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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant ý
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ý Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to § 240.14a-12

AVERY DENNISON CORPORATION
(Name of Registrant as Specified In Its Charter)

N/A
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2 0 2 0 Notice and Proxy Statement Avery Dennison Corporation | 2020 Notice and Proxy Statement SECTION III

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GRAPHIC


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LOGOLOGO

Notice of 20182020 Annual Meeting of Stockholders

To Our Stockholders:

        We cordially invite you to attend our 20182020 Annual Meeting of Stockholders at the Embassy Suites, 800 North Central207 Goode Avenue, Glendale, California 91203 on Thursday, April 26, 2018,23, 2020 at 1:30 p.m. Pacific Time. At the meeting, we will conduct the following items of business:

 GRAPHICGRAPHIC Elect the 1110 directors nominated by our Board to serve a one-year term;
 GRAPHICGRAPHIC Approve, on an advisory basis, our executive compensation;
 GRAPHICGRAPHIC Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2018;2020; and
 GRAPHICGRAPHIC Transact any other business properly brought before the meeting or any adjournment or postponement thereof.

        Our Board recommends that you voteFOR each of theour 10 director nominees in Item 1 andFOR Items 2 and 3. After Dean Scarborough, our Chairman, conducts these items of business at the meeting, Mitch Butier, our President and Chief Executive Officer, will discuss our 2017 performance and answer your questions.

        Stockholders of record as of February 26, 201824, 2020 are entitled to notice of, and to vote at, the meeting and any adjournment or postponement thereof.

        We will be mailing our Notice of Internet Availability of Proxy Materials, which includes instructions on how to access these materials on the Internet, on or before March 15, 2018. If you previously elected to receive a paper copy of our proxy materials, we will mail you our 2018 proxy statement; 2017 annual report, which includes a letter to stockholders from our Chairman and President/CEO; and a proxy card on or about March 16, 2018.

We want your shares to be represented and voted.voted. You can vote as shown in the chart below.



INSTRUCTIONS FOR VOTING

GRAPHICGRAPHIC



On the InternetBY MOBILE DEVICE

You can vote onlineby scanning the QR code atwww.proxyvote.com the right before 11:59 p.m. Eastern Time on April 25, 2018.22, 2020. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.GRAPHIC


​ 
GRAPHICGRAPHIC

By TelephoneBY INTERNET

In the U.S. or Canada, you

You can vote by calling 1.800.690.6903online atwww.proxyvote.com before 11:59 p.m. Eastern Time on April 25, 2018.22, 2020. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.



​ 
GRAPHICGRAPHIC
BY TELEPHONEIn the U.S. and Canada, you can vote by calling 1.800.690.6903 before 11:59 p.m. Eastern Time on April 22, 2020. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.
​ 
GRAPHIC

By MailBY MAIL

You can vote by mail by completing, dating and signing your proxy card and returning it in the postage-paid envelope or otherwise to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.



​ 
GRAPHICGRAPHIC

In PersonIN PERSON

Except with respect to

Unless your shares are held through our Employee Savings Plan, you can vote in person at the Annual Meeting. Beneficial holders must contact their broker or other nominee if they want to vote in person.


        On behalf of theour Board of Directors, management and employees, of Avery Dennison, thank you for your continued support.

 By Order of theOur Board of Directors


 

Susan C. Miller
Corporate Secretary




March 15, 2018

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OUR PLAN TO WIN




Drive outsized growth in high value categories with higher growth and margin potential (e.g., specialty labels, graphics, industrial tapes and radio-frequency identification (RFID))
Grow profitably in our base business through tailored go-to-market strategies and disciplined execution
Maintain our relentless focus on productivity through continued operational excellence and enterprise lean sigma
Deploy capital effectively by balancing investments in organic growth, productivity and acquisitions, while returning cash to shareholders
 Our Strategies


March 6, 2020

Our ValuesGRAPHIC





Customers
We provide innovative, high quality products and solutions, with industry-leading service
Employees
We cultivate a diverse, engaged, safe and healthy workforce
Communities
We are responsible stewards of the environment and a force for good in our communities
Investors
We are committed to delivering superior shareholder returns over the long term
Our Stakeholders

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PROXY SUMMARY

 i

PROXY STATEMENT

 1

GOVERNANCE, SUSTAINABILITY AND SOCIAL RESPONSIBILITY

 1

OUR BOARD OF DIRECTORS

 108

Overview

 108

Governance Guidelines

 129

Director Independence

 1310

Board Leadership Structure

 1411

Board Committees

 1512

Executive Sessions

 1715

Risk Oversight

 1715

Human Capital Management

 2018

Director Education

 2019

Board and Committee Evaluations

 2119

Stockholder Engagement and Communications

 2220

ITEM 1  ELECTION OF DIRECTORS

 2322

Selection of Director Nominees

 2322

Board Matrix of Director Skills, Qualifications and Backgrounds

 2524

Board Refreshment and Director Succession Planning

 2524

Director Diversity

 2726

20182020 Director Nominees

 2726

Director Compensation

 3231

Director Compensation Table

 3433

ITEM 2  ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

 3534

COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE REPORT

 3635

COMPENSATION DISCUSSION AND ANALYSIS (CD&A)

 3736

Executive Summary

 3736

Summary of Compensation Decisions for 20172019

 4846

Discussion of Compensation Components and Decisions Impacting 20172019 Compensation

 5048

Compensation-Setting Tools

 6362

Independent Oversight and Expertise

 6463

Other Considerations

 6564

EXECUTIVE COMPENSATION TABLES

 6766

20172019 Summary Compensation Table

66

2019 Grants of Plan-Based Awards

 67

2017 Grants of Plan-Based Awards

69

20172019 Outstanding Equity Awards at Fiscal Year-End

 7068

20172019 Option Exercises and Stock Vested

 7269

20172019 Pension Benefits

 7470

20172019 Nonqualified Deferred Compensation

 7671

Payments Upon Termination as of December 30, 201728, 2019

 7873

Equity Compensation Plan Information as of December 30, 201728, 2019

 8276

CEO PAY RATIO

 8377

ITEM 3  RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 8479

AUDIT MATTERS

 8580

AUDIT AND FINANCE COMMITTEE REPORT

 8782

SECURITY OWNERSHIP INFORMATION

 9085

Security Ownership of Management and Significant Stockholders

 90

Section 16(a) Beneficial Ownership Reporting Compliance

9185

Related Person Transactions

 9186

VOTING AND MEETING Q&A

 9287

APPENDIX A — RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TOFROM GAAP

 A-192

Avery Dennison Corporation| 20182020 Proxy Statement  |  Table of Contents


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PROXY SUMMARY

        This section summarizesproxy summary contains highlights from information described in greater detail in other parts of this proxy statement and does not contain all the information you should consider before voting. We strongly encourage you to read the entire proxy statement before voting.

DISTRIBUTION OF PROXY MATERIALS

        We will mail our Notice of Internet Availability of Proxy Materials, which includes instructions on how to access these materials on the Internet, on or about March 10, 2020. If you previously elected to receive a paper copy of our proxy materials, we will mail you our 2019 integrated report, which includes a letter to stockholders from our Chairman, President and Chief Executive Officer; our 2019 annual report; our notice and proxy statement for the 2020 Annual Meeting of Stockholders (the "Annual Meeting"); and additional information regarding our businesses and financial and sustainability achievements, as well as a proxy card on or about March 10, 2020.

TIME AND LOCATION OF ANNUAL MEETING

        The Annual Meeting will take place at 1:30 p.m. Pacific Time on April 26, 201823, 2020 at the Embassy Suites, 800 North Central207 Goode Avenue, Glendale, California 91203. Parking will be available next door at 127 Burchett Street, Glendale, California 91203. Attendants will be available to provide assistance with directions and parking tickets will be validated at the Annual Meeting.

ITEMS BEING VOTED ON AT ANNUAL MEETING

        You are being asked to vote on the items of business shown below at the Annual Meeting. Our Board of Directors (our "Board") recommends that you vote FOR all 11each of our 10 director nominees and FOR the other two other items being brought before the stockholder vote.

ITEM
BOARD
RECOMMENDATION

VOTE
REQUIRED

DISCRETIONARY
BROKER VOTING

PAGE
REFERENCE

GRAPHICElection of directorsFOR each nomineeMajority of votes castNo23
GRAPHICAdvisory vote to approve executive compensationFORMajority of shares represented and entitled to voteNo35
GRAPHICRatification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal year 2018FORMajority of shares represented and entitled to voteYes84
ITEM
 BOARD
RECOMMENDATION

 VOTE
REQUIRED

 DISCRETIONARY
BROKER VOTING

 PAGE
REFERENCE

1

 Election of directors GRAPHIC FOR
each nominee
 Majority of votes cast No 22

2

 Advisory vote to approve executive compensation GRAPHIC FOR Majority of shares represented and entitled to vote No 34

3

 Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal year 2020 GRAPHIC FOR Majority of shares represented and entitled to vote Yes 79

BUSINESS STRATEGY OVERVIEW

        We strive to create superior long-term, sustainable value for our customers, employees and investors and improve the communities in which we operate. To realize the business aspects of this vision, we are focused on executing the following keycore strategies:

the following financial priorities:

Maintaining our relentless focus on productivity through continued operational excellence and enterprise lean sigma; and

Deploying capital effectively by balancing our investments in organic growth, productivity and acquisitions, while returning cash to stockholders.

FINANCIAL PERFORMANCE HIGHLIGHTS

        Strong Financial2019 Performance and Continued Execution of Strategic Priorities. FiscalIn fiscal year 2017 marked our sixth consecutive2019, we delivered another year of strong top-line growth, margin expansion and double-digit adjusted earnings per share (EPS) growth.growth and operating margin expansion. We exceededachieved most of our financial goals for the year, with the accomplishments shown below and on the following page.performance highlights described below.

Avery Dennison Corporation| 2018 Proxy Statement |i


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        Organic sales growth,change, adjusted EPS, free cash flow, ROTC and adjusted ROTC are non-GAAPsupplemental financial measures that we provide to investors to assist theminvestors in assessing our performance and operating trendstrends. They are defined, qualified and definereconciled from generally accepted accounting principles in theCompensation Discussion and Analysis United States of America (GAAP) in the last section of this proxy statement. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable financial measures under generally accepted accounting principles in the United States of America (GAAP) and are reconciled to GAAP inAppendix A of this proxy statement.GAAP.

GRAPHICGRAPHIC

        On Track to DeliverDelivering Financial Targets. Our 2014-2018In March 2017, we announced five-year financial goals included anthrough 2021, including targets for organic sales growth, target of 4% to 5%, reflecting confidence in the trajectory of our two largest businesses. We also targeted double-digitGAAP operating margin, adjusted EPS growth. For the first time, we externally communicated a target for ROTC, which has long been a key internal financial metric for our company. We believe that thegrowth and ROTC. The combination of our growth and ROTC targets captures our value creation objectives, which together areis a proxy for growth in economic value added (EVA), one of the performance objectives used in our long-term incentive (LTI) compensation program. As shown below,on the following page, based on our results for the first fourthree years of this five-year period, we are largely on track to achieve or exceed our 2018 commitments to investors.deliver these commitments.

ii    2020 Proxy Statement  |Avery Dennison Corporation


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For the 2017-2019 period, on a three-year compound annual basis (with 2016 as the base period), GAAP reported net sales and reported EPS increased by 5.1% and 0.3%, respectively, and reported net income decreased by 1.8%.


 
 2014-2018
TARGETS*
2017-2021 TARGETS

 2014-2017
2017-2019 RESULTS(1)



Organic Sales Growth(2)

4%+ organic
5%+ ex. currency(3)

 
3.9% organic
4%-5%5.7% ex. currency

GAAP Operating Margin

11%+ in 202110.9% in 2019

Adjusted EPS Growth(2)

10%+18.0%

ROTC

17%+ in 202111.9% in 2019
Adj. ROTC4%(4) of 19.6% in 2019

 

Adjusted EPS Growth

 

12%-15%+

 

17%


ROTC



16%+ in 2018


13% in 2017
Adj. = 19% in 2017
ON TRACK TO ACHIEVE OR EXCEED 2018DELIVER 2017-2021 FINANCIAL TARGETS


*


Percentages for organic sales and adjusted EPS growth reflect compound annual growth rates with 2013 as the base period.

Avery Dennison Corporation| 2018 Proxy Statement |ii


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        In March 2017, we announced our 2017-2021 goals, targeting continued solid organic sales growth and double-digit growth in adjusted EPS on a compound annual basis. While we are only one year into this five-year period, we are on pace to deliver these targets, as shown below.



2017-2021
TARGETS*

2017
RESULTS


(1)

Organic Sales Growth


4+%
5+% with M&A


4%
8% with M&A
Results for non-GAAP measures are reconciled from GAAP in the last section of this proxy statement.


Adjusted EPS Growth


10+%


24%


ROTC


17%+ in 2021


13% in 2017
Adj. = 19% in 2017


ON PACE TO DELIVER 2021 FINANCIAL TARGETS


*(2)

 

Percentages for organic sales growth and adjusted EPS growthtargets reflect five-year compound annual growth rates, with 2016 as the base period. Percentages for results reflect three-year compound annual growth rates, with 2016 as the base period.

(3)


Target with M&Afor sales growth ex. currency reflects the impact of completed acquisitions as of March 2017.2017 of approximately 1 point.

(4)


Excludes the impact of the termination of our U.S. pension plan.

        Reported results for these periods are disclosed in theCompensation Discussion and Analysis section of this proxy statement.

        Disciplined Capital Allocation. Effectively deploying capital is one of our key strategies, and weWe have been consistently disciplined in executing our execution by investingapproach to capital allocation, balancing our investments in organic growth, and productivity and acquiring targeted companies, whileacquisitions with continuing to return cash to stockholders through dividends and share repurchases.In 2019, on net income of $303.6 million, we delivered adjusted ROTC of nearly 20% while investing $257.2 million in capital expenditures to support future growth and further productivity improvement. In addition, we paid $189.7 million in dividends and repurchased $237.7 million in shares of our common stock.

        We have paid quarterly dividends for decades and raised our quarterly dividend rate by 125% since 2010. As shown in the graph below, over the last five years, we have allocated nearly $2 billion to dividends and share repurchases. Given our increased use of available capital for acquisitions and equity investments, we repurchased fewer shares in 2017 compared to prior years.

        We have also allocated capital to investinginvested in our businesses to support organic growth and pursuingpursued targeted acquisitions that support our strategy of increasing our exposure to high value product categories. During 2017,Our spending on capital expenditures in 2019 was comparable to prior year as we successfully completedcontinued investing to enable the future growth of our businesses, improve our profitability and integratedexpand our margins. Last November, we announced our agreement to acquire the acquisitionsTransponder (RFID inlay) Division of (i) Hanita Coatings Rural Cooperative Association Limited, an Israel-based pressure-sensitive manufacturer of specialty films and laminates; (ii) Yongle Tape Ltd.,Smartrac, a China-based manufacturer of specialty tapes and related products used in a variety of industrial markets; and (iii) Finesse Medical Limited, an Ireland-based manufacturer of healthcare products usedleader in the managementdevelopment and manufacture of wound careRFID products. Together with our Intelligent Labels business, this acquisition will create a platform with over $500 million in annual revenue, offering long-term growth and skin conditions.profitability, enhanced research and development capabilities, expanded product lines and additional manufacturing capacity. We completed this acquisition in February 2020. During 2019, we also made equity investments in two other companies.start-up companies developing innovative technological solutions.

        In 2019, we deployed $427.4 million to (i) repurchase 2.2 million shares at an aggregate cost of $237.7 million and (ii) pay an annual dividend of $2.26 per share for an aggregate amount of $189.7 million. Given the higher price of our common stock in 2019, we allocated less capital to share repurchases in 2019 than in 2018, a year in which our stock price had significantly declined in the second half; however, as shown in the graph on the following page the amount repurchased was comparable to the average amount repurchased over the prior four years. We have paid quarterly dividends for decades and most recentlyraised our quarterly dividend rate by approximately 12% in April 2019. As shown in the graph on the following page,over the last five years, we have allocated over $2 billion to dividends and share repurchases and over $565 million to acquisitions and equity investments.

Avery Dennison Corporation  |2020 Proxy Statement    iii


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Capital Allocated to Dividends,
Share Repurchases and Acquisitions*

GRAPHICGRAPHIC

Avery Dennison Corporation| 2018 Proxy Statement |iii


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unconsolidated businesses.

        Three- and Five-Year Cumulative TSR Outperformance. As shown below, withwe achieved total stockholder return (TSR) of over 66%48% in 2017, we2019, and delivered cumulative TSR for the 2015-20172017-2019 three-year period and the 2013-20172015-2019 five-year period that significantlysubstantially outperformed the S&P 500® and the median of the S&P 500 Industrials and Materials subsets.We compare ourselves to the median of the S&P 500 Industrials and Materials subsets (webecause we are a member of the Materials subset, butand also share many characteristics with members of the Industrials subset;subset. This practice is further informed by feedback from investors, who have informed usindicated that they look at both subsets in evaluating our performance relative performance, as we do internally).to that of our peers. We focus on TSR because it measures the return we have providedprovide to our stockholders, including stock price appreciation and dividends paid (assuming reinvestment thereof)of dividends).

        Although we experienced strong TSR in 2019, we continue to believe that our longer-term TSR is a more meaningful measure of our performance than our one-year TSR, which can be significantly impacted by short-term market volatility that may be unrelated to our underlying performance. For example, although we delivered strong financial results in 2018 – exceeding the high end of our adjusted EPS guidance for the year – our TSR for that year was negative, as was the TSR of each of the comparator groups shown below.

GRAPHICGRAPHIC


1-, 3- and 5-YEAR TSR

1-, 3- and 5-YEAR TSR

 2013 2014 2015 2016 2017 3-Year
TSR
 5-Year
TSR
 2015 2016 2017 2018 2019 
3-Year TSR
 
5-Year TSR 
​ ​ 

AVY

 47.5% 6.2% 23.8% 14.6% 66.7% 136.4% 270.3% 23.8% 14.6% 66.7% (20.3)% 48.5% 97.5%  179.9% 
​ ​ 

S&P 500

 32.4% 13.7% 1.4% 12.0% 21.8% 38.3% 108.1% 1.4% 12.0% 21.8% (4.4)% 31.5% 53.2%  73.9% 
​ ​ 

S&P 500 Indus. & Mats.* (median)

 41.0% 11.7% (4.7)% 19.0% 27.5% 49.2% 134.8%

S&P 500 Industrials & Materials*

 (4.3)% 20.7% 28.6% (14.3)% 33.7% 53.1%  78.5% 
*
Based on median of companies in both subsets as of December 31, 2017.2019.

Avery Dennison Corporation|iv    20182020 Proxy Statement  |  ivAvery Dennison Corporation


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STOCKHOLDER ENGAGEMENT

        We continued our longstanding practice of ongoing engagement and open dialogue with stockholders in 2017.2019. Our engagement program takes place throughout the year generallyand – with respect to environmental, social and governance (ESG), executive compensation and human capital management (HCM) matters – as shown in the graphic below.

GRAPHICGRAPHIC

2019 ENGAGEMENT PROCESSRESULTS

        In advance of the 20172019 Annual Meeting, we contacted our 2535 largest institutional stockholders, representing almost 50%approximately 61% of our then-outstanding shares. Board members, including our Lead Independent Director, and management were made available to answer questions and address concerns regarding our executive compensation and governance programs and the items being brought tobefore the stockholder vote at the Annual Meeting.vote. While we received responses from stockholders representing 25%over 30% of our then-outstanding shares, noneonly one of them felt that there was a needdesired to substantively engage duringat that busy time. Respondents declining meetings indicated that they did not have any concerns warranting discussion during proxy season.

        In the fall, without the time pressures associated with proxy season, we reached out tocontacted our 30 largest institutional stockholders, representing nearly 55%over 62% of our then-outstanding shares. Proposed topics for these meetings includedshares, to request a meeting with our business strategy and financial performance, executive compensation matters, Board composition and succession planning, and progress towards achieving our sustainability goals.Lead Independent Director and/or management. We received responses from stockholders representing over 30%nearly 60% of our then-outstanding shares and spoke with stockholders representing approximately 11%35% of thoseour then-outstanding shares.We substantively engaged with every stockholder who requested to do so.so, and our Lead Independent Director led half of these engagements. We also discussed the results of our fall engagement with the Compensation and Executive Personnel Committee (the "Compensation Committee") and the Governance and Social Responsibility Committee of our Board.

        Our off-season meetings focused on potential changes in the Compensation Committee's approach to CEO compensation, as well as our non-employee directors' commitments as they relate to overboarding concerns. We also answered questions regarding our business strategies and financial performance; executive compensation and HCM matters; Board composition and refreshment process; and other ESG matters, including our progress towards achieving our 2025 sustainability goals.

Avery Dennison Corporation| 2018 Proxy Statement  |  2020 Proxy Statement    v


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        The graphics below show the results of our 2017 engagement.2019 engagement with stockholders on ESG, executive compensation and HCM matters.

GRAPHICGRAPHIC

STOCKHOLDER FEEDBACK DURING 20172019 ENGAGEMENT

Governance Matters

        With respect to matters related to governance, we discussed several topics related to our Board's processes, including succession planning and refreshment, diversity, and evaluations. We also discussed the integration of sustainability into our business strategies, and our Board's oversight of our cybersecurity preparedness. Our stockholders expressed interest in the anticipated completion of our CEO transition and our Board's views on proxy access; both of these matters were subsequently addressed with our December 2017 announcement of Dean Scarborough's retirement as our Executive Chairman at the end of that year and our adoption of proxy access.

Executive Compensation Matters

        With respect to matters related to executive compensation, our stockholders expressed support for our program generally and appreciated the more graphical disclosure in our 2017 proxy statement. In addition, we discussed our approach to human capital management, in particular our diversity and inclusion efforts, as well as the linkage between our executive incentive compensation and business strategies. We also provided additional clarification on the market-leveraged stock units (MSUs) included in our LTI program.

        Our Board and management believe that ongoingregular stockholder engagement fosters a deeper understanding of investors' evolving expectations on ESG matters, as well as executive compensation and governanceHCM matters. We look forward to maintainingcontinuing our longstanding practice of connectingengaging in dialogue with our stockholders to ensure our programs continue to align with best practices.

ESG Matters

        With respect to matters related to governance, we discussed topics related to ourBoard composition and its succession planning and refreshment processes, as well as the skills, commitments, tenure, and diversity of our directors. We also commented on ourstockholder rights profile. In addition, we discussed our Board's oversight of ourbusiness strategies and related risks; progress towards achieving our 2025 sustainability goals, including with respect to plastic recyclability and how our businesses are adapting to the risks and opportunities presented by climate change; andaudit matters such as the tenure of our independent auditor.

Avery Dennison CorporationExecutive Compensation and HCM Matters

        With respect to executive compensation, we discussed the linkage between our incentive compensation and business strategies. We also reviewed our approach to HCM, including our executive|leadership development 2018 Proxy Statement andsuccession planning| processes,diversity and inclusionvi initiatives andemployee engagement scores. We also reported on the Compensation Committee's robust oversight of these priorities.


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SUSTAINABILITY

        Sustainability is one of our core values and has long been an integral part of our approach to doing business. Our aim is to improve the sustainability of our products and processes while helping to create shared value for all of our stakeholders. Key to our progress has been integrating sustainability into our underlying business strategies and engaging employees at all levels.

        We        In the integrated annual report onin which this proxy statement is included, we present highlights of our sustainability progress every two years. In September 2017, we issuedachievements against our 2014-2016 Sustainability Report, summarizing our key achievements during the period and progress towards reaching the 2025 sustainability goals. In the first five years of the 10-year horizon for these goals, we set in 2015.have made meaningful progress. We encourage you to review these highlights, as well as our sustainability scorecard shown on the reportfollowing page. You can find additional information on our website atwww.averydennison.com/the sustainability. Our sustainability goals are shown below and our progress is described underSustainability in theGovernance, Sustainability and Social Responsibility section of this proxy statement.our website.

vi    2020 Proxy Statement  |Avery Dennison Corporation


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2025 SUSTAINABILITY GOALS

FOCUS AREA
 GOAL(S)
HIGHLIGHTS OF PROGRESS IN OR THROUGH 2019
GRAPHICGreenhouse
Gas Emissions


GRAPHIC

Greenhouse Gas Emissions

 
Achieve at least a 3% absolute reduction year-over-year.year-over-year and at least a 26% overall reduction, compared to our 2015 baseline, by 2025.Reduced our absolute GHG emissions by over 5% in 2019 and over 30% through 2019 compared to our 2015 baseline.

GRAPHICPaper


PaperGRAPHIC

 

Source 100% certified paper, of which at least 70% will be Forest Stewardship Council®–certified.


Nearly 90% of the total volume of paper we procured in 2019 was certified, with nearly 80% of facestocks Forest Stewardship Council®-certified.

Introduced our rBG liner containing 15% post-consumer waste.

Films

GRAPHICGRAPHIC



Films

 

Ensure that 70% of the films we buy conform to, or enable end products to conform to, our environmental and social guiding principles.

GRAPHIC

 

We introduced a number of recycled-content products in 2019, including our recycled PET (rPET) liner, which uses 30% post-consumer waste, which costs the same as conventional liners and delivers the same functionality, while offering sustainability advantages with respect to water and energy usage and greenhouse gas emissions.

Chemicals

GRAPHIC

 

Ensure that 70% of the chemicals we buy conform to, or enable end products to conform to, our environmental and social guiding principles.


Determined to begin a multi-year process of implementing the restricted substance list of the most restrictive countries in which we do business across all our operations, regardless of less restrictive laws and regulations in many of the countries in which we do business.

GRAPHICProducts and
Solutions


GRAPHIC



Products and Solutions

 

Through innovation, deliver above-average growth in sales from sustainability-driven products and services.



Ensure that 70% of our products and solutions conform to, or enable end products to conform to, our environmental and social guiding principles.





Determined that at least 35% and 40% of our Label and Graphic Materials (LGM) and Retail Branding and Information Solutions (RBIS) business' revenues in 2019, respectively, were from products that are responsibly sourced, enable recyclability, contain recycled content, or use less material without compromising performance.


In our LGM business, we introduced several new facestocks made with recycled content as part of our Clearintent™ portfolio of more sustainable products, including our recycled polyethylene (rPE) facestock made with 30% recycled PE resin, and our Crush Range™ line of paper facestocks made of recycled paper and organic waste.

In May 2019, our RBIS business announced its 10 Solutions for Sustainable Change, which include products that promote apparel recycling, yarn made from recycled polyester, kraft paper alternatives for plastic e-commerce packaging, and intelligent labels that give consumers access to desired information, including a product's provenance and recyclability, via their mobile devices.

GRAPHICWaste


WasteGRAPHIC

 

Be 95% landfill-free, with at least 75% of our waste reused, repurposed or recycled.



Eliminate 70% of the matrix and liner waste from our value chain.



As of the end of 2019, diverted over 90% of our solid waste from landfills with nearly 100 of our sites worldwide over 95% landfill-free, and recycled over 60% of our diverted waste.

We continue working to eliminate the liner and matrix by-product that remains after our label materials are applied. In late 2019, we created an industrywide group focused on better communicating the recycling capabilities offered throughout the industry beginning in North America and Europe, with the aim to ultimately expand these efforts globally.

Transparency

GRAPHICGRAPHIC




Transparency


 


Commit to goals publicly and be transparent in reporting our progress.

GRAPHIC

 

Partnered with Business for Social Responsibility to update our sustainability materiality assessment to ensure continued alignment with the sustainable practices and goals of our customers and the industries we serve.

Published our 2019 integrated report, which summarizes our sustainability progress since our last biennial Sustainability Report was published in September 2017. We are now committing to publishing our progress annually.

People

GRAPHIC

 

Continue to cultivate a diverse (40%+ female at the level of manager and above), engaged, safe (recordable injuryincident rate of <0.25), productive and healthy workforce.



Continue to invest in our employees and the communities in which they live and work.



Expanded our flexible work arrangements, female employee leadership program and unconscious bias training. Evaluated our gender pay equity, making adjustments to compensation where needed. Launched employee resource groups and established regional diversity and inclusion councils. While we work.

have increased female representation at the level of manager and above by over 6% from our 2016 baseline year, it was 34% at the end of 2019.

Continued our world class safety record, with a recordable incident rate of 0.23 in 2019, far surpassing the manufacturing industry average of 3.4 in 2018 (the most recently available industry average).

Avery Dennison Corporation| 2018 Proxy Statement  |  2020 Proxy Statement    vii


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20182020 DIRECTOR NOMINEES (ITEM 1)

        Our Board has overseen ourprovides strong recent performance, including the following:

    Successful executionoversight of our Board-aligned business strategies, which has drivenmanagement team and company, with the following notable accomplishments in recent years:

    Successful execution of our business strategies, which has delivered strong compound annual organic sales growth, operating margin expansion, and double-digit compound adjusted EPS growth in the first three years of the five-year horizon reflected in our financial targets through 2021, as well as TSR over the most recent three- and five-year periods of approximately 96% and 180%, respectively, in each case substantially outperforming the S&P 500;

    The completion of six acquisitions and equity investments in six other companies, in each case consistent with our disciplined approach to acquisitions and investments through which we target companies that can enhance our existing capabilities and increase our exposure to high value product categories;

    Orderly executive leadership development and succession planning, with experienced leaders promoted to CEO and CFO and effectively transitioning into their roles; and

    Thoughtful Board refreshment and succession planning, with four new independent directors appointed to our Board in the last seven years, three of whom increased the racial, ethnic or gender diversity on our Board, as well as two long-serving directors departing from our Board to focus on other endeavors.

    BOARD REFRESHMENT AND SUCCESSION

    Departure of Current Lead Independent Director; Post-Annual Meeting Board Leadership Structure

            In February 2020, our strong TSR performance overLead Independent Director, David Pyott, notified our Board of his intention not to stand for reelection at the most recent three- and five-year periodsAnnual Meeting so that he may focus on other endeavors. As a result, Mr. Pyott's membership on our Board will end on the date of over 136% and 270%, respectively, in each case substantially outperforming the S&P 500;

    The closing and integration of five acquisitionsAnnual Meeting. Our Board actively reviews its composition and the completion of equity investments in three other companiesneed for refreshment, and determined not to appoint an additional director at this time but may decide to do so in the last two years, demonstratingfuture.

            In light of Mr. Pyott's upcoming departure, in February 2020, the Governance Committee evaluated our disciplined approachBoard leadership structure and recommended to acquisitions through which we target companiesour Board that can enhance our existing capabilities and increase our exposurePatrick Siewert be selected to high value product categories; and

    Seamless executionserve as Lead Independent Director. The committee's decision took into account his significant contribution to the Board's responsibility of maintaining the integrity of our Board's executive succession planning withfinancial statements as a member of the 2016 election of Mitch Butier as our Chief Executive Officer (CEO), after serving as Chief Operating Officer under our previous CEO, Dean Scarborough (who then became our Executive Chairman),Audit and Finance Committee for the past 15 years and its Chair for the past four years, as well as his extensive international experience in Asia, a region in which nearly 35% of our sales are generated and approximately 60% of our employees are located. With Mr. Pyott's departure, the 2017 electionGovernance Committee determined that Mr. Siewert is best positioned to provide independent leadership of Greg Lovins as our Chief Financial Officer (CFO).

APPOINTMENT OF NEW DIRECTOR

Board in overseeing our strategies to drive long-term value creation for our key stakeholders of customers, employees, investors and communities. Upon the recommendation of ourthe Governance and Social Responsibility Committee, our Board appointed Andres Lopez as anthe independent directordirectors on our Board unanimously selected Mr. Siewert (with him and Mr. Pyott abstaining) to serve as our Lead Independent Director, effective February 1, 2017. Mr. Lopez brings deep packaging industry expertise as President and CEOimmediately after the Annual Meeting subject to his reelection. A description of Owens-Illinois, Inc., after having served in leadership rolesresponsibilities of increasing responsibility at the glass container manufacturing company (as described in greater detail in his biographyour Lead Independent Director can be found on page 2811 of this proxy statement). Mr. Lopez was subsequently elected to our Board by our stockholders at the 2017 Annual Meeting.statement.

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        In December 2017, Mr. Scarborough, then Executive Chairman, notified the Board that he would be retiring from our company at the end

Table of the year. He was our employee through December 31, 2017 and continues to serve as non-executive Chairman.Contents

DIRECTOR NOMINEES

        Our 10 director nominees have demonstrated their commitment to diligently executing their fiduciary duties on behalf of our stockholders, and we recommend that our stockholders elect each of the nominees shown in the chart below at the Annual Meeting.

NAME
 AGE
 DIRECTOR SINCE
 PRINCIPAL OCCUPATION
 INDEPENDENT
 AC
 CC
 GC
 AGE
 DIRECTOR
SINCE

 PRINCIPAL OCCUPATION
 INDEPENDENT
 AC
 CC
 GC
       
Bradley A. Alford 61 2010 Retired Chairman & CEO, Nestlé USA GRAPHIC
  M M 63 2010 Retired Chairman & CEO, Nestlé USA   M M
Anthony K. Anderson 62 2012 Retired Vice Chair & Managing Partner, Ernst & Young LLP GRAPHIC M   M
 

64

 

2012

 

Retired Vice Chair & Managing Partner, Ernst & Young LLP

 


 

M

 

 

 

M
Peter K. Barker 69 2003 Retired Chairman of California, JPMorgan Chase & Co. GRAPHIC
M  C
 

71

 

2003

 

Retired Chairman of California, JPMorgan Chase & Co.

 


 

M

 


 

C

Mark J. Barrenechea

 

55

 

2018

 

Vice Chair, CEO & CTO, OpenText Corporation

 


 

 

 

M

 

 
Mitchell R. Butier 46 2016 President & CEO, Avery Dennison Corporation GRAPHIC      
 

48

 

2016

 

Chairman, President & CEO, Avery Dennison Corporation

 


 


 


 

Ken C. Hicks 65 2007 Retired Chairman, Foot Locker, Inc. GRAPHIC
M M 
 

67

 

2007

 

Chairman, President & CEO, Academy Sports + Outdoors

 


 

 

 

M

 

 
Andres A. Lopez 55 2017 President & CEO, Owens-Illinois, Inc. GRAPHIC M    
 

57

 

2017

 

President & CEO, O-I Glass, Inc.

 


 

M

 


 

David E. I. Pyott (LID) 64 1999 Retired Chairman & CEO, Allergan, Inc. GRAPHIC
  M M
Dean A. Scarborough 62 2000 Retired Executive Chairman, Avery Dennison Corporation GRAPHIC      
Patrick T. Siewert 62 2005 Managing Director & Partner, The Carlyle Group GRAPHIC
C  

Patrick T. Siewert (LID-Elect)

 

64

 

2005

 

Managing Director & Partner, The Carlyle Group

 


 

C

 

 

 

M
Julia A. Stewart 62 2003 Former Chairman & CEO, DineEquity, Inc. GRAPHIC   C M
 

64

 

2003

 

Chair & CEO, Alurx, Inc.

 


 


 

C

 

M
Martha N. Sullivan 61 2013 President & CEO, Sensata Technologies Holding N.V. GRAPHIC
M M 
 

63

 

2013

 

Retired President & CEO, Sensata Technologies Holding PLC

 


 

M

 

 

 

 

AC = Audit & Finance Committee    CC = Compensation & Executive Personnel Committee     GC = Governance & Social Responsibility Committee
M = Member    C = Chair    LID = Lead Independent Director

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        Our 10 director nominees bring a balance of skills, qualifications and demographic backgrounds in overseeing our company, as highlighted below and shown in greater detail in the Board Matrixmatrix of director skills, qualifications and backgrounds included in theItem 1  Election of Directors section of this proxy statement.

GRAPHICGRAPHIC

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GOVERNANCE HIGHLIGHTS

        Our governance program reflects our company values and facilitates our Board's independent oversight of our company. The highlightsHighlights of our program, which we believe isgenerally consistent and aligned with the Investor Stewardship Group's Corporate Governance Principles for U.S. Listed Companies,are shown below.

Stockholders Rights

    AnnualElection of Directors
    Majority Voting in Director Elections
    Single Class of Outstanding Voting Stock
    Market-Standard Proxy Access

    No Supermajority Voting Requirements
    No Poison Pill
    No Exclusive Forum or Fee Shifting Bylaws

Board Governance

    82% Independent
    Robust Lead Independent Director Role
    Ongoing Director Succession Planning and Board Refreshment
    Executive Succession Planning and Leadership Development
    Annual Board Evaluations
    Mandatory Director Retirement Policy
    Governance Guidelines
    Strong Committee Governance
    Direct Board Access to Management and Experts

ADOPTION OF PROXY ACCESS

        In December 2017, responding to feedback from our largest stockholders, our Board amended our bylaws to permit a stockholder, or a group of no more than 20 stockholders, owning at least 3% of our company's stock continuously for at least three years to submit director nominees (up to 20% of our Board) for inclusion in our proxy materials, subject to the terms and conditions described in our bylaws.GRAPHIC

APPROVAL OF EXECUTIVE COMPENSATION (ITEM 2)

COMPENSATION DESIGN

        Our Board'sThe Compensation and Executive Personnel Committee (the "Compensation Committee") designs our executive compensation program to motivate our executives to execute our business strategies and delivercreate long-term stockholder value.value for our stakeholders. The program delivers pay for performance, with realized compensation dependent on our company achieving rigorous annual and long-term financial performance targets and value creation objectives that advance the interests of our stockholders.

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PERFORMANCE-BASED COMPENSATION

        Target total direct compensation (TDC) tofor our executivesNamed Executive Officers (NEOs) is comprised of the following three components:

    Base salary;

    Performance-based cash incentive under our Annual Incentive Plan (AIP); and

    Long-term incentives delivered in performance-based equity awards, consisting 50% of performance units (PUs) and 50% of MSUs.

Base salary;

Performance-based annual cash incentive award under our Annual Incentive Plan (AIP); and

Long-term incentives (LTIs) delivered in performance-based equity awards, consisting 50% of performance units (PUs) and 50% of market-leveraged stock units (MSUs).

        The Compensation Committee establishes the target TDC of our Named Executive Officers (NEOs)NEOs to incent economicstrong operational and financial performance and stockholder value creation, generally giving consideration to the market median, role responsibilities, individual performance, tenure, retention and succession. The majority of this compensation is performance-based, meaning that ourthese executives ultimately may ultimately not realize some or all of these components of compensationTDC if we fail to achieve our financial objectives. In 2017, approximately 84% and 67%

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Table of the TDC of our CEO and average of our other current NEOs, respectively, was performance-based.Contents


20172019 Target Total Direct CompensationTDC Mix

GRAPHIC

*    Mr. Lovins' 2017 AIP award was prorated based on his opportunity of 40% of base salary for the first six months of the year and his opportunity of 60% of base salary for the second six months of the year. His MSUs and PUs were awarded based on his previous LTI opportunity of 120% of base salary rather than his increased LTI opportunity of 180% of base salary.

PAY-FOR-PERFORMANCEGRAPHIC

PAY FOR PERFORMANCE

        Over the past five years, our cumulative TSR has increased over 270%by nearly 180% while the totalannual compensation of our CEO has increased by only 13%.remained relatively constant. In the graph below, CEO pay reflects the compensation of our former CEO Mr. Scarborough, from 2013 tofor 2015, and the compensation of our current CEO Mr. Butier, for 2016 and 2017.thereafter.


Five-Year CEO Pay and Cumulative TSR

GRAPHICGRAPHIC

CHANGES IN APPROACH TO CEO COMPENSATION FOR 2020

        Over the last few years, the Compensation Committee discussed how best to ensure that it is compensating our CEO optimally and in alignment with the long-term interests of our stockholders. The committee's objectives were to:

Recognize our company's performance and delivery of value to our customers, employees, investors and communities during his four-year tenure as our CEO;

Enhance his incentive to continue creating value for these stakeholders, including by driving superior TSR for our investors; and

Encourage his retention for the long term.

The committee also sought to maintain market-competitive target TDC for him that is well-aligned with our company's performance and ensure that his target TDC does not fall substantially below the market median, without relying on the traditional approach of periodic incremental increases to the components of his TDC – base salary, target AIP award opportunity and target LTI award opportunity – to maintain consistency with a continually rising market median.

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        After extensive discussion, andgiving consideration to the feedback received from dialogue with some of our largest stockholders, the Compensation Committee determined to eliminate potential annual increases to our CEO's base salary and target AIP and LTI opportunities in favor of an even longer-term approach that would hold his target TDC constant for a three-year period. During the three-year period, the Compensation Committee retains the discretion to review our CEO's target TDC if market conditions or company results warrant a change. At the end of the period, the Compensation Committee plans to evaluate both his and our company's performance and market conditions before determining the appropriate level of his compensation, continuing to give consideration to factors such as individual performance, tenure, retention and succession.This approach to CEO compensation is intended to be more consistent with the long-term approach we take to planning our strategies, setting our financial targets and sustainability goals, creating value for our stockholders, developing an engaged and diverse workforce, and investing in the communities in which we operate.

        To ensure our CEO's compensation determined in 2020 remains competitive and mitigate the potential for his target TDC to substantially trail behind his peers in the next three years, the Compensation Committee determined to set his target TDC modestly above market median, recognizing that his base salary had not increased in the previous two years and his target AIP opportunity had not increased since he became CEO in 2016. The committee intends to make no additional increases until 2023. Anticipating that the median for market will continue to grow at historical rates, the Compensation Committee determined to set our CEO's compensation package roughly halfway between the current 50th and 75th percentiles of his market peers, with the expectation that – at the end of the three-year period during which Mr. Butier's compensation is expected not to increase – his TDC would be at or around the market median. This approach is consistent with the approach taken by the Compensation Committee with respect to recommending to our Board the compensation of our non-employee directors.

        Based on 2019 market pay rates and projected 2020 market pay rates for companies with a market capitalization between $6 billion and $10 billion, and with the expert advice and recommendation of its independent compensation consultant, Willis Towers Watson, the Compensation Committee determined to set Mr. Butier's target TDC for 2020 at $9.9 million by increasing (i) his base salary by 6% to $1.2 million, noting that his base salary had not been increased in the previous two years; (ii) his target AIP opportunity from 125% of base salary, the same level as when he became CEO in 2016, to 140% of base salary; and (iii) his target LTI opportunity from 475% of base salary to 585% of base salary.The Compensation Committee noted that over 90% of this increase consists of at-risk, performance-based compensation. These targets are not expected to increase during the next three years, but could decrease if warranted by market conditions or our company results. Mr. Butier's realized compensation will be dependent on our company achieving strong TSR performance, delivering our 2021 financial targets and 2025 sustainability goals, and continuing to serve our customers, engage our employees, and invest in the communities in which we operate.

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COMPENSATION BEST PRACTICES

        As summarized below and described in further detail in theCompensation Discussion and Analysis section of this proxy statement, our executive compensation program aligns with our financial goals and business strategies and reflects best practices.

What We Do


    Pay for performance — 84%– 86% of our CEO's 20172019 target TDC was tied to company performance
    Emphasize long-term performance — 66%– 68% of our CEO's 20172019 target TDC was equity-based and tied to delivering long-term stockholder value
    Use double-trigger change of control vesting provisions  vesting requires a qualifying termination of employment within 24 months
    Manage share usage conservatively  our three-year average burn rate at the end of fiscal year 20172019 of 0.8%0.7% was atslightly above the 50th percentile of companies in the S&P 500
    Maintain rigorous stock ownership guidelines —policy – 6x base salary for our CEO (an increase for 2017 from the previous 5x) and 3x base salary for our other NEOs; require holdingrequires that they hold 50% of their respective minimum ownership level in vested shares
    Able to clawback compensation in the event of an accounting restatement
    UseRely on the advice of an independent compensation consultant retained directly by, and serving at the direction of, the Compensation Committee
    Annually evaluate the Compensation Committee and review its charter
    Periodically assess risks related to our compensation policies and practices
    Following termination, obtain releases from liability from and impose restrictive covenants on our departing executives
    Review tally sheets for our NEOs reflecting all compensation components for our NEOs

What We Don't Do


    X
    No employmentEmployment contracts with our NEOs
    X
    No guaranteedGuaranteed AIP awards; rather, these awards for our NEOs are generally based solely on company or business performance
    X
    No exciseExcise tax gross-ups on change of control severance benefits
    X
    No hedgingHedging or pledging of company stock by directors and officers
    X
    No taxTax gross-ups on perquisites
    X
    No above-marketAbove-market interest rates in our only deferred compensation plan currently openavailable for deferrals
    X
    No re-pricingRe-pricing of stock options without stockholder approval
    X
    No payoutPayout of accrued dividends beforeunless performance conditions are met and underlying equity awards vest
    X
    No grantingGrant of stock options below fair market value
    X
    No NEOs with supplementalSupplemental retirement benefits for executive officers

RATIFICATION OF APPOINTMENT OF PwC (ITEM 3)

        Our Board's Audit and Finance Committee has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for fiscal year 2018,2020, and our Board is seeking stockholder ratification of the appointment. PwC is very well qualified to act as our independent registered public accounting firm and has a deep understanding of our operations and accounting practices. The Audit and Finance Committee considered the qualifications, performance, and independence of PwC, the quality of its discussions with PwC, and the fees charged by PwC for the level and quality of services provided during 2017,2019, and determined that the reappointment of PwC is in the best interest of our company and stockholders.

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PROXY STATEMENT

GOVERNANCE, SUSTAINABILITY AND SOCIAL RESPONSIBILITY

        We produce pressure-sensitive materials and a variety of tickets, tags, labels and other converted products. SomeWe sell most of our pressure-sensitive materials are sold to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting. We sell other pressure-sensitive materials in converted form as tapes and reflective sheeting. We also manufacture and sell a variety of other converted products and items not involving pressure-sensitive components, such as fasteners, tickets, tags, radio-frequency identification (RFID) inlays and tags, and imprinting equipment and related services,solutions, which we market to retailers,serve the apparel manufacturers, and brand owners.other end markets.

GOVERNANCE

        Under the oversight of our Board of Directors (our "Board"), we have designed our governance program to comply with applicable laws and regulations  including the rules of the Securities and Exchange Commission (SEC) and the listing standards of the New York Stock Exchange (NYSE)  and to reflect best practices as informed by the practices of other large public companies, recommendations from our outside advisors, the voting guidelines of our stockholders and the policies of proxy advisory firms. The key features of our program and the related benefits to our stockholders are describednoted in theGovernance Highlights section of ourthe Proxy Summary.Summary; together they form agovernance program that we believe is generally consistent and aligned with the Investor Stewardship Group's Corporate Governance Principles for U.S. Listed Companies.

        We encourage you to visit the Corporate Governanceinvestors section of our website atwww.averydennison.com/corporategovernance,under Corporate Governance, where you can review and download the following documents:documents as currently in effect:

    Amended and Restated Certificate of Incorporation;

    Amended and Restated Bylaws ("Bylaws");

    Corporate Governance Guidelines (our "Governance Guidelines");

    Charters for our Board's Audit and Finance Committee (the "Audit Committee"), Compensation and Executive Personnel Committee (the "Compensation Committee"), and Governance and Social Responsibility Committee (the "Governance Committee");

    Code of Conduct;

    Code of Ethics for the Chief Executive Officer (CEO) and Senior Financial Officers; and

    Audit Committee Complaint Procedures for Accounting and Auditing Matters.

Amended and Restated Certificate of Incorporation;

Amended and Restated Bylaws (our "Bylaws");

Corporate Governance Guidelines (our "Governance Guidelines");

Charters for our Board's Audit and Finance Committee (the "Audit Committee"), Compensation and Executive Personnel Committee (the "Compensation Committee"), and Governance and Social Responsibility Committee (the "Governance Committee");

Code of Conduct;

Code of Ethics for the Chief Executive Officer (CEO) and Senior Financial Officers; and

Audit Committee Complaint Procedures for Accounting and Auditing Matters.

        You can access these documents on our website using the links contained in this proxy statement, but should note that informationInformation on our website is not and should not be considered part of, nor is it incorporated by reference into, this proxy statement. You can also receive copies of these documents, without charge, by writing to our Corporate Secretary at Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

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CODE OF ETHICS

        We have adopted a Code of Ethics that requires our CEO, Chief Financial Officer (CFO) and Chief Accounting Officer (CAO) to act professionally and ethically in fulfilling their responsibilities.

Code of Ethics

    Our CEO, CFO and CAO mustavoid actual or apparent conflicts of interest and disclose any material
    transaction or relationship that could reasonably be expected to raise a conflict of interest to the Governance Committee.


    In addition, they must:

    Ensure that our SEC filings are complete and accurate and contain understandable information;

    Respect the confidentiality of information acquired in the course of the performance of their responsibilities;

    Employ corporate assets responsibly; and

    Report violations of our Code of Ethics to the Chair of either the Audit Committee or the Governance Committee.

Ensure that our SEC filings are complete and accurate and contain understandable information;

Respect the confidentiality of information acquired in the course of the performance of their responsibilities;

Employ corporate assets responsibly; and

Report violations of our Code of Ethics to the Chair of either the Audit Committee or the Governance Committee.

        Supporting the principles reflected in our Code of Ethics, our controllership and internal audit functions ensure that we maintain a robust internal control environment, with the leaders of these functions regularly reporting to, and periodically meeting in executive session with, the Audit Committee.

        Our Code of Ethics is available onunder Corporate Governance in the investors section of our website atwww.averydennison.com/codeofethics.website. Only the Audit Committee or the Governance Committee can amend or waive the provisions of the Code of Ethics, and any amendments or waivers must be posted promptly on our website or timely filed with the SEC on a Current Report on Form 8-K. We last amended our Code of Ethics in April 2014.

CODE OF CONDUCT

        Our Code of Conduct applies to all of our directors, officers and employees.employees and reflects our values of Integrity, Courage, External Focus, Diversity, Sustainability, Innovation, Teamwork and Excellence. It is available under Corporate Governance in the investors section of our website and includes leadership messages, expanded information regarding higher risk areas, and case studies to provide additional guidance on situations that raise more complex ethical questions. Our Code of Conduct has been translated into over 30 languages and our leaders affirm their commitment to complying with it when they first join our company and annually thereafter. We train employees on the Code of Conduct at least bi-annually,biannually, in addition to our online training program generally consisting of four courses per year covering specific risk areas from the Code of Conduct that designated computer-based employees are required to complete.

        To ensure that the policies and principles encompassed in our Code of Conduct reach all our employees, globally, we also develop and launch three "Talkabout" toolkits (also in over 30 languages) globally each year, which managers are required to use to engage in meaningful discussion with their teams regarding topics from the Code of Conduct. These toolkits consist of presentation slides, a leader discussion guide and an introductory subtitled video, which includes messages from our Chief Compliance Officer and other company leadership.

Recent Code Updates

        In 2017, we refreshed our Code of Conduct, which is available on our website atwww.averydennison.com/codeofconduct, with updated leadership messages, additional guidance on certain higher risk areas, and case studies to provide additional guidance on more complex ethical situations. We introduced the updated Code of Conduct with manager and employee communications and created a pocket version for distribution to all employees.

        In 2018, we are further updating our Code of Conduct to reflect our recently updated values of Integrity, Courage, External Focus, Diversity, Sustainability, Innovation, Teamwork and Excellence. In an effort to reinforce our strengths and bring focus to areas in which we have opportunities to further develop, we streamlined and consolidated our previous values and leadership principles into a single set of eight simplified, more memorable values. Moving forward, these values will help shape our culture and guide our behavior as we continue to grow. Later this year, our "Values in Action" campaign will give our employees around the world an opportunity to demonstrate how they are living these values and helping maintain our collective values-based culture.

Avery Dennison Corporation| 2018 Proxy Statement |2


Table of Contentsleaders.

Ethics-Based Corporate Culture and Policies

        TheReflecting the culture of our company, the ethics-based corporate policies and other matters discussed in our Code of Conduct are shown below.on the following page. Our global supplier standards extend our commitment to many of these principles to our third party service providers, establishing our expectation that they also do business in an ethical manner.

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GRAPHICGRAPHIC

Business Conduct GuideLine

            Our Business Conduct GuideLine (the "GuideLine") is a whistleblower hotline available at all hours for employees or third parties to report potential violations of our Code of Conduct, anonymously if they so choose.

        The GuideLine may be reached by (i) calling 888.567.4387800.461.9330 toll-free in the United States; 704.731.0166 collectStates, 720.514.4400 direct with applicable charges from any location, or toll-free outside of the United States; 10.800.711.0729States using the country-specific toll-free numbers found in North China; or 10.800.110.0672 toll-free in South Chinaour Code of Conduct or (ii) visitingwww.integrity-helpline.com/AveryDennison.jspaverydennison.com/guidelinereport(www.financial-integrity.com/AveryDennison.jspaverydennison.com/guidelinereport-eu in Europe).

