| | ITEMS OF BUSINESS FOR STOCKHOLDER VOTE | | 1 | | ElectElection of the 810 directors nominated by our Board to serve for a one-year term
| | | | 2 | | Approve,Approval, on an advisory basis, of our executive compensation
| | | | 3 | | RatifyApproval of a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to provide that stockholders holding 25% of our outstanding common stock have the right to request that we call special meetings of stockholders
| | | | 4 | | Ratification of the appointment of PricewaterhouseCoopers LLPPwC as our independent registered public accounting firm for fiscal year 2022 | | | 4 | | Transact any other business properly brought before the meeting or any adjournment or postponement thereof
2024 |
Our Board recommends that you vote FOR each of our 810 director nominees in Item 1 and FOR Items 2, 3 and 3.4. Stockholders of record as of February 28, 202226, 2024 are entitled to notice of, and to vote in connection with, the meeting and any adjournment or postponement thereof. This notice and our definitive proxy materialsstatement are being first mailed or made available to stockholders on or about March 15, 2022.[●], 2024. We want your shares to be represented and voted.voted. We encourage you to vote promptly as this will save us the time and expense of additional proxy solicitation. As shown on the right,below, you can vote online, by telephone, by mail or, in certain circumstances, during the meeting. On behalf of our Board of Directors, management and team members worldwide, thank you for your investmentinvesting in us and our company. We look forward to engaging with you during the virtual Annual Meeting.  
Vikas Arora Vice President, Associate General Counsel and Corporate Secretary March 10, 2022 
Online
You can vote online at www.proxyvote.com by 11:59 p.m. Eastern Time on April 27, 2022. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.
By Telephone
In the U.S. and Canada, you can vote by calling 1.800.690.6903 by 11:59 p.m. Eastern Time on April 27, 2022. You will need the 16-digit control number on your Notice of Internet Availability or proxy card.
By Mail
You can vote by mail by completing, dating and signing your proxy card and returning it in the postage-paid envelope or otherwise to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.
During Meeting
Unless your shares are held through our Employee Savings Plan, you can vote during the Annual Meeting. Beneficial holders must contact their broker or other nominee to be able to vote during the meeting.
| | | | | | | | | | | | | | | | | | |  | | ONLINE | |  | | BY TELEPHONE | |  | | BY MAIL | |  | | DURING MEETING |  | | You can vote online using the 16-digit control number shown on your Notice of Internet Availability, proxy card or voting instruction form. | | In the U.S. and Canada, you can vote by telephone using the 16-digit control number shown on your Notice of Internet Availability, proxy card or voting instruction form. | | You can vote by mail by completing, dating and signing your proxy card or voting instruction form and returning it in the accompanying postage-paid envelope. | | Registered holders can vote during the meeting. Beneficial holders must contact their broker or other nominee to be able to vote during the meeting. Shares held through our Employee Savings Plan may not be voted during the meeting. |
| Avery Dennison Corporation | 2022 2024 Proxy Statement | Table of Contents |
PROXY SUMMARY This proxy summary includes key messages related to this proxy statement and does not contain all the information you should consider before voting. We strongly encourage you to read the entire proxy statement before voting. DISTRIBUTION OF PROXY MATERIALSINFORMATION REGARDING ANNUAL MEETING
Distribution of Proxy Materials We will mailbegin mailing our Notice of Internet Availability of Proxy Materials, which includes instructions on how to access these materials online and vote your shares, on or about March 15, 2022.[●], 2024. If you previously elected to receive a paper copy of our proxy materials, on or about the same date, we will mail you a proxy card and our 20212023 integrated financial and sustainability report (our “2023 Integrated Report”), which includes a letter to stockholders from our Chairman and President/Chief Executive Officer (CEO); a description of our 2021 annual report;businesses, stakeholders and values; highlights of our strategies, financial performance and sustainability progress; our Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (our “2023 Annual Report”); and the notice and proxy statement for the 2022our 2024 Annual Meeting of Stockholders (the “Annual Meeting”); information regarding our businesses, financial performance. Time, Date and strategic achievements, including our continued progress as it relates to environmental, social and governance (ESG) matters; and a proxy card.Format of Annual Meeting TIME, DATE AND FORMAT OF ANNUAL MEETING
The Annual Meeting will take place at 1:2:30 p.m. Eastern Time on April 28, 2022. Due 25, 2024. To allow stockholders to continued public health concerns about large, indoor in-person gatherings givenattend without the coronavirus/COVID-19 pandemic (“COVID-19”),time and expense of doing so in person, the meeting will be held virtually, with attendance via the internet. To attend the virtual Annual Meeting, you will need to log in to www.virtualshareholdermeeting.com/AVY2022AVY2024 using the 16-digit control number on your Notice of Internet Availability of Proxy Materials, proxy card or proxy card.voting instruction form. Online access to the live audio webcast of the Annual Meeting will open at 1:2:15 p.m. Eastern Time to allow time for you to log in and test your device’s audio system. We encourage you to access the meeting in advance of its designated start time as we plan to begin conducting the meeting promptly. For additional instructions on how to attend the virtual Annual Meeting, please refer to the Voting and Meeting Q&A section of this proxy statement. ITEMS BEING VOTED ON DURING ANNUAL MEETINGItems Being Voted on During Annual Meeting
You are being asked to vote on the items of business shown below during the Annual Meeting. Our Board of Directors (our “Board”) recommends that you vote FORfor each of our 810 director nominees and FOR the otherfor Items 2, items being brought before the stockholder vote.3 and 4. | Item | | Board
Recommendation | | Vote
Required | | Discretionary
Broker Voting | | Page
Reference | | | | | | | | | | ITEM OF BUSINESS | | BOARD
RECOMMENDATION | | VOTE REQUIRED | | DISCRETIONARY
BROKER VOTING | | PAGE | | | 1 | | | 1 | | Election of directors | |  | | FOR
each nominee | | Majority of votes cast | | No | | 39 | | Election of directors | |  | | FOR
each nominee | | Majority of votes cast | | No | | 39 | | | 2 | | Advisory vote to approve executive compensation | | | | FOR | | Majority of shares represented and entitled to vote | | No | | 49 | 2 | | | Advisory vote to approve executive compensation | | | | FOR | | Majority of shares represented and entitled to vote | | No | | 50 | | | 3 | | Ratification of appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for FY 2022 | | | | FOR | | Majority of shares represented and entitled to vote | | Yes | | 89 | | 3 | | | Approval of a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to provide that stockholders holding 25% of outstanding common stock have the right to request that we call special meetings of stockholders | | | | FOR | | Majority of shares outstanding | | No | | 94 | | | 4 | | | 4 | | | Ratification of appointment of PwC as our independent registered public accounting firm for FY 2024 | | | | FOR | | Majority of shares represented and entitled to vote | | Yes | | 96 |
VOTING PRIOR TO OR DURING ANNUAL MEETINGVoting Prior to or During Annual Meeting
You may vote your shares by submitting a proxy in advance of the Annual Meeting online, by telephone or by mail; only in certain circumstances votingmay you vote during the meeting. YouIf you are a registered stockholder who has not previously voted or wants to change your vote, you may not vote during the meeting if your shares are held through our Employee Savings Plan.Annual Meeting. Beneficial holders may only vote during the meeting if they properly request and receive a legal proxy in their name from the broker, bank or other nominee that holds their shares. Shares held through our Employee Savings Plan may not be voted during the meeting. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote and submit your proxy in advance of the meetingpromptly by following the instructions contained in the Voting andon your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 1 |
Asking Questions During Annual Meeting Q&A section of this proxy statement. ASKING QUESTIONS DURING ANNUAL MEETING
We have designed the virtual Annual Meeting to ensure that you have the same rights and opportunities to participate as you would at an in-person meeting, using with an easy-to-use online toolsplatform that allowallows you to attend, vote andask questions.questions. After the business portion ofwe have finished acting upon the Annual Meeting concludesitems of business and the meeting is adjourned, our Chairman/CEOExecutive Chairman will lead a Q&A session during which we intend to answer all questions submitted on the day of or during | | | Avery Dennison Corporation | 2022 Proxy Statement
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the meetingtimely that are pertinent to our company andor the items being brought before stockholder vote. Answers to questions not addressed during the meeting, if any, will be posted promptly after the meeting on the investors section of our website. For information on how to submit questions during the Annual Meeting, please refer to the Voting and Meeting Q&A section of this proxy statement.
OUR COMPANY We are a global materials science and digital identification solutions company specializing in the design and manufacture ofthat provides a wide varietyrange of labelingbranding and functional materials.information solutions that optimize labor and supply chain efficiency, reduce waste, advance sustainability, circularity and transparency, and better connect brands and consumers. Our products and solutions which are used in nearly every major industry, include pressure-sensitivelabeling and functional materials, for labels and graphic applications; tapes and other bonding solutions for industrial, medical and retail applications; tags, labels and embellishments for apparel; and radio-frequencyradio frequency identification (RFID) inlays and tags, software applications that connect the physical and digital, and a variety of products and solutions servingthat enhance branded packaging and carry or display information that improves the customer experience. We serve an array of industries worldwide, including home and personal care, apparel, general retail, e-commerce, logistics, food and other markets. We have approximately 36,000 employees in more than 50 countries.grocery, pharmaceuticals and automotive. Our company is comprisedcomposed of two reportable segments, Materials Group and Solutions Group. Materials Group is a leading provider to pressure-sensitive label and graphics industries worldwide. Our innovative products include label materials, graphics and reflective materials and functional bonding materials, such as tapes. Our label materials enhance shelf appeal for brands, inform shoppers, advance circularity, increase transparency, help reduce waste and improve operational supply chain efficiency. Our graphics portfolio offers highly engineered materials that range from vehicle wraps to architectural films. Materials Group plays a key role in advancing our fast-growing Intelligent Labels business, providing the following businesses: Labelmaterials science capabilities and Graphic Materials (LGM), Retail Brandingprocess engineering expertise essential to developing and Information manufacturing intelligent labels at scale. Solutions (RBIS)Group is a leading global provider of information and Industrialbranding products and Healthcare Materials (IHM).solutions that cover a breadth of customer needs from digital identification and data management, branding and embellishment, as well as productivity, pricing and retail media. We empower customers across multiple retail and industry segments to connect the physical and digital, leveraging our industry-leading RFID solutions. Our technology addresses complex customer challenges, provides transparency and visibility across supply chains, improves labor and waste efficiency, and enables better consumer experiences at the point of purchase and beyond. Market segments served include the global apparel, logistics, food and grocery, and general retail industries. As a large ultra-high frequency RFID solutions provider, we leverage our innovation and data management capabilities, global footprint and market access in the ongoing advancement of our Intelligent Labels business. STRATEGY OVERVIEW We are committed to ensuring the continuinglong-term success of all our stakeholders – our employees, customers, investors, employees and communities. Over the past five years, we have focused on delivering to our potential by managing through macro volatility while evolving our aspirations. In 2021,2023, we continued to invest in theevolved our long-term successstrategies as shown below, adding a vital new one that reflects our growing Materials and Solutions connected capabilities and combining two of our companyformer strategies into one. Drive outsized growth in high-value product categories through market-driven innovation Grow profitably in our base businesses Lead at the intersection of the physical and advance our ESG priorities. To mitigatedigital Effectively allocate capital and relentlessly focus on productivity Lead in an environmentally and socially responsible manner Our customers are increasingly looking for help solving some of the most complex industry challenges, presented by the continued impact of COVID-19, we focused on ensuring the safety and well-being of our employees; managing a dynamic supply/demand environmentincluding labor efficiency and supply chain pressureseffectiveness; waste reduction, circularity and transparency; and better connection between brands and consumers. We believe that physical items will need a digital identity to deliver for our customers; minimizingsolve these challenges, and that we are well-positioned to help the impact of pandemic-related effects for our stockholders; and supporting our communities. industries we serve overcome them. Our key strategies and 2021 achievements are shown below and onvision is to leverage the following page. Our overriding focus remains the long-term success of allstrengths of our stakeholders,Materials and we have a clear setSolutions businesses to lead at the intersection of objectivesthe physical and strategies to deliver for them.digital. | | | | | | | 1 2
| | 2024 Proxy Statement | Avery Dennison Corporation |
We plan to realize this vision through segment leadership, market-driven innovation, and advancement of integrated digital solutions, leveraging our Intelligent Labels business. Our areas of focus address key megatrends that present both risks and opportunities for our company as we seek to help our customers navigate the increasingly digital world and operate more sustainably. Our strategies prioritize using our market insights, driving long-term innovation and enhancing the digital capability of our teams, while continuing to execute well in the core businesses that have been key to our success. Our five strategic pillars and 2023 achievements are shown below. STRATEGIC PILLARS Drive outsized growth in high-value categories through market-driven innovation We seekaim to increase, both organically and through acquisitions, the proportion of our portfolio in high-value products and solutions, both organically and through acquisitions; high-value categories that serve markets that are growing faster than GDP,gross domestic product (GDP), represent large pools of potential profit and leverage our core capabilities. These products and solutions include our Intelligent Labels that use RFID tags and inlays, specialty and durable label materials, graphics and reflective solutions, industrial tapes, Intelligent Labels that use RFID tags and inlays, external embellishments, and with our recent acquisition of CB Velocity Holdings, LLC (“Vestcom”), shelf-edge pricing, productivity and consumer engagement solutions. In 2021, we achieved organic sales change in high-value product categories that outpaced that of our base businesses by a high-single digit rate driven by growth in specialty labels, external embellishments and Intelligent Labels; added to our capabilities and expanded our position in high-value product categories through our acquisition of Vestcom; and more than tripled the size of our Intelligent Labels platform over the last five years, reaching net sales of $0.7 billion in 2021
| • | | In 2023, we continued to increase the proportion of our portfolio in high-value product categories, with significant organic growth in Intelligent Labels, external embellishments, and shelf-edge pricing, productivity and consumer engagement solutions, and the acquisition of three companies that expand the external embellishment capabilities in our Solutions Group. Over the past five years, we more than doubled the size of our Intelligent Labels business, with net sales of ~$850 million in 2023. |
Grow profitabilityprofitably in our base businesses We strive to grow profitability in our base businesses by carefully balancing volume, price and mix, reducing complexity and tailoring our go-to-market strategies
In 2021, we heightened our focus on material reengineering to drive productivity and mitigate the impact of rising input costs
| • | | We strive to grow profitably in our base businesses by carefully balancing volume, price and mix, reducing complexity and tailoring our go-to-market strategies. |
| • | | In 2023, we protected margins in our base businesses through product reengineering and productivity actions to mitigate the impact of lower volume as the industries we serve experienced significant inventory destocking. |
Focus relentlessly on productivityLead at the intersection of the physical and digital
We employ product reengineeringconnect the physical and enterprise lean sigmadigital, leveraging the core capabilities of our Materials and Solutions businesses to expandhelp our margins, enhance our competitiveness (particularly in our base businesses)customers optimize labor efficiency and provide a funding source for reinvestment In 2021, we continued expanding operating margins,supply chain effectiveness, reduce waste, advance circularity and transparency, and better connect brands with approximately $65 million in savings from restructuring, net of transition costsconsumers.
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AllocateEffectively allocate capital effectivelyand relentlessly focus on productivity
We balance our investmentscapital investment in organic growth, productivity, and acquisitions and venture investments, while continuing to return cash to stockholders through dividends and share repurchases In 2021, leveraging our and ensure that we maintain a strong balance sheet with ample capacity to invest. In addition, we invested $272.1 million in fixedtake actions to restructure our operations from time to time and information technology (IT) capital expendituresuse product reengineering and enterprise lean sigma principles to support organic growth; completed three acquisitionsexpand our margins, enhance our competitiveness and made three venture investmentsprovide a funding source for a total of $1.48 billion; increased our quarterly dividend rate by ~10%; and repurchased $180.9 million in shares of our common stockreinvestment.
| | | | | | • | | 5 In 2023, we invested $285.1 million in fixed and information technology (IT) capital expenditures to support organic growth; completed three acquisitions and made one venture investment for a total of $224.9 million; increased our quarterly dividend rate by ~8%; and repurchased $137.5 million in shares of our common stock. We also delivered ~$69 million in pre-tax savings from restructuring actions, net of transition costs.
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Lead in an environmentally and socially responsible manner
We aim to deliver innovations that advance the circular economy and reduce the environmental impact of our operations; build a more diverse workforce and inclusive and equitable culture; maintain operations that promote health and safety; and support our communities through contributions from the Avery Dennison Foundation (ADF), supplemented by contributions from our company
In 2021, we continued to make progress toward our 2025 sustainability goals, reducing the environmental impact of our operations and investing in strategic innovation platforms focused on material circularity and waste reduction/elimination; driving sustainable change in diversity, equity and inclusion (DE+I), with a sharpened focus on increasing workforce racial/ethnic diversity, as well as representation from other underrepresented communities such as LGBTQ+, veteran or disabled individuals; and using the $10 million we contributed to ADF in 2020 to significantly increase grant-making in our communities, resulting in over $6 million of charitable contributions from ADF and our company in 2021. We also announced more ambitious 2030 sustainability goals.
PERFORMANCE HIGHLIGHTS
COVID-19 Response
Our top priority in 2021 as the COVID-19 pandemic continued to evolve and impact our global teams was to safeguard the safety and well-being of our employees by continually adapting our world-class safety protocols. We also were highly focused on delivering for our customers, leveraging our global scale to manage elevated lead times caused by constrained raw material, freight and labor availability and persistent inflation. To minimize the effects of the pandemic on our investors, we maintained a strong balance sheet to ensure financial flexibility. We also more than doubled our financial support for communities in 2021 compared to the prior year.
Strong 2021 Performance
In 2021, by consistently executing our strategies, we delivered our tenth consecutive year of strong top- and bottom-line growth, expanded operating margins and achieved record free cash flow, despite the continued impact of COVID-19 and related supply chain, labor, freight and inflationary challenges. These results reflected the extraordinary efforts undertaken by our leaders and teams globally to respond to the difficult macroeconomic environment and mitigate its impacts on our company. Our performance reflects our rigorous scenario planning, which has enabled us to be prepared for a wide range of financial situations. We advanced our key strategies and delivered strong performance, while continuing to deliver for all of our stakeholders.
Our fiscal year 2021 performance reflects the strength of our markets, our industry-leading positions, the strategic foundations we have laid and our talented team. Our key financial achievements for the year are described below and on the following page.
Reported net sales of $8.41 billion, up ~21%, reflecting volume growth across our businesses and recovery from the prior-year impact of COVID-19
Excluding the impact of currency, sales increased ~19%; sales on an organic basis increased by ~16% driven by continued strong demand for consumer packaged goods and the accelerated shift to e-commerce in LGM, as well as significant organic growth in Intelligent Labels
Reported earnings per share (EPS) increased ~34% from $6.61 in 2020 to $8.83 in 2021, in part due to the prior-year impact of COVID-19
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Lead in an environmentally and socially responsible manner
Adjusted EPS increased ~25% from $7.10We aim to $8.91, drivenadvance the environmental sustainability of our company and value chain by strong growthdelivering innovations that advance the circular economy, reducing the environmental impact of our operations, and operating margin expansion; adjusted EPSoffering value-creation opportunities for the year was substantially higher than the top end of the $7.65our customers. We also seek to $8.05 annual guidance range we provided to investors in February 2021make a positive social sustainability impact by building a more diverse workforce and inclusive and equitable culture, maintaining operations that promote health and safety, and supporting our communities.
| • | | In 2023, we made further progress toward our 2025 and 2030 sustainability goals, reducing the environmental impact of our operations and continuing to invest in our sustainability strategic innovation platform focused, among other things, on material circularity and waste reduction/elimination; driving sustainable change in diversity, equity and inclusion (DEI); and providing $5.5 million in support for our communities, primarily through the Avery Dennison Foundation (ADF). |
With reportednetthese strategies in mind, our near-term priorities are to deliver on our high-value growth initiatives; achieve our financial objectives for the first half of the year; deepen our ecosystem engagement and expand our M&A pipeline; accelerate sustainability-related and digital innovation; and expand organizational capability in both Materials and Solutions. PERFORMANCE HIGHLIGHTS 2023 Performance Although a lower demand environment driven primarily by significant inventory destocking downstream from our company led to a challenging 2023, we delivered sequential improvement each quarter during the year and continued advancement in key growth areas such as Intelligent Labels. Market conditions were significantly worse than we initially anticipated, which resulted in our not realizing our annual performance expectations. Demonstrating strength and resiliency, we navigated the challenging environment, protecting margins; improving service for our customers; deepening our insights into the drivers of demand and inventory throughout our value chain; continuing to shift our product portfolio toward high-value categories, particularly Intelligent Labels; and generating strong cash provided by operating activitiesflow. By leveraging our core strengths of $1,046.8 million, delivered record free cash flowproductivity, cost management and capital stewardship and expanding our potential in intelligent label solutions, we mitigated the impact of $797.7 million, $250+ million higher than 2020 and substantially exceedingthe lower volume environment on our initial 2021 outlookbottom line. Key financial results for the year are shown below. | • | | Net sales of $8.4 billion, down 7.5% from $9.0 billion in 2022, reflecting lower volume primarily as a result of inventory destocking |
Excluding the impact of $600+ millioncurrency, sales declined 6.9% | • | | Reported earnings per share (EPS) decreased from $9.21 in 2022 to $6.20 in 2023 |
On reported net income of $740.1 million, achieved return on total capital (ROTC) including acquisition amortization of ~18%Adjusted EPS decreased 13.7% from $9.15 to $7.90, primarily reflecting lower volume, partially offset by productivity and ROTC excluding acquisition amortization of ~19%restructuring actions
| • | | With net cash provided by operating activities of $826.0 million, delivered adjusted free cash flow of $591.9 million; adjusted free cash flow conversion, meaning the proportion of net income we were able to convert to cash, was more than 100% |
| • | | On net income of $503.0 million, achieved return on total capital (ROTC) of 12.4% |
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Sales change excluding the impact of currency (sales change ex. currency), organic sales change, adjusted EPS, adjusted free cash flow and ROTC both including and excluding acquisition amortization – as well as organic sales change, adjusted earnings before interest, taxes depreciation and amortization (EBITDA) and adjusted EBITDA margin, which isare used later in this proxy summarystatement – are supplemental non-GAAP financial measures that we use internally and provide to assist investors in assessing our performance, operating trends and operating trends.liquidity. These measures are defined, qualified and reconciled from generally accepted accounting principles in the United States of America (GAAP) in the last sectionAppendix A of this proxy statement. These non-GAAP financial measures are not a substitute for or superior to the comparable financial measures under GAAP. Delivering Financial TargetsThe fundamentals of our business shown below continue to provide us with significant competitive advantage.
Our objective is
We are exposed to deliver GDP+diverse and growing end markets, with catalysts for long-term growth We are industry leaders in our primary businesses, with strength in scale and top-quartile returns on capitalinnovation We have a clear set of strategies that have been key to create superior valueour success over the long term. In March 2017, we announced five-year financial targets through 2021. As shown below, we exceeded each of these commitments we made to our investors. This is the third set of long-term financial targets we have delivered. Our consistently strong performance reflects the strength of our industry-leading market positions, the strategic foundations we have laid, and our agile and talented workforce. Given the diversity of our end markets, strong competitive advantages and resilience as an organization, we are confident in our ability to continue delivering for you throughterm across a wide range of business cycles.cycles
For
We are uniquely positioned to connect the 2017-2021 period, on a five-year compound annual basis (with 2016 asphysical and digital to help address some of the base period), GAAP reported net sales, net income and EPS increased by 6.7%, 18.2% and 20.1%, respectively.most complex problems facing the industries we serve Progress Toward 2025 Financial Targets | | | | | | | 2017-2021 Targets | | 2017-2021 Results(1) | | | | Sales Growth(2)
| | 5%+ ex. currency(3) 4%+ organic
| | 6.6% ex. currency 4.6% organic
| | | | GAAP Operating Margin
| | 11%+ in 2021 | | 12.6% in 2021 | | | | Adjusted EPS Growth(2)
| | 10%+ | | 17.3% | | | | ROTC incl. Acquisition Amortization
| | 17%+ in 2021 | | 18.4% in 2021 | | EXCEEDED 2017-2021 FINANCIAL TARGETS | (1) Results for non-GAAP measures are reconciled from GAAP in the last section of this proxy statement.
(2) Percentages for targets and results reflect five-year compound annual growth rates, with 2016 as the base period.
(3) Target for sales growth ex. currency reflects the impact of completed acquisitions as of March 2017 of approximately one point.
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In March 2021, we announced five-year financial targets through 2025. As shown below, based onGiven the first yearchallenges we experienced in 2023, our progress toward these long-term targets slowed during the year; however, we expect significant progress in 2024 as label and apparel markets rebound and growth in our Intelligent Labels business accelerates. We believe that our strategies, together with our team’s ability to execute in various environments, will allow us to continue generating long-term value creation through a balance of this five-year period,GDP+ growth and strong returns, as we are on track to achieve these commitments.unlock significant growth opportunities and our core businesses rebound. In 20212021-2023, on a three-year compound annual basis (with 2020 as the base period), GAAP reported net sales increased by 6.3%, while GAAP operating income, net income and EPS increaseddecreased by 20.6%1.1%, 33.1%3.3% and 33.6%2.1%, respectively. GAAP reported operating margin in 2023 was 9.4%. | | | | | | | | 2021-2025 Targets | | 2021 Results(1) | | | | Sales Growth(2) | | 5%+ ex. currency(3) | | 18.6% ex. currency 15.6% organic | | | | Adjusted EBITDA Margin | | 16%+ in 2025 | | 15.6% in 2021 | | | | Adjusted EPS Growth(2) | | 10% | | 25% | | | | ROTC excl. Acquisition Amortization | | 18%+ in 2025 | | 19.1% in 2021 | | | | ON TRACK TO ACHIEVE 2021-2025 FINANCIAL TARGETS | (1) Results for non-GAAP measures are reconciled from GAAP in the last section of this proxy statement. (2) Percentages for targets reflect five-year compound annual growth rates, with 2020 as the base period. Percentages for results reflect one-year annual growth rates, with 2020 as the base period. (3) Target for sales growth ex. currency reflects the impact of completed acquisitions as of March 10, 2021, which represents (0.2)%. |
| | | | | | | | | | | | 2021-2025 Targets | | 2021-2023 Results(1) | | | | Sales Change Ex. Currency(2) | | 5%+ | | 7.7% | | | | Adjusted EBITDA Growth(2)(3) | | 6.5% | | 5.7% | | | | Adjusted EBITDA Margin | | 16%+ in 2025 | | 15.1% in 2023 | | | | Adjusted EPS Growth(2) | | 10% | | 3.6% | | | | ROTC | | 18%+ | | 12.4% in 2023 |
| (1) | Results for non-GAAP measures are reconciled from GAAP in Appendix A of this proxy statement. | |
| (2) | Percentages for targets reflect five-year compound annual growth rates, with 2020 as the base period. Percentages for results reflect three-year compound annual growth rates, with 2020 as the base period. | |
| (3) | Although adjusted EBITDA growth was not one of our original financial targets, it was implied by our sales change ex. currency and adjusted EBITDA margin targets. The foreign currency translation impact to EBITDA was a benefit of approximately $38 million in 2021 and a headwind of approximately $81 million and $20 million in 2022 and 2023, respectively. | |
Effective Capital Allocation We have been consistently disciplined in executing our capital allocation strategy, balancing our investments in organic growth, productivity, and acquisitions and venture investments with continuing to return cash to stockholders through dividends and share repurchases. In 2021, we invested $272.1 million in fixed and IT capital expenditures to support future growth and further productivity improvement and allocated $1.48 billion to acquisitions and venture investments; we also paid $220.6 million in dividends and repurchased $180.9 million in shares of our common stock.
