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 | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Materials Pursuant to § 240.14a-12 | |
EMERSON ELECTRIC 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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8000 W. Florissant Avenue
St. Louis, MO 63136
I am pleased to invite you to join us at the
At this year’s meeting, we will vote on the election of
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The pandemic highlighted the immense responsibility we have to support critical industries around the world: life sciences, water, food and beverage, power and energy, the cold chain, and indoor air comfort and quality, just to name a few. In 2018,my two decades as CEO, never has a single external shock had such far-reaching and lasting effects on the world – and never have I been prouder of our company’s ability to meet and overcome the toughest of challenges. Amid the evolving market dynamics and uncertainties, we continuedquickly shifted and accelerated our cost containment and restructuring actions to invest for growth, enhance critical capabilities foraddress the new demand environment. And, thanks to our customers and increase shareholder value. We deployed $2.2 billion for bolt-on mergers and acquisitions to drive sales and EPS growth, anddisciplined management process, we repurchased $1 billion in shares. At the same time, we increased our M&A and share repurchase targets through 2021 and enabled the business to continue to deliver on dividend growth, as we have done for 62 years. This strategic, balanced approach to capital deployment is shaping a bright futurestrong and positioningconsistent performance even in the next generationmost challenging of leadership for continued success.conditions, marking in 2020 our 64th year of consecutive increased dividends. For more information on our 20182020 results, please see our 20182020 Annual Report to Shareholders that is being made available with this Proxy Statement.
Through 2020 we further positioned the company to provide solutions from devices, instruments and sensors, to control systems, to data management, analytics and services. Software enables each of these critical value layers. In fact, as part of our ongoing work to guide customers through their individual digital transformation journeys, we are reinforcing our commitment to software as a critical enabler and value driver with our software-enabled innovation portfolio. In 2020, our investment strategy included acquisitions such as Open Systems International, Inc. (OSI Inc.), strengthening our ability to help customers incorporate renewable energy sources and improve energy efficiency and reliability; Verdant, broadening our energy management and optimization capabilities for residential and commercial applications; American Governor Company, building our technology capabilities and expertise in the renewable hydro-electric power industry; and Progea Group, expanding our robust embedded software and control portfolio for manufacturing, infrastructure and building automation applications. We are excited to welcome this new expertise and talent to the Emerson family and excited to further develop and scale these technologies.
Our progress this year would not have been possible without the work and guidance of our Board of Directors. I want to extend a special welcome to our newest board member, William H. Easter III who was elected in October. Bill will bring a wealth of business acumen and wisdom to our ranks. On behalf of the Board and the full team at Emerson, we thank you, our shareholders, for your continued support and trust. We remain committed to creating long-term value for you every day, as we work to make the world a better place.
Your vote is very important. I encourage you to complete, sign and return your proxy card, or use telephone or internet voting prior to the meeting, so that your shares will be represented and voted at the meeting even if you cannot attend. On behalf of the Board of Directors and all of us at Emerson, we thank our shareholders for your continued trust and support.
December 14, 201811, 2020
Sincerely,
DAVID N. FARR
Chairman and
Chief Executive Officer
| PROXY STATEMENT |
Notice of Annual Meeting of Shareholders for Emerson Electric Co. |   |
DATE AND TIME: |
Tuesday, February
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PLACE: |
Emerson Headquarters, 8000 W. Florissant Avenue, St. Louis, MO 63136
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ITEMS OF BUSINESS: |
1. To elect as Directors the
2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm.
3. To approve, on an advisory basis, the compensation of Emerson’s named executive officers.
4. To transact other business, if any, properly brought before the meeting.
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WHO CAN VOTE: |
Record holders of Emerson common stock at the close of business on November
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HOW TO VOTE: |
Your vote is important, and we urge you to cast your vote in advance of the meeting by telephone, internet or mailing your completed and signed proxy card or voting instruction form, or in person at the meeting. If you attend the meeting, you may revoke your previously cast vote and vote in person. Each share is entitled to one vote on each matter to be voted upon at the Annual Meeting.
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MEETING ADMISSION: |
An admission ticket for record holders (or a satisfactory account statement for street name holders) is required to attend the meeting. Please see “Proxy Statement Summary” for information on attending the meeting. If you have questions regarding the required information, or to request an admission ticket, please contact the Emerson Investor Relations Department at 314-553-2197 in advance.
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For more complete information regarding Emerson, please review the Annual Report to Shareholders and the Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
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By order of the Board of Directors,
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| December | SARA YANG BOSCO | |
| St. Louis, Missouri | Secretary |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS Emerson’s Notice of Annual Meeting, Proxy Statement, Form of Proxy, and Annual Report to Shareholders for the fiscal year ended September 30,
Although we are currently planning to hold the Annual Meeting in person, in light of the ongoing public health concerns surrounding the coronavirus (COVID-19) outbreak, we may deem it necessary to hold the Annual Meeting solely by means of remote communication (i.e., a virtual-only meeting) or as a hybrid meeting (i.e., permitting both virtual and in-person attendance) in lieu of an in-person meeting at our headquarters. If we decide to hold a virtual or hybrid Annual Meeting, we will announce it in advance in a press release, and details will be posted on our website at www.Emerson.com, Investors, Investor Resources, Shareholder Information and filed as additional proxy soliciting material with the Securities and Exchange Commission. In that event, the Annual Meeting would be held on the above date and time but would be available via live audio webcast, and shareholders or their legal proxy holders could participate, submit questions, vote, and examine our shareholder list at the Annual Meeting by visiting www.virtualshareholdermeeting.com/EMR2021 and using your 16-digit control number. If you are planning to attend our Annual Meeting, please monitor our website prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting. |
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Letter to Shareholders – Chairman and Chief Executive Officer | i | |||
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Proxy Item No. 2: Ratification of Independent Registered Public Accounting Firm | ||||
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This summary highlights information contained elsewhere in this Proxy Statement and does not contain all of the information you should consider. You should read the entire Proxy Statement before voting.
Annual Meeting
20192021 ANNUAL MEETING INFORMATION
For additional information about our Annual Meeting, including virtual or hybrid options that may be necessary due to COVID-19,see Questions and Answers beginning on page 55.61.
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Meeting Date: Tuesday February |
Meeting Place: Emerson Headquarters 8000 W. Florissant Ave. St. Louis, MO 63136 |
Meeting Time: 10:00 a.m. Central Time |
Record Date: November |
Voting Matters and Board Recommendations
Voting Matters
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Board
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Management Proposals
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Item 1 Election of Directors |
FOR each nominee
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Majority present & entitled to vote
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Item 2 Ratification of appointment of KPMG LLP as Independent Registered Public Accounting Firm
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| Majority present & entitled to vote
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Item 3 Approval of named executive officer compensation |
FOR |
| Majority present & entitled to vote
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For the election of Directors, you have the choice of voting “FOR” all or individual nominees or to “Withhold Authority” to vote for all or individual nominees. For the other proposals, you have the choice to vote “FOR”, “AGAINST” or “ABSTAIN”. |
Casting Your Vote
Whether or not you plan to attend the meeting, please provide your proxy by internet, phone, or by filling in, signing, dating and promptly mailing your proxy card or voting instruction form.
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By Internet: www.proxyvote.com | By Phone: 1-800-690-6903 (toll free within U.S. and Canada) | By Mail: Vote Processing, c/o Broadridge 51 Mercedes Way Edgewood, NY 11717
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Attending the Meeting
You may also vote at the meeting. All attendees must present government-issued photo identification, such as a driver’s license or passport. If you are a shareholder of record, please check the box on your proxy card and bring the tear-off admission ticket with you. If you are a beneficial, or “street name”, holder and your shares are held byin the name of someone else (such as a broker)broker, bank or other nominee), please bring a letter or account statement from that firm showing you were a beneficial holder on November 27, 2018.24, 2020. Failure to provide such identification may result in your exclusion from the meeting.
PROXY STATEMENT SUMMARY
Our Board of Directors
Nominees and Continuing Directors
The Emerson Board is divided into three classes. You are being asked to vote on the threefour Director nominees indicated below for the specified terms. The sixeight continuing Directors were previously elected to three-year terms ending at the Annual Meeting specified. All Directors are independent, except Mr. Farr. Please see “Proxy Item No. 1 – Election of Directors” for more information.
AC Audit Committee
CC Compensation Committee
EC Executive Committee
FC Finance Committee
NC Corporate Governance and Nominating Committee
EC Executive Committee
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Mark A. Blinn Former Chief Executive Officer and President, Flowserve Corp. Age: 58 Director Since 2019 Committees: AC, CC | Arthur F. Golden
Age: Director Since 2000 Committees: EC, FC | Candace Kendle Retired Chairman and Chief Executive Officer, Kendle International, Inc.
Age: Director Since 2014 Committees: AC, NC | James S. Turley Retired Chairman and
Age: Director Since 2013 Committees: AC, EC, NC | |||||||||||||||
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Clemens A. H. Boersig Retired Chairman of the Age: 72 Director Since 2009 Committees: CC, EC, FC | Joshua B. Bolten President and Age: 66 Director Since 2012 Committees: EC, NC | William H. Easter III Former Chairman, President and CEO, DCP Midstream Age: 71 Director Since 2020 Committees: CC, FC | Lori M. Lee Chief Executive Officer AT&T Latin America and Global Marketing Officer, Age: 55 Director Since 2018 Committees: AC, FC | |||||||||||
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Martin S. Craighead Former Chairman and Chief Executive Officer, Baker Hughes, Inc. Age: 60 Director Since 2019 Committees: CC, NC | David N. Farr Chairman and Age: 65 Director Since 2000 Committee: EC | Gloria A. Flach Retired Corporate Vice President and COO, Age: 61 Director Since 2017 Committees: CC, FC | Matthew S. Levatich Former President and Age: 55 Director Since 2012 Committees: AC, FC | |||||||||||
| PROXY STATEMENT |
PROXY STATEMENT SUMMARY
Independent and Engaged Board
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Proactive Governance in 2020
Director Tenure
65 | Average Age |
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Proactive Governance in 2018
Refreshed and Diverse Board
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Board Oversight
| • | Lead Independent Director position |
| • | Balanced Director tenure |
| • | Implementation of key corporate governance policies |
| - | Stock ownership guidelines |
| - | Blackout and stock-trading policies |
| - | Clawback policies |
| - | Pledging and anti-hedging policies |
Board Diversity
THE BOARD SEEKS OUT HIGHLY-QUALIFIED DIVERSE CANDIDATES TO ADD TO THE RANGE OF SKILLS AND EXPERIENCE REPRESENTED ON OUR BOARD.
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Board Diversity Background
PROXY STATEMENT SUMMARY
Fiscal 2020 Performance Highlights
Executive Compensation Highlights
Our pay for performance philosophy and key principles of our executive compensation program directed our performance objectives that drove strong and consistent fiscal 2018 results.2020 results despite the challenging conditions created by the COVID-19 pandemic. We continued to focus on objectives that maximize shareholder value, make Emerson a good global citizen, enhance critical capabilities and encourage career-long commitments to the Company.
NEO Compensation.Fiscal 20182020 NEO annual total compensation including increased annual cash bonuses, reflects our strong fiscal 20182020 results and individual performance and accomplishments of our NEOs, including continued success in reshaping the Company into two global franchises;disciplined management of the Company’s significant growthbusiness and operations and mobilization of our global leadership during the COVID-19 pandemic and other geopolitical challenges; Company’s response and actions upholding the Value of Support Our People in prioritizing a safe working environment for our employees while continuing operations to support critical industries; the continued aggressive execution of cost containment actions announced prior to the global pandemic, and the continued investment for our future with multiple strategic merger and acquisition activity; the actions taken to maintain strong profitability during a changing business environment and leveraging the opportunities for savings and maximized returns resulting from the new Tax Cuts and Jobs Act.acquisitions.
Alignment with Shareholders. We continuedbelieve that our practice of providing long-term stock-based incentivessetting a majority of our NEOs’ pay as “at-risk” pay underscores our commitment to our fundamental pay-for-performance principles. By tying a significant portionpercentage of NEO annual total compensation (cash and annual long-term stock award) to performance-based pay that is dependent on achievement of the Company’s performance goals as well as the consistent attainment of strong individual performance, we maximize the value we can deliver to shareholders. In fiscal 2020, 91% of our CEO’s pay and an average of 85% of the other NEOs’ annual pay was comprised of “at-risk” compensation. OurIn addition, our NEOs generally hold the stock they earn, substantially exceeding our stock ownership guidelines.
Long-Term PerformancePerformance.. Performance shares In fiscal 2020, 100% of our NEOs’ annual long-term stock awards were again the primary long-term incentives for fiscal 2018.performance-based awards. These performance shares awards are subject to the Company’s achievement of established financial objectives over the Fiscal 20182020 – 2020 performance period.2022 Performance Period, benchmarked against a global growth rate target. Adding a relative total shareholder return modifier benchmark for the Fiscal 2021 – 2023 Performance Shares Program.
Competitive CompensationCompensation..We We continued to target NEO annual total compensation in the median market range.
Retention and Succession PlanningPlanning.. We focused on critical retention and succession planning needs for our key executives, including in connection with the retirementdeparture of our former Executive President on October 1, 2018.Commercial & Residential Solutions.
Focus on Values and Purpose..We We continued our global efforts to solidify and communicate our commitment to our Emerson core values.Values and worked to define our Purpose, which builds on and strengthens our Values.
| PROXY STATEMENT |
PROXY STATEMENT SUMMARY
Shareholder Engagement
We value our shareholders’ perspective on our businesses and each year interact with shareholders and investment analysts through a variety of engagement activities. These include our annual investor conference in February and participation in industry conferences throughout the year. In addition, we routinely schedule additional engagement meetings with investors and analysts in various locations around the world, which in 2018 included meetings in New York, Boston, London and Frankfurt, among other locations. In 2018, we also hosted analysts and investors at key operational headquarters in Pittsburgh, Austin, Dayton, St. Louis and Marshalltown, Iowa. Investors and analysts may schedule meetings with our Director of Investor Relations to request additional information regarding the Company. We reach out to our largest shareholders each year in connection with our Annual Meeting to discuss the matters that will be voted on at the meeting and respond to questions or concerns. Our Investor Relations department can be reached at 314-553-2197, investor.relations@emerson.com, or at www.emerson.com, Investors, Investor Resources, Shareholder Information.
Corporate Governance Highlights
Topic | Highlight | |
Director Independence | •
• Strong Lead Independent Director with significant governance duties
• All Board Committees are independent pursuant to requirements of the NYSE and our governance documents
• Regular executive sessions attended by non-management Directors only
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GHG Reduction Targets | • Recently announced a commitment to reduce GHG emissions by 20%, normalized to sales.
• In 2020, formed the Environmental Sustainability Steering Committee to further our environmental sustainability efforts | |
Sustainability and Corporate Social Responsibility Charter Amendments | • Recently amended charter of Corporate Governance and Nominating Committee to emphasize role in overseeing important public policy issues and issues of corporate social responsibility, including health, safety and environmental and sustainability policies and reporting | |
Three Audit Committee Financial Experts | • The Board has determined that three members of the Audit Committee are Audit Committee Financial Experts under SEC rules | |
Shareholder Responsiveness | • In 2020, we again proposed to amend our Restated Articles to declassify our Board of Directors • In 2018, we proposed to amend our Restated Articles to allow shareholders the right to amend our Bylaws • We removed our forum selection Bylaw after it was not ratified by our shareholders | |
Proxy Access Bylaw | • Proactive adoption in 2017 of proxy access for Director nominees
• A shareholder, or group of up to 20, holding 3% of Company stock for 3 years may place a limited number of Director nominees in the Company’s proxy statement for election
• Recently, we further improved our proxy access bylaw to remove a limitation on the number of proxy access nominees that was based on our classified Board structure | |
Board Refreshment
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• Balance of new and continuing Directors, with average tenure of
• Average Director age of
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Reduced Board Compensation Due to COVID-19 Impact
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pandemic impact | |
Other Governance Practices | • Directors elected by majority voting
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• Comprehensive New Director Orientation
• No shareholder rights plan or “poison pill”
• Blackout, clawback, pledging and anti-hedging policies
• Director and executive officer stock ownership policies
• Annual Corporate Social Responsibility and Political Spending Reports
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From Lead Independent Director
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CLEMENS A.H. BOERSIG |
Dear Fellow Shareholder:
WhenIn my role as Lead Independent Director, I took onhave the roleunique opportunity to work closely with the Emerson Board of lead independent director forDirectors, as well as David Farr, the CEO and chairman. The Board’s focus is to guide Emerson in April 2018, it was with excitement and a sense of opportunity. I’ve known Emerson for 30 years and have a great deal of respect for bothas the Company responds to the dynamic economic environment and David Farr as chairmanmakes strategic investments that will deliver value now and CEO. The Company’s principled management style and rigorous focus on governance are a testament to its sustained success – and to shareholders’ continued faith in this128-year-old Company.
The role of lead independent director is an output of a disciplined Board focus.the future. Independence among Board members is a critical tenet of strong governance that ensureskey, so we can effectively represent the voice and interests of shareholders drive important decisions around strategy, capital allocation, compensation and succession planning. The lead independent director role actsas we consult on Company direction.
This year brought its share of challenges, as the Board’s liaison withCOVID-19 pandemic upended global economies and increased pressure on our world’s essential businesses in industries such as healthcare, manufacturing, power and energy, and food and beverage. Emerson’s response made me extremely proud. The Company’s disciplined management style and ability to adapt in real time helped Emerson sustain its business, lead its industries and support its customers and employees through the chairman, consulting regularly on company issueslong, difficult months.
The circumstances of 2020 reinforced the value of an experienced, innovative leadership team to help navigate and meeting with shareholders, as needed.
Asaddress macrotrends impacting the industries Emerson serves. The Company has a Company with a strong culturedeep bench of performance, having David serve as both chairman and CEO of Emerson drives long-term value creation for shareholders. At the same time, it ensures managementleaders, and the Board are alignedis committed to engaging in our viewthe development of opportunitiesthis next generation to build on Emerson’s strong foundation. We continue to take a particularly active role in CEO and risks, while driving consistent focus on strategyDirector succession planning, a duty we approach with the utmost intentionality.
Our current Board and execution that support Emerson’s role as a technology leader and industry steward.
Through my role, I partner closely with David – serving as a check and balance and building critical controls into the governance process. The CEO as chair is best equippedleadership team continue to driveplace special focus on the most impactful areasCompany’s sustainability strategy. This is ultimately the responsibility of the Companyevery executive and promote responsible decision-making byemployee throughout Emerson, and the Board duehas an important role to his day-to-daysupport the Company’s continued drive toward improved operations and innovative solutions for Emerson customers. Emerson has expanded upon its efforts in its latest Corporate Social Responsibility Report, available at Emerson.com/CSR, and we plan to continue looking for opportunities to align our disclosures with established disclosure frameworks.
We’re also committed to ensuring diversity of our Board. I’ve seen firsthand how our collective knowledge and varied expertise – in business leadership, manufacturing and corporate governance in all types of socioeconomic landscapes – have driven our success. In 2020, we were pleased to welcome W.H. (Bill) Easter III, former chairman, president and chief executive officer of DCP Midstream, LLC. Bill brings 35 years of industrial knowledge and expands the business. My role – and the rolerange of perspectives on the Board – is to provide guidance on how daily decisions align withcrucial for the Company’s strategycontinued vitality and direction.
Emerson’s Board culture is one of high engagement. We are both well-informed about the Company and interested in the industry, seeking to understand the latest trends. We employ a thorough annual planning cycle to set strategic priorities and evaluate risks. This process includes a multi-day strategy workshop and rigorous process, overseen by the audit committee, to identify and prioritize the most important financial and operational threats facing the Company.
Board diversity and experience are critical to our effectiveness. Our Board – with women making up one-third of our directors – has a wealth of experience that brings a balanced approach to strategy evaluation and important investment decisions. As a highly engaged Board, we provide insights that inform the Company’s strategy and its corporate social responsibility. In fact, this year we accelerated annual Corporate Social Responsibility (CSR) reporting by six months – providing shareholders and partners with additional line of sight into the Company’s latest focus areas. I invite you to read more in our full CSR Report on Emerson.com.innovation.
On behalf of the entire Board, thank you for your continued engagementsupport and support.engagement. I wish all of you health and success in these unique and challenging times.
Sincerely,
Dr. Clemens A.H. Boersig
Lead Independent Director, Emerson
| PROXY STATEMENT |
Board and Committee Operations
Board and Corporate Governance
Board Responsibility
The primary responsibility of our Board is to foster our long-term success. In fulfilling this role, each Director must exercise good faith business judgment in the best interests of Emerson, our shareholders, employees and our shareholders.communities in which we operate. Our Board has responsibility for establishing broad corporate policies, setting strategic direction and overseeing management. Management has responsibility for our day-to-day operations, implementing these policies and strategic direction, subject to Board oversight.
Governance Principles and Ethics Program
Our Board has adopted Corporate Governance Principles and Practices that govern the structure and operations of our Board, Board oversight of management and relations between the Board and our shareholders. In addition, our Board has adopted an ethics program that applies to all Emerson employees and our Directors, and includes an employee codeEmployee Code of conduct,Conduct, supplements that are specifically applicable to our Directors and executive officers, and an additional code of ethics applicable to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller.
The Company’s Corporate Governance Principles and each component of its ethics program are available on the Company’s website at www.Emerson.com, Investors, Corporate Governance, Business Ethics. Printed copies of these documents are available to shareholders upon written request to Emerson Electric Co., 8000 West Florissant Avenue, St. Louis, Missouri 63136, Attn: Secretary. The Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K by posting required informationany amendments and/or waivers to its ethics code at the same location on its website.
The Board of Directors annually reviews its governance policies and practices, taking into account changes in applicable law, trends in corporate governance and input from shareholders.
Sustainability and Corporate Social Responsibility
Our sustainability and corporate social responsibility strategy is overseen by our Board and its committees as a part of their oversight of our overall strategy and risk management. The full Board has responsibility for the oversight of our sustainability efforts. These efforts are part of a process that is designed to provide the Board timely visibility into the identification, reporting, assessment, and management of sustainability issues. The Corporate Governance and Nominating Committee is responsible for assisting the Board in the oversight of the Company’s sustainability strategy, which includes, among other things, the matters covered in the Company’s Social Responsibility Report (CSR). Our CSR report has been published annually since 2015 and these reports are available on our website. In addition, our Audit Committee reviews a summary of the Company’s environmental activities and a summary of anticipated environmental audits and expenditures each year.
In our business and manufacturing operations around the world, our strategy focuses on efficient use of energy and natural resources to help reduce the intensity of the Company’s greenhouse gas (GHG) emissions. In 2019, we committed to reducing our GHG emissions by 20%, normalized to sales, across our manufacturing and shared services facilities by the year 2028. As part of these efforts, in 2020 we created the Environmental Sustainability Steering Committee, comprised of senior-level Emerson executives, to further our environmental sustainability efforts.
Our human capital management and succession planning, including diversity and inclusion initiatives, are important components of our strategy. Attracting, developing, and retaining talent is key to our business and operating results. As part of our diversity and inclusion efforts, among other things, the Company formed a Diversity Council in 2012, comprised of 14 senior-level Emerson executives to advance diversity and inclusion within the company. In addition, the Company has established the following employee resource groups: Blacks Reinforcing Diversity, Women in STEM, LGBTQ + Allies and the Veterans Resource Group. We are forming a new employee resource group named “Somos,” which will focus on supporting Latin Americans and Hispanics at Emerson and in the communities we serve.
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 7 |
BOARD AND COMMITTEE OPERATIONS
Recent Corporate Governance Changes
Our Corporate Governance and Nominating Committee regularly considers a broad range of corporate governance issues and is committed to adopting governance practices that are the most beneficial to the Company and its shareholders. As part of its review process, the Board recently made changes to Emerson’s corporate governance polices:
Board Refreshment. To ensure that the Board continues to evolve and be refreshed in a manner that serves the Company’s changing business and strategic needs, five new Directors have joined the Company within the last four years.
Board Diversity. To further advance diverse perspectives on our Board, we have added three diverse Directors in the last four years.
GHG Reduction. We have committed to reducing our GHG emissions by 20%, normalized to sales, by the year 2028. This goal was developed in partnership with environmental experts to demonstrate our progress toward reducing emissions while accounting for growth and changes across our dynamic global business.
Emphasis on Sustainability and Corporate Social Responsibility. Recently amended the charter of our Corporate Governance and Nominating Committee to emphasize its role in overseeing important public policy issues and issues of corporate social responsibility, including health, safety and environmental and sustainability policies and reporting. We also formed the Environmental Sustainability Steering Committee to further our environmental sustainability efforts and a Diversity Council to advance diversity and inclusion efforts within the company. We established numerous employee resource groups to provide support to diverse employees within our company.
Our Recent Proposals to Declassify Our Board and to Allow Shareholders the Right to Amend Our Bylaws. We recognize that many of our shareholders would prefer a declassified board structure and the right of shareholders to amend bylaws and that these policies are increasingly considered important aspects of good corporate governance. In response to these trends and shareholder requests, we have acted. Last year, we again asked our shareholders to amend our Restated Articles to declassify our Board of Directors. However, the amendment did not receive the required vote to pass. We made a similar proposal in 2013 with the same result. Similarly, in 2018, we proposed amendments to our Restated Articles providing shareholders the right to amend our Bylaws, but it also did not receive the required approval. We were advised that, based on an analysis of our shareholder base, these proposals would likely not be successful this year. We have discussed this analysis with certain of our larger shareholders. As a result, we are not resubmitting either of these proposals at this year’s Annual Meeting, but we will continue to assess the potential for approval in the future.
Reduced Board Compensation During Pandemic. Our Board implemented Company wide cost cuts during the height of the pandemic, including reducing its own cash compensation
Lead Independent Director. In 2016, we amended our Corporate Governance Principles to provide for a Lead Independent Director, as discussed below in “Board Leadership Structure” on page 8.
Proxy Access Bylaw. Recently,In 2017, we amended our Bylaws to adopt proxy access, which provides eligible shareholders a process for including their director nominees in the Company’s proxy materials. Proxy access is discussed below at “Corporate Governance and Nominating Committee—Proxy Access” on pages 13-14.
Lead Independent Director. Recently,page 14. In November 2020, we amendedfurther improved our Corporate Governance Principlesproxy access bylaw to provide forremove a Lead Independent Director, as discussed below in “Board Leadership Structure”limitation on page 9.the number of proxy access nominees that was based on our classified Board structure.
Removal of Forum Selection Bylaw. Last year,In 2018, we submitted a proposal to shareholders to ratify our forum selection Bylaw, which provided that the sole and exclusive forum for specified legal actions would be courts located in Missouri. The proposal was not approved. As a result, the Board has subsequently reconsidered the provision and removed it from the Bylaws.
Our Proposals to Allow Shareholders’ Right to Amend Bylaws and to Declassify Board. We recognize that the right of shareholders to amend bylaws and a declassified Board of Directors are increasingly considered important aspects of good corporate governance. In response to these trends and shareholder requests, we have acted. Last year, we approved and submitted for shareholder approval amendments to our Restated Articles of Incorporation providing shareholders the right to amend our Bylaws. However, under our Restated Articles of Incorporation, the amendment required the vote of 85% of outstanding shares in favor for approval, which was not attained. Similarly, our Board recently proposed an amendment to our Restated Articles to declassify our Board. That amendment also required such 85% vote and did not attain the required approval level.
Corporate Social Responsibility Reporting. In 2015, at the Board’s direction, we published our first Corporate Social Responsibility Report highlighting the Company’s environmental stewardship, integrity and ethics, corporate governance, political spending and lobbying, human resources and diversity, supply chain practices and community involvement. In 2017, the Company published its third Corporate Social Responsibility Report and accelerated its publication by approximately six months.
| • | Corporate Social Responsibility Reporting. In 2015, at the Board’s direction, we published our first Corporate Social Responsibility Report highlighting the Company’s environmental stewardship, integrity and ethics, corporate governance, political spending and lobbying, human resources and diversity, supply chain practices and community involvement. In 2020, the Company expanded and published its fifth Corporate Social Responsibility Report. |
We believe these actions are marksindicators of good governance and enhance our accountability to shareholders.
BOARD AND COMMITTEE OPERATIONS
Board Meetings and Attendance
There were tennine meetings of the Board during fiscal 2018.2020. All Directors attended at least 75% of the meetings of the Board and committees on which he or she served. Moreover, Directors had 98% Board meeting attendance and the Directors’ average attendance rate at meetings of the committees on which they served.serve was 98%. Directors are strongly encouraged to attend the Annual Meeting, although the Company has no policy requiring attendance. AllTen of the eleven Directors then in office attended the 20182020 Annual Meeting.
