UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Information Required In Proxy Statement

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

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☒ Definitive Proxy Statement

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ARTHUR J. GALLAGHER & CO.

(Name of Registrant as Specified In Its Charter)

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

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Message To Our Stockholders

We had another outstanding year in 2023. On a combined basis, our core brokerage and risk management segments produced adjusted revenue1 growth of 18.7% (to $9.9 billion) and adjusted EBITDAC1 growth of 20.5% (to $3.2 billion). We achieved organic revenue growth of 9.8% in our core brokerage and risk management segments.

☐ 

Dear Fellow Stockholder,

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

March 22, 2024

(1) 
Title

On behalf of each classour Board of securitiesDirectors, I invite you to which transaction applies:

(2) Aggregate numberattend our 2024 Annual Meeting of securitiesStockholders. We will be conducting our Annual Meeting virtually again this year. If you are not able to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuantattend, we encourage you to Exchange Act Rule 0-11 (set forthvote by proxy. These proxy materials contain detailed information about the amountmatters on which we are asking you to vote. We hope you will read these materials and then vote in accordance with the filing feeBoard’s recommendations. Your vote is calculatedvery important to us.

Financial Performance. We had another outstanding year in 2023. On a combined basis, our core brokerage and state how itrisk management segments produced adjusted revenue1 growth of 18.7% (to $9.9 billion) and adjusted EBITDAC1 growth of 20.5% (to $3.2 billion). We achieved organic revenue growth of 9.8% in our core brokerage and risk management segments. We completed acquisitions representing $885.1 million in estimated annualized revenue and made significant progress integrating the Wills Re and Buck acquisitions. It was determined):

truly a fantastic year for our franchise, and I am excited about our future.

(4) Proposed maximum aggregate value

Board of transaction:

Directors. Our Board of Directors is comprised of a group of committed and highly qualified individuals who care deeply about our company and bring a diversity of experiences and perspectives to our Board deliberations. Our directors’ diverse professional backgrounds, skill sets and independent thought leadership have been invaluable to me and the management team in establishing our long-term business strategy, executing on that strategy and managing both short- and long-term risks facing the company.

(5) Total fee paid:

☐ Fee paid previously with preliminary materials.

☐ Check box if any part

After 18 years of service, William Bax is retiring from the Board and not standing for re-election at this year’s meeting. Bill served as Chairman of the feeAudit Committee for many years and most recently served as Chairman of the Risk and Compliance Committee. During Bill’s tenure we grew from $1.5 billion in revenue and 8,750 employees to $9.9 billion in revenue and 52,000 employees. Bill contributed significantly to these results and I want to personally express my appreciation for his years of dedicated service and contributions to our financial success.

I am excited to introduce a new director nominee, Deborah Caplan. I encourage you to review her qualifications and support her and all of our nominees. Including Ms. Caplan, we have added three new independent directors to our Board since 2020, a reflection of our continuing commitment to disciplined board refreshment.

Commitment to Stockholder Engagement. Our Board values the feedback and insights gained from our engagement with stockholders. During the past year, in addition to our regular discussions with stockholders regarding our financial results, we engaged with stockholders representing more than 50% of shares outstanding on corporate governance, broader sustainability matters and executive compensation. We are committed to including our stockholders’ perspectives in our deliberations and we believe that regular communication is offset as provided by Exchange Act Rule 0-11(a)(2)necessary in order to ensure thoughtful and identifyinformed consideration of evolving best practices in areas of concern for our stockholders.

Our Unique Culture. For nearly a century, we have proudly built a reputation of trust and integrity with our clients and colleagues. Now, more than ever, I believe that this culture and history of integrity is a true competitive advantage and a key differentiator when recruiting and retaining talent, attracting acquisition partners, retaining our valued clients and winning new business.

Looking Ahead. During the filingcourse of 2023, clients added exposures and coverages to their existing insurance programs, payrolls and covered lives increased, demand for whichour benefits consulting services remained strong, and we experienced growth in claim counts within our claims handling business. We believe increases in property/casualty rates will continue throughout 2024 due to rising loss costs, a hard reinsurance market, increased frequency of catastrophe losses and social inflation. In addition, the offsetting fee was paid previously. Identifycombination of increasing insurable values, a tight labor market and lower unemployment will likely contribute to increases in client insured exposures. Of course, our job is to help our clients navigate these market pressures. Our team of professionals continue to deliver the previous filing by registration statement number, or the Form or Schedulevery best insurance and the daterisk management advice to clients to help them succeed in this challenging environment.

On behalf of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

LOGO

LOGO

March 23, 2018

Dear Fellow Stockholder,

Thank you for your continued interest in Arthur J. Gallagher & Co. On behalf of our Board of Directors, I invite you to attend the 2018 Annual Meeting of Stockholders. If you are not able to attend in person, we hope that you will vote by proxy. These proxy materials contain detailed information about the matters on which we are asking you to vote. We hope you will read these materials and then vote in accordance with the Board’s recommendations. Your vote is very important to us.

At Gallagher, a strong culture and sound corporate governance are the foundations of our financial performance. This year’s proxy statement reflects our continued focus on performance and growth, an engaged and effective Board, and the culture we have built over the past 90 years.

2017 Performance. We delivered outstanding financial performance in 2017. Our combined brokerage and risk management operations grew adjusted revenue 8.7% to $4.6 billion while expanding our adjusted EBITDAC margin 46 basis points to 25.8%.1 We achieved these results by executing on each of our four key strategic objectives: organic revenue growth, merger and acquisition growth, productivity improvements and quality enhancements, and maintaining our unique Gallagher culture. I am pleased with our team’s performance and excited about our future.

Strong Momentum. We bring incredible value to our clients in every area of insurance, risk management and consulting, and I see many opportunities ahead for our business. In 2017, organic revenue growth was 4.5% for our combined brokerage and risk management operations, representing solid improvement over last year’s 3.1% organic growth.1 Looking forward, the organic growth prospects for our brokerage and risk management operations are attractive. We have a modest market share, the insurance industry is growing, and the world is becoming more risky and complex. As we continue to add capabilities and insights around emerging risks, we are confident in our ability to help any client, of any size, anywhere in the world. Our competitive position is growing stronger every day, and we are well positioned for future growth.

An Engaged and Effective Board. Our Board of Directors is comprised of a group of committed and highly qualified individuals who care deeply about our company and bring a diverse set of experiences and perspectives to our Board deliberations. Our directors’ skill sets and independent thought leadership have been invaluable to me and the management team in establishing our long-term business strategy and executing on that strategy. I am grateful to all of our directors for their dedicated service and I encourage you to support each director nominee on this year’s ballot.

90 Years. In 2017, we celebrated the 90th anniversary of the founding of Arthur J. Gallagher & Co. The values that were instilled in this company in 1927 by my grandfather and our founder, Arthur J. Gallagher, continue to drive our global team’s success today. These traits, articulated inThe Gallagher Way, include a collaborative and professional sales culture, an unwavering focus on our clients and a devotion to maintaining the highest standards of moral and ethical behavior. We believe that our culture is a true competitive advantage and a key differentiator when recruiting experienced talent, growing our own talent through our summer internship program, attracting new acquisition partners, retaining our valued clients and winning new business. As further testament to our unique culture, in 2018 we were pleased to be recognized by the Ethisphere Institute for the 7thconsecutive year as one of the World’s Most Ethical Companies®.

On behalf of our Board of Directors, thank you for your continued support. We look forward to welcoming you at our 2018 Annual Meeting.

Sincerely,

LOGO

our Board of Directors, thank you for your continued support. We look forward to welcoming you at our 2024 Annual Meeting.

LOGOSincerely,

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J. Patrick Gallagher, Jr.

Chairman of the Board and

President and Chief Executive Officer

1

See Exhibit A for reconciliations of non-GAAP measures.

Arthur J. Gallagher & Co.

2850 Golf Road

Rolling Meadows, Illinois 60008-4050

Notice of 20182024 Annual Meeting of Stockholders

Dear Stockholder:

We are pleased to invite you to the 2024 Annual Meeting of Stockholders of Arthur J. Gallagher & Co. (Gallagher or the company), which will be held as a virtual meeting, conducted via live audio webcast, on May 7, 2024, at 9:00 AM CDT. At the meeting, stockholders will vote on each item described below and we will transact such other business that properly comes before the meeting.

      DateVoting Items

Board Recommendations

May 15, 2018

      Time9:00 AM CDT
      Place2850 Golf Road
Rolling Meadows, Illinois 60008-4002
      Record dateStockholders of record at the close of business on March 20, 2018 are entitled to notice of and to vote at the Annual Meeting.
      Items of business

•  To elect
Elect each of the 109 nominees named in the accompanying Proxy Statement as directors to hold office until our 20192025 Annual Meeting.Meeting (Item 1)

FOR each nominee

•  To ratify
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2024 (Item 2)

FOR

•  To approve,
Approve, on an advisory basis, the compensation of our named executive officers.officers (Item 3)

•  To transact such other business that properly comes before the meeting.FOR

      Attending the
      Annual Meeting

Stockholders who wish to attend the Annual Meeting in person should bring a driver’s license, passport or other form of government-issued identification to verify their identities. In addition, if you hold your shares through a broker, you will need to bring either (1) a letter from your broker stating that you held Gallagher shares as of the record date, or (2) a copy of the notice of Annual Meeting document you received in the mail.

Stockholders of record at the close of business on March 18, 2024 are entitled to notice of and to vote at the Annual Meeting. The applicable voting standard and the treatment of abstentions and “broker non-votes” for each of these items are set forth on page 48 of the Proxy Statement. Stockholders may vote shares prior to the meeting by visiting www.proxyvote.com.

On the day of the Annual Meeting, stockholders of record as of the close of business on March 18, 2024, the record date, are entitled to participate in and vote at the Annual Meeting. To participate in the Annual Meeting, including to vote and ask questions, stockholders of record should go to the meeting website at www.virtualshareholdermeeting.com/AJG2024, enter the 16-digit control number found on your proxy card or Notice of Internet Availability of Proxy Materials, and follow the instructions on the website. If your shares are held in street name and your voting instruction form or Notice of Internet Availability of Proxy Materials indicates that you may vote those shares through the www.proxyvote.com website, then you may access, participate in, and vote at the Annual Meeting with the 16-digit access code indicated on that voting instruction form or Notice of Internet Availability of Proxy Materials. Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the Annual Meeting.

Stockholders are encouraged to log in to the Annual Meeting website before the Annual Meeting begins. Online check-in will be available approximately 10 minutes before the meeting starts. Additional information regarding the rules and procedures for participating in the virtual Annual Meeting will be set forth in our meeting rules of conduct, which stockholders will be able to view during the meeting.

We urge you to read the Proxy Statement for additional information concerning the matters to be considered at the Annual Meeting and then vote in accordance with the Board’s recommendations. Your vote is very important to us.

By Order of the Board of Directors

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WALTER D. BAY

GENERAL COUNSEL AND SECRETARY

March 22, 2024

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 15, 2018:7, 2024:

We are making this Notice of Annual Meeting, this Proxy Statement, and our 20172023 Annual Report, and the Notice of Internet Availability of Proxy Materials available on the Internet at www.materials.proxyvote.com/363576 and mailing copies of these Proxy Materialsproxy materials to certain stockholders on or about March 23, 2018. Stockholders of record at the close of business on March 20, 2018 are entitled to notice of and to vote at the Annual Meeting.22, 2024.

By Order of the Board of Directors

 

LOGO

WALTER D. BAY

SECRETARY

DATED: March 23, 2018

Proxy Statement

Table of Contents

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING1
CORPORATE GOVERNANCE

Proxy Statement

Table of Contents

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Corporate Governance

1

 

 

FREQUENTLY REFERENCED

TOPICS

Item 1 – Election of Directors

1

 

Key Governance Practices

8

 

Board Leadership Structure

8

 

 

 

 

 

Director Independence

9

 

 

Compensation Committee Interlocks and

Insider Participation

9

 

Board Diversity

1

 

Stockholder Views

9

 

 

 

 

 

 

Board’s Role in Risk Oversight

9

 

 

 

 

 

Sustainability Oversight and Activities

12

 

Director Qualifications

2

 

Other Board Matters

13

 

 

 

 

 

Director Compensation

14

 

 

 

 

 

Certain Relationships and Related Person Transactions

15

 

Board Skills and

3

 

Security Ownership by Certain Beneficial Owners and Management

16

 

Experience

 

 

Equity Compensation Plan Information

18

 

 

 

 

 

 

 

Key Governance Practices

8

 

Audit Matters

19

 

 

 

 

 

Item 2 – Ratification of Appointment of Independent Auditor

19

 

 

 

 

 

Audit Committee Report

20

 

Board’s Role in Risk

9

 

 

 

Oversight

 

 

Executive Compensation

21

 

 

 

 

 

Compensation Discussion and Analysis

21

 

 

 

 

 

Overview of Our Executive Compensation Program

22

 

Sustainability Oversight and

12

 

2023 Compensation

24

 

Activities

 

 

Compensation Decision-Making Process

30

 

 

 

 

 

Comparative Market Assessment

31

 

 

 

 

 

Compensation Committee Report

32

 

Compensation Discussion

21

Executive Compensation Tables

33

 

and Analysis

 

 

Item 3 – Advisory Vote to Approve the Compensation of Our Named Executive Officers

42

 

 

 

 

 

 

 

Pay versus Performance

43

 

 

Key Executive Compensation

23

 

CEO Pay Ratio Disclosure

47

 

 

Practices

 

 

 

 

 

 

 

 

 

 

Questions and Answers About the Annual Meeting

48

 

 

 

 

 

 

 

 

 

 

2023 Summary Compensation Table

33

 

Exhibits

A-1

 

 

 

 

 

 

Exhibit A: Information Regarding Non-GAAP Measures

A-1

 

 

 

 

 

 

Exhibit B: Resources

B-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Some of the statements in this proxy statement, including those related to our interim goal of 50% reduction in Scope 1 and Scope 2 carbon emissions on a per-employee basis by 2030 in addition to our goal of achieving net zero carbon emissions for our direct operations (Scope 1 and Scope 2) by 2050, may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and are subject to certain risks and uncertainties that could cause actual results to differ materially. Factors that could cause our future performance and actual results or outcomes to differ, possibly materially, from those expressed in the forward-looking statements include, but are not limited to, our ability to formulate and implement plans to reduce our Scope 1 and 2 carbon emissions as anticipated; our reliance on third parties, whose actions are outside our control; and the lack of widely accepted standards for measuring carbon emissions associated with insurance and resinsurance brokerage, consulting and claims managements activities, as well as other factors discussed in our 2023 Annual Report on Form 10-K, subsequent Quarterly Reports on Forms 10-Q, and the other filings we make with the Securities and Exchange Commission. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of, and are based on information available to us on, the date of the applicable document. We do not undertake any obligation to update any forward-looking statements made in or release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this proxy statement, which speaks as of the date issued, or to reflect new information, future or unexpected events or otherwise, except as required by applicable law or regulation. The inclusion of forward-looking and other sustainability-related statements in this proxy statement is not an indication that these contents are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current and forward-looking sustainability-related statements may be used based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

Item 1 – Election of Directors

2

Board Leadership Structure

8

Director Independence

8

Board Committees

9

Board’s Role in Risk Oversight

10

Other Board Matters

10

Director Compensation

11

Certain Relationships and Related Person Transactions

12

Security Ownership by Certain Beneficial Owners and Management

13

Equity Compensation Plan Information

15
AUDIT MATTERS

Item 2 –  Ratification of Appointment of Independent Auditor

16

Audit Committee Report

17
EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

18

Overview of Our Executive Compensation Program

18

2017 Compensation

20

Compensation Decision-Making Process

24

Comparative Market Assessment

25

Compensation Committee Report

26

Executive Compensation Tables

27

Item 3 –  Advisory Vote to Approve the Compensation of Our Named Executive Officers

37

CEO Pay Ratio

37
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING38
EXHIBITS

Exhibit A: Information RegardingNon-GAAP Measures

A-1

Exhibit B: Resources

B-1

LOGO

2018 PROXY STATEMENT

i

Important Information about the Annual Meeting

We are soliciting proxies to be voted at our 2018 Annual Meeting of Stockholders, and at any adjournment or postponement of the Annual Meeting. In connection with this solicitation of proxies, we have made the Notice of Annual Meeting of Stockholders, this Proxy Statement and Annual Report available to you on the Internet or, upon your request, delivered printed versions of these materials to you by mail. We refer to these materials collectively as our proxy materials. Information regarding the Annual Meeting is set forth below:

Purpose

Annual Meeting of Stockholders

Date and Time

May 15, 2018, 9:00 AM CDT

Place

2850 Golf Road, Rolling Meadows, Illinois 60008-4002

Record Date

March 20, 2018

Mailing Date

The Notice of Internet Availability of Proxy Materials was first mailed to stockholders of record, and these proxy materials were first made available to stockholders, on or about March 23, 2018.

Attending the Annual Meeting

Stockholders who wish to attend the Annual Meeting in person should bring a driver’s license, passport or other form of government-issued identification to verify their identities. In addition, if you hold your shares through a broker, you will need to bring either (1) a letter from your broker stating that you held Gallagher shares as of the record date, or (2) a copy of the notice of Annual Meeting document you received in the mail.

At the Annual Meeting, stockholders will act upon the proposals outlined in this Proxy Statement, including the election of directors, ratification of our independent registered public accounting firm, and“say-on-pay”. In addition, there will be a presentation by our Chairman and CEO and an opportunity for you to ask questions of the Board of Directors and our senior management team.

Set forth below is the applicable voting standard, the treatment of abstentions and “brokernon-votes,” and the Board’s voting recommendation for each item on the proxy card.

Voting Item

PageVoting StandardTreatment of Abstentions &
Broker Non-Votes		Board
Recommendation

Election of directors(Item 1)

2Majority of votes castNot counted as votes cast and therefore no effect

FOReach

nominee

Auditor ratification(Item 2)

16Majority of stock having voting power and presentAbstentions treated as votes against. Brokernon-votes not applicable (routine matter, so brokers can vote)FOR

Say-on-pay

(Item 3)

37Majority of stock having voting power and presentAbstentions treated as votes against. Brokernon-votes have no effectFOR

LOGO

2018 PROXY STATEMENT

1

Corporate Governance

ItemITEM 1 – Election of Directors

Evaluation Process for Director Candidates

The Nominating/Governance Committee considers director candidates suggested by stockholders, management or other members of the Board of Directors (Board) and may hire consultants or search firms to help identify and evaluate potential director candidates. In some cases, nominees have been individuals known to Board members or others. In the case of Deborah Caplan, one of our independent directors initially identified her as a potential director nominee. Prior to her nomination, Ms. Caplan met separately with the Chairman and CEO and each member of the Nominating/Governance Committee (which includes our Independent Lead Director), who considered her candidacy. After review and discussion, the Nominating/Governance Committee recommended, and the Board approved, Ms. Caplan's nomination at the annual meeting. For more information regarding how stockholders can submit a director candidate for consideration by the Nominating/Governance Committee, as well as for information regarding “proxy access,” see page 39.50.

The Nominating/Governance Committee evaluates director candidates by considering their judgment, qualifications, attributes, skills, integrity, gender, racial/ethnic diversity, international business or other experience relevant to our global activities and other factors it deems appropriate. The Committee looks for candidates who are leaders in the organizations with which they are affiliated and have experience in positions with a high degree of responsibility. The Committee seeks candidates free from relationships or conflicts of interest that could interfere with the director’s duties to Gallagher or our stockholders. The Committee also evaluates candidates’ independence and takes into account applicable requirements under applicable Securities and Exchange Commission (SEC) rules and New York Stock Exchange (NYSE) listing standards.

Board Diversity

TheOur Board nominees reflect diversity of gender, race/ethnicity, tenure, nationality, age, professional background and viewpoints. Of our nine director nominees, three are women and two are racially/ethnically diverse. We are committed to maintaining a diverse and inclusive Board. Our Board has adopted the “Rooney Rule” for director searches. Under this policy, our Governance Guidelines provide that, when recruiting director candidates, the Nominating/Governance Committee includes, and requests that any search firm it engages include, qualified women and racially/ethnically diverse persons in the pool from which new director nominees are chosen. The Committee actively seeks Board members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. The Committee implements thisassesses the effectiveness of the Board’s diversity search policy through discussions among its members and assesses its effectiveness annually as part of the Committee’s and the Board’s self-evaluationits annual review process. The Committee has also used a search firm on occasion to help it identify highly qualified and diverse candidates.

Board Nominees and Vote Required

Upon the recommendation of the Nominating/Governance Committee, the Board has nominated our Chairman and CEOChief Executive Officer (CEO) and each of the nineadditional eight individuals listed below to hold office until the next annual meeting and the election and qualification of their successors or, if earlier, until their resignation, death or removal. EachOther than Ms. Caplan, each of the nominees currently serves on the Board, and hasall of the nominees have consented to serve for a new termon the Board if elected. However, ifIf any nominee should become unable or unwilling to serve, the Board may nominate another person to stand for election or reduce the numbersize of directors.the Board. William Bax, a current director, is retiring from the Board and is not standing for re-election.

Each director nominee who receives more “FOR” votes than “AGAINST” votes at the Annual Meeting will be elected. Abstentions will have the same effect as a vote “AGAINST.” Any incumbent director nomineesnominee who receivereceives a greater number of votes “AGAINST” election than votes “FOR” election areis required to tender theiran offer of resignation for consideration by the Nominating/Governance Committee in accordance with our Governance Guidelines.

Independent

2024 PROXY STATEMENT

1

Item 1 – Election of Directors

Director Qualifications

The tableWe have summarized below summarizes the key qualifications and areas of experience that led our Board to conclude that each independentnon-management director nominee is qualified to serve on our Board, butBoard; however, this is not intended to be an exhaustive list of their qualifications or contributions to theour Board.

Insurance / Financial
Services Industry

Non-Management

Director Nominees

CEO / COO

Experience

Finance /

Capital

Markets

Change
Management

Risk

Management /

Governance

Sales and

Marketing

International

Finance / Capital
Markets

Insurance

Industry

International

Independence

Sherry S. Barrat

X

XX

William L. BaxSherry Barrat

X

X

X

X

X

X

X

X

X

D. John Coldman

X

X

Frank E. English, Jr.Deborah Caplan

X

X

X

X

X

X

X

Elbert O. Hand

XX

David S. JohnsonTeresa Clarke

X

X

X

X

X

X

X

X

Kay W. McCurdy

X

X

Ralph J. NicolettiJohn Coldman

X

X

X

X

X

X

X

X

Norman L. Rosenthal

X

X

X

David Johnson

2

(Lead Independent Director)

2018 PROXY STATEMENT

X

ITEM 1: ELECTION OF DIRECTORS

X

X

LOGO

X

THE BOARD RECOMMENDS THAT YOU VOTEFORTHE ELECTION OF EACH OF THE DIRECTOR NOMINEES
LISTED BELOW

X

X

Chris Miskel

X

Sherry S. Barrat

X

X

X

X

Age: 68

X

Ralph Nicoletti

X

X

X

X

Norman Rosenthal

X

X

X

X

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These percentages include our Chairman and CEO, Pat Gallagher.

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The Board recommends that you vote “FOR” the election of each of the director nominees listed below

2

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Item 1 – Election of Directors

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Age: 74

Director Since:since: 2013

Independent

Committee Memberships:

•
Compensation (Chair)
•
Nominating/Governance

Nominating/Governance

Public Company Boards: 2 3

Independent

Ms. Barrat retired in 2012 as Vice Chairman of Northern Trust Corporation, a global financial holding company headquartered in Chicago, Illinois. She assumed the role of Vice Chairman in March 2011. From 2006 to 2011, Ms. Barrat served as Global President of Northern Trust’s personal financial services business, which provides asset management, fiduciary, estate and financial planning, and private banking services to individuals and families around the world. During her22-year career at Northern Trust, Ms. Barrat served in various other leadership roles and as a member of the Northern Trust Management Committee. Since 1998, Ms. Barrat has served as a director of NextEra Energy, Inc., one of the largest publicly traded electric power companies in the United States, where she is currently Lead Director, Chair of the Governance & Nominating Committee and a member of the Audit Committee. Since 2013, Ms. Barrat has also served as an independent trustee or director of certain Prudential Insurance mutual funds.

SHERRY BARRAT

Skills

Ms. Barrat's qualifications to serve on our Board and Qualifications

Ms. Barrat’s extensivechair our Compensation Committee include her executive management, operational and financial experience, in particular her deep understanding of the financial services industry and her experience leading a global client service and sales organization, greatly enhances the Board’s decision making.organization. Her roles at Northern Trust, NextEra Energy and Prudential Insurance mutual funds have given her experience navigating complex and changing regulatory environments. She also has significant experience with change management, including planning and implementing a CEO succession plan as part of NextEra Energy's board.

Career Highlights

•
Northern Trust Corporation (1990-2012)
o
Vice Chairman
o
President, Personal Financial Services
o
Member, Management Committee

Global financial holding company


Current Public Company Boards

•
NextEra Energy, Inc. (1998-present)
o
Lead Director
o
Executive Committee
o
Compensation Committee
o
Governance & Nominating Committee
•
Prudential Insurance mutual funds (2013-present)
o
Independent trustee or director of various funds
o
Vice Chair, Investment Review Committee
o
Governance & Nominating Committee
o
Compliance Committee

William L. Baximg134299666_9.jpg 

Age: 61

Age: 74

Director Since: 2006

Independent

Committee Memberships:

Audit (Chair)

Public Company Boards: 12

Independent

Mr. Bax was Managing Partner

DEBORAH CAPLAN

Ms. Caplan's qualifications to serve on our Board include her senior executive experience, a history of building corporate cultures founded on strong values and her extensive operational experience. Her senior executive roles at NextEra Energy, one of the Chicago office of PricewaterhouseCoopers (PwC), an international accounting, auditing and consulting firm, from 1997 until his retirement in 2003, and was a partnerlargest clean energy companies in the firm for 26 years. He currently servesUnited States, have given her valuable experience navigating a complex regulatory environment and the risks and opportunities presented by climate change. In addition, her experience as a directorhuman resources leader and audit committee chairmember of several affiliated mutual fund companies (Northern Fundsother public company boards will enable her to contribute to sound corporate governance and Northern Institutional Funds since 2005,executive compensation practices at the company.

Career Highlights

•
NextEra Energy, Inc. (2011-2024)
Electric power and Northern Multi-Manager Funds since 2006). Mr. Bax previously served as a directorclean energy company
o
Executive Vice President, Human Resources and Corporate Services
o
Vice President and Chief Operating Officer, Florida Power & Light Company
o
Vice President of Sears, RoebuckIntegrated Supply Chain
•
General Electric Company (prior to 2011)
Global conglomerate
o
Senior Vice President of Global Operations for Vendor Financial Services, GE Capital
o
Other senior roles in manufacturing and product development, GE Aircraft Engines

Current Public Company Boards

•
Mid-America Apartment Communities, Inc. (2023-present)
o
Compensation Committee
o
Nominating & Co., a publicly traded retail company, from 2003Corporate Governance Committee

Previous Public Company Boards

•
Terminix Global Holdings, Inc. (2019-2022)
o
Chair, Compensation Committee
o
Environmental, Health and Safety Committee

Other Board Experience

•
Association to 2005, and Andrew Corporation, a publicly traded communications products company, from 2006 to 2007.

Skills and Qualifications

During his 26 years as a partner and six years as headAdvance Collegiate Schools of PwC’s Chicago office, Mr. Bax gained extensive experience advising public companies regarding accounting and strategic issues. This experience, along with his tenure on the boards of public companies, such as Sears and Andrew, strengthen the Board’s decision making. Additionally, Mr. Bax’s experience advising public companies on accounting and disclosure issues enhances the Board’s ability to oversee our assessment and management of material risks.

Business (2019-present)
o
Executive Committee
o
Chair, Global Business Practices Council

LOGO

2024 PROXY STATEMENT

2018 PROXY STATEMENT

3

ITEM 1: ELECTION OF DIRECTORS

Item 1 – Election of Directors

D. John Coldman, OBEimg134299666_10.jpg 

Age: 61

Age: 70Director since: 2021

Director Since: 2014

Independent

Committee Memberships:

•
Audit
•
Risk and Compliance

Compensation

Public Company Boards: 12

Independent

Mr. Coldman began his career at WT Greig, a reinsurance broker.

TERESA CLARKE


Ms. Clarke's qualifications to serve on our Board include her extensive international and financial services expertise, particularly in the areas of corporate finance and mergers & acquisitions. In 1988, he became addition, her roles leading or overseeing technology companies have given her valuable experience in change management, including navigating changing regulatory environments and pivoting businesses to take advantage of new technologies.

Career Highlights

•
Africa.com LLC (2010-present)
Africa-related digital media content company
o
Chair and Chief Executive Officer
•
Goldman Sachs & Co. (Prior to 2010)
Global financial services firm
o
Managing Director, Investment Banking


Current Public Company Boards

•
American Tower Corporation (2021-present)
o
Audit Committee


Previous Public Company Boards

•
Change Financial Limited (2016-2020) - Australian Stock Exchange
o
Board Chair
o
Audit Committee
•
Cim Group Ltd (2016-2020) - Mauritius Stock Exchange
o
Corporate Governance Committee


Community Involvement

•
Smithsonian National Museum of African Art (2022-present)
o
Chair, Advisory Board

img134299666_11.jpg 

Age: 76

Director since: 2014

Committee Memberships:

•
Risk and Compliance

Public Company Boards: 1

JOHN COLDMAN, OBE

Mr. Coldman's qualifications to serve on our Board include his international insurance industry knowledge, his experience within the Lloyd's and London marketplaces, his experience with public company matters and mergers and acquisitions and his significant expertise in 1996 was appointed Chairman of reinsurance.

Career Highlights

•
The Benfield Group the world’s leading independent reinsurance(1988-2008)
Reinsurance and risk intermediary at the time, until its acquisition by Aon Corporation in 2008. From 2001 to 2006, Mr. Coldman served as Deputy company
o
Chairman and a Member of Council of Lloyd’s of London. He has also been a past Chairman of Brit PLC, a publicly traded global specialty insurer and reinsurer, from 1996 to 2000, and
o
Managing Director

Previous Public Company Boards

•
Omega Insurance Holdings Limited a publicly traded insurance and reinsurance group, from 2010 to 2012. Mr. Coldman served as thenon-executive(2010-2012) - London Stock Exchange
o
Chairman
•
Brit PLC (1996-2000) - London Stock Exchange
o
Chairman

Other Board Experience

•
Lloyd’s of London (2001-2006)
o
Deputy Chairman
o
Member of Council
•
Roodlane Medical Ltd., a privately held healthcare services provider, from 2007 to 2011. (2007-2011)
o
Non-Executive Chairman

Community Involvement

•
A U.K. citizen, Mr. Coldman was appointed an Officer of the Order of the British Empire (OBE) in the Queen’sQueen's Birthday Honours List 2017, for “services to business, young people, and charity.”

Skills and Qualifications

The Board greatly benefits from Mr. Coldman’s many years of insurance brokerage, management and financial services experience. In addition, Mr. Coldman’s international insurance industry knowledge, his experience within the Lloyd’s and London marketplaces, and his experience with public company matters and mergers and acquisitions all strengthen the Board’s decision making.


4

img134299666_7.jpg 

Item 1 – Election of Directors

Frank E. English, Jr.img134299666_12.jpg 

Age: 72

Age: 72Director since: 1986

Director Since: 2009

Independent

Committee Memberships:

Audit

Public Company Boards: 31

Chairman Since 2006

PAT GALLAGHER


Mr. English servesGallagher is the only member of management serving on the board of directors and audit committee of Tower International, Inc., a publicly traded global automotive components manufacturer, where he has been a board member or board advisor since 2010. Since 2012, Mr. English has also served on the board of directors and the finance and strategy committee, and since 2013 on the compensation committee, of Cboe Global Markets, a publicly traded holding company for various securities exchanges, including the largest options exchange in the United States. From 2011 to 2017, Mr. English served as a Senior Advisor to W.W. Grainger, a publicly traded broad-based distributor of industrial maintenance, repair and operations supplies. From 1976 to 2009, Mr. English served in various senior roles at Morgan Stanley, finishing his tenure there as Managing Director and Vice Chairman of Investment Banking.

Skills and Qualifications

The Board greatly benefits from Mr. English’s extensive investment banking expertise, particularly in the areas of capital planning, strategy development, financing and liquidity management.

4

2018 PROXY STATEMENT

ITEM 1: ELECTION OF DIRECTORS

J. Patrick Gallagher, Jr.

Age: 66

Director Since: 1986

Chairman of the BoardSince:2006

Public Company Boards: 2

Mr. Gallagher has spent his entire career with Arthur J. Gallagher & Co. in a variety of management positions, starting as a Production Account Executive in 1974, then serving as Vice President of Operations from 1985 to 1990, as President and Chief Operating Officer from 1990 to 1995, and as President and Chief Executive Officer since 1995. In 2011, Mr. Gallagher joined the board of directors of InnerWorkings, Inc., a global, publicly traded provider of managed print, packaging and promotional solutions, and was appointed to its compensation and nominating/governance committees. He also serves on the Board of Trustees of the American Institute for Chartered Property Casualty Underwriters and on the Board of Founding Directors of the International Insurance Foundation.

Skills and Qualifications

Mr. Gallagher’s 44Board. His 50 years of experience with our company and 3238 years of service on the Board, provide him with ahis deep knowledge of our company and the insurance industry and insurance brokerage industries, as well as a depth ofhis extensive leadership experience. This depth of knowledge and experience greatly enhancesenhance the Board’sBoard's decision making and enablesenable Mr. Gallagher to serve as a highly effective Chairman of the Board.