We have invested in our businesses to support organic growth and pursued complementaryacquired companies that expand our capabilities in high-value product categories, increase our pace of innovation and synergistic acquisitions.advance our sustainability priorities. Our fixed and IT capital spending in 20212023 of $285.1 million was nearly 25% higher than in 2020,comparable to 2022, reflecting our continued investment in high-value categories, includingparticularly our fast-growing Intelligent Labels platform, and lower-than-planned capital expenditures in 2020 to mitigate the impact of COVID-19.business. During the year, we acquired Vestcom, an Arkansas-basedThermopatch, Inc. (“Thermopatch”), a New York-based manufacturer specializing in labeling, embellishments and transfers for the sports, industrial laundry, workwear and hospitality industries; LG Group, Inc. (“Lion Brothers”), a Maryland-based designer and manufacturer of apparel brand embellishments; and Silver Crystal Group (“Silver Crystal”), a Canada-based provider of shelf-edge pricing, productivitysports apparel customizations and consumer engagementapplication solutions for retailersacross in-venue,direct-to-business and consumer packaged goods companies, for $1.47 billion, as well as ZippyYum, LLC (“ZippyYum”), a California-based developer of software products usede-commerce platforms; together, these acquisitions expand the external embellishments portfolio in the food service and food preparation industries, and JDCour Solutions Inc. (“JDC”), a Tennessee-based manufacturer of pressure-sensitive specialty tapes, collectively for approximately $43 million. During 2021, weGroup. We also made threeone venture investmentsinvestment in companiesa company developing innovative technological solutions that we believe have the potential to advance our businesses.strategies. In 2021,2023, we deployed $401.5paid $256.7 million to payin dividends of $2.66$3.18 per share and repurchase 0.9repurchased 0.8 million shares of our common stock. We raised our quarterly dividend rate by approximately 10%~8% in April 2021. As shown below, over the last five years, we have allocated over $2 billion to acquisitions and venture investments and nearly $2 billion to dividends and share repurchases.
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As shown below, over the last five years, we have deployed over $2 billion to acquisitions (including venture investments) and returned over $2 billion to stockholders in dividends and share repurchases.
Longer-Term Total Stockholder Return (TSR) Outperformance By generating substantial economic value added (EVA), we drove strongOur TSR in 2021 despite2023 was modestly below the continued uncertain macroeconomic environment as a result of COVID-19 and related supply chain, labor, freight and inflationary challenges. Our TSR of over 40% outperformed the S&P 500 and the median of the S&P 500 Index and the S&P 500 Industrials Index and Materials subsets, twomodestly above the Dow Jones U.S. Container & Packaging Index, three comparator groups we use to assess our relative performance. In 2023, we disaggregated our market basket comparator group used in previous years into the S&P 500 Industrials Index and the Dow Jones U.S. Container & Packaging Index, of which we are a member. We believe this presentation provides greater clarity on our relative performance, reflecting it in a manner more consistent with the methodology used by peer companies.
We believe that our longer-term TSR is a more meaningful measure of our performance than our one-year TSR, which can be significantly impacted by short-term market volatility that may be unrelated to our performance. BothOur five-year cumulative TSR significantly outperformed all three of these comparator groups. | | | | | | | | | | | | AVY | | S&P 500 Index | | S&P 500 Industrials Index | | Dow Jones U.S. Container &
Packaging Index | | | | | | 2019 | | 49% | | 31% | | 29% | | 29% | | | | | | 2020 | | 21% | | 18% | | 11% | | 21% | | | | | | 2021 | | 41% | | 29% | | 21% | | 11% | | | | | | 2022 | | (15)% | | (18)% | | (5)% | | (18)% | | | | | | 2023 | | 14% | | 26% | | 18% | | 8% | | | | | | 3-Year TSR | | 37% | | 33% | | 35% | | (2)% | | | | | | 5-Year TSR | | 145% | | 107% | | 94% | | 53% |
LEADERSHIP TRANSITION | | | | | | EXECUTIVE CHAIRMAN | | | | PRESIDENT/CEO |  | | | |  | Mitch Butier | | | | Deon Stander |
In May 2023, Mitch Butier announced his decision to step down as our three-yearCEO. Our Board elected Mr. Butier as Executive Chairman effective September 1, 2023 to ensure a smooth transition by providing counsel and five-year TSR substantially outperformedguidance to our new CEO, noting that, during his tenure as CEO, our company delivered superior performance while creating even greater future potential, accelerated growth and expanded margins, and advanced our sustainability priorities. | | | 6 | | 2024 Proxy Statement | Avery Dennison Corporation |
Our Board has a well-established CEO succession planning process that is part of its broader ongoing leadership succession planning. Reflecting a thoughtful succession process, in May 2023 our Board elected Deon Stander as President/CEO, effective September 1, 2023. Mr. Stander had been our President/Chief Operating Officer (COO) since March 2022, after having served as Vice President/General Manager of our business now known as Solutions Group since June 2015. Having evaluated his attributes, experiences and strengths as a leader during multiple discussions over the preceding 18-24 months, our Board determined that Mr. Stander, who has served in a number of leadership roles across the globe with increasing responsibility and impact during his 20-year career with our company, was the right individual to lead our company into the future. Mr. Stander has a proven track record, including leading the transformation of our Solutions business and helping accelerate growth in Intelligent Labels. In connection with their transitions to these two comparator groups. We focus on TSR because it measures the value we create for our stockholders, including stock price appreciation and dividends paid (assuming reinvestment of dividends). We compare ourselvesrespective roles, giving consideration to the medianadvice of its independent compensation consultant, WTW, our Board’s Talent and Compensation Committee (the “Compensation Committee”) made the decisions described below related to the compensation of Messrs. Stander and Butier. For Mr. Stander, increased his annual base salary from $700,000 to $1.1 million and his target Annual Incentive Plan (AIP) opportunity from 75% to 135% of base salary, in each case effective September 1, 2023. The Compensation Committee preliminarily aligned to increase his target long-term incentive (LTI) opportunity from 300% to 550% of base salary, effective with the annual LTI award on March 1, 2024, subject to its review of market pay for similar roles at that time. In addition, the Compensation Committee approved a special promotion award of stock options on September 1, 2023 with a grant date fair value of approximately $3 million, 50% of which vests on each of the third and fourth anniversaries of the grant date, in each case subject to his continued service. For Mr. Butier, reduced his annual base salary from $1.3 million to $1 million and his target AIP opportunity from 160% to 120% of base salary, in each case effective September 1, 2023. He received no special LTI award in connection with his role change. 2024 DIRECTOR NOMINEES (ITEM 1) As previously disclosed, in February 2024, Julia Stewart notified our Board of her intention not to stand for reelection at the Annual Meeting. As a result, her membership on our Board will end on the date of the Annual Meeting. Board Performance Highlights Our Board provides strong oversight of our management team and company, with highlights of its accomplishments in recent years described below. Supported management in navigating our response to the pandemic, including related labor, freight and inflationary challenges, in 2020 and 2021; pandemic-related challenges in China, the Russia-Ukraine war, supply chain disruptions, sizable currency movements and inflationary pressures in 2022; and lower demand driven primarily by downstream inventory destocking in 2023 Oversaw management’s consistent execution of our strategies, delivering performance that exceeded our 2021 financial targets and progressed us toward achieving our 2025 financial targets, as well as 2019-2023 TSR of 145%, significantly outperforming the S&P 500 Index, S&P 500 Industrials Index and Materials subsets because we are a member of the Materials subset, and also share many characteristics with members of the Industrials subset; investors have indicated that they also look at both subsetsDow Jones U.S. Container & Packaging Index Supported management in evaluating our performance relative to thatsynergistic acquisition targets, resulting in 15 companies becoming part of our peers.portfolio, adding new capabilities, expanding our position in high-value product categories and enhancing our opportunities in the marketplace Implemented thoughtful Board refreshment and director succession planning to ensure we maintain a high-caliber Board; mitigate the potential impact of concentrated mandatory retirements given the closeness in age of many of our directors; and further enhance overall Board diversity, leading to the appointment of three new independent directors in the last 18 months, two of whom increased the gender and/or ethnic diversity on our Board Conducted regular executive succession planning, resulting in experienced leaders promoted to more senior positions, including our new CEO and Solutions Group President, each appointed in 2023 Sharpened focus on advancing our sustainability agenda, with continuous progress toward achieving our 2025 sustainability goals and more ambitious 2030 goals, as well as enhanced sustainability reporting | | | Avery Dennison Corporation | 2024 Proxy Statement | | 7 |
Matrix of Director Nominee Skills, Qualifications and Demographic Backgrounds Our director nominees bring a balance of skills, qualifications and demographic backgrounds to their roles in providing oversight of our company, as shown by individual in the matrix below. This matrix, which has been revised and expanded from previous years to, among other things, specify key areas of industry and functional experience or expertise, reflects additional information we solicited from directors in our year-end 2023 questionnaire. 5-Year Cumulative TSRAs part of its ongoing director succession planning process, the Governance Committee regularly discussed and reported to our Board during 2023 on the skills, qualifications and demographic backgrounds desirable for our Board to best serve the needs of our company. As part of this process, the Governance Committee initiated a search for new directors with retail/consumer packaged goods (CPG) or finance expertise, which led to the appointment of Maria Fernanda Mejia to our Board in February 2024. The search for an independent director with finance expertise continues and is expected to conclude in the coming months.
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DIRECTOR NOMINEE MATRIX 
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| | | | | | | | | | | | | | | | | | | | | | | | Initial Criteria | | | | | | | | | | | | | Independent(1) | | ✓ | | ✓ | | | | ✓ | | ✓ | | ✓ | | ✓ | | | | ✓ | | ✓ | | | | | | | | | | | | Public Company Leadership Exp.(2) | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | ✓ | | | | ✓ | | | | | | | | | | | | Public Company Board Exp.(3) | | | | ✓ | | | | | | ✓ | | ✓ | | | | | | ✓ | | ✓ | | Industry Experience(4) | | | | | | | | | | | | | Digital/Technology | | | | | | ● | | | | ● | | | | ● | | ● | | | | ● | | | | | | | | | | | | Retail | | | | ● | | ● | | | | ● | | ● | | | | ● | | ● | | | | | | | | | | | | | | Consumer Goods | | | | ● | | | | | | ● | | ● | | | | | | ● | | ● | | | | | | | | | | | | Packaging | | ● | | ● | | ● | | ● | | ● | | ● | | | | ● | | ● | | | | | | | | | | | | | | Materials Science | | ● | | | | ● | | ● | | | | | | ● | | ● | | ● | | | | | | | | | | | | | | Industrial Goods | | ● | | | | ● | | ● | | | | | | ● | | ● | | ● | | | | Functional Experience(4) | | | | | | | | | | | | Finance | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | Marketing | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | M&A | | ● | | ● | | ● | | | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | Environmental Sustainability | | ● | | | | ● | | ● | | ● | | ● | | ● | | ● | | ● | | | | | | | | | | | | | | Cybersecurity | | ● | | | | ● | | | | ● | | | | ● | | ● | | ● | | ● | | | | | | | | | | | | Science/Engineering/R&D | | ● | | ● | | ● | | ● | | | | ● | | ● | | ● | | ● | | ● | | Demographic Background(5) | | | | | | | | | | | | Tenure (years as of YE 2023) | | 63⁄4 | | 133⁄4 | | <1 | | 3⁄4 | | 161⁄2 | | – | | 103⁄4 | | 73⁄4 | | 183⁄4 | | 11⁄4 | | | | | | | | | | | | Gender | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Woman | | | | | | | | ✓ | | | | ✓ | | ✓ | | | | | | | | | | | | | | | | | | Man | | ✓ | | ✓ | | ✓ | | | | ✓ | | | | | | ✓ | | ✓ | | ✓ | | | | | | | | | | | | Non-Binary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Age | | 61 | | 67 | | 55 | | 52 | | 71 | | 60 | | 67 | | 52 | | 68 | | 57 | | | | | | | | | | | | Mandatory Retirement Year | | 2035 | | 2029 | | 2041 | | 2044 | | 2025 | | 2036 | | 2029 | | 2044 | | 2028 | | 2039 | | | | | | | | | | | | Race/Ethnicity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Black or African American | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Hispanic or Latino | | ✓ | | | | | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | White | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | | | | | | | | | | | Asian (including South Asian) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Native American or Alaska Native | | | | | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | LGBTQ+ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Veteran | | | | | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | Works/Worked Outside U.S. | | ✓ | | ✓ | | ✓ | | ✓ | | | | ✓ | | | | ✓ | | ✓ | | |
1-, 3- and 5-YEAR TSR
| (1) | Determined by our Board as independent under NYSE listing standards. |
| (2) | Service as U.S. public company CEO, COO and/or CFO. |
| (3) | Prior or concurrent service on another U.S. public company board excluding companies at which individual served or serves as CEO, COO and/or CFO. |
| (4) | Key for industry and functional experience: |
| • | Technical expertise – Direct management experience or subject matter expertise during professional career. |
| • | Supervisory experience – Supervisory management experience during professional career. |
| • | Substantial knowledge – Knowledge from serving on board of another U.S. public company and/or gained from investment banking or private equity experience. |
| (5) | Classifications for gender, race/ethnicity, LGBTQ+, veteran and works/worked outside the U.S. based on directors’ responses to questionnaire. |
| | | Avery Dennison Corporation | 2024 Proxy Statement | | 9 | | | | | | | | | | AVY | | S&P 500 | | S&P Indus. & Mats.* | | | | | 2017 | | 67% | | 22% | | 28% | | | | | 2018 | | (20)% | | (4)% | | (14)% | | | | | 2019 | | 49% | | 32% | | 34% | | | | | 2020 | | 21% | | 18% | | 17% | | | | | 2021 | | 41% | | 29% | | 24% | | | | | 3-Year TSR | | 154% | | 100% | | 94% | | | | | 5-Year TSR | | 237% | | 133% | | 122% |
* | Based on median of companies in both subsets as of December 31, 2021
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Board Governance Highlights Highlights of our governance program are shown below. | | | Stockholder Rights | | ✓ Market-standard proxy access ✓ If Item 3 is approved at Annual Meeting, stockholders will have the right to request that we call special meetings of stockholders at 25% ownership threshold ✓ No supermajority voting requirements ✓ No poison pill ✓ No exclusive forum or fee-shifting bylaws | Board Governance | | ✓ Annual election of directors ✓ Majority voting in director elections ✓ Single class of outstanding voting stock ✓ Director nominees 80% independent ✓ Robust Lead Independent Director role ✓ Regular director succession planning and paced Board refreshment, including four new directors appointed within last 18 months ✓ Continuous executive succession planning and leadership development ✓ Annual Board/Committee evaluations and individual director feedback process ✓ Mandatory director retirement policy at age 72 with no exemptions or waivers allowed or granted ✓ Best practice Governance Guidelines ✓ Strong Board and Committee governance ✓ Direct access to management and experts |
ESG GOVERNANCESUSTAINABILITY
We have been consistently focused on advancing our ESG profile,sustainability agenda by establishing our priorities, setting ambitious goals and making consistent progress toward their achievement. Our sustainedsustainability progress reflects the leadership of our management team and the engagement and oversight of our Board, as well as the commitment and passion of our management and employees, as well as the robust engagement and oversight of our Board. Our ESG governance structure is shown on the following page.team members worldwide. | | | 6
| | 2022 Proxy Statement | Avery Dennison Corporation
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ESG GOVERNANCE STRUCTURE
We believe that strong datasustainability governance ensures consistency and accuracy of information in support of our ESG priorities and enhanceswe use to provide transparency to our stakeholders. Our ESGgovernance structure is shown below. | | | SUSTAINABILITY GOVERNANCE STRUCTURE |
| | | 10 | | 2024 Proxy Statement | Avery Dennison Corporation |
Sustainability Data and Reporting We continue to refine and expand the sustainability data we disclose, which has provided our stakeholders with regular insight into our progress. Our sustainability data is organized and indexed to the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI) frameworks to facilitate stakeholder usage and comparability of our results with those of other companies. We partnered with a third-party expert to assess our disclosures against the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) regarding the information that companies should disclose to allow their stakeholders to assess and price their climate-related risks and have developed a plan to align with TCFD requirements.We also respondedreport to Carbon Disclosure Project (CDP) Climate, Water and Forests since 2010, 2015 and 2016, respectively. The volumesupport the growing adoption of ESG information we disclose has significantly increased in recent yearsInternational Sustainability Standards Board (ISSB) standards. We plan to assess our reporting against ISSB standards, and other disclosures that incorporate those standards, as part of our scores from ESG rating agencies have continued to improve.ongoing sustainability reporting transparency efforts. During 2021, we evolved our ESG data governance program by establishing an ESG Program Management Office toOur sustainability teams assess our reporting in accordance with frameworks such as the Task Force on Climate-Related Financial Disclosures (TCFD);external frameworks; engage with targeted ESGenvironmental, social and governance (ESG) rating agencies; manage our data collection and reporting processes; createestablish and monitor assurance guidance and controls,controls; and provideapprove reports, data and information for publication.information. In addition, we engagedengage an independent third party to reviewvalidate our energy and GHGgreenhouse gas (GHG) emissions data; requesteddata. Having aligned with the Audit Committee to ensure Board oversight of sustainability governance, our Internal Audit team to perform walkthroughs of key metrics and provide ongoing advisory engagement; and formalized ourreporting processes for ensure data owner sign-off, ESG Sustainability Disclosure Committee review and senior management approval. prior to publication.
Our March 20222024 ESG Download, published concurrently with this proxy statementbeing made available on our ESG website at esg.averydennison.com on or before the filing of our definitive proxy statement, reflects the organizationalour focus we haveand progress on thesesustainability and governance matters. It includes 120 categories~140 metrics covering our policies, goals, strategies, risks, outcomes/metricsoutcomes and certifications. This information comes from multiple data owners and sources, including our enterprise-wide Sustainability Council, the sustainability teams in our businesses, and representatives from corporate and business functions such as EHS, Operations/Supply Chain, Procurement, HR and Law. The ESG Download and other informationInformation on our website areis not and should not be considered part of, nor are theyis it incorporated by reference into, this proxy statement. | | | Avery Dennison Corporation | 2022 Proxy Statement
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ENVIRONMENTAL AND SOCIAL SUSTAINABILITY
Sustainability is one of our core values and has long been integral to our way of doing business. To create value for all our stakeholders, we aim to advanceare advancing our sustainability strategic innovation platformsplatform focused, among other things, on material circularity and waste reduction/elimination, buildelimination; building a more diverse workforce and inclusive and equitable culture, maintainculture; maintaining operations that promote health and safety,safety; and supportsupporting our communities. Integrating sustainability into our business strategies has helped us deliver sustained strong financial performance and engage employees at all levels.levels to deliver sustained progress. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 11 |
In the first sixeight years of the 10-year horizon for our 2025 sustainability goals, we have made substantial progress, including exceeding our goal for cumulative GHG emissions reduction, as shown in the scorecard below. You can find additional information on our ESGsustainability progress in our 2021 integrated sustainability2023 Integrated Report being furnished to the Securities and annual report,Exchange Commission (SEC) prior to the distribution of our proxy materials, as well as onin our March 2024 ESG website at esg.averydennison.com. The 2021 integrated sustainability and annual report and other information on our website are not and should not be considered part of, nor are they incorporated by reference into, this proxy statement.Download. | | | | | | | 20212023 SCORECARD OF PROGRESS TOWARD 2025 SUSTAINABILITY GOALS | Focus Area
| | Goal(s) | | Baseline Year | | Highlights of Progress | Greenhouse Gas Emissions  
| | Achieve at least 3% absolute reduction year-over-year and at least 26% overallcumulative reduction by 2025 | | 2015 | | Reduced absolute GHG emissions by additional ~7% in 12 months through Q3 20212023, our most recently available data, compared to same period in prior year; reduced GHG emissionsyear and by ~48%~63% cumulatively through Q3 2023 compared to baseline year | Paper  
| | Source 100% certified paper, of which at least 70% is Forest Stewardship Council®-certified | | 2015 | | Of total volume of paper procured in 2021, ~91%2023, ~96% was certified, with ~81%~79% of face stock Forest Stewardship Council®-certified | Films  
| | Ensure that 70% of films we buy conform to, or enable end products to conform to, our environmental and social guiding principles
| | N/A | | ~97% of 20212023 film volume conformed to LGM’s restricted substance listMaterials Group’s Restricted Substance List (RSL) | Chemicals  
| | Ensure that 70% of chemicals we buy conform to, or enable end products to conform to, our environmental and social guiding principles
| | N/A | | ~96% of 20212023 chemical volume conformed to LGM’sMaterials Group’s RSL | Products and Solutions  
| | Through innovation, deliver above-average growth in salesDerive 70% of revenues from sustainability-driven products and services
Ensure that 70% of(as defined by our products and solutions conform to, or enable end products to conform to, our environmental and social guiding principlesSustainable ADvantage criteria)
| | 2015 | | ~55%67% of Materials Group (based only on Label and ~50%Graphic Materials) and ~64% of RBISSolutions Group (based only on Apparel and LGMSolutions) sales respectively, in 20212023 came from sustainability-driven products that are responsibly sourced, enable recyclability, contain recycled content or use less material without compromising performance | Waste  
| | Be 95% landfill-free, with at least 75% of our waste reused, repurposed or recycled Eliminate 70% of the matrix and liner waste from our value chain
| | 2015 | | Diverted ~94%~93% of solid waste from landfills and recycled ~67%~64% of waste as of Q3 2021,2023, our most recently available data | People  
| | Continue to cultivate diverse (40%+ female at level of manager and above), engaged, safe (recordable incident rate (RIR) of <0.25), productive and healthy workforce Continue to invest in our employeesMaintain world-class safety and the communities in which they live and workemployee engagement scores
| | 2015 | | Increased female representation at level of manager and above by ~3%~4% from baseline year, reaching 35%~36% at YE 20212023 Continued world-class safety record, with 2021 RIR of 0.21,0.22 in 2023, substantially better than manufacturing industry average of 3.13.2 in 20202022 (most recently available data) Employee engagement of ~80%* in 2023 | Transparency  
| | Commit to goals publicly and be transparent in reporting progress | | N/A | | Continued to enhanceenhancing sustainability transparency by providingwith more frequentcomprehensive reporting, including in our Integrated Reports, proxy statements and comprehensive ESG disclosures, including by launching ESG websiteDownloads |
| * | Data reflects change in engagement survey platform and making new commitments to external standards (e.g., Science Based Targets initiative) in 2021methodology. |
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| | 20222024 Proxy Statement | Avery Dennison Corporation
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After updatingcompleting our biannual materiality assessment in 2020 to better understandprioritize the most significant environmental and social sustainability challenges then facing our company and our stakeholders, we reframed our eight 2025 goals into three broaderestablished an additional set of sustainability goals that we are aiming to achieve by 2030. Within each of these goals, we have specific targets related to environmentaltargets. In 2022, we completed an enhanced materiality assessment, which included an updated mapping of our sustainability priorities throughout our value chain. This process included interviews with internal and social sustainability. We showexternal stakeholders such as members of management, customers and non-governmental organizations (NGOs), as well as industry analysis. The topics that ranked highest in the assessment also offer substantial value-creation opportunities for our progress against the targets shown belowcompany and customers. The most material topics identified in our 2021 integrated annual2022 materiality assessment – transition to a circular economy, advanced technologies and innovation, climate change, GHG emissions and reduction, supply chain, fair and inclusive marketplace, materials management and operational waste – are all reflected in our 2030 sustainability report. goals and targets. Our progress toward our 2030 SUSTAINABILITY GOALS AND TARGETSgoals through 2023 is shown below. | | | | | | | | | 2023 SCORECARD OF PROGRESS TOWARD 2030 SUSTAINABILITY GOALS | | | | | GOALSGoal
| | TARGETSTargets | | Baseline Year | | Highlights of Progress |  
Deliver innovations that advance the circular economy | | Satisfy the recycling, composting or reuse requirements of all single-use consumer packaging and apparel with our products and solutions | | RBIS:
| | | | Solutions Group: 100% withinof our core product categories (printed fabric labels, woven labels, paper, interior heat-transfer labels, packaging and RFID) will meet our third-party verified Sustainable ADvantage Standardstandard | | LGM:N/A
| | ~75% (based only on Apparel Solutions) | | Materials Group: 100% of our standard label products will contain recycled or renewable content; all of our regions will have labels that enable circularity of plastics | 
Reduce the environmental impact in our
operations and supply chain
| | ReducedN/A
| | ~61% (based only on Label and Graphic Materials) | 
Reduce the environmental impact in our operations and supply chain | |
Reduce our Scope 1 and 2 GHG emissions by 70% from our 2015 baseline. Work with our supply chain to reduce our 2018 baseline Scope 3 GHG emissions by 30%, with an ambition of net zero by 2050 | | N/A | | Scope 1 and 2: ~63%; as of Q3 2023, our most recently available data Scope 3: Prior-year calculations publicly available in our most recent CDP Climate response* | | | Source 100% of paper fiber from certified sources focused on a deforestation-free future | | 2015 | | ~96% certified | | | Divert 95% of our waste away from landfills, with a minimum of 80% of our waste recycled and the remainder either reused, composted or sent to energy recovery | | 2015 | | ~89% landfill-free ~64% recycled | | | Deliver a 15% increase in water efficiency at our sites that are located in highhigh- or extremely high riskhigh-risk countries as identified in the World Resources Institute Aqueduct Tool | | N/A | | ~9% as of Q3 2023 |  
Make a positive social impact by enhancing the the livelihood of our people and communities
| | Foster an engaged team and an inclusive workplace.workplace • Inclusion Index: 85% • Employee Engagement: 82% • Females in manager level or above positions: 40% • Safety: 0.2 RIR of 0.20 | | 2015 | | ~76%** (N/A in 2015) ~80%** (from 80%) ~36% (from 32%) 0.22 (from 0.31) | | | Support the participation of our employees in Avery Dennison FoundationADF grants and foster the well-being of the communities in which we and our supply chain operate.operate • 85% of countries in which we operate receive ADF grants • 50% of all ADF grants incorporate volunteerism | | N/A | | Made ADF grants in ~72% of countries in which we operate 95% of grants incorporated employee volunteerism |
| * | Our Scope 3 GHG emissions reporting is currently spend-based and fluctuates with market trends and inflation. |
| ** | Data reflects change in engagement survey platform and methodology. |
DIVERSITY, EQUITY
| | | Avery Dennison Corporation | 2024 Proxy Statement | | 13 |
PEOPLE AND INCLUSION (DE+I)CULTURE Our employee experience depends on our culture, technology and work environment, whether in an office, remote or hybrid. To enhance this experience, we have advanced our professional-level onboarding and expanded digital access for our manufacturing and remote employees; enabled the continuous growth of our employee resource groups (ERGs), which are open to all employees; further enhanced flexible work arrangements; provided more targeted talent development programming; and matured our enterprise leader development program. We have continued annually evaluating pay equity, making adjustments where appropriate. In 2023, we reviewed pay equity (considering total base and annual incentive compensation) with respect to gender for all non-manufacturing employees globally, as well as all manufacturing employees in the U.S. and certain other countries, and with respect to race/ethnicity for all U.S. employees. Our teams engaged with company leadership on our pay equity/transparency priorities and implemented several advancements, such as including employees from recently integrated acquisitions in our population data, expanding our analysis to include long-term incentives for director-level and above employees, and fine-tuning our analytic model in certain regions to reflect their unique circumstances. We also enhanced pay transparency to comply with evolving laws and regulations. Diversity is one of our core values, reflecting our commitment to ensuring an inclusive and equitable environment for people of all backgrounds and orientations andbackgrounds. It is our belief that we gain strength from diverse ideas and teams.teams. Our DEI efforts are intended to foster an environment where our employees can grow and be increasingly productive and innovative, enhancing our reputation as a great place to work and allowing us to attract and retain talent for the benefit of our stakeholders. We are holdinghold ourselves accountable for DE+Iour DEI progress with quantitative targets for employee engagement, inclusion and workforce gender diversity in our 2030 sustainability goals. Over the past several years, we have made consistent progress insignificantly advanced our DE+IDEI journey, as shown on the following page. below. Our 2021 2023 EEO-1 statistics,, which we collect as required by the U.S. Equal Opportunity Commission and reflect the voluntary self-identification by our U.S. employees, can be found in our March 20222024 ESG Download. | | | HIGHLIGHTS OF DEI JOURNEY | | Avery Dennison Corporation | 2022 Proxy Statement
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| | | | | HIGHLIGHTS OF DE+I JOURNEY | | | 2015 
| | • Established 2025 goal of 40%+ female at manager level and above • Employees established Northeast Ohio Chinese Employee Resource Group (ERG)first ERG | | | 20162016-2020
 
| | • Launched unconscious bias training for managers globally • Released DE+I Talkabout Toolkit
• Initiated Women.Empowered development program
• Expanded flexible work arrangements
• Added inclusion index to employee engagement survey
| | | 2017
| | • Employees established Elevate, women’s ERG
• Began requiring gender diverse hiring slate goals globally
• Joined CEO Action for Diversity & Inclusion
• Formally added Diversity as one of our company values
| | | 2018
| | • Established Regional DE+IDEI Councils • Employees established BERG, our Black ERG
• Launched Men as Allies program • Reviewed director+ level gender pay equity, making adjustments where appropriate
| | | 2019
| | • Employees established Veterans ERG and UNITE, our LGBTQ+ ERG
• Launched North America iBelong employee engagement campaign
• Expanded gender pay equity review, making adjustments where appropriate
| | | 2020
| | • Employees established Voz Latina ERG
• Launched regional DE+I town halls
• Began enhancing DE+I transparency with increased ESG reporting
• Started to recruit for enterprise-wide DE+I leader
• Continued expandingexpanded gender pay equity review and began evaluating U.S. racial/ethnic pay equity, in each case making adjustments where appropriate
• Began requiring gender-diverse hiring slates globally • Conducted unconscious bias training for managers globally • Added inclusion index to annual employee engagement survey • Expanded flexible work arrangements • Initiated Women.Empowered development program • Joined CEO Action for Diversity & Inclusion • Employees established several new ERGs, including for women and Black/African American, LGBTQ+ and Latinx employees | | | 2021  
| | • Engaged third party expert to assess our baselineFormalized DEI strategy with four global pillars and help us establish our global DE+I priorities supporting regional focus areas • Established DE+IDEI infrastructure with global leader and dedicated regional resources • Developed global DE+I strategy with four pillars and supporting regional focus areas
• Increased DE+I transparency, including by publishing EEO-1 data and committing to do so annually
• Further enhanced pay equity review by engaging third party expert to analyzewith third-party analysis of U.S. racial/ethnic equity data • Invested to further develop ERG leaders Began annually publishing EEO-1 statistics • Employees establishedReached milestone of 20+ ERGs, focused on mental awareness, single parenting and youngwhich are open to all our employees • Sponsored 50+ diverse leaders in externally-facilitated leadership academies • EnsuredImplemented more equitable benefits for LGBTQ+ employees and their families resulting
| | | 2022-2023 
| | • Made additional progress in 100% scorefemale manager+ representation; on Human Rights Campaign Foundation’s 2022 Corporate Equality Indextrack to reach 40% by 2026 • Improved global female employee engagement and maintained rate of female departures in manager+ positions despite competitive talent market • Grew ERG membership globally by 30%+ • Launched AD Advocate, pairing executives to sponsor and mentor top diverse talent • Implemented new employee engagement survey, providing expanded set of questions more reflective of market best practices, enhanced comparability with peers, improved analytics and pulse survey capability • Completed foundational work focused on DEI strategic pillars of women leaders, fairness manufacturing, inclusion and underrepresented groups (from hiring to development and career growth) |
In 2024, we plan to maintain our focus on fair and transparent talent practices and standards, equitable access to opportunities for career growth and development, and manufacturing team communication and camaraderie. | | | 1014
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STOCKHOLDER ENGAGEMENT In addition to our extensiveongoing investor relations program through which our CEO, Chief Financial Officer (CFO), business leaders and Investor Relations team engage with our investors throughout the year, for over a decade, we have a longstanding practice of semiannual engagementsemiannually engaged with stockholders to further discuss and solicit their feedback on our strategies, performance, executive compensation and ESG matters. 
