Company: AOS
Filing Date: 2025-02-27
Form Type: DEF 14A
Source: 0001193125-25-037641
Chunk: 40

Company: SMITH A O CORP
Filing Date: 2025-02-27
Form: DEF 14A
Chunk 40
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 Annual Incentive Compensation Each year, the PCC reviews and approves our financial objectives for both the company and its business units. The executive annual incentive bonus is tied to achieving those objectives. The better we perform relative to these objectives, the higher the incentive bonus payment. The annual target incentive bonus typically is calculated as a percent of annual base pay for the performance year. The target percent for incentive compensation, like base salary, is determined through periodic benchmarking and review of the median level survey data provided by WTW. Annual incentive compensation represents an “at risk” component of the executive compensation package. Actual incentive bonus amounts are dependent upon performance against specific measurements and may vary from 0% to 200% of targeted amounts. As a general principle, the portion of an executive’s compensation tied to incentive compensation increases with the executive’s level of responsibility. Thus, the chairman and chief executive officer’s annual incentive opportunity is greater than that of the other named executive officers. We targeted an annual incentive opportunity for the 32 A. O. Smith Corporation

Executive Compensation chairman and chief executive officer at 125% of base pay in 2024 based upon WTW survey data for comparably situated executives. The relationship of our incentive targets to market median comparisons as of year end is illustrated in the following table. Mr. Shafer joined A. O. Smith in March 2024. His annual incentive compensation target was set at a level above our target range to reflect his unique skill set and expected future contributions to the company.

| Name               |     | 2024 Target %  
 of Base Salary |     | Target Incentive % to Market Median |
| Kevin J. Wheeler   |     | 125%           |     | 100%                                |
| Charles T. Lauber  |     | 80%            |     | 100%                                |
| Stephen M. Shafer  |     | 100%           |     | 118%                                |
| James F. Stern     |     | 70%            |     | 100%                                |
| Stephen D. O’Brien |     | 60%            |     | 92%                                 |
| Mark A. Petrarca   |     | 65%            |     | 100%                                |

For 2024, the PCC again aligned our incentives with our focus on improving growth of stockholder value through profitable revenue growth. Our 2024 annual incentive plan for corporate executives was based on achieving a combination of two financial measures, corporate