Board Leadership Structure
The Board believes that it should have the flexibility to determine whether the same person should serve as both Chair and CEO based on what it believes will provide appropriate Company leadership.leadership and deep global industry knowledge. The Board believes that its current
| 8 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
BOARD AND COMMITTEE OPERATIONS
structure, with Mr. Farr serving as both Chair and CEO, is appropriate given Mr. Farr’s past success and extensive experience in these roles, the efficiencies of having the CEO serve as Chair, the Company’s strong corporate governance structure, including Mr. Boersig’s strong leadership role as Lead Independent Director, and the Company’s financial performance under Mr. Farr’s leadership.
As part of its leadership structure review, in October 2016 the Board established the Lead Independent Director position to strengthen the independent leadership of the Board. The Lead Independent Director is elected from the independent Directors for a three-year term. Among other things, the Lead Independent Director chairs regularly scheduled meetings of non-management Directors, reviews Board agendas and information, calls meetings of the independent Directors, acts as the Board’s key liaison with the Chairman and serves on the Board’s executive committee. The Lead Independent Director is available for consultation with shareholders. The Chair and CEO consults periodically with the Lead Independent Director and the committee Chairs, all of whom are independent, on Board matters and on issues facing the Company.
Each year the Board, through its Corporate Governance and Nominating Committee, reviews its leadership structure including the combined Chair and CEO, to ensure that it remains appropriate for the Company.
Board Role in Risk Oversight
The Board has responsibility for oversight of the Company’s risk management process. This process is designed to provide to the Board timely visibility into the identification, assessment and management of critical risks. The Audit Committee assists the Board by annually reviewing and discussing with management this process and its functionality. The areas of critical risk include strategic, operational, cyber security, compliance, environmental, sustainability, financial and reputational. The full Board, or the appropriate committee, receives this information through updates from management to enable it to understand and monitor the Company’s risk management process.
Shareholder Engagement
We value our shareholders’ perspective on our businesses and each year interact with shareholders and investment analysts through a variety of engagement activities. These engagement activities include our annual investor conference in February and participation in industry conferences throughout the year. In addition, we routinely schedule additional engagement meetings with investors and analysts in various locations around the world, which in 2020 included meetings in New York City, Boston, Chicago and Frankfurt, Germany, among other locations. In 2020, we also hosted analysts and investors at key operational headquarters in Shakopee, Minnesota and Shanghai, China. Investors and analysts may schedule meetings with our Director of Investor Relations to request additional information regarding the Company. We reach out to our largest shareholders each year in connection with our Annual Meeting to discuss, among other things, the matters that will be voted on at the meeting, leadership structure, business strategy, financial performance, governance, executive compensation, diversity, sustainability initiatives, and we respond to questions or concerns raised by shareholders. We discuss input provided by our shareholders during these meetings with our full Board, Corporate Governance and Nominating Committee, Compensation Committee, and other Committees of the Board as appropriate. Our Investor Relations department can be reached at 314-553-2197, investor.relations@emerson.com, or at www.Emerson.com, Investors, Investor Resources, Shareholder Information.
Board Composition
Our Board consists of ninetwelve Directors. We have added five new Directors in the last four years.
As required by our Restated Articles of Incorporation, our Board is divided into three classes, with the terms of office of each class ending in successive years. The Directors in one class are elected at each Annual Meeting to serve for a three-year term and until their successors are duly elected and qualified, subject to their earlier death, resignation or removal. Periodically, a Director is elected to a class with a shorter term, or moved into a different class between meetings, to rebalance the classes as a result of the early departure of a Director.classes.
Pursuant to the Company’s Bylaws, a Director may not stand for election after age 72.72 without Board review and assessment. If our Board determines that continued service beyond this period is in the best interests of Emerson and our shareholders, our Board may amend the Bylaws to waive this requirement and allow election to an additional one-year terms.term, subject to our classified Board structure and key business issues. In light of their extensive experience and key roles with the Company at this time, we have amended our Bylaws to permit Mr. Golden and Dr. Kendle to stand for election to the Board for an additional term at the 2021 Annual Meeting and to allow Mr. Easter to stand for election at the 2022 Annual Meeting.
| 9 |
BOARD AND COMMITTEE OPERATIONS
We are committed to reviewing our Board’s composition to ensure that we continue to have the right mix of skills, diversity, background and tenure. The diversity and tenure composition of our Board is as follows:
Diversity | Tenure | |
|
|
Our Board’s membership represents a balanced approach to Director tenure, allowing our Board to benefit from the experience of longer-serving Directors as well as the fresh perspectives of newer Directors. The Board is continuouslycontinually seeking out highly-qualified, diverse candidates to add to the range of skills and experiences represented on our Board.
Our Directors have a wide range of skills and experience in a variety of professions and industries, including:
| DIRECTOR SKILLS AND EXPERIENCE | ||
• Global business experience | • Chief executive officer experience | |
• Financial expertise, including chief financial officer experience | • Expertise in technology and innovation | |
• Corporate governance expertise | • Operational leadership, including as chief operating officer | |
• Experience doing business in emerging markets and China • Expertise in cybersecurity and IT | • Business development expertise, including investment banking, mergers and acquisitions and financial markets | |
The specific background, skills and experience of each of our Directors is detailed under Proposal 1 – Election of Directors.
The Corporate Governance and Nominating Committee has the primary responsibility for developing a Director succession plan. The Committee periodically reviews our Board composition and, as discussed above, identifies the appropriate mix of experiences, skills, attributes and tenure for our Board in light of our Company’s current and future business environment and strategic direction, all with the objective of recommending a group of Directors that can best continue our success and represent our shareholders’ interests. The Committee and our Board are committed to developing a diverse pool of potential candidates for future Board service. As part of this process, the Board recently added to the Board Lori Lee, CEO AT&T Latin AmericaWilliam H. Easter III, former Chairman, President and Global MarketingChief Executive Officer for AT&T, Inc.of DCP Midstream. Among other attributes, Ms. LeeMr. Easter brings business insightdeep knowledge in the energy sector and breadth of experience in international relations from herhas extensive experience in strategy, operationspeople and marketing across several countries.organizational leadership experience.
Other Key Governance Policies
We have adopted corporate governance policies which encourage significant long-term stock ownership and align the interests of our executives with our shareholders. These policies include:
Executive compensation practices that incentivize long-term performance with equity compensation using multi-year performance and vesting periods; align executive and shareholder interests and reward for superior performance rather than creating a sense of entitlement.entitlement and without encouraging excessive or unnecessary risk taking. See “Executive Compensation—Compensation – Compensation Discussion and Analysis” on page 19.
Stock ownership guidelines that require NEOs to hold stock equal to at least a specified multiple of their base salaries.
Blackout and stock trading policies that require permission to trade in Emerson stock.
Clawback policies that allow us to reduce, cancel or recover incentive compensation tied to intentional misconduct that led to a material restatement of our financial statements.statements or in connection with violations of the Company’s ethics and compliance programs and policies, including our Code of Conduct. See “Policies Supporting Our Fundamental Principles” on page 30.32.
Pledging and anti-hedging policies that prohibit certain speculative transactions that are not in alignment with our shareholders. Specifically, our hedging policy prohibits any officer (including any executive officers) and Directors from engaging in transactions to hedge or offset value declines in the value of our stock, regardless of how acquired, such as short selling, put or call options, forward sale or purchase contracts, equity swaps and exchange funds. Our pledging policy prohibits pledging of Company shares as collateral for a loan by Directors or elected officers. See “Policies Supporting Our Fundamental Principles” on page 30.32.
| 10 | |
BOARD AND COMMITTEE OPERATIONS
Review, Approval or Ratification of Transactions with Related Persons
We have developed and implemented processes to obtain and review all transactions and relationships in which the Company and any of our Directors, Director nominees or executive officers, or any of their immediate family members, are participants, and to determine whether any of these individuals have a direct or indirect material interest in any such transaction. Transactions that are determined to be material to a related person are disclosed as required. Pursuant to these processes, all Directors and executive officers annually complete a Director and Executive Officer Questionnaire and a Conflict of Interest Questionnaire that are designed to identify related person transactions and both actual and potential conflicts of interest. We also review the nature and extent of business between the Company and other companies affiliated with our Directors or executive officers. Under the Company’s ethics program, an executive officer is required to immediately disclose all the relevant facts and circumstances of any actual or potential conflict of interest to the Company’s Ethics Committee. If the Ethics Committee determines that there is a conflict, it will refer the matter to the Board of Directors. A Director is required to immediately disclose all the relevant facts and circumstances of any actual or potential conflict of interest to the Board. In each case, the Board will review the matter to make a final determination as to whether a conflict exists, and, if so, the appropriate resolution.
The Company has a written ethics program applicable to all Directors and executive officers of the Company that prohibits Directors and executive officers from entering into transactions, or having any relationships, that would result in a conflict of interest with the Company. Waivers of the ethics program requirements for Directors and executive officers may only be granted by the Board of Directors. The Company’s ethics program documents can be found on the Company’s website at www.Emerson.com, Investors, Corporate Governance, Business Ethics.
Certain Business Relationships and Related Party Transactions
Based on the review described above, there were no transactions from October 1, 20172019 through the date of this proxy statement, and there are no currently proposed transactions, in which the Company was or is to be a participant, in which the amount involved exceeded $120,000 and in which any of the Company’s Directors, nominees or executive officers or any of their immediate family members, or any beneficial holder of more than 5% of our common stock, either had or will have a direct or indirect material interest.
Director Independence
The Board has determined that all current Directors, other than Mr. Farr, are independent, as defined under the general independence standards of the NYSE. R. L. Stephenson and J. W. Prueher resigned from the Board during fiscal 2018, but were determined to be independent while they served.New York Stock Exchange (“NYSE”). All Directors identified as independent meet the Board adopted independence standards. These standards are included in Appendix A and are available on the Company’s website at www.Emerson.com, Investors, Corporate Governance, Principles & Practices.
In the course of the Board’s independence determinations, it considered any transactions, relationships and arrangements as required by the Company’s independence standards. In particular, with respect to each of the three most recently completed fiscal years, the Board considered for:
Flach, Levatich Stephenson and Lee, the annual amount of sales to Emerson by the company which the Director serves or served as an executive officer, and purchases by that company from Emerson, and determined that in each case the amounts of such sales and purchases in fiscal 20182020 were less than 0.027%0.001% of such other company’s annual revenue and in each year were immaterial and well below the threshold set in the Emerson independence standards.
Stephenson, an immediate family member employed by KPMG, and determined that such person was not a partner of such firm and did not participate in the audit of Emerson or provide any other services to Emerson.
Golden, the annual amount paid by Emerson to the law firm of which he iswas a partner and determined that the amount of such payments in fiscal 20182020 was less than 1.10%0.236% of such firm’s annual revenues and was in each year immaterial and well below the threshold set in the Emerson independence standards.
Levatich, Prueher,Boersig and Turley, the annual amount of contributions by Emerson to charitable organizations for which the Director serves as a director, officer or trustee and determined that such contributions were immaterial, below the threshold set in the Emerson independence standards, were made through the Company’s normal corporate charitable donation approval process and were not made on behalf of any Director. For 2018,2020, the amount of such contributions were: Boersig: $10,000 to the New York Philharmonic; Levatich: $4,000 to Northwestern University; Prueher: $1,600 to the University of Virginia; and Turley: $139,500 to the Boy Scouts of America-Greater St. Louis Area Council, $992,000$865,648 to the St. Louis Municipal Opera Theatre and $655,000$30,000 to Forest Park Forever. These last threetwo organizations are prominent St. Louis civic organizations to which Emerson, as a St. Louis headquartered company, has provided substantial support for over 30 years, long before Mr. Turley joined the Emerson Board or the boards of these organizations.
BOARD AND COMMITTEE OPERATIONS
Committees of Our Board of Directors
Our Board of Directors has delegated certain of its responsibilities to committees to provide for more efficient Board operations and allow Directors to engage in deeper analysis and oversight in specific areas of importance. The members and Committee Chairs are
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 11 |
BOARD AND COMMITTEE OPERATIONS
designated by the Board based on recommendations from the Corporate Governance and Nominating Committee. The Chair of each Committee helps develop the agenda for that Committee and provides a report to our Board on Committee activities. Each Committee annually reviews the adequacy of its Charter and conducts an evaluation of its performance.
Our Board has adopted written Committee charters which are available on our website, www.emerson.com,www.Emerson.com, Investors, Corporate Governance, Committee Charters. The primary responsibilities and membership of each Committee are below:
| COMMITTEE | PRIMARY RESPONSIBILITIES AND MEMBERSHIP | |
Audit | The Audit Committee assists the Board in providing oversight of the systems and procedures relating to the integrity of the Company’s financial statements, financial reporting process, systems of internal accounting and financial controls, internal audit process, risk management (including technology and cybersecurity), compliance with legal and regulatory requirements and the independent audit of the annual financial statements. The Committee is directly responsible for the appointment, oversight, qualification, independence, performance, compensation and retention of the Company’s independent registered public accounting firm, including audit fee negotiations. The Committee reviews with management major financial risk exposures and the steps management has taken to monitor, mitigate and control such exposures.
The members of the Audit Committee are J. S. Turley (Chair), 2020. | |
The Compensation Committee discharges the Board’s oversight of the Company’s executive compensation program and produces the Committee’s proxy statement report on executive compensation. Among other things, the Committee approves goals and objectives, evaluates performance and sets compensation for the CEO; approves elements of compensation for and oversees the evaluation of certain other officers, including the NEOs; oversees the Company’s equity incentive plans; and monitors the Senior Management Succession Plan.
The current Compensation Committee members are C. A. H. Boersig (Chair), M. A. Blinn, M.S. Craighead, W. H. Easter III and G. A. 2020. | ||
Corporate Governance and Nominating | The Corporate Governance and Nominating Committee oversees the Company’s corporate governance; reviews its governance principles and independence standards; oversees the annual Board and Committee
The members of the Committee are J. B. Bolten (Chair), M. Craighead, C. Kendle and J. S. Turley. The Board has determined that all members are independent under NYSE listing standards. 2020. | |
Executive | The Executive Committee exercises Board authority between Board meetings on matters in which specific direction has not been given by the Board, to the extent permitted by law and except for certain specified matters.
The members of the Committee are D. N. Farr (Chair), C. A. H. Boersig, J. B. Bolten, A. F. Golden, and J. S. Turley. The Committee 2020. | |
BOARD AND COMMITTEE OPERATIONS
|
| |
Finance | The Finance Committee advises the Board with respect to the Board’s oversight of the Company’s financial affairs, including long-range financing requirements and strategy, capital structure, dividend and share repurchase policies, short-term investment policy and hedging strategies, and retirement plans, as well as Company charitable contributions and the Emerson Charitable Trust.
The members of the Committee are A. F. Golden (Chair), C. A. H. Boersig, W. H. Easter III, G. A. Flach, and L. M. Lee. The Committee met four times in fiscal |
| 12 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
BOARD AND COMMITTEE OPERATIONS
Board and Committee Self-EvaluationsEvaluations
Our Board assesses annually its effectiveness and that of its Committees. All Directors complete a self-evaluationan evaluation form for the Board and for each Committee on which they serve. These forms include numerical ratings for certain key metrics, as well as the opportunity for written comments. The comments provide key insights into the areas Directors believe the Board can improve or in which its performance is strong. The self-evaluationevaluation results are reported to the full Board, and each Committee is provided with its Committee evaluation results. The Corporate Governance and Nominating Committee oversees the process. Self-evaluationEvaluation topics include number and length of meetings, topics covered and materials provided, Committee structure and activities, Board composition, including any comments on other members of the Board and their expertise, succession planning, Director participation and interaction with management and promotion of ethical behavior. Our Board discusses the results of each annual self-evaluationevaluation and, as appropriate, implements enhancements and other modifications identified during the self-evaluation.evaluation.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee is primarily responsible for identifying and evaluating director candidates and for recommending re-nomination of incumbent directors. The Committee, which consists entirely of independent directors under applicable SEC rules and NYSE listing standards, regularly reviews the appropriate size and composition of the Board and anticipates vacancies and required expertise. The Committee reviews potential nominees from several sources, including Directors, management, shareholders or others. The Company mayCommittee is also authorized to retain an independent search firmfirms to assist in identifying and evaluatingidentify potential nominees. Ms. Lee,director candidates, as well as other external advisors, including for purposes of performing background reviews of potential candidates. Mr. Blinn, who is standing for election for the first time, was recommended by Messrs. Farr and Stephenson.a shareholder.
In evaluating potential nominees, the Committee considers the knowledge, reputation, experience, integrity and judgment of the candidates, their contribution to the diversity of backgrounds, experience and skills on the Board and their ability to devote sufficient time and effort to their duties as Directors. The Board considers the following experience particularly relevant: manufacturing, global business, in particular in emerging markets and China, business development, technology and innovation, legal, investment banking, acquisitions and finance, government, corporate governance and information technology, as well as experience on the boards of other major organizations. The Company’s Corporate Governance Principles set forth the minimum qualifications for nominees. Candidates are interviewed multiple times by the Chairman and CEO, Lead Independent Director, and other members of the Board to ensure that candidates not only possess the requisites skills and characteristics, but also the personality, leadership traits, work ethic, and independence of thought to effectively contribute as a member of the Board. The best candidates are then recommended by the Committee to the Board.
To ensure that the Board continues to evolve and be refreshed in a manner that serves the Company’s changing business and strategic needs, before recommending for re-nomination a slate of incumbent directors for an additional term, the Committee also evaluates whether incumbent directors possess the requisite skills and perspective, both individually and collectively. This evaluation is based primarily on the results of the periodic review the Committee performs of the requisite skills and characteristics of Board members, as well as the composition of the Board as a whole, and the results of the Board’s annual evaluation.
The Board’s policy is to seek qualified candidates. In evaluating candidates the most qualified candidates without regard toCommittee will consider diversity criteria such as race, ethnicity, gender, cultural background, national origin, religion, disability, age or sexual orientation. However, in evaluating candidates the Committee will consider these diversity criteria. The Board seeks to maintain a balance of perspectives, qualities and skills on the Board to obtain a diversity of viewpoints to better understand the technical, economic, political and social environments in which the Company operates. ExistingThe Board is committed to using refreshment opportunities to strengthen its cognitive diversity. To accomplish this, existing Board members and outside agencies are required to recommend candidates to further these policy objectives. The Board’s success on these objectives is measured by the range of viewpoints represented on the Board.
The Committee will consider candidates recommended by shareholders if required biographical information is properly submitted as described in “Other Matters—Matters – Future Shareholder Proposals and Nominations” at page 5864 below. Properly submitted shareholder recommendations are sent to the Committee and will receive the same consideration as others identified to the Committee.
The Company’s Bylaws permit shareholders to nominate Directors at an annual meeting of shareholders or at a special meeting at which Directors are to be elected. The procedures for making such nominations are discussed in “Other Matters—Matters – Future Shareholder Proposals and Nominations” beginning on page 58.64.
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 13 |
BOARD AND COMMITTEE OPERATIONS
Proxy Access
In 2017, the Board amended the Company’s Bylaws to permit up to 20 shareholders owning in the aggregate at least 3% of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the nominating holders and the
BOARD AND COMMITTEE OPERATIONS
nominees satisfy the requirements specified in the Bylaws, including providing the Company with advance notice of the nomination. For more information on how to submit a nominee for inclusion in Company proxy materials pursuant to these provisions, see “Other Matters—Matters – Future Shareholder Proposals and Nominations” on page 5864 below.
In November 2020, the Board amended our proxy access bylaw to remove a limitation relating to our classified board structure. The limitation provided that as long as we maintained a classified Board, the maximum number of proxy access nominees in a year could not exceed one-half of the number of Directors to be elected at that annual meeting.
Director Compensation
Processes and Procedures for Determination of Director Compensation
The Corporate Governance and Nominating Committee annually reviews compensation practices for the Company’s Directors and makes recommendations to the Board regarding the form and amount of compensation for determination by the Board. To assist the Committee in performing these duties, management engages an outside consultant to prepare a director compensation analysis and to make recommendations. Based on this analysis, management makes recommendations regarding Director compensation for the Committee’s consideration. Frederic W. Cook & Co. prepared this analysis for fiscal 2018. Changes2020. For fiscal 2021, no changes were recommended by management and the Committee and no changes were made by the Board.
Director Compensation Program
Each non-management Director is paid an annual retainer in cash and/or restricted stock or restricted stock units (“RSUs”), as well as meeting fees and reimbursement of expenses. The Lead Independent Director and each Committee Chair receive an additional cash retainer. Mr. Farr does not receive any additional compensation for service on the Board. In fiscal 2018,2020, the Director compensation program provided for the following payments:
Type
| Amount
| |
Annual Cash Retainer | $ | |
Restricted Stock or RSU Retainer | $ | |
Lead Independent Director Retainer | $ | |
Committee Chair Retainers | Audit and Finance and Corporate Governance & | |
Meeting Fees | $1,500 for each Board or Committee meeting | |
Effective DecemberApril 1, 2018,2020 through September 30, 2020, the cash portion of the annual retainer, was increased to $115,000the lead independent director retainer, the committee chair retainers and the restricted stock/RSUs portion of the annual retainer was increased to $150,000, payable February 5, 2019. Other retainers were increased to the following levels: Lead Independent Director—$30,000, Chairs of Audit and Compensation Committees—$25,000 and Chairs of Finance and Corporate Governance and Nominating Committees—$20,000. Board and Committee meeting fees were not increased.reduced by 15% in light of the Company’s cost cutting efforts during the height of the COVID-19 pandemic.
Emerson’s Director Stock Ownership Policy generally requires non-management Directors to hold stock equal to five times annual cash compensation, subject to a phase-in policy for new Directors. Our non-management Directors generally are required to hold all restricted stock and RSUs until retirement from our Board. The awards generally do not vest until the last day of a Director’s term after the age of 72, or earlier death, disability or a change of control of the Company. If a Director’s tenure on the Board ends for any other reason, the vesting of the award is at the discretion of the Committee. If the restrictions on the awards do not lapse, the awards are forfeited to the Company. Restricted stock includes both dividend and voting rights. Dividend equivalents are paid on RSUs, which do not have voting rights.
Directors may defer all or a part of their cash compensation under the Company’s Deferred Compensation Plan for Non-Employee Directors. Directors may also defer payment of the dividend equivalents on RSUs. Deferred amounts are credited with interest quarterly at the Bank of America prime rate. Under SEC rules, interest on deferred amounts is considered above-market if the rate of interest exceeds 120% of the applicable federal long-term rate. During fiscal 2018,2020, the applicable prime rate ranged from 4.25%3.25% to 5.0%5.00%, while 120% of the applicable federal long-term rate ranged from 2.96%1.20% to 3.57%2.49%. A. F. Golden and R. L. Stephenson participated in this deferral program during fiscal 20182020 and above-market earnings on theirhis deferred amounts are set forth in the Director Compensation Table. All deferred amounts are payable in cash.
| 14 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
BOARD AND COMMITTEE OPERATIONS
As part of the Company’s charitable contributions practice, the Company may, in the Board’s discretion, make a charitable contribution in the names of Emerson and a Director (including management Directors) upon retirement from the Board (as determined by the Board), taking into account the Director’s Board tenure, accomplishments, and other relevant factors.
BOARD AND COMMITTEE OPERATIONS
The table below sets forth non-management Director compensation for fiscal 2018.2020.
Director Compensation
Name(1)
| Fees Earned or Paid in Cash ($)
| Stock Awards ($)(2)(3)
|
Change in Pension Value and Nonqualified Deferred
| All Other Compensation ($)(5)
| Total ($)
| ||||||||||||||||||||
C. A. H. Boersig
|
| 163,833
|
|
| 139,960
|
|
| —
|
|
| 10,000
|
|
| 313,793
|
| ||||||||||
J. B. Bolten
|
| 143,500
|
|
| 139,960
|
|
| —
|
|
| 10,000
|
|
| 293,460
|
| ||||||||||
G. A. Flach
|
| 133,000
|
|
| 139,960
|
|
| —
|
|
| 10,000
|
|
| 282,960
|
| ||||||||||
A. F. Golden
|
| 131,000
|
|
| 139,960
|
|
| 33,239
|
|
| 10,000
|
|
| 314,199
|
| ||||||||||
C. Kendle
|
| 128,500
|
|
| 139,960
|
|
| —
|
|
| —
|
|
| 268,460
|
| ||||||||||
M. S. Levatich
|
| 133,000
|
|
| 139,960
|
|
| —
|
|
| 10,000
|
|
| 282,960
|
| ||||||||||
J. W. Prueher(6)
|
| 51,334
|
|
| —
|
|
| —
|
|
| 205,500
|
|
| 256,834
|
| ||||||||||
R. L. Stephenson(7)
|
| 48,250
|
|
| —
|
|
| 7,345
|
|
| —
|
|
| 55,595
|
| ||||||||||
J. S. Turley
|
| 148,500
|
|
| 139,960
|
|
| —
|
|
| 2,500
|
|
| 290,960
|
| ||||||||||
Name(1) |
Fees Earned or Paid in Cash ($) | Stock Awards ($)(2)(3) | Change in Pension Value and Nonqualified Deferred | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||
Mark A. Blinn | 108,716 | 187,377 | — | 50,000 | 346,093 | ||||||||||||||||||||
Clemens A. H. Boersig | 185,226 | 149,946 | — | 10,000 | 345,172 | ||||||||||||||||||||
Joshua B. Bolten | 149,850 | 149,946 | — | 10,000 | 309,796 | ||||||||||||||||||||
Martin S. Craighead | 133,075 | 149,946 | — | — | 283,021 | ||||||||||||||||||||
Gloria A. Flach | 133,075 | 149,946 | — | 5,000 | 288,021 | ||||||||||||||||||||
Arthur F. Golden | 144,300 | 149,946 | 58,775 | 10,000 | 363,021 | ||||||||||||||||||||
Candace Kendle | 125,350 | 149,946 | — | — | 275,296 | ||||||||||||||||||||
Lori M. Lee | 131,350 | 149,946 | — | 5,000 | 286,296 | ||||||||||||||||||||
Matthew S. Levatich | 134,350 | 149,946 | — | 10,000 | 294,296 | ||||||||||||||||||||
James S. Turley | 155,751 | 149,946 | — | — | 305,697 | ||||||||||||||||||||
| (1) | Mr. Farr is the only management Director, and his compensation is set forth in the Summary Compensation Table and related tables. He did not receive any additional compensation for his service as a Director. |
| (2) | On February |
| (3) | The total number of shares of restricted stock held by each of the non-management Directors at September 30, |
| (4) | Includes above-market earnings for fiscal |
| (5) | Includes Company matching contributions under the Company’s charitable matching gifts program, which matches charitable gifts of up to $10,000 for all employees and Directors of the Company. |
For Mr. |
|
Report of the Audit Committee
The Audit Committee assists the Board in providing oversight of the systems and procedures relating to the integrity of the Company’s financial statements, the Company’s financial reporting process, its systems of internal accounting, financial and reporting controls, the performance of the internal audit process,function, risk management, the independent audit process of the Company’s annual financial statements and the Company’s compliance with legal and regulatory requirements. Management is responsible for these processes.
BOARD AND COMMITTEE OPERATIONS
The Audit Committee reviews with management the Company’s major financial risk exposures and the steps management has taken to monitor, mitigate and control such exposures. Management has the responsibility for the implementation of these activities. In fulfilling its oversight responsibilities, the Committee reviewed and discussed with management the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018,2020, including a discussion of the quality and the acceptability of
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 15 |
BOARD AND COMMITTEE OPERATIONS
the Company’s financial reporting and controls. The Committee also reviews the Company’s quarterly earnings press releases and reports on Form 10-Q prior to distribution and filing.
The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. The Committee reviewed with the independent registered public accounting firm the firm’s judgments as to the quality and the acceptability of the Company’s financial reporting and such other matters as are required to be discussed with the Committee under auditing standardsby the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”), including and the matters required to be discussed by PCAOB Interim Auditing Standard AU Section 380, Communication with Audit Committees.Securities and Exchange Commission. In addition, the Committee has discussed with the independent registered public accounting firm the firm’s independence from management and the Company, including the impact of non-audit related services provided to the Company and the matters in the independent registered public accounting firm’s written disclosures required by Rule 3526the applicable requirements of the PCAOB, as may be modified or supplemented.PCAOB.
The Committee also discussed with the Company’s internal auditors and the independent registered public accounting firm in advance the overall scope and plans for their respective audits, including timing, risk assessments, locations and coverage, and any reliance by the external auditors on work performed by the internal auditors. The Committee meets at least quarterly with the internal auditor and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s accounting and financial reporting.
The Committee is directly responsible for the appointment, oversight, qualification, independence, performance, compensation and retention of the Company’s independent registered public accounting firm, including audit fee negotiations and approval. The Committee has evaluated whether retaining KPMG as the Company’s independent auditor for the year is in the best interest of Emerson and its shareholders. The Committee considers whether KPMG’s known legal risks include involvement in proceedings that could impair their ability to perform the annual audit, and reviews historical and proposed KPMG fees charged to the Company.