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The hotline is operated by an independent third party and accepts reports in any language to accommodate the needs of our global workforce and customer/supplier base. All reportsReports are investigated under the direction of our Chief Compliance Officer, in consultation with our law department and senior management and with oversight from the Governance Committee. We prohibit retaliation for good-faith reporting.

COMPLAINT PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS

            The Audit Committee has adopted procedures for the confidential, anonymous submission of complaints related to accounting, accounting standards, internal accounting controls and audit practices.

        These procedures relate to complaints of (i) fraud or deliberate error in the preparation, evaluation, review or audit of our financial statements or other financial reports; (ii) fraud or deliberate error in the recording or maintenance of our financial records; (iii) deficiencies in, or noncompliance with, our internal accounting controls; (iv) misrepresentation or false statement to or by a senior officer or accountant regarding any matter contained in our financial records, statements, or other reports; or (v) deviation from full and fair reporting of our financial condition. Any person, including third parties, may submit a good faith complaint regarding accounting and auditing matters and employees may do so without fear of dismissal or other retaliation. The Audit Committee oversees these procedures, which are available onunder Corporate Governance in the investors section of our website atwww.averydennison.com/auditprocedures.website. Investigations are conducted under the direction of our internal audit department in consultation with our Chief Compliance Officer, law department and senior management to the extent appropriate under the circumstances.

        Stockholders and other interested parties interested in communicating regarding these matters may make a confidential, anonymous report by contacting the Business Conduct GuideLine as described on the previous page or writing to the Audit and Finance Committee Chair, c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

STOCK OWNERSHIP GUIDELINES

2017 Changes to Guidelines

        In the fourth quarter of 2016, the Compensation Committee evaluated the effectiveness and market consistency of our executive stock ownership guidelines to ensure that they effectively encourage our Named Executive Officers (NEOs) and other leaders to maintain meaningful ownership of our common stock.

        At the Compensation Committee's request, Willis Towers Watson reviewed market practices for stock ownership guidelines at companies with $3 billion to $10 billion in annual revenue. Based on this data, Willis Towers Watson recommended the following changes to our guidelines to make them more stringent and better reflect market practices. Upon the advice of its independent compensation consultant, the Compensation Committee approved the changes shown below to our stock ownership guidelines for NEOs and other executives, effective January 1, 2017.

    Eliminated the share guidelines, maintaining only the salary-multiple guidelines, which effectivelyincreased the minimum number of shares required to achieve compliance.

    Increased our CEO's minimum ownership level from 5x to 6x his annual base salary.

    Discontinued counting unexercised stock option gains and began counting only 50% of unvested value of market-leveraged stock units (MSUs) (rather than 100%) for purposes of measuring compliance.

    Required holding 50% of the ownership level in vested shares.

        In February 2017, upon the advice of Willis Towers Watson, the Compensation Committee also approved the following changes to our non-employee director stock ownership guidelines, effective as of the 2017 Annual Meeting: (i) eliminated the share guideline, maintaining only the dollar guideline, and (ii) discontinued counting unexercised stock option gains towards measuring compliance, counting only shares owned, deferred stock units (DSUs) and unvested restricted stock units (RSUs), consistent with our revised executive stock ownership guidelines. Non-employee directors are also required to hold 50% of their ownership level in vested shares, which includes DSUs.

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2017 GuidelinesSTOCK OWNERSHIP POLICY

        Our revised stock ownership guidelines requirepolicy requires that non-employee directors acquire and maintain a minimum equityownership interest in our company equal toof $500,000 and our CEO and other NEOs acquire and maintain a minimum equityownership interest in our company equal to 6x and 3x theirhis or her annual base salary, respectively. At least 50% of the applicable minimum ownership level must be held in vested shares.

        The values of the following shares/units are considered in measuring compliance with our stock ownership policy: (i) shares beneficially owned or deemed to be beneficially owned, directly or indirectly, under federal securities laws; (ii) shares or units held in qualified and non-qualified employee benefit plans; (iii) unvested restricted stock units (RSUs) subject only to time-based vesting; and (iv) 50% of the value of unvested market-leveraged stock units (MSUs) at the target payout level. Neither unvested performance units (PUs) nor stock options are considered in measuring compliance with our stock ownership policy.

            If a director or NEOofficer fails to achieve or make reasonable progress towards achieving his or her minimumrespective ownership level, he or she is required to retain shares acquired, net of taxes, from the exercise of stock options or vesting of stock awards until such level is met. Executives are not allowed to transact in company stock until they certify theirthat they will remain in compliance with our stock ownership guidelinespolicy after giving effect to the transaction they plan to effectuate.

        The following shares/unitsCompensation Committee and their related values are considered in measuring compliance with our stock ownership guidelines: (i) shares beneficially owned or deemed to be beneficially owned, directly or indirectly, under federal securities laws; (ii) shares or units held in qualified and non-qualified employee benefit plans; (iii) unvested RSUs subject only to time-based vesting; and (iv) 50% of the value of unvested MSUs at the target payout level. Neither unvested PUs nor stock options are considered in measuring compliance.

        The Governance Committee reviewed the stock ownership of our non-employee directors in December 2019 and February 2018, noting2020, respectively. Both Committees noted thatall of themour non-employee directors had exceeded the minimum ownership level required by the guidelines,policy, except for Mr. LopezMark Barrenechea who became a director in February 2017September 2018 and has five years to reach the minimum ownership level.The Committee noted that, because Mr. Lopezhe had made reasonable progress towards meeting the applicable level, heMr. Barrenechea was also in compliance.compliance with the policy. On average, the ownership level of our non-employee directors was approximately 7x9x the minimum ownership level, aligning their interests with those of our stockholders and further incenting their focus on creating long-term stockholder value.value creation.

        The Compensation Committee reviewed NEOofficer stock ownership in October 2017December 2019 and determined that all of our Current NEOs were in compliance with our stock ownership guidelines, except for Mr. Gravanis.policy.

COMPLIANCE WITH STOCK OWNERSHIP GUIDELINES
 
COMPLIANCE WITH STOCK OWNERSHIP POLICY
COMPLIANCE WITH STOCK OWNERSHIP POLICY

 SHARES AS OF
2017 FYE (#)

 GUIDELINE
 % OF GUIDELINE
 COMPLIANCE
  SHARES* AS OF
2019 FYE (#)

 MINIMUM
GUIDELINE

 % OF GUIDELINE
 POLICY
COMPLIANCE

NON-EMPLOYEE DIRECTORS

  $500,000     $500,000  

Bradley Alford

 32,159   695% GRAPHIC  38,060   1,009% 

Anthony Anderson

 13,021   281% GRAPHIC  14,544   385% 

Peter Barker

 55,635   1203% GRAPHIC  61,628   1,633% 

Mark Barrenechea

 3,324   88% 

Ken Hicks

 36,522   790% GRAPHIC  40,709   1,079% 

Andres Lopez

 2,408   52% GRAPHIC  5,732   152% 

David Pyott

 63,576   1374% GRAPHIC  70,665   1,873% 

Dean Scarborough

 51,095   1105% GRAPHIC 

Patrick Siewert

 14,226   308% GRAPHIC  15,460   410% 

Julia Stewart

 52,125   1127% GRAPHIC  58,447   1,549% 

Martha Sullivan

 19,635   425% GRAPHIC  24,579   651% 

PRESIDENT & CEO

  6x Base Salary   

CHAIRMAN, PRESIDENT & CEO

  6x Base Salary  

Mitchell Butier

 149,394 $6,798,000 238% GRAPHIC  188,839 $6,798,000 368% 

OTHER CURRENT NEOs

  3x Base Salary   

OTHER NEOs

  3x Base Salary*  

Gregory Lovins

 19,818 $1,650,000 130% GRAPHIC  32,653 $1,854,000 233% 

Georges Gravanis

 15,943 $1,885,785 91% GRAPHIC  19,624 $1,878,846 138% 

Anne Hill

 48,110 $1,596,135 326% GRAPHIC 

Susan Miller

 22,078 $1,643,082 145% GRAPHIC  23,286 $1,743,144 177% 

Deon Stander

 16,740 $1,665,387 133% 
*
Reflects shares/units considered in measuring compliance with our stock ownership policy rather than actual shares owned.

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INSIDER TRADING POLICY

        Our insider trading policy prohibits our directors, officers and employees from (i) engaging in transactions in our company's stock while in the possession of material non-public information; (ii) engaging in transactions in the stock of other companies while in possession of material non-public information that they become aware of in performing their duties; and (iii) disclosing material non-public information to unauthorized persons outside our company.

Limited Trading Windows

        In addition, ourOur insider trading policy restricts trading for directors and officers (including allour NEOs) during blackout periods, which generally begin two weeks before the end of each fiscal quarter and end two business days after the release of earnings for the quarter. Additional blackout periods may be imposed from time to time, with or without notice, depending on the circumstances.

ProhibitionProhibitions on Hedging and Pledging

        Our insider trading policy expressly prohibits our directors, officers and executive officersemployees from (i) purchasing financial instruments (such as prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of shares of our common stock they hold, directly or indirectly, or (ii)indirectly. In addition,directors and officers are expressly prohibited from – and our non-officer employees are strongly discouraged from – pledging any of their shares of common stock to secure personal loans or other obligations, including by holding such shares in a margin account.

            To our knowledge, based on our review of their written representations in our annual director and officer questionnaire, all of our directors and executive officers complied with our insider trading policy during 2017.2019, and none of them has hedged or pledged shares of our common stock.

SUSTAINABILITY

        Sustainability is one of our core values and has long been part of our approach to doing business, driving us to work collaboratively across our entire value chain to address the environmental and social impacts of our products. Ourproducts. We aim is to continually improve the sustainability of our products and processes to create shared value for all of our stakeholders. In 2017, management led the execution of our sustainability strategy through our Sustainability Council, chaired

        With strategic guidance and direction provided by Mitch Butier, our President/Chairman, President and CEO, responsibility over ensuring that we continue to make meaningful progress towards achieving our 2025 sustainability goals currently resides with Deon Stander, Vice President and General Manager of our Retail Branding and Information Solutions (RBIS) business. Our Sustainability Council, led by Mr. Stander and comprised of other corporatea cross-divisional and businesscross-functional group of leaders withto drive broad accountability and continually accelerate our progress, generally meets bimonthly and updates our executive leadership team quarterly. Board oversight throughover sustainability is primarily conducted by the Governance Committee.

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TableCommittee, which receives a report from management at least once a year. In addition, our full Board hears from our leaders on each of Contentsour businesses' sustainability initiatives during its regular review of their business strategies. In July 2019, our Board held strategy sessions focused on our sustainability progress and our innovation efforts to address increasing demand for more sustainable products.

ENGAGING OUR STAKEHOLDERS

        We seek to ensure that our sustainability efforts are consistent with stakeholder expectations.the expectations of our stakeholders shown on the following page. We regularly communicate with individuals and organizations interested in how we do business generally and our sustainability efforts in particular, and also conduct stakeholder interviews as part of our regular sustainability materiality assessments. These activities allowassessments help set our sustainability agenda, focusing us to focus on the areas in which we can have the most impact.

GRAPHIC

SUSTAINABILITY STRATEGY

        The foundation of our sustainability strategy is a science-based sustainability framework developed by The Natural Step, an international NGO. The Natural Step framework serves as the basis of our environmental and social guiding principles, listed below.

ADVANCEMENTS TOWARDS 2025 SUSTAINABILITY GOALS

        We report on our sustainability progress every two years. In September 2017, we issued our 2014-2016 Sustainability Report, summarizing our achievements towards reaching the 2025 sustainability goals we set in 2015. In the first two years of the 10-year goal horizon, we made significant progress, the key to which has been integrating sustainability into our underlying business strategies and engaging employees at all levels. We encourage you to review the report, which contains more information on our progress summarized on the following page, on our website atwww.averydennison.com/sustainability.

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2025 SUSTAINABILITY GOALS
FOCUS AREA
GOAL(S)
HIGHLIGHTS OF PROGRESS REPORTED IN SEPTEMBER 2017
Greenhouse
Gas Emissions



GRAPHIC





Achieve at least 3% absolute reduction year-over-year.Reduced our absolute CO2 emissions over 3% from 2015-2016.

Reduced our energy consumption by nearly 4% during 2014-2016.

Paper


GRAPHIC


Source 100% certified paper, of which at least 70% will be Forest Stewardship Council® — certified.


Over 75% of the total volume of paper we procured in 2016 was responsibly sourced in accordance with the principles of the Forest Stewardship Council® or Programme for the Endorsement of Forest Certification.

Films


GRAPHIC






Ensure that 70% of the films we buy conform to, or enable end products to conform to, our environmental and social guiding principles.


Worked to employ renewable, bio-based film made from plants, such as the sugar-based Bonsucro®-certified filmic facestock we use in our bio-based polyethylene film product.

Chemicals


GRAPHIC


Ensure that 70% of the chemicals we buy conform to, or enable end products to conform to, our environmental and social guiding principles.


Completed the first phase of an enhanced enterprise-wide restricted substance list (RSL) program, focused on avoiding RSL chemicals in designing new products.

Products and
Solutions



GRAPHIC







Through innovation, deliver above-average growth in sales from sustainability-driven products and services.

Ensure that 70% of our products and solutions conform to, or enable end products to conform to, our environmental and social guiding principles.




Developed ClearIntent™, a growing portfolio of products made with materials that are responsibly sourced, reduced and recycled within our Label and Graphic Materials business.

Continued to enable customers to replace conventional packaging and brand elements with more environmentally friendly alternatives through our Retail Branding and Information Solutions business.

In 2016, added certified paper and fabric to the mix of factors customers can analyze as they seek a balance of cost, performance and sustainability through our Greenprint™ environmental impact-analysis tool.

Waste


GRAPHIC


Be 95% landfill-free, with at least 75% of our waste reused, repurposed or recycled.

Eliminate 70% of the matrix and liner waste from our value chain.


As of the end of 2016, diverted over 90% of our solid waste from landfills with 59 landfill-free sites worldwide, and recycled nearly 60% of the diverted waste.

Continued working with customers, recyclers and others to create a recycling infrastructure and network of processors to meet our customers' needs, using research to show that our label liners can be feasibly recycled by identifying capable recyclers worldwide.

Transparency


GRAPHIC






Commit to goals publicly and be transparent in reporting our progress.


Published our 2014-2016 sustainability report and continued stakeholder engagement with regular assessments.

People


GRAPHIC


Continue to cultivate a diverse (40%+ female at the level of manager and above), engaged, safe (recordable injury rate of <0.25), productive and healthy workforce.

Continue to invest in our employees and the communities in which we work.


Created a more flexible work environment, developed female employees' leadership skills and raised awareness of unconscious bias across our company. While making progress with our gender diversity efforts, our female representation at the management level was 32% at the end of 2016.

Continued our world class safety record, with a recordable incident rate of 0.25 in 2016, far surpassing the manufacturing industry average of 3.8 in 2015 (the then-most recently available industry average).

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SUSTAINABILITY STAKEHOLDERS

GRAPHIC

PROGRESS TOWARDS ACHIEVING 2025 SUSTAINABILITY GOALS

        In the integrated report in which this proxy statement is included, we present the highlights of our achievements against our 2025 sustainability goals. In the first five years of the 10-year horizon for these goals, we have made meaningful progress, which is summarized on our sustainability scorecard shown on page vii of the Proxy Summary. You can find additional information on the sustainability section of our website.

SOCIAL RESPONSIBILITY

AVERY DENNISON FOUNDATION

        With Board oversight from the Governance Committee, our social responsibility efforts promotereflect our spirit of community and help strengthen the places around the world in which we do business.operate. We make most of our community investments through the Avery Dennison Foundation (the "Foundation"), which annually invests at least 5% of its assets from the prior year primarily to advance education, sustainability and women's empowerment, education and sustainability in the communities where our employees live and work and encourages employee engagement with a spirit of invention and innovation.The Foundation invests in communities by making grants to community-based organizations, promoting employee volunteerism and engagement, and awarding scholarships.

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GLOBAL GRANTMAKING

        The Foundation's global grantmaking initiative is its primary means of giving. Grantmaking is also aided by our employees worldwide who help identify qualified nongovernmental organizations (NGOs).deserving NGOs. Grant decisions are primarily guided by the following priorities:priorities shown below, which are targeted to the communities in which our employees live and work.

GRAPHICGRAPHIC

EMPLOYEE ENGAGEMENT

        As the hands and heart of our company, our employees are critical to advancing the Foundation's efforts. Because they often have the best understandingbetter understand of the needs of their communities, more than 110 employee-organized Community Investment Teams150 employee teams coordinate volunteerism locally at our global locations. Nearly 50%In 2019, over 75% of the Foundation's grants arewere enhanced with volunteer time from our employees.employees.

        The Foundation also engages employees through theits Granting Wishes program, which allows employees in the U.S., Europe and Latin Americathem to recommend one-time grants to local NGOs. Employees often have a connection to the organizations they nominate through volunteerism or service on the organization's board. In the seveneight years since the Foundation launched Granting Wishes, more than 7002,000 of our employees have taken part,made recommendations, enabling grants of over $1.1 million to more than 200 organizations, including Doctors Without Borders, UNICEF, the American Red Cross and Habitat for Humanity.360 organizations.

SCHOLARSHIPS

        The Foundation provides scholarships to the children of our employees in the U.S., China and India. Since 1977, more than 600 scholarships totaling employees. To date, over $2.2 million650 scholarships have been awarded to students entering their first year of college.U.S. college students.

        In China and India, the Foundation's InvEnt Scholarships have for more than a decade supported the next generation of innovators in science, technology, engineering and mathematics. By providing undergraduates in those communities with tuition assistance, an invention competition and professional development opportunities, the Foundation inspiresseeks to inspire the spirit of innovation in tomorrow'sfuture engineers and technology workers. As part of their application, students submit ideas for an invention they then design during their scholarship year. Scholarships areTo date, nearly 200 scholarships have been awarded to Chinese and Indian students who demonstratehave demonstrated outstanding innovative spirit and excellentstrong practical competence.

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OUR BOARD OF DIRECTORS

OVERVIEW

        Our Board oversees, counsels and ensures management is serving the best interests of our company and stockholders, with the goal of maximizing the performance of our businesses to createdeliver long-term value.value for all our stakeholders.

Our Board's primary responsibilities include the following:

    Establishing astrong governance program program,, with a Board and Committee structure that ensuresindependent oversight;oversight;

    Conductingdirector succession planning to ensure we maintain anengaged and diverse Board with the skills, qualifications and backgrounds to effectively oversee our company;

    Overseeing ourbusinesses, strategies and risks;

    Approving ourannual operating plan and significant strategic and operational actions, includingsignificant capital expenditures and acquisitions;

    Maintaining theintegrity of our financial statements;

    Evaluating the performance of our senior leaders and determiningexecutive compensation; and

    Conductingsuccession planning for our CEO and other senior executives including, and ensuring we have ahuman capital management program that is effectively developing our current and future leaders; and

    Approving ourannual operating plan and significant strategic and operational actions, includingsignificant capital expenditures and acquisitions.leaders.

BOARD COMPOSITION2020 DIRECTOR NOMINEES

        Our Bylaws provide that our Board be comprised of between eight and 12 directors, with the exact number fixed from time to time by Board resolution. Our Board currently has fixed the current number of directors at 11.11 and expects to reduce the size to 10 in April 2020 to reflect David Pyott's departure from the Board at the end of his current term. The nominees for election at the Annual Meeting  and the year of theirhis or her respective initial appointment or election, current or most recent principal occupation, independence status, and current committee memberships  are shown in the chart below.

NAME
DIRECTOR
SINCE

PRINCIPAL OCCUPATION
INDEPENDENT
AC
CC
GC
Bradley A. Alford2010Retired Chairman & CEO, Nestlé USAGRAPHIC
MM
Anthony K. Anderson2012Retired Vice Chair & Managing Partner, Ernst & Young LLPGRAPHICMM
Peter K. Barker2003Retired Chairman of California, JPMorgan Chase & Co.GRAPHIC
MC
Mitchell R. Butier2016President & CEO, Avery Dennison CorporationGRAPHIC
Ken C. Hicks2007Retired Chairman, Foot Locker, Inc.GRAPHIC
MM
Andres A. Lopez2017President & CEO, Owens-Illinois, Inc.GRAPHICM
David E. I. Pyott (LID)1999Retired Chairman & CEO, Allergan, Inc.GRAPHIC
MM
Dean A. Scarborough2000Retired Executive Chairman, Avery Dennison CorporationGRAPHIC
Patrick T. Siewert2005Managing Director & Partner, The Carlyle GroupGRAPHIC
C
Julia A. Stewart2003Former Chairman & CEO, DineEquity, Inc.GRAPHICCM
Martha N. Sullivan2013President & CEO, Sensata Technologies Holding N.V.GRAPHIC
MM
NAME
 AGE
 DIRECTOR
SINCE

 PRINCIPAL OCCUPATION
 INDEPENDENT
 AC
 CC
 GC

Bradley A. Alford

 

63

 

2010

 

Retired Chairman & CEO, Nestlé USA

 



 



 


M

 

M

Anthony K. Anderson

 

64

 

2012

 

Retired Vice Chair & Managing Partner, Ernst & Young LLP

 

 


 

 

M

 

 

 

 

M

Peter K. Barker

 

71

 

2003

 

Retired Chairman of California, JPMorgan Chase & Co.

 



 


M

 



 

C

Mark J. Barrenechea

 

55

 

2018

 

Vice Chair, CEO & CTO, OpenText Corporation

 

 


 

 

 

 

 

M

 

 

Mitchell R. Butier

 

48

 

2016

 

Chairman, President & CEO, Avery Dennison Corporation

 



 



 



 


Ken C. Hicks

 

67

 

2007

 

Chairman, President & CEO, Academy Sports + Outdoors

 

 


 

 

 

 

 

M

 

 

Andres A. Lopez

 

57

 

2017

 

President & CEO, O-I Glass, Inc.

 



 


M

 



 


Patrick T. Siewert (LID-Elect)

 

64

 

2005

 

Managing Director & Partner, The Carlyle Group

 

 


 

 

C

 

 

 

 

M

Julia A. Stewart

 

64

 

2003

 

Chair & CEO, Alurx, Inc.

 



 



 


C

 

M

Martha N. Sullivan

 

63

 

2013

 

Retired President & CEO, Sensata Technologies Holding PLC

 

 


 

 

M

 

 

 

 

 

AC = Audit & Finance Committee    CC = Compensation & Executive Personnel Committee    GC = Governance & Social Responsibility Committee
M = Member    C = Chair    LID = Lead Independent Director

        The ages of our director nominees range from 4648 to 69,71, with an average age of 61.62. Their lengths of service range from oneone-and-a-half to 1817 years, with an average tenure on our Board of tenapproximately nine years. None of our directors serves on more than two other boards of SEC-reporting companies, except for Messrs. Anderson and Pyott, who are both retired and serve on three such other boards.

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APPOINTMENTDEPARTURE OF NEWCURRENT LEAD INDEPENDENT DIRECTORDIRECTOR; POST-ANNUAL MEETING BOARD LEADERSHIP STRUCTURE

        DuringIn February 2020, our Lead Independent Director, David Pyott, notified our Board of his intention not to stand for reelection at the second halfAnnual Meeting so that he may focus on other endeavors. As a result, Mr. Pyott's membership on our Board will end on the date of 2016,the Annual Meeting. Our Board actively reviews its composition and the need for refreshment, and determined not to appoint an additional director at this time but may decide to do so in the future

        In light of Mr. Pyott's upcoming departure, in February 2020, the Governance Committee oversawevaluated our Board leadership structure and recommended to our Board that Patrick Siewert be selected to serve as Lead Independent Director. The committee's decision took into account his significant contribution to the Board's searchresponsibility of maintaining the integrity of our financial statements as a member of the Audit Committee for the past 15 years and its Chair for the past four years, as well as his extensive international experience in Asia, a new independent director. The Committee engaged Korn Ferry, an executive search firm, to assist with the search. Korn Ferry identified a numberregion in which nearly 35% of potential candidates (including Andres Lopez) who were initially evaluated byour sales are generated and approximately 60% of our employees are located. With Mr. Pyott's departure, the Governance Committee and our Chairman, with input from other Board members and senior management. The Governance Committee and other membersdetermined that Mr. Siewert is best positioned to provide independent leadership of our Board interviewed Mr. Lopez, unanimously supporting his candidacy based on his extensive packaging industry expertisein overseeing our strategies to drive long-term value creation for our key stakeholders of customers, employees, investors and the end customer insights he could bring to our Board.communities. Upon the recommendation of the Governance Committee, the independent directors on our Board appointedunanimously selected Mr. LopezSiewert (with him and Mr. Pyott abstaining) to serve as our Board effective February 1, 2017, recognizing his packaging industry experience, public company board experience and global exposure. Also upon the recommendation of the Governance Committee, our Board subsequently appointed Mr. Lopez to the Audit Committee,Lead Independent Director, effective immediately after the 2017 Annual Meeting at which he was first electedsubject to his reelection. A description of responsibilities of our Board by our stockholders.

RETIREMENT OF EXECUTIVE CHAIRMAN

        In December 2017, Mr. Scarborough, then Executive Chairman, notified the Board that he wouldLead Independent Director can be retiring from our company at the endfound on page 11 of the year. He was our employee through December 31, 2017 and continues to serve as non-executive Chairman.this proxy statement.

BOARD MEETINGS AND ATTENDANCE

        Our Board met five times and acted three timesonce by unanimous written consent during 2017.2019. There were 1617 Committee meetings during the year.All of our current directors attended at least 85% of the aggregate number of Board and Committee meetings held during 2017 of which he or she was a member. member during 2019; the average attendance of these directors was 97%.Directors are strongly encouraged to attend our annual stockholder meetings under our Governance Guidelines and,except for our then-retiring former Chairman, all of our directors attended the 20172019 Annual Meeting.

Board and Committee meetingMeeting2017 attendance = 100%.

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GOVERNANCE GUIDELINES

        Our Governance Guidelines provide the governance framework for our company and reflect the values of our Board, as highlighted below.on the following page. They are reviewed at least annually and amended from time to time to reflect changes in regulatory requirements, evolving market practices, recommendations from our advisors and feedback from our stockholders. Our Governance Guidelines were most recently amended in February 2017.December 2019.

Governance Guidelines Highlights

Board Composition

      Reasonable Board size of 11 directors
      No over-boarded directors
      Mandatory retirement after age 72, with no term limits

Director Independence

      82% independent
      Executive sessions of independent directors at every 2017 Board meeting

Board Leadership Structure

      Annual review of Board leadership structure by the Governance Committee
      Robust Lead Independent Director role and independent Committee Chairs

Board Committees

      100% independent
      Act under charters delineating Committee responsibilities
      Directors required to attend Board and Committee meetings

Board Duties

      Directors entitled to rely on independent legal, financial or other advisors at our expense
      Regular review of long-term strategic plans, including major risks and mitigating strategies
      Regular succession planning for our CEO and other executive officers through the Compensation Committee

Continuous Board Improvement

      All new directors participate in an initial orientation to familiarize themselves with our company and after joining a Committee to understand its responsibilities
      Directors continue their education through meetings with management, visits to our facilities and attendance at accredited director education programs
      The Governance Committee oversees an annual evaluation process to ensure our Board, Committees, Chairman and Lead Independent Director are functioning effectively

Director Qualifications

      The Governance Committee reviews the skills and characteristics of our Board members and recommends director nominees

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Governance Guidelines Highlights

Board Composition

Reasonable Board size of 11 directors in 2019

Mandatory retirement after age 72, with no term limits




Director Independence


Current directors and director nominees 91% and 90% independent, respectively

Executive sessions of independent directors held at three Board meetings during 2019




Board Leadership Structure


Annual review of Board leadership structure by the Governance Committee

Robust Lead Independent Director role and independent Committee Chairs




Board Committees


100% independent

Act under charters delineating Committee responsibilities

Directors required to attend Board and Committee meetings




Board Duties


Directors entitled to rely on independent legal, financial or other advisors at our expense

Regular review of long-term strategic plans, including major risks and mitigating strategies

Regular succession planning for our CEO and other senior executives primarily through the Compensation Committee




Continuous Board Improvement


All new directors participate in an initial orientation to familiarize themselves with our company and after joining a Board committee to understand its responsibilities

Directors continue their education through meetings with management, visits to our facilities and attendance at director education programs

The Governance Committee oversees an annual evaluation process to ensure our Board, Committees, Chairman, Lead Independent Director and Committee Chairs are functioning effectively; in 2019, this process included our directors discussing with the Governance Committee Chair the individual performance of their peers




Director Qualifications


The Governance Committee reviews the skills and characteristics of our Board members and recommends director nominees

DIRECTOR INDEPENDENCE

        Our Governance Guidelines require that our Board be comprised of a majority of directors who satisfy the criteria for independence under NYSE listing standards. These standards also require that our audit, compensation and nominating committees be comprised entirely of independent directors. An independent director is one who meets the independence requirements of the NYSE and who our Board affirmatively determines has no material relationship with our company, directly or indirectly as a partner, stockholder or officer of an entity with which we have a relationship.

        Each year, our directors complete a questionnaire designed to solicit information that may have a bearing on the annual independence determination, including all relevant relationships they have with our company, directly or indirectly through our company's sale or purchase of products or services to or from the companies or firms by which they are employed. The Governance Committee reviews any relevant disclosures made in the questionnaires with our General Counsel/Corporate Secretary, as well as any transactions our company has with director-affiliated entities. In February 2018,2020, the Governance Committee reviewed the relationshipsonly one relationship impacting the independence of our director nominees referenced below.

    directors, namely Mr. Butier.    Mr. Butier servesButier's service as our President and CEO.



    Mr. Scarborough.10    Mr. Scarborough formerly served as our Executive Chairman and was an employee2020 Proxy Statement  |Avery Dennison Corporation


    Table of our company through December 31, 2017.Contents

    Mr. Lopez.    Although there were no sales in 2016 or 2017, in 2015 we sold products to Owens-Illinois, Inc., for which Mr. Lopez serves as President and CEO. The payments we received from the company were on competitive terms, in the ordinary course of business, and less than $1 million, the lower of the two applicable thresholds set forth in the NYSE's independence standards.

        After review and discussion of the relevant facts and circumstances, the Governance Committee concluded that only Messrs.Mr. Butier and Scarborough had relationshipsa relationship that werewas disqualifying under NYSE listing standards, otherwise material or impairing of director independence. Upon recommendation of the Governance Committee, our Board affirmatively determined the nine director nominees10 current directors named below to be independent, representing 82%90% of our 10 director nominees.





GRAPHICGRAPHIC

 

GRAPHICGRAPHIC

        For a discussion of the potential impact of tenure on director independence, see theBoard Refreshment and Director Succession Planning section of this proxy statement.

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BOARD LEADERSHIP STRUCTURE

        Our Board currently has a Chairman, who as a recent former employee is not independent, a separate CEO and a Lead Independent Director. Our Governance Guidelines give our Board  acting through its independent directors  the discretion to separate or combine the roles of Chairman and CEO as it deems appropriate based on the needs of our company at any given time; totime. To facilitate this decision-making, the Governance Committee annually reviews our Board leadership structure, providing its recommendation on the appropriate structure for the following yearone-year term to our independent directors. Our independent directors do not view any particular Board leadership structure as necessarily preferable,preferable; rather, they make an informed annual determination taking into account, among other things, our financial position, business strategies and any feedback received from our stockholders.

ROBUST LEAD INDEPENDENT DIRECTOR ROLE

        Our Lead Independent Director balancesrole provides an effective balance with our non-independent Chairman and combined Chairman/CEO roles,role, exercising critical duties in the boardroom to ensure effective and independent Board decision-making. Our Governance Guidelines clearly delineate these responsibilities, which are shown below. Mr. Pyott currently servesserved as our Lead Independent Director.


Director during 2019 and, subject to his reelection, Mr. Siewert will assume the role after the Annual Meeting.

LEAD INDEPENDENT DIRECTOR PRIMARY RESPONSIBILITIES
   
Current Selectee:Designee:
    David Pyott

Executive Sessions Led in 2017: 5


Lead Independent Director is selected annually by our independent directors.

 

Preside over executive sessions of independent directors and meetings of our Board at which theour non-independent ChairmanChairman/CEO is not present

Designee-Elect:
    Patrick Siewert

Serve as liaison between the non-independent ChairmanChairman/CEO and our independent directors

Selected annually by our independent directors.

Approve meeting agendas and schedules and other information sent to our Board to ensure that appropriate items are discussed, with sufficient time for discussion of all items

Call meetings of independent directors when necessary or appropriate

If requested,consult and meet with our stockholders

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        In addition to these responsibilities, Mr. Pyott performed the following activities as Lead Independent Director in 2017:2019:

    Regularly consulted with each of the Chairman and CEO to help guide management's ongoing engagement with the Board on our strategic direction, including reviewing our business strategies and assessing acquisition opportunities;

    Provided feedback to our Chairman and our CEO after executive sessions of independent directors;

    Consulted on an ad hoc basis with other independent directors; and

    Met with members of senior management other than our CEO.

Regularly engaged with our Chairman/CEO to help guide management's ongoing discussions with the Board on our strategic direction, including the review of our business strategies, the mitigation of related risks and the assessment of potential acquisitions;

Consulted regularly with our other independent directors;

Provided feedback to our Chairman/CEO based on his discussions with our other independent directors;

Met with members of senior management other than our Chairman/CEO; and

Led discussions with several of our investors during our fall stockholder engagement program.

        Supplementing our Lead Independent Director in providing independent Board leadership are our Committee Chairs, all of whom are independent.

PRE-ANNUAL MEETING LEADERSHIP STRUCTURE

        Our Board currently has a Chairman/CEO and a Lead Independent Director. The Governance Committee evaluatedoversaw the evaluation of the performance of our ChairmanChairman/CEO and Lead Independent Director during the Board evaluation process conducted in the fourth quarter of 2017.2019, noting that Messrs. Butier and Pyott received positive feedback from our independent directors in their respective roles. Based in part on these evaluations, we believe that our current Board leadership structure is providinghas provided effective independent oversight of our company. During our ongoing engagement with our stockholders, on governance matters, nonefew of them hashave expressed concerns with our current Board leadership structure, which we believe reflects support for our robust and clearly delineated Lead Independent Director role.

POST-ANNUAL MEETING LEADERSHIP STRUCTURE

        In February 2018,2020, the Governance Committee evaluated our Board leadership structure and recommended to our Board that Mr. ScarboroughButier be elected to continue serving as Chairman, noting that his mentorship duringhe has successfully led our CEO transition has continuedcompany for the last four years and is best positioned to assist managementlead our Board in executingoverseeing our Board-aligned strategies to drive long-term stockholder value creation for our key stakeholders of customers, investors, employees and communities. The committee further noted that Mr. Butier has articulated and worked to realize a long-term vision for our company that has delivered top quartile TSR performance and resonated strongly with our stockholders, and that he received positive feedback on his performance fromwe could best continue our independent directors duringprogress towards achieving our 2021 financial targets and 2025 sustainability goals by continuing combined leadership in the 2017 Board evaluation process.boardroom at this time. Upon the recommendation of the Governance Committee, our Board unanimously elected Mr. ScarboroughButier (with him and Mr. Pyott abstaining) to continue servingserve as our Chairman, effective immediately after the Annual Meeting subject to his re-election. Thereelection.

        In light of Mr. Pyott's upcoming departure from our Board, the Governance Committee also recommended that Mr. PyottSiewert (with him and Mr. Pyott abstaining) continue servingserve as Lead Independent Director. Having an experienced director with financial expertise and substantial international experience serve as Lead Independent Director will provide Mr. Pyott has significantly contributedButier valuable mentorship, independent guidance and leadership as he enters his second year in the Chairman role. With Mr. Pyott's departure, the Governance Committee determined that Mr. Siewert is best positioned to our executive compensation and governance programs through his strong,provide independent and strategic leadership of our Board.Board in overseeing our strategies to drive long-term value creation for our key stakeholders. The committee's decision took into account his significant contribution to the Board's responsibility of maintaining the integrity of our financial statements as a member of the Audit Committee for the past 15 years and its Chair for the past four years, as well as his extensive international experience in Asia, a region in which nearly 35% of our sales are generated and approximately 60% of our employees are located. Upon the recommendation of the Governance Committee, our independent directors unanimously selected Mr. PyottSiewert (with him and Mr. Pyott abstaining) to continue servingserve as our Lead Independent Director, effective immediately after the Annual Meeting subject to his re-election.reelection.

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BOARD COMMITTEES

        Each of our Board committees has a written charter that describes its purposes, membership and meeting structure, and responsibilities. These charters, which may be found on our website atwww.averydennison.com/corporategovernance, are reviewed by the respective committee at least annually, with any recommended changes adopted upon approval by our Board. Amended charters are promptly posted on our website. The Charters for the Audit, Compensation and Governance Committees were last amended in February 2017, December 20152018, December 2019, and December 2016, respectively.

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        Each of our Board committees has the ability to form and delegate authority to subcommittees and may obtain advice and assistance from internal or external consultants, legal counsel or other advisors at our expense. In addition, each committee annually evaluates its performance. The primary responsibilities, current membership and 2019 meeting attendance information for the three standing committees of our Board are summarized below and on the following page.


AUDIT & FINANCE COMMITTEE PRIMARY RESPONSIBILITIES

 

 

 
IndependentCurrent Members:
  Patrick Siewert (Chair)
  Anthony Anderson
  Peter Barker
  Ken Hicks
Andres Lopez
  Martha Sullivan

Meetings in 2017:2019: 9

Average Attendance in 2017:2019: 100%96%

All members satisfy the enhanced independence standards required by the NYSE and have been determined by our Board to be financially literate.

Each of Messrs. Anderson, Barker and Siewert has been determined by our Board to be an "audit committee financial expert" under applicable SEC regulations.

 

Oversee financial statement and disclosure matters, including our quarterly and annual financial results, earnings release documentation and SEC reports, internal controls and major financial risk exposures

Appoint and oversee our independent registered public accounting firm, including its qualifications, performance and independence, and the scope, staffing and fees for its annual audit and other audit, review or attestation services

Oversee our internal audit function, including appointing or dismissing the senior internal auditor, evaluating his performance, reviewing significant issues raised in its audits and management's response, and discussing the annual internal audit plan, budget and staffing

Perform compliance oversight responsibilities, includingoverseeing our cybersecurity risk management program and risks related to our company's information technology controls and security; maintaining the procedures established for receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters; reviewing significant correspondence with governmental agencies and legal matters that may have a material impact on our financial statements; and making determinations and recommending actions to our Board regarding any violations of our Code of Ethics related to information contained in our SEC filings and other public communications

Conduct finance oversight responsibilities, including reviewing our capital structure and financing plans, capital allocation strategy, the funding status of our pension plans, and significant tax matters

Approve the Audit and Finance Committee Report included in our proxy statement

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COMPENSATION & EXECUTIVE
PERSONNEL COMMITTEE
 PRIMARY RESPONSIBILITIES

 

 

 
IndependentCurrent Members:
  Julia Stewart (Chair)
  Bradley Alford
  Mark Barrenechea
Ken Hicks
  David Pyott
  Martha Sullivan

Meetings in 2017:2019: 4

Average Attendance in 2017:2019: 100%

All members satisfy the enhanced independence standards required by the NYSE.

All members qualify as "non-employee directors" under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and "outside directors" under Section 162(m) of the Internal Revenue Code of 1986, as amended.

Relies on expert advice of an independent compensation consultant that reports directly to the Committee.

 

Review and approve corporate goals and individual objectives for our CEO's compensation and evaluate our company's and his individual performance todetermine annual CEO compensation

Review andapprove senior executive compensation, including base salaries and incentive compensation, giving consideration to the recommendations of our CEO

Recommend appropriate compensation strategy, incentive plans and benefit programs

Review our diversity and inclusion initiatives, including key performance metrics, as well as ourlearning and development programs and the results of ouremployee engagement survey

Approve our CD&Athe Compensation Discussion and Analysis and the Compensation and Executive Personnel Committee Report included in our proxy statement

Oversee stockholder approval of executive compensation matters, including advisory votes on executive compensation and the frequency of such votes

Ensure no encouragement of excessive risk-taking in our compensation policies and programs

Recommend non-employee director compensation

Conduct executive succession planning for our CEO and other senior leadersexecutive positions and regularly review executive new hires, promotions and role changes, departures and open positions

 

GOVERNANCE & SOCIAL
RESPONSIBILITY COMMITTEE
 PRIMARY RESPONSIBILITIES

 

 

 
IndependentCurrent Members:
  Peter Barker (Chair)
  Bradley Alford
  Anthony Anderson
  David Pyott
  Patrick Siewert
Julia Stewart

Meetings in 2017:2019: 34

Average Attendance in 2017:2019: 100%96%

All members satisfy the independence standards required by the NYSE.

 

Identify potential Board members and recommend director nominees using the criteria set forth in our Governance Guidelines

Periodicallyconsider our Board leadership structure and recommend to our Board whether to separate or combine the positions of Chairman and CEO, as well as who should serve as Lead Independent Director if those positions are combined

Recommend Board and Committee structure, chairsChairs and members

Recommend our independent directors using the independence standards of the NYSE

Review andapprove related person transactions

Oversee andconduct an annual performance evaluation of our Board and its Committees

Review our Governance Guidelines and recommend any changes to our Board

DiscussReview sustainability and corporate social responsibility matters

Oversee our values and ethics program and Code of Conduct, evaluate significant conflicts of interest or questions related to our Code of Conduct and policy on legal and ethical conduct, and make determinations and recommend actions to the Board regarding violations of the Code of Ethics (except for violations over which the Audit Committee has such authority)

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EXECUTIVE SESSIONS

        Our Board believes it is important to have executive sessions without our Chairman/CEO non-independent Chairman or other members of management present, which wereare generally held at every regular Board meeting during 2017.meetings. Our independent directors have robust and candid discussions at these executive sessions during which they critically evaluate the performance of our company, Chairman, Chairman/CEO and management.As Lead Independent Director, Mr. Pyott presided over the fivethree executive sessions of independent directors held during 2017.2019.

        In addition, executiveExecutive sessions were also scheduled for each regular meetingmeetings of the Audit, Compensation and Governance Committees held. These executive sessions generally excluded Mr. Scarborough, Mr. Butierour former non-independent Chairman, our current Chairman/CEO and other members of management, unless the Committee requested the presence of a memberthen-serving Chairman and/or one or more members of management forto attend a portion of the session to provide information or perspective.

RISK OVERSIGHT

        Management is responsible for managing the day-to-day risks confronting our businesses, but our Board has responsibility for overseeing enterprise risk management (ERM). The teams leading our businesses have incorporated ERM into developing and executing strategy,their strategies, assessing the risks and mitigating strategies impacting their businesses, and identifying and implementing appropriate mitigating actions on an ongoing basis. In addition, in consultation with our Chief Compliance Officerhead of risk management and senior management, these teams semiannually prepare a risk profile consisting of a heat map and a summary of their key risks and mitigating strategies, which are used to prepare a company risk profile based on identified business-specific risks as well as enterprise-wide risks.

        We also have robust global processes that support a strong internal control environment to promote the early identification and continued management of risks by our company's leadership. Our legal and compliance functions report into our General Counsel to provide independent evaluation of the challenges facing our businesses and our Vice President of Internal Audit reports to the Audit Committee in the conduct of his operational responsibilities, ensuring his independence from management.

        In performing its oversight role, our Board is responsible for ensuring that the risk managementERM processes designed and implemented by management are functioning effectively, and that our culture fosterspromotes risk-adjusted decision-making.

        Our Board as a whole oversees risks related to our company and business strategies and operations, exercising this responsibility by considering the risks related to its decisions.Each year, our Board receives reports on the ERM process and the strategic plans and risks facing each of our businesses and our company as a whole. These risks may include financial risks, politicalgeopolitical risks, legal and regulatory risks, supply chain risks, competitive risks, information technology risks, and other risks related to the wayways in which we do business. Employees who lead various risk areas  such as information technology; environmental, health and safety; tax; compliance; sustainability; and social responsibility  report periodically to Board Committees and occasionally to our full Board.

        Our Board has delegated to its Committees elements of its risk oversight function to its Committees to better coordinate with management to serve the long-term interests of all of our company and stockholders.stakeholders. Our Board receives reports from the Committee Chairs regarding topics discussed at every Committee meeting,committee meetings, which includesinclude the areas of risk overseen primarily by itsthe Board Committees.

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Risk Oversight

GRAPHICGRAPHIC

        The Audit Committee oversees our internal control environment and evaluates the effectiveness of our internal controls at least annually. Supplementing these processes, the Audit Committee periodically meets in executive session with each of our CEO, CFO, CAO, General Counsel, Vice President of Internal Audit, and representatives of our independent registered public accounting firm. The Governance Committee also meets semiannually with our Chief Compliance Officer to discuss, among other things, discuss ourthe investigation of allegations reported to our Business Conduct GuideLine.

            During 2017,In 2019, the following risk areas were of particular Board and Committee focus:

      The global economic environment;
      Changes in tax laws and regulations, in particular in the U.S.;
      Our U.S. pension plan liabilities;
      Cybersecurity and information technology, including the implementation

    The system and controls we put in place to ensure timely compliance with new lease accounting guidance, as well as our control environment in new or expanded international operations;

    Our tax planning and structuring transactions and strategies;

    Our transfer of assets and liabilities primarily to an annuity insurance provider following the 2018 termination of our U.S. pension plan;

    Cybersecurity and information technology operational risks, including our implementations of an enterprise resource planning system in our Label and Graphic Materials North America business and a significant software upgrade in our RBIS business;

    Risks associated with our restructuring actions, capital investments in the U.S. and South Asia, R&D and innovation, and acquisitions and equity investments; and

    Risks related to environmental, social and governance matters, particularly in the areas of sustainability, our Values and Ethics program, and corporate social responsibility, as well as human capital management.

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Risks associated with our restructuring actions, acquisitions and integration activities.
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RISKS ASSOCIATED WITH COMPENSATION POLICIES AND PRACTICES

        As described in theCompensation Discussion and Analysis section of this proxy statement, we maintain best practices in compensation that collectively encourage ongoing risk assessment and mitigation. The Compensation Committee periodically reviews our compensation programs to ensure that they do not provide incentives that encourage our employees to take excessive risks in managing their respective businesses or functional areas andareas. The committee conducted its most recent review in February 2018.

        Based on the advice of its independent compensation consultant, Willis Towers Watson, the Compensation Committee noted the risk-mitigating features of our compensation policies and practices showndescribed below and on the following page.page, which are substantially the same as what they were at the time of the committee's most recent review.

Governance and Oversight

The Compensation Committee has discretion to decrease Annual Incentive Plan (AIP) awards and long-term incentive (LTI) grants based on individual performance, including as a result of excessive risk-taking.

Our clawback policy serves as a deterrent to fraud or other misconduct that necessitates a restatement of our financial statements (including, without limitation, any accounting restatement due to material noncompliance with any financial reporting requirement).

The Compensation Committee annually evaluates the performance of our CEO and other senior executives in the context of our company and business goals and their individual contributions.

Our stock ownership policy is rigorous and consistent with best practices, with a minimum ownership level of 6x and 3x base salary for our CEO and other NEOs, respectively, and a requirement that 50% of their respective minimum ownership level be held in vested shares.

We prohibit our officers from hedging or pledging company stock and require them to engage in stock transactions only during limited trading windows.

Pay Philosophy and Structure

Our programs prioritize incenting stockholder value creation, balanced by retention and other considerations.

The substantial majority of executive compensation is delivered in equity to motivate our company's pursuit of strong long-term performance and sustainable growth.

Our change of control and executive severance plans are reasonable and consistent with market practices, with change of control benefits provided on a double-trigger basis to mitigate the risk that such a transaction be pursued to advance personal interests rather than the best interests of our stockholders.

Our incentive compensation consists of short- and long-term performance objectives balanced with objectives designed to incent strong annual financial performance and long-term economic and stockholder value creation, as well as balancing growth and efficient capital deployment.

Incentive Program Design

Our AIP and LTI awards incent annual profitable growth balanced with long-term financial value creation, using multiple performance objectives to deliver realized compensation that is based on company and/or business performance.

AIP awards are not guaranteed, with below-threshold performance potentially resulting in zero payout, payments subject to an overall cap of 200%, and individual modifiers for our NEOs generally capped at 100%.

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Governance and Oversight

    The Compensation Committee has discretion to decrease Annual Incentive Plan (AIP) awards and long-term incentive (LTI) grants based on individual performance, including as a result of excessive risk-taking.

    Our clawback policy serves as a deterrent to fraud or other misconduct in connection with our financial statements.

    The Compensation Committee annually evaluates the performance of our CEO and other executives in the context of our company and business goals and their individual contributions.

    Our stock ownership guidelines are rigorous and consistent with best practices, with a minimum ownership level of 6x base salary for our CEO and a requirement that 50% of the ownership level be held in vested shares.

    We prohibit our officers from hedging or pledging company stock and require them to engage in stock transactions only during limited trading windows.

Pay Philosophy and Structure

    Our programs prioritize incenting stockholder value creation, balanced by retention and other considerations.

    The substantial majority of executive compensation is delivered in equity to motivate the pursuit of strong long-term performance and sustainable growth.

    Our change of control and executive severance plans are reasonable and consistent with market practices, with change of control benefits provided on a double-trigger basis to mitigate the risk that such a transaction be pursued to advance personal interests rather than the best interests of our stockholders.

    Our incentive compensation consists of short- and long-term performance objectives that cover different time periods and is balanced with objectives for annual financial performance and long-term economic and stockholder value creation, as well as between growth and efficient capital deployment.

Incentive Program Design

    Our AIP and LTI awards incent annual profitable growth balanced with long-term financial value creation, using multiple performance objectives and providing realized compensation based primarily on our company's performance.

    AIP awards are not guaranteed, with below-threshold performance potentially resulting in zero payout and payments subject to an overall cap of 200%.

    Our equity award vehicles are performance-based, use multiple performance objectives, are subject to threshold and maximum payout opportunities, and have the following additional features that limit potential risk-taking:

    Our performance units (PUs) cliff vest at the end of three years with the payout for the relative total stockholder return (TSR) components capped at 100% of target for any three-year performance period in which absolute TSR is negative to prevent management from being unduly enriched when stockholders experience loss, while still incenting executives to deliver relatively strong performance during challenging economic periods; and

    Our market-leveraged stock units (MSUs) vest over one-, two-, three- and four-year performance periods (with an average performance period of 2.5 years), with challenging performance objectives, including a threshold performance level of absolute TSR of -15% and a target performance level of absolute TSR of 10%.

Our equity awards are performance-based, use multiple performance objectives, are subject to threshold and maximum payout opportunities, and have the following additional features that limit potential risk-taking:


Our performance units (PUs) cliff vest at the end of three years with the payout for the relative total stockholder return (TSR) component capped at 100% of target for any three-year performance period in which absolute TSR is negative to prevent executives from being unduly enriched when stockholders experience loss, while still incenting them to deliver relatively strong performance during challenging economic periods; and


Our market-leveraged stock units (MSUs) vest over one-, two-, three- and four-year performance periods (with an average performance period of 2.5 years), with challenging performance objectives, including a threshold performance level of absolute TSR of (15)% and a target performance level of absolute TSR of 10%.

        Based on these and other factors, Willis Towers Watson determined that our compensation program strikes an appropriate pay-risk balance.

        TheGiving consideration to the advice of Willis Towers Watson, the Compensation Committee has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our company.

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HUMAN CAPITAL MANAGEMENT (HCM)

SUCCESSION PLANNING

        The Compensation Committee and our full Board conduct executive succession planning semiannually, developing and refining succession plans for our CEO and other senior executives. Consistent with this practice,in April 2019, our Board discussed potential successors to our CEO. In addition,in October 2019, the Compensation Committee reviewed talent that is ready – or, with continued development on their current trajectory with mentorship and coaching from our current leaders, will be ready – to fill other senior executive positions in the event of a vacancy. These assessments were then further discussed with our full Board. The Compensation Committee also regularly reviews executive new hires, promotions, transfers and departures to assist with succession planning and leadership development.

