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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

​

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐
Preliminary Proxy Statement
​
☐
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
​
☒
Definitive Proxy Statement
​
☐
Definitive Additional Materials
​
☐
Soliciting Material Pursuant to §240.14a-12
​
W.W. Grainger, Inc.
​
(Name of registrant as specified in its charter)
​
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒
No fee required.
​
☐
Fee paid previously with preliminary materials.
​
☐
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
​
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We Keep the World Working®
Notice of 2023 Annual Meeting of Shareholders
and Proxy Statement​
Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material under §240.14a-12


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W.W. Grainger, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ý

No fee required.

o

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:

o

Fee paid previously with preliminary materials.

o

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



(1)

Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
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LOGO

W.W. GRAINGER, INC.
100 Grainger Parkway
Lake Forest, Illinois 60045-5201
(847) 535-1000
March 16, 2023
[MISSING IMAGE: ph_macpherson-4c.jpg]
W.W. GRAINGER, INC.
100 GRAINGER PARKWAY
LAKE FOREST, ILLINOIS 60045-5201
(847) 535-1000

PHOTO

March 18, 2021

Dear Grainger Shareholders:

We are pleased to invite you to attend virtually the 20212023 annual meeting of shareholders of W.W. Grainger, Inc. on Wednesday, April 28, 2021,26, 2023, at 10 a.m. Central Daylight Time. This year'syear’s annual meeting will be held as a virtual meeting with no in-person attendance.

at our headquarters located at 100 Grainger Parkway in Lake Forest, Illinois 60045.

At the meeting, we will report on our operations and other matters of current interest. Shareholders will also vote on the matters described in the accompanying Notice of Virtual Annual Meeting of Shareholders and Proxy Statement and any other matters properly brought before the meeting.

As in prior years, we have elected to deliver our proxy materials to the majority of our shareholders over the Internet. This delivery process allows us to provide shareholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. The Notice of Virtual Annual Meeting of Shareholders on the following page contains instructions on how to:

•

vote by Internet, by telephone or by mail; and

​
•

receive a paper copy of the proxy materials by mail.

​
Please take the time to carefully read the Notice of Virtual Annual Meeting of Shareholders and Proxy Statement that follow. Whether or not you plan to attend the meeting, please ensure that your shares are represented by giving us your proxy. You can do so by telephone, by Internet, or by signing and dating the enclosed proxy form and returning it promptly in the envelope provided.

We look forward to your participation inat the meeting.

Sincerely,
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D.G. Macpherson
Chairman of the Board and Chief Executive Officer
​

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Sincerely,



GRAPHIC



D.G. Macpherson
Chairman of the Board and Chief Executive Officer

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NOTICE OF VIRTUAL ANNUAL MEETING

OF SHAREHOLDERS

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For additional information about our annual meeting, see Questions and Answers beginning on page 93.
MEETING AGENDA

​Proposal

Proposal
Board
Recommendation
For more
information

​​​ Board
Recommendation		​​For more
information		​
​1.​​​​ ​​
1.to elect 13 Directors11 Director nominees named in the proxy statement for the ensuing year​​
FOR

(all nominees)
​​Page 1211​

​
2.
2.​
​
to ratify the appointment of Ernst & Young LLP as independent auditor for the year ending December 31, 2021; and2023
​
FOR​
FOR
​		​Page 4245

​

​
3.
3.​
​
to approve on a non-binding advisory basis the compensation of Grainger'sGrainger’s Named Executive Officers
​
FOR​

Page 81

​ FOR​​​​ Page 89​
​4.​​to select on a non-binding advisory basis the frequency of the advisory vote on the compensation of Grainger’s Named Executive Officers​​ONE YEAR​​Page 90​

We will also consider any other matters that may properly be brought before the meeting (and any postponements or adjournments of the meeting). As of the date of this proxy statement,Notice of Annual Meeting of Shareholders, we have not received notice of any such matters.

VOTING

Shareholders of W.W. Grainger, Inc. (Grainger or the Company), as of the record date, are entitled to vote, as follows:

•

Shareholders have the right to cumulative voting in the election of Directors. For a definition of cumulative voting, see Questions and Answers—Voting Information / Information/What is cumulative voting? How many votes do I have?/page 85,94; and

​
•

Each share of Grainger common stock is entitled to one vote for each of the other proposals.
​
​
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GRAPHIC​
Internet​
GRAPHIC​​GRAPHIC
Telephone​
​​
Mail​
​
Internet​TelephoneMail
www.proxyvote.com

up until 11:59 p.m. EDT

on April 27, 2021

During the Meeting:
www.virtualshareholdermeeting.com/GWW202125, 2023*
​​1-800-690-6903

up until 1:00 a.m. CDT, 11:59 p.m. EDT,
on April 28, 202125, 2023*		​​Mark, sign and date your proxy card and
return it in the pre-addressed
postage-paid
envelope we have provided or return it to:

Vote Processing

c/o Broadridge

51 Mercedes Way

Edgewood, NY 11717		​
​* Until 11:59 p.m. EDT on April 23, 2023, if your shares are held in the W.W. Grainger, Inc. Retirement Savings Plan, the W.W. Grainger, Inc. 401(k) Plan or the Company’s Employee Stock Purchase Plan​

Regardless of whether you plan to attend the virtual annual meeting,Annual Meeting, we hope you will vote as soon as possible. You may vote your shares during the virtual annual meeting,Annual Meeting, over the Internet or via a toll-free telephone number. If you received a paper copy of a proxy or a voting instruction card by mail, you also may submit your proxy or voting instruction card before the annual meeting by completing, signing, dating and returning your proxy or voting instruction card in the pre-addressed envelope provided. For specific instructions on voting, please refer to the section,see Questions and Answers—Voting Information / page 85.

pages 93-96.


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VIRTUAL MEETING

Due to the public health impact of the COVID-19 pandemic, the 2021 annual meeting will be a virtual meeting without in-person attendance. To virtually attend the annual meeting at www.virtualshareholdermeeting.com/GWW2021 (the "Annual Meeting Website"), you must enter the 16-digit control number found on your proxy card or voting instruction form (the "Control Number"). You may vote your shares and submit your questions during the virtual annual meeting by entering your Control Number and following the instructions also available on the Annual Meeting Website.

Whether or not you plan to virtually attend the annual meeting, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described in the proxy materials for the annual meeting. Shareholders who have sent in proxies or voted via telephone or internet do not need to take any further action. As always, we encourage you to vote your shares prior to the annual meeting.


PROXY MATERIALS

This Notice of Virtual Annual Meeting of Shareholders, the following Proxy Statement and the accompanying Form of Proxy were first distributed or made available to shareholders on or about March 18, 2021.

16, 2023.

By order of the Board of Directors.

GRAPHIC

Hugo Dubovoy, Jr.

[MISSING IMAGE: sg_nancylberardinellikr-bw.jpg]
Nancy L. Berardinelli-Krantz
Senior Vice President Corporate Secretary

& Chief Legal Officer

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 2021

26, 2023

This Notice of Virtual Annual Meeting of Shareholders, the following Proxy Statement, andthe accompanying Form of Proxy and our 20202022 Annual Report on Form 10-K are available under "Financials"“Financials” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.comand also may be obtained free of charge on written request to the Corporate Secretary at Grainger'sGrainger’s headquarters, 100 Grainger Parkway, Lake Forest, Illinois 60045-5201.

60045-5201.


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​CORPORATE GOVERNANCE​​​​1​​
 CORPORATE GOVERNANCE​1

The Role of the Board

1
​ ​​​​1​​
​
The COVID-19 PandemicBoard Actions
​​​​1​1​
Board Actions​
1
Corporate Culture: The Grainger Edge​​​​2​2​
​
Corporate Governance Practices
​​​​4​4​
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Operating Principles offor the Board of Directors
4

Director Independence

4
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Director Independence		​​​​5​​
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Board Qualifications, Attributes, Skills and Background


5
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Director Nominees’ Qualifications, Attributes, Skills and Background Matrix
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Board Refreshment Process
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Board Tenure
​​​​8​9​
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Board Diversity—Rooney RuleDiversity
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Rooney Rule
​​​​9​​
​Attendance of Directors at Meetings

9
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Annual Election of Directors

9
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Candidates for Board Membership

10
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Director Nominees' Experience and Qualifications
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119
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Proposal 1:Annual Election of Directors

12
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2020 Board Meetings and Committee Membership
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209
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Audit Committee
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21Candidates for Board Membership
​​​​10​​
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PROPOSAL 1: ELECTION OF DIRECTORS
​​​​11​​
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Director Nominees’ Experience and Qualifications
​​​​11​​
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Board and Committee Meetings; Executive Sessions
​​​​23​​
​Board Committees & Membership​​​​23​​
​Audit Committee​​​​24​​
​Board Affairs and Nominating Committee

22
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Compensation Committee of the Board

23
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Leadership Structure
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2426
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Lead Director

24
​Leadership Structure​​​​27​​
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Lead Director		​​​​27​​
​Board, Committee and Director Evaluations

25
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Process26
Actions28

Board Oversight

28
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Board's2022 Evaluation Process
​​​​29​​
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Actions
​​​​30​​
​Board Oversight​​​​31​​
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Board’s Role in Shareholder Engagement
​​​​31​28​
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Succession Planning, Talent and Human Capital Management
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Board'sBoard’s Role in Risk Oversight
​​​​33​30​
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Environmental, Social and Governance (ESG)


30
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Political Activity

32
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ESG Oversight and Governance
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Environmental
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Social
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ESG Reporting
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​Political Activity​​​​36​​
​Other Communications with Directors

33
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Available Information

33
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​Available Information​​​​37​​
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Business Conduct Guidelines
​​​​37​33​
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Operating Principles for the Board of Directors
33
Committee Charters33
ESG Report33

Director Compensation

34
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2020 Director CompensationCommittee Charters
​​​​37​35​
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Environmental, Social and Governance Report
​​​​37​​
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Note About Reports and Websites
​​​​37​​
​Director Compensation​​​​38​​
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2022 Director Compensation Table
​​​​39​​
​Ownership of Grainger Stock

36
​ ​​​​40​​
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Security Ownership of Certain Beneficial Owners
​​​​40​36​
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Security Ownership of Directors and Management
​​​​41​38​
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Delinquent Section 16(a) Reports		​​​​42​​
​Report of the Audit Committee

40
​ ​​​​43​​
​

Audit Fees and Audit Committee Pre-Approval
Policies and Procedures


41
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Pre-approval Policy for Audit and Non-Audit Services
41

Proposal 2: Ratify the Independent Auditor

42
​ ​​​​44​​
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PROPOSAL 2: RATIFY THE INDEPENDENT AUDITOR
​​​​45​​
​
Report of the Compensation Committee of the
Board


43
​ ​​

Independent Compensation Consultant; Fees

43
​ ​​



 EXECUTIVE COMPENSATION

 COMPENSATION DISCUSSION AND ANALYSIS

45

CEO Pay Ratio Disclosure

79
​ ​​

Proposal 3: Say on Pay

81
​ ​​

Equity Compensation Plans

82
​​​​46​​
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EXECUTIVE COMPENSATION		​​​​47​​
​Compensation Discussion and Analysis​​​​47​​
​CEO Pay Ratio​​​​82​​
​Pay Versus Performance Disclosure​​​​84​​
​PROPOSAL 3: SAY ON PAY​​​​89​​
​PROPOSAL 4: SAY WHEN ON PAY​​​​90​​
​Equity Compensation Plans​​​​91​​
​Transactions with Related Persons

83
​ ​​



 QUESTIONS AND ANSWERS84

Virtual Meeting

84
​ ​​

Proxy Materials

8492
​ ​​

Voting Information

85
​QUESTIONS AND ANSWERS​​​​93​​
​
Proxy Materials		​​​​93​​
​Voting Information​​​​93​​
​
Information Notnot Incorporated Into This Proxy
Statement


88
​ ​​​​97​​

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Forward-Looking Statements
​		​​​97​​
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APPENDIX A—CATEGORICAL STANDARDS FOR DIRECTOR INDEPENDENCE
​​​​A-1​​

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APPENDIX B—DEFINITIONS AND NON-GAAP FINANCIAL MEASURES AND DEFINITIONS
​​​​B-1​​

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CORPORATE GOVERNANCE

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THE ROLE OF THE BOARD

The Board of Directors of the Company (the Board) acts asis the steward of the Company. OurThe Directors bring to the Boardhave a wealth of business experience and a solid track record of good business judgment in situations relevant to the Company's operationsCompany’s strategy and strategy.

operations.

The Board recognizes the importance of ensuring that our strategy is designed and executed to create sustainable long-term value for Grainger'sGrainger’s shareholders and other stakeholders. The Board maintainsplays an active role in formulating planningstrategy and overseeing theits implementation of Grainger's strategy as to business, operational, financial, regulatory, and environmental, social and governance (ESG) matters.

The Board has a robust annual strategic planning process during which key elements of our business, and financial plans, strategies and near-term and long-term initiatives are developedexplained and reviewed. This process culminates with a full-day Board session with our senior leadership team to review Grainger'sGrainger’s overall strategy, talent, opportunities, challengescapabilities as well as risks and capabilities. The annual strategy process also helps shape the strategic content presented in our communications with the investment community.challenges. In addition to business strategy, the Board reviews Grainger'sGrainger’s short-term and long-term financial plans, which serve as the basis for the annual operating and capital plans for the upcoming year. The annual strategy process also helps shape the strategic content presented in our communications with the investment community. In addition to annual strategic reviews, the Board evaluatesworks with the Company’s ERM Audit team in its consultation with external advisors on a biennial basis to identify and prioritize key risks to the Company based on factors such as materiality and timeline implications. Further, the Board’s continuous evaluation of the Company’s strategic progress made as well as related challenges and risk oversight enables it to identify new opportunities and emerging risks with respect to our strategy and plans throughout the year. In addition, through
Through its Committees, the Board oversees Grainger'sGrainger’s approach to ESG.

The COVID-19 Pandemic

As part of In addition, at least annually, management briefs the Board's strategic guidance and oversight, it has engaged with management to make sure the Company is able to successfully adjust to changing environments during the COVID-19 pandemic. Throughout the pandemic, Grainger has been an essential business supporting hospitals, governments, first responders, food manufacturers, distribution companies and other customers who depend on our products and services to combat the virusentire Board on the front linesCompany’s progress in executing its ESG strategy and keep their businesses up and running. delivering on its commitments.

The Board has closely monitoredmonitors and helpedhelps ensure that Grainger'sGrainger’s management processes and financial resources have been effectively deployed to fulfill our purpose—"“We Keep the World Working"Working”—and to remain the go-to-partnergo-to partner for people who build and run safe, sustainable, and productive operations. With healthIn 2023, the Company will focus on the following four priorities as the primary focus, we established three priorities during this challenge:

    •
    first, continuingaim to servecontinue serving our customers well;

    better than anyone else, grow market share profitably, and make Grainger a great place to work:
•
second, supporting
Drive profitable market share gains by delivering on our growth drivers and service improvements;
​
•
Integrate operational excellence and productivity in all we do to keep our business healthy and sustainable;
​
•
Strengthen our culture and ensure an outstanding team membersmember experience by providing a safe environmentconsistently demonstrating our principles; and job continuity;
​
•
Meet our financial goals across both the high-touch solutions and

•
third, preserving a strong financial and liquidity position to execute business plans and remain positioned to succeed beyond this pandemic.

endless assortment models.

​
Board Actions

The Board believes that a diverse, experienced, and vibrant board significantly contributes to the broad-based thinking needed to reach the sound decisions thatdecisions. This approach helps drive shareholder value and helps ensure that the Board is prepared to help the Company meet both current challenges and future needs. The 20212023 Board slate consists of 1311 Director nominees of varying experience and background, including fivethree non-employee Directors newly appointed since July 2014 and one new independent nominee, Katherine D. Jaspon (the New Nominee). These additions towho joined the Board in the last three years. These new Directors demonstrate itsthe Board’s commitment to gaining the benefits of different perspectives and diversity.

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Corporate Governance

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The Board'sBoard’s various experiences and viewpoints benefit the Company most when they are aligned with our global business needs, reflective of our strong corporate governance practices and consistent with our ESG

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goals. As a result of the Board'sBoard’s ongoing refreshment efforts, we have added Directors with expertise in the technology and digital space as well as in leading ESG initiatives for a global business. Our fivethree newest non-employee Directors, Rodney C. Adkins, Beatriz R. Perez,Katherine D. Jaspon, Susan Slavik Williams, Lucas E. Watson and Steven A. White, and Katherine D. Jaspon as the New Nominee, bring valuable perspectives and experiences in addition to enhancing the diversity of our Board.

Corporate Culture: The Grainger Edge

The Board strongly believes that the Company'sCompany’s culture must be stronglytightly aligned with its business strategy to create value. To that end, the Board is actively engaged with senior management in cultivating Grainger'sGrainger’s culture. The Board believes that a purpose-driven culture has been an asset of the Company that creates a sustainable competitive advantage. Building on the Company'sCompany’s strong foundation while evolving a framework to address future challenges is critical to Grainger'sGrainger’s continued success.

In 2019, the Company introduced the Grainger Edge, a new strategic framework that defines who Grainger is, why Grainger exists, and how team members work together to achieve Grainger'sGrainger’s objectives.

The Grainger Edge includes a set of principles that defines the behaviors expected from team members as they work with each other, customers and suppliers. TheyThe Edge principles support the Company'sCompany’s commitment to having an inclusive culture where all team members operate with the highest ethics in and outside of the Company'sCompany’s industry. The Board fully endorses these principles and believes that alignment to them creates value for shareholders.

The Grainger Edge also is foundational to the foundational structure for the Company'sCompany’s customer-focused business strategy, which is to consistently gain share through two distinct business models that allow it to leverage its scale and supply chain to support customers with different needs.

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The Company'sCompany aligns its pay for performance compensation philosophy aligns with the Grainger Edge and helpsto help further the Company'sCompany’s strategy and long-term value creation.

Starting this year, the Company is providing its Pay Versus Performance Disclosure reflecting compensation paid to its principal executive officers. See Pay Versus Performance Disclosure / page 84.

The Board is committed to helping the Company make the Grainger Edge a successful foundational framework for Grainger and its employees as the Company works to consistently serve customers and gain

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share. The Board understands that top talent is necessary to achieve these goals and supports the Company'sCompany’s commitment to providing employees with resources designed to help them succeed. Grainger'sThe Company’s culture and principles advance the Board'sBoard’s priority of ensuring that the Company attracts, retains, motivates and develops top diverse talent across the Company. The Board routinely conducts in-depth reviews of senior leaders and their development. This engagement gives the Board insight into the Company'sCompany’s talent and succession plans.

The Board believes a culture of ethical behavior is essential to meeting the Company'sCompany’s goals and has adopted Business Conduct Guidelines that use plain language to make expectations more understandable and encourage a "speak up"“speak up” culture for early issue identification. The Business Conduct Guidelines apply to all Directors, officers and employees.

In 2022 the Business Conduct Guidelines were reviewed and updated to make clear the Company’s expectations on diversity, equity and inclusion (DEI), intellectual property and data protection, responsible sourcing, and social media usage.

Delivering business results and creating a sustainable business that does the right thing has guided the Company for more than 90 years. The continuing commitment to these objectives is seen in the Company'sCompany’s ESG initiatives. The Board believes that a thoughtfully articulated ESG approach can help build resilient processes, keep employees more engaged and enable quicker decision-making. Our commitment to ESG has served us well in the COVID-19 pandemic. Safety has been one of our key guiding pillars, and theThe investments we have made over time in building a sustainable end-to-end supply chain have allowed us to continue to serve our customers well. Please see the sectionSee Environmental, Social and Governance (ESG) / page 30.

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Corporate Governance

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Collectively, the activities of the Board and its Committees in reviewing strategy, ESG, culture, talent and ethical behavior enable Graingerthe Company to help millions of customers worldwide keep their operations running and their people safe.

Corporate Governance Practices

Grainger

The Company has a history of strong corporate governance. A key priority of the Board is to set the "tone“tone at the top."” This is reflected in the Board'sBoard’s commitment to governance policies and practices that serve the interests of the Company and its shareholders. Key aspects include:

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Operating Principles offor the Board of Directors

The Board recognizes that defining its role is an evolving process and has established Operating Principles for the Board of Directors (the Operating Principles) that provideas a general framework to assist the Board in fulfilling its duties and responsibilities. Each year, the Board reviews and revises the Operating Principles, as appropriate, to address emerging needs and practices. The Operating Principles are available under "Governance"“Governance” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.com.

DIRECTOR INDEPENDENCE

Our Board of Directors is committed to excellence in its governance practices, including director independence and Board composition. OfThe Board determined that 10 of our current Director nominees, 12 of 1311 Director nominees are independent.
The Board has adopted "categorical standards"“categorical standards” to assist it in making independence determinations of Director nominees. The categorical standards are intended to help the Board

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determine, for example, whether certain relationships between nominees and Graingerthe Company are "material relationships"“material relationships” for purposes of the New York Stock Exchange (NYSE) independence standards. The categorical standards adopted by the Board have more restrictive thresholds than the NYSE'sNYSE’s bright line revenue test for independence. The categorical standards adopted by the Board are set forth in Appendix A to this proxy statementProxy Statement and are also available under "Governance"“Governance” in the Investor Relations section of our website athttp://invest.grainger.com/invest.grainger.com.

The Board considered a variety of factors, including any related party transactions, in assessing the independence of our Directors and the New Nominee against the NYSE'sNYSE’s independence standards and Grainger'sthe Company’s categorical standards. The Board also considered ordinary course business transactions and charitable donations by the Company where a Director or the New Nominee serves as an officer and/or a board member. The Board has made an affirmative determinationdetermined that all 1110 of our non-employee Directors and the New NomineeDirector nominees have no direct or indirect material relationship with Graingerthe Company within the meaning of the NYSE independence standards and Grainger'sthe Company’s categorical standards and, accordingly, meet the applicable requirements for "independence"“independence” set forth in the NYSE'sNYSE’s listing standards.

The Board has also determined that Mr. Roberts, who is not standing for re-election at the annual meeting, has no direct or indirect material relationship with the Company within the meaning of the NYSE independence standards and the Company’s categorical standards.

BOARD QUALIFICATIONS, ATTRIBUTES, SKILLS AND BACKGROUND

We determined that the Board'sBoard’s various experiences and viewpoints benefit us most when they are aligned with our global business needs, our strong corporate governance practices and our ESG goals. As a result of the Board'sBoard’s ongoing refreshment efforts, in recent years, we added Directors with expertise in technology, digital commerce and ESG. Four of our newestThe three Directors Rodney C. Adkins, Beatriz R. Perez,added to the Board since 2020, Katherine D. Jaspon, Susan Slavik Williams, and Steven A. White, and the New Nominee, Katherine D. Jaspon, also enhance the diversity of our Board in addition to bringing theirbring valuable perspectives and experiences.

experiences while enhancing diversity.

The Board'sBoard’s varied perspectives support our business as a broad line, business-to-business distributor of maintenance, repair and operating (MRO) products and services with 20202022 sales of approximately $11.8$15.2 billion. GraingerThe Company operates through its distribution centers, eCommerce platform, contact centers, branches and sales and service representatives with approximately 23,100more than 26,000 employees primarily in North America, JapanAsia and Europe. ApproximatelyMore than 5,000 suppliers worldwide provide Graingerthe Company with approximately 1.5more than 1.4 million products stocked globally in Grainger'sthe Company’s distribution centers and branches worldwide. Approximately 5More than 4.5 million customers worldwide rely on Grainger.

the Company.

The following table highlights specific experience, qualifications, attributes, skills, and background information that the Board considered for each Director nominee. A particular Director nominee may possess additional experience, qualifications, attributes, or skills, even if not indicated below.

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Director Nominee
Qualifications,

Attributes and Skills


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​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ Rodney C. Adkins​​​​ V. Ann Hailey​​Katherine D. Jaspon​​Stuart L. Levenick​​
Operational/StrategyD.G. Macpherson​​Neil S. Novich​​Beatriz R. Perez​​E. Scott Santi​​Susan Slavik Williams​​Lucas E. Watson​​Steven A. White​
​​​​​​
Operational/Strategy
Experience developing and implementing operating plans and business strategy
​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​✓
​✓
Supply Chain/Logistics
​​​​​​​​​​​​​

Experience in supply chain management encompassing the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities		​​✓​✓​​​​​​​✓​​✓​​✓​​​​​​​​​​​✓​​​✓​✓
​
Marketing/Sales & Brand Management
​​​​​​​​​​​​​

Experience managing a marketing/sales function, and in increasing the perceived value of a product line or brand over time in the market		​​✓​​​​​​​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​✓
International​​​​​​​​​​​​​
International
Experience overseeing a complex global organization
​​✓​​​​​​​​✓​​✓​​​​​✓​​✓​​​​​✓​​​✓​
​
Real Estate
​​​​​​​​​​​​​

Experience overseeing complex real estate matters that are integral to a business		​✓​✓​​​​​✓​​​​​​​​​✓​​​​✓​​​​✓
Finance/Capital Allocation​​​​​✓​
​​​​​​​​​
Finance/Capital Allocation
Knowledge of finance or financial reporting; experience with debt and capital market transactions and/or mergers and acquisitions
​​✓​​✓​​✓​​✓​​✓​​✓​​​​​✓​​✓​​✓​✓​✓​✓
​✓
Public Company/Leadership
​​​​​​​​​​​​​
"C-Suite"
“C-Suite” experience with a public company and/or leadership experience as a division president or functional leader within a complex organization		​✓​✓​✓​✓​✓​✓​✓​✓​✓​✓​✓​✓​✓
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Corporate Governance/Public Company Experience
​​​​​​​​​​​​​

Experience serving as a public company director; demonstrated understanding of current corporate governance standards and best practices in public companies		​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​

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Attributes and Skills		​​Rodney C. Adkins​​V. Ann Hailey​​Katherine D. Jaspon​​Stuart L. Levenick​​D.G. Macpherson​​Neil S. Novich​​Beatriz R. Perez​​E. Scott Santi​​Susan Slavik Williams​​Lucas E. Watson​​Steven A. White​
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Risk Assessment & Risk Management
Experience overseeing complex risk management matters
​​✓​​✓​​✓​​✓​​✓​​✓​​​​​✓​​✓​​✓​​✓​
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Government/Public Policy
Experience overseeing complex regulatory matters that are integral to a business
​​✓​​​​​​​​✓​​✓​​​​​✓​​✓​​​​​✓​​✓​
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Digital/eCommerce
Experience implementing digital and omni-channel strategies and/or operating an eCommerce business
​​✓​​✓​​​​​✓​​✓​​​​​✓​​​​​​​​✓​​✓​
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Technology/Cybersecurity
Experience implementing technology strategies and managing/mitigating cybersecurity risks
​​✓​​​​​​​​​​​✓​​✓​​​​​✓​​​​​✓​​✓​
​
Human Resources/​Compensation
Experience managing a human resources/compensation function; experience with executive compensation and broad-based incentive planning
​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​
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Business Ethics
Track record of integrity, uncompromising moral principles and strength of character
​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​
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Environmental, Social and
Governance (ESG)
Informed on Company issues related to ESG while monitoring emerging issues potentially affecting the reputation of the business
​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​
​Director Nominee Tenure, Gender, Age
and Race/Ethnicity		​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Board Tenure​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Years​​9​​17​​2​​17​​6​​24​​6​​13​​3​​5​​2​
​Gender​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Male​​✓​​​​​​​​✓​​✓​​✓​​​​​✓​​​​​✓​​✓​
​Female​​​​​✓​​✓​​​​​​​​​​​✓​​​​​✓​​​​​​​
​Age​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Years Old​​64​​72​​46​​70​​55​​68​​53​​61​​54​​52​​62​

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​​​​✓
Government/Public Policy
Corporate Governance​
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Experience overseeing complex regulatory matters that are integral to a business​✓​​​​✓​✓​​✓​✓​✓​​✓​✓
Digital/eCommerce​​​​​​​​​​​​​
Experience implementing digital and omni-channel strategies and/or operating an eCommerce business​✓​​​
✓​Director Qualifications,
Attributes and Skills		​​​✓​✓Rodney C. Adkins​​V. Ann Hailey​✓​Katherine D. Jaspon​​Stuart L. Levenick​​D.G. Macpherson​​Neil S. Novich​​Beatriz R. Perez​​E. Scott Santi​​Susan Slavik Williams​​Lucas E. Watson​​Steven A. White​
​Race/Ethnicity​​​​​​​✓​​✓
Technology/Cybersecurity​​​​​​​​​​​​​​​​​​​​​​​​​
​African American/Black
Experience implementing technology strategies and managing/mitigating cybersecurity risks​​✓​​​​​​​​​​​​​​​​​​​​​​​​​​​​​✓​
​Asian, Hawaiian, or Pacific Islander​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Caucasian /White​​​​​✓​​✓​​​✓​​✓​​✓​✓
Human Resources/Compensation​​​​​​​​​​​​​
Experience managing a human resources/compensation function; experience with executive compensation and broad-based incentive planning​✓​✓​​​✓​​✓​✓​✓​✓​✓​✓​✓​​​✓​
Business Ethics
Track record of integrity, uncompromising moral principles and strength of character​		Hispanic/Latino​​​​​​​​​​​​​​​​​​​​✓​✓​​✓​​✓​​✓​​✓​​✓​​
​Native American​✓​​✓​​✓​​✓​​✓​​✓
Environmental, Social and Governance (ESG)​​​​​​​​​​​​​​​​​​​​​​​
​Other​​​
Informed on company issues related to ESG while monitoring emerging issues potentially affecting the reputation of the business​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​✓​​​​​
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​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
Board Tenure​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
Years​7​22​15​0​15​4​22​4​15​11​1​3​<1
Gender​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
Male​✓​✓​ ​ ​✓​✓​✓​ ​✓​✓​ ​✓​✓
Female​ ​ ​✓​✓​ ​ ​ ​✓​ ​ ​✓​ ​ 
Age​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
Years Old​62​70​70​44​68​53​66​51​70​59​52​50​60
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African American/Black​✓​✓​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​✓
Asian, Hawaiian, or Pacific Islander​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
Caucasian /White​ ​ ​✓​✓​✓​✓​✓​ ​✓​✓​✓​✓​ 
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Native American​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
Other​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
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Board Refreshment Process

The Board believes that a fully engaged Board is a strategic asset of the Company, and fresh viewpoints and perspectives are important for informed decision-making. At the same time, the Company believes that year-over-year Director continuity is beneficial to shareholders as Directors develop a deeper understanding of the Company over time, which provides significant shareholder value, and that year-over-year Director continuity is beneficial to shareholders.

time.

The Board plans for vacancies well before they arise and periodically evaluates whether its Directors collectively have the right mix of experience,experiences, qualifications, attributes, skills, backgrounds and diverse viewpoints necessary for it to be a good steward for the Company'sCompany’s shareholders. The results of these evaluations are used to identify desirable skill setshelp inform searches for potential Board nominees and to screen Director candidates. The Board codified this skills matrix evaluation practice into the charter of the Board Affairs and Nominating Committee of the Board (the BANC) in 2017.

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In planning for Board refreshment and Director succession, the BANC periodically considers potential Director candidates. As a result of these ongoing reviews, in the last fourthree years, fourthree new independent Directors have been elected.

joined the Board.

The Board has established principles for selecting directorsDirectors in the Company'sCompany’s Criteria for Membership on the Board of Directors (the Criteria). The Criteria list the various factors that the BANC should consider in reviewing candidates for the Board. For example,Grainger’s Criteria provide that Directors who will be age 72 as of the Criteria ensures turnover bynext annual meeting generally prescribing a retirementwill not be nominated. Ms. Hailey has reached an age of 72that exceeds the age guidance. However, the Board has determined not to apply this age guidance for non-employee Director candidates. Within the last five years, two of our Directors did not standMs. Hailey for re-election based on retirement age.

one year to retain her unique experience and expertise as Audit Committee Chair.

Board Tenure

As a group, the average Board tenure of the 20212023 nominees for election to Grainger'sthe Company’s Board of Directors is approximately nine9.5 years, with 46%30% of the non-employee nominees having tenure of less than five years. See Board Qualifications, Attributes, Skills and Background / pages 5-8 of this proxy statement6 - 8 for a matrix reflecting tenure for each nominee.


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Board Diversity—Rooney Rule

Diversity

In addition to stating the desired relevant business experience, qualifications, attributes and skills for Directors, the Board'sBoard’s Criteria also enumerate personal characteristics that should be considered, including reputation for ethics and integrity, common sense and judgment, independent and objective thought, and respect for diverse opinions.

Regarding diversity, the Criteria specify that consideration will be given to candidates without regard to race, color, religion, gender or national origin. To ensure that the Board benefits from diverse perspectives, it proactively seeks qualified nominees from a variety of backgrounds, including candidates of gender, age, and racial and/or ethnic diversity. We have established a long-standing relationship with Russell Reynolds Associates, Inc., a nationally recognized third-party search firm, that has assisted us over the years in identifying potential new Directors. In any retained search for Board candidates, the Board seeksfollows the Rooney Rule.
Rooney Rule
The Board has a longstanding commitment to seeking Director candidates with gender and racial diversity and willto only consider and interviewinterviewing slates that include both gender and raciallyracially/ethnically diverse candidates.

candidates in any retained search. Known as the Rooney Rule, this practice was codified as a Board practice in the Criteria in 2019.

ATTENDANCE OF DIRECTORS AT MEETINGS

As set forth in the Operating Principles, Graingerthe Company expects all Directors to attend the annual meeting of shareholders, Board and Committee meetings, and to spend the time needed to properly discharge their duties. All of the Directors attendedwere in attendance at the 2020 virtual2022 annual meeting.
In addition, during 2020,2022, no Director attended fewer than 75% of the total number of meetings of the Board and of the Committees on which he or she served.

ANNUAL ELECTION OF DIRECTORS

Grainger's

The Company’s Directors are elected for a one-year term each year at the annual meeting of shareholders. ThirteenEach nominee will, therefore, serve until the 2024 annual meeting of shareholders if elected.
Eleven Director nominees, 12all current Board members, and the New Nominee, have been nominated by the Board for election. Each nomineeWhile Mr. Roberts is also a current Board member, he will therefore, serve untilnot be standing for re-election this year in accordance with the 2022 annual meetingCompany’s Criteria, which provide that an outside director generally will not be nominated after the age of shareholders if elected.

72. The Board has determined not to apply the age guidance to Ms. Hailey, who is being nominated to stand for one more year to retain her unique experience and expertise as Audit Committee Chair.

As required under Illinois law, majority voting and cumulative voting apply to all Director elections. Under our majority voting standard, Directors are elected by vote of a majority of the shares of

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Grainger the Company’s common stock present or represented by proxy and entitled to vote at the annual meeting. Under cumulative voting, shareholders have the right to cumulate their votes in the election of Directors. This means that shareholders have a number of votes in the election equal to the number of shares owned multiplied by the number of Directors being elected. Shareholders may cast those votes for the nominees as they choose. For example, all votes may be cast for one nominee, or may be apportioned among two or more nominees. For all other matters beside the election of Directors, each share is entitled to one vote.

A shareholder directing

In addition to withhold authority for re-election of“For” votes, Shareholders may vote “Against” a Director nominee or elect to “Abstain.” A shareholder’s abstention on a Director nominee will have the same effect as votesa vote against the election of that Director.Director nominee. Assuming a quorum is present, broker non-votes will not affect the outcome of the vote. If any of the nominees for Director mentioned below should be unavailable for election, a circumstance that is not expected, the person or persons voting your proxy may exercise discretion to vote for a substitute nominee selected by the Board.


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CANDIDATES FOR BOARD MEMBERSHIP

The BANC recommends to the Board candidates for Board membership.

Before recommending candidates to the Board,making any recommendation, the BANC reviews the results of the annual Board evaluation process and its skills matrix in determining the desired skill set for potential new candidates. The BANC then determines the preferred qualities and characteristics for potential Board nominees by periodically evaluating whether the Board members collectively have the right mix of experience, qualifications, attributes, skills, backgrounds and diverse viewpoints necessary for the Board to be a good steward for the Company'sCompany’s shareholders.

The BANC screens Board candidates based on a number of criteria, including ethical standards, judgment, independence and objectivity, strategic perspective, record of accomplishment, business knowledge, experience applicable to Grainger'sthe Company’s goals, and diversity.

The BANC is assistedhas established a long-standing relationship with its evaluation, recruitment and screening efforts by oura nationally recognized third-party search firm. This firm which helps identify candidateshas assisted the BANC over the years in identifying, evaluating, recruiting and screening potential new Directors that satisfy the Board'sBoard’s criteria.
In addition to Board candidates recommendedidentified by the BANC, suggestions as to nominees are received from the Directors, employees, search firms, shareholders, and others.

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The proxy access provisions of our By-laws permit a qualifying shareholder or group of up to 20 qualifying shareholders who have maintained continuous qualifying ownership of 3% or more of our outstanding common stock for at least the previous three years to nominate and include in our proxy materials qualifying Director nominees constituting up to the greater of two Directors or 20% of the Directors then serving on the Board at the time of the nomination, presuming that the shareholder(s) and nominee(s) satisfy the requirements specified in our By-laws.

Any shareholder who would like the BANC to consider a candidate for Board membership should send a letter of recommendation containing the name and address of the proposing shareholder and of the proposed candidate and setting forth the business, professional and educational background of the proposed candidate, as well as a description of any agreement or relationship between the proposing shareholder and proposed candidate. A written consent of the proposed candidate to be identified as a nominee and to serve as a Director if elected must also be provided. The communication should be sent by mail or other delivery service to the attention of the Corporate Secretary at Grainger'sthe Company’s headquarters. See Questions and Answers / pages 84-88 of this proxy statement93 - 96 for more information.


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DIRECTOR NOMINEES'NOMINEES’ EXPERIENCE AND QUALIFICATIONS

The nominees have provided the following information about themselves, including their ages as of March 18, 2021,16, 2023, and his or hertheir relevant background, including experience for at least the past five years. Grainger'sThe Company’s nominees have varied experience, qualifications, attributes, skills, and backgrounds that assist them in providing guidance and oversight to Grainger'sthe Company’s management.

The Board has identified experience, qualifications, attributes, skills, and backgrounds that, in light of Grainger'sthe Company’s business, structure and challenges, are relevant to service on the Board of Directors. The Board considers nominees who have demonstrated integrity and accomplishment in their business and professional careers and who possess the necessary experience and background to contribute to the Board and Grainger.the Company. In addition, the nominees have engaged in continuing education and other programs to remain current in their particular areas of expertise, to further their understanding of corporate governance, and in other matters relevant to Grainger.

the Company.

The Board believes each of the current nominees qualifies for service on the Board of Directors. Moreover, each of the current nominees has significant leadership experience in large, multifaceted organizations. This leadership experience includes developing and executing corporate strategy, overseeing operations, and identifying and managing risks in organizations similar in size or complexity to Grainger.

the Company.

The summaries provided below are not a comprehensive statement of each nominee'snominee’s background, but are provided to describe the primary experience, qualifications, attributes, skills, and background that led the Board to nominate each individual.

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​Rodney C. Adkins

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Former Senior Vice President of IBM; President of 3RAM Group LLC

PHOTO

Independent Director

Age: 62

Years on Grainger's Board: 6

Director Since: 2014

Grainger Board Committees:

BANC

Chair, CCOB

​​
Qualifications, Attributes and Skills

•


Operational/Strategy

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•


Supply Chain/Logistics

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•


Marketing/Sales & Brand Management

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•


International

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•


Real Estate

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•


Finance/Capital Allocation

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•


Public Company/Leadership

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•


Corporate Governance/Public Company Experience

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•


Risk Assessment & Risk Management

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•


Government/Public Policy

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•


Digital/eCommerce

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•


Technology/Cybersecurity

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•


Human Resources/Compensation

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•


Business Ethics

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•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•


Avnet, Inc. (Chairman of the Board; compensationChair, executive committee; corporate governance committee)

​
•


PayPal Holdings, Inc. (audit committee; risk and compliance committee; corporate governance and nominating committee)

​
•


United Parcel Service, Inc. (Chair, risk committee; compensation and human capital committee)

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Prior Public Company Boards

•


PPL Corporation (2014-2019) (audit committee; finance committee)

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•


Pitney Bowes Inc. (2007-2013) (audit committee; executive compensation committee)

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Business and Other Experience

•


3RAM Group LLC (2015-present), a privately held company specializing in capital investments, business consulting services and property management, where Mr. Adkins serves as President.

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•


International Business Machines Corporation (IBM), a globally integrated technology and consulting company, where Mr. Adkins held numerous development and management roles, including Senior Vice President of Corporate Strategy (2013-2014); Senior Vice President of Systems and Technology Group (2009-2013); Senior Vice President of Development & Manufacturing (2007-2009); and Vice President of Development of IBM Systems and Technology Group (2003-2007).

​
Mr. Adkins served as a Senior Vice President at IBM, where he held various senior roles, including heading Corporate Strategy. Over the course of his 30-year career with IBM, he developed a broad range of experience, including extensive experience in emerging technologies, global business operations, product development, and brand management. He also gained significant experience managing and understanding corporate finance, financial statements and accounting through his many operational roles with IBM.

Additionally, Mr. Adkins managed IBM'sIBM’s supply chain and procurement, giving him direct insight into global trade and supply chains, and the role of distributors in those efforts.

Mr. Adkins has extensive experience in corporate governance matters, is a recognized leader in technology and technology strategy, and serves as a director of other publicly traded companies with additional responsibilities, including one board chairmanship, and two compensation committee and one audit committee assignments.

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Former Senior Vice
President of IBM; President
of 3RAM Group LLC		​
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Independent Director
Age: 64
Years on Grainger’s Board: 9
Director Since: 2014
Grainger Board Committees:
BANC
Chair, CCOB
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TABLE OF CONTENTS
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Brian P. Anderson

Corporate Governance​

Former Chief Financial Officer of OfficeMax Incorporated and Baxter International Inc.

PHOTO

Independent Director

Age: 70

Years on Grainger's Board: 22

Director Since: 1999

Grainger Board Committees:

Audit

BANC

​​​​
​​​
​V. Ann Hailey​​
Qualifications, Attributes and Skills

•


Operational/Strategy

​
•

Supply Chain/Logistics

•

Real Estate

•


Finance/Capital Allocation

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•


Public Company/Leadership

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•


Corporate Governance/Public Company Experience

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•


Risk Assessment & Risk Management

​
•

Human Resources/Compensation


Digital/eCommerce
​
•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•

Pulte Group, Inc. (audit committee; finance and investment committee; nominating and governance committee; former Chair, audit committee)

•

Stericycle, Inc. (Chair, audit committee)

Prior Public Company Boards

•

A.M. Castle & Co. (2005-2016) (Chairman of the Board; Chair, audit committee)

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James Hardie Industries plc (2006-2020) (Chair, audit committee; remuneration committee)

Business and Other Experience

•

OfficeMax Incorporated (2004-2005), a distributor of business to business and retail office products, where Mr. Anderson served as Senior Vice President and Chief Financial Officer.

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Baxter International Inc. (1991-2004), a global diversified medical products and services company, where he held various roles, including Senior Vice President and Chief Financial Officer (1998-2004); Vice President, Finance (1997-1998); Corporate Controller (1993-1997); and Vice President, Corporate Audit (1991-1993).

•

Deloitte LLP (formerly, Deloitte & Touche LLP) (1976-1991), a global professional services firm, where Mr. Anderson served as Audit Partner, for several years.

Mr. Anderson served as the Chief Financial Officer of two large, multinational companies: OfficeMax Incorporated and Baxter International Inc. In the course of his career, he also held various finance positions, including Corporate Controller and Vice President of Audit at Baxter, and spent 15 years at an international public accounting firm, including as an Audit Partner.

As a result, Mr. Anderson has in-depth knowledge of accounting and finance, including in the preparation and review of complex financial reporting statements, as well as experience in risk management and risk assessment and the application of the Committee of Sponsoring Organizations of the Treadway Commission internal controls framework.

Mr. Anderson also has extensive experience sitting on and chairing the audit committees of public companies. He also brings to the Board meaningful experience based on his service as the Company's former Lead Director and former Chairman of the Board of A.M. Castle & Co., as well as his service as a Governing Board Member at the Center for Audit Quality. Mr. Anderson is an audit committee financial expert for purposes of the SEC's rules.


V. Ann Hailey•

​

Former Executive Vice President and Chief Financial Officer of L Brands,Anywhere Real Estate Inc. (formerly, Limited Brands, Inc.)