In performing its review, the Committee also considers the quality, candor and effectiveness of KPMG’s communications with the Committee and management; how effectively KPMG maintained its independence as demonstrated by exercising judgment, objectivity and professional skepticism; reports of the PCAOB and other available data regarding the quality of work performed by KPMG; KPMG’s long tenure and experience as the Company’s auditor, and the geographic reach and expertise of KPMG to address the demands placed on an auditor by the global breadth and complexity of Emerson’s business in terms of quantity, quality and location of staff.
The Committee also considers whether, to assure continuing auditor independence, there should be rotation of the independent registered public accounting firm.
The Committee is responsible for the selection of the lead engagement partner, and as required by law, assures rotation of the lead partner every five years. When appropriate, KPMG provides a list of candidates for the role of lead engagement partner, who are then interviewed by members of senior management. The Committee considers their recommendations and those of KPMG leadership, evaluates the candidate’s qualifications, strengths and weaknesses and selects the lead engagement partner.
In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 20182020 for filing with the Securities and Exchange Commission. In accordance with its Charter, the Committee has reappointed KPMG LLP as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for fiscal 2019,2021, based on their overall qualifications, objectivity, significant experience and understanding of the Company’s operations, and their ability to deploy resources to match Emerson’s global operations.
Audit Committee
| ||||||||
BOARD AND COMMITTEE OPERATIONS
Fees Paid to KPMG LLP
Fees paid to KPMG LLP, the Company’s independent registered public accounting firm:
$ in millions
| 2017
| 2018
|
2019
|
2020
| ||||||||||||
Audit Fees | $ | 20.9 | $ | 22.0 |
$
|
20.4
|
|
$
|
20.6
|
| ||||||
Audit-Related Fees | 4.7 | 2.4 |
|
1.6
|
|
|
1.2
|
| ||||||||
Tax Fees | 0.5 | 0.6 |
|
0.5
|
|
|
0.4
|
| ||||||||
All Other Fees
|
| —
|
|
| —
|
|
|
—
|
|
|
—
|
| ||||
Total KPMG LLP Fees | $ | 26.1 | $ | 25.0 |
$
|
22.5
|
|
$
|
22.2
|
| ||||||
| 16 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
BOARD AND COMMITTEE OPERATIONS
Audit Fees primarily represent the cost for the audit of the Company’s annual financial statements, reviews of quarterly SEC filings and statutory audits at non-U.S. locations.
Audit-Related Fees for 2018 and 2017 include $0 and $2.8 million, respectively, for audit procedures related to actual and potential divestitures. The remaining Audit-Related Fees are primarily attributable to other acquisition and divestiture due diligence, audits of employee benefit plans and statutory filings.
Tax Fees are related to tax compliance services.
The Audit Committee approved in advance all services provided by KPMG LLP. The Audit Committee’s pre-approval policies and procedures are included within the Audit Committee Charter, which can be found on the Company’s website at www.Emerson.com, Investors, Corporate Governance.
The Compensation Committee operates under a written charter that details the Committee’s authority, composition and procedures. The Committee may delegate authority with respect to specific matters to one or more members, provided that all decisions of any such members are presented to the full Committee at its next meeting. For a discussion of delegations of authority to the CEO, see “Equity Compensation Grant Practices” at page 3235 below.
For fiscal 2018,2020, the Compensation Committee reviewed management’s process for assessing risk in the Company’s compensation programs, policies and practices for its employees, including the Company’s executive compensation program and practices. The Committee accepted the result of these reviews that our compensation programs, policies and practices do not create risks that are reasonably likely to have a material adverse effect on our business. Please see “Our Compensation Best Practices” on page 2223 and “Policies Supporting our Fundamental Principles” on page 3032 for additional information.
Role of Executive Officers and the Compensation Consultant
Executive Officers
As described in “Compensation Discussion and Analysis —– Setting Annual Total Compensation” on page 24,25, our CEO makes recommendations to the Compensation Committee based on management input regarding total compensation of the other executive officers. Management also develops and presents to the Committee design recommendations for compensation programs.
The Compensation Committee has unrestricted access to management and may request the participation of management or the Committee’s independent consultant at any meeting or executive session. Committee meetings are regularly attended by the CEO, except for executive sessions and discussions of his own compensation, by the Vice President-Executive Compensation, who leads some of the discussions regarding the Company’s compensation programs, and the Committee’s independent consultant. The Committee regularly reports to the Board on compensation matters and annually reviews the CEO’s compensation with the Board in executive sessions of non-management Directors only.
Compensation Consultant
The Compensation Committee has sole discretion, at Company expense, to retain and terminate compensation consultants, independent legal counsel or other advisors, including sole authority to approve their fees and retention terms. Any Committee member may request the participation of independent advisors at any meeting. Management engages Frederic W. Cook & Co., Inc. from time to time to assist with executive compensation program design and competitive pay analysis. The Committee reviews this information in
BOARD AND COMMITTEE OPERATIONS
determining compensation for the NEOs. The Committee has engaged Exequity LLP as its independent consultant. Exequity reports directly to the Committee and performs services as directed by the Committee. In 2018,2020, Exequity reviewed our comparator group companies, the compensation of our CEO and the other NEOs and a pay for performance analysis. Management engages Frederic W. Cook & Co. from time to time to assist with executive compensation program design and competitive pay analysis. The Committee reviews this information in determining compensation for the NEOs. Neither Exequity nor Frederic W. Cook & Co. provides any other services to the Company. See also “Competitive Market Information” on page 23.24.
Reportof the Compensation Committee Report
The Compensation Committee of the Board of Directors acts on behalf of the Board to establish and oversee the Company’s executive compensation program in the interests of the Company and its shareholders. For a discussion of the Compensation Committee’s policies and procedures, see “Compensation” on page 12, “Compensation Committee” on page 17 and “Role of Our Compensation Committee” on page 21.
Management of the Company has prepared the Compensation Discussion and Analysis describing the Company’s compensation program for senior executives, including the NEOs. See “Compensation Discussion and Analysis” beginning on page 19. The
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 17 |
BOARD AND COMMITTEE OPERATIONS
Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis for fiscal 20182020 with the Company’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s proxy statement for its 20192021 Annual Meeting of Shareholders.
Compensation Committee
| ||||||||
| William H. Easter III | Gloria A. Flach | |||||||
Compensation Committee Interlocks and Insider Participation
The functions and members of the Compensation Committee are set forth above under “Compensation” on page 12. All Committee members are independent and none of the Committee members has served as an officer or employee of the Company or a subsidiary of the Company. During fiscal 2018,2020, no member of the Committee and no other Director was an executive officer of another company on whose compensation committee or board any of our executive officers served.
| 18 | |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes the compensation programs and practices regarding our Named Executive Officers (“NEOs”) for the 20182020 fiscal year. Our NEOs for fiscal 20182020 included our Chief Executive Officer, Chief Financial Officer and the next three most highly compensated officers, as well as our former Executive President Commercial & Residential Solutions who retiredstepped down from this role on October 1, 2018,August 12, 2020 and left the Company effective September 30, 2020, listed below:
NEO NAME
|
NEO TITLE
| |
David N. Farr
|
Chairman and Chief Executive Officer | |
|
| |
Frank J. Dellaquila
|
Senior Executive Vice President and Chief Financial Officer
| |
Michael H. Train
|
President
| |
Steven J. Pelch | Executive Vice President and Chief Operating Officer | |
Surendralal L. Karsanbhai
|
| |
Robert T. Sharp
|
Former Executive President Commercial & Residential Solutions
| |
Executive Summary
At Emerson, our goal is to attract and retain talented executives who deliver value to our shareholders through the achievement of the Company’s specific business objectives, such as consistent, sustained growth in earnings per share, cash flow and cash flow.premium return on investments. Our executive compensation program and overall pay for performance philosophy align with that goal and our results.
Fiscal 20182020 Performance Highlights
Strong growth in sales, earnings and cash flow reinforcing our market leadership positionconsistent financial performance despite rapid downturn of global markets due to COVID-19 pandemic
Sales grewQuickly mobilized executive leadership and global operations teams to $17.4prioritize safe continuity of work in essential industries, maintain supply chain integrity and support our customers and employees
Net sales of $16.8 billion, a 14% increase9% decrease year-over-year
Operating cash flow of $2.9$3.08 billion, an 8%a 3% increase year-over-year (16.6%(18.4% of net sales), and free
Free cash flow of $2.3$2.55 billion, after deducting capital expenditures of $0.6$0.53 billion
62 years (15.2% of increased dividends to shareholders
Continued execution of strategic repositioning to reshape the Company into two global franchises for Automation Solutions and Commercial & Residential Solutions
Deployment of $2.2 billion for bolt-on mergers and acquisitions to drive future sales and earnings per share growth
Successful first year integration ahead of schedule of the Valves & Controls acquisition, the largest acquisition in Emerson historynet sales); a 6% increase year-over-year
| 19 |
EXECUTIVE COMPENSATION
Earnings per share decreased 13% to $3.24, including restructuring expenses of $0.42 and $0.20 of discrete tax benefits; adjusted earnings per share of $3.46 decreased by only 6% excluding these items, benefitting from management’s ongoing restructuring and cost reduction actions and discrete items, ahead of expectations
Continued aggressive execution of cost containment actions announced prior to global pandemic; initiated $304 million of restructuring actions for the year, with total four-year restructuring actions targeted at over $600 million
Concurrent with the focus on cost containment and profitability, Emerson continued to invest for our future with multiple strategic acquisitions which deepen our capabilities in software, renewable energy, transmission and distribution, and building temperature control.
Focus on Purpose and Values
As a unified company, we worked with thousands of employees worldwideAt Emerson, our ability to articulatequickly adapt to changing market dynamics and uncertainties and still rise to the call for innovative solutions from our global values that have grounded Emerson for more than 128 years.customers reflects not only our core Values, but our Purpose-focused mindset. These values guide how we interact withfoundational Values and Purpose-mindset inform our strategy and decisions as an organization and reinforce our core dedication to our employees, shareholders, customers and suppliers. We believe that this is an expectation not only of Emerson, but ofsuppliers and our customersdrive to deliver results. This mindset and the geographies where we do business.outcomes achieved through our disciplined management processes was tested this year through obstacles and challenges that were impossible to foresee but allowed us to maintain strong and consistent financial performance.
In January 2020, we were inspired to define our Purpose and reimagine the causes we work toward every day. As we did when we set out to define our core Values in 2018, we gained the input of over 17,000 employees worldwide to align on our Purpose: To drive innovation that makes the world healthier, safer, smarter and more sustainable. Our Purpose builds on and is strengthened by our foundational Values of Integrity, Collaboration, Safety & Quality, Continuous Improvement, Customer Focus, Innovation and Support Our People.
The focus on our Purpose and the demonstration of our Values starts at the highest level of our organization. Our CEO and NEOs work to reinforce our Purpose and Values with our businesses and global workforce in their actions and decisions. With the onset of the global pandemic, our Values of Safety & Quality, Customer Focus and Support Our People were front and center in our response to the COVID-19 crisis and our Purpose was recognized in our responsibility to support critical industries around the world, including life sciences, water, food and beverage, power and energy, the cold chain and indoor air comfort and quality.
Pay for Performance Fundamental Principles
Our executive compensation program is based on a consistent set of key principles that directs compensation decisions and communicates to participants the Company’s Purpose, core values,Values, critical business strategies and performance objectives. These principles guide the performance objectives that drive strong results to maximize shareholder value, make Emerson a good global citizen, enhance critical capabilities for us and our customers and encourage career-long commitments to the Company.
These fundamental compensation principles include:
maximizing shareholder value by allocating a significant percentage of compensation to performance-based pay that is dependent on achievement of the Company’s performance goals, without encouraging excessive or unnecessary risk taking;
rewarding for superior performance rather than creating a sense of entitlement;
aligning executive and shareholder interests by providing long-term stock-based incentives as a significant portion of total compensation and expecting executives to hold the stock they earn;
attracting and retaining talented executives by providing competitive compensation and career-growth opportunities; and
rewarding overall corporate results while recognizing individual contributions.
Emerson’s shareholders again expressedstrong support for ourOur executive compensation program atmirrors our 2018 Annual Meeting. For eachrigorous and disciplined management process – a hallmark of the last eight Annual Meetings of Shareholders, over 90% of shares voted wereEmerson since our founding in support of1890 – by ensuring that these principles are reflected in our executive compensation program.decisions.
| 20 | |
EXECUTIVE COMPENSATION
Shareholder Engagement and Compensation Program Benchmarking
We engage with and value the feedback of our shareholders on the components of our executive compensation program. We also regularly dialogue with our independent compensation consultants and other industry groups to work to ensure that we are continually reviewing and evolving our compensation programs with competitive market standards. We share feedback received on our compensation programs and market practices with our Compensation Committee. Our Compensation Committee carefully considers the long-term interests of the Company and our shareholders when making decisions regarding our compensation programs.
| In fiscal 2020, we engaged with holders of over 40% of outstanding shares (none of whom were our employees or directors) to specifically discuss our compensation philosophy and programs and to listen to their feedback. |  | ||
| Emerson’s shareholders again expressed strong support for our executive compensation program at our 2020 Annual Meeting, with a vote of 92.8% in support. | |||
| We engaged our independent compensation consultants to benchmark our performance-based compensation program against market practices for other manufacturing companies and our compensation comparator group. Results showed our program to be generally consistent with or superior to market, and no changes for fiscal 2021 were recommended by the Committee’s independent consultant. | |||
| We determined our program would be improved with the addition of a relative total shareholder return modifier on top of our existing operating metrics for our Fiscal 2021 – 2023 Performance Shares Program. |
Role of Our Compensation Committee
Our Compensation Committee acts on behalf of our Board to establish our compensation philosophy and oversee our executive compensation program. The current members of our Compensation Committee are Clemens A. H. Boersig (Chairman), Mark A. Blinn, Martin S. Craighead, William H. Easter III and Gloria A. Flach and Matthew S. Levatich.Flach. Pursuant to its Charter, which can be found on our website at www.emerson.com,www.Emerson.com, our Committee is responsible for:
Compensation Responsibilities
|
Organizational/Talent Responsibilities
| |
• Reviewing and approving compensation of our CEO, NEOs and other executive officers
• Reviewing and approving all compensation plans and aggregated payouts
• Reviewing CEO compensation with non-management members of the Board
• Designating comparator group companies to determine competitive market pay ranges
• Establishing performance objectives and benchmarks for performance-based incentive programs
• Monitoring NEO stock ownership
• Approving all executive benefit plans
|
• Evaluating CEO’s performance
• Reviewing and discussing performance and leadership potential of NEOs and other executive officers with the CEO
• Working with the CEO on succession planning for executive management and our next generation of leaders
| |
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 21 |
EXECUTIVE COMPENSATION
Compensation Mix
In determining the total compensation of each of our NEOs, the Compensation Committee balances the compensation mix considering the executive’s level of responsibilities, leadership and career potential, individual performance and service with the Company, with the objective of achieving a high and sustainable level of Company and individual performance.At-risk compensation generally(annual cash bonus and performance shares) increases as responsibilities increase.increase and generally makes up 75% or more of the total compensation mix for our NEOs. Total compensation is targeted to the median market range.range of our compensation comparator group.
Annual Cash Compensation
| ||
Base Salary
|
Rewards individual performance and may vary with Company performance
| |
Annual Bonus |
Rewards achievement of the Company’s annual financial targets and considers individual performance, contributions and leadership
| |
Long-Term Stock-Based Incentive Compensation | ||
Performance Shares |
Supports achievement of long-term strategic operating goals,
• The primary long-term compensation element
• Three-year performance period
• Aligns executive pay with shareholder interests | |
Restricted Stock |
Supports succession planning, critical retention and key leadership development efforts
•
•
• Cliff vests no sooner than 3 years and generally
| |
|
| |
EXECUTIVE COMPENSATION
Key Compensation Decisions in Fiscal 20182020
Reduced base salaries of all NEOs by 15% for six months between April and September as part of cost-containment actions necessitated by the COVID-19 pandemic
Awarded increaseddecreased annual cash bonuses to all NEOs, reflecting the strong fiscal 2018 accomplishments described above, with Mr. Farr’s bonus increasingdecreasing 14.6% from $2.5$2.4 million in 20172019 to $2.7$2.05 million in 20182020
Awarded performance shares to all NEOs, subject to the achievement of financial targets for the three-year performance period ending September 30, 2020, with maximum payouts ranging from 125% to 155%2022
Awarded restricted stock to Messrs. Dellaquila, Train, Pelch and Sharp to ensureApproved the critical retentionaddition of our key executivesa relative total shareholder return modifier for the Fiscal 2021 – 2023 Performance Shares Program
| 22 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
Expanded clawback rights for all incentive compensation awards and payments beginning in fiscal 2019 to provide for potential forfeiture or clawback in connection with violations of the Company’s ethics and compliance programs and policies, including its Code of Conduct and Code of Ethics to the extent allowed by lawEXECUTIVE COMPENSATION
Our Compensation Best Practices
What We Do
| What We Don’t Do
| |||||
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At-Risk Pay:At-risk compensation increases as responsibilities increase
|
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No Golden Parachutes: No executive employment or individual change of control agreements or “golden parachutes” | |||
|
Talent Management: Robust compensation and performance review and planning process
|
|
No Stock Hedging or Pledging: No hedging or pledging of Company securities | |||
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Risk Analysis: Compensation Committee annual assessment of compensation risks
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No Executive Loans:No loans to executives or purchases of Company securities on margin | |||
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Focus On Retention: Utilize highly-selective restricted stock awards for critical retention and succession planning purposes
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No Repricing of Options: No repricing or buyout of underwater stock options | |||
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Executive Officer Severance Policy: No severance in excess of 2.99 times current NEO cash compensation without shareholder approval
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No Guaranteed Bonuses: Cash bonuses are not guaranteed for NEOs | |||
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Non-competes andNon-solicits: All awards subject tonon-competition andnon-solicitation obligations
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No TaxGross-Ups: No taxgross-ups for NEOs (except for relocation policy applicable to all employees) | |||
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Clawbacks: Maintain clawback rights on cash bonus and equity awards
|
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No Single-Trigger COC:Incentive plans require “double trigger” change of control | |||
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Stock Ownership: NEOs’ actual ownership greatly exceeds stock ownership guidelines
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No Excessive Perks: All executive perquisites have a specific business purpose | |||
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Stock Trading Policy: Executives must obtain written permission from CEO and CFO or General Counsel before trading in Emerson stock
| |||||
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Committee Consultant: Compensation Committee retains independent compensation consultant
| |||||
EXECUTIVE COMPENSATION
Competitive Market Information
How We Determine Our Compensation Comparator Group
The Compensation Committee annually reviews and approves the compensation comparator group that it uses to conduct market analysis and determine competitive pay ranges for our NEOs.NEOs at its June meeting. As in prior years, the Committee reviewed a special study and screening prepared by Frederic W. Cook & Co. and selected compensation comparator companies for fiscal 2020 compensation based upon one or more of the following criteria:criteria (which are not assigned any specific weight):
| Net Revenue: Approximately1⁄2 to 2x Emerson revenues? Market Capitalization: Approximately 1⁄2 to 2x Emerson market capitalization? Common Industries: An Emerson main competitor? Do we compete for customers? Do we compete for talent? Advanced Technology: Employs high technology to fuel growth? |
| Innovation: Brings innovation to market? Grows through repositioning existing product or service offerings? Expands to new market segments? Global Presence: Less than 40% of revenue from one country/region? Business Complexity: Significant business presence in multiple different industries? Emerson Customer: A current Emerson customer in a familiar industry? |
20182020 Compensation Comparator Group Companies
For fiscal 2018, there were2020, no changes were made to theour existing 23-company22-company compensation comparator group listed below:
Fiscal
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Caterpillar |
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Fluor
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Ingersoll Rand
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PPG
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United Technologies
| ||||
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General Dynamics
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International Paper
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Raytheon
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3M
| ||||
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Goodyear Tire
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Lockheed Martin
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Schlumberger
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Honeywell
|
Northrop Grumman
|
TE Connectivity
| |||||
Eaton | Illinois Tool Works | Parker Hannifin | Textron | |||||
The current global economic conditions, organizational restructurings and merger and acquisition activities and other market dynamics may have affected these companies and their appropriateness for inclusion in our compensation comparator group for future periods based on the criteria noted above. The Compensation Committee will undertake a full review of our compensation comparator group companies in June 2021.
Emerson vs. Compensation Comparator Group
| PROXY STATEMENT |
EXECUTIVE COMPENSATION
Elements of Compensation
Setting Annual Total Compensation
The Compensation Committee targets annual total compensation (cash and annual long-term stock compensation) for our NEOs in the median market range of our compensation comparator group. To determine the median range, the Committee uses a competitive pay (cash and long-term stock compensation) analysis of total compensation for the proxy reported officer positions at the compensation comparator group companies prepared by Frederic W. Cook & Co. The Committee also reviews and confirms the competitive market pay analysis with Exequity, its independent compensation consultant. The competitive pay analysis is not used to establish performance goals in the Company’s compensation programs.
The Committee does not set specific financial targets related to annual cash compensation and pay determinations are not based on any formula. Actual pay is dependent on Company and individual performance and based on the Committee’s informed judgment. The Committee does monitor the relative internal compensation relationships between the CEO and the other NEOs, however, no specific pay ratio is targeted.
The Committee meets in executive session to review and set the CEO’s compensation. The Committee considers a number of factors in making its decision, including: market data; compensation elements; Company performance; tenure and experience; retention; and the CEO’s individual performance, leadership, contributions to the Company and impact on results. The Committee also discusses the CEO’s compensation annually with thenon-management Directors in executive session.
For the NEOs and other key executives, our CEO reviews with the Committee the individual performance and leadership potential of these key executives, along with the Company’s financial results, and makes individual pay recommendations to the Committee. The CEO’s recommendations are informed by our robust annual organizational review, compensation planning and performance ratingreview processes.
EXECUTIVE COMPENSATION
Fiscal 20182020 CEO and NEO Performance
CEO Performance.In determining the appropriate level of total compensation for the CEO, the Committee evaluated the Company’s strong and consistent financial performance in fiscal 20182020 (summarized on page 19); his continued success in reshaping despite unprecedented rapid downturn of global markets due to the Company into two global franchises;COVID-19 pandemic; the disciplined management of the Company’s significant growthbusiness and operations and mobilization of our global leadership during the COVID-19 pandemic and other geopolitical challenges; his actions upholding the Value of Support Our People in ensuring employees had a safe working environment while continuing operations to support critical industries; the continued aggressive execution of cost containment actions announced prior to global pandemic; our strategic merger and acquisition activity; his critical succession planning leadership; his actions to bring renewed focus to the Company’s Purpose and Values; his individual leadership, performance and contributions; his tenure as CEO; his individual performance and contributions; and the retention of Mr. Farr. Considering these factors, the Committee determined that Mr. Farr’s increased 20182020 total compensation, positioned him appropriatelywhile down compared to 2019, remains in the median market range, following below median compensation in fiscal 2016 and flat total compensation in fiscal 2017, and reviewed alternatives for continued delivery of the appropriate level of total compensation for Mr. Farr.range. The Committee noted that Mr. Farr successfully led the Company through the 2018a challenging 2020 fiscal year and highlighted the following significant accomplishments.
Fiscal
| ||
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Quickly adapted to COVID-19 pandemic and resulting global market challenges to ensure continuity of work in essential industries and to position Emerson for sustained success
| |
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Enhanced Emerson’s software portfolio through investments in and/or strategic bolt-on
| |
| ||
| ||
| ||
| ||
Open Systems International, Inc. (OSI Inc.), an operations technology software provider that broadens and complements Emerson’s robust software portfolio and ability to help customers in the global | ||
|
| |
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| |
| Continued to | |
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| |
|
Augmented the diversity and expertise of the Board of Directors, including the appointment of William H. (Bill) Easter III, former Chairman, President and Chief Executive Officer of DCP Midstream LLC | |
| Furthered Emerson’s longstanding commitment to creating shareholder value through the Company’s | |
| Achieved continued reduction of greenhouse gas (GHG) emissions, progressing toward the goal to reduce GHG emissions by 20%, normalized to sales, across over 200 of Emerson’s global manufacturing facilities by the year 2028
| |
| PROXY STATEMENT |
EXECUTIVE COMPENSATION
Other Named Executive Officer Performance. In setting compensation for the other NEOs, the Committee considered the Company’s strong and consistent fiscal 20182020 financial performance,performance; the continued successful execution ofadept reaction to the global repositioning and integration effortspandemic and the mobilization of our global operations leaders and workforce to continue to safely service customers during the unprecedented COVID-19 pandemic; the mitigation of supply risks, tariffs and other geopolitical challenges; the restructuring actions taken to maintain strong profitability during a changing business environment,weather the down market and prepare for future growth; and the continued focus on safety and wellbeing of our employees; as well as Mr. Farr’s evaluation of each NEO’s individual performance, leadership and accomplishments. The Committee also evaluated the NEOs based on their interactions with and presentations to the Board.
NEO Fiscal
| ||||
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 |
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F. J. Dellaquila |
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| |||
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| Continued to streamline operational and legal entity structure to reduce administrative costs and improve efficiency of cash mobility and management oversight. Increased the use of digital tools to expand and automate critical internal | |||
| Led effort to ensure financial liquidity amid the market disruption and recession caused by the COVID-19 pandemic | |||
| Oversaw comprehensive effort to improve the Company’s structural cost position to address a new demand environment
| |||
M. H. Train |
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| |||
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| |||
| Provided advocacy and thought leadership with investors, customer executives, industry groups, and government officials around the world on critical topics of Workforce of the Future, STEM, Digital Transformation, Sustainability & Decarbonization, Cybersecurity and Trade Relations, furthering our Purpose of driving innovation that makes the world more sustainable | |||
| Managed worldwide operational and supply chain implications of COVID-19 pandemic response working closely with government officials worldwide, industry bodies and customers | |||
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| |||
S. J. Pelch |
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Managed
| ||
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| |||
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| |||
| Strengthened diversity and inclusion focus across the Company to achieve heightened awareness as we Support our People | |||
S. L. Karsanbhai |
| Drove aggressive organizational and facilities cost restructuring actions, strongly managed cash flow and protected operating margins for the Automation Solutions platform during unprecedented challenging operating environment to position for market rebound and future growth | ||
|
| |||
| Continued to | |||
| Promoted diversity and inclusion efforts through key management development and appointments; Continued focus to Support Our People through executive sponsorship of our new Somos Latinos Employee Resource Group
| |||
R. T. Sharp |
|
Delivered a strong
| ||
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|
| |||
EXECUTIVE COMPENSATION
Fiscal 20182020 Annual Total Compensation Mix
We believe that our practice of setting a majority of our NEOs paycompensation as “at-risk”“at-risk” pay underscores our commitment to our fundamentalpay-for-performance principles. By tying a significant percentage of NEO annual total compensation (cash and equity)long-term stock) to performance-based pay that is dependent on achievement of the Company’s performance goals as well as the consistent attainment of strong individual performance, we maximize the value we can deliver to shareholders. In fiscal 2018,2020, 91% of our CEO’s pay and an average of 70.5%85% of the other NEOs’ annual pay was comprised of “at-risk”“at-risk” compensation (amounts(calculated on base salary paid as shown in Summary Compensation Table; amounts do not include other forms of compensation shown in the Summary Compensation Table).
Annual Cash Compensation
The Committee targets total annual cash compensation in the median market range of total cash compensation, while placing more emphasis on performance-based annual cash bonus than on base salary. Base salary generally represents10-20% of total NEO compensation and bonus generally represents15-25%.
Base Salary. Fiscal 20182020 base salary increases were based on the Committee’s review of the Company’s solid fiscal 2019 performance, individual performance and potential and competitive market compensation. The Committee also considered market survey data that indicated that the predicted merit increase, without promotions, for comparable executive positions averaged approximately 3%. Beginning in April 2020, each NEO’s base salary shown below was decreased by 15% through September 2020 as part of cost-containment actions necessitated by the COVID-19 pandemic.
