Company: AOS
Filing Date: 2025-02-27
Form Type: DEF 14A
Source: 0001193125-25-037641
Chunk: 44

Company: SMITH A O CORP
Filing Date: 2025-02-27
Form: DEF 14A
Chunk 44
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 how effectively executives manage capital. The goal for achieving 100% of target is based on an average of the company’s last five years of ROIC achievement. The threshold and maximum performance levels are based on a market reference point: the five-year average of median ROIC for the S&P 500 Industrials Index. The threshold for achieving any payout is 125% of this reference point, and the maximum payout is achieved at 225% of the reference point. Target value payouts will be earned at 30.8% performance over the course of the measurement period and a maximum payout of 200% of target will be earned should we return 36.5% ROIC as a percent of the Cost of Capital between January 1, 2024, and December 31, 2026. As with annual incentive compensation objectives, the PCC sets targets at levels that are difficult to achieve, but with the expectation they are attainable.

| ROIC Achieved |     | 2024 Plan Payout |
| 20.3%         |     | 0% – Minimum     |
| 30.8%         |     | 100% – Target    |
| 36.5%         |     | 200% – Maximum   |

Through December 2024, which includes one year of the three-year performance period, the performance cash granted in February 2024 had an estimated value of approximately 195.6% of target value. Through December 2024, which includes two years of the three-year performance period, the performance cash granted in February 2023 had an estimated value of approximately 167.5% of target value. The 2024 performance stock has a three-year performance and vesting period with payout based on achievement of the company’s strategic water savings target. This target, defined as a 16-million-gallonsavings in water usage by the third quarter of 2026 from the baseline set using the 12 months ending September 30, 2023, is part of a longer-term water reduction target outlined in the company’s 2024 sustainability report. Water savings is reduction in water usage plus water recycled. Achievement of a 16-million-gallonreduction provides 100% of the target shares, and a reduction of 20-million-gallonswill provide the maximum number of shares at 150% of target.

| Water Savings — millions of gallons |     | 2024 Plan Payout |
| 0                                   |     | 0