PHOTO

Independent Director

Age: 70

Years on Grainger's Board: 15

Director Since: 2006

Grainger Board Committees:

Chair, Audit

BANC

​Qualifications, Attributes and Skills

•

Operational/Strategy

•

Finance/Capital Allocation

•

Public Company/Leadership

•

Corporate Governance/Public Company Experience

•

Risk Assessment & Risk Management

•

Digital/eCommerce

•

Business Ethics

•

Environmental, Social and Governance (ESG)

Other Current Public Company Boards

•

Realogy Holdings Corp. (Chair, audit) (audit committee; nominating and corporate governance committee)

​
Prior Public Company Boards

•


TD Ameritrade Holdings, Inc. (2016-2020) (audit committee; risk committee; outside independent director'sdirector’s committee)

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•


Avon Products, Inc. (2008-2016) (audit committee; finance committee)

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•


L Brands, Inc. (formerly, Limited Brands, Inc.) (2001-2006)

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Business and Other Experience

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Famous Yard Sale, Inc. (2012-2014), an online marketplace, where Ms. Hailey served as President, Chief Executive Officer and Chief Financial Officer.

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•


Gilt Groupe, Inc. (2009-2010), an online shopping and lifestyle company, where Ms. Hailey served as Chief Financial Officer.

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•


L Brands, Inc., a retail apparel, personal care and beauty products company, where Ms. Hailey served as Executive Vice President and Chief Financial Officer (1997-2006); Executive Vice President, Corporate Development (2006-2007); and as a board member (2001-2006).

​
•


Federal Reserve Bank of Cleveland, where Ms. Hailey served on the audit committee (2004-2009) (audit committee)

, including as Chair of the committee (2006-2009)

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•


PepsiCo, Inc. (1977-1990), a global food and beverage company, where Ms. Hailey served in various leadership roles, including Vice President, Headquarters Finance, Pepsi Cola Company; and Vice President, Finance and Chief Financial Officer of Pepsi Cola Fountain Beverage and USA Divisions, as well as holding positions in the marketing and human resources functions.

​
•


Pillsbury Company (1994-1997), a manufacturer and marketer of branded consumer foods.

​
•


RJR Nabisco Foods, Inc. (1992-1994), a diversified manufacturer of consumer products.

​
Ms. Hailey has spent her career in consumer businesses and brings key financial and operations experience to the Company. In particular, Ms. Hailey possesses broad expertise in finance, strategic planning, branding and marketing, retailing, and sales and distribution on a global scale. Ms. Hailey'sHailey’s positions as chief financial officer, her current and prior service as audit committee chair at other companies and the Cleveland Federal Reserve Bank, and her accounting and financial knowledge provide significant expertise to the Board, including an understanding of financial statements, accounting and internal controls, corporate finance and capital markets. Through her experiences at Gilt Groupe and Famous Yard Sale, Ms. Hailey has experience in internet site development and selling as well as new venture management and funding. Ms. Hailey is an audit committee financial expert for purposes of the SEC'sSEC’s rules.

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Corporate Governance
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 Katherine D. Jaspon

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Former Executive Vice President and Chief Financial Officer Dunkin' & Baskin Robbins at Inspireof L Brands,

Inc. (formerly, Limited Brands, Inc.)
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[MISSING IMAGE: ph_haileyann-4c.jpg]

PHOTO

Independent Director Nominee


Age: 44

72
Years on Grainger’s Board: 17
Director Since: New Nominee

2006
Grainger Board Committees:
Chair, Audit
BANC

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Corporate Governance​
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​Katherine D. Jaspon​​
Qualifications, Attributes and Skills

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Operational/Strategy

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•


Real Estate

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•


Finance/Capital Allocation

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•


Public Company/Leadership

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•


Corporate Governance/Public Company Experience

​
•


Risk Assessment & Risk Management

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•


Human Resources/Compensation

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•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Business and Other Experience

•

Dunkin' & Baskin Robbins at

Inspire Brands, formerly knownInc. (2020-Present), a multi-brand restaurant company whose portfolio includes Arby’s, Baskin-Robbins, Buffalo Wild Wings, Dunkin’, Jimmy John’s, Rusty Taco, and SONIC Drive-In, where she serves as Dunkin'Chief Financial Officer.
​
•
Dunkin’ Brands Group, Inc. (2005-present)(2005-2020), a quick service restaurant franchisor (Dunkin'(Dunkin’ Brands), where Ms. Jaspon has held various roles, including Senior Vice President, Chief Financial Officer (2017-present), Vice President, Finance and Treasury (2014-2017), Vice President, Controller and Corporate Treasurer (2010-2014), and Director, Assistant Controller (2005-2010). In December 2020, Dunkin'Dunkin’ Brands was acquired by Inspire Brands.

​
•


KPMG LLP (1997-2005), a global audit, tax and advisory services firm, where Ms. Jaspon held various roles, including Senior Manager.

​
Ms. Jaspon serves as Chief Financial Officer of Inspire Brands, Inc., a multi-brand restaurant company whose portfolio includes nearly 32,000 Arby’s, Baskin-Robbins, Buffalo Wild Wings, Dunkin’, Jimmy John’s, Rusty Taco, and SONIC Drive-In restaurants worldwide. Ms. Jaspon oversees all accounting and reporting, tax, financial planning and analysis, treasury, and internal audit functions for Inspire and its brands. She is currentlyalso responsible for managing Inspire’s relationships with lending institutions, investors, and the financial community.
Prior to joining Inspire in December 2020, Ms. Jaspon served as the Chief Financial Officer of Dunkin'Dunkin’ Brands a globalGroup, Inc., the former parent company with approximately 20,000 restaurants in 65 countries generating approximately $12 billion in sales. From 2011 to 2020, Dunkin' Brands was publicly traded on Nasdaq until it was acquired by Inspire Brands in December 2020. Ms. Jaspon is responsible for theof Dunkin’ and Baskin-Robbins, where she led all finance-related functions, as well as investor relations since 2017. In this role, she oversaw global financial planning and analysis, accounting, financial reporting, business analytics, tax, debt and cash management,treasury, enterprise risk management, electronic payments, insurance, and demand planning functions forfunctions. During her 15-year tenure with Dunkin’ Brands, Ms. Jaspon led several transactions, including the domestic and international Dunkin' and Baskin-Robbins businesses, functions she had previously been responsible for when Dunkin' Brands was publicly traded. She has led Dunkin' Brands through a number of transactions, from itscompany’s initial public offering to its recent going private transaction, including variousand follow-on equity offerings, securitizations and numerous other debt transactions, the divestiture of a brand, and several system implementations. the sale of Dunkin’ Brands to Inspire.
Previously, she served as an auditorMs. Jaspon spent eight years at KPMG LLP for nearly nine years, including as Senior Manager.

Ms. Jasponan auditor. She is a certified public accountant and an audit committee financial expert for purposes of the SEC'sSEC’s rules. In addition,

Ms. Jaspon ispreviously served as a former directormember and chair of the audit committee chairof the board of directors of MOD Super Fast Pizza LLC and also serves on various non-profit boards.

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​ 
Chief Financial Officer,
Inspire Brands, Inc.		​
[MISSING IMAGE: ph_jaspon-4c.jpg]
Independent Director
Age: 46
Years on Grainger’s Board: 2
Director Since: 2021
Grainger Board Committees:
Audit
BANC

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Corporate Governance​
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​Stuart L. Levenick

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Former Group President of Caterpillar Inc.

PHOTO

Independent Director

Lead Director

Age: 68

Years on Grainger's Board: 15

Director Since: 2005

Lead Director Since: 2014

Grainger Board Committees:

Audit

Chair, BANC

​​
Qualifications, Attributes and Skills

•


Operational/Strategy

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•


Supply Chain/Logistics

​
•


Marketing/Sales & Brand Management

​
•


International

​
•


Finance/Capital Allocation

​
•


Public Company/Leadership

​
•


Corporate Governance/Public Company Experience

​
•


Risk Assessment & Risk Management

​
•


Government/Public Policy

​
•


Digital/eCommerce

​
•


Human Resources/Compensation

​
•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•


Finning International Inc. (since 2016) (Chair, audit committee; corporate governance and risk committee)

​
•


Entergy Corporation (since 2005) (lead director (since May 2016); corporate governance committee; executive committee; nuclear committee)

​
Business and Other Experience

•


Caterpillar Inc., a multinational manufacturer of construction and mining equipment, where Mr. Levenick held various leadership roles, including Group President, Customer & Dealer Support (2004-2015);

.

​
•


Executive Office Member (2004-2015); Group President of Caterpillar Inc. (2004-2014); Vice President, Caterpillar Inc. and Chairman of Shin Caterpillar Mitsubishi Ltd. (2000-2004); and Vice President, Asia Pacific Division (2001-2004). Prior to 2000, he held various senior positions with Caterpillar in North America, Asia, and Europe.

​
Mr. Levenick served as a Group President of Caterpillar Inc., leading several divisions for 10 years as part of a 37-year career at the company, in various leadership roles, including as the senior executive of Caterpillar'sCaterpillar’s former joint venture with Mitsubishi in Japan. He has extensive international operations experience as a result of positions outside of the United States in Japan, Singapore, Russia and other countries for more than 20 years. During his career at Caterpillar, Mr. Levenick held leadership roles with operational responsibility for supply chain and logistics, engineering and design, manufacturing, global parts and product support, and global dealer and marketing functions. In addition, he led Caterpillar'sCaterpillar’s global human resources and global purchasing functions.

Mr. Levenick also has experience sitting on and chairing the audit and finance committees of other public companies and brings a broad range of experience to the Board based on his service as the lead director of Entergy Corporation. In addition, Mr. Levenick is an audit committee financial expert for purposes of the SEC’s rules.
Mr. Levenick is a former chairman and director of the Association of Equipment Manufacturers and is a director of the University of Illinois Foundation. He also served as a director of the U.S./Japan Business Council, the U.S./China Business Council, the U.S./Russia Business Council, and as executive director of the U.S. Chamber of Commerce.

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​ 
Former Group President of Caterpillar Inc.		​
[MISSING IMAGE: ph_levenick-4c.jpg]
Independent Director
Lead Director
Age: 70
Years on Grainger’s Board: 17
Director Since: 2005
Lead Director Since: 2014
Grainger Board Committees:
Audit
Chair, BANC
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Corporate Governance

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TABLE OF CONTENTS
D.G. Macpherson

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Chairman of the Board and Chief Executive Officer of W.W. Grainger, Inc.

PHOTO

Chairman of the Board

Age: 53

Years on Grainger's Board: 4

Director Since: 2016

​​​
Corporate Governance​
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​​​
​D.G. Macpherson​​
Qualifications, Attributes and Skills

•


Operational/Strategy

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•


Supply Chain/Logistics

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•


Marketing/Sales & Brand Management

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•


International

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•


Finance/Capital Allocation

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•


Public Company/Leadership

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•


Corporate Governance/Public Company Experience

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•


Risk Assessment & Risk Management

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•


Government/Public Policy

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•


Digital/eCommerce

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•


Technology/Cybersecurity

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•


Human Resources/Compensation

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•


Business Ethics

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•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•


International Paper Company (governance committee; public policy and environment committee)

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Business and Other Experience

•


Chairman of the Board of Directors of the Company, a position assumed in October 2017, and Chief Executive Officer of the Company, a position assumed in October 2016, at which time Mr. Macpherson was also appointed to the Board of Directors.

​
•


Previously, Mr. Macpherson held numerous senior management roles at the Company, including Chief Operating Officer (2015-2016); Senior Vice President and Group President, Global Supply Chain and International (2013-2015); Senior Vice President and President, Global Supply Chain and Corporate Strategy (2012-2013); and Senior Vice President, Global Supply Chain (2008-2012).

​
•


The Boston Consulting Group, Partner and Managing Director (2002-2008).

​
Mr. Macpherson has served Grainger in many capacities over his more than 1214 years with the Company, including developing Company strategy, overseeing the launch of Grainger'sGrainger’s U.S. endless assortment business, Zoro Tools, Inc., building the Company'sCompany’s supply chain capabilities globally and realigning the U.S. business to create greater value for customers of all sizes. Mr. Macpherson also has extensive experience in strategic planning, development and execution. Mr. Macpherson joined Grainger in 2008 after working closely with Grainger for six years as a partner and managing director at The Boston Consulting Group, a global management consulting firm, where he was a member of the Industrial Goods Leadership Team. Mr. Macpherson also has experience in corporate governance matters and serves as a director of another publicly traded company with additional committee responsibilities.

​
Neil S. Novich

​

Former

 
Chairman of the Board President and Chief Executive Officer of RyersonW.W. Grainger, Inc.

​
[MISSING IMAGE: ph_macpherson-4clr.jpg]

PHOTO

Independent Director

Chairman of the Board
Age: 66

55
Years on Grainger'sGrainger’s Board: 22

6
Director Since: 1999

Grainger Board Committees:

Audit

BANC

 2016

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TABLE OF CONTENTS
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Corporate Governance​
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​Neil S. Novich​​
Qualifications, Attributes and Skills

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Operational/Strategy

​
•


Supply Chain/Logistics

​
•


Marketing/Sales & Brand Management

​
•


Finance/Capital Allocation

​
•


Public Company/Leadership

​
•


Corporate Governance/Public Company Experience

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•


Risk Assessment & Risk Management

​
•


Technology/Cybersecurity

​
•


Human Resources/Compensation

​
•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•


Beacon Roofing Supply, Inc. (Chair, compensation committee; former Chair, audit committee)

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•


Hillenbrand, Inc. (Chair, audit committee; mergers and acquisitions committee; nominating and corporate governance committee; former Chair, compensation committee)

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Prior Public Company Boards

•


Analog Devices, Inc. (2008-2020) (audit committee; former Chair, compensation committee)

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•


Ryerson Inc., Chairman of the Board (1999-2007)

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Business and Other Experience

•


Ryerson, Inc. (1994-2007), a global metal distributor and fabricator, where Mr. Novich joined in 1994 as Chief Operating Officer, was named President and CEO in 1996, and was additionally appointed Chairman in 1999. He remained Chairman and CEO until 2007, when the company was sold.

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•


Bain & Company (1981-1994), an international management consulting firm, where Mr. Novich spent several years as a partner and led the firm'sfirm’s Distribution and Logistics Practice.

​
Mr. Novich served as the Chairman of the Board, President and Chief Executive Officer of a global public company where he was deeply engaged in its distribution operations on a domestic and international basis, and also on leadership development and human resources functions. He also spent 13 years with a major management consulting firm, where he was a partner and led the firm'sfirm’s Distribution and Logistics Practice. As a result, Mr. Novich has in-depth operational experience in supply chain, distribution and logistics and experience in developing strategy across a variety of industries.

Mr. Novich also has extensive experience in corporate governance matters and serves as a director of other publicly traded companies with additional responsibilities, including one audit committee chairmanship, one compensation committee chairmanship, and service on various board committees. Mr. Novich is an audit committee financial expert for purposes of the SEC'sSEC’s rules.

Mr. Novich is a trustee of the Field Museum of Natural History and a MemberHistory.
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​ 
Former Chairman of the Dean's Council to the Physical Sciences Division of the University of Chicago.

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Corporate Governance
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Beatriz R. Perez

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Senior ViceBoard, President and Chief Communications, Sustainability and Strategic PartnershipsExecutive Officer of The Coca-Cola Company

Ryerson Inc.
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[MISSING IMAGE: ph_novichneil-4c.jpg]

PHOTO

Independent Director


Age: 51

68
Years on Grainger'sGrainger’s Board: 4

24
Director Since: 2017

1999
Grainger Board Committees:


Audit
BANC

CCOB


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TABLE OF CONTENTS
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Corporate Governance​
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​Beatriz R. Perez​​
Qualifications, Attributes and Skills

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Operational/Strategy

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•


Marketing/Sales & Brand Management

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International

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Public Company/Leadership

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•


Corporate Governance/Public Company Experience

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•


Government/Public Policy

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•


Digital/eCommerce

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•


Human Resources/Compensation

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•


Business Ethics

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•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•


Primerica, Inc. (compensation(corporate governance committee)

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Prior Public Company Boards

•


HSBC North America Holdings, Inc. (2007-2014), the HSBC Finance Corporation (2008-2014), and the HSBC Bank Nevada, N.A. (2011-2013) (nominating and governance; risk & compliance committee; audit committee)

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Business and Other Experience

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The Coca-Cola Company (1996-present), a global beverage company, where prior to assuming her current position in March 2017, Ms. Perez held several leadership positions including as the company'scompany’s first Chief Sustainability Officer (2011- 2017)(2011-2017). Prior to that she held various roles of increasing responsibility at The Coca-Cola Company in the North America Operating Division, including Chief Marketing Officer, Senior Vice President Integrated Marketing, and multiple field operating roles.

​
Ms. Perez is a Senior Vice President and named executive officer of The Coca-Cola Company, a public multinational beverage company, where she leads an integrated team across public affairs and communications, sustainability and marketing assets to support the company'scompany’s growth model and strategic initiatives. In this role, Ms. Perez aligns a diverse portfolio of work against critical business objectives to support brands, communities, consumers and partners worldwide. During her tenure of more than two decades at that company, she has held several leadership roles while garnering significant experience in marketing and sustainability programs.

Ms. Perez also has experience in corporate governance matters and serves as a director of another publicly traded company, with additional responsibilities, including a compensation committee assignment.
Ms. Perez is a strong advocate for community service, serving on various non-profit boards, including The Coca-Cola Foundation.

​
Michael J. Roberts

​

Former Global

 
Senior Vice President and Chief OperatingCommunications, Sustainability and Strategic Partnerships Officer of McDonald's Corporation; Chief Executive Officer and founder of Westside Holdings LLC

The Coca-Cola Company		​
[MISSING IMAGE: ph_perezbea-4c.jpg]

PHOTO

Independent Director


Age: 70

53
Years on Grainger'sGrainger’s Board: 15

6
Director Since: 2006

2017
Grainger Board Committees:


BANC


CCOB


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Corporate Governance​
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​E. Scott Santi​​
Qualifications, Attributes and Skills

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Operational/Strategy

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Supply Chain/Logistics

•


Marketing/Sales & Brand Management

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•


International

​
•

Real Estate

•


Finance/Capital Allocation

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•


Public Company/Leadership

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•


Corporate Governance/Public Company Experience

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•


Risk Assessment & Risk Management
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•
Government/Public Policy

​
•


Technology/Cybersecurity
​
•
Human Resources/Compensation

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•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•

CenturyLink,  Inc. (human resources and compensation committee; nominating and corporate governance committee)

Prior Public Company Boards

•

SP Plus Corporation (formerly, Standard Parking Corporation) (2010-2013) (audit committee; compensation committee; executive committee)

•

Qwest Communications International, Inc. (prior to its acquisition by CenturyLink) (2009-2011) (compensation and human resources committee)

Business and Other Experience

•

Westside Holdings LLC (2006-present), a marketing and brand development company, where Mr. Roberts is Chief Executive Officer and founder.

•

McDonald's Corporation (1997-2006), a global food service retailer, where Mr. Roberts held numerous leadership roles, including President and Chief Operating Officer (2004-2006); Chief Executive Officer, McDonald's USA (2004); President, McDonald's USA (2001-2004); and President, West Division, McDonald's USA (1997-2001).

Mr. Roberts served as President and Chief Operating Officer of McDonald's Corporation, a public, multinational corporation. In his nearly 30 years with the company, he held key executive roles, including President and Chief Executive Officer of McDonald's USA. In these capacities, he acquired extensive management, and profit and loss responsibilities. He was also responsible for marketing and branding experience, and the international operations of the company. In addition, Mr. Roberts has significant experience in human resources and corporate governance matters and serves as a director of another publicly traded company with additional responsibilities, including service on the human resources and compensation committee.

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E. Scott Santi

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Chairman and Chief Executive Officer of Illinois Tool Works Inc.

PHOTO

Independent Director

Age: 59

Years on Grainger's Board: 11

Director Since: 2010

Grainger Board Committees:

Audit

BANC

​Qualifications, Attributes and Skills

•

Operational/Strategy

•

Marketing/Sales & Brand Management

•

International

•

Finance/Capital Allocation

•

Public Company/Leadership

•

Corporate Governance/Public Company Experience

•

Risk Assessment & Risk Management

•

Government/Public Policy

•

Technology/Cybersecurity

•

Human Resources/Compensation

•

Business Ethics

•

Environmental, Social and Governance (ESG)

Other Current Public Company Boards

•

Illinois Tool Works Inc. (Chairman of the Board, 2015-present); director (2012-present)

​
Business and Other Experience

•


Illinois Tool Works Inc. (2004-present), a worldwide manufacturer of engineered components and systems, where Mr. Santi has served as Chief Executive Officer, since November 2012. Previously, Mr. Santi held various senior management roles with ITW, including Vice Chairman of ITW (2008-2012) and Executive Vice President (2004-2008).

​
Mr. Santi is the Chairman and Chief Executive Officer of ITW, a global public company. In the course of his more than 30 years with ITW, he has served in various management roles for ITW including positions requiring significant operational and financial responsibility. During his tenure he has had extensive international responsibility including operating responsibility for a business with annual international revenues of several billion dollars. Mr. Santi has significant experience with mergers and acquisitions and integrating acquired companies. He has also had significant strategic marketing responsibilities and human resource experience including compensation policy, leadership development and succession planning. Mr. Santi is an audit committee financial expert for purposes of the SEC'sSEC’s rules. In addition, Mr. Santi is the current Chairman of the board of directors of the Federal Reserve Bank of Chicago is Chairman of the Civic Committee of the Commercial Club of Chicago. He also serves as a trustee or director on various civic and nonprofit boards, including the boards of trustees of Northwestern University, the Museum of Science and Industry, Rush University Medical Center and the Art Institute of Chicago.

​
​ 
Chairman and Chief Executive Officer of Illinois Tool Works Inc.		​
[MISSING IMAGE: ph_santiscott-4c.jpg]
Independent Director
Age: 61
Years on Grainger’s Board: 13
Director Since: 2010
Grainger Board Committees:
Audit
BANC

​Proxy Statement​​
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TABLE OF CONTENTS
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Corporate Governance​
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​Susan Slavik Williams

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President, Four Palms Ventures; Director, Mark IV Capital, Inc.; President, The Donald Slavik Family Foundation

PHOTO

Independent Director

Age: 52

Years on Grainger's Board: 11

Director Since: 2020

Grainger Board Committees:

BANC

CCOB

​​
Qualifications, Attributes and Skills

•


Operational/Strategy

​
•


Marketing/Sales & Brand Management

​
•


Real Estate

​
•


Finance/Capital Allocation

​
•


Public Company/Leadership

​
•


Corporate Governance/Public Company Experience

​
•


Risk Assessment & Risk Management

​
•


Human Resources/Compensation

​
•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Business and Other Experience

•


Four Palms Ventures, a venture capital firm founded by Ms. Slavik Williams focused on investing in early stage agtech and other technology companies, where Ms. Slavik Williams serves as PresidentManager (2019-present).

​
•


The Donald Slavik Family Foundation, a nonprofit organization supporting programs that preserve wildlife and the environment, where Ms. Slavik Williams presently serves as President and a member of its Board of Directors (1995-present).

​
•


Mark IV Capital, Inc., a private commercial real estate development and investment company, where Ms. Slavik Williams serves on its Board of Directors and presently chairs its compensation committee (1989-present).

​
•


Ernst & Young Consulting (now Capgemini), a global consulting and technology services company, where Ms. Slavik Williams was a Manager (1994-1998).

​
Ms. Slavik Williams is a private investor who has been a long-term significant shareholder of the Company as well as an entrepreneur and environmentalist. She has expansive knowledge in investments, financing, and real estate, including as a result of her 30 plus years of service on the board of directors of Mark IV Capital, Inc., where she presently chairs the compensation committee. She also has a deep understanding of environmental and social matters, working for 2526 years as President and member of the board of directors of a foundation focused on wildlife preservation in the United States, Africa, South America, and Asia. Since 2017, Ms. Slavik Williams has served as a member of the board of directors of iSelect Fund, a venture capital investment firm. For 12 years, Ms. Slavik Williams was a director of the Saint Louis Zoo and currently serves on the conservation committee of its strategic planning group. As a longstanding significant shareholder of the Company, she possesses extensive knowledge of the Company'sCompany’s business, organization, and culture.

​
​ 
President, Four Palms Ventures; Director, Mark IV Capital, Inc.; President, The Donald Slavik Family Foundation		​
[MISSING IMAGE: ph_slavikwilliamssusan-4c.jpg]
Independent Director
Age: 54
Years on Grainger’s Board: 3
Director Since: 2020
Grainger Board Committees:
BANC
CCOB
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​Lucas E. Watson

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Senior Vice President, Go To Market at Cruise LLC

PHOTO

Independent Director

Age: 50

Years on Grainger's Board: 3

Director Since: 2017

Grainger Board Committees:

BANC

CCOB

​​
Qualifications, Attributes and Skills

•


Operational/Strategy

​
•


Supply Chain/Logistics

​
•


Marketing/Sales & Brand Management

​
•


International

​
•


Finance/Capital Allocation

​
•


Public Company/Leadership

​
•


Corporate Governance/Public Company Experience

​
•


Risk Assessment & Risk Management
​
•
Government/Public Policy

​
•


Digital/eCommerce

​
•


Technology/Cybersecurity

​
•


Human Resources/Compensation
​
•
Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Business and Other Experience

•


Madison Square Garden Entertainment Corp. (2022-2023), a live entertainment company, where Mr. Watson served as President, MSG Sphere.
​
•
Cruise LLC (2018-2021), an autonomous vehicle and technology company owned by General Motors Company, a global automotive company, where Mr. Watson served as Senior Vice President, Go to Market (2020-2021) and Chief Marketing Officer and General Manager (2018- 2020).
​
•
Intuit, Inc. (2016-2018), a global provider of business and financial management solutions, where Mr. Watson served as an Executive Vice President and Chief Marketing and Sales Officer.

​
•


Google, Inc. (2011-2016), a global technology company, where Mr. Watson served as Vice President, Global Brand Solutions.

​
•


Procter & Gamble Company (1994-2011), a global consumer products company, where Mr. Watson served in various sales, marketing and digital business roles.

​
Mr. Watson is currently served as President, MSG Sphere at Madison Square Garden Entertainment Corp. where he led the strategy and execution of all business aspects of MSG’s Sphere’s planned state-of-the-art venues that will combine cutting-edge technology with multi-sensory storytelling to deliver fully immersive experiences. Previously, he served as Senior Vice President, Go To Market, and Chief Marketing Officer and General Manager, at Cruise LLC anwhere he led Cruise’s go to market strategy with respect to the company’s autonomous vehicle technology company owned by General Motors company. Previously,fleet. Before Cruise, he served as Executive Vice President and Chief Marketing and Sales Officer at Intuit, where he led the company'scompany’s global sales and go-to-marketgo to market efforts bringing Intuit'sIntuit’s financial management solutions to market across a variety of channels while focusing on global brand expansion, market share growth and strengthening brand equity. As Vice President, Global Brand Solutions at Google, he led the company'scompany’s brand advertising business, working with some of the world'sworld’s leading companies to build stronger and more trusted brands. At Procter & Gamble, a global consumer products company, he served as a Digital Marketingdigital marketing executive and held a variety of other roles across the globe. While atglobe while driving P&G, Mr. Watson drove P&G's&G’s digital initiatives for 75 brands across 200 countries. DuringThrough his experience at Cruise, in addition to his tenure of more than two decades at these multinational public companies, Mr. Watson has held several leadership roles while acquiring a deep understanding of sales, marketing, risk management, technology and digital business.

​
​ 
Former President, MSG Sphere at Madison Square Garden Entertainment Corp.		​
[MISSING IMAGE: ph_watson-4c.jpg]
Independent Director
Age: 52
Years on Grainger’s Board: 5
Director Since: 2017
Grainger Board Committees:
BANC
CCOB
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​Steven A. White

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President, Special Counsel to the CEO, Comcast Cable

PHOTO

Independent Director

Age: 60

Years on Grainger's Board: <1

Director Since: 2020

Grainger Board Committees:

BANC

CCOB

​​
Qualifications, Attributes and Skills

•


Operational/Strategy

​
•


Supply Chain/Logistics

​
•


Marketing/Sales & Brand Management

​
•


Real Estate

​
•


Finance/Capital Allocation

​
•


Public Company/Leadership

​
•


Corporate Governance/Public Company Experience

​
•


Risk Assessment & Risk Management

​
•


Government/Public Policy

​
•


Digital/eCommerce

​
•


Technology/Cybersecurity

​
•


Human Resources/Compensation

​
•


Business Ethics

​
•


Environmental, Social and Governance (ESG)

​
Other Current Public Company Boards

•


Hormel Foods Corporation (compensation committee; governance committee)

​
•


Shaw Communications Inc. (human resources and compensation committee)

​
Business and Other Experience

•


Comcast Corporation, a global media and technology company, where prior to assuming his current position in December 2020, Mr. White held various roles, including President, Comcast West Division (2009-2020), Regional Senior Vice President, Comcast California (2007-2009), and Regional Senior Vice President, Comcast Mid-South Region (2002-2007).

​
•


AT&T Broadband, LLC, a leading provider of global telecommunications, media and technology services that merged with Comcast in 2002, where Mr. White was Senior Vice President from 2000 to 2002.

​
•


Regional Vice President of Tele-Communications, Inc., a cable television and telecommunications provider that merged with AT&T in 2000 (1997 to 2000).

​
•


Colgate-Palmolive Company, a global consumer products company, where Mr. White held various marketing positions (1991 to 1997).

​
Mr. White brings over 30 years of experience in eCommerce, sales, marketing, operations, and general management across multiple industries. Now in his 18th20th year at Comcast Corporation, a global public company, Mr. White has served in various senior management roles with significant operating and financial responsibility over a number of states, thousands of employees, millions of customers, and billions of dollars in revenue. Before his current role as President, Special Counsel to the CEO, Comcast Cable, Mr. White most recently served for 11 years as President, Comcast West. In that capacity, he was responsible for all Comcast cable operations in 13 states, leading nearly 28,000 employees, serving more than nine million customers, and driving annual revenue of nearly $17 billion. Prior to that, Mr. White was responsible for Comcast'sComcast’s operations in California. Before joining the cable industry, Mr. White held various positions at Colgate-Palmolive, including Marketing Director of Colgate-Palmolive'sColgate-Palmolive’s Toothbrush Products Division.

Mr. White also has experience in corporate governance matters and serves as a director of two other public companies, where he serves on various committees. Mr. White also serves on the board of directors of the Comcast Foundation and is a member of the Executive Leadership Council.

​
​ 
President, Special Counsel to the CEO, Comcast Cable		​
[MISSING IMAGE: ph_whitesteve-4c.jpg]
Independent Director
Age: 62
Years on Grainger’s Board: 2
Director Since: 2020
Grainger Board Committees:
BANC
CCOB
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2020

BOARD MEETINGS AND COMMITTEE MEMBERSHIP

The Operating Principles provide for the Board's Committees and the process for selecting Committee leadership. The BANC's recommendations are considered by the Board following each annual meeting of shareholders. The Committees are appointed by the Board based on recommendations of the BANC. As required by each Committee's charter, all members of each Committee must be "independent" Directors.

MEETINGS; EXECUTIVE SESSIONS

Five meetings of the Board were held in 2020.2022. Each Board meeting included at least one executive session, during which only independent Directors were present. In total, 1815 Committee meetings were held in 2020.2022. During each Committee meeting, Committee members also met in closedexecutive session, without management present. TheAt each Board meeting, the Committees report regularly to the full Board on their activities and actions.

BOARD COMMITTEES & MEMBERSHIP
Our Board has established three standing committees: the Audit Committee; the Board Affairs and Nominating Committee; and the Compensation Committee (each, a Committee). Each Committee has a charter that defines its specific responsibilities. Each charter is reviewed annually and each Committee then recommends to the Board charter revisions that may be needed to reflect new responsibilities or evolving best practices. As required by each Committee’s charter, all members of each Committee must be “independent” Directors. Each Committee has the authority to retain independent advisors to assist it in carrying out its responsibilities.
The Operating Principles provide for the Board’s Committees and the process for selecting Committee leadership. The BANC’s recommendations are considered by the Board following each annual meeting of shareholders. The Committee members are appointed by the Board based on recommendations of the BANC. Committee membership as of March 16, 2023 is as follows:
[MISSING IMAGE: tbl_boardcommittees-pn.jpg]
​C​​Chair   ✓ Member   LD Lead Director   FE Audit Committee Financial Expert as defined under SEC rules​
​
† Mr. Roberts is retiring from the Board effective immediately following the Annual Meeting and is not standing for re-election.
Copies of each Committee charter are available under “Governance” in the Investor Relations section of our website at http://invest.grainger.com.
The Board has delegated certain responsibilities and authority to its standing Committees, as described below.

GRAPHIC

GRAPHIC    Chair    GRAPHIC  Member    LD Lead Director    FE Audit Committee Financial Expert as defined under SEC rules

(1)
Subject to election at the annual meeting, will be appointed to the Audit Committee and the Board Affairs and Nominating Committee.

Each Committee has a charter that it reviews annually and then makes recommendations to our Board for charter revisions that may be needed to reflect evolving best practices. Copies of each Committee charter are available under "Governance" in the Investor Relations section of our website at http://invest.grainger.com/.

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AUDIT COMMITTEE

Members
All Independent

PHOTO

V. Ann Hailey (Chair)

Brian P. Anderson

Katherine D. Jaspon*

Stuart L. Levenick

Neil S. Novich

E. Scott Santi

​

Oversees the Company's accounting, financial reporting processes and audits of financial statements and internal controls.

* Subject to election at the annual meeting, will be appointed to the Audit Committee.

​​​
Corporate Governance​
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AUDIT COMMITTEE
​
Members
All Independent
​​
The Audit Committee of the Board (the Audit Committee) met eightfive times in 2020.2022. The Board has determined that each of the members of the Audit Committee is "independent,"“independent,” as that term is defined in the independence requirements for audit committee members contained in the applicable rules of the U.S. Securities and Exchange Commission (the SEC) and in the listing standards of the NYSE. The Board has determined that each of the members of the Audit Committee is financially literate and that each of Ms. Hailey, Mr. Anderson, Mr. Novich, and Mr. Santi is an "audit“audit committee financial expert,"” as that term is defined in the applicable rules of the SEC.

The Audit Committee assists the Board in its oversight responsibility with respect to the following:

•

Grainger's

the Company’s financial reporting process;

​
•

Grainger's

the Company’s systems of internal accounting, financial, and disclosure controls;

​
•


the integrity of Grainger'sthe Company’s financial statements;

​
•

Grainger's

the Company’s compliance with legal and regulatory requirements;

​
•

Grainger's

the Company’s enterprise risk management systems and processes as to business continuity, cybersecurity, privacy, legal and other risks, other than ESG risks, which are also addressed at the meetings of the Board Affairs and Nominating Committee and the Compensation Committee of the Board;

​
•


the qualifications and independence, as well as the appointment, compensation, retention, evaluation, and termination, of Grainger'sthe Company’s independent auditor, the resolution of disagreements between management and the independent auditor regarding financial reporting, and the selection of the auditor'sauditor’s lead audit partner;

​
•


the performance of Grainger'sthe Company’s internal audit function and the independent auditor;

​
•


the pre-approval of audit and permissible non-audit services and fees to be provided by the independent auditor;

​
•


activities and amendments relative to the Company'sCompany’s ERISA plans that involve the investment of funds, subject to coordination with the Compensation Committee where appropriate;

​
•


the establishment of procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, and auditing matters; and

​
•


compliance with Grainger'sthe Company’s Business Conduct Guidelines, including reviews of potential violations communicated through the Company'sCompany’s confidential reporting channels.

​
​
[MISSING IMAGE: ph_haileyann-4c.jpg]
V. Ann Hailey (Chair)
Katherine D. Jaspon
Stuart L. Levenick
Neil S. Novich
E. Scott Santi
​Oversees the Company’s accounting, financial reporting processes and audits of financial statements and internal controls.​
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BOARD AFFAIRS AND NOMINATING COMMITTEE

​
Members

All Independent

PHOTO

Stuart L. Levenick (Chair)

Rodney C. Adkins

Brian P. Anderson

V. Ann Hailey

Katherine D. Jaspon*

Neil S. Novich

Beatriz R. Perez

Michael J. Roberts

E. Scott Santi

Susan Slavik Williams

Lucas E. WatsonSteven A. White

​

Oversees the Company's corporate governance practices and processes and ESG programs and reporting.

* Subject to election at the annual meeting, will be appointed to the Board Affairs and Nominating Committee.

​​
The Board Affairs and Nominating Committee of the Board (the BANC) met five times in 2020.2022. The Board has determined that each of the members of the BANC is "independent,"“independent,” as defined in the independence requirements for members of nominating committees contained in the applicable NYSE listing standards.

The BANC assists the Board in its oversight responsibility as follows:

Board Composition and Renewal

•


makes recommendations to the Board regarding the makeup and size of the Board and the types and functions of its Committees and their initial respective charters;

​
•

setablishes

establishes specific written criteria by which Director nominees shall be qualified;

​
•


periodically evaluates whether the Board members collectively have the right mix of experience, qualifications, attributes, skills, backgrounds and diverse viewpoints necessary for the Board to be a good steward for the Company'sCompany’s shareholders;

​
•


determines the preferred qualifications and characteristics for potential Board nominees, which are shared with our third-party search firm;

and

​
•


identifies and screens potential nominees, consistent with the Board-approved criteria;

criteria.

​
Governance

•


makes recommendations concerning Director and nominee independence, attendance and performance;

​
•


reviews transactions between Graingerthe Company and related persons;

​
•


evaluates in its annual review the overall performance of the Board and its Committees;

​
•


oversees corporate governance, including:

o

​
◦
making initial assessments regarding corporate governance issues or proposals,

o

proposals;

​
◦
recommending corporate governance guidelines, including annual review of the Committee charters, the Operating Principles for the Board, and the Criteria for Membership on the Board,

o

Board;

​
◦
recommending the Lead Director,

o

Director;

​
◦
recommending Board Committee responsibilities, Committee Chairs, and members,

o

members;

​
◦
determining policies regarding rotation of Directors among the Committees,

o

Committees;

​
◦
evaluating the Board'sBoard’s corporate governance, including the adequacy of information supplied to the Board,

o

Board;

​
◦
evaluating the Board'sBoard’s performance of its oversight responsibilities related to Grainger management,the Company management; and

o

​
◦
recommending retirement, compensation, and other policies applicable to Directors;

Directors.
​
​​
[MISSING IMAGE: ph_levenick-4c.jpg]
Stuart L. Levenick (Chair)
Rodney C. Adkins
V. Ann Hailey
Katherine D. Jaspon
Neil S. Novich
Beatriz R. Perez
Michael J. Roberts*
E. Scott Santi
Susan Slavik Williams
Lucas E. Watson
Steven A. White
​
​Oversees the Company’s corporate governance practices and processes and ESG programs and reporting.​​
​* Mr. Roberts is retiring from the Board effective immediately following the Annual Meeting and is not standing for re-election.​​​​
​​​​
Environmental, Social and Governance (ESG)

•


oversees annually the Company'sCompany’s ESG programs and reporting, including environmental and sustainability, social responsibility to its communities, governance, the Company'sCompany’s culture, talent strategy, and diversity, equity and inclusion, and any related enterprise risk management (ERM) reviews (other than human capital management ERM reviews, which are overseen by the Compensation Committee);

.
​
​​
​​​​
Succession Planning and Management Development

•


works with the Compensation Committee to annually review senior management organization, career paths, and succession; and

​
•


leads the annual review of management'smanagement’s performance, including the CEO to the extent necessary to supplement the Compensation Committee'sCommittee’s review of CEO performance relative to CEO compensation goals and objectives.

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COMPENSATION COMMITTEE OF THE BOARD

​
Members

All Independent

PHOTO

Rodney C. Adkins (Chair)

Beatriz R. Perez

Michael J. Roberts

Susan Slavik Williams

Lucas E. Watson

Steven A. White

​

Oversees the Company's compensation philosophy and compensation and human capital management policies and programs.

​​
The Compensation Committee of the Board (the Compensation Committee) met five times in 2020.2022. The Board has determined that each member of the Compensation Committee is "independent,"“independent,” as defined in the independence requirements for members of compensation committees in the applicable SEC rules, the NYSE listing standards, and under the Internal Revenue Code.

The Compensation Committee assists the Board in its oversight responsibility as follows:

•


oversees the Company'sCompany’s compensation and benefits to ensure that:

o

​
◦
the Board appropriately discharges its responsibilities relating to senior management compensation,

o

​
◦
the Company maintains a market competitive compensation structure designed to attract, motivate, develop, and retain key talent,

o

​
◦
compensation and benefits policies and practices reflect the highest level of transparency and integrity,

o

​
◦
compensation is aligned with shareholder value creation and strategic objectives,

o

​
◦
senior management compensation is linked to personal and Company performance and provides appropriate incentives to increase shareholder value,

o

​
◦
compensation policies and practices for all employees are designed with appropriate incentives that do not encourage unnecessary or excessive risk taking and are administered in a transparent manner,

o

​
◦
the interests of shareholders are protected, and

o

​
◦
equity-based plans and incentive plans are appropriately designed and administered, including review and approval of performance measures applicable to short-term and long-term incentive plans;

​
•


provides independent oversight of the administration of the Company'sCompany’s shareholder-approved equity plans;

​
•


annually reviews and approves CEO compensation, as follows:

o

​
◦
reviews and approves corporate goals and objectives relevant to CEO compensation,

o

​
◦
evaluates CEO performance in light of those corporate financial goals and objectives, with assistance from the Lead Director and the other Board Committees, as appropriate, and

o

​
◦
together with the other independent Directors, determines and approves, in its sole discretion, the CEO'sCEO’s total compensation based on the above evaluation, in executive session without members of management present;

​
•


reviews and recommends to the Board for approval the compensation paid to the CEO'sCEO’s direct reports, including the other Named Executive Officers (NEOs);

o

​
◦
Members of management (including some NEOs and the CEO'sCEO’s other direct reports) assist the Compensation Committee in providing recommendations for Grainger'sthe Company’s NEO compensation program design, and for other officers and employees. Management also recommends salary and award levels for the Committee'sCommittee’s review and recommendation, except those related to the CEO;

​
•


together with the other independent Directors as directed by the Board, determines, in their sole discretion, the appropriate compensation design and level of CEO compensation in executive session without members of management present;

​
•


approves annual grants of equity-based compensation awards (including, restricted stock units (RSUs) and performance stockshare units (PSUs)) to NEOs, other officers and employees under approved shareholder plans;

plans and that incorporate claw-back provisions;

​
•


may delegate to management limited authority to grant "off-cycle"“off-cycle” equity-based compensation awards of stock options and RSUs to non-officer employees and to CEO direct reports that are new hires; and, awards under this authority are granted pursuant to terms and conditions approved by the Compensation Committee. Management informs the Compensation Committee of the awarded grants at the Compensation Committee'sCommittee’s next meeting. The pool of shares available to management under this delegation is approved annually by the Compensation Committee. The Compensation Committee may terminate this delegation of authority at its discretion;

​
•


retains, terminates, and approves the compensation for an independent compensation consultant who reports directly to the Compensation Committee; determines the independence of such independent compensation consultant; and, routinely meets in executive session with the independent compensation consultant, without management present; and

​
•


oversees the Company'sCompany’s programs and policies for human capital management and assists the BANC in its oversight of the Company'sCompany’s programs and policies with respect to employee engagement and leadership effectiveness, and any related enterprise risk management reviews.

​
​
[MISSING IMAGE: ph_adkinsrod-4c.jpg]
Rodney C. Adkins (Chair)
Beatriz R. Perez
Michael J. Roberts*
Susan Slavik Williams
Lucas E. Watson
Steven A. White
​Oversees the Company’s compensation philosophy and compensation and human capital policies and programs.​
​* Mr. Roberts is retiring from the Board effective immediately following the Annual Meeting and is not standing for re-election.​
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LEADERSHIP STRUCTURE

The Board has strong governance structures and processes in place to ensure the independence of the Board. These structures and processes, which are reflected in the Operating Principles and the Committees'Committees’ charters, allow for the independent Directors to effectively exercise the Board'sBoard’s authority in overseeing critical matters of strategy, operations, enterprise risk management, financial reporting, and financial reporting.

ESG.

The Board carefully considers its leadership structure and believes that a combined Chairman/CEO position, coupled with an independent Lead Director appointed by the Board, representsprovides effective oversight of management by the best leadership structure for Grainger.Board and results in a high level of management accountability to shareholders. In the Board'sBoard’s view, having a single individual serving as both the Chairman and CEO assists in the timely flow of relevant information, which supports effective Board decision-making and provides a useful connection between the Board and management so that Board actions are appropriately and efficiently executed.