Summarysustainability progress, offering to include directors as participants in scheduled meetings. The objectives of 2021 Engagement Feedback
this program are to maintain regular and thoughtful engagement to directly obtain investor feedback; continue to strengthen our relationships with key investors; and gather perspectives on our sustainability and governance profile to identify potential improvement opportunities. Our Board and management believe that regularongoing stockholder engagement fosters a deeper understanding of our investors’ evolving investor expectations on ESG matters and helps us ensure our programswe continue to align withreflect best practices.The objectives of our stockholder engagement program are to maintain thoughtful dialogue and further strengthen our relationships with our top investors; gather feedback on the prior proxy season and identify potential improvement opportunities based on evolving expectations; and discuss our company strategies, Board matters, executive compensation, and ESG progress. In 2021, we contacted our top 30 investors in the spring and the fall. Board members, in particular our Lead Independent Director, and management were made available to answer questions and address concerns. We engaged with every stockholder who accepted our invitation to meet, and our Lead Independent Director led the majority of our off-season engagements.2023 Engagement Results
| | | | | | | | | 2023 ENGAGEMENT RESULTS* | | | | | | | Outreach | | | Conversations | In 2023, we contacted our top 35 investors in proxy season and the off-season. Board members, in particular our Lead Independent Director (LID), and management were made available to answer questions and discuss matters of investor interest. We engaged with every stockholder who requested a meeting or accepted our invitation to meet, and our Lead Independent Director led the majority of our off-season engagements. | |
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| * | Based on percentage of shares outstanding. |
We discussed the process, results and feedback from our 20212023 engagement regarding executive compensation and social sustainability with the Talent and Compensation Committee (the “Compensation Committee”) and theregarding governance and environmental sustainability with our Board’s Governance Committee of our Board, andCommittee. We also shared highlights with the fullour Board to supplement the reports from those Committee Chairs. In February 2024, giving consideration to the feedback we received from investors during our 2023 engagements, our Board approved, subject to stockholder approval at the Annual Meeting, a Certificate of Amendment to our Amended and Restated Articles of Incorporation to provide that stockholders holding 25% of our outstanding common stock have the right to request that we call special meetings of stockholders. A summary2023 Engagement Feedback
We discussed our leadership transition in all off-season engagements, with investors interested to learn about our Board’s executive succession planning process, engagement with the CEO successor in and outside the boardroom, and strategic rationale for determining Mr. Stander to be the right individual to guide our company in the next phase of its journey. Stockholders also sought to understand the results fromrole, responsibilities and anticipated tenure of our 2021 stockholder engagement is shownExecutive Chairman. Governance Feedback Our 2023 engagements provided feedback on the following page.governance matters described below. | • | | Board composition, including the appropriateness of the balance of skills, qualifications, demographic backgrounds and tenure distribution on our Board given our evolving strategies |
| • | | Board refreshment and diversity, including our director succession planning process to ensure a robust pipeline of potential new directors, the rationale for recent director appointments and our Governance Committee’s search for new directors with retail/CPG or finance expertise |
| • | | Board leadership structure, including our rationale for maintaining a non-independent Chairman complemented by a proactive and engaged Lead Independent Director |
| • | | Our stockholder rights profile, particularly the inability of our stockholders to request that we call special meetings of stockholders |
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Governance Feedback
With respect to governance, our 2021 engagements focused primarily on the matters described below.
Board oversight of ESG matters, including the allocation of responsibilities among Board Committees and our full Board
Board composition, with investors noting that the diversity of skills, qualifications and demographic backgrounds on our Board was appropriate given our company’s strategies and ESG priorities
Board refreshment, including actions underway to mitigate the risk from upcoming concentrated director retirements and the skills and backgrounds we would seek in any new director to complement those of our existing directors
Board leadership structure, including our rationale for maintaining a combined Chairman/CEO with a robust Lead Independent Director role
Director commitments, given the lower level of stockholder support at the 2021 Annual Meeting received by one of our current directors whose board memberships do not comply with certain of our investors’ voting policies
Our shareholder rights profile
Environmental Sustainability Feedback Environmental sustainability was a significant area of focus for the stockholders with which we engaged. Investors uniformly commended our significantly expanded ESGsustainability transparency with in the disclosures contained in our integrated annual and sustainability reports,Integrated Reports, proxy statements and ESG Downloads and on our ESG website at esg.averydennison.com. Environmental sustainability was a key area of focus for many of our investors in 2021.Downloads. During our conversations, we primarily discussed the matters described below. | • | | Our progress against our 2025 and 2030 sustainability goals, including our substantial achievement of the former set of goals and whether adjustments would be made to the original goals or would be reflected in our next set of sustainability goals |
| • | | Our current focus areas, including goal attainment, actions to address increasing regulatory requirements, improved transparency and ESG ratings agency engagement, and approach to materiality |
| • | | Our efforts to reduce Scope 3 GHG emissions, including our investment in internal infrastructure with dedicated procurement resources in each of our business segments; partnership with CDP Supply Chain to optimize engagement with our customers; and measurement methodology, including our potential transition from spend-based to materials-based measurement of these emissions |
| • | | Our 2025 goal related to 70% sustainability-driven products, including our criteria for designation as sustainability-driven and our shift from our goals for 2025 focused on our products to our goals for 2030 focused on what our products enable for our customers and end users |
| • | | Our efforts toward aligning with TCFD requirements, including our assessment with a third-party expert to understand our physical and transactional risks and our plans to incorporate TCFD into our enterprise risk management (ERM) and long-term strategic planning processes |
| • | | Our net zero ambition, including internal strategy development, the impact of our progress reducing Scope 1 and Scope 2 GHG emissions, and our dependence on other parties to reduce Scope 3 GHG emissions |
Executive Compensation and Social Sustainability Feedback The strong linkage between ESG primary focus areas during our 2023 engagements were our leadership transition, Board refreshment and governance profile; executive compensation and social sustainability were not significant topics of discussion. Stockholders did express interest in the impacts of our leadership transition on executive compensation, including the compensation of our new CEO and our company strategies,Executive Chairman, as well as any additional incentives provided to senior leaders in connection with the transition. Investors continued to want to learn more about the ways in which we incent our environmental and social sustainability creates market opportunity and provides competitive advantage Our reframed sustainability framework,leaders to progress toward achieving our 2025 goals and our new 2030 goals, reviewing the step-change advancement between these sets of goals, including our more objective and ambitious 2030 targets, including those related to Scope 1, 2 and 3 GHG emissions reduction and water to address evolved stakeholder expectationssustainability goals.
Engagement Process Our launch of strategic innovation platforms focused on waste reduction/elimination and material circularity
The approval by the Science Based Targets initiative of our 2030 Scope 1 and 2 GHG emissions reduction targets as consistent with reductions required to keep warming to no more than 1.5 degrees Celsius, and our ambition to achieve net zero GHG emissions by 2050
Executive Compensation Feedback
The stockholders with whom we spoke sought information regarding the consideration of ESG matters in our executive compensation program, seeking to ensure that the Compensation Committee is discussing evolving expectations regarding ESG-executive compensation linkage. We discussed our current approach of establishing performance objectives for our annual incentive program based on quantitative financial metrics, supplemented by a qualitative individual assessment of executives that includes consideration of their ESG-related goals. We also explained our Board’s view that our financial success in recent years has been inextricably linked to our ESG focus and progress and that we have made substantial ESG progress as part of our commitment to deliver for all our stakeholders. Investors noted the need to be thoughtful and objective if we were to add ESG performance objectives, cautioning against setting targets without sufficient time and data to assess their appropriateness. To provide additional perspective on the Compensation Committee’s views on the linkage between ESG and executive compensation, we have included additional disclosure in the Compensation Discussion and Analysis section of this proxy statement.
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Social Sustainability and Talent Management Feedback
Social sustainability and talent management continued to be significant areas of investor focus in 2021. In addition to the general feedback on our ESG program noted above, discussions related to these topics included the following:
Training and development opportunities we provide our employees with a view to ensuring an informed and ethical workforce
Our efforts to attract team members from underrepresented communities and ensure diverse hiring slates
The programs we offer to make our company an attractive place to work
Employeeretention and attrition
DE+I continued to be a key topic of engagement. The matters described below were areas of DE+I focus.
The ways in which DE+I aligns with our business strategies, allowing us to recruit and retain an engaged workforce committed to advancing their success and ours
Given our focus on building a more diverse workforce and inclusive and equitable culture, sharing our quantitative achievements, as well as information related to our qualitative efforts to continuously improve
The Compensation Committee’s discussion of our DE+I initiatives and progress at each of its regular meetings in 2021, with supplemental engagement on these matters by our full Board with our CEO, Chief Human Resources Officer (CHRO), business leaders and DE+I leaders
Ourdisclosure of EEO-1 data for the first time in 2021, with investors expressing their interest in learning more about the demographics of our workforce, what drives employee engagement and how our company plans to ensure the continued success of this key stakeholder group
We also candidly discussed our projected inability to achieve our goal of 40%+ women at the manager level and above by 2025, including the challenges we experienced, our key learnings and the organizational enhancements we have made in recent years to ensure we can deliver this renewed goal by 2030.
2022 DIRECTOR NOMINEES (ITEM 1)
Director’s Decision Not to Stand for Reelection
In February 2022, Director Mark Barrenechea notified our Board of Directors of his decision not to stand for reelection at the 2022 Annual Meeting so that he can focus on other endeavors.
Matrix of Director Nominee Skills, Qualifications and Demographic Backgrounds
Our director nominees bring a balance of skills, qualifications and demographic backgrounds to their roles of providing oversight of our company, as shown by individual in the matrix on the following page, which we have modified slightly from prior year to conform with the areas of industry expertise by which we now classify directors given our evolved strategic profile. This matrix reflects information received from each of our directors in their responses to our annual director questionnaire. At least annually, the Governance Committee evaluates and reports to our Board on the skills, qualifications and demographic backgrounds desirable for our Board to best advance our business strategies and serve the interests of all our stakeholders.
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BOARD MATRIX
| | | | | | | | | | | | | | | | | | | | Governance Guidelines Criteria | Independent | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | | | ✓ | Senior Leadership Experience(1) | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | | Industry Experience(2) | | ✓ | | | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | Global Exposure(3) | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | Board Experience(4) | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | | | ✓ | Financial Expertise(5) | | | | ✓ | | | | | | | | | | ✓ | | ✓ | | Industry Expertise | Software/Digital/Cybersecurity(6) | | | | | | | | | | | | | | | | | Retail/Dining | | | | | | | | ✓ | | ✓ | | | | | | | Packaging | | ✓ | | | | | | | | | | | | ✓ | | | Consumer Goods | | | | | | ✓ | | | | ✓ | | | | | | ✓ | Industrial Goods | | | | | | | | | | | | ✓ | | ✓ | | | Materials Science | | | | | | | | | | | | | | ✓ | | | | Demographic Background | Tenure (years) | | 5 | | 9 | | 12 | | 19 | | 14 | | 9 | | 5 | | 16 | Gender | | | | | | | | | | | | | | | | | Female | | | | | | | | ✓ | | | | ✓ | | | | | Male | | ✓ | | ✓ | | ✓ | | | | ✓ | | | | ✓ | | ✓ | Non-Binary Gender | | | | | | | | | | | | | | | | | Age | | 59 | | 66 | | 65 | | 66 | | 69 | | 65 | | 50 | | 66 | Mandatory Retirement Year | | 2035 | | 2028 | | 2029 | | 2028 | | 2025 | | 2029 | | 2044 | | 2028 | Race/Ethnicity | | | | | | | | | | | | | | | | | Black or African American | | | | ✓ | | | | | | | | | | | | | Hispanic or Latino | | ✓ | | | | | | | | | | | | | | | White | | ✓ | | | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | | ✓ | Asian (including South Asian) | | | | | | | | | | | | | | | | | Native Hawaiian or Pacific Islander | | | | | | | | | | | | | | | | | Native American or Alaska Native | | | | | | | | | | ✓ | | | | | | | LGBTQ+ | | | | | | | | | | | | | | | | | Veteran | | | | | | | | | | ✓ | | | | | | | Lives/Has Lived Abroad | | ✓ | | | | ✓ | | | | | | | | ✓ | | ✓ |
| (1) | Service as president, chief executive officer or in similar senior executive positions.
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| (2) | Experience in the software/digital/cybersecurity, retail/dining, packaging, consumer goods, industrial goods or materials science industries.
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| (3) | Seniority in a global enterprise or significant experience in international markets.
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| (4) | Prior or concurrent service on other U.S. public company boards.
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| (5) | Expertise in accounting, auditing, tax, banking, insurance or investments.
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| (6) | Departing director Mark Barrenechea had this expertise, which is among the skills the Governance Committee and our Board will seek in new directors.
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Board Performance Highlights
Our Board provides strong oversight of our management team and company, with highlights of its notable accomplishments in recent years described below.
Supported management in navigating our evolving response to COVID-19, including related labor, freight and inflationary challenges in 2021 by ensuring we protected employee safety and well-being, delivered for our customers, mitigated supply chain risk, maintained a strong balance sheet to provide financial flexibility and supported our communities, while continuing to invest in our company’s future growth and further productivity
Oversaw consistent execution of our business strategies, which delivered significant operating margin expansion and double-digit compound adjusted EPS growth and exceeded our 2017-2021 financial targets, as well as 2017-2021 TSR of 237%, substantially outperforming the S&P 500 and the median of the S&P 500 Materials and Industrials subsets
Acquired 10 companies through year-end 2021 that added new capabilities and expanded our position in high-value product categories that serve markets that are growing faster than GDP, represent large pools of potential profit and leverage our core capabilities
Advanced Board and management focus on advancing ESG priorities, with consistent progress toward achieving our 2025 sustainability goals, more ambitious 2030 goals and increased transparency with more frequent and comprehensive disclosures, resulting in improved scores with key ESG rating agencies
Implemented thoughtful Board refreshment and succession planning, adding 3 new directors in the last 6 years, transitioning Patrick Siewert into Lead Independent Director role and appointing new Chairs for the Audit and Governance Committees, and proactively working to mitigate the impact of upcoming concentrated retirements under our mandatory retirement policy and further enhance Board diversity
Conducted regular executive leadership development and succession planning, resulting in several experienced leaders promoted to senior executive positions, including our new President and Chief Operating Officer (COO), new leaders of our RBIS Apparel Solutions and IHM businesses, and our CHRO and Chief Legal Officer (CLO) in 2020 who effectively transitioned into their roles during 2021
Board Governance Highlights
Our governance program ensures independent Board oversight of our company. Highlights of our program, which we believe is generally consistent and aligned with the Investor Stewardship Group’s Corporate Governance Principles for U.S. Listed Companies, are shown below.
| | | Stockholder
Rights
| | ✓ Market-standard proxy access
✓ No supermajority voting requirements
✓ No poison pill
✓ No exclusive forum or fee-shifting bylaws
| Board
Governance
| | ✓ Annual election of directors
✓ Majority voting in director elections
✓ Single class of outstanding voting stock
✓ Current directors 89% independent; director nominees 88% independent
✓ Robust Lead Independent Director role
✓ Regular director succession planning and Board refreshment
✓ Continuous executive succession planning and leadership development
✓ Annual Board evaluations
✓ Mandatory director retirement policy at age 72 with no exemptions or waivers allowed or granted
✓ Governance Guidelines
✓ Strong Committee governance
✓ Direct access to management and experts
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APPROVAL OF EXECUTIVE COMPENSATION (ITEM 2) The Compensation Committee oversees our executive compensation program, which deliversis designed to deliver pay for performance, with realized compensation dependent on our company achievingachievement of challenging annual and long-term financial targets and longer-term value creation objectives that advance the interests of our stockholders. | | | Avery Dennison Corporation | 2022 Proxy Statement
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ElectionThe substantial majority of President and COO
In late 2021 and early 2022, during Board meetings and executive sessions with our Chairman/CEO, but no other members of management present, and further one-on-one conversations between our Chairman/CEO and each director, our Board conducted leadership planning, among other things, discussing the potential election of Deon M. Stander, the Vice President and General Manager of our RBIS business, as President and COO. As a result of this thorough planning and these robust discussions, in February 2022, Mr. Stander was elected by our Board as our President and COO, effective March 1, 2022. Mr. Butier served as our President through the end of February 2022 and now serves only in the roles of Chairman and CEO.
Performance-Based Compensation
TargetNamed Executive Officer (NEO) target total direct compensation (TDC) foris performance based, meaning that our corporate Named Executive Officers (NEOs) is comprisedexecutives ultimately may not realize the value of at-risk components if we fail to achieve the elements shown below.
ELEMENTS OF TARGET TDC FOR CORPORATE NEOs
 
designated performance objectives.The Compensation Committee approves the target TDC of our NEOs to incent strong operational and financial performance and stockholder value creation. AsThe mix and elements of NEO target TDC are shown below, the substantial majority of this compensation is performance-based, meaning that our executives ultimately may not realize the value of the at-risk components of TDC if we fail to achieve our strategic, financial and ESG objectives. Our business NEO’s 2021 AIP award and PUs had different performance objectives than those of our corporate NEOs. 
| | | | | | | | | | | | | | | | | | | | | ANNUALIZED TARGET TDC MIX | | | | | | 2023 TARGET TDC MIX |  | | CEO* | | 16
| |  | | Avg. of Other NEOs** | | 
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| * | Mr. Stander’s annualized target TDC reflects his compensation package as CEO, excluding his special promotion award of stock options with a grant date fair value of approximately $3 million. |
| ** | Mr. Butier is excluded because his target 2023 TDC primarily reflected his compensation as CEO given the timing of our leadership transition. Francisco Melo’s target TDC mix included in the average reflects his target TDC as President, Solutions Group. |
| | | | | | | | | ELEMENTS OF NEO TARGET TDC | | |  | | LTI Compensation | | Performance Units (PUs) | | Corporate NEOs | | Solutions NEO | | • 50% of LTI with payout = 0% to 200% of target award • 3-year performance period - Company EVA(1) (50%) - Company Relative TSR(2) (50%) | | • 50% of LTI with payout = 0% to 200% of target award • 3-year performance period - Solutions Group EVA (75%) - Company Relative TSR (25%) | | | | • Relative TSR payout capped at 100% if absolute TSR is negative | | Market-leveraged Stock Units (MSUs) | | • 50% of LTI with payout = 0% to 200% of target award • 100% Absolute TSR(3) • 1-, 2-, 3- and 4-year performance periods | | Annual Incentive Compensation | | AIP Award(4) | |  | |  | | | | • Drives performance consistent with annual company or business financial goals • Individual performance modifier based on achievement against predetermined strategic and sustainability objectives (generally capped at 100% for NEOs) | | | | | | Base Salary | | • Annual fixed-cash compensation generally set around market median |
| (1) | Economic Value Added (EVA) is a measure of financial performance calculated by deducting the economic cost associated with the use of capital (weighted average cost of capital multiplied by average invested capital) from after-tax operating profit. |
| (2) | Relative TSR compares our TSR to the TSR of companies in a peer group satisfying certain objective criteria described in the Compensation Discussion and Analysis section of this proxy statement. |
| (3) | Absolute TSR measures the return that we provided our stockholders, including stock price appreciation and dividends paid (assuming reinvestment of dividends). |
| (4) | AIP award for Mr. Melo reflects performance objectives and weightings for the nine months of the year he served as President, Solutions Group. He had different performance objectives and weightings for the three months of the year he served as SVP/GM, Avery Dennison Smartrac. His 2023 AIP award would have been prorated to reflect the respective performance objectives and weightings had not the payout been zero. |
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Pay for Performance As shown inIn the graph below, CEO compensation for 2019 through 2022 reflects Mr. Butier’s compensation as reported in recentour Summary Compensation Tables for those years and, for 2023, Mr. Stander’s compensation as reported in our CEO’s compensation increased commensurate with2023 Summary Compensation Table. Our CEO pay has generally reflected our cumulative TSR except that Mr. Stander’s pay in 2023 was substantially lower than prior-year amounts for Mr. Butier because it primarily reflected his compensation as COO, which was significantly lower than Mr. Butier’s as CEO, as well as his special award of stock options with a grant date fair value of approximately $3 million granted in connection with his 2021 pay reflecting the longer-term approachpromotion to CEO compensation approved by the Compensation Committee in 2021.CEO. See the Compensation Discussion andAnalysis section of this proxy statement for more information.