NEO Name
| FY 2017
| FY 2018
|
2017-2018 Increase (%)
| FY 2019 | FY 2020 | % Change | ||||||||||||||||||
D. N. Farr
|
$
|
1,300,000
|
|
$
|
1,350,000
|
|
|
3.8
|
%
| $ | 1,400,000 |
| $ | 1,400,000 |
|
| — |
| ||||||
E. L. Monser
|
$
|
750,000
|
|
$
|
775,000
|
|
|
3.3
|
%
| |||||||||||||||
F. J. Dellaquila
|
$
|
690,000
|
|
$
|
715,000
|
|
|
3.6
|
%
| $ | 740,000 |
| $ | 762,000 |
|
| 3.0 | % | ||||||
M. H. Train
|
|
|
(1)
|
$
|
570,000
|
|
|
|
(1)
| $ | 650,000 |
| $ | 675,000 |
|
| 3.8 | % | ||||||
S. J. Pelch
|
$
|
460,000
|
|
$
|
550,000
|
|
|
19.6
|
%(2)
| $ | 600,000 |
| $ | 625,000 |
|
| 4.2 | % | ||||||
R. T. Sharp
|
|
|
(3)
|
$
|
560,000
|
|
|
|
(3)
| |||||||||||||||
S. L. Karsanbhai | $ | 525,000 |
| $ | 550,000 |
|
| 4.8 | % | |||||||||||||||
R. T. Sharp(1) | $ | 600,000 |
| $ | 620,000 |
|
| 3.3 | % | |||||||||||||||
| (1) | Mr. |
As shown above, for fiscal 2020, base salary (the only guaranteed portion of NEO compensation) comprised only 9% of our CEO’s and an average of 14.5% of our other NEOs’ annual total compensation.
|
|
| PROXY STATEMENT |
EXECUTIVE COMPENSATION
Bonus.In determining fiscal 20182020 bonuses, the Compensation Committee reviewed the Company’s strong and consistent financial performance, the NEOs actions in leading the Company’s response to the COVID-19 pandemic, the continued aggressive execution of the Company’s strategic repositioningcost-containment actions announced prior to reshape the Company into two global franchisespandemic, and continued investment and preparation for Automation Solutions and Commercial & Residential Solutions, the efforts in the integration of recent acquisitions, actions to navigate a changing global business environment,future growth, as well as the individual performance and leadership of each NEO. The Committee used discretion and based its decisions on its informed judgment considering these factors collectively. No individual weightings were assigned to any of these factors. The fiscal 2018 bonus amounts were subject to the IRC Section 162(m) limitation previously established by the Committee (see “Regulatory Considerations” on page 31).
NEO Name
|
FY 2017
|
FY 2018
|
% Change
| FY 2019 | FY 2020 | % Change | ||||||||||||||||||
D. N. Farr
|
$
|
2,500,000
|
|
$
|
2,700,000
|
|
|
8.0
|
%
| $ | 2,400,000 |
| $ | 2,050,000 |
|
| (14.6 | )% | ||||||
E. L. Monser
|
$
|
1,150,000
|
|
$
|
1,250,000
|
|
|
8.7
|
%
| |||||||||||||||
F. J. Dellaquila
|
$
|
1,150,000
|
|
$
|
1,300,000
|
|
|
13.0
|
%
| $ | 1,175,000 |
| $ | 1,050,000 |
|
| (10.6 | )% | ||||||
M. H. Train
|
|
|
(1)
|
$
|
750,000
|
|
|
|
(1)
| $ | 785,000 |
| $ | 705,000 |
|
| (10.2 | )% | ||||||
S. J. Pelch
|
$
|
500,000
|
|
$
|
700,000
|
|
|
40.0
|
%(2)
| $ | 785,000 |
| $ | 705,000 |
|
| (10.2 | )% | ||||||
R. T. Sharp
|
|
|
(3)
|
$
|
750,000
|
|
|
|
(3)
| |||||||||||||||
S. L. Karsanbhai | $ | 675,000 |
| $ | 605,000 |
|
| (10.4 | )% | |||||||||||||||
R. T. Sharp(1) | $ | 725,000 |
| $ | 650,000 |
|
| (10.3 | )% | |||||||||||||||
| (1) | Mr. |
As shown above, for fiscal 2020, cash bonus comprised only 14% of our CEO’s and an average of 18% for our other NEOs’ annual total compensation.
|
|
Annual Long-Term Stock Compensation
As indicated above, theThe Committee targets total annual compensation for our NEOs in the median market range of our compensation comparator group, placing more emphasis onwith performance-based equitystock compensation being the largest component of our NEOs annual total compensation. We value our long-term stock compensation awards based on the fair value at grant; however, an executive may realize more or less than his or her targeted long-term compensation depending on Company and stock performance over the performance or restriction period.
Performance shares awards are the primary long-term compensation element and the cornerstone of ourpay-for-performance philosophy. We believe that performance shares align the interests of our executives and shareholders and support the achievement of long-term goals of sustained growth in EPS and free cash flow. Restricted stock and stock options are also available for award under our long-term stock-based compensation program. Awards of restricted stock are highly selective and reserved for critical retention, recognition or succession planning purposes. Stock options have not been granted to NEOs since 2015. Annual grants, as opposed to grants every three years, provide the Committee with the flexibility to increase or decrease the amount of an award based on individual performance and target the median market range for total annual compensation.
Performance Shares.Beginning in fiscal 2016,Performance shares awards are the primary long-term compensation element and the cornerstone of our pay-for-performance philosophy. The Committee moved to annual performance shares awards. Annual grants provide the Committee with more flexibility tomay increase or decrease the amount of an award based on individual performance and targettargets the median market range for total annual compensation. We believe that performance shares align the interests of our executives and shareholders and support the achievement of long-term strategic operating goals such as premium, sustained growth in earnings and cash flow. Given our global reach, our G7 GDP performance benchmark also reflects the importance of measuring our growth against the growth of the global economy.
Each annual performance shares programPerformance Shares Program has a three-year performance period with defined operating performance targets set by the Committee at the beginning of the period.period from the various measures set forth in the Company’s Incentive Shares Plans. An award of performance shares under the program represents the right to receive shares of our common stock to the extent the identified performance objectives are met. Dividend equivalents may be paid, but only on earned awards at the end of the performance period. At the end of a performance period, the Committee reviews the Company’s financial results against the performance targets and certifies the level of achievement for payout of the awards. Payouts are made primarily in common stock, with a portion paid in cash to cover tax obligations. Awards include confidentiality,non-competition andnon-solicitation obligations and expanded clawback rights and are subject to a double-trigger change of control provision.
TheAt the end of a performance period, the Committee has authority to determine the targets for each three-year performance shares program from the various measures set forth inreviews the Company’s Incentive Shares Plans.financial results against the operating performance targets and certifies the level of achievement for payout of the awards. The measures specified in the 2015 Incentive Shares Plan are: sales, profit, operating profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization,pre-tax earnings, earnings, net earnings, any related margins, earnings per share, asset management, cash flow, operating cash flow, free cash flow, days sales outstanding, days payables outstanding, inventory turnover, return on total capital, return on equity, total shareholder return, share price, acquisition and divestiture performance, development and achievement of strategic business objectives, customer satisfaction, new product introductions and performance, cost reductions, manufacturing efficiency, delivery lead time performance, research and development achievements, market share, working capital and geographic expansion. Pursuant to these plans, the Committee may include or exclude from both targets and actual results specified items of an unusual,non-recurring or extraordinary nature.nature as allowed by the plans. Pursuant to our Incentive Shares Plans, the Committee also has the discretion to adjust a payout percentage where results and/or business climate warrant.
At Emerson, we pride ourselves on our disciplined management processes that drive strong results to maximize shareholder value. While we continue to meet the challenges presented by the global economic and geopolitical climate and measure ourselves against the growth of the global economy, we also believe that it is important to measure value creation for our shareholders in relation to the performance of a similarly-correlated industry group. Beginning with our Fiscal 2021 – 2023 Performance Shares Program, therefore, we are adding a relative total shareholder return modifier metric to our Performance Shares Program to measure our total shareholder return performance relative to the S&P 500 Capital Goods Index group of companies (the “CGI Group”). We will continue to determine payout percentage by reviewing our financial performance against our operating metrics, with the calculated payout against those metrics continuing to be capped at 125% of target. We will then measure our three-year total shareholder return relative to the CGI Group performance for the same period. If our total shareholder return is at or above the 80th percentile of the CGI Group, the payout percentage from operating results will be increased by 20 percentage points. If our total shareholder return is at or below the 20th percentile of the CGI Group, the payout percentage will be decreased by 20 percentage points. No adjustment will be made for relative performance between the 20th and 80th percentile of the CGI Group.
EXECUTIVE COMPENSATION
The underlying performance metrics forEarly in fiscal 2020, we also engaged our Fiscal 2018–2020independent compensation consultants to benchmark our Performance Shares Program didagainst market practices for performance-based compensation at other manufacturing companies and our compensation comparator group. Results showed our program to be consistent with or superior to market in most all criteria. Our independent consultant noted for the Committee that our Program does not changecontain a threshold level achievement of performance targets prior to payout, whereas most other programs reviewed contain a performance threshold prior to payout. Our independent consultant cautioned, however, that our maximum payout of 125% of target was significantly lower than other programs reviewed; therefore, if a threshold were to be considered, the Committee should also increase the maximum payout opportunity. The consultant also noted the potential wide swings in payouts from year-to-year that may occur with a threshold and higher maximum payout design. The Committee determined that a higher payout opportunity and wide payout swings was not in the prior year programspirit of our compensation philosophy and are as follows:no threshold was added for the Fiscal 2021 – 2023 Performance Shares Program. No changes for fiscal 2021 were recommended by the Committee’s independent consultant.
Fiscal 2020 – 2022 Performance Metrics
(Period from October 1, 2019 – September 30, 2022)
What do we consider when we make performance shares awards? | ||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
In making an individual annual award, the Committee considers the NEO’s: (1) ability to make a significant contribution to the Company’s financial results, (2) level of responsibility, (3) individual performance and (4) leadership potential. The annual performance shares award generally represents more than half of the NEO’s total compensation, depending on the NEO’s role and responsibilities.
In fiscal 2020,100% of our NEOs annual long-term incentive awards were performance-based awards.
Why these performance metrics?
Each year, the Compensation Committee works with executive management and its independent executive compensation consultant to review and establish financial and operational performance metrics that are consistent with our long-term strategic objectives and in line with market practices. The Committee sets targets for the three-year performance period that will challenge our business leaders to drive operating results that generate shareholder returns. At the end of the performance period, our NEOs earned awards are based on the level of achievement against these targets.
For the Fiscal 2020 – 2022 Performance Shares Program, the Committee determined that earnings per share and free cash flow (operating cash flow less capital expenditures) were again the metrics most appropriate to drive premium growth.
Earnings per share (EPS)
EPS provides a holistic measure of the Company’s ability to create value for our shareholders. It emphasizes our operational performance measured through earnings growth, demonstrates the effectiveness of our capital allocation strategy through share repurchases and reflects tax efficient strategies.
Free cash flow (FCF)
Cash generation is a true indicator of our earnings, asset management and investment performance. Operating earnings are the largest contributor to free cash flow and are the result of leverage on incremental sales, specific cost reduction and productivity initiatives and price increases to offset inflation. Improvements in inventory management, days sales outstanding and days payable contribute to working capital reductions which also contribute to free cash flow. Investments in organic growth and acquisitions add to free cash flow. The return on these investments generate returns for our shareholders.
| 30 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
EXECUTIVE COMPENSATION
The Committee will continue to examine our performance metrics through the changing business environment in future award years to ensure continued focus on delivering shareholder value.
How do we benchmark our performance?
The Committee also sets an appropriate benchmark each year that reflects the global reach and focus of our Company. We believe that measuring our financial and operating results against a global benchmark is appropriate in our position as a global leader in the industries we serve.
G7 gross domestic product (G7 GDP)
For the Fiscal 2020 – 2022 Performance Shares Program, the Committee again determined that nominal G7 GDP was the appropriate benchmark and set the target growth rate as 3 percentage points above G7 GDP.
Beginning with the Fiscal 2021 – 2023 Performance Shares Program, the Committee has also added a relative total shareholder return modifier metric to measure our shareholder return performance against the CGI Group of companies, as discussed above.
How do we calculate results against our performance metrics?
At the end of the Fiscal 2020 – 2022 Performance Period, the Committee will review our financial results against the performance targets set at the beginning of the performance period. The Committee will consider whether there are any adjustments that should be made to account for unusual, non-recurring or extraordinary items. The Committee will then certify the level of achievement against the targets for payout of the awards.
Determination of EPS Performance
Fiscal 2022 EPS will be calculated as a percentage of the EPS Target. The EPS target is 2019 EPS multiplied by the compound average annual growth rate in G7 GDP from 2020 – 2022, plus three percentage points, to drive premium earnings growth.
Free cash flow
Cumulative free cash flow from fiscal 2020 – 2022 is calculated as a percentage of the free cash flow target. The free cash flow target is the sum of the yearly free cash flow targets from 2020 – 2022. Each yearly free cash flow target is the prior year target amount, beginning with adjusted fiscal 2019 free cash flow, multiplied by that year’s annual growth rate in G7 GDP, plus three percentage points, to drive premium cash flow growth.
Maximum Payout
Each performance metric is capped at 125% achievement, for a maximum aggregate payout for these awards of 125%.
For the Fiscal 2021 – 2023 Performance Shares Program, the Committee will also review our total shareholder return for the three-year period relative to the CGI Group. If our total shareholder return is above the 80th percentile or below the 20th percentile of the CGI Group, the payout percentage will be adjusted as discussed above. Pursuant to our Incentive Shares Plans, the Committee also has the discretion to adjust a payout percentage where results and/or business climate warrant.
Fiscal 2020 – 2022 Performance Shares Program Awards. In fiscal 2020, 100% of our NEOs’ annual long-term stock compensation was comprised of performance shares awards. The following individual performance shares awards were made to the NEOs:
NEO Name |
FY 2020 – 2022 Performance Shares Awarded ($ Value)(1)
|
FY 2020 – 2022 Performance Shares Awarded (# Shares)
| ||||||
D. N. Farr | $ | 11,499,941 |
|
| 157,609 | |||
F. J. Dellaquila | $ | 2,999,956 |
|
| 41,115 | |||
M. H. Train | $ | 2,999,956 |
|
| 41,115 | |||
S. J. Pelch | $ | 2,999,956 |
|
| 41,115 | |||
S. L. Karsanbhai | $ | 2,500,000 |
|
| 34,263 | |||
R. T. Sharp(2) | $ | 2,500,000 |
|
| 34,263 | |||
| (1) | Value at $72.965 per share, the average high and low stock price of on date of grant, November 5, 2019 |
| (2) | Mr. Sharp stepped down from his position as Executive President Emerson Commercial & Residential August 12, 2020 and resigned from the Company effective September 30, 2020. For a description of the effect of his departure on his equity awards, see “Description of R. T. Sharp Letter Agreement” on page 46. |
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 31 |
EXECUTIVE COMPENSATION
For fiscal 2020, performance shares represented 77% of our CEO’s annual total compensation and an average of 67.5% for our other NEOs.
Fiscal 2018 – 2020 Performance Shares Program. The performance period for the Fiscal 2018 – 2020 Performance Shares Program the following individual awards were made to the NEOs: D. N. Farr, 173,000 shares; E. L. Monser, 42,000 shares; F. J. Dellaquila, 42,000 shares; M. H. Train, 35,000 shares; S. J. Pelch, 42,000 shares; R. T. Sharp, 35,000 shares. Mr. Monser retired on October 1, 2018. For a discussion of the effect of his retirement on his performance shares and other stock awards, please see “Description of E. L. Monser Letter Agreement” on page 43.
The performance period for the Fiscal 2016 – 2018 Performance Shares Program ended on September 30, 2018. Targets were based on the 2015 base year with the EPS and Free Cash Flow performance determinations2020. The targets and weightings were calculated in the same manner as described above but with the maximum payout at 125% for EPS and 100% for cumulative free cash flow, resulting in a maximum payout of 115%.above. The Committee determined that the target earnings per share was $3.37$2.96 and the target cumulative free cash flow was $6.44$7.543 billion. The Company’sIn determining the results for the performance results were appropriately adjustedperiod, the Committee determined that it was appropriate to reflect the Company’s portfolio repositioning activitiesadjust for certain discrete items, including previously approved adjustments primarily related to acquisition and the impact ofdivestiture activity as well as other restructuring fees and tax reform. items.
The Committee determined that the fiscal 20182020 EPS, after adjustmentsa downward adjustment of $0.25$0.18 (from $3.24), was $3.21,$3.06, and cumulative free cash flow over the performance period, after downward adjustment of $97 million (from $7.232 billion), was $6.58 billion from $6.54 billion after adjustments of $0.04 billion discussed above. This performance resulted in a 97% payout of the awarded performance shares.$7.135 billion. The impact from the adjustments resulted in a reduced payment under the formula.
This performance resulted in a 100% payout of the awarded performance shares. This is only the second time in the last decade that the Company has had a performance shares program payout at 100% or more, which correlates to the difficulty of achieving the targets set. The payouts are reflected in the Option Exercises and Stock Vested table on page 38.41.
Restricted Stock. Restricted stock is also available for award under our long-term stock-based compensation program. In limited circumstances, such as special retention, recognition and succession planning needs, the Committee may make a separate award of restricted stock. Awards of restricted stock are highly selectiveselective. Restricted stock awards are not considered as a portion of an NEOs annual total compensation and may, therefore, result in compensation above the median range.range in the year of award. The Committee views this program as an important management succession planning and retention tool. The objective is to lock in top executives and their potential replacements identified through the succession planning process. Restricted stock provides participants with dividends and voting rights beginning on the award date. There is no set frequency of restricted stock awards, and they are granted with long-term cliff vesting periods of up to 10 years and no less than 3 years.
In fiscal 2018, the Committee granted shares of restricted stock as follows: F. J. Dellaquila, 10,000 shares; M. H. Train, 20,000 shares; S. J. Pelch, 10,000 shares; R. T. Sharp, 20,000 shares.
EXECUTIVE COMPENSATION
Stock Options. Our 2011 Stock option awards are still available for granting underOption Plan expired on November 2, 2020. Although our long-term incentive plans; however,NEOs have stock options outstanding, no stock option awards have been made to any of the NEOs since 2015. When utilized,2016. All stock option awards areoptions previously awarded were issued at no less than fair market value on the date of the award and generally vestwith vesting over a period of three years.years with a ten-year term. We do not pay dividend equivalents on stock options and do not “reprice” awards.
Policies Supporting Our Fundamental Principles
To support ourpay-for-performance philosophy and underlying fundamental principles of our compensation programs, we have implemented certain policies regarding NEO ownership of and actions in connection with stock and other incentive compensation. In
| 32 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
EXECUTIVE COMPENSATION
addition to our compensation programs, we believe that appropriate stock ownership guidelines and our stock trading, clawback and pledging and anti-hedging policies further align the interests of our executives with shareholders by encouraging long-term superior performance without encouraging excessive or unnecessary risk taking.
Fundamental Policies
| ||
Stock ownership |
Requires NEOs to hold Emerson stock equal to at least a specified multiple of base salary. NEOs generally have 5 years to comply. Emerson NEOs substantially exceed the guidelines.
| |||||||||||
Position
|
Req. Multiple(1)
|
Actual(2)
| ||||||||||
| CEO | 5X | |||||||||||
| CFO | 3X | |||||||||||
Other NEOs
| 1X
|
| ||||||||||
Stock trading |
Requires written permission from CEO and from CFO or General Counsel before trading in Emerson stock. | |||||||||||
Clawback |
Provides that our Board may reduce, cancel or require recovery of all or a portion of any executive officer’s annual bonus or long-term incentive compensation if the Board determines that the executive officer has engaged in intentional misconduct leading to a material restatement of the Company’s financial statements. Our 2015 Incentive Shares Plan includes additional clawback provisions. Beginning in fiscal 2019, the Company
| |||||||||||
Hedging |
Our hedging policy prohibits
| |||||||||||
Pledging |
Prohibits pledging of Company shares as collateral for a loan by Directors or elected officers.
| |||||||||||
| (1) | Includes share equivalents and shares in retirement accounts and restricted stock. |
| (2) | Actual multiple based on beneficial ownership, excluding options (see page |
Severance, Executive Termination and Retirement
Emerson does not have employment agreements, severance agreements or golden parachute agreements with the NEOs. The terms of all executive terminations and retirements are determined by the Committee individually based on specific facts and circumstances and not on formulaic rules. We follow these general principles:
We do not pay lump sum,non-forfeitable cash severance payments.
As permitted under shareholder-approved plans, departing plan participants, including NEOs, may have additional time to exercise stock options, up to the time permitted in the original grants.
The Committee may allow continuation (without accelerated vesting) of previously granted performance shares or restricted stock awards, which would be paid if and when the Company achieves specified performance targets or time vesting requirements are met.
Departing executives sign extendednon-competition,non-solicitation and confidentiality agreements, and/or reaffirm existing agreements on these matters. Executives forfeit awards if they breach theirnon-competition,non-solicitation or confidentiality agreements.
The Committee has adopted an Executive Officer Severance Policy which provides that the Company shall not implement individual severance or change of control agreements providing certain benefits (as described in the Policy) to any NEO in excess of 2.99 times the sum of the NEO’s then current base salary and most recent cash bonus without shareholder ratification. The policy is located at www.Emerson.com, Investors, Corporate Governance, Executive Officer Severance Policy. E. L. Monser,R. T. Sharp, our former Executive President retiredCommercial & Residential Solutions, left the Company effective October 1, 2018.September 30, 2020. We entered into a letter agreement with Mr. MonserSharp which, among other things, reaffirmed and extended his restrictive covenants. Please see “Description of E. L. MonserR. T. Sharp Letter Agreement” at page 4346 below for a description of his retirement arrangements.
EXECUTIVE COMPENSATION
separation arrangement.
Change of Control
If a change of control occurs, we protect all employees who participate in long-term stock plans, the Savings Investment Restoration PlanPlans and the Pension Restoration Plan as described under “Potential Payments Upon Termination or Change of Control” at page 4044 below. Our 2011 Stock Option Plan and 2015 Incentive Shares Plan include a “double trigger” for vesting following a change of control, although stock awards under our prior stock option and incentive shares plansplan vest upon a change of control. When triggered, we would expect to
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 33 |
EXECUTIVE COMPENSATION
accelerate vesting of stock awards and pay accrued benefits under the Savings Investment Restoration PlanPlans and the Pension Restoration Plan. We do not credit additional years of service under any plans or continue medical or other benefits. We do not make additional cash payments related to stock compensation plans. We do not increase payouts to cover payment of taxes and do not provide taxgross-ups.
Security and Perquisites
Due to increased security risks inherent in senior executive positions, we provide NEOs with residential security monitoring and personal security as needed. The Company’s security policy and the Board of Directors require that the Chairman and CEO use Company aircraft for all travel to promote business efficiency and safety.safety given our global footprint. The Company provides limited personal use of Company aircraft to the other NEOs. All NEOs reimburse the Company at first class rates for personal use.use, calculated at the maximum rate prescribed under U.S. Treasury regulations. The Company also provides NEOs with cars, club memberships, financial planning and an annual physical. These are long-standingWe believe these perquisites that assist in retaining and attracting executives and that we believe are similar to those often provided at othersimilarly-sized companies. NEOs and other employees may receive Company tickets for sporting or other events. The Committee reviews these perquisites annually. Total perquisite costs and related information appear in the Summary Compensation Table on page 33.36. The Company does not provide any reimbursement for taxes on perquisites.perquisites, except as may be prescribed in our relocation policies applicable to all employees.
Other Benefits
The NEOs are eligible for Company-provided benefits that are generally available to all other employees, including a qualified 401(k) savings plan,plans, a qualified defined-benefit pension plan, medical, life and disability insurance and a charitable matching gifts program, among others. The defined-benefit pension is being phased out, but a majority of U.S. employees, including the NEOs, continue to participate. The following additional benefits are also available to the NEOs:
Nonqualified savings plans which allow the NEOs to defer up to 20 percent of cash compensation and continue to receive the Company match after reaching the Internal Revenue Service (IRS) qualified plan limits.
A nonqualified defined-benefit pension plan, which provides benefits based on the qualified plan without regard to IRS limits but does not provide additional credited years of service. Participation is by award and based on the executive’s individual contributions and long-term service to the Company.
Term life insurance coverage.
Regulatory Considerations
IRCInternal Revenue Code Section 162(m) imposes a $1 million limit on the Company’s deductions for compensation paid to specified executive officers (“Covered Employees”). For taxable years beginning before January 1, 2018, the Covered Employees consisted of a corporation’s chief executive officer and up to three other highly compensated executive officers (other than the chief financial officer), and qualifying “performance-based compensation” was not subject to this limitation if specified requirements were met (i.e., compensation paid only if performance meetspre-established objective goals based on performance criteria approved by shareholders).
Pursuant to the Tax Cuts and Jobs Act of 2017, for taxable years beginning after December 31, 2017, (i) the remuneration of a public corporation’s chief financial officer is now also subject to the deduction limit, (ii) once an individual is considered a Covered Employee with respect to a taxable year, he or she will be considered a Covered Employee for all future years, including after termination of employment or death, and (iii) the exemption from the deduction limit for “performance-based compensation” is no longer available. These changes do not apply to remuneration provided under a binding written contract in effect on November 2, 2017, which is not materially modified after that date. Consequently, for fiscal years beginning after December 31, 2017, no remuneration in excess of $1 million paid to a Covered Employee will be deductible unless such compensation is granted pursuant to a written binding contract that was in effect prior to November 2, 2017.
The Company’s incentiveWhile the Committee considers the impact of the tax treatment of executive compensation, plans are generally designed to ensure tax deductibility under Section 162(m). However, time-based restricted stock awards do not qualify under Section 162(m),the primary factor influencing program design is the support of business objectives, and the Committee retains the flexibility to design and administer compensation programs that are in the best interests of Emerson and its shareholders.
NEO cash bonuses are discretionary, subject to maximum amounts based on the Section 162(m) performance objectives selected by the Committee annually from among the objectives identified in the annual incentive plan. The objectives are not communicated to
EXECUTIVE COMPENSATION
participants as targets. The 2018 performance objective was earnings per share. Based on fiscal 2018 performance, the maximum amount of bonus that could be paid to each covered NEO was as follows: D. N. Farr, $9.36 million; E. L. Monser, $4.68 million; F. J. Dellaquila, $3.51 million; M. H. Train, $3.51 million; S. J. Pelch, $3.51 million; and R. T. Sharp $3.51 million. The Committee may exercise “negative discretion”does not communicate annual bonus targets to reduce the award below these amounts based on an assessment of performance.NEOs. Our compensation plans also comply with IRC Section 409A for nonqualified deferred compensation arrangements.
In accordance with FASB ASC Topic 718, for financial statement purposes we expense all equity-based awards over the period earned, or subsequently, based upon their estimated grant date fair value, depending on the terms of the award. FASB ASC Topic 718 has not resulted in any significant changes in our compensation program design.
| 34 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
EXECUTIVE COMPENSATION
Equity Compensation Grant Practices
The Committee approves all grants of equity compensation to executive officers, as defined in Section 16 of the Exchange Act. All elements of executive officer compensation are reviewed by the Committee annually at its October or November meetings. Generally, equity awards are made at those meetings, but may be made at other meetings. The Committee meeting date, or the next business day if the meeting is on anon-business day, is the grant date for equity awards. The Committee has delegated to the CEO authority to grant stock options (1) to employees other than corporate officers and business unit Presidents, subject to the Committee’s prior approval of the aggregate number awarded, and (2) in connection with retention, promotion and acquisitions, which he uses on an infrequent basis. This delegation of authority does not extend to executive officers or other officers who are subject to the Company’s trading blackout policy.
Summary Compensation Table Analysis
Mr. Farr’s total annual compensation for 2018 increased2020 decreased compared to 2017 primarily as result of an2019, resulting from a 15% salary reduction from April through September 2020 and a decreased bonus amount, offset by a slight increase in performance shares awards and an increased bonus dueawarded in November 2019 prior to the Company’s outstanding financial performanceCOVID-19 pandemic and resulting cost-containment actions and other factors discussed above. Mr. Farr’s total compensation as shown in the Summary Compensation Table also includes an amount for the actuarial change in his pension value. ThisAlthough the fiscal 2020 amount was lower than fiscal 2019, these amounts were significantly higher in 2016 compared to 2017 and 2018than prior years as a result of a lower applicable discount rate in 2016,which increased actuarial present values, over which the Committee has no control.
The other NEOs also received a 15% base salary reduction from April through September 2020 and decreased bonus amounts as a result of the COVID-19 pandemic. The increased performance shares awards for fiscal 2020 were made in November 2019, prior to the downturn caused by the COVID-19 pandemic.
No changes were made in the method of calculating any NEO benefits.
Total compensation in the table for the other NEOs for 2018 was comparable to 2017. Mr. Pelch’s total compensation was increased due to his promotion effective December 31, 2017. Total compensation for certain NEOs was also impacted by changes in the discount rate used to calculate pension benefits.
The following information relates to compensation received or earned by our Chief Executive Officer, our Chief Financial Officer, and each of our next three most highly compensated executive officers for the last fiscal year, as well as our former Executive President Commercial and Residential Solutions who retired on October 1, 2018left the Company at the end of fiscal 2020 (the “named executive officers” or “NEOs”).
