Company: AOS
Filing Date: 2025-02-27
Form Type: DEF 14A
Source: 0001193125-25-037641
Chunk: 42

Company: SMITH A O CORP
Filing Date: 2025-02-27
Form: DEF 14A
Chunk 42
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33

Executive Compensation Long-Term Incentive Compensation Long-term incentive compensation consists of restricted stock units, performance cash and performance stock, all of which are focused on ensuring sustained performance or achievement of strategic goals over a multi-year period. We believe strongly that equity-based long-term incentives effectively link the interests of senior management to the interests of our stockholders. The allocation of total value between each of the long-term incentive components may vary from year-to-yearbased on our focus, as determined by the PCC. The long-term incentive portion of an executive’s compensation is “at risk” and is dependent upon corporate performance and growth in stock value. The stated purpose of the Combined Incentive Compensation Plan, which is the vehicle for awarding long-term incentives, is to provide compensation as an incentive to induce key employees to remain in our employ and to encourage them to secure or increase their stock ownership in our company or to otherwise align their interests with our stockholders. The Combined Incentive Compensation Plan motivates behavior through growth-related incentives to achieve long-range revenue and profitability goals. The total target value of all long-term incentive components is compared to comparable positions in the marketplace. Again, the PCC utilizes WTW to assist in benchmarking against the median level of surveyed companies to determine market competitive long-term incentive targets for executive positions. Based upon the analysis that WTW provided in October 2023 for the existing executives and in early 2024 for Mr. Shafer who joined A. O. Smith in March 2024, the long-term incentive grants to our named executive officers were valued in the aggregate at 118% of market median and 104% excluding Mr. Shafer. We set Mr. Shafer’s long-term incentive target above our typical target range relative to market median to reflect the unique skills he brings to the role and his anticipated future contributions. Mr. O’Brien’s long-term incentive target reflects his recent promotion to his role. The following table shows long-term incentive grants to named executive officers in 2024, and compares such grants to market median.

| Name               |     | 2024 Long-Term 
 Incentives     
 Target Value   |           |     | Projected Market Median |
|:-------------------|:----|:---------------|----------:|:----|:------------------------|
| Kevin J. Wheeler   |     | $              | 5,350,000 |     | 111%                    |
| Charles T. Lauber  |     |                | 1,375,