Company: AOS
Filing Date: 2025-02-27
Form Type: DEF 14A
Source: 0001193125-25-037641
Chunk: 34

Company: SMITH A O CORP
Filing Date: 2025-02-27
Form: DEF 14A
Chunk 34
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 performance stock awards. Executive officers also are expected to comply with established stock ownership guidelines which require acquisition and retention of specific levels of our Common Stock. Our view is that this stock ownership aligns the interests of our management team with our stockholders and encourages executive performance but discourages executives from taking undue risk. We believe executive total compensation opportunity should increase commensurate with responsibility and capacity to influence our results. Additionally, as responsibility and accountability increase, so should the portion of compensation which is at risk. Therefore, not only do base salaries increase with position and responsibility, but short-term and long-term incentive opportunities as a percentage of total compensation increase as well. Our executive compensation package is designed to strike a balance between short-term cash compensation in the form of fixed salaries and variable annual incentive plans and long-term compensation in the form of cash-based performance units and equity awards with three-year vesting periods. For the chairman and chief executive officer, approximately 14% of 2024 total target compensation was comprised of base salary, with the remaining 86% being variable compensation dependent on our company performance. The variable compensation was divided so that approximately 18% of total target compensation was attributable to annual incentive bonus and approximately 68% was long-term incentive compensation. For the other named executive officers, approximately 20-35%of total target compensation was comprised of base salary, with the remaining 65-80%being based on our company performance. The variable compensation is structured so that approximately 14-21%of total target compensation represents annual incentive bonus, with roughly 47-65%attributable to long-term incentive compensation. EXECUTIVE COMPENSATION MIX

| Compensation Component    |     | CEO |     | Other NEOs |
| Salary                    |     | 14% |     | 20-35%     |
| Annual Incentives & Bonus |     | 18% |     | 14-21%     |
| Long-Term Incentives      |     | 68% |     | 47-65%     |

The Personnel and Compensation Committee (“PCC”) approved a long-term incentive plan for 2024 which targeted 65% of the chairman and chief executive officer’s long-term incentives, or approximately 44% of total compensation, as equity-based awards. The PCC targeted 65% of the long-term incentives, or approximately 30-42%of total target compensation, as equity-based awards for the other named executive officers. 28 A. O. Smith Corporation

Executive Compensation