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($)(1) | Stock ($)(2) | Option Awards ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
D. N. Farr
Chairman of the Board and
Chief Executive Officer(6)
|
|
2018 |
|
|
1,350,000 |
|
|
2,700,000 |
|
|
10,990,690 |
|
|
— |
|
|
— |
|
|
568,837 |
|
|
15,609,527 |
| ||||||||
|
2017 |
|
|
1,300,000 |
|
|
2,500,000 |
|
|
7,736,250 |
|
|
— |
|
|
526,000 |
|
|
486,278 |
|
|
12,548,528 |
| |||||||||
|
2016
|
|
|
1,300,000
|
|
|
1,700,000
|
|
|
7,368,000
|
|
|
—
|
|
|
4,258,000
|
|
|
511,533
|
|
|
15,137,533
|
| |||||||||
E. L. Monser
Former President(7) |
|
2018 |
|
|
775,000 |
|
|
1,250,000 |
|
|
2,668,260 |
|
|
— |
|
|
165,000 |
|
|
139,790 |
|
|
4,998,050 |
| ||||||||
|
2017 |
|
|
750,000 |
|
|
1,150,000 |
|
|
3,094,500 |
|
|
— |
|
|
162,000 |
|
|
124,171 |
|
|
5,280,671 |
| |||||||||
|
2016
|
|
|
740,000
|
|
|
950,000
|
|
|
2,456,000
|
|
|
—
|
|
|
815,000
|
|
|
133,436
|
|
|
5,094,436
|
| |||||||||
F. J. Dellaquila
Senior Executive Vice President and
Chief Financial Officer
|
|
2018 |
|
|
715,000 |
|
|
1,300,000 |
|
|
3,340,560 |
|
|
— |
|
|
490,000 |
|
|
127,463 |
|
|
5,973,023 |
| ||||||||
|
2017 |
|
|
690,000 |
|
|
1,150,000 |
|
|
3,610,250 |
|
|
— |
|
|
538,000 |
|
|
108,370 |
|
|
6,096,620 |
| |||||||||
|
2016 |
|
|
660,000 |
|
|
950,000 |
|
|
2,456,000 |
|
|
— |
|
|
1,785,000 |
|
|
115,775 |
|
|
5,966,775 |
| |||||||||
M. H. Train President(8)
|
|
2018 |
|
|
570,000 |
|
|
750,000 |
|
|
3,568,150 |
|
|
— |
|
|
— |
|
|
81,448 |
|
|
4,969,598 |
| ||||||||
S. J. Pelch
Chief Operating Officer and Executive Vice
|
|
2018 |
|
|
550,000 |
|
|
700,000 |
|
|
3,340,560 |
|
|
— |
|
|
— |
|
|
80,130 |
|
|
4,670,690 |
| ||||||||
|
2017 |
|
|
460,000 |
|
|
500,000 |
|
|
3,094,500 |
|
|
— |
|
|
35,000 |
|
|
65,369 |
|
|
4,154,869 |
| |||||||||
|
2016
|
|
|
435,000
|
|
|
350,000
|
|
|
3,192,800
|
|
|
—
|
|
|
228,000
|
|
|
126,401
|
(10)
|
|
4,332,201
|
| |||||||||
R. T. Sharp
Executive President
Commercial and Residential Solutions
|
|
2018
|
|
|
560,000
|
|
|
750,000
|
|
|
3,568,150
|
|
|
—
|
|
|
—
|
|
|
95,135
|
|
|
4,973,285
|
| ||||||||
Name and Principal Position
| Fiscal
| Salary
| Bonus
| Stock ($)(2)
| Option Awards ($)
|
Change in
| All Other
| Total
| ||||||||||||||||||||||||
D. N. Farr
Chairman of the Board and
Chief Executive Officer(5) |
| 2020 |
|
| 1,303,750 |
|
| 2,050,000 |
|
| 11,499,941 |
|
| — |
|
| 1,164,000 |
|
| 465,394 |
|
| 16,483,085 |
| ||||||||
| 2019 |
|
| 1,400,000 |
|
| 2,400,000 |
|
| 11,357,291 |
|
| — |
|
| 4,597,000 |
|
| 547,285 |
|
| 20,301,576 |
| |||||||||
| 2018 |
|
| 1,350,000 |
|
| 2,700,000 |
|
| 10,990,690 |
|
| — |
|
| — |
|
| 568,837 |
|
| 15,609,527 |
| |||||||||
F. J. Dellaquila
Senior Executive Vice President and
Chief Financial Officer |
| 2020 |
|
| 709,613 |
|
| 1,050,000 |
|
| 2,999,956 |
|
| — |
|
| 1,776,000 |
|
| 119,711 |
|
| 6,655,280 |
| ||||||||
| 2019 |
|
| 740,000 |
|
| 1,175,000 |
|
| 2,677,238 |
|
| — |
|
| 2,423,000 |
|
| 124,208 |
|
| 7,139,446 |
| |||||||||
| 2018 |
|
| 715,000 |
|
| 1,300,000 |
|
| 3,340,560 |
|
| — |
|
| 490,000 |
|
| 127,463 |
|
| 5,973,023 |
| |||||||||
M. H. Train
President(6) |
| 2020 |
|
| 628,594 |
|
| 705,000 |
|
| 2,999,956 |
|
| — |
|
| 85,000 |
|
| 139,759 |
|
| 4,558,309 |
| ||||||||
| 2019 |
|
| 650,000 |
|
| 785,000 |
|
| 2,677,238 |
|
| — |
|
| 146,000 |
|
| 143,028 |
|
| 4,401,266 |
| |||||||||
| 2018 |
|
| 570,000 |
|
| 750,000 |
|
| 3,568,150 |
|
| — |
|
| — |
|
| 81,448 |
|
| 4,969,598 |
| |||||||||
S. J. Pelch
Executive Vice President and
Chief Operating Officer(7) |
| 2020 |
|
| 582,031 |
|
| 705,000 |
|
| 2,999,956 |
|
| — |
|
| 199,000 |
|
| 79,446 |
|
| 4,565,433 |
| ||||||||
| 2019 |
|
| 600,000 |
|
| 785,000 |
|
| 2,677,238 |
|
| — |
|
| 295,000 |
|
| 96,117 |
|
| 4,453,355 |
| |||||||||
| 2018 |
|
| 550,000 |
|
| 700,000 |
|
| 3,340,560 |
|
| — |
|
| — |
|
| 80,130 |
|
| 4,670,690 |
| |||||||||
S. L. Karsanbhai
Executive President
Automation Solutions(8) |
| 2020 |
|
| 512,188 |
|
| 605,000 |
|
| 2,500,000 |
|
| — |
|
| 95,000 |
|
| 101,737 |
|
| 3,813,925 |
| ||||||||
| 2019 |
|
| 525,000 |
|
| 675,000 |
|
| 3,005,415 |
|
| — |
|
| 163,000 |
|
| 217,038 |
|
| 4,585,453 |
| |||||||||
|
|
| ||||||||||||||||||||||||||||||
R. T. Sharp
Former Executive President
Commercial and Residential Solutions(9) |
| 2020 |
|
| 577,375 |
|
| 650,000 |
|
| 2,500,000 |
|
| — |
|
| 125,000 |
|
| 82,817 |
|
| 3,935,192 |
| ||||||||
| 2019 |
|
| 600,000 |
|
| 725,000 |
|
| 2,314,515 |
|
| — |
|
| 173,000 |
|
| 145,720 |
|
| 3,958,235 |
| |||||||||
| 2018 |
|
| 560,000 |
|
| 750,000 |
|
| 3,568,150 |
|
| — |
|
| — |
|
| 95,135 |
|
| 4,973,285 |
| |||||||||
| (1) | Represent cash bonus amounts paid after the end of the fiscal year with respect to that fiscal year’s performance. |
| (2) | The amounts relate to performance shares awards to all NEOs for each year, restricted stock in 2019 for Mr. Karsanbhai, and restricted stock in 2018 for Messrs. Dellaquila, Train, Pelch and |
| (3) |
|
For each year, includes the aggregate change in the actuarial present value of the NEOs’ accumulated benefits under the Company’s defined benefit pension plans. For fiscal |
COMPENSATION TABLES
| 36 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
COMPENSATION TABLES
| (4) | Includes the following amounts for |
Name | Perquisites(a) | Savings Plan(b) | Life Insurance(c) | Total(d) | Perquisites(a)
| Savings Plan(b)
| Life Insurance(c)
| Total(d)
| ||||||||||||||||||||||||||||
D. N. Farr
|
|
$449,050
|
|
|
$97,198
|
|
|
$22,589
|
|
$
|
568,837
|
|
| $345,956 |
|
| $92,812 |
|
| $26,626 |
|
| $465,394 |
| ||||||||||||
E. L. Monser
|
|
$ 53,307
|
|
|
$49,099
|
|
|
$37,384
|
|
$
|
139,790
|
| ||||||||||||||||||||||||
F. J. Dellaquila
|
|
$ 58,579
|
|
|
$47,599
|
|
|
$21,285
|
|
$
|
127,463
|
|
| $ 47,258 |
|
| $47,210 |
|
| $25,243 |
|
| $119,711 |
| ||||||||||||
M. H. Train
|
|
$ 30,072
|
|
|
$49,281
|
|
|
$ 2,095
|
|
$
|
81,448
|
|
| $ 49,184 |
|
| $88,480 |
|
| $ 2,095 |
|
| $139,759 |
| ||||||||||||
S. J. Pelch
|
|
$ 44,467
|
|
|
$27,156
|
|
|
$ 8,507
|
|
$
|
80,130
|
|
| $ 34,301 |
|
| $34,246 |
|
| $10,899 |
|
| $ 79,446 |
| ||||||||||||
S. L. Karsanbhai |
| $ 26,068 |
|
| $75,669 |
|
| $ — |
|
| $101,737 |
| ||||||||||||||||||||||||
R. T. Sharp
|
|
$ 57,535
|
|
|
$30,604
|
|
|
$ 6,996
|
|
$
|
95,135
|
|
| $ 43,664 |
|
| $32,635 |
|
| $ 6,518 |
|
| $ 82,817 |
| ||||||||||||
| (a) | The perquisites provided |
| (b) | Contributions by the Company for the NEOs to the Company’s retirement savings plans. |
| (c) | Premiums paid by the Company on behalf of the NEOs for term life insurance. |
| (d) | None of these amounts were grossed up for taxes. |
Mr. Farr does not receive any separate compensation for his service as a Director. |
|
Mr. Train became President on October 1, 2018. He previously served as Executive President Automation Solutions. |
Mr. Pelch became Chief Operating Officer on December 31, 2017. |
|
| (9) | Mr. Sharp stepped down as Executive President Commercial and Residential Solutions on August 12, 2020 and resigned from the Company on September 30, 2020. Please see “Description of R. T. Sharp Letter Agreement” at page 46 for a |
COMPENSATION TABLES
The following table provides information about equity awards granted to the NEOs in fiscal 2018.2020.
Name | Grant Date |
Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) |
All Other | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | Grant
|
Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)
|
All Other
| Exercise or Base Price of Option Awards ($/Sh)
| Grant Date Fair Value of Stock and Option Awards ($)(2)
| ||||||||||||||||||||||||||||||||||||||||||||
| Threshold (#) | Target (#)(1) | Maximum (#)(1) | Threshold (#)
| Target (#)(1)
| Maximum (#)(1)
| |||||||||||||||||||||||||||||||||||||||||||||||||||
D. N. Farr |
|
11/7/2017 |
|
|
N/A |
|
|
173,000 |
|
|
250,850 |
|
|
10,990,690 |
| 11/5/2019 | N/A | 157,609 | 197,011 | 11,499,941 | ||||||||||||||||||||||||||||||||||||
E. L. Monser(4) |
|
11/7/2017 |
|
|
N/A |
|
|
42,000 |
|
|
65,100 |
|
|
2,668,260 |
| |||||||||||||||||||||||||||||||||||||||||
F. J. Dellaquila |
|
11/7/2017 |
|
|
N/A |
|
|
42,000 |
|
|
65,100 |
|
|
2,668,260 |
| 11/5/2019 | N/A | 41,115 | 51,394 | 2,999,956 | ||||||||||||||||||||||||||||||||||||
|
4/30/2018 |
|
|
10,000 |
|
|
672,300 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
M. H. Train |
|
11/7/2017 |
|
|
N/A |
|
|
35,000 |
|
|
54,250 |
|
|
2,223,550 |
| 11/5/2019 | N/A | 41,115 | 51,394 | 2,999,956 | ||||||||||||||||||||||||||||||||||||
|
4/30/2018 |
|
|
20,000 |
|
|
1,344,600 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
S. J. Pelch |
|
11/7/2017 |
|
|
N/A |
|
|
42,000 |
|
|
65,100 |
|
|
2,668,260 |
| 11/5/2019 | N/A | 41,115 | 51,394 | 2,999,956 | ||||||||||||||||||||||||||||||||||||
|
4/30/2018 |
|
|
10,000 |
|
|
672,300 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
R. T. Sharp |
|
11/7/2017 |
|
|
N/A |
|
|
35,000 |
|
|
54,250 |
|
|
2,223,550 |
| |||||||||||||||||||||||||||||||||||||||||
|
4/30/2018 |
|
|
20,000 |
|
|
1,344,600 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
S. L. Karsanbhai | 11/5/2019 | N/A | 34,263 | 42,829 | 2,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
R. T. Sharp(3) | 11/5/2019 | N/A | 34,263 | 42,829 | 2,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Includes performance shares awards granted in November |
| (2) | Includes |
|
Mr. |
| PROXY STATEMENT |
COMPENSATION TABLES
Outstanding Equity Awards at FiscalYear-End
The following table provides holdings of stock options, performance shares and restricted stock by our NEOs at the end of fiscal 2018,2020, including unexercised stock options, unvested restricted stock and performance shares with performance conditions that had not yet been satisfied.
Option Awards
|
Stock Awards
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Date of
| Number of
| Number of
| Option
| Option Expiration Date
| Date of Award
| Number of
| Market Vested
| Equity
| Equity
| |||||||||||||||||||||||||||||||||||||||||||||||||
D. N. Farr |
|
10/4/10 |
|
|
250,000 |
|
|
53.31 |
|
|
10/4/2020 |
|
|
(2) |
|
|
200,000(2) |
|
|
15,316,000 |
| ||||||||||||||||||||||||||||||||||||||
| 10/1/13 | 200,000 | 65.07 | 10/1/2023 | 11/1/16 | 150,000(4) | 11,487,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11/7/17
|
|
| 173,000(5)
|
|
| 13,248,340
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
E. L. Monser(6) |
|
10/4/10 |
|
|
130,000 |
|
|
53.31 |
|
|
10/4/2020 |
|
|
(2) |
|
|
10,000(2) |
|
|
765,800 |
| ||||||||||||||||||||||||||||||||||||||
| 10/1/13 | 120,000 | 65.07 | 10/1/2023 | 11/1/16 | 50,000(4) | 3,829,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11/7/17
|
|
| 42,000(5)
|
|
| 3,216,360
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
F. J. Dellaquila |
|
10/4/10 |
|
|
45,563 |
|
|
53.31 |
|
|
10/4/2020 |
|
|
(2) |
|
|
70,000(2) |
|
|
5,360,600 |
| ||||||||||||||||||||||||||||||||||||||
| 10/1/13 | 100,000 | 65.07 | 10/1/2023 | 11/1/16 | 50,000(4) | 3,829,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11/7/17
|
|
| 42,000(5)
|
|
| 3,216,360
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
M. H. Train |
|
10/4/2010 |
|
|
18,000 |
|
|
53.31 |
|
|
10/4/2020 |
|
|
(2) |
|
|
50,000(2) |
|
|
3,829,000 |
| ||||||||||||||||||||||||||||||||||||||
| 10/1/2013 | 22,000 | 65.07 | 10/1/2023 | 11/1/16 | 40,000(4) | 3,063,200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11/3/2015
|
|
| 14,666
|
|
| 7,334
|
|
| 49.64
|
|
| 11/3/2025
|
|
| 11/7/17
|
|
| 35,000(5)
|
|
| 2,680,300
|
| ||||||||||||||||||||||||||||||||||||
S. J. Pelch |
|
10/4/10 |
|
|
5,379 |
|
|
53.31 |
|
|
10/4/2020 |
|
|
(2) |
|
|
45,000(2) |
|
|
3,446,100 |
| ||||||||||||||||||||||||||||||||||||||
| 10/1/13 | 15,000 | 65.07 | 10/1/2023 | 11/1/16 | 50,000(4) | 3,829,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11/7/17
|
|
| 42,000(5)
|
|
| 3,216,360
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
R.T. Sharp |
|
10/1/2013 |
|
|
15,000 |
|
|
65.07 |
|
|
10/1/2023 |
|
|
(2) |
|
|
55,000(2) |
|
|
4,211,900 |
| ||||||||||||||||||||||||||||||||||||||
| 2/2/2015 | 15,000 | 58.97 | 2/2/2025 | 11/1/16 | 40,000(4) | 3,063,200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11/7/17
|
|
| 35,000(5)
|
|
| 2,680,300
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||||||||||||||||
Name
| Date of
| Number of
| Number of
| Option
| Option Expiration Date
| Date of Award
| Number of
| Market Vested
| Equity
| Equity
| ||||||||||||||||||||||||||||||||||||||
D. N. Farr |
| 10/1/13 |
|
| 200,000 |
|
| 65.07 |
|
| 10/1/23 |
|
| 11/6/18 |
|
| 164,384(4) |
|
| 10,778,659 |
| |||||||||||||||||||||||||||
| 11/5/19 |
|
| 157,609(5) |
|
| 10,344,422 |
| ||||||||||||||||||||||||||||||||||||||||
F. J. Dellaquila |
| 10/1/13 |
|
| 100,000 |
|
| 65.07 |
|
| 10/1/23 |
|
| (2) |
|
| 40,000(2) |
|
| 2,622,800 |
| |||||||||||||||||||||||||||
| 11/6/18 |
|
| 38,750(4) |
|
| 2,540,838 |
| ||||||||||||||||||||||||||||||||||||||||
| 11/5/19 |
|
| 41,115(5) |
|
| 2,695,911 |
| ||||||||||||||||||||||||||||||||||||||||
M. H. Train |
| 10/1/13 |
|
| 22,000 |
|
| 65.07 |
|
| 10/1/23 |
|
| (2) |
|
| 40,000(2) |
|
| 2,622,800 |
| |||||||||||||||||||||||||||
| 11/3/15 |
|
| 22,000 |
|
| 49.64 |
|
| 11/3/25 |
|
| 11/6/18 |
|
| 38,750(4) |
|
| 2,540,838 |
| ||||||||||||||||||||||||||||
| 11/5/19 |
|
| 41,115(5) |
|
| 2,695,911 |
| ||||||||||||||||||||||||||||||||||||||||
S. J. Pelch |
| 10/1/13 |
|
| 15,000 |
|
| 65.07 |
|
| 10/1/23 |
|
| (2) |
|
| 45,000(2) |
|
| 2,950,650 |
| |||||||||||||||||||||||||||
| 11/6/18 |
|
| 38,750(4) |
|
| 2,540,838 |
| ||||||||||||||||||||||||||||||||||||||||
| 11/5/19 |
|
| 41,115(5) |
|
| 2,695,911 |
| ||||||||||||||||||||||||||||||||||||||||
S.L. Karsanbhai |
| 10/1/13 |
|
| 10,000 |
|
| 65.07 |
|
| 10/1/23 |
|
| (2) |
|
| 20,000(2) |
|
| 1,311,400 |
| |||||||||||||||||||||||||||
| 8/5/14 |
|
| 4,000 |
|
| 62.84 |
|
| 8/5/24 |
|
| 11/6/18 |
|
| 33,500(4) |
|
| 2,196,595 |
| ||||||||||||||||||||||||||||
| 2/1/16 |
|
| 15,000 |
|
| 45.50 |
|
| 2/1/26 |
|
| 11/5/19 |
|
| 34,263(5) |
|
| 2,246,625 |
| ||||||||||||||||||||||||||||
R. T. Sharp(6) |
| (2) |
|
| 45,000(2) |
|
| 2,950,650 |
| |||||||||||||||||||||||||||||||||||||||
| 11/6/18 |
|
| 33,500(4) |
|
| 2,196,595 |
| ||||||||||||||||||||||||||||||||||||||||
| 11/5/19 |
|
| 34,263(5) |
|
| 2,246,625 |
| ||||||||||||||||||||||||||||||||||||||||
| (1) | The options |
COMPENSATION TABLES
| (2) | Consists of restricted stock which vests as follows: |
Name
|
Number of Shares
|
Vesting Term (in years)
|
Grant Date
|
Vesting Date
|
Number of Shares
|
Vesting Term (in years)
| Grant Date
| Vesting Date
| ||||||||||||||||||||||||||||
D. N. Farr |
|
100,000
|
|
|
10
|
|
|
10/7/2008
|
|
|
10/7/2018
|
| ||||||||||||||||||||||||
|
| 100,000
|
|
| 5
|
|
| 11/4/2014
|
|
| 11/4/2019
|
| |||||||||||||||||||||||||
E. L. Monser |
|
10,000
|
|
|
3
|
|
|
11/1/2016
|
|
|
11/1/2019
|
| ||||||||||||||||||||||||
F. J. Dellaquila |
|
10,000
|
|
|
10
|
|
|
10/7/2008
|
|
|
10/7/2018
|
|
| 10,000 |
|
| 8 |
|
| 10/1/2013 |
|
| 10/1/2021 |
| ||||||||||||
|
| 20,000
|
|
| 10
|
|
| 10/5/2009
|
|
| 10/5/2019
|
|
| 20,000 |
|
| 5 |
|
| 11/1/2016 |
|
| 11/1/2021 |
| |||||||||||||
|
| 10,000
|
|
| 8
|
|
| 10/1/2013
|
|
| 10/1/2021
|
|
| 10,000 |
|
| 5 |
|
| 4/30/2018 |
|
| 4/30/2023 |
| |||||||||||||
|
| 20,000
|
|
| 5
|
|
| 11/1/2016
|
|
| 11/1/2021
|
| |||||||||||||||||||||||||
|
| 10,000
|
|
| 5
|
|
| 4/30/2018
|
|
| 4/30/2023
|
| |||||||||||||||||||||||||
M. H. Train |
|
10,000
|
|
|
10
|
|
|
10/7/2008
|
|
|
10/7/2018
|
|
| 10,000 |
|
| 10 |
|
| 10/1/2012 |
|
| 10/1/2022 |
| ||||||||||||
|
| 10,000
|
|
| 10
|
|
| 10/1/2012
|
|
| 10/1/2022
|
| |||||||||||||||||||||||||
|
| 10,000
|
|
| 10
|
|
| 10/7/2014
|
|
| 10/7/2024
|
|
| 10,000 |
|
| 10 |
|
| 10/7/2014 |
|
| 10/7/2024 |
| |||||||||||||
|
| 20,000
|
|
| 5
|
|
| 4/30/2018
|
|
| 4/30/2023
|
|
| 20,000 |
|
| 5 |
|
| 4/30/2018 |
|
| 4/30/2023 |
| |||||||||||||
S. J. Pelch |
|
10,000
|
|
|
10
|
|
|
10/1/2013
|
|
|
10/1/2023
|
|
| 10,000 |
|
| 10 |
|
| 10/1/2013 |
|
| 10/1/2023 |
| ||||||||||||
|
| 15,000
|
|
| 10
|
|
| 11/3/2015
|
|
| 11/3/2025
|
|
| 15,000 |
|
| 10 |
|
| 11/3/2015 |
|
| 11/3/2025 |
| |||||||||||||
|
| 10,000
|
|
| 5
|
|
| 11/1/2016
|
|
| 11/1/2021
|
|
| 10,000 |
|
| 5 |
|
| 11/1/2016 |
|
| 11/1/2021 |
| |||||||||||||
|
| 10,000
|
|
| 5
|
|
| 4/30/2018
|
|
| 4/30/2023
|
|
| 10,000 |
|
| 5 |
|
| 4/30/2018 |
|
| 4/30/2023 |
| |||||||||||||
R.T. Sharp |
|
10,000
|
|
|
10
|
|
|
10/7/2008
|
|
|
10/7/2018
|
| ||||||||||||||||||||||||
S. L. Karsanbhai |
| 10,000 |
|
| 10 |
|
| 2/1/2016 |
|
| 2/1/2026 |
| ||||||||||||||||||||||||
| 10,000 |
|
| 10 |
|
| 11/6/2018 |
|
| 11/6/2028 |
| |||||||||||||||||||||||||
R. T. Sharp |
| 10,000 |
|
| 10 |
|
| 10/1/2012 |
|
| 10/1/2022 |
| ||||||||||||||||||||||||
|
| 10,000
|
|
| 10
|
|
| 10/1/2012
|
|
| 10/1/2022
|
|
| 15,000 |
|
| 10 |
|
| 2/1/2016 |
|
| 2/1/2026 |
| |||||||||||||
|
| 15,000
|
|
| 10
|
|
| 2/1/2016
|
|
| 2/1/2026
|
|
| 20,000 |
|
| 5 |
|
| 4/30/2018 |
|
| 4/30/2023 |
| |||||||||||||
|
| 20,000
|
|
| 5
|
|
| 4/30/2018
|
|
| 4/30/2023
|
| |||||||||||||||||||||||||
| (3) | Based on the closing share price of |
| (4) | Consists of performance shares awards granted in fiscal |
| (5) | Consists of performance shares awards granted in fiscal |
| (6) |
|
| PROXY STATEMENT |
COMPENSATION TABLES
Option Exercises and Stock Vested
The following table provides the number of shares acquired and value realized for our NEOs in fiscal 20182020 for stock option exercises, performance shares awards earned and vested restricted stock.
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||||||||||||||||
Option Awards
|
Stock Awards
| |||||||||||||||||||||||||||||||||||||||
Name
|
Number of Shares Acquired on Exercise
|
Value Realized on Exercise ($)(1)
|
Number of Shares Acquired on Vesting (#)(3)
|
Value Realized on Vesting ($)(4)
|
Number of Shares Acquired on Exercise
|
Value Realized on Exercise ($)(1)
|
Number of Shares Acquired on Vesting (#)
|
Value Realized on Vesting ($)(4)
| ||||||||||||||||||||||||||||||||
D. N. Farr
|
|
145,500
|
(2)
|
|
10,052,595
|
|
| 203,105 |
| 3,329,634 |
| 173,000 | (2) |
| 12,018,310 | |||||||||||||||||||||||||
|
80,000
|
|
|
5,057,200
|
| |||||||||||||||||||||||||||||||||||
|
60,000
|
|
|
3,849,900
|
|
| 100,000 | (3) |
| 7,391,500 | ||||||||||||||||||||||||||||||
E. L. Monser
|
|
48,500
|
(2)
|
|
3,350,865
|
| ||||||||||||||||||||||||||||||||||
F. J. Dellaquila
|
|
63,437
|
|
|
1,677,011
|
|
|
48,500
|
(2)
|
|
3,350,865
|
|
| 46,563 |
| 941,504 |
| 42,000 | (2) |
| 2,917,740 | |||||||||||||||||||
| 20,000 | (3) |
| 1,299,300 | ||||||||||||||||||||||||||||||||||||
M. H. Train
|
|
17,000
|
|
|
675,860
|
|
|
33,950
|
(2)
|
|
2,345,606
|
|
| 18,000 |
| 254,880 |
| 35,000 | (2) |
| 2,431,450 | |||||||||||||||||||
|
10,000
|
|
|
629,850
|
| |||||||||||||||||||||||||||||||||||
S. J. Pelch
|
|
12,821
|
|
|
288,866
|
|
|
48,500
|
(2)
|
|
3,350,865
|
|
| 5,379 |
| 82,191 |
| 42,000 | (2) |
| 2,917,740 | |||||||||||||||||||
S. L. Karsanbhai |
| 9,000 |
| 182,700 |
| 14,000 | (2) |
| 972,580 | |||||||||||||||||||||||||||||||
R. T. Sharp
|
|
12,000
|
|
|
181,800
|
|
| 33,950
| (2)
|
|
2,345,606
|
|
| 30,000 |
| 322,200 |
| 35,000 | (2) |
| 2,431,450 | |||||||||||||||||||
| (1) | Represents the difference between the option exercise price and the average of the high and low share prices for the Company’s common stock on the day of exercise. |
| (2) | Reflects the earnings of performance shares granted |
| (3) | Represents the vesting of |
| (4) | Values realized for performance shares earned are based on the average of the high and low share prices ($ |
Below is information on the pension benefits for the NEOs under each of the following pension plans.
