UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

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Watsco, Inc.

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Watsco, Inc.

2665 South Bayshore Drive, Suite 901

Miami, Florida 33133

NOTICE OF THE 20192022 ANNUAL MEETING OF SHAREHOLDERS

By order of the Board of Directors,

BARRY S. LOGAN

SeniorExecutive Vice President and Secretary

April 26, 201929, 2022

This is an important meeting, and all shareholders of record as of April 5, 20198, 2022 are invited to attend the meeting and vote in person. We respectfully urge those shareholders who are unable to attend the meeting in person to execute and return the enclosed proxy card as promptly as possible in the enclosed return envelope. No postage is required if mailed in the United States. Any shareholder who executes a proxy card may nevertheless attend the meeting, revoke his or her proxy and vote his or her shares in person.

NOTICE: Brokers are not permitted to vote on Proposals 1 or 2any of the proposals contained in this Proxy Statement (other than proposal 3) without instructions from the beneficial owner of shares entitled to vote at the meeting. Therefore, if you hold your shares through a broker, bank or other nominee and you do not vote your shares in one of the ways described in this Proxy Statement, then your shares will not be voted in respect of Proposals 1 or 2any proposal contained in this Proxy Statement.Statement (other than, in the discretion of your nominee, proposal 3).

TABLE OF CONTENTS

WATSCO, INC.

2665 South Bayshore Drive, Suite 901

Miami, Florida 33133

PROXY STATEMENT

The Company’s 20182021 Annual Report and this Proxy Statement are available at:

www.watsco.com

You are receiving this Proxy Statement because you owned shares of Watsco, Inc. Common stock or Class B common stock as of April 5, 2019,8, 2022, which entitles you to vote those shares at our 20192022 annual meeting of shareholders. Our Board of Directors (referred to as the Board), is soliciting proxies from shareholders who wish to vote their shares at the meeting. By using a proxy, you can vote even if you do not attend the meeting. This Proxy Statement describes and provides information about the matters on which you are being asked to vote so that you can make an informed decision. Watsco, Inc. is referred to in this document as Watsco, we, us, our, and the Company.

This Proxy Statement and the enclosed form of proxy are first being mailed to our shareholders on or about April 26, 2019.29, 2022. Shareholders should review the information contained in this Proxy Statement together with our 20182021 Annual Report which accompanies this Proxy Statement.

Our Internet website and the information contained therein or linked thereto are not incorporated by reference or otherwise made a part of this Proxy Statement.

INFORMATION ABOUT OUR ANNUAL MEETING

When and where is the annual meeting?

The annual meeting will be held on Monday, June 3, 2019,6, 2022, at 9:00 a.m., Eastern Daylight Time at the University Club, 1 West 54^th Street, New York, New York 10019.Watsco, Inc. Corporate Office, 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133.

Who may attend the annual meeting?

Shareholders of record as of April 5, 20198, 2022 (which we refer to as the record date), or their duly appointed proxies, and our invited guests are permitted to attend the annual meeting. To gain admittance, you must bring valid photo identification to the meeting, and we will verify your name against our shareholder list. If a broker or other nominee holds your shares and you plan to attend the meeting, you must bring (1) a brokerage statement evidencing your share ownership as of the record date, (2) a legal proxy from the broker to vote the shares that are held for your benefit, and (3) valid photo identification.

What is the purpose of the annual meeting?

Our 20192022 annual meeting will be held for the following purposes:

Who may vote?

The Board set April 5, 20198, 2022 as the record date for the annual meeting. Holders of Watsco Common stock or Class B common stock at the close of business on the record date are entitled to vote their shares at the annual meeting, or any postponements or adjournments of the annual meeting.

There were 32,224,96233,151,638 shares of our Common stock and 5,408,0195,797,590 shares of Class B common stock issued and outstanding as of the record date, all of which are entitled to be voted at the annual meeting.

A list of shareholders will be available at our corporate office at 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133 during the ten days immediately preceding the annual meeting, and this list will be available at the annual meeting itself for examination by any shareholder entitled to attend the annual meeting.

What are the voting rights of Watsco shareholders?

Holders of our Common stock are entitled to one (1) vote per share, and holders of our Class B common stock are entitled to ten (10) votes per share on each matter that is submitted to shareholders for approval.approval, except with respect to the election of directors as described below.

Election of Directors

Holders of our Common stock vote separately to elect 25% of our number of directors (rounded up to the next whole number), which is presently three (3) directors. Holders of our Class B common stock vote separately to elect 75% of our number of directors (rounded down to the next whole number), which is presently six (6) directors.

Other Matters

Other than with respect to the election of directors, holders of our Common stock and our Class B common stock vote on a combined basis on all other matters or as otherwise required by applicable law.

How do I vote?

Shareholders of Record.You are a shareholder of record if you are registered as a shareholder with our transfer agent, American Stock Transfer & Trust Company, LLC. ToShareholders of record may vote their shares by mail, simply mark, sign and date your proxy card, and return it in the enclosed, postage-paid envelope.internet, telephone, or by mail. To vote in person, you must attend our annual meeting, bring valid photo identification, and deliver your completed proxy card in person.

Beneficial Shareholders.You are a beneficial shareholder if a brokerage firm, bank, trustee or other agent, referred to as a “nominee,” holds your shares. This is often called ownership in “street name” because your name

does not appear on the list of our registered shareholders maintained by our transfer agent. If you hold shares in

How many votes are needed for the proposals to pass?

Election of Directors

Under our Second Amended and RestatedBy-Laws (referred to as our By-Laws), if a quorum is present, to be elected as a director, a nominee must receive a majority of the votes of Common stock and Class B common stock, voting as separate classes to the extent they are entitled to vote on a nominee, cast in favor of such nominee’s election.

A properly executed proxy marked “WITHHOLD VOTE” with respect to the election of a director nominee will have the effect of a vote AGAINST the election of such nominee. Shareholders do not have the right to cumulate their votes for directors.

Approval of aNon-Bindingthe Advisory Resolution Regarding the Compensation of our Named Executive Officers

If a quorum is present, approval requires that a majority of the votes cast at the annual meeting are cast “FOR” approval.

Ratification of KPMG as our independent auditor

If a quorum is present, ratification of the appointment of our independent registered public accounting firm requires that a majority of the votes cast at the annual meeting are cast “FOR” ratification.

What is the effect of abstentions?

Proxies received but marked “ABSTAIN” will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining a quorum, but abstentions will not have an effect on the outcome of any proposal. As noted above, however, a properly executed proxy marked “WITHHOLD VOTE” with respect to the election of a director nominee will have the effect of a vote AGAINST the election of such nominee.

What are “brokernon-votes” and what effect do they have on the proposals?

Brokernon-votes occur when a broker, bank, or other nominee holds shares in “street name” for a beneficial owner and that nominee does not vote the shares because it (i) has not received voting instructions from the beneficial owner and (ii) lacks discretionary voting power to vote those shares with respect to a particular proposal. Brokernon-votes are counted for purposes of determining whether or not a quorum exists for the transaction of business but will not be counted as votes cast “for” or “against” any proposal and will have no effect on the voting results for any proposal.

A broker is entitled to vote shares held for a beneficial owner on “routine” matters without instructions from the beneficial owner of those shares, which include the proposal to ratify KPMG as our independent public accounting firm for the 20192022 fiscal year. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on“non-routine” matters, which include ProposalsProposal No. 1 and Proposal No. 2 described in this Proxy Statement.