Career Highlights

Elbert O. Hand

Age: 78

Director Since: 2002

Independent

Committee Memberships:

Compensation

Nominating/Governance

Public Company Boards: 1

Mr. Hand is the managing member of Alister MacKenzie Apparel, LLC, a manufacturer and distributor of sports and dress apparel, which heco-founded in 2016. Prior to that, he was

•
Arthur J. Gallagher & Co. (1974-present)
o
Chairman of the Board of Hartmarx Corporation, a publicly traded apparel marketing and manufacturing company, from 1992 to 2004, and a member of Hartmarx’s board from 1984 to 2010. He served as
o
Chief Executive Officer of Hartmarx from 1992 to 2002 and as
o
President and Chief Operating Officer from 1987 to 1992. From 1982 to 1989,
o
Vice President of Operations
o
Production Account Executive

Previous Public Company Boards

•
InnerWorkings, Inc. (2011-2019)
o
Compensation Committee
o
Nominating/Governance Committee

Insurance Industry Affiliations

•
The Institutes, previously known as American Institute for Chartered Property Casualty Underwriters (2003-present)
o
Board of Trustees

Community Involvement

•
Mr. Hand also served as President and Chief Executive Officer of Hartmarx’s Men’s Apparel Group. Mr. HandGallagher was a director of Austin Reed Group PLC, a U.K.-based apparel company, from 1995 to 2002, and served as an advisor to its board for a number of years after 2002. From 2010 to 2011, Mr. Hand served as a membergranted Freedom of the board andnon-executive ChairmanCity of Environmental Solutions Worldwide, Inc., a publicly traded manufacturer and marketerLondon in 2007 by the city’s Lord Mayor in recognition of environmental control technologies.

Skills and Qualifications

The Board benefits from Mr. Hand’s three decades of leadership roles in the apparel marketing and manufacturing industry, including significant experience in sales and marketing. Mr. Hand’s long association with U.K. apparel company Austin Reed is valuablehis outstanding contribution to the Board in its oversightLloyd’s insurance market and for his support of our U.K. and other international operations.the Gallagher Lifelong Learning scholarships.

LOGO

2018 PROXY STATEMENTimg134299666_13.jpg 

Age: 67

5Director since: 2003

Committee Memberships:

•
Compensation
•
Nominating/Governance
•
Risk and Compliance

ITEM 1: ELECTION OF DIRECTORS

Public Company Boards: 1

David S. Johnson

Age: 61

Director Since: 2003

Independent Lead Director
Since: since 2016

Committee Memberships:

Compensation

Nominating/Governance

Public Company Boards: 1

DAVID JOHNSON


Mr. Johnson has served as Chief Executive Officer of North America for Aryzta AG, a publicly traded global food business, since January 2018, where he also servesJohnson's qualifications to serve on the company’s group executive committee. From 2009 to 2017, he served as President and Chief Executive Officer of the Americas for Barry Callebaut AG, the world’s largest manufacturer of cocoa and chocolate products, where he also served on the global executive committee. Mr. Johnson served as President and Chief Executive Officer,our Board and as a member of the board, of Michael Foods, Inc., a food processor and distributor, from 2008 to 2009, and as Michael Foods’ President and Chief Operating Officer from 2007 to 2008. From 1986 to 2006, Mr. Johnson served in a variety of senior management roles at Kraft Foods Global, Inc., a global food and beverage company, most recently as President of Kraft Foods North America, and as a member of Kraft Foods’ Management Committee. Prior to that, he held senior positions in marketing, strategy, operations, procurement and general management at Kraft Foods.

Skills and Qualifications

The Board benefits from Mr. Johnson’s more than three decades in the food and beverage industry, including significant experience in sales and marketing. His experience as a senior executive of global businesses, such as Aryzta and Barry Callebaut, are valuable to the Board’s oversight of our international operations. In addition,Independent Lead Director include his knowledge of corporate governance and executive compensation best practices as a former member of Kraft’s and Barry Callebaut’s management committees and Michael Foods’ board, and as a current member of Aryzta’s group executive committee, strengthens the Board’s decision making.

Kay W. McCurdy

Age: 67

Director Since: 2005

Independent

Committee Memberships:

Compensation

Nominating/Governance (Chair)

Public Company Boards: 1

Since 1975, Ms. McCurdy has practiced corporate and finance law at the law firm of Locke Lord LLP, where she has been Of Counsel since 2012 and was a partner from 1983 to 2012. She served on the firm’s Executive Committee from 2004 to 2006. During her career as a corporate and finance attorney, Ms. McCurdy represented numerous companies on a wide range of matters, including financing transactions, mergers and acquisitions, securities offerings, executive compensation and corporate governance. Ms. McCurdy served as a director of Trek Bicycle Corporation, a leading bicycle manufacturer, from 1998 to 2007. In recognition of her ongoing commitment to director education and boardroom excellence, the National Association of Corporate Directors (NACD) has named Ms. McCurdy a NACD Governance Fellow every year since 2010. She is also a director of the Chicago chapter of NACD.

Skills and Qualifications

Ms. McCurdy’s experience advising companies regarding legal, public disclosure, corporate governance, mergers and acquisitions and executive compensation issues provide her with a depth of expertise that enhances our ability to navigate legal and strategic issues, and allows her to make valuable contributions to the Board.

6

2018 PROXY STATEMENT

ITEM 1: ELECTION OF DIRECTORS

Ralph J. Nicoletti

Age: 60

Director Since: 2016

Independent

Committee Memberships:

Audit

Public Company Boards: 1

Mr. Nicoletti has served as Executive Vice President and Chief Financial Officer of Newell Brands, Inc., a publicly traded consumer goods company, since June 2016. From April 2014 to May 2016, Mr. Nicoletti served as Executive Vice President and Chief Financial Officer of Tiffany & Co., a publicly traded jewelry business. Prior to joining Tiffany, Mr. Nicoletti was Executive Vice President and Chief Financial Officer of Cigna Corporation, a publicly traded global health services and insurance company, from 2011 to 2013; and of Alberto Culver, Inc., a publicly traded manufacturer and distributor of beauty products, from 2007 to 2011. Prior to that, Mr. Nicoletti held a number of financial management positions at Kraft Foods, Inc., finishing his tenure there as Senior Vice President of Corporate Audit.

Skills and Qualifications

The Board benefits from Mr. Nicoletti’s financial expertise in various industries and his experience managing privacy and cybersecurity issues. Mr. Nicoletti’s experience as a senior executive of global multi-nationalbusinesses. These roles have provided him with significant experience in change management and navigating complex regulatory environments.

Career Highlights

•
Aryzta AG, now Aspire Bakeries (2018-2021)
Global food business
o
Non-Executive Chairman, North America
o
Chief Executive Officer, North America
•
Barry Callebaut AG (2009-2017)
Cocoa and chocolate products manufacturer
o
President and Chief Executive Officer, Americas
o
Member, Global Executive Committee
•
Michael Foods, Inc. (2007-2009)
Food processor and distributor
o
President, Chief Executive Officer and Board Member
o
Chief Operating Officer
•
Kraft Foods Global, Inc. (prior to 2007)
o
President, Kraft Foods North America
o
Member, Management Committee
o
Other senior roles in marketing, strategy, operations, procurement and general management

Global food and beverage company

Other Board Experience

•
OC Flavors, Inc. (2022-present)
•
Jacobs Holding AG (2018-2021)
o
Board of Advisors
•
Michael Foods, Inc. (2008-2009)

2024 PROXY STATEMENT

5

Item 1 – Election of Directors

img134299666_14.jpg 

Age: 49

Director since: 2020

Committee Memberships:

•
Nominating/Governance (Chair)
•
Compensation

Public Company Boards: 1

Independent

CHRIS MISKEL

Mr. Miskel's qualifications to serve on our Board and chair our Nominating/Governance Committee include his senior executive experience, his involvement in setting strategy for large businesses such as Kraft, Alberto Culver, Cigna, TiffanyLilly, Baxter, Baxalta and Newell Brands, are valuable toShire, his extensive sales and marketing experience, and his knowledge of the Board as we continue to expandhealthcare industry and related privacy and cybersecurity issues. His senior roles in the United Statespharmaceutical industry have also provided him with experience navigating complex and abroad. In addition,changing regulatory environments.

Career Highlights

•
Versiti, Inc. (2017-present)
Blood products supply company
o
President and Chief Executive Officer
•
Baxter / Baxalta / Shire (2013-2017) – Baxalta Incorporated spun off from Baxter International Inc. in 2015 and was acquired by Shire plc in 2016
Global healthcare and pharmaceutical companies
o
Head of Immunology (2015-2017)
o
Vice President, Plasma Strategy and New Products, Global BioTherapeutics (2014-2015)
o
Vice President, U.S. BioScience National Accounts (2013-2014)
•
Eli Lilly and Company (prior to 2013)
Pharmaceutical company
o
General Manager, Lilly Australia and New Zealand
o
Other senior roles

Community Involvement

•
Butler University (2021-present)
o
Board of Trustees
•
Medical College of Wisconsin (2018-present)
o
Board of Directors


img134299666_15.jpg 

Age: 66

Director since: 2016

Committee Memberships:

•
Audit (Chair)

Public Company Boards: 1

Independent

RALPH NICOLETTI

Mr. Nicoletti's qualifications to serve on our Board and chair our Audit Committee include his deep experience as a finance leadersenior executive of publicly traded companies strengthens the Board’s abilityglobal businesses, his deep financial management expertise, capital markets experience and experience managing privacy and cybersecurity issues.

Career Highlights

•
The AZEK Company, Inc. (2019-2021)
Building products company
o
Senior Vice President and Chief Financial Officer
•
Newell Brands, Inc. (2016-2018)
o
Executive Vice President and Chief Financial Officer

Global consumer goods company

•
Tiffany & Co. (2014-2016)
o
Executive Vice President and Chief Financial Officer

Global luxury jewelry company

•
Cigna Corporation (2011-2013)
o
Chief Financial Officer

Global healthcare and insurance company

•
Alberto Culver, Inc. (2007-2011)
o
Executive Vice President and Chief Financial Officer

Beauty products company

•
Kraft Foods, Inc. (prior to oversee accounting2007)
Global food and disclosure issues, as well as the assessment andbeverage company
o
Senior Vice President of Corporate Audit
o
Other senior financial management of material risks.roles

Other Board Experience

•
GPA Global (2023-present)
o
Chair, Audit Committee
•
Cooper’s Hawk Winery & Restaurants (2021-present)
o
Chair, Audit Committee

6

img134299666_7.jpg 

Item 1 – Election of Directors

Norman L. Rosenthal,
Ph.D.img134299666_16.jpg 

Age: 72

Age: 66Director since: 2008

Director Since: 2008

Independent

Committee Memberships:

•
Risk and Compliance (Chair)
•
Audit

Audit

Public Company Boards:1

Independent

Since 1996, Dr. Rosenthal has been President of Norman L. Rosenthal & Associates, Inc., a management consulting firm that specializes in the property and casualty insurance industry. He is also an affiliated partner of Lindsay Goldberg LLC, a private equity firm. Dr. Rosenthal served on the board and as a member of the compensation committee of National Interstate Corporation, a publicly traded insurance company specializing in commercial transportation exposures, from June 2015 until it was acquired by another insurance company in November 2016. He currently serves on the board of The Plymouth Rock Company, a privately held group of auto and homeowners’ insurance companies, as well as that of its subsidiary, Plymouth Rock Management Company of New Jersey. Prior to 1996, Dr. Rosenthal spent 15 years practicing in the property and casualty insurance industry at Morgan Stanley & Co., finishing his tenure there as Managing Director. Dr. Rosenthal holds a Ph.D. in Business and Applied Economics, with an insurance focus, from the Wharton School of the University of Pennsylvania. In 2017, the NACD named Dr. Rosenthal a Leadership Fellow.

NORMAN ROSENTHAL, PH.D.

Skills
Dr. Rosenthal's qualifications to serve on our Board and Qualifications

Dr. Rosenthal’s extensivechair our Risk and Compliance Committee include his experience in the insurance and finance industries, is a valuable resourceincluding extensive experience serving on public company boards of insurance, reinsurance and greatly enriches the Board’s decision making. In addition, Dr. Rosenthal’s expertise in applied economicsreinsurance services companies, and knowledge of risk management, combined with decades ofhis experience as a securities analyst in his prior executive roles at Morgan Stanley.


Career Highlights

•
Norman L. Rosenthal & Associates, Inc. (1996-present)
o
President

P&C industry management consultant and director in the insurance sector, greatly enhances the Board’s abilityconsulting firm

•
Lindsay Goldberg LLC (2016-present)
o
Affiliated Partner

Private equity firm

•
Morgan Stanley & Co. (prior to oversee our assessment and management1996)
o
Managing Director

Global investment bank

Previous Public Company Boards

•
National Interstate Corporation (2015-2016)
•
Aspen Insurance Holdings, Ltd. (2002-2009)
•
Mutual Risk Management Ltd. (1997-2002)
•
Vesta Insurance Group, Inc. (1996-1999)

Other Board Experience

•
The Plymouth Rock Company (2009-present)
•
The Plymouth Rock Management Company of cybersecurity issues and other material risks.New Jersey (2016-present)

LOGO

2024 PROXY STATEMENT

2018 PROXY STATEMENT

7

Corporate Governance

Key Governance Practices

The Board and Nominating/Governance Committee continually evaluate governance best practices and consider modifications to our corporate governance that support our strategic objectives, protect the long-term interests of our stockholders and promote management accountability. Set forth below are several key governance practices:

•
Annual majority vote, with resignation policy if not elected
•
Demonstrated Board refreshment with emphasis on diverse skill set
•
Our Governance Guidelines include a retirement policy for directors
•
Proxy access (3% ownership / 3 years / group of up to 20 / greater of 20% of Board seats or 2 directors)
•
Independent Lead Director with clearly identified role
•
Annual Board and committee self-evaluations
•
Directors are subject to stock ownership guidelines
•
Significant portion of Board compensation in the form of equity awards
•
Regular executive sessions of the Board and committees
•
Board and committee oversight of strategy, risk and sustainability initiatives
•
All current Audit Committee members are financial experts under SEC rules
•
Robust stockholder engagement program

CORPORATE GOVERNANCE

Board Leadership Structure

Pat Gallagher currently serves as Chairman of the Board and CEO. With the exception of the Chairman,Messrs. Gallagher and Coldman, all Board members are independent and actively oversee the activities of the Chairman and other members of the senior management team. We believe that our Board leadership structure allows us to take advantage of Pat Gallagher’s extensive experience and knowledge of our business, which enriches the Board’s decision making. Pat Gallagher’s role as Chairman and CEO also enhances communication and coordination between management and the Board on critical issues.

David Johnson was elected by the Board in 2016 to servehas served as our independentIndependent Lead Director for atwo-year term. Under our Governance Guidelines, the Lead Director may serve up to two consecutivetwo-year terms.since 2016. The duties and responsibilities of the independentIndependent Lead Director are set forth below.

Independent Lead Director Duties & Responsibilities

Act as a liaison between the Chairman and the independentother directors

Be available for consultation and communication with stockholders as appropriate

Call and preside over executive sessions of the independent directorsBoard without the Chairman or other members of management present

Consult with the Chairman and approve Board meeting agendas and schedules

Consult with the Chairman and approve information provided to the Board

Consult with committee chairs with respect to agendas and information needs relating to committee meetings

Work closely with and act as an advisor to the Chairman; be available to discuss with other directors concerns about the company or the Board and relay those concerns, where appropriate, to the Chairman or other members of the Board; and be familiar with corporate governance best practices

Provide leadership to the Board if circumstances arise in which the role of the Chairman may be, or may be perceived to be, in conflict

Conduct the annual performance evaluation of Pat Gallagher in his capacity as Chairman and, together with the Nominating/Governance Committee, evaluate the Board as a whole and review the contributions of each Board member

Perform such other duties and responsibilities as the Board may determine

TheOur non-management and independent directors meet regularly in executive sessions. Executive sessions are held at the beginning and at the end of each regularly scheduledin-person or virtual Board meeting. Other executive sessions may be called by the Independent Lead Director at his discretion or at the request of the Board. Executive sessions at the full-Board level are chaired by our Independent Lead Director. The committees of the Board also meet regularly in executive sessions. Executive sessions are chaired by

The Board believes that its leadership structure as described above provides an effective framework for addressing the risks and opportunities facing our independentcompany, as it effectively allocates authority, responsibility, and oversight between management and the Board. The Board believes the role of the Independent Lead Director.Director underscores our continuing commitment to strong corporate

8

img134299666_7.jpg 

Corporate Governance

governance and Board independence. The Board believes that the Independent Lead Director’s ability to call meetings of the Board when necessary improves the independence of the Board’s leadership structure and its role in risk oversight.

Director Independence

The Board has conducted its annual review of the independence of each director nominee under NYSE standards and the independence standards set forth in Appendix A of our Governance Guidelines (available on our website located at www.ajg.com/ir, under the heading “Corporate Governance”). Based upon its review, the Board has concluded in its business judgment that, with the exception of Pat Gallagher alland John Coldman, each of the directors andother director nominees (Sherry S. Barrat, William L. Bax, D. John Coldman, Frank E. English, Jr., Elbert O. Hand,Deborah Caplan, Teresa Clarke, David S. Johnson, Kay W. McCurdy,Chris Miskel, Ralph J. Nicoletti, and Normal L.Norman Rosenthal) areand William Bax is independent.

8

2018 PROXY STATEMENT

Compensation Committee Interlocks and Insider Participation

CORPORATE GOVERNANCE

Board Committees

The Board currently has Audit,During 2023, Sherry Barrat, David Johnson and Chris Miskel served on the Compensation and Nominating/Governance Committees, allCommittee with Sherry Barrat serving as Chair. None of the members of which are independent. the Board who served on the Compensation Committee, including Kay McCurdy who served on the Committee until May 9, 2023, is a former or current officer or employee of the company or any of our subsidiaries, is involved in a relationship requiring disclosure as an interlocking executive officer or director or had any relationship requiring disclosure under Item 404 of Regulation S-K.

Stockholder Views

Our Board pays close attention to the views of our stockholders, including the 92.5% approval rate received for our “say on pay” proposal in 2023, when making determinations regarding corporate governance and executive compensation.

During the past year, members of our management team and Board engaged with stockholders representing more than 50% of our outstanding shares to discuss various governance, executive compensation and sustainability matters. Based in part on feedback from our stockholders, in 2023 we published an updated sustainability report (see “Impact Report” in Exhibit B) that sets forth our goal of Net Zero emissions in our direct operations (Scope 1 and Scope 2) by 2050 and a new interim 2030 goal.

Board’s Role in Risk Oversight

The Board has delegated primary responsibility for risk oversight to the Risk and Compliance Committee. However, the Board retains overall responsibility for risk oversight, reviews significant risk matters at the full-Board level when appropriate, regularly discusses CEO succession planning, including emergency succession plans, and provides oversight of succession planning for certain other senior management positions in consultation with the CEO.

The Risk and Compliance Committee oversees enterprise risk management (ERM) and compliance with laws and regulations. Among other things, the Committee regularly reviews our major risk exposures and management’s activities to mitigate and monitor such exposures; reviews our business continuity and crisis management framework, including our incident response plans; reviews and discusses with management our risk appetite statements; and reviews our ethics and compliance program, including our Global Standards of Business Conduct and significant legal and regulatory compliance matters. We have a management-level ERM Committee consisting of a Chair and senior personnel representing functional, business and geographic areas across the company, with broad oversight of ERM. The Chair of the ERM Committee, Chief Compliance Officer, Chief Information Officer and Chief Information Security Officer attend each meeting of the Risk and Compliance Committee, as well as regular meetings of the senior executive team dedicated to compliance and risk, and report on our most significant risk exposures. These include significant compliance, data privacy, cybersecurity, sustainability and artificial intelligence matters. See page 10 below for additional information regarding the responsibilities and activities of the Risk and Compliance Committee.

The other committees of the Board oversee the management of risks within their areas of responsibility. The Risk and Compliance Committee coordinates and communicates with these other committees as appropriate. In addition, to facilitate coordination and communication between the committees with respect to risk matters, the Risk and Compliance Committee includes at least one member from each other committee. The Risk and Compliance Committee (and each other committee as appropriate) reports regularly to the Board regarding our major risks and steps undertaken to monitor and mitigate such risks.

For each committee of the Board, the tables below set forth theits primary responsibilities, membersincluding certain key matters relating to risk oversight, as well as its membership, independence, and the number of meetings held in 20172023. See “Sustainability Oversight and Activities” beginning on page 12 for information regarding each committee.committee’s role in overseeing Sustainability matters.

2024 PROXY STATEMENT

9

Corporate Governance

Audit Committeeimg134299666_17.jpg 

Met 5 times in 20172023

Committee Members:

•
Ralph Nicoletti (Chair)
•
William L. Bax (Chair)

Frank E. English, Jr.

Ralph J. Nicoletti

•
Teresa Clarke
•
Norman L. Rosenthal

Audit Committee

The Audit Committee’s responsibilities include general oversight of the integrity of our financial statements; enterprise risk assessment and management; finance activities; our compliance with legal and regulatory requirements; our independent registered public accounting firm’s qualifications and independence; and the performance of our internal audit function and independent registered public accounting firm.

firm; and, in coordination with the Risk and Compliance Committee, our compliance with legal and regulatory requirements and enterprise risk assessment and management. The Audit Committee manages our relationship with our independent registered public accounting firm and is responsible for the appointment, retention, termination and compensation of the independent auditor.

Internal Audit

The Committee oversees an internal audit department, the head of which reports directly to the Committee (on matters other than day-to-day operations). The internal audit department is independent from management and the Committee defines its responsibilities. Among other things, the purpose of the department is to bring a systematic and disciplined approach to evaluating and improving the effectiveness of our risk management, control and governance processes. The internal audit department evaluates the effectiveness of our risk management processes, performs consulting and advisory services for us related to risk management, and reports significant risk exposures to the Audit Committee or Risk and Compliance Committee, as appropriate.

Independence and Audit Committee Financial Experts

Each member of the Audit Committee meets the additional heightened independence and other requirements of the NYSE listing standards and SEC rules. In addition, the Board has determined that each of Mr.Messrs. Bax, Nicoletti and Mr. NicolettiRosenthal and Ms. Clarke qualifies as an “audit committee financial expert” under SEC rules.

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Met 4 times in 2023

Committee Members:

•
Norman Rosenthal (Chair)(1)
•
William Bax
•
Teresa Clarke
•
John Coldman
•
David Johnson

Risk and Compliance Committee

The Risk and Compliance Committee’s responsibilities include reviewing our ERM program, including risk identification, risk appetite, risk assessment and risk mitigation; reviewing management’s approach to identifying and prioritizing our most significant risk exposures and discussing with management the steps that have been taken to mitigate and monitor such exposures; reviewing our management of risks related to cybersecurity and information security, including artificial intelligence risks; receiving regular reports from our Chief Information Officer and/or Chief Information Security Officer regarding the overall status of our cybersecurity and information security programs; reviewing our business continuity and crisis management framework, including incident response plans; receiving regular reports from our Chief Compliance Officer, including with respect to complaints received from internal and external sources, and reviewing our ethics and compliance program, including our Global Standards of Business Conduct and significant legal and regulatory compliance matters.

See "Sustainability Oversight and Activities" below for additional information regarding the Committee's areas of responsibility.

Compensation Committee(1) Norman Rosenthal was appointed Chair effective as of January 24, 2024.

10

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Corporate Governance

img134299666_18.jpg 

Met 65 times in 20172023

Committee Members:

•
Sherry S. Barrat (Chair)

D. John Coldman

Elbert O. Hand

•
David S. Johnson

•
Chris Miskel

Kay W. McCurdy

Compensation Committee

The Compensation Committee’s responsibilities include reviewing and approving compensation arrangements for our executive officers, including our CEO; administering our equity compensationCEO and other benefit plansexecutive officers; reviewing our strategies and policies related to human capital management; and reviewing our overall compensation structure to avoid incentives that promote excessive risk-taking by executive officers and other employees.

employees (see “Compensation Risk Oversight” below). The Compensation Committee may, and in 2017 did, engageengaged a compensation consultant to assist it in carrying out its duties and responsibilities andin 2023. The Committee has the sole authority to retain and terminate any such compensation consultant includingand the sole authority to approve any such consultant’s fees and other retention terms. For more information regarding the role of the Committee’s compensation consultant in setting compensation, see page 24.30.

Independence

Compensation Risk Oversight

The Committee reviews our overall compensation policies and practices to determine whether our program provides incentives for executive officers and other employees to take excessive risks. Based upon an analysis conducted by management and discussions between management and the Committee, the Committee has determined that our compensation policies and practices do not present risks that are likely to have a material adverse effect on us or our business. In reaching this determination, the Committee and management noted the following:

(i)
no single business unit bears a disproportionate share of our overall risk profile;
(ii)
no single business unit is significantly more profitable than the other business units;
(iii)
our compensation practices are substantially consistent across all business units both in the amount and types of compensation awarded;
(iv)
substantially all of our revenue-producing employees are sales professionals whose compensation is tied to the amount of revenue received by the company;
(v)
our annual cash incentive program caps payouts at 200% of target awards; and
(vi)
our performance share units (PSUs) are capped at 200% of target awards and are based on average performance over a three-year measurement period.

In addition, a significant portion of our senior executives’ compensation is deferred and invested in our stock through our Deferred Equity Participation Plan and our senior executives own significant amounts of stock. Stock options vest on the third, fourth and fifth anniversaries of the grant date and performance share units vest on the third anniversary of the grant date. Based on the above, the Committee believes that our compensation practices help ensure that no single year’s results and no single corporate action has a disproportionate effect on senior executives’ annual compensation, and encourage steady and consistent long-term performance by our senior executives.

Independence

Each member of the Compensation Committee meets the additional heightened independence and other requirements of the NYSE listing standards.

2024 PROXY STATEMENT

11

Corporate Governance

Nominating/img134299666_14.jpg 

Governance Committee

Met 43 times in 20172023

Committee Members:

•
Chris Miskel (Chair)
•
Sherry S. Barrat

Elbert O. Hand

•
David S. Johnson

•

Kay W. McCurdy (Chair)

Nominating/Governance Committee

The Nominating/Governance Committee’s responsibilities include identifying qualified Board and Board committee candidates; engaging in succession planning for the Board and key leadership roles on the Board and its committees; recommending changes to the Board’s size and composition; determining outsidereviewing and making recommendations to the Board with respect to director compensation; recommending director independence standards and governance guidelines; reviewing and approving related person transactions (as defined by the SEC) and reviewing legal and regulatory compliance risks relating to corporate governance.governance, including our political contributions and lobbying activities. The Committee also reviews related person transactions to evaluate whether our directors and executive officers have conflicts of interest that could interfere with their ability to carry out their duties to the company.

Independence

Each member of the Nominating/Governance Committee is independent under NYSE standards.

LOGO

2018 PROXY STATEMENT

9

CORPORATE GOVERNANCESustainability Oversight and Activities

Board’s Role in Risk Oversight

Overview.The Board is responsible for oversight and monitoring of our enterprise risk management program. In carrying out this responsibility, the Board has designated the Audit Committee with primary responsibility for overseeing enterprise risk management. The other committees of the Board also oversee the management of risks within their areas of responsibilities. The Board receives periodic reports from eachmaintains overall oversight of sustainability matters. Each Board committee and from management on our major risks and steps undertaken to monitor and mitigate such risks.

Audit Committee.At each regularly scheduled meeting, the Audit Committee monitors management’s risk management function. It does this by discussing, among other things, guidelines and policies regarding risk assessment and risk management, our major financial risk exposures, including cybersecurity, marketplace, regulatory and other risks, and steps taken by management to monitor and control such exposures. Our Global Chief Compliance Officer attends each Committee meeting and reports on significant risk and compliance issues. In addition, the Committee oversees an internal audit department, the headsustainability matters within its scope of which reports directly to the Committee (on matters other thanday-to-day operations). The internal audit department is independent from managementresponsibility as described below and the Committee defines its responsibilities. Among other things, the purpose of the department is to bring a systematic and disciplined approach to evaluating and improving the effectiveness of our risk management, control and governance processes. The internal audit department evaluates the effectiveness of our risk management processes, performs consulting and advisory services for us related to risk management, and reports significant risk exposures, including fraud risks, to the Committee. The Committee periodically reports to the full Board a summaryas appropriate. In addition, from time to time, the full Board receives presentations regarding key sustainability topics.

Audit Committee. The Audit Committee reviews ERM with the assistance of its activitiesthe Risk and any key findings that arise from its risk oversightCompliance Committee, including sustainability matters such as climate and monitoring functions.cybersecurity risks. The Audit Committee also reviews our tax strategies.

Compensation Committee.TheCommittee. The Compensation Committee reviews our overall compensationstrategies and policies related to human capital management, including inclusion and diversity, workplace environment and culture, and talent development and retention. The Compensation Committee receives annual reports on inclusion and diversity from our CEO and Chief Human Resources Officer.

Nominating/Governance Committee. The Nominating/Governance Committee oversees our corporate governance principles and practices, to determine whether our program provides incentives for executive officersand receives regular updates on governance developments from the General Counsel and other employeesmembers of management. As part of succession planning for the Board and key Board and committee leadership roles, and in support of its strategy to take excessive risks. Based upon an analysis conductedpromote diversity on the Board, the Board adopted a policy that the Nominating/Governance Committee must include qualified women and racially/ethnically diverse candidates in the pool from which new director nominees are chosen. The Committee also periodically reviews our political contributions and lobbying activities.

Risk and Compliance Committee. The Risk and Compliance Committee reviews and discusses a variety of sustainability-related risks and related mitigation strategies identified by the management-level ERM Committee and senior executive team. These include risks relating to human capital management, cybersecurity, reputation and discussions between managementclimate change. On a quarterly basis, the Chief Information Officer and Chief Information Security Officer update the Committee on our cybersecurity program. In addition, the Committee has determinedresponsibility for reviewing our ethics and compliance program, including the Global Standards of Business Conduct, and receives regular reports from the Chief Compliance Officer.

Other Sustainability Activities. The company has a management-level committee consisting of employees from across our global businesses and corporate departments, with responsibility for coordinating and communicating the company’s sustainability initiatives. For example, Gallagher Re’s Climate and ESG Centre of Excellence now offers a carbon portfolio benchmarking tool that helps underwriters identify critical locations within their portfolios for decarbonization strategies.

Our Impact Report, EEO-1 Employer Information Report and other sustainability-related materials can be found on our compensation policieswebsite at investor.ajg.com/esg. The Impact Report reiterates our previously announced goal of Net Zero by 2050, limited to Scope 1 and practices doScope 2, and includes a new interim 2030 goal. Our disclosures are aligned with the Global Reporting Initiative (GRI) Standards, the Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosure (TCFD) recommendations. Such reports and other information on our website are not present risks that are likely to have a material adverse effect on us or our business. In reachingdeemed part of this determination, our Committee and management noted the following: (i) no single business unit bears a disproportionate share of our overall risk profile; (ii) no single business unit is significantly more profitable than the other business units; (iii) our compensation practices are substantially consistent across all business units both in the amount and types of compensation awarded; (iv) substantially all of our revenue-producing employees are sales professionals whose compensation is tied to the amount of revenue received by the company; (v) our annual cash incentive program caps payouts at 200% of target awards; and (vi) our PSUs are capped at 200% of target awardsProxy Statement and are based on average performance over a three-year measurement period. A significant portion of our senior executives’ compensation is deferred and invested in Gallagher stock through our DEPP and our senior executives own significant amounts of Gallagher stock. In addition, our equity plansnot incorporated by reference.

12

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permit the use of a variety of equity compensation vehicles with multi-year vesting and overlapping maturity. Based on the above, we believe that our compensation practices help ensure that no single year’s results and no single corporate action has a disproportionate effect on executive officers’ annual compensation, and encourage steady and consistent long-term performance by our executive officers.

Corporate Governance

Nominating/Governance Committee.The Nominating/Governance Committee reviews risks related to our corporate governance structure and processes. The Committee also reviews related person transactions (as defined by the SEC) to evaluate whether our directors and executive officers have conflicts of interest that could interfere with their ability to carry out their duties to the company.

Other Board Matters

Attendance. The Board expects each director to attend and participate in all Board and applicable committee meetings and annual meetings of stockholders. Each director is expected to prepare for meetings in advance and to dedicate the time necessary to discharge properly his or hertheir responsibilities at each meeting and to ensure other commitments do not materially interfere with his or hertheir service on the Board. During 2017,2023, the Board met seven9 times. All of the nomineescurrent directors attended 75% or more of the aggregate meetings of the Board and the committees on which they served during 2017. All of our2023. In addition, all directors then serving on the Board members serving as directors at the time of our 2017 Annual Meeting attended the meeting, and we expect all Board members to attend our 20182023 Annual Meeting.

Stockholder Communications with the Board. A stockholder or other party interested in communicating with the Board, any of its committees, the Chairman, the Independent Lead Director, thenon-management directors as a group or any director individually may do so by writing to theirthe attention of the Corporate Secretary at our principal executive offices, Arthur J. Gallagher & Co., c/o Corporate Secretary, 2850 Golf Road, Rolling Meadows, Illinois 60008-4002.60008-4050. Where appropriate, our Independent Lead Director is available for consultation and communication with stockholders.

Corporate Governance Materials. We are committed to sound and effective corporate governance. To that end, the Board has adopted Governance Guidelines that set forth principles to assist it in determining director independence and other important corporate governance matters.

The Board has also adopted Global Standards of Business Conduct (the Global Standards) that apply to all directors, executive officers and other employees. The Global Standards, along with our Governance Guidelines and the charters of the Audit, Compensation, Nominating/Governance and Nominating/GovernanceRisk and Compliance Committees, are available at www.ajg.com/ir, under the heading “Corporate Governance.” We will provide a copy of the Global Standards or Governance Guidelines without charge to any person who requests a copy by writing to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4002. We intend to satisfy the disclosure requirements of Item 5.05 of Form8-K regarding any amendment to, or waiver from, the Global Standards with respect to any of our directors or executive officers by posting such information on our website.

