Company: AOS
Filing Date: 2025-02-27
Form Type: DEF 14A
Source: 0001193125-25-037641
Chunk: 35

Company: SMITH A O CORP
Filing Date: 2025-02-27
Form: DEF 14A
Chunk 35
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 EXECUTIVE CASH / EQUITY MIX

| Compensation Component    |     | CEO |     | Other NEOs |
| Cash-Based Compensation   |     | 56% |     | 58 - 70%   |
| Equity-Based Compensation |     | 44% |     | 30 - 42%   |

We believe this combination results in a competitive compensation package that provides an incentive for our executives to lead with a focus on short-term results, while positioning us for long-term sustained performance. With approximately 30-44%of their total compensation tied to equity awards, we believe the decisions of named executive officers are aligned with the best interests of our stockholders. We believe this combination of base pay and short-term and long-term incentives supports our objectives of pay-for-performance,while mitigating the potential for undue risk-taking because it ties a significant portion of the executive officer’s compensation to sustained, long-term performance. Outside Consultants Just as we compete for market share in highly competitive global markets, we compete for talent in equally competitive labor environments. To attract and retain critical leadership in these competitive environments, we strive to provide a comprehensive and competitive total compensation package. We utilize the resources of an independent compensation consultant to aid in establishing our programs and to monitor how they compare with the marketplace. Specifically, the PCC has retained WTW, a leading global executive compensation consulting group, to advise the PCC on market trends relative to executive compensation, provide market data, as requested, and share input and views on issues being discussed by the PCC. The PCC has sole authority to approve the independent compensation consultant’s fees and terms of engagement on executive compensation matters. The PCC annually reviews its relationship with WTW to ensure its independence on executive compensation matters, taking into account the independence analysis and recommendation of the Nominating and Governance Committee (“NGC”). In making its recommendation, the NGC reviewed the independence of WTW and the individual representatives of WTW who served as the PCC’s advisors, considering the following specific factors: (i) other services provided to us by WTW; (ii) fees paid by us to WTW as a percentage of WTW’s total revenue; (iii) policies and procedures maintained by WTW that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual representatives of WTW who advised the PCC and any member of the PCC; (v) any shares of our company’s Common Stock owned by the individual representatives; and (