In deciding that a combined Chairman and CEO position is the appropriate leadership structure for Grainger,the Company, the Board also recognized the need for independent leadership and oversight. Having an independent Lead Director actively engaged in planning and oversight is an essential component of effective governance. The Company’s Operating Principles require that a Lead Director be annually elected by and from the independent directors. The Lead Director is responsible for facilitatingensuring Board involvement in major issues and/or proposals ensuringand that the Board is addressing major strategic and operational initiatives, reviewinginitiatives. To this end, the Lead Director reviews meeting agendas and information to be provided to the Board, consultingconsults with Directors, the CEO and management, and presidingpresides at executive sessions of the Board. With the Lead Director performing these important duties and having the power under the By-laws to call meetings of the Board and to lead them in the Chairman’s absence, the Board does not believe that separating the role of the Chairman and CEO would result in strengthening Grainger'sthe Company’s corporate governance or in creating or enhancing long-term value for our shareholders.

The duties performed exclusively by the independent Directors, either collectively or through Committees comprised solely of independent Directors, include selecting the Chairman and CEO and evaluating his or her performance, and setting his or her compensation.

The Board believes that given Grainger's corporate governance structures and processes, a combined Chairman and CEO position in conjunction with an independent

Lead Director provides effective oversight of management by
The Board’s independent Directors elected the Board and results in a high level of management accountability to shareholders.

LEAD DIRECTOR

Under Grainger's By-Laws and the Operating Principles, the Lead Director is elected by and from the Board's independent Directors. The current Lead Director, Mr. Stuart L. Levenick, after the 2022 Annual Meeting of Shareholders. Mr. Levenick was first appointed to

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serve in this capacity after the April 2014 annual meetingAnnual Meeting of shareholders.Shareholders. As Lead Director, Mr. Levenick exercises significant authority over the Board’s operations and plays an important role in the Board’s independent oversight of management, key risks and governance matters. Among the duties assigned to the Lead Director is the responsibility for:


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Board Matter​​Responsibility​
Agendas​​
•


Soliciting feedback from the independent Directors on agenda itemsdirectors for topics to be included in the Board meetings and collaboratingmeeting agenda.
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Collaborating with the Chairman in developing and approving Board meeting agendas.

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Reviewing and approving meeting schedules to ensure that there is sufficient time for discussion of all agenda items.

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Regularly communicating with the Chairman between meetings on strategic and operational issues and acting as a “sounding board” and advisor.
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Communicating with Directors​

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Serving as the primary liaison between the Chairman and the independent Directors.

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Reviewing and approving the types of information sent to the Board.
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Communicating with Shareholders

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Being available, as necessary, for consultation and communication with major shareholders.

shareholders on behalf of the Board.
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Executive Sessions

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Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent Directors.

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Calling meetings of the independent Directors, if appropriate.
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Leading the Board in its annual review of the Board and management’s performance, including the CEO, to the extent necessary to supplement the Compensation Committee’s review of the CEO’s performance relative to applicable compensation goals and objectives.
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Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent Directors.
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Calling meetings of the independent Directors, if appropriate, to review and approve the types of information sent to the Board.

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Leading the Board in its annual review of the Board and management's performance, including the CEO, to the extent necessary to supplement the Compensation Committee's review of the CEO's performance relative to applicable compensation goals and objectives.

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Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent Directors.

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Calling meetings of the independent Directors, if appropriate, to review and approve the types of information sent to the Board.

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Board and Management Evaluations​

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Coordinating with the Board Affairs and Nominating CommitteeBANC and the applicable Board Committee Chairs the annual self-evaluation of the performance and effectiveness of the Board, its Committees and individual Directors.

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Leading the Board in its annual review of the Board'sBoard’s and management'smanagement’s performance, including the CEO, to the extent necessary to supplement the Compensation Committee'sCommittee’s review of the CEO'sCEO’s performance relative to applicable compensation goals and objectives.

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Director Search

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Coordinating with the BANC the Director recruitment and interview process.

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Coordinating with the CEO and the applicable Board Committee Chairs on key risks to the Company and facilitating discussion as appropriate at Board meetings.
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BOARD, COMMITTEE AND DIRECTOR EVALUATIONS

The Board recognizes that a rigorous, ongoing evaluation process is an essential component of strong corporate governance practices and promoting continuing Board effectiveness. Each year, the Board conducts a three-part evaluation process coordinated by the Lead Director and the Committee Chairs: (a) full Board evaluation,evaluation; (b) Committee evaluations,evaluations; and (c) Director self-assessments. To help make sure the

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evaluations are useful and that we are implementing best practices, we routinely review the evaluation process with an external governance expert.

2022 Evaluation Process

Our historic approach had been to ask each Director to respond to written survey

For the 2022 evaluations, questions included the following: (a) any changes that would help Directors increase their understanding of the Company’s business, competitive environment and strategy; (b) whether the Directors agree on the Company’s risk appetite and how Committees are identifying opportunities and addressing risks; (c) whether the governance process provides the Board performs. We had also sought written feedback on more open-endedwith sufficient time and material to make informed decisions and enables Committee’s to cover topics includingat the right level of detail; (d) what the Board and each Committee did well in 2021-2022 and could improve upon in the future; and (e) how succession planning and onboarding processes and effectiveness.

In reviewing our approach to evaluation, including the actions that resulted from past surveys,could be improved.

As in 2019 we adopted a new approach designed to facilitate conversation focused on the Board's challenges and opportunities. We made the following changes, which also formed the basis of the 2020 evaluations:

We believe that this open-ended question/interview approach helps elicit thoughtful and useful responses that encourage more valuable conversations and actionable insights. Supplementing the annual surveys is a continuous feedback loop that does not rely solely on a single, formal event at the end of the year.

As before, the

The results of the evaluations/interviews were compiled anonymously. The Lead Director then discussed with the Board the results of the Board evaluations, individual Director self-assessments, and the management leadership team feedback, while the Committee Chairs discussed the results of the

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The information gained through this process helps shape the content of educational presentations to the Board and identify the skill sets desirable in Director searches conducted from time-to-time by the Board.

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Actions

Among the actions taken as a result of the 2020 Board evaluation processes were an analysiswas continued discussion of the desired skill sets and backgrounds for future directors, changes to Board meeting agenda and content format to create more time for in-depth discussions,Directors, alignment around guiding principles to help management implement the Grainger Edge more effectively,Director succession planning, identification of corporate strategy areas for greater Board visibility, and giving the Board greater visibility into ERM deep dives conducted by the Audit Committee in relation to areas of the business that may carry more significant risk.

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BOARD OVERSIGHT

The Board oversees, counsels, and directs management in the long-term interests of the Company and its shareholders. The Board'sBoard’s oversight responsibilities include:

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Board’s Role in Shareholder Engagement

The Board believes it is important for the Company to maintain active engagement with its shareholders in order to effectively communicate the CompanyCompany’s strategy and to ensure that shareholders'shareholders’ perspectives are understood and considered by the Board. Continuing its practice begun in 2017, the Company arranged for the Board’s Lead Director to meet with a variety of institutional investors to explain the Company’s ESG and executive compensation practices and objectives in 2022 and the Board’s focus for 2022-2023.
On a regular basis, as part of its oversight role, the Board routinely receives reports and briefings from the Company'sCompany’s Investor Relations team summarizing ongoing engagement as well asinvestor feedback and any shareholder concerns, questions and trends.

Grainger The Company has a comprehensive shareholder engagement program to reach a significant cross-section of our shareholder base, including large institutional investors, pension funds, and other investors. Our CEO, CFO, and VP, Investor Relations and other members of our Investor Relations team, maintain regular contact throughout the year with a broad base of shareholders to understand their concerns on various topics, including financial performance, strategy, competitive environment, and ESG and executive compensation matters.

Contact

Engagement with shareholders includes quarterly earnings calls, the Annual Meeting of Shareholders, our annual meeting of shareholders,Lead Director meetings, investor conferences, individual meetings, and other channels of communication. Consistent with prior years, in 2020,2022, the Company proactively reached out to shareholders representing over 53% of current shares outstanding as of December 31, 2022 and met with shareholders representing 38%over 35% of shares outstanding. Continuing its practice begun in 2017,outstanding as of December 31, 2022.
In September 2022, the Company also proactively madehosted Investor Day at its Northeast Distribution Center (Northeast DC) where senior management discussed the Board's Lead DirectorCompany’s strategy and three-year financial targets through 2025, and attendees had the opportunity to engage in a Q&A session with leaders as well as to tour the Northeast DC. The Investor Day presentation is available under “Events & Presentations” in 2020 to explain and discuss the Company's ESG and executive compensation practices and policies.

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Succession Planning, Talent and Human Capital Management

The Board recognizes that it has an important duty to ensure senior leadership continuity by overseeing the development of executive talent and planning for the efficient succession of the CEO and other key leadership positions. The Board has delegated primary oversight responsibility for management development and leadership succession planning to the BANC.BANC, which is comprised of all of the Board’s independent Directors. The BANC reports on its activities to the full Board, which routinely addresses planned succession scenarios and also has developed emergency succession plans that are reviewed annually.

Recruiting, developing, promoting and retaining top diverse talent is a key priority for the Company. The Board annually reviews our talent strategy to ensure we have the right culture and people to support our strategic imperatives well into the future. This strategy has four pillars:

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Evolving our culture

culture;
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Empowering our people leaders

leaders;
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Building our talent pipeline

pipeline; and
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leaders.

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While the BANC has oversight of the Company'sCompany’s talent strategy, including as to diversity, equity and inclusion, the CCOB has oversight of the Company'sCompany’s programs and policies for human capital management and supports the BANC in its oversight of employee engagement and leadership effectiveness.

Consistent with this framework, the BANC routinelyannually conducts in-depth reviews of senior leader development. This review addresses the Company'sCompany’s management development initiatives, assesses senior management resources, and identifies individuals who should be considered as potential future senior executives. To ensure that the succession planning and management development process supports and enhances Grainger'sthe Company’s strategic objectives, the Board and the BANC also regularly consult with the Chairman of the Board and CEO on the Company'sCompany’s organizational needs, the leadership potential and related development plans for key managers and plans for future development and emergency situations.

To supplement these efforts, throughout the year, the senior management team, as well as a broader array of executives throughout our businesses, make presentations to the Board and its Committees and also interact in more informal settings with the Directors. This engagement between Directors and our

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current and future leaders gives our Directors meaningful insight into our current pool of talent, what attracts and retains our executives, and the Company'sCompany’s culture.


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Board’s Role in Risk Oversight

The Board has overall responsibility for risk oversight, with its Committees assisting the Board in performing this function based on their respective areas of expertise. The Board'sBoard’s role is to oversee the Company'sCompany’s enterprise risk management (ERM) programs, including risk assessment and risk management processes and policies used by Graingerthe Company to identify, assess, monitor and address both present and potential strategic, operational, financial, ESG, cybersecurity, compensation, operational, strategic and legal risks on an enterprise-wide basis.

The risk landscape associated This oversight includes working with the COVID-19 pandemic has been,Company’s internal audit team in its consultation with external advisors on a biennial basis to identify and continuesprioritize key risks based on factors including their materiality and the timeframe in which such risks may be realized. The Directors’ involvement helps the Company anticipate future trends and risks. The Board focuses on more material risks that may present a near-term danger and on longer-term risks that may require early preparation due to be, discussedeither their materiality or complexity. As part of this oversight, the Board receives regular reports from management on key risks across these and other subject matters, which gives the Board broad visibility over risks within the organization and the Company’s efforts to mitigate these risks. The Board and/or the applicable Committee also receives advice from time to time from external advisors on specific risk matters. The Lead Director discusses and coordinates with the fullCEO and applicable Committee Chairs on key risks and facilitates discussion as appropriate at Board meetings.

The Committees support the Board in the risk oversight process. The BANC and Compensation Committee Charters specifically assign ERM reviews of the Company’s ESG programs and reporting to the BANC and the Company’s human capital management programs and policies to the Compensation Committee. Members of management regularly provide reports to the BANC and Compensation Committee on relevant risk topics. In addition, as well as eachpart of its Committees through formalexisting oversight responsibility, the Compensation Committee assesses the relationship between potential risk created by the Company’s compensation programs and informal updates as needed. Over the course of 2020, management regularly updatedtheir impact on long-term shareholder value. The Audit Committee assists the Board onin its oversight of the pandemic's impactsCompany’s ERM program and processes, including as to our business continuity, cybersecurity, privacy and legal and other risks as determined by the related strategic, operational and financial risks. Discussions withBoard.
Both the Board and Committees have also included, among other topics, business continuity, employee healththe Audit Committee regularly review the Company’s risk assessment and safety, customer demand, operational challenges, financial resourcesmanagement processes and liquidity, Company strategy, executive compensation, technology, shareholder engagementpolicies and succession plans. Management continues to report toreceive regular updates from the Board and its Committees on its response to the pandemic as appropriate and will seek to identify new risks as they may arise in lightmembers of the continuing effectsCompany’s management who are responsible for the effectiveness of the COVID-19 pandemic.

Company’s ERM program. As part of its ERM oversight, the Board oversees and regularly reviews the Company'sCompany’s programs and processes for cybersecurity risk, including the Company'sCompany’s framework for preventing, detecting, and addressing cybersecurity incidents.incidents and identifying emerging risks both broadly and within related industries. To help inform its approach to devising an appropriate governance framework, cadence, metrics, and reporting to discharge its cybersecurity oversight responsibilities,responsibilities. The Company’s Chief Technology Officer and Chief Information Security Officer (CISO) routinely provide cybersecurity updates to the Board appointed an Ad Hoc Committee on Cybersecurity constituted of Grainger Directors with technology and cybersecurity experience. The Board's cybersecurity oversight framework—full Board ownership and oversight, with Audit Committee support,meeting and quarterly informational updates and annual briefings—was implemented uponinformation packs to the recommendationBoard. The CISO leads an information security team whose mission is to facilitate the protection of the Ad Hoc Committee, which remains availableCompany’s information and computing assets worldwide. This is achieved by establishing guidelines to provide strategic advice as needed.

Bothensure confidentiality, integrity, and availability of assets across the global organization, and by managing risk through the application of appropriate technologies, people, and processes. The Company is also committed to protecting the personally identifiable information (PII) of its team members, customers and suppliers from unauthorized access, usage or disclosure by following globally recognized privacy standards, and building privacy and data protection principles into its systems and processes.

As an output of the 2022 reviews by the Board and the Audit Committee, regularly review Grainger's risk assessmentthe Board updated the Business Conduct Guidelines to continue to set understandable expectations and management processesencourage a “speak up” culture for early issue identification, including the protection and policies, including receiving regularsafeguarding of personally identifiable information and the Company’s intellectual property, data and trade secrets. Facilitating this “speak up” culture is the Company’s Compliance Officer.
The Compliance Officer reports fromdirectly to the Company's Chief Information SecurityLegal Officer and routinely attends Audit Committee Meetings, including annually meeting with the Audit Committee in executive session. The Compliance Officer is notified of every call to the Company’s third-party hosted hotline and hotline web portal, and report made through a web portal, on which team members may anonymously inquire, initiate a complaint or

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participate in internal investigations. The Compliance Officer reports on concerns of Grainger's management who are responsible forsignificance to the effectiveness of Grainger's ERM program.Audit Committee on a quarterly basis. If an issue is significant, the Audit Committee is made aware immediately.
The Board’s risk oversight is supported by internal audit and external audit reviews, external counsel and consultants, the Company’s finance, controller and legal departments and internal disclosure committee. As an output of these reviews, in 2020appropriate or as requested by the Board, revised Committee Charters to specifically assign ERM reviews of the Company's ESG programsCommittees or Lead Director, they prepare materials and reportingprovide presentations to the BANCBoard and Committees on risks identified during the Company's human capital management programs and policiescourse of their work or as part of regular disclosure-related diligence. Management’s disclosure committee reports to the Compensation Committee. In addition,Audit Committee no less than quarterly as part of its existing oversight responsibility,preparation for the Compensation Committee assesses the relationship between potential risk created by Grainger's compensation programsCompany’s quarterly earnings calls and their impactquarterly and annual reports filed on long-term shareholder value.

Forms 10-Q and 10-K.

Environmental, Social and Governance (ESG)

In support of the Company’s purpose, the Company strives to operate sustainably, informed by a long-term, fact-based view of critical issues regarding the environment and society at large. The Grainger team partners with customers, suppliers, and communities on three core areas: environmental, social, and governance. Grainger is committed to being a responsible corporate citizen and strives to integrate ESG principles into the daily operation of its business. Grainger's ESG strategy includes its commitment to governance, operating sustainably and valuing its people. These commitments shape our focus on corporate citizenshipcitizenship.
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ESG Oversight and fuel our determination to make a positive difference today and in the future.

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The Company integrates ESG initiatives into its strategy and daily operations at each level of its business. This begins with general ESG oversight by the BANC, which is comprised of all of the Board’s independent Directors. The BANC annually reviews the Company'sCompany’s ESG programs and reporting, including its environmental and sustainability, social responsibility to its communities,community impact, governance, the Company'scompany culture, talent strategy, and diversity, equity and inclusion.inclusion practices. In turn, the Compensation Committee oversees the Company'sCompany’s programs and policies for human capital management and assists the BANC in its oversight of the Company'sCompany’s programs and policies with respect to employee engagement and leadership effectiveness. The Board includes one DirectorDirectors with particular expertise in corporate sustainability and one Director with expertise in environmental matters.

ESG Leadership Council

The Company's

In developing the Company’s ESG efforts, are led by the Chairman and CEO who chairs management's ESG Leadership Council. The key objectives of theleads an ESG Leadership Council include identifyingthat sets the strategic direction of the Company’s ESG program and identifies ways to incorporate the appropriate ESG initiatives into operations and strategy, overseeing the overall ESG program, and making regular reports to the BANC.strategy. The ESG Leadership CouncilCouncil’s strategy is supportedimplemented by a cross-functional steering committee providingESG Working Groups comprised of subject matter expertise, implementing day-to-day programsexperts focused on near-term priorities, material topics, and driving progress toward the success of our strategy.supporting efforts such as reporting. Core initiatives relating to culture and talent, including human capital management and diversity, equity and inclusion, are led by the GraingerCompany’s Human Resources team in coordination with the ESG Leadership Council.

The Company is also committed to operating with ethics and integrity. The Company’s Business Conduct Guidelines define our shared expectations, consistent with the highest ethical and legal standards, of how we work together, serve customers and business partners, and honor our commitments to shareholders everywhere we do business. In 2022, 100% of Grainger team members completed Business Conduct Guidelines training and certification. Individuals are encouraged to report ethical concerns or complaints regarding Company or individual practices.
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Sustainability

Grainger

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Environmental
The Company strives to operate its business and supply chain sustainably and provides sustainability solutions to help customers do the same. The Company’s sustainability solutions include a portfolio of environmentally preferred products and sustainability services. The Company incorporates sustainability best practices across the business, improving supply chain efficiency and practicing best-in-class facilities construction and maintenance, and measuring and mitigatingall which help mitigate climate-related risk. Grainger has set a carbon target to reduce its absolute scope 1 and scope 2 emissions 30% by 2030 compared to align with the goal of limiting global warminga 2018 baseline, and is on track to well below 2 degrees Celsius. Grainger also provides sustainability solutions for itsachieve this goal.
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Social
The Company values all people who play a part in our business, from customers through an environmentally preferred portfolio (EPP) of products and sustainability services offerings.


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Supply Chain

To help ensure the products Grainger distributes are manufactured and delivered with high ethical standards, its Supplier Code of Ethics focuses on responsible sourcing along the dimensions of human rights, labor, environment and anti-corruption. Grainger's Human Rights Principles include the company's commitment to providing a safe and fair workplace that upholds and respects international human rights standards. These principles are applicable to all Grainger team members to the communities where we live and work. Diversity, equity and inclusion (DEI) are approved and monitored regularly by Grainger's senior leadership.

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Valuing our People

Graingerintegral to the Company’s business success. The Company strives to ensure its team members reflect its increasingly global and diverse customer base. Diversity, equity and inclusion are integral to Grainger's business success. The Company is committed to creating a welcoming culture where all team members can bring their whole selves to work, have opportunities to grow and feel a sense of belonging, regardless of sex, gender, race, color, religion, national origin, age, disability, veteran status, sexual orientation, gender expression or experiences. As of December 31, 2020,2022, within Grainger'sGrainger’s U.S. workforce, approximately 38.5%39% of team members were women and approximately 34.2%39% of team members were racially and ethnically diverse. Grainger has taken several actions to improve inclusion in its recruiting process, which include how its approaches job postings, develop position requirements, conduct interviews and evaluate candidates in general.

ESG Reporting

The Company began reportingworks collaboratively with referencevarious community partners through a combination of resources, including in-kind donations, nonprofit board placement program, team member volunteerism and our 3:1 Matching Gifts Program.
The Company takes steps to help ensure that the products it distributes are manufactured with high ethical standards through a Supplier Code of Ethics and Human Rights Principles. The Company’s Supplier Code of Ethics focuses on responsible sourcing along the dimensions of human rights, labor, environment and anti-corruption. The expectation for responsible sourcing was also added to the GlobalCompany’s Business Conduct Guidelines in 2022. The Company’s Human Rights Principles include the Company’s commitment to providing a safe and fair workplace that upholds and respects international human rights standards. These principles are approved and monitored regularly by senior leadership. The Company’s Supplier Code of Ethics and Human Rights Principles are available under “Governance” in the Investor Relations section of our website at http://invest.grainger.com.
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Grainger’s Supplier Diversity Program assists customers in diversifying their supply chains and promotes the growth of underrepresented supplier groups in the United States. The Company has more than 20 years of experience partnering with small and diverse businesses through two core programs: Grainger’s Tier 1 Channel Development Program and Grainger’s Tier 2 Supplier Diversity Program.
Grainger’s Tier 1 Channel Business Programs (e.g., Diversity Alliances, Federal Resellers Network) help customers meet their diversity procurement goals through the use of certified Diverse Business Enterprise (DBE) authorized resellers. Grainger’s Tier 2 Supplier Diversity Program purchases product from small and/or diverse suppliers to sell to our customers. During the federal government’s fiscal year ended September 30, 2022, Grainger U.S. spent more than $2.1 billion with small businesses, and $260 million with minority-, woman-, veteran-, disabled-person- and LGBT-owned businesses for goods and services.
ESG Reporting Initiative's Sustainability Reporting Standards in 2016 and, since 2017, has been a member of the Dow Jones Sustainability Index. Grainger also reports to CDP and EcoVadis, with respective A- and silver ratings. Grainger
The Company continues to evolve its ESG program and reporting in a manner that is beneficial to the Company and its investors.

As part of this commitment, Grainger has aligned its ESG reportingaligns to the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD) frameworks.

frameworks as part of its disclosures. Grainger also reports to and participates in best-in-class third-party assessments and ratings. Please see “Awards & Recognition” and “Reports & Resources” sections of our ESG website at http://www.GraingerESG.com.

As part of the Company’s continued commitment to transparency and progress on our DEI objectives, we published our U.S. Federal Employment Information Report (EEO-1). The data in the consolidated EEO-1 report is based on the Company’s population in the U.S. as of December 31, 2021 and reflects the Company’s U.S. workforce as of that time. Grainger’s consolidated EEO-1 report is available at http://www.GraingerESG.com.
Since 2011, Grainger publishes an annual ESG reportEnvironmental, Social & Governance Report (formerly the Corporate Responsibility Report) (ESG Report) that is periodically updated and while it is available under "Corporate Citizenship"“ESG” in the Investor Relations section of our website at which links to http://www.GraingerESG.com it is not being incorporated by reference into this proxy statement.

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POLITICAL ACTIVITY

Grainger's

Grainger’s Business Conduct Guidelines prohibit the use of Company funds or assets for political purposes, including for contributions to any political party, candidate or committee. In accordance with this policy, we do not maintain a political action committee (PAC).
Given a particular issue, it is prudent for the Company to understand the legislative and regulatory environments at both the Federalfederal and Statestate levels. We have,The Company has, from time-to-time, engaged advisors to assist us in advocacy,limited lobbying, mainly related to government procurement. In 2020,2022, Grainger was also a member of three trade associations.

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OTHER COMMUNICATIONS WITH DIRECTORS

Grainger has established a process by which shareholders and other interested parties may communicate with the Board, its Committees, and/or individual Directors on matters of interest. Such communications should be sent in writing to:

[Name(s) of Director(s)]

or

[Non-management Directors]

or

[Board of Directors]

W.W. Grainger, Inc.

P.O. Box 66

Lake Forest, Illinois 60045-0066


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If the matter is confidential in nature, please mark the correspondence accordingly. Additional information concerning this process is available in the are available under "Governance"“Governance” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.com.

AVAILABLE INFORMATION

All the documents below are available to shareholders and under "Governance"“Governance” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.com or in print, free of charge, upon request to the Corporate Secretary at Grainger'sGrainger’s headquarters, 100 Grainger Parkway, Lake Forest, Illinois 60045-5201.

Business Conduct Guidelines

Grainger has adopted Business Conduct Guidelines for Directors, officers, and employees, which incorporate the Code of Ethics required by the SEC to apply to a company'scompany’s chief executive officer, chief financial officer, and chief accounting officer or controller. In 2022, the Board updated the Business Conduct Guidelines. The updates to the Business Conduct Guidelines address our team members’ responsibilities to uphold internal sourcing policies in order to help the Company fulfill its commitments to source products responsibly and reinforce their responsibilities to safeguard personally identifiable information and the Company’s data, intellectual property and trade secrets.
The Company provides annual Business Conduct Guidelines training and all Directors, officers, and employees are required to certify annually that they have read, understand and are in compliance with the Business Conduct Guidelines. Our Business Conduct Guidelines are posted in the Governance section on Grainger'sGrainger’s website at http://invest.grainger.com/invest.grainger.com.

Operating Principles for the Board of Directors

Grainger also has adopted Operating Principles for the Board of Directors, which represents its corporate governance guidelines. The Operating Principles are available under "Governance"“Governance” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.com.

Committee Charters

The charters, as adopted by the Board and amended from time to time, of the Audit Committee, the BANC, and the Compensation Committee are available under "Governance"“Governance” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.com.

Environmental, Social and Governance Report
The Company’s annual ESG Report

Grainger publishes an ESG report that is periodically updated and, while it is available under "Corporate Citizenship" inat http://www.GraingerESG.com which may be accessed by clicking “ESG” at the top of the Investor Relations section of our website at http://invest.grainger.com.

Note About Reports and Websites
Neither the Company’s EEO-1 or ESG Reports, nor the information on the Company’s websites, including http://invest.grainger.com and http://www.GraingerESG.com, it is not beingwill be deemed to be incorporated into this Proxy Statement by reference or otherwise incorporated into our proxy statement.

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DIRECTOR COMPENSATION

Grainger’s non-employee Directors each receive an annual cash retainer of $100,000 and an annual deferred stock unit (DSU) grant of $145,000.$160,000. The Lead Director and Directors serving as Committee Chairs receive an additional annual cash retainer.

Grainger's

Grainger intends that its non-employee Directors arewill be compensated at a level that approximates median market practice. In benchmarking Director pay, Grainger uses the same compensation comparator group that is used to benchmark compensation for Grainger'sGrainger’s executives as described in the Compensation Discussion and Analysis /section beginning on page 4647. The Compensation Committee'sCommittee’s independent compensation consultant periodically reviews and updates the comparator group as well as comparative compensation information and advises on Director compensation.

The Directors'Directors’ compensation program, which was last adjusted in April 2018,2022, consists of the following:

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Additional Annual Cash Retainers:

•


$25,000—35,000—Lead Director

​
•


$20,000—25,000—Audit Committee Chair

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•


$15,000—20,000—Compensation Committee Chair

​
•


$10,000—10,000—Board Affairs and Nominating Committee Chair

​
​
​Total Base Compensation $260,000​​

All non-employee Directors receive an annual DSU grant worth $145,000.$160,000. In 2020,2022, the number of shares covered by each grant was equal to $145,000$160,000 divided by the 20-day average stock price through March 31 (a methodology consistent with the calculation used for equity awards to grant-eligible employees), rounded up to the next whole share. For non-employee Directors elected at the 20202022 annual meeting of shareholders, the DSU formula resulted in payment of 576321 DSUs based on a 20-day average stock price as of March 31, 20202022 of $251.89$498.78 per share. The DSUs are settled in shares of Grainger common stock on a 1:1 basis upon termination of service as a Director. On their April 27, 2022 grant date, the value of such DSUs was $157,974 using the closing price of $492.13 per share of Grainger’s common stock on April 26, 2022. Directors may defer their annual cash retainers, Lead Director retainer, and Committee Chair retainers (as applicable), into a DSU account.

Stock ownership guidelines applicable to non-employee Directors were established in 1998. These guidelines provide that within five years after election, a Director must own Grainger common stock and common stock equivalents having a value of at least five times the annual cash retainer fee for serving on the Board. The hedging or pledging of Company shares by Directors or executive officers is prohibited by Company policy (see (see Hedging and Pledging Prohibition / page 6466). No Directors (or executive officers) have hedged or pledged any of the shares beneficially owned by them and all Directors are currently in compliance with the ownership guidelines.

Grainger annually matches Directors'each Director’s charitable contributions on a three-to-one basis up to a maximum Company contribution of $7,500 per Director annually and provides discounts on product purchases, both on the same basis as provided to U.S. Grainger employees.

Mr. Macpherson, who is an employee of Grainger, does not receive any compensation for serving as a Director.

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2020

2022 Director Compensation

​Name​​​
Fees Earned
or Paid in
Cash(1)
​​​
Stock
Awards(2)
​​​
All Other
Compensation(3)
​​​Total​
​Rodney C. Adkins​​​$120,000​​​$157,974​​​$7,500​​​$285,474​
​V. Ann Hailey​​​$125,000​​​$157,974​​​$6,750​​​$289,724​
​Katherine D. Jaspon​​​$100,000​​​$157,974​​​$7,500​​​$265,474​
​Stuart L. Levenick​​​$145,000​​​$157,974​​​$7,500​​​$310,474​
​Neil S. Novich​​​$100,000​​​$157,974​​​$7,500​​​$265,474​
​Beatriz R. Perez​​​$100,000​​​$157,974​​​$7,500​​​$265,474​
​Michael J. Roberts​​​$100,000​​​$157,974​​​$7,500​​​$265,474​
​E. Scott Santi​​​$100,000​​​$157,974​​​$7,500​​​$265,474​
​Susan Slavik Williams​​​$100,000​​​$157,974​​​$0​​​$257,974​
​Lucas E. Watson​​​$100,000​​​$157,974​​​$7,500​​​$265,474​
​Steven A. White​​​$100,000​​​$157,974​​​$0​​​$257,974​
​
(1)

 

Name


​ Fees Earned
or Paid in
Cash (1)


​ Stock
Awards (2)

​ All Other
Compensation (3)

​ Total
​
​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​

 

Rodney C. Adkins

   $115,000   $164,748   $7,500   $287,248  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Brian P. Anderson

 ​ $100,000 ​ $164,748 ​ $0 ​ $264,748 ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

V. Ann Hailey

   $120,000   $164,748   $0   $284,748  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

​

 

Stuart L. Levenick

 ​ $135,000 ​ $164,748 ​ $0 ​ $299,748 ​
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

 

Neil S. Novich

   $100,000   $164,748   $7,500   $272,248  
​​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Beatriz R. Perez

 ​ $100,000 ​ $164,748 ​ $7,500 ​ $272,248 ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Michael J. Roberts

   $100,000   $164,748   $0   $264,748  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

​

 

E. Scott Santi

 ​ $100,000 ​ $164,748 ​ $7,500 ​ $272,248 ​
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

 

Susan Slavik Williams

   $100,000   $164,748   $0   $264,748  
​​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Lucas E. Watson

 ​ $100,000 ​ $164,748 ​ $7,500 ​ $272,248 ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Steven A. White

   $50,000   $104,049   $0   $154,049  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​
(1)
Represents the annual cash retainerretainers received in 20202022 by all non-employee Directors. Mr. White's 2020 annual cash retainer was pro-rated to 50% to reflect his appointment to the Board on October 27, 2020.

​
(2)

Represents the fair value as of the grant date of DSUs paid to non-employee Directors using the closing price of Grainger's common stock as of the immediately preceding trading day. For non-employee Directors other than Mr. White, represents the fair value of their respective 2020Directors’ 2022 award of 576321 DSUs on the grant date of April 29, 2020,27, 2022, using the closing price of $286.02$492.13 per share of Grainger'sGrainger’s common stock as of April 28, 2020. For Mr. White, who was appointed to the Board on October 27, 2020, represents the fair value of his 2020 award of 288 DSUs (reflecting pro-ration of 50% given his appointment to the Board mid-way through the 2020-2021 Director term) on the grant date of October 27, 2020, using the closing price of $361.28 per share of Grainger's common stock as of October 26, 2020.2022. The DSUs immediately vest upon the grant date and will be paid in shares of Grainger common stock on a 1:1 basis upon departure from the Board, computed in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718.

​
(3)

Represents amount paid by the Company to charitable organizations as part of the Company's matching gift programCompany’s Matching Gifts Program with respect to donations made and matched in 2020.2022. The Directors receive no direct or indirect benefit from the matching contributions.
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OWNERSHIP OF GRAINGER STOCK

Security Ownership of Certain Beneficial Owners

The following table sets forth information concerning any person known to Grainger to beneficially own more than 5% of Grainger'sGrainger’s common stock as of December 31, 20202022 except as otherwise noted below. The information in the table and the related notes are based on statements filed by the respective beneficial owners with the SEC pursuant to Sections 13(d) and 13(g) under the Securities Exchange Act of 1934, as amended.

​

Name and Address of Beneficial Owner


​Amount and Nature of
Beneficial Ownership (1)

​Percent of Class
​ ​​ ​​ ​​​​

The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355

5,398,750(2)10.06%
​
Amount and Nature of
Beneficial Ownership(1)
​​​​ ​​ ​Percent of Class​

Susan Slavik Williams
4450 MacArthur Blvd., Second Floor
Newport Beach, CA 92660



​4,728,153(3)​8.81%
​ ​​ ​​ ​​ ​​

Longview Partners (Guernsey) Limited
PO Box 559
Mill Court
La Charroterie
St Peter Port
Guernsey
GY1 6JG
United Kingdom

2,689,371(4)5.12%
​ ​​ The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355		​​​​ ​​

BlackRock, Inc.
55 East 52nd Street
New York, NY 10055



​3,728,861(5)​6.9%
​ ​​
5,513,895(2)
​​​10.91%​
​Susan Slavik Williams
4450 MacArthur Blvd., Second Floor
Newport Beach, CA 92660		​​​
4,726,443(3)
​​​9.36%​
​
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
​​​
4,183,578(4)
​​​8.30%​
​
(1)

Unless otherwise indicated, percentages calculated are based upon Grainger common stock outstanding as set forth in the statements on Schedule 13G or 13G/A filed by the respective beneficial owners with the SEC.

​
(2)

Based on information provided in a Schedule 13G/A filed on February 10, 2021,9, 2023, The Vanguard Group has shared voting power with respect to 75,48864,688 shares, sole dispositive power with respect to 5,200,4575,331,918 shares, and shared dispositive power with respect to 198,293181,977 shares. The Vanguard Group is the parent of several subsidiaries; no one subsidiary'ssubsidiary’s beneficial ownership interest in the Grainger common stock being reported is five percent or more of the total outstanding common shares. The Schedule 13G/A certifies that the securities were acquired in the ordinary course of business and not with the purpose or effect of changing or influencing the control of Grainger.

​
(3)

Based on information provided in a Schedule 13G/A filed on February 8, 2021,January 13, 2022, Ms. Slavik Williams has sole voting power with respect to 4,719,8114,718,101 shares, shared voting power with respect to 8,342 shares, sole dispositive power with respect to 3,084,0513,082,341 shares and shared dispositive power with respect to 1,644,102 shares. Ms. Slavik Williams'Williams’ aggregate beneficial ownership of 4,728,1534,726,443 shares excludes 742,743 shares held in trusts over which Ms. Slavik Williams has no dispositive or voting power. The 8.81% calculation is based on the number of shares shown to be outstanding as of September 30, 2020 on Grainger's Quarterly Report on Form 10-Q filed on October 22, 2020.

(4)
Based on information provided in a Schedule 13G filed on February 16, 2021, Longview Partners (Guernsey) Limited, Longview Partners LLP, and Longview Partners (UK) Limited (collectively referred to hereafter as "Longview Partners") each has (i) shared voting power with respect to 1,719,568 shares and (ii) shared dispositive power with respect to 2,689,371 shares. Longview Partners (Guernsey) Limited is an investment advisor registered under section 203 of the Investment Advisors Act of 1940. Longview Partners (UK) Limited is 100% owned by Longview Partners (Guernsey) Limited. Longview Partners (UK) Limited is the managing member of Longview Partners LLP. The shares reported herein have been acquired on behalf of discretionary clients of Longview Partners. Persons other than Longview Partners are entitled to receive dividends from, and proceeds from the sale of, those shares. None of those persons to the knowledge of Longview
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(4)
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    Partners has an economic interest in more than 5% of the class. The Schedule 13G certifies that the securities were acquired and held in the ordinary course of business and not with the purpose or effect of changing or influencing the control of Grainger.

(5)
Based on information provided in a Schedule 13G/A filed on February 1, 2021,7, 2023, BlackRock, Inc. has sole dispositive power with respect to all of the shares, and sole voting power with respect to 3,152,5263,663,109 shares. Various non-person entities have the right to receive or the power to direct the receipt of dividends or the proceeds from the sale of Grainger'sGrainger’s common stock. No one person'sperson’s interest in the Grainger common stock is more than five percent of the total outstanding common shares. The Schedule 13G/A certifies that the securities were acquired and held in the ordinary course of business and not with the purpose of changing or influencing the control of Grainger.
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Security Ownership of Directors and Management

The table below shows the ownership of Grainger common stock by each Director nominee, each of our NEOs, and all Director nominees and all executive officers as a group, as of March 1, 20216, 2023 except as otherwise noted below.

Beneficial ownership is broadly defined by the SEC. In general, a person beneficially owns securities if the person, alone or with another, has voting power or investment power (the power to sell) over the securities. Being able to acquire either voting or investment power within 60 days, such as by exercising stock options, also results in beneficial ownership of securities. Unless otherwise indicated in the footnotes following the table, each of the named persons had sole voting and investment power with respect to the indicated number of Grainger shares.

​Name of Beneficial Owner​​​Shares​​​
Stock Option
Shares Exercisable
within 60 Days(1)
​​​
Stock
Units(2)
​​​
Percent of
Class(3)
​
​Rodney C. Adkins​​​400​​​—​​​5,234​​​*​
​Kathleen S. Carroll​​​1,682​​​—​​​1,593​​​*​
​V. Ann Hailey​​​200​​​—​​​14,734​​​*​
​John L. Howard(4)​​​63,031​​​23,563​​​20,000​​​*​
​Katherine D. Jaspon​​​—​​​—​​​702​​​*​
​Stuart L. Levenick​​​400​​​—​​​21,586​​​*​
​D.G. Macpherson​​​66,807​​​76,726​​​13,433​​​*​
​Deidra C. Merriwether​​​3,219​​​15,263​​​4,386​​​*​
​Neil S. Novich​​​4,605​​​—​​​31,457​​​*​
​Beatriz R. Perez​​​—​​​—​​​4,179​​​*​
​Paige K. Robbins​​​9,366​​​18,639​​​4,960​​​*​
​Michael J. Roberts​​​1,000​​​—​​​25,918​​​*​
​E. Scott Santi​​​303​​​—​​​9,579​​​*​
​Susan Slavik Williams(5)​​​4,726,443​​​—​​​1,303​​​9.4%​
​Lucas E. Watson(6)​​​157​​​—​​​4,598​​​*​
​Steven A. White(7)​​​—​​​—​​​1,592​​​*​
​Director Nominees and Executive Officers as a Group​​​4,877,661​​​134,191​​​168,921​​​9.9%​
​
(1)

​

 

Name of Beneficial Owner


​ Shares
​ Stock Option
Shares Exercisable
within 60 Days (1)


​ Stock
Units (2)

​ Percent of
Class (3)

​
​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​

 

Rodney C. Adkins

   400   —   4,416   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Brian P. Anderson

 ​ 3,340 ​ — ​ 19,827 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

V. Ann Hailey

   200   —   13,672   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

John L. Howard (4)

 ​ 234,676 ​ 43,688 ​ 20,000 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Katherine D. Jaspon

   —   —   —   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Stuart L. Levenick

 ​ 400 ​ — ​ 20,349 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

D.G. Macpherson

   44,560   169,134   9,925   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Deidra C. Merriwether

 ​ 1,757 ​ 14,483 ​ 3,398 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Neil S. Novich

   4,605   —   29,529   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Thomas B. Okray(5)

 ​ — ​ — ​ — ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Beatriz R. Perez

   —   —   3,170   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Paige K. Robbins

 ​ 7,114 ​ 20,016 ​ 4,079 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Michael J. Roberts

   1,000   —   24,133   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

E. Scott Santi

 ​ 303 ​ — ​ 8,649 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Susan Slavik Williams(6)

   4,728,153   —   586   8.81%  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Lucas E. Watson (7)

 ​ 157 ​ — ​ 3,360 ​ * ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Steven A. White

   —   —   431   *  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Director Nominees and Executive Officers as a Group

 ​ 5,029,320 ​ 253,766 ​ 171,971 ​ 10.04% ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
(1)
In computing the percentage of shares owned by each person and by the group, these shares were added to the total number of outstanding shares for the separate calculations.

​
(2)

Represents the number of stock units credited to the accounts of non-employee Directors, and the number of RSUs credited to the accounts of executive officers. Each stock unit is intended to be the economic equivalent of a share of Grainger common stock. These units are excluded from the computations of percentages of shares owned.

​
(3)

An asterisk (*) indicates less than 1%.

​
(4)

Includes 19,567 shares as to which Mr. Howard has sole voting and investment power, and 215,10943,464 shares as to which Mr. Howard may be deemed to have shared voting and investment power, by virtue of his serving as a director of The Grainger Foundation, Inc. The Grainger Foundation was established in 1949 by William Wallace Grainger, the founder of Grainger, and is not affiliated with Grainger.

(5)
Mr. Okray resigned as Senior Vice President and Chief Financial Officer of the Company effective December 31, 2020 to pursue an opportunity at another publicly-traded company.
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(5)
​
(6)
Based on information provided in a Schedule 13G/A filed on February 8, 2021,January 13, 2022, Ms. Slavik Williams has sole voting power with respect to 4,719,8114,718,101 shares, shared voting power with respect to 8,342 shares, sole dispositive power with respect to 3,084,0513,082,341 shares and shared dispositive power with respect to 1,644,102 shares. Ms. Slavik Williams'Williams’ aggregate beneficial ownership of 4,728,1534,726,443 shares excludes 742,743 shares held in trusts over which Ms. Slavik Williams has no dispositive or voting power. The 8.81% calculation is based on 53,571,736 shares of common stock outstanding as of September 30, 2020.

(7)
​
(6)
Includes 157 shares as to which Mr. Watson has shared voting and/or investment power.
​

(7)
Represents shares held by a family trust of which Mr. White is trustee and primary beneficiary. Mr. White has voting and investment power with respect to all stock units held by the family trust.
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DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act requires the Company’s directors and officers and persons who own more than 10% of the Company’s common stock to file reports of ownership and changes in ownership with the SEC and the NYSE, and to furnish the Company with copies of the reports. Specific due dates for these reports are prescribed by SEC rules and the Company is required to report in this Proxy Statement GRAPHIC     39

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Tableany failure by directors, officers, or 10% holders to file such reports on a timely basis. Based on our review of Contents

​such reports and written representations from the Company’s directors and officers, the Company believes that all such filing requirements were timely met during 2022, with the exception of: 1) a Form 4 for D.G. Macpherson, which was filed late with respect to a single transaction relating to the Company withholding 3,769 shares of common stock for his tax obligations upon the settlement of a restricted stock unit grant on August 1, 2022, and 2) a Form 4 for Paige K. Robbins reporting multiple transfers totaling 7,114 shares from sole ownership to a family trust; Ms. Robbins has sole voting and investment power with respect to such shares.

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REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors assists the Board in fulfilling its oversight responsibilities. The Board has determined that each of the members of the Audit Committee is "independent,"“independent,” as that term is defined in the independence requirements for audit committee members contained in the applicable rules of the Securities and Exchange Commission (the SEC) and corporate governance standards of the New York Stock Exchange. The Audit Committee actsoperates under a written charter adopted by the Board that is reviewed annually; and, it was last amended by the Board on December 9, 2020. annually. The charter is available on the Governance section of Grainger'sGrainger’s website athttp://invest.grainger.com/invest.grainger.com.