10

2024 PROXY STATEMENT

13

2018 PROXY STATEMENT

Corporate Governance

CORPORATE GOVERNANCE

Director Compensation

The Board sets the amount and form of non-management director compensation based upon recommendations made by the Nominating/Governance Committee. Pat Gallagher receives no additionalIn 2023, the Nominating/Governance Committee engaged Pearl Meyer & Partners, LLC (Pearl Meyer) to assess the competitiveness of our director pay program against the same peer group that is used to assess the competitiveness of our executive compensation program and an industry survey. Pearl Meyer found that pay levels for his service as a director. A substantial portionour Board were between the 50th and 75th percentile of eachnon-employee director’s totalthe identified benchmarks. Taking these benchmark results into consideration, in 2023, the target value of the annual compensation consists of equity grants, ingrant was increased from $180,000 to $190,000 and the form ofannual cash retainer was increased from $120,000 to $125,000.

On May 9, 2023, each non-management director was granted 920 restricted stock units. units (RSUs) that vest on the first anniversary of the date of grant (or immediately upon a director’s departure from the Board). Committee Chairs receive additional annual fees as follows: $30,000 for the Audit Committee, $25,000 for each of the Compensation Committee and Risk and Compliance Committee, and $20,000 for the Nominating/Governance Committee. The Independent Lead Director receives an additional annual fee of $35,000. Directors are reimbursed for travel and accommodation expenses incurred in connection with attending Board and committee meetings.

Under our stock ownership guidelines, directors with at least five years of service are expected to own an amount of our common stock with a value equal to five times the cash portion of the annual director retainer. In 2017, the annual cash retainer was $100,000. All of our directors with five or more years of service meet these guidelines.

On May 16, 2017, eachnon-employee director was granted 2,400 restricted stock units that vest on the first anniversary of the date of grant (or immediately upon a director’s departure from the Board). Committee Chairs receive additional annual fees as follows: $25,000 for the Audit Committee, $20,000 for the Compensation Committee and $15,000 for the Nominating/Governance Committee. The Lead Director receives an additional annual fee of $30,000. Directors are reimbursed for travel and accommodation expenses incurred in connection with attending Board and committee meetings.

DirectorsNon-management directors may elect to defer all or a portion of their annual cash retainer or restricted stock unitsRSUs under our Deferral Plan for Nonemployee Directors. Deferred cash retainers and restricted stock unitsRSUs are converted to notional stock units, which are credited to individuals’ accounts along with dividend equivalents when dividends are paid on our common stock. Deferred restricted stock unitsamounts credited to director’s individual accounts are distributed in the form of common stock and deferred cash retainers and accrued dividend equivalents are distributed in cash, at a date specified by each director or upon such director’s departure from the Board.

   

 

Name

 

 

    Fees Earned    

    or Paid in Cash    

    ($)    

 

 

    Stock Awards    

    ($)(1)    

 

 

        Total        

        ($)        

 

 

Sherry S. Barrat

 

  

 

 

 

 

112,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    245,244    

 

 

 

   

 

William L. Bax

 

  

 

 

 

 

122,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    255,244    

 

 

 

   

 

D. John Coldman

 

  

 

 

 

 

97,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    230,244    

 

 

 

   

 

Frank E. English, Jr.

 

  

 

 

 

 

97,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    230,244    

 

 

 

   

 

Elbert O. Hand

 

  

 

 

 

 

102,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    235,244    

 

 

 

   

 

David S. Johnson

 

  

 

 

 

 

127,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    260,244    

 

 

 

   

 

Kay W. McCurdy

 

  

 

 

 

 

112,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    245,244    

 

 

 

   

 

Ralph J. Nicoletti

 

  

 

 

 

 

97,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    230,244    

 

 

 

   

 

Norman L. Rosenthal

 

  

 

 

 

 

97,500

 

 

 

  

 

 

 

 

132,744

 

 

 

  

 

 

 

 

    230,244    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

 

Fees Earned or Paid in Cash
($)(2)

 

 

Stock Awards
($)(3)

 

 

Total
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sherry Barrat

 

 

 

148,750

 

 

 

 

 

198,794

 

 

 

 

 

347,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William Bax

 

 

 

148,750

 

 

 

 

 

198,794

 

 

 

 

 

347,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Teresa Clarke

 

 

 

123,750

 

 

 

 

 

198,794

 

 

 

 

 

322,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John Coldman

 

 

 

123,750

 

 

 

 

 

198,794

 

 

 

 

 

322,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Johnson

 

 

 

158,750

 

 

 

 

 

198,794

 

 

 

 

 

357,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kay McCurdy(1)

 

 

 

35,000

 

 

 

 

 

—

 

 

 

 

 

35,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chris Miskel

 

 

 

138,750

 

 

 

 

 

198,794

 

 

 

 

 

337,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ralph Nicoletti

 

 

 

153,750

 

 

 

 

 

198,794

 

 

 

 

 

352,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Norman Rosenthal

 

 

 

123,750

 

 

 

 

 

198,794

 

 

 

 

 

322,544

 

 

(1)
Ms. McCurdy did not stand for re-election at our 2023 Annual Meeting.
(2)
Mr. Miskel has elected to defer cash retainer payments pursuant to the Deferral Plan for Nonemployee Directors.
(3)
This column represents the full grant date fair value of RSUs granted in 2023 in accordance with FASB ASC Topic 718, Compensation – Stock Compensation, except that in accordance with SEC rules, any estimate for forfeitures is excluded from, and does not reduce, such amounts. For additional information on the valuation assumptions with respect to awards of RSUs, refer to Note 12 to our consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2023. Each director had 920 unvested RSUs outstanding as of December 31, 2023. Messrs, Miskel and Nicoletti and Ms. Clarke have elected to defer RSU awards pursuant to the Deferral Plan for Nonemployee Directors.

(1)

14

This column represents the full grant date fair value of restricted stock units granted in 2017 in accordance with FASB ASC Topic 718,Compensation – Stock Compensation, except that in accordance with SEC rules, any estimate for forfeitures is excluded from, and does not reduce, such amounts. For additional information on the valuation assumptions with respect to awards of restricted stock units, refer to Note 11 to our consolidated financial statements in the Annual Report on Form10-K for the year ended December 31, 2017. Each director had 2,400 unvested restricted stock units outstanding as of December 31, 2017.

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LOGO

2018 PROXY STATEMENT

11

Corporate Governance

CORPORATE GOVERNANCE

Certain Relationships and Related Person Transactions

How We Review and Approve Related Person Transactions

The Company maintains a written Related Person Transactions Policy. We review all relationships and transactions exceeding $120,000 in which the company participates and in which any related person (our directors and executive officers or their immediate family members and any persons owning 5% or more of our common stock) had or will have a direct or indirect material interest.interest, subject to certain exceptions. These include certain transactions that do not require disclosure under Item 404 of Regulation S-K, such as compensation of our executive officers and directors, among others, and which are deemed pre-approved under our Related Person Transactions Policy. The company’s legal staff is primarily responsible for reviewing such relationships and transactions based on the facts and circumstances, and for developing and implementing processes and controls for obtaining and evaluating information about related person transactions. As required by SEC rules, we disclose in this Proxy Statement all such transactions that are determined to be directly or indirectly material to a related person.person and that are required to be disclosed under Item 404 of Regulation S-K. In addition, the Nominating/Governance Committee reviews and approves ratifies or disapproves any such related person transaction. In the course of reviewing and determining whether or not to approve or ratify a disclosable related person transaction, the Committee considers the following factors:

•
Nature of the related person’s interest in the transaction

•
Material transaction terms, including the amount involved

•
Whether the transaction is on terms no less favorable than could have been reached with an unrelated third party

•
For employment arrangements that require disclosure under Item 404 of Regulation S-K, whether compensation is commensurate with that of other employees with equivalent qualifications and responsibilities and holding similar positions

•
Importance and potential benefits of the transaction to the related person and to the company

•
Whether the transaction would impair a director or executive officer’s judgment to act in the company’s best interest

•
Whether the transaction was undertaken in the ordinary course of business

•
Any other matters the Committee deems appropriate, including the conflicts of interest and corporate opportunity provisions of our Global Standards of Business Conduct.

Related Person Transactions for 20172023

Tom Gallagher, our President and one of our named executive officers, is the brother of our CEO. His compensation was approved by the Compensation Committee and is disclosed in the 2023 Summary Compensation Table below. In 2017,2023, the following relatives of PatTom Gallagher were employed with us: (i) Michael Gallagher, his son, is a producer within our brokerage segment, and received total compensation of $868,927, and (ii) Kevin Gallagher, his son, is a strategic planning leader within our brokerage segment, and received total compensation of $454,599.

Patrick M. Gallagher, our Chief Operating Officer, is the son of our CEO. In 2023, he received total compensation of $3,352,594, which was reviewed and approved by the Compensation Committee.

In 2023, the following additional relatives of Pat Gallagher, our CEO, were employed with us: (i) Jennifer Gallagher, his sister, is the head of a specialty sales unit within our brokerage segment, and received total compensation of $944,297;$1,105,105; (ii) Shannon Gallagher, hisbrother-in-law daughter, is a vice presidentmarketing partnership development manager, and received total compensation of niche strategy$400,000; (iii) Sean Gallagher, his son, is a regional manager within our brokerage segment, and received total compensation of $619,217; (iii) one of$1,363,435; and (iv) Brendan Gallagher, his sons is a regional leader within our brokerage segment, and received compensation of $1,132,133; (iv) another son, is a branch manager within our brokerage segment, and received total compensation of $540,591;$1,046,697.

Jonathan Hudson, the son of Scott Hudson, one of our named executive officers, is a producer in our brokerage segment, and (v)received total compensation of $279,642 for 2023. Norah Johnson, daughter of David Johnson, one of our directors, is an account manager in our brokerage segment, and received total compensation of $124,175 for 2023. Tish Cavaness, the wife of Joel Cavaness, one of our executive officers, is a third son is also a branch managerclient service leader within our brokerage segment, and received total compensation of $732,273. A brother$418,000 for 2023.

The total compensation (salary, bonus, and the grant value of Jim Durkin is our leader for global alliancesequity and received compensation of $1,074,424. In addition, a daughter of David Johnson is a business development specialist within our brokerage segment and received compensation of $120,000. The compensationcash awards) of each related person described above was commensurate with that of other employees with equivalent qualifications and responsibilities and holding similar positions.

Tom Gallagher, one of our named executive officers, is a brother of our CEO. His compensation is disclosed in the2017 Summary Compensation Table below.

12

2024 PROXY STATEMENT

15

2018 PROXY STATEMENT

Corporate Governance

CORPORATE GOVERNANCE

Security Ownership by Certain Beneficial Owners and Management

The table below presents information concerning beneficial ownership of our common stock by: (i) each person we know to be the beneficial owner of more than 5% of our outstanding shares of common stock (as of December 31, 2017)2023); (ii) each of our named executive officers, directors and director nominees (as of March 20, 2018)18, 2024); and (iii) all of our executive officers and directors as a group (as of March 20, 2018)18, 2024). The percentage calculations in this table are based on a total of 182,045,873218,302,819 shares of our common stock outstanding as of the close of business on March 20, 2018.18, 2024. Unless otherwise indicated below, to our knowledge, the individuals and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned by them, subject to community property laws where applicable. In addition, unless otherwise indicated,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock Issuable Within 60
Days of March 18, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Shares of
Common
Stock(1)

 

Stock Options

 

Restricted Stock
Units (2)

 

Total Beneficial
Ownership

 

Percent of
Common Stock
Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5% Stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Vanguard Group (3)
100 Vanguard Blvd.
Malvern, PA 19355

 

 

 

25,553,064

 

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

 

25,553,064

 

 

 

 

 

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BlackRock, Inc. (4)
50 Hudson Yards
New York, NY 10001

 

 

 

17,415,095

 

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

 

17,415,095

 

 

 

 

 

8.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Named executive officers, directors and nominees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 

 

 

1,060,488

 

(5)

 

 

 

 

156,810

 

 

 

 

 

—

 

 

 

 

 

1,217,298

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug Howell

 

 

 

310,435

 

(6)

 

 

 

 

50,843

 

 

 

 

 

—

 

 

 

 

 

361,278

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom Gallagher

 

 

 

620,214

 

(7)

 

 

 

 

89,860

 

 

 

 

 

—

 

 

 

 

 

710,074

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Hudson

 

 

 

105,019

 

(8)

 

 

 

 

99,323

 

 

 

 

 

—

 

 

 

 

 

204,342

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt Bay

 

 

 

62,310

 

(9)

 

 

 

 

52,571

 

 

 

 

 

—

 

 

 

 

 

114,881

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sherry Barrat

 

 

 

19,838

 

 

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

20,758

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William Bax

 

 

 

46,984

 

 

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

47,904

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Teresa Clarke

 

 

 

1,960

 

 

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

2,880

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John Coldman

 

 

 

12,774

 

 

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

13,694

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Johnson

 

 

 

45,038

 

 

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

45,958

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chris Miskel

 

 

 

5,641

 

(10)

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

6,561

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ralph Nicoletti

 

 

 

14,549

 

 

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

15,469

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Norman Rosenthal

 

 

 

39,057

 

(11)

 

 

 

 

—

 

 

 

 

 

920

 

 

 

 

 

39,977

 

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All directors and executive officers as a group (20 people)

 

 

 

2,859,751

 

 

 

 

 

 

643,226

 

 

 

 

 

7,360

 

 

 

 

 

3,510,337

 

 

 

 

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Less than 1%

(1)
Includes “notional stock units” held under our SS&T Plan (see page 34) for executive officers. Under this plan, some of our executive officers have deferred equity awards upon vesting or elected to invest other deferred amounts into a Gallagher common stock fund. These deferred notional stock units are included because the addressplan permits participants to elect to move in and out of the Gallagher common stock fund and, as a result, participants have investment power with respect to the underlying shares.
(2)
All non-management director unvested RSUs vest immediately upon a director’s departure from the Board, and are included because a director could depart the Board at his or her discretion and acquire rights to the underlying stock within 60 days.
(3)
Share total obtained from a Schedule 13G/A filed on February 13, 2024 by The Vanguard Group. Vanguard disclosed that it had sole voting power with respect to zero of these shares, shared voting power with respect to 273,811 shares, sole investment power with respect to 24,644,664 shares, and shared investment power with respect to 908,400 shares.
(4)
Share total obtained from a Schedule 13G/A filed on January 25, 2024 by BlackRock, Inc. BlackRock disclosed that it had sole voting power with respect to 16,043,811 of these shares and sole investment power with respect to the full number of shares disclosed.
(5)
Includes 59,308 notional stock units (see footnote (1) above); 219,175 shares held in trust for all persons named belowthe benefit of his children by his wife, Anne Gallagher, and another, as trustees, and over which he has shared voting and shared investment power; 271,525 shares held in a revocable trust of which his wife is c/o Arthur J.the sole trustee and over which he has no voting or investment power and therefore disclaims beneficial ownership; 255,965 shares held by Elm Court LLC, a limited liability company of which the voting LLC membership interests are owned by Pat Gallagher & Co., 2850 Golf Road, Rolling Meadows, Illinois 60008-4002.

and the non-voting LLC membership interests are owned by a grantor retained annuity trust of which Pat Gallagher is the trustee; 66,703 shares held in an irrevocable trust of which he is the sole trustee; 23,448 shares held in trust for the benefit of his children of which he is the sole trustee; and 368 shares held in his 401(k) account.
(6)
Includes 212,672 notional stock units (see footnote (1) above); 3,165 shares held by his wife, over which he has no voting or investment power and therefore disclaims beneficial ownership; and 368 shares held in his 401(k) account.

    
     Common Stock Issuable Within 60
Days of March 20, 2018		       
     

Name

 

Shares of

Common
Stock(1)

  Stock Options  

Restricted Stock

Units (2)

  

Total Beneficial

Ownership

  

Percent of

Common Stock

Outstanding

 

5% Stockholders

 

     

The Vanguard Group (3)

100 Vanguard Blvd.

Malvern, PA 19355

  18,710,585   N/A   N/A   18,710,585   10.3% 
     

BlackRock, Inc. (4)

55 East 52nd Street

New York, NY 10022

  14,413,622   N/A   N/A   14,413,622   7.9% 

NEOs, directors and nominees

 

     

Pat Gallagher

  850,016(5)   134,435   —   984,451   * 
     

Doug Howell

  191,575(6)   80,768   —   272,343   * 
     

Jim Gault

  182,595(7)   63,235   —   245,830   * 
     

Jim Durkin

  316,060(8)   57,235   —   373,295   * 
     

Tom Gallagher

  413,804(9)   63,901   —   477,705   * 
     

Sherry S. Barrat

  12,309   —   2,400   14,709   * 
     

William L. Bax

  37,270   —   2,400   39,670   * 
     

D. John Coldman

  4,847   —   2,400   7,247   * 
     

Frank E. English, Jr.

  10,000   —   2,400   12,400   * 
     

Elbert O. Hand

  30,800   —   2,400   33,200   * 
     

David S. Johnson

  48,828   —   2,400   51,228   * 
     

Kay W. McCurdy

  33,732   —   2,400   36,132   * 
     

Ralph J. Nicoletti

  3,817   —   2,400   6,217   * 
     

Norman L. Rosenthal

  27,625(10)   —   2,400   30,025   * 
     

All directors and executive officers as a group (20 people)

  2,357,295   603,648   21,600   2,982,543   1.6% 

*

16

Less than 1%

img134299666_7.jpg 

(1)

Includes “notional stock units” held under our Supplemental Plan (see page 28) for executive officers. Under this plan, some of our executive officers have deferred restricted stock units upon vesting or elected to invest other deferred amounts into a Gallagher common stock fund. These deferred notional stock units are included because the plan permits participants to elect to move in and out of the Gallagher common stock fund and, as a result, participants have investment power with respect to the underlying shares.

Corporate Governance

LOGO

2018 PROXY STATEMENT

13

(7)
Includes 10,876 notional stock units (see footnote (1) above); 62,295 shares held in a grantor retained annuity trust of which he is the sole beneficiary; 118,440 shares held in trusts for the benefit of his children, of which his wife is the sole trustee, and over which he has no voting or investment power and disclaims beneficial ownership; 32,428 shares held by his wife, over which he has no voting or investment power; 66,709 shares held in an irrevocable trust of which he is the sole trustee; and 368 shares held in his 401(k) account.
(8)
Includes 3,269 notional stock units (see footnote (1) above) and 288 shares held in his 401(k) account.
(9)
Includes 9,676 notional stock units (see footnote (1) above) and 368 shares held in his 401(k) account.
(10)
Includes 1,470 notional stock units held under our Deferral Plan for Nonemployee Directors (see page 14).
(11)
Includes 2,500 shares held in a joint brokerage account with Caryl Rosenthal and 2,000 shares held in a joint brokerage account with Marisa Rosenthal. Dr. Rosenthal has shared voting and investment power with respect to these shares.

CORPORATE GOVERNANCE

(2)Allnon-employee director unvested restricted stock units vest immediately upon a director’s departure from the Board, and are included because a director could depart the Board at his or her discretion and acquire rights to the underlying stock within 60 days.

(3)Share total obtained from a Schedule 13G/A filed on February 9, 2018 by The Vanguard Group. Vanguard disclosed that it had sole voting power with respect to 251,672 of these shares, shared voting power with respect to 31,498 shares, sole investment power with respect to 18,427,219 shares, and shared investment power with respect to 283,366 shares.

(4)Share total obtained from a Schedule 13G/A filed on January 25, 2018 by BlackRock, Inc. BlackRock disclosed that it had sole voting power with respect to 12,857,557 of these shares and sole investment power with respect to the full number of shares disclosed.

(5)Includes 52,548 notional stock units (see footnote (1) above); 217,612 shares held in trust for the benefit of his children by his wife, Anne M. Gallagher, and another, as trustees, and over which he has shared voting and shared investment power; 251,083 shares held in a revocable trust of which his wife is the sole trustee and over which he has no voting or investment power and therefore disclaims beneficial ownership; 205,965 shares held by Elm Court LLC, a limited liability company of which the voting LLC membership interests are owned by Pat Gallagher and thenon-voting LLC membership interests are owned by a grantor retained annuity trust of which Pat Gallagher is the trustee; and 66,703 shares held in an irrevocable trust of which he is the sole trustee.

(6)Includes 146,830 notional stock units (see footnote (1) above); 2,271 shares held by his wife, over which he has no voting or investment power and therefore disclaims beneficial ownership; and 10,915 shares held in a margin securities account at a brokerage firm, with no loans outstanding in the account.

(7)Includes 48,708 shares held by his wife, over which he has shared voting power.

(8)Includes 8,889 notional stock units (see footnote (1) above).

(9)Includes 4,861 notional stock units (see footnote (1) above); 86,760 shares held in a grantor retained annuity trust of which he is the sole beneficiary; 55,280 shares held in trusts for the benefit of his children, of which his wife is the sole trustee, and over which he has no voting or investment power and disclaims beneficial ownership; 31,671 shares held by his wife, over which he has no voting or investment power; and 66,709 shares held in an irrevocable trust of which he is the sole trustee.

(10)Includes 2,500 shares held in a joint brokerage account with Caryl G. Rosenthal and 2,000 shares held in a joint brokerage account with Marisa F. Rosenthal. Dr. Rosenthal has shared voting and investment power with respect to these shares.

Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports

OurSection 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, directors and persons who own more than 10% stockholders are required underof the Exchange ActCompany’s common stock, to file reports of ownership and changes in ownership with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of the NYSE. Copies of theseCompany’s common stock. The Company assists its directors and executive officers by monitoring transactions and completing and filing Section 16 reports must also be furnished to us. Basedon their behalf. To our knowledge, based solely on a review of copies of Forms 3, 4the filed reports and 5 furnished to us or filed with the SEC, or written representations that no additionalother reports wereare required, we believe that duringeach of the last fiscal year, ourCompany’s directors and executive officers directors and 10% stockholderscomplied with all such filing requirements in a timely manner during 2023, other than with respect to a Form 4 filed all reports required by Section 16(a)on behalf of the Exchange Act.Pat Gallagher to report an exercise of stock options on February 6, 2023, which, due to an administrative error, was reported one day late.

14

2024 PROXY STATEMENT

17

2018 PROXY STATEMENT

Corporate Governance

CORPORATE GOVERNANCE

Equity Compensation Plan Information

The following table provides information as of December 31, 2017,2023, regarding the number of shares of our common stock that may be issued under our equity compensation plans.

  
 (a)  (b)  (c) 

 

 

 

 

 

 

 

 

 

(a)

 

(b)

 

(c)

Plan Category

 

Number of securities

to be issued

upon exercise of
outstanding options,

warrants and rights

  

Weighted-average

exercise price of
outstanding options,

warrants and rights

  

Number of securities remaining

available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))

 

 

Number of securities
to be issued upon
exercise of
outstanding
options, warrants
and rights

 

Weighted-average
exercise price of
outstanding options,
warrants and rights

 

Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity compensation plans approved by security holders

  11,318,747(1)   45.27(2)   23,332,905(3) 

 

 

10,040,567

 

(1)

 

 

123.85

 

(2)

 

 

17,249,089

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

  8,000(4)   —   — 

 

 

12,488

 

(4)

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

  11,326,747   45.27(2)   23,332,905 

 

 

10,053,054

 

 

 

123.85

 

(2)

 

 

17,249,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)This amount includes the following:

9,520,993(1)
This amount includes the following:
•
7,857,981 shares that may be issued in connection with outstanding stock options;

206,586•
179,773 shares that may be issued in connection with earned performance share units,PSUs, and unearned performance share unitsPSUs valued at target levels; and

1,591,168•
2,015,197 unvested restrictedRSUs.
(2)
Indicates the weighted average exercise price of the outstanding stock units.options included in column (a).

(2)Indicates the weighted average exercise price of the outstanding stock options included in column (a).

(3)This amount includes the following:

16,162,220(3)
This amount includes the following:
•
12,213,485 shares available under the 20172022 Long-Term Incentive Plan; and

7,170,685•
5,035,604 shares available under our Employee Stock Purchase Plan.
(4)
This amount represents deferred RSUs under the Restricted Stock Plan, an equity compensation plan not approved by stockholders under which we have outstanding awards. All of our directors, officers and employees were eligible to receive awards under the plan, which provided for the grant of contingent rights to receive shares of our common stock. Awards under the plan were granted at the discretion of the Compensation Committee. Each award granted under the plan represents the right of the holder of the award to receive shares of our common stock, cash or a combination of shares and cash, subject to the holder’s continued employment with us for a period of time after the grant date of the award. The Compensation Committee determined each recipient of an award under the plan, the number of shares of common stock subject to such an award and the period of continued employment required for the vesting of such award. The last year we made awards under this plan was 2009.

(4)

18

This amount represents deferred restricted stock units under the Restricted Stock Plan, an equity compensation plans not approved by stockholders under which we have outstanding awards. All of our directors, officers and employees were eligible to receive awards under the plan, which provided for the grant of contingent rights to receive shares of our common stock. Awards under the plan were granted at the discretion of the Compensation Committee. Each award granted under the plan represents the right of the holder of the award to receive shares of our common stock, cash or a combination of shares and cash, subject to the holder’s continued employment with us for a period of time after the grant date of the award. The Compensation Committee determined each recipient of an award under the plan, the number of shares of common stock subject to such an award and the period of continued employment required for the vesting of such award. The last year we made awards under this plan was 2009.

img134299666_7.jpg 

LOGO

2018 PROXY STATEMENT

15

Audit Matters

Audit Matters

ItemITEM 2 – Ratification of Appointment of Independent Auditor

The Audit Committee has considered the qualifications of Ernst & Young LLP and has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2024. As a matter of good governance, the Board is submitting the appointment of Ernst & Young LLP to our stockholders for ratification. If the appointment of Ernst & Young LLP is not ratified, the Audit Committee will consider the outcome of this vote in its future deliberations regarding the selection of our independent registered public accounting firm.

Principal Accountant Fees and Services

The following is a summary of Ernst & Young LLP’s fees for professional services rendered to us for the fiscal years ended December 31, 20172023 and 2016:2022:

  

2023

 

2022

 2017  2016 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audit Fees(1)

 $5,070,000  $4,729,000 

$

7,374,000

 

 

$

6,371,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audit-Related Fees(2)

  1,005,000   814,000 

 

2,033,000

 

 

 

1,828,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Compliance Fees(3)

  1,259,000   1,271,000 

 

610,000

 

 

 

208,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Advisory Fees(4)

  3,902,000   3,955,000 

 

466,000

 

 

 

554,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other Fees(5)

  3,000   9,000 

 

11,000

 

 

 

6,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 $11,239,000  $10,778,000 

$

10,494,000

 

 

$

8,967,000

 

 

 

 

 

 

 

 

(1)Audit fees include fees associated with the annual audit of our company and our subsidiaries and the effectiveness of internal control over financial reporting, the review of our Quarterly Reports on Form10-Q and Annual Report on Form10-K, and statutory audits required internationally.
(1)
Audit fees include fees associated with the annual audit of our company and our subsidiaries and the effectiveness of internal control over financial reporting, the review of our Quarterly Reports on Form 10-Q and Annual Report on Form 10-K, and statutory audits required internationally.
(2)
Audit-related fees principally include issuance of service auditor reports (SOC 1 and SOC 2) related to operations at several of our subsidiaries, due diligence in connection with acquisitions, debt and equity issuance comfort letter procedures and advisory work related to our compliance with foreign statutory requirements.
(3)
Tax compliance fees include fees associated with the preparation of our annual Federal, state and international tax returns.
(4)
Tax advisory fees include tax advice and tax planning related to Federal, state and international tax matters.
(5)
All other fees principally include fees for access to an online accounting information database.

(2)Audit-related fees principally include due diligence in connection with acquisitions, issuance of service auditor reports (SOC 1 and SOC 2) related to operations at one of our subsidiaries and advisory work related to our compliance with foreign statutory requirements.

(3)Tax compliance fees include fees associated with the preparation of our annual Federal and state tax returns.

(4)Tax advisory fees include tax advice and tax planning related to Federal, state and international tax matters.

(5)All other fees principally include fees for access to an online accounting and tax information database.

Audit fees were higher in 20172023 due to increases in part tofees charged for audit work associated with the implementationservices and adoptionan increase in scope of services provided primarily as a new revenue recognition accounting standard effective January 1, 2018.result of acquisition activity during 2023 and other audit-related matters. Audit-related fees were higher in 20172023 due to increased activity related to debt and equity registration statements, service auditor reports and compliance-related matters. Tax advisory fees were lower in part2023 due to additional SOC 2a decrease in scope of services. Tax compliance fees were higher in 2023 due to an increase in scope of services related work.to filing amended prior year income tax returns.

Audit CommitteePre-Approval Policies and Procedures

All audit services, audit-related services, tax services and other services for fiscal years 20172023 and 20162022 werepre-approved by the Audit Committee. It is the policy of the Audit Committee topre-approve the engagement of Ernst & Young LLP before we engage such firm to render audit or other permittednon-audit services. The Audit Committee has adopted procedures forpre-approving all audit and permittednon-audit services provided by Ernst & Young LLP. The Audit Committee annuallypre-approves a list of specific services and categories of services, subject to a specified cost level. Part of this approval process includes making a determination as to whether permittednon-audit services are consistent with the SEC’s rules on auditor independence. The Audit Committee has delegatedpre-approval authority to the ChairmanChair of the Audit Committee for the types of services that Ernst & Young LLP has historically been retained to perform related to integrated audit and other recurring services, subject to reporting any such approvals at the next Audit Committee meeting.

A representative of Ernst & Young LLP is expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement if the representative so desires.

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THE BOARD RECOMMENDS THAT YOU VOTEFORRATIFICATION OF THE APPOINTMENT OF ERNST

The Board recommends that you vote “FOR” ratification of the appointment of Ernst & YOUNGYoung LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBERas our independent registered public accounting firm for the year ending December 31, 20182024

16

2024 PROXY STATEMENT

19

2018 PROXY STATEMENT

Audit Committee Report

The Audit Committee represents and assists the Board in fulfilling its responsibilities for general oversight of the integrity of the company’s financial statements, risk assessment and risk management, and compliance with legal and regulatory requirements. The Audit Committee manages the company’s relationship with and is responsible for the appointment, retention, termination and compensation of Ernst & Young LLP. Ernst & Young LLP has served as the company’s auditor since 1973. The Audit Committee reviews Ernst & Young LLP’s independence, capabilities, expertise, performance and fees in deciding whether to retain its services.

The company’s management is responsible for the preparation, presentation and integrity of its consolidated financial statements, accounting and financial reporting principles, and internal controls designed to assure compliance with accounting standards and applicable laws and regulations. Ernst & Young LLP is responsible for auditing the company’s consolidated financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles and for auditing the effectiveness of the company’s internal controls over financial reporting. The Audit Committee monitors the financial reporting process and reports its findings to the Board.

The Audit Committee carried out its duties and responsibilities, including the following specific actions:

Audit Matters

•

Audit Committee Report

The Audit Committee represents and assists the Board in fulfilling its responsibilities for general oversight of the integrity of the company’s financial statements, risk assessment and risk management, and compliance with legal and regulatory requirements. The Audit Committee manages the company’s relationship with and is responsible for the appointment, retention, termination and compensation of Ernst & Young LLP. Ernst & Young LLP has served as the company’s auditor since 1973. The Audit Committee reviews Ernst & Young LLP’s independence, capabilities, expertise, performance and fees in deciding whether to retain its services.

The company’s management is responsible for the preparation, presentation and integrity of its consolidated financial statements, accounting and financial reporting principles, and internal controls designed to assure compliance with accounting standards and applicable laws and regulations. Ernst & Young LLP is responsible for auditing the company’s consolidated financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles and for auditing the effectiveness of the company’s internal controls over financial reporting. The Audit Committee monitors the financial reporting process and reports its findings to the Board.

The Audit Committee carried out its duties and responsibilities, including the following specific actions:

•
Reviewed and discussed with management and Ernst & Young LLP the company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 20172023 and its internal control over financial reporting as of December 31, 2017;

2023;
•
Reviewed and discussed with Ernst & Young LLP all matters required to be discussed by theapplicable standards of the Public Company Accounting Oversight Board (PCAOB); and

the SEC; and
•
Obtained the written disclosures and letter from Ernst & Young LLP regarding its communications with the Audit Committee concerning Ernst & Young LLP’s independence as required by the PCAOB, including the requirements under PCAOB Rule 3526, and has discussed with Ernst & Young LLP its independence.

Based on these reviews and discussions with management and Ernst & Young LLP, the Audit Committee recommended to the Board that the company’s audited consolidated financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for filing with the SEC. The Audit Committee believes that the retention of Ernst & Young LLP to serve as the company’s independent registered public accounting firm is in the best interests of the company.

AUDIT COMMITTEE

Ralph Nicoletti (Chair)

William Bax

Teresa Clarke

Norman Rosenthal

Based on these reviews and discussions with management and Ernst & Young LLP, the Audit Committee recommended to the Board that the company’s audited consolidated financial statements be included in its Annual Report on Form10-K for the fiscal year ended December 31, 2017, for filing with the SEC. The Audit Committee believes that the retention of Ernst & Young LLP to serve as the company’s independent registered public accounting firm is in the best interests of the company.

AUDIT COMMITTEE

William L. Bax (Chair)

Frank E. English, Jr.