If you hold your shares in street name, it is critical that you provide your broker, bank, or other nominee with instructions on how to cast your vote if you want it to count in the election of directors (Proposal No. 1) and with respect to thenon-binding advisory resolution (Proposal No. 2) described in this Proxy Statement. If you hold your shares in street name, and you do not instruct your broker, bank, or other nominee how to vote, then it will not be voted for the election of directors or with respect to thenon-binding advisory resolutions.resolution.

If any other routine matters are properly brought before the annual meeting in addition to Proposal No. 3, then brokers holding shares in street name may vote those shares in their discretion for any such routine matters.

Who tabulates the votes?

Prior to the annual meeting, we will select one or more inspectors of election for the meeting. Such inspector(s) will determine the number of shares of Common stock and Class B common stock represented at the meeting, the existence of a quorum and the validity and effect of proxies, and shall receive, count and tabulate ballots and votes and determine the results thereof.

Who pays the cost of this proxy solicitation?

We pay the cost of soliciting your proxy, and we reimburse brokerage firms and others for forwarding proxy materials to you. In addition to solicitation by mail, we may also solicit proxies by letter, facsimile,e-mail, telephone, or in person. Our directors, officers, and employees may participate in the solicitation of proxies without additional consideration.

DIRECTORS & EXECUTIVE OFFICERS

Directors & Executive Officers

Our Amended and Restated Articles of Incorporation and Amended and Restatedour By-laws provide that our Board shall consist of no fewer than three nor more than nine members, and that it shall be divided, as nearly as possible into three equal divisions, each of which serves for a three-year term. We refer to directors elected by holders of our Common stock as Common Directors and we refer to directors elected by holders of our Class B common stock as Class B Directors.

The names of our directors, executive officers and director nominees and their respective ages, positions (including designation as a Common Director or Class B Director), biographies and, in the case of directors, their qualifications to serve as directors, are set forth below.

Cesar L. Alvarez rejoined the Board in 2017 after having previously served as a Watsco director from 1997 to 2015. Mr. Alvarez is Senior Chairman of the international law firm of Greenberg Traurig, P.A. (“Greenberg”). He previously served as Greenberg’s Executive Chairman beginning in 2012, and as Greenberg’s Chief Executive Officer from 1997 until his election as Executive Chairman.Chairman in 2012. During his15-year tenure as Chief Executive Officer and Executive Chairman, he, together with his partners, led the firm to become one of the top ten law firms in the United States by leading its growth from 260 lawyers to approximately 1,850 lawyers in more than 36 locations in the United States, Europe, Asia and Latin America. Mr. Alvarez holds degrees in law, as well as a Master in Business Administration. He brings significant entrepreneurial expertise, management experience, and knowledge from his many years of corporate governance experience, both counseling and serving on the boards of directors of other publicly traded companies. HeMr. Alvarez serves on the boards of Mednax, Inc. (chairman of the board and member of the executive committee), Fairholme Funds, Inc., Intrexon Corporation n/k/a Precigen, Inc. (chair of the nominating and governance committee), and theThe St. Joe Company.Company (member of the audit, compensation and governance committees). Mr. Alvarez serves as ourCo-Vice Chairman of the Board and is a member of the Strategy Committee.

Dr. Denise Dickins has served as a Board member since 2007. Since 2006, she has been employed by East Carolina University where she is a Professor of Accounting and Auditing, teaching courses in Auditingauditing and Corporate Governance.corporate governance. From 2002 to 2006, while earning her Ph.D., she was an instructor of various accounting courses at Florida Atlantic University. Prior to that, she served in varying capacities with Arthur Andersen LLP from 1983 to 2002, including Partner in Charge of the South Florida Audit Division. Dr. Dickins is a certified public accountant and certified internal auditor and has served on the board of several publicly traded companies. She currently serves on the board of NV5 Global, Inc. (member of the audit committee and chair of the compensation committee). Dr. Dickins brings auditing and accounting, social, and corporate governance skills to the Board. She is the Lead

Barry S. Logan has served as our SeniorExecutive Vice President, Planning & Strategy since November 2003September 2019 and previously served as a Watsco director from 2011 to 2018. Mr. Logan served as Senior Vice President from 2003 to 2019, as Vice President of Finance and Chief Financial Officer from 1997 to October 2003, as Treasurer from 1996 to 1998 and in other capacities beginning in 1992. Mr. Logan is a certified public accountant. Mr. Logan was Watsco’s fourth corporate employee and is an integral participant in the Company’s business development initiatives, financial, and other strategic activities during his26-year30-year career. He is also the principal contact with the institutional shareholder community and, as such, is the principal contact for engagement with our shareholders.

Ana M. Menendez has served as our Chief Financial Officer and Treasurer since November 2003, as Treasurer since 1998, and as Assistant Secretary since 1999. Ms. Menendez is a certified public accountant. Ms. Menendez supervises all financial and accounting aspects of the Company, including taxes, risk management, benefits, treasury and cash management, the Company’s system of internal control and other compliance activities. She also is the leader and principal contact for the Company’s banking relationships and actively participates at a senior level in a variety of strategic activities. Ms. Menendez served on the Advisory Board of the College of Education at Florida International University from 2013 through 2015. She is a member and board chair of the Miami branch of the Federal Reserve Bank of Atlanta.

Aaron J. (A.J.) Nahmad has served as the President of the Company since January 2016 and as a director since 2011. He served as Vice President of Strategy & Innovation from July 2010 until January 2016 and as Director of Global Business Development beginning in 2005. He holds a B.A. from the University of Pennsylvania and a M.B.A. from New York University’s Leonard N. Stern School of Business. He is the son of Albert H. Nahmad. A.J. Nahmad has led the transformation of Watsco into a technology-enabled business. His promotion to President in January 2016 recognized this leadership and acknowledged the importance of the successful execution and adoption of these innovations across the Watsco enterprise. He is a member of the Strategy Committee.

Albert H. Nahmad has been the visionary founder and leader of Watsco for over 4050 years, having served as our Chairman and Chief Executive Officer since 1972. Among his many contributions, Mr. Nahmad has been instrumental in the scaling of our business through acquisitions, the cultivation of strategic vendor relationships, and the development of Watsco’s entrepreneurial culture. In 1988 Mr. Nahmad made the decision to pivot the Company’s strategic focus from manufacturing to distribution of HVAC/R products. Since that time, Watsco’s market capitalization has grown from $22 million to $5.2$12.1 billion, and its30-year compounded annual growth rate of total shareholder return has been 18%19%. With revenues exceeding $4of $6.3 billion in 2021, Watsco has solidified its place as the industry leader and now has approximately 5,2006,900 employees serving approximately 90,000120,000 active contractor customers through a branch network of 571671 locations. He serves as chair of the Strategy Committee.

Stephen F. Rushwas promoted to serve as Executive Vice President and Chief Operating Officer (“COO”) of the Company on April 1, 2019. Mr. Rush joined the Company in 2001 and served in various leadership roles at several operating subsidiaries of the Company through 2016, when he assumed anon-executive advisory role in the Office of the President. As COO, Mr. Rush will oversee the Company’s primary operating subsidiaries, while assuming other operational responsibilities of the Company. He brings core leadership skills from his more than 40 years of experience in the HVAC/R distribution industry.