 
Executive Compensation Best Practices As summarized below and described in further detail in the Compensation Discussion andAnalysis section of this proxy statement, our executive compensation program aligns with our financial goals and business strategies and reflects best practices. | | | Pay-for-PerformancePay for Performance | | ✓ 88% 87% of CEO 2021CEO’s annualized target TDC tied to company performance ✓ 71% of CEO 2021 target TDC equity-based to incent delivery of long-term stockholder value ✓ Rigorous stock ownership policy;policy requires CEO and Executive Chairman each to own ~6x6x respective base salary, 50%+ of which must be vested shares; does not count unvested PUs or stock options and only counts 50% of unvested MSUs at target
| Compensation Best Practices | | ✓ Double-trigger equity vesting requires termination of employment after change of control ✓ YE 20212023 three-year average burn rate of 0.58%0.50%, in line with 50th percentile of S&P 500 companies ✓ Compensation clawback policy for executive officers in event of accounting restatementrestatement; additional clawback policy applies to all AIP and LTI recipients ✓ Independent compensation consultant retained and servingserves at direction of Compensation Committee ✓ Annual Compensation Committee evaluation and charter review ✓ Periodic formal riskstrategic review of compensation program and assessment of compensation policies and practicesprogram features that mitigate excessive risk-taking ✓ Releases from liability and restrictive covenants for departing executives ✓ Compensation Committee review of NEO tally sheets reflecting all compensation components | | | ✓ No NEO employment contracts unless required by laws of home country ✓ No guaranteed AIP awards; 2023 NEO AIP awards based solely on company, business and ESGfinancial performance ✓ No excise tax gross-ups on change of control severance benefits ✓ No tax gross-ups on perquisites ✓ No above-market interest rates for deferred compensation ✓ No re-pricing of stock options without stockholder approval ✓ No payout of MSU dividend equivalents unless and until vestingawards vest ✓ No grant of stock options awarded below fair market value ✓ No supplemental retirement benefits |
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APPROVAL OF CERTIFICATE OF AMENDMENT TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION (ITEM 3)In February 2024, after giving consideration to the feedback we received from investors during our 2023 engagements and its review of market practices, upon the recommendation of the Governance Committee, our Board approved, subject to stockholder approval at the Annual Meeting, a Certificate of Amendment to our Amended and Restated Certificate of Incorporation (our “Charter”) to provide that stockholders holding 25% of our outstanding common stock have the right to request that we call special meetings of stockholders. The amendment also removes out-of-date references to the declassification of our Board that had been fully implemented by April 2014, providing that directors shall be elected annually for one-year terms, consistent with our existing Charter and best practices. RATIFICATION OF APPOINTMENT OF PwC (ITEM 3)4) Our Board’sThe Audit and Finance Committee has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for fiscal year 20222024 and our Board is seeking stockholder ratification of the appointment. PwC is well-qualified to continue serving as our independent registered public accounting firm, has a deep understanding of our operations and accounting practices, and maintains rigorous procedures to ensure auditor independence. independence from our management and company, which are overseen by the Audit Committee.
The committeeAudit Committee considered the qualifications, performance and independence of PwC, the quality of its discussions with PwC, and the fees charged by PwC for the levelscope and quality of services provided by the firm during 2021 – as well as considerations regarding PwC’sthe firm’s tenure as our independent auditor – and determined that the reappointmentappointment of PwC wasfor 2024 is in the best interest of our company and stockholders. | | | 18Avery Dennison Corporation | 2024 Proxy Statement
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GOVERNANCE With oversight from our Board, we have designed our governance program to comply with applicable laws and regulations – including the rules of the Securities and Exchange Commission (SEC) and the listing standards of the New York Stock Exchange (NYSE) – and to reflect best practices as informed by the practices of other large public companies, recommendations from our outside advisors, the voting guidelines of our stockholders and the policies of proxy advisory firms.
The key features of our governance program are describedshown in the Board Governance Highlights section of the proxy summary. We encourage you to visit the investors section of our website under Corporate Governance, where you can view and download the current versions of the documents shown belowbelow. Information on our website is not and referenced inshould not be considered part of, nor is it incorporated by reference into, this proxy statement. Amended and Restated Certificate of IncorporationCharter
Amended and Restated Bylaws (our “Bylaws”) Corporate Governance Guidelines (our “Governance Guidelines”) Charters for our Board’s Audit and Finance Committee, (the “Audit Committee”), Talent and Compensation Committee, (the “Compensation Committee”)Governance Committee and GovernanceFinance Committee Code of Ethics for the CEO and Senior Financial Officers Audit Committee Complaint Procedures for Accounting and Auditing Matters Information on our website is not and should not be considered part of, nor is it incorporated by reference into, this proxy statement. You can receiverequest copies of these documents, without charge, by writing to our Corporate Secretary at 8080 Norton Parkway, Mentor, Ohio 44060.
VALUES AND ETHICS Code of Conduct, Talkabout Toolkits and Supplier Standards Our Code of Conduct applies to all of our directors, officers and employees and reflects our values of Integrity, Courage, External Focus, Diversity, Sustainability, Innovation, Teamwork and Excellence. The Code It includes leadership messages from our CEO and Chief Compliance Officer; detailed information regarding higher risk areas such as anti-corruption/bribery, antitrust, conflicts of interest, insider trading, anti-harassment, and compliance with laws and regulations; and case studies to provide practical guidance on situations that raise complex ethical questions. It has been translated into over 30The Code is available in 33 languages and our leaders affirm their commitment to complying with it when they first join our company and regularly thereafter as part of our compliance certification process. process described in the Related Person Transactions section of this proxy statement. We plan to update our Code of Conduct in 2024 to refresh its current content and include new topics. We regularly train employees on the Code of Conduct topics in instructor-led sessions held in person or virtually,virtually; in addition to our2023, we held ~230 of these sessions globally. We also deploy mandatory online training program generally consisting of four courses per year thatfor our computer-based employees are required to complete. To ensure that the policiesemployees; in 2023 we launched one enterprise-wide and principles encompassed in our Codefive regional courses using a targeted risk-based approach, with an average completion rate of Conduct reach all our employees, we develop and launch~97%. Our three “Talkabout” Toolkits (also available in over 3033 languages) globallythat we develop each year whichempower managers are required to use to engage in meaningful discussiondiscussions with their teams regarding topics from the Code of Conduct. These toolkits consist of presentation slides, which are supplemented by internal social media campaigns that allow our team members to engage with their colleagues across the globe around our values and an introductory subtitled video, which includes messages from our Chief Compliance Officer and other company leaders.ethics.
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Ethics-Based Corporate Culture and Policies
Reflecting the culture of our company, the ethics-based corporate policies and other matters discussed in our Code of Conduct are shown below. Our global supplier standards extend our commitment to our third partythird-party service providers, establishing our expectation that they do business in an ethical manner.
Business Conduct GuideLine Our Business Conduct GuideLine (the “GuideLine”) is a whistleblower hotline available at all hours for employees or third parties to report potential violations of our Code of Conduct or applicable laws, anonymously if they so choose. The GuideLine may currently be reached by (i) calling 800.461.9330 toll-free in the U.S., toll-free outside of the U.S. using the country-specific numbers found in our Code of Conduct, or +1.720.514.4400 direct with applicable charges from any location or toll-free outside of the U.S. using the country-specific toll-free numbers found in our Code of Conduct or (ii) visiting www.averydennison.com/guidelinereport (www.averydennison.com/guidelinereport-eu in Europe).guidelinereport. The hotlineGuideLine is operated by an independent third party and accepts reports in any language to accommodate the needs of our global workforce and customer/supplier base. Reports are investigated under the direction of our Chief Compliance Officer, in consultation with our law department and senior management and with Board oversight fromprimarily by the Governance Committee and, for certain finance-related matters, also by the Audit Committee. We prohibit retaliation for good-faith reporting. Financial
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Code of Ethics We have adopted aOur Code of Ethics requires that requires our CEO, CFO and Controller/Chief Accounting Officer (CAO) toController act professionally and ethically in fulfilling their responsibilities. Only the Audit Committee or the Governance Committee can amend or waive the provisions of our Code of Ethics, and any amendments or waivers must be posted promptly on our website or timely filed with the SEC on a Current Report on Form 8-K. We last amended our Code of Ethics in April 2014 and we have made no exemptions or granted any waivers since its inception.
| | Code of Ethics Responsibilities
CODE OF ETHICS RESPONSIBILITIES | • Avoidactual or apparent conflicts of interest • Ensure complete and accurate SEC filings • Respect confidentiality of financial and other information • Employ corporate assets responsibly • Report Code of Ethics violations to Chair of Audit or Governance Committees |
Supporting fulfillment of these responsibilities, our controllership and internal audit functions ensure that we maintain a robust internal control environment, with the leaders of these functions regularly reporting to, and periodically meeting in executive session with, the Audit Committee. | | | 20
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COMPLAINT PROCEDURES FOR ACCOUNTING AND AUDITING MATTERS The Audit Committee has adopted procedures for the confidential, anonymous submission of complaints related to accounting, accounting standards, internal accounting controls and audit practices. These procedures relate to reports of (i) fraud or deliberate error in the preparation, evaluation, review or audit of our financial statements or other financial reports; (ii) fraud or deliberate error in the recording or maintenance of our financial records; (iii) deficiencies in, or noncompliance with, our internal accounting controls; (iv) misrepresentation or false statement regarding any matter contained in our financial records, statements or other reports; or (v) deviation from full and fair reporting of our financial condition. Any person, including third parties, may submit a good faithgood-faith complaint regarding accounting and auditing matters and employees may do so without fear of retaliation. The Audit Committee oversees these procedures, with investigations conducted under the direction of our internal audit department in consultation with our Corporate Secretary, Chief Legal Officer (CLO) and other members of senior management to the extent appropriate under the circumstances. Stockholders and other interested parties interested in communicating regarding these matters may make a confidential, anonymous report by contacting the GuideLine or writing to the Audit and Finance Committee Chair, c/o Corporate Secretary, 8080 Norton Parkway, Mentor, Ohio 44060. STOCK OWNERSHIP POLICY Our stock ownership policy requires that our (i)non-employee directors acquire and maintain a minimum ownership interest in our company of $500,000, (ii) Executive Chairman and our CEO acquire and maintain minimum ownership of 6x their base salary and (iii)Level 2 executives and Level 3 executives acquire and maintain a minimum ownership interest in our company equal to 6x,of 3x and 2x their base salary, respectively, atrespectively. At least 50% of whichthe applicable requirement must be held in vested shares.shares. The values of the following shares/units are considered in measuring compliance with our stock ownership policy: (i) shares beneficially owned or deemed to be beneficially owned, directly or indirectly, under federalU.S. securities laws; (ii) for officers, shares or units held in qualified and non-qualified employee benefit plans unvested restricted stock units (RSUs) subject to time-based vesting, and 50% of the value of unvested MSUs at the target payout level; and,(iii) for non-employee directors, deferred stock units (DSUs). Neither; and (iv) for officers and non-employee directors, unvested restricted stock units (RSUs) subject to time-based vesting. Unvested stock options nor unvestedand PUs are not considered in measuring compliance. DSUs, which represent annual cash retainers deferred at a director’s election, are included as owned under the policy because they are earned upon receipt and would be paid out to a participating director upon his or her separation from our Board. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 21 |
Until anon-employee director or officer achieves his or her respectivetheir minimum ownership requirement, he or she isthey are required to retain any shares acquired, net of taxes, from the exercise of stock options or vesting of stock awards until the requirement is met. These individuals areor exercise of stock options. Officers may not allowed to transact in company stock until they certify that they will remain in compliance with our stock ownership policy after giving effect to the transaction they plan to effectuate. The Compensation Committee and the Governance Committee reviewed the stock ownership of our non-employee directors in November 2021December 2023 and February 2022,2024, respectively. Both Committees determinedcommittees noted that all of – excluding the individuals appointed in 2022 and 2023 – our then-serving non-employee directors were in compliance with the policy, withhad average ownership of 12x the ownershipminimum requirement,, helping ensurealigning their interests remain aligned with those of our stockholders and further incenting their focus on long-term stockholder value creation. The relatively high averageAll current non-employee directors have exceeded the minimum ownership levelrequired by our non-employee directors is largely duepolicy, except for Mr. Wagner and Mses. Mejia and Reverberi, who have five years from the date of their respective Board appointments to the inclusion of DSUs for purposes of our stock ownership policy; DSUs represent annual cash retainers deferred at a director’s election. DSUs are included as owned under the policy because they are earned upon receipt and would be paid out to a director upon his or her separation from our Board.reach that level. The Compensation Committee reviewed executive stock ownership in November 2021December 2023 and determined that, all with the exception of our most recently appointed executive officer who has five years from the date of her appointment to reach her level, our executive officers, including all NEOs, were in compliance with our stockhad achieved their minimum ownership policyrequirement. The compliance of ournon-employee directors and NEOs with our stock ownership policy as of at year-end 2021 2023 is shown on the following page.below. | | | Avery Dennison Corporation | 2022 Proxy Statement
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| | | | | | | | | | | | | | | | | | STOCK OWNERSHIP POLICY COMPLIANCE | | | | | Minimum Requirement(1) | | | Shares(2) as of
2021 FYE (#) | | | Requirement
Multiple Achieved | | | Policy
Compliance | | | | | | | Non-Employee Directors | | $ | 500,000 | | | | | | | | | | | | | | Bradley Alford | | | | | | | 42,930 | | | | 18x | | | | ✓ | | Anthony Anderson | | | | | | | 16,069 | | | | 6x | | | | ✓ | | Mark Barrenechea | | | | | | | 6,892 | | | | 2x | | | | ✓ | | Ken Hicks | | | | | | | 43,810 | | | | 18x | | | | ✓ | | Andres Lopez | | | | | | | 8,390 | | | | 3x | | | | ✓ | | Patrick Siewert | | | | | | | 16,842 | | | | 7x | | | | ✓ | | Julia Stewart | | | | | | | 63,471 | | | | 27x | | | | ✓ | | Martha Sullivan | | | | | | | 28,727 | | | | 12x | | | | ✓ | | | | | | | Chairman & CEO | | | | | | | | | | | | | | | | | Mitchell Butier | | $ | 7,200,000 | | | | 269,668 | | | | 8x | | | | ✓ | | | | | | | Level 2 NEOs | | | | | | | | | | | | | | | | | Gregory Lovins | | $ | 1,983,780 | | | | 46,051 | | | | 5x | | | | ✓ | | Deon Stander | | $ | 1,707,021 | | | | 35,663 | | | | 4x | | | | ✓ | | | | | | | Level 3 NEOs(3) | | | | | | | | | | | | | | | | | Deena Baker-Nel | | $ | 832,000 | | | | 4,005 | | | | 1x | | | | ✓ | | Ignacio Walker | | $ | 850,750 | | | | 6,948 | | | | 1x | | | | ✓ | |
| | | | | | | | | | | | | | | | | | STOCK OWNERSHIP POLICY COMPLIANCE | | | | | Minimum Requirement(1) | | | Ownership(2) as of YE 2023(#) | | | Requirement
Multiple Achieved | | | Minimum
Requirement
Achieved | | | | | | | Non-Employee Directors(3) | | $ | 500,000 | | | | | | | | | | | | | | Bradley Alford | | | | | | | 47,454 | | | | 17x | | | | ✓ | | | | | | | Ken Hicks | | | | | | | 46,233 | | | | 17x | | | | ✓ | | | | | | | Andres Lopez | | | | | | | 4,865 | | | | 1x | | | | ✓ | | | | | | | Francesca Reverberi(4) | | | | | | | 1,126 | | | | – | | | | – | | | | | | | Patrick Siewert | | | | | | | 18,226 | | | | 6x | | | | ✓ | | | | | | | Julia Stewart | | | | | | | 54,603 | | | | 20x | | | | ✓ | | | | | | | Martha Sullivan | | | | | | | 32,425 | | | | 12x | | | | ✓ | | | | | | | William Wagner(4) | | | | | | | 1,481 | | | | – | | | | – | | | | | | | Executive Chairman | | | | | | | | | | | | | | | | | Mitchell Butier | | $ | 6,000,000 | | | | 336,085 | | | | 62x | | | | ✓ | | | | | | | CEO | | | | | | | | | | | | | | | | | Deon Stander | | $ | 6,600,000 | | | | 61,861 | | | | 10x | | | | ✓ | | | | | | | Level 2 NEOs | | | | | | | | | | | | | | | | | Gregory Lovins | | $ | 2,250,000 | | | | 78,598 | | | | 19x | | | | ✓ | | | | | | | Francisco Melo(5) | | $ | 1,554,657 | | | | 19,106 | | | | 6x | | | | ✓ | | | | | | | Level 3 NEOs | | | | | | | | | | | | | | | | | Deena Baker-Nel | | $ | 980,000 | | | | 13,259 | | | | 5x | | | | ✓ | | | | | | | Nicholas Colisto | | $ | 913,540 | | | | 10,779 | | | | 4x | | | | ✓ | |
| | (1) | Minimum requirements for Executive Chairman and CEO, Level 2 NEOs and Level 3 NEOs reflect 6x, 3x and 2x, respectively, of their respectiveyear-end 2023 base salary as of year-end 2021.salary. | |
| | (2) | Reflects shares/units considered in measuring compliance with our stock ownership policy rather than vested shares, based on the average closing price of our common stock from October 1 to December 31, 2021.2023. All then-serving non-employee directors, other than Ms. Reverberi and Mr. Wagner, and NEOs were also in compliance with our 50% vested shares requirement at year-end 2023. | |
| | (3) | Minimum requirements forExcludes Ms. Baker-Nel and Mr. Walker increased from 1xMejia who was appointed to 2x their respective base salariesour Board in connection with their promotions in September 2020.February 2024.
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| (4) | Ms. Reverberi and Mr. Wagner were appointed to our Board in February 2023 and October 2022, respectively, and have five years from their respective date of appointment to achieve the minimum ownership requirement. | |
| (5) | Amount for Mr. Melo was converted from euros using the average monthly exchange rate for December 2023. | |
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INSIDER TRADING POLICY Our insider trading policy prohibits our Board members,directors, officers and employees from engaging in transactions in our company’s stock while in the possessionany type of material non-public information; engaging in transactions in the stock of other companiessecurity while in possession of material non-publicnonpublic information relating to the security or the issuer of the security in breach of a duty of trust or confidence, whether the issuer is our company or another company. In addition, (i) if they are in possession of material nonpublic information regarding any other publicly-traded company, including that of our suppliers, customers, competitors or potential acquisition targets, they become awaremay not trade in its securities until the information becomes public or is no longer material; (ii) they may not purchase or sell any security of any other company while in performingpossession of material nonpublic information obtained in the course of their duties;employment or service with our company; and disclosing(iii) they may not directly or indirectly communicate material non-publicnonpublic information to unauthorized personsanyone outside or within our company other than on a need-to-know basis. Officer/Director 10b5-1 Plans Our insider trading policy contains specific requirements regarding contracts, plans or instructions to trade in our company’s securities entered into in accordance with SEC Rule 10b5-1, including with respect to multiple plans and modifications or terminations of existing plans. We reserve the right to suspend, discontinue or otherwise prohibit transactions under a 10b5-1 trading plan if we determine that doing so is in the best interest of our company. Limited Trading Windows Our insider trading policy restricts trading in company stock by Board members, officers (including our NEOs) and director-level employees, or any other person designated by our Corporate Secretary, during blackout periods, which generally begin two weeks before the end of each fiscal quarter and end two business days after the releaseissuance of our earnings release for the quarter. Additional blackout periods may be imposed with or without notice, as the circumstances require. All transactions in company stock must be precleared by our Corporate Secretary. Except for transactions under a previously established Rule 10b5-1 trading plan, if precleared individuals become aware of material nonpublic information or become subject to a blackout period before their transaction is effectuated, they may not complete the transaction even if they previously received preclearance. Prohibitions on Hedging and PledgingCertain Transactions Our insider trading policy prohibits our directors, officers (including our NEOs) and employees from short-selling company stock; transacting in puts, calls or other derivative securities involving company stock; or purchasing financial instruments (such as prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of shares of our common stock they hold, directly or indirectly.company stock. In addition, directors and officers are expressly prohibited from – and our non-officer employees are strongly discouraged from – pledging shares of our common stock to secure personal loansas collateral for a loan, purchasing company securities on margin or other obligations, including by holding such sharesplacing company securities in a margin account. To our knowledge based on our review of their written representations in our annual director and officer questionnaire, all of our Board members and executive officers complied with our insider trading policy during 2021,2023 and none of them has hedged or pledged shares of our common stock.engaged in any transaction prohibited thereby. | | | 22Avery Dennison Corporation | 2024 Proxy Statement
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ENVIRONMENTAL AND SOCIAL SUSTAINABILITY Sustainability and Diversity are two of our core values, and have long been part of our approach to doing business, driving us to work within our company and across our entire value chain to address the environmental and social impacts of our products and practices. practices. We aim to continually improve the environmental sustainability of our products, and processes, build a more diverse, equitable and inclusive workforce, maintain operations that promote health and safety, and provide meaningful support for our communities.communities. With strategic guidance and direction provided by Mitch Butier, our Chairman/CEO, responsibility over ensuring that we continue to make progress toward achieving our sustainability goals resides with Deon Stander, now our President and COO. Our enterprise-wide Sustainability Council, led by Mr. Stander and comprised of a cross-divisional and cross-functional group of leaders to drive broad accountability and continually accelerate our progress, met regularly during 2021 to develop our 2030 sustainability goals and targets, as well as formulate our go-forward ESG strategy.BOARD OVERSIGHT AND MANAGEMENT RESPONSIBILITY
Board oversight overof environmental sustainability and community investment is primarily conducted by the Governance Committee, which receives a report from management on each of these topics at least once a year.annually. In addition, our full Board engages with business leaders on their sustainability initiatives during its regular reviewdiscussion of their business strategies. In July and October 2021, 2023, our full Board held strategy sessions focusedengaged with senior management on environmentalour sustainability progress, having discussed with them throughout the year our innovation efforts to address the increasing need and demand for more sustainable products, oursustainability strategic innovation platforms focused on waste reduction/eliminationplatform, and material circularity,business and enterprise sustainability priorities. In early 2024, our overall ESG strategy, prioritiesBoard reviewed our 2023 Integrated Report, which includes our progress against our 2025 and progress.2030 sustainability goals. Board oversight overof social sustainability is primarily conducted primarily throughby the Compensation Committee, which reviewed our DE+I progressdiscussed DEI, including pay equity and transparency, at each of itsmultiple meetings in 20212023 and regularly discussesreviews other matters related to talent management.management, including the impact of executive promotions, role changes and exits on U.S. racial/ethnic diversity and global gender and generational representation. In December 2021, 2023, our full Board engaged with, and challenged management on, our DE+I progress,employee experience, including by reviewing the four pillarsresults of our enterprise DE+I strategy,employee engagement survey obtained through a more advanced platform using updated questions, as well as its supporting regional focus areas.our progress in each of our four DEI strategic pillars. They also discussed our 2024 plans to activate enterprise-wide standards to more consistently select, promote, develop and reward talent; globally implement a mobile application to better enable our manufacturing employees to access company information; and develop a talent solution connecting everything our team members need for learning, skills advancement and career mobility. ENGAGINGWith strategic guidance and direction provided by our CEO, management is responsible for ensuring that we continue to make progress toward achieving our sustainability goals through our Sustainability Council, which is led by our enterprise sustainability leader reporting in this capacity to our CEO, who is accountable for our progress. The council, which is composed of a cross-divisional and cross-functional group of management, met regularly during 2023 to ensure we progress toward our 2025 sustainability goals, advance our roadmaps to achieve our 2030 sustainability goals and targets, and accurately report to our stakeholders. Our enterprise sustainability leader participated in substantially all our 2023 off-season stockholder engagements to report on our sustainability progress and answer questions from investors.
ENGAGEMENT OF OUR STAKEHOLDERS We seek to ensure thatalign our sustainability efforts are consistentpriorities with the expectations of our stakeholders. We regularly communicate with individuals and organizations interested in how we do business generally andthem regarding our sustainability efforts in particular,progress and also conduct stakeholder interviewsinterview members of management responsible for key sustainability initiatives and third parties as part of our biennial materiality assessments. These assessments help set ourOur material topics and the feedback we received engaging with investors on sustainability agenda, focusing us on the areas in which wematters during 2023 can have the most impact. In 2020, we partnered with Environmental Resources Management to refresh our materiality assessment and reprioritize the sustainability topics most significant to our stakeholders. The resulting materiality map showing the importance of various ESG topics to our company and external stakeholders may be found in our March 2022 ESG Download. We have begun working on our next biennial materiality assessment, which we plan to share with our stakeholders in March 2023.the proxy summary. | | | Avery Dennison Corporation | 2022 Proxy Statement
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SUSTAINABILITY STAKEHOLDERS
Industry
Trade Associations Cross-Industry Working Groups Conferences
Customers and Brand Owners
Product Collaborations Surveys Site Audits Working Groups
Employees
Engagement Survey Works Councils Employee Resource Groups Intranet/Town Halls
Code of Conduct Training Business Conduct GuideLine
Investors
Annual Meetings Quarterly Earnings Calls Investor Meetings Stockholder Engagement Program
Non-Governmental Organizations
Consultations on Issues of Concern Specific Initiatives (e.g., responsibly sourcing paper, reducing GHG emissions)
Policymakers and Regulators
Permitting Audits Certifications
Communities
Foundation Grant-making Employee Volunteerism Civic Collaboration
Suppliers
Supplier Standards Compliance Training Supplier Audits Joint Projects
PROGRESS TOWARD ACHIEVING OUR 2025 AND 2030 GOALS We present our scorecard2023 scorecards showing progress against our 2025 and 2030 sustainability goals through 2021 in the proxy summary. We present our progress against our 2030 goals in our 2021 integrated annual and sustainability report. You can find additional information in our 2023 Integrated Report being furnished to the SEC prior to the distribution of our proxy materials and our March 2024 ESG DownloadsDownload being made available in the investors section ofon our website at investors.averydennison.com andesg.averydennison.com on or before the filing of our ESG website at esg.averydennison.com. Our 2021 integrated sustainability and annual report, ESG Downloads and other informationdefinitive proxy statement. Information on our website areis not and should not be considered part of, nor are theyis it incorporated by reference into, this proxy statement. | | | 24 | | 20222024 Proxy Statement | Avery Dennison Corporation
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We disclose our ESGsustainability metrics usingin accordance with the SASB and GRI frameworks of the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI) and annually report to CDP Worldwide.Climate, Water and Forests. We are a member of the United Nations Global Compact and have made commitments to the UNUnited Nations Sustainable Development Goals and the Science Based Targets initiative (SBTi), with our Scope 1, 2 and 23 GHG emissions reduction targets having been approved by SBTias consistent with levelsreductions required to meet the goals of the Paris Agreement.keep warming to no more than 1.5ºC. DIVERSITY, EQUITY AND INCLUSION (DE+I) Diversity is one of our core values, reflecting our desire to ensure an equitable and inclusive environment for people of all backgrounds and orientations and our recognition that we gain strength from diverse ideas and teams.The importance of DE+I to our company is evidenced by the engagement, inclusion and gender diversity-related targets included in our 2030 sustainability goals. Highlights of our DE+IDEI journey are shown in the proxy summary.Our DEI strategy is grounded in the four global pillars shown below.