Ralph J. Nicoletti

Norman L. Rosenthal

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2018 PROXY STATEMENT

17

Compensation Discussion and Analysis

Compensation Discussion and Analysis

COMPENSATION TOPICS

This Compensation Discussion and Analysis discusses the compensation of the following named executive officers:

•Pat Gallagher

Chairman, President and Chief Executive Officer

•Doug Howell

Chief Financial Officer

•Jim Gault

Corporate VP and Chairman – Global P/C Brokerage

•Jim Durkin

Corporate VP and Chairman – Employee Benefit Consulting and Brokerage

•Tom Gallagher

Corporate VP and CEO – Global P/C Brokerage

Non-GAAP financial measures. See Exhibit A for additional information regarding thenon-GAAP financial measures referred to

Overview of Our Executive Compensation Program

22

Pat Gallagher

Chairman and

Chief Executive Officer

Doug Howell

Chief Financial

Officer

Tom Gallagher

President

Scott Hudson

President –

Risk Management

Walt Bay

General Counsel and

Secretary

Key Executive Compensation Practices

23

2023 Compensation

24

Compensation Committee Report

32

Executive Compensation Tables

33

•
2023 Summary Compensation Table

33

•
2023 Grants of Plan-Based Awards

35

•
Outstanding Equity Awards at 2023 Fiscal Year-End

36

•
2023 Option Exercises and Stock Vested

37

•
2023 Pension Benefits

38

•
2023 Nonqualified Deferred Compensation

39

•
2023 Potential Payments upon Termination or Change in this Proxy Statement (adjusted revenue, adjusted EBITDAC, and adjusted EBITDAC per share, as defined for our annual cash incentive and performance share unit programs, and adjusted EBITDAC margin and organic revenue growth), including required reconciliations to the most directly comparable GAAP financial measures.Control

39

See Exhibit A for additional information regarding the non-GAAP financial measures referred to in this Proxy Statement (adjusted revenue, adjusted EBITDAC, adjusted EBITDAC per share, adjusted EBITDAC margin and organic revenue growth as used in our annual cash incentive and performance share unit programs), including required reconciliations to the most directly comparable GAAP financial measures.

2024 PROXY STATEMENT

21

Compensation Discussion and Analysis

Overview of Our Executive Compensation Program

The Compensation Committee (the Committee) believes that our executive compensation program for named executive officers is balancedpromotes the long-term interests of the company and reasonable and helps us retain and motivate highly talented business leaders through a range of economic cycles.its stockholders. We reward performance by emphasizing a balance of short- and long-term compensation vehicles. Annual cash incentives are awarded based on achievement of financial performance measures and the Committee’s assessment of individual performance. Further details on theThe key principles and objectivesfeatures of our compensationthe program are set forth below.

Principle

Program Features

PrinciplePay for Performance

Features of Compensation Program Aligned to Principle

Pay-for-Performance

•
Our program emphasizesat-risk incentive award opportunities which are tied to specifiedkey financial objectives.

measures.

•  Our
Maximum award opportunities under our annual cash incentive program isare determined based primarily on the achievement of key company performance objectivesadjusted revenue and adjusted EBITDAC growth goals set by the Compensation Committee.

Final award determinations reflect the Committee’s consideration of additional factors including organic revenue growth, adjusted EBITDAC margin, divisional performance and individual achievement, including progress toward inclusion and diversity goals.

•  Our
Performance share units (PSUs), representing 75% of our CEO’s and 60% of other executive officers’ long-term incentive program awardscompensation, are tied to a combination of stock price performance and achievement of performance objectives established by the Compensation Committee.

three-year growth in adjusted EBITDAC per share.

Stockholder Alignment

•
PSUs, stock options and Deferred Equity Participation Plan (DEPP) awards encourage executive officers to pursue the growth of our business in a way that benefits stockholders over the long term.
•
Our executive officers own significant amounts of company stock and are subject to stock ownership guidelines.

Attract and Retain

World-Class Talent

•
Compensation elements and award opportunities are designed to positionenable us to compete effectively for insurance, business, financial or other executive talent.

•
The Compensation Committee engages aan external compensation consultant to conduct a market assessment to ensure that our program is highly competitive.

•
High performers are awarded above-target pay when company performance goals are exceeded.

Stockholder Alignment

•  We align the long-term financial interests of our named executive officers and stockholders through (i) performance share units, stock options and restricted stock units with long vesting periods and (ii) our Deferred Equity Participation Plan, which encourages
DEPP awards encourage retention and alignment with long-term stockholder interests by requiring our named executive officers to remain employed with us through at least age 62 in order to vest in their awards.

•  Pursuant to stock ownership guidelines, senior executives own significant amounts of Gallagher stock throughout the term of their employment (six times salary for CEO, four times for CFO and three times for other named executive officers). All of our named executive officers meet these guidelines.

Committee Discretion

•
While annual incentive awards are determined primarily based on achievement of company performance objectives, the Compensation Committee exercises discretion when necessary to adjust awards based on factors such as organic revenue growth, individual or division performance, changes in accounting standards, economic or business conditions, inclusion and diversity objectives, adherence to companyour cultural values or similar matters.

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18

Compensation Discussion and Analysis

2018 PROXY STATEMENT

Key Executive Compensation Practices

COMPENSATION DISCUSSION AND ANALYSIS

Key Pay and Governance Practices

The Compensation Committee continually evaluates developingemerging best practices inrelated to executive compensation and governance and considers modifications to our executive compensation program that support our business strategies,strategic objectives, provide an appropriate balance of risk and reward for our named executive officers, and align their compensation with the long-term stockholder interests.interests of the company. In 2023, stockholders expressed support for our executive compensation program, approving our “say on pay” proposal with 92.5% of the vote. The following charts summarize certain of our key pay and governanceexecutive compensation practices.

What We Do

What We Don’t Do

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Double-trigger change-in-control agreements

Double-triggerimg134299666_21.jpg 

No automatic single-trigger change-in-control payments in our equity plans or our change in control agreements

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Our 2017 Long-Term Incentive Plan requiresequity plans require the Board to approve any accelerated payouts on a change in control (i.e., not single-trigger)(no automatic single-trigger vesting)

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No new excise tax gross-ups in executive officer change-in-control agreements

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Performance share units (PSUs)PSUs with three-year performance period beginning in 2017

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No guaranteed incentive awards for executive officers

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Minimum vesting requirements for equity awards (equity plans specify minimum of three years for full value awards granted to employees and one year for stock options). In practice,under our plans. PSUs cliff vest in three years and stock options vest ratably over years three through five and RSUs cliff vest in five years

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Stock ownership guidelines for executive officers and directors

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Clawback policy in effect for equity and cash incentive awards

What We Don’t Do

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No single-triggerchange-in-control payments in either the 2017 Long-Term Incentive Plan or our change in control agreements

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No guaranteed incentive awards for senior executives

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No employment agreement with any of our named executive officers

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Executive compensation clawbacks (see below)

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No pledgingpledges of common stock by directors or executive officers and directors without prior approval

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Stock ownership guidelines (see below)

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No hedging of common stock by directors, executive officers and directors

or other employees

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Equity grant policy, including a uniform grant date for annual equity awards

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No excessive perquisites or related taxgross-ups

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No new excise taxgross-ups upon change in control

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No stock option repricing or stock option cash buyouts or liberal share recycling in equity plans

2017 Stockholder VotesClawbacks. As required by the NYSE, the Board has adopted an Incentive Compensation Recovery Policy under which the company will seek to recover incentive compensation “erroneously awarded” to Section 16 Officers in the event of a qualifying accounting restatement. In addition, our plan documents and Stockholder Outreach

When making determinations regarding corporate governanceaward agreements provide that the company may recover executive officers’ annual cash incentive and executive compensation, our Boardequity awards in the event of Directors pays close attentioncertain material misconduct or behavior that could cause harm to stockholders or material reputational risk to the views of our stockholders,company, including the 96% and 94% approval rates received in 2017 by our “say on pay” proposal and our 2017 Long-Term Incentive Plan, respectively. In addition, members of our management team engaged with our largest stockholdersactivity contrary, inimical, or harmful to discuss corporate governance and executive compensation matters during the year.

Based in part on the feedback we received from stockholders, the Compensation Committee changed the performance measure for the performance share units (PSUs) granted under our equity plans. In 2017 we moved to a three-year performance period for our PSU grants. Payouts of PSUs will be based on average growth in adjusted EBITDAC per share over a three-year measurement period. The Committee believes that the performance measure is responsive to stockholder preference for a long-term performance period. The Committee also believes that growth in adjusted EBITDAC per share is a key driver of long-term stock price appreciation, thereby further aligning the interests of the company, that violates company policies including our executivesInsider Trading Policy and Global Standards of Business Conduct or conduct that could give rise to criminal or civil penalties.

Stock Ownership Guidelines. As set forth in our Governance Guidelines, executive officers with thoseat least five years of service are expected to own an amount of our stockholders.common stock with a value equal to a multiple of his or her annualized base salary, as follows: six times annualized base salary for the Chief Executive Officer, four times annualized base salary for the Chief Financial Officer and three times annualized base salary for the other executive officers. For purposes of determining whether executive officers have met the stock ownership guidelines, shares owned directly and net shares underlying vested stock options, unvested restricted stock units, deferred vested shares, and amounts deemed invested in company stock through the company’s nonqualified deferred compensation plans (including the DEPP and the SS&T Plan), are included in calculating ownership levels. All of our executive officers are currently in compliance with these guidelines. See “Director Compensation” for information regarding stock ownership guidelines applicable to our directors.

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2024 PROXY STATEMENT

2018 PROXY STATEMENT

19

23

Compensation Discussion and Analysis

2023 Compensation

COMPENSATION DISCUSSION AND ANALYSIS

2017 Compensation

Components of Compensation for Named Executive Officers

Compensation Element

Objective

Key Features

Compensation Element

Base Salary

Objective

Key Features

Base Salary

CompensateRecognize the experience and expertise of our named executive officers and compensate them for fulfilling the regular duties and responsibilities of their positions

Base salarysalaries reflect internal pay equity considerations and may be increased from time to time based on job performance, promotion into a new role, expansion of duties, or market conditions

See 2023 Compensation Actions for the 2023 base salary decisions for our named executive officers

Annual Cash Incentives

Reward strong operational and financial performance that further short-term strategic objectives

Maximum annual cash incentive opportunities are based on a combination of the company’s growth in adjusted EBITDAC andtied to significant growth in adjusted revenue and actualadjusted EBITDAC. Final awards are subject to the Compensation Committee’s discretion and are determined by such Committee based on various factors, including the company’s organic revenue growth, individual or division performance, changes in accounting standards, economic or business conditions, inclusion and divisional financial performancediversity objectives, adherence to our cultural values or similar matters

See page 2125 for more information

Long-Term Incentives

Performance share units (PSUs), stock options and restricted stock units

Tie a significant portion of compensation to our long- termlong-term performance, promote retention of named executive officers and align the financial interests of named executive officers with those of stockholders

Long-term incentive opportunities are consideredat-risk. They are greater for named executive officers with a greater direct impact on long-term company performance

PSUs and stock options and restricted stock units each tie named executive officers’ long-term wealth to the performance of our stock while multi-year vesting requirements reinforce sustainable value creation. Five-year cliff vesting for restricted stock units,creation and vesting over years three through five for stock options, promotespromote retention of key executive officers

See pages 2125 to 2329 for more information

Deferred Equity Participation Plan (DEPP)

Promote retention of named executive officers and align their financial interests with those of stockholders

Vesting of awards is delayed until named executive officers reach age 62, and forone-year increments after such age

Each named executive officer has made an irrevocable electionelections to invest their awards in a fund representing our common stock

See page 2834 for more information

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2018 PROXY STATEMENT

Compensation Discussion and Analysis

COMPENSATION DISCUSSION AND ANALYSIS

Annual Cash Incentives

In 2017,2023, consistent with performance results, the Compensation Committee approved maximum awards under our annual cash incentive opportunities, to beprogram, determined as follows: (i) target award opportunitiesawards of 150%225% of base salary for our CEO and 100%125% of base salary for our other named executive officers (these percentages were unchanged from 2022), multiplied by (ii) a percentage determined by the combination of adjusted revenue growth and adjusted EBITDAC growth in the year of performance, as set forth in the table below. The percentages in the table below are maximum award opportunities and the Committee retains discretion to reduce awards for performance that does not meet its objectives.

 

 

 

 

 

 

 

Adjusted Revenue Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0% to 2.49%

2.5% to 4.99%

5% to 7.49%

7.5% to 9.99%

≥ 10%

 

0% to 4.99%

 

100%

 

 

100%

 

 

100%

 

 

100%

 

 

100%

Adjusted

5% to 9.99%

 

100%

 

 

100%

 

 

125%

 

 

125%

 

 

150%

EBITDAC

10% to 13.99%

 

100%

 

 

125%

 

 

150%

 

 

150%

 

 

175%

Growth*

14% to 19.99%

 

100%

 

 

125%

 

 

150%

 

 

175%

 

 

200%

 

≥ 20%

 

100%

 

 

150%

 

 

175%

 

 

200%

 

 

200%

* We define “adjusted EBITDAC” for our annual cash incentives and PSUs as follows: EBITDAC for the brokerage and risk management segments excluding (i) gains on sales of books of business, (ii) lease abandonment and workforce termination charges, and (iii) the effect of foreign currency translation. Unlike adjusted EBITDAC as presented in our most recently filed Annual Report on Form 10-K, in this context the measure does not exclude acquisition integration costs other than de minimis amounts included therein related to severance costs.

For the annual cash incentive program, the Compensation Committee uses adjusted revenue growth and adjusted EBITDAC growth as defined above because it believes these measures:

    

 

 

Adjusted Revenue Growth*($B)

 

    

0% to 2.49%

 

 

2.5% to 4.99%

 

 

 

5% to 7.49%

 

 

 

7.5% to 9.99%

 

 

 

> 10%

 

       

Adjusted

EBITDAC

Growth*

 

 

    0% to 4.99%    

 

 

 

100%

 

 

 

100%

 

 

 

100%

 

 

 

100%

 

 

 

100%

 

 

 

    5% to 9.99%    

 

 

 

100%

 

 

 

100%

 

 

 

125%

 

 

 

125%

 

 

 

150%

 

 

 

    10% to 14.99%    

 

 

 

100%

 

 

 

125%

 

 

 

150%

 

 

 

150%

 

 

 

175%

 

 

 

    15-19.99%    

 

 

 

100%

 

 

 

125%

 

 

 

150%

 

 

 

175%

 

 

 

200%

 

 

 

    >20%    

 

 

 

100%

 

 

 

150%

 

 

 

175%

 

 

 

200%

 

 

 

200%

 

•
incentivize our executive officers to make business decisions that align with the long-term interests of our stockholders,
•
hold our executive officers accountable for integration expenses associated with our merger and acquisition activity, and
•
provide strong line of sight between operating decisions and the annual cash incentives earned by our executive officers.

*We define “adjusted revenue” the same here as we do in our other filings (i.e., revenue excluding gains on sales of books of business and adjusted to remove the effect of foreign currency translation). However, we define “adjusted EBITDAC” for our annual cash incentive and performance share unit programs as follows: EBITDAC excluding (i) gains on sales of books of business, (ii) lease abandonment and workforce termination charges, and (iii) the effect of foreign currency translation. Unlike adjusted EBITDAC as presented in our most recent earnings release, in this context the measure doesnot exclude acquisition integration costs and other acquisition-related adjustments. The Committee believes that including the impact of acquisition-related expenses increases management accountability around the execution of our acquisition strategy.

In 2017,2023, we achieved adjusted revenue growth of 8.7%18.7% and adjusted EBITDAC growth of 13.9%19.0%. Based on this performance, as highlighted in the table above, each named executive officer qualified for ana maximum award opportunity of 150%200% of his target award. Final awards discussed below for each named executive officer, discussed under 2023 Compensation Actions, were determined byin the Committee based on various factors, including the company’s organic growth performance and divisional financial performance.

Performance Share Units (PSUs)

In 2017,discretion of the Compensation Committee grantedtaking into account achievements of the company, the applicable division and each individual, among other factors.

Long-Term Incentives

In 2023, the Compensation Committee determined a target long-term incentive award value (as a percentage of base salary) for each named executive officer. The Committee based this target value upon a number of factors including retention considerations, internal pay equity, our historical practices and external market data (see discussion of pay comparison groups on page 31). The Compensation Committee allocated the target award value for each named executive officer between PSUs and stock options. PSUs continue to make up the largest portion of each named executive officer’s award due to the Committee’s commitment to drive business performance and align executive interests with stockholder interests.

For the PSUs, the Compensation Committee uses a target PSU award. The percentagethree-year average of adjusted EBITDAC per share growth (as defined) because it believes this measure:

•
incentivizes our executive officers to make business decisions that align with the long-term interests of our stockholders,
•
holds our executive officers accountable for integration expenses associated with our merger and acquisition activity,
•
provides strong line of sight between operating decisions and the long-term incentives earned by our executive officers, and
•
by calculating it on a per-share basis, ensures that we maintain an optimal capital structure and act as effective stewards of our stockholders’ investment.

2024 PROXY STATEMENT

25

Compensation Discussion and Analysis

Set forth below is the target award that isvalue and allocation between award types for each named executive officer. See 2023 Compensation Actions for the actual grant date fair value of the PSU and stock option awards granted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Named Executive
Officer

Target
Percent
of Salary*

Target Grant
Amount

Performance
Share Units

Stock
Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 

435%

 

 

$

5,655,000

 

 

 

75%

 

 

25%

 

Doug Howell

 

150%

 

 

$

1,425,000

 

 

 

60%

 

 

40%

 

Tom Gallagher

 

150%

 

 

$

1,500,000

 

 

 

60%

 

 

40%

 

Scott Hudson

 

150%

 

 

$

1,125,000

 

 

 

60%

 

 

40%

 

Walt Bay

 

150%

 

 

$

1,112,500

 

 

 

60%

 

 

40%

 

* See “Comparative Market Assessment” on page 31 for more information regarding these percentages.

PSUs. PSUs are granted on a provisional basis and are earned will be based on our average annual performancegrowth in “adjusted EBITDAC” per share (see the definition of “adjusted EBITDAC” under Annual Cash Incentives) over a three-year performance period, as set forthperiod. The award is forfeited for growth less than 4%; 4-9% growth results in a number of earned PSUs interpolated on a straight-line basis between 50% and 100%; 9-14% growth results in a number of earned PSUs interpolated on a straight-line basis between 100% and 200%; and growth of 14% and above results in named executive officers earning 200% of their original award amounts. Earned PSUs vest on the table below.third anniversary of the grant date and settle in shares. For 2017,2023, our one-year growth in adjusted EBITDAC per share was 12.3%16.4%. PSUs granted in 20172023 and earned on the basis of 2017-2019average 2023-2025 performance will cliff vest on March 16, 2020,15, 2026 and PSUs granted in 2022 and earned on the basis of average 2022-2024 performance will vest on March 15, 2025. Based on 2021-2023 average annual growth in adjusted EBITDAC per share of 13.7%, named executive officers earned 194% of PSUs granted in 2021. See Outstanding Equity Awards at 2023 Fiscal Year End and 2023 Option Exercises and Stock Vested for more information.

Stock Options. Stock options vest one-third on each of the third, anniversaryfourth and fifth anniversaries of the dategrant date. See Outstanding Equity Awards at 2023 Fiscal Year-End and 2023 Option Exercises and Stock Vested for information regarding vesting and exercise activity in 2023 for these awards.

Perquisites

In order to support our named executive officers’ efficiency in the performance of grant,their duties, the Board has approved the use of private aircraft by named executive officers for business travel, as well as for personal travel when approved by our CEO. Named executive officers also received corporate and settleauto insurance, financial advisory services and other perquisites as reported in shares.

Average3-Year Adjusted

EBITDAC per Share Growth*

PSUs Earned (% of Target Award)

Less than 4%

0%

4% to 9%

Interpolated on a straight-line basis between 50% and 100%

9% to 14%

Interpolated on a straight-line basis between 100% and 200%

More than 14%

200%

*See the definition of “adjusted EBITDAC” in Annual Cash Incentives above.

As disclosed in our 2015 Proxy Statement, 100%footnote (6) to the 2023 Summary Compensation Table. In addition, the company provides for reimbursement of certain taxes incurred outside the PSUs provisionally awardedU.S. The company does not provide tax gross-ups on perquisites. See footnote (6) to the 2023 Summary Compensation Table for information about any such expenses for named executive officers in 2014 were earned based on our 30.4% growth in EBITAC (defined as net earnings before interest, income taxes, amortization and the change in estimated acquisition earnout payables) in 2014. These earned PSUs vested and settled in shares on March 12, 2017. Please see2017 Option Exercises and Stock Vested below for more information regarding these awards.2023.

LOGO

26

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2018 PROXY STATEMENT

21

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Discussion and Analysis

20172023 Compensation Actions

Pat Gallagher – Chairman and CEO

Performance

Performance

Compensation

Compensation

The Compensation Committee believes that Pat Gallagher performed extremely well in 2017,2023, leading the company to 8.7%18.7% adjusted revenue growth, 13.9%19.0% adjusted EBITDAC growth and 12.3%16.4% adjusted EBITDAC per share growth in our combined brokerage and risk management segments.segments (for definitions of these measures see Annual Cash Incentives above). Gallagher’s total return to stockholders in 20172023 was 25.0%20.5%. This performance compares favorably to the S&P 500 and S&P P&C Insurance indices,index, which increased 21.8% and 22.4%, respectively.had a total shareholder return of 10.7%.

In addition, the Committee recognized the following aspects of Mr.Pat Gallagher’s performance:

Organic growth. The company achieved 4.5%9.8% organic revenue growth during the year, 4.4%8.9% in the brokerage segment and 5.2%15.8% in the risk management segment.

Mergers and acquisitions.The company completed 3951 acquisitions, representing $172$885.1 million in estimated total acquired annualized revenue.revenue, including larger acquisitions such as Buck, Cadence Insurance, Eastern Insurance and My Plan Manager. The company also made significant progress integrating the Willis Re and Buck acquisitions.

Quality and productivity.Productivity. The company increased its adjusted EBITDAC margin 4648 basis points to 25.8%32.5%.

Capital management.Clean energy investments contributed $133 million to net earnings; theThe company returned $284$473.6 million to stockholders as dividends; the companydividends, maintained significant liquidity;liquidity and the company remained well within its debt covenants.

Sustainability. In 2023, the company released an updated Sustainability Report, which includes a goal of Net Zero emissions in the company’s direct operations (Scope 1 and Scope 2) by 2050 and an interim 2030 goal. Pat Gallagher also made continued progress on inclusion and diversity, including initiatives to track and improve supplier diversity.

Culture. Pat Gallagher continued to effectively promote our culture to colleagues around the world.

Based on Pat Gallagher’s and the company’s performance, the Compensation Committee made the following compensation decisions for 2017:2023:

Base salary – increased from $1,000,000 to $1,250,000, his first increase since 2007.remained the same, at $1,300,000.

Annual cash incentive – $2,812,500, 150%$5,850,000, 200% of his target award.

2023 target PSU award – target award of 32,65022,524 PSUs with a grant date value of $1,856,479.$3,988,775.

Stock option award – 58,30030,029 stock options with an exercise price of $56.86$177.09 and a grant date value of $665,786.$1,388,841.

DEPP award – $1,000,000.$2,250,000.

As discussed below underComparative Market Assessment, Pat Gallagher’s compensation has been significantly belowIn early 2023, the median for similarly situated CEOs in our peer group. The Compensation Committee took this into consideration when approving the increasesapproved an increase in hisPat Gallagher's 2023 target long-term incentive award from 360% to 435% of base salary, equity awards and DEPP award in 2017.

Over the past three years, our total return to stockholders (including dividends) was 47.3%, while Pat Gallagher’s compensation increased by 40.2%.salary. Please see "Comparative Market Assessment" below. The Compensation Committee believes Mr.that, with this change, Pat Gallagher’s compensation is appropriately aligned with ourthe long-term total return tointerests of the company and its stockholders.

2024 PROXY STATEMENT

27

Compensation Discussion and Analysis

Doug Howell – Chief Financial Officer

Performance

Performance

Compensation

Compensation

The Compensation Committee evaluated Doug Howell’s performance in light of the company’s overall performance as described above for Pat Gallagher. In addition, the Compensation Committee considered the following items:

•  Mr. Howell’s
his contributions as a member of the senior management team to the company’s strong overall financial performance;
•
his leadership of expense saving initiatives, critical to increasingdespite an inflationary environment, as well as the return of travel and other expenses post-pandemic, resulting in an increase of our adjusted EBITDAC margin;

•  implementationmargin of a new revenue recognition accounting standard;

48 basis points to 32.5%;

•
success in maintaining investment grade credit ratings from S&P, Moody’s and Fitch in support of the company’s public debt;
•
$1.95 billion in public debt issuances and successful debt placements;

renewal of our $1.7 billion credit facility; and

•  the
successful execution and financing of our acquisition program using primarily cash and debt; and

debt.

•  significant growth in our tax-advantaged clean energy investments earnings.

Based on Doug Howell’s and the company’s performance, the Compensation Committee made the following compensation decisions for 2017:2023:

Base salary – remained the same, at $850,000.$950,000.

Annual cash incentive – $1,275,000, 150%$2,375,000, 200% of his target award.

2023 target PSU award – target award of 11,1004,541 PSUs with a grant date value of $631,146.$804,166.

Stock option award – 19,80012,107 stock options with an exercise price of $56.86$177.09 and a grant date value of $226,116.$559,949.

Restricted stock unit award – 3,700 restricted stock units, with a grant date value of $210,382.

DEPP award – $450,000.$900,000.

Tom Gallagher – President*

Performance

Compensation

22

2018 PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

Jim Gault – Chairman, Global P/C Brokerage

Performance

Compensation

In evaluating Jim Gault’sTom Gallagher’s performance in 2017,2023, the Compensation Committee considered the following items:

•
his contributions as a member of the senior management team to the company’s strong overall financial performance;

•
the strong financial performance of our global P/C brokerage business, including 8.1% adjusted revenue growth, 17.8% adjusted EBITDAC growth and 4.5% organic revenue growth;

business;

•
completion by our global P/C brokerage business completed 20of 43 acquisitions representing $105$500.9 million in estimated acquired annualized revenue; and

•
his ongoing oversight of the successful transitionintegration of management responsibility forthe Willis Re acquisition into our global P/C brokerage business to Tom Gallagher.

Based on Jim Gault’sbusiness; and

•
his role in reorganizing the company’s performance, the Compensation Committee made the following compensation decisions for 2017:

Base salary – remained the same, at $800,000.

Annual cash incentive – $1,200,000, 150% of his target award.

Equity awards – In anticipation of the transition in division leadership Mr. Gault did not receive equity awards in 2017.

DEPP award – $1,000,000.

Jim Durkin – Chairman, Employee Benefit Consulting and Brokerage

Performance

Compensation

In evaluating Jim Durkin’s performance in 2017, the Committee considered the following items:

•  his contributions as a member of the senior management team to the company’s strong overall financial performance;

•  the strong financial performance of our employee benefit consulting and brokerage business, including 12.7% adjusted revenue growth, 12.8% adjusted EBITDAC growth and 4.8% organic revenue growth;

•  our employee benefit consulting and brokerage business completed 15 acquisitions representing $51 million in acquired annualized revenue; and

•  the successful transition of Mr. Durkin’s management responsibilities to his successor.

Based on Jim Durkin’s and the company’s performance, the Compensation Committee made the following compensation decisions for 2017:

Base salary – remained the same, at $725,000.

Annual cash incentive – $1,087,500, 150% of his target award.

Equity awards – In anticipation of the transition in division leadership, Mr. Durkin did not receive equity awards in 2017.

DEPP award – $950,000.

Tom Gallagher – CEO, Global P/C Brokerage

Performance

Compensation

In evaluating Tom Gallagher’s performance in 2017, the Committee considered the following items:

•  his contributions as a member of the senior management team to the company’s strong overall financial performance;

•  the strong financial performancestructure of our global P/C brokerage business including 8.1% adjusted revenue growth, 17.8% adjusted EBITDAC growth and 4.5% organic revenue growth;

•  ourunits in light of continued global P/C brokerage business completed 20 acquisitions representing $105 million in acquired annualized revenue; and

growth.

•  the successful rebranding of our global P/C brokerage business.

Based on Tom Gallagher’s and the company’s performance, the Compensation Committee made the following compensation decisions for 2017:2023:

Base salary – increased from $750,000 to $800,000.remained the same, at $1,000,000.

Annual cash incentive – $1,200,000, 150%$2,500,000, 200% of his target award.

2023 target PSU award – target award of 10,4504,780 PSUs with a grant date value of $594,187.$846,490.

Stock option award – 37,30012,744 stock options with an exercise price of $56.86$177.09 and a grant date value of $425,966.$589,410.

DEPP award – $400,000.$900,000.

* On October 24, 2023, the Board of Directors appointed Tom Gallagher as President, succeeding Pat Gallagher in such role, effective January 1, 2024. Performance results are based on Tom Gallagher's prior role as President - P/C Brokerage.

28

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Compensation Discussion and Analysis

Scott Hudson – President, Risk Management

LOGO

Performance

2018 PROXY STATEMENT

Compensation

23

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Decision-Making Process

The Compensation Committee is responsible for determining compensation opportunities for our named executive officers, establishing the annual total value to be transferred through our equity plans, setting thresholds, targets and maximum awards for incentive compensation, and approving final award amounts. To determine compensation opportunities for our named executive officers, the Committee takes into account the compensation objectives noted earlier underComponents of Compensation for Named Executive Officers, compensation data for our comparison groups, trends in the financial service and insurance brokerage sectors and the strategic value of a given role, among other factors.

Tally Sheets

The Compensation Committee also carefully considers the data compiled in a tally sheet prepared by management for each named executive officer. Tally sheets provide:

a comprehensive view of our compensation payout exposure under various termination scenarios (for example, voluntary or involuntary termination, retirement, and change in control);

details regarding all compensation, benefits and perquisites delivered to our named executive officers during the most recent three-year period and a projection for the coming year; and

a three-year analysis of equity and deferred compensation, which provides insight into total wealth accumulation for each officer, as well as the sensitivity of these figures to changes in our stock price.

This information provides a comprehensive context in which the Committee can determine the appropriate type and amount of compensation for each named executive officer.

Role of the CEO

At the beginning of each year, Pat Gallagher proposes performance objectives for the company and himself. The Compensation Committee and the Board review these objectives with Mr. Gallagher and make modifications as necessary. Following this review and discussion, the Compensation Committee and the Board finalize and approve the objectives for Mr. Gallagher and the company. The objectives include both quantitative financial measurements and qualitative strategic and operational considerations that focus on factors Mr. Gallagher and the Board believe create long-term stockholder value. Mr. Gallagher reviews and discusses preliminary considerations regarding his own compensation with the Compensation Committee but does not participate in the Committee’s final determination of his compensation. Mr. Gallagher also reviews the performance of each other named executive officer and presents a summary of these performance reviews to the Committee, along with preliminary recommendations regarding salary adjustments, if any, and annual award amounts.

Role of the Compensation Consultant

The Compensation Committee retained Pearl Meyer & Partners, LLC (Pearl Meyer) as its independent executive compensation consultant. In connection with its engagement, Pearl Meyer reviewed 2017 proxy season results and implications for our pay practices; assisted in the review and confirmation of our peer group for executive compensation and performance review purposes; provided updates on emerging executive compensation trends, including proxy advisory firm and regulatory developments; and reviewed and assessed all elements of our pay programs for executive officers, including the competitiveness of pay levels and incentive program design. The Committee assessed Pearl Meyer’s independence pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Pearl Meyer from serving as an independent consultant to the Committee.

Tax Considerations

Section 162(m) of the Internal Revenue Code limits the deductibility for Federal income tax purposes of compensation payable in a taxable year to our named executive officers to the extent that such compensation exceeds $1 million. On December 22, 2017, the United States enacted tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). Among other things, the Tax Act repealed the qualified performance-based compensation exception under Section 162(m) and expanded the group of covered employees potentially subject to the $1 million deductibility cap. As a result of the Tax Act changes to Section 162(m), we expect that equity awards and other compensation granted to named executive officers after November 2, 2017 will not be deductible to the extent such amounts exceed $1 million in any one year.

24

In evaluating Scott Hudson’s performance in 2023, the Compensation Committee considered the following items:

•
his contributions as a member of the senior management team to the company’s strong overall financial performance;
•
the strong financial performance of our risk management segment, including 18.4% adjusted revenue growth, 28.6% adjusted EBITDAC growth and 15.8% organic revenue growth;
•
the completion by our risk management segment of a large acquisition representing $59.1 million in estimated acquired annualized revenue; and
•
the ongoing diversification of our risk management segment’s book of business driven by significant growth in carrier and captive manager claims management outsourcing opportunities.

2018 PROXY STATEMENT

Based on Scott Hudson’s and the company’s performance, the Compensation Committee made the following compensation decisions for 2023:

Base salary – remained the same, at $750,000.

Annual cash incentive – $1,875,000, 200% of his target award.

2023 target PSU award – 3,585 PSUs with a grant date value of $634,868.

Stock option award – 9,558 stock options with an exercise price of $177.09 and a grant date value of $442,058.

DEPP award – $750,000.

COMPENSATION DISCUSSION AND ANALYSIS

Comparative Market Assessment

The Compensation Committee reviews compensation data from two different comparison groups as a market reference for its named executive officer compensation decisions.

Proxy Comparison Group

The Compensation Committee uses the Proxy Comparison Group as a reference point for our compensation plan structure, pay mix, general equity granting practices and individual pay levels.

This group is focused on our direct competitors for executive talent. Its members are selected from insurance brokers and carriers and from professional and financial services companies that may compete with us for executive talent or in specific lines of business.

The companies listed below under “Insurance Brokers” are of particular interest for the Compensation Committee. Although Aon, Marsh & McLennan and Willis Towers Watson are larger than we are on several size dimensions, the Committee believes it is important to understand their compensation programs given that they compete with us the most directly. Additionally, we aresimilarly-sized to themedian-sized company in the broader peer group.

The companies set forth below were used for the 2017 analysis. There were no changes to this group from the prior year.

Walt Bay – General Counsel and Secretary

Insurance Brokers

Performance

Compensation

In evaluating Walt Bay’s performance in 2023, the Compensation Committee considered the following items:

•
his contributions as a member of the senior management team to the company’s strong overall financial performance;
•
strong leadership of the company’s legal and compliance departments;
•
successful management of the company’s legal and reputational risks, including litigation, mergers and acquisitions and regulatory compliance issues; and
•
his role as a strategic advisor to our Board, CEO and executive management team on key legal and business matters.