George P. Sape rejoined the Board in 2015 and previously served as a Watsco director from 2003 to 2014. Mr. Sape retired in 2015 as the Managing Partner of Epstein Becker and Green, P.C., a New York-based law firm, after 29 years. Mr. Sape previously served as Vice President and General Counsel for Organizations Resources Counselors, Inc., a consulting services provider to a number of Fortune 500 companies and has served as counsel or as an advisor to various congressional committees related to labor, education and public welfare. Mr. Sape also serves on the board of the University of Colorado School of Business. Mr. Sape is a member of the

Bob L. Moss rejoined the Board in 2014 after having previously served as a director from 1992 to 2012. Mr. Moss is a dynamic leader and has built a successful career in the construction industry over the span of approximately 50 years. He is the Founder, Chairman, and Chief Executive Officer of Moss & Associates LLC, founded in 2004, which has grown intois one of the largest general contractors in the Southern United States with revenues of10 offices and over 600 employees that generates more than $1 billion.billion in annual revenues. Mr. Moss previously served as chairmanChairman of the boardBoard and Chief Executive Officer of Centex Construction Group (“Centex”), where he spent 23 years building Centex into the largest domestic general building contractor in the nation. Mr. Moss serves as ourCo-Vice Chairman of the Board and is a member of the Nominating & Governance Committee. Mr. Moss brings entrepreneurial skills, business-building abilities, leadership development experience, and a wealth of knowledge of the construction industry, including environmental matters, to our Board. Mr. Moss serves as our Co-Vice Chairman of the Board.

Steven (Slava) Rubin was appointed to the Board in March 2018. Mr.��Rubin is founder and partnerco-founder of humbition, an early stageearly-stage operators venture fund investing in high growth internet-based businesses.built by founders, for founders. He is alsoco-founder of Vincent, an online platform to discover and diligence the vast world of alternative investments. Mr. Rubin previously founded Indiegogo, Inc. (“Indiegogo”), a company dedicated to empowering people from all over the world to make their ideas a reality. As Chief Executive Officer for a decademore than 10 years since inception in 2006, Mr. Rubin grew Indiegogo from an idea to over 500,000 campaigns and more than $1 billion distributed around the world. Prior to Indiegogo, he was a strategy consultant for more than a decade servingworking on behalf of clients such as MasterCard, Goldman Sachs MasterCard and FedEx. He is also the founder of “Music Against Myeloma,” a charity that raises funds and awareness for cancer research in partnership with the International Myeloma Foundation. Mr. Rubin is a graduate of The Wharton School at the University of Pennsylvania. He currently serves as a member of the board for Indiegogo. Mr. Rubin is an innovative technologist who brings entrepreneurial, management, and strategic insights to the Board. He is a member of the Compensation Committee and Nominating & Governance Committee.

Valerie Schimel was recommended for nomination by our Nominating & Governance Committee in April 2022. Ms. Schimel is founder and Chief Executive Officer of Munchkin Fun LLC, Florida’s largest digital parenting publication. Munchkin Fun was launched in 2008 in Miami, Florida as a for-profit business to help families spend quality time together and has since expanded throughout Florida. Ms. Schimel is also the President of the Albert H. and Jane D. Nahmad Family Foundation, which supports youth and education in Miami-Dade County. She has participated on Watsco’s Advisory Board since 2019 and is the daughter of Albert H. Nahmad, our Chairman & CEO. Ms. Schimel also serves on the Board of Visitors of the Pratt Engineering School at Duke University and various other educational boards in South Florida. She holds a B.A. from Duke University and a M.A. in Health Communications from New York University. Ms. Schimel brings entrepreneurial, managerial, technology and social/community skills to our Board. If elected, she will be a member of the Strategy Committee.

Director Skills & Experience and Demographic Background

The table below details the skills and experience each director brings to our Board:

The charts below depict the diversity of our Board based on gender, ethnicity, independence, and age:

CORPORATE GOVERNANCE

Overall Role of the Board

Our business and affairs are managed under the direction of our Board, which is the Company’s ultimate decision-making body, except with respect to those matters reserved to our shareholders. The Board’s mission is to maximize long-term shareholder value. Our Board oversees our business strategy and risk management process, establishes our overall corporate policies, selects and evaluates our executive management team, which is charged with the conduct of our business, and acts as an advisor and counselor to executive management. Our Board also oversees our business strategy and planning,

Watsco is a “controlled company�� as welldefined by the New York Stock Exchange (referred to as the performanceNYSE) because, as a group, our Chairman & CEO and our President controlled 53.8% of managementthe combined voting power of our outstanding common stock as of April 8, 2022, the record date for the annual meeting. Our Chairman & CEO, our President, and director nominee Valerie Schimel, who is the daughter of our Chairman & CEO, controlled 54.5% of the combined voting power of our outstanding common stock as of the record date. Our Chairman & CEO’s voting control has decreased from 62.0% in executing our business strategy2005 to 48.9% as of the record date. As a controlled company, Watsco is not required to comply with certain corporate governance policies required of other publicly traded companies that are not controlled companies. For example, the Board is not required to be composed of a majority of independent directors, and assessingthe Company is not required to have a Compensation Committee or a Nominating & Governance Committee. However, because the Board strives to establish policies and managing risks.procedures that it believes are in the best interests of the Company’s shareholders, the Company generally complies with the corporate governance policies applicable to publicly traded NYSE-listed companies that are not controlled companies.

Board Leadership Structure

Role of Chairman & CEO. Our Board regularly reviews its structure and composition taking into consideration the Company’s performance and expectations for the future. Under the leadership of Albert H. Nahmad, Watsco’s annual total shareholder returns (the measurement of stock appreciation, including the reinvestment of dividends) on a compounded basis in comparison to the S&P 500 Index for each of the respective time periods were:

The Board believes this track record of success reflects Mr. Nahmad’s effective leadership and creativity in devising and executing the Company’s strategic initiatives and in confronting its challenges. As Chairman and CEO, heMr. Nahmad facilitates a strong collaboration between management and the independent members of the Board. The Board believes that the Company and its shareholders are best served by having Mr. Nahmad continue to serve as Chairman and CEO.

Co-Vice Chairman of the Board.Currently Messrs. Alvarez and Moss serve as theCo-Vice Chairmen of the Board. The primary responsibility of this role is to preside at all Board meetings at which the Chairman is not present, including regularly scheduled mandatory executive sessions of the independent directors held at least once a year, and apprise the Chairman of the issues considered. The development of more senior members of the Board as Vice Chairs is considered an important element of succession planning at the Board level.

Lead Independent Director. To facilitate and strengthen the Board’s independent oversight of the Company’s strategies, performance and succession planning, and to uphold effective governance standards, the

Board has developed the role of a lead independent director. The position of lead independent director is currently held by Dr. Dickins.Mr. Custer. As Lead Independent Director, Dr. DickinsMr. Custer has the following duties and responsibilities:

Risk Oversight.Watsco encounters a range of risks, including governance, legal, financial, operational, international, strategic, and reputational risks. Within these broad categories, specific social risks include human capital management, which includes talent acquisition, development and retention, health and wellness, safety, and succession. Other specific risks include cybersecurity threats, the competitive landscape in which we operate, and any impact of disruptive events, such as environmental issues, natural disasters, and pandemics.

