, as described in footnote (1), earned and unearned compensation expense is adjusted based on changes in the expected achievement of the performance targets. As of December 31, 2018, the Company estimated vesting of, and therefore expensed, this award at 100% of the “target” award based on expected achievement of performance targets.
(5)
The amounts shown reflect the numbers of shares of RSUs granted to each Named Executive Officer pursuant to the Flowserve Corporation Equity and Incentive Compensation Plan.
(6)
This amount represents RSUs granted to Ms. Burger as part of her sign-on compensation.

~~- 2019 PROXY STATEMENT 42~~

~~Outstanding Equity Awards at Year-End 2018~~

~~The following table sets forth certain information with respect to outstanding equity awards as of December 31, 2018 with respect to the Named Executive Officers.~~

Name
Option Awards

Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

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⁽¹⁾
($)
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⁾
($)
R. Scott Rowe
114,943
⁽²⁾
48.63
5/4/2027

105,382
⁽³⁾
4,006,634
—

—

57,750
⁽⁴⁾
4,391,330

66,798
⁽⁵⁾
5,079,331
Lee S. Eckert
—

—
—

36,012
⁽⁶⁾
1,369,188
—

—

18,220
⁽⁵⁾
1,385,482
David J. Wilson
—

—
—

28,927
⁽⁷⁾
1,099,807

8,503
⁽⁵⁾
646,559

8,590
⁽⁸⁾
653,184
Keith E. Gillespie

22,533
⁽⁹⁾
856,720
—

—

12,048
⁽¹⁰⁾
916,115

10,103
⁽⁴⁾
768,247

11,783
⁽⁵⁾
895,944
Elizabeth L. Burger
—

—
—

10,481
⁽¹¹⁾
398,502

8,466
⁽⁵⁾
643,736
(1)
Calculated using a price per share of $38.02 the closing market price of the Company’s common stock as reported by the NYSE on December 31, 2018, the end of the Company’s last completed fiscal year. The restricted share unit and contingent performance share unit amounts include regularly declared dividends accrued on the “target” award, which will vest only to the same extent as the underlying award, if at all. Concerning all contingent performance awards, the amounts of units used in calculating the payout values assumes the maximum level of performance target achievement, which would result in the target unit amounts presented in the table vesting at 200%.
(2)
All stock options vest on April 1, 2020.
(3)
22,377 RSUs vested on March 1, 2019 and 19,292 RSUs vested on April 1, 2019. Mr. Rowe’s remaining RSUs vest as follows: 22,211 shares of RSUs on March 1, 2020; 19,292 shares of RSUs on April 1, 2020; and 22,210 shares of RSUs on March 1, 2021.
(4)
These shares represent long-term equity incentive awards in the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The targets set for the 2017 plan are based on: 1) three-year average ROIC performance relative to the three-year average of WACC and compared to that of the PPG and 2) relative TSR compared to that of the PPG for the same period. Payouts can range from 0 shares to a maximum of 200% of the target. As of December 31, 2018, the Company estimated vesting of, and therefore expensed, these awards at 100% of the target shares presented based on expected achievement of performance targets.
(5)
These shares represent long-term equity incentive awards in the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The targets set for the 2018 plan are based on: 1) ROIC improvement goals which closely correlate to the compounded annual share price growth rate of the S&P Industrial Machinery Index over a 10-year period and 2) relative TSR compared to that of the PPG for the same period. Payouts can range from 0 shares to a maximum of 200% of the target. As of December 31, 2018, the Company estimated vesting of, and therefore expensed, these awards at 100% of the target shares presented based on expected achievement of performance target.
(6)
6,104 RSUs vested on February 28, 2019. Mr. Eckert’s remaining RSUs vest as follows: 6,058 RSUs on February 28, 2020; 17,792 of RSUs will cliff vest on October 9, 2020 and 6,058 RSUs on February 28, 2021.
(7)
2,849 RSUs vested on February 28, 2019. Mr. Wilson’s remaining RSUs vest as follows: 2,827 shares on February 28, 2020; 20,424 of restricted stock units will cliff vest on September 11, 2020 and 2,827 shares on February 28, 2021.
(8)
These shares represent a two-year cliff equity incentive award in the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The target performance for this award are is based on 2019 Flowserve Operating Income ("OI"), Flowserve Pump Division ("FPD") OI and FPD Revenue, weighted 50% for Flowserve OI and 25% each for each of FPD OI and FPD Revenue.
(9)
3,384 RSUs vested on February 1, 2019, 4,016 RSUs vested on February 3, 2019 and 3,947 RSUs vested on February 28, 2019. Mr. Gillespie’s remaining RSUs vest as follows: 3,351 RSUs on February 1, 2020; 3,918 RSUs on February 28, 2020: and 3,918 RSUs on February 28, 2021.
(10)
These shares represent target long-term equity incentive awards in the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The target set for the 2016 plan is based on: 1) the Company’s average RONA performance compared to that of the PPG; and 2) bookings growth compared to overall GDP growth of countries that are members of the OECD for the same period. Payouts can range from 0 shares to a maximum of 200% of the target. As of December 31, 2018, the Company estimated vesting of, and therefore expensed, these awards at 50% of the target shares presented based on expected achievement of performance targets.
(11)
2,836 RSUs vested on February 28, 2019 and 672 RSUs vested on April 16, 2019. Ms. Burger’s remaining RSUs vest as follows: 2,815 RSUs on February 28, 2020; 672 RSUs on April 16, 2020; 2,815 RSUs on February 28, 2021 and 671 RSUs on April 16, 2021.

~~- 2019~~

The payout ranges for PSUs shown above are 0% below threshold performance, 50% at threshold, 100% at target and 200% at maximum, in each case of the NEO’s respective target award opportunity.

PerformancePeerGroup(PPG): The O&C Committee believes that the use of absolute performance measures alone yields an incomplete picture of Company performance and has determined to assess attainment of our PSU TSR metric against a performance peer group. During 2020, the performance peer group was reviewed to ensure continued alignment with Flowserve’s aspiration to become the leading company within the Flow Control Industry. The performance peer group was identified based, generally, on publicly traded companies that are: (1) industrial equipment manufacturers; (2) direct business peers of the Company; and (3) financially comparative to the Company. No changes were made to the performance peer group for 2020.

2021 PROXY STATEMENT 43

~~2018 Option Exercises~~

PERFORMANCE PEER GROUP (PPG)

2020PERFORMANCEPEERGROUP(16Companies)

CIRCOR International

Colfax Corporation

Crane Co.

Dover Corporation

Ebara Corp

Ingersoll Rand

IDEX Corporation

IMI plc

ITT Corp.

KSB Aktiengesellschaft

Neles Oyj

Rotork plc

SPX FLOW, Inc.

Sulzer AG

Weir Group PLC

Xylem Inc.

+0Change

2018 PSU Payout

•

TSRPerformanceShareScore: For the 2018-2020 performance period, the Company’s TSR was (6.3)% representing the 26.9th percentile of the performance peer group resulting in a 53.8% payout for this component of the award.

•

ROICPerformanceScore: For the 2018-2020 performance period, ROIC targets were set as year-over-year (YoY) incremental ROIC improvement targets over the prior year’s actual ROIC as shown in the chart below. Actual ROIC in 2017 was 7.6%, thus setting the 2018 ROIC Target as 8.6% (+1.0% improvement).

The final payout was determined by calculating the average of the payout over the three-year performance period, which resulted in a three-year average ROIC payout of 133.3% for this component of the award.

Threshold
50% Payout
Target
100% Payout
Maximum
200% Payout
Result
Payout
2018
YoY Improvement
8.4%
+0.8%
8.6%
+1.0%
8.8%
+1.2%
10.7%
200.0%
2019
YoY Improvement
11.5%
+0.8%
11.7%
+1.0%
11.9%
+1.2%
12.9%
200.0%
2020
YoY Improvement
13.7%
+0.8%
13.9%
+1.0%
14.1%
+1.2%
11.4%
0.0%

3-Year average ROIC Payout
133.3%

2021 PROXY STATEMENT 44

~~2018 Pension Benefits~~

2018 PSU Vesting

The following table illustrates the 2020 PSU Payout for each NEO⁽¹⁾:

NEO
Target
PSUs

Payout
Percentage

2020 LTIP
Payout⁽²⁾
R. Scott Rowe
65,990
×
93.6%
=
61,767
John E. (Jay) Roueche, III
3,910
×
93.6%
=
3,660
Keith E. Gillespie
11,640
×
93.6%
=
10,895
Elizabeth L. Burger
8,400
×
93.6%
=
7,862
(1)
Given their start dates with the Company, Ms. Minnix and Ms. Schwetz did not receive any PSUs that vested in 2020.
(2)
The number of shares reported in this column does not include dividend equivalent units that accrued during the performance period.

Special Awards

In 2020, we provided special compensation awards to certain executives in the following amounts:

Executive

Special Award Details

Rationale

Mr.Roueche

•

$50,000 Cash Bonus

•

1,050 RSUs that vest ratably over three years

In recognition of his service and ~~Stock Vested~~

~~The following table sets forth certain information with respect~~contributions as interim CFO from December 2019 to ~~stock option exercises~~February 2020

Ms.Schwetz

•

$250,000 cash bonus subject to repayment if she did not remain employed for one year

•

$500,000 make-whole cash bonus

•

15,770 RSUs that vest ratably over three years

Sign-on and ~~restricted stock unit vesting~~make whole awards to help induce the executive to join our organization and provide meaningful retention once she joined the organization

Ms.Minnix

•

$350,000 cash bonus subject to repayment if she is terminated for cause or resigns her employment within three years

In recognition of her contributions in navigating the challenges of unprecedented business demands in 2020 to ensure the company maintained compliance and operations during ~~the fiscal year ended December 31, 2018 with respect to the Named Executive Officers.~~

Name

Option Awards

Stock Awards

Number of Shares
Acquired on Exercise
(#)

Value Realized
on Exercise
($)

Number of Shares
Acquired on Vesting
(#)⁽¹⁾

Value Realized
on Vesting
($)

R. Scott Rowe

—

—

19,017

824,007

Lee S. Eckert

—

—

—

—

David J. Wilson

—

—

—

—

Keith E. Gillespie

—

—

22,295

981,482

Elizabeth L. Burger

—

—

—

—

(1)
The number of shares reported includes shares that were surrendered during the fiscal year ended December 31, 2018 to pay for taxes upon the vesting of restricted stock units.

~~The following table sets forth certain information as of December 31, 2018 with respect to potential payments under our pension plans for each Named Executive Officer. Please refer to “—Elements~~a rapidly changing and complex regulatory environment in light of the ~~Executive Compensation Program—Flowserve Corporation Pension Plans” above for~~COVID-19 pandemic, as well as provide meaningful retention as a ~~narrative description~~key member of the ~~material factors necessary to an understanding of our pension plans.~~executive team.

Name

Plan Name

Number of
Years Credited
Service
(#)

Present Value
of Accumulated
Benefit
($)

Payments
During Last Fiscal
Year
($)

R. Scott Rowe

Qualified — Cash Balance⁽¹⁾

1.8

34,986

—

Non-Qualified — SMRP

1.8

164,397

—

Non-Qualified — SERP

1.8

131,313

—

Lee S. Eckert

Qualified — Cash Balance⁽¹⁾

1.2

22,648

—

Non-Qualified — SMRP

1.2

27,019

—

Non-Qualified — SERP

1.2

37,671

—

David J. Wilson

Qualified — Cash Balance⁽¹⁾

1.3

23,584

—

Non-Qualified — SMRP

1.3

18,342

—

Non-Qualified — SERP

1.3

32,844

—

Keith E. Gillespie

Qualified — Cash Balance⁽¹⁾

3.7

71,887

—

Non-Qualified — SMRP

3.7

74,178

—

Non-Qualified — SERP

3.7

104,704

—

Elizabeth L. Burger

Qualified — Cash Balance⁽¹⁾

0.7

17,089

—

Non-Qualified — SMRP

0.7

4,490

—

Non-Qualified — SERP

0.7

16,767

—

(1)
The Company sponsors cash balance designed pension plans for eligible employees. Each executive accumulates a notional amount derived from the plan provisions; each Named Executive Officer’s account balances as of December 31, 2018 are presented above. We believe that this is the best estimate of the present value of accumulated benefits.

~~Potential Payments upon Termination or Change In Control~~

On November 2, 2018, in connection with an annual review of the compensation plans and arrangements of the Company, the O&C Committee amended and restated the Prior CIC Plan by adopting the CIC Plan. In addition, the O&C Committee approved the amendment and restatement of the Company’s prior Amended and Restated Officer Severance Plan, as amended on February 14, 2017 (the “Prior Severance Plan”) by the adoption of the Officer Severance Plan. The information below describes certain compensation that would have been paid under existing plans and contractual arrangements

Other Compensation

Other benefits provided to the Named Executive Officers are generally consistent with those provided to other employees of the Company, including health and retirement benefits. These elements of our compensation program are outlined in more detail below:

2021 PROXY STATEMENT 45

Flowserve Corporation Executive Officer Severance Plan

Retirement	Qualified Pension Plan	• Tax-qualified pension plan, available to all salaried U.S. employees
	Senior Management Pension Plan	• Non-qualified defined benefit restoration plan, available to executive officers and other U.S. employees based on salary level
	Supplemental Executive Pension Plan	• Non-qualified supplemental defined benefit plan, available to eligible U.S. executives to maintain competitive total retirement benefits
	401(k) Plan	• Tax-qualified 401(k) plan available to all U.S. employees; Company currently matches 75% of pre-tax contributions up to 6% of salary
Other	Executive Officer Severance Plan	• Sets standard benefits for senior executives in the event of a qualifying termination ~~of such executive’s employment with the Company or change~~
	Change in control of the Company, assuming such events occurred on December 31, 2018. Amounts shown thus include amounts earned through such time and are estimates of the amounts that would have been paid out to theControl Plan	• Sets standard benefits for senior executives upon ~~their~~qualifying termination or a change-in-control (based upon the executive’s compensation and service levels as of such date and the closing price of the Company’s common stock on December 31, 2018 of $38.02). The actual amounts to be paid out can only be determined at the time of a change-in-control or ~~- 2019 PROXY STATEMENT 44~~ ~~Back to Contents~~ such executive’s termination of employment with the Company. Upon any termination of employment, each of the Named Executive Officers would also be entitled to the vested amounts and contributions shown in the “2018 Pension Benefits” table above. In addition to the amounts shown in the “2018 Pension Benefits” table above, each of the Named Executive Officers are entitled to payments and benefits under the Company’s Officer Severance Plan and the CIC Plan in the event of a termination of such executive’s employment with the Company or change in control of the Company. In addition, the Company sponsors several non-qualified pension plans and equity and non-equity incentive compensation plans that provide the Named Executive Officers with additional compensation in connection with a change in control or termination of employment under certain circumstances. The following is a description of the compensation payable to the Named Executive Officers in connection with a termination of employment and/or change in control under these arrangements and a table summarizing the estimated payouts assuming that a termination of employment and/ or change in control occurred on December 31, 2018. ~~Flowserve Corporation Executive Officer Severance Plan~~
	~~All of the Named Executive Officers currently participate~~Limited Other Benefits	• Physical exam, enhanced vacation, relocation benefits

Each of the Named Executive Officers participates in the Company’s Amended and Restated Executive Officer Severance Plan (the “Officer Severance Plan”). Under this plan, the Company’s officers are provided benefits upon a termination as a result of a reduction in force or by the Company without cause. No benefits are payable under the Officer Severance Plan to any officer who receives benefits under the Company’s Change in Control Severance Plan (the “CIC Plan”). The Officer Severance Plan does not provide for any additional payments or benefits upon a termination of employment by the Company for cause, upon the executive’s resignation for any reason (including “good reason” or “constructive termination”) or upon the executive’s death or disability.

