Company: GGG
Filing Date: 2025-03-12
Form Type: DEF 14A
Source: 0001193125-25-052581
Chunk: 19

Company: GRACO INC
Filing Date: 2025-03-12
Form: DEF 14A
Chunk 19
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 could be purchased with the dividends at the current fair market value of the shares. Non-employeedirectors receive an annual option grant. In February 2024, non-employeedirectors received an annual option grant of 4,830 shares. The number of shares granted was based on a Black-Scholes value of $28.96 per share on February 15, 2024, and an economic value of approximately $140,000. In February 2025, non-employeedirectors received an annual option grant of 4,980 shares. The number of shares granted was based on a Black-Scholes value of $28.06 per share on February 13, 2025, and an economic value of approximately $140,000. Upon first joining the Board, non-employeedirectors are also eligible to receive an initial option grant with an economic value equal to that of the most recent option grant for non-employeedirectors. Options granted to non-employeedirectors are issued under the Graco Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The options are non-statutory,have a 10-yearduration and become exercisable in equal installments over four years, beginning with the first anniversary of the date of the grant. The option exercise price is the fair market value of the stock on the date of grant, as defined in the Plan. The Plan defines “fair market value” as the closing sales price of the stock on the principal securities market on which it trades on the date immediately preceding the date of grant. Our Board’s philosophy is to target retainer compensation at a level approximately comparable to the median of the market, and to target equity compensation in the form of stock options at a level approximately comparable to the 75th percentile of the market, in order to attract and retain capable Board members, to encourage above-market Company performance, and to strengthen the link between our director compensation program and the interests of our shareholders in Graco stock performance. 13 Graco Inc. 2025 Proxy Statement

Our Governance Committee requested that the Graco Compensation Department conduct a peer group comparison of director compensation and present such data at its February 2024 meeting. The peer companies used for the 2024 benchmarking study matched the peer group identified for executive compensation on page 23 of the Compensation Discussion and Analysis section of the Proxy Statement for the 2024 Annual Meeting of Shareholders. In reviewing the peer group comparison,