Management is responsible for the Company'sCompany’s internal controls and the financial reporting process and for compliance with applicable laws and regulations. Ernst & Young LLP (EY), the Company'sCompany’s independent auditor, was responsible for performing an independent audit of the Company'sCompany’s most recent consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. The Audit Committee'sCommittee’s responsibility is to monitor and oversee these processes.

In performing these responsibilities, the Audit Committee reviewed and discussed the Company'sCompany’s audited consolidated financial statements and the effectiveness of internal control over financial reporting with management and EY. The Audit Committee discussed with EY matters required to be discussed under Statement on Auditing Standards No. 1301 "“Communications with Audit Committees"Committees” adopted by the Public Company Accounting Oversight Board (PCAOB). EY also provided to the Audit Committee the letter and written disclosures required by PCAOB standards concerning EY'sEY’s independence, and the Audit Committee discussed with EY the matter of the firm'sthat firm’s independence.

Based on the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020,2022, as filed with the SEC.

V. Ann Hailey, Chair
Brian P. Anderson

Katherine D. Jaspon
Stuart L. Levenick

Neil S. Novich

E. Scott Santi

​

Members of the Audit Committee of

the Board of Directors

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AUDIT FEES AND AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

The following table sets forth the fees for professional services rendered by Ernst & Young LLP (EY)EY with respect to fiscal years 20202022 and 2019,2021, respectively:

​Fee Category​​​2022​​​2021​
​Audit Fees(1)​​​$5,226,400​​​$5,103,000​
​Audit-Related Fees(2)​​​$203,400​​​$268,470​
​Tax Fees(3)​​​$520,294​​​$272,724​
​All Other Fees(4)​​​$2,900​​​$7,000​
​Total Fees​​​$5,952,994​​​$5,651,194​
​
(1)

Fee Category


​​2020
​​2019
​
​ ​​ ​​ ​​ ​​ ​​

Audit Fees (1)

​ ​$6,081,000​ ​$5,329,700​ 
​​​ ​​ ​​ ​​ ​​

Audit-Related Fees (2)

​​​177,000​​​177,000​​
​ ​​​​ ​​​​ ​​

Tax Fees (3)

​ ​282,300​ ​372,300​ 
​ ​​ ​​ ​​ ​​ ​​

All Other Fees (4)

​​​7,000​​​7,000​​
​ ​​​​ ​​​​ ​​

Total Fees

​ ​$6,547,300​ ​$5,886,000​ 
​ ​​ ​​ ​​ ​​ ​​
(1)
Audit Fees. Consists of fees billed for professional services rendered for the audit of Grainger'sGrainger’s annual financial statements and internal control over financial reporting, review of the interim financial statements included in Grainger'sGrainger’s quarterly reports on Form 10-Q, and other services normally provided in connection with Grainger'sGrainger’s statutory and regulatory filings or engagements. Fees for the fiscal year ended December 31, 2019 were originally reported to the Company by EY as $6,075,000. The amount reported in this table has been corrected to reflect the final fees as reported to the Company by EY following the filing of the Company's 2019 Annual Notice of Meeting and Proxy Statement.

​
(2)

Audit-Related Fees. Consists of fees billed for professional services rendered for assurance and related services that are reasonably related to the performance of the audit or a review of Grainger'sGrainger’s financial statements and are not reported under "Audit“Audit Fees."” These services include the audits of Grainger'sGrainger’s employee benefit plans and various attest services.

​
(3)

Tax Fees. Consists of fees billed for professional services rendered for tax compliance, tax advice and tax planning. These services include assistance with the preparation of various tax returns.

​
(4)

All Other Fees. Consists of fees billed for all other professional services rendered to Grainger, other than those reported as "Audit“Audit Fees,"” Audit-Related Fees"Fees” and "Tax“Tax Fees."”

​
Pre-Approval Policy for Audit and Non-Audit Services

The Audit Committee has adopted a policy for the pre-approval of all audit and permitted non-audit services to be provided to Grainger by its independent auditor and is responsible for the review and approval of any fees associated with those services. Also, specific pre-approval by the Audit Committee is required for any proposed services exceeding pre-approved fee levels.

Pre-approvals for categories of services are granted at the start of each fiscal year and are applicable for 12 months from the date of pre-approval. In considering these pre-approvals, the Audit Committee reviews detailed supporting documentation from the independent auditor for each proposed service to be provided. Unused pre-approval amounts are not carried forward to the next year.

The Company'sCompany’s Controller monitors services provided by the independent auditor and overall compliance with the pre-approval policy. The Corporate Controller reports periodically to the Audit Committee about the status of outstanding engagements, including actual services provided and associated fees, and must promptly report any noncompliance with the pre-approval policy to the Chairman of the Audit Committee.

The Audit Committee may delegate pre-approval authority for audit and non-audit services to one or more of its members, and such authority has been delegated to the Chair of the Audit Committee. The decisions of any member to whom such authority is delegated must be presented to the full Audit Committee at its next scheduled meeting. The Audit Committee may not delegate to management its responsibilities to pre-approve services performed by the Company'sCompany’s independent auditor. The Audit Committee periodically reviews reports summarizing all services provided by the independent auditor.

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The Audit Committee is directly responsible for the appointment, compensation, retention, evaluation, termination and oversight of the independent external audit firm that performs audit services. In considering Ernst & Young LLP's (EY) appointment for the 2021 fiscal year, the Audit Committee reviewed the firm's qualifications and competencies, including the following factors:

•

EY's historical performance and its recent performance during its engagement for the 2020 fiscal year;

•

EY's capability and expertise in handling the breadth and complexity of the Company's operations;

•

the qualifications and experience of key members of the engagement team, including the lead audit partner, for the audit of the Company's financial statements;

•

the quality of EY's communications with the Audit Committee regarding the conduct of the audit, and with management with respect to issues identified in the audit;

•

external data on audit quality and performance, including recent PCAOB reports on EY; and

•

EY's reputation for integrity and competence in the fields of accounting and auditing.

​

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The Audit Committee is directly responsible for the appointment, compensation, retention, evaluation, termination and oversight of the independent external audit firm that performs audit services. In considering Ernst & Young LLP’s (EY) appointment for the 2023 fiscal year, the Audit Committee reviewed the firm’s qualifications and competencies, including the following factors:
•
EY’s historical performance and its recent performance during its engagement for the 2022 fiscal year;
​
•
EY’s capability and expertise in handling the breadth and complexity of the Company’s operations;
​
•
The qualifications and experience of key members of the engagement team, including the lead audit partner, for the audit of the Company’s financial statements;
​
•
The quality of EY’s communications with the Audit Committee regarding the conduct of the audit, and with management with respect to issues identified in the audit;
​
•
External data on audit quality and performance, including recent PCAOB reports on EY; and
​
•
EY’s reputation for integrity and competence in the fields of accounting and auditing.
​
EY has been retained as the Company'sCompany’s independent auditor continuously since 2005. To ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent auditor. The Audit Committee ensures that the mandated rotation of EY'sEY’s personnel occurs routinely and the Audit Committee is directly involved in the review, selection and evaluation of EY'sEY’s lead engagement partner.

The Audit Committee and the Board of Directors believe that the continued retention of EY to serve as the Company'sCompany’s independent auditor for the year ending December 31, 20212023 is in the best interests of the Company and its shareholders, and the Board is asking shareholders to ratify this appointment.
Representatives of EY are expected to be present at the meeting to respond to appropriate questions of shareholders and to make any desired statements.

Approval of the proposal requires the affirmative votes of a majority of the shares of Grainger common stock present or represented by proxy and entitled to vote at the annual meeting. Abstentions will have the same effect as votes against the proposal. In the event the proposal is not approved, the Board will consider the negative vote as a mandate to appoint another independent auditor for the next year.

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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD

The Compensation Committee of the Board (the Compensation Committee) reviewed and discussed the Compensation Discussion and Analysis (CD&A) with management. Based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in the Company's proxy statementCompany’s Proxy Statement for its 20212023 annual meeting of shareholders and in its Annual Report on Form 10-K for the year ended December 31, 2020,2022, as filed with the SEC. The Compensation Committee actsoperates under a written charter last amended on December 9, 2020,adopted by the Board that is reviewed annually.
The Amendedamended and Restatedrestated charter is available in the Governance section of Grainger'sGrainger’s website athttp://invest.grainger.com/invest.grainger.com.

Rodney C. Adkins, Chairman

Beatriz R. Perez

Michael J. Roberts

Susan Slavik Williams

Lucas E. Watson

Steven A. White

​

Members of the Compensation Committee of

the Board of Directors

INDEPENDENT COMPENSATION CONSULTANT; FEES

In overseeing the Company's compensation programs, the Compensation Committee of the Board (the Compensation Committee) develops programs based on its own deliberations, programs and recommendations from management, and compensation and benefits consultants, including its independent compensation consultant.

Deloitte Consulting LLP (Deloitte Consulting) had served as the Compensation Committee's independent compensation consultant since 2009. In May 2020, the partner leading the Deloitte Consulting engagement retired, causing the Compensation Committee to conduct a broad-based search process for a new independent compensation consultant. Following review of the consulting firms asked to participate in the search process, the Compensation Committee selected and retained Pay Governance LLC (Pay Governance) as its independent compensation consultant effective November 2020.

After a review of the factors prescribed by the SEC and the NYSE rules and regulations, the Compensation Committee determined that each of Deloitte Consulting and Pay Governance and (collectively, the 2020 Independent Compensation Consultants) is independent.

At the Compensation Committee's direction, the independent compensation consultant:

    •
    attends Compensation Committee meetings;

    •
    assists the Compensation Committee in the review of goals and objectives for the CEO compensation;

    •
    provides the Compensation Committee with comparable compensation market data, including pay levels and pay practices of both our comparator companies and general industry;

    •
    helps the Compensation Committee evaluate recommendations proposed by management;

    •
    assists with incentive compensation program design, structure, and selection of the metrics;
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The following table sets forth the fees for services rendered by Deloitte Consulting and its affiliates with respect to fiscal year 2020:

Type of Fee


​​Deloitte Consulting
 
​​​ ​​ ​​

Executive Compensation Consulting

​ ​​$177,505​​ 
​ ​​ ​​ ​​

All Other Consulting

​​​​$1,767,629​​ 
​ ​​ ​​ ​​

Total Fees

​ ​​$1,945,134​​ 
​ ​​ ​​ ​​

The following table sets forth the fees for services rendered by Pay Governance and its affiliates with respect to fiscal year 2020:

Type of Fee


​​Pay Governance
 
​​​ ​​ ​​

Executive Compensation Consulting

​ ​​$56,627​​ 
​ ​​ ​​ ​​

All Other Consulting

​​​​$0​​ 
​ ​​ ​​ ​​

Total Fees

​ ​​$56,627​​ 
​ ​​ ​​ ​​

Executive Compensation Consulting Fees:    Consists of fees billed for services provided to advise the Compensation Committee with respect to executive and Director compensation.

All Other Consulting Fees:    Consists of fees billed for all other services provided to Grainger. None of these fees are related to compensation matters.

Affiliates of Deloitte Consulting have provided other services to Grainger that are unrelated to executive compensation matters. The decision to engage an affiliate of Deloitte Consulting for these other services was made by management. The Board has been informed of this ongoing work and the use of an affiliate of Deloitte Consulting but neither the Board nor the Compensation Committee specifically approved these services. After a review of the factors prescribed by the SEC and the NYSE rules and regulations, the Compensation Committee determined that none of the 2020 Independent Compensation Consultants had any conflicts of interest

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EXECUTIVE COMPENSATION

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​COMPENSATION DISCUSSION AND ANALYSIS

​

This Compensation Discussion and Analysis (CD&A) explains the compensation earned by Grainger's Named Executive Officers (NEOs) and describes the Company'sCompany’s pay for performance compensation philosophy and programs.

programs, and explains the compensation earned by Grainger’s Named Executive Officers (NEOs) in 2022.

Please read this CD&A in conjunction with the advisory votevotes we are conducting on the compensationCompensation of our NEOs under(see Proposal 3, Say on Pay / page 89) and on the frequency of the advisory vote on the Compensation of our NEOs (see Proposal 4, Say When on Pay / page 8190) as it contains information that is relevant to your voting decision.

Opportunity for Shareholder Comment

Grainger has a comprehensive shareholder engagement program to reach a significant cross-section of our shareholder base.program. The Compensation Committee carefully considers feedback from our shareholders regarding NEO compensation.

Shareholders who wish to directly provide feedback to the Company may do so by contacting investorrelations@grainger.comthe Company’s Investor Relations team using the information provided at the bottom of http://invest.grainger.com or under Other Communications with Directors on page 36.

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Introduction
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Introduction

​		​
46​

2020 Highlights

​
462022 Highlights		​​​​48​​

Key 2020 Compensation Changes

​462022 Compensation Program Overview​​​​48​​

​		Shareholder Engagement​​​​49​​

Executive Summary

​
47Future Programs—ESG modifier		​​​​49​​

2021 Leadership Transitions

​		​
48​

Compensation Philosophy

​
Executive Summary
​​​​4849​​

Performance Summary

​		​49​

Compensation Actions in Response to COVID-19

​50Named Executive Officers (NEOs) for 2022​​​​49​​
​2022 Financial and Program Performance Highlights​​​​50

​​
​​​
​
Compensation Philosophy, Plans, and Practices
​​​​52​​
​​​
​Compensation Philosophy​​​​52​​
​Compensation Elements and Pay Mix

​​​​5053​​
​

Total Target Compensation

​​​​5254​​
​

Company Compensation Practices

​​​​5355​​
​

Determination of Total Target Compensation

​​​​5356​​
​

Risk Mitigating Actions

​​​​5457​​
​

Risk Assessment

​​​​5557​​

Compensation Philosophy, Plans, and Practices

​
55

Compensation Committee of the Board

​​​​
5557		​​
​Independent Compensation Consultant

​​​​58​​
​Role of Management

​​​​5660​​
​

Compensation Comparator Group

​​​​5660​​
​

Base Salaries

​​​​5961​​
​

Annual Incentives

​​​​6062​​
​

Long-Term Incentives

​​​​6164​​

Other At Risk Awards

​63

Stock Ownership Guidelines

​​​​6466​​
​

Hedging and Pledging Prohibition

​​​​6466​​
​

Other Benefits

​​​​6467​​

​		​​
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Compensation Tables

​​​​
6668		​​
​​​
​

Summary Compensation Table

​​​​
6668		​​
​

Grants of Plan-Based Awards Table

​​​​6769​​
​

Outstanding Equity Awards atand Fiscal Year-End Table

​​​​6870​​
​

Option Exercises and Stock Vested Table

​​​​6972​​
​

Nonqualified Deferred Compensation Table

​​​​7073​​

​		​​
​

Employment Agreements, Change in Control, and Termination of Employment Arrangements

​​​​
7174		​​

Employment Agreements

​		​
71​
​Employment Agreements​​​​74

​​
​Change in Control—Equity Plans

​​​​7174​​
​

Change in Control Agreements

​​​​7174​​
​

Deductibility of Executive Compensation

​​​​7174​​
​

Accounting Considerations

​​​​7274​​
​

Compensation Recoupment Policyof Equity Awards (Claw-backs)

​​​​7275​​

Termination

​73Termination​​​​75​​

Retirement

​73Retirement​​​​75​​
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Other Potential Post-Employment Payments

​​​​7477​​
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Introduction
​
We delivered strong full year 2022 performance by remaining relentlessly focused on what matters most—​providing our customers exceptional service and living our Grainger Edge Principles. By leveraging our advantaged supply chain capabilities and focusing on our strategic initiatives, we successfully executed against our long-term strategy to profitably gain share and deliver strong shareholder returns. We met 2022 with a drive to succeed and delivered an outstanding year of profitable growth. As described within the CD&A, our executive compensation programs support our strategy and align our leadership team with long-term growth and profitability.
2022 Highlights
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​Metrics Aligned with
Our Priorities		​​​Reflect Strong 2022
Performance		​​​
Executive Pay is Pay for
Performance
​
​
NEO incentive programs and metrics aligned with our priorities to:
•
Execute on our growth drivers to provide customers with a flawless experience and tangible value.
​
•
Drive operational excellence and productivity to keep the business healthy and enable future investments.
​
​​​
Company performance surpassed expectations:
•
Delivered $15.2 billion in sales, up 16.5% on a daily basis.(1)
​
•
Produced adjusted ROIC of 40.6%, up from 31.9% in 2021. (1)
​
•
Outgrew U.S. MRO market by ~775 basis points (bps) in High-Touch Solutions—U.S. business.
​
•
Expanded operating margin by 255 bps to 14.4% on an adjusted basis.(1)
​
•
Diluted EPS up 51.5% on a reported basis and 49.5% on an adjusted basis.(1)
​
​​​
2022 NEO compensation reflects our pay for performance design:
•
2022 short and long-term incentive payouts correspond with strong performance which far exceeded expectations.
​
•
Based on strong performance, NEO annual incentive was 177% of target and the 2020 Performance Share Unit (PSU) cycle payout was 123% of target.
​
​
2022 Compensation Program Overview
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(1)
See Appendix B of this Proxy Statement GRAPHIC     45

Tablefor information regarding compensation and non-GAAP financial measures, including a reconciliation of Contents

non-GAAP financial measures to the most directly comparable GAAP financial measures.
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Based on the unprecedented global pandemic and a periodCompensation Committee’s review of deep reflection on social issues, the Company remains guided by its purpose and its principles in fulfilling its commitment to serve customers, to protect the health and safety of employees, and to execute its business strategy. In the wake of these events, the Company focused on critical operating priorities and enhancing existing workplace initiatives related to health and safety, diversity, equity, and inclusion, and employee experience. Throughout the year, the Company reviewed financial performance as well as the pandemic's overall impact on its employees and concluded that itsCompany’s executive compensation programs, remained relevant and consistent with shareholder and other stakeholder interests.

2020 Highlights

    •
    Achieved Strong Financial Performance:  The Company delivered strong financial performance and operatingincluding the results despite a challenging environment.

    •
    Aligned Compensation Programs with Shareholders:  In direct response to shareholder feedback, the Company revised its 2020 compensationdriven by these programs and previewed these changes in last year's proxy statement, receiving athe strong endorsement with approximately 93%level of shareholder votes cast to support our Say on Pay vote.

    •
    Deferral of Merit-Based Increases and Temporary Salary Reductions:  The Company deferred for three months paying the annual Company-wide merit increases from April 1, 2020 to July 1, 2020 and executives voluntarily elected temporary salary reductions for the second quarter of 2020 with a 50% reduction for the Chairman and CEO and a 20% reduction for other NEOs.

    •
    No Other Changes or Modifications Resulting from the COVID-19 Pandemic:  The compensation programs were carefully and continuously evaluated during the year. Despite the extraordinary events of the past year, the original design proved viable in achieving the intended pay-for-performance results. No modifications were deemed necessary to existing programs based on the Company's performance and alignment with shareholder value creation.

Key 2020 Compensation Changes

The 2020 Say on Pay vote garnered broad support with approximately 93% of shareholders voting in favor of our executive compensation programs. This strong support demonstrates the Company's responsiveness to shareholders, and indicates that shareholders agreed with various action the Company took in 2020 to strengthen the link between pay and performance, including:

    •
    Establishing a performance-based long-term incentive program with 50% performance share units (PSUs) and 50% restricted stock units (RSUs).

    •
    Aligning the 2020 PSU design with the performance measures focused on the Company's strategic growth priorities in both the U.S. High-Touch Solutions and Endless Assortment businesses and total Company operating margin which eliminated overlapping measures with the short-term incentive program.

    •
    Using a 20-day average stock price to determine the number of shares awarded under our long-term incentive program to mitigate the potential for outsized long-term incentive grant values due to significant stock price volatility.
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In recognition of the challenges and uncertainty resulting from the COVID-19 pandemic, the Company separately evaluated the 2020 compensation program against the following factors:

    •
    Financial performance, including whether the programs remain aligned with near and long-term objectives

    •
    Appropriateness of the original targets to remain relevant and challenging under current conditions

    •
    Relative workforce impact and performance to peer companies

    •
    Ability for Company programs to attract, motivate, and retain critical talent

Based on its review and considering the shareholder support for Company programs,2022, the Compensation Committee determined that the programs are aligned with shareholder value creation and no modifications or discretionary adjustmentsactions to the 20202022 NEO short-term and long-term incentive compensation programs were needed. These actions

Shareholder Engagement
Our CEO, CFO, and VP, Investor Relations and other members of our Investor Relations team maintain regular contact throughout the year with a broad base of shareholders to alignunderstand their concerns on various topics, including financial performance, strategy, competitive environment, ESG and executive compensation matters. Contact with shareholder value creation are consistentshareholders includes quarterly earnings calls, the annual meeting of shareholders, our annual Lead Director meetings, investor conferences, individual meetings, and other channels of communication. Consistent with prior years, in 2022, the Company contacted shareholders representing over 53% of shares outstanding and met with shareholders representing over 35% of shares outstanding (percentage of shares outstanding noted as of December 31, 2022). We also hosted an investor day in September with investors and analysts attending both in person at our Northeast Distribution Center as well as participating via webcast. Overall, more than 250 attendees joined the event.
Future Programs—ESG modifier
During 2022, in partnership with the philosophyCompensation Committee’s independent compensation consultant and approach described throughout this CD&A.

Executive Summary

      The Company'sour ESG Leadership Council, we studied various notional compensation program isdesigns to assess how various ESG metrics could align with our goal to drive a purpose-driven culture that enables strong performance and aligns with our ESG objectives. Informed by this review, for 2023, the Committee approved integrating an ESG modifier within the NEOs’ annual incentive program, the 2023 Company Management Incentive Plan (MIP). The 2023 MIP will continue to be underpinned by equally weighted financial metrics, daily sales growth and adjusted ROIC as it encourages management to focus on profitable growth. The ESG modifier can increase or decrease payouts determined by financial performance by up to +/-10 percentage points based on two quantitative metrics: total absolute scope 1 and 2 emissions and diverse leadership representation.

​Executive Summary​
The Company’s compensation programs are based upon a philosophy that is applied to all Company employees—to attract and retain the best people and provide them with appropriate performance-based incentives that encourage them to achieve results that create long-term shareholder value.

Named Executive Officers (NEOs) for 2020

2022

​
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​D.G. Macpherson​​Deidra C. Merriwether​​Paige K. Robbins​​John L. Howard​​Kathleen S. Carroll​

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The following table reflects NEO positions held as of the end of 2020. As explained below under "2021 Leadership Transitions," several leadership and role changes took place in January 2021 in connection with Mr. Okray's departure from the Company and new responsibilities assigned to Mses. Merriwether and Robbins.

2022.
​

LOGO

LOGO

LOGO

LOGO

D.G. Macpherson

John L. Howard

Paige K. Robbins

Deidra C. Merriwether

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Named Executive Compensation

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Officer
​​Title
​ ​​​Title​
​D.G. Macpherson​​​Chairman of the Board & Chief Executive Officer (CEO)
​​​​​
John L. Howard​​​Senior Vice President & General Counsel
​​​ ​​
Paige K. Robbins​​Senior Vice President, Chief Technology, Merchandising, Marketing, and Strategy Officer*
​ ​​​​
Deidra C. Merriwether​​​Senior Vice President & President, North American Sales & Service*Chief Financial Officer​
​Paige K. Robbins​​​Senior Vice President and President, Grainger Business Unit​
​John L. Howard​​
Former Officer
​		​
Senior Vice President & General Counsel(1)
​Title
​Kathleen S. Carroll​​​​
Thomas B. Okray​​Former Senior Vice President & Chief Human Resources Officer​
​
(1)
As previously disclosed on the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2022, Mr. Howard stepped down as the Company’s General Counsel on January 30, 2023. He will continue as Senior Vice President until July 31, 2023 and as an active employee for six months thereafter.
​
2022 Financial and Program Performance Highlights
​How We Performed (Incentive Program Financial Officer*Measures)​
​Delivered strong full year performance across all metrics, far-exceeding expectations​
​
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(1)
See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
​
(2)
Share gain is based on outgrowth measured as High-Touch Solutions—U.S. daily sales growth less estimated U.S. MRO market growth. Company estimates using compilation of external market data, including volume and price. Three-year average based on actual performance for 2020 (+805 bps), 2021 (+77 bps), and 2022 (+781 bps).
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In 2022, Grainger’s team members (more than 26,000 worldwide as of December 31, 2022) remained relentlessly focused on our customers and advancing our strategic initiatives to drive short and long-term growth. We also continued to strengthen our purpose-driven culture and to make progress with our ESG objectives. This relentless focus resulted in an outstanding year of profitable growth which consistently surpassed expectations throughout the year. Highlights include:
•
Demand was incredibly strong in both businesses, enabling us to finish the year with $15.2 billion in sales, up 16.5% on a daily basis or 19.3% in daily, constant currency;(1)
​
•
During the year, we achieved 255 basis points of operating margin expansion on an adjusted basis and a nearly 50 percent increase in adjusted EPS;(1)
​
•
In our High-Touch Solutions North America segment, we focused on our growth engines and achieved approximately 775 basis points of U.S. MRO market outgrowth in 2022, far exceeding our updated target of 400-500 basis points annually;(1)
​
•
In our Endless Assortment segment, both Zoro and MonotaRO made strong progress with Zoro U.S. daily sales growth of 22.3% and MonotaRo daily sales growth of 19.9% in local currency and local days;(1) and
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We also generated over $1.3 billion in operating cash flow, an increase of 42% over 2021, and returned $949 million to Grainger shareholders through dividends and share repurchases all while achieving 40.6% 2022 adjusted ROIC up 870 basis points from last year.(1)
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In addition to delivering strong 2022 financial results, in both High-Touch Solutions N.A. and Endless Assortment segments, we made strategic investments to extend our supply chain, technology and customer-facing capabilities including:
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Added supply chain capacity, including a new bulk warehouse in the U.S. and the start-up of the Inagawa Distribution Center in Japan;
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Expanded our digital and data capabilities, including progress with our customer and product information management systems in our high-touch solutions model and improved account management tools in our endless assortment model; and
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Executed against our merchandising and marketing initiatives including enhanced search and recommendation functionality.
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​Our Executive Compensation Performance​
​2022 NEO annual incentives paid out at 177% of target reflecting an outstanding year of profitable growth​
Throughout 2022, the Compensation Committee evaluated our compensation programs against the following factors:
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Financial performance, including whether the programs remain aligned with near and long-term objectives;
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Appropriateness of the original targets to remain relevant and challenging under current conditions;
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Alignment to the broader Grainger team and performance to peer companies; and
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Ability for Company programs to attract, motivate, and retain critical talent.
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The Committee did not make discretionary adjustments to the structure of existing incentive programs or adjust payouts for material items for the 2022 annual incentives as it believes the programs remained strongly aligned with the Company’s pay-for-performance objectives and consistent with shareholder interests.
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(1)
See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
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The discussion of the Company’s annual incentives within the CD&A refer to MIP, which is tied to total Company performance (high-touch solutions model and endless assortment model). The 2022 MIP payout was based as a percentage of the NEO’s annualized base salary as of December 31, 2020.

2021 Leadership Transitions

2022 and total Company results. The following leadership transitions took placeCompany’s 2022 year-over-year daily sales growth and adjusted ROIC:

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Short-term financial results exceeded expectations and therefore the payout for the 2022 MIP was above target. Daily sales growth was 16.5%, resulting in January 2021:

    •
    Mr. Okray resigned as Senior Vice Presidentan 91% sales growth payout, and Chief Financial Officer2022 adjusted ROIC was 40.6%, resulting in a 86% adjusted ROIC payout, for a combined 2022 MIP payout of 177%.(1) The Company’s average MIP payout for NEOs over the last five years (2017-2021) was 106%. See Annual Incentives / page 62 .
​2020-2022 NEO Performance Share Units (PSUs) achieved 123% of target payout​
The Compensation Committee approved the final results of the Company to pursue an opportunity2020-2022 PSU program at another publicly-traded company. His last day in this role at Grainger was123% of target. The 2020-2022 cycle covered a three-year performance period starting January 1, 2020 and ending December 31, 2020.

•
Robert F. O'Keef, Jr.2022. The 2020 PSU cycle was based on three performance metrics—U.S. share gain (a relative metric), Endless Assortment businesses revenue growth, and total Company adjusted operating margin performance. As outlined in detail on page 66, U.S. share gain was 554 bps, Endless Assortment businesses revenue growth was 14.9%, and total Company adjusted operating margin expanded 69 bps on average over the Company's Vice Presidentthree-year performance period, and Treasurer, assumed additional responsibilities as interim Chief Financial Officer, effective January 1, 2021.

•
Ms. Merriwethertherefore the payout for these PSUs attained 123% of target.(1)
​2022 NEO long-term incentive equity mix was 50% Performance Share Units and 50% Restricted
Stock Units		​
The equity mix for the 2022 long-term incentive program was appointed Senior Vice President50% PSUs and Chief Financial Officer, effective January 12, 2021, succeeding Mr. O'Keef as Chief Financial Officer who continues as50% time-vested RSUs. The three-year performance period for the Company's Vice President and Treasurer.

•
Ms. Robbins was appointed Senior Vice President and President of the Grainger Business Unit, effective January 12, 2021.

PSUs granted in 2022 runs from 2022-2024. The RSUs granted in 2022 vest on a pro rata basis over a three-year period.

​Compensation Philosophy, Plans and Practices​
Compensation Philosophy

The Company'sCompany’s overall NEO compensation structure is designed to drive profitable growth leading to shareholder value creation and create a strong link between pay and Company short-termannual and long-term performance. This philosophy extends throughout the Company as employees below the executive level are also provided incentives to growbased on growing the business (Sales Growth)(sales growth) while achieving attractive investment returns (Return on Invested Capital, or ROIC)(ROIC) for the Company'sCompany’s shareholders. For executives, the compensation program isprograms are designed to link pay to performance and isare structured to reward both annual and long-term Company performance, while not encouraging excessive risk taking. The Company is focused on its strategy of consistently gaining market share and attaining profitable sales growth through its High-Touch Solutionshigh-touch solutions model and the Endless Assortmentendless assortment model. These objectives are directly reflected in the 20202022 long-term incentive design for executives which further reinforces pay for performance.

The Company'sCompany’s compensation philosophy aligns with the Grainger Edge, a new strategic framework that outlinesEdge. As described above, the Company's purpose, aspiration, strategy, and principles. The Grainger Edge is the foundational structure for the Company'sCompany’s strategy and culture with individual performance assessments for all Company employees, including NEOs, based on goals set in alignment with the Grainger Edge. For more on The Grainger Edge principles, see The Role of the Board /Corporate Culture: The Grainger Edge on page 2.

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Performance Summary

In 2020, the Company maintained a strong financial position supporting a return of capital to shareholders while making progress on strategic growth priorities, including embedding the Grainger Edge principles as a new cultural framework. Following the onset of the COVID-19 pandemic, the Company executed its pandemic plan across the organization to rapidly address customer needs, supply chain disruptions, and unprecedented macroeconomic conditions, while prioritizing the health and safety of employees. Through the collective efforts of our global workforce and leadership, the Company achieved strong operating results and ended the year with approximately less than 1% of its workforce on furlough and without any major workforce reductions.

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The Company operated safely and effectively and drove strong operating results in a challenging environment while delivering a return of capital to shareholders
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(1)
Organic daily sales, a non-GAAP measure, excludes results for Fabory (post June 30, 2020) and Grainger China (post August 21, 2020) in the prior year period to reflect the completed divestitures of these businesses.

(2)
Reported daily sales growth for Zoro Tools, Inc. in the U.S. and MonotaRO Co., Ltd. in Japan (excludes Zoro UK Limited).

(3)
U.S. MRO market based on Company estimates using compilation of external market data. Outgrowth measured as U.S. segment daily sales growth less estimated U.S. MRO market growth.

(4)
Total Company adjusted operating margin is a non-GAAP measure.

(5)
Adjusted ROIC is a non-GAAP measure.

*
See Appendix B to this proxy statement for a definition of these measures and for a reconciliation to the nearest comparable GAAP measure.

Incentives earned in 2020 reflect the following financial results against our performance metrics:

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      short-term financial results did not meet expectations and therefore the payout for the annual bonus program was below target at 84%; and
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      long-term results for the three-year 2018-2020 Performance Restricted Stock Units (PRSUs) cycle met the profitability threshold and therefore the payout for these PRSUs attained 100% of target.

Compensation Actions in Response to COVID-19

During the early stages of the pandemic, the Company decided to defer for three months paying the annual company-wide merit increases planned for April 1, 2020 until July 1, 2020. This measure was intended to allow the Company to maintain financial flexibility and preserve job continuity in the face of considerable uncertainty. In addition, the Company's executive leadership team voluntarily elected temporary base salary reductions for the second quarter of 2020, including a 50% reduction for the Chairman and CEO and 20% reductions for the executive leadership (including NEOs).

To recognize employees whose day-to-day job responsibilities required them to remain working at Grainger facilities or customer locations during this unprecedented time, beginning in March 2020, the Company provided $6.9M in premium and essential leader pay, a benefit that continued through mid-June 2020 along with other pandemic, facility closure, and dependent care pay programs. The Company also assumed the full cost for COVID-related testing and enhanced our benefit offerings with additional tools and resources to support the physical and emotional well-being of our employees and their families, including providing two weeks of additional "pandemic pay" to cover lost wages for those impacted by COVID-19.

Throughout 2020, the executive compensation program was evaluated to determine if the original design remained relevant under current conditions as well as strongly aligned with performance. After review of the Company's performance during the pandemic, the Compensation Committee determined that no discretionary adjustments to the structure of existing incentive programs or modifications to final payouts were warranted, which were determined, in each case, based on pre-pandemic performance expectations. The Committee concluded that the existing programs remained strongly aligned with the Company's pay-for-performance objectives and consistent with shareholder interests.

Compensation Elements and Pay Mix

As part of the Company'sCompany’s pay for performance philosophy, the Company'sCompany’s compensation program includes several features that maintain alignmentprograms are aligned with shareholders.

The 20202022 NEO compensation mix is comprised of base salary, short-termannual incentives, and long-term equity incentives includingconstituted of PSUs and RSUs,RSUs.
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The design of the executive compensation programs and a performance-based retirement vehicle. To make our long-term compensation program more performance-based, beginningelements described above remained unchanged in 2020,2022.
•
Annual:   The MIP focuses on one-year sales growth compared to the Company replaced stock optionsprior year and PRSUsadjusted ROIC, with 50% performance share units (PSUs) and 50% restricted stock units (RSUs).

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Compensation Elements Introduced in 2020:

Long-Term:   The Company's currentCompany’s long-term incentive design and underlying metrics correspond directly with the Company'sCompany’s strategic initiatives, which are critical to providing sustained shareholder returns and future growth. As previewed in our proxy statement for the 2020 annual meeting of shareholders, the
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The metrics for 20202022 PSU awards (to be paid in 3 years based on actual performance) focus on three-year average U.S. share gain endless assortment businessrelative to estimated U.S. market growth, Endless Assortment segment revenue growth, and total Company adjusted operating margin(1). performance.(2) The Compensation Committee selected these performance measures because they are directly aligned with the Company'sCompany’s business strategy to gain share and grow profitability as:

•

Accelerating share gain in the Company's U.S.Company’s High-Touch SolutionsSolutions—U.S. business is directly connected to the Company'sCompany’s focus on top line growth and expanding its leadership position in the U.S. MRO space by being the go-to-partner for customers who build and run safe, sustainable and productive operations.

operations;
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•

Profitable revenue growth in the Endless Assortment businessessegment is an important growth driver for the Company.

Company; and
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•
Adjusted
Total Company adjusted operating margin(1) balances the above growth initiatives by focusing management on attaining profitability targets as the Company grows, which over time, we believe will lead to improved shareholder returns.

(1)
2020 adjusted operating margin is a non-GAAP financial measure. For a definition of this measure and for a reconciliation to the nearest comparable GAAP measure, see Appendix B to this proxy statement.
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Compensation Elements Continuing from 2019—The design of the Company's annual incentive plan, retirement and base salary practices remain unchanged in 2020. The annual incentive plan focuses on one-year sales growth compared to the prior year and a predetermined level of ROIC, with both measures linked to the Company's one-year plan. Performance is measured at the Company-wide level. Short-term incentive plans are capped at 200% of the target award.

Effective January 1, 2021, the Company's new Retirement Savings Plan replaced the Company's Employees Profit Sharing Plan as the primary Company-sponsored retirement vehicle for U.S.-based employees. The Retirement Savings Plan provides for a 6% Company contribution to the 401(k) plan.

Total Target Compensation

Target total

Total target compensation for the Company'sCompany’s employees is generally set to approximate the market median, with differentiation based on tenure, skills, proficiency, and performance as required to attract and retain key talent. The weighting of the individual compensation components varies by level, with more senior level executives having a greater emphasis on performance-based long-term compensation—compensation which aligns management incentives to the interests of shareholders. NEO compensation is generally structured so that the largest individual component is long-term equity, followed by base salary and performance-based annual incentives.
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(1)
For the 2022-2024 PSU cycle, Endless Assortment segment revenue growth is based on year-over-year sales growth in constantcurrency, local days.
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(2)
See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
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Each NEO'sNEO’s compensation is compared to equivalent positions in a comparator group selected by the Compensation Committee (with assistance from the Committee'sCommittee’s independent compensation consultant)consultant, Pay Governance LLC (Pay Governance)) and nationally recognized surveys. NEO base salaries and long-term incentive grant values are determined based on many factors including individual performance, responsibilities, internal equity and the overall relation to market levels of compensation.

These components and the use of performance-based pay are generally aligned with the compensation mix of the comparator group and survey data. The tables below show compensation components as a percentage of the total target compensation package. While Grainger no longer grants stock options,

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(1)
The charts above reflect total target compensation (based on rounded percentage of annualized base salary, target annual and long-term incentive at the table includes stock options in the performance-basedgrant date fair value for 2022). Average NEO pay category for the comparator group.

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Company Compensation Practices

Overall, the Company'sCompany’s compensation program isprograms are designed to be straightforward and understandable to its employees and shareholders, and to drive long-term shareholder value creation by aligning compensation with both individual and Company performance. The Company'sCompany’s compensation programs also maintain alignment with shareholders and best practices (and by not including certain featuresfeatures) as outlined below.

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Determination of Total Target Compensation

The Compensation Committee is charged with ensuring that compensation, especially for executives, is linked to both individual and Company performance, and ensuring that compensation policies and practices for all employees do not include incentives to take inappropriate risk.

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Risk Mitigating Actions

The Company'sCompany’s compensation programs are designed to include risk-mitigating features, and the Compensation Committee also engaged its independent compensation consultant to assist in the process of an annual internal risk assessment of all incentive-based compensation, including short-termannual and long-term incentive programs.

The Compensation Committee'sCommittee’s oversight responsibility includes assessing the relationship between potential risk created by the Company'sCompany’s compensation programs and their impact on long-term shareholder value. The Company believes that the appropriate metrics are used in its incentive plan design and the metrics do not create unreasonable risk. In order to encourage profitable growth while protecting shareholders'shareholders’ interests, the Company'sCompany’s compensation programs includesinclude the following risk mitigating components such as:

•
balanced
Balanced performance measures—sales growth combined with profitability;

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Robust performance measure selection and rigorous targets;

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Balanced mix of short-termannual and long-term incentives;

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Clear business conduct guidelines.

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The Company has established recoupment policies with respect to executive compensation in the event of fraud, criminal misconduct, materially inaccurate financial statements, conduct that violates Company policy, misconduct that causes or is discovered to have caused damage or injury to the Company'sCompany’s property or reputation or violations of non-competition or non-solicitation agreements, or in the event an Executive receives any amount in excess of what the executive should have received for any reason.

The later recoupment trigger applies whether or not the executive officer has engaged in wrongful conduct. Recoveries under these provisions can extend back for three years from the date of the initial filing that contained the relevant financial statements.

Further, both the existing Change in Control Agreements and awards under the W.W. Grainger, Inc. 2015 and 2022 Incentive Plan, as amended and restated as of October 31, 2018 (the 2015 Incentive Plan),Plans have double-trigger change in control provisions.

Risk Assessment

Since 2009, the Compensation Committee has engaged its independent compensation consultant, to conduct a risk assessment of the Company’s compensation programs that is completed every three years. Deloitte ConsultingIn 2021, the Committee’s independent compensation consultant, Pay Governance conducted the Company's most recentCompany’s triennial risk assessment in 2018 and the results were discussed with the Compensation Committee.
For the interim years, the Company conducts an annual internal risk review based on practices and methodologies recommended by the Compensation Committee'sCommittee’s independent compensation consultant.

Based on the interim-year risk review conducted in 20202022 and the Compensation Committee'sCommittee’s discussions, the Compensation Committee does not believe that the Company'sCompany’s compensation policies and practices are reasonably likely to have a material adverse effect on the Company. The Company continues to monitor and evaluate the above mitigating practices as part of its annual review process.

Compensation Philosophy, Plans, and Practices

Compensation Committee of the Board

The Compensation Committee is responsible for the Company'sCompany’s compensation programs.

The Compensation Committee oversees the Company'sCompany’s compensation and benefit programs for all officers and other employees. The Compensation Committee is responsible for ensuring that the Company's Company’s

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compensation practices provide appropriate incentives to increase long-term shareholder value, reflect the highest level of integrity, and protect the interests of shareholders. One of its responsibilities is to make certain that a competitive compensation structure is in place that will attract, reward, and retain employees and to motivate them to grow the business profitably. Under its charter, the Compensation Committee makes executive compensation decisions and recommends actions to the Board of Directors and to shareholders (for example, related to the advisory Say on Pay vote or equity plan proposals), as appropriate.

In setting individual compensation levels, the Compensation Committee selects a compensation comparator group of companies and reviews studies of total compensation paid to executives in those comparator group companies with similar duties and responsibilities. The Compensation Committee supplements the comparator group information with nationally recognized survey data for comparably sized general industry companies generally within in the $10 billion to $20 billion revenue range to gain a broader perspective of market practice, as the pool for executive talent extends beyond the comparator group.
The Compensation Committee then considers a variety of reference points, including competitive compensation data at the 25th, 50th, and 75th percentiles,quartiles of market, individual and Company performance, the executive'sexecutive’s overall experience,

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replaceability, internal equity, unique skills, and management'smanagement’s recommendation to determine appropriate compensation for each executive. All elements of compensation are valued and reviewed in evaluating the relative competitiveness of the Company'sCompany’s compensation practices against the comparator group. Target totalgroup and published survey data. Total target compensation for the Company'sCompany’s executives (including the NEOs) is generally set to approximate the market median.

The Compensation Committee reviews at least annually a tally sheet for each NEO to evaluate the potential value of all compensation. The tally sheet includes each NEO'sNEO’s current base salary, annual incentive award, and the value of all outstanding equity-awards (both vested and unvested), deferrals, benefits, and perquisites, as well as potential payments under retirement and certain change in control situations. Since no NEO has an employment agreement with the Company that guarantees continued employment, the tally sheets also facilitate the Compensation Committee'sCommittee’s evaluation of vested and unvested awards and the retention value of these awards.

In discharging its responsibilities, the Compensation Committee regularly consults with independent advisors, compensation consultants, and the Company'sCompany’s management. After a review of the factors prescribed by the SEC and the NYSE, the Compensation Committee determined that Pay Governance, its compensation consultant since November 2020, Independent Compensation Consultants areis an independent advisorsadvisor under the applicable rules and regulations. The Compensation Committee'sCommittee’s charter is available in the Governance section of Grainger'sGrainger’s website athttp://invest.grainger.com/invest.grainger.com.

Independent Compensation Consultant
In overseeing the Company’s compensation programs, the Compensation Committee develops programs based on its own deliberations, as well as considering recommendations from management and compensation and benefits consultants, including its independent compensation consultant.
After a review of the factors prescribed by the SEC and the NYSE rules and regulations, the Compensation Committee determined that Pay Governance is independent and retained Pay Governance as its independent compensation consultant. At the Compensation Committee’s direction, the independent compensation consultant:
•
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The Compensation Committee seeks advice from the independent compensation consultant on compensation trends and best practices, as well as in reviewing the Company’s programs and policies to ensure they are designed and operate to achieve their purposes and goals. The independent compensation consultant did not provide any additional services to the Company in 2022.

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Role of Management

Management assists the Compensation Committee in the design, recommendation, and implementation of compensation programs.