LEADERSHIP DEVELOPMENT

        Our Board is actively involved in human capital managementoverseeing our company's HCM program to identify and develop our future leaders. We maintain a robust performance review process and leadership development programprocesses for our employees. ManagementSenior management develops and reports to the Compensation Committee or our full Board on leadership at lowerexecutive levels of our organization by identifying high potential talent and critical experts, cultivating the skills and capabilities to allow identified individuals to become our future leaders, and providing them with developmental opportunities. opportunities to further develop.Through regular reports from management, our Board has the opportunity to meet our business leaders and functional leaders in law, finance, information technology, compliance, and human resources. In addition, Board members have freedom of access to all our employees, and are encouraged to visit our facilities to meet local management and attend company events.

SUCCESSION PLANNINGDIVERSITY AND INCLUSION

        Diversity is one of our core values, reflecting our efforts to create an inclusive and respectful environment for people of all backgrounds and orientations and our recognition that we gain strength from diverse ideas and teams.The Compensation Committee and/orimportance of diversity and inclusion to our company is further evidenced by the inclusion of diversity-related targets in our 2025 sustainability goals. Diversity and inclusion at our company are led by our cross-functional and cross-divisional Diversity and Inclusion Council, co-chaired by Anne Hill, our Senior Vice President and Chief Human Resources Officer, and Deon Stander, the Vice President and General Manager of our RBIS business. Board conducts executive succession planning semiannually, developing and refining succession plans for our CEO and key executive officers. Consistent with this practice, in April and October 2017,oversight is conducted primarily through the Compensation Committee discussed talent thatCommittee.

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        In recent years, among other initiatives, our diversity and inclusion efforts have focused on training our managers globally onunconscious bias, increasing the number of sites offeringflexible work arrangements, and expanding our Women Empowered program featuring interactive discussions among nominated participants to facilitate and enhance their development. We also evaluated ourgender pay equity and made adjustments to compensation where needed.

        In 2019, we launchedemployee resource groups (ERGs), which are voluntary employee-led groups made up of individuals who join together based on common interests, backgrounds or demographic characteristics such as race, ethnicity or sexual orientation. Our ERGs currently include groups centered around women, ethnic Chinese, black employees, military veterans, and LGBT+ individuals; participation in these groups is currently ready — or, with continued development onnot limited to individuals in these categories, but rather is open to all employees interested in learning about the experiences and challenges of their current trajectory with mentorship and coaching from our current leaders, will be ready — to fill executive officer positions in the event of a vacancy. Those discussions were then summarized and reported to our Board.colleagues. In addition, we establishedregional diversity and inclusion councils to provide leadership of initiatives that more strongly resonate with employees in their respective regions. We plan to launchglobal harassment prevention training in 2020 to supplement the Compensation Committee reviews executive new hires, promotionsanti-harassment messages we continually reinforce as part of our Values and departures at its regularly-scheduled meetings.Ethics program.

DIRECTOR EDUCATION

INITIAL ORIENTATION

        Our initial director orientation generally covers (i) our strategies, performance and leadership; (ii) investor messaging; (iii) the strategies and risks of our businesses; (iv) finance matters, including our financial reporting policies and practices, internal control environment, internal audit deployment, tax planning and compliance, and capital structure; (v) legal and compliance matters, including our governance policies and procedures, valuesValues and ethics, compliance,Ethics program, and ERM; (vi) human resourcesexecutive compensation and HCM matters, including executive compensation, succession planning, leadership development, and non-employee director compensation;diversity and inclusion; and (vii) information technology and cybersecurity.

        In connection with his initial appointment to our Board in early 2017, we provided Mr. Lopez with information regarding our businesses, strategic plans and risk-mitigating actions, competitors, non-employee director compensation policies and other matters. Our CEO then met with Mr. Lopez to discuss these matters. We conducted further orientation for Mr. Lopez in the spring of 2017 in connection with his appointment to the Audit Committee.

CONTINUING EDUCATION

        Our continuing director education program consists of periodic visits to our facilities and management presentations regarding our business operations, strategies, risks and values and ethics. We provide updates on relevantthese topics of interest to our Board at and between meetings throughout the year, and provide access to a boardroom news resource platform for them to keep informed of emerging best practices. We also reimburse directors who attend accreditedcontinuing director education programs for program fees and related expenses.

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BOARD AND COMMITTEE EVALUATIONS

        The Governance Committee oversees and conducts an annual performance evaluation of our Board, Chairman, Lead Independent Director and Board Committees, including the Committee Chairs.In 2019, our directors began evaluating the individual performance of their peers serving on the Board, providing candid feedback and helping ensure continuous boardroom improvement, as well as assisting with director succession planning.Our Board views the evaluation process as integral to assesingassessing its effectiveness and identifying improvement opportunities in the pursuit of continued excellence. Many of the improvements in our governance practices and Board processes were identified and implemented as a result of the annual evaluation process.

GRAPHICGRAPHIC

        In response to feedback received in recent years during the evaluation process, our Board made the following enhancements to its processes:

    Identified the need for anindependent director in the packaging industry, culminating in the appointment of Mr. Lopez to our Board;

    Given our increased strategic focus on acquisitions,enhanced discussion of M&A pipeline and targets actively under consideration, as well as the integration and performance of recently acquired companies;

    Continued its focus onexecutive succession planning and leadership development with more frequent discussions on director succession planning and the desired profile of future candidates;

    Continued our Board's and the Audit Committee's review and discussion of ourcybersecurity preparedness and exposures related to pension liabilities;

    Enhancedinteraction with management below the executive officer level; and

    Conductedpost-investment reviews of the return on significant capital expenditures.

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        In response to evaluation feedback received in recent years, our Board made the following enhancements to its membership and processes:

Enhanced our director succession planning process by focusing more deeply onBoard leadership roles, such as our Lead Independent Director and Committee Chairs, and identifying the need forindependent directors with packaging and technology expertise, culminating in the appointments of Messrs. Lopez and Barrenechea to our Board;

Enhanced the review of potential CEO successors and their progress against their development plans and continued its focus onexecutive succession planning and leadership development with more frequent discussions with the Compensation Committee and our full Board;

Given our strategic focus on acquisitions, enhanced discussion of ourM&A pipeline and targets actively under consideration, as well as the integration and performance of acquired companies;

Continued our Board's and the Audit Committee's review and discussion of ourcybersecurity preparedness and actions being taken to address ourpension liabilities, including the 2018 termination of our U.S. pension plan and the transfer of those liabilities primarily to an annuity insurance provider in 2019;

Conducted annualpost-investment reviews of the return on significant capital expenditures, acquisitions and information technology investments;

Increased engagement with the Board oninvestor relations matters and ourstockholder engagement program and provided additional information on thecompetitive landscape in each of our businesses, in each case to further bring external perspectives into the boardroom; and

Enhanced our Chairman/CEO's engagement with the Board between meetings, with regular email updates to the full Board and one-on-one meetings between him and each director.

STOCKHOLDER ENGAGEMENT AND COMMUNICATIONS

        We value stockholder feedback on our environmental, social and governance program,(ESG) and executive compensation and HCM matters, and we actively solicit input through stockholder engagement to ensure that we reflect not only our program reflectsevolving business strategies but also the changing business environment and stockholder expectations.expectations of our investors.

STOCKHOLDER ENGAGEMENT ON GOVERNANCEESG MATTERS IN 20172019

        We continued our longstanding practice of open dialogue with stockholders in 2017.2019. In advance of the 20172019 Annual Meeting, we contacted our 2535 largest institutional stockholders, representing almost 50%approximately 61% of our then-outstanding shares. Board members, including our Lead Independent Director, and management were made available to answer questions and address concerns regarding our executive compensation and governance programs and the items being brought to stockholder vote atbefore the Annual Meeting. While we received responses from stockholders representing 25% of our then-outstanding shares, none of them felt that there was a need to substantively engage during that busy time.

        In the fall, we reached out to our 30 largest institutional stockholders, representing nearly 55% of our then outstanding shares, to learn what issues are important to them without the time pressures associated with proxy season. As a result of these efforts, we received responses from stockholders representing over 30% of our then-outstanding shares, only one of them desired to substantively engage at that busy time. Respondents declining meetings indicated that they did not have any concerns warranting discussion during proxy season.

        In the fall, without the time pressures associated with proxy season, we contacted our 30 largest institutional stockholders, representing over 62% of our then-outstanding shares, to request a meeting with our Lead Independent Director and/or management. We received responses from stockholders representing nearly 60% of our then-outstanding shares and spoke with stockholders representing approximately 11%35% of thoseour then-outstanding shares.We substantively engaged with every stockholder who requested to do so.so, and our Lead Independent Director led half of these engagements.We also discussed the results of our fall engagement on ESG matters with the Governance Committee.

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        During our 2017 engagement program, withWith respect to matters related to governance, we focused on our non-employee directors' commitments as they relate to overboarding concerns and discussed several topics related to our Board's processes, includingBoard composition and its succession planning and refreshment processes, as well as the skills, commitments, tenure, and diversity and evaluations.of our directors. We also discussed the integration of sustainability intocommented on our business strategies, andstockholder rights profile. In addition, we discussed our Board's oversight of our cybersecurity preparedness. Our stockholders expressed interest inbusiness strategies and related risks; progress towards achieving our 2025 sustainability goals, including with respect to plastic recyclability and how our businesses are adapting to the anticipated completionrisks and opportunities presented by climate change; and audit matters such as the tenure of our CEO transition and our Board's views on proxy access; both of these matters were subsequently addressed with our December 2017 announcement of Mr. Scarborough's retirement as our Executive Chairman at the end of that year and our adoption of proxy access.independent auditor.

CONTACTING OUR BOARD

        We welcome ongoingOur Board welcomes feedback from all our stockholders. We review correspondence submitted by stockholders, discussing theany substantive feedback received with senior management and/or our Board as appropriate.

        Stockholders and other interested parties may contact our Board, Chairman, Lead Independent Director, any Committee or Committee Chair, or any other individual director concerning business matters by writing to: Board of Directors (or a particular subgroup or individual director), c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

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ITEM 1 ELECTION OF DIRECTORS

        Our Bylaws provide for a Board of between eight and 12 directors, with the exact number fixed by a resolution of our Board. Effective February 1, 2017,Our Board has fixed the current number of directors at 11; in conjunction with Mr. Lopez's appointment and upon the recommendation of the Governance Committee,April 2020, our Board fixedexpects to fix the number of directors at 11.10 to reflect David Pyott's departure from the Board on the date of the Annual Meeting. All nominees are standing for election at the Annual Meeting for a one-year term.term expiring at the 2021 Annual Meeting.

        Each of the 1110 nominees is presently serving on our Board and has consented to being named in this proxy statement and serving if elected by our stockholders.

MAJORITY VOTING STANDARD; UNELECTED DIRECTOR RESIGNATION REQUIREMENT

        Our Bylaws provide for the approval by a majority of votes cast for the election of directors in uncontested elections like this one and require that an incumbent director who is not re-elected tender his or her resignation from our Board. Our Board, excluding the tendering director, is required to determine whether to accept the resignation  taking into account the recommendation of the Governance Committee and any other factors it considers appropriate  and publicly disclose its decision regarding the tendered resignation, including its rationale for the decision, within 90 days from the date election results are certified. In contested elections, plurality voting is the standard for the election of directors.

        In voting for the election of directors, each share has one vote for each position to be filled and there is no cumulative voting.

RECOMMENDATION OF BOARD OF DIRECTORS

Our Board of Directors recommends that you vote FOR each of the 10 director nominees.The persons named as proxies will vote for thetheir election, of each of the 11 nominees, unless you specify otherwise. If any director nominee were to become unavailable prior to the Annual Meeting, your proxy would be voted for a substitute nominee designated by our Board or we would decrease the size of our Board.

SELECTION OF DIRECTOR NOMINEES

        Director nominees are generally recommended by the Governance Committee for nomination by our Board and election by our stockholders. Director nominees may also be recommended by the Governance Committee for appointment to our Board, with their election by stockholders taking place at the next Annual Meeting. Our Board believes that our directors reflect a balance of skills, qualifications and demographicsbackgrounds that allows them to effectively discharge their oversight responsibilities.responsibilities as shown in the matrix included later in this section.

            In consideringevaluating whether to recommend a candidate as a director nominee, the Governance Committee primarily uses the following criteria set forth in our Governance Guidelines:

      Ability to qualify as independent,Independence, to ensure that a majority of our Board remains independent;

      Business and leadership experience, includingindustry experience andglobal exposure and considering factors such as size, industry, scope, complexity and global operations;complexity;

      Experience as a board member ofBoard experience at another public company;

      Experience in finance, accounting and/or executive compensation;compensation;

      Time commitments, including other boards on which the nominee serves;

      Potentialconflicts of interest;interest;

      Demographic characteristics (such as gender, race and ethnicity);

      Ability to contribute to the oversight and governance of our company; and

      Ability to represent the balanced interests of stockholders as a whole, rather than those of any special interest group.

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        For incumbent directors, the Governance Committee also evaluatesconsiders their contributions to our Board and Committees, attendance at Board and Committee meetings, compliance with our stock ownership guidelines,policy, and mandatory retirement datedates to assist with director succession planning. The Governance Committee does not assign specific weights to the criteria and no particular criterion is necessarily applicable to all nominees.

        The Governance Committee reviews the qualifications of any candidate with those of our current directors in assessing how our Board can most effectively fulfill its oversight responsibilities. Sources for identifying potential nominees include current Board members, senior management, executive search firms, and our stockholders.

STOCKHOLDER SUBMISSION OF DIRECTOR NOMINEES

Advance Notice Nominees

        Stockholders may recommend director candidates by submitting the candidate's name, together with his or her biographical information, professional experience and written consent to nomination, to Governance and Social Responsibility Committee Chair, c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203. To be considered at the 20192021 Annual Meeting, advance notice stockholder nominations must comply with the requirements referenceddescribed in the lastpenultimate section of this proxy statement underSubmission of Stockholder Items for 2019 Annual Meeting.statement. The Governance Committee considers stockholder nominees on the same basis as it considers all other nominees.

Proxy Access Nominees

        Our Board recently amended our Bylaws to permit aA stockholder, or a group of no more than 20 stockholders, owning at least 3% of our company's stock continuously for at least three years is permitted to submit director nominees (up to 20% of the Board) for inclusion in our proxy materials, subject to the requirements specified in our Bylaws. For further information on submitting proxy access nominees, please refer to the penultimate section of this proxy statementSubmission of Stockholder Items for 2019 Annual Meeting..

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BOARD MATRIX OF DIRECTOR SKILLS, QUALIFICATIONS AND BACKGROUNDS

        Our directorsdirector nominees bring abalance of skills, qualifications and demographic backgrounds in overseeingto their oversight of our company, as shown in the matrix below. The Governance Committee regularly evaluates the skills and qualifications desirable for our Board to best meetadvance our business strategies and serve the changing needsinterests of our business.key stakeholders of customers, investors, employees and communities.

GRAPHICGRAPHIC

BOARD REFRESHMENT AND DIRECTOR SUCCESSION PLANNING

        Our Board's ongoing director succession planning is designed to ensure an independent, well-qualified Board, with diversity in experienceskills, qualifications and background to effectively provide strongbackgrounds that aligns with our business strategies and enables effective oversight.

NO TERM LIMITS

        Our Governance Guidelines reflect our Board's belief that directors should not be subject to term limits. While term limits could help facilitate fresh ideas and viewpoints being brought to the Board,boardroom, our Board believes they are counter-balanced bycould result in the disadvantage of causing thepremature loss of a director who over a period of time has become well-versedgained expertise in assessing our strategies, operations and risks and is providingcontinuing to provide valuable contributions to Board deliberations. WeFurther,we believe that our Board's decision not to establish term limits at this time is consistent with the prevailing practice among companies in the S&P 500.

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        We recognize        Our Board recognizes that certain governance stakeholders have suggested that longer-serving directors may have decreased independence and objectivity; however, we believeour Board believes that arbitrarily removing knowledgeable directors and losing the oversight consistency they bring  particularly during periods of either executive management change, similar tosuch as our recent CEO and CFO transitions, or Board change, such as Dean Scarborough's April 2019 departure from our Board after having served as Chairman for nine years and David Pyott's upcoming departure from our Board in April 2020 after having served as Lead Independent Director for 10 years – weighs against implementing term limits.limits at this time. Ultimately, our Board believes that it is our Board'sits responsibility to establish appropriate board refreshment policies, usingin light of our strategies, leadership team and financial position at any particular time, exercising its discretion in the best interest of our company and stockholders.

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Tablethe Governance Committee and/or full Board regularly reviews the skills, qualifications and backgrounds of Contentsits members to ensure that they continue to meet the needs of our businesses, align with our strategies and advance the interests of all of our stakeholders.

POLICIES AND RECENT ACTIONS SUPPORTING REGULAR BOARD REFRESHMENT

        Our Board has adopted the policies described below to facilitate regular refreshment of our Board and ensure that it continues to independently oversee, challenge and partner with our management with refreshed points of view.team.

POLICY
DESCRIPTION
EVENTS OCCURRING AT OR SINCE
2017 2019 ANNUAL MEETING

Mandatory
Resignation
Policy


Incumbent directors who are not elected by our stockholders must tender their resignation.All incumbent directors standing for election were elected at the 20172019 Annual Meeting.

Mandatory
Retirement
Policy


Directors must retire on the date of the annual meeting of stockholders that follows their reaching the age of 72. Since inception, this policy has never been waived.


No directors retired under this policy in 2017.2019.

Resignation Tendered Upon Change in Principal Employment


Directors who change the principal occupation, position or responsibility they held when they were elected to our Board must volunteer to resign from the Board.

After being informed of his planned retirement from our company at the end of 2017, our Board determined that Mr. Scarborough should continue serving as a director. They subsequently re-elected him as Chairman, subject to his re-election.

In November 2019, Ms. Stewart resigned from DineEquity, Inc. effective March 2017informed our Chairman and the Governance Committee Chair of her potential appointment as chairman and CEO of a then-yet-to-be-named specialty products company focused on health and wellness. Although she volunteered to resign from our Board. After excusing her from the meeting,Board, the Governance Committee determined that Ms. Stewart should remain on our Board.

In January 2020, Ms. Sullivan informed our Chairman and the Governance Committee Chair of her retirement as President and CEO of Sensata Technologies effective March 1, 2020. Although she volunteered to resign from the Board, the Governance Committee determined that Ms. Sullivan should remain on our Board.

Prior Notice Requirement to Prevent Over-Boarding

Directors must give prior notice before accepting another public company directorship so that the director's ability to fulfill Board responsibilities may be appropriately evaluated if he or she serves on more than four other public company boards.

In May 2017, Mr. Hicks joined the board of Whole Foods Corporation. Mr. Hicks only served on our Board at that time and Whole Foods was soon after acquired by

No directors accepted another company.public company directorship in 2019.

        Over the past eight years, five directors retired from our Board as a result of our mandatory retirement policy and two directors resigned from our Board (not due to any disagreement with our company).        Upon the recommendation of the Governance Committee, Mr.Messrs. Barrenechea and Lopez waswere appointed to our Board as an independent directordirectors in September 2018 and February 2017.2017, respectively. In connection with his becoming our CEO, transition, Mr. Butier joined our Board as a non-independent director in May 2016. In addition, Mr. Scarborough departed from our Board in April 2019 and Mr. Pyott will depart our Board in April 2020. We believe that this recent experience — coming after four new independentwith both joining and departing directors were appointed to our Board between 2009 and 2013 — demonstrates our Board's commitment to ongoingregular refreshment.

AGE AND TENURE

        The average age of our director nominees is 61,62, which we believe is comparable to the average board age in the S&P 500 and within the 60-63 year band in which the plurality of these companies fall. The average tenure of our director nominees is tenapproximately nine years, which we believe is comparable to the average tenure for companies in the S&P 500 and within the six-to-ten6-10 year band in which the majority of these companies fall.

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        The charts on the following pagebelow show the age and tenure of our director nominees, which we believe is balancedreflect a balance between newnewer directors who bring newfresh ideas and insights and longer-serving directors with deep institutional knowledge of our Board and company.

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Director Nominees

GRAPHICGRAPHIC

DIRECTOR DIVERSITY

        Our Governance Guidelines reflect that the Governance Committee's assessment of the qualifications of director candidates includes consideration of demographic characteristics such as race, gender and ethnicity. Although neither the Governance Committee nor our full Board does not havehas a formal policy regarding the consideration of diversity in selecting director nominees, the Governance Committeecommittee seeks to recommend individuals with a broad diversity of experience, profession, skill, geographic representation and background, which may include consideration of an individual's demographic background, including characteristics such as race, gender and national origin.ethnicity. While diversity is a consideration, nominees are not chosen or excluded solely or primarily on that basis; rather, the Governance Committee focuses on skills, experience and background that can complement our existing Board in light of the diverse and global nature of our businesses and operations.

        Our Board recognizes the benefits of racial, ethnic and gender diversity in the boardroom, including better reflecting our global customer base and the healthy debate that results from different viewpoints that may stem from diverse backgrounds. The racial, ethnic and gender diversity of our 20182020 director nominees is shown in the chart below.

GRAPHICGRAPHIC

20182020 DIRECTOR NOMINEES

        The following pages provide information on the directors nominated for election at the Annual Meeting, including his or her age, current board leadership roles, and business experience during at least the past five years. We also indicate the name of any other public company board on which each nominee currently serves, or has served during the past five years; for these purposes, "public company" means one that is required to file reports with the SEC.

        In addition to the information presented regarding each nominee's experience and qualifications that led our Board to conclude that he or she should serve as a director  which includes senior leadership experience, industry experience, global exposure, financial sophistication, and public company board experience  we believe that each of them has integrity and adheres to our high ethical standards.Each nominee also has demonstrated the ability to exercise sound judgment, fulfill the time commitments necessary to serve on our Board, and is committed to servingadvance the long-term interests of all our stockholders.stakeholders.

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GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Owens-Illinois,O-I Glass, Inc., a glass container manufacturer and supplier to food and beverage brands

President & Chief Executive Officer since January 2016

Chief Operating Officer & President, Glass Containers, from February 2015 to December 2015

President, O-I Americas, from July 2014 to January 2015

President, O-I Latin America, from April 2009 to July 2014

    

Andres A. Lopez

Age 5557


Director since February 2017


Independent


Other Public Company Boards

Current:

Owens-Illinois,O-I Glass, Inc.

Past Five Years:

None

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Oversees a company with over $6.9$6.7 billion in 2017 revenues and more than 26,00027,000 employees in 2019

Industry experience andglobal exposure

Leads a multinational packaging company in the beverage segment of the consumer goods industry into which we sell our label and graphic materials

Global exposure

Led Latin America and Americas divisions, after having worked in positions of increasing responsibility throughout the region

Public company board experience

Concurrent service on one other public company board

BOARD LEADERSHIP ROLES

Audit Committee Member

   

GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Ernst & Young LLP, an assurance, tax, transaction and advisory services firm

Vice Chair, Managing Partner and Member of the Executive Board from 2000 to March 2012

  




Anthony K. Anderson

Age 6264


Director since December 2012


Independent


Other Public Company Boards

Current:

AAR Corporation

Exelon Corporation

Marsh & McLennan Companies, Inc.

Past Five Years:

First American Financial Corporation

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Served on the executive board of Ernst & Young for 12 years, and as the managing partner of the Midwest and Pacific Southwest regions

Director of Perspectives Charter School (Chairman), World Business Chicago (Executive Committee) and the Chicago Urban League (former Chairman)

Financial sophistication

35 years of financial statement and internal control expertise acquired through auditing global public companies

Substantial experience advising audit committees of large multinational corporations

Certified public accountant (now inactive)

Public company board experience

Concurrent service on three other public company boards and prior service on other public company boards

BOARD LEADERSHIP ROLES

Audit Committee Member

Governance Committee Member

   

GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Nestlé USA, a nutrition, health and wellness company

Chairman & Chief Executive Officer from January 2006 to October 2012

Nestlé Brands Company, an operating unit of Nestlé USA

President & Chief Executive Officer from 2003 to December 2005

Bradley A. Alford

Age 6163


Director since April 2010


Independent


Other Public Company Boards

Current:

ConAgra Foods, Inc.

Perrigo Company plc

Past Five Years:

NoneConAgra Foods, Inc.

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Led a company then with $12+over $12 billion in annual revenues and 26,000+more than 26,000 employees

Industry experience andglobal exposure

30+35+ years in the consumer goods industry

Knowledge of the food and beverage segments of the consumer goods industry into which we sell our label and graphic materials

Global exposure

International management assignments

SignificantSubstantial M&A and integration experience

Public company board experience

Concurrent service on one other public company board and prior service on other public company boards

BOARD LEADERSHIP ROLES

Compensation Committee Member

Governance Committee Member



  

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GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Allergan,Alurx, Inc., a globalspecialty products company focused on health care companyand wellness

ChairmanChair & Chief Executive Officer from June 2013 to March 2015 and February 2006 to April 2011

Chairman, President & Chief Executive Officer from April 2011 to June 2013 and April 2001 tosince January 2006

President & Chief Executive Officer from January 1998 to March 2001

David E.I. Pyott

Age 64


Director since November 1999


Independent


Other Public Company Boards

Current:

Alnylam Pharmaceuticals Inc.

BioMarin Pharmaceutical Inc.

Koninklijke Philips N.V.

Past Five Years:

Allergan, Inc.

Edwards Lifesciences Corporation

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Led a company with over $7 billion in annual revenues and over 11,000 employees

Global exposure and industry experience

30+ years of strategic, operational, research and development and marketing experience in the healthcare industry into which we sell our industrial and healthcare materials2020

Public board experience

Concurrent service on three other public boards and prior service on other public boards

BOARD LEADERSHIP ROLES

Lead Independent Director

Compensation Committee Member

Governance Committee Member

GRAPHIC

SELECT BUSINESS EXPERIENCE

Avery Dennison Corporation

Executive Chairman from May 2016 to December 2017

Chairman & Chief Executive Officer from November 2014 to April 2016

Chairman, President & Chief Executive Officer from April 2010 to October 2014

President & Chief Executive Officer from May 2005 to April 2010

President & Chief Operating Officer from May 2000 to April 2005

Dean A. Scarborough

Age 62


Director since May 2000


Not Independent


Other Public Company Boards

Current:

Mattel,Dine Brands Global, Inc.

Past Five Years:

None

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Seven years leading our company as Chairman, 11 years as Chief Executive Officer and 14+ years as President

Global exposure and industry experience

30+ years managing or overseeing our global label and graphic materials operations

Public board experience

Concurrent service on one other public board

BOARD LEADERSHIP ROLES

Chairman

GRAPHIC

SELECT BUSINESS EXPERIENCE

(formerly DineEquity, Inc.), owner, operator and franchisor of IHOP and

Applebee's restaurants

Chairman & Chief Executive Officer from June 2008 to March 2017

IHOP Corporation, DineEquity's predecessor entity

Chairman & Chief Executive Officer from May 2006 to May 2008

President, Chief Executive Officer & Chief Operating Officer from May 2002 to April 2006

President & Chief Operating Officer from December 2001 to May 2002

Julia A. Stewart

Age 6264


Director since January 2003


Independent


Other Public Company Boards

Current:

None

Past Five Years:

DineEquity,Dine Brands Global, Inc.

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Led a large, publicly-traded full-service restaurant company then with over $600 million in annual revenues and nearly 1,000 employees

Global exposure

Substantial operational and marketing experience in the dining industry

Expertise in brand positioning, risk assessment, financial reporting and governance

Public company board experience

Prior service on other public company boards

BOARD LEADERSHIP ROLES

Compensation Committee Chair

Governance Committee Member



  

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GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Academy Sports + Outdoors, a sports and recreation retailer

Chairman, President & Chief Executive Officer since May 2018

Foot Locker, Inc., a specialty athletic retailer

Executive Chairman from December 2014 to May 2015

Chairman, President & Chief Executive Officer from February 2010 to November 2014

President and Chief Executive Officer from August 2009 to February 2010

J.C. Penney Company, Inc., a retail company

President & Chief Merchandising Officer from January 2005 to July 2009

President & Chief Operating Officer from July 2002 to December 2004

Ken C. Hicks

Age 6567


Director since July 2007


Independent


Other Public Company Boards

Current:

None

Past Five Years:

Foot Locker,  Inc.

Whole Foods Corporation

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

OversawLeads a company currently with over $7more than 250 U.S. locations, nearly $5 billion in annual revenues and over 43,000more than 23,000 employees

Industry experience

2930+ years of senior marketing and operational experience in the retail industry into which we sell our retail branding and information solutions

Public company board experience

Prior service on other public company boards

BOARD LEADERSHIP ROLES

Audit Committee Member

Compensation Committee Member

   

GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Sensata Technologies Holding N.V.,OpenText Corporation, a supplier of sensors and controls

President & Chief Executive Officer since January 2013

President from September 2010 to December 2012

Chief Operating Officer from April 2006 to August 2010

Texas Instruments, Inc., Sensata's predecessor entityglobal software company

Vice President of Sensor Products from 1997 to 2006Chair, Chief Executive Officer and Chief Technology Officer since January 2012




Martha N. SullivanMark J. Barrenechea

Age 6155


Director since February 2013September 2018


Independent


Other Public Company Boards

Current:

Sensata Technologies Holding N.V.OpenText Corporation

Dicks Sporting Goods

Past Five Years:

None

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Leads a business-to-business enterprisecompany with over $3.3nearly $3 billion in 2017 revenues and approximately 13,000 employees in 2019

GlobalIndustry experience andglobal exposure

Over 30 years of experience in the technology industry, including experience globally in software, cloud solutions, cybersecurity, and industryinformation technology transformation

Public company board experience

Concurrent service on two other public company boards


BOARD LEADERSHIP ROLES

Compensation Committee Member



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GRAPHIC

RECENT BUSINESS EXPERIENCE

Sensata Technologies Holding PLC, a supplier of sensors and controls

President & Chief Executive Officer from January 2013 to March 2020

President from September 2010 to December 2012

Chief Operating Officer from April 2006 to August 2010

Texas Instruments, Inc., Sensata's predecessor entity

Vice President of Sensor Products from 1997 to 2006

Martha N. Sullivan

Age 63


Director since February 2013


Independent


Other Public Company Boards

Current:

Sensata Technologies Holding PLC

Past Five Years:

None

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Led a company with approximately $3.5 billion in revenues and more than 21,000 employees in 2019

Industry experience andglobal exposure

Oversees all business segments, global operations and strategic planning

Strong technology background, including experience overseeing a radio-frequency identification business

Public company board experience

Concurrent service on one other public company board

BOARD LEADERSHIP ROLES

Audit Committee Member

Compensation Committee Member

   

GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

Avery Dennison Corporation

Chairman, President & Chief Executive Officer since April 2019

President & Chief Executive Officer from May 2016 to April 2019

President & Chief Operating Officer from November 2014 to April 2016

Senior Vice President & Chief Financial Officer from June 2010 to October 2014; continued serving as CFO until March 2015

Vice President, Global Finance, and Chief Accounting Officer from March 2007 to May 2010

    

Mitchell R. Butier

Age 4648


Director since April 2016


Not Independent


Other Public Company Boards

Current:

None

Past Five Years:

None

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Has heldHeld roles of increasing responsibility at our company, including CAO, CFO, COO and now Chairman, President & CEO

Industry experience andglobal exposure

Served in senior leadership positions in our primary business segments, including international assignments in Europe

Financial sophistication

Served as our CFO for almost three years and our CAO for nearly five years

BOARD LEADERSHIP ROLES

NoneChairman



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GRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

The Carlyle Group, a global alternative investment firm

Managing Director and Partner since April 2007

The Coca-Cola Company, a beverage company

Senior Advisor from February 2006 to March 2007

Group President, Asia, from August 2001 to February 2006

    

Patrick T. Siewert

Age 6264


Director since April 2005


Independent


Other Public Company Boards

Current:

Mondelez International, Inc.

Past Five Years:

None

 

SELECT SKILLS AND QUALIFICATIONS

Industry experience and financial sophisticationglobal exposure

Led a division of a global company in the beverage segment of the consumer goods industry into which we sell our label and graphic materials

Work experience in Asia, a region in which we generate a significant amount of our sales and a majority of our employees is located

Financial sophistication

Advises on investments in consumer goods businesses globally, particularly in Asia

Global exposure

Work experience in Asia, a region in which we manufacture many of our products and a region that is driving our growth in emerging markets

Public company board experience

Concurrent service on one other public board

BOARD LEADERSHIP ROLES

Lead Independent Director-Elect

Audit Committee Chair

Governance Committee Member



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GRAPHICGRAPHIC

 

SELECTRECENT BUSINESS EXPERIENCE

JPMorgan Chase & Co., a global financial services firm

Chairman of California and Executive Committee Member from September 2009 to January 2013

Goldman Sachs & Co., an investment banking, securities and investment management firm

Partner/Managing Director from 1982 to 1998

Peter K. Barker

Age 6971


Director since January 2003


Independent


Other Public Company Boards

Current:

Fluor Corporation

Franklin Resources, Inc.

Past Five Years:

None

 

SELECT SKILLS AND QUALIFICATIONS

Senior leadership experience

Led a division then with over 21,000 employees

Member of the executive committee overseeing a global enterprisecompany then with $100+over $100 billion in annual revenues

Led a division then with more than 21,000 employees

Financial sophistication

37 years of investment banking experience, advising companies on capital structure, strategic planning, financing, recapitalization, acquisitions and divestitures

Public company board experience

Concurrent service on two other public boards and prior service on other public boards

BOARD LEADERSHIP ROLES

Governance Committee Chair

Audit Committee Member

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DIRECTOR COMPENSATION

        In recommending non-employee director compensation to our Board based on the independent expert advice of Willis Towers Watson, the Compensation Committee seeks totarget compensation at the median of companies similar in size, global scope and complexity with which we compete for director talent. Compensation is reviewed periodically (approximately every three years) to ensure market competitiveness and consistency. Themajority of compensation is delivered in equity to align director interests with those of our stockholders. Because he retired from our company at the end of 2017, Mr. Scarborough will be compensated pursuant to our non-employee compensation program beginning in 2018.

MEDIAN TOTAL REMUNERATIONTARGET COMPENSATION

        After having been unchanged for three years, non-employee director compensation was increased in 2016 based upon the advice of Willis Towers Watson that our previous overall compensation was below the market median. To maintain the program's market-competitiveness and attract and retain qualified directors, upon the recommendation of the Compensation Committee, our Board approved changes to target total non-employee director remuneration at the market median through 2017. The primary components of our non-employee director compensation program are summarized in the charts below and described thereafter.

GRAPHICGRAPHIC GRAPHICGRAPHIC

        Our 2017 Incentive Award Plan, under which RSUs are granted to our non-employee directors, limits the sum of the grant date fair value of equity awards and the amount of any cash compensation, in each case granted to any non-employee director during any calendar year, to $600,000.In 2019, each of our non-employee directors received less than half of our maximum compensation amount.

COMPENSATION SETTING

        In February 2019, the Compensation Committee considered our non-employee director compensation program, which had not changed the compensation received by our non-employee directors other than our Lead Independent Director since May 2016. At the Compensation Committee's request, Willis Towers Watson reviewed trends in non-employee director compensation and assessed the competitiveness of all components of our program, including cash compensation (Board and Committee Chair retainers), equity grants, total direct compensation (annual cash plus equity), total remuneration, our stock ownership policy and the additional retainer for our Lead Independent Director.

        Using benchmarking data from public filings of companies ranked in the Fortune 375-500, Willis Towers Watson recommended that our annual equity grant to non-employee directors be increased by $15,000 to increase the proportion of their compensation delivered in equity to 60% to further align their interests with those of our stockholders. This change would bring total non-employee director compensation to $255,000, the projected median non-employee director compensation of our Fortune 375-500 peers in 2021, the next time the Compensation Committee then expected to review the program. Based on the advice of Willis Towers Watson,Watson's recommendation, the Compensation Committee recommended to our Board that the supplemental Lead Independent Director retaineramount of annual equity compensation granted to our non-employee directors be increased to $155,000, with grants continuing to be in the form of RSUs that vest in one year.

        After consideration of the advice from the independent compensation consultant, the recommendation of the Compensation Committee, and further increased from $25,000 to $30,000 to more closely align with market practices. Ourdiscussion, our Board approved the increaserevised non-employee director compensation program, effective May 1, 2017.as of the date of the 2019 Annual Meeting.

STOCK OWNERSHIP GUIDELINESPOLICY

        Our stock ownership guidelines requirepolicy requires non-employee directors to own $500,000 inof our company stock, 50% of which must be held in vested shares. In February 2017, upon the advice of Willis Towers Watson, the Compensation Committee discontinued considering stockStock option gains are not considered towards measuring guideline compliance, countingpolicy compliance; only shares owned directly or in a trust, deferred stock units (DSUs) and RSUs. These changes, which made the guidelines more stringent, were consistent with the changes made to our executive stock ownership guidelines effective 2017.unvested RSUs count for these purposes.

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        Directors are prohibited from hedging or pledging our common stock.

        Except for our newest director, who has five years to reach histhe minimum ownership level, all of our non-employee directors satisfyhave achieved the holding requirements ofminimum ownership level required by our stock ownership guidelines. Nonepolicy;average non-employee director ownership was approximately 9x the required level at year-end 2019. Based on our review of their written representations in our annual director questionnaire, none of our non-employee directors has hedged or pledged our common stock.

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EQUITY COMPENSATION

        The 20172019 equity grant to non-employee directors was made in the form of RSUs that vest in one year,on the one-year anniversary of the grant date, consistent with the one-year term to which directors are elected; however, unvestedelected. Unvested RSUs (i) fully vest upon a director's death, disability, retirement from our Board after reaching age 72 or termination of service within 24 months after a change of control. Unvested RSUscontrol and (ii) are generally cancelled in the event a director voluntarily resigns, is not re-elected by stockholders or is otherwise asked to leave our Board.Board, unless the Compensation Committee determines otherwise. On May 1, 2017,2019, each of our then-serving non-employee directors was granted 1,6781,414 RSUs with a grant date value of approximately $140,000$155,000 based on the fair market value of our common stock on that date.

        On February 1, 2017,In connection with his departure from our Board on the date of his appointmentthe 2019 Annual Meeting and as permitted by our 2017 Incentive Award Plan, the Compensation Committee determined to our Board, Mr. Lopez received a prorated equity grant foraccelerate the remaindervesting of the RSUs granted in May 2018 to Dean Scarborough, our former Chairman. These RSUs were scheduled to vest a few days after his departure from our Board. In accelerating the vesting, the Compensation Committee noted that Mr. Scarborough had served nearly the entire one-year term expiring at the 2017 Annual Meeting consisting of 445 RSUs with a grant date value of approximately $35,000 based on the fair market value offor which he had been elected by our common stock on that date.stockholders.

DEFERRABLE CASH COMPENSATION

        Cash retainers are paid semiannually and prorated for any director's partial service during the year. Directors are also reimbursed for travel expenses incurred to attend Board meetings and continuing director education events.

        Non-employeeOur non-employee directors may choose to receive this compensation in (i) cash, either paid directly or deferred into an account under our Directors Variable Deferred Compensation Plan,Program (DVDCP), which accrues earnings at the rate of return of certain bond and equity investment funds managed by an insurance company;a third party; (ii) DSUs credited to an individual account pursuant to our Directors Deferred Equity Compensation PlanProgram (DDECP); or (iii) a combination of cash and DSUs. None of our current non-employee directors currently participates in the DVDCP and eightnine of our non-employee directorsthem currently participate in the DDECP. When a director participating in the DDECP retires or otherwise ceases serving as a director, the dollar value of the DSUs in his or her account is divided by the closing price of our common stock on the last date of the director's service, with the resulting number of shares of our common stock issued to the director. Dividend equivalents, representing the value of dividends per share paid on shares of our common stock calculated with reference to the number of DSUs held as of a dividend record date, are reinvested on the applicable payable date in the form of additional DSUs credited to the accounts of directors participating in the DDECP.

MATCHING GIFT PROGRAM

        We match up to $10,000 per year of a non-employee director's contributions to charitable organizations or educational institutions.

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DIRECTOR COMPENSATION TABLE

NAME
FEES
EARNED
OR PAID
IN CASH(1)

STOCK
AWARDS(2)

CHANGE IN
PENSION VALUE AND
NONQUALIFIED DEFERRED
COMPENSATION EARNINGS(3)

ALL OTHER
COMPENSATION(4)

TOTAL

Bradley A. Alford

$100,000$136,973



$7,000$243,973

Anthony A. Anderson

$100,000$136,973$236,973

Peter K. Barker

$115,000$136,973



$10,000$261,973

Ken C. Hicks

$100,000$136,973$10,000$246,973

Andres A. Lopez

$91,667$170,721







$262,388

David E.I. Pyott

$128,333$136,973$8,336$10,000$283,642

Patrick T. Siewert

$120,000$136,973







$256,973

Julia A. Stewart

$115,000$136,973$10,000$261,973

Martha N. Sullivan

$100,000$136,973




$



$236,973

NAME
FEES
EARNED
OR PAID
IN CASH(1)

STOCK
AWARDS(2)

CHANGE IN
PENSION VALUE AND
NONQUALIFIED DEFERRED
COMPENSATION EARNINGS(3)

ALL OTHER
COMPENSATION(4)

TOTAL

Bradley A. Alford

$100,000$151,777



$7,500$259,277

Anthony A. Anderson

$100,000$151,777$251,777

Peter K. Barker

$115,000$151,777



$10,000$276,777

Mark J. Barrenechea

$100,000$151,777$251,777

Ken C. Hicks

$100,000$151,777



$10,000$261,777

Andres A. Lopez

$100,000$151,777$251,777

David E.I. Pyott

$130,000$151,777$7,132$10,000$298,909

Dean A. Scarborough(5)

Patrick T. Siewert

$120,000$151,777



$10,000$281,777

Julia A. Stewart

$115,000$151,777$10,000$276,777

Martha N. Sullivan

$100,000$151,777



$10,000$261,777
(1)
Messrs.Mr. Butier and Scarborough dodoes not appear in the table because they were employed byhe served as President and CEO of our company in 20172019 and did not receive any additional compensation to serve as directors.director or Chairman. Amounts represent retainers earned as shown in the table below. At their election, the following directors deferred their cash compensation through the DDECP, with the following balances of DSUs in their accounts as of December 30, 2017,28, 2019, the last day of our 20172019 fiscal year: Alford — 16,154;– 18,675; Anderson — 8,070;– 10,268; Barker — 27,225;– 30,468; Barrenechea – 1,030; Hicks — 12,512;– 13,949; Lopez — 285;– 859; Pyott — 47,642;– 51,981; Stewart — 35,475;– 39,047; and Sullivan — 7,967.– 10,161.
DIRECTOR
BOARD LEADERSHIP ROLES
BOARD
RETAINER

COMMITTEE
CHAIR RETAINER

LEAD DIRECTOR
RETAINER

BOARD LEADERSHIP ROLES
BOARD
RETAINER

COMMITTEE
CHAIR RETAINER

LEAD DIRECTOR
RETAINER

Alford$100,000



$100,000







Anderson $100,000 $100,000
BarkerGovernance Committee Chair$100,000$15,000Governance Committee Chair$100,000$15,000



Barrenechea $100,000
Hicks $100,000$100,000







Lopez$91,667



 $100,000
PyottLead Independent Director$100,000$28,333Lead Independent Director$100,000



$30,000
ScarboroughFormer Chairman
SiewertAudit Committee Chair$100,000$20,000Audit Committee Chair$100,000$20,000



StewartCompensation Committee Chair$100,000$15,000Compensation Committee Chair$100,000$15,000
Sullivan$100,000





$100,000







(2)
Amounts reflect the grant date fair value without adjustment for forfeitures, of 1,6781,414 RSUs granted on May 1, 2017. Amount for Mr. Lopez also reflects the grant date fair value, without adjustment for forfeitures, of 445 RSUs granted on February 1, 2017 in connection with his appointment to our Board.2019. The fair value of RSUs was determined based on the fair market value of our common stock on the grant date, adjusted for foregone dividends.dividends, of $107.34. Each non-employee director serving as of December 30, 201728, 2019 held 3,7071,414 unvested RSUs, except for Mr. Lopez, who held 2,1231,563 unvested RSUs.

(3)
We do not currently have a retirement benefit program for non-employee directors. Amount for Mr. Pyott reflects the change in present value of his accumulated benefits, based on an interest rate of 2.37% as of December 28, 2019, under a director retirement plan the accrual of benefits under which was frozen in 2002, based on an interest rate of 3.03% as of December 30, 2017.2002.

(4)
Amounts reflect our matching gifts for contributions made to charitable organizations or educational institutions.

(5)
Mr. Scarborough retired from the Board on the date of our 2019 Annual Meeting. Although he served as a non-employee director for four months of the year, he received no cash fees during this time since the fees for the second half of a non-employee director's term are paid in December of the previous year. In addition, he received no stock awards during the year, which are granted only to elected directors after the date of the Annual Meeting. However, in connection with his departure from our Board on the date of the 2019 Annual Meeting and as permitted by our 2017 Incentive Award Plan, the Compensation Committee determined to accelerate Mr. Scarborough's RSUs granted in May 2018 that were scheduled to vest a few days after his departure from our Board. In accelerating the vesting, the Compensation Committee noted that he had served nearly the entire one-year term for which he had been elected by our stockholders.

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ITEM 2 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

        After considering the preliminary voting results of the advisory vote on the frequency of our say-on-pay vote at our 2017 Annual Meeting, our Board determined to hold say-on-pay votes annually, at least until the next advisory vote on the frequency of our say-on-pay vote (expected to occur at our 2023 Annual Meeting).

        In this Item 2, our stockholders are being asked to vote on the following resolution:

              RESOLVED, that the Company's stockholders approve, on an advisory basis, the compensation of the Company's Named Executive Officers (NEOs), as described in theCompensation Discussion and Analysis andExecutive Compensation Tables sections of the Company's 2018 proxy statement.

         RESOLVED, that the Company's stockholders approve, on an advisory basis, the compensation of the Company's Named Executive Officers (NEOs), as described in theCompensation Discussion and Analysis andExecutive Compensation Tables sections of the Company's 2020 proxy statement.

RECOMMENDATION OF BOARD OF DIRECTORS

        We remainare committed to maintaining ongoing engagement with our stockholders to solicitseek their viewpointsfeedback and discuss why we believe our executive compensation program properly aligns with our strategies by encouragingincenting our leaders to deliver strong financial performance and create superior long-term, sustainable value for our customers, employees, investors and communities.Our Board of Directors recommends that you vote FOR approval, on an advisory basis, of our executive compensation.Properly dated and signed proxies will be so voted unless you specify otherwise.

MEANING OF ADVISORY VOTE

        The advisory vote is a vote to approve the compensation of our NEOs, as described in theCompensation Discussion and Analysis (CD&A) andExecutive Compensation Tables sections of this proxy statement. It isnot a vote on our general compensation policies or any specific element of compensation, the compensation of our non-employee directors, our CEO pay ratio, or the features of our compensation program designed to prevent excessive risk-taking as described inRisks Associated with Compensation Policies and Practices.

        The results of the advisory vote are not binding on our Board. However, in accordance with SEC regulations, the Compensation Committee will disclose the extent to which it takes into account the results of the vote in the CD&A of our 20192021 proxy statement.

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COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE REPORT

        The Compensation and Executive Personnel Committee (referred to in this report as the "Committee") of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis (CD&A) required by Item 402(b) of Regulation S-K with management and, based on its review and those discussions, has recommended to our Board of Directors that the CD&A be included in our 20182020 proxy statement and incorporated by reference into our 20172019 Annual Report on Form 10-K.

        The Committee welcomes feedback regarding our executive compensation program. Stockholders may communicate with the Committee by writing to the Compensation and Executive Personnel Committee Chair, c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

Julia A. Stewart, Chair
Bradley A. Alford
Mark J. Barrenechea
Ken C. Hicks
David E. I. Pyott
Martha N. Sullivan

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COMPENSATION DISCUSSION AND ANALYSIS*

 ��      This Compensation Discussion and Analysis (CD&A) describes the principles and practices underlying our executive compensation program and the decisions made by the Compensation and Executive Personnel Committee of our Board of Directors (referred to in this CD&A as the "Committee") related to 20172019 executive compensation. This CD&A contains the sections shown below.

    Executive Summary
        Business Strategy Overview
        On Track to DeliverDelivering Financial Targets
        20172019 Financial Performance
        Disciplined Capital Allocation
        Three- and Five-Year Cumulative TSR Outperformance
        20172019 Say-on-Pay Vote and Stockholder Feedback During 20172019 Engagement
        2017 NEOs2019 Named Executive Officers (NEOs)
        Overview of Pay Philosophy and Executive Compensation Components
        Continuous Evolution ofChanges in Approach to CEO Compensation Programfor 2020
        Strong Compensation Governance Practices
    Summary of Compensation Decisions for 20172019
    Discussion of Compensation Components and Decisions Impacting 20172019 Compensation
        Base Salary
        20172019 AIP Awards
        20172019 Grants of LTI Awards
        20172019 Vesting of Previously Granted LTI Awards
        Perquisites
        Relocation and Other Temporary Benefits
        General Benefits
        Severance Benefits
    Compensation-Setting Tools
    Independent Oversight and Expertise
    Other Considerations

EXECUTIVE SUMMARY

BUSINESS STRATEGY OVERVIEW

        Over the last several years, we have been successfully executingexecuted our business strategies, which are designed to create long-term, sustainable value for our customers, employees and investors and improve the communities in which we operate.From our stockholders' perspective, we believe that value is best measured by our total stockholder return (TSR) and cumulative economic value added (EVA), both of which are performance objectives used in our LTIlong-term incentive (LTI) compensation program and inform how we set our goals for sales growth, operating margin improvement, asset efficiency, and capital allocation.

        We communicated long-term goals in 2014 for the organic sales growth, adjusted earnings per share (EPS) growth and return on total capital (ROTC) we planned to achieve by 2018, raising the bar over the five-year goals we established in 2012 and substantially achieved through 2015. With only one year remaining in the 2014-2018 period, we are on track to achieve or exceed our targets.capital allocation.

        In late 2016,March 2017, we changedannounced long-term goals for our operating structure to align with our overall business strategy. As a result, our results are now based on the following segments:three reporting segments – Label and Graphic Materials (LGM), Retail Branding and Information Solutions (RBIS), and Industrial and Healthcare Materials (IHM). In March 2017, we announced new long-term goals for 2021 for these new segments, as well as for – and our company as a whole, targeting continued solid organic sales growth, andGAAP operating margin expansion, double-digit growth in adjusted EPSearnings per share (EPS) growth on a compound annual basis.basis, and the ROTC we planned to achieve by 2021.

   


*
This CD&A contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from the results, performance or achievements expressed or implied thereby. For a detailed discussion of these risks, see Part I, Item 1a.1a, "Risk Factors" and Part II, Item 7.7, "Management's Discussion and Analysis of Financial Condition and Results of Operations"Operations," in our 20172019 Annual Report on Form 10-K, filed on February 21, 201826, 2020 with the SEC (our "2017"2019 Annual Report"). Stockholders should note that statements contained in this CD&A regarding our company and business performance targets and goals should not be interpreted as management's expectations, estimates of results or other guidance.

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        To achieve our targets, we have been consistently executing four key strategies. First,these goals, we are focused on drivingexecuting the following four core strategies:

Achieving outsized growth in high value product categories (organically and through acquisitions) to improve our portfolio mix over time. Product categories are defined as high value when they serve markets that are growing faster than gross domestic product (GDP), represent large pools of potential profit and leverage our core capabilities. Examples include our specialty and durable label materials, graphic and reflective solutions, industrial tapes, and radio-frequency identification (RFID) inlays and tags. In 2019, we delivered growth in most of these categories that was higher than the growth in our base businesses, while also enhancing our RFID platform through our agreement to acquire the Transponder (RFID inlay) Division of Smartrac (such division referred to herein as "Smartrac"), which we announced last November;

Growing profitably in our base businesses by carefully balancing volume, price and mix; reducing complexity; and tailoring our go-to-market strategies;

Advancing sustainability in our operations and throughout value chains; and

Fostering well-being and diversityin our teams.

        In addition, we continue to improve our portfolio mix over time. Product categories are defined as high value when they serve markets that are growing faster than gross domestic product (GDP), represent large pools of potential profit and leverage our core capabilities. Examples include specialty and durable label materials, graphic and reflective materials, industrial tapes, and radio-frequency identification (RFID) inlays and tags. In 2017, we delivered above-average growth in these categories, while also increasing our exposure to them through acquisitions.

        Second, we are focusedfocus on delivering solid growth in our base business by carefully balancing volume, price and mix; reducing complexity; and tailoring our go-to-market strategies.