Emerson Retirement Plan
The Emerson Electric Co. Retirement Plan is atax-qualified retirement program that covered approximately 60,00040,000 participants on September 30, 2018,2020, including the NEOs. Plan benefits are based primarilygenerally on a formula that considers the highest consecutive five-yearfive-calendar-year average of the executive’s annual cash earnings, base salary plus bonus (final average earnings), not to exceed theIRS-prescribed limit applicable totax-qualified plans ($270,000280,000 for fiscal 2018)calendar year 2020).
The plan provides an annual benefit accrual for each year of service of 1.0% of final average earnings up to “covered compensation” and 1.5% of final average earnings in excess of “covered compensation,” limited to 35 years of service. When the employee has attained 35 years of service, the annual accrual is 1.0% of final average earnings. “Covered compensation” is based on the average of Social Security taxable wage bases, and varies per individual based on Social Security retirement age. A small portion of the accrued benefits payable from the plan for Messrs. Farr, Train and Pelch includes benefits determined under different but lesser pension formulas for periods of prior service at Company business units. In addition, Mr.Messrs. Train isand Karsanbhai are no longer accruing pension benefit service under the plan.
The accumulated benefit that an employee earns over his or her career with the Company is payable upon retirement as a monthly annuity for life with a guaranteed minimum term of five years. The normal retirement age for this plan is 65. Employees who have attained age 55 and 10 years of service are eligible to retire early under the plan. As of September 30, 2018,2020, Messrs. Farr, Dellaquila, Train and DellaquilaPelch are eligible for early retirement. If an employee retires before age 65, the accrued benefit is reduced for the number of years prior to age 65 that the benefit commences (4% for each of the first five years that retirement precedes age 65, and 5% for each additional year). Employees vest in their accrued benefit after five years of service. The plan provides for spousal joint and survivor annuity options. No employee contributions are required.
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 41 |
COMPENSATION TABLES
Benefits under the plan are subject to the limitations under IRC Section 415, which in fiscal 2018 is $220,0002020 was $230,000 per year for a single life annuity payable at anIRS-prescribed retirement age. This limitation may be actuarially adjusted in accordance with IRS rules for items such as other forms of distribution and different annuity starting dates.
COMPENSATION TABLES
Emerson Pension Restoration Plan
The Emerson Electric Co. Pension Restoration Plan is anon-qualified plan that is an unfunded obligation of the Company. Benefits are payable from the Company’s general operating funds. Participation in, and benefits payable from, the plan are by award, subject to Compensation Committee approval. A participant who terminates employment with a vested retirement benefit will receive at age 65 or later termination of employment a benefit based on the same final average earnings formula as described above for the Emerson Retirement Plan, for all years of service at Emerson, and not subject to theIRS-prescribed limitations on benefits and compensation applicable to the Emerson Retirement Plan. The benefit payable from the Pension Restoration Plan is reduced by the benefit received from the Emerson Retirement Plan. Benefits payable from the Pension Restoration Plan are generally payable as a monthly annuity for life with a guaranteed minimum term of five years, provided that in certain circumstances a participant or a participant’s beneficiary may be eligible to receive a lump sum payment. If an NEO is terminated for cause or engages in actions that adversely affect the Company, the benefits may be forfeited. No pension benefits were paid to any of the NEOs during fiscal 2018.2020.
The amounts reported in the table below equal the present value of the accumulated benefit at September 30, 20182020 for the NEOs under each plan based upon the assumptions described in footnote (2).
Pension Benefits Table
|
Pension Benefits Table
|
Pension Benefits Table | ||||||||||||||||||||||
Name | Plan Name | Number Of Years Credited Service (#)(1) | Present Value of Benefit ($)(2) | Payments During Last Fiscal Year ($) | Plan Name
| Number Of Years Credited Service (#)(1)
| Present Value of Benefit ($)(2)
| Payments During Last Fiscal Year ($)
| ||||||||||||||||
D. N. Farr
|
Emerson Electric Co. Retirement Plan Emerson Electric Co. Pension Restoration Plan
|
38 38
|
$ $
|
1,654,000 23,393,000
|
|
— —
| Emerson Electric Co. Retirement Plan Emerson Electric Co. Pension Restoration Plan | 40 40 | $ $ | 2,069,000 28,739,000 |
| — — | ||||||||||||
E. L. Monser
|
Emerson Electric Co. Retirement Plan Emerson Electric Co. Pension Restoration Plan
|
17 17
|
$ $
|
777,000 4,679,000
|
|
— —
| ||||||||||||||||||
F. J. Dellaquila
|
Emerson Electric Co. Retirement Plan Emerson Electric Co. Pension Restoration Plan
|
27 27
|
$ $
|
1,128,000 6,468,000
|
|
— —
| Emerson Electric Co. Retirement Plan Emerson Electric Co. Pension Restoration Plan | 29 29 | $ $ | 1,585,000 10,210,000 |
| — — | ||||||||||||
M. H. Train(3)
|
Emerson Electric Co. Retirement Plan
|
18
|
$
|
574,000
|
|
—
| Emerson Electric Co. Retirement Plan | 18 | $ | 805,000 | — | |||||||||||||
S. J. Pelch
|
Emerson Electric Co. Retirement Plan
|
32
|
$
|
913,000
|
|
—
| Emerson Electric Co. Retirement Plan | 34 | $ | 1,407,000 | — | |||||||||||||
S. L. Karsanbhai(3) | Emerson Electric Co. Retirement Plan | 20 | $ | 730,000 | — | |||||||||||||||||||
R. T. Sharp
|
Emerson Electric Co. Retirement Plan
|
16
|
$
|
416,000
|
|
—
| Emerson Electric Co. Retirement Plan | 18 | $ | 714,000 | — | |||||||||||||
| (1) | The number of years of service credited under the plans is computed as of the same pension plan measurement date used for financial statement reporting purposes with respect to the Company’s financial statements for the last completed fiscal year. |
| (2) | The accumulated benefit is based on service and earnings under the plans through September 30, |
| (3) |
|
Nonqualified Deferred Compensation
The Emerson Electric Co. Savings Investment Restoration Plan (“(the “Savings Investment Restoration Plan I”) and the Emerson Electric Co. Savings Investment Restoration Plan”Plan II (the “Savings Investment Restoration Plan II” and together with the Savings Investment Restoration Plan I, collectively, the “Savings Investment Restoration Plans”) is aare nonqualified, unfunded defined contribution plan.plans. The plan providesplans provide benefits that would have been provided under the Emerson Electric Co. Employee Savings Investment Plan, the Company’s qualified 401(k) plan (the “ESIP”), but could not be provided due to IRC qualified plan compensation limits.
Participants in the Savings Investment Restoration PlanPlans are designated by the Compensation Committee. Participants may defer up to 20% of compensation and the Company will make matching contributions for participants who defer at least 5% of compensation in an
| 42 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
COMPENSATION TABLES
amount equal toto: (a) for the Savings Investment Restoration Plan I, 50% of the first 5% of those deferrals (not to exceed 2.5% of compensation less the maximum matching amount the participant could have received under the ESIP).; and (b) for the Savings Investment Restoration Plan II, 7.5% of the participant’s compensation less (x) the maximum matching amount the participant could have received under the ESIP and (y) any other contribution for the applicable year made on behalf of the participant under the ESIP. Compensation generally includes cash pay (base salary and annual bonus) received by a participant, including employee ESIP contributions, and excludes any reimbursements, awards or other payments under equity compensation plans, stock option gains, any severance payments and other incentive payments. Amounts deferred under the plan are 100% vested and will beare credited quarterly with returns based on the sameparticipant’s selection of available investment alternatives, selected by the participant under the ESIP,
COMPENSATION TABLES
which include an Emerson common stock fund and more than 20 other mutual fund investment alternatives. The Company matching contributions vest 20% each year for the first 5 years of service, after which the participant is 100% vested in all contributions. The matching contributions are credited to a book-entry account reflecting units equivalent to Emerson stock. There are no “above-market earnings” as all earnings are market-based consistent with the investment funds elected. All deferred amounts and Company matching contributions are accounted for on the Company’s financial statements and are unfunded obligations of the Company and paid in cash when benefit payments commence.
Generally, distribution of vested account balances occurs in a lump sum no later than one year following termination of employment. Upon retirement, or in other certain instances, participants may receive their account balances in up to 10 equal annual installments, if previously elected. Unvested matching contributions become fully vested upon (i) retirement with Compensation Committee approval on or after the age of 55, (ii) death or disability, (iii) termination of the plan, or (iv) a change of control of the Company. Additionally, under the Savings Investment Restoration Plan II, a participant will be entitled to payment of vested matching contributions only if the Compensation Committee determines that such participant is an executive in good standing at the time the executive terminates employment (whether upon retirement or otherwise); provided, that if such participant is discharged for cause and/or engages in other activity that is harmful to or competitive with the Company, the rights of such participant to such amount will be forfeited and any such amount that has previously been paid to the participant may be recovered by the Company, unless the Committee determines that such activity is not detrimental to the best interests of the Company. All or a portion of any participant’s vested account balance may be distributed earlier in the event of an unforeseeable emergency, if approved by the Compensation Committee. For amounts deferred or vested as of December 31, 2004, a participant may receive a distribution ofafter-tax deferrals upon 30 days’ notice.
Nonqualified Deferred Compensation Table
|
Nonqualified Deferred Compensation Table
|
Nonqualified Deferred Compensation Table
| |||||||||||||||||||||||||||||||||||||||||||
Name
| Executive Contributions in Last FY ($)(1)
| Emerson Contributions ($)(1)
| Aggregate Earnings in Last FY ($)(2)
| Aggregate Withdrawals/ Distributions ($)
| Aggregate ($)(1)(3)
| Executive Contributions in Last FY ($)(1)
| Emerson Contributions ($)(1)
| Aggregate Earnings in Last FY ($)(2)
| Aggregate Withdrawals/ Distributions ($)
| Aggregate ($)(1)(3)
| |||||||||||||||||||||||||||||||||||
D. N. Farr
|
|
307,833
|
|
|
88,098
|
|
|
2,078,696
|
|
|
—
|
|
|
13,127,643
|
| 297,000 | 84,412 | 1,749,404 | — | 16,023,873 | |||||||||||||||||||||||||
E. L. Monser
|
|
153,917
|
|
|
40,141
|
|
|
550,394
|
|
|
—
|
|
|
4,010,215
|
| ||||||||||||||||||||||||||||||
F. J. Dellaquila
|
|
157,627
|
|
|
38,555
|
|
|
148,734
|
|
|
—
|
|
|
4,073,157
|
| 122,349 | 38,842 | 199,697 | — | 4,781,229 | |||||||||||||||||||||||||
M. H. Train
|
|
20,188
|
|
|
28,031
|
|
|
51,403
|
|
|
—
|
|
|
358,390
|
| 141,677 | 67,480 | 94,859 | — | 862,027 | |||||||||||||||||||||||||
S. J. Pelch
|
|
154,267
|
|
|
20,917
|
|
|
152,876
|
|
|
—
|
|
|
1,269,208
|
| 109,591 | 28,778 | 65,744 | — | 1,691,223 | |||||||||||||||||||||||||
S. L. Karsanbhai | 59,479 | 59,674 | 16,620 | — | 245,171 | ||||||||||||||||||||||||||||||||||||||||
R. T. Sharp
|
|
118,417
|
|
|
21,504
|
|
|
40,087
|
|
|
—
|
|
|
469,846
|
| 130,541 | 24,235 | 36,013 | — | 839,981 | |||||||||||||||||||||||||
| (1) | Includes amounts contributed by each NEO and by the Company, respectively, to the Savings Investment Restoration |
| (2) | Aggregate earnings under the plan are not above-market and are not included in the Summary Compensation Table. |
| (3) | Includes amounts reported as compensation for the NEOs in the Summary Compensation Table for prior years. The following aggregate amounts of NEO and Company contributions were included in the Summary Compensation Table for fiscal |
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 43 |
COMPENSATION TABLES
Potential Payments Upon Termination or Change of Control
As described above, the NEOs do not have any written or oral employment agreements with the Company and have no other agreements that contain severance or “golden parachute” provisions. As described on page 43,46, the terms and conditions of Mr. Monser’s retirementSharp’s separation are set forth in a letter agreement. Please see “Description of E. L. MonserR. T. Sharp Letter Agreement” on page 43.46.
The information below generally describes payments or benefits under the Company’s compensation plans and arrangements that would be available to all participants in the plans, including the NEOs, in the event of the participant’s termination of employment or of a Change of Control of the Company. Any such payments or benefits that an NEO has elected to defer would be provided in accordance with IRC Section 409A. Payments or benefits under other plans and arrangements that are generally available to the Company’s employees on similar terms are not described.
Conditions and Obligations Applicable to Receipt of Termination/Change of Control Payments
In the event of any termination or Change of Control, all executives participating in stock options, performance shares, restricted stock or the Pension Restoration Plan have the following obligations to the Company.
Stock Options. NEOsareNEOsare obligated to keep Company information confidential, assign to the Company intellectual property rights, and, during and for one year after termination, not compete with, or solicit the employees of, the Company.
COMPENSATION TABLES
Performance Shares and Restricted Stock. NEOs are obligated not to compete with, or solicit the employees of, the Company during and for two years after termination. For awards granted from November 2018, the awards are also conditioned upon the participant’s compliance with all practices and policies under Emerson’s Ethics and Compliance Program, including the Code of Conduct and Code of Ethics, and that a participant’s actions will reflect Emerson’s Core Value of Integrity. Violations of such Ethics and Compliance Program may result in the forfeiture of such awards or the repayment of any amounts paid under such awards.
Pension Restoration Plan. If an NEO is discharged for cause, enters into competition with the Company, interferes with the Company’s relations with a customer, or engages in any activity that would result in a decrease in sales by the Company, the NEO’s rights to benefits under the Plan will be forfeited, unless the Compensation Committee determines that the activity is not detrimental to the Company.
Savings Investment Restoration Plans. The NEO’s rights to benefits under the Savings Investment Restoration Plan II will be forfeited if the NEO is (a) not in good standing at the time the NEO terminates employment (whether upon retirement or otherwise) as determined by the Compensation Committee, or (b) is discharged for cause, enters into competition with the Company, interferes with the Company’s relations with a customer, or engages in any activity that would result in a decrease in sales by the Company, unless the Compensation Committee determines that the activity is not detrimental to the Company.
Additionally, upon retirement or involuntary termination, NEOs generally execute letter agreements reaffirming their applicable confidentiality,non-competition andnon-solicitation obligations and may enter into extendednon-competition agreements.
Payments Made Upon Retirement
Upon retirement, the Company’s compensation plans and arrangements provide as follows:
The Compensation Committee has the discretion to determine whether any annual cash bonus award would be paid, subject to satisfaction of any pre-established performance conditions;
Upon retirement, as determined by the Compensation Committee, all unvested stock options held for at least 12 months before retirement would vest, and all unexercised options could be exercised for a period of five years after retirement, up to the original option term;
Upon retirement after age 65, the NEOs would receive a prorated payout of performance shares, as reasonably determined by the Compensation Committee, subject to satisfaction ofpre-established performance conditions, to be paid after the applicable performance period. Before age 65, the Compensation Committee has the discretion to determine whether a NEO would receive a prorated, other or no payout of performance shares, which payout would be made after the performance period, subject to the satisfaction of performance conditions;
The Compensation Committee has the discretion to determine whether to allow the NEOs to continue to vest in restricted stock following retirement, or to reduce the vesting period to not less than three years;
| 44 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
COMPENSATION TABLES
If not previously vested, the NEOs would be vested in Company contributions to the Savings Investment Restoration PlanPlans if retirement occurs with the approval of the Compensation Committee on or after age 55; and
Under the Company’s Pension Restoration Plan, an NEO’s benefit commences after age 65 or later retirement and is paid as a monthly annuity, or a lump sum if elected.
Payments Made Upon Death or Disability
Upon death or total disability, the Company’s compensation plans and arrangements provide as follows:
The Compensation Committee has the discretion to determine whether any annual cash bonus award would be paid, subject to satisfaction of any pre-established performance conditions;
All unvested stock options would vest immediately, and be exercisable for a period of one year, up to the original option term;
The Compensation Committee has the discretion to determine whether the NEOs would receive full, partial or no payout of performance shares after the performance period and subject to satisfaction ofpre-established performance conditions;
Restricted stock will be prorated for years of service during the vesting period and distributed free of restriction at the end of the vesting period, with Compensation Committee discretion to reduce the vesting period to not less than three years;
If not previously vested, the NEOs would vest in Company contributions to the Savings Investment Restoration Plan;Plans;
Upon the death of an NEO participating in the Pension Restoration Plan, the surviving spouse would receive, in the form of a monthly annuity payment commencing at the NEO’s earliest retirement date, 50% of the actuarially equivalent accrued benefit. The estate of a single person who dies while employed will receive a lump sum benefit as of the date of death which is actuarially equivalent to the annuity that the surviving spouse of a married person would have received. Upon termination due to disability, benefits would start the later of when the NEO reaches age 65 or termination, and be paid in the form of a monthly annuity or a lump sum distribution; and
Upon an NEO’s death, the beneficiaries would receive proceeds from Company provided term life insurance.
COMPENSATION TABLES
Payments Made Upon Other Termination
If an NEO’s employment terminates for any other reason (i.e., voluntary termination, termination for cause or involuntary
termination), he or she would only receive:
Payment of the vested portion of the NEO’s accounts in the Savings Investment Restoration Plan account,Plans, in a single lump sum after termination.termination, subject, in the case of any Savings Investment Restoration Plan II account, to (i) the Compensation Committee’s determination that the NEO is in good standing at the time of the termination, and (ii) the NEO not being discharged for cause or engaging in other activity that is harmful to or competitive with the Company, as provided under the Savings Investment Restoration Plan II.
Under the Company’s compensation plans and arrangements, the Compensation Committee may also, in its discretion, determine whether to provide any additional payments or benefits to the NEO. This exercise of discretion is unlikely to result in any additional benefits in the case of a voluntary resignation or termination for cause. This includes the discretion to:
Determine whether any annual cash bonus award would be paid, subject to satisfaction ofpre-established performance conditions;
If termination occurs with Company consent, the Compensation Committee may allow the NEO up to three months after termination, up to the original option term, to exercise vested stock options;
Determine whether the NEO would receive full, partial or no payout of performance shares after the performance period and subject to satisfaction ofpre-established performance conditions;
Determine whether to allow the NEO to continue to vest in restricted stock, or to reduce the vesting period to not less than three years; and
Determine whether an NEO terminated for cause or for engaging in actions that adversely affect the Company will forfeit the right to receive vested benefits under the Pension Restoration Plan starting after the later of age 65 or termination, paid in the form of a monthly annuity or a lump sum distribution.
Payments Made Upon Change of Control
Upon a Change of Control, the Company’s compensation plans and arrangements provide as follows:
Annual cash bonus awards are not paid;
All unvested stock options become fully exercisable if either the options have not been appropriately assumed by the acquiror, or within two years after the change of control, the optionee is involuntarily terminated other than for cause, the optionee’s title, duties or responsibilities are adversely changed, or the optionee is required to relocate;
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 45 |
COMPENSATION TABLES
Performance objectives of outstanding performance shares awards would be deemed satisfied, with payout made immediately. For performance shares granted under the shareholder approved 2015 Incentive Shares Plan, performance objectives would be deemed satisfied at the highest level provided for in the award, if a “double trigger” event occurs, meaning that in connection with a change of control (a) the award has not been appropriately assumed or an equivalent award substituted by the acquiror, (b) cash is the primary form of consideration paid to shareholders, or (c) following the change of control, the holder is involuntarily terminated other than for cause, or within two years after the change of control, the holder’s title, duties or responsibilities are adversely changed, or the holder is required to relocate by more than 50 miles;
All restricted stock awarded under the 2006 Incentive Shares Plan would vest immediately. Restricted stock and restricted stock units awarded under the 2015 Incentive Shares Plan would vest immediately if a “double trigger” event (as defined above) occurs;
The NEO would vest in all unvested Company contributions to the Savings Investment Restoration Plan,Plans, and the vested amount would be paid in a single lump sum; and
An NEO participating in the Pension Restoration Plan would become fully vested and could elect immediate payment in the form of a lump sum or a life annuity. In early fiscal 2016, for benefits accruing after 2004, the Plan was amended to conform the assumptions used in calculating lump sums payable to the assumptions used by the Company to accrue liabilities with respect to U.S. retirement plans for financial reporting purposes, as set forth in the Company’s Annual Report on Form10-K.
“Change of Control” Definition
“Change of Control” generally means: (i) the acquisition of beneficial ownership of 20% or more of the Company’s common stock, (ii) individuals who currently make up the Company’s Board of Directors (or who subsequently become Directors after being approved for election by at least a majority of current Directors) ceasing to make up at least a majority of the Board, or (iii) approval by the Company’s shareholders of (a) a reorganization, merger or consolidation which results in the ownership of 50% or more of the Company’s common stock by persons or entities that were not previously shareholders; (b) a liquidation or dissolution of the Company; or (c) the sale of substantially all of the Company’s assets. With respect to participants who have deferred payment of earned awards under the 2006 Incentive Shares Plan, and as provided for in the 2015 Incentive Shares Plan, the Change of Control must also meet the requirements of IRC Section 409A and any transaction referenced in (iii) above must have actually occurred, rather than merely have been approved. With respect to the Company’s Pension Restoration Plan and Savings Investment Restoration Plan,Plans, a Change of Control refers to a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, as such terms are defined under IRC Section 409A and the regulations promulgated thereunder.
COMPENSATION TABLES
Description of E. L. MonserR. T. Sharp Letter Agreement
E. L. Monser retiredMr. Sharp stepped down as Executive President Commercial and Residential Solutions on OctoberAugust 12, 2020 and resigned from the Company on September 30, 2020. On September 1, 2018. On October 2, 2018,2020, the Company and Mr. MonserSharp entered into a letter agreement in connection with his retirement. separation from the Company, effective September 30, 2020.
Under the letter agreement, Mr. MonserSharp agreed, among other things: (i) not to compete with, or solicit toor hire the employees of, the Company or any of its subsidiaries or affiliates during a period of fivefour years from his date of retirement;the separation date; (ii) not to use or disclose any confidential information of the Company; (iii) to reaffirm all existingnon-compete, invention,non-disclosure andnon-solicitation obligations he has to the CompanyCompany; and (iv) to comply withnon-disparagement obligations. obligations. Mr. MonserSharp also released and discharged the Company, its affiliates, and its and their respective directors, officers, employees, agents and agentsother parties from any and all claims or liabilities of whatever nature and will remain subject to the Company’s clawback policy.policies.
Under the Letter Agreement, Mr. MonserSharp will receive salary continuation payments at his current base salary rate and certain health and welfare benefits until the earlier of June 30, 2021 or the date on which he commences other employment. He will also continue to receive his Company automobile and club benefits through his salary continuation period. Mr. Sharp remained eligible to receive his 2018fiscal 2020 annual bonus based on Companythe Company’s financial performance.performance for fiscal 2020.
As permitted under the Company’s 2015 Incentive Shares Plan, Mr. MonserSharp remained eligible to receive a full payout of any earned awardawards under the Fiscal 2016–2018 – 2020 Performance Shares Program, and remainshe will remain eligible to receive a full payout of any earned awards under the Fiscal 2017–2019 Performance Shares Program,his other held performance shares awards, subject to the Company’s achievement of the performance objectives. Mr. Monser has agreed to remain available for consulting on an as needed basis. In consideration for his availability, Mr. Monser may receive up to a 50% pro rata earned payout of the performance shares awarded to him under the Company’s Fiscal 2018–2020 Performance Shares Program, subject to the Company’s achievement of theapplicable performance objectives, which amount willto be determined and paid at the times provided for under the 2018 Program. The agreement reduced his maximum payout opportunity from 155% to 125% with respect toprograms. As permitted under the 2018 Program.Company’s Incentive Shares Plans, Mr. Monser’s vested options will remain exercisable for five years following retirement, but no longer than the original term of each option. In addition, Mr. Monser’s restricted stock awardsSharp’s Restricted Stock Awards will continue to vest in accordance withaccording to their terms.terms and be payable on the respective vesting dates of such awards. Please see the “Outstanding Equity Awards at Fiscal Year-End Table” at page 3639 above for more information on these awards.
| 46 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
COMPENSATION TABLES
Mr. MonserSharp will be eligible to receive monthly pension benefits earned under the Company’s qualified andnon-qualified pension plans. He will also be eligible to receive distributions from the Company’s qualified pension plan, pursuant to the terms and conditions of and to be paid in the manner and at the time set for in such plan. He will also be eligible to receive distributions under the qualified and non-qualified 401(k) 401(k)and profit-sharing retirement savings plans, as provided under those plans.
If Mr. MonserSharp violates any of his obligations to the Company under the letter agreement,Letter Agreement, he will forfeit all payments to be made or benefits provided under the letter agreement,Letter Agreement and will repay to the Company, as liquidated damages,one-half of of the economic value of all benefits provided to him under the letter agreementLetter Agreement prior to the date of breach.
Quantification of Payments and Benefits
The following tables quantify the potential payments and benefits upon termination or a Change of Control of the Company for each of the NEOs, assuming the NEO’s employment terminatedevent occurred on September 30, 2018,2020, given the NEO’s compensation and service level as of that date and, if applicable, based on the Company’s closing share price of $76.58$65.57 on that date. Other benefit assumptions made with respect to specific payments or benefits are set forth in applicable footnotes to the tables. See “Description of E. L. MonserR. T. Sharp Letter Agreement” above for a description of Mr. Monser’s retirementSharp’s separation arrangements. Due to the number of factors that affect the nature and amount of any payments or benefits provided upon a termination or Change of Control including, but not limited to, the date of any such event, the Company’s stock price and the NEO’s, any actual amounts paid or distributed may be different. None of the payments set forth below would begrossed-up for taxes.