Members of management (including the NEOs and the CEO'sCEO’s other direct reports) assistroutinely recommend programs to the Compensation Committee by routinely recommending programs that management believes will provide the appropriate level of compensation and incentives consistent with the Company'sCompany’s compensation philosophy. Consistent with this process, management works with the Compensation Committee'sCommittee’s independent compensation consultant to develop market information and recommends adjustments in base salaries, annual incentive targets, and long-term incentive awards, as well as changes to programs required for regulatory compliance to be reviewed by the Compensation Committee and approved by the Board. For NEOs other than Mr. Macpherson, the recommendations also include the structure and targets of short-term and long-term incentive programs, as well as changes to programs required for regulatory compliance.programs. These recommendations are reviewed and approved by the Chairman of the Board and CEO before they are presented to the Compensation Committee. Mr. Macpherson'sMacpherson’s compensation is reviewed by the Compensation Committee in conjunction with its independent compensation consultant and is approved by the independent directors in executive session without management present.

Compensation Comparator Group

The Company'sCompany’s compensation program isprograms are regularly benchmarked against a Compensation Committee-approved comparator group of companies that are similar to the Company in size and complexity and nationally recognized compensation surveys. The Company performs these studies to understand current market practices and to provide a reference point for compensation discussions.

Every year, the Compensation Committee determines a compensation comparator group of companies and undertakes a study of total compensation paid to executives occupying similar positions with similar duties and responsibilities in the comparator companies. All elements of compensation are valued and

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considered when determining the relative competitiveness of the Company'sCompany’s compensation practices. Consistent with this practice, a comparator group compensation study was conducted in 2020 (20202022 (2022 Compensation Study).

Based on the 20202022 Compensation Study, the previous comparator group was updated to include Stanley Black & Decker,Cintas Corporation and AutoZone, Inc. due to itstheir comparable business characteristics and operational similarities to the Company and to remove Anixter InternationalBeacon Roofing Supply, Inc., and Insight Enterprises, Inc. due to its acquisition by WESCO International Inc. (an existing peer),their significantly lower enterprise value compared to the Company and Ingersoll-Rand plc, due its divestiture of its industrial segment. the other peer companies.
The 20202022 comparator group consists of 1718 companies that are relatively similar in complexity and size to Grainger and represent the types of major companies with which Grainger historically competes for executive talent. The companies that were selectedevaluated for the 20202022 Compensation Study arewere generally within a range of 0.5approximately 0.4 to 2.02.5 times Grainger'sGrainger’s annual revenue. The competitive market for executive talent includes companies both within and outside the same industry or sector as the Company. Most of the Company'sCompany’s publicly traded direct competitors tend to be too small in sales or scope of operations for direct compensation comparisons with the Company. Including a broader range of companies provides a more representative depiction of the Company'sCompany’s competitive market for talent. Therefore, companies used for compensation comparison purposes differ from those in the industry indices used in the Company Performance Graph in Part II, Item 5 of the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

2022.

The Committee relied on its 2020 Independent Compensation Consultants2022 independent compensation consultants for survey and market data. The role of management in selecting the comparator group was limited to providing general comments on the relevance of each industrycompany represented by the comparator companies.

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Avnet, Inc.​ ​$19,519​ ​$5,752
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HD Supply Holdings, Inc.​​​$6,047​​​$9,120
​ ​​​​ ​​ ​​
Henry Schein, Inc.​ ​$9,986​ ​$11,967
​ ​​ ​​ ​​ ​​
Illinois Tool Works Inc.​​​$14,109​​​$63,739
​ ​​​​ ​​ ​​
Insight Enterprises, Inc.​ ​$7,731​ ​$3,466
​ ​​ ​​ ​​ ​​
LKQ Corporation​​​$12,506​​​$15,797
​ ​​​​ ​​ ​​
Parker-Hannifin Corporation​ ​$14,320​ ​$31,777
​ ​​ ​​ ​​ ​​
Sanmina Corporation​​​$8,234​​​$2,347
​ ​​​​ ​​ ​​
Stanley Black & Decker, Inc.​ ​$14,442​ ​$31,550
​ ​​ ​​ ​​ ​​
Univar Solutions Inc.​​​$9,287​​​$7,148
​ ​​​​ ​​ ​​
WESCO International, Inc.​ ​$8,359​ ​$3,972
​ ​​ ​​ ​​ ​​
25th Percentile​​​$8,234​​​$5,752
​ ​​​​ ​​ ​​
50th Percentile​ ​$10,800​ ​$15,797
​ ​​ ​​ ​​ ​​
75th Percentile​​​$14,442​​​$31,550
​ ​​​​ ​​ ​​
W.W. Grainger, Inc.​ ​$11,486​ ​$20,551
​ ​​ ​​ ​​ ​​
Percent Rank​​​53%​​​59%
​ ​​​​ ​​ ​​
​
Executive Compensation​
​​​​
​​​

​Company​​​2021
Revenue
($mil)*		​​​2021
Enterprise Value
($mil)**		​
​AutoZone, Inc.​​​$14,630​​​$50,340​
​Avnet, Inc.​​​$19,535​​​$5,474​
​CDW Corporation​​​$20,821​​​$32,114​
​Cintas Corporation​​​$7,116​​​$48,450​
​Eaton Corporation plc​​​$19,628​​​$77,745​
​eBay Inc.​​​$10,420​​​$36,375​
​Expeditors International of Washington, Inc.​​​$16,524​​​$21,388​
​Fastenal Company​​​$6,011​​​$37,213​
​Genuine Parts Company​​​$18,871​​​$22,276​
​Henry Schein, Inc.​​​$12,401​​​$13,015​
​Illinois Tool Works Inc.​​​$14,455​​​$83,031​
​LKQ Corporation​​​$13,089​​​$20,913​
​Parker-Hannifin Corporation​​​$14,348​​​$46,946​
​Stanley Black & Decker, Inc.​​​$15,617​​​$36,142​
​United Rentals, Inc.​​​$9,716​​​$34,654​
​Univar Solutions Inc.​​​$9,536​​​$7,101​
​Watsco, Inc.​​​$6,280​​​$11,567​
​WESCO International, Inc.​​​$18,218​​​$11,382​
​25th Percentile​​​$9,892​​​$14,989​
​50th Percentile​​​$14,401​​​$33,384​
​75th Percentile​​​$17,794​​​$44,513​
​W.W. Grainger, Inc.​​​$13,022​​​$29,034​
​Percent Rank​​​41%​​​45%​
​
*

Revenue is for Fiscal Year 2019.

2021.
​
**

Enterprise Value is calculated as market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents, as of 12/31/2019.December 31, 2021.

The Compensation Committee reviewed and approved the comparator group and considered the findings of the 2020 Compensation Study in conjunction with a tally sheet listing the potential value of all compensation available for the NEOs. The Compensation Committee concluded that the NEOs' earned and potential awards for 2020 were consistent with the Company's pay philosophy, Company and individual performance, and market practices (as reflected in the 2020 Compensation Study).

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The next Compensation Study and comparator group validation is scheduled to take place in 2021.

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Base Salaries

Base salaries are intended to provide an appropriate level of fixed compensation to attract and retain executives. Base salaries are determined after a detailed evaluation of individual performance, competitive market levels, and executive experience.

Following the annual performance management review process (which is similar to the process in which all employees participate), base salaries are reviewed and adjusted (if appropriate) to reflect individual and Company performance with goals set in alignment with the Grainger Edge, base salaries for comparable positions from market studies, experience, tenure, fairness and internal equity.

Base salary increases for the NEOs, with the exception of Mr. Macpherson, are reviewed and approved by the Chairman of the Board and CEO before they are presented to the Compensation Committee for review and recommendation to the Board. The Compensation Committee reviews these recommendations in conjunction with its independent compensation consultant.

The compensation awarded to Mr. Macpherson was determined by the independent directors with assistance from the Compensation Committee and its independent compensation consultant. The Compensation

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Committee reviews and approves the corporate goals and objectives relevant to Mr. Macpherson'sMacpherson’s compensation and evaluates his performance in light of those goals and objectives. The Compensation Committee recommended, and the independent directors approved in executive session without management present, Mr. Macpherson'sMacpherson’s compensation level based on this evaluation.

During the early stages of the pandemic, the Company decided to defer for three months paying the

​Name​​​2022
Annualized
Base Salary		​​​
Annualized Base
Salary Percent
Change (6)
​
​D.G. Macpherson(1)​​​$1,100,000​​​No Change​
​Deidra C. Merriwether(2)​​​$675,000​​​4%​
​Paige K. Robbins(3)​​​$675,000​​​4%​
​John L. Howard(4)​​​$756,500​​​2%​
​Kathleen S. Carroll(5)​​​$531,500​​​10%​
​
(1)
Mr. Macpherson’s annual company-wide merit increases planned for April 1, 2020 until July 1, 2020. In addition, the Company's executive leadership team voluntarily elected temporary base salary reductions for the second quarter of 2020 with a 50% reduction for the Chairman and CEO and 20% for the executive leadership (including NEOs). Salaries were reinstated and certain salaries were increased effective July 1, 2020 as follows:

remained $1,100,000 throughout 2022.
​

 

Name


​ 2019
Annualized
Base Salary


​ Annualized Base
Salary Effective
7/1/2020


​ Annualized Base
Salary Percent
Change (3)


​ Actual 2020
Base Salary
Increase
Percent (4)



​
​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​

 

D.G. Macpherson

   $1,060,900   $1,060,900   0%   –9%  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

​

 

Thomas B. Okray

 ​ $715,000 ​ $730,000 ​ 2% ​ 0%  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

 

John L. Howard

   $715,000   $720,000   1%   –1%  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

​

 

Paige K. Robbins (1)

 ​ $570,000 ​ $570,000 ​ 0% ​ –1%  
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

 

Deidra C. Merriwether (2)

   $475,000   $530,000   0%   –1%  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​
(2)
(1)
Ms. Robbins'Merriwether’s annual base salary was increased from $530,000$650,000 to $570,000 effective November 1, 2019 to reflect the expansion of her role and responsibilities.

(2)
$675,000.
​
(3)
Ms. Merriwether'sRobbins’s annual base salary was increased from $475,000$650,000 to $530,000$675,000.
​
(4)
Mr. Howard’s annual base salary was increased from $741,600 to $756,500.
​
(5)
Ms. Carroll’s annual base salary was increased from $483,000 to $531,500.
​
(6)
All applicable NEO salary changes were effective JanuaryApril 1, 2020 to reflect the expansion of her role and responsibilities.

(3)
2022. Percentage increase based on annualized base salary.

(4)
Reflects actualyear-over-year base salary including reduction in base salaries based on deferral of Company-wide merit increases from April 1st to July 1st and temporary base salary reductions for the second quarter of 2020 with a 50% reduction for the Chairman and CEO and 20% for NEOs.
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Annual Incentives

Annual incentives are intended to provide an appropriate level of variable compensation to encourage executives to achieve annual results that create shareholder value without encouraging excessive risk taking.

NEOs are eligible to receive short-term cash-based incentives on the achievement of specified annual Company-wide financial performance measures set forth in the Company Management Incentive Program (MIP). The Company structures the MIP to motivate performance that balances short-term and long-term results and aligns the interests of management with shareholders.

Each NEO'sNEO’s target incentive award under the annual incentive program is based on a review of competitive market practice and is designed to approximate a market value that is generally at the median of the comparator group.

The following table displays the 20202022 MIP target payment applicable to each NEO.

​Name​​​2022 Target Incentive
(as a % of base salary)		​​​Performance Results
(as a % of the target)		​
​D.G. Macpherson​​​​​150%​​​​​​177%​​
​Deidra C. Merriwether​​​​​90%​​​​​​177%​​
​Paige K. Robbins​​​​​90%​​​​​​177%​​
​John L. Howard​​​​​80%​​​​​​177%​​
​Kathleen S. Carroll(1)​​​​​80%​​​​​​177%​​
​
(1)

Name


​​2020 Target Incentive
(as a % of base salary)

​​Performance Results (as a % of the target)
​
​ ​​​​ ​​ ​​ ​​

D.G. Macpherson (1)

​ ​150%​ ​84%​ 
​ ​​ ​​​​ ​​ ​​

Thomas B. Okray (2)

​​​95%​​​0%​ 
​ ​​​​ ​​ ​​ ​​

John L. Howard

​ ​80%​ ​84%​ 
​ ​​ ​​​​ ​​ ​​

Paige K. Robbins

​​​80%​​​84%​ 
​ ​​​​ ​​ ​​ ​​

Deidra C. Merriwether

​ ​80%​ ​84%​ 
​ ​​ ​​​​ ​​ ​​
(1)
Mr. Macpherson's 2020Ms. Carroll’s annual MIP target incentive was increased from 135%55% to 150%80% effective April 1, 2020.

(2)
Mr. Okray resigned as Senior Vice President and Chief Financial Officer of the Company to pursue an opportunity at another publicly-traded company. His last day in this role at Grainger was December 31, 2020. Accordingly, Mr. Okray was not eligible to receive a 2020 MIP payment.
2022.

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The final payout is based as a percentage of the NEO'sNEO’s annualized base salary as of December 31, 20202022 and total Company results. The 20202022 MIP was based on the Company's 2020 Adjusted ROIC (see Appendix B) andCompany’s year-over-year daily sales growth.growth and 2022 adjusted ROIC. The Company determined the payment earned for ROIC and the payment earned for sales growth and the payment earned for 2022 adjusted ROIC, and the two amounts were added together:

MIP Payment = (ROIC Performance + Sales Growth Performance)

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The Company believes the design of the annual incentive program supports the creation of shareholder value as it encourages management to focus on profitable sales growth and ROIC.the effective use of capital. The basic framework of the MIP has been in place for more than 10 years, although specific objectives and performance target levels have been modified on a year-by-year basis in light of the current economic and competitive environment. This framework was selected to align with Company strategy and to balance sales growth with profitability, efficiency, expense management, and asset management. Adjusted ROIC reflects how effectively management uses Company assets and is generally defined by the Company as pre-tax adjusted operating earnings divided by net working assets. Year-over-year daily sales growth is determined by year-over-year results. AcquisitionsBusiness results from acquisitions, divestitures, and divestituresliquidations that occur during the year are not included in the calculation of daily sales growth or adjusted ROIC. These measures are consistent with the Company'sCompany’s objective of growing profitably over time, which it believes is closely linked with shareholder value creation.

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the target award. Short-term financial results exceeded expectations and therefore the payout for the 2022 MIP was above target. Daily sales growth was 16.5%, resulting in an 91% sales growth payout, and adjusted ROIC was 40.6%, resulting in a 86% adjusted ROIC payout, for a combined 2022 MIP payout of 177%.(1) The Company’s average MIP payout for NEOs over the last five years (2017-2021) was 106%. See Annual Incentives / page 62.

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The following table shows the performance and payout scenarios that were established at the beginning of the year for 2020:

2022:
​
Adjusted ROIC
Performance(1)
​​​
% Payout(2)
 
​
​< 28.6%​​​0%​
​32.2%​​​40%​
​33.5% – 35.1%​​​50%​
​39.1%​​​60%​
​41.5%​​​100%​
​
Daily Sales
Growth Performance(1)
​​​
% Payout(2)
 
​
​< 3%​​​0%​
​7.2%​​​40%​
​9% – 10.5%​​​50%​
​14.8%​​​60%​
​17.0%​​​100%​
​
(1)
ROIC
Performance (1)

​​% Payout (2)
​​​ ​​
< 14.3%​ ​0%
​ ​​ ​​
28.1%​​​40%
​​​ ​​
29.5% to 29.8%​ ​50%
​ ​​ ​​
31.3%​​​60%
​​​ ​​
45.1%​ ​100%
​ ​​ ​​


Daily Sales
Growth Performance (3)

​​% Payout (2)
​​​ ​​
< –10.3%​ ​0%
​ ​​ ​​
3.2%​​​40%
​​​ ​​
4.5 to 4.9%​ ​50%
​ ​​ ​​
6.0%​​​60%
​​​ ​​
19.8%​ ​100%
​ ​​ ​​
(1)
2020 Adjusted ROIC is a non-GAAP financial measure. For a definition of this measure and for a reconciliation to the nearest comparable GAAP measure, see Appendix B to this proxy statement.

(2)
Payouts are interpolated on a straight-line basis.

(3)
For the year 2020, reported2022, daily sales growth was 3.5%16.5% and 2020 Adjustedadjusted ROIC (see footnote (1) immediately above) was 28.2%40.6%. This resulted in a final MIP payout of 84%177% of target (notarget. No discretion was exercised).
exercised. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

​
(2)
Payouts are interpolated on a straight-line basis.
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The Company believes that it establishes adjusted ROIC and sales growth targets that are rigorous and provide an appropriate level of motivation. Under the terms and conditions of the MIP, the Compensation Committee has the discretionability to adjust the reported financial results for incentive plan purposes to correct for any unusual circumstances, both positive and negative, that might affect adjusted ROIC or sales growth. However, as noted earlier,
Based on the Compensation Committee did not elect to modify or exercise discretion for existing 2020 NEOCommittee’s review of the Company’s executive compensation programs, including the MIP. After reviewing several factors, including financial performance relative to peersresults driven by the programs and pay for performance alignment, the strong level of shareholder support in 2022, the Compensation Committee concludeddetermined that the original constructprogram results are aligned with shareholder value creation and targets remained appropriate under current conditions.

approved the 177% payout based on the financial results and incentive payout scales disclosed herein.

Long-Term Incentives

The Company provides annual long-term incentives to NEOs and other key managers in order to:

•
align
Align the Company'sCompany’s long-term business strategy and goals with those that increase shareholder value;

​
•
achieve
Achieve financial performance that balances growth, profitability, and asset management;

​
•
reward
Reward management for taking prudent action and achieving results that create shareholder value;

​
•
attract
Attract qualified leaders to join the Company; and

​
•
retain
Retain management through business cycles.​

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The Company'sCompany’s long-term incentives for NEOs are provided under shareholder-approved incentive plans. The target number of shares granted to the NEOs is designed to approximate the median economic value of the compensation comparator group or applicable survey data for comparable jobs. The Compensation Committee annually establishes the target value of the award based on the executive'sexecutive’s position. The actual award may be adjusted up or down to reflect individual performance.

After careful review and consideration informed by

The Company’s practice is to use the Company's engagement with shareholders following the 2019 Say on Pay voting results, the Company retired20-day average closing price of its prior long-term incentive program comprisedcommon stock as of 50% Performance Restricted Stock Units (PRSUs) and 50% stock options; with the final grant of stock options and PRSUs occurring in 2019. In responseMarch 31 to shareholder input and a review of market practice, the Company's 2020 program uses a mix of 50% PSUs and 50% RSUs. Beginning with the 2020 equity grants, the Company also adjusted the methodology for calculatingcalculate the number of shares underlying its annual equity grants to both directorsthe NEOs and other grant-eligible employees from a 20-day average stock price ended January 31 to a 20-day average stock price ended March 31 to better reflect market practice and to reduce short-term volatility between the value used to convert shares and the Company’s stock price value on the day of grant.

2020 The same 20-day average is used to calculate the number of shares underlying the Company’s annual equity grants to directors.

2022 NEO Long-Term Incentives Overview

The long-term incentives provided to NEOs during 20202022 are summarized as follows:

Award
​​Weight
​​Vesting
​​Performance Measure
​ ​​ Award​​​​ Weight​​​Vesting​​​Performance Measure​
​Performance Share Units (PSUs)​​​50%​​​
Three-year cliff vesting contingent
on performance
​​U.S. share gain, endless assortment businesses' revenue growth, and adjusted operating margin (1) percentage, with each metric equally weighted.
​ ​​​​
U.S. share gain,(1) Endless Assortment segment revenue growth,(2) and total Company adjusted operating margin performance,(3) with each metric equally weighted.
​​
​​ ​​ ​​
Restricted Stock Units (RSUs)​​​50%​​​Three-year graded vesting​​​Grant allocatedvalue determined based on individual performance; long-term value based on appreciation in stock price.​
​
(1)
U.S. share gain is a relative metric which refers to the High-Touch Solutions—U.S. business daily sales growth less estimated U.S. MRO market growth.
​
(2)
Reflects revenue growth as reported under the Endless Assortment segment which was effective January 1, 2021.
​
(3)
See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
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(1)
2020 adjusted operating margin is a non-GAAP financial measure. For a definition of this measure and for a reconciliation to the nearest comparable GAAP measure, see Appendix B to this proxy statement.

As noted earlier, the Compensation Committee did not elect to modify or otherwise exercise discretion for existing 20202022 NEO compensation programs, including the long-term incentive program. The Company continuously evaluates its long-term incentive program against its objective to provide appropriate incentives to drive long-term shareholder value creation, align management with the Company'sCompany’s strategic initiatives, and remain responsive to market practice.

2020

2022 Performance Share Units (PSUs)

The Company's 2020 Performance Share UnitCompany’s 2022 PSU program provides the NEOs and other executives with a potential share payout depending on three performance metrics—U.S. share gain endless assortment businesses'(a relative metric), Endless Assortment segment revenue growth, and total Company adjusted operating margin(1) achievement performance—over a three-year cycle measured at the end of the third year based on the period average. The Compensation Committee (with the assistance of its independent compensation consultant) and management perform a thorough analysis in setting the financial measures and threshold, target, and maximum goals for a three-year performance cycle that begins January 1 of the first year. No dividend equivalents are paid on PSUs. The Compensation Committee mayhas the flexibility to use different objectives and targets from year to year to maximize alignment with then-current business objectives and to reflect economic conditions.

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The Company believes that these metrics are essential to gaining share and achieving profitable growth and are the appropriate performance measures to align with our pay for performance philosophy. This awardThe 2022 awards will remain at risk through 2023.

2020 Restricted Stock2024.

2021 Performance Share Units (RSUs)

(PSUs)

The Company's RSUCompany’s 2021 PSU program provides the NEOs and other executives with RSUs denominated in units of common stock with grants allocated based on individual performance. RSUs align NEO's and other executives' interests with stock price movement over time and three-year vesting encourages meaningful retention.

2018-2020 Performance Restricted Stock Unit (PRSUs)

The Company's 2018 PRSU program vested in 2020. The 2018 PRSU program was designed to provide NEOs and other executives with a potential share payout depending on ROIC achievement three performance metrics—U.S. share gain (a relative metric), Endless Assortment segment revenue growth, and total Company adjusted operating margin performance—over a three-year cycle with the actual number of shares paid to an NEO being either 0% or 100% of the target number of PRSUs awarded. The ROIC component was measured at the end of the third year based on the period average. The 2021 PSU program is designed on a similar basis as the 2022 PSU program, including with respect to financial measures, thresholds, targets and goals and do not include the payment of dividend equivalents. The 2021 award will remain at risk through 2023.

Restricted Stock Units (RSUs)
The Company’s RSU program applicable for 2022 and in prior years provides the NEOs and other executives with RSU grants allocated based on individual performance. RSUs align NEOs and other executives’ interests to stock price appreciation over time and three-year average. These measurement dates reinforcedgraded vesting encourages meaningful retention.
2020 Performance Share Unit (PSU) Program
The Compensation Committee approved the final results of the 2020-2022 PSU program at 123% of target. The 2020-2022 cycle was based on a long-term focus.three-year performance period from January 1, 2020 and ending December 31, 2022 performance period and was underpinned by three performance metrics—U.S. share gain (a relative metric), Endless Assortment businesses revenue growth, and total Company adjusted operating margin performance. U.S. share gain was 554 bps, Endless Assortment businesses revenue growth was 14.9%, and total Company adjusted operating margin expanded 69 bps on average over the three-year performance period. Therefore the payout for these PSUs was 123% of target.(1) No dividend equivalents were paid on PRSUs.

PSUs. The 2018 PRSU Program focused on maintaining profitability over a three-year periodfollowing table shows the performance and retaining key talent during our pricing initiative. Vesting was based on achieving total Company three-year average ROIC thresholdpayout scenarios that were established at or above 18%, as shown in the table below.

beginning of 2020:

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Three-Year Average ROIC
Performance (2018 - 2020) (1)



​​% Payout
​ ​​​
Executive Compensation​

<18%

​​0%
​​​
​​

³18%

Total Payout(1)*
​​​100%
​
U.S. Share Gain(2)*
​​​
Endless Assortment
Businesses Revenue
Growth(3)*
​​​
Total Company Adjusted
Operating Margin
Performance(4)*
​
​0%​​​0 bps or less​​​0% or less​​​-200 bps or less​
​1% to 79%​​​1 to 149 bps​​​1% to 9%​​​-199 to -61 bps​
​80% to 99%​​​150 to 249 bps​​​10% to 14%​​​-60 to -21 bps​
​100%​​​250 to 350 bps​​​15% to 20%​​​-20 to 20 bps​
​101% to 120%​​​351 to 449 bps​​​21% to 25%​​​21 to 60 bps​
​121% to 199%​​​450 to 799 bps​​​26% to 39%​​​61 to 199 bps​
​200% (maximum)​​​800 bps or greater​​​40% or greater​​​200 bps or greater​
​
(1)
2018-2020 Adjusted Average ROIC is
Payouts are interpolated on a non-GAAP financial measure.straight-line basis.
​
(2)
Based on three-year average U.S. share gain performance for 2020 (+805 bps), 2021 (+77 bps), and 2022 (+781 bps).
​
(3)
Based on three-year average Endless Assortment businesses revenue growth performance for 2020 (17.5%), 2021 (19.6%), and 2022 (7.7%). Endless Assortment reportable segment was effective January 1, 2021. For a definition of this measure and for a reconciliation to the nearest comparable GAAP measure, see Appendix B to this proxy statement.

The 2018-2020 Adjusted Average ROIC was 28.6%. Accordingly, the profitability threshold was achieved, and participants earned 100% of their target. The Compensation Committee has approved the Company's calculation of 2018-2020 Adjusted Average ROIC for purposes of the 2018-2020 PRSU cycle.

Other At Risk Awards

The last grant under the PRSU program was made in 2019, with the same features as the 2018 program. The 2019 PRSU program focuses on maintaining a threshold level of profitability over a three-year period. Vesting2020-2022 PSU cycle, Endless Assortment businesses revenue growth is based on achievingMonotaRO and Zoro U.S. and based on year-over-year sales growth based on U.S. sales days and in USD.

​
(4)
Based on three-year average year-over-year change in total Company three-year average ROIC at or above 18%adjusted operating margin performance for 2020 (-89 bps), consistent with the 2018 PRSU program design. This award will remain at risk through 2021.

2021 (+43 bps), and 2022 (+253 bps).
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*
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Stock Ownership Guidelines

The Company continues to believe that requiring executive ownership of Company stock creates alignment between executives and shareholders and encourages executives to act to increase shareholder value. In 1996, the Company established stock ownership guidelines for its NEOs and other officers. In 2011, the Company increased the minimum ownership requirement for the CEO from 5x base salary to 6x and established a retention ratio for equity awards. The stock ownership guidelines for the current NEOs are as follows:

​NEO​​​

NEO


​​Minimum Ownership Requirement

as a Percentage of Base Salary

​​Currently in Compliance?
​ ​​​Currently in Compliance?​
​D.G. Macpherson​​​​ ​​

D.G. Macpherson

​​6x​​​Yes
​ ​​ ​​​​ ​​

Thomas B. Okray (1)

​		Deidra C. Merriwether​​​3x​​​Yes
​ ​​​​ ​​ ​​

John L. Howard

​​3x​​Yes
​ ​​ ​​​​ ​​

​

Paige K. Robbins

​​​3x​​​Yes​
​John L. Howard​​​​ 3x​​​Yes​
​Kathleen S. Carroll​​

Deidra C. Merriwether

​​3x​​​Yes
​ ​​ ​​​​ ​​
(1)
Mr. Okray resigned as Senior Vice President and Chief Financial Officer of the Company effective December 31, 2020 to pursue an opportunity at another publicly-traded company

These stock ownership guidelines must be met within three years of being appointed an officer or assuming a new position and are reviewed annually by the Board. NEOs are required to hold net shares realized from exercised option shares and other stock awards until ownership requirements are met. Officers who fail to achieve these ownership levels will not be allowed to sell shares received from the vesting of equity awards until they comply with the guidelines. Shares owned directly by the officer (including those held as a joint tenant or as a tenant in common), shares owned in a self-directed IRA, shares owned or held for the benefit of a spouse or minor children, PRSUs, and RSUs are counted toward meeting the guidelines. Stock options (whether vested or unvested) and performance share awardsPSUs are not counted toward meeting the ownership guidelines.

Hedging and Pledging Prohibition

The Company'sCompany’s Business Conduct Guidelines (which are available under "Governance"“Governance” in the Investor Relations section of our website athttp://invest.grainger.com/invest.grainger.com) prohibit employees and the Board of Directors

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from engaging in any financial arrangement (including, without limitation, short sales, put and call options) that establish a short position in Company stock and are designed to hedge or offset, any decrease in market value of the Company'sCompany’s (or its subsidiaries'subsidiaries’) equity securities. Company officers and Directors are also prohibited from pledging any Company stock as collateral for a loan or for a margin account. No Directors or executive officers have hedged or pledged any of the shares beneficially owned by them.

Other Benefits

The

All other components ofbenefits, including the Company's compensation programRetirement Savings Plan, which provides for an annual, fixed 6% Company contribution to the 401(k) plan for NEOs and all other U.S.-based eligible employees, and various welfare benefits provided to NEOs and other executive officers, are substantially similarcomparable to those available for mostprovided to the majority of the Company's othersalaried and hourly U.S.-based Company employees, other than the benefits discussedexcept as noted in this section. This includes
•
The NEOs receive the same health and welfare benefits and(the NEOs also receive the same retirement profit sharing

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contribution methodology6% to the 401(k) plan) that is appliedapplicable to theall eligible U.S.-based employees who are retirement profit sharing participants. employees.

​
•
The Company provides Supplemental Profit Sharing Plans solely to maintain an equal Company retirement contribution percentage of retirement profit sharing compensation contribution6% to approximately 149202 employees, including NEOs, who would be subject to contribution or compensation limitations imposed on qualified plans by the Internal Revenue Code. The Company does not provide any other supplemental retirement benefits to its NEOs or other employees based in the United States.

For 2020, the Company's annual contribution to retirement profit sharing is based on ROIC. Under the terms

​
Other components of the Profit Sharing Plan, the Company contributes a minimum of 8% of payrollCompany’s compensation programs that apply only to the plan and provides for additional contribution if a threshold return on capital is achieved. The Company's Profit Sharing Plan includes a 401(k) feature for all U.S.-based employees, including the NEOs. Of the 8% Company minimum contribution, the first 3% (which is funded from the retirement profit sharing pool) will go into the 401(k). Effective January 1, 2021, the Retirement Savings Plan replaced the Company's Profit Sharing Plan as the primary Company-sponsored retirement vehicle for U.S.-based employees. The Retirement Savings Plan provides for a 6% Company contribution to the 401(k) plan.

NEOs:

•
Physical Exams: Effective April 2011, the Company requires that the NEOs and certain other Company officers have periodic physical examinations that are paid for by the Company. The Company believes that periodic physical exams are helpful in maintaining the effectiveness of its executive talent. There are currentlyAs of December 31, 2022, there were seven participants in the program.

​
•
Transportation: Officers also are allowed the business use of a car and driver, while Mr. Macpherson is allowed personal use of a car and driver, subject to reimbursement of the incremental cost of use. Officers are allowed the business use of corporate aircraft, which is chartered by the Company from a third-party provider on an as-needed basis, while Mr. Macpherson is allowed personal use, subject to reimbursement of the full cost of use. These benefits represent a cost-effective method of allowing the Company’s top executives to more effectively use their time.
​
•
Discontinued Benefit Plans:Messrs. Macpherson and Howard have grandfathered participation in the Company'sCompany’s Executive Death Benefit Plan that(EDBP), which was discontinuedclosed to new participants effective December 31, 2009. The2009 at which time benefit formulas for existing participants were frozen. Under this program, the beneficiary of a participant who dies while employed by the Company is entitled to a taxable benefit of 120 monthly payments of 50% of the participant'sparticipant’s monthly compensation, calculated on the basis ofbase salary and target annual incentive. If a participant who is retirement-eligible under the EDBP dies after retirement or other separation of service from the Company, the beneficiary is entitled to a lump sum death benefit equal to 100% of the participant’s annual base salary and target annual incentive, unless such participant elects to receive, in lieu of the post-retirement death benefit, a lump sum cashout of the participant’s death benefit upon retirement. The Company'sCompany’s policy is that, unless offered to other employees, it will not make payments, grants, or awards following the death of an executive in the form of unearned salary or unearned bonuses, accelerated vesting or the continuation in force of unvested equity grants, awards or un-granted equity, perquisites, and other payments or awards made in lieu of compensation.

​
Mr. Howard has grandfathered participation in the Company'sCompany’s Frozen Voluntary Salary and Incentive Deferral Plan, which was discontinued effective December 31, 2016 (the Voluntary Salary and Incentive Deferral Plan).2016. Participants of this plan were previously able to defer up to 50% of their base salary and up to 85% of their bonus through this plan.

Officers are allowed the business use of corporate aircraft, which is chartered by the Company from a third party provider on an as-needed basis, while Mr. Macpherson is allowed personal use of corporate aircraft, subject to reimbursement of the full cost of use. Officers also are allowed the business use of a car and driver, while Mr. Macpherson is allowed personal use of a car and driver, subject to reimbursement of the incremental cost of use. These benefits represent a cost-effective method of allowing the Company's top executives to more effectively use their time. All other benefits, including the retirement profit sharing contribution percentages and various welfare benefits provided to U.S. NEOs and other executive officers, are comparable to those provided to the majority of salaried and hourly U.S.-based Company employees.

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Executive Compensation Tables

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​Compensation Tables​
Summary Compensation Table

​Name and Principal Position*​​​Year​​​Salary​​​
Stock
Awards(1)
​​​Non-Equity
Incentive Plan
Comp.		​​​Change in
Pension
Value
and NQDC
Earnings		​​​
All Other
Comp.(2)
​​​Total​
​D.G. Macpherson
Chairman of the Board &
Chief Executive Officer		​​​2022​​​$1,100,000​​​$5,734,290​​​$2,920,500​​​$0​​​$212,868​​​$9,967,658​
​2021​​​$1,090,225​​​$5,241,816​​​$2,343,000​​​$0​​​$340,553​​​$9,015,594​
​2020​​​$969,091​​​$4,761,519​​​$1,303,316​​​$0​​​$441,452​​​$7,475,378​
​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Deidra C. Merriwether
Senior Vice President & Chief Financial Officer		​​​2022​​​$668,750​​​$1,726,159​​​$1,075,275​​​$0​​​$89,944​​​$3,560,128​
​2021​​​$646,384​​​$1,236,411​​​$830,700​​​$0​​​$64,835​​​$2,778,330​
​2020​​​$523,885​​​$523,887​​​$356,160​​​$0​​​$61,577​​​$1,465,509​
​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Paige K. Robbins
Senior Vice President & President
Grainger Business Unit		​​​2022​​​$668,750​​​$1,726,159​​​$1,075,275​​​$0​​​$94,714​​​$3,564,898​
​2021​​​$647,589​​​$1,236,411​​​$830,700​​​$0​​​$66,549​​​$2,781,249​
​2020​​​$563,423​​​$619,357​​​$383,040​​​$0​​​$77,708​​​$1,643,528​
​​​​​​​​​​​​​​​​​​​​​​​​​​​
​John L. Howard
Senior Vice President &
General Counsel		​​​2022​​​$752,775​​​$1,066,068​​​$1,071,204​​​$0​​​$181,139​​​$3,071,186​
​2021​​​$736,200​​​$1,038,961​​​$842,458​​​$0​​​$78,907​​​$2,696,526​
​2020​​​$709,442​​​$1,000,279​​​$483,840​​​$0​​​$324,391​​​$2,517,952​
​​​​​​​​​​​​​​​​​​​​​​​​​​​
​Kathleen S. Carroll
Senior Vice President &
Chief Human Resources Officer		​​​2022​​​$519,375​​​$1,015,447​​​$693,807​​​$0​​​$59,618​​​$2,288,247​
​2021​​​$477,250​​​$420,755​​​$377,223​​​$0​​​$46,325​​​$1,321,553​
​​​​​​​​​​​​​​​​​​​​​​​​​​​
​
*
Name and Principal Position*
​​Year
​​Salary(1)
​​Bonus
​​Stock
Awards(2)

​​Option
Awards(3)

​​Non-Equity
Incentive
Plan
Comp.(4)



​​Change in
Pension
Value
and NQDC
Earnings




​​All Other
Comp.(5)

​​Total
​​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​
D. G. Macpherson​ ​2020​ ​$969,091​ ​$0​ ​$4,761,519​ ​$0​ ​$1,303,316​ ​$0​ ​$441,452​ ​$7,475,378
Chairman of the Board &​ ​2019​ ​$1,053,175​ ​$0​ ​$2,901,333​ ​$2,081,098​ ​$1,074,161​ ​$0​ ​$555,360​ ​$7,665,127
Chief Executive Officer​ ​2018​ ​$1,030,000​ ​$0​ ​$4,086,887​ ​$3,100,501​ ​$1,842,464​ ​$0​ ​$395,992​ ​$10,455,844
 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​
Thomas B. Okray​​​2020​​​$714,827​​​$0​​​$1,571,661​​​$0​​​$0​​​$0​​​$99,158​​​$2,385,646
Sr. Vice President &​​​2019​​​$711,250​​​$0​​​$885,359​​​$634,924​​​$482,625​​​$0​​​$162,886​​​$2,877,044
Chief Financial Officer​​​2018​​​$498,630​​​$0​​​$2,450,059​​​$0​​​$567,000​​​$0​​​$795,845​​​$4,311,534
 ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​​
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
John L. Howard​ ​2020​ ​$709,442​ ​$0​ ​$1,000,279​ ​$0​ ​$483,840​ ​$0​ ​$324,391​ ​$2,517,952
Sr. Vice President &​ ​2019​ ​$712,500​ ​$0​ ​$565,733​ ​$405,659​ ​$429,000​ ​$0​ ​$397,717​ ​$2,510,609
General Counsel​ ​2018​ ​$703,533​ ​$0​ ​$796,617​ ​$604,376​ ​$749,486​ ​$0​ ​$185,994​ ​$3,040,006
 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​
Paige K. Robbins​​​2020​​​$563,423​​​$0​​​$619,357​​​$0​​​$383,040​​​$0​​​$77,708​​​$1,643,528
Sr. Vice President Chief Technology,​​​2019​​​$531,667​​​$0​​​$270,519​​​$194,040​​​$342,000​​​$0​​​$110,016​​​$1,448,242
Merchandising, Marketing and Strategy Officer​​​2018​​​$508,500​​​$0​​​$846,722​​​$262,778​​​$516,375​​​$0​​​$118,944​​​$2,253,319
 ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​​
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​
Deidra C. Merriwether​ ​2020​ ​$523,885​ ​$0​ ​$523,887​ ​$0​ ​$356,160​ ​$0​ ​$61,577​ ​$1,465,509
Sr. Vice President & President,​ ​2019​ ​$469,491​ ​$0​ ​$221,411​ ​$158,748​ ​$204,844​ ​$0​ ​$80,479​ ​$1,134,972
North America Sales & Service​ ​2018​ ​$448,922​ ​$0​ ​$293,843​ ​$210,209​ ​$305,749​ ​$0​ ​$100,035​ ​$1,358,758
 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​
2022.
​
(1)
Reflects actual reduction in base salaries based on deferral of Company-wide merit increases from April 1 to July 1, 2020 and temporary base salary reductions for the second quarter of 2020 with a 50% reduction for the Chairman and CEO and 20% for NEOs.

(2)

Represents the grant date fair value of stock awards computed in accordance with FASB ASC Topic 718 and with PSUs calculated at target achievement. PSUs have a maximum payout of 200% of the target award. Therefore, the PSUPSUs awards at 200% of target would have a grant date fair value of $4,590,313, $1,515,150, $964,313, $597,088,$5,625,711, $1,693,474, $1,693,474, $1,045,882, and $505,050$996,220 for Messrs.Mr. Macpherson, Okray, andMs. Merriwether, Ms. Robbins, Mr. Howard, and Mses. Robbins and Merriwether, respectively. Mr. Okray stepped down as Senior Vice President and Chief Financial Officer as of December 31, 2020 and forfeited any unvested equity awards as of his employment termination date.

(3)
Represents the grant date fair value of option awards computed in accordance with FASB ASC Topic 718. Further details with respect to these awards are included in the Company's audited financial statements included in the Annual Report on Form 10-K for the relevant fiscal year ended. Mr. Okray exercised 3,118 shares of vested stock options on February 8, 2021. Under the existing provisions of the Long-Term Incentive Plan, he was entitled to exercise vested stock options within 3 months after his employment termination date.

(4)
Mr. Okray was not eligible to receive a 2020 MIP payment based on his employment termination date.

(5)
Ms. Carroll.
​
(2)
For 2020,2022, includes contributions accrued under the Company's profit sharingCompany’s Retirement Savings plan and the related supplemental profit sharingprofit-sharing plan ($175,343, $99,158, $93,889, $72,938, and $56,807206,580, $89,944, $89,944, $95,700, $53,751) for Messrs.Mr. Macpherson, Okray, andMs. Merriwether, Ms. Robbins, Mr. Howard, and Mses. Robbins and Merriwether respectively).Ms. Carroll. It also includes the incremental cost of the frozen Executive Death Benefit Program ($266,109 and $224,78280,136 for Messrs. Macpherson and Howard, respectively)Howard) and the cost of executive physicals ($5,720,6,288, $4,770, $4,770$5,303, $5,867) for Mr. Macpherson, Ms. Robbins, Mr. Howard and Mses. Robbins and Merriwether, respectively).Ms. Carroll, respectively.
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Grants of Plan-Based Awards

​Name​​​Grant
Date		​​​Approval
Date		​​​
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
​​​
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
​​​All Other
Stock
Awards:
No. of
Shares of
Stock
or Units		​​​
Grant
Date Fair
Value of
Stock
Awards(3)
​
​Threshold​​​Target​​​Maximum​​​Threshold​​​Target​​​Maximum​​
​D.G. Macpherson​​​​​​​​​​​$0​​​$1,650,000​​​$3,300,000​​​​​​​​​​​​​​​​​​​​​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​0​​​5,664​​​11,328​​​​​​​$2,812,856​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​​​​​​​​​​​​​5,664​​​$2,921,434​
​Deidra C. Merriwether​​​​​​​​​​​$0​​​$607,500​​​$1,215,000​​​​​​​​​​​​​​​​​​​​​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​0​​​1,705​​​3,410​​​​​​​$846,737​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​​​​​​​​​​​​​1,705​​​$879,422​
​Paige K. Robbins​​​​​​​​​​​$0​​​$607,500​​​$1,215,000​​​​​​​​​​​​​​​​​​​​​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​0​​​1,705​​​3,410​​​​​​​$846,737​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​​​​​​​​​​​​​1,705​​​$879,422​
​John L. Howard​​​​​​​​​​​$0​​​$605,200​​​$1,210,400​​​​​​​​​​​​​​​​​​​​​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​0​​​1,053​​​2,106​​​​​​​$522,941​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​​​​​​​​​​​​​1,053​​​$543,127​
​Kathleen S. Carroll​​​​​​​​​​​$0​​​$391,981​​​$783,962​​​​​​​​​​​​​​​​​​​​​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​0​​​1,003​​​2,006​​​​​​​$498,110​
​4/1/22​​​2/16/22​​​​​​​​​​​​​​​​​​​​​​​​​​​1,003​​​$517,337​
​
(1)
 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 
​ 

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​All Other
​​​

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Stock
​​Grant

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Awards:
​​Date Fair

​​​​​​​​​​​Estimated Future Payouts
​​Estimated Future Payouts
​​No. of
​​Value of

​​​​​​​​​​​Under Non-Equity Incentive
​​Under Equity Incentive
​​Shares of
​​Stock and

​​​Grant
​​Approval
​​Plan Awards (1)
​​Plan Awards (2)
​​Stock or
​​Option
​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​ ​​​​​​

Name


​​Date
​​Date
​​Threshold
​​Target
​​Maximum
​​Threshold
​​Target
​​Maximum
​​Units
​​Awards (3)
​​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

D. G. Macpherson

​ ​ ​ ​ ​ ​$0​ ​$1,551,566​ ​$3,103,133​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

​ ​4/1/20​ ​2/18/20​ ​ ​ ​ ​ ​ ​ ​0​ ​9,925​ ​19,850​ ​ ​ ​$2,295,156

​ ​4/1/20​ ​2/18/20​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​9,925​ ​$2,466,363
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Thomas B. Okray

​​​​​​​​​​​$0​​​$684,375​​​$1,368,750​​​​​​​​​​​​​​​​​​​​

​

​​​4/1/20​​​2/18/20​​​​​​​​​​​​​​​0​​​3,276​​​6,552​​​​​​​$757,575

​

​​​4/1/20​​​2/18/20​​​​​​​​​​​​​​​​​​​​​​​​​​​3,276​​​$814,086
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

John L. Howard

​ ​ ​ ​ ​ ​$0​ ​$576,000​ ​$1,152,000​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

​ ​4/1/20​ ​2/18/20​ ​ ​ ​ ​ ​ ​ ​0​ ​2,085​ ​4,170​ ​ ​ ​$482,156

​ ​4/1/20​ ​2/18/20​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​2,085​ ​$518,123
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Paige K. Robbins

​​​​​​​​​​​$0​​​$456,000​​​$912,000​​​​​​​​​​​​​​​​​​​​

​

​​​4/1/20​​​2/18/20​​​​​​​​​​​​​​​0​​​1,291​​​2,582​​​​​​​$298,544

​

​​​4/1/20​​​2/18/20​​​​​​​​​​​​​​​​​​​​​​​​​​​1,291​​​$320,814
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Deidra C. Merriwether

​ ​ ​ ​ ​ ​$0​ ​$424,000​ ​$848,000​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

​ ​4/1/20​ ​2/18/20​ ​ ​ ​ ​ ​ ​ ​0​ ​1,092​ ​2,184​ ​ ​ ​$252,525

​ ​4/1/20​ ​2/18/20​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​1,092​ ​$271,362
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​
(1)
Represents potential amounts under the 20202022 MIP. Actual payout amounts under the 20202022 MIP are included in the "Non-Equity“Non-Equity Incentive Plan Comp."” column of the Summary Compensation Table. Mr. Okray resigned as Senior Vice President and Chief Financial Officer of the Company. His last day in this role at Grainger was December 31, 2020. Accordingly, Mr. Okray was not eligible to receive a 2020 MIP payment.