        Third, we remain highly focused on continuously improving productivity to expand margins, enhance our competitiveness and provide a funding source for reinvestment. Product reengineering and lean operating principles are among the levers we use in executing this strategy.following financial priorities:

        Our final key strategy is to be a highly disciplined allocator of capital. This applies to our acquisition criteria and how we deploy capital for organic growth and productivity, as well as our approach to stockholder distributions.

Maintaining our relentless focus on productivity to expand margins, enhance our competitiveness (particularly in our base businesses) and provide a funding source for reinvestment. Product reengineering and enterprise lean sigma are the primary levers we use in executing this priority.

Deploying capital effectively and in a highly disciplined manner. This is reflected in how we deploy capital for organic growth, productivity, acquisitions and equity investments, as well as our approach to stockholder distributions (dividends and share repurchases).

ON TRACK TO DELIVERDELIVERING FINANCIAL TARGETS

        Our 2014-2018The five-year financial goals through 2021 that we announced in March 2017 included antargets for organic sales growth, target of 4% to 5%, reflecting confidence in the trajectory of our two largest businesses. We also targeted double-digitGAAP operating margin, adjusted EPS growth. For the first time, we externally communicated a target for return on total capital (ROTC), which has long been a key internal financial metric for our company. We believe that the combination of our growth and ROTC targets effectively communicates our value creation objectives, which together are a proxy for EVA, one of the performance objectives used in our LTI program.ROTC. As shown on the following page,below, based on our results forof the first fourthree years of this five-year period, we are largely on track to achieve or exceed our 2018 commitments to investors. For the 2014-2017 period, on a compound annual basis, reported sales grew by 2%, reported EPS grew by 10% and reported net income grew by 7%.deliver these commitments.

        Organic sales growth,change, adjusted EPS, ROTC and adjusted ROTC  as well as sales change excluding currency (sales change ex. currency) and free cash flow, which is described on page 40 —are also discussed in this CD&A – are non-GAAP financial measures that we provide to investors to assist them in assessing our performance and operating trends. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable financial measures under generally accepted accounting principlesGAAP, are defined, qualified and reconciled from GAAP in the United States of America (GAAP) and are reconciled to GAAP inAppendix Alast section of this proxy statement.

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Table of ContentsFor the 2017-2019 period, on a three-year compound annual basis (with 2016 as the base period), GAAP reported net sales and reported EPS increased by 5.1% and 0.3%, respectively, and GAAP reported net income decreased by 1.8%.

 
 2014-2018
TARGETS*
2017-2021 TARGETS

 2014-2017
2017-2019 RESULTS(1)

Organic Sales Growth(1)(2)

4%-5%

 4%+ organic
5%+ ex. currency(3)
3.9% organic
5.7% ex. currency

GAAP Operating Margin

11%+ in 202110.9% in 2019

Adjusted EPS Growth(2)

10%+18.0%

ROTC

17%+ in 202111.9% in 2019
Adj. ROTC(4) of 19.6% in 2019

Adjusted EPS Growth(2)

 

12%-15%+

 

17%

ROTC(3)


16%+ in 2018


13% in 2017
Adj.(4) 19% in 2017

ON TRACK TO ACHIEVE OR EXCEED 2018DELIVER 2017-2021 FINANCIAL TARGETS

(1)

 Organic sales change refers toResults for non-GAAP measures are reconciled from GAAP in the increase or decrease in sales excluding the estimated impactlast section of currency translation, product line exits, acquisitions and divestitures, and, where applicable, the extra week in our fiscal year. Percentages represent compound annual growth rates, with 2013 as the base period.this proxy statement.

(2)

 

Adjusted net income per common share, assuming dilution (adjusted EPS) refers to adjusted net income divided by the weighted average number of common shares outstanding, assuming dilution. Adjusted net income is income from continuing operations before taxes tax-effected at the full-year GAAP tax rate and adjustedPercentages for tax-effected restructuring charges and other items. Adjusted tax rate is the full-year GAAP tax rate adjusted to include the impact of previously planned repatriation of foreign earnings for the fourth quarter of 2017 and exclude the provisional estimated impact of the impact of the Tax Cuts and Job Act (TCJA). Percentages representtargets reflect five-year compound annual growth rates, with 20132016 as the base period. Percentages for results reflect three-year compound annual growth rates, with 2016 as the base period.

(3)

 

ROTC refers to income from continuing operations excludingTarget for sales growth ex. currency reflects the expense and tax benefitimpact of debt financing, divided by the averagecompleted acquisitions as of beginning and ending invested capital (total debt plus shareholders' equity).March 2017 of approximately 1 point.

(4)

 

Adjusted ROTC excludes the estimated tax provision impact resulting from the TCJA of $172.0 million, lessExcludes the impact of previously planned repatriationthe termination of foreign earnings for the fourth quarter of 2017 of $29.4 million.our U.S. pension plan.

        In March 2017, we announced 2017-2021 goals, targeting continued solid organic sales growth and double-digit growth in adjusted EPS on a compound annual basis. While we are only one year into this five-year period, we are on pace to deliver these targets, as shown below. Compared to 2016, in 2017, reported sales grew by 9% and — driven by the provisional estimated impact of the Tax Cuts and Job Act (TCJA) — reported EPS and reported net income each declined by 12%.


2017-2021
TARGETS*

2017
RESULTS

Organic Sales Growth4+%
5+% with M&A

4%
8% with M&A

Adjusted EPS Growth


10+%


24%

ROTC


17+% in 2021


13% in 2017
Adj. = 19% in 2017
ON PACE TO DELIVER 2021 FINANCIAL TARGETS

*

Percentages for organic sales growth and adjusted EPS growth reflect compound annual growth rates with 2016 as the base period. Target with M&A reflects completed acquisitions as of March 2017.

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20172019 FINANCIAL PERFORMANCE

        FiscalIn fiscal year 2017 marked our sixth consecutive2019, we delivered another year of strong top-line growth, margin expansion and double-digit adjusted EPS growth.growth and operating margin expansion. We exceededachieved most of our financial goals for the year, with the accomplishments shown below.

    Achieved net sales of approximately $6.6 billion, an increase of 8.7% over the prior year, through a balance of organic growth and acquisitions.

    Excluding the impact of currency, sales grew by 8.2%; on an organic basis, sales grew by 4.2%, driven by growth in high value product categories and businesses serving emerging markets.

    Although reported EPS decreased from $3.54 in 2016 to $3.13 in 2017 due to a substantial increase in our provision for income taxes to reflect the provisional estimated impact of the TCJA, adjusted EPS increased from $4.02 to $5.00, significantly exceeding the high end of the $4.30-$4.50 guidance range we gave in February 2017.

    With net cash provided by operating activities of $650.1 million, delivered free cash flow of $421.7 million. Free cash flow refers to cash flow from operations, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from sales (purchases) of investments.

    On reported net income of $281.8 million, achieved return on total capital (ROTC) of 12.9%; adjusted to exclude the net impact of the TCJA, ROTC increased to 18.8%.

    Continued our disciplined approach to capital allocation by investing $226.1 million in capital expenditures to support organic growth and $319.3 million in acquisitions and equity investments, while allocating $155.5 million to dividends and $129.7 million to share repurchases.

GRAPHICGRAPHIC

DISCIPLINED CAPITAL ALLOCATION

        We achieved these resultshave been consistently disciplined in executing our approach to capital allocation, balancing our investments in organic growth, productivity and acquisitions, with continuing to return cash to stockholders through dividends and share repurchases.In 2019, on net income of $303.6 million, we delivered adjusted ROTC of nearly 20% while maintaining a healthy balance sheetinvesting $257.2 million in capital expenditures to support future growth and continuing the disciplined executionfurther productivity improvement. In addition, we paid $189.7 million in dividends and repurchased $237.7 million in shares of our capital allocation strategy. Over the last five years, we have allocated nearly $2 billion to dividends and repurchases. In 2017, we deployed approximately $285 million to (i) repurchase 1.5 million shares at an aggregate cost of nearly $130 million and (ii) pay an annual dividend of $1.76 per share for an aggregate amount of over $155 million. We have paid quarterly dividends for decades and raised our quarterly dividend rate by 125% since 2010; most recently, we raised the quarterly dividend rate by 10% in April 2017. Given our increased use of available capital for acquisitions and equity investments, we repurchased fewer shares in 2017 compared to prior years.


For complete information regarding our 2017 performance, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" — in particular the information contained under the heading "Non-GAAP Financial Measures" — and our audited consolidated financial statements and notes thereto contained in our 2017 Annual Report.

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GRAPHICcommon stock.

        We have also allocated capital to investinginvested in our businesses to support organic growth and pursuingpursued targeted acquisitions that support our strategy of increasing our exposure to high value product categories. In 2017, we increased ourOur spending on capital expenditures by approximately 9% over thein 2019 was comparable to prior year as we continued investing to growenable the future growth of our business and continued to take actions tobusinesses, improve our profitability and expand our margins. In addition,Last November, we successfully completed and integrated the acquisitions of (i) Hanita Coatings Rural Cooperative Association Limited, an Israel-based pressure-sensitive manufacturer of specialty films and laminates; (ii) Yongle Tape Ltd.,announced our agreement to acquire Smartrac, a China-based manufacturer of specialty tapes and related products used in a variety of industrial markets; and (iii) Finesse Medical Limited, an Ireland-based manufacturer of healthcare products usedleader in the managementdevelopment and manufacture of wound careRFID products. Together with our Intelligent Labels business, this acquisition will create a platform with over $500 million in annual revenue, offering long-term growth and skin conditions.profitability, enhanced research and development capabilities, expanded product lines and additional manufacturing capacity. We completed this acquisition in February 2020. During 2019, we also made equity investments in two other companies.start-up companies developing innovative technological solutions.

        In 2019, we deployed $427.4 million to (i) repurchase 2.2 million shares at an aggregate cost of $237.7 million and (ii) pay an annual dividend of $2.26 per share for an aggregate amount of $189.7 million. Given the higher price of our common stock in 2019, we allocated less capital to share repurchases in 2019 than in 2018; however, as shown in the graph on the following page, the amount repurchased was comparable to the average amount repurchased over the prior two years. We have paid quarterly dividends for decades and most recentlyraised our quarterly dividend rate by


For complete information regarding our 2019 performance, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" – in particular the information contained under the heading "Non-GAAP Financial Measures" – and our audited consolidated financial statements and notes thereto contained in our 2019 Annual Report.

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approximately 12% in April 2019. As shown in the graphs below,over the last three years, we have allocated nearly $1.3 billion to dividends and share repurchases.

GRAPHIC

THREE- AND FIVE-YEAR CUMULATIVE TSR OUTPERFORMANCE

        As shown below, with TSRwe achieved total stockholder return (TSR) of nearly 67%over 48% in 2017, we2019, and delivered cumulative TSR for the 2015-20172017-2019 three-year period and the 2013-20172015-2019 five-year period that significantlysubstantially outperformed the S&P 500® and the median of the S&P 500 Industrials and Materials subsets.We compare ourselves to the median of the S&P 500 Industrials and Materials subsets (webecause we are a member of the Materials subset, butand also share many characteristics with members of the Industrials subset;subset. This practice is further informed by feedback from investors, who have informed usindicated that they look at both subsets in evaluating our performance relative performance, as we do internally).to that of our peers. We focus on TSR because it measures the return we have providedprovide to our stockholders, including stock price appreciation and dividends paid (assuming reinvestment thereof)of dividends).

        Although we experienced strong TSR in 2019, we continue to believe that our longer-term TSR is a more meaningful measure of our performance than our one-year TSR, which can be significantly impacted by short-term market volatility that may be unrelated to our underlying performance. For example, although we delivered strong financial results in 2018 – exceeding the high end of our adjusted EPS guidance for the year – our TSR for that year was negative, as was the TSR of each of the comparator groups shown below.

GRAPHICGRAPHIC


1-, 3- and 5-YEAR TSR

1-, 3- and 5-YEAR TSR

 2013 2014 2015 2016 2017 3-Year
TSR
 5-Year
TSR
 2015 2016 2017 2018 2019 
3-Year TSR
 
5-Year TSR 
​ ​ 

AVY

 47.5% 6.2% 23.8% 14.6% 66.7% 136.4% 270.3% 23.8% 14.6% 66.7% (20.3)% 48.5% 97.5%  179.9% 
​ ​ 

S&P 500

 32.4% 13.7% 1.4% 12.0% 21.8% 38.3% 108.1% 1.4% 12.0% 21.8% (4.4)% 31.5% 53.2%  73.9% 
​ ​ 

S&P 500 Indus. & Mats.* (median)

 41.0% 11.7% (4.7)% 19.0% 27.5% 49.2% 134.8%

S&P 500 Industrials & Materials*

 (4.3)% 20.7% 28.6% (14.3)% 33.7% 53.1%  78.5% 
*
Based on median of companies in both subsets as of December 31, 2017.2019.

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20172019 SAY-ON-PAY VOTE AND STOCKHOLDER FEEDBACK DURING 20172019 ENGAGEMENT

        We continued our practice of maintaining proactive ongoing dialogue with stockholders in 2017.2019. The Committee made significant changes tocontinually evolves our executive compensation program – including, in recent years, replacing regular grants of stock options and time-vesting restricted stock units (RSUs) with performance-based market-leveraged stock units (MSUs), capping Annual Incentive Plan (AIP) awards at 200% of target, and establishing additional guardrails on PU and MSU performance criteria – to address direct feedback from our stockholders and more closely align our LTIexecutive compensation program with our financial profile and business strategies, demonstratingstrategies. We believe this process and the specific actions taken demonstrate the Committee's commitment to paying for performance and being responsive to stockholder feedback. SeeContinuous Evolution of Compensation Program later in this CD&A. In 2017,2019, during our ongoing stockholder engagement program, we discussed elements of our executive compensation program with some of our stockholders, who generally expressed support for its current structure. We also solicited stockholder opinions regarding potential changes in the Committee's approach to CEO compensation for 2020 that are discussed later in this CD&A, sharing that feedback with the Committee.

Results and Analysis of 20172019 Vote

        At the 20172019 Annual Meeting, approximately 94%95% of our stockholders approved, on an advisory basis, our executive compensation. The level of support we received was consistent with the high approval rates forwe have received in each of the last twothree years. The Committee believes that our consistently high approval rate,rates in recent years, along with the positive feedback we have received during our ongoing engagement with stockholders, reflects strong support of the changes to our compensation program, made in recent years, as well as our consistently improving CD&A disclosure.

Stockholder Engagement Process

        We value stockholder feedback on our executive compensation policies and practices, and we actively solicit input through our stockholder engagement program. Our ongoing engagement program takes place throughout the year, generally as shown in the graphic below.

GRAPHIC

Feedback During 2017 Engagement

        We continued our longstanding practice of ongoing engagement and open dialogue on executive compensation and human capital management (HCM) matters with stockholders in 2017.2019. Our engagement program takes place throughout the year, as shown in the graphic below.

GRAPHIC

Feedback During 2019 Engagement

        In advance of the 20172019 Annual Meeting, we contacted our 2535 largest institutional stockholders, representing almost 50%approximately 61% of our then-outstanding shares. Board members, including our Lead Independent Director, and management were made available to answer questions and address concerns regarding our executive compensation and governance programs and the items being brought tobefore the stockholder vote at the Annual Meeting.vote. While we received responses from stockholders representing 25% of our then-outstanding shares, none of them felt that there was a need to substantively engage during that busy time.

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        In the fall, we reached out to our 30 largest institutional stockholders, representing nearly 55% of our then-outstanding shares, to learn what issues are important to them without the time pressures associated with proxy season. As a result of these efforts, we received responses from stockholders representing over 30% of our then-outstanding shares, only one of them desired to substantively engage at that busy time. Respondents declining meetings indicated that they did not have any concerns warranting discussion during proxy season.

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        In the fall, without the time pressures associated with proxy season, we contacted our 30 largest institutional stockholders, representing over 62% of our then-outstanding shares, to request a meeting with our Lead Independent Director and/or management. We received responses from stockholders representing nearly 60% of our then-outstanding shares and spoke with stockholders representing approximately 11%35% of thoseour then-outstanding shares.We substantively engaged with every stockholder who requested to do so.so, and our Lead Independent Director led half of these engagements. We also discussed the results of our fall engagement with the Committee.

        During our 2017 engagement, withOur off-season meetings focused on potential changes in the Committee's approach to CEO compensation for 2020 described later in this CD&A. With respect to matters related to executive compensation, our stockholders expressed support for our program generally and appreciated the increased graphical disclosure in our 2017 proxy statement. In addition, we also discussed our approach to human capital management, in particular our diversity and inclusion efforts, as well as the linkage between our executive incentive compensation and business strategies. We also provided additional clarificationreviewed our approach to HCM, including our executive leadership development and succession planning processes, diversity and inclusion initiatives and employee engagement scores. We also reported on the market-leveraged stock units (MSUs) included in our LTI program.Committee's robust oversight of these priorities.

20172019 NAMED EXECUTIVE OFFICERS (NEOs)

        In this CD&A and theExecutive Compensation Tables section of this proxy statement, we provide compensation information for our 20172019 NEOs, who are identified in the chart below. In connection with his planned retirement, Mr. Gravanis ceased serving in the capacity shown below and as an executive officer of our company on December 31, 2019.

20172019 NEOs
NAME
 TITLE
Mitchell R. Butier Chairman, President & Chief Executive Officer
Gregory S. Lovins Senior Vice President & Chief Financial Officer
Georges GravanisPresident, Label and Graphic Materials
Anne HillSenior Vice President & Chief Human Resources Officer
Susan C. Miller Senior Vice President, General Counsel & Secretary
Anne L. BrammanDeon M. StanderVice President & General Manager,
Retail Branding and Information Solutions
Georges Gravanis Former Senior Vice President, & Chief Financial OfficerLabel and Graphic Materials

        The NEOs who served at the end of our 2017 fiscal year (which excludes Ms. Bramman) are collectively referred to in this CD&A as our "Current NEOs."

OVERVIEW OF PAY PHILOSOPHY AND EXECUTIVE COMPENSATION COMPONENTS

        The Committee has designed ourOur executive compensation program to reflect itsreflects the Committee's philosophy that a substantial majority of compensation should be tied to our success in meeting our performance objectives and creating stockholder value, providing higher compensation when we deliver superior, sustained performance. The objectiveobjectives of this strategy isare to motivate our executives to achieve our annual and long-term financial goals and recognize their contributions to delivering strong performance.

The Committee implements its pay-for-performance philosophy primarily through the following:

    Establishing target total direct compensation (TDC) to incent economicstrong operational and financial performance and stockholder value creation, giving consideration to the market median of companies similar in size, scope and complexity with which we compete for executive talent, role responsibilities, individual performance, tenure, retention, and succession;

    Aligning our annual incentives for executives with our company's annual operating plan and key financial and strategic goals; and

    Rewarding long-term performance using absolute and relative TSR, as well as cumulative EVA, to focus our executives on delivering consistent and sustainable stockholder value creation.

        Incentive compensation for the year consisted of a target award opportunityopportunities under our Annual Incentive Plan (AIP)AIP and long-term incentive (LTI) programs,our LTI compensation program, with payouts determined based on our performance against goals established by the Committee in February 2017.2019. The Committee structures annual incentive compensation to reward NEOs based on corporate and/or business performance to motivate them and align their compensation with stockholder interests, giving consideration to their individual contributions in achieving our financial results.Our LTI awards provide upside opportunityhigher realized compensation for exceeding performance targets and downside risk up(up to and including cancellation,cancellation) for failing to achieve threshold performance, with EVA targets generally consistent with our externally communicated long-term financial goals for earnings growth and ROTC. AIP targets are generally established at or above the midpoint of our annual guidance and consistent with our long-term financial goals.

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growth and ROTC. AIP targets are established at or above the midpoint of the guidance we give to our stockholders on our anticipated performance for the year and consistent with the achievement of our long-term financial goals.


Elements of Total Direct CompensationTDC for Corporate NEOs

GRAPHICGRAPHIC

        As shown in the graph below, the substantial majority of our Current NEOs' 20172019 target TDC was performance-based.


2017 Target Total Direct Compensation
GRAPHIC

GRAPHIC
*  Mr. Lovins' 2017 AIP award was prorated based on his opportunity of 40% of base salary for the first six months of the year and his opportunity of 60% of base salary for the second six months of the year. His MSUs and PUs were awarded based on his previous LTI opportunity of 120% of base salary rather than his increased LTI opportunity of 180% of base salary.

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        Over the past five years, our cumulative TSR has increased over 270%by nearly 180% while the totalannual compensation of our CEO has increased by only 13%.remained relatively constant. In the graph below, CEO pay reflects the compensation of our former CEO Mr. Scarborough, from 2013 tofor 2015, and the compensation of our current CEO Mr. Butier, for 2016 and 2017.thereafter.


Five-Year CEO Pay and Cumulative TSR

GRAPHICGRAPHIC

CONTINUOUS EVOLUTION OFCHANGES IN APPROACH TO CEO COMPENSATION PROGRAMFOR 2020

        Over the past severallast few years, the Committee has discussed how best to ensure that it is compensating our CEO optimally and in alignment with the views expressedlong-term interests of our stockholders. The Committee's objectives were to:

Recognize our company's performance and delivery of value to our customers, employees, investors and communities during his four-year tenure as our CEO;

Enhance his incentive to continue creating value for these stakeholders, including by driving superior TSR for our investors; and

Encourage his retention for the long term.

        The Committee also sought to maintain market-competitive target TDC for him that is well-aligned with our company's performance and ensure that his target TDC does not fall substantially below the market median, without relying on the traditional approach of periodic incremental increases to the components of his TDC – base salary, target AIP award opportunity and target LTI award opportunity – to maintain consistency with a continually rising market median.

        After extensive discussion, andgiving consideration to the feedback received from dialogue with some of our largest stockholders, the Committee determined to eliminate year-over-year increases to our CEO's base salary and target AIP and LTI opportunities in favor of an even longer-term approach that would hold his target TDC constant for a three-year period. During the three-year period, the Committee retains the discretion to review our CEO's target TDC if market conditions or company results warrant a change. At the end of the period, the Committee plans to evaluate both his and our company's performance and market conditions before determining the appropriate level of his compensation, continuing to give consideration to factors such as individual performance, tenure, retention and succession.This approach to CEO compensation is intended to be more consistent with the long-term approach we take to planning our strategies, setting our financial targets and sustainability goals, creating value for our stockholders, developing an engaged and proxy advisory firms with managementdiverse workforce, and Willis Towers Watson,investing in the Committee's independent compensation consultant, and has taken several actionscommunities in light of this feedback. Highlights of these changes are shown on the timeline on the following page; together they demonstrate the Committee's ongoing evaluation of our executive compensation program and efforts undertaken to continuously evolve the program to reflect market practices and changes in our financial profile and strategic focus, as well as address feedback from our stockholders.which we operate.

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        2018To ensure our CEO's compensation determined in 2020 remains competitive and mitigate the potential for his target TDC to substantially trail behind his peers in the next three years, the Committee determined to set his target TDC modestly above market median, recognizing that his base salary had not increased for two years and his target AIP opportunity had not increased since he became CEO in 2016. The Committee intends to make no additional increases until 2023. Anticipating that the median for market will continue to grow at historical rates, the Committee determined to set our CEO's compensation package roughly halfway between the current 50th and 75th percentiles of his market peers, with the expectation that – at the end of the three-year period during which Mr. Butier's compensation is expected not to increase – his TDC would be at or around the market median. This approach is consistent with the approach taken by the Committee with respect to recommending to our Board the compensation of our non-employee directors.

        Based on 2019 market pay rates and projected 2020 market pay rates for companies with a market capitalization between $6 billion and $10 billion, and with the expert advice and recommendation of its independent compensation consultant, Willis Towers Watson, the Committee determined to set Mr. Butier's target TDC for 2020 at $9.9 million by increasing (i) his base salary by 6% to $1.2 million, noting that his base salary had not been increased in the previous two years; (ii) his target AIP opportunity from 125% of base salary, the same level it was when he became CEO in 2016, to 140% of base salary; and (iii) his target LTI opportunity from 475% of base salary to 585% of base salary.The Committee noted that over 90% of this increase consists of at-risk, performance based compensation. These targets are not expected to increase during the next three years, but could decrease if warranted by market conditions or company results. Mr. Butier's realized compensation will be dependent on our company achieving strong TSR performance, delivering our 2021 financial targets and 2025 sustainability goals, and continuing to serve our customers, engage our employees, and invest in the communities in which we operate.

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Executive Compensation Changes Made in Recent Years

GRAPHIC

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STRONG COMPENSATION GOVERNANCE PRACTICES

        Our executive compensation program incorporates the best practices shown below, which the Committee believes ensure that it serves the long-term interests of our stockholders.

POLICY OR BEST PRACTICE
 DESCRIPTION AND BENEFIT TO OUR STOCKHOLDERS
PAY FOR PERFORMANCE
Majority of Compensation Primarily Performance-Based 84%86% of our CEO's target TDC and 67%72% of the average target TDC of our other Current NEOs for 20172019 was tied to company performance and subject to cancellation if our performance is poor.will not be earned for below-threshold performance.
Capped Annual Incentive
Set At or Above
Midpoint of Guidance
 AIP award is based primarily on our achievement of performance objectives targeted at or above the midpoint of our annual guidance and consistent with our long-term financial goals, subject to downward discretion based on the Committee's assessment of our CEO's achievement of his predetermined and objectively measurable goals and our other NEOs' individual contributions, with AIP awards capped at 200% of target.target and individual modifiers for our NEOs generally capped at 100%.
Majority Long-Term Equity
Incentive Compensation

Our LTI awards emphasize long-term performance, with PUs cliff-vesting at the end of three years and MSUs having an average performance period of 2.5 years. Equity compensation aligns NEO interests with stockholder interests by delivering compensation based on our long-term performance and stockholder value creation.
Median Targeting TDC (base salary + annual cash incentive opportunity + LTI equity opportunity) and its elements are targeted at the median of companies similar in size, global scope and complexity, giving consideration to role responsibilities, individual performance, tenure, retention, and succession.
No Annual Stock Options Given their past adverse impact on our burn rate and related stockholder feedback, we last made a regular grant of stock options in 2012, though theystock options may be granted for special purposes such as promotion.
BEST PRACTICES
No Employment
Contracts

 
Our NEOs are employed at will.at-will.
Rigorous Stock
Ownership GuidelinesPolicy
 Our CEO is currently required to maintain at least 6x his annualbase salary; at the end of 2017,2019, Mr. Butier owned stock with a market value of approximately 14x22x his annual salary.base salary and nearly 4x the level required by our policy. Our other Current NEOs are required to maintain ownership of at least 3x their annualrespective base salaries. Except for Mr. Gravanis,All of our Current NEOs were in compliance with our stock ownership guidelinespolicy at the end of 2017.2019.
No Hedging
or Pledging

 
Our insider trading policy prohibits our directorsofficers and employees from hedging – and our officers from hedging or pledging – our common stock and all our Current NEOs are in compliancecomplied with the policy.policy in 2019.
Limited Trading Windows Our NEOs may only transact in our common stock during approved trading windows after satsifying the clearance requirements under our insider trading policy, which now includes certifying that they will remain in compliance with our stock ownership guidelinespolicy after giving effect to the transaction they plan to effectuate.
LowMedian Burn Rate Our three-year average burn rate of 0.7% at the end of fiscal year 2017 of 0.8%2019 was atslightly above the 50th percentile of the companies in the S&P 500.
Clawback Policy Cash and equity incentive compensation is subject to clawback in the event of fraud or other intentional misconduct on the part of an NEO that necessitates a restatement of our financial results.
No Excise Tax
Gross Ups

 
We do not gross-up payments received in connection with termination following a change of control for excise taxes.
Double Trigger
Equity Vesting
 Equity awards are not accelerated on change of control, unless the NEO is terminated without cause or terminates employment for good reason within 24 months thereof.following the change of control.
No Repricing/Exchange
of Underwater
Underwater Stock Options


 
Our equity plans prohibit the repricing or exchange of underwater options without stockholder approval.
Limited
Perquisites
 Other than a capped financial planning reimbursement and our payment for an annual physical examination, our corporate NEOs receive a flat taxable executive benefit allowance in lieu of enumerated perquisites that is not subject to any tax gross-up.
Reasonable
Severance Benefits

 
SeveranceCurrent severance formula requiresfor qualifying termination:
CEO: 2x (annual salary + highest AIP award in last three years + cash value of 12 months of health insurance premiums)
Others: 1x (annual salary + highest AIP award in last three years + cash value of 12 months of health insurance premiums)
Reasonable Change of
Control Benefits
 Change of controlCurrent severance formula requiresfor qualifying termination within 24 months offollowing a change of control:
CEO: 3x (annual salary + highest AIP award in last three years + cash value of 12 months of health insurance premiums) + prorated AIP award for year of termination
Others: 2x (annual salary + highest AIP award in last three years + cash value of 12 months of health insurance premiums) + prorated AIP award for year of termination
STRONG GOVERNANCE
Independent
Oversight

 
The Committee is comprised solely of independent directors and its executive compensation decisions are reviewed and ratified by all of our independent directors.

Independent
Expert Advice
Compensation Consultant


Willis Towers Watson, which has been determined by the Committee to be independent and free of conflicts of interest, provides the Committee with expert executive compensation advice.

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SUMMARY OF COMPENSATION DECISIONS FOR 20172019

        The Committee designs executive compensation to pay for performance, with the target TDC of NEOs established to incent economicstrong financial performance and stockholder value creation, giving consideration to the market median of companies similar in size, global scope and complexity with which we compete for executive talent, role responsibilities, individual performance, tenure, retention and succession. The majority of thisThis compensation is primarily performance-based, meaning that our executives may ultimately not realize some or all of these components of compensation if we fail to achieve our financial objectives. In 2017,2019, approximately 84%86% and 67%72% of the TDC of our CEO and average of our other Current NEOs, respectively, was performance-based.

        In determining 20172019 NEO compensation, the Committee considered the following:

    Company/Business Performance – Our company's financial performance, including our 2019 adjusted sales growth, adjusted EPS, and free cash flow for our corporate NEOs, and, for our business NEOs, primarily the performance of their respective business;

    Stockholder Returns – Our TSR on an absolute basis, as well as relative to an objectively determined group of peer companies;

    Annual Individual Performance – Our CEO's performance against the predetermined and objectively measurable strategic objectives established for him at the beginning of the year and the individual contributions of our other NEOs;

    Competitiveness – Market pay practices and company performance relative to peers; and

    Investor Feedback – The results of our 2019 say-on-pay vote and feedback on our executive compensation received during our ongoing stockholder engagement program.

    Company/Business Performance — Our company's overall financial performance, including our 2017 adjusted sales growth, adjusted EPS, and free cash flow for our corporate NEOs, and, for our business NEO, the performance of our LGM business;

    Stockholder Returns — Our TSR on an absolute basis, as well as relative to a designated group of peer group companies;

    Annual Individual Performance — Our CEO's performance against the predetermined and objectively measurable strategic objectives established for him at the beginning of the year and the individual contributions of our other Current NEOs;

    Competitiveness — Market pay practices and company performance relative to peers; and

    Responsiveness to Investors — The results of our 2017 say-on-pay vote and feedback on our executive compensation received during our ongoing stockholder engagement program.

        The key elements of 20172019 NEO target TDC are showndescribed in the table shown on the following table. pages.While we provide consistent, market-competitive target TDC opportunities for our NEOs, the actual compensation they realize varies year-to-year based primarily on company and business performance; for 2017,2019, the incentive compensation realized by our NEOs was based solely on company and/or business performance.

        In determining Mr. Butier's target TDC for 2019, the Committee focused on his LTI compensation, having increased his target LTI opportunity from 425% to 475% of base salary in February 2018. The Committee had not increased his base salary in either of the past two years or his target AIP opportunity since he became CEO in 2016. This approach reflects the Committee's pay-for-performance philosophy by prioritizing performance-based equity to further incent our CEO to deliver top quartile long-term stockholder value creation.

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2017 TOTAL DIRECT COMPENSATION (TDC)2019 TDC SUMMARY
COMPONENT
 DESCRIPTION
 DECISIONS IMPACTING 20172019 EXECUTIVE COMPENSATION
        
FIXED

Base Salary

16%14% of TDC for CEO;

Avg. 33%28% of TDC for
Other Current NEOs


 
Provides fixed, market competitive monthly income for performing daily responsibilities Excluding promotions, theThe Committee provided NEOsapproved limited salary increases for our NEOs of approximately 3%, consistent with the average increase for our U.S. employees, except for Mr. Gravanis,Butier, whose base salary increased by 5% to reflect the size and scope of his role.was not increased.
        
PERFORMANCE-BASED CASH

Target
AIP Award

Capped at 200% of
of target

Avg. 18% of TDC for CEO;
Avg. 20% of TDC for
Other Currentall NEOs

 Provides variable, cash-based incentive to motivate our executives to grow sales, increase profitabilityprofits and deliver strong free cash flow consistent with our annual financial goals

AIP opportunity based on market survey data; financial modifier based on corporate or business performance; capped individual modifier based on our CEO's achievement against predetermined and objectively measurable strategic objectives and our other NEOs' individual contributions

 The only change to NEO target AIP opportunities in 20172019 was an increase in Mr. Lovins'Stander's target AIP opportunity from 40%50% to 60% of base salary in connection withto better reflect the market median for his promotion to CFO. His 2017 AIP award was prorated to reflect 40% of base salary for the first six months of the year and 60% of base salary for the second six months of the year.role.

Our company or business performance resulted in financial modifiers of 170%91%, 76% and 127%114% for our corporate NEOs, and ourLGM business NEO (Mr. Gravanis) and RBIS business NEO (Mr. Stander), respectively.

The Committee determined in February 2017 generally to cap the individual modifiers for our CEO and theother NEOs reporting to himare generally capped at 100% (rather than the 150% applicable to other AIP participants) to prioritize delivery offocus their efforts on delivering long-term company and business performance and advance its pay-for-performance philosophy.performance. The Committee approved individual modifiers of 100% for all Current NEOs.

2017 AIP awards fell within the range of 127% to 170% of target.NEOs for 2019.

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2017 TOTAL DIRECT COMPENSATION (TDC)
COMPONENT
DESCRIPTION
DECISIONS IMPACTING 2017 EXECUTIVE COMPENSATION
        
PERFORMANCE-BASED EQUITY

LTI Awards

66%68% of TDC for CEO;

Avg. 47%53% of TDC for
Other Current NEOs



 
Provides variable, equity-based incentive compensation to align NEO interests with stockholder interests and drive long-term value creation

LTI opportunity based on market survey data; award vehicles, performance criteria and weightings based oninformed by expert advice and recommendations of Willis Towers Watson

 LTI Awards Granted in 20172019

There were the followingThe only changes to NEO target LTI opportunities for 2017:2019 were increases in (i) an increase in Mr. Butier's target LTI opportunity from 400% to 425% of base salary to bring his target LTI opportunity closer to the market median and (ii) an increase in Mr. Lovins' target LTI opportunity from 120%200% to 250% and (ii) Mr. Stander's target LTI opportunity from 140% to 180% of base salary, in connection witheach case to better reflect the market median for his promotion to CFO; however, his 2017 annual LTI awards were granted based on his previous target LTI opportunity.respective role.

50% in PUs that cliff-vest at the end of a three-year period with payout ranging from zero to 200% subject to our achieving at leastbased on the threshold levelachievement of performance for the cumulative EVA and relative TSR performance objectives established for the award. The payout for the TSR component is capped at 100% of target for any three-year performance period in which absolute TSR is negative. There were no changes to the performance objectives or weightings from the prior year.year for our corporate NEOs or our LGM business NEO; the objectives for our RBIS business NEO changed from 100% RBIS' cumulative EVA in 2018 to 75% RBIS' cumulative EVA and 25% company TSR in 2019.

50% in MSUs that vest based on our absolute TSR over one-, two-, three- and four-year performance periods, with an average performance period of 2.5 years. Consistent with recent years, the performance criteria were as follows: (i) the threshold performance level for absolute TSR, which results in a payout at vesting of 85%, was –15%(15)%; (ii) the target performance level, which results in a payout at vesting of 100%, requires a TSR of 10%; and (iii) the maximum performance level, which results in a payout at vesting of 200%, requires a TSR of 75%.

 

 

The Committee approved a one-time special equity award to Mr. Lovins in connection with his promotion to CFO. He was granted RSUs with a grant date fair value of approximately $550,000 on September 1, 2017, which vest in equal installments on the first, second, third and fourth anniversaries of the grant date, subject to his continued service.






LTI Awards Vesting in 2019

2017-2019 PUs: Our 2017-2019 TSR was at the 97th percentile of the objectively determined peer group established in February 2017. Cumulative EVA for our company was $890.0 million, exceeding the maximum level of performance. Cumulative EVA for our RBIS business also exceeded its maximum level of performance. Cumulative EVA for our LGM business was 115% of target. The PUs granted in 2017 for the 2017-2019 performance period paid out at (i) 200% of target for our corporate NEOs and our RBIS business NEO and (ii) 136% of target for our LGM business NEO.

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2019 TDC SUMMARY
COMPONENT
DESCRIPTION
DECISIONS IMPACTING 2019 EXECUTIVE COMPENSATION
LTI Awards Vesting in 2019

 

 

Our 2015-2017 TSR was at the 97th percentile of an objectively determined peer group established in February 2015. Cumulative EVA for our company was over $601 million, exceeding the maximum level of performance. The PUs granted in 2015 for the 2015-2017 performance period vested at 200% of target for all of our Current NEOs.

MSUs

4th Tranche payout forof MSUs granted in 20142016

:
2016-2019 Absolute TSR = 136%
Paid out at 200% of target

        3rd Tranche payout for MSUs granted in 2015
  

3rd Tranche of MSUs granted in 2017:
2017-2019 Absolute TSR = 90%
Paid out at 200% of target

        2nd Tranche payout for MSUs granted in 2016
  

2nd Tranche of MSUs granted in 2018:
2018-2019 Absolute TSR = 14%
Paid out at 200%106% of target

        1st Tranche payout for MSUs granted in 2017
  

1st Tranche of MSUs granted in 2019:
2019 Absolute TSR = 41%
Paid out at 188%147% of target

20172019 TDC TARGETED AT MEDIAN

        In addition to thesethe primary elements of our executive compensation program described above, we also provide our NEOs with limited perquisites and benefits that the Committee believes are comparable to those offered by other multinational public companies.

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DISCUSSION OF COMPENSATION COMPONENTS AND
DECISIONS IMPACTING 20172019 COMPENSATION

        The Committee aims to have base salaries at or around the market median, with the substantial majority of NEO compensation consisting of incentive compensation to advance the Committee's pay-for-performance philosophy, driving higher realized compensation when our financial performance is stronger and lower realized compensation when our financial performance is weaker. In addition, it provides the Committee with the flexibility to respond to changing business conditions, manage compensation to reflect career progression, and adjust compensation to reflect differences in executive experience and performance.

BASE SALARY

        Increases in base salary are generally driven bybased on the average percentage merit increase given to our U.S. employees, subject to marginal increase or decrease based on the NEO's performance and the market median for positions with similar scope and responsibility. In February 2017, theThe Committee approved baselimited salary increases, of 3% for our then-serving NEOs of approximately 3%, effective April 1, 2019, consistent with the average increase for our U.S. employees, except for Mr. Gravanis,Butier, whose base salary increased by 5% to reflectwas not increased.

        NEO base salaries at year-end 2019 were as follows: Mr. Butier – $1,133,000; Mr. Lovins – $618,000; Ms. Miller – $581,048; Mr. Stander – $555,129; and Mr. Gravanis – $626,282. Amount for Mr. Gravanis was converted from euros using the size and scopeaverage exchange rate for the 12 months of his role.2019.

20172019 AIP AWARDS

        The 20172019 AIP was designed to incent management to create long-term stockholder value. NEOs are not eligible for guaranteed AIP awards. AIP awards are determined for each fiscal year using the formula below. IndividualIn contrast to the general AIP formula shown,individual modifiers for NEOs are generally capped at 100% (although the Committee retains the discretion to determine higher individual modifiers, up to 150%).

GRAPHICGRAPHIC

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Target AIP Opportunities

        As a percentage of 20172019 year-end base salary, the target AIP opportunities for 20172019 were 125% for Mr. Butier; 75% for Messrs. Gravanis and Lovins; and 60% for Ms. BrammanMiller and Mr. Gravanis; 60% for Mses. Hill and Miller; and 50% forStander. The only change to NEO target AIP opportunities in 2019 was an increase in Mr. Lovins. Mr. Lovins' 2017 AIP award was prorated to reflect hisStander's target AIP opportunity of 40% of base salary for the first six months of the year and his target AIP opportunity offrom 50% to 60% of base salary to better reflect the market median for the second six months of the year.his role.

AIP Performance Objectives and Weightings; Target-Setting Principles

        The following performance objectives and weightings for the 20172019 AIP were established and weighted by the Committee, in consultation with Willis Towers Watson. Our CEO, Chief Human Resources Officer and then-serving CFO participated during portions of the meetings during which the Committee reviewed and recommended performance objectives for our AIP and analyzed our performance against these objectives.

        For our business participants (including Mr. Gravanis)NEOs (Messrs. Gravanis and Stander), the Committee determined to link 75% of the AIP financial modifier to their respective business' results and 25% to corporate results. Business performance objectives were designed to be achievable only if the relevantrespective business substantially improved upon its 20162018 performance and delivered results consistent with the achievement of our 2014-2018its 2021 financial targets.

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20172019 AIP TARGETS

GRAPHICGRAPHIC

        In setting the targets for these objectives, the Committee aimed to ensure consistency with our long-term2021 financial targets and require adjusted sales growth andEPS improvement over the prior year; adjusted EPS improvement fromis the results achieved in the prior year.measure on which we provide annual guidance to our investors and a primary driver of stockholder value creation. These were the same objectives and weightings used for purposes of the 20162018 AIP to continue incenting our NEOs to increase sales on an organic basis, improve profitability and generate strong free cash flow.

        Target adjusted sales growth of 4.4% was set consistent with our 2017-2021 target of at the low end ofleast 4% but lower than what we achieved in 2018, reflecting our long-term target, reflecting top-line challenges in the retail apparelexpectations for lower volume growth due to challenging market served by our RBIS business; however, the target required improvement from the prior year.conditions. Target adjusted EPS was established above the midpoint of the annual guidance we announcedprovided to investors in February 2017January 2019 and represented a 11%9% increase (a 16% increase on a currency neutral basis) from our 20162018 results for this measure. Although we did not externally communicate a free cash

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flow target as part of our 20182021 goals, we continue to expect our businesses to generate strong free cash flow, an important metric used internally and by our investors in evaluating our performance. Although lower than our 2016 result, our 2017the amount of cash we have available for debt reductions, dividends, share repurchases, and acquisitions. Our 2019 target for free cash flow reflected increasedwas 5% higher than the free cash flow we generated in 2018, despite continued planned above-average investment in fixed capital, expenditures planned for 2017information technology and cash restructuring payments to support our future growth and achieve our 2017-2021 financial targets.profitability.

CORPORATE 2017 AIP TARGETS VS. 2014-2018 TARGETS AND 2016 RESULTS 
  2014-2018 Target 2016 Results 2017 AIP Target
Adjusted Sales Growth 4%-5% 3.9% 4.0%
Adjusted EPS 12%-15%+ Growth $4.02 $4.45
(up 11% from 2016*)
Free Cash Flow N/A $387M $355M

*


On a currency neutral basis, the 2017 AIP target for adjusted EPS was 16% higher than the results we achieved in 2016.
CORPORATE 2019 AIP TARGETS VS. LONG-TERM TARGETS AND 2018 RESULTS

 2017-2021 Long-Term Target 2018 Results 2019 AIP Target

Adjusted Sales Growth

 4%+ 5.5% 4.4%

Adjusted EPS Growth

 10%+ $6.06 $6.60
(9% over 2018)

Free Cash Flow

 N/A $429M $450M
(5% over 2018)

Financial Modifiers

        Financial modifiers are capped at 200%. Consistent with prior years, in evaluating our achievement of these performance objectives, the Committee hashad the discretion to exclude the impact, positive or negative, of extraordinary items such as acquisitions and divestitures; restructuring and integration actions not included in our annual net income plan; currency translation fluctuations; changes in accounting principles, tax codes or related regulations and rulings; extraordinary events such as natural disasters, terrorism and war; costs related to the early extinguishment of debt;debt and pension plan terminations; costs of litigation outside the normal course of business; and non-cash charges associated with the impairment of long-lived assets.

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        The table belowon the following page shows the 2019 AIP financial modifiers for our NEOs for 2017.NEOs. As shown, we exceeded the target level was exceeded for two of the three performance objectives established for our corporate NEOs; exceeded for two of the four performance objectives established for our LGM business NEO; and exceeded for all four of the performance objectives established for our corporate NEOs and two of the performance objectives established for ourRBIS business NEO. Our corporate and business performance resulted in an AIP financial modifiermodifiers of 170%91% for our corporate Current NEOs, and 127%76% for our LGM business NEO and 114% for our RBIS business NEO. Because she was not employed at the end

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Table of 2017, Ms. Bramman was not eligible for a 2017 AIP award.Contents

2017 AIP FINANCIAL MODIFIERS
 
 NEO
 PERFORMANCE OBJECTIVE
 WEIGHTING
 THRESHOLD (50%)
 TARGET (100%)
 MAXIMUM (200%)
 2017 ACTUAL
 MODIFIER
 WEIGHTED AVERAGE MODIFIER
  
  Butier
Lovins
 Total Company
Adjusted Sales Growth(1)

 
20% 1.9% 4.0% 8.1% 4.2% 105%21% 
  Hill
Miller
 Total Company
Adjusted EPS(2)

 
60% $4.20 $4.45 $4.95 $4.96 200%120% 
    Total Company
Free Cash Flow(3)

 
20% $280M $355M $505M $423M 143%29% 
  Corporate NEO Financial Modifier  170% 
  Gravanis Total Company
Adjusted EPS(2)

 
25% $4.20 $4.45 $4.95 $4.96 200%50% 
  Label and Graphic Materials (LGM) LGM
Adjusted Sales Growth(4)

 
20% 2.9% 5.0% 8.4% 4.2% 78%16% 
    LGM
Adjusted Net Income(4)(5)

 
35% $366M $385M $424M $384M 96%33% 
    LGM
Free Cash Flow(4)

 
20% $251M $291M $371M $322M 140%28% 
  Business NEO Financial Modifier  127% 

2019 AIP FINANCIAL MODIFIERS
 NEO(s)PERFORMANCE
OBJECTIVE
WEIGHTINGTHRESHOLD
(50%)
TARGET
(100%)
MAXIMUM
(200%)
2019
ACTUAL
MODIFIERWEIGHTED
AVERAGE
MODIFIER
 
 Butier
Lovins
Miller


Total Company
Adjusted Sales Growth(1)

20%2.5%4.4%8.2%2.0%0%0% 
​ ​​​​​​​​​​​​​​​​​
  Total Company
Adjusted EPS(2)

60%$6.27$6.60$7.19$6.62103%62% 
​ ​​​​​​​​​​​​​​​​​
  Total Company
Free Cash Flow(3)

20%$378M$450M$594M$514M145%29% 
 Corporate NEO Financial Modifier91% 
 GravanisTotal Company
Adjusted EPS(2)

25%$6.27$6.60$7.19$6.62103%26% 
​ ​​​​​​​​​​​​​​​​​
  LGM
Adjusted Sales Growth(4)

20%2.8%4.5%8.0%1.2%0%0% 
​ ​​​​​​​​​​​​​​​​​
  LGM Adjusted Net Income(4) (5)35%$434M$457M$498M$445M74%26% 
​ ​​​​​​​​​​​​​​​​​
  LGM Free Cash Flow(4)20%$254M$314M$434M$344M122%24% 
 LGM Business NEO Financial Modifier76% 
 StanderTotal Company
Adjusted EPS(2)

25%$6.27$6.60$7.19$6.62103%26% 
​ ​​​​​​​​​​​​​​​​​
  RBIS
Adjusted Sales Growth(4)

20%2.4%4.5%8.7%5.1%116%23% 
​ ​​​​​​​​​​​​​​​​​
  RBIS Adjusted Net Income(4) (5)35%$118M$131M$147M$134M118%41% 
​ ​​​​​​​​​​​​​​​​​
  RBIS
Free Cash Flow(4)

20%$79M$99M$139M$106M116%23% 
 RBIS Business NEO Financial Modifier114% 
(1)
Total Company Adjusted Sales Growth refers to reported sales growthdecline of 8.7%(1.2)%, adjusted for the impact of currency translation of (0.5)% and the net impact of acquisitions and product line divestitures of (3.9)%3.3%. Total does not sum due to rounding.

(2)
Total Company Adjusted EPS refers to reported net income per common share, assuming dilution, of $3.13,$3.57, adjusted for tax-effected restructuring costs, impact of the TCJAcharges and other items, pension plan settlements, and tax benefit from discrete foreign tax structuring and planning transactions of $1.87 and excluding$3.03. Using its permitted discretion under the $.04 positiveAIP, the Committee also excluded the $.02 impact of transaction costs related to our acquisition of Smartrac, which were incurred prior to our entry into an agreement to purchase the three acquisitions completedcompany in 2017.November 2019, to not disadvantage AIP participants from pursuing acquisitions.

(3)
Total Company Free Cash Flow refers to cash flow from operations of $650.1$746.5 million,minus purchases of property, plant and equipment of $190.5$219.4 million and software and other deferred charges of $35.6$37.8 million,plus proceeds from sales of property, plant and equipment of $6.0$7.8 million,minusplus purchasesproceeds from insurance and sales (purchases) of investments, net, of $(8.3)$4.9 million,plus cash flowpension plan contribution for plan termination of $1.3$10.3 million. Using its permitted discretion under the AIP, the committee also excluded $1.9 million of transaction costs related to our acquisition of Smartrac, which were incurred prior to our entry into an agreement to purchase the company in November 2019, to not disadvantage AIP participants from the negative impact of the three acquisitions in 2017.pursuing acquisitions. Free cash flow is measured quarterly to ensure consistent management of working capital throughout the year, subject to adjustment if the full-year target is not achieved. While total company free cash flow was 119%114% of target, our averagethe measurement of this objective on a quarterly performancebasis, as required by the Committee to incent consistent delivery of free cash flow throughout the year, resulted in a modifier of 143%145% for that objective.

(4)
Adjusted sales growth, adjusted net income and free cash flow measures at the segment level are internal metrics. These metrics either exclude or make simplifying assumptions for items that cannot be allocated precisely by segment, such as interest and income tax expenses, and related balance sheet accounts, such as deferred tax assets and liabilities, income tax payables and receivables, and short- and long-term debt. Certain balance sheet accounts such as pension and other postretirement benefits and insurance that are generally managed at the corporate level, as well as the impact of foreign currency translation, are also excluded from the calculation of these metrics for the segments. In certain limited circumstances, one-time items may be excluded from segment adjusted net income. The impact of intercompany sales is included in segment metrics. While LGM's free cash flow was 111%110% of target, its averagethe measurement of this objective on a quarterly performancebasis, as required by the Committee to incent consistent delivery of free cash flow throughout the year, resulted in a modifier of 140%122% for that objective. Using its permitted discretion under the AIP, the Committee adjusted RBIS' free cash flow payout to exclude the impact of approximately $18 million of higher-than-planned capital spend associated with accelerating growth in of our Intelligent Labels platform.

(5)
Adjusted net income refers to reported net income before taxes, tax-effected at the adjusted tax rate, and adjusted for tax-effected restructuring costs, the impact of the TCJAcharges and other items. Adjusted tax rate is the full-year GAAP tax rate, adjusted to exclude certain unusual or infrequent events that are expected to significantly impact the GAAP tax rate, such as impacts related to the termination of our U.S. pension plan and the effects of discrete tax planning actions.

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NEO Performance Evaluations & Individual Modifiers

        Our NEOs are evaluated on their individual performance for the year, with the Committee approving our CEO's goals for the year and our CEO approving the goals of our other NEOs. The NEOs' performance of our NEOs is assessed in February of the following year. For theour NEOs other than ourthe CEO, this assessment considers the totality of their performance rather than assigning weightings to their performance goals. Individual modifiers for all participants are capped at 150%, subject to the total cap on AIP awards of 200%.

        In February 2017,        Although it retains the discretion to determine higher individual modifiers (up to 150%), the Committee has determined that the individual modifiers for our CEO recommended and the Committee agreed that for 2017 his individual modifier and that of theother NEOs reporting to himshould generally be capped at 100%.All of the 2017 NEO individual modifiers for 2019 were capped at 100%., as they were for the three prior years.