COMPENSATION	Officer Severance Plan ~~as described~~Payment for NEOs
Cash Payment	• 24 months’ base salary continuation • Payment equivalent to target AIP bonus, provided Company actually achieves threshold performance under ~~“—Elements~~the AIP for the year
PSUs	• A pro-rated payout of the Executive Compensation Program” above. Under the Officer Severance Plan, the Company’s officers are provided the following benefits for a termination of employment as a result of a reduction in force or if the executive is terminated without cause: (i) two years of the officer’s current base salary, paid on a bi-weekly basis in accordance with the Company’s regular salary payments and (ii) a lump sum payment, payable at the time annual incentive awards are paid to officers still employed by the Company, substantially equivalent to the AIP payment, at target, the officer would have otherwise received under the Company’s AIP (provided that the Company actually satisfies the threshold performance results for the performance period) if the officer had been employed at the end of the applicable performance period and was otherwise eligible for a payment under the AIP. To the extent an affected officer has outstanding contingent performance shares or time-vested restricted stock units, the officer would also be eligible to receive (i) a pro-rated amount of the performance shares or units,PSUs, if any, that have a performance cycle that would otherwise end in the year that contains the termination date ~~and (ii) a~~based on the number of months the executive was employed during the performance period
RSUs	• A cash payment in lieu of any ~~time vested restricted stock units~~RSUs that would otherwise vest within 90 calendar days following the termination ~~date.~~ In addition, in order to receive such payments, the executive must execute a release and covenant not to sue and must continue to comply with any non-competition or non-solicitation agreements in effect with the Company following his or her termination of employment. No benefits are payable under the Officer Severance Plan to any officer who receives benefits under the CIC Plan. The Officer Severance Plan does not provide for any additional payments or benefits upon a termination of employment by the Company for cause, upon the executive’s resignation for any reason (including “good reason” or “constructive termination”) or upon the executive’s death or disability. For purposes of the Officer Severance Plan, the term “cause” generally means the covered executive’s (i) willful and continued failure to perform basic job duties after written demand for substantial performance is delivered to the executive by the Board, which specifically identifies the manner in which the Board believes that the executive has not substantially performed the executive’s duties, or (ii) willful engagement in conduct materially and demonstrably injurious to the Company, monetarily or otherwise. ~~In addition, to protect~~date based on the Company’s ~~competitive position, each executive is required to sign an agreement with~~average closing price over the Company that requires the executive to forfeit the proceeds from some or all of the executive’s long-term incentive awards if the executive engages in conduct that is detrimental to the Company. Detrimental conduct includes working for certain competitors, soliciting customers or employees after employment ends and disclosure of confidential information in a manner that may result in competitive harm to the Company. ~~Flowserve Corporation Change-in-Control Severance Plan~~ ~~All of the Named Executive Officers currently participate~~twenty trading days in the ~~Company’s CIC Plan, as described under “—Elements of~~month preceding the Executive Compensation Program” above. Benefits under the CIC Plan are triggered if, within two years following a change-in-control of the Company (as defined in the CIC Plan and discussed below), (i) the employment of the Named Executive Officer is terminated involuntarily other than for cause, death or disability, or (ii) for reasons constituting a “constructive termination.” In addition, benefits are triggered when a Named Executive Officer is terminated within the 90-day period immediately prior to a change-in-control if suchofficer’s termination ~~(i) occurs after the initiation of discussions leading to such change-in-control and (ii) can be demonstrated to have occurred at the request or initiation of parties to such change-in-control.~~date.

For purposes of the Officer Severance Plan and CIC Plan, the term “cause” generally means the covered executive’s:

•

willful and continued failure to perform basic job duties after written demand for substantial performance is delivered to the executive by the Board; or

•

willful engagement in conduct materially and demonstrably injurious to the Company, monetarily or otherwise.

Flowserve Corporation Executive Change in Control Plan

Each of the Named Executive Officers participates in the Company’s Change in Control Plan (“CIC Plan”). Benefits under the CIC Plan are triggered if, within two years following a change in control the Named Executive Officer is terminated without cause (and not on account of death or disability), or resigns for reasons constituting a “constructive

2021 PROXY STATEMENT 46

termination.” Benefits are also triggered if a Named Executive Officer is terminated within the 90-day period immediately prior to a change in control if such termination (i) occurs after the initiation of discussions leading to such change in control and (ii) can be demonstrated to have occurred at the request or initiation of parties to such change in control. The severance benefits provided upon a termination of employment covered under the CIC Plan include:

•

A target bonus or target annual incentive award in effect at the time of termination (or if higher, at the time of the change-in-control), pro-rated based on the number of days the Named Executive Officer was employed during the performance period.COMPENSATION •	CEO	OTHER NEOs
Cash Payment⁽¹⁾	A lump sum ~~cash~~ payment equal to ~~as applicable, (i) three times~~3x the sum of the ~~CEO’s then-current~~executive’s annual base salary and target ~~bonus or other~~ annual incentive ~~award; (ii) two and half times an executive vice president’s then-current~~	A lump sum payment equal to a multiple of the executive’s annual base salary and target ~~bonus or other~~ annual incentive ~~award; and (iii) two times a president's or~~as follows: • 2.5x for executive vice presidents⁽²⁾; • 2.0x for senior vice ~~president’s then-current~~presidents and presidents; and • 1.5x for vice presidents
Long-Term Incentive Awards	Full vesting at target of each cash or stock-based long-term incentive award. Named Executive Officers have 90 days following the date of employment termination to exercise any vested stock options	Same
Life, Medical, Health and Accident Benefits	Company provided coverage for the executive and his or her dependents for a number of months following termination equal to annual ~~base salary and target bonus or other annual incentive award; provided that if a change in control occurs prior~~severance multiplier used to ~~November 2, 2019, any executive who was a participant in~~calculate the ~~CIC Plan prior to November 2, 2018 shall receive a lump sum~~cash payment, multiplied by 12 months	Same

Supplemental Pension Benefits	Supplemental retirement benefits equal to the ~~higher~~difference between the amounts the executive would have been entitled to had he or she remained employed through the end of the ~~benefit calculated under~~benefits continuation period and the ~~CIC Plan or the Prior CIC Plan.~~ amounts actually received		Same
(1) For purposes of this calculation, the base salary is the highest of: (i) the highest-annualized monthly base salary during the twelve months preceding the termination; (ii) the base salary in effect on the date of termination; and (iii) the base salary in effect on the date of the ~~change-in-control.~~ change in control. (2) The Company does not currently have any Executive Vice Presidents.

For purposes of the CIC Plan, the term “constructive termination” generally means the occurrence of any one of the following events within two years after the effective date of a change in control without the express written consent of the covered executive:

•

a material reduction in the authority, duties or responsibilities held by the covered executive immediately prior to the change in control;

•

a material reduction of the covered executive’s base salary;

•

the relocation (without the covered executive’s consent) of the covered executive’s principal place of employment by more than 35 miles from its location immediately prior to a change in control; or

•

any other material failure of the Company to honor all the terms and provisions of the CIC Plan or any agreement with the covered executive.

Participation in the CIC Plan is contingent upon the covered executive executing a confidentiality and non-competition agreement at the time the executive is notified that he or she has been chosen to participate in the CIC Plan and a release in favor of the Company at the time of separation from service. The CIC Plan also includes a “best-after-tax” 280G provision, which provides that each executive will receive either (1) all payments and benefits otherwise due in

2021 PROXY STATEMENT 47

Retirement Benefits (Pension, 401k, SERP and SMRP and End of Service)

connection with the change in control or (2) $1.00 less than the amount that would trigger the excise tax under Section 4999 of the Internal Revenue Code, whichever results in the largest after tax amount to the executive.

The Company’s supplemental pension and incentive plans for senior management contain provisions that serve to implement the provisions of the CIC Plan. Our Qualified Plan (as defined below) also confers competitive post-employment benefits to all participating employees, including to executives, upon a change in control.

Employment Agreements

Consistent with its philosophy, the Company generally does not enter into employment agreements with its Named Executive Officers, who are considered to serve at the will of the Company. No current Named Executive Officer has an employment agreement.

Restrictive Covenant Agreements

To protect the Company’s competitive position, each executive is required to sign an agreement with the Company that requires the executive to forfeit the proceeds from a portion of the executive’s long-term incentive awards if the executive engages in conduct that is detrimental to the Company. Detrimental conduct includes working for certain competitors, soliciting customers or employees after employment ends and disclosing confidential information in a manner that may result in competitive harm to the Company.

We provide pension benefits to all U.S. salaried employees, including the Named Executive Officers, under the Flowserve Corporation Pension Plan (the “Qualified Plan”), which is a tax-qualified defined benefit pension plan. Because the Internal Revenue Code (the “Code”) limits the pension benefits that can be accrued under a tax-qualified pension plan (based on an annual compensation limit), we also maintain a separate non-qualified defined benefit restoration pension plan, the Senior Management Retirement Plan (the “SMRP”). The SMRP compensates participants, including the Named Executive Officers, for the reduction in their pension benefit resulting from this Code limitation. The SMRP is designed to provide a comparable level of retirement benefits to those provided to other U.S. employees under the Qualified Plan based on a comparable benefit formula. In addition, we also maintain a second non-qualified supplemental defined benefit pension plan, the Supplemental Executive Retirement Plan (the “SERP”), for our eligible U.S. executives, including the Named Executive Officers, in order to remain competitive with general industry companies similar in size. These three programs are designed to provide eligible U.S. executives with income following retirement and to help ensure that we are able to attract and retain executive talent by providing comprehensive retirement benefits.

Participants in the Qualified Plan and the SMRP accrue contribution credits based on age and years of service at the rate of 3% to 7% for eligible earnings up to the Social Security wage base, and at the rate of 6% to 12% for eligible earnings in excess of the Social Security wage base. Participants in the SERP accrue contribution credits at the rate of 5% of all eligible earnings. Eligible earnings generally include base salary and annual incentive awards. SERP participants also earn interest on the accrued contributions based on the rate of return on 10-year Treasury bills.

End of Service Benefits

The Company’s long-term incentive program allows RSUs and PSUs to continue to vest over the original vesting period for employees who retire at a minimum age of 55 years with 10 years of continuous service with the Company. The O&C Committee believes that this encourages the participants to continue to focus on the Company’s performance as they approach and through retirement.

Perquisites

The O&C Committee strives to make our executive compensation program primarily performance-based and, as such, does not provide perquisites for our executive officers, other than the following:

•

ExecutivePhysicals. All Named Executive Officers were eligible to receive an annual physical examination. The O&C Committee believes this is a competitive benefit within the market and contributes to executive effectiveness.

2021 PROXY STATEMENT 48

•

EnhancedVacation. All Named Executive Officers are eligible to receive an enhanced vacation benefit. Each officer is eligible for a minimum of four weeks’ vacation and may receive additional vacation, if the officer’s years of service so qualify under the Company’s regular employee vacation award schedule.

•

RelocationBenefits. All Named Executive Officers are eligible to receive standard, market competitive relocation benefits pursuant to the Company’s executive relocation policy. These benefits include travel costs, home finding trip, broker assistance, home sale and buyout assistance, new residence assistance, reimbursement for transportation, moving expenses and other relocation expenses.

The aggregate incremental cost of these benefits to the Named Executive Officers is included in the “Summary Compensation Table” under the “All Other Compensation” column and related footnotes.

Compensation Governance Policies

Stock Ownership Requirements

To further align executive and shareholder interests, each of our Named Executive Officers are required to own a minimum amount of Company common stock equal in value to a specified multiple of their annual base salary.

Named Executive Officer	Ownership Requirement
*ChiefExecutiveOfficer*	5 x Annual Base Salary
*PresidentsandSeniorVicePresidents*	3 x Annual Base Salary
*VicePresidents***	1 x Annual Base Salary

•

Shares held directly by an executive or shares held in the Flowserve Corporation Non-Qualified Deferred Compensation Plan and unvested RSUs count toward satisfying the stock ownership requirements. Unvested PSUs do not count toward satisfying the stock ownership requirements.

•

The required stock ownership levels are expected to be achieved within five years from the date the guidelines were first applicable or within five years of the executive joining the Company.

•

Executives who do not meet the ownership requirement must show that they have retained at least 60% of the net shares received from vested RSUs and PSUs from the time the ownership guidelines became applicable.

•

As of December 31, 2020, all Named Executive Officers met their stock ownership requirements under these tests.

Anti-Hedging and Pledging Policies

Under the Company’s Insider Trading Policy all directors and employees (including the Named Executive Officers) are prohibited from pledging stock and engaging in any transactions (such as trading in options) that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s common stock.

Clawback Policy

Our Clawback and Forfeiture Policy (the “Clawback Policy”) reinforces our commitment to integrity and the highest standards of ethical conduct through our compensation program. Under the Clawback Policy, the O&C Committee has the ability to recoup previously paid and/or cancel outstanding incentive compensation from any current or former executive officer, or any other designated officer of the Company, if:

(1) the committee determines that a financial metric used to determine the amount, vesting or payment of the incentive compensation was calculated incorrectly, regardless of whether due to fraud or intentional misconduct or whether such error requires a financial restatement; or

(2) the covered officer engages in egregious conduct, which generally includes conduct that constitutes “cause” for termination under applicable Company plans or agreements, a material breach of a written Company policy (including our Code of Conduct) and certain other egregious misconduct.

With respect to incorrect calculations, the Company may cancel any outstanding incentive compensation and recoup incentive compensation received by the executive during the three-year period preceding the date the Company discovers the error or is required to prepare an accounting restatement. With respect to egregious conduct, the

2021 PROXY STATEMENT 49

Tax and Accounting Implications of Executive Compensation

Company may cancel any outstanding incentive compensation and recoup incentive compensation received by the executive during the one-year period preceding the date the Company discovers the conduct.

Section 162(m) of the Code limits to $1.0 million per year the U.S. federal income tax deduction available to public corporations for compensation paid for any fiscal year to certain covered employees, including to the Company’s CEO, CFO, and the three other most highly-compensated executive officers as of the end of the fiscal year.

The O&C Committee retains discretion to establish executive compensation arrangements that it believes are consistent with its principles described earlier and in the best interests of the Company and our shareholders, even if those arrangements are not fully deductible under Section 162(m).

The Company recognizes compensation expense in our financial statements for all equity-based awards pursuant to the principles set forth in FASB ASC 718, “Compensation—Stock Compensation”. The O&C Committee considered the GAAP accounting implications of the awards in setting the long-term incentive mix and further determined that the mix of RSUs and PSUs was appropriate for 2020.

Annual Executive Compensation Program Review and Compensation Risk

The O&C Committee regularly monitors and annually reviews our executive compensation program to determine, in consultation with its compensation consultant, whether the elements of the program are consistent with our executive compensation objectives and principles. As part of this, the O&C Committee evaluates whether the Company’s risk management objectives are being met with respect to the executive compensation program and our compensation programs as a whole. If the elements of the program are determined to be inconsistent with our objectives and principles, or if any incentives are determined to encourage risks that are reasonably likely to have a material adverse effect on us, the elements are adjusted as necessary.

Following the O&C Committee’s annual review in 2020, the O&C Committee concluded that no risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the O&C Committee considered the following:

ATTRIBUTE		RISK-MITIGATING EFFECT
Emphasis on long-term, equity-based compensation subject to our rigorous clawback policy		Discourages risk-taking that produces short-term results at the expense of this calculation, the target bonus or annual incentive award is the higher of the target bonus or annual incentive award in effect on (i) the date of termination or (ii) the date of the change-in-control.building long-term shareholder value
Long vesting requirements: • Three-year ratable vesting for RSUs • ~~Payment~~Three-year cliff vesting for PSUs		Helps ensure our executives realize their compensation over a time horizon consistent with creating long-term shareholder value
Payments under our AIP and the number of shares that a participant may earn under our RSU and PSU awards ~~granted under~~are capped		Reduces possibility that extraordinary events or formulaic payments could distort incentives or over-emphasize short-term over long-term performance
Robust stock ownership guidelines		Helps ensure our executives’ economic interests are aligned with the long-term ~~incentive program and any other stock option or other stock-based long-term incentive~~interests of our shareholders
Prohibition on derivative transactions		~~- 2019 PROXY STATEMENT 45~~Helps ensure the alignment of interests generated by our executives’ equity holdings is not undermined by hedging or similar transactions
Use of independent compensation consultant that performs no other services for the Company		Helps ensure advice will not be influenced by conflicts of interest
The O&C Committee can exercise judgment in assessing the personal performance factor for our annual incentive awards to determine annual cash incentive compensation payments		Discourages risk-taking that produces short-term results at the expense of building long-term shareholder value

2021 PROXY STATEMENT 50

Organization and Compensation Committee Report

The Organization and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above in this proxy statement with management. Based on this review and discussion, the Organization and Compensation Committee recommended to the Board of Directors that this Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2020.

David E. Roberts, Chairman
Ruby R. Chandy
Gayla J. Delly
John L. Garrison

2021 PROXY STATEMENT 51

Summary Compensation Table

The following table sets forth compensation information for 2020, 2019 and 2018 for our Named Executive Officers.