​
(2)

The number of shares that may be earned for the 20202022 grant of PSUs are eitherfrom 0% orto 200% of the target award and will be determined based on the Company's achievement of three-year average performance goals for: U.S. Share Gain, Endless Assortment revenue growth, and adjusted operating margin, with each metric weighted equally (2020 adjusted operating margin is a non-GAAP financial measure. For a definition of this measure and for a reconciliation to the nearest comparable GAAP measure, see Appendix B to this proxy statement.). The awards were made under the 2015 Incentive Plan. Mr. Okray forfeited unvested equity awards, including the 2020 grant of PSUs, as of his employment termination date.

incentive plan.
​
(3)

Represents the grant date fair value of awards of RSUs and PSUs at target payout as calculated under FASB ASC Topic 718 without allocating over the vesting period. As noted above, Mr. Okray forfeited unvested equity awards, including the 2020 grant of RSUs and PSUs. Mr. Okray exercised 3,118 shares of vested stock options on February 8, 2021. Under the existing provisions of the Long-Term Incentive Plan, he was entitled to exercise vested stock options within 3 months after the employment termination date.
​

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​Proxy Statement​​
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​

​
Executive Compensation​
​

​

​

​		​

​

​

Executive Compensation

​

Outstanding Equity Awards at Fiscal Year-End

​Name​​​Option Awards​​​Stock Awards​
​
No. of
Securities
Underlying
Unexercised
Options
Exercisable(1)
​​​
No. of
Securities
Underlying
Unexercised
Options
Unexercisable(1)
​​​Equity
Incentive
Plan
Awards: No.
of Securities
Underlying
Unexercised
Unearned
Options		​​​
Option
Exercise
Price(2)
​​​
Option
Expiration
Date(3)
​​​No. of
Shares or
Units of
Stock
That Have
Not Vested		​​​
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested(4)
​​​
Equity
Incentive Plan 
Awards: No.
of Unearned
Shares, Units
or Other
Rights
That Have
Not Vested(5)
​​​
Equity
Incentive Plan 
Awards:
Market or
Payout
of Unearned
Shares, Units
or Other
Rights
That Have
Not Vested(6)
​
​D.G. Macpherson​​​​​​​​​​​​​​​​​​​​​​​
34,537(13)
​​​$19,211,206​​​
24,708(14)
​​​$13,743,825​
​
23,827(9)
​​​​​​​​​​​$234.38​​​3/31/2026​​​​​​​​​​​​​​​​​
​
36,415(10)
​​​​​​​​​​​$231.20​​​4/2/2027​​​​​​​​​​​​​​​​​
​
46,063(11)
​​​​​​​​​​​$276.64​​​4/1/2028​​​​​​​​​​​​​​​​​
​
30,663(12)
​​​​​​​​​​​$311.26​​​3/31/2029​​​​​​​​​​​​​​​​​
​Deidra C. Merriwether​​​
2,127(7)
​​​​​​​​​​​$248.22​​​4/29/2024​​​
5,730(15)
​​​$3,187,313​​​
6,566(16)
​​​$3,652,338​
​
2,496(8)
​​​​​​​​​​​$231.88​​​3/31/2025​​​​​​​​​​​​​​​​​
​
2,860(9)
​​​​​​​​​​​$234.38​​​3/31/2026​​​​​​​​​​​​​​​​​
​
2,318(10)
​​​​​​​​​​​$231.20​​​4/2/2027​​​​​​​​​​​​​​​​​
​
3,123(11)
​​​​​​​​​​​$276.64​​​4/1/2028​​​​​​​​​​​​​​​​​
​
2,339(12)
​​​​​​​​​​​$311.26​​​3/31/2029​​​​​​​​​​​​​​​​​
​Paige K. Robbins​​​
2,127(7)
​​​​​​​​​​​$248.22​​​4/29/2024​​​
6,548(17)
​​​$3,642,325​​​
6,566(18)
​​​$3,652,338​
​
3,122(8)
​​​​​​​​​​​$231.88​​​3/31/2025​​​​​​​​​​​​​​​​​
​
3,813(9)
​​​​​​​​​​​$234.38​​​3/31/2026​​​​​​​​​​​​​​​​​
​
2,814(10)
​​​​​​​​​​​$231.20​​​4/2/2027​​​​​​​​​​​​​​​​​
​
3,904(11)
​​​​​​​​​​​$276.64​​​4/1/2028​​​​​​​​​​​​​​​​​
​
2,859(12)
​​​​​​​​​​​$311.26​​​3/31/2029​​​​​​​​​​​​​​​​​
​John L. Howard​​​​​​​​​​​​​​​​​​​​​​​
2,565(22)
​​​$1,426,781​​​
4,758(19)
​​​$2,646,638​
​
12,390(9)
​​​​​​​​​​​$234.38​​​3/31/2026​​​​​​​​​​​​​​​​​
​
8,607(10)
​​​​​​​​​​​$231.20​​​4/2/2027​​​​​​​​​​​​​​​​​
​
8,979(11)
​​​​​​​​​​​$276.64​​​4/1/2028​​​​​​​​​​​​​​​​​
​
5,977(12)
​​​​​​​​​​​$311.26​​​3/31/2029​​​​​​​​​​​​​​​​​
​Kathleen S. Carroll​​​
1,690(12)
​​​​​​​​​​​$311.26​​​3/31/2029​​​
2,448(20)
​​​$1,361,700​​​
3,080(21)
​​​$1,713,250​
​
(1)

​​​Option Awards
​​Stock Awards
​​​​ ​​​​​​ ​​​​​​ ​​​​​​ ​​​​​​ ​​​​​​ ​​​​​​ ​​​​​​ ​​​​​​ ​​​

Name*


​​No. of
Securities
Underlying
Unexercised
Options
Exercisable (1)





​​No. of
Securities
Underlying
Unexercised
Options
Unexercisable (1)






​​Equity
Incentive
Plan
Awards: No.
of Securities
Underlying
Unexercised
Unearned
Options








​​Option
Exercise
Price (2)


​​Option
Expiration
Date (3)


​​No. of
Shares or
Units of
Stock
That Have
Not Vested





​​Market
Value of
Shares or
Units of
Stock
That Have
Not Vested (4)






​​Equity
Incentive Plan
Awards: No.
of Unearned
Shares, Units
or Other
Rights
That Have
Not Vested (5)








​​Equity
Incentive Plan
Awards:
Market or
Payout
of Unearned
Shares, Units
or Other
Rights
That Have
Not Vested (6)
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

D. G. Macpherson

​ ​15,741 (7)​ ​ ​ ​ ​ ​$245.86​ ​4/23/2023​ ​9,925 (14)​ ​$4,052,775​ ​52,904 (15)​ ​$21,602,819

​ ​12,266 (8)​ ​ ​ ​ ​ ​$248.22​ ​4/29/2024​ ​ ​ ​ ​ ​ ​ ​ 

​ ​14,380 (9)​ ​ ​ ​ ​ ​$231.88​ ​3/31/2025​ ​ ​ ​ ​ ​ ​ ​ 

​ ​23,827 (10)​ ​ ​ ​ ​ ​$234.38​ ​3/31/2026​ ​ ​ ​ ​ ​ ​ ​ 

​ ​36,415 (11)​ ​ ​ ​ ​ ​$231.20​ ​4/2/2027​ ​ ​ ​ ​ ​ ​ ​ 

​ ​ ​ ​46,063 (12)​ ​ ​ ​$276.64​ ​4/1/2028​ ​ ​ ​ ​ ​ ​ ​ 

​ ​10,221 (11)​ ​20,442 (13)​ ​ ​ ​$311.26​ ​3/31/2029​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Thomas B. Okray

​​​3,118 (11)​​​​​​​​​​​$311.26​​​3/31/2029​​​​​​​​​​​​​​​​
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​

John L. Howard

​ ​9,728 (9)​ ​ ​ ​ ​ ​$231.88​ ​3/31/2025​ ​ ​ ​ ​ ​7,071 (16)​ ​$2,887,372

​ ​12,390 (10)​ ​ ​ ​ ​ ​$234.38​ ​3/31/2026​ ​ ​ ​ ​ ​ ​ ​ 

​ ​8,607 (11)​ ​ ​ ​ ​ ​$231.20​ ​4/2/2027​ ​ ​ ​ ​ ​ ​ ​ 

​ ​ ​ ​8,979 (12)​ ​ ​ ​$276.64​ ​4/1/2028​ ​ ​ ​ ​ ​ ​ ​ 

​ ​1,992 (11)​ ​3,985 (13)​ ​ ​ ​$311.26​ ​3/31/2029​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Paige K. Robbins

​​​2,330 (7)​​​​​​​​​​​$245.86​​​4/23/2023​​​4,079 (17)​​​$1,665,619​​​3,546 (18)​​​$1,447,974

​

​​​2,127 (8)​​​​​​​​​​​$248.22​​​4/29/2024​​​​​​​​​​​​​​​​

​

​​​3,122 (9)​​​​​​​​​​​$231.88​​​3/31/2025​​​​​​​​​​​​​​​​

​

​​​3,813 (10)​​​​​​​​​​​$234.38​​​3/31/2026​​​​​​​​​​​​​​​​

​

​​​2,814 (11)​​​​​​​​​​​$231.20​​​4/2/2027​​​​​​​​​​​​​​​​

​

​​​​​​​3,904 (12)​​​​​​​$276.64​​​4/1/2028​​​​​​​​​​​​​​​​

​

​​​953 (11)​​​1,906 (13)​​​​​​​$311.26​​​3/31/2029​​​​​​​​​​​​​​​​
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​

Deidra C. Merriwether

​ ​2,127 (8)​ ​ ​ ​ ​ ​$248.22​ ​4/29/2024​ ​3,398 (19)​ ​$1,387,539​ ​1,872 (20)​ ​$764,412

​ ​2,496 (9)​ ​ ​ ​ ​ ​$231.88​ ​3/31/2025​ ​ ​ ​ ​ ​ ​ ​ 

​ ​2,860 (10)​ ​ ​ ​ ​ ​$234.38​ ​3/31/2026​ ​ ​ ​ ​ ​ ​ ​ 

​ ​2,318 (11)​ ​ ​ ​ ​ ​$231.20​ ​4/2/2027​ ​ ​ ​ ​ ​ ​ ​ 

​ ​ ​ ​3,123 (12)​ ​ ​ ​$276.64​ ​4/1/2028​ ​ ​ ​ ​ ​ ​ ​ 

​ ​779 (11)​ ​1,560 (13)​ ​ ​ ​$311.26​ ​3/31/2029​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​
(1)
Represents stock option awards with a ten-year term and three-year cliff vesting for awards granted through 2018; three-year graded vesting for awards granted in 2019. Upon retirement from the Company, unvested options automatically vest and may be exercised within the lesser of six years or the remaining term of the option. Mr. Howard is currently retirement-eligible.

retirement eligible.
​
(2)

Awards were issued at fair market value, which is the closing stock price on the grant date.

​
(3)

Represents ten years after the award date.

​
(4)

Represents the aggregate unvested RSUs outstanding multiplied by the year-end closing price ($408.34).

556.25) and 2020 PSUs granted to all NEOs and 2016 PRSU awards granted to Mr. Macpherson.
​
(5)

Represents the maximum number of shares to be issued in connection with the 20182021 and 2019 PRSUs granted to the NEOs and the 2015 and 2016 PRSUs granted to Mr. Macpherson.

2020 PSUs.
​
(6)

Represents the aggregate performance awards outstanding assuming payouts at maximum levels multiplied by the year-end closing price ($408.34)556.25).

​
(7)
100% of these options vested on April 24, 2016.

(8)

100% of these options vested on April 30, 2017.

(9)
​
(8)
100% of these options vested on April 1, 2018.

(10)
​
(9)
100% of these options vested on April 1, 2019.

(11)
​
(10)
100% of these options vested on April 3, 2020.

(12)
​
(11)
100% of these options will vestvested on April 2, 2021.

(13)
Represents remaining unvested stock option awards granted
​
(12)
100% of these options vested on April 1, 2019, which will vest ratably on April 2, 2021 and April 1, 2022.
​

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​

​

​

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​


​



(13)

​
(14)
3,308 of theseRepresents 3,309 RSUs that will vest on April 1, 2021, 3,308 of these2023, 2,230 RSUs that will vest on April 1, 2022, and 3,309 of these2023, 2,230 RSUs that will vest on April 1, 2023.

(15)
15,355 of these PRSUs will vest on April 2, 2021, 10,221 of these PRSUs2024, 1,888 RSUs that will vest on April 1, 2022, 8,507 of these PRSUs2023, 1,888 RSUs that will vest on AugustApril 1, 2022,2024 and 1,888 RSUs that will vest on April 1, 2025. 8,896 of these PRSUs will vest on October 3, 2023. 9,925 of these2023 and 12,208 PSUs that will vest on April 1, 2023, subjectbased on the final 2020 PSU performance results from January 1, 2020 through December 31, 2022.
​
(14)
Represents 13,380 of PSUs that are assumed to vest on April 1, 2024, based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 20202021 through December 31, 2022.

(16)
2,993 of these PRSUs will vest on April 2, 2021,2023 and 1,993 of these PRSUs will11,328 PSUs that are assumed to vest on April 1, 2022. 2,0852025, based on the maximum level of these PSUs will vest on April 1, 2023 subject to the achievement of the performance goals over the three-year performance period from January 1, 20202022 through December 31, 2022.

(17)
430 of these2024.
​
(15)
Represents 1,265 RSUs that will vest on AprilNovember 1, 2021, 1,016 of these2024, 364 RSUs will vest on September 2, 2021, 430 of these RSUs will vest on April 1, 2022, 431 of these RSUsthat will vest on April 1, 2023, and 1,772 of these526 RSUs will vest on April 2, 2025.

(18)
1,302 of these PRSUs will vest on April 2, 2021 and 953 of these PRSUs will vest on April 1, 2022. 1,291 of these PSUsthat will vest on April 1, 2023, subject526 RSUs that will vest on April 1, 2024, 568 RSUs that will vest on April 1, 2023, 568 RSUs that will vest on April 1, 2024, 569 RSUs that will vest on April 1, 2025 and 1,343 PSUs that will vest on April 1, 2023, based on the final 2020 PSU performance results from January 1, 2020 through December 31, 2022.
​

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​​​
(16)
Represents 3,156 PSUs that are assumed to vest on April 1, 2024 based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 20202021 through December 31, 2022.

(19)
1,041 of these RSUs will vest on April 2, 20212023 and 1,265 of these RSUs will vest on November 1, 2024. 364 of these RSUs will3,410 PSUs that are assumed to vest on April 1, 2021, 3642025, based on the maximum level of these RSUs will vest on April 1, 2022, and 364 of these RSUs will vest on April 1, 2023.

(20)
780 of these PRSUs will vest on April 1, 2022. 1,092 of these PSUs units will vest on April 1, 2023 subject to the achievement of the performance goals over the three-year performance period from January 1, 2022 through December 31, 2024.
​
(17)
Represents 431 RSUs that will vest on April 1, 2023, 526 RSUs that will vest on April 1, 2023, 526 RSUs that will vest on April 1, 2024, 568 RSUs that will vest on April 1, 2023, 568 RSUs that will vest on April 1, 2024, 569 RSUs that will vest on April 1, 2025, 1,772 RSUs that will vest on April 2, 2025 and 1,588 PSUs that will vest on April 1, 2023, based on the final 2020 PSU performance results from January 1, 2020 through December 31, 2022.

​
(18)
Represents 3,156 PSUs that are assumed to vest on April 1, 2024 based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 2021 through December 31, 2023 and 3,410 PSUs that are assumed to vest on April 1, 2025, based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 2022 through December 31, 2024.
​
(19)
Represents 2,652 PSUs that are assumed to vest on April 1, 2024 based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 2021 through December 31, 2023 and 2,106 PSUs that are assumed to vest on April 1, 2025, based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 2022 through December 31, 2024.
​
(20)
Represents 232 RSUs that will vest on April 1, 2023, 179 RSUs that will vest on April 1, 2023, 179 RSUs that will vest on April 1, 2024, 334 RSUs that will vest on April 1, 2023, 334 RSUs that will vest on April 1, 2024, 335 RSUs that will vest on April 1, 2025 and 855 PSUs that will vest on April 1, 2023, based on the final 2020 PSU performance results from January 1, 2020 through December 31, 2022.
​
(21)
Represents 1,074 PSUs that are assumed to vest on April 1, 2024 based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 2021 through December 31, 2023 and 2,006 PSUs that are assumed to vest on April 1, 2025, based on the maximum level of achievement of the performance goals over the three-year performance period from January 1, 2022 through December 31, 2024.
​
(22)
Represents 2,565 PSUs that will vest on April 1, 2023, based on the final 2020-2022 PSU performance results from January 1, 2020 through December 31, 2022.
​

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​​​
Option Exercises and Stock Vested

​Name​​​Option Awards Exercised​​​Stock Awards Vested​
​
No. of
Shares
Acquired
on
Exercise(1)
​​​
Value
Realized on
Exercise(2)
​​​No. of
Shares
Acquired on
Vesting		​​​
Value
Realized on
Vesting(3)
​
​D.G. Macpherson​​​26,646​​​$8,238,141​​​24,266​​​$12,752,144​
​Deidra C. Merriwether​​​0​​​$0​​​1,670​​​$861,370​
​Paige K. Robbins​​​2,330​​​$592,224​​​1,909​​​$984,644​
​John L. Howard​​​0​​​$0​​​3,046​​​$1,571,097​
​Kathleen S. Carroll​​​0​​​$0​​​975​​​$502,896​
​
(1)

 ​ Option Awards Exercised
​ Stock Awards Vested
​ ​ ​ ​ ​​ ​ ​ ​​ ​ ​ ​​ ​ ​ ​

Name*


​ No. of
Shares
Acquired
on
Exercise (1)





​ Value
Realized on
Exercise (2)


​ No. of
Shares
Acquired on
Vesting



​ Value
Realized on
Vesting (3)
​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​

D. G. Macpherson

   16,923   $2,573,054   13,232   $4,479,297
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Thomas B. Okray

 ​ 0 ​ $0 ​ 2,868 ​ $767,649
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

John L. Howard

   18,903   $2,967,889   10,024   $3,220,114
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Paige K. Robbins

 ​ 6,630 ​ $1,085,012 ​ 2,273 ​ $691,468
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Deidra C. Merriwether

   0   $0   3,629   $1,267,577
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
    *
    Mr. Okray resigned as Senior Vice President and Chief Financial Officer as of December 31, 2020 and forfeited unvested equity awards as of his employment termination date. Mr. Okray exercised 3,118 shares of vested stock options on February 8, 2021. Under the existing provisions of the Long-Term Incentive Plan, he was entitled to exercise vested stock options within 3 months after the employment termination date.

(1)
Represents the number of stock options exercised.

​
(2)

Represents the difference between the exercise price and the market price of the common stock on the date of exercise.

​
(3)

Represents the value of the RSU, PSU, and PRSU awards on the vesting date.
​

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Executive Compensation
​

Nonqualified Deferred Compensation

​Name​​​Plan​​​Executive
Contributions
in Last FY		​​​
Company
Contributions
in Last FY(1)
​​​
Aggregate
Earnings
in Last FY(2)
​​​Aggregate
Withdrawals/
Distributions		​​​
Aggregate
Balance at
Last FYE(3)
​
​D.G. Macpherson​​​SPSP II​​​$0​​​$126,185​​​$(512,700)​​​$0​​​$2,717,584​
​Total​​​$0​​​$126,185​​​$(512,700)​​​$0​​​$2,717,584​
​Deidra C. Merriwether​​​SPSP II​​​$0​​​$42,665​​​$(65,020)​​​$0​​​$348,495​
​Total​​​$0​​​$42,665​​​$(65,020)​​​$0​​​$348,495​
​Paige K. Robbins​​​SPSP II​​​$0​​​$44,379​​​$(115,481)​​​$0​​​$603,085​
​Total​​​$0​​​$44,379​​​$(115,481)​​​$0​​​$603,085​
​John L. Howard​​​Frozen Salary & Incentive Deferral​​​$0​​​$0​​​$(630,508)​​​$0​​​$3,494,552​
​SPSP & SPSP II​​​$0​​​$55,787​​​$(485,383)​​​$0​​​$2,722,863​
​Deferred RSUs​​​$0​​​$0​​​$760,200​​​$0​​​$11,125,000​
​Total​​​$0​​​$55,787​​​$(355,691)​​​$0​​​$17,342,415​
​Kathleen S. Carroll​​​SPSP II​​​$0​​​$23,680​​​$(12,682)​​​$0​​​$74,415​
​Total​​​$0​​​$23,680​​​$(12,682)​​​$0​​​$74,415​
​
(1)

Name


​​Plan
​​Executive
Contributions
in Last FY


​​Company
Contributions
in Last FY (1)


​​Aggregate
Earnings
in Last FY (2)


​​Aggregate
Withdrawals/
Distributions


​​Aggregate
Balance at
Last FYE (3)
​​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

D. G. Macpherson

​ ​SPSP & SPSP II​ ​$0​ ​$284,975​ ​$369,061​ ​$0​ ​$2,630,671

​ ​Total​ ​$0​ ​$284,975​ ​$369,061​ ​$0​ ​$2,630,671
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

Thomas B. Okray

​​​SPSP & SPSP II​​​$0​​​$135,996​​​$55,400​​​$0​​​$321,769

​​​Total​​​$0​​​$135,996​​​$55,400​​​$0​​​$321,769
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

John L. Howard

​ ​Frozen Salary & Incentive Deferral​ ​$0​ ​$0​ ​$387,162​ ​$0​ ​$3,781,006

​ ​SPSP & SPSP II​ ​$0​ ​$128,795​ ​$295,413​ ​$0​ ​$2,814,453

​ ​Deferred RSUs​ ​$0​ ​$0​ ​$1,396,400​ ​$0​ ​$8,166,800

​ ​Total​ ​$0​ ​$128,795​ ​$2,078,975​ ​$0​ ​$14,762,260
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Paige K. Robbins

​​​SPSP & SPSP II​​​$0​​​$83,426​​​$84,447​​​$0​​​$542,326

​​​Total​​​$0​​​$83,426​​​$84,447​​​$0​​​$542,326
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Deidra C. Merriwether

​ ​SPSP & SPSP II​ ​$0​ ​$53,889​ ​$48,078​ ​$0​ ​$287,709

​ ​Total​ ​$0​ ​$53,889​ ​$48,078​ ​$0​ ​$287,709
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
(1)
The Company provides the supplemental profit sharingprofit-sharing plans (SPSPs) solely to maintain an equal percentage of profit sharingprofit-sharing contribution to employees (including all NEOs) who would be subject to contribution or compensation limits imposed on qualified plans by the Internal Revenue Code. For Messrs.Mr. Macpherson, Okray, andMs. Merriwether, Ms. Robbins, Mr. Howard, and Mses. Robbins and MerriwetherMs. Carroll, this represents the Company SPSP contribution. These contributions were disclosed as part of "All“All Other Comp."” in the 20202022 Summary Compensation Table.

​
(2)

Represents earnings on all nonqualified deferred compensation balances, including SPSP earnings, stock price appreciation and dividend equivalent payments for vested, deferred RSUs, and forearnings. For Mr. Howard, includes earnings on voluntary deferrals.

deferrals and vested deferred restricted stock units.
​
(3)

Aggregate year-end balances for the SPSPs, vested deferred RSUs, and forSPSPs. For Mr. Howard, includes year-end balances for his voluntary deferral account. Mr. Howard has 20,000account and vested deferred RSUs outstanding.restricted stock units.
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​Employment Agreements, Change in Control, and Termination of Employment Arrangements

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Employment Agreements

The Company does not maintain employment agreements with its NEOs.

Change in Control—Equity Plans

Under the terms of the Company'sCompany’s 2015 Incentive Plan and 2022 Incentive Plan, which isare the sourcesources for all equity awards granted after April 2015, "double trigger"“double trigger” vesting provisions apply to all equity awards (i.e., both a change in control occurs and a participant is involuntarily terminated within one year of the change in control).

Change in Control Agreements

The Company has 2x Changechange in Control Agreementscontrol agreements (CIC Agreements) with a number of executives, including the NEOs.six executive officers. These CIC Agreements are intended to ensure that in the event of a pending or threatened change in control, the Company retains its management and that their full attention is focused on the best interests of the Company and its shareholders and not on the uncertainty of their future employment prospects under those circumstances.

•
The Company'sCompany’s CIC Agreements have double-trigger arrangements. Under each CIC Agreement, the executive is entitled to certain benefits which include a lump-sum payment equal to 2x the sum of (i)(a) the executive'sexecutive’s annual salary, (ii)(b) the executive'sexecutive’s target annual incentive, and (iii)(c) in connection with the Company'sCompany’s non-contributory supplemental retirement profit sharing plans, a percentage of annual salary and annual incentive equal to the average percentage of covered compensation contributed by the Company under the plans for the last three fiscal years. The executive is also entitled to two years of continued health and dental benefits.

•
The Company has committed that no more than 10 positions will be eligible for CIC Agreements in the future. Existing agreements remain in place.

Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code generally disallows a federal income tax deduction to a public company for compensation over $1 million per taxable year paid to the Company'sCompany’s NEOs. Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), compensation that qualified as "performance-based"“performance-based” compensation was not subject to the deductibility limit. Effective for taxable years beginning after December 31, 2017, subject to certain transition relief, the TCJA eliminated this exception. Stock Options granted to our NEOs prior to November 2, 2017 under the 2015 Incentive Plan qualify for the transition relief, and gains on exercises of such stock options are considered to be "performance-based"“performance-based” compensation not subject to the $1 million deductibility limit. Any other compensation paid to our NEOs, including awards other than the grandfathered stock options, is subject to the Section 162(m) deductibility limit and all or a portion of such compensation may be nondeductible. While the tax treatment applicable to the Company'sCompany’s compensation programs was considered, the Company intends to authorize compensation that will not be deductible under Section 162(m) as it believes doing so is in the best interest of the Company and its shareholders.

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Accounting Considerations

Upon vesting, settlement, or maturity, equity awards under the 20152022 Incentive Plan and predecessor plans are distributed in the form of shares of the Company'sCompany’s common stock. Under the Accounting Standards Codification (ASC) 718, (formerly FAS 123R), these types of awards are considered equity awards. As a result, the total amount of compensation expense to be recorded for the awards is based on the fair value of the awards on the grant date. This fair value is then recorded over the vesting period, usually three years, and is recorded to compensation expense, net of estimated forfeitures, and as an increase in paid-in capital. The amount of compensation expense is not subsequently adjusted for changes in the Company'sCompany’s share price, but it is

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adjusted for the estimated number of shares to be distributed. If an equity award is forfeited, all previously recorded compensation expensed is reversed. While the accounting treatment described above was considered in the development of the long-term incentive program, it was not a material consideration.

Compensation Recoupment Policyof Equity Awards (Claw-Backs)

In connection with using long-term incentives as a method to align management and shareholder interests, the Company provides an annual equity award agreement that sets forth the terms of the award, including continued employment, and compliance with the Company'sCompany’s Business Conduct Guidelines and applicable laws and regulations. In addition, the Company'sCompany’s equity award agreements contain recoupment (or claw-back) provisions that specify situations granting the Board discretion to recoup both cash incentives and equity compensation from the NEOs and other employees.

Under the recoupment terms of these agreements, the Company may recover incentive compensation:

•

that was awarded based on achievement of financial results that were the subject of a restatement if the officer engaged in criminal conduct or financial fraud and in the case of materially inaccurate financial statements whether or not they result in a restatement, and whetherincluding to the extent required by applicable law or not the executive officer has engaged in wrongful conduct. Recoveries under these provisions can extend back for three years from the datelisting standard of the initial filing that contained the relevant financial statements;

NYSE;
​
•

should an executive violate confidentiality or non-compete or non-solicit obligations; or

​
•

if the Company determines that an executive:

    o
​
◦
has committed fraud against the Company or has engaged in any criminal conduct, including embezzlement or theft, that involves or is related to the Company;

o
​
◦
engaged in any other conduct that violates Company policy, causes or is discovered to have caused, any loss, damage, injury or other endangerment to Grainger'sthe Company’s property or reputation; or

o
​
◦
receives any amount in excess of what the Executive should have received for any reason.

​
This policy applies to any incentive compensation awarded or paid to an employee at a time when he or she is an officer.officer including to the extent required by applicable law or listing standard of the NYSE. Subsequent changes in status, including retirement or termination of employment, do not impact the Company'sCompany’s rights to recover compensation under this policy.

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Termination

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Termination

The Company does not have employment contractscontracts. In 2022, the Company formalized a written severance policy applicable to U.S. team members, including both NEOs and does not maintain severance programsnon-NEOs. In general, named executive officers are eligible to receive pay and benefit continuation for its NEOs. The executive's CIC Agreements provide12 months under this policy guidance in the potential forevent of a lump sum payment following a change“qualifying termination” as defined in control.the policy guidance. Except for aterminations covered under this policy guidance or those taken withing certain limited periodperiods of time following a change in control the NEOs are not entitled to severance upon termination.

The executive’s CIC Agreements provide the potential for a lump sum payment following a change in control.

Retirement

The definition of retirement eligibility is the same for all U.S. employees. Under thisthe Retirement Savings Plan, an employee is retirement-eligible upon reaching age 60. For equity awards made under the prior 2015 Incentive Plan, an employee is retirement-eligible upon attaining age 60, age 55 with 20 years of service, or 25 years of service. Under the retirement definition applicable to the 2022 Incentive Plan, an additional 5 years of service was added to the age 60 requirement such that an employee is retirement-eligible upon attaining any of the following:

•

age 60;

60 and 5 years of service;
​
•
age
Age 55 and 20 years of service; or

​
•

25 years of service.

Mr. Howard is

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Under the only NEO who is retirement-eligible.

The2022 Incentive Plan, the Company provides the following upon termination of active employment due to retirement for all retirement-eligible employees, including NEOs:

•
outstanding
Outstanding stock options become vested and executives have the right to exercise such stock options within six years from date of termination or for the remaining term of the stock option, whichever is less;

​
•
settlement
Settlement of PRSUs and PSUs occurs after the end of the performance period in common stock equal to the number of the executive'sexecutive’s outstanding performance shares earned for the performance period;
​
•
Continued vesting for RSUs granted under the 2022 Incentive Plan; and

​
•
cash
Cash payments equal to account balances under retirement profit sharing, any supplemental retirement profit sharing program, and the Frozen Voluntary Salary and Incentive Deferral Plan will be made in installment payments for up to 15 years or in a lump-sum payment based on the election made by the executive in accordance with the terms and conditions of those plans.

​
Mr. Howard is the only NEO who is retirement-eligible as of December 31, 2022 for purposes of the Company’s active retirement programs and discontinued Executive Death Benefit Plan. Mr. Macpherson, who has reached age 55 and 10 years of services as of the end of December 31, 2022, is only considered early retirement eligible under the Company’s discontinued Executive Death Benefit Plan, which was closed to new participants effective December 31, 2009 (Please see “Other Benefits” page 67 for details on the frozen EDBP).
The following tables illustrate the potential incremental payments and benefits that could be received by the NEOs upon his or her retirement, death or disability or upon a change in control of the Company. The amounts shown in the following tables assume that any such retirement, death, disability or change in control, as applicable, was effective as of December 31, 20202022 and thus only includes amounts earned through such date. However, the actual amounts that would be paid out under each circumstance can only be determined at the time of separation.

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Other Potential Post-Employment Payments

Macpherson, D. G.

D.G.
​Type of Payment​​​
Retirement(7)
($)
​​​Death
($)		​​​Disability
($)		​​​
Involuntary
Termination
without
Cause(8)
($)
​​​Change In
Control Only
($)		​​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)		​
​Cash Compensation​​​​​​​​​​​​​​​​​​​​​​​​​
​Cash Severance​​​$0​​​$0​​​$0​​​$2,750,000​​​$0​​​$5,830,000​
​Long-Term Incentives​​​​​​​​​​​​​​​​​​​​​​​​​
​Restricted Stock Units​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(1)
​​​$0​​​$7,472,106​​​$7,472,106​​​$4,131,269​​​$0​​​$7,472,106​
​Performance Shares​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(2)
​​​$0​​​$17,341,094​​​$17,341,094​​​$15,718,234​​​$0​​​$17,341,094​
​Benefits​​​​​​​​​​​​​​​​​​​​​​​​​
​
Continuation of Health & Welfare Benefits(3)
​​​$0​​​$0​​​$0​​​$17,908​​​$0​​​$35,733​
​
Life Insurance and Death Benefit Payout(4)
​​​$1,077,970​​​$10,917,123​​​$0​​​$0​​​$1,287,454​​​$1,287,454​
​
Continuation of Retirement Savings Plan(5)
​​​$0​​​$0​​​$0​​​$66,000​​​$0​​​$0​
​Perquisites and Tax Payments​​​​​​​​​​​​​​​​​​​​​​​​​
​
Outplacement(6)
​​​$0​​​$0​​​$0​​​$165,000​​​$0​​​$165,000​
​Total​​​$1,077,970​​​$35,730,323​​​$24,813,200​​​$22,848,411​​​$1,287,454​​​$32,131,387​
​
(1)

Type of Payment


​​Retirement (7)
($)

​​Death
($)

​​Disability
($)

​​Change In
Control Only
($)


​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Cash Compensation

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

Cash Severance

​​​$0​​​$0​​​$0​​​$0​​​$5,851,925
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Long-Term Incentives

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Stock Options

​​​ ​​​ ​​​ ​​​ ​​​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Unvested and Accelerated Awards (1)

​ ​$0​ ​$8,051,006​ ​$8,051,006​ ​$8,051,006​ ​$8,051,006
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Restricted Stock Units

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards (2)

​ ​$0​ ​$4,052,775​ ​$4,052,775​ ​$4,052,775​ ​$4,052,775
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Performance Shares

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards (3)

​ ​$0​ ​$21,602,819​ ​$21,602,819​ ​$21,602,819​ ​$18,563,238
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Benefits

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Continuation of Health & Welfare Benefits (4)

​ ​$0​ ​$0​ ​$0​ ​$0​ ​$34,418
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Life Insurance and Death Benefit Payout (5)

​​​$0​​​$11,812,269​​​$0​​​$0​​​$2,365,490
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Perquisites and Tax Payments

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Outplacement (6)

​​​$0​​​$0​​​$0​​​$0​​​$159,135
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Total

​ ​$0​ ​$45,518,869​ ​$33,706,600​ ​$33,706,600​ ​$39,077,988
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​
(1)
Unvested options become immediately exercisable in the event of death, disability, retirement, or a change in control.

(2)
Mr. Macpherson has one grantthree grants of unvested RSUs as of December 31, 2020.

(3)
2022.
​
(2)
Mr. Macpherson has three grants of unvested PSUs and one unvested PRSU as of December 31, 2022. In the event of death or disability, Mr. Macpherson is entitled to receive in settlement of performance-based awards, a number of shares of common stock equal to the target number of shares that vest based uponas defined under the Company's average return on invested capital, as of the date of death or disability.

(4)
relevant award agreements.
​
(3)
The health and welfare benefits value upon a change in control followed by termination without cause or with good reason is based upon two years of continuation of active health and welfare benefits using the Company'sCompany’s budget/insured rates projected forward throughout the two years using 6.0%4.5% health and 3.5%3.0% dental annual trends as well as a 3.01%4.92% annual discount factor.

(5)
In the event of involuntary termination without cause, Mr. Macpherson is entitled to continued health and welfare benefits at the active team member’s rates for a 12 month period.
​
(4)
Upon death, Mr. Macpherson'sMacpherson’s survivors shall receive, for 120 months, 50% of his monthly base salary and target bonus amount, under the frozen Executive Death Benefit Plan (EDBP). The figure above reflects the present value lump-sum payment amount based upon the FTSE pension curve discount rate of 2.05%. Upon a change in control, under the frozen EDBP, heMr. Macpherson would receive a lump sum cash benefit equal to the present value of 100% of his annual base salary and target bonus amount assuming mortality at age 80 and based on 120% of the applicable federal rate. Upon retirement, Mr. Macpherson has elected to receive a lump sum cash benefit in lieu of the post-retirement death benefit under the EDBP. The figure included in the table reflects the present value of 100% of his annual base salary and target bonus amount based on an annualized interest rate factor of 6% and assuming mortality at age 80. This amount may be increased to reflect the estimated federal income tax payable on such benefit, based on the Applicable Federal Ratethen maximum tax rate, subject to a cap of 1.58%.

200% of his annual base salary plus target bonus amount.
​
(5)
In the event of involuntary termination without cause, Mr. Macpherson will continue to be eligible to receive a fully vested 401(k) contribution for a 12 month period.
​
(6)

In the event of a change in control followed by termination without cause or with good reason or involuntary termination without cause, the Company shall provide Mr. Macpherson with standard outplacement services provided that the cost of such services to the Company not exceed 15% of the Executive'sExecutive’s annual base salary in effect on the date of termination. The amount above represents the maximum cost to the Company for providing such outplacement services.

​
(7)

Mr. Macpherson is retirement eligible under EDBP as of December 31, 2022.
​
(8)
In the event of a Qualifying Termination Employment Event for involuntary terminations without cause, the above-named executive would be eligible for 12 months of pay and continuation of certain benefit plans and entitlements.
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Merriwether, Deidra C.
​Type of Payment​​​
Retirement(7)
($)
​​​Death
($)		​​​Disability
($)		​​​
Involuntary
Termination
without
Cause(8)
($)
​​​Change In
Control Only
($)		​​​Change In
Control and
Termination
without Cause
or with
Good Reason
($)		​
​Cash Compensation​​​​​​​​​​​​​​​​​​​​​​​​​
​Cash Severance​​​$0​​​$0​​​$0​​​$1,282,500​​​$0​​​$2,718,900​
​Long-Term Incentives​​​​​​​​​​​​​​​​​​​​​​​​​
​Restricted Stock Units​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(1)
​​​$0​​​$2,439,713​​​$2,439,713​​​$811,198​​​$0​​​$2,439,713​
​Performance Shares​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(2)
​​​$0​​​$2,433,594​​​$2,433,594​​​$1,965,278​​​$0​​​$2,433,594​
​Benefits​​​​​​​​​​​​​​​​​​​​​​​​​
​
Continuation of Health & Welfare Benefits(3)
​​​$0​​​$0​​​$0​​​$17,908​​​$0​​​$35,733​
​
Life Insurance and Death Benefit Payout(4)
​​​$0​​​$0​​​$0​​​$0​​​$0​​​$0​
​
Continuation of Retirement Savings Plan(5)
​​​$0​​​$0​​​$0​​​$40,500​​​$0​​​$0​
​Perquisites and Tax Payments​​​​​​​​​​​​​​​​​​​​​​​​​
​
Outplacement(6)
​​​$0​​​$0​​​$0​​​$101,250​​​$0​​​$101,250​
​Total​​​$0​​​$4,873,307​​​$4,873,307​​​$4,218,634​​​$0​​​$7,729,190​
​
(1)
Ms. Merriwether has four grants of unvested RSUs as December 31, 2022.
​
(2)
Ms. Merriwether has three grants of unvested PSUs as December 31, 2022. In the event of death or disability, Ms. Merriwether is entitled to receive in settlement of performance-based awards, a number of shares of common stock equal to the target number of shares as defined under the relevant award agreements.
​
(3)
The health and welfare benefits value upon change in control and termination without cause or with good reason is based upon two years of continuation of active health and welfare benefits using the Company’s budget/insured rates projected forward throughout the two years using 4.5% health and 3.0% dental annual trends as well as a 4.92% annual discount factor. In the event of involuntary termination without cause, Ms. Merriwether is entitled to continued health and welfare benefits at the active team member’s rates for a 12 month period.
​
(4)
Ms. Merriwether is not eligible for the frozen Executive Death Benefit Plan.
​
(5)
In the event of involuntary termination without cause, Ms. Merriwether will continue to be eligible to receive a fully vested 401(k) contribution for a 12 month period.
​
(6)
In the event of a change in control followed by termination without cause or with good reason, the Company shall provide Ms. Merriwether with standard outplacement services provided that the cost of such services to the Company not exceed 15% of the Executive’s annual base salary in effect on the date of termination. The amount above represents the maximum cost to the Company for providing such outplacement services.
​
(7)
Ms. Merriwether is not eligible for retirement under the Company'sCompany’s retirement plan as of December 31, 2020.
​

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2022.

​

​

​

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Executive Compensation

​

​

​

​

​


​


​



​

Okray, Thomas B.

Mr. Okray resigned as Senior Vice President and Chief Financial Officer of the Company effective December 31, 2020. Mr. Okray exercised 3,118 shares of vested stock options on February 8, 2021. Under the existing provisions of the Long-Term Incentive Plan, he was entitled to exercise vested stock options within 3 months after the employment termination date.

For plan year 2020, Mr. Okray is entitled to a final Profit Sharing Plan contribution of $17,100 and Supplemental Profit Sharing Plan II contribution of $82,058 in March 2021 under the existing provisions of the respective plans. Under plan rules, the entire Supplemental Profit Sharing II account balance will be transferred to Mr. Okray in August 2021.

​

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Table of Contents

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​

​

​

​

​

​

​

​

Executive Compensation
​

Howard, John L.

(8)

Type of Payment


​​Retirement(7)
($)

​​Death
($)

​​Disability
($)

​​Change In
Control Only
($)


​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)
​​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Cash Compensation

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Cash Severance

​​​$0​​​$0​​​$0​​​$0​​​$2,903,040
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Long-Term Incentives

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Stock Options

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards(1)

​ ​$1,569,398​ ​$1,569,398​ ​$1,569,398​ ​$1,569,398​ ​$1,569,398
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Restricted Stock Units

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards(2)

​ ​$0​ ​$0​ ​$0​ ​$0​ ​$0
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Performance Shares

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards(3)

​ ​$2,887,372​ ​$2,887,372​ ​$2,887,372​ ​$2,887,372​ ​$2,248,830
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Benefits

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Continuation of Health & Welfare Benefits(4)

​ ​$407,331​ ​$0​ ​$0​ ​$0​ ​$34,418
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Life Insurance and Death Benefit Payout(5)

​​​$664,678​​​$5,859,866​​​$0​​​$0​​​$1,372,643
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Perquisites and Tax Payments

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Outplacement(6)

​​​$0​​​$0​​​$0​​​$0​​​$108,000
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Total

​ ​$5,528,779​ ​$10,316,636​ ​$4,456,770​ ​$4,456,770​ ​$8,236,330
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​
(1)
Unvested options become immediately exercisable inIn the event of death, disability, retirement, or a change in control.