        The Committee reviewed and evaluated our CEO's 20172019 performance, taking into account his performance against the predetermined and objectively measurable strategic objectives established in February 2017,of that year, his self-assessment of his performance, and market reference and other data provided by Willis Towers Watson. Our CEO is not involved in the decisions regarding his compensation, which are determined by the Committee meeting in executive session with Willis Towers Watson. The Committee determined the individual modifier for our CEO based on its assessment of his performance, within the context of the capcaps described above.

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        For 2017,2019, the Committee evaluated the performance of our CEO, determining that he substantially achieved or exceeded each of his strategic objectives for the year, as shown in the chart below.

2019 CEO PERFORMANCE EVALUATION
STRATEGIC OBJECTIVE
 WEIGHTING
 EVALUATION
Accelerate exposure to high value product categories – Achieve growth objectives for LGM's graphics and specialty, RBIS' RFID and IHM's industrial tapes and medical product categories; continue building M&A pipeline and achieve acquisition objectives; and continue integrating Intelligent Labels across LGM and RBIS, while building Intelligent Labels team in Asia 25% Exceeded overall objective. Continued to grow high value product categories in LGM and IHM faster than our base businesses; grew RFID solutions by more than 20% enterprise-wide; advanced cross-divisional Intelligent Labels platform with strong results and momentum; and enhanced M&A pipeline with announcement of Smartrac acquisition

Drive profitable growth in base business – Selectively regain share in LGM's base product categories; grow volumes in RBIS' base business (adjusted for RFID); and accelerate near-term productivity in IHM

 

20%

 

Expanded margins in base product categories despite missing top-line objectives due to relatively soft market conditions, and largely regained share positions in targeted market segments

Continue relentless focus on productivity –Achieve targeted restructuring savings and complete LGM's European restructuring; begin executing key footprint optimization projects; and implement new operating structure

 

15%

 

Exceeded overall objective. Completed LGM's European restructuring program; began processes of transferring IHM's European medical capacity from Belgium to Ireland and optimizing footprint of IHM's tapes business in China; and began to implement new operating structure to increase speed and allocate more resources towards high value product categories

Deploy capital effectively –Invest in capital expenditures at targeted amount to enable future growth, as well as targeted amount in accelerated growth platforms; and repurchase shares, in each case consistent with our capital allocation objectives

 

15%

 

Exceeded overall objective. Invested nearly $260 million in capital expenditures to enable future growth; completed implementation of enterprise resource planning system in LGM North America; accelerated investment in Intelligent Labels and graphics solutions; and repurchased shares in a disciplined manner

Succession planning –Progress CEO succession strategy with goal of ready-now successors by targeted deadline; refine/execute executive leadership development plans; and develop plan for senior leadership transitions

 

10%

 

Achieved overall objective. Continued refining and executing development plans for key leaders and potential successors; began implementing new leadership structure; and successfully executed key leadership transitions

Sustainability/Diversity – Make progress towards achieving 2025 sustainability goals, including reduce greenhouse gas emissions by 3%; ensure at least 90% of sites are landfill-free; develop accelerated roadmap in LGM to enable greater recyclability of consumer packaged goods; and assess and implement gender pay equality

 

15%

 

Achieved overall objective. Made continued progress towards achieving 2025 sustainability goals: exceeded greenhouse gas emissions reduction target by over two percentage points; diverted over 90% of solid waste from landfills; increased Clearintent portfolio of products in LGM that enable greater recyclability; and assessed and ensured gender pay equity

Individual Modifier Based on Committee Evaluation

 

100%

 

100%





2017 CEO PERFORMANCE EVALUATION

PERFORMANCE ASSESSED AGAINST
PREDETERMINED AND MEASURABLE STRATEGIC OBJECTIVE
WEIGHTINGEVALUATION
Drive outsized growth in high value categories — Achieve growth objectives for Graphics, Specialty, RFID and industrial tapes; integrate acquisitions and continue building M&A pipeline; and develop Intelligent Labels platform across LGM and RBIS25%Although growth objectives in Graphics and Specialty were not achieved, exceeded growth objectives for RFID and industrial tapes; built robust M&A pipeline; and made substantial progress developing Intelligent Labels platform
Grow profitably in base business — Maintain share in LGM's base product categories; grow volumes in RBIS' base categories; and achieve growth objectives in base business of Vancive Medical Technologies (Vancive)25%Gained share in LGM's base product categories; substantially grew volume in RBIS' base categories; and returned Vancive's base business to significant growth in the second half of the year
Continue relentless focus on productivity —Achieve targeted RBIS restructuring savings and ensure profitability of Vancive's base business15%Achieved targeted RBIS restructuring savings and achieved profitability for Vancive's base business by the fourth quarter of the year
Deploy capital effectively —Invest in capital expenditures to enable future growth; issue European-based debt to fund business and acquisitions; and repurchase shares15%Substantially delivered targeted capital expenditures; issued €500 million of senior notes due in 2025; and repurchased shares in disciplined and appropriate manner
Succession planning —Refine executive leadership development plans; execute regional business leader transitions; and develop CEO succession strategy to ensure availability of ready-now successors15%Refined executive leadership-plans; executed regional business leader transitions; and made substantial progress with CEO succession strategy by identifying and developing potential successors
Sustainability/Diversity —Make progress toward 2025 sustainability goals, including reduce greenhouse gas (GHG) emissions by 3%; ensure at least 90% of sites are landfill free; and improve enterprise-wide gender diversity at the level of manager and above5%GHG emissions decreased by over 10% from prior year; over 90% of sites were landfill-free; and enterprise-wide gender diversity at the level of manager and above increased by 1% from prior year









Individual Modifier Based on Committee EvaluationOBJECTIVES100%

BASED ON PERFORMANCE AGAINST PREDETERMINED AND MEASURABLE STRATEGIC OBJECTIVES

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        Our CEO recommended to the Committee the individual modifiers for our other Current NEOs based on his assessment of their 20172019 performance. The Committee considered our CEO's recommendationsrecommendation and challenged his assessments of our other NEOs' performance as needed, whileappropriate, retaining the discretion to approve individual modifiers for our other Current NEOsthem lower than what the 100% our CEO had recommended. Other than discussing with our CEO their performance against their individual performance plans, our other Current NEOs played no role in their compensation determinations.

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        In determining the individual modifiers for our other Current NEOs and recognizing that the general cap of 100% eliminated the potential upside from the individual modifier on their AIP awards, the Committee highlightednoted the following regardinghighlights of the 20172019 performance of theour other Current NEOs:

      Mr. Lovins — Transitioned from Treasurer to Chief Financial Officer; led our finance function, delivering results that exceeded our 2017 goals for organic sales growth, adjusted EPS and free cash flow; and continued disciplined execution of capital allocation.

      Mr. Gravanis — Led our LGM business, delivering strong performance on key financial metrics; improved productivity, service and quality; integrated two acquisitions while expanding organizational capability to better serve high value product categories.

      Ms. Hill — Led our human resource and communications functions with particular focus on executive succession planning; diversity and inclusion initiatives; employee engagement; and the development and communication of our evolved values to support our business strategies.

      Ms. Miller — Led our legal function with particular focus on acquisitions and other investments; business transformation initiatives; and enhancements to our Values and Ethics program, including our updated Code of Conduct.

Mr. Lovins –Led our finance function, delivering results that met our 2019 goal for adjusted EPS despite a challenging market environment, with free cash flow significantly above our target; executing our capital allocation strategies to enable future organic growth, the acquisition of Smartrac and the return of cash to stockholders through dividends and share repurchases; and serving as interim leader of our IHM segment, achieving top-line growth with significant margin expansion in that business for the year.

Ms. Miller –Led our legal function, developing a new operational model aligned with our company's core strategies that will accelerate productivity, standardize processes and deploy best practices across the function; supporting our capital allocation strategies, including our acquisition of Smartrac and footprint optimization efforts; and overseeing our values and ethics and compliance program.

Mr. Stander –Led our RBIS business, delivering strong performance in 2019 that exceeded all of its key financial and performance metrics; continuing to accelerate growth and capability in its high value product categories of RFID and external embellishments; and elevating productivity, service, speed and quality with an engaged and diverse global team.

Mr. Gravanis –Led our LGM business, delivering operating margin expansion and strong free cash flow in a challenging top-line environment; building its portfolio of more sustainable products while advancing its progress in reducing waste and greenhouse gas emissions; and completing a multi-year recapitalization plan in Europe, including a substantial expansion of LGM's Luxembourg manufacturing facility.

        Based on the above assessments and after giving consideration to the recommendations of our CEO (other than with respect to himself), the Committee approved individual modifiers of 100% for all Current NEOs.

AIP Awards

        Our NEOs received the AIP awards shown in the table below for 2017,2019, based on their respective year-end base salary, AIP opportunity, financial modifier and individual modifier.

2017 AIP AWARDS


NEO

 2017 YE
BASE SALARY
 AIP
OPPORTUNITY
 TARGET
AIP
AWARD
 FINANCIAL
MODIFIER
 INDIVIDUAL
MODIFIER
 AIP
AWARD

Butier

 $1,133,000 125% $1,416,250 170% 100% $2,407,625

Lovins*

 $550,000 50% $275,000 170% 100% $467,500

Gravanis*

 $628,595 75% $471,446 127% 100% $598,737

Hill

 $532,045 60% $319,227 170% 100% $542,686

Miller

 $547,694 60% $328,616 170% 100% $558,647

Bramman**

 $575,025 75% $431,269   

2019 AIP AWARDS
NEO
2019 YE
BASE SALARY

AIP
OPPORTUNITY

TARGET
AIP AWARD

FINANCIAL
MODIFIER

INDIVIDUAL
MODIFIER

AIP
AWARD

Butier

$1,133,000125%$1,416,25091%100%$1,288,788

Lovins

$618,00075%$463,50091%100%$421,785

Miller

$581,04860%$348,62991%100%$317,252

Stander(1)

$555,12957.5%$319,999114%100%$363,887

Gravanis(2)

$626,28275%$469,71176%100%$361,677
*(1)
Mr. Lovins'Stander's AIP award was prorated based on his target AIP opportunity of 40%50% of base salary for the first halfquarter of the year and his increased target AIP opportunity of 60% of base salary for the second halfremainder of the year.
(2)
Amounts for Mr. Gravanis were converted from euros using the exchange rate as of our fiscal year-end.

**
Ms. Bramman did not receive an AIP award since she was not employed at the end of 2017.

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2017 2019 GRANTS OF LTI AWARDS

        Our LTI program provides variable incentive compensation to enhance alignment of executive interests with stockholder interests and drive long-term value creation. The annual LTI awards granted in 20172019 were fully performance-based and delivered through the following equity vehicles:

    50% in PUs that cliff-vest at the end of a three-year period subject to the achievement of the respective cumulative EVA and relative TSR performance objectives established for the award; and

    50% in MSUs that vest at the end of the one-, two-, three- and four-year performance periods, with an average performance period of 2.5 years, based solely on our absolute TSR.

    54    2020 Proxy Statement  |Avery Dennison Corporation


    Table of a three-year period subject to our achievement of the cumulative EVA and relative TSR performance objectives established for the award; andContents

    50% in MSUs that vest at the end of the one-, two-, three- and four-year performance periods, with an average performance period of 2.5 years, based solely on our absolute TSR.

        Annual LTI awards were granted on February 23, 2017,28, 2019, the day our Board held its regularly-scheduled meeting.

        The Committee does not offset the loss or gain of prior year grants in determining current year grants, as doing so would compromise the intended risk/reward nature of these incentives.

        Actual amounts, if any, realized by our NEOs from the vesting of these awards will be based on our performance, as well as our stock price, at the time of vesting.

        Although we have suspended the regular grant of stock options and time-vesting RSUs to our executives, special awards may be granted by the Committee for hiring, promotion, retention and/or other incentive purposes, with the awards granted on the first day of the last month of the calendar quarter following the event or decision to make such a grant. In connection with his promotionNo such awards were granted to CFO, Mr. Lovins was granted a special one-time award of RSUs with a grant date fair value of approximately $550,000 on September 1, 2017, which vestour NEOs in equal installments on the first, second, third and fourth anniversaries of the grant date, subject to his continued service.2019.

Target LTI Opportunity

        As a percentage of base salary, the target LTI opportunities for our NEOs were 425%475% for Mr. Butier; 120%250% for Mr. Lovins; and 180% for Mr.Ms. Miller and Messrs. Gravanis and Mses. Hill and Miller; and 200% for Ms. Bramman. In 2017, (i) Mr. Butier's target LTI opportunity increased from 400% to 425% of base salary to bring his LTI opportunity closer to the market median and (ii) Mr. Lovins' target LTI opportunity increased from 120% to 180% of base salary in connection with his promotion to CFO; however, his 2017 annual LTI awards were granted based on his previous target LTI opportunity. Stander.Target LTI award opportunities represented approximately 66%79% and 47%75%, respectively, of our CEO's and other Current NEOs' average totalperformance-based incentive compensation.The only changes to NEO target LTI opportunities for 2019 were increases in (i) Mr. Lovins' target LTI opportunity from 200% to 250% of base salary and (ii) Mr. Stander's target LTI opportunity from 140% to 180% of base salary, in each case to better reflect the market median for his respective role.

Performance Units (PUs)

        Awarded under our 2017-2019 Mid-Term Incentive Plan (MTIP),        PUs cliff-vest in shares of our common stock after the end of athe three-year 2019-2021 period at threshold (50% payout), target (100% payout) and maximum (200% payout) levels based on our achievement of the performance objectives established for the award. PUs do not accrue dividend equivalents and are not counted towards measuring compliance with our stock ownership guidelines.policy.

        Consistent with the 2016-2018 MTIP, theThe Committee selectedestablished the following performance objectives for the 2017-2019 MTIP.2019-2021 PUs. The Committee believes that these objectives continue to appropriately align executive compensation with the long-term interests of our stockholders because delivering cumulative EVA and strong TSR relative to peer companies directly impacts both the number of shares executives may receive at vesting andreflects the value creation we provide to our stockholders.

    Cumulative EVA, weighted 50%create for our corporate NEOs (based on our total company EVA) and 75% for our business NEO (based on LGM's cumulative EVA). EVA is a measure of financial performance calculated by deducting the economic cost associated with the use of capital (weighted average cost of capital multiplied by average invested capital) from our after-tax operating profit. The Committee established corporate EVA goals consistent with our 2014-2018 targets and our key financial objective of delivering superior TSR, with the target payout at the low end of these targets and the maximum payout at the high end of these targets. Targets for our businesses focused on EVA change compared to the prior three-year period, with the target payout for executives linked to our LGM business (including Mr. Gravanis) requiring positive EVA and significant change in EVA, with the cost of capital being fixed over the performance period, but reassessed annually for new cycles. Average invested capital is targeted to increase at a rate substantially below our targeted rate of organic sales growth. Unlike under the AIP, cash restructuring charges — which include severance and related costs and exclude asset impairment charges and lease and other contract cancellation costs — are included in EVA calculations as it is expected that these investments will generate a return over the MTIP's longer performance period (in contrast to the AIP). Whether linked to corporate or business results, the 2017-2019 EVA targets require continued improvement in our performance.
investors.

Cumulative EVA, weighted 50% for our corporate NEOs (based on our total company EVA) and 75% for our business NEOs (based on their respective business' cumulative EVA). EVA is a measure of financial performance calculated by deducting the economic cost associated with the use of capital (weighted average cost of capital multiplied by average invested capital) from our after-tax operating profit. The Committee established cumulative EVA targets for our corporate NEOs consistent with our 2017-2021 targets for earnings growth and ROTC and our primary objective of delivering superior TSR, with the target payout at the midpoint of these targets and the maximum payout at the high end of these targets. Cumulative EVA targets for our business NEOs focused on their respective business' EVA change compared to the prior three-year period, with the target payout at the midpoint of their respective business' 2017-2021 targets and the cost of capital fixed over the performance period. In contrast to the AIP, cash restructuring charges – which include severance and related costs and exclude asset impairment charges and lease and other contract cancellation costs – are included in EVA calculations as the Committee expects that these investments will generate a return over the three-year performance period (in contrast to the AIP, which has a one-year performance period). Whether linked to corporate or business results, the 2019-2021 cumulative EVA targets require continue improvement in financial performance.

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    Relative TSR compared to an objectively determined peer group of companies, weighted 50% for our corporate NEOs and 25% for our business NEO. TSR measures the return that we have provided our stockholders, including stock price appreciation and dividends paid (assuming reinvestment thereof), expressed as a percentage. Consistent with its pay-for-performance philosophy, the Committee designed the TSR objective to provide realized compensation only if our stockholder value creation compares favorably relative to the designated peer group. The Committee set the threshold payout level at TSR at the 40th percentile, the target payout level at TSR at the 50th percentile and maximum payout level at TSR at the 80th percentile, which were the same levels used for the 2016-2018 MTIP. Reflecting previously received stockholder feedback, payouts for the relative TSR component of these PUs is capped at 100% of target if our absolute TSR is negative for the 2017-2019 performance period. In assessing the rigor of the TSR objectives, the Committee noted that our stock price and TSR had substantially increased in the last few years; as a result, performing at the median relative to our peers over the 2017-2019 performance period would represent solid performance, particularly in light of our relatively high exposure to foreign currency translation risk and the end market challenges in the apparel industry served by our RBIS business.

            Consistent with the 2016-2018 MTIP and upon the recommendation of Willis Towers Watson, to benchmark TSR, the Committee continued utilizing a peer group(‡) comprised of U.S. companies (i) in similar industries based on their classification in one of five GICS groups (diversified chemicals, specialty chemicals, metal and glass containers, paper packaging, and paper products) and (ii) with revenues during the last twelve months of $1 billion to $20 billion. Based on the formulaic application of the same objective criteria, the peer group changed from the prior year as follows: (i) GCP Applied Technologies was added because it became a public company and met the other criteria; (ii) Domtar Corp. was added because its GICS code was reclassified; (iii) Olin Corp. was deleted because its GICS code was reclassified; (iv) AEP Industries Inc. was deleted because it was acquired; and (v) Innospec Inc. was deleted because its last twelve months' revenues fell below $1 billion.

    Relative TSR compared to an objectively determined peer group of companies, weighted 50% for our corporate NEOs and 25% for our business NEOs. TSR measures the return that we provide to our stockholders, including stock price appreciation and dividends paid (assuming reinvestment of dividends). Consistent with its pay-for-performance philosophy, the Committee designed the TSR objective to provide realized compensation only if our stockholder value creation compares favorably relative to the designated peer group. The Committee set the threshold payout level at TSR at the 40th percentile, the target payout level at TSR at the 50th percentile, and the maximum payout level at TSR at the 80th percentile, which were the same levels used for the 2018-2020 PUs.Reflecting previously received stockholder feedback, payouts for the relative TSR component of PUs are capped at 100% of target if our absolute TSR is negative for the 2019-2021 performance period. In assessing the rigor of the TSR objectives, the Committee noted that our stock price and TSR had significantly decreased in the prior year; as a result, performing at the median relative to our peers over the 2019-2021 performance period would represent solid performance, particularly in light of our relatively high exposure to the impact of foreign currency translation and geopolitical and trade-related uncertainty.






    Consistent with the 2018-2020 PUs and upon the recommendation of Willis Towers Watson, to benchmark TSR, the Committee continued utilizing a peer group comprised of U.S. companies (i) in similar industries based on their classification in one of five GICS groups (diversified chemicals, specialty chemicals, metal and glass containers, paper packaging, and paper products) and (ii) with revenues during the last twelve months of $1 billion to $20 billion. Based on the formulaic application of the same objective criteria, the peer group changed from the prior year as follows: (A) Ingevity Corporation; Neenah, Inc.; Rayonier Advanced Materials Inc.; and Schweitzer-Mauduit International Inc. were added because each of their last twelve months' revenues had exceeded $1 billion; (B) A. Schulman, Inc. and KapStone Paper and Packaging Corporation were deleted because they had been acquired; and (C) Venator Materials PLC was deleted because it was no longer based in the U.S.


    2019-2021 PUs
    2017-2019 MTIPNEO
    PERFORMANCE OBJECTIVES
    WEIGHTING
    Butier
    Lovins
    Miller


    Total Company Cumulative EVA50%
    Relative TSR50%

    Gravanis
    LGM Cumulative EVA75%
    Relative TSR25%

    Stander


    RBIS Cumulative EVA75%
    Relative TSR25%
    NAMEPERFORMANCE OBJECTIVESWEIGHTING
    Butier
    Lovins
    Hill
    Miller
    Bramman




    Total Company Cumulative EVA Relative TSR50%
    50%
    GravanisLGM Cumulative EVA
    Relative TSR
    75%
    25%

    Market-leveraged Stock Units (MSUs)

            In 2013, based on the expert advice and recommendation of Willis Towers Watson, the Committee began granting our NEOs MSUs which are LTI awards that:

      Are fully performance-based because they are tied to our absolute TSR performance, which represents appreciation in our stock price and dividends paid; and

      Have one-, two-, three- and four-year performance periods, with an average performance period of 2.5 years.


      (‡)
      The following companies comprise the peer group for purposes of the 2017-2019 MTIP: A. Schulman, Inc.; Albermarle Corporation; AptarGroup, Inc.; Ashland Global Holdings; Axalta Coating Systems Ltd.; Ball Corporation; Bemis Company, Inc.; Berry Plastics Group, Inc.; Celanese Corporation; Clearwater Paper Corporation; Crown Holdings Inc.; Domtar Corporation; Eastman Chemical Company; Ecolab Inc.; Ferro Corporation; GCP Applied Technologies Inc., Graphic Packaging Holding Company; Greif Inc.; H.B. Fuller Company; Huntsman Corporation; International Flavors & Fragrances Inc.; KapStone Paper and Packaging Corporation; Kraton Corporation; Minerals Technologies Inc.; NewMarket Corporation; Owens-Illinois Inc.; Packaging Corporation of America; P.H. Glatfelter Company; Platform Specialty Products Corporation; PolyOne Corporation; PPG Industries Inc.; RPM International Inc.; Sealed Air Corporation; Sensient Technologies Corporation; Silgan Holdings Inc.; Sonoco Products Company; Stepan Company; The Chemours Company; The Sherwin-Williams Company; Valhi Inc.; W.R. Grace & Co.; and WestRock Company.

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      Are fully performance-based because they are tied to our absolute TSR performance, which represents appreciation in our stock price and dividends paid; and

      Have one-, two-, three-and four-year performance periods, with an average performance period of 2.5 years.

              The Committee wanted to useselected an equity vehicle that has one-, two-, three- and four-year performance periodsvests ratably over years because MSUs replaced stock options and RSUs, both of which had vested ratably over four years. The transition to granting MSUs was made to address burn rate concerns raised by our stockholders and increase the performance linkage of our LTI program. MSUs were designed to achieve the combined objectives of our previouspreviously granted equity vehicles, including retention (similar to RSUs) and the provision of meaningful upside opportunity tied tohigher realized compensation from stock price appreciation (similar to stock options, but more limited due to fewer shares earned for target performance and a cap on the number of shares that can be earned above target), while making theour LTI compensation program fully performance-based.performance-based. The Committee continues to believe that retention is an important objective of our executive compensation program.


      The following companies comprised the peer group for the 2019-2021 PUs at the end of fiscal year 2019: Albermarle Corporation; AptarGroup, Inc.; Ashland Global Holdings Inc.; Axalta Coating Systems Ltd.; Ball Corporation; Berry Global Corp., Inc.; Celanese Corporation; The Chemours Company; Clearwater Paper Corporation; Crown Holdings Inc.; Domtar Corporation; Eastman Chemical Company; Ecolab Inc.; Element Solutions Inc. [previously traded as Platform Specialty Products Corporation]; Ferro Corporation; GCP Applied Technologies Inc., Graphic Packaging Holding Company; Greif Inc.; H.B. Fuller Company; Huntsman Corporation; Ingevity Corporation; Innospec Inc.; International Flavors & Fragrances Inc.; Kraton Corporation; Minerals Technologies Inc.; Neenah, Inc.; NewMarket Corporation; O-I Glass, Inc.; Packaging Corporation of America; P.H. Glatfelter Company; PolyOne Corporation; PPG Industries Inc.; PQ Group Holdings Inc.; Rayonier Advanced Materials Inc.; RPM International Inc.; Schweitzer-Mauduit International, Inc.; Sealed Air Corporation; Sensient Technologies Corporation; Silgan Holdings Inc.; Sonoco Products Company; Stepan Company; The Sherwin-Williams Company; Valhi Inc.; W.R. Grace & Co.; and WestRock Company.

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              MSUs vest based on our performance over periods as shown in the graph on the graph below,following page, with the number of shares paid out at vesting based solely on our absolute TSR and the value realized reflecting both the number of shares paid out as well as our stock price at the time of vesting. Although dividend equivalents accrue on MSUs during the performance period, they are earned and paid out only at vesting; as such, if the threshold level of performance were not achieved, any dividend equivalents accrued during the performance period would be cancelled.

      GRAPHIC

              The number of shares paid out at vesting for the MSUs granted in 2014 reflected the performance criteria shown onfor MSUs, which reflect previously received stockholder feedback seeking to make the left below, resulting in every 1% increase in TSR increasing the payout by 1%. The Committee significantly changed the MSU program beginning in 2015, making the threshold and target performance criteria more challenging, to reflect stockholder feedback and our improved financial profile, asare shown in the chart on the right below. To help mitigateon the effect on participants of more challenging threshold and target hurdles, the Committee also proportionally increased the number of shares paid out for achieving threshold performance from 70% to 85% and decreased the TSR required for a maximum payout from 100% to 75%. As a result, everyfollowing page. Every 1% increase in TSR above 10% increases the payout by 1.54%. The Committee determined to maintain the same MSU programperformance objectives for 2017 to continue observing payout experience to ensure2019 given that the program's revisedmore challenging MSU structure is achieving the Committee's goals.goal of incenting strong long-term performance and value creation.

      2013/2014 MSUs

       

      2015/2016/2017 MSUs

       ABSOLUTE TSR UNIT PAYOUT   ABSOLUTE TSR UNIT PAYOUT

      Cancelled

       <-30%         0%         

      Cancelled

       <-15%         0%        

      Threshold

       -30%         70%         

      Threshold

       -15%         85%        

      Target

       0%         100%         

      Target

       10%         100%        

      Above Target

       >0%         >100%         

      Above Target

       >10%         >100%        

      Maximum

       100%         200%         

      Maximum

       75%         200%        
      GRAPHICGRAPHIC

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      Annual LTI Awards

              Our NEOs were granted the annual LTI awards shown in the table below in February 2017.2019. The number of awards granted was based on the respective NEO's (i) base salary at year-end 20162018 and (ii) target LTI opportunity, with the number of PUs granted based on a grant date fair value equal to the average closing price for shares of our common stock during the first ten trading days of February 20172019 and the number of MSUs based on a grant date fair value determined by ausing the Monte-Carlo simulation usingmethod described in footnote (2) of the trading days of January 2017.2019 Summary Compensation Table. As a result of these methodologiesthe methodology used to determine grant date fair value, awarded LTI values were slightly exceededlower than target LTI values.

      2017 ANNUAL LTI AWARDS


      NEO

       2016 YE
      BASE SALARY
       TARGET LTI
      OPPORTUNITY
       PUs
      (#)
       PUs
      ($)
       MSUs
      (#)
       MSUs
      ($)
       LTI VALUE

      Butier

       $1,100,000 425% 29,452 $2,526,940 25,574 $2,337,476 $4,864,416

      Lovins(1)

       $412,000 120% 3,114 $267,177 2,705 $247,243 $514,420

      Gravanis(2)

       $542,034 180% 6,147 $496,547 5,337 $487,807 $984,354

      Hill

       $516,548 180% 5,858 $502,608 5,086 $464,872 $967,480

      Miller

       $531,742 180% 6,030 $517,366 5,236 $478,570 $995,936

      Bramman(3)

       $575,025 200% 7,246 $621,697 6,291 $575,015 $1,196,712

      2019 ANNUAL LTI AWARDS
      NEO
      2018 YE
      BASE SALARY

      TARGET LTI
      OPPORTUNITY

      PUs
      (#)

      PUs
      ($)

      MSUs
      (#)

      MSUs
      ($)

      LTI VALUE

      Butier

      $1,133,000475%24,092$2,667,21319,807$2,690,830$5,358,043

      Lovins(1)

      $600,000250%6,715$743,4205,521$750,042$1,493,462

      Miller

      $564,125180%4,545$503,1753,737$507,681$1,010,856

      Stander(2)

      $538,960180%4,509$478,5993,571$485,129$963,728

      Gravanis(3)

      $627,969180%5,254$557,6844,160$565,146$1,122,830
      (1)
      Mr. Lovins' target LTI opportunity reflects his previouswas increased from 200% to 250% of base salary in 2019.
      (2)
      Mr. Stander's target LTI opportunity since his promotionwas increased from 140% to CFO occurred after the February 2017 grant date.180% of base salary in 2019.
      (2)(3)
      Mr. Gravanis' base salary was converted from euros using the exchange rate as of our fiscal year end.
      (3)
      The LTI awards granted to Ms. Bramman were cancelled upon the termination of her employment before our fiscal year-end.

      20172019 VESTING OF PREVIOUSLY GRANTED LTI AWARDS

      2015-2017 MTIP2017-2019 PUs Eligible Forfor Vesting

              The PUs granted to our NEOs in February 20152017 were eligible for vesting at the end of 20172019 based (i) for our corporate NEOs, (excluding Mr. Lovins, who was an LGM employee in February 2015 and received PUs with the same performance criteria as our business NEO), 50% on our total company's cumulative three-year EVA and 50% on our three-year relative TSR compared to a peer group§ of companies determined using the same objective criteria used for the 2017-2019 MTIP and2018-2020 PUs; (ii) for Mr. Lovins and our LGM business NEO, 75% on LGM's cumulative three-year EVA and 25% on our three-year relative TSR. The key goal-setting principle in setting cumulative EVA targets was to be consistent with our long-term financial goals for growth and ROTC, which the Committee believes translate into delivering above-average TSR.

              The target for corporate EVA — cumulative EVA of $446 million — was consistent with our 2014-2018 targets for organic sales growth and operating margin, and recognized that increasing sales and operating margin, together with balance sheet efficiency, are key drivers of EVA improvement. The target was nearly three times higher than our cumulative EVA for the three-year period ending in 2014. EVA required for maximum payout — cumulative EVA of $497 million — was consistent with the high end of our long-term growth and operating margin targets. As shown on the following page, we delivered total company cumulative EVA of over $601 million during the 2015-2017 performance period, resulting in a payout of 200% for the EVA component for our corporate NEOs (excluding Mr. Lovins).

         


      §

      The following companies comprised the peer group for the 2017-2019 PUs at vesting for purposesthe time of the 2015-2017 MTIP: A. Schulman, Inc.;payout: Albermarle Corporation; AptarGroup, Inc.; Ashland Global Holding; Axalta Coating Systems Ltd.; Ball Corporation; Bemis Company, Inc.; Berry Plastics Group, Inc.; Celanese Corporation; The Chemours Company; Clearwater Paper Corporation; Crown Holdings Inc.; Eastman Chemical Company; Ecolab Inc.; Element Solutions Inc. (previously traded as Platform Specialty Products Corporation); Ferro Corporation; FMC Corp;GCP Applied Technologies; Graphic Packaging Holding Company; Greif Inc.; H.B. Fuller Company; Huntsman Corporation; International Flavors & Fragrances Inc.; KapStone Paper and PackagingKraton Corporation; Kraton Performance Polymers Inc.; Minerals Technologies Inc.; NewMarket Corporation; Olin Corp.; Owens-IllinoisO-I Glass, Inc.; Packaging Corporation of America; P.H. Glatfelter Company; PolyOne Corporation; PPG Industries Inc.; RPM International Inc.; Sealed Air Corporation; Sensient Technologies Corporation; Silgan Holdings Inc.; Sonoco Products Company; Stepan Company; The Sherwin-Williams Company; Valhi Inc.; Verso Paper Corporation; and W.R. Grace & Co.
      ; and WestRock Company.

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      on LGM's cumulative three-year EVA and 25% on our three-year relative TSR; and (iii) for our RBIS business NEO, 100% on RBIS' cumulative three-year EVA. The key goal-setting principle in setting cumulative EVA targets was consistency with our 2017-2021 financial goals for growth and ROTC, which the Committee believes translates into delivering above-average TSR.

              The cumulative EVA target of $692 million for our corporate NEOs was consistent with our 2017-2021 targets for organic sales growth and operating margin expansion and recognized that increasing sales and operating margin, together with balance sheet efficiency, are key drivers of EVA improvement.The cumulative EVA target established in February 2017 for our corporate NEOs was approximately 55% higher than the cumulative EVA we achieved for the three-year period ending in 2016. EVA required for maximum payout – cumulative EVA of $774 million – was consistent with the high end of our long-term growth and operating margin targets. As shown below, we delivered cumulative EVA of $890 million for the 2017-2019 performance period, resulting in a payout of 200% for the EVA component for our corporate NEOs.

      2015-2017 MTIP: CORPORATE CUMULATIVE EVA 
      (In millions)  2015  2016  2017  CUMULATIVE 
      Adjusted EBIT(1) $483.6 $586.4 $656.6  
      Taxes(2) $(159.1)$(192.3)$(183.8)   
       $324.5 $394.1 $472.8  
      Capital charge(3) $(182.8)$(185.3)$(221.9)   
      EVA $141.7 $208.8 $250.9 $601.4 

        2017-2019 PUS: CORPORATE CUMULATIVE EVA
        (In millions)  2017  2018  2019  CUMULATIVE EVA  
       Adjusted EBIT(1) $656.6 $713.1 $776.9   
        Taxes(2)  (183.8) (178.3) (191.1)    
       Equity method investment net losses –   (2.0)(2.6)  
           472.8  532.8  583.2     
       Capital charge(3) (221.9)(233.9)(243.0)  
        EVA $250.9 $298.9 $340.2 $890.0  
      (1)
      Adjusted EBIT refers to earnings before interest expense and taxes, excluding non-cash restructuring costs, andas well as other items. Adjusted EBIT includes cash restructuring costs and is a non-GAAP financial measure and is reconciled tofrom GAAP inAppendix A the last section of this proxy statement.
      (2)
      BasedThe GAAP tax rate for 2017, 2018 and 2019 was 52.2%, 15.4% and (22.7)%, respectively. Taxes shown in the table are based on an effectiveadjusted tax rate of 32.9%28.0%, 32.8%25.0% and 28.0%24.6% for fiscal years 2015, 20162017, 2018 and 2017,2019, respectively. The effectiveadjusted tax rate for 2017 represents the full-year GAAP rate, adjusted to includeexclude certain unusual or infrequent events that are expected to significantly impact the impactGAAP tax rate, such as completion of previously planned repatriationour 2017 provisional estimate of foreign earnings for the fourth quarter of 2017 and exclude the impact of the TCJA.Tax Cuts and Jobs Act (TCJA), impacts related to the termination of our U.S. pension plan, and the effects of discrete tax structuring and planning transactions.
      (3)
      8.5% of average invested capital of $2.15$2.61 billion, $2.18$2.75 billion and $2.61$2.86 billion for fiscal years 2015, 20162017, 2018 and 2017,2019, respectively, using an annual five-point average (December of prior year and March, June, September and December of current year) of short- and long-term debt plus equity.

              The cumulative EVA generated by our LGM business also exceeded the target established by the Committee. The payout        Relative TSR for the EVA component for Mr. Lovins and our business NEO was 200%. Due to the competitively sensitive nature of information on business-level EVA, targets and actual results are not disclosed. Information regarding the goal-setting process and rigor of the EVA2017-2019 performance objectives has been included in the discussion of the 2017-2019 MTIP on the previous page.

              TSR for the period was at the 97th percentile of the designated peer group, resulting in a 200% payout for this component for all Current NEOs.

      GRAPHIC


      GRAPHIC

      GRAPHIC

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      MSUs Eligible for Vesting

              Four tranches of MSUs were eligible for vesting at the end of 20172019 based on our absolute TSR for the four-, three-, two-, and one-year performance periods shown below, with the number of shares paid out at vesting determined in accordance with the following formula:

      GRAPHICGRAPHIC

      4TH TRANCHE PAYOUT FOR MSUSOF MSUs GRANTED IN 20142016 3RD TRANCHE PAYOUT FOR MSUSOF MSUs GRANTED IN 20152017
      4-Year performance period: 2014-2017Performance period = 4 years 3-Year performance period: 2015-2017Performance period = 3 years
      2016-2019 Absolute TSR = 136%2017-2019 Absolute TSR = 90%
      Paid out at 200% of target Paid out at 200% of target


      2ND TRANCHE PAYOUT FOR MSUSOF MSUs GRANTED IN 20162018

       

      1ST TRANCHE PAYOUT FOR MSUSOF MSUs GRANTED IN 20172019
      2-Year performance period: 2016-2017Performance period = 2 years 1-Year performance period: 2017Performance period = 1 year
      2018-2019 Absolute TSR = 14%2019 Absolute TSR = 41%
      Paid out at 200%106% of target Paid out at 188%147% of target

      PERQUISITES

              Consistent with market practices, our corporateU.S. NEOs receive the perquisites shown in the chart below. We do not reimburse our NEOs for the tax consequences of their receipt of these perquisites.

      LIMITED PERQUISITES
      PERQUISITE DESCRIPTION AND LIMITATIONS BENEFIT TO STOCKHOLDERS

      Executive Benefit Allowance


      $70,000 for CEO and $65,000 for our other NEOs;NEOs, which has not increased since program inception in 2011; taxable to NEO with no gross-up

       

      Flat allowance reduces expense of administering a variety of separate perquisites

      Financial Planning

       

      Annual reimbursement of up to $25,000 for our CEO and $15,000 for our other NEOs; taxable to NEO with no gross-up

       

      Allows executives to focus on job duties

      Annual Physical Examination

       

      Paid directly to the service provider only to the extent actually used; as such, not taxable to our NEOs

       

      Facilitates maintenance of good overall health by key company leaders

              In 2019, Mr. Gravanis receivesreceived an automobile allowance consistent with customary executive benefit programsbenefits in the Netherlands. He also receives taxable dependent tuition assistance. For more information, see footnote (5) of the20172019 Summary Compensation Table.

      RELOCATION AND OTHER TEMPORARY BENEFITS

              We provide relocation assistance to some of our senior level employees, which may include our NEOs. Mr. LovinsNone of our NEOs received a one-time taxable lump-sum payment of $100,000 as compensation for the expenses associated with traveling from his home to our headquarters; provided, however, that if Mr. Lovins leaves within 12 or 24 months of his appointment date, he is required to repay 100% or 50%, respectively, of this lump-sum payment. If Mr. Lovinsthese benefits in the future utilizes our relocation assistance services on terms and conditions substantially similar to our other relocating executives, this lump-sum amount will be deducted from any benefits provided at that time. In addition, Mr. Lovins received an interim monthly cash stipend and temporary housing assistance during his service as our Interim CFO. For more information, see footnote (5) of the2017 Summary Compensation Table.

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      GENERAL BENEFITS

      Nonqualified Deferred Compensation Benefits

              Our U.S. NEOs are eligible to participate in our nonqualified deferred compensation plan, which allows eligible U.S. employees to defer up to 75% of their base salary and up to 90% of their AIP award. Although we previously allowed deferral of LTI awards, we suspendedended this plan feature in 2015. The plan provides those NEOs and other eligible employees in the U.S. with a long-term capital accumulation opportunity because deferred amounts accumulate on a pre-tax basis. Participating executives may select from a number of investment options.options. Our only deferred compensation plan currently open for deferrals does not offer above-market interest rates.Deferrals are 100% vested.

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              We made an annual contribution in early 2017as of January 1, 2019 to the deferred compensation accounts of our U.S. NEOs of up to 6% offor 401(k) eligible earnings and deferred compensation in 2018 in excess of the Internal Revenue Code of 1986, as amended (the "Code") compensation limit. This annual contribution provided an automatic contribution of 3% of pay and a matching contribution of up to 50% of the first 7% of pay above the Code compensation limit. This benefit wasis designed to supplement 401(k) contributions that are limited under the Code.

              For additional information regarding our deferred compensation plan and accrued NEO benefits thereunder, see20172019 Nonqualified Deferred Compensation inExecutive Compensation Tables.

      Retirement Benefits

              Our U.S. NEOs arehad been eligible for retirement benefits under our now terminated U.S. pension plan and may be eligible for retirement benefits under our benefit restoration plan, a nonqualified excess benefit plan, in each case subject to the same terms and conditions as our other eligible U.S. employees. Because we froze the accrual of benefits under these plans was frozen as of December 31, 2010, none of our eligible NEOs accrued additional retirement benefits during 2017.2019. In addition, we terminated our U.S. pension plan as of September 28, 2018. For additional information regarding these plans and accrued NEO benefits thereunder, see20172019 Pension Benefits inExecutive Compensation Tables. Mr. Gravanis hashad legally mandated retirement benefits in his previous work location of France and his current work location ofat the time he ceased serving as an employee in the Netherlands.

      Defined Contribution Benefits

              Our U.S. NEOs are eligible to participate in our employee savings plan, a qualified 401(k) plan that permits U.S. employees to defer up to 100% of their eligible earnings less payroll deductions to the plan on a pre-tax basis and 25% of their eligible earnings on an after-tax basis, subject to the annual limit prescribed by the Internal Revenue Service (IRS) for the aggregate of company contributions and employee pre- and post-tax contributions. Employee deferrals are immediately vested upon contribution and in 2017contribution. In 2019, we contributed up to 6%6.5% of an employee's eligible compensation, 3% of which was an automatic contribution and up to 3%3.5% of which was a matching contribution of 50% of the employee's contributions up to 6%,7% of pay, subject to the Code limits. For 2018, we increased our matching contribution to 50% of the employee's contributions up to 7%, subject to Code limits.compensation limit. Participants vest in company contributions to their savings plan account after two years of service.

              Employees are immediately eligible to participate in the savings plan, and all our Current NEOs participated in the plan during fiscal year 2017,2019, except for Mr. Gravanis who iswas not a U.S. employee and therefore was therefore ineligible. Our U.S. NEOs participate in these plansthe plan subject to the same eligibility and benefit terms and conditions as our other U.S. employees.

      Life Insurance Benefits

              In addition to the $50,000 in life insurance benefits we provide to all U.S. employees, our U.S. NEOs are provided with supplemental life insurance benefits equal to three times the NEO's base salary less $50,000, up to a maximum coverage amount of $1 million.

      Executive Long-Term Disability Insurance Benefits

              If our U.S. NEOs elect to enroll in executive long-term disability coverage, their long-term disability benefit is equal to 65% of their eligible pre-disability monthly earnings up to a maximum of $25,000 per month. Coverage is available only for the executive; dependents are not covered.

      Personal Excess Liability Insurance Benefits

              We provide $3 million of personal excess liability insurance coverage to our U.S. NEOs. Personal excess liability coverage provides an additional layer of liability coverage that supplements the coverage provided by the individual's personal liability insurance. To receive any benefit from this excess liability insurance, the NEO must maintain certain minimum coverage requirements under his or her personal liability policy.

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      SEVERANCE BENEFITS

              None of our NEOs has an employment contract. The absence of employment contractscontract, and each is employed at-will, which reflects our pay-for-performance philosophy; if an NEO is no longer performing at the expected level, he or she can be terminated immediately without receiving a contractually-guaranteed payment. However, the Committee believes that providing our executives with severance benefits helps ensure that they act in the best interests of our company and stockholders, even if doing so may be contrary to their personal interests, such as where it could lead to the termination of their employment or a change of control of our company. The Committee believes the amount of these benefits and the terms and conditions upon which they are provided are consistent with market practices. Unvested equity awards outstanding on the date of termination are generally cancelled, except for employees who qualify as retirement eligible under the terms of our equity incentive plans, whose awards are accelerated upon termination of service. Mr. Gravanis and Mses. Hill and Miller qualified as retirement eligible as of the end of fiscal year 2017. SeeEquity Incentive Plans following thePayments Upon Termination as of December 30, 2017 table for further information.

              The rightscompensation of our NEOs in the event of termination not for cause are governed by our Amended and Restated Executive Severance Plan (the "Severance Plan") and our Amended and Restated Key Employee Change of Control Severance Plan (the "COC Severance Plan"). We use these plans rather than individually negotiated agreements to provide us with the flexibility to change the severance benefits for which our NEOs are eligible to reflect market practices without the need to obtain their individual consent. In addition, this plan-based approach eliminates the time and expense it would require to individually negotiate separation payments and ensures that our NEOs are eligible for benefits on the same terms and conditions as employees with similar levels of responsibility. Receipt of benefits under these plans is conditioned on the executive signing a waiver and general release of most claims against our company, as well as agreeing to non-competition, non-solicitation, and non-disclosure covenants in favor of our company. Any violation of these covenants could result in our company seeking to recover some or all severance benefits previously paid or pursuing any other claims that may be appropriate under the circumstances.

              Unvested equity awards outstanding on the date of termination are generally cancelled, except for employees who qualify as retirement eligible under the terms of our equity incentive plans, whose awards are accelerated upon termination of service. Mr. Gravanis' severance benefitsGravanis and Ms. Miller qualified as retirement eligible as of the end of fiscal year 2019. As a result, their outstanding PUs and MSUs would also be subject to applicable Dutch labor laws and regulations in effectvest at the time of his separation, and he would receive the greaterend of the amount provided underperformance period on a prorated basis based on our plans and the amount required by those laws and regulations.actual performance.

              For additional information regarding potential NEO benefits under these plans, including the treatment of equity awards under various termination scenarios, seePayments Upon Termination as of December 30, 201728, 2019 inExecutive Compensation Tables.

      Severance Following Involuntary Termination Not for Cause

              Our NEOs are eligible to receive severance benefits upon involuntary termination not for "cause," in accordance with the terms and conditions of the Severance Plan. In the event of a qualifying termination, our CEO currently would be eligible to receive two times the sum of his annual salary, his highest AIP award received infor the preceding three years and the cash value of 12 months of his qualified medical and dental insurance premiums; our other NEOs currently would be eligible to receive one times his or her respective sum of these amounts. All NEOs currently would also be eligible to receive up to $25,000 in outplacement services for up to one year following termination of employment. Any payments made under the Severance Plan would be offset by any payments received by the NEO under any statutory, legislative and regulatory requirement or, if applicable, the COC Severance Plan.

              In connection with her separation from our companyFebruary 2020, the Committee amended and in accordance withrestated the terms and conditionsSeverance Plan, effective July 1, 2020, to provide that the AIP award portion of the Severance Plan Ms. Bramman received severance benefits of $1,223,313 in 2017, which included (i) $575,025, her annual base salary as of her termination date; (ii) $633,965, herpayment be changed from the highest AIP award inreceived for the lastpreceding three years; and (iii) $14,323,years to the cash valuetarget AIP award for the year of twelve months of premiums for qualified medical and dental plans in which she participated as of her termination date. In consideration of her receipt of these benefits, Ms. Bramman agreed to a waiver and release of any claims against our company and to non-competition, non-solicitation and non-disclosure covenants in favor of our company. All unvested equity awards held by Ms. Bramman on the date of her termination of employment were cancelled.termination.

      Severance Following Change of Control

              Our NEOs are eligible for severance payments upon termination not for "cause" or by the executive for "good reason" within 24 months of a "change of control" of our company, in accordance with the terms and conditions of the

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      COC Severance Plan. In the event of a qualifying termination following a change of control, our CEO currently would be eligible to receive three times the sum of his annual salary, his highest AIP award received infor the preceding three years, and the cash value of 12 months of his qualified medical and dental insurance premiums; our other NEOs currently would be eligible to receive two times his or her respective sum of these amounts. Our NEOs would also be eligible to receive a pro-ratapro rata AIP award for the year of termination and up to $25,000 in outplacement services for up to one year following termination of employment. Any payments under the COC Severance Plan would be offset by any payments received by the NEO under the Severance Plan and any other statutory, legislative and regulatory requirement.

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              In February 2020, the Committee amended and restated the COC Severance Plan, effective July 1, 2020, to provide that the AIP award portion of the COC Severance Plan be changed from the highest AIP award received for the preceding three years to the target AIP award for the year of termination.

              Under our equity incentive plans, unvested equity awards granted to our NEOs would generally vest only if the NEO is terminated without "cause" or resigns for "good reason" within 24 months after the change of control. Outstanding PUs and MSUs granted beginning in 2018 vest based on actual performance, if determinable, and otherwise based on target performance.

              Our NEOs are not eligible to receive any excise tax gross-up on amounts payable under the COC Severance Plan. However, ifIf an NEO would otherwise incur excise taxes under Section 4999 of the Code, payments under the COC Severance Plan maywill be reduced at the participating NEO's election so that no excise taxes would be due.due if the reduction results in a greater after-tax benefit to the NEO.

      COMPENSATION-SETTING TOOLS

      MARKET SURVEY DATA

              The Committee annually considers market survey data to target TDC, looking at a cross section of U.S.market capitalization peer companies to reflect the broad talent market across which we seek our executives. The Committee reviews results from surveys prepared bya third partiesparty survey to understand market compensation practices and assess our competitiveness, narrowing the scope of the results to account for variations caused by company size.

              In February 2017,2019, the Committee was presented with industry-wide data from the following published compensation surveys, with executive matches based on job and functional responsibility: (i) the most recent Willis Towers Watson U.S. Compensation General Industry Database, comprised of data, including annual revenues, from 360 participants and (ii) the most recent Hewitt Total Compensation Measurement Survey, which was narrowed in scope to focus on the data of the 6352 participants with $5$6 billion to $10 billion in annual revenues.revenue. The Committee reviewed the data from each surveywith executive matches based on job and functional responsibility on an aggregated basis, with no consideration of eitherthe survey's respective component companies, which were not determined or known by the Committee.

              The Committee uses the survey data as a reference point to target TDC and the components thereof at the market median, giving consideration to responsibilities, individual performance, tenure, retention and succession.

      PEER GROUPS

              For determining our relative TSR for purposes of vesting 2017-2019 PUs and granted under the 2015-2017 MTIP and 2017-2019 MTIP,2019-2021 PUs, the Committee used a peer group comprised of U.S. companies satisfying objective criteria for industry classification and revenue size, the names of which have beenare disclosed in this CD&A. The Committee does not utilize a peer group for any other purpose.

      TALLY SHEETS

              The Committee annually reviews tally sheets that reflect the components of each NEO's compensation. The tally sheets reviewed in 2017February 2020 included the following information for 2015, 2016 and 2017:

        Compensation history, including annual cash compensation (base salary and AIP awards), LTI awards, valueeach of vested LTI awards, and annualized cost of benefits and perquisites;

        The expected value of annual compensation for the year, including base salary, AIP award andmost recent up to three fiscal years in which the grant date fair value of LTI awards;

        Accumulated value of compensation, including total accumulated value of LTI awards and accumulated benefit values under our retirement and deferred compensation plans;

        Potential payments under various termination scenarios; and

        Compliance with our stock ownership guidelines.
      individual was an NEO:

      Compensation history, including annual cash compensation (base salary and AIP awards), LTI awards, value of vested LTI awards, and annualized cost of benefits and perquisites;

      The expected value of annual compensation for the year, including base salary, AIP award and the grant date fair value of LTI awards;

      Accumulated value of compensation, including total accumulated value of LTI awards and accumulated benefit values under our retirement and deferred compensation plans;

      Potential payments under various termination scenarios; and

      Compliance with our stock ownership policy.

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              The Committee believes that reviewing tally sheets is useful in determining executive compensation because they provide a historical perspective on NEO compensation and include information that will be contained in our proxy statement.

      INDEPENDENT OVERSIGHT AND EXPERTISE

              Our Board believes that hiring and retaining effective executives and providing them with market-competitive compensation are essential to the success of our company and advance the interests of our stockholders. The Committee, which is comprised solely of independent directors, is responsible for overseeing our executive compensation program. The Committee may delegate authority to subcommittees or, in certain limited circumstances not related to the compensation of our executive officers, to our CEO.

              Under its charter, the Committee has the authority, in its sole discretion and at our expense, to obtain advice and assistance from external advisors. The Committee may retain and terminate any compensation consultant or other external advisor and has sole authority to approve the advisor's fees and other terms and conditions of the retention. In retaining its advisors, the Committee must consider each advisor's independence from management, as required by NYSE listing standards.