To manage these risks and other risks, we have implemented an annual Enterprise Risk Assessment (referred to as ERA) process, which is a company-wide effort managed by key senior management, to identify, assess, manage, report, and monitor risks that may affect our ability to achieve our objectives and strategy. The process is led by our Vice President of Internal Audit and Compliance, of which the Audit Committee has oversight responsibility.

As part of the ERA process, each business unit and corporate functional department is responsible for identifying and reporting risks that are specific to its operations and, when applicable, to the Company at large. The Audit Committee and Board also discuss enterprise risks with senior management on a regular basis, including through reviews of compliance issues and business risks. For example, the Audit Committee is formally updated at least annually about information technology infrastructure and cybersecurity risks. The Audit Committee Chair also receives ad hoc updates.

As part of regular Board and committee meetings, our directors consider important external and internal risks that may impact the Company. The full Board regularly reviews reports from management on various aspects of our business, including relatedthe risks disclosed in our most recent annual report filed on Form 10-K, and strategies and tactics to address identified risks. At

Codes of Ethics and Conduct.The Board has adopted codes of ethics and conduct that are designed to ensure that directors, officers, and employees of the Company are aware of their ethical responsibilities and avoid conduct that may pose risk to the Company. We maintain (i) an Employee Code of Business Ethics and Conduct that is applicable to all employees, and (ii) a Code of Conduct for Executives that is applicable to members of our Board, our NEOs, and other senior operating and financial personnel. There were no amendments or waivers from either code of conduct in 2018.2021. Oversight of investigations of known or potential violations under either code of conduct is the responsibility of the Audit Committee. To obtain copies of our Codes of Ethics and Conduct, please see “Corporate Governance Documents” below.

Board Meetings.The Board meets regularly during the year, and it additionally holds special meetings and acts by unanimous written consent whenever circumstances require. During 2018,2021, the Board took actionheld six meetings and acted by unanimous written consent five times and held eight meetings.seven times. In 2018,2021, all directors attended at least 86%100% of the aggregate number of meetings of the Board and the respective committees on which the directors served. Independent directors meet at regularly scheduledhold formal executive sessions without management present.present at least annually and communicate independently on an ad hoc basis. All of our directors are encouraged to attend our annual meeting of shareholders and all did attendattended our annual meeting in 2018.2021.

Board Committees.During 2018,2021,the Board maintained an Audit Committee, a Compensation Committee, and a Nominating & Governance Committee. Each committeeCommittee, each of which is composed entirely of directors meeting the applicable independence guidelines of the NYSE. InAdditionally, the Board maintained a Strategy Committee, originally established in March 2018, the Board formed a Strategy Committee. The Committees

Audit Committee.The Audit Committee’s functions include overseeing the preparation, presentation, and integrity of our financial statements and internal control over financial reporting, the qualifications of our independent registered public accounting firm, compliance with legal and regulatory requirements, and the performance of our internal audit function and controls regarding finance, accounting, legal compliance and ethics that management and our Board have established. The Audit Committee’s responsibilities additionally include, but are not limited to:

Nominating & Governance Committee.Our Nominating & Governance Committee’s purpose is to assist the Board in identifying individuals qualified to become members of our Board consistent with the criteria set forth in our Corporate Governance Guidelines, to help in the evaluation of the effectiveness of our Board and its individual members, and to review and update our corporate governance principles. The Board may assume, change or add additional activities fromtime-to-time to assure the effective operation of the Board. The Nominating & Governance Committee’s activities include, but are not limited to:

The Nominating & Governance Committee will consider candidates recommended by Watsco’sour shareholders pursuant to written applications submitted to the Nominating & Governance Committee, c/o Watsco, Inc., 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133. The information required to be included in any such recommendation is set forth in our Second Amended and Restated Bylaws,By-Laws, and the general qualification and specific qualities and skills established by the committee for directors are described above. Although we have not adopted a formal policy regarding the consideration of Board candidates recommended by our shareholders, the Board believes that the procedures set forth in our By-Laws are currently sufficient and that the establishment of a formal policy is not necessary.

Director Election – Majority Vote. Director nominees are elected by our shareholders based on a majority vote, voting as separate classes.classes, as described above under “What are the voting rights of Watsco shareholders?”.

Director Compensation PhilosophyPhilosophy.. Consistent with our executive compensation philosophy described below, we measure success by our ability to create shareholder value over significantly long periods of time. Accordingly, our director compensation program is primarily designed to align director compensation with long-term shareholder returns. We also recognize that the required amount of Board member effort depends on several variables, including committee membership, and therefore varies among Board members. Fromtime-to-time, independent compensation consulting firm, Pearl Meyer, provides the Compensation Committee with advice, various peer comparisons, and best practices with respect to director compensation.

The following table sets forth the total compensation received by ournon-management directors in 2018:2021:

tenure. With respect to ournon-management directors and director nominees, as of the date of this Proxy Statement, fourthree have served on the Board for more than five years (Mr. Alvarez, Dr. Dickins, Mr. Moss and Mr. Sape)Moss), and threefour (including one new director nominee who has yet to serve as a director) have served on the Board for less than five years.years (Mr. Custer, Mr. Macdonald, Mr. Rubin, and Ms. Schimel).

Management Succession. As reflected in our Corporate Governance Guidelines, one of the Board’s primary responsibilities includes planning for CEO succession and monitoring and advising on management’s succession planning for other NEOs, with the goal of establishing an effective succession plan. The Board routinely discusses management succession during the course of its meetings, including during sessions held by the Company’snon-management directors.

Shareholder Proposals.Shareholders interested in submitting a proposal for inclusion in our proxy materials for our 20202023 annual meeting of shareholders may do so by following the procedures set forth in Rule14a-8 promulgated by the SEC under the Exchange Act. To be eligible for inclusion in such proxy materials, our Corporate Secretary must receive shareholder proposals no later than December 28, 2019.30, 2022. Any shareholder

Environmental

Our websitecompany and our customers are all capable of driving change that is atwww.watsco.com.good for the consumer, good for the environment, and good for our business. The products we sell have a direct and meaningful impact on overall energy consumption and CO₂e emissions. As consumers replace older existing systems, particularly with high-efficiency systems, consumers save on energy costs and reduce greenhouse gas emissions. Upcoming federal regulatory changes will influence what products consumers choose from and how contractors present innovative solutions to homeowners.

To that end, we are partnering with OEMs and suppliers to invest in more tools, technology and training for our customers to capitalize on this important opportunity. Our industry has much to contribute to this endeavor – and as a leader we are committed to do our part. Please visit our website at www.watsco.com/environment for information related to our impact on the environment.

Diversity and Inclusion

We value and foster the diversity and inclusion of the people with whom we work. Our commitment includes providing equal access to, and participation in, employment and advancement opportunities without regard to race, color, religion, national origin, age, disability, veteran or military status, pregnancy status, sex, gender identity, sexual orientation, or marital status. Diverse teams facilitate contributions from people of different backgrounds and varied points of view. Furthermore, we believe that well managed diverse teams make better decisions faster and outperform less diverse teams. Additionally, we believe that employees who feel valued, understood, and inspired benefit the Company as a whole. Inclusive leadership leads to innovative solutions and an inclusive environment is a critical foundation for us, as high-performing, engaged teams join together to help us implement our strategies. You can find our human rights policy on our investor relations website atwww.investors.watsco.comhttps://investors.watsco.com under the section captioned “Governance”.