D. N. Farr
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
|
Invol. Term. not ($)
|
Change of ($)(13)
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
| Invol. Term. not ($)
| Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(2)
|
|
—
|
(1)
|
|
—(3)
|
|
| — | (1) |
| — | (1) |
| — | (1) |
| — | (2) |
| — | (1) |
| —(3) |
| ||||||||||||||||||||||||
Stock Options
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
|
|
—
|
|
|
—(4)
|
|
| — | (4) |
| — | (4) |
| — | (4) |
| — |
| — |
| —(4) |
| ||||||||||||||||||||||||||
Performance Shares
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(2)(5)
|
|
—
|
(5)(6)
|
|
33,568,843(7)
|
|
| — | (5)(6) |
| — | (5)(6) |
| — | (5)(6) |
| — | (2)(5) |
| — | (5)(6) |
| 26,391,351(7) | |||||||||||||||||||||||||
Restricted Stock
|
|
—
|
(8)
|
|
13,784,400
|
(9)
|
|
13,784,400
|
(9)
|
|
—
|
(8)
|
|
—
|
(8)
|
|
15,316,000(10)
|
|
| — | (8) |
| — | (9) |
| — | (9) |
| — | (8) |
| — | (8) |
| — (10) |
| ||||||||||||||||||||||||
Pension Restoration Plan(11)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||
Life Insurance Benefits
|
|
—
|
|
|
200,000
|
(12)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| — |
| 200,000 | (12) |
| — |
| — |
| — |
| — |
| ||||||||||||||||||||||||||||
F. J. Dellaquila | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
| Invol. Term. not ($)
| Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive |
| — | (1) |
| — | (1) |
| — | (1) |
| — | (2) |
| — | (1) |
| —(3) |
| ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
| — | (4) |
| — | (4) |
| — | (4) |
| — |
| — |
| —(4) |
| ||||||||||||||||||||||||||||||||||||||||||||
Performance Shares |
| — | (5)(6) |
| — | (5)(6) |
| — | (5)(6) |
| — | (2)(5) |
| — | (5)(6) |
| 6,545,935(7) | |||||||||||||||||||||||||||||||||||||||||||
Restricted Stock |
| — | (8) |
| 1,885,138 | (9) |
| 1,885,138 | (9) |
| — | (8) |
| — | (8) |
| 2,622,800(10) |
| ||||||||||||||||||||||||||||||||||||||||||
Pension Restoration Plan(11) |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||
Life Insurance Benefits |
| — |
| 200,000 | (12) |
| — |
| — |
| — |
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
M. H. Train | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
| Invol. Term. not ($)
| Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive |
| — | (1) |
| — | (1) |
| — | (1) |
| — | (2) |
| — | (1) |
| —(3) |
| ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
| — | (4) |
| — | (4) |
| — | (4) |
| — |
| — |
| —(4) |
| ||||||||||||||||||||||||||||||||||||||||||||
Performance Shares |
| — | (5)(6) |
| — | (5)(6) |
| — | (5)(6) |
| — | (2)(5) |
| — | (5)(6) |
| 6,545,935(7) | |||||||||||||||||||||||||||||||||||||||||||
Restricted Stock |
| — | (8) |
| 1,442,540 | (9) |
| 1,442,540 | (9) |
| — | (8) |
| — | (8) |
| 2,622,800(10) |
| ||||||||||||||||||||||||||||||||||||||||||
Pension Restoration Plan |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||
Life Insurance Benefits |
| — |
| 200,000 | (12) |
| — |
| — |
| — |
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
COMPENSATION TABLES
F. J. Dellaquila
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
|
Invol. Term. not ($)
|
Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(2)
|
|
—
|
(1)
|
|
—(3)
|
| ||||||||||||||||||||||||||||||||||||||||||
Stock Options
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
|
|
—
|
|
|
—(4)
|
| ||||||||||||||||||||||||||||||||||||||||||
Performance Shares
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(2)(5)
|
|
—
|
(5)(6)
|
|
9,771,608(7)
|
| ||||||||||||||||||||||||||||||||||||||||||
Restricted Stock
|
|
—
|
(8)
|
|
3,235,505
|
(9)
|
|
3,235,505
|
(9)
|
|
—
|
(8)
|
|
—
|
(8)
|
|
5,360,600(10)
|
| ||||||||||||||||||||||||||||||||||||||||||
Pension Restoration Plan(9)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||||||||||||||||||||||||
Life Insurance Benefits
|
|
—
|
|
|
200,000
|
(12)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||||||||||||||||||||||||
S. J. Pelch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
M. H. Train
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
|
Invol. Term. not ($)
|
Change of ($)(13)
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
| Invol. Term. not ($)
| Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(2)
|
|
—
|
(1)
|
|
—(3)
|
|
| — | (1) |
| — | (1) |
| — | (1) |
| — | (2) |
| — | (1) |
| —(3) |
| ||||||||||||||||||||||||
Stock Options
|
|
84,414
|
(4)
|
|
84,414
|
(4)
|
|
84,414
|
(4)
|
|
—
|
|
|
—
|
|
|
84,414(4)
|
|
| — | (4) |
| — | (4) |
| — | (4) |
| — |
| — |
| —(4) |
| ||||||||||||||||||||||||||
Performance Shares
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(2)(5)
|
|
—
|
(5)(6)
|
|
7,983,465(7)
|
|
| — | (5)(6) |
| — | (5)(6) |
| — | (5)(6) |
| — | (2)(5) |
| — | (5)(6) |
| 6,545,935(7) | |||||||||||||||||||||||||
Restricted Stock
|
|
—
|
(8)
|
|
1,531,600
|
(9)
|
|
1,531,600
|
(9)
|
|
—
|
(8)
|
|
—
|
(8)
|
|
3,829,000(10)
|
|
| — | (8) |
| 1,737,605 | (9) |
| 1,737,605 | (9) |
| — | (8) |
| — | (8) |
| 2,950,650(10) |
| ||||||||||||||||||||||||
Pension Restoration Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||
Life Insurance Benefits
|
|
—
|
|
|
200,000
|
(12)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| — |
| 200,000 | (12) |
| — |
| — |
| — |
| — |
| ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. J. Pelch
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S. L. Karsanbhai | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
|
Invol. Term. not ($)
|
Change of ($)(13)
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
| Invol. Term. not ($)
| Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(2)
|
|
—
|
(1)
|
|
—(3)
|
|
| — | (1) |
| — | (1) |
| — | (1) |
| — | (2) |
| — | (1) |
| —(3) |
| ||||||||||||||||||||||||
Stock Options
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
|
|
—
|
|
|
—(4)
|
|
| — | (4) |
| — | (4) |
| — | (4) |
| — |
| — |
| —(4) |
| ||||||||||||||||||||||||||
Performance Shares
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(2)(5)
|
|
—
|
(5)(6)
|
|
9,771,608(7)
|
|
| — | (5)(6) |
| — | (5)(6) |
| — | (5)(6) |
| — | (2)(5) |
| — | (5)(6) |
| 5,554,025(7) | |||||||||||||||||||||||||
Restricted Stock
|
|
—
|
(8)
|
|
1,033,830
|
(9)
|
|
1,033,830
|
(9)
|
|
—
|
(8)
|
|
—
|
(8)
|
|
3,446,100(10)
|
|
| — | (8) |
| 458,990 | (9) |
| 458,990 | (9) |
| — | (8) |
| — | (8) |
| 1,311,400(10) |
| ||||||||||||||||||||||||
Pension Restoration Plan
|
|
N/A
|
|
| N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||||||||||||
Life Insurance Benefits
|
|
—
|
|
|
200,000
|
(12)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
| — |
| 200,000 | (12) |
| — |
| — |
| — |
| — |
| ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. L. Sharp
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination
| Retirement ($)
| Death ($)
| Disability ($)
|
Voluntary or For ($)
|
Invol. Term. not ($)
|
Change of ($)(13)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Cash Incentive
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(1)
|
|
—
|
(2)
|
|
—
|
(1)
|
|
—(3)
|
| ||||||||||||||||||||||||||||||||||||||||||
Stock Options
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
(4)
|
|
—
|
|
|
—
|
|
|
—(4)
|
| ||||||||||||||||||||||||||||||||||||||||||
Performance Shares
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(5)(6)
|
|
—
|
(2)(5)
|
|
—
|
(5)(6)
|
|
7,983,465(7)
|
| ||||||||||||||||||||||||||||||||||||||||||
Restricted Stock
|
|
—
|
(8)
|
|
1,569,890
|
(9)
|
|
1,569,890
|
(9)
|
|
—
|
(8)
|
|
—
|
(8)
|
|
4,211,900(10)
|
| ||||||||||||||||||||||||||||||||||||||||||
Pension Restoration Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||||||||||||||||||||||||
Life Insurance Benefits
|
|
—
|
|
|
200,000
|
(12)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||||||||||||||||||||||||
| (1) | The Committee has discretion whether or not to pay a bonus, subject to satisfaction of performance conditions. For illustrative purposes only, the bonuses paid for fiscal |
| (2) | This column assumes the Committee would exercise its discretion not to pay a bonus or make a payout of outstanding performance shares. |
| (3) | There would be no acceleration or special treatment for annual cash incentive opportunities for the fiscal year in which the Change of Control occurs. |
| (4) | Represents the closing share price of |
| (5) | The Committee has discretion to provide a prorated, other or no payout, subject to the achievement of performance |
COMPENSATION TABLES
| (6) | Assumes the Committee does not allow any payout for the performance shares awards granted in |
| (7) | The amount shown includes the entire amount of |
| (8) | Assumes Committee would exercise its discretion to not allow any further vesting. |
| (9) | Represents pro rata value of all unvested restricted stock, based on years elapsed rounded to whole years. |
| (10) | Represents the value of all unvested shares of restricted stock. |
| (11) | See “Pension Benefits” on page |
| (12) | Represents face amount of policies paid for by the Company which are not generally available to all employees. |
| (13) | The Change of Control column assumes that the applicable conditions for a “double trigger” change in control were met as of September 30, |
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 determined the ratio of the annual total compensation of our CEO compared to the annual total compensation of our median employee.
As is permitted under the SEC rules, to determine our median employee in 2018, we chosecollected data as of July 1, 2018 for all employees globally and used “Base Pay, Shift Premium and Overtime, Bonus and Commission or equivalent” as our consistently applied compensation measure. Using a determination date of July 1, 2018, we calculated the median wages for 80,723 employees. We excluded employees in the following 5 countries (4.95% of the global workforce), underAfter applying the 5% de Minimis rule: Hungary (600), Indonesia (33), The Philippines (3,023), Slovakia (323) and Ukraine (18).
Applyingexemption, we used a valid statistical sampling methodology toon the remaining 76,726 employees, we thenpopulation and produced a sample of employees who were paid within a 5% range of thatthe established median andcompensation measure, then selected an employee from within that group as ourgroup.
| 48 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
COMPENSATION TABLES
For fiscal 2020, using the same determination date and statistical sampling methodology, we determined that the median employee from the prior year falls outside the 2020 5% range and identified a new median employee. We determined that the 20182020 Summary Compensation Table total compensation and value of nondiscriminatory benefits for our CEO and median employee were $15,619,741 and $36,791, which$16,490,284 (which includes $10,214$7,199 in company providedcompany-provided medical and dental benefits applicable to all employees that are not included in the compensation reported for our CEO.CEO in the Summary Compensation Table on page 36) and $48,786, respectively. Our estimate of the ratio of CEO pay to median worker pay is 425:1. This ratio is a reasonable estimate calculated using a methodology consistent with the SEC rules as described above.above is 338:1.
As of July 1, 2020, we had a global population of approximately 85,887 employees. From that population, we excluded 4,280 employees from 12 countries (4.98% of the global workforce), under the 5% de Minimis rule, resulting in a remainder of 81,607 employees. Excluded countries and employee counts are as follows: Angola (6), Belarus (1), Ecuador (1), Gabon (2), Indonesia (25), Panama (1), The Philippines (3,108), Serbia and Montenegro (4), Thailand (1,081), Tunisia (23), Ukraine (26), and Venezuela (2).
As the SEC rules allow for companies to adopt a wide range of methodologies, to apply country exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices to identify the median employee and calculate the CEO pay ratio, the pay ratios reported by other companies may not be comparable to the pay ratio reported above.
Proxy Item No. 1:ELECTION OF DIRECTORS
Nominees and Continuing Directors
The Board of Directors is divided into three classes, with the terms of office of each class ending in successive years. The Board of Directors has nominated threefour Directors of the Company to be elected for termsa term ending at the Annual MeetingsMeeting specified below, or until their successors have been elected and qualified. Pursuant to the Company’s Bylaws, a person may not stand for election as a Director after attaining the age of 72, provided that the Bylaws provide that this restriction does not apply to (i) Mr. Golden and Dr. Kendle until the Company’s 2022 Annual Meeting, and (ii) Mr. Easter until the Company’s 2023 Annual Meeting. Information with respect to the nominees for election, as well as the other Directors whose terms will continue after the Annual Meeting, is set forth below. All of the nominees meet the Board membership criteria described on page 13 under “Nomination Process.” Each of the nominees and continuing Directors has had the same position or other executive positions with the same employer over the last five years unless otherwise indicated. This information includes each nominee’s specific experience, qualifications, attributes and skills that led the Board to conclude that he or she should serve as a Director, and prior directorships held by each nominee at other public companies within the last five years.
Board Diversity
Directors’ Core Competencies
The table below shows the Directors’ Core Competencies as a full Board. These competencies are aligned with our business strategy.
| |
MANAGEMENT PROPOSALS
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE ELECTION OF THE NOMINEES LISTED BELOW.
Director Nominees for Terms Ending in 20222024
Age: 58 Director Since: 2019 Committees: • Audit Committee • Compensation Committee | MARK A. BLINN FORMER CHIEF EXECUTIVE OFFICER AND PRESIDENT, FLOWSERVE CORP., A SUPPLIER OF INDUSTRIAL MACHINERY Key Experiences: • CEO Experience • Global Business Experience • Business Development Expertise Qualifications: Mr. Blinn’s qualifications also include his leadership experience, global business experience, industry experience, and extensive Board experience, including his prior service as the Chief Executive Officer and President of Flowserve from October 2009 until March 2017. He previously served Flowserve as Chief Financial Officer from 2004 to 2009 and in the additional role of Head of Latin America from 2007 to 2009. Prior to Flowserve, Mr. Blinn served in senior finance, treasury and planning positions at FedEx Kinko’s Office and Print Services, Inc., Centex Corp., FirstPlus Financial Inc., Electronic Data Systems Corp. and Commercial Capital Funding Inc. He also serves on the executive board for Southern Methodist University’s Cox School of Business. Current Public Company Directorships: • Kraton Corporation • Leggett & Platt Incorporated • Texas Instruments Incorporated |
Age: 74 Director Since: 2000 Committees: • Executive Committee • Finance Committee | ARTHUR F. GOLDEN SENIOR COUNSEL, DAVIS POLK & WARDWELL, A LAW FIRM Key Experiences: • Business Development Expertise • Global Business Experience • Corporate Governance Experience Qualifications: Mr. Golden’s qualifications to serve on the Board include his leadership, international and industry experience as Senior Partner and Global Co-Chair of Mergers and Acquisitions at Davis Polk; leading Davis Polk teams in private and governmental litigation; representing large multinational companies in corporate governance matters and acquisition-related transactions; counseling multinational companies on antitrust matters; his prior service as a member of his firm’s Management Committee; and his current service as Chairman of the Board of Trustees of Rensselaer Polytechnic Institute. Mr. Golden moved to Senior Counsel at his law firm in January 2020. |
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 51 |
MANAGEMENT PROPOSALS
Age: 73 Director Since: 2014 Committees: • Audit Committee • Nominating Committee | CANDACE KENDLE RETIRED CHAIR AND CHIEF EXECUTIVE OFFICER, KENDLE INTERNATIONAL INC., A GLOBAL CLINICAL RESEARCH ORGANIZATION Key Experiences: • CEO Experience • Technology and Innovation Expertise • Corporate Governance Experience Qualifications: Dr. Kendle’s qualifications to serve on the Board include her leadership, international and healthcare experience, gained from her prior service as co-founder, Chair and Chief Executive Officer of Kendle International Inc.; her experience as a founder of ReadAloud.org, a non-profit organization aimed at improving childhood literacy; her prior service as a director and member of the Audit Committee of United Parcel Service, Inc.; her prior service as a director and as a member of the Audit and Corporate Governance Committees of H. J. Heinz; and her prior service on the faculties of a number of leading universities, including the University of Cincinnati College of Pharmacy, the University of Pennsylvania School of Medicine, and the University of North Carolina School of Medicine and School of Pharmacy. Prior Public Company Directorships (year service ended): • United Parcel Service, Inc. (2019) • H. J. Heinz (2013) |
Age: Director Since: 2013 Committees: • Audit Committee • Executive Committee • Nominating Committee | JAMES S. TURLEY RETIRED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, ERNST & YOUNG, A PROFESSIONAL SERVICES ORGANIZATION Key Experiences: • Financial Expertise • CEO Experience • Corporate Governance Experience Qualifications: Mr. Turley’s qualifications to serve on the Board include his leadership and expertise in audit and financial reporting as Chairman and Chief Executive Officer of Ernst & Young from 2001 through June 30, 2013; his service as a director and member of the Audit, Executive and Risk Management Committees of Citigroup, Inc.; his service as a director and member of the Audit and Governance Committees of Northrop Grumman Corporation; his service as a director and Chair of the Compensation Committee of Precigen, Inc. (formerly Intrexon Corporation); and his service on the boards of the Kohler Company and the St. Louis Trust Company. He also serves on the board of directors and as an officer of the Boy Scouts of America, and on the boards of directors of the World Scouting Foundation, St. Louis MUNY, Theatre Forward and Forest Park Forever. Current Public Company Directorships: • Citigroup, Inc. • Northrop Grumman Corporation • Precigen, Inc. |
| 52 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
MANAGEMENT PROPOSALS
Continuing Directors
The following Directors are not standing for election at the 2021 Annual Meeting of Shareholders.
Directors with Terms Ending in 2022
Age: 72
Director Since: 2009
Committees: • Compensation Committee • Executive Committee • Finance Committee | CLEMENS A. H. BOERSIG LEAD INDEPENDENT DIRECTOR, EMERSON RETIRED CHAIRMAN, THE SUPERVISORY BOARD, DEUTSCHE BANK AG, A GLOBAL INVESTMENT BANK
• Corporate Governance Experience | ||
Qualifications: Dr. Boersig’s qualifications to serve on the Board also include his leadership, financial expertise and international experience gained from his past service as Chairman of the Supervisory Board of Deutsche Bank AG, as a current member of the Supervisory Boards and various Board committees of Daimler AG and Linde AG; and his experience from his prior service as a member of the Management Boards of Deutsche Bank, Robert Bosch GmbH and RWE AG and the Supervisory Board of Bayer AG; and as former Chief Financial Officer and Chief Risk Officer of Deutsche Bank and Chief Financial Officer of RWE.
Current Public Company Directorships: • Linde plc • Supervisory Board Member of Daimler AG, Linde AG
Prior Public Company Directorships (year service ended): • Member of the Supervisory Board of Bayer AG (2017) • Management • RWE AG (1999) • Robert Bosch GmbH (1996) | |||
Age:
Director Since: 2012
Committees: •
• Nominating Committee | JOSHUA B. BOLTEN PRESIDENT AND CHIEF EXECUTIVE OFFICER, BUSINESS ROUNDTABLE, Key Experiences: • Corporate Governance Experience • Operational Leadership • Global Business | |||
Qualifications: Mr. Bolten’s qualifications to serve on the Board also include his financial, leadership, and governmental experience in his position prior to January 2017 as Managing Director of Rock Creek Global Advisors, an international advisory firm, and his prior positions as White House Chief of Staff to President George W. Bush; Director of the Office of Management and Budget; White House Deputy Chief of Staff; General Counsel to the U.S. Trade Representative; and Chief Trade Counsel to the U.S. Senate Finance Committee, and his current experience as President and Chief Executive Officer of the Business Roundtable and a member of the Boards of the U.S. Holocaust Memorial Museum, the ONE Campaign and Princeton University.
Current • International Advisory Board of BP plc • PIMCO Global Advisory Board | ||||
Each biography is supplemented with the inclusion of three key experiences that each Director brings to the Board.
MANAGEMENT PROPOSALS
Age: Director Since: 2020 Committees: • Compensation Committee • Finance Committee | WILLIAM H. EASTER III FORMER CHAIRMAN AND PRESIDENT AND CHIEF EXECUTIVE OFFICER, DCP MIDSTREAM LLC, A LARGE MIDSTREAM PETROLEUM SERVICE COMPANY Key Experiences: • CEO Experience • Operational Leadership • Global Business Experience Qualifications: Mr. Easter’s qualifications to serve on the Board also include his extensive leadership, operational, and government affairs experience gained from his past service as Chairman, President and CEO of DCP Midstream LLC and his more than 30 years in senior roles with ConocoPhillips; his current service as a director and member of the Audit and Corporate Practices Committee of Grupo Aeromexico, S.A.B.; his current service as a director and Chair of the Compensation Committee and member of the Nominating & Governance Committee of Concho Resources Inc.; and his current service as a director and Chair of the Audit Committee and member of the Governance and Safety & Security Committees of Delta Airlines Inc. He also serves Chairman of the Board of the Memorial Hermann Hospital System in Houston. Current Public Company Directorships: • Concho Resources Inc. • Delta Airlines Inc. • Grupo Aeroméxico, S.A.B. de C.V. Prior Public Company Directorships (year service ended): • Baker Hughes, Inc. (2017) |
Age: 55
Director Since: 2018
Committees: • Audit Committee • Finance Committee | LORI M. LEE CHIEF EXECUTIVE OFFICER, AT&T LATIN AMERICA GLOBAL MARKETING OFFICER, AT&T, INC., A GLOBAL TECHNOLOGY, MEDIA AND TELECOMMUNICATIONS COMPANY
| ||
Qualifications: Ms. Lee’s qualifications to serve on the Board also include her leadership, international and global marketing experience in her prior positions as Senior Executive Vice President and Global Marketing Officer AT&T, Inc. from April 2015 through July 2017; Senior Executive Vice President – Home Solutions, AT&T, Inc. from April 2013 through March 2015; Executive Vice President – Home Solutions, AT&T, Inc.; Chief Marketing Officer – Home Solutions, AT&T Services, Inc.; Senior Vice President – Small Business Marketing, AT&T Services, Inc.; Senior Vice President – Customer Care, AT&T Operations, Inc.; Senior Vice President-Corporate Strategy, AT&T Operations, Inc.; Senior Vice President – Strategic Planning, AT&T Operations, Inc.
Ms. Lee has also been a licensed Certified Public Accountant and has held numerous Vice President of Finance Positions. | |||
Continuing Directors
The following Directors are not standing for election at the 2019 Annual Meeting of Shareholders.
Directors with Terms ending in 2020
| 54 | PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS |
MANAGEMENT PROPOSALS
Directors with Terms Ending in 2023
Age: Director Since: 2019 Committees: • Compensation Committee • Nominating Committee | MARTIN S. CRAIGHEAD FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, BAKER HUGHES, INC., AN INDUSTRIAL SERVICE COMPANY Key Experiences: • CEO Experience • Global Business Experience • Business Development Expertise Qualifications: Mr. Craighead’s qualifications also include his leadership experience, global business experience and extensive background in the oil and gas industry, including his prior service as Chairman of Baker Hughes from April 2013 to July 2017; as Chief Executive Officer of Baker Hughes from January 2012 to July 2017; and as President of Baker Hughes from July 2010 to July 2017. He first joined Baker Hughes in 1986 and was its Chief Operating Officer from 2009 to 2012 and Group President of drilling and evaluation from 2007 to 2009. He also served as President of INTEQ from 2005 to 2007 and President of Baker Atlas from February 2005 to August 2005. Mr. Craighead was also the Vice Chairman of Baker Hughes from July 2017 to May 2019. Current Public Company Directorships: • PQ Corporation • Texas Instruments |
Age: 65
Director Since: 2000
Committees: • Executive Committee | DAVID N. FARR CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, EMERSON
| ||
• Global Business Experience • Business Development Expertise
Qualifications: Mr. Farr’s qualifications to serve on the Board also include his prior leadership, international and planning experience as Chief Operating Officer of Emerson; Executive Vice President and Business Leader, Emerson Process Management; Chief Executive Officer of Astec International, a former Hong Kong based Emerson subsidiary; President, Ridge Tool Company, a subsidiary of Emerson; and Vice President, Emerson Corporate Planning and Development, and as a Director of International Business Machines Corporation.
Current Public Company Directorships: • International Business Machines Corporation (IBM) | |||
MANAGEMENT PROPOSALS
Age:
Director Since: 2017
Committees: • Compensation Committee • Finance Committee | GLORIA A. FLACH RETIRED CORPORATE VICE PRESIDENT AND CHIEF OPERATING OFFICER, NORTHROP GRUMMAN CORPORATION, A GLOBAL SECURITY COMPANY
• Global • Technology and Innovation Expertise | |||
Qualifications: With over 35 years in the aerospace and defense industry, Ms. Flach’s qualifications to serve on the Board include her leadership, international and
| ||||
Age:
Director Since: 2012
Committees: • Audit Committee • | MATTHEW S. LEVATICH FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER,
| |||
• Operational Leadership • Global Business Experience
Qualifications: Mr. Levatich’s qualifications also include his extensive manufacturing, global marketing and management experience as a former Harley-Davidson executive, including his prior service as President and Chief Executive Officer from May 2015 to March 2020; as President and Chief Operating Officer of Harley-Davidson Motor Company, Inc. from 2009 to May 2015; as President and Managing Director of MV Agusta Motor S.p.A., a subsidiary of Harley-Davidson, Inc.; and as Vice President and General Manager, Parts & Accessories and Custom Vehicle Operations of Harley-Davidson, Inc.; and his experience on the executive advisory board of the MMM Program at the J. L. Kellogg Graduate School of Management and Robert R. McCormick School of Engineering and Applied Sciences at Northwestern University.
| ||||
MANAGEMENT PROPOSALS
Directors with Terms Ending in 2021
|
| |||
| ||||
|
| |||
Prior Public Company Directorships (year service ended): • Harley-Davidson, Inc. (2020) | ||||
| |
MANAGEMENT PROPOSALS
|
| |||
| ||||
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
In accordance with its Charter, the Audit Committee has selected KPMG LLP, independent registered public accounting firm, to audit the Company’s consolidated financial statements for fiscal 2019.2021. KPMG LLP served as the Company’s independent registered public accounting firm for fiscal 20182020 and has been retained continuously as the Company’s external auditor for more than 50 years.since 1938.
The members of the Audit Committee (i) having received KPMG LLP’s written independence report and having discussed same with KMPG LLP; and (ii) having assessed KPMG LLP’s past service and qualifications believe that the continued retention of KPMG LLP is in the best interests of the Company and its shareholders. The Audit Committee is asking the shareholders to ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019.2021.
The Audit Committee is not required to take any action as a result of the outcome of this ratification vote. In the event shareholders fail to ratify the appointment, the Audit Committee may reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the Committee determines that such a change would be in the Company’s and the shareholders’ best interests.
The Audit Committee has approved in advance all services provided by KPMG LLP. A member of KPMG LLP willis expected to be present at the meeting with the opportunity to make a statement and respond to appropriate questions from shareholders.
OUR BOARD AND AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE
“FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
OUR BOARD AND AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. |
MANAGEMENT PROPOSALS
Proxy Item No. 3:ADVISORY VOTE ON EXECUTIVE COMPENSATION
At each of the last eightten Annual Meetings of Shareholders, over 90% of shares voted were in support of the Company’s executive compensation program. Pursuant to Section 14A of the Exchange Act and SEC rules, our Board of Directors is again submitting for a non-binding shareholder vote our executive compensation as described in this proxy statement (commonly referred to as “say-on-pay”“say-on-pay”). We plan to hold this vote annually.
Emerson is a performance-driven, financially focused company with a long track record of strong performance in good economic times, and stable profitability and returns to shareholders even when economic conditions are unfavorable. Our pay for performance executive compensation program is an integral part of our consistent and rigorous management process. We believe it has effectively motivated and rewarded Emerson executives to meet the challenges of recessions, inflationary periods, technological changes and intense global competition, and it continues to do so today.
We encourage shareholders to review the Compensation Discussion and Analysis on pages 19 to 32.35. The Company’s executive compensation program supports Emerson’s rigorously-applied management, organizational review and compensation planning processes, which have been implemented over the years by successive teams of talented and committed executives.
The foundational elements of our program include paying for performance, maximizing shareholder value without excessive risk, aligning executive and shareholder interests, providing competitive pay to attract and retain executives and rewarding results while recognizing individual contributions.
We believe the program strikes the appropriate balance between responsible, measured pay practices and incentivizing our executives to dedicate themselves fully to value creation for our shareholders, as evidenced by Emerson’s pay practices:
Pay for Performance.NEO compensation is tied to Company performance.
We Target Competitive and Market Based Pay with Actual Pay Dependent on Performance.
Long-Term Performance. Our primary incentive compensation – performance shares – is based on the Company’s achievement of established financial objectives over a minimum three yearthree-year performance period.
Maximize Shareholder Value While Mitigating Risk. Our performance shares program is based on above-market growth targets and rewards growth over the long term, discouraging short-term risk taking.
Alignment with Shareholders. We have substantial stock ownership requirements, which our NEOs greatly exceed, and blackout, expanded clawback, pledging and anti-hedging policies.
No Tax Gross-Ups. We do not provide tax gross-ups to our NEOs.NEOs (except with respect to our relocation policy applicable to all employees).
No Employment, Severance or Golden Parachute Agreements with any of our NEOs.
Non-compete, Non-solicitation and Confidentiality Agreements. We require executives to enter into non-competition, non-solicitation and confidentiality agreements as a condition of all equity awards.
Double Trigger Change of Control.We utilize double trigger provisions on change of control in our 2011 Stock Option Plan and in our 2015 Incentive Shares Plan.
We regularly evaluate the individual elements of our compensation program in light of market conditions and governance requirements and make changes as appropriate for Emerson’s business.
The Board strongly endorses the Company’s executive compensation program and recommends that the shareholders vote in favor of the following resolution:
RESOLVED, that the shareholders approve the compensation of the Company’s named executive officers as described in this proxy statement under “Executive Compensation” and “Compensation Tables”, including the Compensation Discussion and Analysis and the tabular and narrative disclosure contained in this proxy statement.
Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee, and neither the Board nor the Compensation Committee will be required to take any action as a result of the vote. The Compensation Committee will carefully evaluate the outcome of the vote when considering future executive compensation arrangements. After our Annual Meeting on February 5, 2019,2, 2021, we expect that the next say-on-pay vote will occur at our next Annual Meeting scheduled to be held on February 4, 2020.1, 2022.
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE
“FOR” THIS PROPOSAL.
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Ownership of Emerson Equity Securities
Ownership of Directors and Executive Officers
The following table shows the number of shares of the Company’s common stock that are beneficially owned by the Directors, by each of the NEOs, and by all Directors and executive officers as a group, as of September 30, 2018.2020. No person reflected in the table owns more than 0.5% of the outstanding shares of Emerson common stock.
