Company: GGG
Filing Date: 2025-03-12
Form Type: DEF 14A
Source: 0001193125-25-052581
Chunk: 31

Company: GRACO INC
Filing Date: 2025-03-12
Form: DEF 14A
Chunk 31
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 Inc. 2025 Proxy Statement

Components of the Executive Compensation Program Our executive compensation program is designed to reward short-term results and motivate long-term performance through the use of three primary total compensation components: base salary; short-term incentives; and long-term incentives. The following table summarizes each of these components of compensation:

| Component                   |     | Form of       
 Compensation  |     | Purpose                                                                                                                                                                                                                                |     | Key Characteristics                                                                                                                                                                                                                           |     | Performance-Based/At Risk                                                                                                            |
| Base Salary                 |     | Cash          |     | Recognizes individual work experience, performance, skill and level of responsibility                                                                                                                                                  |     | Fixed compensation   Guided by the 50th percentile market data, but subject to individual performance in prior year, role, tenure, relative position in marketplace and budget constraints   Used to compute other components of compensation |     | No                                                                                                                                   |
| Short-Term Incentives (STI) |     | Cash          |     | Establishes a strong link between pay and results   Motivates attainment of annual key business objectives                                                                                                                             |     | Variable compensation tied to actual performance   Bonus thresholds, targets and maximums are set as a percentage of base salary                                                                                                              |     | Yes, fluctuates based on corporate and division/region performance; may not pay out if pre-established, measurable goals are not met |
| Long-Term Incentives (LTI)  |     | Stock options |     | Motivates attainment of long-term goals and overall operational growth   Aligns executives’ interests with shareholders’ interests in creating long-term shareholder value   Retains executive talent through gradual vesting schedule |     | Variable compensation provided to reward Company’s long-term performance   Annual vesting of 25% over a four-year period from grant date   Stock options expire ten years from grant date                                                     |     | Yes, stock options increase in value only if share price rises above grant date fair market value                                    |

**In addition to reviewing the benchmarking data described above, the MOCC reviews compensation and benefits tally sheets for our projected NEOs showing their current and potential total compensation and benefits components. The tally sheets also display estimated compensation and benefits for hypothetical change of control and involuntary and voluntary terminations. Specifically, the tally sheets reviewed by the MOCC in September 2024 provided actual compensation for 2022 and 2023 and target annual compensation for 2024. These tally sheets also provided retirement balances as of December 31, 2023, projected to normal retirement age or the