Health and Safety

We continuously strive to improve all aspects of our work practices. We actively support a culture of safety and wellness for the following:benefit of our employees and their families along with our customers. Providing a safe and healthy work environment is a business priority and is core to our values. Health and safety are an essential part of a broader workforce strategy that reduces the risk of harm to employees and helps them remain healthy, engaged and productive.

To build and sustain a culture based on these principles, our commitment to safety and wellness is incorporated into the incentive structure of our key operational leaders. For wellness, we measure employee engagement in completing annual physicals and health assessments to help ensure that our philosophical values are put into action. For safety, we measure and carefully evaluate incidents related to workers compensation, vehicle accidents and injuries to third-parties, and we continuously seek to improve safety measures intended to reduce the number of such incidents. You can find our health and safety policies on our investor relations website at https://investors.watsco.com under the section captioned “Governance”.

Advisory Board.On March 11,In 2019, the Board formed an Advisory Board to provide thoughts, advice, andnon-binding recommendations to our Board.recommendations. The Board may appoint up to six members to the Advisory Board with termsis viewed as a resource that provides expert insight that complements the knowledge, understanding, and strategic thinking of three years.the Board members. The Advisory Board is not a Board committee or otherwise a part of the Board. Our Chairman & CEO has sole discretion over Advisory Board membership, including the number of members, shall receiveterm of service, and compensation for their services as determined by the Board in its sole discretion. services.

Members of the Advisory Board may include possiblepotential future Board members, former Board members, and other individuals whom the Board determines may be able to provide valuable insight. The Boardfollowing persons comprise the current membership of the Advisory Board:

Matt Ehrlichman

Mr. Ehrlichman was appointed Albert Nahmad’s daughter, Valerie Schimel, age 41, to the Advisory Board in March 2020. He is the co-founder, CEO and Chairman of Porch Group, Inc., a consumer and social internet marketplace that connects homeowners with local home service professionals. Prior to Porch, Mr. Ehrlichman was the co-founder and CEO of Thriva until it was acquired by Active Network, where he served as the Chief Strategy Officer from 2007 to 2012. Mr. Ehrlichman received options to purchase 3,000 shares of Common stock upon his appointment to the Advisory Board. Our subsidiary Watsco Ventures, LLC, invested $2,500,000 in Porch with the goal of helping contractor customers grow and become more profitable. In connection with Porch’s initial public offering on December 23, 2020, we received shares of Porch Group, Inc. common stock, of which we had 64,377 shares as of December 31, 2021.

Brian E. Keeley

Mr. Keeley was appointed to the Advisory Board in April 2022. He previously served as a Watsco director from 2018 to 2022. Mr. Keeley is the Chief Executive Officer of Baptist Health South Florida, Inc. (“Baptist Health”), the largest not-for-profit healthcare organization in South Florida, with 12 hospitals, a network of more than 100 outpatient facilities and physician practices, and one of the nation’s largest international programs. Under his leadership, Baptist Health implemented transformational technologies throughout its organization and has been rated among Fortune’s “100 Best Companies to Work For” in America. Mr. Keeley is a former member and board chair of the Miami Branch of the Federal Reserve Bank of Atlanta. Upon his appointment, Mr. Keeley received an option grant to purchase 1,000 shares of Common stock.

Ana Lopez-Blazquez

Ms. Lopez-Blazquez was appointed to the Advisory Board in March 11, 2019. Ms. Schimel2021. She is founderExecutive Vice President, Chief Strategy & Transformation Officer for Baptist Health and Chief Executive Officer of Munchkin FunBaptist Health Enterprises, a subsidiary of Baptist Health. In her role as Chief Strategy Officer for Baptist Health, Ms. Lopez-Blazquez is responsible for strategy development and execution with particular emphasis on driving the growth agenda and brand management of Baptist Health across South Florida. As Chief Transformation Officer, Ms. Lopez-Blazquez provides overall strategic leadership and direction for all aspects of business transformation including implementation strategy. Ms. Lopez-Blazquez joined Baptist Hospital of Miami in 1987 as Director of Planning and has led their strategic planning and business/market development functions since that time. Upon her appointment, Ms. Lopez-Blazquez received an option grant to purchase 1,000 shares of Common stock.

Matthew A. Love

Mr. Love was appointed to the Advisory Board in November 2021. He is President and Chief Executive Officer of Nicklaus Children’s Health System, parent organization of Nicklaus Children’s Hospital, a nationally recognized nonprofit pediatric specialty hospital based in Miami. Mr. Love possesses more than 25 years of experience in financial and operational oversight in both adult and pediatric healthcare systems. He is a fellow in the American College of Healthcare Executives. Upon his appointment, Mr. Love received an option grant to purchase 1,000 shares of Common stock.

LeShelle May

Ms. May was appointed to the Advisory Board in June 2021. She is an accomplished computer engineer recognized for her leadership and innovation in the development of software and web applications. Ms. May joined CNN in 1996 as a senior system/software developer and is currently part of a team responsible for migrating all of CNN’s legacy content to the cloud. Previously, she led several advanced projects, including CNNgo, the NewsApps Portal, and MS2, a video content management system that enables online viewers to watch live news coverage, which won CNN a Technology & Engineering Emmy Award in 2000. Prior to CNN, she worked in various technology positions for Indus International and BellSouth Corp. Upon her appointment, Ms. May received an option grant to purchase 1,000 shares of Common stock.

Troy Rice

Mr. Rice was appointed to the Advisory Board in June 2021. He is President of FPL Energy Services, a subsidiary company of NextEra Energy, Inc., a leading clean energy company and a provider of value residential, commercial and public-sector products and services. NextEra Energy is the parent company of Florida Power & Light, the largest rate-regulated utility in the United States as measured by retail electricity produced and sold. Mr. Rice joined NextEra in 2002 and has held a number of leadership positions throughout his career.

Gary L. Tapella

Mr. Tapella was appointed to the Advisory Board in February 2022. He previously served as a Watsco director from 2006 to 2010. He is an Operating Partner of One Rock Capital Partners, LLC, a digital media company launchedvalue-oriented, operationally focused private equity firm with $5 billion of capital commitments. Prior to joining One Rock he was an Operating Partner at Ripplewood Holdings, LLC from 2005 to 2009. Mr. Tapella retired from Rheem Manufacturing Company in 2012 to help Florida families spend quality time together. Ms. Schimel also serves2005 as President and Chief Executive Officer following a 36-year career with the company. His experience there included managing Rheem’s Canadian and Singapore based pan-Asian companies and he served as Senior Vice President International and Chief Operating Officer. Upon his appointment, Mr. Tapella received an option grant to purchase 1,000 shares of Common stock.

Rachel Wilson

Ms. Wilson was appointed to the Albert H.Advisory Board in July 2019. She has served as Head of Cybersecurity for Morgan Stanley Wealth Management and Jane D. Nahmad Foundation, which supports educationInvestment Technology since April 2017. She is responsible for the cybersecurity of wealth and youth development in Miami-Dade County, Florida. The Board is currently considering additional persons forinvestment management systems and the integrity and confidentiality of client data. Prior to Morgan Stanley, Ms. Wilson spent 15 years at the National Security Agency (NSA), holding several key senior executive level leadership positions. Upon her appointment to the Advisory Board.Board, Ms. Wilson received options to purchase 3,000 shares of Common stock.