Based on Walt Bay’s and the company’s performance, the Compensation Committee made the following compensation decisions for 2023:

Base salary – remained the same, at $725,000.

Annual cash incentive – $1,812,500, 200% of his target award.

2023 target PSU award – 3,545 PSUs with a grant date value of $627,784.

Stock option award – 9,452 stock options with an exercise price of $177.09 and a grant date value of $437,155.

DEPP award – $675,000.

2024 PROXY STATEMENT

29

Compensation Discussion and Analysis

Compensation Decision-Making Process

The Compensation Committee is responsible for determining compensation opportunities for our named executive officers, establishing the annual total value to be transferred through our equity plans, setting thresholds, targets and maximum awards for incentive compensation, establishing performance measures and approving final award amounts. To determine compensation opportunities for our named executive officers, the Committee takes into account the compensation objectives noted earlier under Components of Compensation for Named Executive Officers, compensation data for our comparison groups, trends in the financial service and insurance brokerage sectors and the strategic value of a given role, among other factors. The Compensation Committee may delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee, members of the Board or officers or other employees of the company all or any portion of the Committee’s authority, duties and responsibilities, to the extent permitted by law or applicable plan documents.

Tally Sheets

The Compensation Committee also considers the data compiled in a tally sheet prepared by management for each named executive officer. Tally sheets provide:

•
a comprehensive view of our compensation payout exposure under various termination scenarios (for example, voluntary or involuntary termination, retirement, and change in control);
•
details regarding all compensation, benefits and perquisites delivered to our named executive officers during the most recent four-year period and a projection for the coming year; and
•
an analysis of equity and deferred compensation, which provides insight into total wealth accumulation for each officer, as well as the sensitivity of these figures to changes in our stock price.

This information provides a comprehensive context in which the Committee can determine the appropriate type and amount of compensation for each named executive officer.

Role of the CEO

At the beginning of each year, Pat Gallagher proposes performance objectives for the company and himself. The Compensation Committee and the Board review these objectives with Mr. Gallagher and make modifications as necessary. Following this review and discussion, the Compensation Committee and the Board finalize and approve the objectives for Mr. Gallagher and the company. The objectives include both quantitative financial measurements and qualitative strategic and operational considerations that focus on factors Mr. Gallagher and the Board believe create long-term stockholder value. Mr. Gallagher reviews and discusses preliminary considerations regarding his own compensation with the Compensation Committee but does not participate in the Committee’s final determination of his compensation. Mr. Gallagher also reviews the performance of each other named executive officer and presents a summary of these performance reviews to the Committee, along with preliminary recommendations regarding salary adjustments, if any, and annual award amounts.

Role of the Compensation Consultant

The Compensation Committee retained Pearl Meyer as its independent executive compensation consultant. In connection with its engagement, Pearl Meyer reviewed 2023 proxy season results and implications for our pay practices; assisted in the review and confirmation of our peer group for executive compensation and performance review purposes; provided updates on emerging executive compensation trends, including proxy advisory firm and regulatory developments; and reviewed and assessed individual elements of our pay programs for executive officers, including the competitiveness of pay levels and incentive program design. The Committee assessed Pearl Meyer’s independence pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Pearl Meyer from serving as an independent consultant to the Committee.

30

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Compensation Discussion and Analysis

Comparative Market Assessment

Professional / Financial Services Firms

The Compensation Committee reviews compensation data from two different comparison groups as a market reference for its named executive officer compensation decisions.

Proxy Comparison Group

The Compensation Committee uses the Proxy Comparison Group as a reference point for our compensation plan structure, pay mix, general equity granting practices and individual pay levels.

This group is focused on our direct competitors for executive talent. Its members are selected from insurance brokers and carriers and from professional and financial services companies that may compete with us for executive talent or in specific lines of business.

The companies listed below under “Insurance Brokers” are of particular interest for the Compensation Committee. Although Aon plc and Marsh & McLennan Companies are larger than we are on certain size dimensions, the Committee believes it is important to understand their compensation programs given that they directly compete with us for executive talent. Additionally, we are similarly-sized or significantly larger, depending on the size dimension, compared to the median-sized company in the broader peer group.

The Compensation Committee used the companies set forth below for the 2023 analysis. There were no changes from the comparison group disclosed in the prior year.

Automatic Data Processing, Inc.

The Bank of New York Mellon Corporation

The Charles Schwab Corporation

Fidelity National Financial, Inc.

Franklin Resources, Inc.

Moody’s Corporation

Northern Trust Corporation

Raymond James Financial, Inc.

Robert Half International Inc.

S&P Global Inc.

Survey Comparison Group

The Compensation Committee also uses a Survey Comparison Group as a reference point for individual pay levels for certain executive positions.

This group consists of insurance and general industry companies similar to us in total assets, revenue or number of employees. In 2023, the Compensation Committee reviewed pay data from published surveys conducted by Aon-Hewitt.

Results of the Comparative Market Assessment

For 2023, the Compensation Committee examined the total direct compensation opportunity (base salary, annual cash incentives and long-term incentives) for each named executive officer, as well as individual elements of compensation. Data from the Proxy Comparison Group and Survey Comparison Group were used as a market reference for compensation decisions. The Compensation Committee does not target total compensation to a specific percentile of comparison group compensation.

The comparative market assessment showed that target long-term incentives were below the 50th percentile for Pat Gallagher and at the 50th percentile for the other named executive officers compared to the Proxy Comparison Group. Taking the results of this assessment into consideration, the Compensation Committee approved increases in the long-term incentive targets for named executive officers, other than Pat Gallagher, from 125% of salary to 150% of salary, and for Pat Gallagher from 360% to 435% of salary.

Insurance Brokers

Aon plc

Brown & Brown, Inc.

Marsh & McLennan Companies, Inc.

Willis Towers Watson plc

Insurance Carriers

Insurance Carriers

American Financial Group Inc.

Arch Capital Group Ltd.

CNA Financial Corp.

Axis Capital Holdings Ltd.

The Hartford Financial Services Group, Inc.

Markel Corp.

W.R. Berkley Corp.

CNA Financial Corp.

Markel Corp.

Old Republic International Corp.

Unum Group

XL Group Ltd.

Professional / Financial Services Firms

Fidelity National Financial, Inc.

Raymond James Financial, Inc.

Survey Comparison Group

The Compensation Committee also uses a Survey Comparison Group as a reference point for individual pay levels for certain executive positions.

2024 PROXY STATEMENT

31

This group consists of insurance and general industry companies similar to us in total assets, revenue or number of employees. In 2017, the Compensation Committee reviewed pay data from two published surveys,

Compensation Discussion and Analysis

Compensation Committee Report

The Compensation Committee oversees the company’s compensation program for named executive officers on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth above.

Based on the review and discussion referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the company’s 2024 Proxy Statement and incorporated by reference in its 2023 Annual Report on Form 10-K, which it files with the SEC.

Compensation Committee

Sherry Barrat (Chair)

David Johnson

Chris Miskel

32

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Executive Compensation Tables

Executive Compensation Survey conducted by MercerTables

2023 Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and
Principal
Position

Year

Salary
($)

Stock
Awards
($)(1)

Option
Awards
($)(2)

Non-Equity
Incentive Plan
Compensation
($)(3)

Bonus
($)(4)

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)

All Other
Compensation
($)(6)

Total
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

2023

1,300,000

 

3,988,775

 

1,388,841

 

5,850,000

 

—

 

36,498

 

2,932,108

 

15,496,222

 

Chairman and

2022

1,300,000

 

3,575,528

 

1,227,365

 

5,850,000

 

—

 

—

 

2,242,033

 

14,194,926

 

Chief Executive Officer

2021

1,300,000

 

3,692,473

 

1,799,676

 

5,200,000

 

—

 

19,063

 

1,871,043

 

13,882,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug Howell

2023

950,000

 

804,166

 

559,949

 

2,375,000

 

—

 

984

 

1,177,179

 

5,867,278

 

Chief Financial Officer

2022

950,000

 

726,205

 

498,312

 

2,375,000

 

—

 

—

 

779,346

 

5,328,863

 

 

2021

950,000

 

749,494

 

730,976

 

1,900,000

 

500,000

 

191

 

770,200

 

5,600,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom Gallagher

2023

1,000,000

 

846,490

 

589,410

 

2,500,000

 

—

 

27,671

 

1,725,962

 

6,689,533

 

President

2022

1,000,000

 

764,259

 

524,521

 

2,500,000

 

—

 

—

 

1,382,682

 

6,171,462

 

 

2021

1,000,000

 

789,143

 

769,085

 

2,000,000

 

1,000,000

 

—

 

935,000

 

6,493,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Hudson

2023

750,000

 

634,868

 

442,058

 

1,875,000

 

—

 

—

 

904,161

 

4,606,086

 

President –

2022

750,000

 

573,194

 

393,305

 

1,875,000

 

—

 

—

 

624,545

 

4,216,044

 

Risk Management

2021

700,000

 

552,528

 

538,325

 

1,400,000

 

—

 

—

 

612,805

 

3,803,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt Bay

2023

725,000

 

627,784

 

437,155

 

1,812,500

 

—

 

—

 

870,068

 

4,472,507

 

General Counsel

2022

725,000

 

569,230

 

390,735

 

1,812,500

 

—

 

—

 

598,359

 

4,095,825

 

and Secretary

2021

725,000

 

587,701

 

572,810

 

1,450,000

 

500,000

 

—

 

583,357

 

4,418,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
This column includes the full grant date fair value of PSUs andTop Management Industry RSUs granted during each fiscal year. The amounts reported in this column have been calculated in accordance with FASB ASC Topic 718, Compensation Survey conducted by Willis Towers Watson.

Results– Stock Compensation. The amounts reported in this column for PSUs granted during each fiscal year represent the value of each award at the grant date based upon the probable outcome of the Comparative Market Assessment

performance conditions under the program, determined in accordance with FASB ASC Topic 718. In accordance with SEC rules, any estimate for forfeitures is excluded from, and does not reduce, such amounts. Maximum payouts for the 2023 PSU awards as of the date of grant were as follows: Pat Gallagher – $7,977,550; Doug Howell – $1,608,331; Tom Gallagher – $1,692,980; Scott Hudson – $1,269,735; and Walt Bay – $1,255,568. For 2017,a discussion of PSUs, see page 26. For additional information on the Compensation Committee examinedvaluation assumptions with respect to stock grants, refer to Note 12 to our consolidated financial statements in the total direct compensation opportunity (base salary,Annual Report on Form 10-K for the year ended December 31, 2023.

(2)
This column represents the full grant date fair value of stock option awards granted during each fiscal year. The amounts reported in this column have been calculated in accordance with FASB ASC Topic 718. In accordance with SEC rules, any estimate for forfeiture is excluded from, and does not reduce, such amounts. For additional information on the valuation assumptions with respect to option grants, refer to Note 10 to our consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2023.
(3)
This column represents annual performance-based cash incentivesincentive awards related to services rendered in 2021, 2022 and long-term incentives)2023. Awards are reported for the year in which they are earned, regardless of the year in which they are paid. The 2021, 2022 and 2023 awards were paid fully in cash in April of 2022 and 2023 and expected to be paid April of 2024, respectively.
(4)
The amounts set forth for 2021 represent one-time cash bonuses awarded to Doug Howell, Tom Gallagher and Walt Bay in connection with their contributions to completing the Wills Re acquisition. These amounts were paid out in April of 2022.
(5)
The amounts shown in this column represent the aggregate change in actuarial present value of each named executive officer, as well as each individual element of compensation. Data fromofficer’s benefits under our pension plan, except where such change is a negative value. When that is the Proxy Comparison Group and Survey Comparison Group were used ascase, SEC rules require that a market reference for compensation decisions. The Compensation Committee does not target total compensation to a specific percentile of comparison group compensation.

The comparative market assessment showed that total direct compensation for our named executive officer group was generally competitive with the Proxy Comparison Group. However, the assessment showed that Pat Gallagher’s total direct compensation was significantly below the median for similarly situated CEOs in the Proxy Comparison Group. As discussed above under2017 Compensation Actions,the Committee took this data into consideration in approving Pat Gallagher’s compensation for 2017.

LOGO

2018 PROXY STATEMENT

25

Compensation Committee Report

The Compensation Committee oversees the company’s compensation program for named executive officers on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth above.

Based on the review and discussion referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysiszero be included in the company’s 2018 Proxy Statementthis table. In 2023, such figures were all positive. Scott Hudson and incorporated by reference in its 2017 Annual Report on Form10-K, which it files with the SEC.

Walt Bay do not have any accrued benefits under our pension plan.

COMPENSATION COMMITTEE

Sherry S. Barrat(Chair)

D. John Coldman

Elbert O. Hand

David S. Johnson

Kay W. McCurdy

26

2024 PROXY STATEMENT

33

2018 PROXY STATEMENT

Executive Compensation Tables

2017 Summary Compensation Table

         
   Name and
   Principal    Position (1)		 Year  

Salary

($)

  

Bonus

($) (2)

  

Stock

Awards

($) (3)

  

Option

Awards

($) (4)

  

Non-Equity

Incentive Plan

Compensation

($) (2)(5)

  

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($) (6)

  

All Other

Compensation

($) (7)

  

Total

($)

 
         

Pat Gallagher

Chairman, President and Chief Executive Officer

 

  2017   1,250,000   —   1,856,479   665,786   2,812,500   87,165   1,214,561   7,886,491 
  2016   1,000,000   —   823,934   531,505   2,250,000   37,215   1,096,513   5,739,167 
  2015   1,000,000   —   727,178   471,750   2,250,000   0   1,024,349   5,473,277 
         

Doug Howell

Chief Financial Officer

  2017   850,000   —   841,528   226,116   1,275,000   2,630   580,302   3,775,576 
  2016   850,000   —   701,546   225,615   1,275,000   1,638   572,447   3,626,246 
  2015   750,000   —   547,115   176,675   1,125,000   0   610,700   3,209,490 
         

Jim Gault

Corporate VP, Chairman –Global P/C Brokerage

 

  2017   800,000   —   —   —   1,200,000   82,149   1,136,247   3,218,396 
  2016   800,000   —   330,011   318,565   1,200,000   35,073   524,001   3,207,650 
  2015   800,000   200,000   290,871   283,050   800,000   0   553,746   2,927,667 
         

Jim Durkin

Corporate VP, Chairman –Employee Benefit Consulting and Brokerage

 

 

  2017   725,000   —   —   —   1,087,500   97,440   1,072,008   2,981,948 
  2016   725,000   —   299,414   288,990   1,087,500   41,420   532,067   2,974,391 
  2015   725,000   —   263,169   256,225   1,087,500   5,256   506,046   2,843,196 
         

Tom Gallagher

Corporate VP, CEO –
Global P/C Brokerage

 

  2017   800,000   —   594,187   425,966   1,200,000   69,973   505,932   3,596,058 
  2016   750,000   —   310,341   299,130   1,125,000   28,886   2,115,624   4,628,981 
  2015   700,000   525,000   253,935   247,900   350,000   0   1,175,265   3,252,100 

(1)

Executive Compensation Tables

Principal positions are as of December 31, 2017.

(2)Amounts in this column are reported for the year in which they are earned, regardless of the year in which they are paid.
(6)
For 2023, includes the following:

(3)This column includes the full grant date fair value of PSUs and restricted stock units granted during each fiscal year. The amounts reported in this column have been calculated in accordance with FASB ASC Topic 718,Compensation – Stock Compensation. The amounts reported in this column for PSUs granted during each fiscal year represent the value of each award at the grant date based upon the probable outcome of the performance conditions under the program, determined in accordance with FASB ASC Topic 718. In accordance with SEC rules, any estimate for forfeitures is excluded from, and does not reduce, such amounts. Maximum payouts for the PSU awards as of the date of grant were as follows: Pat Gallagher – $3,712,958; Doug Howell – $1,262,292; and Tom Gallagher – $1,188,374. For a discussion of PSUs, see page 21. For additional information on the valuation assumptions with respect to stock grants, refer to Note 11 to our consolidated financial statements in the Annual Report on Form10-K for the year ended December 31, 2017.

 

 

 

 

 

 

 

 

 

Named
Executive
Officer

DEPP
Awards*
($)

SS&T
Plan Match**
($)

401(k)
Match***
($)

Corporate
Auto &
Insurance
($)

Financial
Advisory
Services
($)

Non U.S Tax
Reimbursement
($)(1)

Private
Aircraft****
($)

Other*****
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 

 

2,250,000

 

 

 

 

341,000

 

 

 

 

16,500

 

 

 

 

8,664

 

 

 

 

—

 

 

 

 

—

 

 

 

 

186,448

 

 

 

 

129,496

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug Howell

 

 

900,000

 

 

 

 

149,750

 

 

 

 

16,500

 

 

 

 

8,664

 

 

 

 

17,555

 

 

 

 

—

 

 

 

 

57,895

 

 

 

 

26,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom Gallagher

 

 

900,000

 

 

 

 

158,500

 

 

 

 

16,500

 

 

 

 

5,064

 

 

 

 

—

 

 

 

 

507,361

 

 

 

 

84,112

 

 

 

 

54,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Hudson

 

 

750,000

 

 

 

 

114,750

 

 

 

 

16,500

 

 

 

 

—

 

 

 

 

17,555

 

 

 

 

—

 

 

 

 

5,356

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt Bay

 

 

675,000

 

 

 

 

110,375

 

 

 

 

16,500

 

 

 

 

8,664

 

 

 

 

17,555

 

 

 

 

—

 

 

 

 

24,618

 

 

 

 

17,356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)This column represents the full grant date fair value of stock option awards granted during each fiscal year. The amounts reported in this column have been calculated in accordance with FASB ASC Topic 718. In accordance with SEC rules, any estimate for forfeiture is excluded from, and does not reduce, such amounts. For additional information on the valuation assumptions with respect to option grants, refer to Note 9 to our consolidated financial statements in the Annual Report on Form10-K for the year ended December 31, 2017.
(1)
The amount reported in this column represents non-U.S. tax reimbursements related to an expatriate assignment that ended in 2016.

(5)This column represents annual performance-based cash incentive awards related to services rendered in 2015, 2016 and 2017. Awards are reported for the year in which they are earned, regardless of the year in which they are paid. These awards were paid fully in cash in April of 2016 and 2017 and March of 2018, respectively.

(6)The amounts shown in this column represent the aggregate change in actuarial present value of each named executive officer’s benefits under our pension plan, except where such change is a negative value. When that is the case, SEC rules require that a zero be included in this table. In 2015, such figures were as follows: Pat Gallagher – $(419); Doug Howell – $(557); Jim Gault – $(395); and Tom Gallagher – $(7,851).

LOGO

2018 PROXY STATEMENT

27

EXECUTIVE COMPENSATION TABLES

(7)For 2017, includes the following:

       
   Named Executive
   Officer		 

DEPP
Awards*

($)

  

Supplemental

Plan Match**
($)

  401(k)
Match***
($)		  

Corporate

Auto &
Insurance
($)

  Financial
Advisory
Services
($)		  

Non-

Employee
Travel
($)

  

Club Memberships

Not Exclusively
For Business Use,
Cell Phone
Allowance, Employee
Commission Return

($)

 
       

Pat Gallagher

  1,000,000   161,500   13,500   8,292   —   —   31,269 
       

Doug Howell

  450,000   92,750   13,500   8,292   15,760   —   — 
       

Jim Gault

  1,000,000   86,500   13,500   5,892   12,760   1,410   13,185 
       

Jim Durkin

  950,000   77,125   13,500   8,292   11,820   —   11,271 
       

Tom Gallagher

  400,000   75,000   13,500   4,692   —   8,900   3,840 

*Deferred Equity Participation Plan (DEPP)

Deferred cash awards under the DEPP are nonqualified deferred compensation awards under Section 409A of the Internal Revenue Code. Each named executive officer has made an irrevocable election to have such awards deemed invested in a fund representing shares of our common stock. Awards under the DEPP do not vest until participants reach age 62 (or theone-year anniversary of the date of grant for participants over the age of 61, which includeapplies to Pat Gallagher, Jim GaultDoug Howell, Tom Gallagher and Jim Durkin)Scott Hudson). Accordingly, amounts in the plan are subject to forfeiture in the event of a voluntary termination of employment prior to age 62 (or the minimumone-year vesting period). Awards deemed invested in our common stock provide an incentive for our named executive officers to manage our company for earnings growth and total shareholder return. In addition, the deferred realization of these awards encourages retention of our named executive officers until a normal retirement age, and forone-year increments after such age.

**Supplemental Savings and Thrift Plan (Supplemental(SS&T Plan) Match

The SupplementalSS&T Plan allows certain highly compensated employees (those with compensation greater than an amount set annually by the IRS)Internal Revenue Service (IRS) to defer up to 80% of their base salary and annual cash incentive payment. We match any deferrals of salary and annual cash incentive payments on adollar-for-dollar basis up to the lesser of (i) the amount deferred or (ii) 5% of the employee’s regular earnings minus the maximum contribution that we could have matched under the 401(k) Plan. All such cash deferrals and match amounts may be deemed invested, at the employee’s election, in a number of investment options that include various mutual funds, an annuity product and a fund representing our common stock. Such employees may also defer restricted stock units and PSUs, but these deferrals are not subject to company matching. Amounts held in the SupplementalSS&T Plan accounts are payable as of the employee’s termination of employment, or at such other time as the employee elects in advance of the deferral, subject to certain exceptions set forth in IRS regulations.

***401(k) Match

Under our 401(k) Savings and Thrift Plan (401(k) Plan), a tax qualified retirement savings plan, participating employees, including our named executive officers, may contribute up to 75% of their earnings on abefore-tax orafter-tax basis into their 401(k) Plan accounts, subject to limitations imposed by the Internal Revenue Service (IRS). Under the 401(k) Plan,IRS. For fiscal year 2023, we matchmatched an amount equal to one dollar for every dollar an employee contributescontributed on the first 5% of his or her regular earnings.earnings, subject to standard IRS compensation limits. The 401(k) Plan has other standard terms and conditions.

****Private Aircraft

Amounts in this column represent the incremental cost to the company of personal use of private aircraft. See page 26 for additional information. The incremental cost of aircraft chartered by the company is calculated as the actual cost billed to the company for the applicable chartered flight. The incremental cost of personal use of company aircraft is calculated using the hourly incremental variable cost for flight services, including fuel costs, crew trip expenses and landing and parking fees. Fixed costs that do not change based on usage, such as pilot salaries, amortized costs of the company aircraft and maintenance costs not related to trips, are excluded. Where more than one executive officer was on the same flight, the cost was allocated proportionally between them. The imputed income attributable to such flights was taxable income and the associated taxes were not reimbursed or paid by the company.

*****Other

Amounts in this column include club memberships not exclusively for business use, cell phone allowance, corporate event tickets, and for Pat Gallagher and Tom Gallagher $25,891 relating to travel in connection with a one-time retirement event for certain recent retirees in recognition of their contributions to the company.

28

34

img134299666_7.jpg 

2018 PROXY STATEMENT

Executive Compensation Tables

EXECUTIVE COMPENSATION TABLES

20172023 Grants of Plan-Based Awards

        

Name

 Plan  

Grant

Date

  

 

Estimated Future Payouts

UnderNon-Equity

Incentive Plan Awards

  

 

Estimated Future Payouts

Under Equity

Incentive Plan Awards

  

All Other

Stock

Awards:

Number of

Shares of

Stock or

Units

(#)

  

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)

  

Exercise

or Base

Price of

Option

Awards

($/sh)

  

Grant

Date Fair

Value of

Stock and

Option

Awards

($)

 
   

Threshold

($)

  

Target

($)

  

Maximum

($)

  

Threshold

(#)

  

Target

(#)

  

Maximum

(#)

             
            

Pat Gallagher

  LTIP(1)   3/16/17   —   —   —   —   —   —   —   58,300   56.86   665,786 
            
   LTIP(3)   3/16/17   —   —   —   16,325   32,650   65,300   —   —   —   1,856,479 
            
   ANNUAL(4)   N/A   N/A   1,875,000   3,750,000   —   —   —   —   —   —   N/A 
            

Doug Howell

  LTIP(1)   3/16/17   —   —   —   —   —   —   —   19,800   56.86   226,116 
            
   LTIP(2)   3/16/17   —   —   —   —   —   —   3,700   —   —   210,382 
            
   LTIP(3)   3/16/17   —   —   —   5,550   11,100   22,200   —   —   —   631,146 
            
   ANNUAL(4)   N/A   N/A   850,000   1,700,000   —   —   —   —   —   —   N/A 
            

Jim Gault

  ANNUAL(4)   N/A   N/A   800,000   1,600,000   —   —   —   —   —   —   N/A 
            

Jim Durkin

  ANNUAL(4)   N/A   N/A   725,000   1,450,000   —   —   —   —   —   —   N/A 
            

Tom Gallagher

  LTIP(1)   3/16/17   —   —   —   —   —   —   —   37,300   56.86   425,966 
            
   LTIP(3)   3/16/17   —   —   —   5,225   10,450   20,900   —   —   —   594,187 
            
  ANNUAL(4)   N/A   N/A   800,000   1,600,000   —   —   —   —   —   —   N/A 

 

 

Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards

 

Estimated Future Payouts
Under Equity
Incentive Plan Awards

 

All Other
Stock
Awards:
Number of
Shares of

 

All Other
Option
Awards:
Number of
Securities

 

Exercise
or Base
Price of
Option

 

Grant Date
Fair Value
of Stock

 

Name

Plan

Grant
Date

Threshold
($)

 

Target
($)

 

Maximum
($)

 

Threshold
(#)

 

Target
(#)

 

Maximum
(#)

 

Stock or
Units (#)

 

Underlying
Options (#)

 

Awards
($/sh)

 

and Option
Awards ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat

LTIP(1)

3/15/23

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

30,029

 

177.09

 

 

1,388,841

 

Gallagher

LTIP(2)

3/15/23

 

—

 

 

—

 

 

—

 

 

11,262

 

 

22,524

 

 

45,048

 

 

—

 

 

—

 

 

—

 

 

3,988,775

 

ANNUAL(3)

N/A

N/A

 

 

2,925,000

 

 

5,850,000

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug

LTIP(1)

3/15/23

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

12,107

 

 

177.09

 

 

559,949

 

Howell

LTIP(2)

3/15/23

 

—

 

 

—

 

 

—

 

 

2,271

 

 

4,541

 

 

9,082

 

 

—

 

 

—

 

 

—

 

 

804,166

 

ANNUAL(3)

N/A

N/A

 

 

1,187,500

 

 

2,375,000

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom

LTIP(1)

3/15/23

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

12,744

 

 

177.09

 

 

589,410

 

Gallagher

LTIP(2)

3/15/23

 

—

 

 

—

 

 

—

 

 

2,390

 

 

4,780

 

 

9,560

 

 

—

 

 

—

 

 

—

 

 

846,490

 

ANNUAL(3)

N/A

N/A

 

 

1,250,000

 

 

2,500,000

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott

LTIP(1)

3/15/23

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

9,558

 

 

177.09

 

 

442,058

 

Hudson

LTIP(2)

3/15/23

 

—

 

 

—

 

 

—

 

 

1,793

 

 

3,585

 

 

7,170

 

 

—

 

 

—

 

 

—

 

 

634,868

 

ANNUAL(3)

N/A

N/A

 

 

937,500

 

 

1,875,000

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt

LTIP(1)

3/15/23

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

9,452

 

 

177.09

 

 

437,155

 

Bay

LTIP(2)

3/15/23

 

—

 

 

—

 

 

—

 

 

1,773

 

 

3,545

 

 

7,090

 

 

—

 

 

—

 

 

—

 

 

627,784

 

 

ANNUAL(3)

N/A

N/A

 

 

906,250

 

 

1,812,500

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Stock options under our 2022 Long-Term Incentive Plan, vesting one-third on each of the third, fourth and fifth anniversaries of the grant date.
(2)
The amounts represent the range of possible shares issuable to each named executive officer on the third anniversary of the grant date related to PSUs under our 2022 Long-Term Incentive Plan. See page 26.
(3)
The amounts in this line represent the range of possible annual cash incentive award the named executive officer was eligible to receive in April 2024, related to 2023 performance under our annual cash incentive program. The amounts were subject to performance criteria and subject to the Compensation Committee’s downward discretion. The amounts actually paid to each named executive officer are reported in the “Non-Equity Incentive Plan Compensation” column of the 2023 Summary Compensation Table and footnote (3) thereto.

(1)

Stock options under our 2017 Long-Term Incentive Plan, vestingone-third on each of the third, fourth and fifth anniversaries of the grant date.

2024 PROXY STATEMENT

35

(2)

Executive Compensation Tables

Restricted stock units under our 2017 Long-Term Incentive Plan, vesting on the fifth anniversary of the grant date.

(3)The range of possible awards each named executive officer would have been eligible to receive on the third anniversary of the grate date related to performance share units under our 2017 Long-Term Incentive Plan. See page 21.

(4)The amounts in this line represent the range of possible annual cash incentive award the named executive officer was eligible to receive in March 2018, related to 2017 performance under our annual cash incentive program. The amounts were subject to performance criteria and subject to the Compensation Committee’s downward discretion. There was no threshold payout level for these awards for 2017. The amounts actually awarded to each named executive officer are reported in the“Non-Equity Incentive Plan Compensation” column of the2017 Summary Compensation Table and are more fully discussed in footnote (5) thereto.