Name and
Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)⁽³⁾
Option
Awards
($)
Non-Equity
Incentive
Plan
Compen-
sation
($)⁽⁴⁾
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)⁽⁵⁾
All Other
Compen-
sation
($)⁽⁶⁾
Total
($)
R. Scott Rowe
President and Chief Executive Officer
2020
1,133,000
—

5,981,225
⁽¹⁰⁾
—
894,260
305,060
18,909
8,332,454
2019
1,133,000
—

6,188,041

—
1,018,340
323,757
18,728
8,681,868
2018
1,126,654
—

5,944,049

—
1,250,832
227,180
153,754
8,702,469
Amy B. Schwetz⁽¹⁾
VP and Chief
Financial Officer
2020
562,500
750,000
⁽⁷⁾
2,342,754
⁽¹¹⁾
—
279,471
68,663
100,042
4,103,430
John E. (Jay) Roueche, III⁽²⁾
Vice President, Treasurer
And Investor Relations
2020
343,757
50,000
⁽⁸⁾
416,743
⁽¹²⁾
—
113,051
80,798
13,319
1,017,668
2019
341,898
—

386,825

—
128,737
81,572
14,861
953,892

Lanesha T. Minnix
Senior Vice President,
Chief Legal Officer
2020
463,785
350,000
⁽⁹⁾
675,794
⁽¹³⁾
—
224,453
91,531
12,872
1,818,434
Keith E. Gillespie
Senior VP and
Chief Sales Officer
2020
485,000
—

624,343
⁽¹⁴⁾
—
166,625
122,721
18,803
1,417,492
2019
485,000
—

691,654

—
265,125
139,255
14,250
1,595,285
2018
485,000
—

1,077,752

—
406,042
84,258
44,976
2,098,028
Elizabeth L. Burger
Senior VP and Chief Human Resources Officer
2020
478,950
—

779,687
⁽¹⁵⁾
—
204,765
93,540
14,517
1,571,459
2019
475,731
—

806,447

—
233,177
85,352
85,065
1,685,772
2018
330,865
100,000

935,972

—
198,077
38,347
65,371
1,668,632
(1)
Ms. Schwetz commenced employment with Flowserve on February 17, 2020 and assumed the position of Chief Financial Officer effective February 24, 2020.
(2)
Mr. Roueche was appointed as Interim Chief Financial Officer from December 3, 2019 through February 23, 2020, following which he returned to his former position as Vice President, Treasurer and Investor Relations.
(3)
Represents the grant date fair value of long-term equity incentive awards under the Company’s long-term incentive program computed in accordance with FASB ASC 718 “Compensation—Stock Compensation”, excluding the impact of forfeitures. The incentive awards are granted in the form of restricted stock units, which generally vest ratably over a three-year period, and contingent performance share units. The performance criteria for these awards are described in further detail under “—Elements of the Executive Compensation Program—Long-Term Incentives—Contingent Performance Share Units” above. The reported value of the contingent performance awards is computed based on the grant date estimate of compensation cost to be recognized over the three-year period, which was 100%, or “target”. Payout for the contingent performance awards can range from 0 shares to a maximum of 200% of target. Assumptions used in the valuations are discussed in Note 8 to the Company’s audited consolidated financial statements for the year ended December 31, 2020 in the Annual Report.
(4)
The amounts in this column represent an annual cash incentive bonus under the Company’s Annual Incentive Plan for the applicable year.
(5)
There were no above-market or preferential earnings with respect to any deferred compensation balances.

2021 PROXY STATEMENT 52

(6)

~~award~~For 2019 and 2020, this column excludes the employer-paid portion of certain health and welfare benefits received by named executive officers that ~~have been earned~~are available generally to all salaried U.S. employees, which includes medical, dental, vision and ~~not yet paid, pursuant to~~prescription insurance, and short-term and long-term disability insurance, but includes the ~~terms~~employer-paid portion of these benefits for 2018. The following table shows the ~~applicable plan.~~

•

~~Full vesting at target~~components of ~~each cash or stock-based long-term incentive award or grant.~~this column for the Named Executive Officers ~~have 90 days following~~for 2020, calculated at the aggregate incremental cost to the Company:

Name
Defined Contribution
Retirement Plan
Contributions
Insurance
Premiums^(A)
Other
Total
R. Scott Rowe
$12,825
$2,355
$  3,729
^(B)
$ 18,909
Amy B. Schwetz
  12,375
  1,361
86,306
^(C)
100,042
John E. (Jay) Roueche, III
  12,104
  1,215
—

13,319
Lanesha T. Minnix
  11,798
  1,074
—

12,872
Keith E. Gillespie
  12,825
  3,291
2,687
^(D)
18,803
Elizabeth L. Burger
  12,825
  1,692

14,517

(A)

Includes annual premiums for group term life insurance.

(B)

Reflects amounts attributable to an annual physical exam.

(C)

Includes $35,000 in relocation allowance payments and $51,306 attributable to relocation expenses ($31,498 for relocation expenses and $19,808 for tax gross-up costs related to the relocation expenses).

(D)

Reflects amounts attributable to an annual physical exam.

(7)

Includes a cash sign-on bonus of $250,000, which was subject to repayment if Ms. Schwetz did not remain employed by the Company for one year, and a one-time, make-whole cash bonus of $500,000.

(8)

Includes a one-time discretionary bonus of $50,000 in recognition of Mr. Roueche’s service as interim Chief Financial Officer from December 19, 2019 through February 23, 2020.

(9)

Includes a one-time discretionary bonus of $350,000 in recognition of Ms. Minnix’s contributions in navigating the challenges of unprecedented business demands in 2020. Such bonus is subject to repayment in the event of certain terminations of employment prior to November 27, 2023.

(10)

Calculated using a price per share of $46.35, the closing market price of the Company’s common stock as reported by the NYSE on February 20, 2020, the date of ~~employment termination to exercise vested~~the grant. Includes 60,450 shares ($2,801,858) of restricted stock ~~options.~~

•

~~Continuation~~units and 60,450 contingent performance share units ($3,179,368), which represents the target award. The contingent performance share units include 30,225 shares with a TSR metric and fair value of ~~participation in~~$58.84 calculated using the ~~life insurance, medical, health and accident benefit plans for a period following~~Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 120,900 shares, or $6,358,736 at the date of ~~termination equal to the severance multiplier used to calculate the lump sum payment, multiplied by 12 months.~~grant.

•(11)

~~Calculation~~Calculated using a price per share of ~~benefits under~~$46.35, the ~~Company’s defined benefit pension plan including supplemental retirement plan benefits.~~

•

A “best-after-tax” cutback payment that would modify the payments to the greatest, net after-tax amount of (i) the amounts payable to the covered executive due to the change in control or (ii) one dollar less than the amounts payable to the covered executive due to the change in control that would subject the covered executive to an excise tax.

~~For purposes of the CIC Plan, “change in control” generally means the occurrence of any of the following events:~~

•

~~any person acquires more than 30%~~closing market price of the Company’s ~~total voting power represented~~common stock as reported by the ~~Company’s then outstanding voting securities other than in specific circumstances;~~NYSE on February 20, 2020, the date of the grant. Includes 32,060 shares ($1,485,981) of restricted stock units and 16,290 contingent performance share units ($856,773), which represents the target award. The contingent performance share units include 8,145 shares with a TSR metric and fair value of $58.84 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 32,580 shares, or $1,713,545 at the date of grant.

•(12)

Calculated using a ~~majority~~price per share of $46.35, the ~~members of the Board are replaced in any 12-month period other than in specific circumstances;~~ 

•

~~the consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation in which (i) the holders~~closing market price of the Company’s ~~outstanding shares of~~ common stock ~~and outstanding voting securities immediately prior to such merger or consolidation receive securities possessing at least 50%~~as reported by the NYSE on February 20, 2020, the date of the ~~total voting power represented by~~grant. Includes 4,770 shares ($221,090) of restricted stock units and 3,720 contingent performance share units ($195,653), which represents the ~~outstanding voting securities~~target award. The contingent performance share units include 1,860 shares with a TSR metric and fair value of $58.84 calculated using the surviving entity (or parent thereof) immediately after such merger or consolidation, and (ii) the elected members of the Board immediately prior to such merger or consolidation constitute at least half of the board of directors of the surviving entity (or parent thereof) immediately after such merger or consolidation; or

•

~~any person acquires more than 50% of the total gross fair market~~Monte Carlo simulation. The maximum potential value of the ~~assets~~performance award, assuming the highest level of ~~the Company other than in specific circumstances.~~

For purposes of the CIC Plan, the term “cause” generally means: (i) the willful and continued failure by a covered executive to substantially perform his duties with the Company (other than any such failure resulting from incapacity due to physicalperformance conditions, is 7,440 shares, or ~~mental illness), after a written demand for substantial performance is delivered to~~$391,307 at the covered executive by the Board that specifically identifies the manner in which the Board believes that he has not substantially performed his duties, or (ii) the willful engagement by the covered executive in conduct materially and demonstrably injurious to the Company, monetarily or otherwise.

~~For purposes of the CIC Plan, the term “constructive termination” generally means the occurrence of any one of the following events within two years after the effective~~ date of grant.

(13)

Calculated using a ~~change in control without~~price per share of $46.35, the ~~express written consent of the covered executive:~~

•

~~a material reduction in the authority, duties or responsibilities held by the covered executive immediately prior to the change in control;~~

•

~~a material reduction by the Company of the covered executive’s base salary;~~

•

~~any other material failure of the Company to honor all the terms and provisions of the CIC Plan or any agreement with the covered executive.~~

A “constructive termination” shall only occur if the covered executive provides notice to the Company of the occurrence of an event that constitutes “constructive termination” within 30 days of the initial occurrence of such event, the Company fails to cure such event within the first 30 days following the receipt of such notice, and the covered executive terminates his employment in the first 30 days following the endclosing market price of the Company’s ~~opportunity to cure.~~

~~Participation in~~common stock as reported by the ~~CIC Plan is contingent upon~~NYSE on February 20, 2020, the ~~covered executive executing a confidentiality and non-competition agreement and release in favor~~date of the ~~Company at~~grant. Includes 6,830 shares ($316,571) of restricted stock units and 6,830 contingent performance share units ($359,224), which represents the ~~time the executive is notified that he or she has been chosen to participate in the CIC Plan.~~

target award. The ~~Company’s supplemental pension~~contingent performance share units include 3,415 shares with a TSR metric and ~~incentive plans for senior management contain provisions that serve to implement the provisions~~fair value of ~~the CIC Plan. Our Qualified Plan also confers competitive post-employment benefits to the executives upon a change-in-control.~~

The principle difference between the Prior CIC Plan and the CIC Plan is that the severance multiplier has been reduced to two for senior vice presidents and to one and half for vice presidents of the Company, provided that if a change in control occurs prior to November 2, 2019, any executive who was a participant in the Prior CIC Plan on November 2, 2018 shall be entitled to a severance benefit$58.84 calculated using the ~~higher~~Monte Carlo simulation. The maximum potential value of the ~~severance multiplier~~performance award, assuming the ~~executive would have received under~~highest level of performance conditions, is 13,660 shares, or $718,448 at the ~~Prior CIC Plan~~date of grant.

(14)

Calculated using a price per share of $46.35, the closing market price of the Company’s common stock as reported by the NYSE on February 20, 2020, the date of the grant. Includes 6,310 shares ($292,469) of restricted stock units and 6,310 contingent performance share units ($331,874), which represents the target award. The contingent performance share units include 3,155 shares with a TSR metric and fair value of $58.84 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 12,620 shares, or $663,749 at the ~~CIC Plan.~~date of grant.

(15)

Calculated using a price per share of $46.35, the closing market price of the Company’s common stock as reported by the NYSE on February 20, 2020, the date of the grant. Includes 7,880 shares ($365,238) of restricted stock units and 7,880 contingent performance share units ($414,449), which represents the target award. The contingent performance share units include 3,940 shares with a TSR metric and fair value of $58.84 calculated using the Monte Carlo simulation. The maximum potential value of the performance award, assuming the highest level of performance conditions, is 15,760 shares, or $828,897 at the date of grant.

~~- 2019 PROXY STATEMENT 46~~

2021 PROXY STATEMENT 53

2020 Grants of Plan-Based Awards

The following table sets forth certain information with respect to 2020 plan-based awards granted to the Named Executive Officers for the year ended December 31, 2020.

Name
Grant
Date
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards⁽¹⁾
Estimated Future Payouts
Under Equity Incentive Plan
Awards⁽²⁾
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
Grant Date
Fair Value
of Stock
and Option
Awards
($)⁽³⁾
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)

Maximum
(#)
R. Scott Rowe

679,800
1,359,600
2,719,200
—
—
—
—

—

2/20/2020
—
—
—
15,113
30,225
60,450
—

1,400,929
⁽⁵⁾
2/20/2020
—
—
—
15,113
30,225
60,450

1,778,439
⁽⁵⁾
2/20/2020
—
—
—
—
—
—
60,450
⁽⁴⁾
2,801,858

Amy B. Schwetz

212,449
424,898
849,796
—
—
—
—

—

2/20/2020
—
—
—
4,073
8,145
16,290
—

377,521
⁽⁵⁾
2/20/2020
—
—
—
4,073
8,145
16,290
—

479,252
⁽⁵⁾
2/20/2020
—
—
—
—
—
—
32,060
⁽⁴⁾
1,485,981

John E. (Jay) Roueche

85,940
171,879
343,758
—
—
—
—

—

2/20/2020

930
1,860
3,720

86,211
⁽⁵⁾
2/20/2020

930
1,860
3,720

109,442
⁽⁵⁾
2/20/2020

4,770
⁽⁴⁾
221,090

Lanesha T. Minnix

170,625
341,250
682,500
—
—
—
—

—

2/20/2020
—
—
—
1,708
3,415
6,830
—

158,285
⁽⁵⁾
2/20/2020
—
—
—
1,708
3,415
6,830
—

200,939
⁽⁵⁾
2/20/2020
—
—
—
—
—
—
6,830
⁽⁴⁾
316,571

Keith E. Gillespie

157,625
315,250
630,500
—
—
—
—

—

2/20/2020
—
—
—
1,578
3,155
6,310
—

146,234
⁽⁵⁾
2/20/2020
—
—
—
1,578
3,155
6,310
—

185,640
⁽⁵⁾
2/20/2020
—
—
—
—
—
—
6,310
⁽⁴⁾
292,469

Elizabeth L. Burger

155,659
311,318
622,635
—
—
—
—

2/20/2020
—
—
—
1,970
3,940
7,880
—

182,619
⁽⁵⁾
2/20/2020
—
—
—
1,970
3,940
7,880
—

231,830
⁽⁵⁾
2/20/2020
—
—
—
—
—
—
7,880
⁽⁴⁾
365,238

2021 PROXY STATEMENT 54

~~Quantification of Potential Payments~~

(1)

~~The following table sets forth~~Under the ~~estimated value of~~Annual Incentive Plan, the ~~potential payments to each of the Named Executive Officers who were employed as of December 31, 2018, assuming the executive’s employment had terminated on December 31, 2018.~~

~~For the events of termination involving a change-in-control, we assumed that the change-in-control also occurred on December 31, 2018. In addition to the payments~~primary performance measures are internally defined metrics set forth in the following tables, the Named Executive Officers may receive certain payments upon their termination or a change-in-control pursuant to our Deferral Plan, Qualified Plan, SERP and SMRP. Previously vested amounts and contributions made to such plans by each Named Executive Officer are disclosed in the “2018 Pension Benefits” table.