Name | Total Shares of Emerson Common Stock Beneficially Owned(1)(2) | ||||
Blinn | |||||
Clemens A. H. Boersig | |||||
Joshua B. Bolten | |||||
Martin S. Craighead | |||||
Frank J. Dellaquila(3) | |||||
William H. Easter III(4) | |||||
David N. Farr(5) | |||||
Gloria A. Flach | |||||
Arthur F. Golden | |||||
Surendralal Karsanbhai(6) | |||||
Candace Kendle(7) | |||||
Lori M. Lee | |||||
Matthew S. Levatich | |||||
Steven J. Pelch | |||||
Robert T. Sharp | 132,105 | ||||
Michael H. Train | 210,943 | ||||
James S. Turley | 17,239 | ||||
All Directors and Executive Officers as a group | |||||
| (1) | Under rules of the SEC, persons who have power to vote or dispose of securities, either alone or jointly with others, are the beneficial owners of such securities. Each person reflected in the table has both sole voting power and sole investment power with respect to the shares included in the table, except as described in the footnotes below and except for the following shares of restricted common stock over which the person named has no investment power: Mr. |
| (2) | As required by SEC rules, includes the following shares which such persons have, or will have within 60 days after September 30, |
| (3) | Includes 8,442 shares held by the spouse of Mr. Dellaquila. Also includes 56,486 shares held by the FJD Gift Trust, a grantor trust for Mr. Dellaquila with Mr. Dellaquila’s spouse and descendants as beneficiaries and Mr. Dellaquila as trustee. Also includes 75,315 shares held by the SRD Gift Trust, a grantor trust for Mr. Dellaquila’s spouse with Mr. Dellaquila’s descendants as beneficiaries and Mr. Dellaquila and his spouse as trustees. |
| (4) | Mr. Easter was elected to the Board in October 2020. His share ownership is stated as of October 6, 2020. |
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 59 |
OWNERSHIP OF EMERSON EQUITY SECURITIES
| (5) | Includes |
Includes 907 shares held as custodian for Mr. Karsanbhai’s son and daughter and 23,129 shares held by trust over which Mr. Karsanbhai exercises investment power. |
| (7) | Includes 1,200 shares held by the spouse of Dr. Kendle. |
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OWNERSHIP OF EMERSON EQUITY SECURITIES
| (8) | Includes |
| (9) | Includes |
| (10) |
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Ownership of Greater than 5% Shareholders
The following table lists the beneficial ownership of each person holding more than 5% of Emerson’s outstanding common stock as of September 30, 20182020 based on a review of filings with the SEC on Schedule 13G.
Name and Address
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Total Shares of Beneficially Owned
| Percent of Class
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Total Shares of Beneficially Owned
| Percent of Class
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The Vanguard Group (1) | 44,860,753 | 6.98 | % | 47,837,520 | 7.9 | % | ||||||||||||||
100 Vanguard Blvd., Malvern, PA 19355
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BlackRock, Inc. (2) | 41,049,012 | 6.4 | % | 47,061,626 | 7.7 | % | ||||||||||||||
55 East 52nd Street, New York, NY 10055
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| (1) | The Vanguard Group filed a Schedule 13G/A on February |
| (2) | BlackRock, Inc. filed a Schedule 13G/A on |
The Company is not aware of any other shareholders who beneficially own more than 5% of its outstanding common stock.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company’s Directors and executive officers are required, pursuant to Section 16(a) of the Exchange Act, to file statements of beneficial ownership and changes in beneficial ownership of common stock of the Company with the SEC and the NYSE, and to furnish copies of such statements to the Company. Based solely on a review of the copies of such statements furnished to the Company and written representations that no other such statements were required, the Company believes that during fiscal 2018 its Directors and executive officers complied with all such requirements.
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Questions and Answers About the 20192021 Annual Meeting
1. Why did I receive these materials?
Our Board of Directors is soliciting proxies on its behalf to be voted at the 20192021 Annual Meeting of Shareholders on February 5, 20192, 2021 at 10:00 a.m., Central Time, at the Headquarters of the Company, 8000 W. Florissant Avenue, St. Louis, MO 63136. The proxies also may be voted at any adjournments or postponements of the meeting. All properly executed written proxies, and all properly completed proxies submitted by telephone or by the internet, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy, unless the proxy is earlier revoked.
2. How are these materials being distributed?
On or about December 14, 2018,11, 2020, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to certain shareholders of record as of November 27, 2018,24, 2020, and posted our proxy materials for shareholder access at www.proxyvote.com. As more fully described in the Notice, shareholders may also request printed proxy materials. The Notice and website also provide information regarding how you may request proxy materials in printed or electronic form or electronically on an ongoing basis. We also mailed proxy materials to certain shareholders.
3. Why am I getting these materials from my broker, bank or other nominee, and not directly from Emerson?
If you hold your shares through a broker, bank or other nominee, you may also receive either the Notice or printed proxy materials from that entity, as required by SEC rules.
4. What is the difference between a shareholder of record and a shareholder who holds shares in street name?
If your shares are registered in your name on the books and records of our transfer agent, Computershare Trust Company, N.A., you are a shareholder of record. If your shares are held for you in the name of your broker, bank or other nominee, your shares are held in street name.
5. What is the record date and what does it mean?date? Who can vote?
The record date for the 20192021 Annual Meeting is November 27, 201824, 2020 (“record date”). The record date was established by our Board under Missouri law. Holders of Emerson common stock at the close of business on the record date are entitled to receive notice of and vote at the meeting, or in the case of holders in street name, provide voting instructions to their broker, bank or other nominee. Each shareholder of record on the record date is entitled to one vote for each share of our common stock held on
that date. There is no cumulative voting with respect to the election of Directors. On the record date, there were issued and entitled to be voted 623,121,869599,468,617 shares of our common stock, par value $0.50 per share.
6. What are the different methods I can use to vote my shares?
By Telephone or Internet: All shareholders of record may vote their shares by telephone (within the United States, U.S. territories and Canada, there is no charge for the call) or by internet, using the procedures and instructions described on the proxy card, notice of internet availability of proxy materials and other enclosures. If you vote by telephone or internet, you need not mail back your proxy card. A control number, located on the proxy card or Notice, must be provided to verify your identity and allow you to vote your shares and confirm that your voting instructions have been properly recorded.
Street name holders may vote by telephone or internet if their brokers, banks or other nominees make those methods available. Each broker, bank or other nominee will enclose instructions with the proxy materials. Follow the voting instructions on the form you receive from that firm.
In Writing: All shareholders also may vote by mailing their completed and signed proxy card (in the case of shareholders of record) or their completed and signed voting instruction form (in the case of street name holders).
In Person: All shareholders of record may vote in person at the meeting. Street name holders must obtain a legal proxy from their broker, bank or other nominee and bring the legal proxy to the meeting in order to vote in person at the meeting. If we decide to hold the Annual Meeting in a virtual-only or hybrid format, we will announce it in advance in a press release, and details will be posted on our website at www.Emerson.com, Investors, Investor Resources, Shareholder Information and filed as additional proxy soliciting material with the Securities and Exchange Commission. If you are planning to attend our Annual Meeting, please monitor our website prior to the meeting date.
7. How many votes must be present to hold the 20192021 Annual Meeting?
To conduct the meeting, a majority of our issued and outstanding shares entitled to vote as of the record date for the meeting November 27, 2018,24, 2020, must be present in person or by proxy at the meeting. This is referred to as a quorum.
Your shares are counted as present at the meeting if you attend the meeting and vote in person or if you properly vote by internet,
| PROXY STATEMENT FOR EMERSON 2021 ANNUAL MEETING OF SHAREHOLDERS | 61 |
QUESTIONS AND ANSWERS ABOUT THE 2021 ANNUAL MEETING
telephone or mail. Abstentions, proxies which are marked or voted to deny discretionary authority on other matters and shares of record held by a broker, bank or other nominee (“broker shares”) that are voted on any matter are also included in determining the number of shares present. Broker shares that are not voted on any matter will not be included in determining whether a quorum is present.
QUESTIONS AND ANSWERS ABOUT THE 2019 ANNUAL MEETING
8. What vote is required to pass the proposals?
If a quorum is present, the affirmative vote of a majority of the shares entitled to vote whichthat are present in person or represented by proxy at the 20192021 Annual Meeting is required to elect Directors, to ratify the appointment of KPMG, to approve the compensation of the Company’s NEOs and to act on any other matters properly brought before the meeting.
Shares represented by proxies which are marked or voted “withhold authority” with respect to the election of any one or more nominees for election as Directors, proxies which are marked or voted “abstain” on the other proposals, and proxies which are marked or voted to deny discretionary authority on other matters will be counted for the purpose of determining the number of shares represented by proxy at the meeting. Such proxies will thus have the same effect as a vote against such nominee or nominees, against such proposals and against such other matters, respectively.
9. What if I do not specify a choice for a matter when returning a proxy?
If your proxy card is signed and returned without specifying choices, the shares will be voted FOR the nominees for Director in Proposal 1, FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm in Proposal 2 and FOR the approval, on an advisory basis, of the compensation of the Company’s NEOs in Proposal 3. Otherwise, signed proxy cards without specified choices will be voted in the discretion of the proxies.
10. How will my shares be voted on any other matters to come before the meeting?
The Company knows of no other matters to come before the meeting. If any other matters properly come before the meeting, the proxies solicited hereby will be voted on such matters in the discretion of the persons voting such proxies, who are members of the Company’s management, except proxies which are marked to deny discretionary authority. The Company knows of no reason why any of the nominees for Director named herein would be unable to serve. In the event, however, that any nominee named should prior to the election become unable to serve as a Director, your proxy (unless designated to the contrary) will be voted for such other person or persons, if any, as the Board of Directors of the Company may recommend.
11. Will my shares be voted if I do not provide my proxy or voting instructions?
Shareholders of Record: If you are a shareholder of record, your shares will not be voted if you do not provide your proxy or vote in person at the meeting. It is, therefore, important that you vote your shares.
Street Name Holders: If your shares are held in street name and you do not provide your voting instructions to your broker, bank or other nominee, your shares may be voted by your broker, bank or other nominee only on certain “routine” matters, pursuant to rules of the NYSE.
Only the ratification of the selection of KPMG LLP as our independent registered public accounting firm is considered a “routine” matter for which brokers, banks or other nominees may vote uninstructed shares. The other proposals to be voted on at the meeting are not considered “routine” under NYSE rules. If you do not provide voting instructions on a non-routine matter, your broker may indicate on the proxy that it does not have discretionary voting authority and your shares will not be voted on that matter, which is referred to as a “broker non-vote.” Broker non-votes will not be considered as present and entitled to vote with respect to that matter and thus will have no effect on the outcome of the vote with regard to such matters.
12. How can I revoke a proxy or change my vote?
You may revoke your proxy at any time before it is voted (in the case of proxy cards) by giving notice to the Secretary of the Company or by executing and mailing a later-dated proxy. To revoke a proxy, or change your vote cast, by telephone or internet, you must do so by telephone or internet, respectively (following the directions on your proxy card), by 11:59 p.m. Eastern Standard Time on February 4, 2019.1, 2021. If your shares are held in street name, you should follow the instructions provided by your broker, bank or other nominee to revoke or change your voting instructions
13. Who will pay the cost of this proxy solicitation?
The solicitation will be by internet and mail and the expense thereof will be paid by the Company. The Company has retained Saratoga Proxy Consulting, LLCMacKenzie Partners, Inc. to assist in the solicitation of proxies at an estimated cost of $15,000 plus expenses. In addition, solicitation of proxies may be made by additional mailings, electronic mail, telephone or in person by Directors, officers or other employees of the Company and we may request brokerage houses, banks and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of shares held of record by such persons. We will reimburse such persons for expenses incurred in forwarding such soliciting material.
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QUESTIONS AND ANSWERS ABOUT THE 20192021 ANNUAL MEETING
14. How do I obtain admission to the 20192020 Annual Meeting?
Please see “Proxy Statement Summary—Attending the Meeting” above for information on attending the meeting and required information. If you have questions regarding whether you have the required information, directions, or if you require any special accommodations due to a disability, please contact the Emerson Investor Relations Department at 314-553-2197 in advance of the meeting. The meeting facilities will open at 9:30 a.m., Central Time, to facilitate your registration and security clearance. For your security, you will not be permitted to bring any packages, briefcases, large pocketbooks or bags into the meeting. Also, cellular and digital phones, audio tape recorders, video and still cameras, laptops and other portable electronic devices will not be permitted into the meeting. We thank you in advance for your patience and cooperation with these rules.
15. What does it mean if I receive more than one proxy card?
It means that you have multiple accounts with brokers and/or our transfer agent. Please vote all shares represented by each proxy card or other voter information card received from your bank or broker. We recommend that you contact your bank or broker, or our transfer agent, to consolidate as many accounts as possible under the same name and address. Our transfer agent is Computershare Trust Company, N.A, P.O. Box 505000, Louisville, Kentucky 40233; you can reach Computershare at 1-888-213-0970 (from within the U.S. or Canada) or 1-781-575-2879 (from outside the U.S. or Canada).
16. May shareholders ask questions at the 20192021 Annual Meeting?
Yes. The Chairman will answer shareholders’ questions during the Q&A period of the meeting. In order to provide an opportunity for everyone who wishes to ask a question, each shareholder will be limited to two minutes. Shareholders may ask a second question only after all others have first had their turn and if time allows. When speaking, shareholders must direct questions to the Chairman and confine their questions to matters that relate directly to the business of the meeting.
17. Is it possible that the Annual Meeting will be changed to a virtual or hybrid format?
Although we are currently planning to hold the Annual Meeting in person, in light of the ongoing public health concerns surrounding the coronavirus (COVID-19) outbreak, we may deem it necessary to hold the Annual Meeting solely by means of remote communication (i.e., a virtual-only meeting) or as a hybrid meeting (i.e., permitting both virtual and in-person attendance) in lieu of an in-person meeting at our headquarters. If we decide to hold a virtual or hybrid Annual Meeting, we will announce it in advance in a press release, and details will be posted on our website at www.Emerson.com, Investors, Investor Resources, Shareholder Information and filed as additional proxy soliciting material with the Securities and Exchange Commission. In that event, the Annual Meeting would be held on the above date and time but would be available via live audio webcast, and shareholders or their legal proxy holders could participate, submit questions, vote, and examine our shareholder list at the Annual Meeting by visiting www.virtualshareholdermeeting.com/EMR2021 and using your 16-digit control number. If you are planning to attend our Annual Meeting, please monitor our website prior to the meeting date.
Future Shareholder Proposals and Nominations
Proposals for Inclusion in Proxy Statement Pursuant to Rule 14a-8
Proposals of shareholders intended to be presented at the 20202022 Annual Meeting scheduled to be held on February 4, 2020,1, 2022, must be received by the Company by August 16, 201913, 2021 for inclusion in the Company’s proxy statement and proxy relating to that meeting pursuant to Rule 14a-8 under the Exchange Act. Upon receipt of any such proposal, the Company will determine whether or not to include such proposal in the proxy statement and proxy in accordance with regulations governing the solicitation of proxies.
Proposals and Nominations Not for Inclusion in Proxy Statement
In accordance with our Bylaws, a shareholder who intends to submit an item of business, including a Director nomination or other proposal, outside of our proxy statement, at an Annual Meeting must comply with the requirements of our Bylaws including the provision of timely notice to the Secretary of Emerson in advance of the meeting. To be timely, a shareholder’s notice ordinarily must be received at the principal executive offices of the Company not less than 90 nor more than 120 days before the meeting, i.e.,meeting. For the 2022 Annual Meeting of Shareholders to be held on February 1, 2022, such notice must be received between October 74 and November 6, 2019 for the 2020 Annual Meeting.3, 2021. However, if the Company gives less than 100 days’ (1) notice of the meeting or (2) prior public disclosure of the date of the meeting, then such notice must be received within 10 days after notice of the meeting is mailed or other public disclosure of the meeting is made.
A shareholder’s notice to the Secretary shall set forth (i) as to each matter the shareholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the Annual Meeting, and (ii) as to the proposing shareholder(s) and the beneficial owner, if any, on whose behalf the proposal is made, and their respective affiliates or associates or others acting in concert therewith various “proposing shareholder information” as specified in detail in our Bylaws. This proposing shareholder information includes such information as material interests or arrangements, names and addresses, the number of shares beneficially owned, any derivative or hedging positions, any material interest in any contract with the Company or any affiliate or competitor, all information that would be required to be set forth in a Schedule 13D (or an amendment) if such a statement were required, any other information relating to any such person that would be required to be disclosed in a proxy statement or proxy contest, a representation whether any such person is or intends to participate in the solicitation of proxies, and a representation that the shareholder is a shareholder of record entitled to vote and intends to continue to hold such stock of the Company through the meeting.
In addition to the proposing shareholder information, for Director nominations outside of our proxy statement, the notice shall also include, as to each person whom the shareholder proposes to nominate, the information specified in detail in our Bylaws. Such information includes the name, age, business address and residence of such nominee, the principal occupation, the number of shares beneficially owned, any other information relating to such person that is required to be disclosed in solicitations of proxies for Director elections or is otherwise required, in certain cases details of any relationship, or understanding between the shareholder(s) and the nominee.
Our Bylaws also set out specific eligibility requirements that nominees for Director must satisfy, which require nominees to:
complete and return a written questionnaire with respect to the background and qualification of the nominee and the background of any other person or entity on whose behalf the nomination is being made; and
provide a written representation and agreement that the nominee:
| ○ | is not and will not become a party to (1) any agreement or arrangement with, and has not given any commitment or assurance to, any person as to how such nominee will act or vote (a “Voting Commitment”) that has not been disclosed to us or (2) any Voting Commitment that could limit or interfere with the nominee’s ability to comply with the nominee’s fiduciary duties under applicable law; |
| ○ | is not and will not become a party to any agreement or arrangement with any person with respect to any compensation, reimbursement or indemnification in connection with service as a director that has not been disclosed therein; and |
| ○ | if elected, would be in compliance and will comply with all of our applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines. |
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OTHER MATTERS
These requirements are separate from the requirements a shareholder must meet to have a proposal included in the Company’s proxy statement. The foregoing time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority.
Director Nominees for Inclusion in Proxy Statement (Proxy Access)
In August 2017, the Board amended the Bylaws to permit a holder (or a group of not more than 20 holders) of at least 3% of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the nominating holder(s) and the nominee(s) satisfy the requirements specified in the Bylaws, including providing the Company with advance notice of the nomination. Notice of director nominees submitted under these Bylaw provisions must be delivered to and received by the Secretary of the Company, whose address is 8000 West Florissant Avenue, St. Louis, Missouri 63136, no sooner than July 17, 201914, 2021 and no later than August 16, 2019,13, 2021, to be considered timely for purposes of the Company’s 20202021 Annual Meeting.
To utilize proxy access, among other things, the electing shareholder and proposed nominee must comply with the detailed requirements set forth in our Bylaws, including the provision of the proposing shareholder information, various other required information, representations, undertakings, agreements and other requirements as set forth in the Bylaws and as required by law.
In each case the notice must be given to the Secretary of the Company, whose address is 8000 West Florissant Avenue, St. Louis, Missouri 63136. Any shareholder desiring a copy of the Company’s Bylaws will be furnished one without charge upon written request to the Secretary. A copy of the Bylaws is available on the Company’s website at www.Emerson.com, Investors, Corporate Governance, Bylaws.
Communications with the Company and Obtaining Emerson Documents
Shareholders and other interested persons may contact the Lead Independent Director or any of our Directors in writing c/o Emerson Electric Co., 8000 West Florissant Avenue, St. Louis, Missouri 63136, Attn: Secretary. All such letters will be forwarded promptly to the Lead Independent Director or relevant Director.
The Company’s Corporate Governance Principles and Practices and the charters of all Board committees are available on the Company’s website at www.Emerson.com, Investors, Corporate Governance. The foregoing documents are available in print to shareholders upon written request delivered to Emerson Electric Co., 8000 West Florissant Avenue, St. Louis, Missouri 63136, Attn: Secretary.
Additional Filings
The Company’s Forms 10-K, 10-Q, 8-K and all amendments to those reports are available without charge through the Company’s website on the internet as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. They may be accessed as follows: www.Emerson.com, Investors, SEC filings. Information on our website does not constitute part of this proxy statement.
Householding of Proxies
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for annual reports, proxy statements and notices of internet availability of proxy materials with respect to two or more shareholders sharing the same address by delivering a single annual report, proxy statement and/or a notice of internet availability of proxy materials addressed to those shareholders. This process, which is commonly referred to as “householding,” can provide extra convenience for shareholders and cost savings for companies. The Company and some brokers household annual reports, proxy materials and notices of internet availability of proxy materials, delivering a single annual report, proxy statement and and/or notice of internet availability of proxy materials to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders.
Once you have received notice from your broker or the Company that your broker or the Company will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate annual report, proxy statement and notice of internet availability of proxy materials, or if you currently receive multiple copies of these documents and would prefer to participate in householding, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a written request to Emerson Electric Co., 8000 West Florissant Avenue, St. Louis, Missouri 63136, Attn: Investor Relations, or by telephoning 314-553-2197 or by visiting our website.
EMERSON DIRECTOR INDEPENDENCE STANDARDS
In order to be considered independent under the rules of the New York Stock Exchange, the Board must determine that a director does not have any direct or indirect material relationship with Emerson Electric Co. (“Emerson”). The Board has established the following guidelines to assist it in determining director independence under the NYSE rules. Any Director who meets the following standards will be deemed independent by the Board:
1. The Director was not employed by Emerson, and no immediate family member of the Director was employed by Emerson as an executive officer, within the preceding three years;
2. The Director is not a partner or employee of Emerson’s independent auditor, and no immediate family member of the Director is a partner of Emerson’s independent auditor, or is employed by such auditor and personally works on Emerson’s audit, and neither the Director nor any immediate family member has been within the preceding three years a partner of or employed by Emerson’s independent auditor and has personally worked on Emerson’s audit within that time;
3. Neither the Director nor any immediate family member of the Director was employed as an executive officer by any company at the same time any Emerson executive officer served as a member of such company’s compensation committee within the preceding three years;
4. Neither the Director, nor any member of the Director’s immediate family received in any twelve-month period during any of Emerson’s last three fiscal years direct compensation in excess of $120,000 from Emerson other than regular director compensation, pension and other deferred payments that are not in any way contingent on continued service to Emerson, and compensation received by an immediate family member for service as a non-executive officer of Emerson;
5. If the Director is an employee of, or if any immediate family member is an executive officer of, another organization that does business with Emerson, the annual sales to, or purchases from, Emerson by such company in each of the last three fiscal years were less than the greater of two percent of the annual revenues of such company or $1,000,000;
6. If the Director is an executive officer of another organization which is indebted to Emerson, or to which Emerson is indebted, the total amount of either company’s indebtedness to the other is less than two percent of the total consolidated assets of the company the Director serves as an executive officer;
7. If the Director is, or is a director, executive officer or greater than 10% owner of an entity that is, a paid advisor, paid consultant or paid provider of professional services to Emerson, any member of Emerson’s senior management or any immediate family member of a member of Emerson’s senior management, the amount of such payments is less than the greater of 2% of such entity’s annual revenues or $1,000,000 during Emerson’s current fiscal year;
8. If the Director is a partner, principal or counsel in a law firm that provides professional services to Emerson, the amount of payments for such services is less than the greater of 2% of such law firm’s annual revenues or $1,000,000 during Emerson’s current fiscal year;
9. If the Director serves as an officer, director or trustee of a charitable organization to which Emerson makes contributions: (i) Emerson’s discretionary contributions to such organization are less than the greater of two percent of such organization’s total annual charitable receipts or $1 million; (ii) Emerson’s contributions are normal matching charitable gifts and similar programs available to all employees and independent directors; or (iii) the charitable donation goes through the normal corporate charitable donation approval processes, and is not made “on behalf of” a Director;
10. The Director’s ownership of Emerson stock, direct or indirect, is less than 1% of the total outstanding Emerson stock;
11. If the Director is affiliated with, or provides services to, an entity in which Emerson has an ownership interest, such ownership interest is less than 20%; and
12. Any other relationship between the Director and Emerson not covered by the standards set forth above is an arrangement that is usually and customarily offered to customers of Emerson.
If any relationship exists between Emerson and any Director that is not addressed by the standards set forth above, the Directors meeting these standards shall determine whether such relationship impairs the independence of such Director.
| A-1 | PROXY STATEMENT FOR EMERSON |
Emerson
World Headquarters
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, MO 63136
Emerson.com
EMERSON ELECTRIC CO.
8000 WEST FLORISSANT AVENUE
P.O. BOX 4100
ST. LOUIS, MO 63136-8506
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING. BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. IF YOU VOTE BY INTERNET OR PHONE, YOU DO NOT NEED TO RETURN THIS PROXY CARD.
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on February 1, 2021 for shares held directly and by 11:59 P.M. Eastern Time on January 28, 2021 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by Emerson Electric Co. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on February 1, 2021 for shares held directly and by 11:59 P.M. Eastern Time on January 28, 2021 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote by mail, your proxy card must be received prior to the start of the Annual Meeting of Shareholders for your vote to be counted.
SPECIAL VOTING DEADLINE NOTICE TO PARTICIPANTS IN EMERSON ELECTRIC CO. BENEFIT PLANS
If you own shares of Emerson Electric Co. common stock through any benefit plan of Emerson or any of its subsidiaries, the shares represented by your proxy card include those shares. To allow sufficient time for the plan trustees to vote, the trustees must receive your voting instructions by 11:59 P.M. Eastern Time on January 28, 2021. If the trustees do not receive your properly completed instructions by that date, the trustees will vote the shares in the same proportion as the votes that the trustees receive from other plan participants, unless otherwise required by law.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D27806-P46415-Z78439 KEEP THIS PORTION FOR YOUR RECORDS
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| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY | |||||
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THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING NOMINEES: | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||||
1. | ELECTION OF DIRECTORS FOR TERMS ENDING IN 2024 | |||||||||||||||||||||||||||||||||||||
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01) M. A. Blinn | ||||||||||||||||||||||||||||||||||||||
02) A. F. Golden | ||||||||||||||||||||||||||||||||||||||
03) C. Kendle | ||||||||||||||||||||||||||||||||||||||
04) J. S. Turley | ||||||||||||||||||||||||||||||||||||||
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||
| 2. | Ratification of KPMG LLP as Independent Registered Public Accounting Firm. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||
| 3. | Approval, by non-binding advisory vote, of Emerson Electric Co. executive compensation. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||
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The undersigned hereby acknowledges receipt of Notice of Annual Meeting and accompanying Proxy Statement. | ||||||||||||||||||||
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(NOTE:Please sign exactly as your name(s) appear(s) hereon. All holders must sign. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. If a corporation, please sign in full corporate name by authorized officer. If a partnership, please sign in partnership name by authorized person.) | ||||||||||||||||||||
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Please indicate if you plan to attend this meeting.
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ADMISSION TICKET
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, February 5, 20192, 2021
10:00 A.M., Central Standard Time
Currently Scheduled to be Held at
Emerson Electric Co. Headquarters
8000 West Florissant Avenue
St. Louis, MO 63136
PLEASE PRESENT THIS
NON-TRANSFERABLE TICKET AT THE REGISTRATION DESK UPON ARRIVAL* |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and our Annual Report to Shareholders for the fiscal year ended
September 30, 2018,2020, are available at www.proxyvote.com.
*Although we are currently planning to hold the Annual Meeting in person, in light of the ongoing public health concerns surrounding the COVID -19 pandemic, we may deem it necessary to make alternative arrangements for the Annual Meeting, which may include holding the meeting solely by means of remote communication. If we decide to hold a virtual Annual Meeting, we will announce it in advance in a press release, and details will be posted on our website at www.Emerson.com, Investors, Investor Resources, Shareholder Information and filed as additional proxy soliciting material with the Securities and Exchange Commission. In that event, the Annual Meeting would be held on the above date and time but would be available via live audio webcast, and shareholders or their legal proxy holders could participate, submit questions, vote, and examine our shareholder list at the Annual Meeting by visiting www.virtualshareholdermeeting.com/EMR2021 and using your 16-digit control number, but only if the meeting is held virtually and not in St. Louis. If you are planning to attend our Annual Meeting, please monitor our website prior to the meeting date. As always, we encourage you to vote the shares prior to the Annual Meeting.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, does hereby appoint D.N. FARR, S.Y. BOSCO, and J.A. SPERINO, or any of them, with full powers of substitution, the true and lawful attorneys-in-fact, agents and proxies of the undersigned to represent the undersigned at the Annual Meeting of the Shareholders of EMERSON ELECTRIC CO., to be held on February 5, 2019,2, 2021, commencing at 10:00 A.M., Central Standard Time, at the Headquarters of the Company, 8000 West Florissant Avenue, St. Louis, Missouri, or an alternative venue as determined by the Company (including live via the internet at www.virtualshareholdermeeting.com/EMR2021), and at any and all adjournments of said meeting, and to vote all the shares of Common Stock of the Company standing on the books of the Company which the undersigned is entitled to vote as specified and in their discretion on such other business as may properly come before the meeting. The matters stated on the reverse side were proposed by the Company, except as indicated.
THIS PROXY WILL BE VOTED AS SPECIFIED AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued, and to be marked, dated and signed, on the other side)