Pursuant to its related-party transaction policy, the Audit Committee reviewed and approved the following transactionstransaction using the criteria set forth above:

Moss & Associates LLC served as general contractor for the remodeling of our Miami headquarters, which was completed in early 2018. Moss & Associates LLC has revenues in excess of $1 billion. Mr. Moss has served as its Chairman and Chief Executive Officer since its founding in 2004. During 2018, payments made to Moss & Associates LLC for construction services totaled approximately $124,000, which Mr. Moss has indicated were not material to Moss & Associates LLC, nor did Mr. Moss have a material direct or indirect interest in such payments.

Greenberg Traurig, P.A. serves as our principal outside counsel for compliance and acquisition-related legal services. Greenberg Traurig, P.A. has annual revenues in excess of $1$2 billion. Mr. Alvarez, a director, is the Senior Chairman of Greenberg Traurig, P.A. During 2018, weWe paid Greenberg Traurig approximately $131,000$225,000 for services performed in 2021, and we anticipate this arrangement will continue. Mr. Alvarez has indicated this amount was not material to Greenberg Traurig, P.A., nor did Mr. Alvarez have a material direct or indirect interest in such payments.

STOCK OWNERSHIP

The following table sets forth information regarding the beneficial ownership of our Common stock and Class B common stock by (i) each shareholder known by us to beneficially own more than 5% of either class of our voting securities;securities, (ii) each of our directors and director nominees;nominees, (iii) each of our named executive officers;officers, and (iv) our directors and executive officers as a group.

The table also contains, in the final column, the combined voting power of the voting securities on all matters presented to the shareholders for their approval, except for the election of directors and for such separate class votes as aremay be required by Florida law. Holders of our Common stock are entitled to one (1) vote per share on each matter that is submitted to shareholders for approval and holders of our Class B common stock are entitled to ten (10) votes per share on each matter that is submitted to shareholders for approval. All information is as of the record date, April 5, 2019.8, 2022. As of the record date, we had 32,224,96233,151,638 shares of Common stock and 5,408,0195,797,590 shares of Class B common stock issued and outstanding.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC reports of ownership of, and transactions in, our equity securities. To our knowledge, based solely on a review of copies of such reports that we received, our records and written representations received from our directors, executive officers and certain of those persons who own greater than 10% of any class of our equity securities, for the year ended December 31, 2018,2021, all applicable Section 16(a) filing requirements were complied with on a timely basis.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table contains information as of December 31, 20182021 with respect to compensation plans (including individual compensation arrangements) under which any of our equity securities are authorized for issuance.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Our executive compensation program is grounded in the principle that compensation should be highly dependent uponon long-term shareholder returns. This key tenet of our compensation philosophy has driven the unique design of our program for many years and has enabled our executive leadership team to remain solidly focused on long-term performance. Watsco’s entry into the HVAC/R distribution industry began in 1989, and, over the last 30 years,1989. Since that time, we have generated an 18%cumulative total shareholder return of 26,442% (or a 19% compounded annual growth rate for total shareholder return.rate).

Our compensation philosophy is unique in comparison to other companies because of our approach to long-term incentives. Allincentives is unique. Unlike most companies that grant their officers and employees restricted shares that we have granted to 59 leaders throughout the Company, includingvest over a period of a few years, our NEOs, vest onlyrestricted share awards cliff-vest toward the end of their careersan employee’s career (usually age 62 or older). Vesting may occur even later for those who extendFor employees extending their careers beyond age 62.62, vesting may occur even later. This means that our key leaders willdo not know the value and cannot realize the value of their equityrestricted share awards until they have spent their respective careers with the Company. Restricted share awards are subject to significant market, performance, and forfeiture risks. During the vesting period, shares of restricted stock include the right to vote and the right to receive dividends.

The Company began granting restricted shares in 1997. As of the record date, 127 of the Company’s key leaders, including the NEOs, hold restricted share awards that cliff-vest between 2022 and 2051. If, for any reason other than death or disability, a holder of restricted shares leaves the Company, his or her restricted shares are forfeited.

We believe granting long-duration restricted stock effectivelyshares balances strategic risk-taking and long-term performance,value creation, creates an ownership culture, and aligns the interests of high-performing leaders with the interests of our shareholders. Additionally, we believe these awards help build a sustainable future by ensuring that our executives make the right long-term business decisions that will survive well past their retirement.

The Company began granting restricted stock awards to a variety of leaders in 1997. As it relates to our NEOs,97%none of their restricted share awards have not yetever vested.On a weighted-average basis, our NEO’s respective restricted share awards have been outstanding for approximately 12 years14 years. Certain restricted stock awards for our Chairman & CEO begin to vest in October 2022 (at age 82) with additional vesting in 2024 (at age 84), in 2028 (at age 88), and willin 2029 (at age 89). Restricted stock awards for our President do not begin to vest until 2022 for the Chairman & CEO and not until 2043 for the President.(at age 62). This long-term vesting demonstrates the program’s distinct nature and the long-term perspective that is at the core of the Company’s compensation philosophy, which is unique to Watsco.

This compensation discussion and analysis (referred to as CD&A) explains our executive compensation program for our NEOs listed below. It also describes the Compensation Committee’s process for making pay decisions in 2018.2021.

20182021 Business Performance. Watsco produced another year of record performance. As compared to 2017:2020:

Philosophy, Culture & Performance

Executive Compensation Philosophy.We measure success by our ability to create shareholder returns over significantly long periods of time.Thetime.The vision and leadership of our entrepreneurial business leaders are at the core of our performance and it is their continued commitment to drive sustainable growth that we believe will contribute to our ongoing success. To this end, we must attract, motivate, andretain high-caliber talent.

Pay-For-Performance & Ownership Culture. For employees throughout Watsco, including our NEOs, we maintain apay-for-performance performance-based culture that provides for a variety of potential rewards. Our equity-based plans include 401(k) matching contributions to eligible employees, a voluntary employee stock purchase plan, and the granting of stock options and restricted stock awards based on individual merit and performance. The equity-based compensation plans are intended to promote long-term performance and foster an “ownership culture” whereby management and employees think and act as owners of the Company. As described above, our restricted stock program is unique because an employee’s restricted shares vest entirely toward the end of his or her career (age 62 or later), subjecting such awards to significant market, performance, and forfeiture risks.

Concentrated Use of Long-Term Incentives Using Restricted Stock. For our Chairman & CEO, the President, and other NEOs, the primary component of long-term incentive compensation is restricted stock that cliff-vests.cliff-vests at retirement. Long-term incentive compensation grants of restricted stock are subject to significant market, performance, and forfeiture risks, which means that our key leaders do not know and cannot realize the value of their restricted share awards until they have spent their respective careers with the Company. This method has been consistent over the Company’s history and is rooted in the principle that long-term, equity-based compensation is the most effective method to balance the management of long-term opportunities along with long-term risks and to align the interests of executives with those of our shareholders. Due to the unusually long vesting periods and associated risks of forfeiture, and as supported by independent valuations obtained by the Company, the Compensation Committee believes the present value of such awards is likely significantly less than theirthe “face value” atwhen issued that is reported in the time of issuance. This program also extends beyond the NEOs to 55 other key leaders.Summary Compensation Table below.