              During 2017,2019, the Committee retained Willis Towers Watson as its independent compensation consultant and the firm performed the following services for the Committee:

      WILLIS TOWERS WATSON 20172019 SERVICES
      Assisted with setting the target TDC for our CEO, both for 2019 and potential changes in approach going forward
      Evaluated proxy advisory firms' pay-for-performance analyses
      Assessed our non-employee director compensation program
      Commented on our 20172019 CD&A
      RecommendedProvided incentive compensation advice (including analyzing the performance of our AIP payouts, evaluating global long-term incentives, and recommending the relative TSR peer group for the PUs granted in 20172019)
      Provided guidance on the impact of the TCJA on executive compensation
      Reviewed the appropriateness of our executive compensation benchmarking methodologyperquisites
      Conducted analyses of the share utilization and stockholder value transfer related to our LTI compensation
      Reported on U.S. investor areas of focus related to executive compensation and HCM matters
      Assessed and recommended changes to our non-employee director compensation program
      Prepared for, attended and reviewed documentation for Committee meetings
      Provided guidance to management on performing the analysis to support our 2018 CEO pay ratio disclosure

              In 2017,2019, Willis Towers Watson received $139,873$255,355 in compensation from our company for professional services directly performed for or at the request of the Committee. We also reimbursed the firm for its reasonable expenses.

              The Committee conducted its annual assessment of Willis Towers Watson's performance in December 2017,2019, which included a review of the services provided during the year, the fees paid therefor and the following additional evaluation criteria:

        Experience – The firm's depth and breadth of executive compensation knowledge and experience; qualification as a board-level consultant; quality of staff, data, and other resources; and understanding of our business strategy and challenges, industry, performance drivers and HCM considerations;

        Independence –The firm's objectivity in giving advice and making recommendations, and its willingness to provide candid feedback regarding management and Committee proposals, questions and concerns;

        Preparation – The quality and timeliness of the firm's reports (in accuracy, type and amount of information, clear communication and responsiveness to issues); its review and feedback on management proposals, and the firm's preparation with the Committee Chair and our management, as appropriate; and

        Committee Relationship – The accessibility and availability of members of the engagement team; the firm's reporting relationship with the Committee Chair and its working relationship with our human resources team; and the effectiveness of its communication.

        Experience

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        Table of executive compensation knowledge and experience; quality of staff, data, and other resources; and understanding of our business strategy and issues, industry, performance drivers and human capital considerations;Contents

        Independence —The firm's objectivity in giving advice and making recommendations, and its willingness to provide candid feedback regarding management and Committee proposals, questions and concerns;

        Preparation — The quality and timeliness of the firm's reports and its review and feedback on management proposals, and the firm's preparation with the Committee Chair and our management, as appropriate; and

        Committee Relationship —The accessibility and availability of members of the engagement team; the firm's relationship with the Committee Chair and our human resources staff; and the effectiveness of its communication.

              Based on this assessment, the Committee determined that it continued to bewas satisfied with the performance of Willis Towers Watson and the individual members of the engagement team serving the Committee.

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      ADVISOR INDEPENDENCE

              Willis Towers Watson and the Committee have had the following protocols in place since the engagement commenced to ensure the firm's independence from management:the Committee has the sole authority to select, retain and terminate Willis Towers Watson, as well as authorize the firm's fees and determine the other terms and conditions that govern the engagement;engagement; the Committee directs Willis Towers Watson on the process for delivery and communication of its work product, including its analyses, findings, conclusions and recommendations;in the performance and evaluation of its duties, Willis Towers Watson is accountable, and reports directly, to the Committee;Committee; and the Committee may consult with Willis Towers Watson at any time, with or without members of management present, at the Committee's sole discretion.

              As required by SEC regulations and NYSE listing standards, the Committee considered the independence of its advisors in December 2017.2019. The Committee reviewed information provided by Willis Towers Watson, members of the Committee and our executive officers related to the following factors:

        Other services provided to our company —During fiscal year 2017, Willis Towers Watson performed no services for our company other than executive compensation consulting services;

        Fees paid by our company as a percentage of the firm's total revenue —Fees from our company reflected approximately 0.002% of Willis Towers Watson's revenue for its fiscal year ended December 31, 2017;

        Policies and procedures maintained to prevent or mitigate conflicts of interest —Willis Towers Watson has multiple such policies and procedures, including a comprehensive code of conduct and ethics and quality policies that mandate rigorous work reviews and periodic compliance reviews, which the firm has represented to the Committee are highly effective;

        Business or personal relationships with members of the Committee —Based on disclosures from Willis Towers Watson and members of the Committee, we are aware of no such business or personal relationships;

        Company stock owned by Willis Towers Watson firm representatives —No members of the Willis Towers Watson team serving the Committee own any stock in our company, other than perhaps through investments in mutual or other funds managed without the member's input; and

        Business or personal relationships with any executive officer of our company — Based on disclosures from the firm and our executive officers, we are aware of no business or personal relationships with Willis Towers Watson or the members of the engagement team advising the Committee.

      Other services provided to our company – During fiscal year 2019, Willis Towers Watson performed no services for our company other than executive compensation services performed at the request of the Committee;

      Fees paid by our company as a percentage of the firm's total revenue – Fees from our company reflected approximately 0.001% of Willis Towers Watson's revenue for its fiscal year ended December 31, 2019;

      Policies and procedures maintained to prevent or mitigate conflicts of interest – Willis Towers Watson has several policies and procedures to ensure its advice is objective and independent, including a comprehensive code of conduct and ethics and quality policies that mandate rigorous work reviews and periodic compliance reviews, which the firm has represented to the Committee are highly effective;

      Business or personal relationships with members of the Committee – Based on disclosures from Willis Towers Watson and members of the Committee, we are aware of no such business or personal relationships;

      Company stock owned by Willis Towers Watson firm representatives – No members of the Willis Towers Watson team serving the Committee own any stock in our company, other than potentially through investments in mutual or other funds managed without the member's input; and

      Business or personal relationships with any executive officer of our company – Based on disclosures from the firm and our executive officers, we are aware of no business or personal relationships with Willis Towers Watson or the members of the engagement team advising the Committee.

              The Committee affirmatively determined Willis Towers Watson to be independent and both the firm and the members of the engagement team advising the Committee to be free of any conflicts of interest.

      OTHER CONSIDERATIONS

      CLAWBACK POLICY

              In the event of fraud or other intentional misconduct on the part of an NEO that necessitates a restatement of our financial results (including, without limitation, any accounting restatement due to material noncompliance with any financial reporting requirement), the NEO would be required to reimburse our company for any AIP or LTI awards paid or granted in excess of the amount that would have been paid or granted based on the restated financial results. These remedies would be in addition to, not instead of, any other actions taken by our company (through the imposition of any discipline up to and including termination), law enforcement agencies, regulators or other authorities. This clawback policy has been contractually acknowledged by our NEOs upon the execution of their LTI award agreements since 2010.

              The Committee first approved our clawback policy in 2009 to subject incentive compensation to forfeiture if our financial results are not achieved consistent with our high ethical standards. This policy is expressly incorporated into our AIP and LTI plans. The Committee anticipates that it will revise the policy if and as necessary to comply with final rules issued by the SEC.

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      TAX IMPLICATIONS OF EXECUTIVE COMPENSATION

              The Committee aims to compensate our NEOs in a manner that is tax effective for our company. However, the Committee may adopt or implement compensation programs and/or practices that are not fully tax deductible to the extent it believes doing so is in the best interests of our company and stockholders.

      Section 162(m) of the Code

              UnderPrior to the enactment of the TCJA, Section 162(m) of the Code ("Section 162(m)") as in effect for fiscal year 2017,generally limited our federal income tax deductions for executive compensation in any fiscal year 2017 were limited to the extent total compensation for certain executive officers exceeded $1 million in any onesuch year, unless it qualified as "performance-based." To qualify as performance-based under Section 162(m) as in effect for fiscal year 2017, compensation must, among other things, be based solely upon the achievement of objective performance goals and made under a plan that is administered by a compensation committee comprised solely of "outside directors." In addition, the material terms of the plan must be disclosed to and approved by our stockholders and the Committee must certify that the performance goals were achieved before payments can be made.

              Our Senior Executive Annual Incentive Plan is designed in a manner intended to comply with the provisions of Section 162(m) as in effect for fiscal year 2017 and was last approved by our stockholders in 2014, which constituted approval of the performance-based criteria contained therein. Under the plan, our NEOs are eligible to receive a maximum annual cash incentive award based on a specified percentage of our gross profit less marketing, general and administrative expenses, in each case as reported on our consolidated statement of operations for the applicable fiscal year. The Committee annually reviews the maximum plan awards and may exercise its discretion to decrease, but not increase, such awards. The AIP awards granted to our NEOs in 2017 were substantially below the maximum amounts calculated under the Senior Executive Annual Incentive Plan. In addition to the Senior Executive Annual Incentive Plan, we have designed certain of our other compensation programs in a manner intended to comply with Section 162(m) as in effect for fiscal year 2017 so that total compensation paid to any employee covered by Section 162(m) generally should not, unless otherwise determined appropriate, exceed $1 million in any one year, except for compensation payments that qualify as "performance-based."

              Tax law changes resulting from the TCJA could impact our future pay practices, as executive compensation paid to certain executive officers (including our CFO, whose compensation was not previously subject to Section 162(m)) exceeding $1 million in any tax year beginning after December 31, 2017 is generally no longer deductible under Section 162(m). Pursuant to the TCJA, the exception for "performance-based" compensation described above was repealed effective for taxFor taxable years beginning after December 31, 2017, the TCJA amended Section 162(m) by, among other things, expanding the scope of executive officers covered by Section 162(m) and therefore,eliminating the exception for "performance-based" compensation. As a result, compensation previously intendedin excess of $1 million paid to be "performance-based" maycovered executive officers generally will not be deductible, unless it qualifies for limited transition relief applicable to certain remunerationunder the TCJA. To qualify for transition relief, compensation must, among other things, be payable pursuant to a written binding contract that was in effect on November 2, 2017.2017 and not subsequently modified in any material respect.

              DueWhile in the past we have structured certain of our incentive compensation in a manner intended to be tax-deductible for purposes of Section 162(m), due to the TCJA and the uncertainties in the applicationsapplication of Section 162(m) andas amended by the TCJA, there is no guarantee that deductions claimed under Section 162(m) will not be challenged or disallowed by the IRS and our ability to deduct compensation under Section 162(m) may be restricted. Furthermore, although the Committee believes that the deductibility of executive compensation is an important consideration and may continue to consider the effects of the TCJA on our future pay practices, it reserves the right to approve and pay executive compensation arrangements that are not fully tax deductible, and/or modify compensation programs and practices without regard forto tax deductibility, if we believeit believes that doing so is in the best interests of our company and stockholders.

      Section 409A of the Code

              Nonqualified deferred compensation must be deferred and paid under plans or arrangements that satisfy the requirements of Section 409A of the Code with respect to the timing of deferral elections and payments and certain other matters. Failure to satisfy these requirements could expose individuals to accelerated income tax liabilities, penalty taxes and interest on their compensation deferred under these plans. As a general matter, we design and administer our compensation and benefit plans and arrangements in a manner intended to cause suchthese plans and arrangements to be either exempt from, or satisfy the requirements of, Section 409A of the Code.

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      EXECUTIVE COMPENSATION TABLES

      20172019 SUMMARY COMPENSATION TABLE

              The table below shows the compensation earned by or awarded to our NEOs during fiscal years 2017, 20162019, 2018 and 20152017 in accordance with SEC regulations. Compensation as shown in the table does not reflect the compensation actually realized by our NEOs for these years. For example, the amounts set forth under "Stock Awards" do not represent amounts realized by our NEOs; rather, they represent the aggregate grant date fair value for financial reporting purposes of PUs (which are subject to ourthe achievement of cumulative EVA and relative TSR performance objectives measured at the end of a three-year period and may result in no such compensation ultimately being realized by our NEOs) and MSUs (which are subject to cancellationforfeiture in the event our absolute TSR declines more than 15% over one-, two-, three- andor four-year performance periods).

      NAME AND
      PRINCIPAL POSITION

      YEAR
      SALARY(1)
      BONUS
      STOCK
      AWARDS(2)

      OPTION
      AWARDS

      NON-EQUITY
      INCENTIVE PLAN
      COMPENSATION(3)

      CHANGE IN
      PENSION VALUE
      AND NQDC
      EARNINGS(4)

      ALL OTHER
      COMPENSATION(5)

      TOTAL
      Mitchell R. Butier         

      President &

      2017$1,124,750$4,864,416$2,407,625$344,240$218,437$8,959,468

      Chief Executive Officer

      2016$988,333$4,694,582$2,000,008$1,832,620$170,266$152,978$9,838,787
       2015$761,250$4,579,014$1,058,569$160,240$6,559,073
      Gregory S. Lovins(6)         

      Senior Vice President &

      2017$480,949$100,000$1,038,782$467,500$89,626$283,905$2,460,762

      Chief Financial Officer

               
      Georges Gravanis(7)         

      President,

      2017$618,551$984,354$598,737$50,267$2,251,909

      Label and Graphic

      2016$523,775$925,850$682,964$403,353$2,535,942

      Materials

      2015$440,528$1,420,555$413,304$461,401$2,735,788
      Anne Hill         

      Senior Vice President &

      2017$528,171$967,480$542,686$34,654$141,413$2,214,404

      Chief Human Resources

      2016$512,787$963,150$455,596$39,999$131,318$2,102,850

      Officer

      2015$499,045$1,215,025$425,626$141,937$2,281,633
      Susan C. Miller         

      Senior Vice President,

      2017$543,706$995,936$558,647$1,307,825$141,896$3,548,010

      General Counsel &

      2016$527,870$991,532$468,996$331,781$126,461$2,446,640

      Secretary

      2015$513,723$1,058,267$419,095$74,010$137,574$2,202,669
      Anne L. Bramman         

      Former Senior Vice

      2017$241,772$1,196,712$65,236$1,322,136$2,825,856

      President &

      2016$568,769$1,173,635$633,965$3,656$120, 421$2,500,446

      Chief Financial Officer

      2015$425,868$200,000$1,426,135$405,900$329,572$2,787,475

      NAME AND
      PRINCIPAL POSITION

      YEAR
      SALARY(1)
      BONUS
      STOCK
      AWARDS(2)

      NON-EQUITY
      INCENTIVE PLAN
      COMPENSATION(3)

      CHANGE IN
      PENSION VALUE
      AND NQDC
      EARNINGS(4)

      ALL OTHER
      COMPENSATION(5)

      TOTAL

      Mitchell R. Butier

              

      Chairman, President &

      2019$1,133,000$5,358,043$1,288,788$508,024$207,177$8,495,032

      Chief Executive Officer

      2018$1,133,000$5,580,651$1,741,988$0$254,058$8,709,697
       2017$1,124,750$4,864,416$2,407,625$344,240$218,437$8,959,468

      Gregory S. Lovins

              

      Senior Vice President &

      2019$613,500$1,493,462$421,785$81,676$126,425$2,736,848

      Chief Financial Officer

      2018$587,500$1,140,762$553,500$0$123,963$2,405,725
       2017$480,949$100,000$1,038,782$467,500$89,626$283,905$2,460,762

      Susan C. Miller

              

      Senior Vice President,

      2019$576,817$1,010,856$317,252$1,070,207$148,872$3,124,004

      General Counsel &

      2018$560,017$1,022,200$416,324$0$147,356$2,145,897

      Secretary

      2017$543,706$995,936$558,647$1,307,825$141,896$3,548,010

      Deon M. Stander(6)

              

      Vice President &

      2019$551,086$963,728$363,887$105,550$143,172$2,127,423

      General Manager, RBIS

      2018$535,290$750,000$870,212$388,051$0$98,242$2,641,795

      Georges Gravanis(7)

              

      Former President, LGM

      2019$653,884$1,122,830$356,980$24,889$2,158,583
       2018$651,785$1,145,707$546,333$26,640$2,370,465
       2017$618,551$984,354$598,737$50,267$2,251,909
      (1)
      Amounts include any portions of salary contributed to our employee savings plan or deferred under our deferred compensation plan. Changes in base salary approved by the Compensation Committee becomefor 2019 became effective on April 1st. of that year. Mr. Lovins' baseButier's salary alsowas not increased in connection with his promotion to CFO effective July 2017.2019 for the reasons described in theCompensation Discussion and Analysis section of this proxy statement.

      (2)
      Amounts reflect the aggregate grant date fair value of stock awards, without adjustment for forfeitures,PUs and MSUs granted in 2019 and do not reflect compensation actually realized by our NEOs.NEOs in that year. For values actually realized by our NEOs from the vesting of PUs and MSUs during the year, see the "Value Realized on Vesting" column of the20172019 Option Exercises and Stock Vested table.

      Amounts in 20172019 include the grant date fair value of PUs, without adjustment for forfeitures, which are payablepaid out in shares of our common stock at the end of a three-year period provided that the designated performance objectives.objectives are achieved at the end of the period. The actual number of shares issuedpaid out at vesting can range from 0% to 200% of the target shares at the time of grant. The performance objectives that determine the number of shares that may be earned for the PUs granted in 20172019 were (i) cumulative EVA (weighted 50% based on our total company for our corporate NEOs and 75% based on our LGMtheir respective business for our business NEO)NEOs), which is a performance condition under Accounting Standards Codification Topic 718,Compensation-Stock Compensation (ASC 718), and (ii) company relative TSR (weighted 50% for our corporate NEOs and 25% for our business NEO)NEOs), which is a market condition under ASC 718, compared to the TSR of a peer group of companies objectively determined based on GICS code and revenue size, which is a market condition under ASC 718, in each case computed over the three-year (2017-2019)(2019-2021) performance period. The performance condition component of the fair value of PUs was determined based on the fair market value of our common stock on the date of grant adjusted for foregone dividends.date. The maximum grant date fair valuevalues of the performance condition component of PUs was $2,231,201, $235,908were $2,643,588, $736,764, $714,753, and $698,481$832,758 for Messrs. Butier, Lovins, Stander, and Gravanis, respectively, and $443,786, $456,816 and $548,937$498,717 for Mses. Hill, Miller and Bramman, respectively.Ms. Miller. The market condition component of the fair value of PUs was determined as of the date of grant using the Monte-Carlo simulation method, which utilizes multiple input variables to estimate the probability of meeting the performance objectives established for the award, including the expected volatility of our stock price relative to the group of peer companies listed on page 56 of this proxy statement at the end of the three-year performance period and other assumptions appropriatea risk-free interest rate of 2.48% derived from linear interpolation of the term structure of Treasury Constant Maturities yield rates for determining fair value;the performance period; as such, their maximum grant date fair values were the same as their target grant date fair values included in the table. Based on the Monte-Carlo simulation method, the grant date fair value of the market condition component of the PUs was 111.98% of our closing stock price on the grant date. The grant date fair values of the market condition component of the PUs were $1,345,419, $375,038, $121,222, and $141,305 for Messrs. Butier, Lovins, Stander, and Gravanis, respectively, and $253,816 for Ms. Miller.

      Amounts in 2019 also include the grant date fair value of MSUs, which are paid out in shares of our common stock over one-, two-, three- and four-year performance periods provided that the designated performance objectives are achieved as of the end of each period. The number of shares paid out at vesting can range from 0% to 200% of the target shares on the grant date. The single performance objective that determines the number of units that may be paid out for MSUs is our absolute TSR, which is a market condition under ASC 718; as such, their maximum grant date fair values were the same as their target grant date fair values shown in the table. The grant date fair value of the market condition componentMSUs of the PUs$135.85 in 2019 for all NEOs, which was $1,411,340, $149,223 and $147,306 for Messrs. Butier, Lovins and Gravanis, respectively, and $280,715, $288,958 and $347,228 for Mses. Hill, Miller and Bramman, respectively. The PUs granted to Ms. Bramman were cancelled upon the termination of her employment before the end125.74% of our 2017 fiscal year.

      Amounts in 2017 also includeclosing stock price on the grant date, fair valuewas determined using the Monte-Carlo simulation method, which utilizes multiple input variables to estimate the probability of MSUs, without adjustmentmeeting the performance objectives established for forfeitures, which are payable in sharesthe award, including the expected volatility of our common stock price over one-, two-, three- and four-year performance periods provided thatand risk-free interest rates of 2.55%, 2.52%, 2.48% and 2.48% for the first, second, third and fourth MSU tranches, respectively, derived from linear interpolation of the term structure of Treasury Constant Maturities yield rates for the performance objective is achieved as of the end of each period. The actual number of shares issued can range from 0% to 200% of the target shares at the time of grant. The single performance objective that determines the number of units that may be earned for MSUs was our absolute TSR, which is a market condition under ASC 718; as such, their maximum grant date fair values are the same as their target grant date fair values shown in the table. The fair value of MSUs was determined as of the grant date using the Monte-Carlo simulation method described above. The grant date fair value of the 2017 MSUs was $91.40 per share for all NEOs. The MSUs granted to Ms. Bramman were cancelled upon the termination of her employment before the end of our 2017 fiscal year.

      Amount in 2017 for Mr. Lovins also includes the grant date fair value of RSUs, without adjustment for forfeitures, granted to him in connection with his promotion to CFO, which vest ratably over four years, subject to his continued service. The fair value of these RSUs was determined based on the closing price of our common stock on the grant date, adjusted for foregone dividends. The grant date fair value of these RSUs was $90.22 per share.periods.

      Avery Dennison Corporation| 2018 Proxy Statement |67


      Table of Contents

      (3)
      Amounts reflect cash AIP awards under our AIP for the applicable year, which are determined in February and paid in March of the following year.

      (4)
      Accumulated retirement benefits under our pension plan and benefit restoration plan, as applicable, were frozen effective December 31, 2010. Changes in pension values are based primarily on changes in the actuarial assumptions used to calculate pension amounts in accordance with SEC regulations, rather than changes in benefits or the amount the individual will actually receive upon retirement. Mr. Gravanis and Ms. Bramman werewas not eligible to participate in these plans.

      66    2020 Proxy Statement  |Avery Dennison Corporation


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      (5)
      The table shown below shows the components of the amounts for 2017.2019.
       
      PERQUISITESBENEFITS 

      PERQUISITES
      BENEFITS
       
      NAME
      EXECUTIVE
      BENEFIT
      ALLOWANCE

      FINANCIAL
      PLANNING

      OTHER*
      COMPANY
      CONTRIBUTION
      AND MATCH,
      EMPLOYEE
      SAVINGS PLAN

      COMPANY
      CONTRIBUTIONS,
      DEFERRED
      COMP. PLAN

      EXCESS
      LIFE
      INSURANCE

      EXECUTIVE
      LONG-TERM
      DISABILITY
      INSURANCE

      EXECUTIVE
      LIABILITY
      INSURANCE

      EXECUTIVE
      SEVERANCE
      PLAN**

      TOTAL

      Butier

      $70,000$20,515

      $16,200$106,974$1,944$2,331$473



      $218,437        NAME
      Executive
      Benefit
      Allowance

      Financial
      Planning

      Other*
      Company
      Contribution
      and Match,
      Employee
      Savings Plan

      Company
      Contributions,
      Deferred
      Comp. Plan

      Excess
      Life
      Insurance

      Executive
      Long-Term
      Disability
      Insurance

      Executive
      Group
      Term Life
      Insurance

      Excess
      Executive
      Liability
      Insurance

      TOTAL

      Lovins

      $51,458$166,735$16,200$44,764$1,944$2,331$473$283,905

      Gravanis









      $50,267























      $50,267

      Butier

      $70,000



      $4,382$18,575$106,936$1,944$2,700$1,800$840$207,177

      Hill

      $65,000$15,000$16,200$40,465$1,944$2,331$473$141,413

      Lovins

      $65,000$3,478$18,200$32,463$1,944$2,700$1,800$840$126,425

      Miller

      $65,000$15,000

      $16,200$40,948$1,944$2,331$473



      $141,896

      Miller

      $65,000$15,000



      $18,200$37,268$1,944$2,700$7,920$840$148,872

      Bramman

      $29,792$8,068$16,381$42,604$810$971$197$1,223,313$1,322,136

      Stander

      $61,250$18,200$55,478$1,944$2,700$2,760$840$143,172

      Gravanis









      $22,138















      $2,751



      $24,889
      ​​​​​​​​​​​​​​​​​​​​

        *
        AmountAmounts for Mr.Messrs. Butier and Lovins reflects (i) a one-time taxable lump-sum payment of $100,000 as compensationreflect payments for the expenses associated with traveling from his home in Ohio to our headquarters; provided, however, that if Mr. Lovins leaves within 12 or 24 months of his appointment date, he is required to repay 100% or 50%, respectively, of this lump-sum payment; (ii) $38,000 for the interim cash stipend of $10,000 per month he received during his service as our Interim CFO; and (iii) $28,735 in temporary housing assistance during his service as our Interim CFO and as our Treasurer. If Mr. Lovins in the future utilizes our relocation assistance services on the terms and conditions offered to our relocating executives, the lump-sum payment he received will be deducted from any benefits provided at that time.their executive physical examinations. Amount for Mr. Gravanis reflects (i) $22,199 for anhis automobile allowance, and (ii) $28,068 for taxable dependent tuition assistance, in each case converted from euros using the exchange rates as of each month-end during 2017.2019.

        **
        Amount for Ms. Bramman reflects severance benefits related to her separation from our company in accordance with the terms and conditions of our Executive Severance Plan, representing the sum of (i) $575,025, her annual base salary as of her termination date; (ii) $633,965, her highest AIP award in the last three years; and (iii) $14,323, the cash value of twelve months of premiums for qualified medical and dental plans in which she participated as of her termination date. In consideration of her receipt of these benefits, Ms. Bramman agreed to a waiver and release of any claims against our company and to non-competition, non-solicitation and non-disclosure covenants in favor of our company.

      (6)
      Mr. LovinsStander first became an NEO in 2017.2018. As permitted by SEC rules, the table shows his compensation beginning in the year in which he became an NEO.

      (7)
      Amounts for Mr. Gravanis were converted from euros using the average exchange rate as of our fiscal year-end (1.1738467)for the 12 months in 2019 (1.11998950), except for amounts forAll Other Compensation described in footnote (5) above.

      Avery Dennison Corporation| 2018 Proxy Statement |68


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      20172019 GRANTS OF PLAN-BASED AWARDS

              The table below provides information regarding grants of plan-based incentive awards made to our NEOs during 2017.2019.

       
       
       
       
       
       
       
       
       
      ALL OTHER
      STOCK
      AWARDS:
      NUMBER OF
      SHARES OF
      STOCK
      UNITS(#)

       
       
       
       
      ESTIMATED FUTURE PAYOUTS
      UNDER NON-EQUITY
      INCENTIVE PLAN AWARDS ($)(1)
      ESTIMATED FUTURE PAYOUTS
      UNDER EQUITY
      INCENTIVE PLAN AWARDS (#)(2)
       
       
       
       
      GRANT DATE
      FAIR VALUE
      OF STOCK
      AND OPTION
      AWARDS ($)(3)

      NAME
      AWARD
      TYPE

      GRANT
      DATE

      THRESHOLD
      TARGET
      MAXIMUM
      THRESHOLD
      TARGET
      MAXIMUM

      Mitchell R. Butier

                

      MSUs02/23/1721,73825,57451,148$2,337,476

      PUs02/23/1714,72629,45258,904$2,526,940

      AIP Award$708,125$1,416,250$2,832,500

      Gregory S. Lovins(1)

                

      MSUs02/23/172,2992,7055,410$247,243

      PUs02/23/171,5573,1146,228$267,177

      RSUs09/01/175,812$524,363

      AIP Award$137,500$275,000$550,000

      Georges Gravanis

                

      MSUs02/23/174,5365,33710,674$487,807

      PUs02/23/173,0746,14712,294$496,547

      AIP Award$235,723$471,446$942,892

      Anne Hill

                

      MSUs02/23/174,3235,08610,172$464,872

      PUs02/23/172,9295,85811,716$502,608

      AIP Award$159,614$319,227$638,454

      Susan C. Miller

                

      MSUs02/23/174,4515,23610,472$478,570

      PUs02/23/173,0156,03012,060$517,366

      AIP Award$164,308$328,616$657,232

      Anne L. Bramman

                

      MSUs02/23/175,3476,29112,582$575,015

      PUs02/23/173,6237,24614,492$621,697

      AIP Award$215,635$431,269$862,538

        ESTIMATED FUTURE PAYOUTS
      UNDER NON-EQUITY
      INCENTIVE PLAN AWARDS ($)(1)
      ESTIMATED FUTURE PAYOUTS
      UNDER EQUITY
      INCENTIVE PLAN AWARDS (#)(2)
      ALL OTHER
      STOCK
      AWARDS:
      NUMBER OF
      SHARES OF
      GRANT DATE
      FAIR VALUE
      OF STOCK
      NAME
      AWARD
      TYPE

      GRANT
      DATE

      THRESHOLD
      TARGET
      MAXIMUM
      THRESHOLD
      TARGET
      MAXIMUM
      STOCK
      UNITS(#)

      AND OPTION
      AWARDS ($)(3)

      Mitchell R. Butier

                

      MSUs02/28/1916,83619,80739,614$2,690,830

      PUs02/28/1912,04624,09248,184$2,667,213

      AIP Award$708,125$1,416,250$2,832,500

      Gregory S. Lovins

                

      MSUs


      02/28/19


      4,693

      5,521

      11,042



      $

      750,042

      PUs02/28/193,3586,71513,430$743,420

      AIP Award$231,750$463,500$927,000

      Susan C. Miller

                

      MSUs02/28/193,1763,7377,474$507,681

      PUs02/28/192,2734,5459,090$503,175

      AIP Award$174,314$348,629$697,258

      Deon M. Stander

                

      MSUs02/28/193,0353,5717,142$485,129

      PUs02/28/192,2554,5099,018$478,599

      AIP Award$166,539$337,077$666,155

      Georges Gravanis

                

      MSUs


      02/28/19


      3,536

      4,160

      8,320



      $

      565,146

      PUs02/28/192,6275,25410,508$557,684

      AIP Award$234,856$469,712$939,403
      (1)
      Amounts represent threshold, target and maximum amountsopportunities under the 20172019 AIP. Target awards were established by multiplying each NEO's base salary at the end of 20172019 by the following target AIP opportunities: 125% for Mr. Butier; 50% for Mr. Lovins; 75% for Mr. GravanisMessrs. Lovins and Ms. Bramman;Gravanis; and 60% for Mses. HillMs. Miller and Miller.Mr. Stander. Payout levels range from 50% if the target amounts for threshold performance are achieved with respect to each of the performance objectives to 200% if the amounts for maximum performance are achieved with respect to each of the performance objectives. Amounts for Mr. Lovins reflect his fiscal year-end AIP opportunity of 60% and his previous AIP opportunity of 40%, in each case prorated for the months of his service in his respective roles during the year. Because Ms. Bramman was not employed on the last day of our fiscal year, she did not receive a 2017 AIP award.

      (2)
      Amounts for MSUs represent threshold, target and maximum payout opportunities, which are payablepaid out in shares of our common stock over one-, two-, three- and four-year performance periods provided that the absolute TSR performance objective is achieved as of the end of each period. The actual number of shares issuedpaid out can range from 0% to 200% of the target number of shares aton the time of grant date, with a threshold payout opportunity of 85%. MSUs accrue dividend equivalents during the performance period, which are earned and paid out only at vesting. The MSUs granted to Ms. Bramman were cancelled upon the termination of her employment before the end of our 2017 fiscal year.

      Amounts for PUs represent threshold, target and maximum payout opportunities granted underfor the 2017-2019 MTIP,2019-2021 PUs, which are payablepaid out in shares of our common stock at the end of a three-year performance period provided that the cumulative EVA and relative TSR performance objectives, are achieved as ofat the end of the period. The actual number of shares issuedpaid out can range from 0% to 200% of the target number of shares aton the time of grant date, with a threshold payout opportunity of 50% if threshold performance is achieved with respect to each of the performance objectives. The PUs granted to Ms. Bramman were cancelled upon the termination of her employment before the end of our 2017 fiscal year.

      (3)
      The grant date fair value of MSUs was determined using the Monte-Carlo simulation method, which utilizes multiple input variables, including expected volatility of our stock price and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the performance objective established for the award.

      The grant date fair value for the performance condition component of PUs was determined based on the fair market value of our common stock on the date of grant adjusted for foregone dividends.date. The grant date fair value for the market condition component of PUs was determined as of the grant date of grant using the Monte-Carlo simulation method described above.

      The grant date fair value of RSUs was determined basedFor information on the fair market valueinputs to the Monte-Carlo simulation method, see footnote (2) of our common stock on the date of grant, adjusted for foregone dividends.

      2019 Summary Compensation Table.For additional information regarding the assumptions we use for our stock-based compensation, see Note 12, "Long-Term Incentive Compensation," to the consolidated financial statements contained in our 20172019 Annual Report.

      Avery Dennison Corporation| 2018 Proxy Statement  |  692020 Proxy Statement    67


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      20172019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

              The table below shows NEO equity awards outstanding as of December 30, 2017,28, 2019, the end of our 20172019 fiscal year. Ms. Bramman has not been included in the table because she had no equity awards outstanding at fiscal year end.


       
      OPTION AWARDS
      STOCK AWARDS
      NAME
       GRANT
      DATE

       NUMBER OF
      SECURITIES
      UNDERLYING
      UNEXERCISED
      OPTIONS —
      EXERCISABLE (#)

       NUMBER OF
      SECURITIES
      UNDERLYING
      UNEXERCISED
      OPTIONS —
      UNEXERCISABLE (#)

       OPTION
      EXERCISE
      PRICE ($)

       OPTION
      EXPIRATION
      DATE

       NUMBER OF
      SHARES OR
      UNITS OF
      STOCK
      THAT
      HAVE NOT
      VESTED (#)

       MARKET
      VALUE OF
      SHARES OR
      UNITS OF
      STOCK
      THAT
      HAVE NOT
      VESTED ($)(1)

       EQUITY
      INCENTIVE
      PLAN AWARDS:
      NUMBER OF
      UNEARNED
      SHARES,
      UNITS OR
      OTHER
      RIGHTS THAT
      HAVE NOT
      VESTED (#)

       EQUITY
      INCENTIVE
      PLAN AWARDS:
      MARKET OR
      PAYOUT VALUE
      OF UNEARNED
      SHARES,
      UNITS OR
      OTHER
      RIGHTS THAT
      HAVE NOT
      VESTED ($)(1)

      GRANT
      DATE

      NUMBER OF
      SECURITIES
      UNDERLYING
      UNEXERCISED
      OPTIONS –
      EXERCISABLE (#)

      NUMBER OF
      SECURITIES
      UNDERLYING
      UNEXERCISED
      OPTIONS –
      UNEXERCISABLE (#)

      OPTION
      EXERCISE
      PRICE ($)

      OPTION
      EXPIRATION
      DATE

      NUMBER
      OF
      SHARES OR
      UNITS OF
      STOCK
      THAT
      HAVE NOT
      VESTED (#)

      MARKET
      VALUE OF
      SHARES OR
      UNITS OF
      STOCK
      THAT HAVE
      NOT
      VESTED ($)(1)

      EQUITY
      INCENTIVE
      PLAN AWARDS:
      NUMBER OF
      UNEARNED
      SHARES,
      UNITS OR
      OTHER
      RIGHTS THAT
      HAVE NOT
      VESTED (#)

      EQUITY
      INCENTIVE
      PLAN AWARDS:
      MARKET OR
      PAYOUT VALUE
      OF UNEARNED
      SHARES,
      UNITS OR
      OTHER
      RIGHTS THAT
      HAVE NOT
      VESTED ($)(1)

      Mitchell R. Butier

                        

      Mitchell R. Butier

             

       02/27/14       8,166(5) $937,947

       02/26/15       46,696(4) $5,363,50302/25/1615,709(4)$2,067,461

       02/26/15       26,829(5) $3,081,57906/01/1670,554(2)70,554(2)$73.9606/01/26

       03/02/15     3,809(3) $437,502  02/23/1758,904(5)$7,752,356

       02/25/16       70,320(4) $8,076,95502/23/1726,333(4)$3,465,686

       02/25/16       47,117(5) $5,411,85902/22/1846,648(5)$6,139,344

       06/01/16  141,108(2) $73.96 06/01/26    02/22/1829,590(4)$3,894,340

       02/23/17       58,904(4) $6,765,71302/28/1948,184(5)$6,341,497

       02/23/17       51,326(5) $5,895,30402/28/1937,380(4)$4,919,582

      Total

          141,108     3,809 $437,502 309,358 $35,532,860 70,55470,554  262,748$34,580,266

      Gregory S. Lovins

                        

      Gregory S. Lovins

             

       02/27/14       2,100(5) $241,20602/25/161,716(4)$225,843

       02/26/15       10,054(4) $1,154,80202/23/176,228(5)$819,668

       02/26/15       5,777(5) $663,54602/23/172,787(4)$366,797

       02/25/16       7,672(4) $881,20609/01/172,906(3)$382,459

       02/25/16       5,141(5) $590,49502/22/189,536(5)$1,255,032

       02/23/17       6,228(4) $715,34802/22/186,050(4)$796,241

       02/23/17       5,429(5) $623,57502/28/1913,430(5)$1,767,522

       09/01/17     5,812(3) $667,566  
      02/28/1910,420(4)$1,371,376

      Total

               5,812 $667,566 42,401 $4,870,178   2,906$382,45950,167$6,602,479

      Georges Gravanis

                        

       02/27/14       3,336(5) $383,173

       02/26/15       12,922(4) $1,484,221

       02/26/15       7,427(5) $853,065

       06/01/15     6,086(3) $699,038  

       02/25/16       14,390(4) $1,652,835

       02/25/16       9,641(5) $1,107,365

       02/23/17       12,294(4) $1,412,089

       02/23/17       10,711(5) $1,230,265

      Total

               6,086 $699,038 70,721 $8,123,013

      Anne Hill

                        

       02/27/14       5,583(5) $641,263

       02/26/15       21,908(4) $2,516,353

       02/26/15       12,589(5) $1,445,973

       02/25/16       14,428(4) $1,657,200

       02/25/16       9,666(5) $1,110,237

       02/23/17       11,716(4) $1,345,700

       02/23/17       10,207(5) $1,172,376

      Total

                 86,097 $9,889,102

      Susan C. Miller

                        

      Susan C. Miller

             

       02/27/14       4,790(5) $550,17902/25/163,318(4)$436,682

       02/26/15       19,080(4) $2,191,52902/23/1712,060(5)$1,587,216

       02/26/15       10,965(5) $1,259,44002/23/175,391(4)$709,510

       02/25/16       14,852(4) $1,705,90102/22/188,544(5)$1,124,476

       02/25/16       9,951(5) $1,142,97202/22/185,420(4)$713,326

       02/23/17       12,060(4) $1,385,21202/28/199,090(5)$1,196,335

       02/23/17       10,508(5) $1,206,94902/28/197,053(4)$928,245

      Total

                 82,206 $9,442,182   50,876$6,695,790

      Deon M. Stander

      Deon M. Stander

             

      02/25/161,499(4)$197,283

      02/23/1716,192(5)$2,131,029

      02/23/172,414(4)$317,707

      02/22/187,634(5)$1,004,711

      02/22/184,843(4)$637,387

      02/28/199,018(5)$1,186,859

      02/28/196,740(4)$887,051

      Total

         48,340$6,362,027

      Georges Gravanis

      Georges Gravanis

             

      02/25/163,215(4)$423,126

      02/23/178,376(5)$1,102,365

      02/23/175,497(4)$723,460

      02/22/189,808(5)$1,290,831

      02/22/186,223(4)$819,009

      02/28/1910,508(5)$1,382,958

      02/28/197,851(4)$1,033,270

      Total

         51,478$6,775,019

      (1)
      Market value calculated based on a stock price of $114.86, the closing price of our common stock of $131.61 on December 29, 2017,27, 2019, the last trading day of our 20172019 fiscal year.

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      (2)
      Stock options granted to Mr. Butier on June 1, 2016 vest 50% on each of the third and fourth anniversaries of the grant date, subject to his continued service.

      (3)
      RSUs granted to (i) Mr. Butier on March 2, 2015 vest 50% on the grant date, 40% on December 1, 2016 and 10% on the third anniversary of the grant date; (ii) Mr. Lovins on September 1, 2017 vest in equal installments on the first, second, third and fourth anniversaries of the grant date; and (iii) Mr. Gravanis on June 1, 2015 vest in equal installments on the first, second, third and fourth anniversaries of therespective grant date, in each case subject to his continued service.

      (4)
      PUs are eligible for vesting at the end of a three-year performance period, subject to achievement of the cumulative EVA and relative TSR performance objectives established for the award. Amounts are listed at (i) 200% of target for the PUs granted under the 2015-2017 MTIP, which was the payout based on actual performance during the period as determined by the Compensation Committee in February 2018, and (ii) the maximum level of performance for the PUs granted under the 2016-2018 MTIP and 2017-2019 MTIP as actual performance through December 30, 2017 would result in above-target payouts.

      (5)
      MSUs are eligible for vesting as of the end of the period over one-, two-, three- and four-year performance periods, subject to achievement of the absolute TSR performance objective established for the award. Amounts are listedshown at (i) 200%, 200%, 106% and 147% of target for the vesting tranches of the MSUs granted in 2014, 2015,2016, 2017, 2018 and 2016 and 188% of target for the vesting tranche of the MSUs granted in 2017,2019, respectively, the payouts for all NEOs based on our actual performance for the respective performance periods as determined by the Compensation Committee in February 2018,2020; and (ii) the maximum level of performance for the remaining tranches of these grants (asthe MSUs granted in 2017, 2018 and 2019, as actual performance through December 30, 201728, 2019 would result in above-target payouts),payouts.

      (5)
      PUs are eligible for vesting at the end of a three-year performance period, subject to achievement of the applicable performance objectives established for the NEO's award. Amounts are shown at (i) 200% of target for the 2017-2019 PUs for all NEOs except that Mr. Gravanis' 2017-2019 PUs are shown at 136% of target, which were the payouts based on the actual performance for the period as determined by the Compensation Committee in each case including dividend equivalents accruedFebruary 2020, and (ii) the maximum level of performance for the 2018-2020 PUs and 2019-2021 PUs for all NEOs as ofactual performance through December 30, 2017.28, 2019 would result in above-target payouts.

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      20172019 OPTION EXERCISES AND STOCK VESTED

              The table below provides information regarding the number of shares acquired and the value realized by our NEOs upon the exercise of stock options and the vesting of stock awards during 2017.2019. Amounts under stock awards reflect the vesting of (i) the PUs granted in 20142016 for the 2014-20162016-2018 performance period, which paid out at 200% of target based on our relative TSR for all NEOs and at 200% of target based on our cumulative EVA for our corporate NEOs (excluding Mr. Lovins) and 185%Lovins who was part of LGM at the time of grant), 200% of target based on our LGM business'LGM's cumulative EVA for Messrs. Lovins and Gravanis, and 200% of target based on RBIS' cumulative EVA for Mr. Lovins and our business NEO;Stander; (ii) the fourth tranche of MSUs granted in 20132015 that paid out at 200% of target based on our 2013-20162015-2018 absolute TSR; (iii) the third tranche of MSUs granted in 20142016 that paid out at 156%188% of target based on our 2014-20162016-2018 absolute TSR; (iv) the second tranche of MSUs granted in 20152017 that paid out at 153%137% of target based on our 2015-2016 absolute TSR; (v) the first tranche of MSUs granted in 2016 that paid out at 123% of target based on our 20162017-2018 absolute TSR; and (vi)(v) RSUs granted in 2015 and 2017 that vested in 2017.2019. MSU amounts include accrued dividend equivalents paid out at vesting. The first tranche of MSUs granted in 2018 were cancelled as we did not meet the threshold level of performance.


       OPTION AWARDS STOCK AWARDS OPTION AWARDS STOCK AWARDS
      NAME
       NUMBER OF
      SHARES ACQUIRED
      ON EXERCISE (#)

       VALUE REALIZED
      ON EXERCISE ($)(1)

       NUMBER OF
      SHARES ACQUIRED
      ON VESTING (#)

       VALUE REALIZED
      ON VESTING ($)(2)

       NUMBER OF
      SHARES ACQUIRED
      ON EXERCISE (#)
       VALUE REALIZED
      ON EXERCISE ($)
       NUMBER OF
      SHARES ACQUIRED
      ON VESTING (#)
       VALUE REALIZED
      ON VESTING ($)(1)

      Mitchell R. Butier

       77,551 $5,046,850 63,247 $5,073,042 



      108,154 $11,671,980

      Gregory S. Lovins

         14,726 $1,181,172   14,675 $1,594,841

      Susan C. Miller

       



      25,488 $2,750,666

      Dean M. Stander

         25,338 $2,734,477

      Georges Gravanis

       



      25,267 $2,041,120 



      26,201 $2,813,645

      Anne Hill

         37,056 $2,972,262

      Susan C. Miller

       104,065 $4,315,635 28,048 $2,249,730

      Anne L. Bramman

         7,063 $  576,802


      (1)Amounts reflect the number of shares acquired on exercise multiplied by the difference between the fair market value of our common stock on the exercise date and the exercise price, and include the exercise of the following option awards:


      NAME
       GRANT DATE
       NUMBER OF
      SHARES ACQUIRED
      ON EXERCISE (#)

       EXERCISE
      PRICE ($)

       FAIR MARKET
      VALUE ON
      EXERCISE DATE ($)

       VALUE
      REALIZED
      ON EXERCISE ($)

      Butier

                

       02/28/08 20,580 $52.12 $105.87 $1,106,247

       09/02/08 15,000 $49.44 $105.78 $845,169

       02/26/10 13,971 $31.67 $106.42 $1,044,361

       06/01/10 28,000 $33.61 $106.86 $2,051,073

      Miller

                

       02/28/08 13,035 $52.12 $79.17 $352,679

       02/24/11 52,920 $39.32 $79.16 $2,108,158

       02/23/12 38,110 $30.50 $79.17 $1,854,798

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      (2)(1)
      Amounts reflect the number of shares acquired onpaid out at vesting multiplied by the fair market value of our common stock on the vesting date, and include the vesting of the following stock awards. NumbersThe number of shares acquired onpaid out at vesting for MSUs includes payoutsthe payout of accrued dividend equivalents.
      NAME
       AWARD
      TYPE

       GRANT
      DATE

       NUMBER OF
      UNITS
      SUBJECT TO
      VESTING (#)

       PERFORMANCE
      MODIFIER (%)

       NUMBER OF
      SHARES
      ACQUIRED
      ON VESTING (#)*

       FAIR
      MARKET
      VALUE ON
      VESTING
      DATE ($)

       VALUE
      REALIZED ON
      VESTING ($)

      Butier

                    

       MSUs  02/28/13 3,151 200% 6,301 $80.21 $505,403

       MSUs  02/27/14 4,008 156% 6,252 $80.21 $501,473

       MSUs  02/26/15 6,584 153% 10,073 $80.21 $807,955

       MSUs  02/25/16 7,708 123% 9,481 $80.21 $760,471

       PUs  02/27/14 15,570 200% 31,140 $80.21 $2,497,740

      Lovins

                    

       MSUs  02/28/13 1,180 200% 2,359 $80.21 $189,215

       MSUs  02/27/14 1,031 156% 1,608 $80.21 $128,978

       MSUs  02/26/15 1,417 153% 2,168 $80.21 $173,895

       MSUs  02/25/16 840 123% 1,033 $80.21 $82,857

       PUs  02/27/14 3,779 200% 7,558 $80.21 $606,227

      Gravanis

                    

       RSUs  06/01/15 3,043  3,043 $84.96 $258,533

       MSUs  02/28/13 1,470 200% 2,939 $80.21 $235,737

       MSUs  02/27/14 1,637 156% 2,553 $80.21 $204,776

       MSUs  02/26/15 1,822 153% 2,787 $80.21 $223,545

       MSUs  02/25/16 1,577 123% 1,940 $80.21 $155,608

       PUs  02/27/14 6,352 189% 12,005 $80.21 $962,921

      Hill

                    

       MSUs  02/28/13 2,411 200% 4,822 $80.21 $386,773

       MSUs  02/27/14 2,740 156% 4,275 $80.21 $342,898

       MSUs  02/26/15 3,088 153% 4,724 $80.21 $378,912

       MSUs  02/25/16 1,581 123% 1,945 $80.21 $156,008

       PUs  02/27/14 10,645 200% 21,290 $80.21 $1,707,671

      Miller*

                    

       MSUs  02/27/14 2,351 156% 3,667 $80.21 $294,130

       MSUs  02/26/15 2,690 153% 4,115 $80.21 $330,064

       MSUs  02/25/16 1,628 123% 2,002 $80.21 $160,580

       PUs  02/27/14 9,132 200% 18,264 $80.21 $1,464,956

      Bramman

                    

       RSUs  06/01/15 2,164  2,164 $84.96 $183,853

       MSUs  06/01/15 1,653 153% 2,529 $80.21 $202,851

       MSUs  02/25/16 1,927 123% 2,370 $80.21 $190,098
      *Because Ms. Miller elected to defer the MSUs granted to her in 2013, including related dividend equivalents, under our Executive Variable Deferred Retirement Plan, their vesting is reflected in the2017 Nonqualified Deferred Compensation table.
      NAME
       AWARD
      TYPE

       GRANT
      DATE

       NUMBER OF
      UNITS
      SUBJECT TO
      VESTING (#)

       PERFORMANCE
      MODIFIER (%)

       NUMBER OF
      SHARES
      ACQUIRED ON
      VESTING (#)

       FAIR
      MARKET
      VALUE ON
      VESTING
      DATE ($)

       VALUE
      REALIZED ON
      VESTING ($)

      Butier

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       MSUs  02/26/15 6,286 200% 13,680 $107.92 $1,476,346

       MSUs  02/25/16 7,542 188% 15,055 $107.92 $1,624,736

       MSUs  02/23/17 6,394 137% 9,099 $107.92 $981,964

       MSUs  02/22/18 5,713 0%   

       PUs  02/25/16 35,160 200% 70,320 $107.92 $7,588,934

      Lovins

                    

       RSUs  09/01/17 1,453  1,453 $115.57 $167,923

       MSUs  02/26/15 1,353 200% 2,947 $107.92 $318,040

       MSUs  02/25/16 823 188% 1,641 $107.92 $177,097

       MSUs  02/23/17 676 137% 962 $107.92 $103,819

       MSUs  02/22/18 1,168 0%   

       PUs  02/25/16 3,836 200% 7,672 $107.92 $827,962

      Miller

                    

       MSUs  02/26/15 2,569 200% 5,593 $107.92 $603,597

       MSUs  02/25/16 1,593 188% 3,180 $107.92 $343,186

       MSUs  02/23/17 1,309 137% 1,863 $107.92 $201,055

       MSUs  02/22/18 1,047 0%   

       PUs  02/25/16 7,426 200% 14,852 $107.92 $1,602,828

      Stander

                    

       MSUs  02/26/15 1,344 200% 2,929 $107.92 $316,098

       MSUs  02/25/16 720 188% 1,437 $107.92 $155,081

       MSUs  02/23/17 586 137% 834 $107.92 $90,005

       MSUs  02/22/18 935 0%   

       PUs  02/25/16 10,069 200% 20,138 $107.92 $2,173,293

      Gravanis

                    

       RSUs  06/01/15 3,043  3,043 $103.33 $314,433

       MSUs  02/26/15 1,740 200% 3,789 $107.92 $408,909

       MSUs  02/25/16 1,543 188% 3,080 $107.92 $332,394

       MSUs  02/23/17 1,334 137% 1,899 $107.92 $204,940

       MSUs  02/22/18 1,201 0%   

       PUs  02/25/16 7,195 200% 14,390 $107.92 $1,552,969

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      20172019 PENSION BENEFITS

              The present values of accumulated pension benefits shown in the table below have been calculated based on the assumptions we used to calculate our fiscal year-end pension benefit obligations forin the auditedconsolidated financial statements contained in our 20172019 Annual Report. Since the accrual of additional amountsbenefits under these plans has been frozen since December 31, 2010, the fluctuationschange in pensionpresent values from year to year areis based primarily on changes in the assumptions usedwe use to determine the present value of participants' accumulated benefits for purposes of our year-end audited financial statements and secondarily on the passage of time. For example, we are required to calculate the present value of future pension liabilities using a discount rate based on corporate bond yields,Messrs. Gravanis and as discount rates decrease (as they did during 2017), the present values of accumulated benefits can increase significantly. Ms. Bramman and Mr. GravanisStander have not been included in the table because they have no accrued benefits under these plans. No payments from these plans were made to any of our 2017 NEOs.