(2)
Mr. Howard does not have anyQualifying Termination Employment Event for involuntary terminations without cause, the above-named executive would be eligible for 12 months of pay and continuation of certain benefit plans and entitlements.
​

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Executive Compensation​
​​​​
​​​
Robbins, Paige K.
​Type of Payment​​​
Retirement(7)
($)
​​​Death
($)		​​​Disability
($)		​​​
Involuntary
Termination
without
Cause(8)
($)
​​​Change In
Control Only
($)		​​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)		​
​Cash Compensation​​​​​​​​​​​​​​​​​​​​​​​​​
​Cash Severance​​​$0​​​$0​​​$0​​​$1,282,500​​​$0​​​$2,718,900​
​Long-Term Incentives​​​​​​​​​​​​​​​​​​​​​​​​​
​Restricted Stock Units​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(1)
​​​$0​​​$2,759,000​​​$2,759,000​​​$848,467​​​$0​​​$2,759,000​
​Performance Shares​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(2)
​​​$0​​​$2,544,288​​​$2,544,288​​​$2,075,971​​​$0​​​$2,544,288​
​Benefits​​​​​​​​​​​​​​​​​​​​​​​​​
​
Continuation of Health & Welfare Benefits(3)
​​​$0​​​$0​​​$0​​​$17,908​​​$0​​​$35,733​
​
Life Insurance and Death Benefit Payout(4)
​​​$0​​​$0​​​$0​​​$0​​​$0​​​$0​
​
Continuation of Retirement Savings Plan(5)
​​​$0​​​$0​​​$0​​​$40,500​​​$0​​​$0​
​Perquisites and Tax Payments​​​​​​​​​​​​​​​​​​​​​​​​​
​
Outplacement(6)
​​​$0​​​$0​​​$0​​​$101,250​​​$0​​​$101,250​
​Total​​​$0​​​$5,303,288​​​$5,303,288​​​$4,366,596​​​$0​​​$8,159,171​
​
(1)
Ms. Robbins has four grants of unvested RSUs as of December 31, 2020.

(3)
2022.
​
(2)
Ms. Robbins has three grants of unvested PSUs as of December 31, 2022. In the event of death or disability, Ms. Robbins is entitled to receive in settlement of performance-based awards, a number of shares of common stock equal to the target number of shares as defined under the relevant award agreements.
​
(3)
The health and welfare benefits value upon change in control and termination without cause or with good reason is based upon two years of continuation of active health and welfare benefits using the Company’s budget/insured rates projected forward throughout the two years using 4.5% health and 3.0% dental annual trends as well as a 4.92% annual discount factor. In the event of involuntary termination without cause, Ms. Robbins is entitled to continued health and welfare benefits at the active team member’s rates for a 12 month period.
​
(4)
Ms. Robbins is not eligible for the frozen Executive Death Benefit Plan.
​
(5)
In the event of involuntary termination without cause, Ms. Robbins will continue to be eligible to receive a fully vested 401(k) contribution for a 12 month period.
​
(6)
In the event of a change in control followed by termination without cause or with good reason, the Company shall provide Ms. Robbins with standard outplacement services provided that the cost of such services to the Company not exceed 15% of the Executive’s annual base salary in effect on the date of termination. The amount above represents the maximum cost to the Company for providing such outplacement services.
​
(7)
Ms. Robbins is not eligible for retirement under the Company’s retirement plan as of December 31, 2022.
​
(8)
In the event of a Qualifying Termination Employment Event for involuntary terminations without cause, the above-named executive would be eligible for 12 months of pay and continuation of certain benefit plans and entitlements.
​

​Proxy Statement​​
[MISSING IMAGE: lg_grainger-pn.jpg]
​​79​
TABLE OF CONTENTS
​​​​
Executive Compensation​
​
​​​
Howard, John L.
​Type of Payment​​​
Retirement(6)
($)
​​​Death
($)		​​​Disability
($)		​​​
Involuntary
Termination without
Cause(7)
($)
​​​Change In
Control Only
($)		​​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)		​
​Cash Compensation​​​​​​​​​​​​​​​​​​​​​​​​​
​Cash Severance​​​$0​​​$0​​​$0​​​$1,361,700​​​$0​​​$2,886,804​
​Long-Term Incentives​​​​​​​​​​​​​​​​​​​​​​​​​
​Performance Shares​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated
Awards(1)
​​​$2,483,100​​​$2,483,100​​​$2,483,100​​​$2,177,580​​​$0​​​$2,483,100​
​Benefits​​​​​​​​​​​​​​​​​​​​​​​​​
​
Continuation of Health & Welfare Benefits(2)
​​​$0​​​$0​​​$0​​​$11,463​​​$0​​​$26,365​
​
Life Insurance and Death Benefit Payout(3)
​​​$955,170​​​$5,405,762​​​$0​​​$52,667​​​$1,058,899​​​$1,058,899​
​
Continuation of Retirement Savings Plan(4)
​​​$0​​​$0​​​$0​​​$45,390​​​$0​​​$0​
​Perquisites and Tax Payments​​​​​​​​​​​​​​​​​​​​​​​​​
​
Outplacement(5)
​​​$0​​​$0​​​$0​​​$113,475​​​$0​​​$113,475​
​Total​​​$3,438,270​​​$7,888,862​​​$2,483,100​​​$3,762,275​​​$1,058,899​​​$6,568,643​
​
(1)
Mr. Howard has three grants of unvested PSUs as December 31, 2022. In the event of death or disability, Mr. Howard is entitled to receive in settlement of performance-based awards, a number of shares of common stock equal to the target number of shares that vest based uponas defined under the Company's average return on invested capital, asrelevant award agreements.
​
(2)
The retirement benefits represent the present value of the end of the performance period. Mr. Howard is retirement-eligible as offuture benefits assuming retirement at December 31, 2020.

(4)
The2022 using: Mr. Howard’s remaining health and welfare benefits valueplan coverage and post-age 65 Medicare retiree health subsidy costs until assumed mortality at age 80, the Company’s budget/insured rates projected forward with a 4.5% health and 3.0% dental annual trends, as well as a 4.92% annual discount factor. Benefits calculated upon a change in control followed byand termination without cause or with good reason isare based upon two years of continuation of active health and welfare benefitsbenefit, using the Company'sCompany’s budget/insured rates projected forward throughout the two years using 6.0%4.5% health and 3.5%3.0% dental annual trends as well as a 3.01%4.92% annual discount factor.

(5)
In the event of involuntary termination without cause, Mr. Howard is entitled to continued health and welfare benefits at the active team member’s rates for a 12 month period.
​
(3)
Upon death, Mr. Howard'sHoward’s survivors shall receive, for 120 months, 50% of his monthly base salary and target bonus amount, under the frozen Executive Death Benefit Plan (EDBP). The figure above reflectsUpon a change in control, Mr. Howard would receive a lump sum cash benefit equal to the present value lump-sum paymentof 100% of his annual base salary and target bonus amount assuming mortality at age 80 and based uponon 120% of the FTSE pension curve discount rate of 2.05%.applicable federal rate. Upon retirement, heMr. Howard has elected to receive a present valuelump sum cash settlement at retirementbenefit in lieu of the post-retirement death benefit under the EDBP. The figure included in the table reflects the present value of 100% of his annual base salary and target bonus amount based on an annualized interest rate factor of 6% and assuming mortality at age 80. This amount may be increased to reflect the estimated federal income tax payable on such benefit, based on the 6.0% discountthen maximum tax rate, and assumed mortalitysubject to a cap of age 80 under200% of his annual base salary plus target bonus amount.
​
(4)
In the frozen EDBP provisions. Uponevent of involuntary termination without cause, Mr. Howard will continue to be eligible to receive a change in control, under the frozen EDBP, he would receive the present value based on the Applicable Federal Rate of 1.58%.

(6)
fully vested 401(k) contribution for a 12 month period.
​
(5)
In the event of a change in control followed by termination without cause or with good reason, the Company shall provide Mr. Howard with standard outplacement services provided that the cost of such services to the Company not exceed 15% of the Executive'sExecutive’s annual base salary in effect on the date of termination. The amount above represents the maximum cost to the Company for providing such outplacement services.

(7)
​
(6)
Mr. Howard has met the eligibility requirements for retirement under the Company'sCompany’s retirement plan as of December 31, 2020.
​

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2022. As previously disclosed on the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2022, Mr. Howard stepped down as the Company’s General Counsel on January 30, 2023. He will continue as Senior Vice President until July 31, 2023 and as an active employee for six months thereafter.

​

​

​

​

Executive Compensation

​

​

​

​

​


​


​



​

Robbins, Paige K.

(7)

Type of Payment


​​Retirement (7)
($)

​​Death
($)

​​Disability
($)

​​Change In
Control Only
($)


​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Cash Compensation

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

Cash Severance

​​​$0​​​$0​​​$0​​​$0​​​$2,298,240
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Long-Term Incentives

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Stock Options

​​​ ​​​ ​​​ ​​​ ​​​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Unvested and Accelerated Awards (1)

​ ​$0​ ​$699,191​ ​$699,191​ ​$699,191​ ​$699,191
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Restricted Stock Units

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards (2)

​ ​$0​ ​$1,665,619​ ​$1,665,619​ ​$1,665,619​ ​$1,665,619
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Performance Shares

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Unvested and Accelerated Awards (3)

​ ​$0​ ​$1,447,974​ ​$1,447,974​ ​$1,447,974​ ​$1,052,598
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Benefits

​​​ ​​​ ​​​ ​​​ ​​​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Continuation of Health & Welfare Benefits (4)

​ ​$0​ ​$0​ ​$0​ ​$0​ ​$34,418
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Life Insurance and Death Benefit Payout (5)

​​​$0​​​$0​​​$0​​​$0​​​$0
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​

Perquisites and Tax Payments

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Outplacement (6)

​​​$0​​​$0​​​$0​​​$0​​​$85,500
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Total

​ ​$0​ ​$3,812,784​ ​$3,812,784​ ​$3,812,784​ ​$5,835,567
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​
(1)
Unvested options become immediately exercisable inIn the event of death, disability, retirement, or a change in control.

(2)
Qualifying Termination Employment Event for involuntary terminations without cause, the above-named executive would be eligible for 12 months of pay and continuation of certain benefit plans and entitlements.
​

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Executive Compensation​
​​​​
​​​
Carroll, Kathleen S.
​Type of Payment​​​
Retirement(7)
($)
​​​Death
($)		​​​Disability
($)		​​​
Involuntary
Termination
without
Cause(8)
($)
​​​Change In
Control Only
($)		​​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)		​
​Cash Compensation​​​​​​​​​​​​​​​​​​​​​​​​​
​Cash Severance​​​$0​​​$0​​​$0​​​$923,481​​​$0​​​$1,957,781​
​Long-Term Incentives​​​​​​​​​​​​​​​​​​​​​​​​​
​Restricted Stock Units​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(1)
​​​$0​​​$886,106​​​$886,106​​​$414,592​​​$0​​​$886,106​
​Performance Shares​​​​​​​​​​​​​​​​​​​​​​​​​
​
Unvested and Accelerated Awards(2)
​​​$0​​​$1,243,219​​​$1,243,219​​​$985,860​​​$0​​​$1,243,219​
​Benefits​​​​​​​​​​​​​​​​​​​​​​​​​
​
Continuation of Health & Welfare Benefits(3)
​​​$0​​​$0​​​$0​​​$17,908​​​$0​​​$35,733​
​
Life Insurance and Death Benefit Payout(4)
​​​$0​​​$0​​​$0​​​$0​​​$0​​​$0​
​
Continuation of Retirement Savings Plan(5)
​​​$0​​​$0​​​$0​​​$31,890​​​$0​​​$0​
​Perquisites and Tax Payments​​​​​​​​​​​​​​​​​​​​​​​​​
​
Outplacement(6)
​​​$0​​​$0​​​$0​​​$79,725​​​$0​​​$79,725​
​Total​​​$0​​​$2,129,325​​​$2,129,325​​​$2,453,456​​​$0​​​$4,202,564​
​
(1)
Ms. RobbinsCarroll has three grants of unvested RSU grantsRSUs as of December 31, 2020.

(3)
2022.
​
(2)
Ms. Carroll has three grants of unvested PSUs as December 31, 2022. In the event of death or disability, Ms. RobbinsCarroll is entitled to receive in settlement of performance-based awards, a number of shares of common stock equal to the target number of shares that vest based uponas defined under the Company's average return on invested capital, as of the date of death or disability.

(4)
relevant award agreements.
​
(3)
The health and welfare benefits value upon a change in control followed byand termination without cause or with good reason is based upon two years of continuation of active health and welfare benefits using the Company'sCompany’s budget/insured rates projected forward throughout the two years using 6.0%4.5% health and 3.5%3.0% dental annual trends as well as a 3.01%4.92% annual discount factor.

(5)
In the event of involuntary termination without cause, Ms. RobbinsCarroll is entitled to continued health and welfare benefits at the active team member’s rates for a 12 month period.
​
(4)
Ms. Carroll is not eligible for the frozen Executive Death Benefit Plan.

​
(5)
In the event of involuntary termination without cause, Ms. Carroll will continue to be eligible to receive a fully vested 401(k) contribution for a 12 month period.
​
(6)

In the event of a change in control followed by termination without cause or with good reason, the Company shall provide Ms. RobbinsCarroll with standard outplacement services provided that the cost of such services to the Company not exceed 15% of the Executive'sExecutive’s annual base salary in effect on the date of termination. The amount above represents the maximum cost to the Company for providing such outplacement services.

​
(7)

Ms. RobbinsCarroll is not eligible for retirement under the Company'sCompany’s retirement plan as of December 31, 2020.
​

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Table of Contents

​
2022.

​

​

​

​

​

​

​

​

Executive Compensation
​

Merriwether. Deidra C.

(8)
Type of Payment
​​Retirement (7)
($)

​​Death
($)

​​Disability
($)

​​Change In
Control
Only
($)



​​Change In
Control and
Termination
without Cause
or with Good
Reason
($)
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​
Cash Compensation​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

Cash Severance (1)

​​​$0​​​$0​​​$0​​​$0​​​$2,136,960
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​
Long-Term Incentives​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Stock Options

​​​ ​​​ ​​​ ​​​ ​​​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Unvested and Accelerated Awards (2)

​ ​$0​ ​$562,744​ ​$562,744​ ​$562,744​ ​$562,744
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Restricted Stock Units

​​​ ​​​ ​​​ ​​​ ​​​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Unvested and Accelerated Awards (3)

​ ​$0​ ​$1,387,539​ ​$1,387,539​ ​$1,387,539​ ​$1,387,539
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Performance Shares

​​​ ​​​ ​​​ ​​​ ​​​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Unvested and Accelerated Awards (4)

​ ​$0​ ​$764,412​ ​$764,412​ ​$764,412​ ​$429,982
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
Benefits​​​ ​​​ ​​​ ​​​ ​​​ 
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​

Continuation of Health & Welfare Benefits (6)

​ ​$0​ ​$0​ ​$0​ ​$0​ ​$34,418
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​

Life Insurance and Death Benefit Payout (7)

​​​$0​​​$0​​​$0​​​$0​​​$0
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​
Perquisites and Tax Payments​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​

Outplacement (8)

​​​$0​​​$0​​​$0​​​$0​​​$79,500
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​​​ ​​
Total​ ​$0​ ​$2,714,696​ ​$2,714,696​ ​$2,714,696​ ​$4,631,143
​ ​​​​ ​​ ​​ ​​ ​​​​ ​​ ​​ ​​
(1)
Unvested options become immediately exercisable in the event of death, disability, retirement, or a change in control.

(2)
Ms. Merriwether has three grants of unvested RSUs as December 31, 2020.

(3)
In the event of death or disability, Ms. Merriwether is entitled to receive in settlement of performance-based awards, a number of shares of common stock equal to the target number of shares that vest based upon the Company's average return on invested capital, as of the date of death or disability.

(4)
The health and welfare benefits value upon a change in control followed by termination without cause or with good reason is based upon two years of continuation of active health and welfare benefits using the Company's budget/insured rates projected forward throughout the two years using 6.0% health and 3.5% dental annual trends as well as a 3.01% annual discount factor.

(5)
Ms. Merriwether is not eligible for the frozen Executive Death Benefit Plan.

(6)
In the event of a change in control followed by terminationQualifying Termination Employment Event for involuntary terminations without cause, or with good reason,the above-named executive would be eligible for 12 months of pay and continuation of certain benefit plans and entitlements.
​

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As part of its annual process, the Company shall provide Ms. Merriwether with standard outplacement services provided that the cost of such services to the Company not exceed 15% of the Executive's annual base salary in effect on the date of termination. The amount above represents the maximum cost to the Company for providing such outplacement services.

(7)
Ms. Merriwether is not eligible for retirement under the Company's retirement plan as of December 31, 2020.
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CEO PAY RATIO DISCLOSURE

Under SEC rules, we are required to calculate and disclosecalculates the ratio of the annual total compensation of Mr. Macpherson, Chairman and CEO, to the annual total compensation of the Company'sCompany’s median employee. Further,The 2022 ratio of CEO pay to median employee pay is 143:1. For context, the 2021 ratio of CEO pay to the Company’s median employee pay was 138:1. The increase in the CEO pay ratio in 2022 relative to 2021 is mostly due to higher incentive compensation payouts as a result of the Company’s robust 2022 performance.

In calculating 2022 total compensation for our median employee and CEO, we included the estimated Company cost of their respective Company-provided health and wellness benefits. The CEO’s total compensation reported in the Summary Compensation Table for 2022 is $9,967,658. The CEO’s total compensation for purposes of our pay ratio disclosure calculation is $9,979,458, which differs from the total compensation described in the Summary Compensation Table on page 68 by the amount of his estimated health and wellness benefits. The median employee’s estimated 2022 total compensation was $70,135 (which includes compensation of $58,335 and estimated benefits of $11,800.
​Element​​​Chairman and CEO ($)​​​Median Employee ($)​
​Base Salary​​​$1,100,000​​​$53,533​
​Stock Awards​​​$5,734,290​​​$0​
​Non-Equity Incentive Plan Compensation​​​$2,920,500​​​$0​
​All Other Compensation​​​$212,868​​​$4,802​
​Estimated Company Health and Wellness Benefits​​​$11,800​​​$11,800​
​Total​​​$9,979,458​​​$70,135​
​CEO PAY RATIO​​​143:1​
Methodology
Validation of Median Employee—The Company last identified the median employee in 2020 using the process described below. We believe the previously identified median employee for 2020 remains appropriate for 2022. Following SEC guidelines, the median employee should be identified once every three years, unless has been a significant change to its employee population or compensation arrangements that it reasonably believes would result in a significant change in the pay ratio disclosure.
•
The Company’s median employee’s circumstances have not materially changed relative to 2020.
​
•
The Company has not had significant changes in our workforce, such as employee population size fluctuations, acquisition or divestitures. As the Company identified the median employeeof December 31, 2022, Grainger had more than 26,000 team members worldwide, of whom approximately 23,000 were full-time and 3,000 were part-time or temporary.
​
•
We have not had significant changes in 2017,our pay programs that we reasonably believe would result in a new median employee has been identified for purposes of the 2021 CEOsignificant change to this pay ratio disclosure.

Based on the newly identified median employee, the ratio of CEO pay to median employee pay is 116:1 as outlined below. In calculating 2020 total compensation for our median employee and CEO, we included the estimated Company cost of their respective Company-provided health and wellness benefits. The CEO's total compensation reported in the Summary Compensation Table for 2020 is $7,475,378. The CEO's total compensation for purposes of our pay ratio disclosure calculation is $7,485,389, which differs from the total compensation described in the Summary Compensation Table on page 66 of this document by his health and wellness benefits amount. The median employee's estimated 2020 total compensation was $64,355 (which includes compensation of $54,344 and estimated benefits of $10,011.

​
​ Element
​ Chairman and CEO ($)
​ Median Employee $
​
​ ​​ ​​ ​​ ​​ ​​ ​​
  Base Salary   $969,091   $49,712  
​ ​​ ​​​​ ​​ ​​ ​​
​ Stock Awards ​ $4,761,519 ​ $0 ​
​​​ ​​​​ ​​ ​​ ​​
  Non-Equity Incentive Plan Compensation   $1,303,316   $0  
​ ​​ ​​​​ ​​ ​​ ​​
​ All Other Compensation ​ $441,452 ​ $4,632 ​
​ ​​ ​​ ​​ ​​​​ ​​
  Estimated Company Health and Wellness Benefits   $10,011   $10,011  
​ ​​​​ ​​ ​​ ​​ ​​
​ Total ​ $7,485,389 ​ $64,355   
​ ​​​​ ​​ ​​ ​​ ​​
      CEO PAY RATIO   116:1  
​ ​​ ​​​​ ​​ ​​ ​​

Methodology

Prior Year Identification Process—As permitted under the SEC rules, the following process was used to identify the median employee in 2020:

•

Applied a consistent compensation measure of "base pay"“base pay” earned during the period from January 1, 2020 to September 30, 2020, rather than summary compensation table (SCT) total compensation for all of 2020.

​
•

Annualized base pay for those employees who started work during 2020. The identified median employee is a full-time, U.S.-based employee.

​
•

Determined the above-mentioned employee populations full year'syear’s compensation based on the compensation elements required for inclusion in the SCT, with the exception of incorporating
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healthcare benefits in total compensation as discussed previously in this section. The other components of our compensation programprograms for NEOs are substantially similar to those available for most of our other employees. This includes the same health and welfare benefits and the same performance-based retirement profit sharing contribution methodology that is applied to the U.S.-basedU.S.- based employees who are retirement profit sharing participants.​

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◦
Included in calculation: Canada, Japan, Mexico, United Kingdom, United States (approximately 22,644 employees as of the calculation date)

•
.
​
◦
Excluded from calculation: China, Czech Republic, Germany, Hungary, India, Indonesia, Ireland, Malaysia, Panama, Poland, South Africa, South Korea, Thailand, United Arab Emirates (approximately 1,015 employees as of the calculation date).

•
​
◦
Note that as of December 31, 2020, Grainger had approximately 23,100 employees, of whom approximately 21,800 were full-time, and 1,300 were part-time or temporary.
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The Company is asking its shareholders for their non-binding advisory approval of the 2020 compensation of its Named Executive Officers (NEOs).

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At our 2020 Annual Meeting of Shareholders, shareholders provided a clear endorsement of the Company's executive compensation programs with approximately 93% voting in favor of our NEO compensation.

As described in the "Compensation Discussion and Analysis" on pages 46, the 2020 NEO compensation programs remain consistent with the program described to shareholders in our 2020 proxy statement and reflects:

•

Pay for Performance Approach:    Our programs align pay with performance in the best interest of our shareholders.

•

Balanced and Sound Pay Practices:    The Company sets target compensation to approximate the market median of companies that are of similar size and complexity and rewards long-term performance while not encouraging excessive risk taking.

•

Strong Financial Performance:    The Company delivered strong operating results despite a challenging environment.

•

Direct Link to Strategy:    NEO pay is tied to near and long-term strategic objectives with the long-term incentive directly tied to gaining share in our U.S. High-Touch Solutions model and propelling sales growth in our Endless Assortment business model over the next several years and our annual incentive program provided NEOs incentives to grow the business (Sales Growth) while achieving investment returns for the Company's shareholders (ROIC).

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​Pay Versus Performance Disclosure​
In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. We have selected adjusted ROIC and daily sales growth as the financial measures we consider the two most important in linking performance to compensation actually paid as the Company’s overall NEO compensation structure is designed to drive profitable growth leading to shareholder value creation
​Year​​​
Summary
Compensation
Table
Total for
PEO(1)
​​​
Compensation
Actually
Paid to
PEO(1)(2)(3)
​​​
Average
Summary
Compensation
Table
Total for
Non-PEO
NEOs(1)
​​​
Average
Compensation
Actually
Paid to
Non-PEO
NEOs(1)(2)(3)
​​​
Value of Initial
Fixed $100
Investment
Based On:(4)
​​​Net
Income
($MM)		​​​
Adjusted
ROIC(5)
​​​
Daily
Sales
Growth(5)
​
​TSR​​​Peer
Group
TSR		​​
​2022​​​$9,967,658​​​$14,293,346​​​$3,121,115​​​$3,736,729​​​$172​​​$151​​​$1,547​​​40.6%​​​16.5%​
​2021​​​$9,015,594​​​$16,301,335​​​$2,138,920​​​$2,891,203​​​$158​​​$170​​​$1,043​​​31.9%​​​12.8%​
​2020​​​$7,475,378​​​$14,661,338​​​$2,003,159​​​$3,002,624​​​$123​​​$125​​​$695​​​28.2%​​​3.5%​
​
(1)
D.G. Macpherson was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.
​
​2020​​​2021​​​2022​
​Thomas B. Okray​​​Deidra C. Merriwether​​​Deidra C. Merriwether​
​John L. Howard​​​Paige K. Robbins​​​Paige K. Robbins​
​Paige K. Robbins​​​John L. Howard​​​John L. Howard​
​Deidra C. Merriwether​​​Kathleen S. Carroll​​​Kathleen S. Carroll​
​​​​​Robert F. O’Keef, Jr.​​​​​
​
(2)
The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually realized or received by the Company’s NEOs. These amounts reflect total compensation as set forth in the Summary Compensation Table above for each year, adjusted as described in footnote 3 below.
​
(3)
Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table.
​
​Year​​​Summary Compensation
Table Total
for Mr. Macpherson
($)		​​​Exclusion of Stock
Awards and Option
Awards for Mr. Macpherson
($)		​​​Total—Inclusion of
Equity Values for
Mr. Macpherson
($)		​​​Compensation
Actually Paid to
Mr. Macpherson
($)		​
​2022​​​$9,967,658​​​$5,734,290​​​$10,059,978​​​$14,293,346​
​2021​​​$9,015,594​​​$5,241,816​​​$12,527,557​​​$16,301,335​
​2020​​​$7,475,378​​​$4,761,519​​​$11,947,479​​​$14,661,338​
​Year​​​Average Summary
Compensation Table
Total for
Non-PEO NEOs
($)		​​​Average Exclusion
of Stock Awards
and Option Awards for
Non-PEO NEOs
($)		​​​Total—Average
Inclusion of
Equity Values for
Non-PEO NEOs
($)		​​​Average Compensation
Actually Paid to
Non-PEO NEOs
($)		​
​2022​​​$3,121,115​​​$1,383,458​​​$1,999,072​​​$3,736,729​
​2021​​​$2,138,920​​​$848,877​​​$1,601,160​​​$2,891,203​
​2020​​​$2,003,159​​​$928,796​​​$1,928,261​​​$3,002,624​

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The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables. The amounts reported in the total columns reflect rounding, which may result in slight variations when compared with the sum of the components listed in the tables:
​Year​​​Year-End Fair
Value of Equity
Awards Granted
During Year
That Remained
Unvested as
of Last Day
of Year for
Mr. Macpherson
($)		​​​Change in Fair
Value of Prior
Awards that
Remained
Unvested
at Year
End for
Mr. Macpherson
($)		​​​Vesting-Date
Fair
Value of Equity
Awards Granted
During Year that
Vested During
Year for
Mr. Macpherson
($)		​​​Change in Fair
Value from Last
Day of Prior
Year to Vesting
Date of Unvested
Equity Awards
that Vested
During Year
for
Mr. Macpherson
($)		​​​Value of
Dividends
or Other
Earnings
Paid on Stock
or Option Awards
Not Otherwise
Included for
Mr. Macpherson
($)		​​​Total—Inclusion
of Equity
Values
for
Mr. Macpherson
($)		​
​2022​​​$6,675,304​​​$2,954,636​​​$0​​​$339,165​​​$90,872​​​$10,059,978​
​2021​​​$6,815,797​​​$5,842,318​​​$0​​​$(210,414)​​​$79,857​​​$12,527,557​
​2020​​​$8,329,333​​​$6,569,082​​​$0​​​$(2,995,599)​​​$44,663​​​$11,947,479​
​Year​​​Average
Year-End
Fair Value
of Equity
Awards Granted
During Year
That Remained
Unvested as of
Last Day of
Year for
Non-PEO
NEOs
($)		​​​Average
Change in Fair
Value from
Last Day
of Prior Year to
Last Day of Year
of Unvested Equity
Awards for
Non-PEO
NEOs
($)		​​​Average
Vesting-Date
Fair
Value of
Equity Awards
Granted During
Year that
Vested During
Year for
Non-PEO
NEOs
($)		​​​Average
Change in Fair
Value from
Last Day of
Prior Year to
Last Day of Year
of Unvested
Equity
Awards for
Non-PEO
NEOs
($)		​​​Average Value
of Dividends or
Other Earnings
Paid on Stock
or Option Awards
Not Otherwise
Included for
Non-PEO
NEOs
($)		​​​Total—Average
Inclusion of
Equity
Values for
Non-PEO
NEOs
($)		​
​2022​​​$1,464,055​​​$372,838​​​$135,782​​​$8,730​​​$17,668​​​$1,999,072​
​2021​​​$1,030,096​​​$434,013​​​$106,327​​​$14,776​​​$15,947​​​$1,601,160​
​2020​​​$1,412,902​​​$721,500​​​$129,531​​​$(358,544)​​​$22,873​​​$1,928,261​
For the equity values included in the above tables, the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant.
(4)
The Peer Group TSR set forth in this table utilizes the Dow Jones U.S. Industrial Suppliers Total Stock Market Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2022. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the Dow Jones U.S. Industrial Suppliers Total Stock Market Index, respectively. Historical stock performance is not necessarily indicative of future stock performance.
​
(5)
We determined both adjusted ROIC and daily sales to be the two “most important” financial performance measure used to link performance to Compensation Actually Paid to our PEO and other NEOs in fiscal 2022, in accordance with Item 402(v) of Regulation S-K.
​
Adjusted ROIC is a non-GAAP financial measure. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of our 2022 adjusted ROIC, 2021 adjusted ROIC and 2020 adjusted ROIC to the most directly comparable GAAP financial measures. Daily sales growth for purposes of the relevant incentive program reflects certain non-GAAP adjustments as previously disclosed. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of our 2021 organic, daily sales growth and 2020 organic, daily sales growth to the most directly comparable GAAP financial measures.
Description of Relationship Between NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and the Company’s cumulative TSR over the three-year period from 2020 through 2022.

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PEO and Average NEO Compensation Actually Paid
Versus Grainger TSR, 2020-2022
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Description of Relationship Between NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our net income during fiscal 2020 through 2022.
PEO and Average NEO Compensation Actually Paid
Versus Grainger Net Income, 2020-2022
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Description of Relationship Between NEO Compensation Actually Paid and Adjusted ROIC
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our adjusted ROIC during fiscal 2020-2022.

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PEO and Average NEO Compensation Actually Paid
Versus Grainger Adjusted ROIC, 2020-2022
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See Appendix B of this Proxy Statement for a reconciliation of our 2022 adjusted ROIC, 2021 adjusted ROIC and 2020 adjusted ROIC to the most directly comparable GAAP financial measures.
Description of Relationship Between NEO Compensation Actually Paid and Daily Sales Growth
Daily sales growth for purposes of the relevant incentive program reflects certain non-GAAP adjustments as previously disclosed for certain program years. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of our 2021 daily sales growth and 2020 daily sales growth to the most directly comparable GAAP financial measures.
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our daily sales growth during fiscal 2020-2022.
PEO and Average NEO Compensation Actually Paid
Versus Grainger Daily Sales Growth, 2020-2022
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Description of Relationship Between Company TSR and Peer Group TSR
The following chart compares our cumulative TSR over the three-year period from 2020 through 2022 to that of the Dow Jones U.S. Industrial Suppliers Total Stock Market Index.
Total Shareholder Return: GWW vs. Dow Jones U.S. Industrial Suppliers Index
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Fiscal 2022 Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEO and other NEOs in fiscal 2022 to Company performance. The measures in this table are not ranked, and definitions for these terms can be found in Appendix B to this Proxy Statement.
​Most Important Performance Measures
(3 to 7 metrics w/o ranking)		​
​Adjusted ROIC(1)​
​Daily Sales Growth(2)​
​U.S. Share Gain(3)​
​Endless Assortment Segment Revenue Growth(4)​
​Total Company Adjusted Operating Margin Performance(5)​
​
(1)
Adjusted ROIC is a non-GAAP financial measure. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
​
(2)
Daily sales growth for purposes of the relevant incentive program reflects certain non-GAAP adjustments as previously disclosed for certain program years. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
​
(3)
U.S. share gain is a relative metric which refers to the High-Touch Solutions—U.S. business daily sales growth less estimated U.S. MRO market growth.
​
(4)
Daily sales growth for Endless Assortment segment.
​
(5)
Total Company adjusted operating margin change is a non-GAAP measure and for purposes of the annual incentive program. See Appendix B of this Proxy Statement for information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
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The Company is asking its shareholders for their non-binding advisory approval of the 2022 compensation of its Named Executive Officers (NEOs).
At our 2022 Annual Meeting of Shareholders, shareholders provided a clear endorsement of the Company’s executive compensation programs with approximately 91.5% voting in favor of our NEO compensation.
As described in the “Compensation Discussion and Analysis” beginning on page 47, the 2022 NEO compensation programs remain consistent with the program described to shareholders in our 2022 Proxy Statement and reflects:
•
Pay for Performance Approach: Our programs align pay with performance in the best interest of our shareholders.
​
•
Balanced and Sound Pay Practices: The Company sets target compensation to approximate the market median of companies that are of similar size and complexity and rewards long-term performance while not encouraging excessive risk taking.
​
•
Delivered strong 2022 results, far exceeding expectations: In 2022, the Company delivered strong financial performance, finishing the year with full year sales of $15.2 billion up 16.5% on a reported basis or up 19.3% in daily, constant currency. This includes market outgrowth of approximately 775 basis points in the High-Touch Solutions—U.S. business. The Company expanded adjusted operating margins by 255 bps to 14.4%, realized adjusted diluted EPS of $29.66, up 49.5% versus prior year, produced 2022 return on invested capital (ROIC) of 41.0% on a reported basis and 40.6% on an adjusted basis and returned over $949 million to Grainger shareholders through dividends and share repurchases.(1)
​
•
Direct Link to Strategy: NEO pay is tied to near and long-term strategic objectives with the long-term incentive directly tied to gaining share in our High-Touch Solutions—U.S. business and propelling sales growth in our Endless Assortment segment over the next several years and our annual incentive program provided NEOs incentives to grow the business (sales growth) while achieving investment returns for the Company’s shareholders (ROIC).
​
We are asking our shareholders to vote "FOR"“FOR” the approval of the compensation of the Company'sCompany’s NEOs, as disclosed in the "Compensation“Compensation Discussion and Analysis"Analysis” section of this proxy statement,Proxy Statement, including the related tables, notes and narrative.

While this Say on Pay vote is advisory and non-binding, the Board of Directors and the Compensation Committee of the Board, which is comprised of independent Directors, value the opinions expressed by our shareholders and will consider the outcome of this Say on Pay vote when making future compensation decisions regarding the NEOs.

This Say on Pay vote is intended to address the 20202022 compensation of the NEOs as disclosed in the "Compensation“Compensation Discussion and Analysis"Analysis” as a whole rather than any specific item or amount of executive compensation.

Approval of the proposal requires the affirmative votes a majority of the shares of Grainger common stock present or represented by proxy and entitled to vote at the annual meeting. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not affect the outcome of the vote.

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The Company is required to seek a shareholder vote on the frequency of the advisory Say on Pay vote every six years. In 2011 and 2017, management recommended an annual advisory Say on Pay vote. The next advisory frequency vote is scheduledbeing conducted again this year as Proposal 4.

​
(1)
See Appendix B of this Proxy Statement for 2023.

information regarding compensation and non-GAAP financial measures, including a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.

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The Company is asking shareholders to cast an advisory vote on how often they wish to hold a shareholder advisory vote on Named Executive Officer compensation (Say on Pay). Shareholders are being asked to vote on whether the Say on Pay vote should occur every one year, every two years or every three years.
The Board of Directors and the Compensation Committee of the Board believe that shareholders should have a frequent opportunity to provide the Company with input on its executive compensation and therefore, recommend that shareholders vote for an annual (one year) interval for the shareholder advisory vote on Say on Pay.
If a majority of the votes are not cast for one option, the Board of Directors will consider the option of once every one, two or three years that receives the highest number of votes cast as the shareholders’ preferred choice of voting frequency for the advisory vote on Say on Pay. While the Board of Directors and the Compensation Committee of the Board value the opinions of the Company’s shareholders and will consider the outcome of the vote, because this vote is advisory and not binding on the Company, the Board and the Compensation Committee may decide it is in the best interests of the shareholders and the Company to hold an advisory vote on Say on Pay more or less frequently than the option receiving the most votes of shareholders.
You may cast your vote on your preferred choice of voting frequency by choosing the option of voting every one year, every two years, or every three years or you may abstain from voting, on the enclosed proxy card. Abstentions and broker non-votes will not affect the outcome of the vote. Shareholders are not voting to approve or disapprove the recommendation of the Board of Directors.

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EQUITY COMPENSATION PLANS

This table contains information as of December 31, 20202022 about Grainger'sGrainger’s equity compensation plans, all of which have been approved by Grainger'sGrainger’s shareholders.

​​​​​Number of common
shares to be
issued upon
exercise of
outstanding stock
options warrants,
and rights		​​​Weighted-average
exercise price
of outstanding
stock options,
warrants, and
rights		​​​Number of
common shares
available for
future issuance
under equity
compensation plans
(excluding
common shares
reflected in
the first column)		​
​Equity compensation plans approved by shareholders​​​
814,543(1)(2)
​​​
$262.39(3)
​​​
1,519,362(4)
​
​Equity compensation plans not approved by shareholders​​​0​​​N/A​​​0​
​Total​​​814,543​​​$262.39​​​1,519,362​
​
(1)
​ ​ ​ Number of common
shares to be issued
upon exercise of
outstanding stock
options warrants,
and rights





​ Weighted-average
exercise price of
outstanding stock
options, warrants,
and rights




​ Number of common shares
available for future
issuance under equity
compensation plans
(excluding common
shares reflected
in the first column)






​
​ ​​ ​​ ​​ ​​ ​​ ​​ ​​ ​​
  Equity compensation plans approved by shareholders   1,247,800(1)(2)   $258.15(3)   2,145,860(4)  
​ ​​ ​​​​ ​​ ​​ ​​ ​​​​
​ Equity compensation plans not approved by shareholders ​ 0 ​ N/A ​ 0 ​
​​​ ​​ ​​ ​​ ​​​​ ​​ ​​
  Total   1,247,800   $258.15   2,145,860  
​ ​​ ​​ ​​​​ ​​ ​​ ​​ ​​
(1)
Represents 1,061,77926,210 shares of common stock outstanding under the 2022 Incentive Plan, 735,198 shares of common stock outstanding under the 2015 Incentive Plan, 166,02133,135 shares of common stock outstanding under the 2010 Incentive Plan, and 20,000 shares of common stock outstanding under the 1990 Incentive Plan.

​
(2)

Includes an aggregate of 337,414211,032 RSUs that are to be settled by the issuance of shares of common stock on a 1-for-1 basis. It also includes 150,212 Director's155,190 deferred stock units to be settled upon each Director'sDirector’s retirement. Additionally, it includes 97,88091,959 performance shares which will vest and settle between 20212023 and 2023.2025. The number of performance shares vested is dependent on the Company sales and/orresults of the three-year average ROIC performance versus target.

metrics detailed in the Executive Compensation section.
​
(3)

Weighted-average exercise price of outstanding stock options; excludes RSUs, performance shares, and Director'sdeferred stock units.

​
(4)

Represents shares of common stock authorized for issuance under the 20152022 Incentive Plan in connection with awards of stock options, stock appreciation rights, stock units, shares of common stock, RSUs of common stock and other stock-based awards. Under the 2015 Incentive2022 Plan, all shares issued pursuant to "Full“Full Value Awards" (awardsAwards” ​(awards other than stock options or stock appreciation rights which are settled by the issuance of shares, e.g., restricted stock, RSUs, Director'sdeferred stock units, or other stock-based awards) may be granted with the limit of no more than one million (1,000,000) shares of the Share Authorization. There are no shares of common stock available for future issuance under other plans.
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TRANSACTIONS WITH RELATED PERSONS

Grainger's

Grainger’s Business Conduct Guidelines require that conflicts of interest in any form be avoided. The Board has adopted written policies and procedures, to be applied by the BANC, for the review, approval, or ratification of any transactions with related persons. Those policies and procedures apply to any proposed transaction in which Grainger is a participant, the amount involved exceeds $120,000, and any Director, executive officer, or significant shareholder or any immediate family member of such a person has a direct or material indirect interest. The policy requires that any such proposed transaction be previously reviewed by the BANC to determine, among other things, the benefits of the transaction to Grainger, the availability of other sources of comparable products or services, and whether the terms of the proposed transaction are comparable to those provided to unrelated third parties. The BANC determined that the Company did not engage in any related person transactions in 2020.

2022.

In the ordinary course of its operations during 2020,2022, Grainger engaged in various types of transactions with organizations with which Grainger Directors are associated in their principal business occupations or otherwise. Specifically, in the ordinary course of its business during 2020,2022, Grainger bought products and/or services from, or sold products and/or services to, companies with which Mses. Jaspon, Perez and Slavik Williams, and Messrs. Adkins, Santi, Watson and White are or were associated as senior executives or otherwise as of December 31, 2020.2022. In no instance did the total amount of the purchases from or sales to any such company during 20202022 represent more than 0.188%0.177% of the consolidated gross revenues of that company for the year or more than 0.217%0.188% of the consolidated gross revenues of Grainger for the year. We believe that such transactions have been conducted on an arms'arms’-length basis and do not represent a material interest to the Directors.

In addition, as part of its overall 20202022 charitable contributions program, Grainger made donations to tax-exempt organizations with which one or more Directors serve as officers, directorsDirectors or trustees. In no instance did the total amount of the contributions to any charitable organization exceed $8,000$35,900 during 2020.

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2022.

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QUESTIONS AND ANSWERS

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PROXY MATERIALS

VIRTUAL MEETING

What is the purpose of this Proxy Statement?
​

How do I attend the virtual Annual Meeting of Shareholders?

To virtually attend the annual meeting, go to the virtual Annual Meeting Website at www.virtualshareholdermeeting.com/GWW2021; then, you must enter the 16-digit control number found on your proxy card or voting instruction form (the "Control Number").

How do I vote during the virtual meeting?

You may vote your shares and submit your questions during the virtual annual meeting by entering your Control Number and following the instructions also available on the Annual Meeting Website. You may vote during the virtual meeting by going to www.virtualshareholdermeeting.com/GWW2021.

PROXY MATERIALS

What is the purpose of this proxy statement?

This proxy statementProxy Statement relates to the 20212023 annual meeting of shareholders of Grainger, to be held on April 28, 2021,26, 2023, and any adjournment of that meeting to a later date. It contains information intended to help you make your voting decisions. We are sending this proxy statementProxy Statement to you because Grainger'sGrainger’s Board of Directors is soliciting your proxy to vote your shares at the meeting. This proxy statementProxy Statement and other proxy-soliciting materials were first sent or made available to shareholders on or about March 18, 2021.

16, 2023.
What does it mean if I receive more than one set of proxy materials?
​

What does it mean if I receive more than one set of proxy materials?

Receiving multiple sets of proxy-soliciting materials generally means that your Grainger shares are held in different names or in different accounts. You must sign, date and return all proxy forms to ensure that all of your shares are voted.

May I revoke my proxy?
​

May I revoke my proxy?

Yes. You may revoke your proxy at any time before the voting at the meeting. You can do so in one of the following ways:

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VOTING INFORMATION

Who is entitled to vote?
​

Who is entitled to vote?

Holders of shares of common stock outstanding on Grainger'sGrainger’s books at the close of business on March 1, 2021,6, 2023, the record date for the meeting, may vote. There were 52,340,99350,262,705 shares of common stock outstanding on that date.

What is the difference between holding shares as “shareholder of record” and as “beneficial owner”?
​

What is the difference between holding shares as "shareholder of record" and as "beneficial owner"?

If your shares are registered directly in your name with Grainger'sGrainger’s transfer agent, Computershare Trust Company, N.A., you are the shareholder of record with respect to those shares and you have the right to instruct us directly how to vote your shares or to vote during the virtual meeting.

If your shares are held in street name by a brokerage firm, bank, or other nominee, you are the beneficial owner of the shares. Your nominee is required to vote your shares according to your direction. If you do not instruct your nominee how you want your shares voted, your shares cannot be voted for the election of Directors, or on the advisory vote on the compensation of Grainger'sGrainger’s Named Executive Officers (NEOs). or on the frequency of the shareholder advisory votes on the compensation of Grainger’s NEOs. Please contact your brokerage firm, bank, or other nominee with instructions to vote your shares for the election of Directors, and on the advisory vote on the compensation of Grainger'sGrainger’s NEOs, on the frequency of the shareholder advisory votes on the compensation of Grainger’s NEOs, and on other matters to be considered at the meeting.