The Company believes this balance of risk and reward over long periods is more effective than more conventional equity-based programs that provide considerably shorter-term vesting and payouts, and effectively aligns the development of a employeeleader’s wealthandshareholder wealth. The program also serves as an important method to retain key leaders for the duration of their careers.

Overall Performance.Total shareholder return (referred to as TSR) measures share price appreciation plus the reinvestment of dividends. The Company views total shareholder return as the simplest and most fundamental method of measuring long-term value creation for shareholders and considers it as a metric in determining long-term incentive awards. Based on data provided by FactSet Research Systems Inc. (referred to as FactSet), the Company’s compounded annual growth rate (referred to as CAGR) in comparison to a variety of public-company market indices as of December 31, 20182021 was as follows:

Our5-year,10-year,15-year5-year, 10-year, 15-year, and20-year TSR, and our25-year30-year TSR of 18.2% in particular,20.6%, demonstrates the sustained level of performance of our Company over long periods of time. These results are also important in assessing the Company’s business strategy, quality of leadership, culture and the relative effectiveness of our compensation practices. Based on further analysis of data from FactSet, the Company’s performance ranks as follows:

Governance, Compensation Actions & Summary of Details

Compensation Governance Practices.We believe that our executive compensation program promotes sound governance standards and includes many shareholder-friendly features, such as:

Determination of Executive Compensation. The Board delegates responsibility for determining the compensation structure of our Chairman & CEO and our President to the Compensation Committee. For our other NEOs, our Chairman & CEO determines their compensation after review and consultation with the Compensation Committee. The Compensation Committee currently consists of three independent directors appointed by the Board. In providing input regarding the other NEOs’ compensation, the Compensation Committee considers each NEO’s responsibilities, the overall financial performance of the Company, the performance of the department or function that such NEO leads, and their collective success in meeting the Company’s strategic priorities. The Compensation Committee has the opportunity to meet with the NEOs at various times during the year, which allows the Compensation Committee to form its own independent evaluation of each individual’s performance.

The Compensation Committee has engaged Pearl Meyer, an independent compensation consulting firm, to periodically provide advice, relevant market data, various peer group comparisons, and best practices with respect to the compensation of our Chairman & CEO and President. The Compensation Committee assessed the independence of Pearl Meyer based on the specific criteria under applicable SEC and NYSE rules and determined that no conflict of interest is raised by Pearl Meyer’s work for the Compensation Committee.

Elements of Executive Compensation.NEO compensation may consist of base salary, an annual cash incentive or bonus (applicable to our NEOs other than our Chairman & CEO), and restricted share awards, the composition of which is determined annually. As described above, our core executive compensation philosophy focuses on long-term performance which typically results in base salaries that may be considered by some to be below market, and in long-term restricted stock based-incentivesstock-based incentives that may be considered by some to be above market. We believe such comparisons are not meaningfulconsequential as: (1) our long-term incentive awards are highly-aligned with long-term shareholder returns, while many other companies’ are not,more short-term focused, (2) the “face-value” of long-term incentives are required to be reported in the Summary Compensation Table at their values“market” on the date of grant, not on their cliff-vesting dates, and (3) resulting operational outcomes such as the long-term tenure of our executive team and the correlation of our long-term shareholder returns are often ignored.not factored into comparisons of compensation to the market.

During the vesting period for restricted stock awards, recipients are entitled to receive all cash dividends paid on such restricted share awards, and recipients are entitled to vote the restricted shares on all matters on which our shareholders are entitled to vote.

Base Salary. Base salary is designed to adequately compensate and reward the NEOs for theirday-to-day performance. The Compensation Committee determines base salary for our Chairman & CEO and for our President. Our Chairman & CEO determines base salaries for our other NEOs after review and consultation with the Compensation Committee. When setting and adjusting each NEO’s salary level, the executive’s roles and responsibilities, experience, potential, and performance are considered. Other factors are considered such as the annual merit increase, if any, paid to all other Company employees, demand in the labor market for the particular executive, general business conditions, and succession planning. These factors are not weighted. Adjustments to base salary are discretionary and based on an overall collective assessment of all these factors. Salaries paid to the NEOs in 2021 are shown in the Summary Compensation Table.

Peer Comparisons. Given the uniqueness and concentration ofour unique compensation related to thestructure that focuses primarily on equity awards with long-term vesting periods ofunder our restricted stock program, the Compensation Committee has determined that neither base

A summary of restricted stock awards currently held by our NEOs, including the range of years during which such shares were granted, the range of cliff-vesting dates, and the weighted-average years remaining until the cliff-vesting date is reached as of December 31, 2018 isthe record date, April 8, 2022 was as follows:

Use of Objective, Simple Performance Metrics to Determine Share-Based Compensation.The Company uses simpleCompensation Committee considers two performance metrics to determine whether, and how much, share-based compensation is awarded to itsthe Chairman & CEO and its President: (i) growth in earnings per share (EPS) and (ii) growth in stock price. If either increases, then restricted stock is awarded. If neither increases, then there is no restricted stock award in that year. As an example, no restricted stock awards were granted to our Chairman & CEO in 2007 or 2008 due to EPS and stock price performance at that time.during those years.

The use of these criteria is centered on the philosophy that total long-term shareholder return is the primary method of determiningmeasuring the success of the Company. We also believe EPS and stock price are objective, simple and require no interpretation. The Compensation Committee recognizes that external factors can impactinfluence our stock price in the short-term, but we believe that there is an equal chanceprobability that such external factors can be positive or negative. A greater consideration is that the ultimate value an award under our cliff-vesting program is not known on the date of the award – but rather the date they vest, which can be years or even decades after an award is made. Short-term external factors become irrelevant over such a long period of vesting, and solely long-term performance will dictate long-term value.

EPS is defined as diluted EPS calculated in accordance with U.S. generally accepted accounting principles, referred to as GAAP. WeGenerally, we do not consider any“non-GAAP” adjustments to EPS that have the effect of increasing EPS. Common stock price is the closing date price of Watsco’s shares as reported by the New York Stock Exchange.NYSE.

Compensation & Long-Term IncentivesIncentive for Our Chairman & CEO.The Chairman & CEO’s compensation is composed of base salary and a restricted share award contingent upon the attainment of specified performance criteria (hecriteria. He is not eligible to receive any cash incentive).

incentive. As part of our response to the COVID-19 pandemic, Mr. Nahmad voluntarily accepted a reduction in his base salary to $300,000 in 2021. Mr. Nahmad’s annualbase salary of $600,000 was $825,000 in 2016, which was subject to a 20% voluntary reduction in response to a broader-based cost reduction effort by the Company. In 2017 through July 2018, Mr. Nahmad’s annual salary was $725,000, which was reduced in July 2018 by 20% to an annual rate of $580,000 in connection with further cost reduction efforts.reinstated on January 1, 2022.

In terms of his long-term incentive award, the Compensation Committee determines annual performance factors within the first 90 days of each calendar year and formalizes such factors as an amendment to the Chairman & CEO’s employment agreement (such agreement and amendments are referred to together as the Employment Agreement). 2018’sThe 2021 amendment to the Employment Agreement was originally filed with the SEC as Exhibit 10.110.1(w) to the Quarterlyour Annual Report on Form10-Q10-K for the quarteryear ended MarchDecember 31, 20182020 and is incorporated herein by reference. We refer to this amendment as the 20182021 Amendment.