      NAME
        
       PLAN NAME
       NUMBER OF
      YEARS OF
      CREDITED
      SERVICE (#)

       PRESENT VALUE OF
      ACCUMULATED
      BENEFIT(1) ($)

       

      Mitchell R. Butier

               

         Pension Plan  9.33 $295,325 

         Benefit Restoration Plan  9.33 $246,063 

       Total      $541,388 

      Gregory S. Lovins

               

         Pension Plan  15.58 $295,522 

         Benefit Restoration Plan  15.58 $32,960 

       Total      $328,482 

      Anne Hill

               

         Pension Plan  5.50 $172,579 

         Benefit Restoration Plan  5.50 $215,723 

       Total      $388,302 

      Susan C. Miller

               

         Pension Plan  21.00 $881,458 

         Benefit Restoration Plan  21.00 $427,302 

       Total      $1,308,760 

      (1)

      Amounts shown for Pension Plan (i) for Mr. Butier and Ms. Miller reflect the lump-sum value of the applicablepension benefit accrued as of March 21, 2019, the date on which these benefit obligations were transferred to an annuity insurance provider, and (ii) for Mr. Lovins reflect the lump-sum value received as a result of his election to receive a lump-sum payment in connection with the plan's termination. Amounts shown for Benefit Restoration Plan for all NEOS reflect the lump-sum value of the pension benefit accrued as of December 30, 2017. 28, 2019, the last day of our fiscal year.

      NAME
       
      PLAN NAME
      NUMBER OF YEARS
      OF CREDITED SERVICE
      (#)

      PRESENT VALUE OF
      ACCUMULATED
      BENEFIT(1, 2) ($)

      PAYMENTS DURING
      LAST FISCAL YEAR(1,3)
      ($)

      Mitchell R. Butier

          

       Pension Plan9.33$297,947

       Benefit Restoration Plan9.33$306,726

      Total  $604,673

      Gregory S. Lovins

          

       Pension Plan15.58$119,506

       Benefit Restoration Plan15.58$41,272

      Total  $41,272$119,506

      Susan C. Miller

          

       Pension Plan21.00$896,165

       Benefit Restoration Plan21.00$501,799

      Total  $1,397,964
      (1)
      While the Benefit Restoration Plan allows for lump-sum payment, the Pension Plan requiresrequired that distributions take the form of a monthly annuity, except in special circumstances. For information regarding the assumptions we use to determine the present value of accumulated benefits for our pension plans, see Note 6, "Pension and Other Postretirement Benefits," to the consolidated financial statements contained in our 20172019 Annual Report.

      (2)
      Amounts for the Pension Plan reflect the lump-sum value of the pension benefit accrued as of March 21, 2019, the date on which these benefit obligations were transferred to an annuity insurance provider.

      (3)
      Amount reflects the lump-sum value received as a result of Mr. Lovins' election to receive a lump-sum payment in connection with the Pension Plan termination.

      PENSION PLAN

              We providepreviously provided qualified retirement benefits for eligible U.S. employees under the Avery Dennison Pension Plan (the "Pension Plan"). All of our NEOs  except for Ms. Bramman, who joined our company after the Pension Plan was closed to new participants,Messrs. Gravanis and Mr. Gravanis, who is not employed in the U.S. — areStander – were eligible to receive benefits under the Pension Plan, including reduced benefits in the event of early retirement. The accrual of additional benefits under the Pension Plan was frozen as of December 31, 2010; as2010.

              In September 2018, we terminated the Pension Plan. In connection with the termination, we contributed $200 million to the plan in August 2018. During the fourth quarter of 2018, we settled approximately $152 million of our Pension Plan liabilities through lump-sum payments from existing plan assets to eligible participants who elected to receive them. In March 2019, we settled the liabilities for approximately 8,300 active and former employees and their beneficiaries of approximately $750 million primarily through the purchase of a result, no additional accruals were made during 2017.group annuity contract from American General Life Insurance Company ("AGL"), a subsidiary of American International Group, Inc. AGL assumed the future annuity payments for these individuals, commencing at April 1, 2019.

              Compensation covered by the Pension Plan includesincluded base salary and AIP awards, up to the applicable statutory limitations each plan year. Employees vestvested in the Pension Plan after five years of service, or at age 55 upon termination of employment. The annual pension benefit payable in 2017 was limited to $215,000 under the Code.

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              Benefits under the Pension Plan arewere based on pensionable earnings, length of service, when benefits commence, and how they are paid. Benefits arewere calculated separately for each year of applicable service using a formula equal to 1.25% times compensation up to the breakpoint (which for each year prior to our freezing the accrual of additional benefits was the average of the Social Security wage bases for the preceding 35 years) plus 1.75% times compensation in excess of the breakpoint. The results of the calculation for each year of service arewere added together to determine the annual single life annuity benefit under the Pension Plan for an employee at normal retirement (generally age 65), which iswas not subject to reduction for Social Security payments.

              Eligible participants may electcould have elected to receive their benefits in one of several payment forms that are all payable in monthly installments. Benefits arewere generally paid in annuity form over the lifetime of the participant and/or a beneficiary. By default, single participants arewere eligible for a single life annuity, and they can choosecould have chosen from alternate payment forms that may includeincluded benefits payable to a beneficiary. By default, married participants arewere eligible for a joint and survivor annuity that iswas payable over the participant's lifetime, and, if survived by a spouse, over the spouse's lifetime. Married participants cancould choose alternate payment forms, with the consent of the spouse. The monthly benefit each eligible participant maycould receive iswas adjusted based on the plan's definition of actuarial equivalence.

              Benefits arewere generally payable without reduction after participants reach age 65; however, certain participants  including our participating NEOs — may be– could have been eligible to receive an unreduced benefit at age 62. Prior to age 62, a participant's benefits arewere reduced by 15% for commencement of benefits at age 61 and an additional 5% for each additional year early the participant electselected to receive benefits early, provided that no benefit maycould commence before a participant reachesreached age 55.

      BENEFIT RESTORATION PLAN

              Our Benefit Restoration Plan (BRP) is a nonqualified excess benefit plan that provides for the payment of supplemental retirement benefits to eligible participants in an amount equal to the amount by which their benefits otherwise payable under the Pension Plan would be reduced under the Code. All NEOs  except for Ms. Bramman, who joined our company after the BRP was closed to new participants,Messrs. Gravanis and Mr. Gravanis, who is not employed in the U.S. —Stander – are eligible to receive benefits under the BRP. The accrual of additional benefits under the BRP was frozen as of December 31, 2010; as a result, no additional accruals were made during 2017.2019.

              Because the BRP is designed to mirror the Pension Plan, the information concerning the compensation covered, benefit formula, early retirement provisions, and payment forms is the same as that of the Pension Plan except that (i) the BRP provides for payment in the form of a lump-sum distribution, unless a timely election is made for monthly payments over the lifetime of the participant and a designated beneficiary, and (ii) BRP benefits are generally payable upon the later of separation from service and age 55.

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      20172019 NONQUALIFIED DEFERRED COMPENSATION(1)

              The table below provides information regarding NEO and company contributions to nonqualified deferred compensation plans(1) in fiscal year 2017.2019. Mr. Gravanis has not been included in the table because, as a non-U.S. employee, he iswas not eligible to participate in the only plan currently open for deferrals.participate.

      NAME
       EXECUTIVE
      CONTRIBUTIONS
      IN LAST FY ($)

       REGISTRANT
      CONTRIBUTIONS
      IN LAST FY ($)(2)

       AGGREGATE
      EARNINGS
      IN LAST FY ($)(3)

       AGGREGATE
      WITHDRAWALS/
      DISTRIBUTIONS ($)

       AGGREGATE
      BALANCE AT
      LAST FYE ($)

      Mitchell R. Butier

       

      $106,974 $275,313 

      $1,494,862

      Gregory S. Lovins

        $44,764 $34,287  $192,676

      Anne Hill

       

      $40,465 $7,019 

      $743,406

      Susan C. Miller

        $40,948 $2,984,419  $5,403,442

      Anne L. Bramman

       $23,959 $42,604 $65,236 

      $258,889

      NAME
      EXECUTIVE
      CONTRIBUTIONS
      IN LAST FY ($)

      REGISTRANT
      CONTRIBUTIONS
      IN LAST FY ($)(2)

      AGGREGATE
      EARNINGS
      IN LAST FY ($)(3)

      AGGREGATE
      WITHDRAWALS/
      DISTRIBUTIONS ($)

      AGGREGATE
      BALANCE AT
      LAST FYE ($)

      Mitchell R. Butier





      $106,936$508,024



      $2,157,416

      Gregory S. Lovins

      $32,463$81,676$330,843

      Susan C. Miller





      $37,268$1,069,543



      $6,082,114

      Deon M. Stander

      $132,652$55,478$105,550$589,410
      (1)
      Amounts reflect the NEOs' participation in the Executive Variable Deferred Retirement Plan (EVDRP). Under the EVDRP, participants may choose among publicly available funds ranging from money market and bond funds to index and other equity/mutual funds. The rate of return depends on the funds selected by the participant, who may make changes via an online database provided by the plan administrator. The funds available for investment under the EVDRP during 2017, and their respective rate of return for the year or such shorter portion of the year during which the fund was available, are set forth in the table below.participant.

       NAME OF FUND
       2017
      RATE OF RETURN

       NAME OF FUND
       2017
      RATE OF RETURN

       Advisor Managed Portfolio, Conservative Allocation 7.21%MFS Growth 32.14%
       Advisor Managed Portfolio, Moderate Allocation  9.94%American Century VP Mid Cap Value, Class 2 11.89%
       Advisor Managed Portfolio, Moderate Growth Allocation 13.49%Janus Henderson VIT Enterprise- Service Shares 27.56%
       Advisor Managed Portfolio, Growth Allocation  16.04%BlackRock Small Cap Index 14.49%
       Advisor Managed Portfolio, Aggressive Allocation 18.87%Templeton Foreign VIP Class 2 17.13%
       Avery EVDRP Survivor-Fixed  7.00%MFS International Large Cap 27.99%
       Avery Fixed Rate 3.39%Invesco V.I. International Growth Series II Shares 23.19%
       Fidelity VIP Government Money Market Service Class  0.95%Oppenheimer Emerging Markets 35.02%
       PIMCO Inflation Managed 4.07%MFS VIT Utilities, Service Class 14.92%
       Western Asset Diversified Bond  7.28%Van Eck VIP Global Hard Assets (1.33)%
       BlackRock Equity Index 21.94%   
      (2)
      Company contributions to the EVDRP are included in theAll "All Other CompensationCompensation" column of the20172019 Summary Compensation Table.

      (3)
      Amounts reflect EVDRP vested account balances as of December 30, 2017,28, 2019, the last day of our 20172019 fiscal year. Because the amounts do not represent above-market earnings, they are not reported in the2019 Summary Compensation Table. Ms. Miller elected to defer the MSUs granted to her in 2013, including related dividend

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        equivalents, under the EVDRP. The following amounts shown below were reported under the "All Other Compensation" column of the2017 Summary Compensation Table in previous proxy statements:statements.

    NAME
    AGGREGATE COMPANY
    CONTRIBUTIONS
    PREVIOUSLY REPORTED ($)

    Butier

    $294,064

    Lovins

    Hill

    $111,236

    Miller

    $79,350

    Bramman

    $18,797
    NAME
    AGGREGATE COMPANY
    CONTRIBUTIONS
    PREVIOUSLY REPORTED ($)

    Butier

    $562,340

    Lovins

    $80,971

    Miller

    $164,898

    Stander

    $25,486

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    EXECUTIVE VARIABLE DEFERRED RETIREMENT PLAN

            Our Executive Variable Deferred Retirement Plan (EVDRP) is the only active deferred compensation plan available to our eligible U.S. employees. Earnings are based on a fixed rate and/or the performance of variable bond and equity funds selected by the participant from available options.options. The EVDRP does not offer investment options that provide above-market interest rates.

            Eligible employees are able to defer U.S. taxes until their investment is withdrawn, providing an opportunity for them to accumulate savings on a pre-tax basis. We also benefit from this arrangement because we do not have to expend cash to pay amounts individuals have elected to defer. As a result, we can use this cash for other corporate purposes until a deferred compensation account is paid to thea participant at the time the participant elected to receive in-service withdrawals or after termination of employment.

            All deferred compensation accounts are unfunded obligations of our company and subject to the same risks as any of our general debts and obligations. As a result, these accounts help mitigate risk-seeking behavior by management that could be detrimental to the long-term health of our company.

    Employee Contributions

            Under the EVDRP, eligible employees can defer up to 75% of their salary and 90% of their AIP award.

    Company ContributionsContribution

            In early 2017,As of January 1, 2019, we made a contribution to the deferred compensation accounts of eligible employees of up to 6% of an eligible employee's annualbased on 401(k) eligible earnings and deferred compensation in excess of the Code compensation limit. Ourlimit and deferred compensation in 2018. This annual contribution provided an automatic contribution of 3% of pay plus a matching contribution of 50% on the first 7% of pay not covered by company contributions to our 401(k) Plan. This contribution was added to the deferred compensation accounts of eligible employees who were employed at year-end 2016,2018, which included all our participating NEOs. This benefit is designed to supplement 401(k) contributions that are limited under the Code.

    Withdrawals/Distributions

            Contributions to deferred compensation accounts are required to be distributed following an eligible employee's separation from service. Subject to Section 409A of the Code, eligible employees may elect to receive separation from service withdrawals in the form of a lump-sum payment or monthly installments over two to 20 years. Eligible employees may change the method in which payments are distributed provided that they do so at least 12 months before the date of distribution; however, any such change would resultresults in the distribution occurring or beginning five years later than it would have otherwise. All of our NEOs are "key"specified employees" under Section 409A of the Code. Distributions to keyspecified employees cannot be made until at least the seventh month after separation from service, except in the event of death.

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    PAYMENTS UPON TERMINATION AS OF DECEMBER 30, 201728, 2019

            The table below shows potential benefits that would have been payable to our Current NEOs in the event of termination on December 30, 2017,28, 2019, the last day of our 20172019 fiscal year. Amounts paid or distributed upon actual termination may differ from amounts shown due to timing and any future changes to our benefit plans. Because she was no longer employed at our fiscal year-end, Ms. Bramman has not been included in the table. The severance payments and benefits Ms. Bramman received in connection with her termination earlier in the year are disclosed underExecutive Severance Plan.

     
      
     TERMINATION SCENARIOS AS OF THE END OF FISCAL YEAR 2017
     
    NAME
     BENEFIT
     DEATH
     QUALIFYING
    DISABILITY

     QUALIFYING
    RETIREMENT(2)

     INVOLUNTARY
    TERMINATION
    NOT FOR
    CAUSE

     TERMINATION
    WITHIN 24
    MOS. OF
    CHANGE OF
    CONTROL

     
    Mitchell R. Butier           
      Severance Payment       $5,973,348 $8,960,023 
      Unvested Stock Options(1)         $5,771,882 
      Unvested RSUs(1) $437,502 $437,502     $437,502 
      Unvested PUs(1) $6,501,689 $6,501,689     $10,103,086 
      Unvested MSUs(1) $5,329,923 $5,329,923     $7,708,127 
      Outplacement       $25,000 $25,000 
    Total   $12,269,114 $12,269,114   $5,998,348 $33,005,620 
      Elimination of Excise Tax Liability         $(3,537,226)
      Value of Forfeited Equity(1) $(11,751,482)$(11,751,482)$(24,020,596)$(24,020,596)  
    Gregory S. Lovins           
      Severance Payment       $865,733 $1,731,465 
      Unvested Stock Options(1)           
      Unvested RSUs(1) $667,566 $667,566     $667,566 
      Unvested PUs(1) $990,361 $990,361     $1,375,678 
      Unvested MSUs(1) $788,997 $788,997     $1,064,265 
      Outplacement       $25,000 $25,000 
    Total   $2,446,924 $2,446,924   $890,733 $4,863,974 
      Value of Forfeited Equity(1) $(660,585)$(660,585)$(3,107,510)$(3,107,510)  
    Georges Gravanis           
      Severance Payment       $1,388,449 $2,776,899 
      Unvested Stock Options(1)           
      Unvested RSUs(1) $699,038 $699,038 $699,038 $699,038 $699,038 
      Unvested PUs(1) $1,528,404 $1,528,404 $2,270,514 $2,270,514 $2,274,573 
      Unvested MSUs(1) $1,290,013 $1,290,013 $2,016,493 $2,016,493 $1,796,427 
      Outplacement       $25,000 $25,000 
    Total   $3,517,455 $3,517,455 $4,986,045 $6,399,494 $7,571,937 
      Elimination of Excise Tax Liability         $(995,695)
      Value of Forfeited Equity(1) $(1,252,583)$(1,252,583)$216,119 $216,119   
    Anne Hill           
      Severance Payment       $1,008,696 $2,017,392 
      Unvested Stock Options(1)           
      Unvested RSUs(1)           
      Unvested PUs(1) $2,034,860 $2,034,860 $3,293,036 $3,293,036 $2,759,626 
      Unvested MSUs(1) $1,664,254 $1,664,254 $2,661,839 $2,661,839 $2,194,106 
      Outplacement       $25,000 $25,000 
    Total   $3,699,114 $3,699,114 $5,954,875 $6,988,571 $6,996,124 
      Value of Forfeited Equity(1) $(1,254,618)$(1,254,618)$1,001,361 $1,001,361   
    Susan C. Miller           
      Severance Payment       $1,023,687 $2,047,375 
      Unvested Stock Options(1)           
      Unvested RSUs(1)           
      Unvested PUs(1) $1,895,267 $1,895,267 $2,991,031 $2,991,031 $2,641,321 
      Unvested MSUs(1) $1,557,876 $1,557,876 $2,473,007 $2,473,007 $2,088,988 
      Outplacement       $25,000 $25,000 
    Total   $3,453,143 $3,453,143 $5,464,038 $6,512,725 $6,802,684 
      Value of Forfeited Equity(1) $(1,277,166)$(1,277,166)$733,733 $733,733  
     

     
     
    TERMINATION SCENARIOS AS OF THE END OF FISCAL YEAR 2019
    NAME
    BENEFIT
    DEATH
    QUALIFYING
    DISABILITY

    QUALIFYING
    RETIREMENT(2)

    INVOLUNTARY
    TERMINATION
    NOT FOR
    CAUSE

    TERMINATION
    WITHIN
    24 MOS. OF
    CHANGE OF
    CONTROL

    Mitchell R. Butier

         
     Severance Payment$7,125,236$10,687,855
     Unvested Stock Options(1)$4,067,720
     Unvested PUs(1)$5,922,625$5,922,625$10,116,597
     Unvested MSUs(1)$4,245,268$4,245,268$7,760,819
     Outplacement$25,000$25,000
    Total $10,167,893$10,167,893$7,150,236$32,657,991
     Value of Forfeited Equity(1)$(11,777,244)$(11,777,244)$(21,945,137)$(21,945,137)

    Gregory S. Lovins

         
     Severance Payment$1,193,493$2,386,986
     Unvested RSUs(1)$382,459$382,459$382,459
     Unvested PUs(1)$828,178$828,178$1,921,111
     Unvested MSUs(1)$616,697$616,697$1,511,450
     Outplacement$25,000$25,000
    Total $1,827,334$1,827,334$1,218,493$6,227,006
     Value of Forfeited Equity(1)$(1,987,685)$(1,987,685)$(3,815,019)$(3,815,019)

    Susan C. Miller

         
     Severance Payment$1,154,660$2,309,320
     Unvested PUs(1)$1,168,434$1,168,434$1,962,042$1,962,042$1,954,014
     Unvested MSUs(1)$840,123$840,123$1,250,129$1,250,129$1,503,476
     Outplacement$25,000$25,000
    Total $2,008,557$2,008,557$3,212,171$4,391,831$5,791,810
     Value of Forfeited Equity(1)$(1,448,933)$(1,448,933)$(245,319)$(245,319)

    Deon M. Stander

         
     Severance Payment$965,173$1,930,346
     Unvested PUs(1)$1,400,418$1,400,418$2,161,299
     Unvested MSUs(1)$512,721$512,721$1,116,535
     Outplacement$25,000$25,000
    Total $1,913,139$1,913,139$990,173$5,233,180
     Value of Forfeited Equity(1)$(1,364,695)$(1,364,695)$(3,277,834)$(3,277,834)

    Georges Gravanis

         
     Severance Payment$1,341,739$2,683,478
     Unvested PUs(1)$1,239,284$1,239,284$1,532,577$1,532,577$2,145,901
     Unvested MSUs(1)$884,367$884,367$1,292,193$1,292,193$1,622,642
     Outplacement$25,000$25,000
     Code Section 280G Adjustment $(145,641)
    Total $2,123,651$2,123,651$2,824,770$4,191,509$6,331,380
     Elimination of Excise Tax Liability$(684,867)
     Value of Forfeited Equity(1)$(1,644,892)$(1,644,892)$(943,774)$(943,774)
    (1)
    Values for equity awards were determined as follows: (i) for stock options, the number of shares that would have been exercisable multiplied by the difference between the fair market value of our common stock on December 29, 2017,27, 2019, the last trading day of our 20172019 fiscal year, and the applicable exercise price; (ii) for RSUs, PUs and MSUs, the number of shares that would have been acquired or forfeited on vesting multiplied by the fair market value of our common stock on December 29, 2017.27, 2019.

    (2)
    Mr. Gravanis and Mses. Hill andMs. Miller qualified as retirement eligible at the end of fiscal year 20172019 because they had reached the age of 55 and had completed over ten years of service with our company. As a result, in every termination scenario, all of their unvested equity awards would vest, with unvested PUs and MSUs vesting on a prorated basis after the end of their respective performance period based on our actual performance.

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            In addition to the amounts shown in the table on the previous page,above, in the event of termination, our Current NEOs would be entitled to receive their accrued and vested benefits under any pension and deferred compensation plansplan in which they participate. These amounts would be determined and paid in accordance with the terms and conditions of the applicable plans,plan, and are not included in the table. See2017 Pension Benefits and20172019 Nonqualified Deferred Compensation for information on these benefits.

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            None of our Current NEOs has an employment contract;contract, and all of them are employed at-will; if an NEO iswere no longer performing at the expected level, he or she cancould be terminated for cause immediately without receiving a contractually-guaranteed payment.The other potential payments upon termination or a change of control are described below.

    EXECUTIVE SEVERANCE PLAN

            Each of our Current NEOs is a participant in the Severance Plan. Upon involuntary termination not for cause, they currently would be entitled to the following benefits:benefits shown below.

    GRAPHICGRAPHIC

    In February 2020, the Compensation Committee amended and restated the Severance Plan, effective July 1, 2020, to provide that the AIP award portion of the Severance Plan payment be changed from the highest AIP award received during the last three years to the target AIP award for the year of termination.

    Benefits Not Subject to Gross up. Benefits are subject to withholding for all applicable taxes and not grossed-up for taxes.

    Trigger for Benefits. Involuntary termination, whichexcludes termination for cause; due to disability; due to death; due to voluntary resignation; or due to an executive declining simultaneous or continuing employment in a comparable position.

    Definition of Cause. Cause is defined as (i) commission of a crime or other act that could materially damage the reputation of our company or its subsidiaries; (ii) theft, misappropriation, or embezzlement of company or subsidiary property; (iii) falsification of company or subsidiary records; (iii)(iv) substantial failure to comply with written policies and procedures; (iv)(v) misconduct; or (v)(vi) substantial failure to perform material job duties not cured within 30 days after written notice.

            Mr. Gravanis' severance benefits would be subject to applicable Dutch labor laws and regulations in effect at the time of his separation, and he would receive the greater of the amount provided under the Severance Plan and the amount required by those laws and regulations.

            In connection with her separation from our company and in accordance with the terms and conditions of the Severance Plan, Ms. Bramman received severance benefits of $1,223,313, which included (i) $575,025, her annual base salary as of her termination date; (ii) $633,965, her highest AIP award in the last three years; and (iii) $14,323, the cash value of twelve months of premiums for qualified medical and dental plans in which she participated as of her termination date. In consideration of her receipt of these benefits, Ms. Bramman agreed to a waiver and release of any claims against our company and to non-competition, non-solicitation and non-disclosure covenants in favor of our company.

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    KEY EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN

            Each of our Current NEOs is also a participant in the COC Severance Plan, which is designed to retain certain key executives during a period in which a change of control transaction is being negotiated or a hostile takeover is being attempted. Participants are only entitled to benefits if they are terminated not for "cause" or terminate employment for "good reason" within 24 months of the change of control (a "double trigger"). In suchthese circumstances, they currently would be entitled to the following benefits:benefits shown below.

    GRAPHICGRAPHIC

    In February 2020, the Compensation Committee amended and restated the COC Severance Plan, effective July 1, 2020, to provide that the AIP award portion of the COC Severance Plan payment be changed from the highest AIP award received for during the last three years to the target AIP award for the year of termination.

    Benefits Not Subject to Gross-up. Benefits are subject to withholding for all applicable taxes and not grossed-up for excise or other taxes. However, if the payment would trigger an excise tax for a particular NEO, the NEO can elect to receive (i) his or her full benefits, with him or her responsible for paying any applicable excise taxes, or (ii) reduced benefits to an amount sufficient to eliminate any excise tax liability.

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            Definition of Change of Control. Change of control is defined as (i) replacement of a majority of our Board during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of our Board; or (ii) acquisition by any person, group or corporation that has entered into a merger, acquisition, consolidation, purchase, stock acquisition, asset acquisition, or similar business transaction with our company, of (A) together with any of our company's stock previously held, more than 50% of the total fair market value or the total voting power of our company's stock; (B) 30% or more of the total voting power of our company's stock during any 12-month period; or (C) assets of our company having a total gross fair market value of 40% or more of the total gross fair market value of all of our company's assets during any 12-month period.

            Definition of cause. Cause is defined as it is under the Severance Plan.

            Definition of good reason. Good reason is defined as (i) material diminution in base compensation; (ii)  material diminution in authority, duties, or responsibilities or supervisor's authority, duties, or responsibilities; (iii) material change in geographic job location; or (iv) any other action or inaction that constitutes a material breach by our company.

            Mr. Gravanis' severance benefits would be subject to applicable Dutch labor laws and regulations in effect at the time of his separation, and he would receive the greater of the amount provided under the COC Severance Plan and the amount required by those laws and regulations.

    EQUITY INCENTIVE PLANS

            Under both our previous Amended and Restated Stock Option and Incentive Plan last approved by our stockholders in April 2012 and our 2017 Incentive Award Plan approved by stockholders in April 2017, unvested equity awards held by our Current NEOs on the date of termination would be treatedvest as set forthshown in the table on the following page.below. Mr. Gravanis and Mses. Hill andMs. Miller qualified as retirement eligible at the end of our 20172019 fiscal year because they had reached the age of 55 and had completed over ten years of service with our company.

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    VESTING OF EQUITY AWARDS ON TERMINATION EVENTS
     
     PUs
     MSUs
     RSUs
     Stock Options
    Resignation/Involuntary Termination, whether For or Not for Cause Cancelled Cancelled Cancelled Cancelled
    Death Vest at time of event on a prorated basis based on target performance Vest at time of event on a prorated basis based on target performance Vest Cancelled
             
    Qualifying Disability Same as death Same as death Vest Cancelled
             

    Qualifying Retirement


    Vest after the end of the performance period on a prorated basis based on actual performance

     

    Vest after the end of the performance period on a prorated basis based on actual performance

     

    Vest

     

    Vest and exercisable by our CEO for the full term of the option and by our other NEOs for the lesser of five years and the full term of the option
    Change of Control* Vest based on actual, if determinable, and otherwise target performance only in the event of termination without cause or for good reason within 24 months after change of control Vest based on actual, if determinable, and otherwise target performance only in the event of termination without cause or for good reason within 24 months of the change of control Vest only in the event of termination without cause or for good reason within 24 months after change of control Vest only in the event of termination without cause or for good reason within 24 months after change of control
    *
    Unvested PUs and MSUs granted prior to May 2017 would vest based on target performance. Unvested stock options granted prior to April 26,May 2012 would vest on a change of control consistent with terms and conditions of previous stockholder-approved version of an Amended and Restated Stock Options and Incentive Plan.control.

            All unvested MSUs, PUs and RSUs held by Ms. Bramman on the date of her termination of employment were cancelled in accordance with the provisions described above. She held no stock options as of the date of her termination.

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    EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 30, 201728, 2019

    PLAN CATEGORY
     NUMBER OF SECURITIES
    TO BE ISSUED UPON
    EXERCISE OF
    OUTSTANDING
    OPTIONS, WARRANTS
    AND RIGHTS (A)

     WEIGHTED-AVERAGE
    EXERCISE PRICE OF
    OUTSTANDING OPTIONS,
    WARRANTS AND RIGHTS (B)

     NUMBER OF SECURITIES
    REMAINING AVAILABLE FOR
    FUTURE ISSUANCE UNDER
    EQUITY COMPENSATION PLANS
    (EXCLUDING SECURITIES
    REFLECTED IN COLUMN (A)) (C)

    Equity compensation plans approved by security holders

          

    Amended and Restated Stock Option and Incentive Plan(1)

     2,514,362 $44.39 

    Amended and Restated Director Equity Plan(2)

     

    4,000

     

    $20.64

     

    2017 Incentive Award Plan(3)

     

    69,772

     



    5,295,342

    Total

     

    2,588,134

     

    $44.22

     

    5,295,342


    PLAN CATEGORY
     NUMBER OF SECURITIES
    TO BE ISSUED UPON
    EXERCISE OF
    OUTSTANDING
    OPTIONS, WARRANTS
    AND RIGHTS (A)

     WEIGHTED-AVERAGE
    EXERCISE PRICE OF
    OUTSTANDING OPTIONS,
    WARRANTS AND RIGHTS (B)

     NUMBER OF SECURITIES
    REMAINING AVAILABLE FOR
    FUTURE ISSUANCE UNDER
    EQUITY COMPENSATION PLANS
    (EXCLUDING SECURITIES
    REFLECTED IN COLUMN (A)) (C)

    Equity compensation plans approved by security holders

          

    Amended and Restated Stock Option and Incentive Plan(1)

     649,133 $62.10 

    2017 Incentive Award Plan(2)

     

    1,084,368

     



    4,320,221

    Total

     

    1,733,501

     

    $62.10

     

    4,320,221

    (1)
    Our Amended and Restated Stock Option and Incentive Plan (the "Previous Plan") was last approved by stockholders in April 2012. We last issued awards under the Previous Plan in March 2017. Under the Previous Plan, shares issuable under outstanding equity awards granted prior to December 30, 2017 included (i) stock options RSUs and DSUsRSUs for non-employee directors and (ii) stock options, RSUs, PUs and MSUs for officers and other eligible employees. Amount in column (A) includes 543,592206,240 stock options; 140,4107,509 RSUs; 155,333 DSUs; 844,240189,565 MSUs (including accrued dividend equivalents and reflecting the unvested tranchestranche of the MSUs granted in 2014, 2015, 2016 and 2017 at the maximum level of performance as actual performance would result in above-target payoutspayout and the 2016 and 2017 tranches subject to vesting as of December 30, 201728, 2019 at 200%, 200%, 200% and 188%, respectively, reflecting the payout based on actual performance); 904,559245,819 PUs (reflecting the maximum level of performance for the relative TSR component of 2015-2017, 2016-2018 andthe 2017-2019 MTIP cyclesPUs cycle as actual performance would result in above-target payouts, and a weighted-average of 185%, 189% and 163%, respectively,171% for the cumulative EVA component of these MTIP cycles)PUs). Price in column (B) does not include RSUs, DSUs, MSUs, PUs or dividend equivalents.

    (2)
    Under our Amended and Restated Director Equity Plan, equity awards included stock options and DSUs. We last issued awards under this plan in April 2009 and thereafter began issuing our non-employee directors awards under the Previous Plan. Amount in column (A) includes only stock options.

    (3)
    Our 2017 Incentive Award Plan (the "Current Plan") was approved by our stockholders in April 2017. We began issuing awards under the Current Plan in May 2017. Under the Current Plan, shares issuable under outstanding equity awards granted prior to December 30, 2017 includedinclude (i) RSUs and DSUs for non-employee directors and (ii) RSUs, PUs and MSUs for officers and other eligible employees. Amount in column (A) representsincludes 51,895 RSUs; 182,500 DSUs; 333,537 MSUs (including accrued dividend equivalents and reflecting the unvested tranches of the MSUs granted in 2018 and 2019 at the maximum level of performance as actual awards grantedperformance would result in above-target payouts and the tranches subject to non-employee directors, officersvesting as of December 28, 2019 at 106% and other eligible employees.147%, respectively, reflecting the payout based on actual performance); 516,436 PUs (reflecting the maximum level of performance for the relative TSR component of 2018-2020 and 2019-2021 PUs as actual performance would result in above-target payouts, and a weighted-average of 195% and 158%, respectively, for the cumulative EVA components of these PUs). Amount in column (C) represents the aggregate number of shares available for future issuance, with each full-value award decreasing the number of shares available for future issuance by 1.5 shares.

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    CEO PAY RATIO

            As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing this disclosure about the relationship between the median annual total compensation of our employees to the annual total compensation of our CEO. To understand this disclosure, we think it is important to give context about our operations. We are located in placescountries around the world to best serve our customers, with approximately 76%77% of our revenues generated outside the U.S. and approximately 48%33% of our revenues generated in emerging markets (Asia, Latin America, Eastern Europe and Middle East/Northern Africa). As a global organization with employees located in over 50 countries, approximately 87% of our employees are located outside the U.S. and approximately 71% are located in emerging markets. Wemarkets, where median compensation is substantially lower than it is in the U.S.

            The charts shown below provide a breakdown of our global employee population by region and function. Nearly 20,000 of our approximately 33,000 employees, representing over 60% of our global workforce, are in Asia, serving our customers in that region. In addition, approximately 65% of our global workforce works in the operations of our manufacturing facilities worldwide or in positions directly supporting them from other locations.


    GRAPHIC


    GRAPHIC

            Our compensation philosophy is to offer market-based, competitive wages and benefits in all the markets where we compete for talent — 99%– all of our employees arewere paid in excessat least the applicable minimum wage, and 98% of our employees were paidabovethe applicable legal minimum wage.wage at the end of 2019. Our CEO's compensation is driven by pay for performance, in-line with our peers and commensurate with that provided by companies of similar size, scalescope, complexity and performance.

    2019 PAY RATIO FOR 2017

      The annual total compensation of our median employee (among all employees except for our CEO) was approximately $12,016.
      Our CEO's annual total compensation, as reported in theTotal column of the2017 Summary Compensation Table, was $8,959,468.
      Based on this information, a reasonable estimate of the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee was approximately 746 to 1.

    The annual total compensation of our median employee (among all employees except for our CEO) was approximately $12,278.

    Our CEO's annual total compensation, as reported in theTotal column of the2019 Summary Compensation Table, was $8,495,032.

    Based on this information, a reasonable estimate of the 2019 ratio of the annual total compensation of our CEO to the annual total compensation of our median employee was approximately 692 to 1.

            We calculated this ratio based on the rules and guidance provided by the SEC. SEC rules allow for varying methodologies for companies to use in identifying their median employee; other companies may have different workforce demographics and employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their CEO pay ratios. Consequently, the CEO pay ratios reported by other companies are unlikely tomay not be meaningful for purposes of comparison to our CEO pay ratio.

    IDENTIFICATION OF MEDIAN EMPLOYEE

            Given that there were no significant changes in the compensation arrangements of our global workforce from 2018 to 2019 or our global workforce during that period that would cause a significant change in our CEO pay ratio, as allowed by SEC rules, we are using the same median employee in 2019 as we did in 2018. However, given that the role of the median employee identified for 2017 changed in 2018, we identified another employee as the median employee for 2018 from the same group from which we identified the 2017 median employee. The employee identified for 2018 had comparable pay

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    to the median employee in 2017 but best represented the compensation of the employees in this group given the 2017 median employee's role change.

            For purposes of identifying our median employee in 2017 from the same group from which we identified our median employee in 2018 given the 2017 median employee's role change, we considered annual base compensation, which is the most common pay element for all our employees, as reflected in our global human resources information system. We selected this compensation element because it represents the principal broad-based compensation element for the vast majority of our employees globally. We measured compensation for purposes of determining the median employee using the 12-month period ending December 31, 2017. NoWe made cost-of-living adjustments were made.adjustments.

            We selected November 1, 2017 as the date on which to determine our median employee. As of that date, we had 30,256 employees, 26,231 of which were located outside of the United States and approximately 21,000 of which were located in emerging markets. We utilized the de minimis exemption to eliminate countries representing no more than 5% of our global population in the aggregate. The countries excluded were Indonesia, Pakistan and Sri Lanka, Indonesia and Pakistan with 646, 542 202 and 646202 employees, respectively, in the aggregate then representing approximately 4.6% of our global population. Weworkforce.

            To determine our medianable group, we used a statistical sampling approach known as stratified sampling to concentrate on medianable employees, which were those within a narrow range of the estimated median salary of $9,524, because these employees were all reasonably likely to be our median employee. As a result of this statistical sampling process, we identified 647 employees with a salary within $500 of this amount. Employees from China represented 51% of the medianable group; as a result, we narrowed the medianable group to those 329 employees. Finally, we identified the nine employees who were potentially our median employee by analyzing additional qualitative and quantitative characteristics, including pay volatility.

    MEDIAN EMPLOYEE COMPENSATION

            Using thisthe methodology described above, we determined that our median employee for 2019 was a full-time, salaried employee working at a manufacturing facility in China, with annual base compensation of approximately $10,498.China. For purposes of this disclosure, we converted the employee's base compensation from Chinese Yuan to U.S. dollars using the exchange rate as of December 1, 20172019 of 0.15074998.

    CALCULATION OF MEDIAN EMPLOYEE'S COMPENSATION0.14216662.

            In determining the annual total compensation of approximately $12,016$12,278 for our median employee, as required by SEC rules, we calculated the employee's compensation in accordance with Item 402(c)(2)(x) of Regulation S-K, consistent with how we determine our CEO's total compensation for the20172019 Summary Compensation Table.

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    ITEM 3 RATIFICATION OF APPOINTMENT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

            The Audit Committee  which is directly responsible for the appointment, compensation (including approval of audit and non-audit fees) and evaluation of the independent registered public accounting firm that audits our financial statements and internal control over financial reporting  has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for fiscal year 2018,2020, and our Board is seeking stockholder ratification of the appointment. Stockholder ratification is not required by our Bylaws or applicable laws and regulations. However, our Board annually submits this appointment for stockholder ratification as an element of our strong governance program. If stockholders were not to ratify the appointment, the Audit Committee would reconsider whether or not to retain PwC, but could determine to do so in the committee's discretion. In addition, even if the appointment is ratified, the Audit Committee could subsequently appoint a different independent registered public accounting firm without stockholder approval if the committee were to determine that doing so would be in the best interests of our company and stockholders.

            Although no formal statement from PwC is planned, representatives of the firm will be present at the Annual Meeting to answer questions from stockholders.

    AUDIT COMMITTEE EVALUATION

            In determining whether to reappoint PwC, the Audit Committee considered the qualifications, performance, and independence of the firm and the audit engagement team, the quality of its discussions with PwC, and the fees charged by PwC for the quality and breadth of services provided. In connection with the 20182020 appointment, the Audit Committee considered, among other things, the following:

      Audit Quality — The quality of PwC's audit and non-audit work, based on its oversight of the firm's work product, as well as its discussions with management in executive session without PwC present and its discussions with PwC in executive session without management present;

      Performance — PwC's reports on its quality controls and its performance during our 2017 and prior-year audits;

      Qualitative Review — The results of our global survey of members of management and the Audit Committee evaluating PwC's (i) expertise and resources, (ii) audit planning, (iii) communication and interaction, (iv) independence, objectivity and professional skepticism and (v) value for fees;

      Self-Assessment — PwC's annual self-assessment of its accomplishments in connection with its audit, its satisfaction of the service needs and expectations of the Audit Committee and management, and areas of continued focus and improvement opportunities;

      Regulatory Reviews — External data on the firm's audit quality and performance, including recent Public Company Accounting Oversight Board (PCAOB) reports on PwC and its peer firms;

      Reasonableness of Fees — The appropriateness of PwC's fees for audit and non-audit services, both on an absolute basis and relative to comparable firms;

      Independence — Written disclosures from the firm and the independence letter required by the PCAOB; and

      Tenure — PwC's tenure as our independent auditor, including the benefits of having a long-tenured auditor and the controls in place to mitigate any potential independence risk.

    Audit Quality – The quality of PwC's audit and non-audit work, based on its oversight of the firm's work product, as well as its discussions with management in executive session without PwC present and its discussions with PwC in executive session without management present;

    Performance – PwC's reports on its quality controls and its performance during our 2019 and prior-year audits;

    Qualitative Review – The results of our global survey of members of management and the Audit Committee evaluating PwC's (i) expertise and resources, (ii) audit planning, (iii) communication and interaction, (iv) independence, objectivity and professional skepticism and (v) value for fees;

    Self-Assessment – PwC's self-assessment of its accomplishments in connection with the 2019 audit, its satisfaction of the service needs and expectations of the Audit Committee and management, and areas of continued focus and improvement opportunities;

    Regulatory Reviews – External data on the firm's audit quality and performance, including recent Public Company Accounting Oversight Board (PCAOB) reports on PwC and its peer firms;

    Reasonableness of Fees – The appropriateness of PwC's fees for audit and non-audit services, both on an absolute basis and relative to comparable firms;

    Independence – Written disclosures from the firm and the independence letter required by the PCAOB; and

    Tenure – PwC's tenure as our independent auditor, including the benefits of having a long-tenured auditor and the controls we and they have in place to mitigate any potential independence risk.

            The Audit Committee has determined that the appointment of PwC is in the best interest of our company and stockholders. The Audit Committee has appointed, subject to stockholder ratification, PwC as our independent registered public accounting firm for fiscal year 20182020 and recommends that stockholders ratify the appointment at the Annual Meeting.

    RECOMMENDATION OF BOARD OF DIRECTORS

            Our Board recommends that you vote FOR ratification of the appointment of PwC as our independent registered public accounting firm for fiscal year 2018.2020.Properly dated and signed proxies will be so voted unless you specify otherwise.

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    AUDIT MATTERS

    AUDITOR TENURE

            PwC has been our independent registered public accounting firm since 1998 and served in that capacity during fiscal year 2017.2019. Through its predecessor entities, the firm has served as our independent auditor since at least 1960, which was the first year our financial statements were subject to SEC reporting requirements. We have not determinedbeen unable to determine the exact year PwC began serving as the auditor for our company. PwC is very well qualifiedwell-qualified to act as our independent registered public accounting firm and has a deep understanding of our operations and accounting practices. Some governance stakeholders have suggested that long tenure poses a risk to auditor independence. The Audit Committee believes, however, that PwC's years of experience auditing our company confers significant benefits, including the following:

      Higher Audit Quality — PwC has deep institutional knowledge regarding our operations, businesses, and accounting policies and practices;

      Economies of Scale —PwC has a global presence with resources in virtually all of the countries in which we do business, enabling the firm to cost-effectively perform statutory audit work on our subsidiary accounts; and

      Cost Efficiency — Having familiarity with our business allows PwC to perform its services and ensure audit quality more cost-competitively than other firms.

    Audit Quality – PwC has deep institutional knowledge regarding our operations, businesses, and accounting policies and practices;

    Scale –PwC has a global presence with resources in virtually all of the countries in which we do business, enabling the firm to cost-effectively perform statutory audit work on our subsidiary accounts; and

    Cost –PwC is able to effectively perform the needed audit, audit-related, tax compliance and tax planning services and ensure audit quality cost-competitively.

            In conducting its periodic review of whether to appoint a new independent registered public accounting firm, the Audit Committee considers the fact that onboarding a new firm would require a significant time commitment on the part of management, potentially distracting from the paramount focus on financial reporting and internal controls, without necessarily increasing audit quality. The Audit Committee also noted that PwC has implemented advanced technological tools that have improved the firm's delivery of its assurance procedures.

            The Audit Committee has several controls in place to mitigate any potential independence risk, including the following:

      Limits on Non-Audit Services — The Audit Committee assesses the impact providing non-audit services may have on PwC's independence each time it approves the firm's provision of these services, as well as during its annual assessment of the firm's independence;

      Periodic Consideration of Auditor Rotation — The Audit Committee periodically considers whether to change the independent registered public accounting firm based on its assessment of PwC's audit quality, performance, compensation and independence;

      Executive Sessions — The Audit Committee meets regularly both with PwC without management present and with management without PwC present; and

      Lead Audit Partner Selection — The Audit Committee selects any new lead audit partner, in consultation with members of senior management and representatives of PwC.

    Limits on Non-Audit Services – The Audit Committee assesses the impact providing non-audit services may have on PwC's independence each time it approves the firm's provision of these services, as well as during its annual assessment of the firm's independence;

    Periodic Consideration of Auditor Rotation – The Audit Committee periodically considers whether to change the independent registered public accounting firm based on its assessment of PwC's audit quality, performance, compensation and independence, having most recently done so in February 2020 and determined to retain PwC;

    Executive Sessions – The Audit Committee meets regularly both with PwC without management present and with management without PwC present; and

    Lead Engagement Partner Selection – The Audit Committee selects any new lead engagement partner, in consultation with members of senior management and representatives of PwC.

            In order toTo regularly bring a fresh perspective to the engagement,audit, a new lead auditengagement partner is designated at least every five years, and ayears. A new partner was last designated for the 2014 audit.2019 audit, having shadowed the previous partner in 2018 to ensure service continuity and knowledge transfer. The then-serving Audit Committee Chair and other members of the committee interviewed the partner prior to his designation, and the Audit Committee as a whole was directly responsible for making the selection, in consultation with members of senior management and representatives from PwC. During 2017, the entire Audit Committee met with the candidate proposed to be the next lead audit partner, who is expected to be designated by the Committee for the 2019 audit.

    AUDITOR INDEPENDENCE

            PwC has advised us that neither the firm nor any member thereof has any financial interest, direct or indirect, in any capacity in our company or our subsidiaries. As a result, PwC has confirmed to the Audit Committee that it is in compliance with allthe rules, standards and policies of the PCAOB and the regulations of the SEC governing auditor independence.

            The Audit Committee considers the impact providing non-audit services may have on PwC's independence each time it approves the firm's provision of such services, as well as during its annual assessment of the firm's independence. In

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    February 2018,2020, the Audit Committee reviewed the non-audit services approved by the Committee and provided by PwC during 2017,2019, including the related fees, and determined that the firm's provision of these services did not impair PwC's independence.

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    AUDITOR COMPENSATION

            In negotiating and approving PwC's fees and services, the Audit Committee considers whether PwC is best positioned to provide the services effectively and efficiently due to its familiarity with our operations, businesses, accounting policies and practices, internal controls, and financial and information technology systems, as well as whether the services enhance our ability to manage or control risks and maintain audit quality. The Audit Committee monitorsperiodically receives updates on the services rendered and fees paid to PwC to ensure that the servicesthey are within the parameters approved by the Audit Committee.

    COMMITTEE APPROVAL OF FEES

            The Audit Committee has adopted procedures for the pre-approval of all audit and non-audit services provided by the independent registered public accounting firm, and the fees paid to PwC in 20172019 were pre-approved. The Audit Committee pre-approved 2017the estimated audit fees in February of that year,2019, received a mid-year update on year-to-date fees incurred in July, and assessed the final fees in connection with its review of the results of the audit in February 2018.2020. These procedures include reviewing and approving a plan for audit and permitted non-audit services, which includes a description of, and estimated fees for, audit services and non-audit services. Additional Audit Committee approval is required for non-audit services not included in the initial plan or substantially in excess of the budgeted amount for the particular category of services. The Audit Committee has delegated interim pre-approval authority to its Chair for services not included in the audit plan; these services are reviewed with the entire Audit Committee at a subsequent meeting.

    AUDIT FEES

            For fiscal years 20172019 and 2016,2018, PwC provided the services shown below for our company  all of which were approved by the Audit Committee using the procedures described above  for which we paid the firm the fees indicated.

     
    2017
    2016

    Audit Fees(1)

    $8,025,000$6,957,000

    Audit-Related Fees(2)

    448,000788,000

    Tax Fees:

      

    Tax Compliance(3)

    1,949,0002,214,000

    Tax Planning(4)

    1,369,0001,843,000

    All Other Fees(5)

    55,00013,000

    Total Fees

    $11,846,000$11,815,000

     
    2019
    2018

    Audit Fees(1)


    $

    8,406,000


    $

    7,946,000

    Audit-Related Fees(2)

    486,000503,000

    Tax Fees:

      

    Tax Compliance(3)

    2,358,0002,312,000

    Tax Planning(4)

    2,415,0001,792,000

    All Other Fees(5)

    30,00040,000

    Total Fees

    $13,695,000$12,593,000
    (1)
    Includes fees for services performed to comply with the standards established by the PCAOB, including the audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting; audits in connection with statutory filings; and other services that the principal independent registered public accounting firm most effectively and efficiently can provide, such as procedures related to audits of our income tax provisions and related reserves,comfort letters, consents and review of our SEC filings.

    (2)
    Includes fees associated with assurance and related services traditionally performed by the independent registered public accounting firm and reasonably related to the performance of the audit or review of our financial statements, including assistance in financial due diligence related to acquisitions and divestitures; accounting consultations; consultations concerning financial accounting and reporting standards; general advice on implementation of SEC and Sarbanes-Oxley requirements; and audit or compliance services not required by statuteapplicable statutes or regulation.regulations. This category also includes audits of pension and other employee benefit plans, as well as the audit or review of financial or information technology systems and internal controls unrelated to the audit of the financial statements.

    (3)
    Includes fees associated with tax compliance such as preparation of tax returns in foreign jurisdictions, tax audits and transfer pricing.pricing documentation.

    (4)
    Includes fees for domestic and international tax planning, and tax planning related to restructurings,restructuring actions, acquisitions and divestitures.

    (5)
    Includes fees for any services other than those described in the above categories. Included an information technology license inIn both years, included subscriptions and a researchlicenses to accounting and development study in Israeltax resources and a trade compliance project in Malaysia in 2017.other permissible services that do not fall within the other listed categories.

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    AUDIT AND FINANCE COMMITTEE REPORT

    COMPOSITION AND QUALIFICATIONS

            The Audit and Finance Committee (referred to in this report as the "Committee") of our Board of Directors is comprised of the directors named below,at the end of this report, each of whom meets the enhanced independence and experience standards for audit committee members set forth in Securities and Exchange Commission (SEC) rules and New York Stock Exchange (NYSE) listing standards. Our Board of Directors has determined all members to be financially literate and designated each of Messrs. Anderson, Barker and Siewert as an "audit committee financial expert" under applicable SEC regulations. Members of the Committee are prohibited from sitting on the audit committee of more than two other public companies, and all members are in compliance with this restriction.

    PRIMARY RESPONSIBILITIES

            The Committee has a written charter adopted by our Board of Directors, which is available onunder Corporate Governance in the investors section of our website atwww.averydennison.com/auditcharter.website. The Committee annually reviews the charter and recommends changes to the Board for approval. The charter was last amended in February 2017.December 2018.

            During fiscal year 2017,2019, the Committee primarily performed the following activities on behalf of our Board of Directors:

      Reviewed and discussed with management and the independent registered public accounting firm our quarterly and annual financial results, earnings release documentation and the related reports filed with the SEC;

      Reviewed and discussed with management, the Vice President of Internal Audit and the independent registered public accounting firm our internal controls report and the independent registered public accounting firm's attestation thereof;

      Evaluated the qualifications, performance and independence of the independent registered public accounting firm and met with representatives of the firm to discuss the scope, budget, staffing and progress of the firm's audit;

      Supervised the Vice President of Internal Audit with respect to the scope, budget, staffing and progress of the internal audit and evaluated his personal performance, as well as the performance of the internal audit function; and

      Discussed significant financial risk exposures and the steps taken by management to monitor and control these exposures.

    Reviewed and discussed with management and the independent registered public accounting firm our quarterly and annual financial results, earnings release documentation and the related reports filed with the SEC;

    Reviewed and discussed with management, the Vice President of Internal Audit and the independent registered public accounting firm our internal controls report and the independent registered public accounting firm's attestation thereof;

    Evaluated the qualifications, performance and independence of the independent registered public accounting firm and met with representatives of the firm to discuss the scope, budget, staffing and progress of the firm's audit;

    Supervised the Vice President of Internal Audit with respect to the scope, budget, staffing and progress of the internal audit and evaluated his personal performance, as well as the performance of the internal audit function; and

    Discussed significant financial risk exposures, including our cybersecurity risk management program and risks related to our company's information technology controls and security, and the steps taken by management to monitor and control these exposures.