Triggering Event
Compensation Component

Payout($)

R. Scott
Rowe

Lee S.
Eckert

David J.
Wilson

Keith E.
Gillespie

Elizabeth
L. Burger

Death
Life insurance benefit (1.5x base salary capped at $1.5M; third party payment)

1,500,000

849,750

691,875

727,500

697,500

Immediate vesting of outstanding equity awards⁽¹⁾⁽²⁾

10,741,949

1,385,466

646,525

2,146,853

643,745

Total

12,241,949

2,235,216

1,338,400

2,874,353

1,341,245

Disability
Short-term and long-term disability benefit to age 65 (third party payment)

4,568,025

3,226,870

3,778,258

3,011,866

4,221,318

Immediate vesting of outstanding equity awards⁽¹⁾⁽²⁾

10,741,949

1,385,466

646,525

2,146,853

643,745

Total

15,309,974

4,612,335

4,424,783

5,158,718

4,865,063

Retirement
Vesting of contingent performance shares

—

—

—

—

—

Total

—

—

—

—

—

Termination Without Cause by the Company Not in Connection with Change-in-Control
Termination payment (2x base salary)

2,266,000

1,133,000

922,500

970,000

930,000

Target annual incentive award

1,359,600

424,875

299,813

315,250

302,250

Vesting of outstanding equity

5,662,624
⁽³⁾
—

760,400
⁽⁴⁾
—

—

Cash payment in lieu of vesting of RSU

846,555

230,914

107,760

888,105

107,289

Total

10,134,779

1,788,789

2,090,472

2,173,355

1,339,539

Change-in-Control – Termination Without Cause by the Company or Constructive Termination
Termination payment (base salary times applicable multiplier)

3,399,000

1,699,500

922,500

1,455,000

1,395,000

Termination payment (target annual incentive award times applicable multiplier)

4,078,800

1,274,625

599,625

945,750

906,750

Immediate vesting of outstanding equity awards⁽¹⁾

10,741,949

2,061,912

1,749,645

2,146,853

720,380

Supplemental pension benefit

1,070,117

410,397

204,179

349,359

310,409

Health & welfare benefit

82,024

65,777

40,631

68,352

65,900

Excise tax and gross-up payment

—

—

—

—

—

Total

19,371,890

5,512,211

3,516,579

4,965,314

3,398,439

(1)
For restricted stock units and contingent performance units, these amounts are calculated assuming that the market price per share of the Company’s common stock on the date of event was equal to the closing price of the Company’s common stock on December 31, 2018 ($38.02). For Mr. Rowe’s sign-on stock options, these amounts are calculated using the Black Scholes model and a price per share of $48.63, the closing market price of the Company’s common stock as reported by the NYSE on May 4, 2017, the date of the grant, which delivers a fair value of $17.40.
(2)
Only applies to equity awards issued under the Long-term Incentive Plan except for sign-on stock options for Scott Rowe.
(3)
Pursuant to Mr. Rowe’s employment offer letter with the Company.
(4)
Pursuant to Mr. Wilson’s employment offer letter with the Company.

~~- 2019 PROXY STATEMENT 47~~

~~CEO Pay Ratio for Fiscal Year 2018~~

~~Pay Ratio~~

Our CEO to median employee pay ratio has been calculated in accordance with the recently adopted rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act and is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Mr. Rowe had 2018 total compensation of $8,702,469, as reflected in the “Summary Compensation Table” in this proxy statement. Our median employee’s annual total compensation for 2018 was $81,830, calculated using the same methodology as used in the calculation of the compensation of the Named Executive Officers under the “Summary Compensation Table.” As a result, the annual total compensation for our CEO in 2018 was approximately ~~106~~~~times~~ ~~that of our median employee’s annual total compensation.~~

~~Identification of Median Employee~~

~~We identified the median employee by examining the 2017 total target cash compensation for all employees who were employed~~ by the Company or its consolidated subsidiaries on October 2, 2017, excluding our CEO. For purposes of calculating the 2018 pay ratio, the Company determined that there had been no change in its workforce composition or compensation arrangements that would significantly impact the pay ratio disclosure since the Company determined its median employee in 2017. Accordingly, the Company utilized the same median employee for purposes of calculating its 2018 pay ratio.

Total target cash compensation was calculated by totaling an employee’s annual base salary and target incentive compensation. We did not make any assumptions, adjustments, or estimates with respect to total target cash compensation. We used total target cash compensation and excluded annual equity awards for our calculations because we do not widely distribute annual equity awards to employees.

~~Annual Total Compensation~~

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 may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

~~- 2019 PROXY STATEMENT 48~~

~~Financial Performance Data~~

~~PROPOSAL TWO~~:

~~ADVISORY VOTE ON EXECUTIVE COMPENSATION~~

~~The Board values the opinions of the Company’s shareholders as expressed through their votes and other communications. This Say on Pay vote is advisory, meaning that it is not binding on~~O&C Committee. In February 2020 the O&C Committee or Board. This vote will not affect any compensation already paid or awarded to any Named Executive Officer, nor will it overrule any decisions the Board has made. Nonetheless, the O&C Committee and the Board will review and carefully consider the outcome of the advisory voteapproved metrics based on ~~executive compensation when making future decisions regarding our executive compensation programs and policies.~~

We design our executive compensation programs to implement our core objectives of attracting and retaining key leaders, rewarding current performance, driving future performance and aligning the long-term interests of our executives with those of our shareholders. Shareholders are encouraged to read the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement, including the “Executive Summary”. In the CD&A, we have provided shareholders with a description of our compensation programs, including the philosophy and strategy underpinning the programs, the individual elements of the compensation programs and how our compensation plans are administered.

~~We believe shareholders should consider the following financial performance data and compensation design elements when voting on this proposal:~~

•

Concerning our 2018 performance: bookings were $4.0 billion, up 5.7% compared to 2017; revenue was $3.8 billion, up 4.7% compared to 2017; earnings per share was $0.91, up from $.02 in 2017; backlog was $1.9 billion at December 31, 2018, up 5.3% compared to 2018 beginning backlog.

•

~~Concerning our annual incentive plan, the bookings performance metric was 104% of plan, the revenue performance metric was 101% of plan, the~~ operating income, ~~performance metric was 102% of plan, the~~sales/bookings, primary working capital as a percentage of sales and on-time delivery. In response to the unfolding COVID-19 pandemic, the O&C Committee re-convened in July 2020 to review the 2020 Annual Incentive Plan opportunity and determined that it would be appropriate to measure the 2020 Annual Incentive Plan as two separate performance ~~metric was 90% of plan,~~periods: H1 (measured from January 1 through June 30, 2020) and H2 (measured from July 1 through December 31, 2020), hereby referred to as H1 Plan and H2 Plan respectively. The H1 Plan would be determined based on the performance measures established in February 2020, and the ~~customer on-time delivery metric~~H2 Plan would be determined based on new performance measures established in July 2020. The new performance measures established in July 2020 were based on operating income, bookings, primary working capital reduction, and past due backlog reduction. The final payout was ~~96%~~determined by adding the overall attainment of ~~plan~~each performance period, weighted 50% each. Actual amounts payable under the Annual Incentive Plan, if payable, can range from 50% (Threshold) to 200% (Maximum) of the target amounts for the Named Executive Officers based upon the extent to which performance under the foregoing criteria meets, exceeds or is below the target and ~~when combined, resulted in an annual incentive award percentage~~can be further increased or decreased based on individual performance. These amounts represent amounts payable if the Named Executive Officer is employed for the full calendar year. Any Named Executive Officers who were not employed for the full calendar year were eligible for a pro-rated amount based on their time of employment. Actual payout for 2020 was 65.8% of ~~92% of~~the target amount for all Named Executive Officers other than ~~David Wilson and Keith~~Mr. Gillespie. For Mr. Gillespie, ~~who had additional metrics related to their specific job functions which resulted in payouts of 93.9% and 128.8%, respectively.~~

•

~~The Company’s average RONA~~the actual payout for ~~the 2016-2018 performance period~~2020 was ~~7.9%, which represented approximately 70.5% of the three-year median average RONA of the PPG and the Company’s bookings in 2018 was $4 billion, which was 85.4%~~52.9% of the target ~~average GDP growth.~~

~~Compensation Design Elements~~amount.

•(2)

~~On average,~~The number of shares listed represents long-term equity incentive awards in the form of PSUs under the Company’s long-term incentive program. The performance criteria for these awards are discussed in “Elements of the Executive Compensation Program” beginning on page 35.

(3)

These amounts represent the fair value, as determined under FASB ASC Topic 718, of the stock awards based on the grant date fair value estimated by the Company for financial reporting purposes.

(4)

The amounts shown reflect the numbers of shares of RSUs granted to each Named Executive ~~Officers had 71.7% (or 85.8%~~Officer pursuant to the Flowserve Corporation Equity and Incentive Compensation Plan.

(5)

Represents the fair value on the date of grant, as described in ~~the case~~footnote (2), of the ~~CEO) of their pay “at risk,” or dependent upon Company and stock price performance, as well as individual performance.~~

•

~~Maximum payout levels~~“target” award for ~~the annual cash incentive award are capped at 200% of target, with formulaic positive or negative adjustment for individual performance, and~~ the contingent performance share units. During the performance period, as described in footnote (1), earned and unearned compensation expense is adjusted based on changes in the expected achievement of the performance targets. As of December 31, 2020, the Company estimated vesting of, and therefore expensed, this award ~~payouts are capped~~ at ~~200%~~100% of ~~target, which avoids excessive total compensation and reduces~~ the “target” award based on expected achievement of performance targets.

2021 PROXY STATEMENT 55

Outstanding Equity Awards at Year-End 2020

The following table sets forth certain information with respect to outstanding equity awards as of December 31, 2020 with respect to the Named Executive Officers.

Name
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock that
Have Not
Vested
(#)
Market Value
of Shares or
Units of
Stock that
Have Not
Vested⁽¹⁾
($)
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⁾
($)
R. Scott Rowe
114,943
⁽²⁾
48.63
5/4/2027
131,395
⁽³⁾
4,841,903
—

            —
—

—
          —
—

            —
70,190
⁽⁴⁾
5,172,997
—

—
          —
—

            —
68,674
⁽⁵⁾
5,061,259
—

—
          —
—

            —
62,216
⁽⁶⁾
4,585,343
Amy B. Schwetz
—

—
          —
32,997
⁽⁷⁾
1,215,931
—

            —
—

—
          —
—

            —
16,766
⁽⁶⁾
1,235,653
John E. (Jay) Roueche
—

—
          —
9,091
⁽⁸⁾
334,987
—

            —
—

—
          —
—

            —
4,159
⁽⁴⁾
306,507
—

—
          —
—

            —
4,193
⁽⁵⁾
309,008
—

—
          —
—

            —
3,829
⁽⁶⁾
282,174
Lanesha T. Minnix
—

—
          —
14,852
⁽⁹⁾
547,291
—

            —
—

—
          —
—

            —
7,497
⁽⁵⁾
552,517
—

—
          —
—

            —
7,030
⁽⁶⁾
518,080
Keith E. Gillespie
—

—
          —
15,619
⁽¹⁰⁾
575,560
—

            —
—

—
          —
—

            —
12,381
⁽⁴⁾
912,466
—

—
          —
—

            —
7,497
⁽⁵⁾
552,517
—

—
          —
—

            —
6,494
⁽⁶⁾
478,634
Elizabeth L. Burger
—

—
          —
17,609
⁽¹¹⁾
648,895
—

            —
—

—
          —
—

            —
8,896
⁽⁴⁾
655,607
—

—
          —
—

            —
8,741
⁽⁵⁾
644,216
—

—
          —
—

            —
8,110
⁽⁶⁾
597,726
(1)
Calculated using a price per share of $36.85 the closing market price of the Company’s common stock as reported by the NYSE on December 31, 2020, the end of the Company’s last completed fiscal year. The restricted share unit and contingent performance share unit amounts include regularly declared dividends accrued on the “target” award, which will vest only to the same extent as the underlying award, if at all. Concerning all contingent performance awards, the amounts of units used in calculating the payout values assumes the maximum level of performance target achievement, which would result in the target unit amounts presented in the table vesting at 200%.
(2)
All stock options vest on April 1, 2020.
(3)
20,739 RSUs vested on February 20, 2021, 22,891 RSUs vested on February 28, 2021; and 23,397 RSUs vested on March 1, 2021, in each case including accrued dividend equivalents. Mr. Rowe’s remaining RSUs vest as follows: 20,739 shares of RSUs on February 20, 2022; 22,891 RSUs on February 28, 2022; and 20,738 RSUs on February 20, 2023.
(4)
These shares represent long-term equity incentive awards in the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The targets set for the 2018 plan are based on: 1) ROIC improvement goals which closely correlate to the compounded annual share price growth rate of the S&P Industrial Machinery Index over a 10-year period and 2) relative TSR compared to that of the PPG for the same period. Payouts can range from 0 shares to a maximum of 200% of the target. As of December 31, 2020, the Company estimated vesting of 133% and 54%, respectively, and therefore expensed the awards at the same percentage of the target shares presented for the ROIC award and 100% for TSR award, respectively, based on achievement of performance target and US GAAP.
(5)
These shares represent long-term equity incentive awards in the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The targets set for the 2019 plan are based on: 1) ROIC improvement goals compared to the Company’s long-term ROIC targets and 2) relative TSR compared to that of the PPG for the same period. Payouts can range from 0 shares to a maximum of 200% of the target. As of December 31, 2020, the Company estimated vesting of 100% and therefore expensed, these awards at 100% of the target shares presented based on expected achievement of performance target.

2021 PROXY STATEMENT 56

2020 Option Exercises and Stock Vested

(6)

These shares represent long-term equity incentive ~~to engage~~awards in ~~unnecessarily risky behavior.~~

•

~~The annual cash incentive award and~~ the form of contingent performance share units under the Company’s long-term incentive program, plus accrued dividend equivalents. The targets set for the 2020 plan are based on: 1) ROIC improvement goals compared to the Company’s long-term ROIC targets and 2) relative TSR compared to that of the PPG for the same period. Payouts can range from 0 shares to a maximum of 200% of the target. As of December 31, 2020, the Company estimated vesting of 67% for ROIC award ~~have threshold payout levels, ensuring that incentive compensation is reduced or eliminated altogether if minimum~~and 100% for TSR award and therefore expensed, these awards at the percentages presented based on expected achievement of performance ~~levels are not achieved.~~targets.

•(7)

~~Our officers are subject to equity ownership guidelines, which further encourage a long-term focus~~10,999 RSUs vested on ~~sustainable performance~~February 20, 2021, including accrued dividend equivalents. Ms. Schwetz’s remaining RSUs vest as follows: 10,999 RSUs on February 20, 2022; and ~~align our officers’ interests with those of our shareholders.~~10,999 on February 20, 2023.

•(8)

~~Our officers are prohibited from engaging~~1,637 RSUs vested on February 20, 2021, 1,398 RSUs vested on February 27, 2021 and 1,386 RSUs vested on February 28, 2021, in ~~transactions designed to pledge or hedge against the value of the Company’s stock.~~each case including accrued dividend equivalents. Mr. Roueche’s remaining RSUs vest as follows: 1,637 RSUs on February 20, 2022; 1,397 RSUs on February 28, 2022 and 1,636 RSUs on February 20, 2023.

•(9)

~~The Company maintains a Recoupment of Incentive Compensation Policy allowing for the “clawback” of incentive compensation,~~2,343 RSUs vested on February 20, 2021 and 2,499 RSUs vested on February 27, 2021, in each case including ~~AIP~~accrued dividend equivalents. Ms. Minnix’s remaining RSUs vest as follows: 2,824 RSUs vest on June 11, 2021; 2,343 RSUs on February 20, 2022; 2,499 RSUs on February 27, 2022; and ~~LTIP compensation,~~2,344 RSUs on February 20, 2023.

(10)

2,165 RSUs vested on February 20, 2021, 2,499 RSUs vested on February 27, 2021 and 4,127 RSUs vested on February 28, 2021, in ~~the event of a financial restatement or misconduct.~~each case including accrued dividend equivalents. Mr. Gillespie’s remaining RSUs vest as follows: 2,165 RSUs on February 20, 2022; 2,499 RSUs on February 27, 2022 and 2,164 RSUs on February 20, 2023.

(11)

2,704 RSUs vested on February 20, 2021; 2,914 RSUs vested on February 27, 2021 and 2,966 vested on February 28, 2021, in each case including accrued dividend equivalents. Ms. Burger’s remaining RSUs vest as follows: 706 RSUs on April 16, 2021; 2,703 RSUs on February 20, 2022; 2,913 RSUs on February 27, 2022 and 2,703 RSUs on February 20, 2023.

The following table sets forth certain information with respect to restricted stock unit vesting during the fiscal year ended December 31, 2020 with respect to the Named Executive Officers. No Named Executive Officers exercised any stock options during 2020.

Name
Stock Awards
Number of
Shares
Acquired on
Vesting
(#)⁽¹⁾
Value Realized
on Vesting
($)
R. Scott Rowe
79,995
2,615,757
Amy B. Schwetz
     —
          —
John E. (Jay) Roueche, III
  8,532
   296,357
Lanesha T. Minnix
  5,197
   172,878
Keith E. Gillespie
12,544
   481,151
Elizabeth L. Burger
  6,404
   246,173
(1)
The number of shares reported includes shares that were surrendered during the fiscal year ended December 31, 2020 to pay for taxes upon the vesting of restricted stock units and performance share units.