LOGO

2018 PROXY STATEMENT

29

EXECUTIVE COMPENSATION TABLES

Outstanding Equity Awards at 20172023 FiscalYear-End

 

 

 

 

 

Option Awards(1)

Stock Awards

 

Option Awards(1)

 

  

Stock Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

 

Exercisable

  

Number of

Securities

Underlying

Unexercised

Options (#)

 

Unexercisable

  

Option

Exercise

Price ($)

  

Option

Expiration

Date

  

Number

of Shares or
Units of Stock

That Have Not
Vested(2) (#)

  

Market Value
of Shares or
Units of Stock

That Have Not
Vested(3) ($)

  

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units

or Other
Rights
That
Have Not
Vested(4)
(#)

 

 

  

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested(5)
($)

 

 

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)

Option
Exercise
Price
($)

Option
Expiration
Date

Number of
Shares or Units
of Stock That
Have Not
Vested(2)
(#)

Market Value of
Shares or Units
of Stock That
Have Not
Vested(3)
($)

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested(4)
(#)

Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested(5)
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 

 

 

 

17,762

 

 

 

 

 

 

0

 

 

 

 

 

 

23.76

 

 

 

 

 

 

3/4/18

 

 

 

 

 

 

—

 

 

 

 

 

 

—

 

 

  —  

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  25,600   0   30.95   3/7/18   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,300

 

 

 

—

 

 

 

56.86

 

 

3/16/24

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  34,600   0   35.71   3/15/19   —   —   —   — 

 

 

41,400

 

 

 

—

 

 

 

70.74

 

 

3/15/25

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

29,367

 

 

 

14,683

 

 

 

79.59

 

 

3/14/26

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  23,801   11,899   39.17   3/12/20   —   —   —   — 
 
  23,567   47,133   46.87   3/11/21   —   —   —   — 

Pat Gallagher

 

 

22,851

 

 

 

45,699

 

 

 

86.17

 

 

3/12/27

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

76,975

 

 

 

127.90

 

 

3/16/28

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  0   51,000   46.17   3/10/22   —   —   —   — 

 

 

—

 

 

 

35,825

 

 

 

158.56

 

 

3/15/29

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

30,029

 

 

 

177.09

 

 

3/15/30

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  0   62,900   43.71   3/16/23   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

56,008

 

 

 

12,595,034

 

 

 

90,148

 

 

 

20,272,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  0   58,300   56.86   3/15/24   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,900

 

 

 

—

 

 

 

70.74

 

 

3/15/25

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

          

 

33,914

 

 

 

  

 

2,146,078

 

 

 

  

 

32,650

 

 

 

  

 

4,132,184

 

 

 

 

 

9,401

 

 

 

4,699

 

 

 

79.59

 

 

3/14/26

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

5,711

 

 

 

11,419

 

 

 

86.17

 

 

3/12/27

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Doug Howell

  6,061   0   23.76   3/4/18   —   —   —   — 

 

 

—

 

 

 

31,265

 

 

 

127.90

 

 

3/16/28

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

14,545

 

 

 

158.56

 

 

3/15/29

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  10,200   0   30.95   3/7/18   —   —   —   — 

 

 

—

 

 

 

12,107

 

 

 

177.09

 

 

3/15/30

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,043

 

 

 

3,832,720

 

 

 

18,242

 

 

 

4,102,261

 

 

  13,600   0   35.71   3/15/19   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  13,334   6,666   39.17   3/12/20   —   —   —   — 

 

 

37,300

 

 

 

—

 

 

 

56.86

 

 

3/16/24

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

29,800

 

 

 

—

 

 

 

70.74

 

 

3/15/25

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  20,401   40,799   46.87   3/11/21   —   —   —   — 

 

 

18,801

 

 

 

9,399

 

 

 

79.59

 

 

3/14/26

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Tom Gallagher

 

 

10,447

 

 

 

20,893

 

 

 

86.17

 

 

3/12/27

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

32,895

 

 

 

127.90

 

 

3/16/28

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  0   19,100   46.17   3/10/22   —   —   —   — 

 

 

—

 

 

 

15,310

 

 

 

158.56

 

 

3/15/29

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

12,744

 

 

 

177.09

 

 

3/15/30

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  0   26,700   43.71   3/16/23   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,970

 

 

 

2,691,769

 

 

 

19,200

 

 

 

4,317,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  0   19,800   56.86   3/15/24   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,300

 

 

 

—

 

 

 

56.86

 

 

3/16/24

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

          

 

35,306

 

 

 

  

 

2,234,164

 

 

 

  

 

11,100

 

 

 

  

 

1,404,816

 

 

 

 

 

23,200

 

 

 

—

 

 

 

70.74

 

 

3/15/25

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

14,601

 

 

 

7,299

 

 

 

79.59

 

 

3/14/26

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Jim Gault

  15,900   0   35.71   3/15/19   —   —   —   — 

Scott Hudson

 

 

8,124

 

 

 

16,246

 

 

 

86.17

 

 

3/12/27

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

23,025

 

 

 

127.90

 

 

3/16/28

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  10,667   5,333   39.17   3/12/20   —   —   —   — 

 

 

—

 

 

 

11,480

 

 

 

158.56

 

 

3/15/29

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

9,558

 

 

 

177.09

 

 

3/15/30

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  10,567   21,133   46.87   3/11/21   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,381

 

 

 

1,884,674

 

 

 

14,400

 

 

 

3,238,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  0   30,600   46.17   3/10/22   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,800

 

 

 

—

 

 

 

70.74

 

 

3/15/25

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  0   37,700   43.71   3/16/23   —   —   —   — 

 

 

10,567

 

 

 

5,283

 

 

 

79.59

 

 

3/14/26

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

5,877

 

 

 

11,753

 

 

 

86.17

 

 

3/12/27

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

          

 

13,575

 

 

 

  

 

859,026

 

 

 

  

 

—

 

 

 

  

 

—

 

 

 

 

Jim Durkin

  1,270   0   23.76   3/4/18   —   —   —   — 

Walt Bay

 

 

—

 

 

 

24,500

 

 

 

127.90

 

 

3/16/28

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

 

 

11,405

 

 

 

158.56

 

 

3/15/29

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

  10,400   0   30.95   3/7/18   —   —   —   — 

 

 

—

 

 

 

9,452

 

 

 

177.09

 

 

3/15/30

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,664

 

 

 

3,297,708

 

 

 

14,270

 

 

 

3,209,038

 

 

  14,200   0   35.71   3/15/19   —   —   —   — 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  9,734   4,866   39.17   3/12/20   —   —   —   — 
 
  9,601   19,199   46.87   3/11/21   —   —   —   — 
 
  0   27,700   46.17   3/10/22   —   —   —   — 
 
  0   34,200   43.71   3/16/23   —   —   —   — 
 
      

 

12,302

 

 

 

  

 

778,471

 

 

 

  

 

—

 

 

 

  

 

—

 

 

 

(1)
Stock options vest or vested in accordance with the following vesting schedules:

Expiration Date

One-third vests on each of:

30

3/16/24

2018 PROXY STATEMENT

EXECUTIVE COMPENSATION TABLES

  
  

Option Awards(1)

 

  

Stock Awards

 

 
        

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

 

Exercisable

  

Number of

Securities

Underlying

Unexercised

Options (#)

 

Unexercisable

  

Option

Exercise

Price ($)

  

Option

Expiration

Date

  

Number

of Shares or
Units of Stock

That Have Not
Vested(2) (#)

  

Market Value
of Shares or
Units of Stock

That Have Not
Vested(3) ($)

  

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units

or Other
Rights
That
Have Not
Vested(4)
(#)

 

 

  

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or Other
Rights
That
Have Not
Vested(5)
($)

 

 
        

Tom Gallagher

  11,500   0   30.95   3/7/18   —   —   —   — 
        
  15,200   0   35.71   3/15/19   —   —   —   — 
        
  14,201   7,099   39.17   3/12/20   —   —   —   — 
        
  9,234   18,466   46.87   3/11/21   —   —   —   — 
        
  0   26,800   46.17   3/10/22   —   —   —   — 
        
  0   35,400   43.71   3/16/23   —   —   —   — 
        
  0   37,300   56.86   3/15/24   —   —   —   — 
        
      

 

12,360

 

 

 

  

 

782,141

 

 

 

  

 

10,450

 

 

 

  

 

1,322,552

 

 

 

(1)Stock options vest in accordance with the following vesting schedules:

Expiration Dates

One-fifth vest on each of:

3/4/18

March 5, 2009, March 5, 2010, March 5, 2011, March 5, 2012 and March 5, 2013

3/7/18

March 8, 2012, March 8, 2013, March 8, 2014, March 8, 2015 and March 8, 2016

Expiration Dates

One-third vest on each of:

3/15/19

March 16, 2015, March 16, 2016 and March 16, 2017

3/12/20

March 13, 2016, March 13, 2017 and March 13, 2018

3/11/21

March 12, 2017, March 12, 2018 and March 12, 2019

3/10/22

March 11, 2018, March 11, 2019 and March 11, 2020

3/16/23

March 17, 2019, March 17, 2020 and March 17, 2021

3/15/24

March 16, 2020, March 16, 2021 and March 16, 2022

LOGO

3/15/25

2018 PROXY STATEMENT

March 15, 2021, March 15, 2022 and March 15, 2023

31

3/14/26

March 14, 2022, March 14, 2023 and March 14, 2024

3/12/27

March 12, 2023, March 12, 2024 and March 12, 2025

3/16/28

March 16, 2024, March 16, 2025 and March 16, 2026

3/15/29

March 15, 2025, March 15, 2026 and March 15, 2027

3/15/30

March 15, 2026, March 15, 2027 and March 15, 2028

EXECUTIVE COMPENSATION TABLES

(2)

36

The following table provides information with respect to the vesting of each named executive officer’s unvested restricted stock units and performance share units as of December 31, 2017:

img134299666_7.jpg 

      

Vesting Dates

 Type of award Pat
Gallagher		  Doug
Howell		  Jim
Gault		  Jim
Durkin		  Tom
Gallagher		 
      

3/12/18

 Restricted Stock Units*  —   4,050   —   —   — 
      

3/11/20

 Restricted Stock Units*  —   3,950   —   —   — 
      

3/17/21

 Restricted Stock Units*  —   5,350   —   —   — 
      

3/16/22

 Restricted Stock Units*  —   3,700   —   —   — 
      

3/11/18

 Performance Share Units**  15,064   7,556   6,025   5,452   5,260 
      

3/17/19

 Performance Share Units**  18,850   10,700   7,550   6,850   7,100 
      

Total

   33,914   35,306   13,575   12,302   12,360 

*

Restricted stock units granted in 2014 (vesting four years from the date of grant), and 2015, 2016 and 2017 (vesting five years from the date of grant).

Executive Compensation Tables

**Performance share units (PSUs) granted, and earned based on our performance, in 2015 and 2016. See page 21 for information regarding PSUs.
(2)
The following table provides information with respect to the vesting of each named executive officer’s unvested RSUs and earned PSUs as of December 31, 2023:

(3)The amounts in this column are based on a closing stock price of $63.28 for our common stock on December 31, 2017.


Vesting Date

 

Type of award

Pat
Gallagher

Doug
Howell

Tom
Gallagher

Scott
Hudson

Walt
Bay

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/14/24

 

Restricted Stock Units*

 

 

—

 

 

 

 

2,825

 

 

 

 

—

 

 

 

 

—

 

 

 

 

3,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/12/25

 

Restricted Stock Units*

 

 

—

 

 

 

 

2,850

 

 

 

 

—

 

 

 

 

—

 

 

 

 

2,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/16/24

 

Performance Share Units**

 

 

56,008

 

 

 

 

11,368

 

 

 

 

11,970

 

 

 

 

8,381

 

 

 

 

8,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

56,008

 

 

 

 

17,043

 

 

 

 

11,970

 

 

 

 

8,381

 

 

 

 

14,664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)The following table provides information with respect to the vesting of each named executive officer’s unearned unvested performance share units as of December 31, 2017:

* Granted in 2019 and 2020 (vesting five years from the date of grant).

** Granted in 2021, 200% of award earned based on our 2021-2023 performance.

      

Vesting Date

 Type of award Pat
Gallagher		  Doug
Howell		  Jim
Gault		  Jim
Durkin		  Tom
Gallagher		 
      

3/16/20

 Performance Stock Units*  32,650   11,100   —   —   10,450 
(3)
The amounts in this column are based on a closing stock price of $224.88 for our common stock on December 31, 2023.
(4)
The following table provides information with respect to the vesting of each named executive officer’s unearned unvested PSUs as of December 31, 2023:

*Performance share units (PSUs) granted in 2017, to be earned on the basis of 2017-2019 performance. See page 21 for information regarding PSUs.


Vesting Date

 

Type of award

Pat
Gallagher

Doug
Howell

Tom
Gallagher

Scott
Hudson

Walt
Bay

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/25

 

Performance Share Units*

 

 

45,100

 

 

 

 

9,160

 

 

 

 

9,640

 

 

 

 

7,230

 

 

 

 

7,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/15/26

 

Performance Share Units**

 

 

45,048

 

 

 

 

9,082

 

 

 

 

9,560

 

 

 

 

7,170

 

 

 

 

7,090

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

90,148

 

 

 

 

18,242

 

 

 

 

19,200

 

 

 

 

14,400

 

 

 

 

14,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)The amounts in this column are based on a closing stock price of $63.28 for our common stock on December 31, 2017 and a 200% payout. See page 21 for more information.

2017* Granted in 2022, to be earned on the basis of 2022-2024 performance. The amounts reported represent maximum payouts (200% of target awards) based on 2022-2023 performance. See page 26 for more information.

** Granted in 2023, to be earned on the basis of 2023-2025 performance. The amounts reported represent maximum payouts (200% of target awards) based on 2023 performance. See page 26 for more information.

(5)
The amounts in this column are based on a closing stock price of $224.88 for our common stock on December 31, 2023.

2023 Option Exercises and Stock Vested

 
 Option Awards  Stock Awards 
 

Option Awards

Stock Awards

Name

 

Number of
Shares
Acquired
on Exercise

(#)

  

Value
Realized on
Exercise

($)

  

Number of
Shares
Acquired on
Vesting

(#) (1)(2)

  

Value
Realized on
Vesting

($) (1)(2)

 

Number of
Shares
Acquired
on Exercise
(#)

Value
Realized on
Exercise
($)

Number of
Shares
Acquired
on
Vesting
(#)(1)(2)

Value
Realized on
Vesting
($)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

  67,417   2,062,125   18,300   1,038,495 

 

 

62,900

 

 

 

 

9,429,968

 

 

 

 

68,540

 

 

 

12,677,158

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug Howell

  61,375   1,806,495   13,550   769,558 

 

 

16,800

 

 

 

 

3,013,367

 

 

 

 

20,370

 

 

 

1,576,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jim Gault

  19,682   563,150   8,900   505,231 
 

Jim Durkin

  6,900   217,601   8,150   462,654 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom Gallagher

  8,276   254,653   8,550   485,532 

 

 

25,400

 

 

 

 

3,676,904

 

 

 

 

15,660

 

 

 

2,896,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Hudson

 

 

18,700

 

 

 

 

2,747,883

 

 

 

 

12,180

 

 

 

2,252,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt Bay

 

 

21,800

 

 

 

 

3,818,074

 

 

 

 

13,800

 

 

 

2,535,578

 

 

 

 

 

 

 

 

 

 

 

(1)
These columns reflect the vesting of RSUs and PSUs, as applicable. RSUs awarded on March 15, 2018 vested on March 15, 2023 with value realized of $177.09 per share plus accrued cash dividend equivalents. PSUs awarded on March 12, 2020 were earned at 200% on the basis of 2020-2022 performance and vested on March 12, 2023 with value realized of $182.76 per share plus accrued cash dividend equivalents.
(2)
Pursuant to the terms of the SS&T Plan (see page 34), Doug Howell deferred receipt of his RSUs vesting in 2023 and half of his PSUs vesting in 2023. He elected lump-sum distributions of the deferred RSUs in July 2028 and the deferred PSUs in July 2024.

(1)

These columns reflect the vesting of restricted stock units and performance share units. Restricted stock units awarded on March 13, 2013 vested on March 13, 2017, with value realized of $56.99 per share plus accrued cash dividend equivalents. Performance stock units awarded on March 12, 2014 (earned on the basis of 2014 performance) vested on March 12, 2017, with value realized of $56.99 per share plus accrued cash dividend equivalents.

2024 PROXY STATEMENT

37

(2)

Executive Compensation Tables

Pursuant to the terms of the Supplemental Plan (see page 28), Doug Howell deferred receipt of 5,500 shares related to the March 13, 2017 vesting of restricted stock units he was awarded on March 13, 2013. He elected alump-sum distribution in July 2018.

32

2018 PROXY STATEMENT

EXECUTIVE COMPENSATION TABLES

20172023 Pension Benefits

No payments were made under our defined benefit plans during 2023.

   

Name

 Plan Name Number
of
Years of
Credited
Service
(#)		  Present
Value of
Accumulated
Benefit ($)		 
   

Pat Gallagher

 Arthur J. Gallagher & Co. Employees’ Pension Plan          25   775,053 
   

Doug Howell

 Arthur J. Gallagher & Co. Employees’ Pension Plan          1   24,844 
   

Jim Gault

 Arthur J. Gallagher & Co. Employees’ Pension Plan          25   730,450 
   

Jim Durkin

 Arthur J. Gallagher & Co. Employees’ Pension Plan          25   836,549 
   

Tom Gallagher

 Arthur J. Gallagher & Co. Employees’ Pension Plan          25   500,224 

Name

 

Plan Name

Number of
Years of
Credited
Service
(#)(1)

Present
Value of
Accumulated
Benefit
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 

Arthur J. Gallagher & Co. Employees’ Pension Plan

 

 

25

 

 

 

 

904,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug Howell

 

Arthur J. Gallagher & Co. Employees’ Pension Plan

 

 

1

 

 

 

 

26,929

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom Gallagher

 

Arthur J. Gallagher & Co. Employees’ Pension Plan

 

 

25

 

 

 

 

525,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Hudson

 

Arthur J. Gallagher & Co. Employees’ Pension Plan

 

 

—

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt Bay

 

Arthur J. Gallagher & Co. Employees’ Pension Plan

 

 

—

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
The last year of credited service was 2005. Total years of actual service were as follows at December 31, 2023: Pat Gallagher - 49; Doug Howell - 20; Tom Gallagher - 43; Scott Hudson - 13; and Walt Bay - 16.

We maintain the Arthur J. Gallagher & Co. Employees’ Pension Plan (the Pension Plan) which is qualified under the Internal Revenue Code and which historically covered substantially all domestic employees. In 2005, we amended the Pension Plan to freeze the accrual of future benefits for all domestic employees effective July 1, 2005. Benefits under the Pension Plan are based upon the employee’s highest average annual earnings for a five calendar-year period with us and are payable after retirement in the form of an annuity or a lump sum. The maximum amount of annual earnings that may be considered in calculating benefits under the Pension Plan is $210,000 (the maximum amount of annual earnings allowable by law in 2005, the last year that benefits accrued under the Pension Plan).

Benefits under the Pension Plan are calculated as an annuity equal to 1% of the participant’s highest annual average earnings multiplied by years of service, and commencing upon the participant’s retirement on or after age 65. The maximum benefit under the pension plan upon retirement would be $53,318 per year, payable at age 65 in accordance with IRS regulations. Participants also may elect to commence their pensions anytime on or after attaining age 55 if they retire prior to age 65, with an actuarial reduction to reflect the earlier commencement date, ranging from 54% at age 55 to no reduction at age 65. All of our named executive officers with accumulated benefits under the plan are eligible to take this early retirement option. Pat Gallagher and Tom Gallagher are eligible for normal age retirement under the Pension Plan. For additional information on the valuation assumptions with respect to pensions, refer to Note 1213 to our consolidated financial statements in the Annual Report on Form10-K for the year ended December 31, 2017.2023.

2017

38

img134299666_7.jpg 

Executive Compensation Tables

2023 Nonqualified Deferred Compensation

   

Name

 Plan Name Executive
Contributions
in Last Fiscal
Year
($) (1)		  Registrant
Contributions
in Last Fiscal
Year
($) (2)		  Aggregate
Earnings
in Last
Fiscal
Year
($) (3)		  Aggregate
Withdrawals/
Distributions
in Last
Fiscal
Year
($) (4)		  

Aggregate
Balance
at Last
Fiscal
Year

End
($) (4)(5)

 

 

Plan Name

Executive
Contributions
in Last Fiscal
Year(1)
($)

Registrant
Contributions
in Last Fiscal
Year(2)
($)

Aggregate
Earnings
in Last
Fiscal
Year(3)
($)

Aggregate
Withdrawals/
Distributions
in Last Fiscal
Year(4)
($)

Aggregate
Balance at
Last Fiscal
Year
End(4)(5)
($)

  

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 DEPP  —   1,000,000   1,089,613   59,454   5,813,014 

 

 

 

 

 

 

 

 

 

 

 

Pat Gallagher

 Supplemental Plan  350,000   161,500   1,008,368   —   11,735,824 

 

DEPP

 

 

—

 

 

 

2,250,000

 

 

 

5,665,597

 

 

 

 

2,070,418

 

 

 

 

31,562,361

 

 

  

 

SS&T Plan

 

 

715,000

 

 

 

341,000

 

 

 

4,098,449

 

 

 

 

—

 

 

 

 

28,193,642

 

 

Doug Howell

 DEPP  —   450,000   1,807,799   —   9,235,153 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doug Howell

 Supplemental Plan  611,320   92,750   1,772,782   —   9,526,341 

 

DEPP

 

 

—

 

 

 

900,000

 

 

 

6,642,920

 

 

 

 

42,023,978

 

 

 

 

1,096,458

 

 

  

 

SS&T Plan

 

 

2,843,916

 

 

 

149,750

 

 

 

5,391,634

 

 

 

 

—

 

 

 

 

46,800,371

 

 

Jim Gault

 DEPP  —   1,000,000   622,508   26,424   3,514,784 
Supplemental Plan  100,000   86,500   438,630   —   3,503,457 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jim Durkin

 DEPP  —   950,000   2,326,988   26,424   12,017,326 
Supplemental Plan  181,250   77,125   838,844   —   4,910,125 
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tom Gallagher

 DEPP  —   400,000   1,624,245   —   8,295,604 

 

DEPP

 

 

—

 

 

 

900,000

 

 

 

520,275

 

 

 

 

31,135

 

 

 

 

2,977,852

 

 

Supplemental Plan  75,000   75,000   314,497   —   1,449,670 

 

SS&T Plan

 

 

175,000

 

 

 

158,500

 

 

 

63,996

 

 

 

 

—

 

 

 

 

2,942,905

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Hudson

 

DEPP

 

 

—

 

 

 

750,000

 

 

 

4,930,824

 

 

 

 

20,713,970

 

 

 

 

913,715

 

 

 

SS&T Plan

 

 

206,250

 

 

 

114,750

 

 

 

470,372

 

 

 

 

—

 

 

 

 

2,364,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walt Bay

 

DEPP

 

 

—

 

 

 

675,000

 

 

 

3,602,267

 

 

 

 

—

 

 

 

 

21,114,475

 

 

 

SS&T Plan

 

 

126,875

 

 

 

110,375

 

 

 

764,979

 

 

 

 

—

 

 

 

 

4,008,238

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)Amounts in this column include amounts reported in the “Salary” and/or“Non-Equity Incentive Plan Compensation” columns in the2017 Summary Compensation Table. For Doug Howell, the amount in this column also includes the value of restricted stock units vested in 2017, which he deferred until July 2018. For more information, see also footnote (2) to the2017 Option Exercises and Stock Vested table.
(1)
Amounts in this column include amounts reported in the “Salary” and/or “Non-Equity Incentive Plan Compensation” columns in the 2023 Summary Compensation Table.
(2)
These amounts are included in the “All Other Compensation” column of the 2023 Summary Compensation Table.
(3)
Amounts in this column are not included in the 2023 Summary Compensation Table. These amounts represent the change in market value on deferred and matched amounts under the SS&T Plan and on our contributions to the DEPP, based on the market-rate returns and dividend equivalents credited to participant accounts for the period January through December 2023. Participants may direct their SS&T Plan account balances into a number of deemed investment options that include mutual funds, an annuity product and a fund representing our common stock, and may change such deemed investments on any regular business day, subject to our Insider Trading Policy. Awards under the DEPP are credited with returns of deemed investments elected by the participant, including a fund representing our common stock. Each of our named executive officers has elected the fund representing our common stock.
(4)
For Pat Gallagher, this amount includes both an accelerated distribution under the DEPP to cover applicable taxes on vested awards and receipt of a distribution in accordance with prior elections under the DEPP. Doug Howell, Tom Gallagher and Scott Hudson also received an accelerated distribution under the DEPP to cover applicable taxes on a vested award.
(5)
The DEPP amounts include the following amounts also reported as compensation in this and prior years’ Summary Compensation Tables (as applicable): Pat Gallagher - $12,150,000; Doug Howell - $8,200,000; Tom Gallagher - $5,300,000; Scott Hudson - $3,000,000; and Walt Bay - $2,675,000.

LOGO

2018 PROXY STATEMENT

33

EXECUTIVE COMPENSATION TABLES

(2)These amounts are included in the “All Other Compensation” column of the2017 Summary Compensation Table.

(3)Amounts in this column are not included in the 2017 Summary Compensation Table. These amounts represent the change in market value on deferred and matched amounts under the Supplemental Plan and on our contributions to the DEPP, based on the market-rate returns and dividend equivalents credited to participant accounts for the period January through December 2017. Participants are able to direct that their Supplemental Plan account balances be deemed invested in a number of investment options that include various mutual funds, an annuity product and a fund representing our common stock, and may change such elections on any regular business day. Awards under the DEPP are credited with returns of deemed investments elected by the participant, including a fund representing our common stock. All of our named executive officers have elected the fund representing our common stock.

(4)For Pat Gallagher, Jim Gault and Jim Durkin, reflects accelerated distributions under the DEPP to cover applicable taxes on vested awards.

(5)The DEPP amounts include amounts also reported as compensation in this and prior years’ Summary Compensation Tables, as follows: Pat Gallagher – $9,850,000; Doug Howell – $4,550,000; Jim Gault – $6,100,000; Jim Durkin – $5,100,000; and Tom Gallagher – $1,800,000.

20172023 Potential Payments upon Termination or Change in Control

Change-in-Control Agreements

We provide our named executive officers withchange-in-control agreements, which we believe are an important part of their overall compensation. In addition to helping secure their continued dedication to stockholder interests prior to or following a change in control, the Compensation Committee also believes these agreements are important for recruitment and retention, as all or nearly all of our competitors for talent have similar agreements in place for their senior employees. In general, compensation levels under these agreements are separate and unrelated to named executive officers’ overall compensation decisions for a given year.

Double Trigger

Each named executive officer’schange-in-control agreement provides for payments if there is a “Termination” of the individual within 24 months after a “Change in Control” (commonly referred to in combination as a “double trigger”).

•
AChange in Control occurs (i) if a person or group is or becomes the beneficial owner, directly or indirectly, of our securities representing 50% or more of the voting power to elect directors, (ii) if there is a change in the composition of the Board such that within a period of two consecutive years, individuals who at the beginning of suchtwo-year period constitute the Board and any new directors elected or nominated by at leasttwo-thirds of the directors who were either directors at the beginning of thetwo-year period or were so elected or nominated, cease for any reason to constitute at least a majority of the Board, or (iii) our stockholders approve the sale of all or substantially all of our assets or any merger, consolidation, issuance of securities or purchase of assets, the result of which would be the occurrence of any event described in (i) or (ii) above. A substantially similarchange-in-control definition is used under our equity plans, the DEPP and the SupplementalSS&T Plan, except that our equity plans and the DEPP do not include subsection (iii) above.

•
ATermination means either (i) a termination of employment by us for any reason other than death, physical or mental incapacity or “cause” (defined as gross misconduct or willful and material breach of thechange-in-control agreement) or (ii)

2024 PROXY STATEMENT

39

Executive Compensation Tables

resignation upon the occurrence of (1) a material change in the nature or scope of the individual’s authorities, powers, functions or duties, (2) a reduction in total compensation, (3) any relocation of the individual’s principal place of employment more than 35 miles from his or her location prior to the Change in Control, (4) a breach of thechange-in-control agreement by us or (5) a good faith determination by the individual that as a result of the Change in Control, his or her position is materially affected.

Payments upon Double Trigger

Under thechange-in-control agreements, each named executive officer subject to a Termination within 24 months after a Change in Control is entitled to receive:

•
Severance – two-times salary, bonus and annual cash incentive. A lump sum severance payment equal to salary, bonus and annual cash incentive compensation payments for a24-month period on the basis of a salary rate not less than his annual salary prior to the termination, or if greater, the salary at the time of the Change in Control and the bonus and annual cash incentive payment prior to termination or, if greater, the bonus and annual cash incentive payment prior to the Change in Control. The severance payment would be made in a lump sum not more than seven days after the date of termination.

•
No new excise taxgross-up payments. Ourchange-in-control agreements entered into prior to 2008 provide that the named executive officer would be eligible to receive an excise tax“gross-up” “gross-up” payment as defined in Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended, relating toso-called “excess parachute payments.” However, ourchange-in-control agreements entered into after 2008 do not contain excise taxgross-ups, and it is our policy not to enter into newchange-in-control agreements that contain excise taxgross-ups, or amend existingchange-in-control agreements without removing these provisions.

•
Participation in benefit plans. Thechange-in-control agreements also provide for continued participation in welfare benefit plans, including medical, dental, life and disability insurance, on the same basis and at the same cost as prior to the Termination, for the shorter of atwo-year period or until the individual becomes covered by a different plan with coverage or benefits equal to or greater than the plan provided by us. The agreements also provide for the payment of any unpaid salary and a lump sum cash payment for accumulated but unused vacation.

34

2018 PROXY STATEMENT

EXECUTIVE COMPENSATION TABLES

Other Termination andChange-in-Control Payments

The table below shows potential incremental payments, benefits and equity award accelerations upon termination of our named executive officers. The amounts are determined under existing agreements and plans for various termination scenarios. The amounts assume that the trigger events for all such payments occurred on December 31, 20172023 and use the closing price of our common stock on that date of $63.28.$224.88. The amounts in the table below do not include the amount of pension or deferred compensation our named executive officers would receive under each termination scenario becausescenario. Instead, these amounts are reflected in the20172023 Pension Benefits and20172023 Nonqualified Deferred Compensation tables presented above.

•
Stock options. All of our named executive officers have outstanding stock options, which they are eligible to exercise upon termination of employment. If they are terminated for cause they are eligible to exercise all options that are vested at the time of termination, subject to the restrictive covenant and clawback provisions in their award agreements. Upon a voluntary resignation or termination without cause, (1) they may exercise or retain through their original expiration date all nonqualified stock options granted before 2013 that have vested as of the date of termination, and (2) becauseBecause our named executive officers have all reached the age of 55, nonqualifiedupon a voluntary resignation or termination without cause, their stock options that were granted in 2013 or later are no longerwould not be subject to forfeiture if their departure from the company is at least two years after the date of grant. If a named executive officer is terminated due to death or disability, all stock options vest and remain outstanding through their original expiration date. If there isUpon a change in control, all stock options granted prior to the approval of our 2017 Long-Term Incentive Plan vest immediately and may be exercised through their original expiration date. For stock options granted after the approval of our 2017 and 2022 Long-Term Incentive Plan,Plans, accelerated vesting at a change in control (or at termination of employment within six months prior to or twenty-four months following the change in control) requires Board approval.

Restricted stock units.•
RSUs. Doug Howell is the only named executive officer withand Walt Bay have outstanding restricted stock units.RSUs. Upon a termination for cause, all unvested restricted stock unitsRSUs would lapse. Because he hasthey have reached the age of 55, upon a voluntary resignation or termination without cause, his restricted stock units aretheir RSUs would not be subject to forfeiture if histheir departure from the company is at least two years after the date of grant, although vesting and distribution will still occur in accordance with the original schedule. If he terminatesthey terminate because of death or disability the awards immediately vest. If there is a change in control, all restricted stock units granted prior to the approval of our 2017 Long-Term Incentive Plan vest immediately. For restricted stock units granted after the approvalAccelerated vesting of our 2017 Long-Term Incentive Plan, accelerated vestingtheir RSUs at a change in control (or upon termination of employment within six months prior to or twenty-four months following the change in control) requires Board approval.

•
PSUs. All of our named executive officers have outstanding PSUs. Upon a termination for cause, all unvested PSUs would lapse. Because our named executive officers have all reached the age of 55, upon a voluntary resignation or termination without cause, the earned portion of PSUs arewould not be subject to forfeiture if their departure from the company is at least two years after the date of grant, although vesting and distribution will still occur in accordance with the original schedule. If there isthey terminate because of death or disability the awards vest immediately at target. Upon a change in control, or upon termination of employment within six months prior to or twenty-four months following a change in control, immediate vesting of all earned PSUs granted prior to the approval of our 2017 Long-Term Incentive Plan vest immediately and the deemed satisfaction of performance conditions at target levels for unearned PSUs are deemed satisfied at target levels or, if greater, on a pro rata basis based on actual achievement as of the date of the change in control. For PSUs granted after the approval of our 2017 Long-Term Incentive Plan,control, require Board approval is required at a change in control both for accelerated vesting and for the deemed satisfaction of performance conditions described in the prior sentence.approval.

•
DEPP. All of our named executive officers participate in the DEPP. Amounts in this plan vest on the earliest to occur of (1) the date the participant turns 62 (or theone-year anniversary of the date of grant for participants over 61), (2) death, (3) termination of employment because of disability, (4) termination in a manner that grants the person severance pay under our Severance

40

img134299666_7.jpg 

Executive Compensation Tables

Plan (filed as an exhibit to our Securities Exchange Act of 1934, as amended (Exchange Act) filings) and (5) a change in control. Accordingly, vesting would accelerate under all of the termination scenarios other than a voluntary resignation or a termination for cause.

•Termination for Cause. Where applicable, termination “for cause” under our plans generally means a termination of employment based upon the good faith determination of the company that one or more of the following events has occurred: (i) the participant has committed a dishonest or fraudulent act to the material detriment of the company; (ii) the participant has been convicted (or pleaded guilty ornolo contendere) for a crime involving moral turpitude or for any felony; (iii) material and persistent insubordination on the part of the participant; (iv) the loss by the participant, for any reason, of any license or professional registration without the company’s written consent; (v) the diversion by the participant of any business or business opportunity of the company for the benefit of any party other than the company; (vi) material violation of the company’s Global Standards of Business Conduct by the participant; or (vii) the participant has engaged in illegal conduct, embezzlement or fraud with respect to the assets, business or affairs of the company.

•
Termination for Cause. Where applicable, termination “for cause” under our plans generally means a termination of employment based upon the good faith determination of the company that one or more of the following events has occurred: (i) the participant has committed a dishonest or fraudulent act to the material detriment of the company; (ii) the participant has been convicted (or pleaded guilty or nolo contendere) for a crime involving moral turpitude or for any felony; (iii) material and persistent insubordination on the part of the participant; (iv) the loss by the participant, for any reason, of any license or professional registration without the company’s written consent; (v) the diversion by the participant of any business or business opportunity of the company for the benefit of any party other than the company; (vi) material violation of the company’s Global Standards of Business Conduct by the participant; or (vii) the participant has engaged in illegal conduct, embezzlement or fraud with respect to the assets, business or affairs of the company.
•
No LiberalChange-in-Control Definitions in Equity Plans or DEPP. None of our equity plans or the DEPP has a “liberal”change-in-control definition (i.e., they do not provide for buyout thresholds lower than 50%, and a change in control is deemed to occur upon completion, rather than stockholder approval, of a transaction).