    OVERSIGHT OF CONSOLIDATED FINANCIAL STATEMENTS

            Management is responsible for our consolidated financial statements, accounting and financial reporting policies, internal control over financial reporting, and disclosure controls and procedures. The Committee appointed the independent registered public accounting firm of PricewaterhouseCoopers LLP (PwC) to provide audit, audit-related and tax compliance services, with limited tax planning and other non-audit services to the extent approved by the Committee. PwC was responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and issuing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America (GAAP). The Committee's responsibility is to monitor and oversee our accounting and financial reporting processes and the auditaudits of our consolidated financial statements and our internal control over financial reporting. The members of the Committee are not professionally engaged in the practice of auditing or accounting and rely without independent verification on the information provided to them and the representations made by management and PwC.

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            The Committee reviewed and discussed our consolidated financial statements and related footnotes for the fiscal year ended December 30, 2017 —28, 2019 – including our company's critical accounting policies and management's significant estimates and judgments —judgments��– with management and PwC, as well as PwC's report and unqualified opinion on the audit. Management represented to the Committee and PwC that our consolidated financial statements were prepared in accordance with

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    GAAP. PwC presented the matters required to be discussed by Auditing Standard No. 1301,Communications with Audit Committees, as adopted by the PCAOB and currently in effect. The Committee received thethese written disclosures and the letters from PwC required by the applicable requirements of the PCAOB regarding communications concerning independence including Ethics and Independence Rule 3526,Communications with Audit Committees Concerning Independence, and Rule 3524,Audit Committee Pre-approval of Certain Tax Services, and Rule 3526,Communication with Audit Committees Concerning Independence –and discussed with PwC its independence from our company and management.

            Based on the Committee's review and discussions with management and PwC described above, as well as the Committee's review of the representations of management and the audit report and unqualified opinion of PwC, the Committee recommended that our Board of Directors approve the inclusion of the audited consolidated financial statements for the year ended December 30, 201728, 2019 in our Annual Report on Form 10-K filed with the SEC.

    OVERSIGHT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

            The Committee's responsibility is to appoint the independent registered public accounting firm, and monitor and oversee the firm's qualifications, compensation, performance and independence. In this capacity, the Committee reviewed with PwC the overall scope of and fees for its audit, and monitored the progress of PwC's audit in assessing our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the firm's findings and required resources.

            PwC provided to the Committee the written disclosures and independence letter required by the PCAOB. The Committee discussed with PwC its independence from our company and management and concluded that PwC was independent during fiscal year 2017.2019. The Committee has a policy requiring pre-approval of fees for audit, audit-related, tax and other services and has concluded for 2017 that PwC's provision of limited non-audit services to our company in 2019 was compatible with maintaining its independence.

            Under its charter, the Committee is required to periodically consider whether it is appropriate to change the independent registered public accounting firm, and the Committee most recently evaluated with management and PwC regarding whether it may be appropriate to do so in 2015,February 2020, with a view to ensuring that audit quality would continue to be paramount. The Committee determined at that time to retain PwC.

            The Committee has determined that the appointment of PwC as our independent registered public accounting firm for fiscal year 20182020 is in the best interest of our company and stockholders. The Committee has appointed PwC in such capacity and recommends that stockholders ratify the appointment at the Annual Meeting.

    OVERSIGHT OF INTERNAL AUDIT

            The Committee's responsibility is to monitor and oversee our internal audit function, reviewing the significant audit results reported to management and management's responses thereto. In this capacity, the Committee reviews with the Vice President of Internal Audit the overall scope and budget for the internal audit, and regularly monitors the progress of the internal audit's progressaudit in assessing our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the Vice President of Internal Audit's key findings and required resources. The Committee directly supervises the Vice President of Internal Audit in the conduct of his operational responsibilities and evaluates his individual performance as well as that of the entire internal audit function.

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    EXECUTIVE SESSIONS

            The Committee regularly meets separately in executive session without management present with each of the Vice President of Internal Audit and PwC to review and discuss their evaluations of the overall quality of our accounting and financial reporting and internal control. The Committee also periodically meets, without PwC or the Vice President of Internal Audit present, with management, as well as occasionally with only our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and General Counsel to discuss, among other things, significant risk exposures impacting our financial statements and accounting policies.

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    STOCKHOLDER FEEDBACK

            The Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints regarding our accounting, internal controls and auditing matters. SeeComplaint Procedures for Accounting and Auditing Matters in theGovernance, Sustainability and Social Responsibility section of this proxy statement. The Committee welcomes feedback regarding its oversight of our audit and finance programs. Stockholders may communicate with the Committee by writing to the Audit and Finance Committee Chair, c/o Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

    Patrick T. Siewert, Chair
    Anthony K. Anderson
    Peter K. Barker
    Ken C. Hicks
    Andres A. Lopez
    Martha N. Sullivan

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    SECURITY OWNERSHIP INFORMATION

    SECURITY OWNERSHIP OF MANAGEMENT AND SIGNIFICANT STOCKHOLDERS

            The table below shows the number of shares of our common stock beneficially owned by our (i) directors; (ii) NEOs; (iii) current directors and executive officers as a group; and (iv) greater-than-five-percent, or "significant," stockholders, in each case as of the February 26, 201824, 2020 record date for the Annual Meeting. "Beneficial ownership" means that the individual, group or entity, directly or indirectly, has or shares with others the power to vote (or direct the voting of) or the power to dispose of (or direct the disposition of) the shares; the individual, group or entity may or may not have any economic interest in the shares. The reportinginclusion of information in the table does not constitute an admission that the individual, group or entity is, for the purpose of Section 13 or 16 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the beneficial owner of the shares shown.

    NAME OF
    BENEFICIAL OWNER

    COMMON
    STOCK(1)

    NUMBER OF SHARES SUBJECT
    TO DSUS, OPTIONS
    EXERCISABLE, AND
    RSUS VESTING
    WITHIN 60 DAYS(2)

    NUMBER OF SHARES
    BENEFICIALLY OWNED

    PERCENT OF
    CLASS(3)

    Directors

        

    Dean A. Scarborough

    194,109250,962445,071*

    Bradley A. Alford

    12,29832,16344,461*

    Anthony K. Anderson

    1,2448,0709,314*

    Peter K. Barker

    24,70345,23469,937*

    Mitchell R. Butier

    155,6103,809159,419*

    Ken C. Hicks

    20,30328,52148,824*

    Andres A. Lopez

    148285433*

    David E. I. Pyott

    12,22765,65177,878*

    Patrick T. Siewert

    10,51910,519*

    Julia A. Stewart

    12,94351,48464,427*

    Martha N. Sullivan

    7,9618,79116,752*

    Non-Director NEOs

        

    Gregory S. Lovins

    15,18515,185*

    Georges Gravanis

    22,55222,552*

    Anne Hill

    39,02239,022*

    Susan C. Miller

    49,17849,178*

    Anne L. Bramman

    6,2036,203*

    All current directors and executive officers as a group (18 persons)

    580,685517,9521,098,6371.3%

    Significant stockholders

        

    The Vanguard Group(4)

    10,102,91610,102,91611.5%

    BlackRock, Inc.(5)

    6,761,7586,761,7587.7%

    State Street Corporation(6)

    4,793,6424,793,6425.4%

    NAME OF
    BENEFICIAL OWNER

    COMMON
    STOCK(1)

    NUMBER OF RIGHTS
    EXERCISABLE AND VESTING
    WITHIN 60 DAYS(2)

    NUMBER OF SHARES
    BENEFICIALLY OWNED

    PERCENT OF
    CLASS(3)

    Directors    

    Bradley A. Alford

    17,97129,65747,628*

    Anthony K. Anderson

    2,86210,26813,130*

    Peter K. Barker

    29,74646,47776,223*

    Mark J. Barrenechea

    8801,0301,910*

    Mitchell R. Butier

    160,203171,990332,193*

    Ken C. Hicks

    25,34620,26745,613*

    Andres A. Lopez

    3,4598594,318*

    David E. I. Pyott

    17,27062,96380,233*

    Patrick T. Siewert

    14,04614,046*

    Julia A. Stewart

    17,98643,71161,697*

    Martha N. Sullivan

    13,00410,98523,989*
    Non-Director NEOs    

    Gregory S. Lovins

    24,14912,67536,824*

    Susan C. Miller

    17,74024,28142,021*

    Deon M. Stander

    12,60621,25533,861*

    Georges Gravanis

    24,14917,20717,207*
    All current directors and executive officers as a group (16 persons)392,661485,214877,8751.1%
    Significant stockholders    

    The Vanguard Group(4)

    9,709,4909,709,49011.7%

    BlackRock, Inc.(5)

    6,558,2686,558,2687.9%

    T. Rowe Price Associates, Inc.(6)

    6,218,8316,218,8317.5%
    (1)
    Except as otherwise noted herein, each director, NEO and current executive officer has sole voting and investment power with respect to the shares indicated and no shares have been pledged as security by any such person. Includes for the following beneficial owners the following amounts of shares held in various employee savings plans as of February 26, 2018: Mr. Scarborough — 43,673; Mr.24, 2020: Butier — 3,742; Mr.– 3,887; Lovins — 1,944; Ms. Hill — 2,742; Ms.– 2,022; Miller — 684;– 711; and all current directors and executive officers as a group — 58,106. For Mr. Scarborough, also includes 3,315 shares held in the Capital Accumulation Plan, a legacy deferred compensation plan that last received deferrals in 2005; and 148 and 20 shares held by his wife and one of his children, respectively, as to which he disclaims beneficial ownership.– 11,436. For Ms. Miller, also includes 16,1063,623 shares held in the EVDRP.

    (2)
    Numbers reported in this column are not entitled to vote at the Annual Meeting. Includes the following number of DSUs deferred through the DDECP by the following directors as of February 26, 2018,24, 2020, as to which they have no voting or investment power: Mr. Alford — 16,154; Mr.– 18,675; Anderson — 8,070; Mr.– 10,268; Barker — 27,225; Mr.– 30,468; Barrenechea – 1,030; Hicks — 12,512; Mr.– 13,949; Lopez — 285; Mr.– 859; Pyott — 47,642; Ms.– 51,981; Stewart — 35,475;– 39,047; and Ms. Sullivan — 7,967.– 10,161. DSUs are included as beneficially owned because, if any of these directorsthe director were to resign or retire from our Board, theirhis or her DDECP account would be valued as of the date of separation and the equivalent number of shares of our common stock would be issued to the separating director.

    (3)
    Percent of class based on 88,101,59483,295,966 shares of our common stock outstanding as of February 26, 2018.24, 2020. Individuals with an (*) beneficially own less than 1% of our outstanding common stock.

    (4)
    Number of shares beneficially owned based on information as of December 31, 20172019 contained in Amendment No. 78 to Schedule 13G filed with the SEC on February 12, 2018.2020. The Vanguard Group has sole voting power with respect to 125,625128,633 shares; shared voting power with respect to 15,06520,617 shares; sole dispositive power with respect to 9,966,7399,566,814 shares; and shared dispositive power with respect to 136,177142,676 shares. The Vanguard Group is an investment adviser, in accordance with Rule 13d-1(b)(1)(ii)(E) of the Exchange Act, with a business address of 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

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    (5)
    Number of shares beneficially owned based on information as of December 31, 20172019 contained in Amendment No. 911 to Schedule 13G filed with the SEC on January 29, 2018.February 5, 2020. BlackRock, Inc. has sole voting power with respect to 5,880,3065,681,221 shares and sole dispositive power with respect to all 6,761,7586,558,268 shares. BlackRock, Inc. is a parent holding company or control person, in accordance with Rule 13d-1(b)(1)(ii)(G) of the Exchange Act, with a business address of 55 East 52nd Street, New York, New York 10055.

    (6)
    Number of shares beneficially owned based on information as of December 31, 20172019 contained in Schedule 13G filed with the SEC on February 14, 2018. State Street Corporation2020. T. Rowe Price Associates, Inc. has sharedsole voting power with respect to 2,149,512 shares and sharedsole dispositive power with respect to all 4,793,6426,218,831 shares. State Street CorporationT. Rowe Price Associates, Inc. is a parent holding company or control person,an investment adviser, in accordance with Rule 13d-1(b)(1)(ii)(G)(E) of the Exchange Act, with a business address of State100 East Pratt Street, Financial Center, One Lincoln Street, Boston, Massachusetts 02111.Baltimore, Maryland 21202.

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    SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

            Section 16(a) of the Exchange Act requires our directors, executive officers, and owners of greater than 10% our equity securities (collectively, our "Insiders") to timely file initial reports of ownership and reports of changes in ownership with the SEC. Due to the complexity of SEC reporting rules, we undertake to file these reports on behalf of our directors and executive officers and have instituted procedures to assist them with complying with their reporting obligations. We reviewed our records, SEC filings and written representations from our directors and executive officers that no other reports were required to have been filed.

            All of our Insiders complied with the Section 16(a) filing requirements on a timely basis during 2017.

    RELATED PERSON TRANSACTIONS

            Both our Code of Conduct and Conflict of Interest Policy (our "COI Policy") provide that conflicts of interest should be avoided. Under our Governance Guidelines, directors are expected to comply with the Code of Conduct and avoid any action, position or interest that conflicts with the interests of our company, or gives the appearance of a conflict. Our COI Policy proscribes any of our officers (including our executive officers) or employees or any of their immediate family members – from directly or indirectly doing business, seeking to do business or owning an interest in an entity that does business or seeks to do business with our company without approval in writing from the Governance Committee. Under our COI Policy, any officer or employee who has a question as to the interpretation of the policy or its application to a specific activity, transaction or situation may submit the question in writing to our General Counsel/Secretary for any further necessary review by the Governance Committee.

            On an annual basis, all of our employees at the level of manager and above are required to complete a compliance certification in which they must (i) disclose, among other things, whether they or any of their immediate family members have a job, contract or other position with an entity that has commercial dealings with our company and (ii) certify their compliancethat they have complied with our COI Policy and Code of Conduct. Non-supervisory professionals in our sales, marketing, customer service and purchasing functions complete this certification in even years, and non-supervisory professionals in our technology, finance, supply chain, technical services, environmental, health and safety, legal and risk functions do so in odd years. All disclosures are reviewed by our compliance department in consultation with our law department and senior management to determine whether the activity has the potential to significantly influence our business. The Governance Committee receives a report from our Chief Compliance Officer on the disclosures elicited in the annual compliance certification and, in the event that aan unresolved disclosure potentially gives rise to a conflict of interest, determines whether a conflict of interest exists or whether there is a reasonable likelihood that the activity, transaction or situation would influence the individual's judgment or actions in performing his or her duties for our company.

            In addition, each of our directors and executive officers annually completes a questionnaire designed to solicit information about any potential related person transactions. Transactions involving directors are reviewed with the Governance Committee by the General Counsel/Secretary in connection with the annual assessment of director independence and review of related person transactions. Responses from executive officers are reviewed by the Office of the General Counselour Chief Compliance Officer with oversight by the Governance Committee in the event any transactions are identified.

            We review internal financial records to identify transactions with security holders known by us from information contained in Schedules 13D or 13G filed with the SEC to be beneficial owners of more than five percent of our common stock to determine whether we have any relationships with the security holders that might constitute related person transactions under Item 404(a) of Regulation S-K. Findings are then discussedIn the event of any findings, our General Counsel/Secretary discusses them with the Governance Committee.

            During fiscal year 2017,2019, there were no related person transactions requiring disclosure under Item 404 of Regulation S-K. To our knowledge, all related person transactions were subject to review under our policies and procedures.

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    VOTING AND MEETING Q&A

    ANNUAL REPORT AND PROXY MATERIALS

    WHEN WILL I RECEIVE THE 20172019 ANNUAL REPORT?

            We willexpect to mail or make available our 20172019 Annual Report to Stockholders to all stockholders of record on or about March 15, 2018.10, 2020.

    HOW DO I ACCESS THE 20182020 PROXY MATERIALS?

            We have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending the Notice of Internet Availability of Proxy Materials (the "Notice") to our stockholders of record. Brokers, banks and other nominees (collectively, "nominees") who hold shares on behalf of beneficial owners (also called "street name" holders) will send a similar notice. You will have the ability to access our proxy materials on the website referred to in the Notice. Instructions on how to request printed proxy materials by mail, including an option to receive paper copies in the future, may be found in the Notice and on the website referred to in the Notice.

            On or about March 15, 2018,10, 2020, we intend to make this proxy statement available on the Internet and mail the Notice to all stockholders entitled to vote. We intend to mail this proxy statement, together with a proxy card, to stockholders entitled to vote at the Annual Meeting who have previously requested paper copies on or about March 16, 2018.10, 2020. In addition, if you request paper copies of these materials for the first time, they will be mailed within three business days of request. If you hold your shares in street name, you may request paper copies of the proxy statement and proxy card from your nominee by following the instructions on the notice your nominee provides to you.

            Stockholders of record may obtain a copy of this proxy statement without charge by writing to our Corporate Secretary, Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

    WHAT IS HOUSEHOLDING?

            We have adopted a procedure approved by the SEC called householding. Under this procedure, we are permitted towill deliver a single copy of our 2019 integrated report, which includes our 2019 annual report and 2020 notice and proxy statement, and annual report to stockholders sharing the same address. Householding allows us to reduce our printing and postage costs and prevents duplicative information from being received at your household. HouseholdingOur use of householding affects only the delivery of proxy materials; it has nodoes not impact on the delivery of dividend checks.

            For holders who share a single address, we are sending only one annualintegrated report and proxy statement to that address unless we have received instructions to the contrary from any stockholder at that address. If you wish to receive an additional copy of our annualintegrated report, or proxy statement, or if you receive multiple copies of our annualintegrated report or proxy statement and wish to receive a single copy in the future, you may make your request by writing to our Corporate Secretary at Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

            If you are a street name holder and wish to revoke your consent to householding and receive separate copies of our proxy statement and annual report in future years, you may call Broadridge Investor Communications Services toll-free at 800.542.1061866.540.7095 in the U.S. and Canada or write to them c/o Householding Department, 51 Mercedes Way, Edgewood, New York 11717.

    HOW CAN I ACCESS THE ANNUAL REPORT AND PROXY MATERIALS ELECTRONICALLY?

            Instead of receiving paper copies of proxy statements and annual reports by mail in the future, you can elect to receive an email that will provide a link to these documents on the Internet. By electing to access proxy materials viaon the Internet, you will be able to access them more quickly, save us the cost of printing and mailing them to you, reduce the amount of mail you receive from us, and help us preserve environmental resources.

            You may enroll to access proxy materials and annual reports electronically for future Annual Meetings by registering online at the following website:https://enroll.icsdelivery.com/avy. If you voteare voting on the Internet, simplyyou can follow the promptslinks on the voting website to linkget to the electronic enrollment website.

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    VOTING

    WHO IS ENTITLED TO VOTE?

            Stockholders of record as of the close of business on February 26, 201824, 2020 are entitled to notice of, and to vote at, the Annual Meeting. Our common stock is the only class of shares outstanding, and there were 88,101,59483,295,966 shares of common stock outstanding on February 26, 2018. A24, 2020. The list of stockholders entitled to vote will be available for inspection at the Annual Meeting, as well as starting 10 days before the Annual Meeting during regular business hours at our company headquarters. You are entitled to one vote for each share of common stock held on the record date.

    HOW DO I VOTE?

            You may vote by submitting a proxy or voting in person at the Annual Meeting. If you hold your shares in street name, you may only vote in person at the meeting if you properly request and receive a legal proxy in your name from the nominee that holds your shares.

            The method of voting by proxy differs depending on whether you are viewing this proxy statement on the Internet or reviewing a paper copy, as follows:

        If you are viewing this proxy statement on the Internet, you may vote your shares by (i) submitting a proxy on the Internet by following the instructions on the website or (ii) requesting a paper copy of the proxy materials and following one of the methods described below; and

        If you are reviewing a paper copy of this proxy statement, you may vote your shares by (i) submitting a proxy by telephone or on the Internet by following the instructions on the proxy card or (ii) completing, dating and signing the proxy card included with the proxy statement and returning it in the preaddressed, postage paid envelope provided.

    If you are viewing this proxy statement on the Internet, you may vote your shares by (i) submitting a proxy on the Internet by following the instructions on the website or (ii) requesting a paper copy of the proxy materials and following one of the methods described below; and

    If you are reviewing a paper copy of this proxy statement, you may vote your shares by (i) submitting a proxy by telephone or on the Internet by following the instructions on the proxy card or (ii) completing, dating and signing the proxy card included with the proxy statement and returning it in the preaddressed, postage paid envelope provided.

            We encourage you to vote by proxy by telephone or on the Internet since these methods immediately record your vote and allow you to confirm that your votes have been properly recorded. Telephone and Internet voting facilities close at 11:59 p.m. Eastern Time on April 25, 2018.22, 2020.

    WHAT IF MY SHARES WERE ACQUIRED THROUGH THE DIRECT SHARE PURCHASE AND SALE PROGRAM?

            Shares acquired through our Direct Share Purchase and Sale Program may be voted by following the procedures described above.

    WHAT IF MY SHARES ARE HELD IN THE EMPLOYEE SAVINGS PLAN?

            If you hold shares as a participant in our Employee Savings (401(k)) Plan, your vote serves as a voting instruction to Fidelity Management Trust Company, the trustee of the plan, on how to vote the shares you hold through the plan. Your voting instruction must be received by the trustee by 11:59 p.m. Eastern Time on April 23, 2018.20, 2020.

            If the trustee does not receive your instruction in a timely manner, your shares will be voted in the same proportion as the shares voted by participants in the plan who timely furnish instructions. Shares of our common stock that have not been allocated to participant accounts will also be voted by the trustee in the same proportion as the shares voted by participants in the plan who timely furnish instructions.

    HOW DO I REVOKE MY PROXY OR CHANGE MY VOTE AFTER I HAVE VOTED?

            If you give a proxy pursuant to this solicitation, you may revoke it at any time before it is acted upon at the Annual Meeting by (i) submitting another proxy by telephone or on the Internet (only your last voting instructions will be counted); (ii) sending a later dated paper proxy; (iii) delivering to our Corporate Secretary a written notice of revocation prior to the voting of the proxy at the Annual Meeting; or (iv) if you are entitled to do so, voting in person at the Annual Meeting. Simply attending the Annual Meeting will not revoke your proxy.

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            If your shares are held in street name, you may only change your vote by submitting new voting instructions to your nominee. You must contact your nominee to find out how you can change your vote. Shares held in our Employee Savings Plan cannot be changed or revoked after 11:59 p.m. Eastern Time on April 23, 2018,20, 2020, nor can they be voted in person at the Annual Meeting.

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    IS MY VOTE CONFIDENTIAL?

            Except in contested proxy solicitations, when required by law or as expressly authorized by you (such as by making a written comment on your proxy card, in which case the comment, but not your vote, will be shared with our company), your vote or voting instruction is confidential and will not be disclosed to any other person other than to the broker, trustee, agent or other entity tabulating your vote. Our directors, officers or employees will not be able to learn how you voted.

    HOW WILL VOTES BE COUNTED?

            Votes cast by proxy or in person at the Annual Meeting will be tabulated by Broadridge Financial Solutions, Inc., the independent inspector of election appointed by our Board. The inspector of election will also determine whether a quorum is present. At the Annual Meeting, shares represented by proxies that reflect abstentions or "broker non-votes" (which are shares held by a nominee that are represented at the meeting, but with respect to which the nominee neither has non-discretionarydiscretionary authority to vote nor has been given actual authority to vote on a particular item) will be counted as shares that are present and entitled to vote at the Annual Meeting for purposes of determining the presence of a quorum. Items 1 and 2 are "non-routine" under the rules of the NYSE, and Item 3 is routine. Nominees are prohibited from voting on non-routine items in the absence of instructions from the beneficial owners of the shares; as a result, if you hold your shares in street name and do not submit voting instructions to your nominee, your shares willnot be voted on Item 1, election of directors, or Item 2, approval, on an advisory basis, of our executive compensation. We urge you to promptly provide voting instructions to your nominee so that your vote is counted.

            The vote required to approve each of the Annual Meeting items, as well as the impact of abstentions and broker non-votes, is shown in the chart below.

     
     ITEM
     VOTE
    REQUIRED

     IMPACT OF
    ABSTENTIONS

     IMPACT OF
    BROKER
    NON-VOTES

    GRAPHIC1 Election of directors Majority of votes cast Not counted as votes cast; no impact on outcome Not counted as votes cast; no impact on outcome
    GRAPHIC2 Advisory vote to approve executive compensation Majority of shares represented and entitled to vote Negative impact on outcomeNot counted as represented and entitled to vote; no impact on outcomeNegative impact on outcome
    GRAPHIC3 Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal year 20182020 Majority of shares represented and entitled to vote Not applicableNegative impact on outcome
    Not applicable

    WHAT IF THERE IS ADDITIONAL BUSINESS TO BE VOTED ON?

            As of the date of this proxy statement, we know of no other business to be presented for consideration at the meeting. However, ifIf any other business properly comes before the meeting, your vote will be cast on any such other business in accordance with the best judgment of the individuals acting pursuant to your proxy.

    HOW DO I FIND VOTE RESULTS?

            We expect to announce preliminary voting results at the Annual Meeting and report final voting results in a Current Report on Form 8-K filed with the SEC on or before May 2, 2018.April 29, 2020.

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    ANNUAL MEETING

    WHAT IS THE TIME AND LOCATION OF THE ANNUAL MEETING?

            The Annual Meeting will take place at 1:30 p.m. Pacific Time on April 26, 201823, 2020 at the Embassy Suites, 800 North Central207 Goode Avenue, Glendale, California 91203.

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    Table of Contents Parking will be available next door at 127 Burchett Street, Glendale, California 91203. Attendants will be available to provide assistance with directions and parking tickets will be validated at the Annual Meeting.

    HOW CAN I ATTEND THE MEETING?

            If you would like to attend the Annual Meeting, please bring photo identification. If you are a stockholder of record, you may bring the top half of your proxy card or your Notice to serve as your admission ticket. If you hold your shares in street name, you willmay be required to present proof of ownership to be admitted into the meeting. Acceptable documentation includes your Notice, a recent brokerage statement or a letter from your nominee evidencing your beneficial ownership of shares of our common stock as of February 26, 2018.24, 2020. If you would like to secure admission in advance, you may send a written request with proof of ownership to our Corporate Secretary at Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203.

            Stockholders will be admitted into the Annual Meeting beginning at 1:00 p.m. Pacific Time and seating will be on a first-come basis. For safety and security reasons, cameras, recording equipment, computers, or large bags or other packages will not be permitted into the meeting.

    MAY I ASK QUESTIONS AT THE MEETING?

            Our Chairman will conduct the Annual Meeting in an orderly and timely manner in accordance with our Bylaws and Delaware law. To assist him in fulfilling his responsibilities, we have established rules for stockholders wishing to address the meeting, which will be available at the meeting. Only stockholders as of the record date or their properly-appointed proxies may ask questions at the meeting, and they may do so only after recognized by our Chairman, who may limit the length of discussion on any particular matter.

            As a result of time constraints and other considerations, we cannot assure you that every stockholder wishing to address the meeting will have the opportunity to do so. However, all stockholders are invited to direct inquiries or comments regarding business matters to our Investor Relations department by email toinvestorcom@averydennison.com or by mail to Avery Dennison Corporation, 207 Goode Avenue, Glendale, California 91203. In addition, stockholders wishing to address matters to our Board or any of its members may do so as described underContacting Our Board in theOur Board of Directors section of this proxy statement.

    OTHER MATTERS

    HOW ARE PROXIES BEING SOLICITED?

            We have retained D. F. King & Co., Inc. to assist in soliciting proxies for a fee of $12,000, plus reimbursement of out-of-pocket expenses incident to preparing and mailing our proxy materials. Some of our employees may solicit proxies in person, by telephone or by email; these employees will not receive any additional compensation for their proxy solicitation efforts. We will bear all costs related to this solicitation of proxies and we will reimburse banks, brokers and other custodians, nominees and fiduciaries for reasonable out-of-pocket expenses they incur in forwarding our proxy materials to beneficial stockholders. You can help reduce these costs by electing to access proxy materials electronically.

    HOW DO I SUBMIT ITEMS FOR POTENTIAL CONSIDERATION AT THE 20192021 ANNUAL MEETING?

            To propose business otherwise satisfying the eligibility requirements of SEC Rule 14a-8 to be considered for inclusion in our proxy statement for the 20192021 Annual Meeting, you must mail proposed items so they are received at our principal executive offices on or before November 15, 2018.10, 2020. If you wish to nominate persons for election to our Board or bring any other business before an annual meeting under the advanced notice provisions or our Bylaws, you must notify our Corporate Secretary in writing 90 to 120 days prior to the first anniversary of the preceding year's annual meeting (with respect to the 20192021 Annual Meeting, no earlier than December 27, 201824, 2020 and no later than January 26, 2019)23, 2021).

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            Your notice must include, among other things, the following information:

        As to each person who you propose to nominate for election or re-election as a director:

        As to each person who you propose to nominate for election or reelection as a director:

        All information relating to the person that is required to be disclosed in solicitations of proxies for election of directors in an election contest or is otherwise required pursuant to Regulation 14 under the Exchange Act;

        The person's written consent to be named in our proxy statement as a nominee and serve as a director if elected; and

        A description of any material relationships between you (and your associates and affiliates) and the nominee (and his or her associates and affiliates), as more particularly set forth in our Bylaws;

        As to any other item of business you propose to bring before the meeting, a brief description of the business, the reasons for conducting the business at the meeting and any material interest you have in the business being proposed; and

        Your name and address, and class and number of shares you own beneficially and as of record, as well as information relating to your security ownership in our company, as described in greater detail in Article II, Section 14 of our Bylaws, which are available under Corporate Governance in the investors section of our website.

                Stockholder items of proxies for election of directors in an election contest or is otherwise required pursuant to Regulation 14 under the Exchange Act;

        The person's written consent to be named in our proxy statement as a nominee and serve as a director if elected; and

        A description of any material relationships between you (and your associates and affiliates) and the nominee (and his or her associates and affiliates), as more particularly set forth in our Bylaws;

        As to any other item of business you propose to bring before the meeting, a brief description of the business, the reasons for conducting the business at the meeting and any material interest you have in the business being proposed; and

        Your name and address, and class and number of shares you own beneficially and as of record, as well as information relating to your security ownership in our company, as described in greater detail in Article II, Section 14 of our Bylaws, a copy of which is available on our website atwww.averydennison.com/bylaws.

            We will not permit stockholder items that do not fully comply with the advance notice requirements contained in our Bylaws will not be permitted to be brought before the 20192021 Annual Meeting.

    HOW DO I NOMINATE DIRECTORS FOR INCLUSION IN THE 20192021 PROXY STATEMENT?

            Our Board recently amended our Bylaws to permit a stockholder, or a group of no more than 20 stockholders, owning at least 3% of our company's outstanding shares of common stock continuously for at least three years to nominate and include in our annual meeting proxy materials director nominees constituting up to the greater of two nominees or 20% of our Board, subject to the requirements specified in Article II, Section 17 of our Bylaws, a copywhich are available under Corporate Governance in the investors section of which is available on our website atwww.averydennison.com/bylaws.website. Notice of proxy access director nominees for the 20192021 Annual Meeting must be delivered to our Corporate Secretary at our principal executive offices no earlier than October 16, 201811, 2020 and no later than November 15, 201810, 2020 and must otherwise comply with our Bylaws.

    Avery Dennison Corporation| 2018 Proxy Statement  |  962020 Proxy Statement    91


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    APPENDIX A —
    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TOFROM GAAP

            We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results that are prepared in accordance with GAAP. Based upon feedback from investors and financial analysts, we believe that the supplemental non-GAAP financial measures we provide are useful to their assessmentsassessment of our performance and operating trends, as well as liquidity.

            Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it difficult to assess our underlying performance in a single period. By excluding the accounting effects, both positive andor negative, of certain items (e.g.,(such as restructuring charges, legal settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains andor losses from curtailment andor settlement of pension obligations, gains or losses on sales of certain assets, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. These non-GAAP financial measures are used internally to evaluate trends in our underlying performance, as well as to facilitate comparison to the results of competitors for a single period. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency, or timing.

            We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparison to the results of competitors for a single period.

            We use the following non-GAAP financial measures in this proxy statement:

        Sales change ex. currency refers to the increase or decrease in sales excluding the estimated impact of foreign currency translation. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations.

        Organic sales change refers to the increase or decrease in sales excluding the estimated impact of foreign currency translation, product line exits, acquisitions and divestitures, and, where applicable, an extra week in our fiscal year.

      Sales change ex. currency refers to the increase or decrease in net sales excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustment for transitional reporting of highly inflationary economies (Argentina). Segment results are also adjusted for the reclassification of sales between segments. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior period results translated at current period average exchange rates to exclude the effect of currency fluctuations.

      Organic sales change refers to sales change ex. currency, excluding the estimated impact of product line exits, acquisitions and divestitures, and, where applicable, the extra week in our fiscal year.

      We believe that sales change ex. currency and organic sales change assist investors in evaluating the sales growthchange from the ongoing activities of our businesses and provide greaterenhance their ability to evaluate our results from period to period.

        Adjusted net income per common share, assuming dilution (adjusted EPS), refers to adjusted net income divided by weighted average number of common shares outstanding, assuming dilution. Adjusted net income is income from continuing operations before taxes, tax-effected at the adjusted tax rate, and adjusted for tax-effected restructuring charges and other items. Adjusted tax rate is the full-year GAAP tax rate, adjusted to exclude certain unusual or infrequent events that are expected to significantly impact that rate, such as impacts related to the enactment of the U.S. Tax Cuts and Jobs Act (TCJA) and our U.S. pension plan termination, effects of certain discrete tax planning actions, and other items. We believe that adjusted EPS assists investors in understanding our core operating trends and comparing our results with those of our competitors.

        Free cash flow refers to cash flow provided by operating activities, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments. Free cash flow is also adjusted for the cash contributions related to the termination of our U.S. pension plan. We believe that free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases, and acquisitions.

        Return on total capital (ROTC) refers to net income excluding the expense and tax benefit of debt financing divided by the average of beginning and ending invested capital.Adjusted ROTC refers to ROTC adjusted for the impact of the TCJA and pension plan settlements. We believe that ROTC and adjusted ROTC assist investors in understanding our ability to generate returns from our capital.

        Adjusted net income per common share, assuming dilution (adjusted EPS), refers to adjusted net income divided by weighted average number of common shares outstanding, assuming dilution. Adjusted net income is income from continuing operations before taxes tax-effected at the full-year GAAP tax rate and adjusted for tax-effected restructuring charges and other items. Adjusted tax rate is the full-year GAAP tax rate adjusted to include the impact of previously planned repatriation of foreign earnings for the fourth quarter of 2017 and exclude the reasonable estimate ("provisional amount") of the impact of the ("TCJA"). We believe that adjusted EPS assists investors in understanding our core operating trends and comparing our results with those of our competitors.

        Free cash flow refers to cash flow from operations, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from sales (purchases) of investments. We believe that free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases, and acquisitions.

        Return on total capital (ROTC) refers to income from continuing operations excluding the expense and tax benefit of debt financing divided by the average of beginning and ending invested capital. Adjusted ROTC refers to ROTC adjusted for the impact of the TCJA. We believe that ROTC and adjusted ROTC assist investors in understanding our ability to generate returns from our capital.

        Adjusted EBIT refers to earnings before interest expense and taxes, excluding non-cash restructuring costs, andas well as other items. We believe that adjusted EBIT assists investors in understanding our core operating trends and comparing our results with those of our competitors. We use adjusted EBIT to calculate economic value added (EVA).

        Avery Dennison Corporation| 2018 Proxy Statement |A-1


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        ORGANIC SALES CHANGE

        ($ in millions)
         2013
         2014
         2015
         2016
         2017
         4-YR CAGR(1)

        Net sales

         $6,140.0 $6,330.3 $5,966.9 $6,086.5 $6,613.8  

        Reported sales change

           3.1% (5.7)% 2.0% 8.7%  

        Foreign currency translation

           1.1% 8.6% 2.6% (0.5)%  

        Sales change ex. currency (non-GAAP)

           4.2% 2.9% 4.6% 8.2%  

        Extra week impact

           ~(1.2)% ~1.2%    

        Acquisitions/divestiture

            0.6% (0.7)% (3.9)%  

        Organic sales change (non-GAAP)(2)

           3.1% 4.6% 3.9% 4.2% 4.0%

        (1)
        Compound Annual Growth Rate
        (2)
        Totals may not sum due to rounding and other factors.

        ADJUSTED EARNINGS PER SHARE (EPS)

         
         2013
         2014
         2015
         2016
         2017
         4-YR CAGR(1)
         2017 Growth
         

        As reported net income per common share from continuing operations, assuming dilution

         $2.41 $2.58 $2.95 $3.54 $3.13       

        Adjustments(2)

         $0.03 $0.04             

        Previously reported net income per common share from continuing operations, assuming dilution

         $2.44 $2.62 $2.95 $3.54 $3.13       

        Non-GAAP adjustments per common share, net of tax:

                              

        Restructuring charges and other items

         $0.24 $0.49 $0.49 $0.48 $0.29       

        Estimated tax provision impact resulting from the TCJA(3)

                 $1.91       

        Impact of previously planned repatriation of foreign earnings for Q4 2017

                 $(0.33)      

        Adjusted net income per common share from continuing operations, assuming dilution (non-GAAP)

         $2.68 $3.11 $3.44 $4.02 $5.00  16.9% 24.4%

        (1)
        Compound Annual Growth Rate
        (2)
        GAAP adjustments for 2013-2015 reflect the previously disclosed impact, one of the third quarter of 2015 revision to certain benefit plan balances, which had an immaterial impact on the non-GAAP amounts.
        (3)
        Our income tax provision for fiscal year 2017 includes the provisional estimated impact of the TCJA. The TCJA significantly revises U.S. corporate income taxation, among other changes, lowering corporate income tax rates, implementing a territorial tax regime, and imposing a one-time transition tax through a deemed repatriation of accumulated untaxed earnings and profits of foreign subsidiaries. This provision includes a reasonable estimate ("provisional amount") of the impact of the TCJA onperformance objectives used in our tax provision following the guidance of SEC Staff Accounting Bulletin No. 118 (SAB 118).
        long-term incentive compensation program.

        Avery Dennison Corporation| 2018 Proxy Statement |A-2

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        ORGANIC SALES CHANGE

        ($ in millions)
        2015
        2016
        2017
        2018
        2019
        2015-2019
        5-YR CAGR(1)

        2017-2019
        3-YR CAGR(2)

        Net sales

        $5,966.9$6,086.5$6,613.8$7,159.0$7,070.1  

        Reported sales change

        (5.7)%2.0%8.7%8.2%(1.2)%  

        Foreign currency translation

        8.6%2.6%(0.5)%(1.4)%3.3%  

        Sales change ex. currency (non-GAAP)(3)

        2.9%4.6%8.2%6.9%2.0%4.9%5.7%

        Extra week impact

        ~1.2%  

        Acquisitions/divestiture

        0.6%(0.7)%(3.9)%(1.4)%  

        Organic sales change (non-GAAP)(3)

        4.6%3.9%4.2%5.5%2.0%4.0%3.9%
        (1)
        Reflects five-year compound annual growth rate, with 2014 as the base period.
        (2)
        Reflects three-year compound annual growth rate, with 2016 as the base period.
        (3)
        Totals may not sum due to rounding and other factors.

        ADJUSTED EARNINGS PER SHARE (EPS)

         
        2015
        2016
        2017
        2018
        2019
        2015-2019
        5-YR CAGR(1)

        2017-2019
        3-YR CAGR(2)

        As reported net income per common share from continuing operations, assuming dilution

        $2.95$3.54$3.13$5.28$3.57  

        Non-GAAP adjustments per common share, net of tax:

               

        Restructuring charges and other items(3)

        0.490.480.290.680.47  

        Pension plan settlements and related charges

        0.843.12  

        Tax benefit from discrete foreign tax structuring and planning transactions

        (0.35)(0.56)  

        TCJA provisional amounts and subsequent adjustments(4)

        1.91(0.39)  

        Impact of previously planned repatriation of foreign earnings for Q4 2017

        (0.33)  

        Adjusted net income per common share from continuing operations, assuming dilution (non-GAAP)

        $3.44$4.02$5.00$6.06$6.6016.2%18.0%

        The adjusted tax rate was 28.0%, 25.0% and 24.6% for 2017, 2018 and 2019, respectively.

        (1)
        Reflects five-year compound annual growth rate, with 2014 as the base period.
        (2)
        Reflects three-year compound annual growth rate, with 2016 as the base period.
        (3)
        Includes restructuring charges, Argentine peso remeasurement transition loss, other restructuring-related charge, transactions costs, reversal of acquisition-related contingent consideration, net gain on sales of assets, and other items.
        (4)
        In the fourth quarter of 2018, we finalized our provisional amounts as defined under SEC Staff Accounting Bulletin No. 118 related to the TCJA.

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        FREE CASH FLOW

        ($ in millions)
         2015
         2016
         2017
         2017
         2018
         2019

        Net cash provided by operating activities

         $473.7 $585.3 $650.1 $645.7 $457.9 $746.5

        —Purchases of property, plant and equipment

         (135.8) (176.9) (190.5)

        —Purchases of software and other deferred charges

         (15.7) (29.7) (35.6)

        —Proceeds from sales of property, plant and equipment

         7.6 8.5 6.0

        —Purchases of investments, net

         (0.5) (0.1) (8.3)

        Free cash outflow from discontinued operations

         .1  

        Purchases of property, plant and equipment

         (190.5) (226.7) (219.4)

        Purchases of software and other deferred charges

         (35.6) (29.9) (37.8)

        Proceeds from sales of property, plant and equipment

         6.0 9.4 7.8

        Proceeds from insurance sales (purchases) of investments, net

         (3.9) 18.5 4.9

        Plus: Pension plan contributions for plan termination

          200.0 10.3

        Free cash flow (non-GAAP)

         $329.4 $387.1 $421.7 $421.7 $429.2 $512.3

        RETURN ON TOTAL CAPITAL (ROTC)

        ($ in millions)
         2016
         2017
         Adjusted
        2017 ROTC

        As reported net income

         $320.7 $281.8 $281.8

        Estimated tax provision impact resulting from the TCJA(1)

           $172.0

        Impact of previously planned repatriation of foreign earnings for Q4 2017

           $(29.4)

        Interest expense, net of tax benefit

         40.3 30.1 45.4

        Effective tax rate(1)

         32.8% 52.2% 28.0%

        Income from operations, excluding expense and tax benefit of debt financing (non-GAAP)

         $361.0 $311.9 $469.8

        Total debt

         $1,292.5 $1,581.7 $1,581.7

        Shareholders' equity

         $925.5 $1,046.3 $1,046.3

        Estimated tax provision impact resulting from the TCJA(1)

           $172.0

        Impact of previously planned repatriation of foreign earnings for Q4 2017

           $(29.4)

        Total debt and shareholders' equity

         $2,218.0 $2,628.0 $2,770.6

        Return on Total Capital (ROTC) (non-GAAP)

         17.0% 12.9% 18.8%

        ($ in millions)
        2017
        2018
        2019
        2018 Adjusted
        ROTC

        2019 Adjusted
        ROTC

        Net income

        $281.8$467.4$303.6$467.4$303.6

        Pension plan settlements and related charges

           93.7444.1

        Tax benefit from pension plan contributions

           (31.0) 

        Tax benefit from pension plan settlements

           (19.3)(179.0)

        Interest expense, net of tax benefit(1)(2)

        30.149.557.243.957.2

        Effective tax rate(2)

        52.2%15.4%24.6%25.0%24.6%

        Income from operations, excluding expense and tax benefit of debt financing (non-GAAP)

        311.9516.9360.8554.7625.9

        Total debt


        $1,581.7

        $1,966.2

        $1,939.5

        $1,966.2

        $1,939.5

        Shareholders' equity

        1,046.2955.11,204.0955.11,204.0

        Pension plan settlements and related changes

           93.7444.1

        Tax benefit from pension plan contributions

           (31.0) 

        Tax benefit from pension plan settlements

           (19.3)(179.0)

        Total debt and shareholders' equity

        $2,627.9$2,921.3$3,143.5$2,964.7$3,408.6

        Return on Total Capital (ROTC) (non-GAAP)

        12.9%18.6%11.9%19.3%19.6%
        (1)
        Our incomeInterest expense, net of tax provisionbenefit for fiscal year 2017 includes2019, based on our GAAP tax rate of (22.7)%, is not meaningful. Applying the provisional estimated impactadjusted tax rate of 24.6% removes the benefit of the TCJA. negative tax rate from pension plan settlements and discrete foreign tax structuring and planning transactions.
        (2)
        The TCJA significantly revises U.S. corporate income taxation, among other changes, lowering corporate incomeadjusted tax rates, implementing a territorial tax regime,rate was 28.0%, 25.0% and imposing a one-time transition tax through a deemed repatriation of accumulated untaxed earnings24.6% for 2017, 2018 and profits of foreign subsidiaries. This provision includes a reasonable estimate ("provisional amount") of the impact of the TCJA on our tax provision following the guidance of SEC Staff Accounting Bulletin No. 118 (SAB 118).2019, respectively.

        ADJUSTED EARNINGS BEFORE INTEREST AND TAXES (EBIT)

        ($ in millions)
         2014
         2015
         2016
         2017

        As reported income from continuing operations before taxes

         $360.8 $408.9 $477.1 $589.5

        Adjustments(1)

         3.6 (1.0)  

        Previously reported income from continuing operations before taxes Adjustments:

         $364.4 $407.9 $477.1 $589.5

        Non-cash restructuring costs

         10.7 6.4 4.1 1.0

        Other items(2)

         2.1 8.8 45.3 3.1

        Interest expense

         63.3 60.5 59.9 63.0

        Adjusted operating income before interest expense, taxes, non-cash restructuring costs and other items (non-GAAP)

         $440.5 $483.6 $586.4 $656.6

        ($ in millions)
         2017
         2018
         2019

        Net income

         $281.8 $467.4 $303.6

        Reconciling items:

              

        Interest expense

         63.0 58.5 75.8

        Provision for (benefit from) income taxes

         307.7 85.4 (56.7)

        Earnings before interest expense and taxes

         $652.5 $611.3 $322.7

        Adjustments:

              

        Non-cash restructuring costs

         1.0 9.9 4.8

        Other items(1)

         3.1 91.9 449.4

        Adjusted earnings before interest expense, taxes, non-cash restructuring costs and other items (non-GAAP)

         $656.6 $713.1 $776.9
        (1)
        GAAP adjustments for 2014Includes pension plan settlements and 2015 reflect the previously disclosed impact of the third quarter of 2015 revision to certain benefit plan balances, which had an immaterial impact on the non-GAAP amounts.

        (2)
        Includes loss from settlement of pension obligations,related charges, transaction costs, net gainsgain on sales of assets, equity method investment losses and other items.

        Avery Dennison Corporation|94    20182020 Proxy Statement  |  A-3Avery Dennison Corporation


        Table of Contents

        LOGO


         

        AVERY DENNISON CORPORATION

        C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC.

        P.O. BOX 1342

        BRENTWOOD, NY 11717

        VOTE BY INTERNET - www.proxyvote.com

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        VIEW MATERIALS & VOTE w SCAN TO AVERY DENNISON CORPORATION C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on April 20, 2020 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 22, 2020 for shares held directly and by 11:59 p.m. Eastern Time on April 20, 2020 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E89166-P32305 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. AVERY DENNISON CORPORATION The Board of Directors recommends you vote FOR the following nominees: For Against Abstain The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain 1. Election of Directors ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 2. Approval, on an advisory basis, of our executive compensation. 1a. Bradley Alford 3. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2020. 1b. Anthony Anderson 1c. Peter Barker NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof. 1d. Mark Barrenechea 1e. Mitchell Butier 1f. Ken Hicks 1g. Andres Lopez 1h. Patrick Siewert 1i. Julia Stewart 1j. Martha Sullivan ! For address change/comments, mark here. (see reverse for instructions) Please indicate if you plan to attend this meeting. ! Yes ! No Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date

         

        E35648-P00674

        KEEP THIS PORTION FOR YOUR RECORDS

        THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

        DETACH AND RETURN THIS PORTION ONLY

               AVERY DENNISON CORPORATION

        The Board of Directors recommends you vote FOR the following nominees:

        1.

        Election of Directors

        For

        Against

        Abstain

        The Board of Directors recommends you vote FOR proposals 2 and 3.

        For

        Against

        Abstain

        1a.

        Bradley Alford

        o

        o

        o

        2.

        Approval, on an advisory basis, of our executive compensation.

        o

        o

        o

        1b.

        Anthony Anderson

        o

        o

        o

        3.

        Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2018.

        o

        o

        o

        1c.

        Peter Barker

        o

        o

        o

        1d.

        Mitchell Butier

        o

        o

        o

        NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof.

        1e.

        Ken Hicks

        o

        o

        o

        1f.

        Andres Lopez

        o

        o

        o

        1g.

        David Pyott

        o

        o

        o

        1h.

        Dean Scarborough

        o

        o

        o

        1i.

        Patrick Siewert

        o

        o

        o

        1j.

        Julia Stewart

        o

        o

        o

        1k.

        Martha Sullivan

        o

        o

        o

        For address change/comments, mark here.

        o

        (see reverse for instructions)

        Please indicate if you plan to attend this meeting.

        o

        o

        Yes

        No

        Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

        Signature [PLEASE SIGN WITHIN BOX]

        Date

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        Date


        Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

        The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.www.proxyvote.com. E89167-P32305 AVERY DENNISON CORPORATION ANNUAL MEETING OF STOCKHOLDERS APRIL 23, 2020 THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS The undersigned hereby appoints Susan Miller and Vikas Arora, or each of them, with full power of substitution, proxies for the undersigned to act and vote at the 2020 Annual Meeting of Stockholders of Avery Dennison Corporation and at any adjournment or postponement thereof as indicated upon the matters set forth on the reverse side and described in the proxy statement for the meeting, and, in their discretion, upon any other matters that may properly come before the meeting. This card provides voting instructions, as applicable, to (i) the appointed proxies for shares held of record by the undersigned, including those held under the Company's Direct Share Purchase and Sale Program, and (ii) the Trustee for shares held on behalf of the undersigned in the Company's Employee Savings Plan. IF NO OTHER INDICATION IS MADE, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL DIRECTOR NOMINEES, AND FOR PROPOSALS 2 AND 3. Consistent with its fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended, Fidelity Management Trust Company, as Trustee of the Avery Dennison Corporation Employee Savings Plan, will vote shares of Company stock for which timely instructions are not received and shares of Company stock that have not been allocated to the account of any participant in the same proportion in which allocated shares of Company stock are voted by participants who timely furnish voting instructions. The card must be received no later than 5:00 p.m. Eastern Time on April 20, 2020, and telephone and Internet votes must be completed by 11:59 p.m. on the same day. Your voting instructions are confidential and may not be revealed to anyone, except as required by law. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side Address Changes/Comments:

         

        E35649-P00674

        AVERY DENNISON CORPORATION

        ANNUAL MEETING OF STOCKHOLDERS

        APRIL 26, 2018

        THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

        The undersigned hereby appoints Susan Miller and Vikas Arora, or each of them, with full power of substitution, proxies for the undersigned to act and vote at the 2018 Annual Meeting of Stockholders of Avery Dennison Corporation and at any adjournment or postponement thereof as indicated upon the matters set forth on the reverse side and described in the proxy statement for the meeting, and, in their discretion, upon any other matters that may properly come before the meeting. This card provides voting instructions, as applicable, to (i) the appointed proxies for shares held of record by the undersigned, including those held under the Company's Direct Share Purchase and Sale Program, and (ii) the Trustee for shares held on behalf of the undersigned in the Company's Employee Savings Plan.

        IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION OF ALL DIRECTOR NOMINEES, AND FOR PROPOSALS 2 AND 3.

        Consistent with its fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended, Fidelity Management Trust Company, as Trustee of the Avery Dennison Corporation Employee Savings Plan, will vote shares of Company stock for which timely instructions are not received and shares of Company stock that have not been allocated to the account of any participant in the same proportion in which allocated shares of Company stock are voted by participants who timely furnish voting instructions. The card must be received no later than 5:00 p.m. Eastern Time on April 23, 2018, and telephone and Internet votes must be completed by 11:59 p.m. on the same day.

        Your voting instructions are confidential and may not be revealed to anyone, except as required by law.

        Address change/comments:

        (If you noted any address changes and/or comments above, please mark corresponding box on the reverse side.)

        Continued and to be signed on reverse side