2021 PROXY STATEMENT 57

2020 Pension Benefits

The following table sets forth certain information as of December 31, 2020 with respect to potential payments under our pension plans for each Named Executive Officer. Please refer to “—Elements of the Executive Compensation Program—Retirement Benefits (Pension, 401k, SERP and SMRP and End of Service)” above for a narrative description of the material factors necessary to an understanding of our pension plans.

Name
Plan Name
Number of
Years Credited
Service
(#)
Present Value of
Accumulated
Benefit
($)
Payments
During Last
Fiscal Year
($)
R. Scott Rowe
Qualified—Cash Balance⁽¹⁾
3.8
73,903
—
Non-Qualified—SMRP
3.8
507,737
—
Non-Qualified—SERP
3.8
377,873
—
Amy B. Schwetz
Qualified—Cash Balance⁽¹⁾
0.8
17,692
—
Non-Qualified—SMRP
0.8
22,383
—
Non-Qualified—SERP
0.8
28,587
—
John E. (Jay) Roueche, III
Qualified—Cash Balance⁽¹⁾
8.2
171,953
—
Non-Qualified—SMRP
8.2
117,795
—
Non-Qualified—SERP
8.2
196,456
—
Lanesha T. Minnix
Qualified—Cash Balance⁽¹⁾
2.5
42,861
—
Non-Qualified—SMRP
2.5
54,154
—
Non-Qualified—SERP
2.5
80,614
—
Keith E. Gillespie
Qualified—Cash Balance⁽¹⁾
5.7
122,467
—
Non-Qualified—SMRP
5.7
191,853
—
Non-Qualified—SERP
5.7
198,426
—
Elizabeth L. Burger
Qualified—Cash Balance⁽¹⁾
2.7
54,384
—
Non-Qualified—SMRP
2.7
72,749
—
Non-Qualified—SERP
2.7
90,105
—
(1)
The Company sponsors cash balance designed pension plans for eligible employees. Each executive accumulates a notional amount derived from the plan provisions; each Named Executive Officer’s account balances as of December 31, 2020 are presented above. We believe that this is the best estimate of the present value of accumulated benefits.

2021 PROXY STATEMENT 58

Quantification of Potential Payments

The following table sets forth the estimated value of the potential payments to each of the Named Executive Officers who were employed as of December 31, 2020, assuming the executive’s employment had terminated on December 31, 2020 under the scenarios outlined below.

For the events of termination involving a change in control, we assumed that the change in control also occurred on December 31, 2020. In addition to the payments set forth in the following tables, the Named Executive Officers may receive certain payments upon their termination or a change in control pursuant to our Flowserve Corporation Deferred Compensation Plan, Qualified Plan, SERP and SMRP. Previously vested amounts and contributions made to such plans by each Named Executive Officer are disclosed in the “2020 Pension Benefits” table.

Triggering Event
Compensation Component
Payout($)
R. Scott
Rowe

Amy B.
Schwetz
John E. (Jay)
Roueche
Lanesha T.
Minnix
Keith E.
Gillespie
Elizabeth
Burger
Death
Life Insurance (1.5x base salary; third party payment, max $1.5)
1,500,000

975,000
515,636
787,500
727,500
718,425
Immediate vesting of outstanding equity awards
9,665,204

1,833,758
737,309
1,082,590
1,091,136
1,396,758
Total
11,165,204

2,808,758
1,252,945
1,870,090
1,818,636
2,114,183
Disability
Short-term and long-term disability benefit to age 65
(third party payment)
4,087,697

4,719,795
2,901,363
4,830,780
2,580,037
3,746,570
Immediate vesting of outstanding equity awards⁽¹⁾
9,665,204

1,833,758
737,309
1,082,590
1,091,136
1,395,758
Total
13,752,901

6,553,552
3,638,672
5,913,370
3,671,172
5,142,327
Retirement
Vesting of outstanding equity awards
—

—
—
            —
            —
            —
Total
—

—
—
            —
            —
            —
Termination Without Cause by the Company Not in Connection with Change in Control
Termination payment (2x base salary)
2,266,000

1,300,000
687,514
1,050,000
970,000
957,900
Target annual incentive award
1,359,601

487,500
171,879
341,250
315,250
311,318
Vesting of outstanding equity
—

—
—
            —
—
—
Cash payment in lieu of vesting of RSU
2,469,924

1,215,931
162,880
178,432
323,929
140,361
Total
6,095,524

2,940,829
1,022,273
1,569,682
1,609,179
1,409,579
Change in Control—Termination Without Cause by the Company or Constructive Termination
Termination payment (base salary times applicable multiplier)
3,399,000

1,300,000
515,636
1,050,000
970,000
957,900
Termination payment (target annual incentive award times applicable multiplier)
4,078,800

975,000
257,818
682,500
630,500
622,635
Immediate vesting of outstanding equity awards
9,665,204

1,833,758
737,309
1,082,590
1,091,136
1,395,758
Supplemental pension benefit
1,143,155

468,408
285,215
240,260
426,381
340,002
Health & welfare benefit
92,352

48,955
34,430
47,420
52,603
49,425
Total
18,378,511

4,626,120
1,830,408
3,102,770
3,170,620
3,365,720
(1)
For restricted stock units, these amounts are calculated assuming that the market price per share of the Company’s common stock on the date of event was equal to the closing price of the Company’s common stock on December 31, 2020 ($36.85).

2021 PROXY STATEMENT 59

CEO PAY RATIO FOR FISCAL YEAR 2020

Pay Ratio

Our CEO to median-compensated employee pay ratio has been calculated in accordance with the applicable rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act and is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Mr. Rowe had 2020 total compensation of $8,362,067, which reflects the total compensation reported in the “Summary Compensation Table” in this proxy statement, plus the employer-paid portion of health, vision and dental benefits and disability insurance premiums available to U.S. full-time employees. Our median employee’s annual total compensation for 2020 was $85,523, calculated using the same methodology as used in the calculation of the compensation of the Named Executive Officers under the “Summary Compensation Table,” except that such calculation also includes the employer-paid portion of disability insurance premiums, and health, vision and dental benefits, as applicable. As a result, the annual total compensation for our CEO in 2020 was approximately 98times that of our median employee’s annual total compensation.

Identification of Median Employee

For purposes of calculating the 2020 pay ratio, the Company examined the 2020 total target cash compensation for all employees who were employed by the Company or its consolidated subsidiaries on October 1, 2020, excluding our CEO, and selected a new median employee for purposes of calculating its 2020 pay ratio.

Annual Total Compensation

After identifying the median employee based on total target cash compensation, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the “Summary Compensation Table” in this proxy statement, except that for purposes of determining our CEO to median compensation employee pay ratio, we included the employer-paid portion of health, vision and dental benefits and disability insurance premiums.

2021 PROXY STATEMENT 60

PROPOSAL TWO:
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

At each Annual Meeting, the Board provides shareholders the opportunity to cast an advisory vote on the compensation of our Named Executive Officers, pursuant to Schedule 14A of the Securities Exchange Act. This proposal, commonly known as a “Say on Pay” proposal, gives our shareholders the opportunity to endorse or not endorse our executive compensation programs and policies and the compensation paid to our Named Executive Officers. Our next Say on Pay vote following the 2021 Annual Meeting will be held at our 2022 Annual Meeting of Shareholders provided our Board does not change our annual say on pay voting frequency.

The Board values the opinions of the Company’s shareholders as expressed through their votes and other communications. This Say on Pay vote is advisory, meaning that it is not binding on the O&C Committee or Board. This vote will not affect any compensation already paid or awarded to any Named Executive Officer, nor will it overrule any decisions the Board has made. Nonetheless, the O&C Committee and the Board will review and carefully consider the outcome of the advisory vote on executive compensation when making future decisions regarding our executive compensation programs and policies.

We generally design our executive compensation programs to implement our core objectives of attracting and retaining key leaders, rewarding current performance, driving future performance and aligning the long-term interests of our executives with those of our shareholders. In light of the unique challenges presented by the COVID-19 pandemic and the volatility in commodity prices during 2020, we also implemented certain changes to our compensation program in an effort to balance pay for performance considerations with retention and motivation factors, in an effort to maintain a compensation program that provided focus on and rewarded the achievement of the Company’s evolving strategic priorities during an unprecedented period of global economic uncertainty and to help drive operational improvement.

Shareholders are encouraged to read the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement. In the CD&A, we have provided shareholders with a description of our compensation programs, including the philosophy and strategy underpinning the programs, the individual elements of the compensation programs and how our compensation plans are administered.

The Board believes that the Company’s executive compensation programs use appropriate structures and sound pay practices that are effective in achieving our core objectives. Accordingly, the Board recommends that you vote in favor of the following resolution:

“RESOLVED,thattheFlowserveCorporationshareholdersapprove,onanadvisorybasis,thecompensationoftheCompany’snamedexecutiveofficersasdescribedinthesectionofthisProxyStatemententitled‘ExecutiveCompensation’.”

✔

The Board recommends that you vote ~~in favor of the following resolution:~~

“~~RESOLVED,~~~~that~~~~the~~~~Flowserve~~~~Corporation~~~~shareholders~~~~approve,~~onan~~advisory~~~~basis,~~~~the~~~~compensation~~of~~the~~~~Company’s~~~~named~~~~executive~~~~officers~~as~~described~~in~~the~~~~section~~of~~this~~~~Proxy~~~~Statement~~~~entitled~~~~‘Executive~~~~Compensation’.~~FOR”

~~- 2019 PROXY STATEMENT 49~~

~~Required Vote and Recommendation~~

Approval of this proposal will require the affirmative vote of a majority of the votes cast in person or represented by proxy. Abstentions will not count as votes cast on this proposal. Therefore, abstentions will have no effect on the proposal. Additionally, broker non-votes will not be considered to have voted on this proposal, and therefore will have no effect on the proposal. The individuals named as proxies on the enclosed proxy card will vote your proxy “FOR” this proposal unless you instruct otherwise on the proxy.

The advisory vote on executive compensation is non-binding, meaning that our Board will not be obligated to take any compensation actions, or to adjust our executive compensation programs or policies, as a result of the vote. Notwithstanding the advisory nature of the vote, the resolution will be considered passed with the affirmative vote of a majority of the votes cast at the Annual Meeting.

~~The Board recommends that you vote~~“~~FOR~~”the approval of this advisory vote on Executive Compensation.

~~- 2019 PROXY STATEMENT 50~~

2021 PROXY STATEMENT 61

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RelatedPartyTransactionPolicy.The Company has adopted a written policy for approval of transactions between the Company and its directors, director nominees, executive officers, greater-than-5% beneficial owners and their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year.

The policy provides that the CG&N Committee reviews transactions subject to the policy and determines whether or not to approve or ratify those transactions. In doing so, the CG&N Committee takes into account, among other factors it deems appropriate, whether the transaction is on terms that are no less favorable to the Company 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. In addition, the Board has delegated authority to the Chairman of the CG&N Committee to pre-approve or ratify transactions where the aggregate amount involved is expected to be less than $1 million. A summary of any new transactions pre-approved by the Chairman is provided to the full CG&N Committee for its review in connection with each regularly scheduled CG&N Committee meeting.

The CG&N Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include:

•

business transactions with other companies in which a related person’s only relationship is as an employee, director or less-than-10% beneficial owner if the amount of business falls below the thresholds in the NYSE’s listing standards and the Company’s director independence standards; and

•

charitable contributions, grants or endowments to a charitable organization where a related person is an employee if the aggregate amount involved does not exceed the greater of $1 million or 2% of the organization’s total annual receipts.

2021 PROXY STATEMENT 62

SECURITY OWNERSHIP OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS

The following table sets forth as of March 16, 2021 ownership of Company common stock by director nominees, members of the Board, each executive officers, greater-than-5% beneficial owners and their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year.

~~The CG&N Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include:~~

•

~~The CG&N Committee was not requested to and did not approve any transactions required to be reported under applicable SEC rules in 2018.~~

~~- 2019 PROXY STATEMENT 51~~

~~SECURITY OWNERSHIP OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS~~

~~The following table sets forth as of March 21, 2019 ownership of Company common stock by members of the Board, each exeuctive~~ officer individually and all members of the Board and all executive officers as a group. Except pursuant to applicable community property laws and except as otherwise indicated, each shareholder identified possesses sole voting and investment power with respect to his or her shares.

~~Name of Beneficial Owner~~	~~Amount and nature of~~ ~~beneficial ownership~~⁽¹⁾		~~Percent of class~~
~~Elizabeth L. Burger~~	~~2,750~~	⁽²⁾	*
~~Ruby R. Chandy~~	~~7,943~~	⁽³⁾	*
~~Leif E. Darner~~	~~12,258~~		*
~~Gayla J. Delly~~	~~45,981~~	⁽⁴⁾	*
~~Lee S. Eckert~~	~~4,575~~		*
~~Roger L. Fix~~	~~55,568~~	⁽⁵⁾	*
~~John R. Friedery~~	~~48,593~~	⁽⁶⁾	*
~~John L. Garrison~~	~~669~~	⁽⁴⁾	*
~~Keith E. Gillespie~~	~~39,563~~	⁽⁷⁾	*
~~Joe E. Harlan~~	~~38,245~~	⁽⁴⁾	*
~~John R. Lenander~~	~~22,413~~	⁽⁸⁾	*
~~Michael C. McMurray~~	—		*
~~Rick J. Mills~~	~~59,337~~	⁽⁴⁾	*
~~Lanesha T. Minnix~~	—		*
~~David E. Roberts~~	~~29,686~~	⁽⁴⁾	*
~~R. Scott Rowe~~	~~70,595~~	⁽⁹⁾	*
~~David J. Wilson~~	~~2,092~~		*
~~Kirk R. Wilson~~	~~35,087~~	⁽¹⁰⁾	*
~~All members of the Board and executive officers as a group (18 individuals)~~	~~475,355~~	⁽¹¹⁾	*
* ~~Less than 1%.~~ ~~(1)~~ Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act and, unless otherwise indicated, represents securities for which the beneficial owner has sole voting and investment power. Any securities held in the name of and under the voting and investment power of a spouse of an executive officer or director have been excluded. For each person or group, also includes any securities that person or group has the right to acquire within 60 days pursuant to stock options under certain Company stock option and incentive plans. ~~(2)~~ ~~Includes 667 shares of common stock that Ms. Burger has the right to acquire within 60 days pursuant to restricted stock units.~~ ~~(3)~~ Includes 5,369 compensational shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Ms. Chandy does not possess any voting or investment power over these deferred shares. ~~(4)~~ Represents compensational shares that have been deferred under the director stock deferral plan and/or a Company stock plan. The holder does not possess any voting or investment power over these deferred shares. ~~(5)~~ Includes 43,456 compensational shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Mr. Fix does not possess any voting or investment power over these deferred shares. ~~(6)~~ Includes 43,125 compensational shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Mr. Friedery does not possess any voting or investment power over these deferred shares. ~~(7)~~ ~~Includes 1,248 shares of common stock that Mr. Gillespie has the right to acquire within 60 days pursuant to contingent performance share units.~~ ~~(8)~~ ~~Includes 283 shares of common stock that Mr. Lenander has the right to acquire within 60 days pursuant to contingent performance share units.~~ ~~(9)~~ ~~Includes 19,017 shares of common stock that Mr. Rowe has the right to acquire within 60 days pursuant to restricted stock units.~~ ~~(10)~~ ~~Includes 772 shares of common stock that Mr. Wilson has the right to acquire within 60 days pursuant to contingent performance share units.~~ ~~(11)~~ Includes 21,987 shares of common stock that members of this group have the right to acquire within 60 days pursuant to restricted stock units or contingent performance share units under certain Company stock incentive plans. Also includes 265,868 compensational shares that have been deferred under various Company plans for which no member of the group possesses voting power.

~~- 2019 PROXY STATEMENT 52~~

~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS~~

The following shareholders reported to the SEC that they beneficially own more than 5% of the Company’s common stock. The information is presented as of March 14, 2019 and is based on stock ownership reports on Schedule 13G filed with the SEC and subsequently provided to us. We know of no other shareholder holding 5% or more of the Company’s common stock.