 

Executive Benefits
and Payments
Upon Separation

Voluntary
Resignation
($)

 

Death or
Disability
($)

 

Termination
with Cause
($)

 

Termination
without
Cause
($)

 

Change in
Control(1)
($)

 

Termination
without Cause or
Resignation for
Good Reason
Following
Change in
Control
($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Pay

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,300,000

 

 

 

—

 

 

 

14,300,000

 

 

 

Stock Options

 

 

15,937,237

 

 

 

19,748,237

 

 

 

—

 

 

 

15,937,237

 

 

 

19,748,237

 

 

 

19,748,237

 

 

PSUs(2)

 

 

12,759,016

 

 

 

29,808,808

 

 

 

—

 

 

 

12,759,016

 

 

 

29,808,808

 

 

 

29,808,808

 

Pat Gallagher

 

DEPP(3)

 

 

28,821,215

 

 

 

31,562,361

 

 

 

28,821,215

 

 

 

31,562,361

 

 

 

31,562,361

 

 

 

31,562,361

 

 

Benefit Plan Participation(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

58,290

 

 

Excise Tax Gross-Up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

22,288,923

 

 

 

Total

 

 

57,517,468

 

 

 

81,119,406

 

 

 

28,821,215

 

 

 

61,558,614

 

 

 

81,119,406

 

 

 

117,766,619

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Pay

 

 

—

 

 

 

—

 

 

 

—

 

 

 

730,769

 

 

 

—

 

 

 

6,650,000

 

 

Stock Options

 

 

5,298,727

 

 

 

6,841,945

 

 

 

—

 

 

 

5,298,727

 

 

 

6,841,945

 

 

 

6,841,945

 

 

RSUs

 

 

1,310,932

 

 

 

1,310,932

 

 

 

—

 

 

 

1,310,932

 

 

 

1,310,932

 

 

 

1,310,932

 

Doug Howell

 

PSUs(2)

 

 

2,589,811

 

 

 

6,041,265

 

 

 

—

 

 

 

2,589,811

 

 

 

6,041,265

 

 

 

6,041,265

 

 

DEPP(3)

 

 

—

 

 

 

1,096,458

 

 

 

—

 

 

 

1,096,458

 

 

 

1,096,458

 

 

 

1,096,458

 

 

Benefit Plan Participation(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

51,766

 

 

Excise Tax Gross-Up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

Total

 

 

9,199,469

 

 

 

15,290,600

 

 

 

—

 

 

 

11,026,696

 

 

 

15,290,600

 

 

 

21,992,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Pay

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,000,000

 

 

 

—

 

 

 

7,000,000

 

 

 

Stock Options

 

 

7,453,806

 

 

 

9,078,201

 

 

 

—

 

 

 

7,453,806

 

 

 

9,078,201

 

 

 

9,078,201

 

 

 

PSUs(2)

 

 

2,726,814

 

 

 

6,359,485

 

 

 

—

 

 

 

2,726,814

 

 

 

6,359,485

 

 

 

6,359,485

 

Tom Gallagher

 

DEPP(3)

 

 

1,881,394

 

 

 

2,977,852

 

 

 

1,881,394

 

 

 

2,977,852

 

 

 

2,977,852

 

 

 

2,977,852

 

 

 

Benefit Plan Participation(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

65,061

 

 

 

Excise Tax Gross-Up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

Total

 

 

12,062,014

 

 

 

18,415,538

 

 

 

1,881,394

 

 

 

14,158,472

 

 

 

18,415,538

 

 

 

25,480,599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Pay

 

 

—

 

 

 

—

 

 

 

—

 

 

 

375,000

 

 

 

—

 

 

 

5,250,000

 

 

 

Stock Options

 

 

5,546,919

 

 

 

6,765,049

 

 

 

—

 

 

 

5,546,919

 

 

 

6,765,049

 

 

 

6,765,049

 

 

 

PSUs(2)

 

 

1,909,212

 

 

 

4,633,715

 

 

 

—

 

 

 

1,909,212

 

 

 

4,633,715

 

 

 

4,633,715

 

Scott Hudson

 

DEPP

 

 

—

 

 

 

913,715

 

 

 

—

 

 

 

913,715

 

 

 

913,715

 

 

 

913,715

 

 

 

Benefit Plan Participation(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

67,084

 

 

 

Excise Tax Gross-Up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

Total

 

 

7,456,131

 

 

 

12,312,479

 

 

 

—

 

 

 

8,744,845

 

 

 

12,312,479

 

 

 

17,629,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance Pay

 

 

—

 

 

 

—

 

 

 

—

 

 

 

446,154

 

 

 

—

 

 

 

5,075,000

 

 

 

Stock Options

 

 

4,773,836

 

 

 

5,981,926

 

 

 

—

 

 

 

4,773,836

 

 

 

5,981,926

 

 

 

5,981,926

 

 

RSUs

 

 

1,315,678

 

 

 

1,315,678

 

 

 

—

 

 

 

1,315,678

 

 

 

1,315,678

 

 

 

1,315,678

 

Walt Bay

 

PSUs(2)

 

 

2,030,747

 

 

 

4,731,254

 

 

 

—

 

 

 

2,030,747

 

 

 

4,731,254

 

 

 

4,731,254

 

 

DEPP

 

 

—

 

 

 

21,114,475

 

 

 

—

 

 

 

21,114,475

 

 

 

21,114,475

 

 

 

21,114,475

 

 

 

Benefit Plan Participation(4)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

67,082

 

 

Excise Tax Gross-Up

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6,320,573

 

 

Total

 

 

8,120,261

 

 

 

33,143,333

 

 

 

—

 

 

 

29,680,889

 

 

 

33,143,333

 

 

 

44,605,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
For stock options, RSUs and PSUs granted after 2017, assumes Board approval of accelerated payouts at a change in control.
(2)
For purposes of this table we assume that unearned PSUs are valued at actual achievement as of December 31, 2023.
(3)
The participant has reached age 62, which means that substantially all award balances under the plan are vested.
(4)
Represents the lump sum present value of two years of benefits as described above under Participation in benefit plans.

LOGO

2024 PROXY STATEMENT

2018 PROXY STATEMENT

35

41

EXECUTIVE COMPENSATION TABLES

       
  

Executive Benefits

and Payments
Upon Separation

 Voluntary
Resignation		  Death or
Disability		  

Termination

with Cause

  Termination
without
Cause		  Change in
Control		  

Termination

without Cause or

Resignation for

Good Reason

Following

Change in Control

 

Pat Gallagher

 Severance Pay $—  $—  $—  $1,250,000  $—  $8,125,000 
 Stock Options (1)  5,377,048   6,982,287   3,444,101   5,377,048   6,982,287   6,982,287 
 Restricted Stock Units  —   —   —   —   —   — 
 PSUs(2)  959,125   959,125   —   959,125   4,285,651   4,285,651 
 DEPP (3)  4,671,007   5,813,014   4,671,007   5,813,014   5,813,014   5,813,014 
 Benefit Plan Participation (4)  —   —   —   —   —   62,266 
 Excise TaxGross-Up  —   —   —   —   —   — 
  Total $11,007,180  $13,754,426  $8,115,108  $13,399,187  $17,080,952  $25,268,218 

Doug Howell

 Severance Pay $—  $—  $—  $457,692  $—  $4,250,000 
 Stock Options (1)  2,159,235   3,407,177   1,600,512   2,159,235   3,407,177   3,407,177 
 Restricted Stock Units  524,644   1,116,102   —   524,644   1,116,102   1,116,102 
 PSUs(2)  481,091   481,091   —   481,091   1,890,274   1,890,274 
 DEPP  —   9,235,153   —   9,235,153   9,235,153   9,235,153 
 Benefit Plan Participation (4)  —   —   —   —   —   50,578 
 Excise TaxGross-Up  —   —   —   —   4,539,306   7,097,187 
  Total $3,164,970  $14,239,523  $1,600,512  $12,857,815  $20,188,012  $27,046,471 

Jim Gault

 Severance Pay $—  $—  $—  $800,000  $—  $4,000,000 
 Stock Options (1)  1,867,886   2,605,675   868,949   1,867,886   2,605,675   2,605,675 
 Restricted Stock Units  —   —   —   —   —   — 
 PSUs  383,612   383,612   —   383,612   873,154   873,154 
 DEPP (3)  2,372,778   3,514,784   2,372,778   3,514,784   3,514,784   3,514,784 
 Benefit Plan Participation (4)  —   —   —   —   —   41,095 
 Excise TaxGross-Up  —   —   —   —   —   — 
  Total $4,624,276  $6,504,071  $3,241,727  $6,566,282  $6,993,613  $11,034,708 

Jim Durkin

 Severance Pay $—  $—  $—  $725,000  $—  $3,625,000 
 Stock Options (1)  2,076,477   2,745,771   1,170,156   2,076,477   2,745,771   2,745,771 
 Restricted Stock Units  —   —   —   —   —   — 
 PSUs  347,129   347,129   —   347,129   791,283   791,283 
 DEPP (3)  10,932,420   12,017,326   10,932,420   12,017,326   12,017,326   12,017,326 
 Benefit Plan Participation (4)  —   —   —   —   —   60,490 
 Excise TaxGross-Up  —   —   —   —   —   — 
  Total $13,356,026  $15,110,226  $12,102,576  $15,165,932  $15,554,380  $19,239,870 

Tom Gallagher

 Severance Pay $—  $—  $—  $800,000  $—  $4,000,000 
 Stock Options (1)  2,046,350   3,149,751   1,284,775   2,046,350   3,149,751   3,149,751 
 Restricted Stock Units  —   —   —   —   —   — 
 PSUs(2)  334,904   334,904   —   334,904   1,468,771   1,468,771 
 DEPP  —   8,295,604   —   8,295,604   8,295,604   8,295,604 
 Benefit Plan Participation (4)  —   —   —   —   —   50,578 
 Excise TaxGross-Up  —   —   —   —   —   3,823,052 
 Total $2,381,254  $11,780,259  $1,284,775  $11,476,858  $12,914,126  $20,787,756 

(1)
A substantial portion

Item 3 – Advisory vote to Approve the Compensation of the values shown represent fully vested amounts, which are disclosed above underOutstanding Equity Awards at 2017 FiscalYear-end.our Named Executive Officers

(2)Unearned PSUs are valued at target performance levels.

(3)The participant has reached age 62, which means that substantially all award balances under the plan are vested.

(4)Represents the lump sum present value of two years of benefits as described above underParticipation in benefit plans.

36

2018 PROXY STATEMENT

Item 3 – Advisory Votevote to Approve the Compensation of Ourour Named Executive Officers

Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to vote, on anon-binding, advisory basis, to approve the compensation of our named executive officers, as described in the Compensation Discussion and Analysis, compensation tables and related narrative discussion in this Proxy Statement. This proposal, commonly known as“say-on-pay” “say-on-pay”, gives our stockholders the opportunity to express their views on the compensation of our named executive officers.officers and is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our executive compensation philosophy, policies and practices. Our stockholders are given the opportunity to vote, on anon-binding, advisory basis, onsay-on-pay proposals annually. Our stockholders will have the next opportunity to vote on such a proposal at the 20192025 Annual Meeting.

We believe that our compensation program for named executive officers is structured in the best manner possible to support our company and business objectives, as well as to support our culture and traditions developed over the past 90 years.since our founding in 1927. We believe our program strikes the appropriate balance between using responsible, measured pay practices and effectively motivating our executives to dedicate themselves fully to value creation for our stockholders.

We encourage you to read our Compensation Discussion and Analysis on pages 1821 to 2531 of this Proxy Statement and our Executive Compensation tables on pages 2733 to 36.41.

ResolutionThe vote is advisory, which means that the vote is not binding on the Board or the Compensation Committee and Recommendation

neither the Board nor the Compensation Committee will be required to take any action, or refrain from taking any action, as a result of the outcome of the vote on this proposal. The Board strongly endorsesand the company’sCompensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program for named executive officers and recommends that stockholders vote in favor of the following resolution:program.

Resolution and Recommendation

The Board strongly endorses the company’s compensation program for named executive officers and recommends that stockholders vote in favor of the following resolution:

RESOLVED, that the compensation of the named executive officers of Arthur J. Gallagher & Co., as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative in this Proxy Statement, is hereby APPROVED.

img134299666_34.jpg 

The Board recommends that you vote “FOR” the advisory resolution approving the compensation of the company’s named executive officers

42

img134299666_7.jpg 

Pay Versus Performance

Pay Versus Performance

As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive “compensation actually paid” and the company’s financial performance for each of the last three completed calendar years. For further information concerning the company’s pay for performance philosophy and how the company aligns executive compensation with performance, see Overview of Our Executive Compensation Program and Components of Compensation for Named Executive Officers.

 

 

 

 

 

 

 

 

 

 

 

 

 

Value of Initial Fixed $100
Investment Based On:

 

 

 

 

 

 

 

 

Year

 

Summary
Compensation
Table Total for
PEO(1)

 

 

Compensation
Actually Paid
to PEO(2)

 

 

Average
Summary
Compensation
Table Total for
Non-PEO
Named
Executive
Officers(3)

 

 

Average
Compensation
Actually Paid
to Non-PEO
Named
Executive
Officers(4)

 

 

Total
Shareholder
Return(5)

 

 

Peer Group
Total
Shareholder
Return(6)

 

 

Net
Income
(millions)

 

 

Adjusted
EBITDAC
Growth(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

$

15,496,222

 

 

$

32,997,722

 

 

$

5,408,851

 

 

$

9,743,063

 

 

$

120.50

 

 

$

108.60

 

 

$

969.5

 

 

 

19.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

$

14,194,926

 

 

$

23,190,737

 

 

$

4,953,048

 

 

$

6,908,560

 

 

$

112.43

 

 

$

97.54

 

 

$

1,114.2

 

 

 

18.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

$

13,882,255

 

 

$

36,172,141

 

 

$

5,079,153

 

 

$

11,580,235

 

 

$

139.01

 

 

$

141.53

 

 

$

906.8

 

 

 

17.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

$

11,177,460

 

 

$

26,471,099

 

 

$

3,744,087

 

 

$

8,713,871

 

 

$

132.15

 

 

$

106.24

 

 

$

818.8

 

 

 

21.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
The dollar amounts reported in this column are the amounts reported for Pat Gallagher (the company’s Chairman and Chief Executive Officer) for each of the corresponding years in the “Total” column of the Summary Compensation Table.
(2)
The dollar amounts reported in this column represent the amount of “compensation actually paid” to Pat Gallagher, as computed in accordance with Item 402(v) of Regulation S-K and do not reflect total compensation actually realized or received. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Actually Paid to PEO

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Compensation Table Total

 

$

15,496,222

 

 

$

14,194,926

 

 

$

13,882,255

 

 

$

11,177,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table

 

$

5,377,616

 

 

$

4,802,893

 

 

$

5,492,149

 

 

$

3,637,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less, Change in Pension Value reported in Summary Compensation Table

 

$

36,498

 

 

 

—

 

 

$

19,063

 

 

$

98,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, year-end fair value of outstanding and unvested equity awards granted in the year

 

$

11,639,809

 

 

$

7,503,151

 

 

$

13,095,137

 

 

$

10,030,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, fair value as of vesting date of equity awards granted and vested in the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years

 

$

12,000,551

 

 

$

7,566,230

 

 

$

14,263,150

 

 

$

10,345,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus (less), change in fair value from prior year end until the vesting date of equity awards granted in prior years that vested in the year

 

$

(762,443

)

 

$

(1,297,632

)

 

$

416,987

 

 

$

(1,371,701

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, dividends or other earnings paid on awards in the covered fiscal year prior to vesting if not otherwise included in the Summary Compensation Table Total for the covered fiscal year

 

$

37,697

 

 

$

26,954

 

 

$

25,824

 

 

$

25,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less, prior year-end fair value for any equity awards forfeited in the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, pension service cost for services rendered during the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation Actually Paid to Pat Gallagher

 

$

32,997,722

 

 

$

23,190,737

 

 

$

36,172,141

 

 

$

26,471,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)
The dollar amounts reported in this column represent the average of the amounts reported for the company’s named executive officers as a group (excluding Pat Gallagher) in the “Total” column of the Summary Compensation Table in each applicable year. The named executive officers included for these purposes in each applicable year 2020 through 2023 are as follows: Doug Howell, Tom Gallagher, Scott Hudson and Walt Bay.

2024 PROXY STATEMENT

43

Pay Versus Performance

(4)
The dollar amounts reported in this column represent the average amount of “compensation actually paid” to the named executive officers of Arthur J. Gallagher & Co.as a group (excluding Pat Gallagher), as computed in accordance with Item 402(v) of Regulation S-K. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed pursuant toat the compensation disclosure rulestime of the Securitiesgrant.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Compensation Actually Paid to Non-PEO Named Executive Officers

2023

2022

2021

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Compensation Table Total

 

$

5,408,851

 

 

$

4,953,048

 

 

$

5,079,153

 

 

$

3,744,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table

 

$

1,235,470

 

 

$

1,109,940

 

 

$

1,322,515

 

 

$

925,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less, Change in Pension Value reported in Summary Compensation Table

 

$

7,164

 

 

 

—

 

 

$

48

 

 

$

20,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, year-end fair value of outstanding and unvested equity awards granted in the year

 

$

2,387,352

 

 

$

1,578,828

 

 

$

2,958,220

 

 

$

2,498,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, fair value as of vesting date of equity awards granted and vested in the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years

 

$

3,439,861

 

 

$

1,941,447

 

 

$

4,681,938

 

 

$

3,877,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus (less), change in fair value from prior year end until the vesting date of equity awards granted in prior years that vested in the year

 

$

(258,894

)

 

$

(462,939

)

 

$

174,571

 

 

$

(467,652

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, dividends or other earnings paid on awards in the covered fiscal year prior to vesting if not otherwise included in the Summary Compensation Table Total for the covered fiscal year

 

$

8,526

 

 

$

8,115

 

 

$

8,916

 

 

$

8,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less, prior year-end fair value for any equity awards forfeited in the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plus, pension service cost for services rendered during the year

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Compensation Actually Paid to Non-PEO Named Executive Officers

 

$

9,743,063

 

 

$

6,908,560

 

 

$

11,580,235

 

 

$

8,713,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)
Total Shareholder Return (TSR) is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and Exchange Commission, including(ii) the Compensation Discussiondifference between the company’s share price at the end of each fiscal year shown and Analysis, the beginning of the measurement period, by (b) the company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is December 31 of the prior fiscal year.
(6)
Includes Aon plc; Marsh & McLennan Companies, Inc.; Willis Towers Watson plc; and Brown & Brown, Inc.
(7)
“Adjusted EBITDAC” growth as defined for our annual cash incentives and PSUs under Annual Cash Incentives and Long-Term Incentives. See Exhibit A for reconciliations of non-GAAP measures.

44

img134299666_7.jpg 

Pay Versus Performance

Description of Relationships between Information Presented in Pay versus Performance Table

As discussed in more detail under Overview of our Executive CompensationProgram, an important part of the company’s executive compensation tablesprogram is pay-for-performance. While we use several performance measures to align executive compensation with company performance, not all of those measures are presented in the Pay versus Performance table. We seek to promote the long-term interests of the company and its stockholders and therefore the related narrativeperformance measures used by the company do not always correspond directly to compensation actually paid for a particular year (as calculated in this Proxy Statement, is hereby APPROVED.accordance with SEC rules). In accordance with SEC rules, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table.


Compensation Actually Paid, Cumulative TSR and Peer Group TSR

LOGOTHE BOARD RECOMMENDS THAT YOU VOTEFORTHE ADVISORY RESOLUTION APPROVING THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS

img134299666_35.jpg 

Compensation Actually Paid and Net Income

img134299666_36.jpg 

2024 PROXY STATEMENT

45

Pay Versus Performance

Compensation Actually Paid and Adjusted EBITDAC Growth

img134299666_37.jpg 

Financial Performance Measures

The most important financial performance measure used to link compensation actually paid to the company’s named executive officers for the most recently completed fiscal year to the company’s performance is adjusted EBITDAC growth, although we also consider adjusted revenue growth and adjusted EBITDAC per share growth in connection with final award determinations for annual cash incentives and PSU payouts.

The measures used for both long-term and short-term incentive awards have been selected because the Compensation Committee believes they incentivize our executive officers to make business decisions that align with the long-term interests of our stockholders and act as effective stewards of our stockholders’ investment. We believe these measures hold our executive officers accountable for integration expenses associated with our merger and acquisition activity and provide a strong connection between operating decisions and cash incentives. Further, calculating adjusted EBITDAC growth on a per-share basis to determine PSUs awards promotes management accountability around the financing of our merger and acquisition activity within an appropriate capital structure.

Most Important Measures in Determining NEO Pay

Adjusted EBITDAC growth

Adjusted Revenue growth

Adjusted EBITDAC per share growth

46

img134299666_7.jpg 

CEO Pay Ratio

CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the ratio of the annual total compensation of Pat Gallagher, our CEO, to the annual total compensation of the median compensated of all our other employees who were employed as of December 31, 2017.2023. For 2017,2023, Pat Gallagher’s total compensation was $7,886,491$15,496,222 and the annual total compensation of our median compensated employee was $62,441.$63,485. The ratio between these two amounts was 126244 to 1.

This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) and the methodology described below. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

As of December 31, 2017,2023, our total employee population consisted of approximately 27,16452,155 employees. As permitted by the rule, we excluded approximately 751non-U.S. employees, or less than 3% of our total U.S. andnon-U.S. employee population, from the followingnon-U.S. jurisdictions: Guernsey (127), Colombia (100), Chile (71), Jersey (70), Peru (66), Jamaica (61), Barbados (49), Bermuda (31), Gibraltar (28), Singapore (27), Sweden (25), Cayman Islands (21), Isle of Man (20), Norway (15), Malta (14), Saint Lucia (11), Saint Vincent and the Grenadines (5), Dominica (3), Grenada (2), Antigua and Barbuda (2), United Arab Emirates (2), and Saint Kitts and Nevis (1). We also excluded approximately 8914,334 employees of the businesses we acquired during 2017,2023, which are identified in Note 3 to our consolidated financial statements in the Annual Report on Form10-K for the year ended December 31, 2017.2023. We also excluded approximately 2,535 non-U.S. employees, or less than 5% of our total U.S. and non-U.S. employee population, from the following non-U.S. jurisdictions: Ireland (296), Peru (238), Chile (227), Brazil (215), Bermuda (157), Sri Lanka (152), Romania (151), Singapore (112), Guernsey (103), Trinidad and Tobago (98), Sweden (70), Jamaica (57), Norway (56), United Arab Emirates (55), Jersey (53), Germany (53), Japan (50), Barbados (46), Switzerland (34), France (33), Malaysia (33), Cayman Islands (32), Turkey (27), Isle of Man (26), Gibraltar (19), Italy (19), Hong Kong (17), Malta (16), Taiwan (16), South Africa (14), Republic of Korea (13), Saint Lucia (7), Belgium (7), Spain (5), Saint Vincent and the Grenadines (4), Vietnam (4), Antigua and Barbuda (3), Dominica (3), Grenada (3), Denmark (3), Netherlands (3), Saints Kitts and Nevis (2), Liechtenstein (2), and Finland (1). After giving effect to these two adjustments, our employee population consisted of approximately 25,52245,246 individuals.

We used 20172023 gross taxable income as set forth in our payroll data to determine our “median employee,” which we annualized for all permanent employees who did not work for the entire year. Once identified, we calculated the annual total compensation of our “median employee” for 20172023 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of the20172023 Summary Compensation Table included in this Proxy Statement.

LOGO

2024 PROXY STATEMENT

2018 PROXY STATEMENT

37

47

Questions & Answers About the Annual Meeting

Questions & Answers About the Annual Meeting

What is the quorum requirement for holding the Annual Meeting?

The holders of a majority of the stock issued and outstanding and entitled to vote at a meeting of the stockholders, present in person or deemed to be present or represented by proxy, shall constitute a quorum for purposes of any Annual Meeting of Stockholders. Brokernon-votes and abstentions are counted for purposes of determining the presence of a quorum at this Annual Meeting. If a quorum is not present at the scheduled time of the Annual Meeting, the stockholders entitled to vote thereat, present in person, deemed to be present or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present, deemed to be present or represented.

What are brokernon-votes?

If you are the beneficial owner of shares held in the name of a broker, trustee or other nominee and do not provide that broker, trustee or other nominee with voting instructions, your shares may constitute “brokernon-votes.” Generally, brokernon-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. Under the rules of the NYSE, brokers, trustees or other nominees may generally vote on routine matters but cannot vote onnon-routine matters. Only the ratification of the appointment of our independent auditor is considered a routine matter. The other proposals are not considered routine matters, and without your instructions, your broker cannot vote your shares.

Will any matters other than those identified in this Proxy Statement be decided at the Annual Meeting?

As of the date of this Proxy Statement, we are not aware of any matters to be raised at the Annual Meeting other than those described in this Proxy Statement. If any other matters are properly presented at the Annual Meeting for consideration, the people named as proxy holders on the proxy card will vote your proxy on those matters in their discretion. If any of our nominees are not available as a candidate for director, the proxy holders will vote your proxy for any other candidate the Board may nominate.

Who can vote, and how do I vote?

Only holders of our common stock at the close of business on the record date of March 20, 2018 are entitled to notice of and to vote at the Annual Meeting. We have no other outstanding securities entitled to vote, and there are no cumulative voting rights for the election of directors. At the close of business on the record date, we had 182,045,873 shares of common stock outstanding and entitled to vote. Each holder of our common stock on that date will be entitled to one vote for each share held on all matters to be voted upon at the Annual Meeting.

“Record holders” may vote (1) by completing and returning a proxy card, (2) on the Internet, or (3) using a toll-free telephone number. Please see the proxy card for specific instructions on how to vote using one of these methods. The telephone and Internet voting facilities for record holders will close at 11:59 p.m.

Eastern Daylight Time on May 14, 2018. “Beneficial owners” will receive instructions from their broker or other intermediary describing the procedures and options for voting.

What is the difference between a “record holder” and a “beneficial owner”?

If your shares are registered directly in your name, you are considered the “record holder” of those shares. If, on the other hand, your shares are held in a brokerage account or by a bank or other intermediary, you are considered the “beneficial owner” of shares held in street name, and a Notice of Internet Availability of Proxy Materials (Internet Availability Notice) was forwarded to you automatically from your broker or other intermediary. As a beneficial owner, you have the right to instruct your broker or other intermediary to vote your shares in accordance with your wishes. You are also invited to attend the Annual Meeting. Because a beneficial owner is not the record holder, you may not vote your shares in person at the meeting unless you obtain a “legal proxy” from your broker or other intermediary. Your broker or other intermediary has provided you with an explanation of how to instruct it regarding the voting of your shares. If you do not provide your broker or other intermediary with voting instructions, your broker or other intermediary will not be allowed to vote your shares at the Annual Meeting for any matter other than ratification of the appointment of our independent auditor.

If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you are a record holder and sign the proxy card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (FOR all of our nominees to the Board, FOR ratification of the appointment of our independent registered public accounting firm, and FOR the approval of the compensation of our named executive officers).

What is “householding”?

Householding is a procedure approved by the SEC whereby multiple stockholders of record who share the same last name and address will receive only one Internet Availability Notice or one set of proxy materials. Each stockholder of record will continue to receive a separate proxy card. We have undertaken householding to reduce printing costs and postage fees. A stockholder must affirmatively consent to householding. Record holders who wish to begin or discontinue householding may contact Broadridge Investor Communication Solutions, Inc. (Broadridge) by calling1-800-542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Broadridge will undertake the necessary steps to continue or discontinue householding upon such request of a record holder. Beneficial owners who wish to begin or discontinue householding should contact their broker or other intermediary. You can also request prompt delivery of a copy of the Proxy Statement and Annual Report by contacting our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4002 (telephone number:630-773-3800).

What should I do if I receive more than one Internet Availability Notice or proxy card?

If you own some shares of common stock directly as a record holder and other shares indirectly as a beneficial owner, or if you

What is the quorum requirement for holding the Annual Meeting?

The holders of a majority of the stock issued and outstanding and entitled to vote at a meeting of the stockholders, present in person or deemed to be present or represented by proxy, shall constitute a quorum for purposes of any Annual Meeting of Stockholders. Broker non-votes and abstentions are counted for purposes of determining the presence of a quorum at this Annual Meeting. If a quorum is not present at the scheduled time of the Annual Meeting, the stockholders entitled to vote thereat, present in person, deemed to be present or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present, deemed to be present or represented.

What are broker non-votes?

A “broker non-vote” occurs with respect to a proposal when a broker, trustee, or other nominee has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders but is not permitted to vote on other proposals without instructions from the beneficial owner and the beneficial owner fails to provide the nominee with such instructions. Under the rules of the NYSE, brokers, trustees or other nominees may (but are not required to and may elect not to) generally vote on routine matters but cannot vote on non-routine matters. We expect that only the ratification of the appointment of our independent auditor will be considered a routine matter. We do not expect the other proposals to be considered routine matters, and, as such, without your instructions, your broker cannot vote your shares. Whether a proposal is considered routine or non-routine is subject to NYSE rules and final determination by the NYSE. As indicated above, even with respect to routine matters, some brokers choose not to exercise discretionary voting authority. Therefore, we encourage you to provide voting instructions to your broker or other nominee as soon as possible.

Will any matters other than those identified in this Proxy Statement be decided at the Annual Meeting?

As of the date of this Proxy Statement, we are not aware of any matters to be raised at the Annual Meeting other than those described in this Proxy Statement. If any other matters are properly presented at the Annual Meeting for consideration, the people named as proxy holders on the proxy card will vote your proxy on those matters in their discretion. If any of our nominees are not available as a candidate for director, the proxy holders will vote your proxy for any other candidate the Board may nominate or the Board may choose to decrease the size of the Board or leave a vacancy on the Board.

Who can vote, and how do I vote?

Only holders of our common stock at the close of business on the record date of March 18, 2024 are entitled to notice of and to vote at the Annual Meeting. We have no other outstanding securities entitled to vote, and there are no cumulative voting rights for the election of directors. At the close of business on the record date, we had 218,302,819 shares of common stock outstanding and entitled to vote. Each holder of our common stock on that date will be entitled to one vote for each share held on all matters to be voted upon at the Annual Meeting.

“Record holders” may vote (1) by completing and returning a proxy card, (2) on the Internet, or (3) using a toll-free telephone number. Please see the proxy card for specific instructions on how to vote using one of these methods. The telephone and Internet voting facilities for record holders will close at 11:59 p.m. Eastern Daylight Time on May 6, 2024. “Beneficial owners” will receive instructions from their broker or other intermediary (or should contact their broker or other intermediary for instructions) describing the procedures and options for voting. Shares held in the Arthur J. Gallagher & Co. Employees’ 401(k) Savings and Thrift Plan must be voted by 5:00 p.m. Eastern Daylight Time on May 2, 2024.

What is the voting standard and the treatment of abstentions and broker non-votes for each item on the proxy card?

38

Voting Item

2018 PROXY STATEMENT

Voting
Standard

Treatment of

Abstentions &

Broker Non-Votes

QUESTIONS & ANSWERS ABOUT THE ANNUAL MEETING

own shares of common stock through more than one broker or other intermediary, you may receive multiple Internet Availability Notices or, if you request proxy materials to be delivered to you by mail, you may receive multiple proxy cards. It is necessary for you to vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the Internet Availability Notices you receive in order to vote all of the shares you own. If you request proxy materials to be delivered to you by mail, each proxy card you receive will come with its own prepaid return envelope. If you vote by mail, please make sure you return each proxy card in the return envelope that accompanied the proxy card.

May I change my vote after I return my proxy?

Yes. If you are a record holder, even after you have submitted your proxy, you may revoke your proxy at any time before it is exercised by delivering a written notice of revocation to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4002. You may also revoke your proxy and change your vote at any time by timely mailing a proxy card that is properly signed and dated with a later date than your previous vote, by casting a later dated proxy via the Internet or telephone, or by voting in person at the Annual Meeting.

If you are a beneficial owner of shares held in street name, you must contact the holder of record to revoke a previously authorized proxy. Beneficial owners must have a “legal proxy” from their broker to vote in person at the Annual Meeting. Attendance at the Annual Meeting will not, by itself, revoke a proxy.

Who will pay the costs of soliciting these proxies?

We will pay the costs of soliciting proxies to be voted at the Annual Meeting. After the Internet Availability Notices are initially distributed, we and our agents may also solicit proxies by mail, electronic mail, telephone or in person. We will also reimburse brokers and other intermediaries for their expenses in sending Internet Availability Notices to beneficial owners. In addition, we have hired Morrow Sodali LLC to assist us in soliciting proxies, for which we will pay a fee of $10,000 plus their reasonableout-of-pocket expenses.

What is the deadline for submitting a stockholder proposal to be included in the 2019 Proxy Statement?

The deadline for submitting a stockholder proposal to be included in our Proxy Statement and proxy card for the 2019 Annual Meeting is close of business on or before November 23, 2018. Such proposals must comply with the requirements of Rule14a-8 under the Securities Exchange Act of 1934, as amended (the Exchange Act), regarding stockholder proposals to be included in company-sponsored proxy materials. Proposals should be addressed to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4002.

How do I submit a proposal regarding a director nomination or other item of business to be presented directly at the 2019 Annual Meeting?

Under our bylaws, notice of any matter that is not submitted for inclusion in our Proxy Statement and proxy card for the 2019

Annual Meeting, but that a stockholder instead wishes to present directly at the Annual Meeting, including director nominations and other items of business, must be delivered to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4002, not later than the close of business on February 14, 2019 and not earlier than the close of business on January 15, 2019. If the date of the Annual Meeting is more than 30 days before or after May 15, 2019, notice of any such matter must be delivered not earlier than the close of business on the 120th day prior to the date of the 2019 Annual Meeting and not later than the close of business on the later of the 90th day prior to the 2019 Annual Meeting or the 10th day following the date the 2019 Annual Meeting date is publicly announced. For these purposes, “close of business” means 5:00 p.m. CDT. We will not entertain any nominations or other items of business at the 2019 Annual Meeting that do not meet the requirements in our bylaws. If we do not receive notice of a matter by February 14, 2019 (or the applicable deadline if the 2019 Annual Meeting is more than 30 days before or after May 15, 2019), SEC rules permit the people named as proxy holders on the proxy card to vote proxies in their discretion when and if the matter is raised at the 2019 Annual Meeting. Any stockholder proposal relating to a director nomination should set forth all information relating to such person required to be disclosed in solicitations of proxies for contested director elections under Regulation 14A of the Exchange Act, including, among other things, the particular experience, qualifications, attributes or skills of the nominee that, in light of our business and structure, led to the stockholder’s conclusion that the nominee should serve on the Board. The proposal should also include the director nominee’s written consent to be named in our Proxy Statement as a nominee and to serve as a director if elected. Stockholders are also advised to review our bylaws, which contain additional disclosure and other requirements regarding the information to be included in the advance notices of stockholder proposals and director nominations.

How do I recommend a proposed director nominee to the Board for consideration?

Any stockholder who wishes to propose director nominees for consideration by the Board’s Nominating/Governance Committee, but does not wish to present such proposal at an annual meeting, may do so at any time by directing a description of each nominee’s name and qualifications for Board membership to the Chair of the Nominating/Governance Committee, c/o our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4002. The recommendation should contain all of the information regarding the nominee described in the question and answer above and in our bylaws relating to director nominations brought before an annual meeting. The Nominating/Governance Committee evaluates nominee proposals submitted by stockholders in the same manner in which it evaluates other nominees.

Where can I find the voting results of the Annual Meeting?

An automated system administered by Broadridge will tabulate the votes. Voting results will be reported in a Current Report on Form8-K that we will file with the SEC within four business days following the Annual Meeting.

LOGO

Election of directors
(Item 1)

2018 PROXY STATEMENT

Majority of votes cast

Not counted as votes cast and therefore no effect

39

Auditor ratification
(Item 2)

Majority of stock having voting power and present

Abstentions treated as votes against. Broker non-votes are not expected to be applicable

Say-on-pay
(Item 3)

Majority of stock having voting power and present

Abstentions treated as votes against. Broker non-votes, if any, have no effect

48

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Questions & Answers About the Annual Meeting

What is the difference between a “record holder” and a “beneficial owner”?