Beginning in 2020, we redoubled our efforts on DE+I, engaging with our employees across the globe to gather information on areas where we most needed to focus. After listening and learning from our employees, our leaders regularly met to discuss areas of focus, and each of our business’ strategies include quantitative DE+I goals, with their leaders evaluated on the progress they make.
In 2021, we engaged a third party expert to help us perform DE+I baselining, which included an enterprise-wide inclusion assessment and pipeline analysis, provide external benchmarking and obtain independent anonymous and focus group feedback from our team members worldwide. With this information, we identified our DE+I priorities and developed our go-forward DE+I strategy,which includes the following four pillars: increasingIncreasing the number of women who hold leadership positions; enhancingpositions
Enhancing the experience of our shop floor employees; increasing DE+Imanufacturing employees Increasing representation and inclusion for underrepresented groups;groups, with priority populations and makingactions established regionally Making merit and transparency even more foundational to our employee experience. These pillars, as well as the supporting regional focus areas, have been communicated to our employees worldwide. Each
Members of our strategic pillars is sponsored by members of our Company Leadership Team.senior leadership formally sponsor or actively engage in progressing these DEI pillars. To ensure we achieve our goals, we have advanced our internal DE+I capability and leadership, withemploy a Global DE+IDEI Director and additional resources in each of our regions together forming a global infrastructure of fully-dedicated resources. To keep ourselves accountable, we are committed to continuingadvise and support our Regional DEI Councils and ERGs. We regularly report to, enhance external transparency into our DE+I journey through regular reporting and engagementengage with, our stakeholders so they may criticallycan assess our DEI progress and provide feedback to help us achieveadvance our goals.journey. OTHER TALENT MANAGEMENT MATTERS Succession Planning TheLeading up to its decision in May 2023 to appoint Deon Stander as our new CEO, our Board discussed leadership succession in multiple meetings during the preceding 18-24 months, helping ensure a smooth transition. In addition, in July 2023, the Compensation Committee reviewed leadership team changes, assessed key areas of leadership development and our full Board conduct executive succession planning at least semiannually, reviewing succession plans for our CEOfocus, and other senior executives. Consistent with this practice, in April 2021, the Compensation Committee discussed potential successors to the members of our Company Leadership Team, which includes the leaders of our businesses and aligned on a process and timeline to enhance focus on CEO succession planning as a matter of strong corporate governance.functions. In October 2021,and December 2023, the Compensation Committee again reviewed leadership changes and the key areas of focus in our Materials and Solutions businesses, as well as enterprise-wide, with a view to ensuring we have talent that is ready – or, with continued development on their current trajectory with mentorship and coaching from our current leaders, will be ready – to fill senior executive positions in the event of a vacancy. These assessments were further discussed withvacancy. Our Compensation Committee Chair reported on these reviews to our full Board. In addition, in JulyRecognizing that we have had several recent leadership changes, including the recent appointments of our new CEO and December 2021, Solutions Group President, our full Board conducted CEOleadership succession planning to ensure ready-now successors over multiple time horizons.at all of its meetings during the first half of 2023.
The Compensation Committee also reviewsregularly receives reports on executive new hires, promotions transfers and role changes, departures in connection with eachand open positions – as well as the impact of its meetingsthese developments on U.S. racial/ethnic and global gender and generational representation – to assist with executive succession planning and leadership development.planning. Leadership Development The Compensation Committee oversees our company’s talent management programsprogram to assist with identifying and developing our future leaders. We maintain a robust performance review process and provideprogress leadership development opportunitiesplans for our employees. top talent, while also providing development opportunities to our employees more broadly. Senior management reports to the Compensation Committee oron our full Board on leadership at executive levels of our organization by identifying high-potential talent, and critical experts, cultivating the skills and capabilities to allowenable identified individuals to become our future leaders, and ensuring that they have appropriate development plans in place to progress them toward roles with greater responsibility.Through regular reports from management, ourresponsibility. Our Board has the opportunity to meetactively engage with our business leaders and functional leaders in law, finance, information technology and human resources.outside the boardroom. In addition, Board members have freedom of access to all our employees, and are encouraged toperiodically visit our facilities to meet with local management and attend company events.have the freedom to directly contact any of our employees. | | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 25 |
COMMUNITY INVESTMENT With Board oversight fromby the Governance Committee, our community investment efforts help strengthen the communities around the world in which we operate. We make most of our community investments through the Avery Dennison Foundation (ADF),ADF, which annually distributes at least 5% of its assets from the prior year. ADF’s grant-making, our primary means of giving,grantmaking is aided by our employees worldwide, who help identify deserving nonprofit organizations serving their local communities wherethat can advance their mission and impact with additional financial support. In 2023, after undertaking a formal strategic review process, ADF updated and refined its vision, mission and grantmaking focus areas. ADF’s updated grantmaking strategy focuses funding on charitable organizations working to increase education access, advance environmental sustainability and support secure livelihoods. Alongside its grantmaking focus areas, ADF continues supporting disaster response, DEI and nonprofit organizations identified by our employees live and work. Historically, ADF has given to organizations advancing education, women’s empowerment and sustainability. In 2021, ADF continued to address these funding areas, while also responding toaround the COVID-19 pandemic, natural disasters and the call for greater DE+I worldwide.world addressing challenges in their local communities. In 2021, ADF and our company collectively made $6.3$5.5 million in grants and other financial contributions more than doubleduring 2023.
Enhanced Focus on Grantmaking In support of its enhanced vision and mission, ADF prioritizes grants to communities and geographies facing the greatest need, as well as organizations that demonstrate inclusivity and equity in their work. The total amount of the prior year. In the discussion that follows, we provide an overviewgrants in each pillar, as well as select grant recipients, made in 2023, 95% of this giving.which incorporated employee volunteerism, are shown below: COVID-19 and Disaster Response
| | | | | | 2023 ADF GRANT HIGHLIGHTS | ~$980K TO
INCREASE EDUCATION ACCESS | | ~$650K TO ADVANCE
ENVIRONMENTAL SUSTAINABILITY | | ~$1.3M TO
SUPPORT SECURE LIVELIHOODS | • Ascendance SDB BHD to support youth empowerment programs in Malaysia • Fundacion Leer in support of literacy programming in Argentina • Institute of International Education to provide scholarships to children of company employees in countries with significant employee presence | | • Asheville GreenWorks to support urban heat mapping and tree canopy restoration in North Carolina • Gift of the Givers to improve clean water access in rural Africa | | • Universal Access Project of the UN Foundation to support the Resilience Fund for Women in Global Value Chains • Connecting Dreams Foundation to support India’s first LGBTQI Center of Excellence in Delhi • Islamic Relief USA to improve economic access for people in Pakistan and Kenya | | |
Supporting Employees in Times of Crisis Beginning inIn 2020, ADF shifted its resources to support the response to COVID-19 in communities where our company has a presence. We continued that support in 2021. In a joint effort with the company, ADF provided grants to help fund COVID-19 relief efforts by nonprofit organizations in our global communities, including those described below.
India: A grant of $230,000 to support the American India Foundation in helping meet the acute shortage of portable hospital beds in the city of Gurgaon, where our company has facilities; a second grant of $235,000 to the American India Foundation helped source vaccines, supply diagnostic and medical emergency equipment, raise vaccination awareness and mitigate nutrition gaps in the city of Bangalore, where our company also has operations
Brazil: A grant of $100,000 supported Doctors Without Borders/Médecins Sans Frontières’ with vaccine coordination and the purchase and distribution of medical supplies
Sri Lanka: A grant of $50,000 helped the Rotary Club in the city of Kandy provide ICU beds at a rural hospital and purchase ventilators and other needed medical equipment
Vietnam: Two grants totaling $70,000 helped support the Red Cross Vietnam’s COVID-19 response in Long An and Bac Ninh
In 2021, ADF also continued to support thelaunched an Employee Assistance Fund it launchedto support company employees who had been significantly impacted by the pandemic; from 2020 to 2022, the fund distributed ~$4.6 million to more than 4,000 individuals in 2020, which provides27 countries. With the global impact of the pandemic having substantially diminished but the potential opportunity for further impact remaining, ADF converted the fund to an Employee Crisis Fund to provide financial assistance to our employees who have been significantly adversely impacted by COVID-19. The fund was designed to help provide for basic needs such as housing and utilities, medical care, dependent carenatural disasters and other pandemic-related expenses. Thehumanitarian crises. In 2023, this fund also providesprovided support to families of475 company employees who have died from COVID-19. Employee donations have significantly supplemented ADF funds for this effort. In all, more than $3.4 million was distributed in 2021 to more than 4,200 individuals in 27 countries. The fund is administerednorthern China impacted by Global Impact, an independent third party.severe flooding.
Supporting Disaster Relief Efforts ADF also partneredpartners with third-partyan independent nonprofit, GlobalGiving, to facilitate donations from our employeespromote and supplement employee giving to disaster relief efforts ensuring that theiraround the globe. Employees are able to give to organizations supporting impacted communities. In 2023, 300+ employees made donations totaling ~$25,000 to organizations responding to earthquakes in Turkey and Syria and emergency and long-term support legitimateto people in need in Gaza, Israel and vetted nonprofit organizations in affected communities. AllUkraine. These donations made through GlobalGiving arewere matched by ADF. In addition, ADF made a grant of $250,000 to a member organization of the International Committee of the Red Cross to support relief efforts in Israel, where we have a significant employee presence. Promoting DEI ADF supported organizations promoting DEI globally, with grants totaling $395,000. ADF continued to work with our company’s Regional DEI Councils and employees receive regular reports fromERGs to ensure that it supported organizations making a difference in the organizations theycommunities in which our team members live and work. In addition to certain of the grants shown in the chart above, grants in 2023 included support describing accomplishments with the funding received. In 2021, our employees supported 43 charitable organizations through GlobalGiving, with donations totaling $60,000. DE+I Support
Promptedfor LGBTQ+ youth in part by eventsSingapore, veterans in the U.S. and people with disabilities in 2020, and in recognition of the role it can play in accelerating society’s journey toward greater equity, ADF made grants to organizations promoting DE+I globally. ADF worked with our regional DE+I councils and ERGs around the world to identify organizations most relevant to underrepresented communities in each region. A selection of these grants is described below.Mexico.
Education: Included grants of $200,000 to World Vision Honduras to teach life skills to at-risk women; $132,000 to Associação Beneficente ABID to enhance foster care services in São Paulo, Brazil; $17,000 to Fundacion Leer to support literacy programs in Buenos Aires, Argentina; and $5,000 to Boys and Girls Club of Pasadena, California
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Sustainability: Included grants of $200,000 to Waste and Resource Action Program to support public-private partnerships aimed at reducing food waste in Indonesia and $50,000 to Lake-Geauga Habitat for Humanity to provide housing for low-income families in Painesville, Ohio
Women’s Empowerment: Included grants of $250,000 to UN Foundation Resilience Fund to support women in South and Southeast Asia; $124,000 to The Smile Foundation to support women’s empowerment in Delhi, India; $100,000 to Right to Play to provide educational opportunities for girls in refugee camps and underserved communities in Pakistan and Burundi; and $88,000 to Gesanghua Education Foundation to provide hygiene care packages for girls in Qinghai, China
DE+I: Included grants of $200,000 to HOLA Ohio to support a new Hispanic community center in Painesville; $50,000 to Youth Opportunities Unlimited to provide job readiness and training to African American youth in Cleveland, Ohio; $25,000 to the LGBT Community Center of Greater Cleveland to support LGBTQ+ awareness and programming in Northeastern Ohio; $25,000 to the Wounded Warrior Project to support veteran mental health; and $10,000 to Stichting – Women in Higher Technical Education to support gender diversity in STEM programs in the Netherlands
Employee EngagementEngaging Employees
As the heart and hands of our company, ourOur employees are critical to advancingadvance our community investment efforts at the local level through both their giving and volunteerism. More than 150 employee teams coordinate volunteerism locally at our global locations. Examples of employee engagement in 2021 are described below.
Employees in India supported The Smile Foundation’s “Health Cannot Wait” campaign to boost distribution of oxygen concentrators and ventilators to government health institutions
Team members in Ireland honored International Women’s Day by donating to Longford Women’s Link, an organization providing education and training opportunities for women
Our RBIS employees produced limited-edition, iron-on patches designed to celebrate healthcare and frontline workers and promote health and safety, with net proceeds benefiting Doctors Without Borders/Médecins Sans Frontières
Business partnerships with local organizations promoting DE+I,personal monetary contributions as well as our company hiring interns from community partners such as Esperanza, the National Society of Black Engineers and Black Professionals Charitable Foundation
ADF also engages employees through itsvolunteerism. Through ADF’s signature Granting Wishes program, which allows employees nominate local NGOs to recommend one-timereceive grants to their local non-governmental organizations (NGOs). Given increased need in 2021, employees were more engaged than ever in nominating charitable organizations for funding and volunteering to support those organizations, resultingorganize volunteer events. In 2023, ADF made ~$1 million in grants of $10,000 eachin 37 countries through Granting Wishes.
Providing College Scholarships Partnering with independent third parties to 80 NGOs in 33 countries. In the 10 years sinceadvance education access, ADF launched Granting Wishes, more than 2,000 of our employees have submitted funding recommendations, resulting in grants to more than 350 organizations. Scholarship Programs
ADF continues to provideprovides college scholarships to the children of ourcompany employees. The U.S. employeesScholars program, administered in partnership with Scholarship America, annually awards scholarships in the U.S. To date, over 660 scholarships have been awarded. This program is administered by Scholarship America, an independent third party.
and Canada. In 2023, ADF has also partnered with our companythe Institute of International Education to develop a Children of Employees Scholarship Program outside the U.S. Initial countries proposed for the program includeprovide scholarships in Bangladesh, Honduras, India, Mexico, Sri Lanka and Vietnam. ThisVietnam, with plans to expand the program to additional countries in which is expectedwe have a significant employee presence in future years. While 2022 marked the end of ADF’s Spirit of Invention (InvEnt) Scholarship Program, alumni from recent years gathered in person in 2023 having been unable to launch in 2022, will be administered bymeet during their participation due to pandemic-related restrictions, giving them the Institute for Internal Education, an independent third party. ADF’sopportunity to meet with regional leaders of our company and expand their professional network. Over 10 years, the InvEnt Scholarships have forprogram provided tuition assistance and professional development opportunities to more than a decade supported the next generation of innovators in100 talented science, technology, engineering and mathematics. Scholarships have provided undergraduates in China and India with tuition assistance, the opportunity to participate in an invention competition and professional development opportunities. To date, scholarships have been awarded to over 100 students in China and nearly 100 students in India who have demonstrated outstanding innovative spirit and strong practical competence.mathematics scholars.
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OUR BOARD OF DIRECTORS OVERVIEW Our Board oversees, counsels and ensures management is serving the best interests of our company, and stockholders, with the goal ofa view toward maximizing the performance of our businesses and delivering long-term value for all our stakeholders. PRIMARY BOARD RESPONSIBILITIESinvestors.
| PRIMARY BOARD RESPONSIBILITIES | • Establish Board/Committee composition, structure and responsibilities to ensure strong independent oversight • Conduct director succession planning to maintain engaged and diverse Board with balance of skills, qualifications and demographic backgrounds • Oversee businesses, strategy execution, risk mitigation, sustainability progress and governance profile • Approve annual operating plan and strategic decisions, including significant fixed and IT capital expenditures and acquisitions • Maintain integrity of financial statements • Evaluate performance of senior leaders and determine executive compensation • Conduct CEO and other executive succession planning and help us develop leaders that advance our future growth and ensure high-performing teams, diverse talent and equitable and inclusive culture |
Establish strong governance, with Board/Committee structure and responsibilities providing independent oversight
Review Board composition andconduct director succession planning to maintain engaged and diverse Board with balance of skills, qualifications and demographic backgrounds
Oversee businesses, strategy execution, ESG priorities and progress, and risk mitigation
Approve annual operating plan and strategic decisions, including significant fixed and IT capital expenditures and acquisitions
Maintain integrity of financial statements
Evaluate performance of senior leaders and determine executive compensation
Conduct executive succession planning and ensure effective talent management
Our Board’s top priority in 2021 given the continuing public health crisis of COVID-19 was supporting management in protecting the health, safety and well-being of our employees, delivering for our customers, minimizing the impact of the pandemic on our investors and supporting our communities.
20222024 Director Nominees
Our BylawsGovernance Guidelines provide our Board’s view that our Board be comprised ofa size between 8 and 12 directors withallows for effective Board functioning, although it may periodically comprise a larger or smaller number of directors. Under our Bylaws, the exact number of directors is fixed from time to time by Board resolution. Our Board has fixed the current number of directors at 9. InAs previously disclosed, in February 2022, director Mark Barrenechea2024, Julia Stewart notified our Board of his decisionher intention not to stand for reelection at the 2022 Annual Meeting so he can focus on other endeavors;; she is continuing to serve as a result, ourCompensation Committee Chair through April 2024. Our Board expects that it willplans to fix the number of directors at 8 in April 2022 assuming that all nominees are reelected.10 following Ms. Stewart’s departure from our Board. Our 20222024 director nominees are shown in the chart below. As shown by individual in the Director Nominee Matrix in the proxy summary, they collectively bring a balance of industry and functional experiences and demographic backgrounds in overseeing management in advancing our strategies and achieving our financial and sustainability goals. | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Age | | | Director Since | | | Principal Occupation | | Independent | | AC | | | CC | | | GC | | | | | | | | | | Bradley A. Alford | | | 65 | | | | 2010 | | | Retired Chairman & CEO, Nestlé USA | | ✓ | | | | | | ● | | | | ● | | | | | | | | | | | Anthony K. Anderson | | | 66 | | | | 2012 | | | Retired Vice Chair & Managing Partner, Ernst & Young LLP | | ✓ | | ● | | | | | | | | ● | | | | | | | | | | | Mitchell R. Butier | | | 50 | | | | 2016 | | | Chairman & CEO, Avery Dennison Corporation | | | | | | | | | | | | | | | | | | | | | | | Ken C. Hicks | | | 69 | | | | 2007 | | | Chairman, President & CEO, Academy Sports + Outdoors | | ✓ | | | | | | ● | | | | | | | | | | | | | | | Andres A. Lopez | | | 59 | | | | 2017 | | | President & CEO, O-I Glass, Inc. | | ✓ | | ● | | | | | | | | | | | | | | | | | | | Patrick T. Siewert | | | 66 | | | | 2005 | | | Managing Director & Partner, The Carlyle Group | | ✓ | | ● | | | | | | | | ● | | | | | | | | | | | Julia A. Stewart | | | 66 | | | | 2003 | | | Chair & CEO, Alurx, Inc. | | ✓ | | | | | | ● | | | | ● | | | | | | | | | | | Martha N. Sullivan | | | 65 | | | | 2013 | | | Retired CEO, Sensata Technologies Holding PLC | | ✓ | | ● | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME | | AGE | | | DIRECTOR SINCE | | PRINCIPAL OCCUPATION | | INDEPENDENT | | AC | | CC | | GC | | FC | | | | | | | | | | | 1 | | Bradley A. Alford | | | 67 | | | 2010 | | Retired Chairman & CEO, Nestlé USA | | ✓ | | | | ● | | ● | | | | | | | | | | | | | 2 | | Mitchell R. Butier | | | 52 | | | 2016 | | Executive Chairman, Avery Dennison Corporation | | – | | | | | | | | ● | | | | | | | | | | | 3 | | Ken C. Hicks | | | 71 | | | 2007 | | Executive Chairman, Academy Sports + Outdoors, Inc. | | ✓ | | | | ● | | | | | | | | | | | | | | | 4 | | Andres A. Lopez | | | 61 | | | 2017 | | President & CEO, O-I Glass, Inc. | | ✓ | | ● | | ● | | | | | | | | | | | | | | | 5 | | Maria Fernanda Mejia^ | | | 60 | | | 2024 | | Retired CEO, International, Newell Brands Inc. | | ✓ | | ● | | | | | | | | | | | | | | | | | 6 | | Francesca Reverberi | | | 52 | | | 2023 | | SVP, Engineered Materials & CSO, Trinseo PLC | | ✓ | | | | ● | | | | | | | | | | | | | | | 7 | | Patrick T. Siewert  | | | 68 | | | 2005 | | Retired Managing Director & Partner, The Carlyle Group | | ✓ | | ● | | | | ● | | ● | | | | | | | | | | | 8 | | Deon M. Stander | | | 55 | | | 2023 | | President & CEO, Avery Dennison Corporation | | – | | | | | | | | ● | | | | | | | | | | | 9 | | Martha N. Sullivan | | | 67 | | | 2013 | | Retired CEO, Sensata Technologies Holding PLC | | ✓ | | ● | | | | | | | | | | | | | | | | | 10 | | William R. Wagner | | | 57 | | | 2022 | | Retired President & CEO, GoTo Group, Inc. | | ✓ | | ● | | | | ● | | |
AC = Audit and Finance Committee CC = Talent and Compensation Committee GC = Governance Committee FC = Finance Committee 
The ages of our director nominees range from 5052 to 69,71, with an average age of approximately 63.61. Their lengths of service range from 5less than one to 19 years, with an average tenure on our Board – after Mr. Barrenechea’s scheduled departure in April 2022 – of approximately 111/28 years. Our director nominees bring a balance of skills, qualifications and demographic backgrounds in overseeing our company, as shown by individual in the Board matrix included in the proxy summary.
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Board Meetings and Attendance Our Board met fiveseven times and acted once by unanimous written consent during 2021.2023. There were 1424 Board Committee meetings and one Committee action by unanimous written consent during the year. All incumbent directors attended at least 75% of their respective Board and Committee meetings, withmeetings; average attendance of 99%was 100%. In addition, our directors regularly discussed strategic, business and financial matters with each of critical importance with our Chairman/Executive Chairman and our CEO throughout the year outside of meetings, particularly with regard to our COVID-19 response; related supply chain, labor, freight and inflationary challenges; potential acquisitions; and ESG priorities and progress.meetings. Directors are strongly encouraged to attend our annual stockholder meetings under our Governance Guidelines and all then-serving directors attended the virtual 20212023 Annual Meeting.