Name and Address of Beneficial Owner
Amount and nature of
beneficial ownership⁽¹⁾

Percent of class
EdgePoint Investment Group Inc.
150 Bloor Street West, Suite 500
Toronto, Ontario M5S 2X9, Canada
15,818,460
⁽²⁾
12.1%
The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355
14,057,048
⁽³⁾
10.7%
Invesco Ltd.
1555 Peachtree Street NE, Suite 1800
Atlanta, GA 30309
13,492,395
⁽⁴⁾
10.3%
First Eagle Investment Management, LLC
1345 Avenue of the Americas
New York, NY 10105
12,640,271
⁽⁵⁾
9.7%
Blackrock, Inc.
55 East 52^nd Street
New York, NY 10055
8,529,554
⁽⁶⁾
6.5%
FMR LLC
245 Summer Street
Boston, MA 02210
7,255,564
⁽⁷⁾
5.5%
(1)
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act and, unless otherwise indicated, represents securities for which the beneficial owner has sole voting and investment power.
(2)
Based on a Schedule 13G/A filed with the SEC on February 13, 2019. The filing indicates sole voting power for 0 shares, shared voting power for 15,818,460 shares, sole dispositive power for 0 shares and shared dispositive power for 15,818,460 shares.
(3)
Based on a Schedule 13G/A filed with the SEC on February 11, 2019. The filing indicates sole voting power for 152,222 shares, shared voting power for 28,916 shares, sole dispositive power for 13,879,801 shares and shared dispositive power for 177,247 shares.
(4)
Based on a Schedule 13G/A filed with the SEC on February 5, 2019. The filing indicates sole voting power for 13,485,160 shares, shared voting power for 0 shares, sole dispositive power for 13,492,395 shares and shared dispositive power for 0 shares.
(5)
Based on a Schedule 13G/A filed with the SEC on February 11, 2019. The filing indicates sole voting power for 11,997,149 shares, shared voting power for 0 shares, sole dispositive power for 12,640,271 shares and shared dispositive power for 0 shares.
(6)
Based on a Schedule 13G/A filed with the SEC on February 4, 2019. The filing indicates sole voting power for 7,392,055 shares, shared voting power for 0 shares, sole dispositive power for 8,529,554 shares and shared dispositive power for 0 shares.
(7)
Based on a Schedule 13G/A filed with the SEC on February 13, 2019. The filing indicates sole voting power for 1,032,444 shares, shared voting power for 0 shares, sole dispositive power for 7,255,564 shares and shared dispositive power for 0 shares.

~~- 2019 PROXY STATEMENT 53~~

~~EQUITY COMPENSATION PLAN INFORMATION~~

The following table provides certain information about our common stock that may be issued upon the exercise of options granted under the Flowserve Corporation Equity and Incentive Compensation Plan (the “2010 Plan”).

Plan Category
Number of Securities to Be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding Option,
Warrants and Rights⁽¹⁾
Number of Securities Remaining Available for
Future Issuance Under Equity Compensation
Plans (Excluding Securities Reflected in the
First Column)⁽²⁾
Equity compensation plans approved by securities holders
114,943
48.63
2,089,079
Equity compensation plans not approved by securities holders
—
—
—
TOTAL
—
—
—
(1)
These amounts represent the weighted average exercise price for the total number of outstanding options.
(2)
The shares of common stock reflected in this column include shares available for issuance under the 2010 Plan. This column does not reflect shares that were the subject of outstanding awards under the 2010 Plan at December 31, 2018.

~~SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE~~

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and any person beneficially owning more than 10% of the Company’s common stock to file reports of ownership and any changes in ownership with the SEC. Based solely on the Company’s review of reports furnished to the Company and representations provided to the Company by persons required to file reports under Section 16 of the Exchange Act, the Company’s directors, executive officers and greater than ten-percent beneficial owners properly and timely complied with their Section 16(a) filing requirements during the fiscal year ended December 31, 2018.

~~- 2019 PROXY STATEMENT 54~~
Name of Beneficial Owner
Amount and nature of
beneficial ownership⁽¹⁾
Total
Percent
of class
Directors

Sujeet Chand
1,000

7,353
⁽²⁾
*
Ruby R. Chandy
2,574

14,125
⁽³⁾
*
Gayla J. Delly
5,196

51,177
⁽⁴⁾
*
Roger L. Fix
17,308

60,764
⁽⁵⁾
*
John R. Friedery
10,664

53,789
⁽⁶⁾
*
John L. Garrison
—

12,174
⁽⁷⁾
*
Michael C. McMurray
—

5,196
⁽⁷⁾
*
David E. Roberts
—

34,882
⁽⁷⁾
*
R. Scott Rowe
311,030
⁽⁸⁾
311,030

*
Carlyn R. Taylor⁽⁹⁾
—

760
⁽⁷⁾
*
Named Executive Officers

Elizabeth L. Burger
18,441
⁽¹⁰⁾
18,441

*
Keith E. Gillespie
63,974

63,974

*
Lanesha T. Minnix
8,018

8,018

*
John E. (Jay) Roueche III⁽¹¹⁾
21,719

21,719

Amy B. Schwetz⁽¹²⁾
6,753

6,753

*
All members of the Board and executive officers as a group (19 individuals)
509,248
⁽¹³⁾
712,726
⁽¹⁴⁾
*
*
Less than 1%.
(1)
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act and, unless otherwise indicated, represents securities for which the beneficial owner has sole voting and investment power. For each person or group, also includes any securities that person or group has the right to acquire within 60 days pursuant to stock options under certain Company stock option and incentive plans.
(2)
Includes 6,353 shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Mr. Chand does not possess any voting or investment power over these deferred shares.
(3)
Includes 11,551 shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Ms. Chandy does not possess any voting or investment power over these deferred shares.
(4)
Includes 45,981 shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Ms. Delly does not possess any voting or investment power over these deferred shares.
(5)
Includes 43,456 shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Mr. Fix does not possess any voting or investment power over these deferred shares.
(6)
Includes 43,125 shares that have been deferred under the director stock deferral plan and/or a Company stock plan. Mr. Friedery does not possess any voting or investment power over these deferred shares.

The following shareholders reported to the SEC that they beneficially own more than 5% of the Company’s outstanding common stock. The information is presented as of December 31, 2020, except as noted, and is based on stock ownership reports on Schedule 13G filed with the SEC and subsequently provided to us. We know of no other shareholder holding more than 5% of the Company’s common stock.

The following table provides certain information about our common stock that may be issued upon the exercise of options or vesting of restricted stock units granted under the Flowserve Corporation 2010 Equity and Incentive Compensation Plan (the “2010 Plan”) and the Flowserve Corporation 2020 Long-Term Incentive Plan (the “2020 Plan”) as of December 31, 2020.

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and any person beneficially owning more than 10% of the Company’s common stock to file reports of ownership and any changes in ownership with the SEC. Based solely on the Company’s review of such reports filed with the SEC and representations provided to the Company by persons required to file reports under Section 16 of the Exchange Act, the Company’s directors, executive officers and greater than 10% beneficial owners timely complied with their Section 16(a) filing requirements during 2020, except that due to an administrative error one Form 4 reporting an equity grant related to their compensation as members of our Board was inadvertently filed one day late for Sujeet Chand, Ruby R. Chandy and John L. Garrison.

The Audit Committee has approved PricewaterhouseCoopers LLP (“PwC”) to serve as our independent registered public accounting firm for 2021.

We are asking our shareholders to ratify the appointment of PwC as our independent registered public accounting firm. Although shareholder ratification is not required by our By-Laws or otherwise, the Board is submitting this proposal for ratification because we value our shareholders’ views on the Company’s independent registered public accounting firm and as a matter of good corporate practice. In the event that our shareholders fail to ratify the selection, it will be considered as a direction to the Audit Committee to consider the selection of a different firm, though the Company may nonetheless determine to retain PwC. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests ~~of the Company and its shareholders.~~

The proposal to ratify the appointment of PwC to serve as the Company’s independent registered public accounting firm for 2019 requires the affirmative vote of at least a majority of the votes cast in favor of or against this proposal. Abstentions will not count as votes cast on this proposal. Therefore, abstentions will have no effect on the proposal. Additionally, broker non-votes will not be considered to have voted on this proposal, and therefore will have no effect on the proposal. The individuals named as proxies on the enclosed proxy card will vote your proxy “FOR” ratifying the appointment of PwC unless you instruct otherwise on the proxy or unless you withhold authority to vote.

~~The Board recommends that you vote~~“~~FOR~~”~~the ratification of appointment of Pricewaterhousecoopers LLP to serve as our independent registered public accounting firm for 2019.~~

We are asking shareholders to approve the Flowserve Corporation 2020 Long-Term Incentive Plan (the “2020 Plan”). The Board of Directors of the Company (the “Board”) adopted the 2020 Plan to be effective as of January 1, 2020 (the “Effective Date”), subject to shareholder approval. The 2020 Plan is intended to replace the Flowserve Corporation Equity and Incentive Compensation Plan (the “Prior Plan”). If the 2020 Plan is approved by our shareholders, the Prior Plan will terminate on December 31, 2019 but will continue to apply to awards granted under the Prior Plan before such date. No further awards will be made under the Prior Plan after December 31, 2019 provided the 2020 Plan is approved by shareholders, and further provided that the terms of the Prior Plan will continue to apply to awards previously granted under the Prior Plan. It is the judgment of the Board that the 2020 Plan is in the best interest of the Company and its shareholders.

✔

~~Introduction~~

~~Reasons for the Proposal~~

The Board and the O&C Committee believe that to enhance long-term shareholder value, the Company needs to maintain competitive employee compensation, incentive, and retention programs. Providing employees and other key contributors an equity stake in the Company’s success is a vital component of these programs. The purpose of the 2020 Plan is to attract and retain the services of key employees and outside directors of the Company and its subsidiaries and to provide such persons with a proprietary interest in the Company through the granting of incentive stock options (“ISOs”), nonqualified stock options, stock appreciation rights (“SARs”), restricted stock, bonus stock, restricted stock units (“RSUs”), performance awards, dividend equivalent rights, and other awards, whether granted singly, or in combination, or in tandem, that will increase the interest of such persons in the Company’s welfare, furnish an incentive to such persons to continue their services for the Company or its subsidiaries and provide a means through which the Company may attract able persons as employees and outside directors. In furtherance of the above, since the Prior Plan was adopted, we have made multiple leadership appointments and promotions to advance our strategy. We made equity grants from the Prior Plan in connection with each of these new hires and promotions. We believe these new hires and promotions are key to the development and strengthening of the management team with the experience and talent necessary to further implement our transformation.

The Board and O&C Committee further believe that the number of shares of common stock currently available under the Prior Plan is insufficient to meet the Company’s current and future equity compensation needs. Shareholder approval of the 2020 Plan is intended to ensure that the Company has sufficient shares available to attract and retain key employees and outside directors and to further the Company’s growth and development. For a discussion of awards under the Prior Plan as components of the Company’s executive compensation program, please refer to the “Compensation Discussion and Analysis” section.

~~Key Features of the 2020 Plan~~

~~We believe that the 2020 Plan reflects a broad range of compensation and governance best practices, with some of the key features as follows:~~

•

No~~Liberal~~~~Share~~~~Recycling~~on~~Stock~~~~Options~~or~~SARs.~~ The 2020 Plan is not subject to liberal share “recycling” provisions on stock options or SARs, meaning (among other things) that shares used to pay the purchase price of stock options, and shares tendered or withheld to satisfy tax withholding obligations with respect to stock options or SARs, do not again become available for grant.

•

~~Minimum~~~~Vesting~~~~Requirements.~~ ~~No equity-based award granted under the 2020 Plan may vest (even on a pro rata basis) prior to the first anniversary of the applicable grant date, subject to limited exceptions.~~

•

~~Outside~~~~Director~~~~Grant~~~~Limit.~~ No outside director in any calendar year may be granted awards denominated in shares which, when combined with all cash retainers and other fees paid for the same year, have an aggregate value in excess of $600,000.

•

No~~Repricing~~or~~Replacement~~of~~Options~~or~~SARs.~~ Without shareholder approval, options and SARs granted under the 2020 Plan may not be repriced to reduce the exercise price or base price for the shares under the award or replaced if the exercise price or base price exceeds the fair market value of the shares under the award. Cash buyouts of underwater awards are not permitted.

•

No~~In-the-Money~~~~Option~~or~~SAR~~~~Grants.~~ ~~The 2020 Plan prohibits the grant of options or SARs with an exercise or base price less than 100% of the fair market value of our common stock on the date of grant.~~

•

No~~“Evergreen”~~~~Provision.~~ The total number of shares of common stock that may be issued under the 2020 Plan is limited to the share reserve that is subject to shareholder approval. That is, the 2020 Plan does not include an automatic share replenishment provision (also known as an “evergreen” provision).

~~- 2019 PROXY STATEMENT 56~~

~~Historical Burn Rate; Potential Economic Dilution Analysis~~

•

No~~Gross-Ups.~~ ~~The 2020 Plan does not provide for excise tax gross-ups.~~

•

No~~Single-Trigger~~~~Accelerated~~~~Vesting.~~ Under the 2020 Plan, there is no automatic single-trigger accelerated vesting in connection with a change in control where the awards are continued or the acquirer assumes the awards or grants substitute awards.

We are committed to managing the use of our equity incentives prudently to balance the benefits equity compensation brings to our compensation programs against the dilution it causes our shareholders. As part of our analysis when considering the number of shares to be reserved under the 2020 Plan, we considered the Prior Plan’s average annual equity grant rate, or “burn rate,” calculated as the number of shares subject to equity awards granted under the Prior Plan, divided by the weighted average number of shares outstanding for that period. Our average burn rate for the three years ending December 31, 2018 was 0.61%. The total potential dilution resulting from issuing all shares authorized under our equity plans as of March 1, 2019 would be approximately 10.8%. We believe that our burn rate and potential dilution amounts are reasonable for our industry and market conditions. Although the use of equity awards is an important part of our compensation program, we are mindful of our responsibility to our shareholders in granting equity awards.

Fiscal Year
Stock Options
Granted
PSUs
Granted⁽¹⁾
RSUs
Granted
Total
Granted⁽²⁾
Weighted
Average
Common
Shares
Outstanding
Burn
Rate
2018
—
242,949
689,443
932,392
130,823,000
0.71%
2017
114,943
274,566
418,253
807,762
130,703,000
0.62%
2016
—
178,152
455,867
634,019
130,432,000
0.49%
3-Year Average
38,314
231,889
521,188
791,391
130,652,667
0.61%
(1)
The number of PSUs earned in 2016, 2017, and 2018 were 447,452; 225,166; and 20,250, respectively.
(2)
Total Granted = Options + Value Shares

~~Outstanding~~~~Shares~~asof~~March~~1,~~2019:~~

Outstanding
Stock Options⁽¹⁾
Outstanding
Full-Value
Awards
Shares
Remaining
Available for
Future Grant
Shares Available Under Prior Plan as of 3/1/2019
114,993
1,944,634
1,368,632
Shares Remaining Available for Future Grant Upon Approval of the 2020 Plan
—
—
12,500,000
(1)
As of 3/1/19, the 114,943 stock options outstanding had a weighted average exercise price of $48.63 and a weighted average life of 8.18 years.

~~Expected Duration~~

We expect that the shares available under the 2020 Plan for future awards, if the 2020 Plan is approved by our shareholders, will be sufficient for currently-anticipated awards for the next six years. Expectations regarding future share usage could be impacted by a number of factors such as hiring and promotion activity at the executive level; the rate at which shares are returned to the Prior Plan reserve upon awards’ expiration, forfeiture or cash settlement; the future performance of our stock price; factors involved in acquiring other companies; and other factors. While we believe that the assumptions we used are reasonable, future share usage may differ from current expectations.

~~Description of the 2020 Plan~~

The following is a brief description of the 2020 Plan. A copy of the 2020 Plan is attached as Appendix A to this Proxy Statement, and the following description is qualified in its entirety by reference to the 2020 Plan.

~~Effective Date and Expiration~~

The 2020 Plan was adopted by the Board to be effective as of January 1, 2020, subject to and conditioned upon shareholder approval. Unless sooner terminated by action of the Board, the 2020 Plan will terminate and expire on the tenth anniversary of the Effective Date, but awards granted before that date will continue to be effective in accordance with their terms and conditions. The 2020 Plan replaces and supersedes the Prior Plan in its entirety. The Prior Plan will terminate on December 31, 2019 but will continue to apply to awards granted under the Prior Plan before such date. Awards may be granted under the 2020 Plan prior to the time of shareholder approval, provided that such awards are made subject to shareholder approval.