If my shares are held in “street name,” can my broker vote for me?
​

If my shares are held in "street name," can my broker vote for me?

Unless you have given specific voting instructions to your broker, your broker cannot vote your shares on the election of Directors, on the advisory vote related to executive compensation, on the frequency of the shareholder advisory votes on the compensation of Grainger’s NEOs or on any non-routine matters.

What is the voting standard for each annual meeting agenda items?


​
​  Annual Meeting Agenda
Item

​Voting
Standard

​Frequency of
Vote

​Cumulative
Voting?

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What is the voting standard for each annual meeting agenda items?
​
​​ ​​ ​​ ​​ ​​
Election of DirectorsMajority VotingAnnualYes
​ ​​ Meeting Agenda Item​​​​ ​​ ​​ ​​ Voting Standard​​​Frequency of Vote​​​Cumulative
Voting?		​
​Election of Directors​​​Majority Voting​​​Annual​​​Yes​
​Ratification of Independent Auditor​Majority Voting​Annual​No​
​ ​​​​ ​​ ​​ Majority Voting​​​​ Annual​​​No​
​(Non-binding) Advisory Vote on NEO Compensation ("(“Say on Pay"Pay”)Majority VotingAnnualNo
​ ​​ ​​ ​​​​ ​​ ​​ ​​ Majority Voting​​​Annual​​​No​
​Frequency of the (Non-binding) Advisory Vote on NEO Compensation (“Say When on Pay”)​​​Highest number of votes cast for one of the options of every one year, two years, or three years​​​Every 6 years​​​No​
What is cumulative voting? How many votes do I have?

​

What is cumulative voting? How many votes do I have?

YouUnder Illinois law and Grainger’s By-laws, you have the right to cumulative voting in the election of Directors. This means that you have a number of votes in the election equal to the number of shares you own multiplied by the number of Directors being elected. You may cast those votes for the nominees as you choose. For example, you may cast all your votes for one nominee, or you may apportion your votes among two or more nominees.

Cumulative voting is only available for Director elections. In any matter other than the election of Directors, each of your shares is entitled to one vote.

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Does Grainger have majority voting for the election of Contents

Directors with a resignation policy for Directors failing to receive the required majority vote?
​

Does Grainger have majority voting for the election of Directors with a resignation policy for Directors failing to receive the required majority vote?

Yes. As required under Illinois law, Directors may only be elected by the votes of a majority of the shares of Grainger common stock present or represented by proxy and entitled to vote at the annual meeting. Moreover, in accordance with the Company'sCompany’s Criteria for Membership on the Board of Directors, any Director standing for re-election (including the 1311 nominees standing for election at the annual meeting) who fails to receive the required majority vote is expected to tender his or her resignation for consideration by the BANC. The BANC will consider the resignation and make a recommendation to the Board of Directors concerning the acceptance or rejection of the resignation. The Board will then take formal action on the BANC'sBANC’s recommendation within 90 days after the results of the Director election at the annual meeting are certified. Following the Board'sBoard’s decision on the BANC'sBANC’s recommendation, the Company will publicly disclose the Board'sBoard’s decision.

What voting standard applies to the ratification of the appointment of the independent auditor?
​

What voting standard applies to the ratification of the appointment of the independent auditor?

Ratification of the appointment of the independent auditor requires the affirmative votes of a majority of the shares of Grainger common stock present or represented by proxy and entitled to vote at the annual meeting.

What voting standard applies to the advisory vote on the compensation of the NEOs?
​

What voting standard applies to the advisory vote on the compensation of the NEOs?

Although the shareholders'shareholders’ vote is advisory and therefore non-binding, the vote on the compensation of the Named Executive Officers (Say on Pay)—Grainger'sGrainger’s five highest paid executive officers whose compensation is discussed in the Compensation Discussion and Analysis section of this proxy statement—Proxy Statement—is determined by the affirmative votes of a majority of the shares of Grainger common stock present or represented by proxy and entitled to vote at the annual meeting.


How frequently does Grainger conduct an advisory vote on the compensation of its NEOs?

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How frequently does Grainger conduct an advisory vote on the compensation of its NEOs?
​
The Board of Directors has determined to hold an advisory vote on the compensation of the Named Executive Officers (Say on Pay) at every annual meeting of shareholders. Shareholders have the opportunity to cast an advisory vote on the frequency of Say on Pay votes at least every six years. At the 2017 annual meeting, the shareholders voted for one year as the frequency of the Say on Pay vote. The nextThere will be an advisory vote on the frequency of the Say on Pay vote will occur at Grainger'sGrainger’s 2023 annual meeting.

What voting standard applies to the vote on the frequency of the advisory vote on the compensation of the NEOs?
​

What if I don't indicate my voting choices?

If a majority of the votes are not cast for one of the options for the frequency of the advisory vote (one year, two years, or three years), the Board of Directors will consider the option that receives the highest number of votes cast as the shareholders’ preferred choice; however, this vote is advisory only and is not binding.

What if I don’t indicate my voting choices?
​
If Grainger receives your proxy in time to permit its use at the meeting, your shares will be voted in accordance with the instructions you indicate. If we have received your proxy and you have not indicated otherwise, your shares will be voted as recommended by Grainger'sGrainger’s Board. Specifically, your shares will be voted, either individually or cumulatively:

•

FOR the election of the 1311 Director nominees;

nominees named in the proxy statement;
​
•

FOR the proposal to ratify the appointment of the independent auditor; and

​
•

FOR the approval of the non-binding advisory vote on the compensation of Grainger'sGrainger’s NEOs; and
​
•
FOR ONE YEAR as the frequency for shareholder advisory votes on the compensation of Grainger’s NEOs.
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If you are a beneficial owner and the shares you own are held in street name by a brokerage firm, bank, or other nominee you must specifically instruct your nominee how you want your shares voted for the election of Directors, on the advisory resolution on the compensation of Grainger'sGrainger’s NEOs, and on the frequency of the shareholder advisory votes on the compensation of Grainger’s NEOs; otherwise, your nominee is not allowed to vote your shares. Please contact your brokerage firm, bank, or other nominee with instructions to vote your shares for the election of Directors and on other matters to be considered at the meeting.

How does discretionary voting apply?
​

How does discretionary voting apply?

Grainger is not aware of any matter not described in this proxy statementProxy Statement that will be presented for consideration at the meeting. If another matter is properly presented, your shares will be voted on the matter in accordance with the judgment of the person or persons voting the proxy unless your proxy withholds discretionary authority.

What constitutes a quorum at the meeting?
​

What constitutes a quorum at the meeting?

A majority of the outstanding shares entitled to vote on a matter must be present or represented by proxy at the annual meeting to constitute a quorum for consideration of that matter at the meeting. A quorum is necessary for valid action to be taken on the matter. Your shares will be present by proxy and count toward the quorum if you give us your proxy by telephone, by Internet, or by signing, dating, and returning a proxy form.

Where can I find the voting results?
​

How do I vote during the virtual meeting?

You may vote your shares and submit your questions during the virtual annual meeting by entering your Control Number and following the instructions also available on the Annual Meeting Website. You may vote during the virtual meeting by going to www.virtualshareholdermeeting.com/GWW2021.

Where can I find the voting results?

We will report the voting results on a Form 8-K within four business days after the end of our annual meeting.


What is the deadline for receipt of shareholder proposals for inclusion in the 2022 annual meeting proxy statement?

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What is the deadline for receipt of shareholder proposals for inclusion in the 2024 annual meeting Proxy Statement?
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A shareholder who intends to present a proposal at the next annual meeting of shareholders and who wishes the proposal to be included in our proxy materials for that meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (Exchange Act), must submit the proposal in writing to the Corporate Secretary at the address on the notice of virtual annual meeting accompanying this proxy statement.Proxy Statement. The proposal must be received by Grainger no later than November 18, 202117, 2023 and must comply with the applicable SEC rules and other requirements prescribed in our By-laws.

What is the procedure for nomination of Directors at the 2024 annual meeting of shareholders using Grainger’s proxy access By-laws?
​

What is the procedure for nomination of Directors at the 2022 annual meeting of shareholders using Grainger's proxy access By-laws?

A qualifying shareholder, or a group of up to 20 qualifying shareholders, owning 3% or more of the Company'sCompany’s outstanding shares of common stock continuously for at least the previous three years may nominate and include in Grainger's proxy statementGrainger’s Proxy Statement and proxy card qualifying Director nominees

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constituting up to the greater of two Directors or 20% of the Directors then serving on the Board, provided that the shareholder(s) and nominee(s) satisfy the requirements specified in our By-laws.

What is the procedure for other nominations of Directors or proposals to transact business at the 2024 annual meeting of shareholders?
​

What is the procedure for other nominations of Directors or proposals to transact business at the 2022 annual meeting of shareholders?

A shareholder entitled to vote for the election of Directors at an annual meeting and who is a shareholder of record on:

•

the record date for that annual meeting,

​
•

the date the shareholder provides timely notice to Grainger, and

​
•

the date of the annual meeting

​
may directly nominate persons for Director or make proposals of other business to be brought before the annual meeting, by providing proper timely written notice to the Corporate Secretary at the address on the notice of virtual annual meeting accompanying this proxy statement.

Proxy Statement.

Our By-laws require that written notice of proposals intended to be presented by a shareholder at the next annual meeting, but that are not intended for inclusion in our proxy statementProxy Statement for that meeting pursuant to Rule 14a-8 of the Exchange Act, be delivered no earlier than December 29, 2021,28, 2023, and no later than January 28, 2022.

26, 2024.

Our By-laws also require that written notice of nominees for the election of Directors intended to be made by a shareholder at the next annual meeting be delivered by no later than the date with respect to submission of shareholder proposals under Rule 14a-8 of the Exchange Act as set forth in the proxy statementProxy Statement for the preceding annual meeting of shareholders, which in this case is November 18, 2021.

17, 2023.

To be in proper written form, these notices must include certain information required by our By-laws, including information about the shareholder, any beneficial owner on whose behalf the nomination or proposal is being made, their respective affiliates or associates or others acting in concert with them, and any proposed Director nominee.

A copy of our By-laws is available under "Governance"“Governance” in the Investor Relations section of our website at http://invest.grainger.com/invest.grainger.com or may be obtained free of charge on written request to the Corporate Secretary at the address on the notice of virtual annual meeting accompanying this proxy statement.

Proxy Statement.


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INFORMATION NOT INCORPORATED INTO THIS PROXY STATEMENT

The

Neither the Company’s EEO-1 or ESG Reports, nor the information on our website (the Company’s websites, including http://invest.grainger.com/) is not invest.grainger.comand shall nothttp://www.GraingerESG.com, will be deemed to be a part ofincorporated into this Proxy Statement by reference or otherwise incorporated into any other filings we makethe Company makes with the SEC, except to the extent wethe Company specifically incorporate itincorporates any such information by reference.

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FORWARD-LOOKING STATEMENTS
From time to time in this Proxy Statement as well as in other written reports, communications and verbal statements, Grainger makes forward-looking statements that are not historical in nature but concern forecasts of Contents

​future results, business plans, analyses, prospects, strategies, objectives and other matters that may be deemed to be “forward-looking statements” under the federal securities laws. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “estimate,” “believe,” “expect,” “could,” “forecast,” “may,” “intend,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including references to assumptions.
The Company cannot guarantee that any forward-looking statement will be realized and achievement of future results is subject to risks and uncertainties, many of which are beyond the Company’s control, which could cause the Company’s results to differ materially from those that are presented.
Important factors that could cause actual results to differ materially from those presented or implied in the forward-looking statements include, without limitation: inflation, higher product costs or other expenses, including operational and administrative expenses; the impact of macroeconomic pressures and geopolitical trends, changes and events, including the impact of Russia’s invasion of Ukraine on the global economy, tensions across the Taiwan Straits and in overall relations with China, and the ramifications of these and other events; a major loss of customers; loss or disruption of sources of supply; the unknown duration and health, economic, operational and financial impacts of the global outbreak of the coronavirus disease 2019 and its variants (COVID-19); changes in customer or product mix; increased competitive pricing pressures; changes in third party practices regarding digital advertising; failure to enter into or sustain contractual arrangements on a satisfactory basis with group purchasing organizations; failure to develop, manage or implement new technology initiatives or business strategies, including with respect to the Company’s eCommerce platforms; failure to adequately protect intellectual property or successfully defend against infringement claims; fluctuations or declines in the Company’s gross profit margin; the Company’s responses to market pressures; the outcome of pending and future litigation or governmental or regulatory proceedings, including with respect to wage and hour, anti-bribery and corruption, environmental, regulations related to advertising, marketing and the Internet, consumer protection, pricing (including disaster or emergency declaration pricing statutes), product liability, compliance or safety, trade and export compliance, general commercial disputes, or privacy and cybersecurity matters; investigations, inquiries, audits and changes in laws and regulations; failure to comply with laws, regulations and standards, including new or stricter environmental laws or regulations; government contract matters; disruption or breaches of information technology or data security systems involving the Company or third parties on which the Company depends; general industry, economic, market or political conditions; general global economic conditions including tariffs and trade issues and policies; currency exchange rate fluctuations; market volatility, including price and trading volume volatility or price declines of the Company’s common stock; commodity price volatility; facilities disruptions or shutdowns; higher fuel costs or disruptions in transportation services; outbreaks of pandemic disease or viral contagions such as the COVID-19 pandemic; natural or human induced disasters, extreme weather and other catastrophes or conditions; effects of climate change; failure to execute on the Company’s efforts and programs related to environmental, social and governance matters; competition for, or failure to attract, retain, train, motivate and develop executives and key employees; loss of key members of management or key employees; changes in effective tax rates; changes in credit ratings or outlook; the Company’s incurrence of indebtedness or failure to comply with restrictions and obligations under its debt agreements and instruments and other factors that can be found in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent periodic reports filed on Form 10-K and Form 10-Q, which are available under “Financials” in the Investor Relations section of the Company’s website at http://invest.grainger.com.
Caution should be taken not to place undue reliance on the Company’s forward-looking statements and the Company undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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Appendix A—Categorical Standards for Director Independence
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APPENDIX A

CATEGORICAL STANDARDS FOR DIRECTOR INDEPENDENCE

Business Transactions.   A Director'sDirector’s independence will not be deemed to be impaired by reason of his or her service as an executive officer of another company that does business with Grainger if in each of the three most recent fiscal years the other company'scompany’s annual sales to Grainger are less than one percent (1%) of that company'scompany’s consolidated gross revenues and if in each of the three most recent fiscal years Grainger'sGrainger’s sales to the other company are less than one percent (1%) of that company'scompany’s consolidated gross revenues.

Tax-Exempt Contributions.   A Director'sDirector’s independence will not be deemed to be impaired by reason of his or her service as an officer, Director or trustee of a tax-exempt organization that receives contributions from Grainger if Grainger'sGrainger’s contributions to the organization are less than one percent (1%) of the organization'sorganization’s total annual contributions.

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Appendix B—Definitions and Non-GAAP Financial Measures
 and Definitions​

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APPENDIX B

DEFINITIONS

COMPENSATION AND NON-GAAP FINANCIAL MEASURES

"2018 AND DEFINITIONS

“Adjusted ROIC"EPS” means ROIC calculated using operatingtotal Company adjusted diluted earnings adjustedper share on a consolidated basis (as reconciled to its most directly comparable GAAP measure in Part II, Item 7 (page 20)29) of the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 20182022 filed with the SEC on February 28, 2019)21, 2023). The Company's GAAP financial statements are the source for all amounts used in the ROICtotal Company adjusted diluted earnings per share calculation. ROIC is calculated using operating earnings divided by
​Adjusted Earnings Per Share (EPS)​​​For the twelve months ended December 31,​​​Percent increase
from prior year		​
​2022​​​2021​​​%​
​Reported diluted earnings per share​​​​$30.06​​​​​$19.84​​​​​​51.5%​​
​
Non-GAAP adjustment(1)
​​​​$(0.40)​​​​​$—​​​​​​​​​
​Adjusted diluted earnings per share​​​​$29.66​​​​​$19.84​​​​​​49.5%​​
​
(1)
Reflects the divestiture of Cromwell’s enterprise software business completed in the fourth quarter of 2022.
​
“Adjusted net working assets (a five-point average sales”for the year-to-date). Net working assets are working assets minus working liabilities defined as follows: working assets equal Total assets less cash equivalents (part of Cash and cash equivalents; 5-point average of $173.6 million), deferred taxes, and investments in unconsolidated entities (part of Other Assets), plus the LIFO reserves (part of Inventories—net; 5-point average of $386.7 million). Working liabilities equal Total current liabilities less Short-term debt, Current maturities of long-term debt and Income taxes payable. For purposes of the 2018 MIP payout (previously disclosed2020-2022 PSU cycle refers to reported net sales and excludes the impact on results of Fabory and Grainger China business in the Company's 2019 Notice of Annual Meeting and Proxy Statement filed withperiods prior to divestiture as shown in the SEC on March 14, 2019) and the 2017-2019 PSU payout, the Compensation Committee has accepted the Company's calculation of 2018 reconciliation below labeled “Adjusted Operating Margin Reconciliation”.
“Adjusted ROIC, which was 28.5%.

"2019 Adjusted ROIC"operating earnings” means the Company's return on invested capital calculated usingtotal Company adjusted operating earnings adjustedon a consolidated basis (as reconciled to its most directly comparable GAAP measure in Part II, Item 7 (page 20)29) of the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 20192022 filed with the SEC on February 20,21, 2023). The GAAP financial statements are the source for all amounts used in the total Company adjusted operating earnings calculation.

For purposes of the 2020-2022 PSU cycle, “adjusted operating earnings” includes certain non-GAAP adjustments and excludes results of Fabory and Grainger China business in the periods prior to divestiture as shown in the reconciliation below labeled “Adjusted Operating Margin Reconciliation”.
“Adjusted operating margin” means total Company adjusted operating earnings divided by net sales on a consolidated basis (as reconciled to its most directly comparable GAAP measure in Part II, Item 7 (page 29) of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 21, 2023). The GAAP financial statements are the source for all amounts used in the total Company adjusted operating earnings calculation.
For purposes of the 2020-2022 PSU cycle, “adjusted operating margin” means adjusted operating earnings divided by adjusted net sales inclusive of certain non-GAAP adjustments and excludes results of Fabory and Grainger China business in the periods prior to divestiture as shown in the reconciliation below labeled “Adjusted Operating Margin Reconciliation”. Adjusted operating margin performance is calculated based on a three year average of adjusted operating earnings and the year-over-year change; for 2020 (-89 bps), for 2021 (+43 bps), and 2022 (+253 bps).

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​
​​​
​Adjusted Operating Margin Reconciliation
(in millions of dollars)		​​​For the twelve months ended December 31,​
​2022​​​2021​​​2020​​​2019​
​Reported net sales​​​​$15,228​​​​​$13,022​​​​​$11,797​​​​​$11,486​​
​
Business divestitures(1)
​​​​$—​​​​​$—​​​​​$(150)​​​​​$(302)​​
​Adjusted net sales (PSU)​​​​$15,228​​​​​$13,022​​​​​$11,647​​​​​$11,184​​
​Reported operating earnings​​​​$2,215​​​​​$1,547​​​​​$1,019​​​​​$1,262​​
​
Non-GAAP adjustments(2)
​​​​$(21)​​​​​$—​​​​​$308​​​​​$126​​
​Adjusted operating earnings​​​​$2,194​​​​​$1,547​​​​​$1,327​​​​​$1,388​​
​
Business divestitures(1)
​​​​$—​​​​​$—​​​​​$7​​​​​$(8)​​
​Adjusted operating earnings (PSU)​​​​$2,194​​​​​$1,547​​​​​$1,334​​​​​$1,380​​
​Reported operating margin​​​14.5%​​​11.9%​​​8.6%​​​11.0%​
​
Adjusted operating margin (PSU)(1)
​​​14.4%​​​11.9%​​​11.5%​​​12.3%​
​
(1)
Reflects the results of Fabory and Grainger China business in the periods prior to divestiture.
​
(2)
Reflects Grainger’s total restructuring—net, impairment charges and business divestiture (gains) losses.
​
“Adjusted ROIC” means the Company’s return on invested capital calculated using adjusted operating earnings (as reconciled to its most directly comparable GAAP measure in Part II, Item 7 (page 29, 27 and 27) of the Company’s Annual Report on Form 10-K for the fiscal years ended December 31, 2022, 2021 and 2020). The GAAP financial statements are the source for all amounts used in the ROIC calculation. ROIC is calculated using adjusted operating earnings divided by net working assets (a five-point average for the year-to-date). Net working assets are working assets minus working liabilities defined as follows: working assets equal total assets less cash equivalents (five-point average of $150.2 million)$192.6, $268.4, $745.2 million for the full year 2022, 2021 and 2020, respectively), deferred and prepaid income taxes, operating lease right-of-use assets and investments in unconsolidated entities, (part of Other Assets), plus the LIFO reserve (part of Inventories—net; five-point(five-point average of $414.1 million)$600.7, $461.9, $443.6 million for the full year 2022, 2021 and 2020, respectively). Working liabilities are the sum of trade payables, accrued compensation and benefits, accrued contributions to employees' profit-sharingemployees’ profit sharing plans, and accrued expenses. For purposes of the 20192022, 2021 and 2020 MIP and 2017-2019 PSU payouts,, the Compensation Committee has accepted the Company'sCompany’s calculation of 2019 Adjusted2022, 2021 and 2020 adjusted ROIC, which was 29.3%40.6%, 31.9% and 28.2%.

"

​2022 Adjusted ROIC Reconciliation
(in millions of dollars)		​​Q4’22​​Q3’22​​Q2’22​​Q1’22​​Q4’21​​​Value​
​Adjusted operating earnings [A]​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​$2,194​​
​Total Assets​​​$7,588​​​​$7,201​​​​$7,049​​​​$6,993​​​​$6,592​​​​​​​​​
​Less: Cash Equivalents​​​$208​​​​$259​​​​$184​​​​$217​​​​$95​​​​​​​​​
​Less: Deferred and prepaid income taxes​​​$20​​​​$29​​​​$31​​​​$14​​​​$46​​​​​​​​​
​Less: Right of Use Asset​​​$367​​​​$360​​​​$337​​​​$361​​​​$393​​​​​​​​​
​Plus: LIFO reserves​​​$693​​​​$647​​​​$606​​​​$547​​​​$510​​​​​​​​​
​Less: Working Liabilities​​​$1,923​​​​$1,744​​​​$1,703​​​​$1,650​​​​$1,490​​​​​​​​​
​Total Net Working Assets (5-point Avg) [B]​​​$5,763​​​​$5,457​​​​$5,399​​​​$5,298​​​​$5,077​​​​​$5,399​​
​Adjusted ROIC [A/B]​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​40.6%​

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​​​​
​​​
​2021 Adjusted ROIC Reconciliation
(in millions of dollars)		​​Q4’21​​Q3’21​​Q2’21​​Q1’21​​Q4’20​​​Value​
​Adjusted Operating Earnings [A]​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​$1,547​​
​Total Assets​​​$6,592​​​​$6,390​​​​$6,462​​​​$6,333​​​​$6,295​​​​​​​​​
​Less: Cash Equivalents​​​$95​​​​$161​​​​$377​​​​$387​​​​$322​​​​​​​​​
​Less: Deferred and prepaid income taxes​​​$46​​​​$46​​​​$61​​​​$14​​​​$21​​​​​​​​​
​Less: Right of Use Asset​​​$393​​​​$202​​​​$209​​​​$210​​​​$210​​​​​​​​​
​Plus: LIFO reserves​​​$510​​​​$458​​​​$450​​​​$446​​​​$446​​​​​​​​​
​Less: Working Liabilities​​​$1,490​​​​$1,528​​​​$1,560​​​​$1,436​​​​$1,391​​​​​​​​​
​Total Net Working Assets (5-point Avg) [B]​​​$5,077​​​​$4,911​​​​$4,705​​​​$4,732​​​​$4,797​​​​​$4,844​​
​Adjusted ROIC [A/B]​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​31.9%​
​2020 Adjusted ROIC Reconciliation
(in millions of dollars)		​​Q4’20​​Q3’20​​Q2’20​​Q1’20​​Q4’19​​​Value​
​Adjusted Operating Earnings [A]​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​$1,327​​
​Total Assets​​​$6,295​​​​$6,583​​​​$7,194​​​​$7,177​​​​$6,005​​​​​​​​​
​Less: Cash Equivalents​​​$322​​​​$621​​​​$1,368​​​​$1,271​​​​$144​​​​​​​​​
​Less: Deferred and prepaid income taxes​​​$21​​​​$40​​​​$43​​​​$75​​​​$22​​​​​​​​​
​Less: Right of Use Asset​​​$210​​​​$210​​​​$210​​​​$210​​​​$223​​​​​​​​​
​Plus: LIFO reserves​​​$446​​​​$466​​​​$444​​​​$436​​​​$426​​​​​​​​​
​Less: Working Liabilities​​​$1,391​​​​$1,409​​​​$1,327​​​​$1,443​​​​$1,350​​​​​​​​​
​Total Net Working Assets (5-point Avg) [B]​​​$4,797​​​​$4,769​​​​$4,690​​​​$4,614​​​​$4,692​​​​​$4,712​​
​Adjusted ROIC [A/B]​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​28.2%​
��Daily sales” refers to net sales for the period divided by the number of selling days for the period. Daily sales for purposes of the relevant incentive program reflects certain non-GAAP adjustments as previously disclosed. Please see below for details regarding our 2021 organic, daily sales and 2020 Adjusted ROIC" meansorganic, daily sales in constant currency definitions.
“Daily sales growth” refers to the Company's return on invested capital calculated using operating earnings, adjusted (as reconciledgrowth in daily sales compared to itsprior year. Daily sales growth for purposes of the relevant incentive program reflects certain non-GAAP adjustments as previously disclosed. Please see below for details regarding our 2022 daily sales growth and a reconciliation of our 2021 organic, daily sales growth and 2020 organic, daily sales growth in constant currency to the most directly comparable GAAP measure in Part II, Item 7 (page 27)financial measures.
2022:For purposes of the Company's Annual Report2022 MIP:
•
“daily sales growth” refers to the growth in daily sales. The following table outlines the reconciliation of reported sales growth to daily sales growth on Form 10-Ka constant currency basis:
​
​2022 Daily Sales Growth Reconciliation​​​Twelve Months Ended
December 31, 2022		​
​Reported sales​​​​​16.9%​​
​
Day impact(1)
​​​​​0.4%​​
​Daily sales​​​​​16.5%​​
​
Foreign exchange(2)
​​​​​(2.8)%​​
​Daily, constant currency sales​​​​​19.3%​​
​
(1)
Reflects total Company net sales for the fiscal year ended December 31, 2020 filed withperiod divided by the SEC on February 24, 2021). The GAAP financial statements are the source for all amounts usednumber of U.S. selling days in the ROIC calculation. ROICperiod. There were 255 and 254 sales days in the full year 2022 and 2021, respectively.
​

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​
​​​
(2)
Foreign exchange is calculated using operating earningsby the difference of local currency sales at the current year average rate and at the prior year average rate for the period.
​
2021:For purposes of the 2021 MIP:
•
“organic, daily sales” refers to organic, daily sales and excludes results of Fabory and Grainger China in the periods prior to divestiture and the liquidation of Zoro Tools Europe.
​
•
“organic, daily sales growth” refers to growth of organic, daily sales. The following table outlines the reconciliation of reported sales growth to organic, daily sales growth:
​
​2021 Daily Sales Growth Reconciliation​​​Twelve Months Ended
December 31, 2021		​
​Reported sales​​​​​10.4%​​
​Day impact(1)​​​​​0.9%​​
​Daily sales​​​​​11.3%​​
​
Business divestitures(2)
​​​​​1.5%​​
​Organic, daily sales​​​​​12.8%​​
​
(1)
Reflects total Company net sales for the period divided by net working assets (a five-point average for the year-to-date). Net working assets are working assets minus working liabilities defined as follows: working assets equal total assets less cash equivalents (five-point averagenumber of $745.2 million), deferred taxes,U.S. selling days in the period. There were 254 and investments256 sales days in unconsolidated entities, plus the LIFO reserve (five-point averagefull year 2021 and 2020, respectively.
​
(2)
Reflects the Fabory and Grainger China business divestitures and the commenced liquidation of $443.6 million). Working liabilities are the sum of trade payables, accrued compensation and benefits, accrued contributions to employees' profit sharing plans, and accrued expenses. Zoro Tools Europe.
​
2020:For purposes of the 2020 MIPMIP:
•
“organic, daily sales” refers to organic, constant currency daily sales and 2018-2020 PRSU payouts,excludes results for Fabory and Grainger China business in the Compensation Committee has acceptedperiods prior to divestiture.
​
•
“organic, daily sales growth” refers to organic, constant currency daily sales growth and excludes results for Fabory and Grainger China business in the Company's calculationperiods prior to divestiture. The following table outlines the reconciliation of 2020 Adjusted ROIC, which was 28.2%.

"2018-2020 Adjusted Average ROIC" means the average of 2020 Adjusted ROIC (28.2%) plus of 2019 Adjusted ROIC (29.3%) plus 2018 Adjusted ROIC (28.5%). For purposes of the 2018-2020 PRSU payout, the Compensation Committee has accepted the Company's calculation of 2018-2020 Adjusted Average ROIC, which was 28.6%.

​

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​
reported sales growth to organic, constant currency daily sales growth:
​

​

​

2020 Daily Sales Growth Reconciliation

​

​​Twelve Months Ended
December 31, 2020		​

​

​

​		Reported sales

​

​

Appendix B—Definitions and Non-GAAP Financial Measures
​​​2.7%​​
​
Day impact(1)
​​​​​(0.4)%​​
​Daily sales​​​​​2.3%​​
​
Business divestitures(2)
​​​​​1.3%​​
​Organic, daily sales​​​​​3.6%​​
​
Foreign exchange(3)
​​​​​(0.1)%​​
​Organic, daily, constant currency sales​​​​​3.5%​​
​
(1)
Reflects total Company net sales for the period divided by the number of U.S. selling days in the period. There were 256 and 255 sales days in the full year 2020 and 2019, respectively.

​

"

(2)
Reflects the Fabory and Grainger China business divestitures.
​
(3)
Foreign exchange is calculated by the difference of local currency sales at the current year average rate and at the prior year average rate for the period.
​
“Endless Assortment businesses" is one of two of Grainger's business models, where the Company's endless assortment businesses are focused on providing a simple, transparent and streamlined experience for customers to shop millions of products and includes Zoro Tools, Inc. in the U.S. and MonotaRO Co., Ltd. in Japan. Effective January 1, 2021, Grainger has established the Endless Assortment reportable segment, which includes Zoro Tools, Inc., MonotaRO Co., Ltd., and Zoro UK Limited.

"Endless assortment businesses' revenue growth" ” for purposes of the PSUs granted in 20202020-2022 PSU cycle, refers to the Company's revenuedaily sales growth attributable to Zoro Tools, Inc. in the U.S. and MonotaRO Co., Ltd. in Japan and will be calculated based on a three-year average year-over-year sales growth in U.S. dollars, U.S. days.


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​​​​
​​​
​Endless Assortment Businesses
Revenue Growth Reconciliation
(in millions of dollars)		​​​Twelve Months Ended
December 31, 2022		​​​Twelve Months Ended
December 31, 2021		​​​Twelve Months Ended
December 31, 2020		​
​Reported sales​​​​​8.1%​​​​​​18.7%​​​​​​17.9%​​
​
Day impact(1)
​​​​​(0.4)%​​​​​​0.9%​​​​​​(0.4)%​​
​Daily sales���​​​​7.7%​​​​​​19.6%​​​​​​17.5%​​
​
(1)
Daily sales are defined as the Endless Assortment businesses reported sales for purposesthe period divided by the number of U.S. selling days in the 2020-2022 PSU cycle.

period. There were 255, 254, 256, and 255 sales days in the full year 2022, 2021, 2020, and 2019, respectively.

​
“Endless Assortment segment revenue growth” refers to daily sales growth associated with the Endless Assortment reportable segment.
For purposes of the PSUs granted in 2021 endless assortment businesses'and 2022, Endless Assortment segment revenue growth will refer to revenue growth associated with the new Endless Assortment reportable segment effective January 1, 2021 which includes Zoro Tools, Inc., MonotaRO Co., Ltd., and Zoro UK Limited, and will be calculatedis based on a three-year average.

"High-Touch Solutions

For purposes of the 2021-2023 PSU cycle, Endless Assortment segment revenue growth is based on year-over-year sales growth in U.S. dollars, U.S. days.
For purposes of the 2022-2024 PSU cycle, Endless Assortment segment revenue growth is based on year-over-year sales growth in constant currency, local days.
The following table outlines the reconciliation of Endless Assortment segment reported sales growth to daily sales growth:
​Endless Assortment Segment
Revenue Growth Reconciliation		​​​Twelve Months Ended
December 31, 2022		​
​Reported sales​​​​​8.2%​​
​
Day impact(1)
​​​​​0.5%​​
​Daily sales​​​​​7.7%​​
​
(1)
Daily sales are defined as the Endless Assortment businesses reported sales for the period divided by the number of U.S. selling days in the period. There were 255 and 254 sales days in the full year 2022 and 2021, respectively.
​
As subsets of Endless Assortment revenue growth:
•
“MonotaRO daily sales growth” refers to the growth in daily sales growth associated with MonotaRO Co., Ltd. in Japan. The following table outlines the reconciliation of MonotaRO reported sales growth to local day and currency sales growth:
​
​MonotaRO Daily Sales Growth​​​Twelve Months Ended
December 31, 2022		​
​Reported sales​​​​​0.8%​​
​
Local day impact(1)
​​​​​0.4%​​
​Local daily sales​​​​​1.2%​​
​
Foreign exchange(2)
​​​​​(18.7)%​​
​Local days and currency​​​​​19.9%​​
​
(1)
Local daily sales reflects the MonotaRO sales for the period divided by the number of MonotaRO selling days in the period. There were 242 and 243 sales days in the full year 2022 and 2021, respectively.
​
(2)
Foreign exchange is calculated by the difference of local currency sales in local days and reported sales in U.S. currency in MonotaRO local days. MonotaRO sales translated to U.S currency is calculated by the difference of local currency sales at the current year average rate and at the prior year average rate for the period.
​

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Appendix B—Non-GAAP Financial Measures and Definitions​
​
​​​
•
“Zoro U.S. daily sales growth” refers to the change in daily sales growth associated with Zoro Tools, Inc. in the U.S. The following table outlines the reconciliation of Zoro Tools, Inc. in the U.S. reported sales growth to daily sales growth:
​
​Zoro U.S. Daily Sales Growth​​​Twelve Months Ended
December 31, 2022		​
​Reported sales​​​​​22.8%​​
​
Day impact(1)
​​​​​(0.5)%​​
​Daily sales​​​​​22.3%​​
​
(1)
Daily sales reflects the Zoro U.S. sales for the period divided by the number of U.S. selling days in the period. There were 255 and 254 in the full year 2022 and 2021, respectively.
​
“Endless assortment model"” refers to one of two of Grainger'sGrainger’s business models, where the Company'sCompany’s endless assortment businesses are focused on providing a simple, transparent and streamlined experience for customers to shop millions of products and includes the following Endless Assortment businesses: Zoro Tools, Inc. in the U.S.; MonotaRO Co., Ltd. in Japan; and Zoro UK Limited.
“High-touch solutions model” refers to one of two of Grainger’s business models, where the Company’s high-touch solutions businesses provide value-added maintenance, repair and operating (MRO) solutions that are rooted in deep product knowledge and customer expertise primarily in North America. Effective January 1, 2021, Grainger has establishedAmerica and includes the High Touch Solutions—North America reportable segment, which includes thefollowing Grainger-branded businesses in the U.S., Canada, Mexico and Puerto Rico.

"Long-term compensation" consists of stock options, PRSUs, PSUs, and retirement profit sharing. Annual retirement profit sharing contributions are based on the Company's short-term performance; distributions are restricted, with full vesting of contributions once a participant has achieved five years of service with the Company as described further under "Long-Term Incentives" and "Other Benefits."

"Organic Daily Sales"

“High-Touch Solutions—U.S. business” refers to organic constant currencyGrainger-branded businesses in the U.S. that form part of the high-touch solutions model.
“U.S. share gain” or “outgrowth” is a relative metric using High-Touch Solutions—U.S. business daily sales and excludes results for Fabory (post June 30, 2020) and Grainger China (post August 21, 2020) in the prior year period to reflect the completed divestitures. The following table outlines the reconciliation of reported sales growth to organic, constant currency daily sales growth:

​Daily Sales Growth, Constant Currency
(in millions of dollars)

​Twelve Months Ended
December 31, 2020

​
​ ​​ ​​ ​​ ​​
Reported sales2.7%
​ ​​ ​​ ​​​​
​Day impact​(0.4)​
​​​ ​​ ​​ ​​
Daily sales2.3%
​ ​​ ​​ ​​​​
​Business divestitures(1)​1.3​
​​​ ​​ ​​ ​​
Organic daily sales3.6%
​ ​​ ​​ ​​​​
​Foreign exchange​(0.1)%​
​​​ ​​ ​​ ​​
Organic, daily, constant currency sales3.5%
​ ​​ ​​ ​​​​
(1)
Represents the results of the Fabory business (divested on 6/30/2020) and the Grainger China business (divested on 8/21/2020).

"Peer group" is the Company's comparator group in the 2020 Deloitte Consulting Compensation Study as described further under "Compensation Comparator Group."

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​

​

​

​

​


​


​

​



​

"Performance-Based Compensation" consists of the annual incentive plan, long-term incentives, and retirement profit sharing as described further under "Annual Incentives" and "Long-Term Incentives."

"ROIC" means the Company's return on invested capital calculated using operating earnings divided by net working assets.

"Total Company Adjusted Operating Margin" means the Company's adjusted operating earnings over net sales on a consolidated basis using operating earnings, adjusted (as reconciled to its most directly comparable GAAP measure in Part II, Item 7 (page 27) of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 24, 2021). The GAAP financial statements are the source for all amounts used in the Total Company Adjusted Operating Margin calculation. For purposes of the PSUs granted in 2021, adjusted operating margin will be calculated based on a three-year average.

"U.S. share gain" means the Company's daily sales growth calculated under its former U.S. reportable segment less estimated U.S. MRO market growth. The U.S. MRO market is based on Company estimates using a compilation of external market data.

For purposes of the PSUs granted in 2020, 2021, U.S. share gain will referand 2022, refers to U.S. daily sales growth under the new High-Touch Solutions—North AmericaSolutions N.A. reportable segment effective January 1, 2021 less estimated U.S. MRO market growth of each respective year and will be calculated based on a three-year average. The U.S. MRO market is based on Company estimates using a compilation of external market data.

​

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Table

For purposes of Contents

LOGO

the 2020-2022 PSU cycle, the three year average was based on actual performance for 2020 (+805 bps), 2021 (+77 bps) and 2022 (+781 bps). The following table outlines the reconciliation of reported sales growth to daily sales growth for the High-Touch Solutions—U.S. business.
​High-Touch Solutions—U.S. Business Daily Sales Growth​​​Twelve Months Ended
December 31, 2022		​​​Twelve Months Ended
December 31, 2021		​​​Twelve Months Ended
December 31, 2020		​
​Reported sales​​​​​20.3%​​​​​​10.2%​​​​​​2.9%​​
​
Day impact(1)
​​​​​(0.5)%​​​​​​0.9%​​​​​​(0.4)%​​
​Daily sales​​​​​19.8%​​​​​​11.1%​​​​​​2.5%​​

​
(1)
Daily sales reflects the High-Touch Solutions—U.S. business sales for the period divided by the number of U.S. selling days in the period. There were 255, 254, 256, and 255 sales days in the full year 2022, 2021, 2020, and 2019, respectively.
​

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W.W. GRAINGER, INC.100 GRAINGER PARKWAYLAKE FOREST, IL 60045 W.W. GRAINGER, INC. The Board of Directors recommends you vote FOR the following: 1.Election of Directors Nominees: 1a.Rodney C. Adkins1b.V. Ann Hailey1c.Katherine D. Jaspon1d.Stuart L. Levenick1e.D.G. Macpherson1f.Neil S. Novich1g.Beatriz R. Perez1h.E. Scott Santi1i.Susan Slavik Williams1j.Lucas E. Watson1k.Steven A. White For !!!!!!!!!!! Against!!!!!!!!!!! Abstain !!!!!!!!!!! SCAN TO VIEW MATERIALS & VOTE w SCAN TO W.W. GRAINGER, INC. 100 GRAINGER PARKWAY LAKE FOREST, IL 60045 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of informationofinformation up until 11:59 p.m. ET on (1) April 25, 202123, 2023 for shares held in a Plan and (2) April 27, 202125, 2023 if you are a registered shareholder. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - GoELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to www.virtualshareholdermeeting.com/GWW2021 You may attendreduce the meetingcosts 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, vote during the meeting. Have the informationwhen prompted, indicate that is printedyou agree
to receive or access proxy materials electronically in the box marked by the arrow available and follow the instructions.future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. ET on (1) April 25, 202123, 2023 for shares held in a Plan.Plan and (2) April 25, 2023 if you are a registered shareholder. 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 havewehave provided or return itreturnit to Vote Processing, c/o Broadridge,oBroadridge, 51 Mercedes Way,Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D39226-P47496 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. W.W. GRAINGER, INC.V00886-P86444 The Board of Directors recommends you vote FOR the following: For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! ! ! 1. Election of Directors Nominees: 01) 02) 03) 04) 05) 06) 07) Rodney C. Adkins Brian P. Anderson V. Ann Hailey Katherine D. Jaspon Stuart L. Levenick D.G. Macpherson Neil S. Novich 08) 09) 10) 11) 12) 13) Beatriz R. Perez Michael J. Roberts E. Scott Santi Susan Slavik Williams Lucas E. Watson Steven A. White The Board of Directors recommends you vote FOR proposalsFORForAgainstproposals 2 and 3. For Against Abstain ! ! ! ! ! ! 2. Proposal2.Proposal to ratify the appointment of Ernst & Young Young!!LLP as independent auditor for the year ending DecemberendingDecember 31, 2021. 3. Say2023. 3.Say on Pay: ToPay proposal to approve on a non-binding advisorybasis the compensation of W.W. Grainger, Inc.'s Named !!Executive Officers. The Board of Directors recommends you vote1 Year2 Years3 Years1 Year for proposal 4. 4.Say When on Pay proposal to select on a!!!non-binding advisory basis the frequencyof the advisory vote on compensation of the Company'sW.W. Grainger, Inc.'s Named Executive Officers. NOTE: In their discretion upon such other matters as may properlymayproperly come before the meeting or any adjournment or postponementorpostponement thereof. Abstain !! Abstain ! 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

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This material is being sent to you by reason of your being a registered shareholder or your participation in one or more of the following plans available to eligible employees of W.W.ofW.W. Grainger, Inc. and/or its subsidiaries: W.W. Grainger, Inc. Retirement Savings Plan W.W. Grainger, Inc. 401(k) Plan Employee Stock Purchase Plan Important Notice Regarding the Availability of Proxy Materials for the Virtual Annual Meeting:The Notice & Proxy Statement, and the Annual Report are available at www.proxyvote.com. D39227-P47496V00887-P86444 W.W. GRAINGER, INC. Virtual Annual Meeting of Shareholders April 28, 202126, 2023 10:00 AM CDT This proxy is solicited by the Board of Directors The undersigned hereby appoints D.G. Macpherson and John L. Howard,Deidra C. Merriwether, and each of them, proxies of the undersigned with full power of substitution to represent the undersigned and to vote all of the shares of the Common Stock of W.W. Grainger, Inc.,which the undersigned is entitled to vote at the Virtual Annual Meeting of Shareholders of W.W. Grainger, Inc., to be held on April 28, 2021onApril 26, 2023, at 100 Grainger Parkway, Lake Forest, IL 60045, and at any and all adjournments thereof, with all the powers the undersigned would possess if personally present and voting. A majority of proxies or substitutes who shall be present at the meeting may exercise all powers hereunder. All proxies will be voted as specified. If no specification is made, the
proxy will be voted FOR items 1, 2 and 3.3 and for 1 YEAR for item 4. The proxy holders reserve the right to cumulate votes and cast such votes in favor of the election of some or all of the applicable director nominees in their sole discretion. Continued and to be voted, signed and dated on reverse side


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