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Additional Board Engagement Bringing their industry and functional expertise, some of our directors – in certain cases, together with third-party experts – are providing supplemental guidance outside the boardroom to management in its execution of our strategic initiatives related to digital solutions, environmental sustainability and food, as well as our focus on cybersecurity risk management. At this time, Mr. Wagner is a member of our Digital Advisory Council and our Cybersecurity Advisory Council; Mses. Mejia and Reverberi are members of our Circularity and Future of Packaging Advisory Council; and Mr. Alford is a member of our Food Advisory Council. Messrs. Butier and/or Stander serve on each of these Advisory Councils. Directors serving on Advisory Councils are not currently provided any additional compensation for doing so, but that could change for independent directors as the time commitments of their service continue to be assessed. GOVERNANCE GUIDELINES Our Governance Guidelines provide the governance framework for our company and reflect the values of our Board, as highlighted below. They are reviewed at least annually and amended from time to time to reflect changes in regulatory requirements, evolving market practices, recommendations from our advisors and feedback from our stockholders.investors. Our Governance Guidelines were most recentlylast amended in December 2021. | | | BOARD GOVERNANCE HIGHLIGHTS | | | Board Composition | | ✓ Reasonable Board size of 9 directors; after Annual Meeting, 8 directors10 director nominees reflects increased refreshment in recent years ✓ Mandatory retirement after age 72 with no exemptions or waivers allowed or granted; no term limitsgranted ✓ On average, director nominee age of 6361 years and tenure of 111/28 years ✓ 63% 50% of director nominees are female women and/or from other underrepresented communities | | | Director Independence | | ✓ Current directors and director Director nominees 89% and 88%80% independent respectively ✓ Executive sessions of independent directors held at all five 20216 Board meetings in 2023 | | | Board Leadership Structure | | ✓ Annual review of Board leadership structure ✓ Robust Lead Independent Director role and independent CommitteeAudit, Compensation and Governance Chairs | | | Board Committees | | ✓ 100% independent ✓ Annual composition review and periodic structural review and Chair/membersmember rotation (including in July 2023 and February 2024)
✓ Act under annually reviewed charters reflecting best practices and stakeholder expectations ✓ Directors required to attend Board/Committee and stockholder meetings | | | Board Duties | | ✓ Regular CEO/senior executiveleadership succession planning ✓ Ongoing review of long-term strategic plans, including key risks and mitigating strategies ✓ Directors entitled to rely on independent legal, financial or other advisors at our expense | | | Continuous Board Improvement | | ✓ New directors participate in initialreceive orientation materials and engage with senior management to familiarize themselves with our Board and company, and also participate in additional orientation sessions after joining Board committees to better understand their responsibilities and processes ✓ Continuing education through meetings with management, visits to our facilities and participation in director education programs ✓ Annual evaluation process ensures Board, Committees, Chairman, Lead Independent Director and Committee Chairs are functioning effectively; includes peer evaluationeffectively ✓ Individual director feedback process advances continuous director development and assists with Board succession planning | | | Director Qualifications | | ✓ Regular review of Board composition (skills, qualifications,(including industry and functional experience, demographic backgrounds, including with respect to gender, racetenure, and ethnicity,mandatory retirement date) and board commitments) andongoing director succession planning |
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DIRECTOR INDEPENDENCE Our Governance Guidelines require that our Board be comprised ofcomprise a majority of directors who satisfy the criteria for independence under NYSE listing standards and that our audit, compensationAudit, Compensation and nominating committeesGovernance Committees be comprisedcomposed entirely of independent directors. An independent director is one who meets the independence requirements of the NYSE and who our Board affirmatively determines has no material relationship with our company, directly or indirectly as a partner, stockholder or officer of an entity with which we have a business relationship. | | | Avery Dennison Corporation | 2022 Proxy Statement
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Each year, our directors complete a questionnaire designed to solicit information that may have a bearing on our Board’s independence determination, including allany relationships they have with our company, directly or indirectly through our company’s sale or purchase of products or services to or from theany companies or firms by which they are employed. The Governance Committee reviewsdiscusses any relevant disclosures made in the questionnaires relevant to its independence assessment with our Corporate Secretary, as well as any transactions our company has with director-affiliated entities. In February 2022,2024, after review of the facts and circumstances relevant to each director,their respective relationships, the Governance Committee concluded that only Mr.Messrs. Butier and Stander had a relationshiprelationships that waswere disqualifying under NYSE listing standards, otherwise material or impairing of director independence. Upon the recommendation of the Governance Committee, our Board affirmatively determined the 8 current9 directors named below serving for all or part of 2023, as well as our newest director appointed in February 2024, to be independent; as shown below, 88% of our director nominees are independent. | | | | | | | | | Independent Directors
2023 INDEPENDENT DIRECTORS | | DIRECTOR NOMINEE INDEPENDENCE* | Bradley Alford Anthony Anderson Mark Barrenechea
Ken Hicks Andres Lopez Francesca Reverberi Patrick Siewert Julia Stewart Martha Sullivan William Wagner | | | | Director Nominee Independence
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| * | 
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For a discussion of the potential impact of tenure on director independence, see the Board Refreshment and Director Succession Planning section of this proxy statement. BOARD LEADERSHIP STRUCTURE | | | | | | EXECUTIVE CHAIRMAN | | PRIMARY RESPONSIBILITIES |
Mitch Butier Elected annually by our Board | | In addition to customary duties of Chairman: • Provide Board’s collective input on company strategies to CEO • Engage with CEO on value-enhancing strategic opportunities, as well as other key relationships and strategic alliances • Support CEO and Company Leadership Team in expanding and deepening relationships with key stakeholders • Participate in certain Advisory Councils • Mentor CEO, acting as principal liaison between him and Board members | | | | LEAD INDEPENDENT DIRECTOR | | PRIMARY RESPONSIBILITIES | 
Patrick Siewert Elected annually by independent directors | | • Preside over executive sessions of independent directors and Board meetings where Executive Chairman is not present • Approve Board meeting agendas, schedules and other information sent to our Board • Call meetings of independent directors • Consult and meet with stockholders |
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Our Governance Guidelines give our Board – acting through its independent directors – the discretion to separate or combine the roles of Chairman and CEO as it deems appropriate based on the needs of our company at any given time. To facilitate this decision-making, the Governance Committee annually reviews our Board leadership structure, providing its recommendation on the appropriate structure for the following one-year term to our independent directors giving consideration to, among other things, our financial position, business strategies ESGand sustainability and governance priorities, andas well as any feedback received from our stockholders.investors and other stakeholders. During the first two-thirds of the year, we had a combined Chairman/CEO and a Lead Independent Director. In connection with our CEO transition, our other directors in July elected Mr. Butier as Executive Chairman effective September 2023 for the remainder of the term ending at the Annual Meeting based on their belief that his leadership would optimize the execution of our strategic priorities as he mentors Mr. Stander in his new role as CEO. At that time, the Chairman and CEO roles were separated, each filled by long-serving leaders of our company who have developed and executed our strategies effectively to deliver long-term value for our employees, customers, investors and communities. Because Mr. Butier remains our employee, Mr. Siewert was elected by our independent directors through the Annual Meeting to continue ensuring independent oversight of our Board. Robust Lead Independent Director Role Our robust Lead Independent Director role balances our combined Chairman/CEOExecutive Chairman role, by exercising critical duties to ensure independent decision-making in the boardroom. Mr. Siewert began serving as our Lead Independent Director in April 2020 and was most recently reelected by our independent directors in February 2024 for another a one-year term in April 2021.beginning after the Annual Meeting, subject to his reelection. Our Governance Guidelines clearly define his primary responsibilities, which are shown below. | | | | | LEAD INDEPENDENT DIRECTOR
| | PRIMARY RESPONSIBILITIES
| Designee:
Patrick Siewert
| | • Preside over executive sessions of independent directors and Board meetings where Chairman/CEO is not present
• Serve as liaison between Chairman/CEO and independent directors
| Selected annually by independent directors
| | • Approve Board meeting agendas and schedules
• Call meetings of independent directors
• Consult and meet with stockholders
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in the chart above. Mr. Siewert also performed the activities described below and on the following page as Lead Independent Director in 2021.2023. Led majority of our off-season stockholder engagement discussions
Frequently engaged with Chairman/CEO to help guide strategic direction, including COVID-19 response and related supply chain, labor, freight and inflationary challenges, review of business strategies, mitigation of related risks, assessment of potential acquisitions and ESG progress
Consulted frequently with other independent directors and interviewed each of them as part of annual Board/Committee evaluation process
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Oversaw our new director search process, including meeting regularly with senior management and the external firm selected by the Governance Committee to lead the search; interviewing and assessing high-potential candidates; and leading director succession planning discussions with the Governance Committee he chairs, as well as with our Executive Chairman, our CEO and other Board members |
Provided feedback to Chairman/CEO based on discussions with independent directors
| • | | Directed our Board/Committee evaluation process, meeting individually with each other director to obtain verbal feedback to supplement their written evaluations |
Met with members of senior management other than Chairman/CEO
| • | | Led the majority of our off-seasonstockholder engagements |
| • | | Oversaw our individual director feedback process through which each director was able to provide anonymous written feedback on their peers, giving consideration to their preparation, participation and engagement in and outside the boardroom with a view to enhancing their overall performance and assisting with director succession planning |
| • | | Consulted frequently with our independent directors and provided feedback to our Executive Chairman and our CEO based on these discussions, including our Board’s evaluation of their 2023 performance with the Compensation Committee Chair |
| • | | Met regularly with our Executive Chairman and our CEO, as well as periodically with other members of management and representatives of our independent registered public accounting firm |
Supplementing our Lead Independent Director in providing independent Board leadership are our CommitteeAudit, Compensation and Governance Chairs, all of whom are independent. Board Leadership StructureAssessment and Evaluation During our Board evaluation process conducted during the fourth quarterquarters of 2021, 2022 and 2023,Messrs. Butier and Siewert each received uniformly positive feedback from our independent directors in their respective roles as Chairman/CEOChairman and Lead Independent Director, indicating that our current Board leadership structure is enabling effective oversight of our company. During our 2021 engagement with stockholders, only one investor expressed a preference that the positions of Chairman and CEO be separated at our company, which we believe reflects support for our robust and clearly delineated Lead Independent Director role and Mr. Siewert’s participation and strong engagement in the majority of our off-season meetings.Director. In February 2022,May and July 2023, having delayed its planned discussion of these matters from April 2023 as a result of its leadership and Board succession planning work, the Governance Committee evaluated our Board leadership structure and recommended to our Board that Mr. Butier be elected to continue serving asin the role of Chairman, noting that he has successfully led our company as CEO for the last six years and remainsremained best positioned to lead our Board in overseeing our strategies to deliver long-term value for our employees, customers, investors and communities. The committee further noted that Mr. Butier has articulated and worked to realize a long-term vision for our company that has delivered top quartile TSR performance and exceeded our 2017-2021 financial targets and that we can best continue to advance our strategies and ESG progress toward achieving our 2025 sustainability goals – as well as our 2021-2025 financial targets and more ambitious 2030 sustainability goals – continuing with combined leadership in the boardroom at this time.strategies. Upon the recommendation of the Governance Committee, our Board unanimously elected Mr. Butier (with him abstaining) to servenot present for the discussion or vote) as ourExecutive Chairman effective immediately afterSeptember 1, 2023 through the Annual Meeting. In February 2024, giving consideration to the valuable mentorship he has provided our new CEO and his successful transition to the role of Executive Chairman, upon the recommendation of the Governance Committee, our Board (with him not present for the discussion or vote) elected Mr. Butier to continue serving as Executive Chairman for a one-year term ending at the 2025 Annual Meeting, subject to his reelection. At that time,
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In July 2023, the Governance Committee also recommended that Mr. Siewert (with him not participating inpresent for the discussion)discussion or vote) continue serving as Lead Independent Director. Director through the Annual Meeting. Having a long-serving director with financialfinance expertise and substantial internationalextensive experience working outside the U.S. serve as Lead Independent Director has provided Mr.Messrs. Butier and Stander valuable mentorshipcounsel and guidance while ensuring robust independent Board oversight of management. The committee also recognized Mr. Siewert’s valuable support and substantial effort with our stockholder engagement program. The Governance Committee determined that, in light of his demonstrated commitment, engagement and strong leadership, in the second year in which he served in this capacity, Mr. Siewert should continue in the role of ensuring independent stewardship of our Board in its oversight of our strategies to deliver long-term value for all our stakeholders.responsibilities. The committee’s decision took into account his significant contribution to the Board’s responsibilitiescontributions as a member and former Chair of the Audit Committee since joining our Board and as its Chair for five years, as the current Chair of the Governance Committee, andas well as his extensive international experiencemore than 25 years working in Asia Pacific, a region from which approximately 35%~30% of our 2023 sales originated and approximately 58%~56% of our employees were located in 2021.at year-end 2023. Upon the recommendation of the Governance Committee, ourthe independent directors unanimously selectedon our Board elected Mr. Siewert (with him abstaining fromnot present for the discussion or vote) to serve as Lead Independent Director effective immediately afterthrough the Annual Meeting. In February 2024, upon the recommendation of the Governance Committee, the independent directors on our Board elected Mr. Siewert (with him not present for the discussion or vote) to continue serving as Lead Independent Director for the term ending at the 2025 Annual Meeting, subject to his reelection. During our 2023 stockholder engagements, while certain investors expressed a preference for an independent chairman, they appreciated the rationale for our current Board leadership structure given our recent CEO transition and other senior leadership changes. BOARD COMMITTEES Each of our Board Committees has a written charter that describes its purposes,purpose, membership and meeting structure, and responsibilities. These charters may be found on the investors section of our website under Corporate Governance and are reviewed by the respective committee at least annually, with any recommended changes adopted upon approval by our Board. Amended charters are promptly posted on our website. The Charterscharters of the Audit Committee, Compensation Committee and Governance CommitteesCommittee were most recently amended in February 2021. EachDecember 2023, December 2023 and October 2021, respectively; the charter of the Finance Committee was first adopted by our Board in December 2023.
Our Board Committees hashave the ability to form and delegate authority to subcommittees and may obtain advice and assistance from internal or external consultants, legal counsel or other advisors at our expense. In addition, each committee annually evaluates its performance. The primary responsibilities, current membership and 20212023 meeting and attendance information for the three standingindependent committees of our Board are summarized onbelow. In July 2023 and February 2024, upon the following pages.recommendation of the Governance Committee, our Board modestly adjusted the membership of its committees; the current Chairs and members are reflected in this proxy statement. | | | Avery Dennison Corporation | 2022 Proxy Statement32
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| | | | | | | | AUDIT AND
FINANCE COMMITTEE
 | | MEMBERS | | PRIMARY RESPONSIBILITIES | | | | Current Members:
Martha Sullivan (Chair) Anthony Anderson
Andres Lopez Maria Fernanda Mejia Patrick Siewert 2021 meetings: 8
2021 average attendance: 100%William Wagner
Audit committee financial experts: Anderson and expert: Siewert All members satisfy NYSE enhanced independence standards MEETINGS 2023 meetings: 8 Avg. attendance: 90% | | • Oversee financial statement and disclosure matters, including quarterly and annual earnings release documentation and SEC reports, internal controls, critical accounting policies and practices, and major financial risk exposures and significant tax matters • Appoint and oversee independent registered public accounting firm, including evaluating its qualifications and independence, as well as scope, staffing and fees for annual audit and other audit, review or attestation services, and annually reviewing its performance and regularly considering whether to changeappoint a new firm; in addition, approve compensation and engagement of any other such firm preparing or issuing audit reports or related work or performing other audit review or attest services • Oversee internal audit function, including appointing/dismissing senior internal auditor, evaluating his performance, reviewing significant issues identified in internal audits and management’s response, and discussing annual internal audit plan, budget and staffing • Perform compliance oversight responsibilities,, including overseeing cybersecurity risk managementand risks related to information technology controls and security;security; maintaining procedures for complaints regarding accounting, internal accounting controls or auditing matters; reviewing financially materialsignificant legal matters; and making determinations regarding certain Code of Ethics violations • Conduct finance oversight responsibilities, including reviewing capital structure and financing plans, capital allocation strategy, funding status of pension plans, and significant tax matters • Approve Audit and Finance Committee Report for proxy statement
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| | | | | | | | TALENT AND
COMPENSATION COMMITTEE
 | | MEMBERS | | PRIMARY RESPONSIBILITIES | | | | Current Members:
Julia Stewart (Chair) Bradley Alford Mark BarrenecheaAndres Lopez
Ken Hicks 2021 meetings: 4
2021 average attendance: 100%Francesca Reverberi
All members satisfy NYSE enhanced independence standards and qualify as “non-employee directors” under Exchange Act Rule 16b-3 MEETINGS 2023 meetings: 5 Avg. attendance: 100% | | • Review and approve corporateAIP and LTI targets within context of company goals and CEO objectives andobjectives; evaluate company and individual performance to determine annual CEO compensation • Review and approve senior executive compensation, including base salaries and incentive compensation • Oversee CEO succession planning and conductConduct leadership succession and development planning for other senior executives; and regularly review executive new hires, promotions and role changes, departures and open positions, as well as executive diversity trends • Oversee appropriateexecutive compensation strategy, incentive plans, equity-based plans and benefit programs • Review and provide oversight of talent management policies and strategies related to talent management, including DE+IDEI and pay equity and transparency; leadership compensation plans, benefit programs,benefits, recruiting and retention strategies, and development programs; and employee engagement • Review stockholder engagement process, results and feedback related to executive compensation, and talent management and social sustainability • Approve CD&A and Talent and Compensation Committee Report for proxy statement • Oversee stockholder approval of executive compensation matters, including say-on-pay votes and frequency of suchsay-on-frequency votes • Ensure noAssess compensation programs for potential encouragement of excessive risk-taking in compensation policies/programs • Recommend non-employee director compensation • Administer clawback policies providing for recoupment of incentive compensation determined to have been erroneously received by executive officers or other AIP or LTI recipients |
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| | | | | | GOVERNANCE
COMMITTEE
 | | MEMBERS | | PRIMARY RESPONSIBILITIES | | | | Current Members:
Patrick Siewert (Chair) Bradley Alford Anthony Anderson
Julia Stewart 2021 meetings: 2
2021 average attendance: 100%William Wagner
All members satisfy NYSE independence standards MEETINGS 2023 meetings: 10 Avg. attendance: 95% | | • IdentifyRegularly review Board composition and conduct director succession planning, identifying potential or incumbentnew Board members and recommend recommending director nominees nominees/appointees • Annuallyconsider Board leadership structure and recommend whether to separateelect independent Chairman or combine positions of Chairman and CEO; if combined, recommend Lead Independent Director • Recommend Board and Committee structure, Chairs and members • Recommend independent directors based on NYSE independence standards • Review and approve related person transactions • Overseeannual Board/Committee performance evaluation of Board and Committees process, as well as individual director feedback process • Review Governance Guidelines and recommend changes • Review and provide oversight ofgovernance, environmental sustainability and community investment initiatives, policies and programs practices • Review stockholder engagement process, results and feedbackrelated to governance, environmental sustainability and community investment • Review stockholder proposals • Oversee valuesValues and ethicsEthics program and Code of Conduct, evaluate significant conflicts of interest and make determinations regarding certain Code of Ethics violations |
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In addition to the above committees required by SEC rules and NYSE listing standards, upon the recommendation of the Governance Committee, our Board formed a standalone non-independent Finance Committee in July 2023, the responsibilities of which were previously performed by the Audit Committee. | | | | | | | |  | | MEMBERS | | PRIMARY RESPONSIBILITIES | | Mitch Butier (Chair) Patrick Siewert Deon Stander MEETINGS 2023 meetings: 1 Avg. attendance: 100% | | Conduct finance oversight responsibilities, includingreviewing and making recommendations to our Board regarding: • Capital structure in light of our financial plans, current operations and long-term strategies • Capital allocation strategy, including stockholder dividends, stock repurchase program and financial capacity for significant transactions such as strategic investments, acquisitions and divestitures • Financing plans including equity, debt or other securities offerings and private placements that may materially impact our financial position • Pension plan financing status • Other financial matters that management or our Board desires to have reviewed by the committee |
EXECUTIVE SESSIONS Our Board believes it is important to have separate executive sessions with our Chairman/CEO, without other membersMr. Butier, with Mr. Stander, with both of management present,them and without him, botheither of them, each of which arewas generally held at each2023 Board meeting.meetings. Our independent directors have robust and candid discussions at the executive sessions that exclude Mr. Butierour Executive Chairman and/or our CEO during which they critically evaluate the performance of them, management as a whole and our company, Chairman/CEO and management. company. As Lead Independent Director, Mr. Siewert presided over the fivesix executive sessions of independent directors held during 2021.2023. In 2021, implementing feedback from our annualOur Board evaluation process, our Boardgenerally began starting each of its 2023 meetings with one of two executive sessions with our Chairman/CEO, but no other members of management,Messrs. Butier and Stander to discuss key focus areas and frame meeting discussions; the second such session at the end of the meeting providesthese meetings provided time for the Board to reflect and align on key priorities, after which our independent directors meetgenerally met in executive session without our Chairman/CEO.session.
Executive sessions arewere also generally scheduledheld for meetings of the Audit, Compensation and Governance Committees.regular 2023 Board Committee meetings. These executive sessions exclude our Chairman/CEO and otherexcluded members of management unless the Committee requestscommittee requested one or more of them to attend a portion of the session to provide additional information or perspective.perspective, in which case the committee generally met independently thereafter. RISK OVERSIGHT Management is responsible for managing the day-to-day risks confronting our businesses, and our Board has responsibility for overseeing enterprise risk management (ERM). oversees ERM. In performing its oversight role, our Board is responsible for ensuringensures that the ERM processes designed and implemented by management are functioning effectively and that our culture promotespromoting risk-adjusted decision-making. The teams leading our businesses have incorporated ERMERM-rooted thinking into developingtheir strategic development and executing their strategies,execution, assessing the risks impacting their businesses and identifyingimplementing and implementing appropriateadjusting mitigating actions on an ongoing basis. In addition, in consultation with our leader of Risk Managementrisk management team and senior management, these teamsthey semiannually prepare a risk profileprofiles consisting of a heat map and a summary of their key risks and mitigating strategies, which are used to prepare a company risk profile based on identified business-specificbusiness risks as well as enterprise-wideenterprise risks. Among other things, these risks including risks related to ESG matters such asinclude the macroeconomic environment; climate change, GHG emissionsenvironmental regulation and energy use; materials management;sustainability trends; cybersecurity; operational and supply chain disruptions; and M&A. In 2023, we further enhanced our ERM program by assigning accountability for key risks and mitigating strategies to identified business or functional leaders and began prioritizing mitigation strategies based on discussions with business leaders led by risk champions from our law department. Our compliance and IT functions also continued their annual ERM reviews. These advancements have allowed our ERM Steering Committee to benefit from the critical thinking of a broader cross-section of company leaders. We aim to continue advancing the circular economy; DE+I; waste; and employee health and safety.our ERM program, with oversight by our Board. | | | Avery Dennison Corporation | 2022 Proxy Statement34
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We have globalrobust processes that support oura strong internal control environment and promote the early identification and continuedongoing mitigation of risks by our company’s leadership.risks. Our legal and compliance functions, including our Chief Compliance Officer, report intoto our CLO to provide independent evaluation of the challenges facing our businesses and our Vice President of Internal Audit leader reports to the Audit Committee in the conduct of his operational responsibilities, ensuring hishelping ensure he maintains independence from management. In 2021, we enhanced our already robust ERM program by meeting to prepare risk profiles with an expanded group of functional leaders for our RBIS and IHM businesses and each of the regions of our LGM business, in addition to the global risk profiles we have routinely prepared for each of our reportable segments and our company as a whole. We also prepared standalone compliance and information technology risk profiles to enable greater focus on these critical risk areas, and designated risk champions from our Law Department to partner with our Risk Management team in facilitating future ERM discussions with our business leadership teams. These advancements have embedded ERM deeper into our organization, allowing us to benefit from the engagement and critical thinking of a broader cross-section of corporate and business leaders. We plan to continue advancing our ERM program, with leadership from our ERM Steering Committee comprised of members of senior management and oversight by our Board.
Our Board as a whole oversees risks related to our company and business strategies and operations,five-year strategic plan horizon, exercising this responsibility by considering the risks related to its decisions. Each year, ourmanagement’s strategies and execution plans. Our Board annually receives reports on the ERM process and the resulting company risk profile, engaging throughout the year with management on their strategic plans and risks facing our businesses and company as a whole; these risks include financial risks, geopolitical risks, legal and regulatory risks, supply chain risks, competitive risks, compliance risks, ESG risks, information technology risks and other risks related to the ways in which we do business. key risks. Employees who lead various risk areas – such as law, information technology, tax, compliance, sustainability, DE+IDEI and community investment – report periodically to Board Committees and occasionally to our full Board. OurAs shown below, our Board has delegated elements of its risk oversight responsibility to its Committees to bettermore efficiently coordinate with management to serve the long-term interests of all our stakeholders.in risk mitigation. Our Board receives reports from the Committee Chairs regarding topics discussed at committee meetings, including the areas of risk they primarily oversee, and engages with our leaders on these risk areasmitigation during its regular review ofengagement with our business strategies.leaders.