~~- 2019 PROXY STATEMENT 57~~

~~Director Award Limits~~

~~Share Authorization~~

Subject to equitable adjustments as provided in the 2020 Plan, the maximum number of shares of common stock that may be delivered pursuant to awards granted under the 2020 Plan is the sum of (i) 12,500,000, plus (ii) any shares which, as of the Effective Date, are available for grant under the Prior Plan, plus (iii) any shares which, as of the Effective Date, are subject to outstanding awards under the Prior Plan that again become available for grant under the 2020 Plan as further described below, of which one hundred percent of such aggregate total number of shares may be delivered pursuant to ISOs qualifying under Section 422 of the Internal Revenue Code of 1986, as amended (the “IRC”). Any shares that are subject to options or SARs will be counted against this limit as one share for every one share granted, and any shares that are subject to awards other than options or SARs will be counted against this limit as 3.06~~shares for every one share granted. As stated earlier, after the Effective Date of the 2020 Plan, no awards may be granted under the Prior Plan.~~

Shares to be issued may be made available from authorized but unissued shares of common stock, shares of common stock held by the Company in its treasury, or shares of common stock purchased by the Company on the open market or otherwise. During the term of the 2020 Plan, the Company will at all times reserve and keep available the number of shares of common stock that shall be sufficient to satisfy the requirements of the 2020 Plan. The 2020 Plan also provides that no more than 5% of the shares of common stock that may be issued pursuant to an award under the 2020 Plan may be designated as Exempt Shares. “Exempt Shares” are shares subject to awards that are granted with more favorable vesting provisions than the minimum vesting provisions otherwise required by the 2020 Plan (as described below).

~~Share Counting~~

To the extent that any award or any Prior Plan Award is forfeited, canceled, or settled in cash or expires in whole or in part, then the number of shares covered by the award or Prior Plan Award so forfeited, expired, canceled or settled in cash may again be awarded under the 2020 Plan. In the event that withholding tax liabilities arising from an award other than an option or SAR, or, after the Effective Date, anaward other than an option or stock appreciation right under the Prior Plan are satisfied by the tendering or withholding of shares, the shares so tendered or withheld will be added to the shares available for awards under the 2020 Plan. However, the following shares will not be added to the shares authorized for grant: (i) shares tendered or withheld in payment of the purchase price of or to satisfy any tax withholding obligation with respect to options or SARs (or options or stock appreciation rights under the Prior Plan), (ii) shares subject to a SAR (or a stock appreciation right under the Prior Plan) that are not issued in connection with its stock settlement on exercise thereof, and (iii) shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of options (or options under the Prior Plan).

Any shares that again become available for awards under the 2020 Plan will be added as (i) one share for every one share subject to options or SARs granted under the 2020 Plan or options or stock appreciation rights granted under the Prior Plan, and (ii) as 3.06 shares for every one share subject to awards other than options or SARs granted under the 2020 Plan or awards other than options or stock appreciation rights granted under the Prior Plan.

No outside director may be granted any award in any calendar year, when taken together with all cash retainers and other fees paid for services for the same year, that exceed in the aggregate $600,000 (with equity awards computed as of the date of the grant in accordance with applicable financial accounting rules).

~~Individual Award Limits~~

Subject to certain equitable adjustments, the maximum number of shares of common stock that may be granted to an individual in any calendar year with respect to (i) options or SARs is 200,000 shares of common stock and (ii) other awards in the aggregate is 200,000 shares of common stock.

~~Administration~~

The 2020 Plan will be administered by the Board or such committee of the Board as is designated by the Board (the “Committee”). The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with or without cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the Board. If necessary to satisfy the requirements of Rule 16b-3 promulgated under the Exchange Act, membership on the Committee shall be limited to those members of the Board who are “non-employee directors” as defined in Rule 16b-3. As of the Effective Date, the Board intends for the O&C Committee to administer the 2020 Plan.

The Committee will interpret the 2020 Plan and award agreements, prescribe, amend, and rescind any rules and regulations and sub-plans (including sub-plans for awards made to participants who are not residents in the United States), as necessary or appropriate for the administration of the 2020 Plan, establish performance goals for an award and certify the extent of their achievement, and make such other determinations or certifications and take such other action as it deems necessary or advisable in the administration of the 2020 Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive on all interested parties. The Committee may delegate certain duties to one or more officers of the Company as provided in the 2020 Plan.

~~- 2019 PROXY STATEMENT 58~~

~~Financial Effect of Awards~~

~~Eligibility~~

Employees (including any employee who is also a director or an officer) and outside directors of the Company or its subsidiaries whose judgment, initiative and efforts contributed to or may be expected to contribute to the successful performance of the Company and its subsidiaries are eligible to participate in the 2020 Plan, provided that only employees of a corporation will be eligible to receive ISOs. As of December 31, 2018, the Company and its subsidiaries had approximately 17,000 employees employees and 10 outside directors. Upon Leif E. Darner’s retirement from the Board effective as of the Annual Meeting, the Company will have 9 outside directors. The Committee is empowered, in its sole discretion, to select the employees and directors who will participate in the 2020 Plan.

The Company will receive no monetary consideration for the granting of awards under the 2020 Plan, unless otherwise provided when granting restricted stock or RSUs. The Company will receive no monetary consideration other than the option price for shares of common stock issued to participants upon the exercise of their stock options, and the Company will receive no monetary consideration upon the exercise of SARs.

~~Stock Options~~

The Committee may grant either ISOs qualifying under IRC Section 422 or nonqualified stock options, provided that only employees of the Company and its subsidiaries (excluding subsidiaries that are not corporations) are eligible to receive ISOs. Stock options may not be granted with an option price less than 100% of the fair market value of a share of common stock on the date the stock option is granted. If an ISO is granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary), the option price must be at least 110% of the fair market value of a share of common stock on the date of grant. ISOs may not be granted to any employee if the grant would permit the aggregate fair market value of a share of common stock (on the date the ISO is granted) with respect to which ISOs are exercisable for the first time by such employee during any calendar year to exceed $100,000. The Committee will determine the terms of each stock option at the time of grant, including, without limitation, the methods by or forms in which shares will be delivered to participants. The maximum term of each option, the times at which each option will be exercisable, and provisions requiring forfeiture of unexercised options at or following termination of employment or service generally are fixed by the Committee, except that the Committee may not grant stock options with a term exceeding 10 years or, in the case of an ISO granted to an employee who owns or is deemed to own more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary), five years. In addition, no dividends or dividend equivalent rights may be paid or granted with respect to any stock options or SARs granted under the 2020 Plan.

Recipients of stock options may pay the option exercise price by (a) cash or check, bank draft, or money order payable to the order of the Company; (b) common stock (including restricted stock) owned by the participant on the exercise date, valued at its fair market value on the exercise date; (c) delivery (including by facsimile or electronic transmission) to the Company or its designated agent of an executed irrevocable option exercise form (or, to the extent permitted by the Company, exercise instructions, which may be communicated in writing, telephonically, or electronically) together with irrevocable instructions from the participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the shares of common stock purchased upon exercise of the stock option or to pledge such shares as collateral for a loan and promptly deliver to the Company the amount of sale or loan proceeds necessary to pay such purchase price (except for executives subject to our prohibition on pledging as described in our Compensation Discussion and Analysis Section of this Proxy Statement.); and/or (d) any other form of valid consideration that is acceptable to the Committee in its sole discretion.

~~Stock Appreciation Rights~~

The Committee is authorized to grant SARs as a stand-alone award, or freestanding SARs, or in conjunction with stock options granted under the 2020 Plan, or tandem SARs. A SAR is the right to receive an amount equal to the excess of the fair market value of a share of common stock on the date of exercise over the exercise price. The exercise price may be equal to or greater than the fair market value of a share of common stock on the date of grant. The Committee, in its sole discretion, may place a ceiling on the amount payable on the exercise of a SAR, but any such limitation shall be specified at the time the SAR is granted. A SAR granted in tandem with a stock option will require the holder, upon exercise, to surrender the related stock option with respect to the number of shares as to which the SAR is exercised. The Committee will determine the terms of each SAR at the time of the grant, including, without limitation, the methods by or forms in which the value will be delivered to participants (whether made in shares of common stock, in cash or in a combination of both). The maximum term of each SAR, the times at which each SAR will be exercisable, and provisions requiring forfeiture of unexercised SARs at or following termination of employment or service generally are fixed by the Committee, except that no freestanding SAR may have a term exceeding 10 years and no tandem SAR may have a term exceeding the term of the option granted in conjunction with the tandem SAR.

~~Restricted Stock and RSUs~~

The Committee is authorized to grant restricted stock and RSUs. Restricted stock consists of shares of common stock that are transferred or sold by the Company to a participant but are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the participant until the end of a restricted period as specified by the Committee. RSUs are the right to receive shares of common stock at a future date in accordance with the terms of such grant upon the attainment of certain conditions specified by the Committee, which include substantial risk of forfeiture and restrictions on their sale or other transfer by the participant. The Committee determines the eligible participants to whom, and the time or times at which, grants of restricted stock or RSUs will be made, the number of shares or units to be granted, the price and method of payment of the price to be paid, if any, the time or times within which the shares covered by such grants will be subject to

~~- 2019 PROXY STATEMENT 59~~

~~Dividend Equivalent Rights~~

forfeiture, the time or times at which the restrictions will terminate, and all other terms and conditions of the grants. Restrictions or conditions could include, but are not limited to, the attainment of performance goals (as described below), continuous service with the Company, the passage of time or other restrictions or conditions; provided that, if the right to receive dividends is awarded, then (A) any dividends with respect to a restricted stock award shall be withheld by the Company for the participant’s account until such award is vested; and (B) such dividends so withheld by the Company and attributable to any particular share of restricted stock shall be distributed to such participant in cash or, at the discretion of the Committee, in shares of common stock having a fair market value equal to the amount of such dividends, if applicable, upon the vesting of such share and, if such share is forfeited, the participant shall will also forfeit the right to dividends attributable to such forfeited share. The value of the RSUs may be paid in shares of common stock, cash, or a combination of both, as determined by the Committee.

~~Bonus Stock~~

The Committee is authorized to grant common stock as a bonus in the form of restricted stock or as common stock without restrictions, provided that any bonus stock granted without restrictions shall be treated as Exempt Shares. Awards granted as bonus stock shall be subject to such other terms as shall be determined by the Committee.

~~Performance Awards~~

The Committee may grant performance awards payable in cash, shares of common stock, or a combination thereof at the end of a specified performance period. Payment will be contingent upon achieving pre-established performance goals (as discussed below) by the end of the performance period. The Committee will determine the length of the performance period, the maximum or minimum payment value of an award, and the minimum performance goals required before payment will be made, so long as such provisions are not inconsistent with the terms of the 2020 Plan, and to the extent an award is subject to IRC Section 409A, are in compliance with the applicable requirements of IRC Section 409A and any applicable regulations or guidance. If the Committee determines in its sole discretion that the established performance measures or objectives are no longer suitable because of a change in the Company’s business, operations, corporate structure, or for other reasons that the Committee deems satisfactory, the Committee may modify the performance measures or objectives and/or the performance period. Subject to Committee discretion, a performance award will terminate for all purposes if the participant is not continuously employed by the Company at all times during the applicable performance period.

~~Other Awards~~

The Committee may grant other forms of awards payable in cash or shares of common stock if the Committee determines that another form of award is consistent with the purpose and restrictions of the 2020 Plan. The terms and conditions of such other form of award will be specified by the grant. Such other awards may be granted for no cash consideration, for such minimum consideration as may be required by applicable law or for such other consideration as may be specified by the grant.

The Committee may grant a dividend equivalent right either as a component of another award or as a separate award. The terms and conditions of the dividend equivalent right will be specified by the grant and, when granted as a component of another award, may have terms and conditions different from such other award; provided, however, that (i) any dividend equivalent rights with respect to such other award will be withheld by the Company for a participant’s account until such other award is vested, subject to such terms as determined by the Committee; and (ii) such dividend equivalent rights so withheld and attributable to another award will be distributed to such participant in cash or, at the discretion of the Committee, in shares of common stock having a fair market value equal to the amount of such dividend equivalent rights, if applicable, upon vesting of the other award and, if such other award is forfeited, the right to dividend equivalent rights attributable to such forfeited award will also be forfeited. No dividend equivalent right may be paid or granted with respect to any stock option or SAR. Dividend equivalents granted as a separate award may also be paid currently or may be deemed to be reinvested in additional shares of common stock (which may accrue additional dividend equivalents). Any such reinvestment will be at the fair market value at the time thereof. Dividend equivalent rights may be settled in cash or shares of common stock.

~~Performance Goals~~

Awards of restricted stock, RSUs, performance awards, and other awards (whether relating to cash or shares of common stock) under the 2020 Plan may be made subject to the attainment of performance goals relating to one or more business criteria which, where applicable, may consist of one or more or any combination of the following criteria: (1) earnings per share; (2) increase in revenues; (3) increase in cash flow; (4) increase in cash flow return; (5) return on net assets; (6) return on assets; (7) return on investment; (8) return on capital; (9) economic value added; (10) operating margin; (11) contribution margin; (12) net income; (13) pretax earnings; (14) pretax earnings before interest, depreciation, and amortization; (15) pretax operating earnings after interest expense and before incentives, service fees, and extraordinary or special items; (16) total shareholder return; (17) debt reduction; (18) operating income; (19) general and administrative expenses; (20) net asset value; (21) operating costs; (22) ratio of debt to debt plus equity; (23) profit before tax; (24) economic profit; (25) earnings before interest and taxes; (26) operating earnings; (27) ratio of operating earnings to capital spending; (28) free cash flow; (29) net profit; (30) net sales; (31) sales growth; (32) stock price; (33) return on equity; (34) return on shareholders’ equity; (35) market share; (36) total return to shareholders; (37) gross profit; (38) income before taxes; (39) income after taxes; (40) debt to equity measures; (41) growth measures; (42) return on sales; (43) operating cash flow; (44) cash flow

~~- 2019 PROXY STATEMENT 60~~

~~Vesting of Awards; Forfeiture; Assignment~~

return on investments; (45) sales; (46) inventory turnover; (47) on-time delivery measures; (48) any other metric selected by the Committee and (49) any of the above goals determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of comparable companies (“Performance Criteria”). Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company and may be measured relative to a peer group or index. Any Performance Criteria may include or exclude events as determined by the Committee, including (i) events that are of an unusual nature or indicate infrequency of occurrence, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws, (iv) the effect of a merger or acquisition, as identified in the Company’s quarterly and annual earnings releases, or (v) other similar occurrences. In all other respects, Performance Criteria shall be calculated in accordance with the Company’s financial statements, under generally accepted accounting principles, or under a methodology established by the Committee prior to the issuance of an award which is consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report.

Except as otherwise provided below, the Committee, in its sole discretion, may determine that an award will be immediately vested in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its date of grant, or until the occurrence of one or more specified events, subject in any case to the terms of the 2020 Plan. Except to the extent an award is for Exempt Shares, no awards granted by the Committee nor any portion of an award (even on a pro rata basis) may vest earlier than one year after the date of grant (excluding, for this purpose, any substitute awards, shares delivered in lieu of fully vested cash awards, and awards to outside directors made on the date of an annual meeting of shareholders that vest on the earlier of the first anniversary of the grant date or the next annual meeting of shareholders that is at least 50 weeks after the grant date); provided that this restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of death, “total and permanent disability”, retirement or upon a “change in control” (as such terms are defined in the 2020 Plan or the applicable award agreement). Notwithstanding the foregoing, the Committee may, in its sole discretion, grant awards with more favorable vesting provisions at any time, provided that the shares of common stock subject to such awards will be designated as Exempt Shares. As discussed above, only 5% of the shares of common stock that may be issued pursuant to an award under the 2020 Plan may be designated as Exempt Shares. The Committee may also, in its sole discretion, accelerate the vesting or waive any restrictions of any award, including in cases of death, total and permanent disability, retirement or upon a change in control, in the terms of the award of otherwise.

The Committee may impose on any award, at the time of grant or thereafter, such additional terms and conditions as the Committee determines, including terms requiring forfeiture of awards in the event of a participant’s termination of service. The Committee will specify the circumstances under which performance awards may be forfeited in the event of a termination of service by a participant prior to the end of a performance period or settlement of awards. Except as otherwise determined by the Committee, restricted stock will be forfeited upon a participant’s termination of service during the applicable restriction period.

Awards granted under the 2020 Plan generally are not assignable or transferable except by will or by the laws of descent and distribution, except that the Committee may, in its discretion and pursuant to the terms of an award agreement, permit certain transfers of nonqualified stock options or SARs to: (i) the spouse (or former spouse), children, or grandchildren of the participant (“Immediate Family Members”); (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members; (iii) a partnership in which the only partners are (1) such Immediate Family Members and/or (2) entities which are controlled by Immediate Family Members; (iv) an entity exempt from federal income tax pursuant to IRC Section 501(c)(3) or any successor provision; or (v) a split interest trust or pooled income fund described in IRC Section 2522(c)(2) or any successor provision, provided that (x) there is no consideration for any such transfer, (y) the applicable award agreement pursuant to which such award is granted must be approved by the Committee and must expressly provide for such transferability, and (z) subsequent transfers of transferred awards will be prohibited except those by will or the laws of descent and distribution. In no event may any award be transferred to a third-party financial institution for value.