If your shares are registered directly in your name, you are considered the “record holder” of those shares. If, on the other hand, your shares are held in a brokerage account or by a bank or other intermediary, you are considered the “beneficial owner” of shares held in street name, and a Notice of Internet Availability of Proxy Materials (Internet Availability Notice) was forwarded to you automatically from your broker or other intermediary. As a beneficial owner, you have the right to instruct your broker or other intermediary to vote your shares in accordance with your wishes. You are also invited to attend the Annual Meeting. Because a beneficial owner is not the record holder, you may not vote your shares in person at the meeting unless you obtain a “legal proxy” from your broker or other intermediary. Your broker or other intermediary has provided you with an explanation of how to instruct it regarding the voting of your shares. If you do not provide your broker or other intermediary with voting instructions, your broker or other intermediary may in some cases vote the shares in their discretion, but are not permitted to vote on certain proposals and may choose not to vote on any of the proposals.

If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If you are a record holder and sign the proxy card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board (FOR all of our nominees to the Board, FOR ratification of the appointment of our independent registered public accounting firm, and FOR the approval of the compensation of our named executive officers).

What is “householding”?

Householding is a procedure approved by the SEC whereby multiple stockholders of record who share the same last name and address will receive only one Internet Availability Notice or one set of proxy materials. Each stockholder of record will continue to receive a separate proxy card. We have undertaken householding to reduce printing costs and postage fees. A stockholder must affirmatively consent to householding. Record holders who wish to begin or discontinue householding may contact Broadridge Investor Communication Solutions, Inc. (Broadridge) by calling 1-800-542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Broadridge will undertake the necessary steps to continue or discontinue householding upon such request of a record holder. Beneficial owners who wish to begin or discontinue householding should contact their broker or other intermediary. You can also request prompt delivery of a copy of the Proxy Statement and Annual Report by contacting our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050 or at the following telephone number: 630-773-3800.

What should I do if I receive more than one Internet Availability Notice or proxy card?

If you own some shares of common stock directly as a record holder and other shares indirectly as a beneficial owner, or if you own shares of common stock through more than one broker or other intermediary, you may receive multiple Internet Availability Notices or, if you request proxy materials to be delivered to you by mail, you may receive multiple proxy cards. It is necessary for you to vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the Internet Availability Notices you receive in order to vote all of the shares you own. If you request proxy materials to be delivered to you by mail, each proxy card you receive will come with its own prepaid return envelope. If you vote by mail, please make sure you return each proxy card in the return envelope that accompanied the proxy card.

May I change my vote or revoke my proxy?

Yes. If you are a record holder, even after you have submitted your proxy, you may revoke your proxy at any time before it is exercised by delivering a written notice of revocation to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050. You may also revoke your proxy and change your vote at any time by timely mailing a proxy card that is properly signed and dated with a later date than your previous vote, by casting a later dated proxy via the Internet or telephone, or by voting on the Internet at the virtual Annual Meeting.

If you are a beneficial owner of shares held in street name, you must contact the holder of record to revoke a previously authorized proxy. Beneficial owners must have a “legal proxy” from their broker to vote in person at the Annual Meeting. Attendance at the Annual Meeting will not, by itself, revoke a proxy.

Who will pay the costs of soliciting these proxies?

We are soliciting proxies from stockholders on behalf of our Board and we will pay the costs of soliciting proxies to be voted at the Annual Meeting. After the Internet Availability Notices are initially distributed, we and our agents may also solicit proxies by mail, electronic mail, telephone or in person. We will also reimburse brokers and other intermediaries for their expenses in sending Internet Availability Notices to beneficial owners. In addition, we have hired Morrow Sodali LLC, 333 Ludlow Street, 5th Floor, Stamford, CT 06902, to assist us in soliciting proxies, for which we will pay a fee of $11,000 plus their reasonable out-of-pocket expenses.

2024 PROXY STATEMENT

49

Questions & Answers About the Annual Meeting

What is the deadline for submitting a director nominee under our “proxy access” by-law or a stockholder proposal under Rule 14a-8 to be included in the 2025 Proxy Statement?

Pursuant to Rule 14a-8, if a stockholder wants the company to consider a proposal for inclusion in our proxy materials for presentation at our 2025 Annual Meeting, the proposal should be addressed to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050, must comply with all relevant SEC requirements, and must be received by us not later than close of business on November 22, 2024.

Our by-laws permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of the company’s outstanding common stock continuously for at least three years to nominate and include in the company’s proxy materials directors constituting up to the greater of two or 20% of board seats, if the stockholder(s) and the nominee(s) meet the requirements in our by-laws. Notice of director nominations submitted under these proxy access by-law provisions must be delivered to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050, no earlier than the close of business on October 23, 2024 and no later than the close of business on November 22, 2024. For these purposes, “close of business” means 5:00 p.m. CDT. If the date of the Annual Meeting is more than 30 days before or after May 7, 2025, a notice under our proxy access by-law must be so delivered not earlier than the close of business on the 150th day prior to the 2025 Annual Meeting and not later than the close of business on the later of the 120th day prior to the 2025 Annual Meeting or the 10th day following the date the 2025 Annual Meeting date is publicly announced. Director nominations submitted pursuant to the proxy access provisions of our by-laws must comply with all of the requirements of our by-laws, which are currently under review by our Board. If amendments are approved by our Board, such changes will be timely disclosed pursuant to SEC rules through the filing of a Form 8-K.

How do I submit a proposal regarding a director nomination or other item of business to be presented directly at the 2025 Annual Meeting?

In addition, our by-laws provide notice procedures for stockholders to nominate a person as a director and to propose business to be considered by stockholders at a meeting (but not for inclusion in the proxy statement). Notice of nomination or proposal must set forth the information required by the by-laws (including information required under Rule 14a-19) and must be delivered to our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050, not later than the close of business on February 6, 2025 and not earlier than the close of business on January 7, 2025. If the date of the 2025 Annual Meeting is more than 30 days before or after May 7, 2025, notice of any such matter must be delivered not earlier than the

close of business on the 120th day prior to the date of the 2025 Annual Meeting and not later than the close of business on the later of the 90th day prior to the 2025 Annual Meeting or the 10th day following the date the 2025 Annual Meeting date is publicly announced. For these purposes, “close of business” means 5:00 p.m. CDT. We will not entertain any nominations or other items of business at the 2025 Annual Meeting that do not meet the requirements in our by-laws. If we do not receive notice of a matter within the above-mentioned window (or the applicable deadline if the 2025 Annual Meeting is more than 30 days before or after May 7, 2025), SEC rules permit the people named as proxy holders on the proxy card to vote proxies in their discretion if the matter is raised at the 2025 Annual Meeting.

How do I recommend a proposed director nominee to the Board for consideration?

Any stockholder who wishes to propose director nominees for consideration by the Board’s Nominating/Governance Committee, but does not wish to present such proposal at an annual meeting, may do so at any time by directing a description of each nominee’s name and qualifications for Board membership to the Chair of the Nominating/Governance Committee, c/o our Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050. The recommendation should contain all of the information regarding the nominee described in the question and answer above and in our by-laws relating to director nominations brought before an annual meeting. The Nominating/Governance Committee evaluates nominee proposals submitted by stockholders in the same manner in which it evaluates other nominees.

Where can I find the voting results of the Annual Meeting?

An automated system administered by Broadridge will tabulate the votes. Voting results will be reported in a Current Report on Form 8-K that we will file with the SEC within four business days following the Annual Meeting.

Any stockholder who would like a copy of our Annual Report on Form 10-K, including the related financial statements and financial statement schedules, may obtain one, without charge, by addressing a request to the attention of the Corporate Secretary at 2850 Golf Road, Rolling Meadows, Illinois 60008-4050. Our copying costs will be charged if copies of exhibits to the Annual Report are requested. You may also obtain a copy of the Annual Report, including exhibits, from our website, investor.ajg.com, by clicking on “Financials.”

50

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Exhibit A: Information Regarding Non-GAAP Measures

Exhibit A:Information RegardingNon-GAAP Measures

For 2017,2023, the executive compensation performance measures used by the Compensation Committee were adjusted EBITDAC, adjusted EBITDAC per share, and adjusted revenue, in each case for our combined brokerage and risk management segments. The Committee believes that these measures align with the key components of our long-term strategy and drive our long-term stock price performance. Please see page 2125 in the body of this Proxy Statement for detailed information regarding these measures.adjusted EBITDAC as used by the Committee for executive compensation purposes. In the context of 20172023 compensation decisions, the Committee also considered our adjusted EBITDAC margin and organic revenue performance. For these measures, definitions and GAAP reconciliations are set forth below.

The measures discussed below are not in accordance with, or are an alternative to, the GAAP information provided in this Proxy Statement. We believe that these presentations provide useful information to management, analysts and investors regarding financial and business trends relating to Gallagher’s results of operations and financial condition. Our industry peers may provide similar supplementalnon-GAAP information related to adjusted EBITDAC margin and organic revenues, although they may not use the same or comparable terminology and may not make identical adjustments. For example, our organic revenue is calculated differently than some of our industry peers. Thenon-GAAP information we provide should be used in addition to, but not as a substitute for, the GAAP information provided in this Proxy Statement. Certain reclassifications have been made to the prior year amounts in order to conform them to the current year presentation.

Adjusted EBITDAC Margin – adjusted EBITDAC margin is presented to improve the comparability of our results between periods by eliminating the impact of items that have a high degree of variability.

•
EBITDAC – We define this measure as net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables.

•
Adjusted EBITDAC – We define this measure as EBITDAC adjusted to exclude net gains realized from sales of books of business,or losses on divestitures, acquisition integration costs, for large acquisitions, workforce related charges,and lease termination related charges, acquisition-related adjustments and the period-over-period impact of foreign currency translation, as applicable. The amounts excluded with respect to foreign currency translation are calculated by applying current year foreign exchange rates to the same periods in the prior year.

Please note that “adjusted EBITDAC” as defined on page 2125 in the context of annual cash incentives and performance share unitsPSUs and as used throughout this proxy statement and the letter from our CEO is the same as this definition, except that it does not exclude acquisition integration costs and other acquisition-related adjustments.

than de minimis amounts included therein related to severance costs.

•
Adjusted EBITDAC margin – We define this measure as adjusted EBITDAC divided by total adjusted revenues (see(for the brokerage segment) and total adjusted revenues before reimbursements (for the risk management segment). See table on the next page).page A-3.

Organic Revenues – For the brokerage segment, organic change in base commission and fee revenues, excludessupplemental revenues and contingent revenues exclude the first twelve months of net commission and feesuch revenues generated from acquisitions and the net commission and feesuch revenues related to divested operations disposed of in each year presented. These commissions and feesrevenues are excluded from organic revenues in order to help interested persons analyze the revenue growth associated with the operations that were a part of Gallagher in both the current and prior year.periods. In addition, organic change in base commission and fee revenue organic growthrevenues, supplemental revenues and contingent revenues excludes the period-over-period impact of foreign currency translation.translation to improve the comparability of its results between periods. For the risk management segment, organic change in fee revenues excludes the first twelve months of fee revenues generated from acquisitions and the fee revenues related to divested operations disposed of in each year presented. In addition, change in organic growth excludes the impact of the period-over-period impact of foreign currency translation to improve the comparability of our results between periods.

These revenue items are excluded from organic revenues in order to determine a comparable, but non-GAAP, measurement of revenue growth that is associated with the revenue sources that are expected to continue in the current year and beyond. Gallagher hasbeyond, as well as eliminating the impact of the items that have a high degree of variability. We have historically viewed organic revenue growth as an important indicator when assessing and evaluating the performance of itsour brokerage and risk management segments. GallagherWe also believesbelieve that using this non-GAAP measure allows readers of our financial statements to measure, analyze and compare the growth from itsour brokerage and risk management segments in a meaningful and consistent manner.

LOGO

A-1

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2018 PROXY STATEMENT

A-1

EXHIBIT A: INFORMATION REGARDINGNON-GAAP MEASURES

Exhibit A: Information Regarding Non-GAAP Measures

All figures are unaudited and in millions except percentages

ADJUSTED REVENUE AND ADJUSTEDAdjusted Revenue and Adjusted EBITDAC MARGINMargin

  

 

 

 

 

 

 

ADJUSTED REVENUE

 

        2017        

 

  

        2016        

 

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage – Revenue

 $3,830.5  $3,527.9 

 

$

8,637.2

 

 

 

$

7,303.8

 

 

Gains on book sales

  (3.4)   (6.6) 

 

 

 

 

 

 

 

Net gains (losses) on divestitures

 

 

(9.6

)

 

 

 

(12.1

)

 

 

 

 

 

 

 

 

Levelized foreign currency translation

  

 

—

 

 

 

  

 

(13.2

 

) 

 

 

 

 

 

 

 

(25.1

)

 

 

 

 

 

 

 

 

 

Brokerage – Adjusted Revenue

 $

 

3,827.1

 

 

 

 $

 

3,508.1

 

 

 

 

$

8,627.6

 

 

 

$

7,266.6

 

 

 

 

 

 

 

 

 

 

Risk Management – Revenue

 $768.6  $718.1 

 

 

 

 

 

 

 

Risk Management – Revenue before Reimbursements

 

$

1,287.6

 

 

 

$

1,092.6

 

 

 

 

 

 

 

 

 

Net gains (losses) on divestitures

 

 

(0.4

)

 

 

 

(0.9

)

 

 

 

 

 

 

 

 

Levelized foreign currency translation

  

 

—

 

 

 

  

 

2.0

 

 

 

 

 

—

 

 

 

 

(4.9

)

 

 

 

 

 

 

 

 

 

Risk Management – Adjusted Revenue

 $

 

768.6

 

  

 

 $

 

720.1

 

  

 

 

$

1,287.2

 

 

 

$

1,086.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and Risk Management – Adjusted Revenue

 $

 

4,595.7

 

  

 

 $

 

4,228.2

 

  

 

 

$

9,914.8

 

 

 

$

8,353.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDAC – Brokerage

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

1,169.4

 

 

 

$

1,201.8

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

401.6

 

 

 

 

394.7

 

 

 

 

 

 

 

 

 

Depreciation

 

 

124.4

 

 

 

 

103.6

 

 

 

 

 

 

 

 

 

Amortization

 

 

523.6

 

 

 

 

448.7

 

 

 

 

 

 

 

 

 

Change in estimated acquisition earnout payables

 

 

376.8

 

 

 

 

90.4

 

 

 

 

 

 

 

 

 

EBITDAC

 

$

2,595.8

 

 

 

$

2,239.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDAC – Risk Management

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

154.0

 

 

 

$

115.8

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

55.3

 

 

 

 

41.4

 

 

 

 

 

 

 

 

 

Depreciation

 

 

35.9

 

 

 

 

37.8

 

 

 

 

 

 

 

 

 

Amortization

 

 

7.7

 

 

 

 

6.2

 

 

 

 

 

 

 

 

 

Change in estimated acquisition earnout payables

 

 

0.5

 

 

 

 

(7.4

)

 

 

 

 

 

 

 

 

EBITDAC

 

$

253.4

 

 

 

$

193.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDAC – Brokerage and Risk Management

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

1,323.4

 

 

 

$

1,317.6

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

456.9

 

 

 

 

436.1

 

 

 

 

 

 

 

 

 

Depreciation

 

 

160.3

 

 

 

 

141.4

 

 

 

 

 

 

 

 

 

Amortization

 

 

531.3

 

 

 

 

454.9

 

 

 

 

 

 

 

 

 

Change in estimated acquisition earnout payables

 

 

377.3

 

 

 

 

83.0

 

 

 

 

 

 

 

 

 

EBITDAC

 

$

2,849.2

 

 

 

$

2,433.0

 

 

 

 

 

 

 

 

 

  

EBITDAC – Brokerage

 

 

        2017        

 

  

        2016        

 

 
  

Net earnings

 $424.0  $357.1 

Provision for income taxes

  222.5   194.1 

Depreciation

  61.8   57.2 

Amortization

  261.8   244.7 

Change in estimated acquisition earnout payables

 

  

 

29.3

 

 

 

  

 

32.1

 

 

 

  

EBITDAC

 

 $999.4  $885.2 

  

EBITDAC – Risk Management

 

 

        2017        

 

  

        2016        

 

 
  

Net earnings

 $59.9  $57.2 

Provision for income taxes

  37.0   35.3 

Depreciation

  31.1   27.2 

Amortization

  2.9   2.5 

Change in estimated acquisition estimated payables

 

  

 

1.6

 

 

 

  

 

—

 

 

 

  

EBITDAC

 

 $

 

132.5

 

  

 

 $

 

122.2

 

  

 

  

EBITDAC – Brokerage and Risk Management

 

 

        2017        

 

  

        2016        

 

 
  

Net earnings

 $483.9  $414.3 

Provision for income taxes

  259.5   229.4 

Depreciation

  92.9   84.4 

Amortization

  264.7   247.2 

Change in estimated acquisition estimated payables

 

  

 

30.9

 

 

 

  

 

32.1

 

 

 

  

EBITDAC

 

 $

 

1,131.9

 

  

 

 $

 

1,007.4

 

  

 

  

ADJUSTED EBITDAC

         2017                  2016         
  

Brokerage – EBITDAC

 $999.4  $885.2 

Gains on book sales

  (3.4)   (6.6) 

Acquisition integration

  14.8   45.7 

Workforce and lease termination

  30.1   20.7 

Acquisition related adjustments

  9.1   3.7 

Levelized foreign currency translation

 

  

 

—

 

 

 

  

 

(4.2

 

) 

 

  

Brokerage – Adjusted EBITDAC

 

 $

 

1,050.0

 

  

 

 $

 

944.5

 

  

 

  

Risk Management – EBITDAC

 $132.5  $122.2 

Workforce and lease termination

  0.9   2.2 

Levelized foreign currency translation

 

  

 

—

 

 

 

  

 

0.6

 

 

 

  

Risk Management – Adjusted EBITDAC

 

 $

 

133.4

 

  

 

 $

 

125.0

 

  

 

  

Brokerage and Risk Management – Adjusted EBITDAC

 

 $

 

1,183.4

 

  

 

 $

 

1,069.5

 

  

 

  

Brokerage and Risk Management – Adjusted Revenue

 

 $

 

4,595.7

 

  

 

 $

 

4,228.2

 

  

 

  

Brokerage and Risk Management – Adjusted EBITDAC Margin

 

   

 

25.75

 

%  

 

   

 

25.29

 

%  

 

2024 PROXY STATEMENT

A-2

Exhibit A: Information Regarding Non-GAAP Measures

ADJUSTED EBITDAC

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage – EBITDAC

 

 

$

2,595.8

 

 

 

$

2,239.2

 

 

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on divestitures

 

 

 

(9.6

)

 

 

 

(12.1

)

 

 

 

 

 

 

 

 

 

 

 

Acquisition integration

 

 

 

243.7

 

 

 

 

167.9

 

 

Workforce and lease termination

 

 

 

63.4

 

 

 

 

48.9

 

 

Acquisition related adjustments

 

 

 

69.3

 

 

 

 

46.8

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

(18

)

 

 

 

 

 

 

 

 

 

 

 

Brokerage – Adjusted EBITDAC

 

 

$

2,962.6

 

 

 

$

2,472.5

 

 

 

 

 

 

 

 

 

 

 

 

Risk Management – EBITDAC

 

 

$

253.4

 

 

 

$

193.8

 

 

 

 

 

 

 

 

 

 

 

 

Net gains (losses) on divestitures

 

 

 

(0.4

)

 

 

 

(0.9

)

 

 

 

 

 

 

 

 

 

 

 

Acquisition integration

 

 

 

1.0

 

 

 

 

6.4

 

 

Workforce and lease termination

 

 

 

3.4

 

 

 

 

0.4

 

 

Acquisition related adjustments

 

 

 

0.5

 

 

 

 

1.8

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

(0.9

)

 

 

 

 

 

 

 

 

 

 

 

Risk Management – Adjusted EBITDAC

 

 

$

257.9

 

 

 

$

200.6

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and Risk Management – Adjusted EBITDAC

 

 

$

3,220.5

 

 

 

$

2,673.1

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and Risk Management – Adjusted Revenue

 

 

$

9,914.8

 

 

 

$

8,353.4

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and Risk Management – Adjusted EBITDAC Margin

 

 

 

32.5

%

 

 

 

32.0

%

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED EBITDAC (as defined for Annual Cash Incentives and PSUs)

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage – ADJUSTED EBITDAC

 

 

$

2,962.6

 

 

 

$

2,472.5

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition integration (other than de minimis amounts included therein
related to severance costs)

 

 

 

(241.5

)

 

 

 

(167.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Levelized foreign currency translation

 

 

 

4.6

 

 

 

 

3.7

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage – Adjusted EBITDAC (as defined for Annual Cash Incentives and PSUs)

 

 

$

2,725.7

 

 

 

$

2,308.5

 

 

 

 

 

 

 

 

 

 

 

 

Risk Management – ADJUSTED EBITDAC

 

 

$

257.9

 

 

 

$

200.6

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition integration (other than de minimis amounts included therein
related to severance costs)

 

 

 

(1.0

)

 

 

 

(1.8

)

 

 

 

 

 

 

 

 

 

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

Risk Management – Adjusted EBITDAC (as defined for Annual Cash Incentives and PSUs)

 

 

$

256.9

 

 

 

$

198.8

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage and Risk Management – Adjusted EBITDAC (as defined for Annual Cash Incentives and PSUs)

 

 

$

2,982.6

 

 

 

$

2,507.3

 

 

 

 

 

 

 

 

 

 

 

 

A-3

img134299666_7.jpg 

Exhibit A: Information Regarding Non-GAAP Measures

Organic Revenue Growth

Brokerage – Organic Revenue Growth

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

Commissions and fees, as reported

 

 

$

7,750.0

 

 

 

$

6,664.3

 

 

 

 

 

 

 

 

 

 

 

 

Less commission and fees from acquisitions

 

 

 

(531.8

)

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

Less divested operations

 

 

 

—

 

 

 

 

(10.5

)

 

 

 

 

 

 

 

 

 

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

(21.8

)

 

 

 

 

 

 

 

 

 

 

 

Organic base commissions and fees

 

 

$

7,218.2

 

 

 

$

6,632.0

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental revenues, as reported

 

 

$

314.2

 

 

 

$

284.7

 

 

 

 

 

 

 

 

 

 

 

 

Less supplemental revenues from acquisitions

 

 

 

(4.9

)

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

(0.4

)

 

 

 

 

 

 

 

 

 

 

 

Organic supplemental revenues

 

 

$

309.3

 

 

 

$

284.3

 

 

 

 

 

 

 

 

 

 

 

 

Contingent revenues, as reported

 

 

$

235.3

 

 

 

$

207.3

 

 

 

 

 

 

 

 

 

 

 

 

Less contingent revenues from acquisitions

 

 

 

(8.9

)

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

(1.0

)

 

 

 

 

 

 

 

 

 

 

 

Organic contingent revenues

 

 

$

226.4

 

 

 

$

206.3

 

 

 

 

 

 

 

 

 

 

 

 

Organic base commissions and fees, supplemental revenues and contingent revenues

 

 

$

7,753.9

 

 

 

$

7,122.6

 

 

 

 

 

 

 

 

 

 

 

 

Organic change in base commissions and fees, supplemental revenues and contingent revenues

 

 

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk Management – Organic Revenue Growth

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

Fees

 

 

$

1,246.1

 

 

 

$

1,075.8

 

 

 

 

 

 

 

 

 

 

 

 

International performance bonus fees

 

 

 

2.2

 

 

 

 

15.0

 

 

 

 

 

 

 

 

 

 

 

 

Fees as reported

 

 

$

1,259.7

 

 

 

$

1,090.8

 

 

 

 

 

 

 

 

 

 

 

 

Less fees from acquisitions

 

 

 

(5.5

)

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

Less divested operations

 

 

 

—

 

 

 

 

(3.2

)

 

 

 

 

 

 

 

 

 

 

 

Levelized foreign currency translation

 

 

 

—

 

 

 

 

(4.8

)

 

 

 

 

 

 

 

 

 

 

 

Organic fees

 

 

$

1,254.2

 

 

 

$

1,082.8

 

 

 

 

 

 

 

 

 

 

 

 

Organic change in fees

 

 

 

15.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined Brokerage and Risk Management – Organic Revenue Growth

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

 

Combined organic revenue

 

 

$

9,008.1

 

 

 

$

8,205.4

 

 

 

 

 

 

 

 

 

 

 

 

Organic change in revenue

 

 

 

9.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024 PROXY STATEMENT

A-4

Exhibit B: Resources

Exhibit B: Resources*

Annual Meeting

A-2

2018 PROXY STATEMENT

EXHIBIT A: INFORMATION REGARDINGNON-GAAP MEASURES

ORGANIC REVENUE GROWTH

  

Brokerage – Organic Revenue Growth

         2017                  2016         

Commissions and fees, as reported

 $3,495.9  $3,214.8 

Less commission and fees from acquisitions

  (166.5)   — 

Less disposed of operations

  —   (3.8) 

Levelized foreign currency translation

  —   (12.9) 

Organic base commissions and fees

 $3,329.4  $3,198.1 
  

Supplemental revenues, as reported

 $163.7  $147.0 

Less supplemental revenues from acquisitions

  (2.5)   — 

Less disposed of operations

  —   (0.5) 

Levelized foreign currency translation

  —   (1.5) 

Organic supplemental revenues

 $161.2  $145.0 
  

Contingent revenues, as reported

 $111.8  $107.2 

Less contingent revenues from acquisitions

  (5.8)   — 

Less disposed of operations

  —   (2.9) 

Levelized foreign currency translation

  —   (0.6) 

Organic contingent revenues

 $106.0  $103.7 

Organic base commissions and fees, supplemental revenues and contingent revenues

 $3,596.6  $3,446.8 
  

Organic change in base commissions and fees, supplemental revenues and contingent revenues

  4.4%  

  

Risk Management – Organic Revenue Growth

         2017                  2016         

Fees

 $762.7  $713.5 

International performance bonus fees

  5.3   3.6 

Fees as reported

  768.0   717.1 

Less fees from acquisitions

  (11.9)   — 

Levelized foreign currency translation

  —   2.0 

Organic fees

 $756.1  $719.1 
  

Organic change in fees

  5.2%  

  

Combined Brokerage and Risk Management – Organic Revenue Growth

         2017                  2016         
  

Combined organic revenue

 $4,352.7  $4,165.9 
  

Organic change in revenue

  4.5%  

LOGO

Proxy Statement

2018 PROXY STATEMENT

A-3

Exhibit B:Resources

Annual Meeting

Proxy Statement

www.ajg.com/ir > Financial Reports > 20182024 Proxy Statement

Annual Report

www.ajg.com/ir > Financial Reports > 20172023 Annual Report

Board of Directors

Board of Directors

www.ajg.com/ir > Corporate Governance > Board of Directors

Board Committee Members

www.ajg.com/ir > Corporate Governance > Board Committee Members

Composition

Audit Committee Charter

www.ajg.com/ir > Corporate Governance > Audit Committee Charter

Compensation Committee Charter

www.ajg.com/ir > Corporate Governance > Compensation Committee Charter

Nominating/Governance Committee Charter

www.ajg.com/ir > Corporate Governance > Nominating/Governance Committee Charter

Governance Documents

Risk and Compliance Committee Charter

www.ajg.com/ir > Governance > Risk and Compliance Committee Charter

Governance Documents

By-Laws

www.ajg.com/ir > Governance > By-Laws

Governance Guidelines

www.ajg.com/ir > Governance > Governance Guidelines

Global Standards of Business Conduct

www.ajg.com/ir > Corporate Governance > Global Standards of Business Conduct

Governance Guidelines

Other Resources

The Gallagher Way

www.ajg.com/about-us/the-gallagher-way/

Impact Report

www.ajg.com/ir > Corporate GovernanceESG > Governance Guidelines

Impact Report

Other Resources

The Gallagher WaySASB Disclosures

www.ajg.com/about-us/the-gallagher-way/

ir > ESG > SASB Disclosures

Corporate Social Responsibility

www.ajg.com/about-us/corporate-social-responsibility/

* The inclusion of our website address in this Proxy Statement does not include or incorporate by reference the information on our website, including the documents referenced above, into this Proxy Statement.

LOGO

B-1

img134299666_7.jpg 

2018 PROXY STATEMENT

B-1

img134299666_38.jpg 

LOGO

LOGO

img134299666_39.jpg 

GGallagher ARTHUR J. GALLAGHER & CO.

2850 GOLF ROAD

ROLLING MEADOWS, IL 60008

60008-4050 SCAN TO VIEW MATERIALS & VOTE 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 information up untilinformation. Vote by 11:59 P.M. Eastern Daylight Time on May 14, 2018.6, 2024 (other than with respect to shares held in The Arthur J. Gallagher & Co. Employees' 401(k) Savings and Thrift Plan). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

During The Meeting - Go to www.virtualshareholdermeeting.com/AJG2024 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE -1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up untilinstructions. Vote by 11:59 P.M. Eastern Daylight Time on May 14, 2018.6, 2024 (other than with respect to shares held in The Arthur J. Gallagher & Co. Employees' 401(k) Savings and Thrift Plan). Have your proxy cardR proposals 2 and 3. Ratification of the Appointment of Ernst & Young LLP as our Independent Auditor for the fiscal year ending December 31, 2024. For Against Abstain 0 0 0 1d. John Coldman O 0 3. Approval, on an Advisory Basis, of the Compensation of our Named Executive Officers. 0 0 0 1e. Pat Gallagher 0 0 1f. David Johnson 0 0 1g. Chris Miskel 0 0 1h. Ralph Nicoletti O 0 1i. Norman Rosenthal 0 0 0 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 hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have providedfull corporate or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurredpartnership name by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

E40145-P03050              KEEP THIS PORTION FOR YOUR RECORDS

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date

ARTHUR J. GALLAGHER & CO.

Company Proposals:

The Board of Directors recommends you vote FOR the following:

1.    Election of DirectorsForAgainstAbstain

1a.

Sherry S. Barrat

☐

☐

☐

1b.    

William L. Bax

☐

☐

☐

The Board of Directors recommends you vote FOR proposals 2 and 3.

For

Against

Abstain

1c.D. John Coldman☐☐☐

2.

Ratification of the Appointment of Ernst & Young LLP as our Independent Auditor for 2018.

☐

☐

☐

1d.

Frank E. English, Jr.

☐

☐

☐

1e.

J. Patrick Gallagher, Jr.

☐

☐

☐

3.    Approval, on an Advisory Basis, of the Compensation of our Named Executive Officers.☐☐☐

1f.

Elbert O. Hand

☐

☐

☐

1g.

David S. Johnson

☐

☐

☐

.

1h.

Kay W. McCurdy

☐

☐

☐

1i.

Ralph J. Nicoletti

☐

☐

☐

1j.

Norman L. Rosenthal

☐

☐

☐

Please indicate if you plan to attend this meeting.

☐

☐

Yes

No

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]    DateSignature (Joint Owners)Date

img134299666_40.jpg 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The 2018 Notice of 2024 Annual Meeting and Proxy Statement and 20172023 Annual Report are available at www.proxyvote.com.

For directions to We will be conducting our 2024 Annual Meeting of Stockholders virtually at www.virtualshareholdermeeting.com/AJG2024. V34947-P05189 ARTHUR J. GALLAGHER & CO. Annual Meeting of Stockholders May 7, 2024 9:00 AM CDT This proxy is solicited by the meeting, please contact:

Corporate Secretary c/oBoard of Directors The undersigned hereby appoints J. Patrick (Pat) Gallagher, Jr. and Walter D. Bay, each of whom is an officer of Arthur J. Gallagher & Co., 2850 Golf Road, Rolling Meadows, IL 60008.

Ator either of them, as proxies, each with the entrancepower to appoint his substitute, and hereby authorizes them to represent and to vote all of the shares of Common Stock of ARTHUR J. GALLAGHER & CO. that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM, CDT on May 7, 2024, virtually at www.virtualshareholdermeeting.com/AJG2024, and any adjournment or postponement thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting of Stockholders or any adjournment or postponement thereof (including, if applicable, on any matter which the Board of Directors did not know would be presented at the Annual Meeting of Stockholders by a reasonable time before the proxy solicitation was made or for the election of a person to the meeting, youBoard of Directors if any nominee named in Proposal 1 becomes unable to serve or for good cause will not serve). This proxy, when properly executed, will be requestedvoted in the manner directed herein. If the proxy is properly executed but no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. For participants in The Arthur J. Gallagher & Co. Employees' 401(k) Savings and Thrift Plan, if you do not provide voting instructions, the trustee will vote the shares that are deemed to show a driver’s license, passport orbe in the account in The Arthur J. Gallagher & Co. Employees' 401(k) Savings and Thrift Plan in the same proportion as The Arthur J. Gallagher & Co. Employees' 401(k) Savings and Thrift Plan shares of other form ofparticipants for which the trustee has received proper voting instructions. The votes by The Arthur J. Gallagher & Co. Employees' 401(k) Savings and Thrift Plan participants must be received no later than by 5:00 P.M. Eastern Daylight Time on May 2, 2024. Continued and to be signed on reverse side

government-issued identification.

— — — — — — — — — — —  — — — — — — — — — — — — — — — — — — — —  — — — — — — — — — — — — — — — — — —

E40146-P03050    

ARTHUR J. GALLAGHER & CO.

Annual Meeting of Stockholders

May 15, 2018 9:00 AM CDT

This proxy is solicited by the Board of Directors

The undersigned hereby appoints J. Patrick Gallagher, Jr. and Walter D. Bay, each of whom is an officer of Arthur J. Gallagher & Co., or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of ARTHUR J. GALLAGHER & CO. that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM, CDT on May 15, 2018, at 2850 Golf Road, Rolling Meadows, IL 60008, and any adjournment or postponement thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting of Stockholders or any adjournment thereof (including, if applicable, on any matter which the Board of Directors did not know would be presented at the Annual Meeting of Stockholders by a reasonable time before the proxy solicitation was made or for the election of a person to the Board of Directors if any nominee named in Proposal 1 becomes unable to serve or for good cause will not serve).

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.

Continued and to be signed on reverse side