| | | | | | | | | | Risk Oversight
| RISK OVERSIGHT |
| | | | | | |
| | | | | | | Board of Directors | | | | | | | | • Business strategies • Annual operating plan and significant fixed and IT capital expenditures • Corporate governance • Acquisitions, divestitures and other significant transactions • Enterprise risk management | | |
| | | | | | | | | | | | | | | | | | | | |  Audit Committee
| |  Compensation Audit Committee
| | | |  | | 
| | | |  | | Governance Committee | | | |  | | Finance Committee | | | | | | | | • Financial reporting processes and statements, and internal controls • Capital structure
• Financing, including debt, liquidity, capital allocation and pension plan funding
• Stockholder distributions (dividends and stock repurchases)
• Information technology and cybersecurity • Certain legal, compliance and regulatory matters | | | | • Executive compensation and CEO/senior executive succession planning • Annual and long-term incentive plans • Compensation plans and benefit programsclawback policies • Non-employee director compensation • Social sustainability, and talent management, including DE+I; leadership compensation, plans, benefit programs,benefits, and recruiting and retention strategies and development progress;retention; DEI; and employee engagement | | | | • Board and Committee structure and composition • Director succession planning • Governance, environmental sustainability and community investment • Values and Ethics/Code of Conduct • Conflicts of interest and related person transactions • Governance, environmental sustainability and community investment • Certain legal, compliance and regulatory matters
|
| | | | | | | Management
• Day-to-day management of risks facing our businesses
| | |
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| | 2022 Proxy Statement | Avery Dennison Corporation• Capital structure and allocation strategy, including stockholder dividends, stock repurchases and financial capacity for strategic transactions
• Financing plans, including debt, liquidity and other securities offerings • Pension plan funding status |
The Audit Committee oversees our internal control environment and evaluates the effectiveness of our internal controls at least annually. Supplementing these processes, the Audit Committee meets regularly meets in executive session with each of our CFO, Controller/CAO, Vice President ofController, Internal Audit leader, and representatives of our independent registered public accounting firm, and meets as needed in executive session with other members of senior management such as our CEO and CLO. The Governance Committee meets semiannually with our Chief Compliance Officer to discuss, among other things, the investigation of allegations reported to the GuideLine.significant internal investigations. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 35 |
During 2021,2023, our Board was particularly focused on overseeing the risk areas described below. | | | | | | | | 2021 Risk Focus Areas 2023 RISK FOCUS AREAS
| | | | | |
| | • | | Navigating challenging near-term business environment – Addressing lower demand driven primarily by downstream inventory destocking, as well as preparing for potential recessionary environment through rigorous scenario planning and identified potential productivity and restructuring actions |
Impact of COVID-19– Prioritizing safety and well-being of global team members, followed immediately by delivering for customers. Among other things, COVID-19 response encompassed risks related to business continuity; governmental regulations impacting manufacturing operations; cybersecurity and information technology security in work-from-home environment for office-based employees; and finance matters such as cash management and collections
Delivering for customers – Managing constrained raw material, freight and labor availability and elevated lead times to continue providing high-quality service to customers
| • | | Further accelerating Intelligent Labels adoption – Executing key apparel and logistics programs, accelerating new segment and use case adoption, and expanding manufacturing capacity to ensure we can deliver for customers in this fast-growing business |
Inflation management – Offsetting impact of inflation through productivity and pricing
| • | | Advancing sustainable innovation initiatives – Accelerating our sustainable innovation efforts through governmental engagement and investment in new technologies to turn sustainability-related headwinds into opportunities for competitive differentiation |
Intelligent Labels – Further accelerating primary long-term profitable growth driver, including risks related to acquisition and integration of Vestcom
| • | | Advancing digital journey – Accelerating our digital strategies and evolving our Digital Advisory Council to advance our market insights, digital capabilities and innovation to lead at intersection of physical and digital |
Innovation – Advancing innovation through strategic innovation platforms on material circularity and waste reduction/elimination
| • | | Optimizing portfolio of businesses – Integrating previously separated businesses into Materials Group, executing and integrating acquisitions, and expanding our M&A pipeline and deal conversion |
M&A – Being bolder to expand robust pipeline of acquisition opportunities, including evaluating risks related to our acquisitions and integrations of Zippy Yum and JDC, as well as our venture investments, while maintaining our disciplined approach to capital allocation
ESG – Heightening focus on ESG matters, resulting in more frequent and comprehensive disclosures contained in our integrated sustainability and annual reports, proxy statements and ESG Downloads
Sustainability – Increasing focus on more sustainable packaging, including strategies and risks related to the strategic innovation platforms described above
DE+I – Raising the bar to drive sustainable change with new 2030 goals and more robust global infrastructure
| • | | Advancing cybersecurity preparedness – Addressing more volatile cybersecurity landscape with increasing threats on manufacturers, incorporating learnings from of our maturity assessments and publicly reported incidents at other companies |
Risks Associated with Compensation Policies and Practices As described in the Compensation Discussion and Analysis section of this proxy statement, we maintain best practices in compensation that collectively encourage ongoing risk mitigation. The Compensation Committee annually discusses with management and its independent compensation consultant, WTW, whether our executive compensation programs areprogram is meeting the committee’s objectives. In addition, the Compensation Committee periodically engages WTW to undertake a more formal assessment of our compensation programs to ensure they dothat our program does not provide incentives that encourage our employees to take excessive risksrisk-taking in managingthe management of their respective businesses or functional areas. The committee most recently conducted this evaluation in February 2022.2024. The Compensation Committee noted the key risk-mitigating features of our executive compensation program described on the following page.below. | | | | | Avery Dennison Corporation | 2022 Proxy Statement
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| | | | | | | | Risk-Mitigating Compensation Features RISK-MITIGATING FEATURES
| | | | | |
| | | Governance and Oversight | | ✓ Compensation Committee has discretion to decrease Annual Incentive Plan (AIP)AIP and LTI awards and long-term incentive (LTI) grants to penalize potentially risky actions ✓ Clawback policy deters fraud or other misconduct that resultsrequires recoupment of certain incentive-based compensation to executive officers if we are required to prepare accounting restatement to correct material noncompliance with any financial reporting requirement; in financial restatement, providing means to recoup inappropriately receivedaddition, all AIP and LTI awardsrecipients are subject to compensation clawback in connection with financial restatement indicating fraud or misconduct ✓ Incentive compensation plan structure and targets are reviewed within context of market practices, tied to operatingannual business plans and corporatecompany goals, and approved by Compensation Committee ✓ Compensation Committee annually evaluates CEO/senior executive performance against challenging strategic, financial and ESGsustainability goals ✓ Rigorous stock ownership policy is consistent with best practices, with minimum ownership level of 6x for CEO; requires net shares acquired to be retained until compliance is achieved ✓ Officers prohibited from hedging or pledging company stock and required to engage in stock transactions only during limited trading windows
| Pay Philosophy and Structure | | ✓ Focus on incenting stockholder value creation, balanced by retention and other considerations ✓ Incentive compensation designed to incent strong annual financial performance and long-term economic and stockholder value creation, balance growth and efficient capital deployment, and consider sustainability progress and individual contributions thereto ✓ Substantial majority of leadership compensation delivered in long-term equity or cash-based awards to motivate pursuit of superior performance and sustainable growth ✓ Rigorous stock ownership policy, with minimum ownership requirement of 6x for CEO; requires net shares acquired to be retained until compliance is achieved and pre-transaction certifications of continued compliance ✓ Executive severance plans consistent with market practices, with double-trigger change of control severance benefits and only for most senior NEOs ✓ Incentive compensation designed to incent strong annual financial performance and long-term economic and stockholder value creation, and balance growth and efficient capital deployment
| Incentive Program Design | | ✓ AIP and LTI awards incent achievement of annual profitable growthfinancial goals and long-term financialeconomic and stockholder value creation, using multiple performance objectives covering different time periods ✓ AIP awards not guaranteed, with below-threshold performance resulting in zero payout, payments subject to overall cap of 200%, and NEO individual modifiers generally capped at 100% ✓ Equity awards usefully performance-based, using multiple performance objectives, vestvesting over multiple time horizons and are subject to threshold and maximum payout opportunities • Performance units (PUs)PUs cliff vest at end of three years with payout for relative total stockholder return (TSR)TSR component capped at 100% of target if absolute TSR is negative • Market-leveraged stock units (MSUs)MSUs vest over one-1-, two-2-, three- 3- and four-year4-year performance periods (average performance period of 2.5 years), with threshold performance at absolute TSR of (15)% and target performance at absolute TSR of 10% |
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Given its assessed low risk in each of these categories and other factors, WTW advised the Compensation Committee that our compensationexecutive pay program strikes an appropriate pay-risk balance and presents nodoes not present risk-related concerns. The Compensation Committee has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our company. DIRECTOR EDUCATION Initial Orientation Our initial director orientation materials and discussions with management generally coverscover our (i) our performancestakeholders, values, strategies, and leadership;financial and sustainability goals; (ii) investor messaging; (iii) thebusiness and company strategies, risks and mitigating strategies,actions; (iii) sustainability priorities and ESG priorities of our businesses;progress; (iv) finance matters,Board succession planning objectives; (v) information regarding company leadership and recent Board/committee meetings; (vi) Board, governance and company policies, including our financial reporting policiesGovernance Guidelines, Committee charters, conflict of interest policy, non-employee director compensation program, insider trading policy and practices, internal control environment, internal audit deployment, tax planningCode of Conduct; (vii) investor messaging; and compliance,(viii) SEC filings and capital allocation; (v) legal and compliance matters, includingsustainably reporting. In connection with her appointment to our Board composition, governance policiesin February 2024, we provided Ms. Mejia with information regarding these matters. Our Executive Chairman, CEO and procedures, Valuesother members of management met with Ms. Mejia to discuss them to ensure a smooth initial onboarding. Ms. Mejia also joined as an observer in select Board Committee meetings to better understand their respective responsibilities and Ethics program, and ERM; (vi) executive compensation and talent management matters, including succession planning, leadership development, DE+I and community investment; and (vii) information technology and cybersecurity.was assigned two independent directors on our Board to help guide her continued onboarding process. | | | 36
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Continuing Education Our continuingongoing director education program consists of regular interactions with and presentations from members of management regarding our businesses, strategies, financial performance and sustainability progress, as well as periodic visits to our facilities. In the spring of 2023, our Board visited our headquarters in Mentor, Ohio, which also serves as our Materials Group’s North American headquarters, and met informally with members of that business’ leadership. Visits to that facility, as well as to our Solutions Group innovation center in Miamisburg, Ohio and certain international facilities and regular management presentations regarding our business operations, performance, strategies and risk mitigation activities. in Asia, are planned for 2024. We provide updates on these topics to our Board during and between meetings throughout the year, and providedirectors with access to a boardroom news resource platform for them to keep informed of emerging best practices. We alsoregulatory developments and market practices, and reimburse directors who attend continuing director education programs for fees and related expenses. BOARD AND COMMITTEE EVALUATIONS The Governance Committee oversees an annual performance evaluation of our Board, Chairman, Lead Independent Director and Board Committees,committees, including the Committee Chairs.As part of this process, our directors evaluate the performance of their peers serving on the Board, providing candid feedback to enable continuous boardroom improvement and assist with director succession planning. Our Board views the evaluation process as integral to assessing its effectiveness and identifying improvement opportunities in the pursuit offor continued excellence. Weimprovement. Through this process, we have continually improved our Board processes as a resultfunctioning. As part of this annual evaluation process, as shownour directors historically had the opportunity to provide our Lead Independent Director candid feedback on other directors. In 2023, the Governance Committee implemented a more formal process for directors to provide anonymized individual feedback on their peers to advance continuous improvement and assist with Board succession planning. The summary below andfocuses on the following page.broader Board/Committee evaluation process. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 37 |
BOARD AND COMMITTEE EVALUATIONS Process Written evaluations onof Board/Committee Composition, including balance and diversity of skills, qualifications and demographic backgrounds Meeting mechanics and structure Fulfillment of responsibilities Meeting content and conduct Effectiveness of Chairman, Lead Independent Director and Committee Chairs One-on-one interviews with Governance Committee Chair to provide additional perspectives and discuss feedback
Verbal peer reviews to identify potential improvement opportunities for individual directors
| • | | One-on-one discussions with Governance Committee Chair to provide additional perspective on written evaluations |
2021 2023 Review of Results
Discussion of anonymized evaluation results and feedback Chairman/CEO,Executive Chairman, Lead Independent Director/Governance Committee Chair and Corporate Secretary and CLO
Joint Governance Committee and
Board discussion in executive session with Chairman/Executive Chairman and CEO, aligning ondiscussing potential improvement opportunities for implementation Committees in executive session, discussing potential improvement opportunities Recent Improvement Actions Sharpened focus on strategic and risk oversight, highlighting one business group during each Board meeting, establishing mentorships between individual directors and key business leaders, and ensuring meeting discussions prioritize discussion of challenges and opportunities rather than presentation of information
Heightened focus on financial scenario planning, cybersecurity preparedness, ESG priorities and progress, and compliance matters
Enhanced discussion of M&A pipeline and potential targets, as well as performance of acquired companies and integration learnings
Expanded review of potential CEO successors and their development plans to ensure ready-now successors over multiple time horizons and increased engagement with leaders below NEO level to enhance executive succession planning and leadership development
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Sharpened focus on executive succession planning and leadership development, appointing new CEO after having evaluated his attributes, experiences and strengths and determined that he was best positioned to lead our company into the future in which we believe every product will have a digital identity |
Increased engagement on investor relations,stockholder engagement and competitive landscape to bring external perspectives into boardroom
Conducted annual post-investment reviews of returns on significant fixed capital expenditures, acquisitions and IT investments
| • | | Enhanced director succession planning with view toward more regular refreshment, launching new director search in 2023 focused on candidates with retail/CPG or finance expertise that could also increase gender or racial/ethnic diversity on our Board, with Ms. Mejia being appointed to our Board in February 2024 |
Sharpened focus on director succession planning, selecting new Lead Independent Director, appointing new Chairs for Audit and Governance Committees and refreshing Committee memberships; proactively aligning on steps to mitigate impact of upcoming concentrated retirements; and focusing on software/digital/cybersecurity and materials science industry expertise and increased Board diversity for future directors
| • | | Advanced strategic oversight, expanding mentorships between individual directors and key business leaders and increasing Board engagement with members of management below senior leadership level |
Increased Chairman/CEO engagement with directors between meetings, with frequent updates and one-on-one discussions between him and each director, which were important in 2021 as we continued responding to COVID-19, mitigated related supply chain, labor, freight and inflationary challenges, advanced ESG focus and transparency, and redoubled efforts to advance DE+I
| • | | Heightened focus on strategic priorities of digital solutions and sustainability-driven innovation, as well as cybersecurity risk management |
| • | | Continuous discussion of M&A pipeline and potential targets, as well as performance of acquired companies and integration learnings |
Refined Board schedule and meeting process to maintain robust dialogue despite move to primarily virtual meetings given COVID-19, including establishing annual strategic discussion calendars, beginning each meeting in executive session with Chairman/CEO, but no other members of management, to discuss key focus areas and frame meeting discussions; holding another such executive session to reflect on the meeting and align on key priorities, after which our independent directors meet in executive session without our Chairman/CEO; and planning to hold certain Committee meetings off-cycle (not coincident with Board meetings) and future Board meetings as a mix of virtual and in-person meetings given equally high level of engagement and discussion in both formats
| • | | Refined Board schedule and meeting process, implementing additional executive sessions with our Executive Chairman and our CEO, as well as ones with each of them, and conducting certain Committee meetings virtually to expand time for in-person full Board meetings |
| • | | Continued regular Executive Chairman and CEO engagement with directors between meetings and increased time dedicated to executive sessions that exclude other members of management to provide greater time for Board-only discussion, after which independent directors generally meet in executive session |
STOCKHOLDER ENGAGEMENT We value stockholder feedback on our governance program and we actively solicit input through stockholder engagement to ensure that weour practices reflect not only our evolving business strategies but also the expectations of our stakeholders. In addition to our extensive investor relations program through which members of management engage with our investors throughout the year, thisThis supplemental engagement program is depicted – and the feedback we received on governance matters isare described – in the proxy summary. CONTACTING OUR BOARD Our Board welcomes feedback from all our stockholders.stakeholders. We review all correspondence submitted byreceived from stockholders, discussing feedback received with senior management and/or our Board as appropriate. Stockholders and other interested parties may contact our Board, Executive Chairman, Lead Independent Director, any Committee Chair or any other individual director concerning business matters by writing to Board of Directors (or particular Board subgroup or individual director), c/o Corporate Secretary, 8080 Norton Parkway, Mentor, Ohio 44060. | | | 38 | | 20222024 Proxy Statement | Avery Dennison Corporation
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ITEM 1 – ELECTION OF DIRECTORS Our Bylaws provide for a Board of between 8 and 12 directors, withthat the exact number fixed by resolution of our Board. Our Board has fixed the current number of directors at 9. Inwill be fixed from time to time by resolution duly approved by our Board. As previously disclosed, in February 2022, director Mark Barrenechea2024, Julia Stewart notified our Board of his decisionher intention not to stand for reelection at the 2022 Annual Meeting so he can focus on other endeavors; as a result, ourMeeting. Our Board expects that it willplans to fix the number of directors at 810 following Ms. Stewart’s departure from our Board in April 2022 assuming that all nominees are reelected. All nominees are standing for election for a one-year term expiring at the 2023 Annual Meeting.2024. In voting for the election of directors, each share has one vote for each position to be filled and there is no cumulative voting. Each of our nominees is presently serving on our Board and has consented to being named in this proxy statement and serving if elected by stockholders. All nominees are standing for election for a one-year term ending at the 2025 Annual Meeting.
Majority Voting Standard; Unelected Director Resignation Requirement In voting for the election of directors, each share has one vote for each position to be filled and there is no cumulative voting. Our Bylaws provide for the approval by a majority of votes cast for the election of directors in uncontested elections like this one and require that an incumbent director who is not reelected tender his or her resignation from our Board. Our Board, excluding the tendering director, iswould be required to determine whether to accept the resignation – taking into account the recommendation of the Governance Committee and any other factors it considers appropriate – and publicly disclose its decision regarding the tendered resignation, including theand rationale for its decision, within 90 days from the date election results are certified. In contested elections, plurality voting is the standard for the election of directors. Recommendation of Board of DirectorsRecommendation
Our Board of Directors recommends that you vote FOR each of our 8 director nominees.
| | Our Board recommends that you vote FOR each of our 10 director nominees. |
The persons named as proxies will vote for their election, unless you specify otherwise. If any director nominee were to become unavailable prior to the Annual Meeting, your proxy would be voted for a substitute nominee designated by our Board or we would decrease the size of our Board. SELECTION OF DIRECTOR NOMINEES Director nomineesDirectors are generally recommended by the Governance Committee for nomination by our Board and election by our stockholders. Director nomineesNew directors may also be recommended by the Governance Committee for appointment to our Board, with their election by stockholders taking place at the next Annual Meeting. Our director nominees reflect a balance and diversity of skills, qualifications and demographic backgrounds, asAs shown in the Board matrix containedDirector Nominee Matrix in the proxy summary, that allows our director nominees bring a balance of industry and functional experiences and reflect diverse demographic backgrounds, allowing them to effectively discharge their oversight responsibilities.
In evaluating whether to recommend a new or incumbent director nominee, the Governance Committee primarily usesconsiders the criteria in our Governance Guidelines, which are described below. | | • | | Independence, to ensure substantial majority of our Board remainsis independent | |
| | • | | BusinessU.S. public company leadership and/or Board experience and leadershipworking or having worked outside the U.S., as well as industry and functional experience, including industry experience and global exposure andin each case considering factors such as size, scope and complexity
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| | • | | Board service at other U.S. publicly-tradedpublic companies | |
| | • | | Experience in finance, accounting and/or executive compensation | |
| | • | | For incumbent directors, attendanceBoard/Committee engagement and effectiveness, meeting attendance, compliance with our stock ownership policy, and mandatory retirement date | |
| | • | | Time commitments,, including service on other boards; any new directors joining our Board who are public company executive officers of a public company may not serve on more than one other U.S. public company Boardboard | |
| | • | | Potential conflicts of interest | |
| | • | | Demographic characteristics (including, without limitation, gender, race and ethnicity); background; when evaluating new nominees, the committee will seek to consideronly considers (and askrequires any search firm engaged to provide) candidatescandidate slates that include highly qualified women and individuals from other underrepresented communities | |
| | • | | Ability to contribute to oversight, our company’s governance and sustainability of our company | |
| • | | Ability to represent balanced interests of all stockholders, as well as the interests of our other stakeholders, rather than those of any special interest group priorities and progress
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For incumbent directors, the Governance Committee also considers their contributions to our Board and Committees, mandatory retirement dates to assist with director succession planning, and feedback received during our annual Board evaluation process. The Governance Committee does not assign specific weights to the criteria and no particular criterion is necessarily applicable to all nominees.
The Governance Committee reviews the skills, qualifications and demographic background of any candidate with those of our current directors to assess howensure our Board can most effectively fulfill its oversight responsibilities.has a broad diversity of experiences and viewpoints. Sources for identifying potential nominees include current Board members, senior management, executive search firms and investors. The Governance Committee regularly reviewed the skills, qualifications, demographic backgrounds, ages, tenures and scheduled mandatory retirement dates of our directors and conducted Board succession planning to ensure that it continues to meet the needs of our businesses, effectively oversee management in executing our strategies and advance the interests of our stakeholders. Its search for new directors with retail/CPG or finance expertise led to Ms. Mejia’s appointment to our Board in February 2024; the search for an additional director with finance expertise continues. Stockholder Submission of Director Nominees The Governance Committee considers stockholder nominees on the same basis as it considers all other nominees. Advance Notice Nominees Stockholders may recommend director candidates by submitting the candidate’s name, together with his or her biographical information, professional experience, and written consent to nomination and the other information required by our Bylaws, to Governance Committee Chair, c/o Corporate Secretary, 8080 Norton Parkway, Mentor, Ohio 44060. To be considered at the 20232025 Annual Meeting, advance notice stockholder nominations must comply with the deadlines and other requirements described in the Voting and Meeting Q&A section of this proxy statement. The Governance Committee considers stockholder nominees on the same basis as it considers all other nominees. Proxy Access Nominees A stockholder, or a group of no more than 20 stockholders, owning at least 3% of our company’s stock continuously for at least three years is permitted to submit director nominees (up to 20% of the Board) for inclusion in our proxy materials, subject to the deadlines and other requirements described in our Bylaws. For information on submitting proxy access nominees for the 20232025 Annual Meeting, please refer to the Voting and Meeting Q&A section of this proxy statement. BOARD REFRESHMENT AND DIRECTOR SUCCESSION PLANNING Our Board’s ongoing director succession planning is designed to ensure an independent, well-qualified Board. Our Governance Committee’s long-term objective is to position our Board for regular refreshment, ensure access to a broad new director candidate pool and achieve a more balanced tenure distribution with diversity in skills, qualificationsapproximately one-third comprised each of newer directors, medium-tenure directors and demographic backgrounds that enables effective independent oversight and aligns with our business strategies and ESG priorities.longer-term directors. No Term LimitsTenure
Our Governance Guidelines reflect our Board’s beliefcurrently provide that directors shouldare not be subject to termtenure limits. While termtenure limits could help facilitate new viewpoints being brought to the boardroom, ourensure regular Board believesrefreshment, they could also result in the premature loss of a director who over a longer period of time has gained valuable experience and is continuing to significantly contribute to our Board deliberations assessing our strategies, operations, risks and mitigating strategies, and ESG priorities and progress. We believe that our Board’s decision not to establish term limits at this time is consistent with the prevailing practice among companies in the S&P 500.company. Our Board recognizes that certain governance stakeholders have suggested that longer-serving directors may have decreased independence and objectivity. However, our Board believes that, except as required by our mandatory retirement policy arbitrarily removing knowledgeable directors and losing the oversight consistency they bring, particularly during periods of executive management change, such as our new President and COO, the new leaders for our RBIS Apparel Solutions and IHM businesses, and our CHRO and CLO elected in 2020 weighs against implementing term limits at this time. Ultimately, our Board believes it is responsible for establishing appropriate boarddetermines its refreshment policies in light of our evolving strategies and financial position, and ESG priorities at any particular time, exercising its discretion in the best interest of our company and stockholders. To assist in discharging this responsibility, in November 2021 and February 2022, the Governance Committee reviewed the skills, qualifications and demographic backgroundsCertain of our Board membersstakeholders have suggested that longer-tenured directors may have decreased independence and conducted director succession planning to ensureobjectivity. However, we believe that the removal of knowledgeable directors and loss of oversight consistency they bring – particularly during periods of senior leadership change, such as our Board continues to meet the needs of our businesses, align with our strategiesrecent CEO and advance the interests of all our stakeholders.Solutions Group President appointments – are important counterbalancing considerations. | | | 40 | | 20222024 Proxy Statement | Avery Dennison Corporation
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Policies and Events Supporting Regular Board Refreshment Our Board has adopted the policies described below to facilitate regular refreshment, and ensure that it continues to independently oversee and challenge our management team.with the described events having occurred since last year’s Annual Meeting. | | | | | PolicyPOLICY | | DescriptionDESCRIPTION | | Events Occurring at or Since 2021 Annual MeetingEVENTS OCCURRING AT/SINCE 2023 ANNUAL MEETING | | | | Mandatory Resignation Policy | | Incumbent directors not elected by stockholders must tender their resignation | | All incumbent directors then standing for election were elected at the 20212023 Annual MeetingMeeting. | | | | Mandatory Retirement Policy | | Directors must retire on date of annual meeting of stockholders that follows their reaching age 72; no exemptions or waivers allowed or granted | | Peter Barker retired under this policy on the date of the 2021 Annual MeetingNo directors were subject to mandatory retirement in 2023. | | | | Resignation Tendered
Upon Change in
Principal Employment | | Directors who change their principal occupation, position or responsibility must volunteer to resign | | NoThe following independent directors changed their principal employment sincein 2023: Ms. Reverberi assumed additional responsibilities as leader of Trinseo’s Engineered Materials division; Mr. Hicks became Executive Chairman of Academy Sports + Outdoors, transitioning out of the 2021 Annual Meetingroles of President and CEO; and Mr. Siewert retired from The Carlyle Group, continuing in an independent advisory capacity. In each case, the Governance Committee determined that the director should remain on our Board. | | | | Prior Notice Requirement
to Prevent Overboarding | | Directors must give prior notice before accepting another U.S. public company directorship so that his/her ability to fulfill Board responsibilities may be evaluated if he/she serves on more than four other such boards | | No directorsMr. Wagner joined anotherthe board of BlackLine, Inc. in October 2023. With this appointment, he now serves on three other U.S. public company board since the 2021 Annual Meetingboards, which is within our Governance Guidelines policy applicable to retired directors. |
Upon the recommendation of the Governance Committee, Messrs. BarrenecheaMr. Wagner and LopezMses. Mejia and Reverberi were appointed as independent directors to our Board as independent directors in September 2018October 2022, February 2024 and February 2017,2023, respectively. In connection with his becoming our CEO, Mr. ButierStander joined our Board when he became CEO in May 2016.September 2023. Mr. Barker retiredAnderson departed from our Board in April 2021November 2023 and Mr. BarrenecheaMs. Stewart will leave our Board in April 2022.2024. We believe that this recent experience with both joining and departing directors demonstrates our Board’s commitment to regular Board refreshment. Both the Governance Committee and our full Board plan to regularly discussdiscussed director succession planning at multiple meetings held in 20222023 to mitigate the impact of upcoming concentrated retirements, developoversee a candidate profilesearch for one or more new directors that would bothfocused on candidates with retail/CPG or finance expertise to complement and advance the skills and qualifications currently representedcollective experience on our Board and also further enhance Board diversity. DIRECTOR DIVERSITY
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BOARD COMPOSITION Our Board supports and reflects our values, recognizing the benefits of diversity in the boardroom, including the healthy debate that results from different viewpoints that may stem from diverse backgrounds. Age and Tenure The average age of our director nominees is 63, which is consistent with the average director age in the S&P 500 and within the 60 to 63-year band in which the plurality of these companies fall. The average tenure of our director nominees is 111⁄2 years; were it not for our most recently appointed director’s decision not to stand for reelection, our average tenure of 101⁄261 and 8 years, would have been comparable to the average tenure for companies in the S&P 500, the majority of which have average tenure of six to ten years.respectively. Our director nominees reflect a balance betweeninclude newer directors who bringbringing fresh ideas and insights into the boardroom and longer-serving directors with deep institutional knowledge of our Board and company. | | | | | | | Director Nominee
Age and Tenure
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Demographic BackgroundGender and Racial/Ethnic Diversity
Our Governance Guidelines reflect that the Governance Committee’s assessment of director candidates includes consideration of their demographic backgrounds, including, without limitation, race, gender and ethnicity. Although we have no formal policy regarding the consideration of diversity in selecting director nominees, the Governance Committee seeks to recommend individuals with a broad diversity of experience, skill,skills, geographic representation and demographic background. While diversity is a consideration and an area of Board refreshment focus, in recommending future nominees, a given nominee would not be chosen or excluded solely or primarily on that basis; rather, the Governance Committee would focusfocuses on ana candidate’s overall candidate profile that wouldto complement our existing Board in lightthose of the diverse and global natureexisting members of our businesses and operations. Board.When evaluating new nominees,director candidates, the Governance Committee will seek to consideronly considers (and askrequires any search firm engaged to provide) candidatescandidate slates that include highly qualified women and individuals from other underrepresented communities; 2two of our 4three most recently appointed independent directors increased the racial,gender and/or ethnic or gender diversity on our Board. | | | | | | | Director Nominee Diversity | | | | | |
 2022
2024 DIRECTOR NOMINEES The following pages provide information on the directors nominated for election,our 2024 director nominees, including his or hertheir age, length of service, independence, current Board roles and business experience during at least the past five years. We also indicate the name of any other U.S. public company board on which each nominee currently serves or has served during the past five years. We alsoFor each nominee, we present each nominee’s experienceselect skills and qualifications, that led our Board to conclude that he or she should serve as a director, which includes seniorU.S. public company leadership experience, industry expertise, global exposure, U.S. public company board experience, and/areas of industry and functional experience, and experience working or financial expertise as defined inhaving worked outside the U.S. The balance of skills, qualifications and demographic backgrounds on our Board matrixis shown in the Director Nominee Matrix in the proxy summary. Each nominee also hassummary; consistent with that disclosure, Select Skills and Qualifications excludes board service at U.S. public companies at which the individual served or serves as CEO, COO or CFO. All director nominees have demonstrated the ability to exercise sound judgment, fulfill the time commitments necessary to serve on our Board and advance the long-term interests of our stockholders, as well as those of our other stakeholders.stakeholders.
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| | | | | |  Age 5961 Director since February 2017 Independent | | RECENT BUSINESS EXPERIENCE O-I Glass, Inc., a glass container manufacturer and supplier to food and beverage brands • President & CEO since January 2016 • COO & President, Glass Containers, from FebruaryJanuary 2015 to December 2015 • President, O-I Americas, from July 2014 to JanuaryJuly 2015 • President, O-I Latin America, from April 2009 to July 2014 BOARD ROLES Audit Committee Member Compensation Committee Member OTHER PUBLIC COMPANY BOARDS Current: O-I Glass, Inc. Past Five Years: None | | SELECT SKILLS AND QUALIFICATIONS SeniorU.S. public company leadership experience
• Oversees company with $6.4$7+ billion in revenues and more than 24,000~24K employees in 20212023 Industry expertise and global exposurefunctional experience • Leads multinationalAs leader of global glass company, brings packaging companyindustry expertise, as well as extensive experience in foodmaterials science and beverage segment of consumerindustrial goods, industry into whichin each case complementing our LGM business sellsMaterials Group • Led Latin AmericaGiven impact of waste and Americas divisions, after having workedrecycling in positions of increasing responsibility throughout the regionglass value chain, technical expertise in environmental sustainability, as well as supervisory experience in finance, marketing, M&A, cybersecurity and R&D as CEO Works/Has Worked Outside the U.S. public company board experience • Concurrent service on one other boardWork assignments in Latin America |
| | | | | | | | ANTHONY K. ANDERSON BRADLEY A. ALFORD | | | | | |
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 Age 66 Director since December 2012
Independent
| | RECENT BUSINESS EXPERIENCE
Ernst & Young LLP, an assurance, tax, transaction and advisory services firm
• Vice Chair, Managing Partner and Member of Executive Board from 2000 to March 2012
BOARD ROLES
Audit Committee Member
Governance Committee Member
OTHER PUBLIC COMPANY BOARDS
Current:
AAR Corporation
Exelon Corporation
Marsh & McLennan Companies, Inc.