The 20182021 Amendment provides that a 20182021 performance award, if any: (a) shall be made through a grant of restricted Class B common shares with a cliff-vest date of October 15, 2026,2028 (at age 88), subject to forfeiture prior to this date as set forth in the restricted stock agreement; (b) is subject to his employment for the entire year unless the Compensation Committee specifically determines otherwise; (c) is subject to a maximum of $20$10 million; and (d) shall use the following performance factors to determine the amount of the award:

EPS growth

(i) No incentive is earned if 20182021 EPS did not exceed $5.81$7.01⁽¹⁾, or

(ii) $61,000$43,500 in value is awarded for each one cent of EPS growth in 20182021 (if less than $6.10$7.36⁽²⁾), or

(iii) $91,000$65,000 in value is awarded for each one cent of EPS growth in 20182021 (if equal to or greater than $6.10$7.36⁽²⁾),plus

Common stock price growth

(i) No incentive is earned if the price of Watsco’s Common stock did not exceed $170.04$226.55⁽³⁾ on December 31, 2018,2021, or

(ii) $1,700$1,200 in value awarded for each one cent of increase in the price of Watsco’s Common stock over the prior year (if less than $204.05$271.86⁽⁴⁾), or

(iii) $2,500$1,800 in value is awarded for each one cent of increase in the price of Watsco’s Common stock over the prior year (if equal to or greater than $204.05$271.86⁽⁴⁾)

Watsco’s 20182021 EPS was $6.49$10.78 per share and the price of its Common stock decreasedincreased from $170.04$226.55 to $139.14$312.88 as of December 31, 2018.2021. The calculated gross value of the 20182021 award was approximately $15.5 million, which exceeded the maximum of $10.0 million. Therefore, the value of the 2021 award earned by our Chairman & CEO was approximately $8.6 million. However, Mr. Nahmad electedlimited to waive the portion of the award related to the initial adoption of the Tax Cuts and Jobs Act of 2017. Accordingly, his 2018 award was reduced by approximately $2.4$10.0 million to a gross value of approximately $6.2 million (45,752(32,592 restricted Class B Commoncommon shares) as reflected in the Summary Compensation Table. Mr. Nahmad also received $42.00$122.56 in cash in lieu of a fractional shares. No restricted stock award was earned by our Chairman & CEO in 2018 for the stock price component of his 2018 long-term incentive program.share.

Compensation & Long-Term IncentivesIncentive for Our President.On January 15, 2016, A.J. Nahmad was promoted to President. Under his direction and leadership, Watsco began in 2012 to actively increase its investment in a number of scalable technologies to further strengthen its leadership position in the HVAC/R marketplace and to introduce technology strategies that havefar-reaching potential. His promotion to President acknowledged his leadership and recognized the importance of the successful execution and adoption of these technological innovations across the Watsco enterprise. His promotion was also considered an important event for the Company in terms of management succession with the goal of achieving long-term, generational continuity and consistency of Watsco’s unique culture.

Our President’s 20182021 compensation program included: (i) an initialincluded a base salary of $650,000, which$600,000. In relation to 2021 performance, our President was reduced in July 2018 by 15%eligible to an annual rate of $552,500 in connection with company-wide cost reduction efforts, (ii) eligibility forreceive an annual cash incentive of up to $450,000 as(as described above,above) and (iii) eligibility for a

EPS growth

(i) No incentive is earned if 20182021 EPS did not exceed $5.81$7.01⁽¹⁾, or

(ii) $26,000$43,500 in value is awarded for each one cent of EPS growth in 20182021 (if less than $6.10$7.36⁽²⁾), or

(iii) $39,000$65,000 in value is awarded for each one cent of EPS growth in 20182021 (if equal to or greater than $6.10$7.36⁽²⁾),plus

Common stock price growth

(i) No incentive is earned if the price of Watsco’s Common stock did not exceed $170.04$226.55⁽³⁾ on December 31, 2018,2021, or

(ii) $700$1,200 in value is awarded for each one cent of increase in the price of Watsco’s Common stock from the prior year (if less than $204.05$271.86⁽⁴⁾), or

(iii) $1,100$1,800 in value is awarded for each one cent of increase in the price of Watsco’s Common stock from the prior year (if equal to or greater than $204.05$271.86⁽⁴⁾)

Valuation of Restricted Shares. Although restricted shares granted in 20182021 are presented in the Summary Compensation Table at grant date fair value, calculated in accordance with FASB ASC Topic 718, due to the unusually long vesting periods and associated market and forfeiture risks,the present value of such awards is likely significantly less. Independent valuations obtained by the Company suggest that, collectively, the present value of such awards is at least 25% less and may be as much as 50% less than the grant date fair value.

Long-Term Incentives for our Other NEOs. For our other NEOs, the Chairman & CEO considers and recommends discretionary restricted share grants,awards, which are subject to the review and approval of the Compensation Committee. The decision to grant restricted stock awards to our other NEOs is based on the subjective weighting of the following criteria, together with the overall performance of the Company:

In 2018, no2021, the Compensation Committee approved a discretionary award of 5,000 restricted shares of Class B common stock to our EVP. No restricted shares were awarded to our SVP and CFO.

the Chairman & CEO, CFO, or any of the next three most highly compensated officers. However, performance-based compensation payable pursuant to contracts entered into prior to November 2, 2017 does not count against the $1.0 million deduction limit. Our policy with respect to Section 162(m) is to make reasonable efforts to ensure that compensation is deductible without limiting our ability to attract and retain qualified executives. The Compensation Committee has not adopted a policy that all compensation must be deductible, believing in the importance of retaining flexibility to design compensation programs that recognize a full range of criteria important to our success, even where compensation payable under the programs may not be fully deductible.deductible for tax purposes. Our Compensation Committee monitors the tax impacts of our compensation policies and practices.

Risk Considerations in our Compensation Programs.We have reviewed our compensation structures and policies as they pertain to risk and have determined that our compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company.

Consideration of Shareholder Advisory Vote on Executive Compensation

Shareholders are asked annually to cast a non-binding advisory votesvote to approve the executive compensation of our NEOs. In 2018,2021, we presented our shareholders with anon-bindingan advisory proposal to approve the compensation of our NEOs. A majority of votes cast by our Common shareholders and Class B shareholders

COMPENSATION COMMITTEE REPORT

The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing.

The Compensation Committee has reviewed and discussed the CD&A contained in this Proxy Statement with management. Based on that review and discussion, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this Proxy Statement.

The following independent directors, who comprise the Compensation Committee, provide this report:

COMPENSATION TABLES

Summary Compensation Table

The following table sets forth the compensation earned by the NEOs for services rendered for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.

Comparison of CEO Compensation to Total Shareholder Return and EPS Growth Rate. The following chart represents the comparison for the last five calendar years of (i) our Chairman & CEO’s total compensation as summarized in the Summary Compensation Table, (ii) compensation actually paid (consisting of his base salary), (iii) total shareholder return (share price appreciation plus the reinvestment of dividends) for each of the last five calendar years, and (iv) EPS growth rates for each of the last five calendar years.