~~Adjustments Upon Changes in Capitalization~~

In the event that any dividend or other distribution, recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange of the shares of common stock or other securities of the Company, issuance of warrants or other rights to purchase shares of common stock or other securities of the Company, or other similar corporate transaction or event affects the fair value of an award, then the Committee will adjust any or all of the following so that the fair value of the award immediately after the transaction or event is equal to the fair value of the award immediately prior to the transaction or event (i) the number of shares and type of common stock (or the securities or property) which thereafter may be made the subject of awards, (ii) the number of shares and type of shares of common stock (or other securities or property) subject to outstanding awards, (iii) the number of shares and type of common stock (or the securities or property) specified as the annual per-participant limitation under the 2020 Plan, (iv) the option price of each outstanding award, (v) the amount, if any, the Company pays for forfeited shares of common stock in accordance with the terms of the 2020 Plan, and (vi) the number of or exercise price of shares of common stock then subject to outstanding SARs previously granted and unexercised under the 2020 Plan, to the end that the same proportion of the Company’s issued and outstanding shares of common stock in each instance will remain subject to exercise at the same aggregate exercise price; provided however, that the number of shares of common stock (or other securities or property) subject to any award will always be a whole number. Notwithstanding the foregoing, no such adjustment will be made or authorized to the extent that such adjustment would cause the 2020 Plan or any stock option to violate IRC Section 422 or IRC Section 409A. All such adjustments must be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject.

~~- 2019 PROXY STATEMENT 61~~

~~Amendment or Discontinuance of the 2020 Plan~~

~~Change in Control~~

In the event an acquiror or a surviving or resulting corporation does not agree to assume or substitute the outstanding awards, and unless otherwise provided in an award agreement, all awards granted under the 2020 plan may be canceled by the Company, in its sole discretion, as of the effective date of any change in control, merger, consolidation or share exchange, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the common stock or the rights thereof (or any rights, options, or warrants to purchase same), or of any proposed sale of all or substantially all of the assets of the Company, or of any dissolution or liquidation of the Company, by either:

•

giving notice to each holder and permitting the purchase during the 30-day period next preceding such effective date of any or all of the shares subject to such outstanding awards, including in the Board’s discretion some or all of the shares as to which such awards would not otherwise be vested and exercisable; or

•

in certain circumstances, and subject to certain adjustments, paying the holder an amount equal to a reasonable estimate of the difference between the net amount per share payable in such transaction or as a result of such transaction and the price per share of such award to be paid by the participant, multiplied by the number of shares subject to the award.

The Board may, at any time and from time to time, without the consent of the participants, alter, amend, revise, suspend, or discontinue the 2020 Plan in whole or in part; provided, however, that (i) no amendment that requires shareholder approval in order for the 2020 Plan and any awards under the 2020 Plan to continue to comply with IRC Sections 421 and 422 (including any successors to such sections, or other applicable law) or any applicable requirements of any securities exchange or inter-dealer quotation system on which the Company’s stock is listed or traded, will be effective unless such amendment is approved by the requisite vote of the Company’s shareholders entitled to vote on the amendment; and (ii) unless required by law, no action by the Board regarding amendment or discontinuance of the 2020 Plan may adversely affect any rights of any participants or obligations of the Company to any participants with respect to any outstanding award under the 2020 Plan without the consent of the affected participant.

~~No Repricing of Stock Options or SARs~~

The Committee may not “reprice” any stock option or SAR without shareholder approval. For purposes of the 2020 Plan, “reprice” means any of the following or any other action that has the same effect: (i) amending a stock option or SAR to reduce its exercise price or base price, (ii) canceling a stock option or SAR at a time when its exercise price or base price exceeds the fair market value of a share of common stock in exchange for cash or a stock option, SAR, award of restricted stock or other equity award, or (iii) taking any other action that is treated as a repricing under generally accepted accounting principles, provided that nothing will prevent the Committee from (x) making adjustments to awards upon changes in capitalization, (y) exchanging or cancelling awards upon a merger, consolidation, or recapitalization, or (z) substituting awards for awards granted by other entities, to the extent permitted by the 2020 Plan.

~~Recoupment for Restatements~~

The Committee may recoup all or any portion of any shares or cash paid to a participant in connection with an award, in the event of a restatement of the Company’s financial statements, as set forth in the Company’s clawback policy, if any, approved by the Board from time to time. See "Compensation Discussion and Analysis - Additional Executive Compensation Information - Recoupment of Incentive Compensation" for more information regarding the Recoupment Policy.

~~Federal Income Tax Consequences~~

The following is a brief summary of certain federal income tax consequences relating to the transactions described under the 2020 Plan as set forth below. This summary does not purport to address all aspects of federal income taxation and does not describe state, local, or foreign tax consequences. This discussion is based upon provisions of the IRC and the treasury regulations issued thereunder, and judicial and administrative interpretations under the IRC and treasury regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation.

~~Law Affecting Deferred Compensation~~

IRC Section 409A regulates all types of deferred compensation. If the requirements of IRC Section 409A are not satisfied, deferred compensation and earnings thereon will be subject to tax as they vest, plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax. Certain performance awards, stock options, stock appreciation rights, RSUs, and certain types of restricted stock are subject to IRC Section 409A. The Company intends that awards granted under the 2020 Plan comply with, or otherwise be exempt from, IRC Section 409A, but make no representation or warranty to that effect.

~~- 2019 PROXY STATEMENT 62~~

~~Incentive Stock Options~~

A participant will not recognize income at the time an ISO is granted. When a participant exercises an ISO, a participant also generally will not be required to recognize income (either as ordinary income or capital gain). However, to the extent that the fair market value (determined as of the date of grant) of the shares of common stock with respect to which the participant’s ISOs are exercisable for the first time during any year exceeds $100,000, the ISOs for the shares of common stock over $100,000 will be treated as nonqualified stock options, and not ISOs, for federal tax purposes, and the participant will recognize income as if the ISOs were nonqualified stock options. In addition to the foregoing, if the fair market value of the shares of common stock received upon exercise of an ISO exceeds the exercise price, then the excess may be deemed a tax preference adjustment for purposes of the federal alternative minimum tax calculation. The federal alternative minimum tax may produce significant tax repercussions depending upon the participant’s particular tax status.

The tax treatment of any shares of common stock acquired by exercise of an ISO will depend upon whether the participant disposes of his or her shares prior to two years after the date the ISO was granted or one year after the shares of common stock were transferred to the participant (referred to as the “Holding Period”). If a participant disposes of shares of common stock acquired by exercise of an ISO after the expiration of the Holding Period, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the shares of common stock. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as short-term or long-term capital loss, depending upon how long the participant has held the shares.

If the participant disposes of shares of common stock acquired by exercise of an ISO prior to the expiration of the Holding Period, the disposition will be considered a “disqualifying disposition.” If the amount received for the shares of common stock is greater than the fair market value of the shares of common stock on the exercise date, then the difference between the ISO’s exercise price and the fair market value of the shares of common stock at the time of exercise will be treated as ordinary income for the tax year in which the “disqualifying disposition” occurs. The participant’s basis in the shares of common stock will be increased by an amount equal to the amount treated as ordinary income due to such “disqualifying disposition.” In addition, the amount received in such “disqualifying disposition” over the participant’s increased basis in the shares of common stock will be treated as short-term or long-term capital gain, depending on how long the participant has held the shares of common stock. However, if the price received for shares of common stock acquired by exercise of an ISO is less than the fair market value of the shares of common stock on the exercise date and the disposition is a transaction in which the participant sustains a loss which otherwise would be recognizable under the IRC, then the amount of ordinary income that the participant will recognize is the excess, if any, of the amount realized on the “disqualifying disposition” over the basis of the shares of common stock.

~~Nonqualified Stock Options~~

A participant generally will not recognize income at the time a nonqualified stock option is granted. When a participant exercises a nonqualified stock option, the difference between the option price and any higher market value of the shares of common stock on the date of exercise will be treated as compensation taxable as ordinary income to the participant. The participant’s tax basis for shares of common stock acquired under a nonqualified stock option will be equal to the option price paid for such shares of common stock, plus any amounts included in the participant’s income as compensation. When a participant disposes of shares of common stock acquired by exercise of a nonqualified stock option, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the shares of common stock. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as short-term or long-term capital loss, depending upon how long the participant has held the shares.

~~Special Rule if Option Price is Paid for in Shares of Common Stock~~

If a participant pays the option price of a nonqualified stock option with previously-owned shares of common stock and the transaction is not a disqualifying disposition of shares previously acquired under an ISO, the shares of common stock received equal to the number of shares surrendered are treated as having been received in a tax-free exchange. The participant’s tax basis and holding period for these shares received will be equal to the participant’s tax basis and holding period for the shares surrendered. The shares of common stock received in excess of the number of shares surrendered will be treated as compensation taxable as ordinary income to the participant to the extent of their fair market value. The participant’s tax basis in these shares will be equal to their fair market value on the date of exercise, and the participant’s holding period for such shares will begin on the date of exercise.

If the use of previously acquired shares of common stock to pay the exercise price of a nonqualified stock option constitutes a disqualifying disposition of shares previously acquired under an ISO, the participant will have ordinary income as a result of the disqualifying disposition in an amount equal to the excess of the fair market value of the shares of common stock surrendered, determined at the time such shares were originally acquired on exercise of the ISO, over the aggregate option price paid for such shares. As discussed above, a disqualifying disposition of shares of common stock previously acquired under an ISO occurs when the participant disposes of such shares before the end of the Holding Period. The other tax results from paying the exercise price with previously-owned shares are as described above, except that the participant’s tax basis in the shares that are treated as having been received in a tax-free exchange will be increased by the amount of ordinary income recognized by the participant as a result of the disqualifying disposition.

~~- 2019 PROXY STATEMENT 63~~

~~Restricted Stock, Bonus Stock~~

A participant who receives restricted stock or bonus stock generally will recognize as ordinary income the excess, if any, of the fair market value of the shares at such time as the shares are no longer subject to forfeiture or restrictions, over the amount paid, if any, by the participant for such shares. However, a participant who receives restricted stock may make an election under IRC Section 83(b) within 30 days of the date of transfer of the shares of common stock to recognize ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions on such shares) over the purchase price, if any, of such shares. If a participant does not make an election under IRC Section 83(b), then the participant will recognize as ordinary income any dividends received with respect to such shares. At the time of sale of such shares, any gain or loss realized by the participant will be treated as either short-term or long-term capital gain (or loss) depending on the holding period. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount previously taxable as ordinary income, plus the purchase price paid by the participant, if any, for such shares.

~~Stock Appreciation Rights~~

Generally, a participant who receives a stand-alone SAR will not recognize taxable income at the time the stand-alone SAR is granted, provided that the SAR is exempt from or complies with IRC Section 409A. If a participant receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the recipient at the time it is received. If a participant receives the appreciation inherent in the SARs in stock, the spread between the then current market value and the grant price, if any, will be taxed as ordinary income to the participant at the time it is received.

~~Other Awards~~

In the case of an award of RSUs, performance awards, dividend equivalent rights or other stock or cash awards, the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any shares received on the date of payment or delivery, provided that the award is exempt from or complies with IRC Section 409A. In that taxable year, the Company will receive a federal income tax deduction in an amount equal to the ordinary income which the participant has recognized.

~~Federal Tax Withholding~~

Any ordinary income realized by a participant in connection with an award under the 2020 Plan is subject to withholding of federal, state, and local income tax and to withholding of the participant’s share of tax under the Federal Insurance Contribution Act and the Federal Unemployment Tax Act. To satisfy federal income tax withholding requirements, the Company and its subsidiaries will have the right to require that, as a condition to the issuance of any shares of common stock, the participant remit to the Company an amount sufficient to satisfy the withholding requirements. Alternatively, the Company may withhold a portion of the shares of common stock (valued at fair market value) that otherwise would be issued to the participant to satisfy all or part of the withholding tax obligations or may, if the Company consents, accept delivery of shares of common stock with an aggregate fair market value that equals or exceeds the required tax withholding payment. Withholding does not represent an increase in the participant’s total income tax obligation, since it is fully credited toward his or her tax liability for the year. Additionally, withholding does not affect the participant’s tax basis in the shares of common stock.

~~Tax Consequences to the Company~~

To the extent that a participant recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of IRC Section 280G and is not disallowed by the $1,000,000 limitation on certain executive compensation under IRC Section 162(m).

~~Million Dollar Deduction Limit and Other Tax Matters~~

In prior tax years, the Company could deduct compensation of more than $1,000,000 that was paid to certain “covered employees” if such compensation constituted “qualified performance-based compensation” (determined in accordance with IRC Section 162(m) as in effect at that time). Following the recent enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in late 2017, the Company may no longer deduct compensation of more than $1,000,000 (including performance-based compensation, unless grandfathered as described below) that is paid to “covered employees” (as defined in IRC Section 162(m), as amended by the Tax Act), which include an individual (or, in certain circumstances, his or her beneficiaries) who, at any time during the taxable year, is the Company’s principal executive officer, principal financial officer, an individual who is among the three highest compensated officers for the taxable year (other than an individual who was either the Company’s principal executive officer or its principal financial officer at any time during the taxable year), or anyone who was a covered employee for purposes of IRC Section 162(m) for any tax year beginning on or after January 1, 2017. This limitation on deductions only applies to compensation paid by a publicly-traded corporation (and not compensation paid by non-corporate entities) and may not apply to certain types of compensation, such as qualified performance-based compensation that is payable pursuant to a written, binding contract (such as an award agreement corresponding to a Prior Plan Award) that was in place as of November 2, 2017, so long as the contract is not materially modified after that date. To the extent that compensation is payable pursuant to a Prior Plan Award on or before November 2, 2017, and if the Company

~~- 2019 PROXY STATEMENT 64~~

~~Interests of Directors and Executive Officers~~

determines that IRC Section 162(m) will apply to any such awards, the Company generally intends, to the extent practicable, that the terms of those awards will not be materially modified and will be constructed so as to constitute qualified performance-based compensation and, as such, will be exempt from the $1,000,000 limitation on deductible compensation. Notwithstanding the foregoing, even though performance-based compensation in excess of $1,000,000, if paid to a covered employee, is no longer tax deductible, the Company intends to continue to grant, when in the best interests of the Company and its shareholders, awards that are subject to the achievement of certain pre-established performance goals, which are described in the “Performance Goals” section above.

If an individual’s rights under the 2020 Plan are accelerated as a result of a change in control and the individual is a “disqualified individual” under IRC Section 280G, the value of any such accelerated rights received by such individual may be included in determining whether or not such individual has received an “excess parachute payment” under IRC Section 280G, which could result in (i) the imposition of a 20% federal excise tax (in addition to federal income tax) payable by the individual on the value of such accelerated rights, and (ii) the loss by the Company of a compensation deduction.

~~All members of the Board and all executive officers of the Company are eligible for awards under the 2020 Plan and thus, have a personal interest in the approval of the 2020 Plan.~~

~~Plan Benefits~~

All awards to employees and outside directors under the 2020 Plan are made at the discretion of the Committee. Therefore, the future benefits and amounts that will be received or allocated to such individuals under the 2020 Plan are not determinable at this time.

~~The closing sale price of a share of the Company’s common stock on the New York Stock Exchange on March 1, 2019 was $45.00 per share.~~

~~Required Vote and Recommendation~~

The proposal to approve the Flowserve Corporation 2020 Long-Term Incentive Plan requires the affirmative vote of at least a majority of the votes cast in favor of or against this proposal. Abstentions will not count as votes cast on this proposal. Therefore, abstentions will have no effect on the proposal. Additionally, broker non-votes will not be considered to have voted on this proposal, and therefore will have no effect on the proposal. The individuals named as proxies on the enclosed proxy card will vote your proxy “FOR” the approval of the Flowserve Corporation 2020 Long-Term Incentive Plan unless you instruct otherwise on the proxy or unless you withhold authority to vote.

~~The Board recommends that you vote~~“~~FOR~~”~~the approval of the Flowserve Corporation 2020 Long-Term Incentive Plan.~~

~~- 2019 PROXY STATEMENT 65~~