Past Five Years:
First American Financial Corporation
| | SELECT SKILLS AND QUALIFICATIONS
Senior leadership experience
• Served on executive board of Ernst & Young for 12 years, and as managing partner of Midwest and Pacific Southwest regions
Financial expertise
• 45+ years of financial statement and internal control expertise acquired through auditing global public companies
• Substantial experience advising audit committees of large multinational corporations
• Certified public accountant (now inactive)
U.S. public company board experience
• Concurrent service on three other boards and prior service on other boards
|
| | | | |  Age 6567
Director since April 2010 Independent | | RECENT BUSINESS EXPERIENCE Nestlé USA, a nutrition, health and wellness company • Chairman & CEO from January 2006 to October 2012 Nestlé Brands Company, an operating unit of Nestlé USA • President & CEO from 2003 to December 2005 BOARD ROLES Compensation Committee Member Governance Committee Member OTHER PUBLIC COMPANY BOARDS Current: Perrigo Company PLC Past Five Years: Conagra Brands, Inc. | | SELECT SKILLS AND QUALIFICATIONS Senior leadership experience
• Led company then with over $12 billion in annual revenues and more than 26,000 employees
Industry expertise and global exposure
• 41+ years in consumer goods industry
• Knowledge of food and beverage segments into which our LGM business sells
• Substantial M&A and integration experience
U.S. public company board experience • Concurrent service on one other board and prior service on other boards Industry experience • Technical expertise in consumer goods industry into which our Solutions Group sells with 42+ years in roles of increasing responsibility, as well as extensive experience in packaging, focused primarily on consumer goods Functional experience • Technical expertise in marketing, as well as supervisory experience in finance, M&A and R&D as regional CEO Works/Has Worked Outside the U.S. • Work assignments in Oceania |
| | | | | Age 55 Director since September 2023 Not Independent | | RECENT BUSINESS EXPERIENCE Avery Dennison Corporation • President & CEO since September 2023 • President & COO from March 2022 to August 2023 • VP/GM, RBIS (now Solutions Group), from June 2015 to February 2022 • VP/GM, Global Commercial and Innovation, RBIS, from January 2013 to May 2015 • VP/GM, Global Commercial, RBIS, from October 2010 to December 2012 BOARD ROLES Finance Committee Member OTHER PUBLIC COMPANY BOARDS Current: None Past Five Years: None | | SELECT SKILLS AND QUALIFICATIONS U.S. public company leadership experience • Held roles of increasing responsibility at our company, including COO and CEO Industry experience • Led our Solutions Group business and oversaw our Materials Group as COO, with packaging industry expertise and extensive experience in digital, materials science and industrial goods Functional experience • Technical environmental sustainability expertise having led our enterprise Sustainability Council, with supervisory experience in finance, marketing, M&A, cybersecurity and R&D as CEO Works/Has Worked Outside the U.S. • Work assignments in Europe and Asia Pacific |
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| | | | | | | | JULIA A. STEWART FRANCESCA REVERBERI | | | | | |
| | | | | |   Age 6652 Director since January 2003February 2023 Independent | | RECENT BUSINESS EXPERIENCE Alurx, Inc.,Trinseo PLC, a health and wellness companyspecialty materials solutions provider
• Founder, ChairSVP, Engineered Materials & CEOChief Sustainability Officer since JanuaryJuly 2023 • SVP, Sustainable Plastics & Chief Sustainability Officer from July 2021 to July 2023 • SVP, Engineered Materials & Synthetic Rubber, from March 2020 to December 2021 • General Manager, Engineered Materials, from October 2019 to May 2021 • Global Senior Business Director, Performance Plastics, from December 2017 to October 2019 Dine Brands Global, Inc. (formerly DineEquity, Inc.), owner, operator and franchisor of IHOP and Applebee’s restaurants
• Chairman & CEO from June 2008 to March 2017
BOARD ROLES Compensation Committee Chair Governance Committee Member
OTHER PUBLIC COMPANY BOARDS Current: Bite Acquisition Corp.None Past Five Years: Dine Brands Global, Inc.None | | SELECT SKILLS AND QUALIFICATIONS Senior leadershipIndustry experience
• Led company then with over $600 millionTechnical materials science expertise focused on applied science in annual revenues and nearly 1,000 employeesplastics, as well as extensive experience in industrial goods, in each case complementing our Materials Group Industry expertise and global exposureFunctional experience
• Substantial operationalServes as global sustainability leader, with technical expertise in environmental sustainability • Advanced educational and marketingprofessional engineering expertise, with supervisory experience in retail/dining industry • Expertise in brand positioning, risk assessment, financial reporting and governancemarketing as divisional leader
Works/Has Worked Outside the U.S. public company board experience • Concurrent service on one other board and prior service on other boardsWorks in Europe, region leading sustainability-related requirements |
| | | | | |   Age 6971 Director since July 2007 Independent | | RECENT BUSINESS EXPERIENCE Academy Sports + Outdoors, a sports and recreation retailer • Executive Chairman since June 2023 • Chairman, President & CEO sincefrom May 2018 to May 2023 Foot Locker, Inc., a specialty athletic retailer • Executive Chairman from December 2014 to May 2015 • Chairman, President & CEO from February 2010 to November 2014 • President & CEO from August 2009 to February 2010 BOARD ROLES Compensation Committee Member OTHER PUBLIC COMPANY BOARDS Current: Academy Sports + Outdoors Past Five Years: Whole Foods CorporationNone | | SELECT SKILLS AND QUALIFICATIONS SeniorU.S. public company leadership experience
• LeadsLed company then with more than 250 U.S. locations, over $5$6.4 billion in annual revenues and more than 23,000~22K employees Industry expertise
• 34+ years of senior marketing and operational experience in retail industry into which our RBIS business sells
U.S. public company board experience • Concurrent service on one other board and priorPrior service on other boards Industry experience • 35+ years of retail industry expertise into which our Solutions Group sells, as well as extensive experience in consumer goods and packaging industries Functional experience • 35+ years of technical marketing expertise, including roles as merchandising leader at two retail companies, and supervisory experience in finance, M&A, environmental sustainability and cybersecurity as CEO |
| | | | |  Age 60 Director since February 2024 Independent | | RECENT BUSINESS EXPERIENCE Newell Brands Inc. • CEO, International, from February 2022 to February 2023 Kellogg Company • SVP and President, Latin America, from November 2011 to February 2020 BOARD ROLES Audit Committee Member OTHER PUBLIC COMPANY BOARDS Current: None Past Five Years: Grocery Outlet | | SELECT SKILLS AND QUALIFICATIONS U.S. public company board experience • Prior service on other boards Industry experience • 25 years of consumer goods industry expertise into which our Solutions Group sells, as well as extensive experience in packaging, focused primarily on consumer goods Functional experience • Technical expertise in marketing, as well as supervisory experience in environmental sustainability and R&D as regional CEO Works/Has Worked Outside the U.S. • Work assignments in Latin America, Europe and Asia Pacific |
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| | | | | |  Age 6567 Director since February 2013 Independent | | RECENT BUSINESS EXPERIENCE Sensata Technologies Holding PLC, a supplier of sensors and controls • President & CEO from January 2013 to March 2020 • President & COO from SeptemberApril 2010 to December 2012 • COO from AprilMay 2006 to AugustApril 2010 Texas Instruments, Inc., Sensata’s predecessor entity • Vice President ofVP, Sensor Products, from 1997 to 2006 BOARD ROLES Audit Committee Chair OTHER PUBLIC COMPANY BOARDS Current: Sensata Technologies Holding PLC Past Five Years: Goldman Sachs Acquisition Holding Company Corp II | | SELECT SKILLS AND QUALIFICATIONS SeniorU.S. public company leadership experience
• Led company then with approximately $3.5 billion in annual revenues and more than 21,000~21K employees Industry experience • Industrial goods industry expertise and global exposure • Oversaw allextensive materials science experience, in each case complementing our Materials Group, as well as extensive experience in technology from overseeing RFID business, segments, global operations and strategic planning
• Strong technology background, including experience overseeing an RFID businesscomplementing our Solutions Group
U.S. public company boardFunctional experience
• Concurrent service on one other boardHigher education in engineering and prior service on another boardtechnical expertise in R&D, as well as supervisory experience in finance, marketing, M&A and environmental sustainability as CEO |
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| | | | | | Age 5052 Director since April 2016 Not Independent | | RECENT BUSINESS EXPERIENCE Avery Dennison Corporation • Executive Chairman since September 2023 • Chairman & CEO sincefrom March 2022 to August 2023 • Chairman, President & CEO from April 2019 to February 2022 • President & CEO from May 2016 to April 2019 • President & COO from November 2014 to April 2016 • Senior Vice PresidentSVP & CFO from June 2010 to October 2014; continued serving as CFO until March 2015 • Vice President,VP, Global Finance, & Chief Accounting OfficerCAO from March 2007 to May 2010 BOARD ROLES Executive Chairman Finance Committee Chair OTHER PUBLIC COMPANY BOARDS Current: None Past Five Years: None | | SELECT SKILLS AND QUALIFICATIONS SeniorU.S. public company leadership experience
• Held roles of increasing responsibility at our company, including CAO, CFO, COO and CEO Industry expertise and global exposureexperience • Served in positions of increasing responsibility in what is now our primary business segments, including internationalMaterials Group, gaining packaging industry expertise and extensive materials science and industrial goods experience Functional experience • Technical finance expertise having served as CAO and CFO and environmental sustainability expertise from advancing our sustainability goals value-creation opportunities • Supervisory experience in marketing, M&A, cybersecurity and R&D as CEO Works/Has Worked Outside the U.S. • Work assignments in Europe gaining packaging, industrial goods and materials science industry expertise Financial expertise
• Served as CAO for 3 years and CFO for 5 years
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| | | | | | Age 6668 Director since April 2005 Independent | | RECENT BUSINESS EXPERIENCE The Carlyle Group, a global alternativediversified investment firm • Retired Managing Director and Partner sinceand Head of Consumer, Media and Retail, Asia, from April 2007 to June 2023 The Coca-Cola Company, a beverage company • Executive Committee member and Group President, Asia, from August 2001 to March 2007 BOARD ROLES Lead Independent Director Governance Committee Chair Audit Committee Member Finance Committee Member OTHER PUBLIC COMPANY BOARDS Current: Mondelēz International, Inc. Past Five Years: None | | SELECT SKILLS AND QUALIFICATIONS Industry expertise and global exposure
• Led division of global consumer goods company in beverage segment of consumer goods industry into which our LGM business sells
• Work experience, citizenship and residency in Asia, region in which we generate substantial amount of sales and majority of our employees is located
Financial expertise
• Advises on investments in consumer goods businesses globally, particularly in Asia
U.S. public company board experience • Concurrent service on one other board Industry experience • Consumer goods industry expertise having led regional division of global beverage company into which our Solutions Group sells and extensive experience in materials science and industrial goods industries, complementing our Materials Group Functional experience • Finance and 15+ years of M&A expertise, advising on investments in consumer goods businesses and leading consumer, medial and retail investment practices in Asia Pacific, as well as supervisory experience in marketing and R&D as regional President Works/Has Worked Outside the U.S. • 25+ years working in Asia Pacific |
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Age 57 Director since October 2022 Proxy Statement Independent | | RECENT BUSINESS EXPERIENCE GoTo Group, Inc. (formerly LogMeIn, Inc.), a provider of software as a service and cloud-based remote work tools • President & CEO from December 2015 to January 2022 • President & COO from January 2015 to December 2015 • COO from May 2013 to December 2014 BOARD ROLES Audit Committee Member Governance Committee Member OTHER PUBLIC COMPANY BOARDS Current: BlackLine, Inc. Akamai Technologies, Inc. Semrush Holdings, Inc. Past Five Years: LogMeIn, Inc. | | SELECT SKILLS AND QUALIFICATIONS U.S. public company leadership experience • Led company then with $1+ billion in annual revenues and ~4K employees U.S. public company board experience • Concurrent service on three other boards Industry experience • 25+ years of digital/technology industry expertise, as well as extensive experience in technology-based consumer goods, in each case complementing our Solutions Group and our strategy to lead at the intersection of the physical and digital Functional experience • Technical cybersecurity expertise, as well as marketing expertise as functional leader at two technology companies; supervisory experience in finance, M&A and R&D as CEO |
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DIRECTOR COMPENSATION In recommending non-employee director compensation to our Board, with the independent expert advice of WTW, the Compensation Committee seeks to target compensation ataround the median of similarly sizedsimilar-size companies with which we compete for director talent. Compensation is reviewed periodically (generally every three years) to ensure market competitiveness and consistency. The majority of compensation is delivered in equity to align director interests with those of our stockholders. MedianAnnual Target Compensation
The components of our 2023 non-employee director compensation program are summarizedshown in the charts below and described thereafter.below. | | | | | | | NON-EMPLOYEE DIRECTOR COMPENSATION | | |  | Target Grant Date Fair Value of Restricted Stock Units (RSUs) | | $ | 170,000 | | Cash Retainer | | $ | 100,000 | | Match of Charitable/Educational Contributions | | $ | 10,000 | | Additional Cash Retainer for Lead Independent Director | | $ | 30,000 | | Additional Cash Retainer for Audit Committee Chair | | $ | 25,000 | | Additional Cash Retainer for Compensation Committee Chair | | $ | 20,000 | | Additional Cash Retainer for Governance Committee Chair | | $ | 20,000 | |
| | | | | | | | | 2023 NON-EMPLOYEE DIRECTOR COMPENSATION | Target Grant Date Fair Value of RSUs | | $ | 170K | | | 
| Board Retainer | | $ | 100K | | Match of Charitable/Educational Contributions | | $ | 10K | | Additional Retainers* | | | | | Lead Independent Director | | $ | 30K | | Audit Committee Chair | | $ | 25K | | Compensation Committee Chair | | $ | 20K | | Governance Committee Chair | | $ | 20K | |
| * | There is currently no additional Finance Committee Chair retainer because our Executive Chairman is serving in that capacity. |
Our 2017 Incentive Award Plan under which RSUs are granted to our non-employee directors, limits the sum of the grant date fair value of equity awards and the amount of any cash compensation grantedprovided to any non-employee director directors during any calendar year to $600,000.In 2021, all non-employee directors except for our Lead Independent Director/Governance Compensation Setting Non-employee director compensation is reviewed by the Compensation Committee Chair and our Audit Committee Chair received less than half of this maximum compensation amount. Compensation Setting
every three years. In February 2021, at2024, the Compensation Committee’s request, its independent compensation consultant analyzed trends in non-employee director compensation and assessed the competitiveness of the components of our program, including total cash compensation (Board and Committee Chair retainers), annual equity grant, charitable match, total direct compensation (annual cash plus equity), our stock ownership policy and the additional retainer for our Lead Independent Director.program’s market competitiveness. Using benchmark data from public filings of companies ranked in the Fortune 350-500, WTW recommended thatthe following adjustments to non-employee director compensation: the target grant date fair value of the annual RSU award increase by $15,000; the Board retainer increase by $15,000; the additional cashretainer for our Lead Independent Director increase by $15,000; and the additional retainers for our Audit, Compensation and Governance Committee Chairs each increase by $10,000, $5,000 and the target grant date fair value of our annual equity grant to non-employee directors increase by $15,000. Modestly increasing the annual equity grant$5,000, respectively. These modest increases would bring total direct compensation for regular Board service to $270,000$300,000 (or $280,000$310,000 with the charitable match), the projected median of Fortune 350-500 companies in 2024,2027, the next time the Compensation Committee plans to review non-employee director compensation.the program. Giving consideration to among other things, the advice of WTW, the Compensation Committee recommended to our Board that the target grant date fair value of the annual award of RSUs be increased to $185,000; the Board retainer be increased to $115,000; the additional cashretainer of our Lead Independent Director be increased to $45,000; and the additional retainers for our Audit, Compensation and Governance Committee Chairs be increased to $35,000, $25,000 $20,000 and $20,000, respectively, and the target grant date fair value of RSUs granted annually to our non-employee directors be increased to $170,000.$25,000, respectively. Based onUpon the recommendation of the Compensation Committee, and further discussion, our Board approved the revised non-employee director compensation program, effective as of the date of the 2021 Annual Meeting.
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Stock Ownership Policy Our stock ownership policy requires non-employee directors to own at least $500,000 of our company stock, 50% of which must be held in vested shares. Only shares owned directly or in a trust, deferred stock units (DSUs)DSUs and unvested RSUs which are subject only to time-based vesting count for these purposes. Our non-employee directors are prohibited from hedging or pledging our common stock.measured to determine policy compliance. All of our non-employee directors have achieved the minimum ownership required by our stock ownership policy; average non-employee director ownership was ~12xpolicy other than Mr. Wagner and Mses. Reverberi and Mejia who have five years from the required level at year-end 2021. Based on our reviewdate of their written representations in our 2021 director questionnaire, nonerespective Board appointment to achieve that level. The average ownership of our all other then-serving non-employee directors has hedged or pledged our common stock.was 12x the minimum ownership requirement at year-end 2023. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 47 |
Equity Compensation The 2021annual equity grantaward to non-employee directors consistedconsists of RSUs that vest on the one-year anniversary of the grant date, consistent with the one-year term to which directors are elected. Unvested RSUs (i) fully vest upon a director’s death, disability, retirement from our Board after reaching age 72 or termination of service within 24 months after a change of control and (ii) are cancelled in the event a director voluntarily resigns, is not reelected by stockholders or is otherwise asked to leaveleaves our Board before vesting, unless otherwise determined by the Compensation Committee. On May 1, 2021,2023, each of our then-serving non-employee directors was granted 792awarded 971 RSUs with a grant date fair value of $167,809.$166,978. InOn February 23, 2023, in connection with her appointment to our Board, Ms. Reverberi received an award of 155 RSUs with a grant date fair value of $27,817, reflecting the annual equity award of $170,000 prorated for the remaining two months of the term ending at the 2023 Annual Meeting.
Following his mandatory retirementdeparture from our Board on the date of the 2021 Annual Meetingin November 2023 and as permitted by our 2017 Incentive Award Plan, the Compensation Committee determined to accelerate the vesting of the RSUs granted to Peter BarkerMr. Anderson on May 1, 2023 in May 2020 that were scheduled to vest a few days afterrecognition of his separation fromdecade-plus service on our Board. In making its determination, the Compensation Committee noted that Mr. Barker had served nearly the entire one-year term for which he had been elected by our stockholders. Deferrable Cash Compensation CashAnnual retainers are paid semiannually and prorated for any director’s partial service during the year. Directors are also reimbursed for travel expenses incurred to attend Board meetings and continuing director education events.
Our non-employee directors may chooseelect to receive this compensation in (i) cash, either paid directly or deferred into an account under our Directors Variable Deferred Compensation Program (DVDCP), which accrues earnings at the rate of return of certain bond and equity investment funds managed by a third party; (ii) DSUs credited to an individual account pursuant to our Directors Deferred Equity Compensation Program (DDECP); or (iii) a combination of cash and DSUs. NoneIn 2023, none of our then-serving non-employee directors participatesparticipated in the DVDCP and 7four of them currently participateparticipated in the DDECP. Dividend equivalents, representing the value of dividends per share paid on shares of our common stock calculated with reference tobased on the number of DSUs held as of a dividend record date, are reinvested on the applicable payable date in the form of additional DSUs credited to the accounts of directors participating in the DDECP. DSUs. When a director participatingparticipant in the DDECP ceases serving as a director, the dollar value of the DSUs in his or her account is divided by the closing price of our common stock on the last date of the director’s service, with the resulting number of shares of our common stock, less fractional shares, issued to the director. In connection with his departure from our Board effective November 30, 2023, Mr. Anderson was issued 13,102 shares of our common stock reflecting his DDECP account balance on that date. Charitable Match We match up to $10,000 per year of each non-employee director’s documented contributions to charitable organizations or educational institutions. | | | Avery Dennison Corporation | 2022 Proxy Statement48
| | 472024 Proxy Statement | Avery Dennison Corporation
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DIRECTOR COMPENSATION TABLE | | | | | | | | | | | | | | | | | | | | | | Name | | Fees
Earned
or Paid
in Cash(1) | | Stock
Awards(2) | | All Other
Compensation(3) | | Total | | | | | | Bradley A. Alford | | | $ | 100,000 | | | | $ | 167,809 | | | | $ | 10,000 | | | | $ | 277,809 | | | | | | | Anthony A. Anderson | | | $ | 100,000 | | | | $ | 167,809 | | | | | — | | | | $ | 267,809 | | | | | | | Peter K. Barker(4) | | | | — | | | | | — | | | | | — | | | | | — | | | | | | | Mark J. Barrenechea | | | $ | 100,000 | | | | $ | 167,809 | | | | | — | | | | $ | 267,809 | | | | | | | Ken C. Hicks | | | $ | 100,000 | | | | $ | 167,809 | | | | $ | 10,000 | | | | $ | 277,809 | | | | | | | Andres A. Lopez | | | $ | 100,000 | | | | $ | 167,809 | | | | | — | | | | $ | 267,809 | | | | | | | Patrick T. Siewert | | | $ | 150,000 | | | | $ | 167,809 | | | | $ | 10,000 | | | | $ | 327,809 | | | | | | | Julia A. Stewart | | | $ | 120,000 | | | | $ | 167,809 | | | | $ | 10,000 | | | | $ | 297,808 | | | | | | | Martha N. Sullivan | | | $ | 125,000 | | | | $ | 167,809 | | | | $ | 10,000 | | | | $ | 302,809 | |
| | | | | | | | | | | | | | | | | | | | | | Name(1) | | Fees Earned or Paid in Cash(2) | | Stock
Awards(3) | | All Other
Compensation(4) | | Total | | | | | | Bradley A. Alford | | | | $100,000 | | | | | $166,978 | | | | | $ 2,000 | | | | | $268,978 | | | | | | | Anthony A. Anderson(2) | | | | $ 50,000 | | | | | $166,978 | | | | | — | | | | | $216,978 | | | | | | | Ken C. Hicks | | | | $100,000 | | | | | $166,978 | | | | | $10,000 | | | | | $276,978 | | | | | | | Andres A. Lopez | | | | $100,000 | | | | | $166,978 | | | | | — | | | | | $266,978 | | | | | | | Francesca Reverberi | | | | $100,000 | | | | | $194,795 | | | | | — | | | | | $294,795 | | | | | | | Patrick T. Siewert | | | | $150,000 | | | | | $166,978 | | | | | $10,000 | | | | | $326,978 | | | | | | | Julia A. Stewart | | | | $120,000 | | | | | $166,978 | | | | | $10,000 | | | | | $296,978 | | | | | | | Martha N. Sullivan | | | | $125,000 | | | | | $166,978 | | | | | $10,000 | | | | | $301,978 | | | | | | | William R. Wagner | | | | $100,000 | | | | | $166,978 | | | | | $10,000 | | | | | $276,978 | |
| | (1) | Mr.Messrs. Butier doesand Stander do not appear in the table because he servesthey serve as Executive Chairman and CEO of our company, respectively, and does not receive anyno additional compensation to serve ason our Board. Ms. Mejia does not appear on the table because she was not a director or Chairman. during 2023.
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| (2) | Amounts represent retainers earned as shown in the table below. At their election, the following currently-serving directors deferredhad, for one or more years during their cashservice, deferred compensation through the DDECP, with the indicated following number of DSUs in their accounts as of January 1, 2022,December 30, 2023, the last day of our 20212023 fiscal year: Mr. Alford – 20,575; Mr. Anderson – 11,895; Mr. Barrenechea – 2,356;22,398; Mr. Hicks – 14,808;15,330; Mr. Lopez – 1,275;1,649; Ms. Stewart – 41,829;43,303; and Ms. Sullivan – 12,067.13,864. Following his departure from our Board in November 2023, Mr. Barker’s DDECP accountAnderson was paid out to him inissued 13,102 shares of our common stock after he left our Board in April 2021 in accordance with program terms.reflecting his DDECP account balance, less fractional shares, on his separation date. |
| | | | | | | | | | | | | | | | | | | Director | | Board Leadership Roles | | Board Retainer | | Committee Chair Retainer | | Lead Director Retainer | | | | | | Alford | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Anderson | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Barker | | | | | | — | | | | | — | | | | | — | | | | | | | Barrenechea | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Hicks | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Lopez | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Siewert | | Lead Independent Director, Governance Committee Chair | | | $ | 100,000 | | | | $ | 20,000 | | | | $ | 30,000 | | | | | | | Stewart | | Compensation Committee Chair | | | $ | 100,000 | | | | $ | 20,000 | | | | | — | | | | | | | Sullivan | | Audit Committee Chair | | | $ | 100,000 | | | | $ | 25,000 | | | | | — | |
| | | | | | | | | | | | | | | | | | | Director | | Board Leadership Roles | | Board Retainer | | Committee Chair Retainer | | Lead Director Retainer | | | | | | Alford | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Anderson | | | | | $ | 50,000 | | | | | — | | | | | — | | | | | | | Hicks | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Lopez | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Reverberi | | | | | $ | 100,000 | | | | | — | | | | | — | | | | | | | Siewert | | Lead Independent Director, Governance Committee Chair | | | $ | 100,000 | | | | $ | 20,000 | | | | $ | 30,000 | | | | | | | Stewart | | Compensation Committee Chair | | | $ | 100,000 | | | | $ | 20,000 | | | | | — | | | | | | | Sullivan | | Audit Committee Chair | | | $ | 100,000 | | | | $ | 25,000 | | | | | — | | | | | | | Wagner | | | | | $ | 100,000 | | | | | — | | | | | — | |
| | (2)(3) | Amounts reflect the grant date fair valuevalues of 792 RSUs granted on May 1, 2021 in accordance with Accounting Standards Codification Topic 718, Compensation, Stock Compensation)Compensation (ASC 718). Fair value wasvalues were determined based on the fair market value of our common stock on the respective grant date, adjusted for foregone dividends, of $211.88.dividends. Each non-employee director serving as of January 1, 2022at year-end 2023 held 792971 unvested RSUs, except that Ms. Reverberi held 1,126 unvested RSUs. |
| | (3)(4) | Amounts reflect our match of documented director contributions made to charitable organizations or educational institutions. |
| | (4) | Mr. Barker retired from the Board on the date of our 2021 Annual Meeting. Although he served as a non-employee director for four months of the year, he received no cash fees during this time since fees for the second half of a non-employee director’s term are paid in December of the previous year. In addition, he received no stock awards during the year, which are granted only to elected directors after the date of the Annual Meeting. However, in connection with his mandatory retirement from our Board on the date of the 2021 Annual Meeting and as permitted by our 2017 Incentive Award Plan, the Compensation Committee determined to accelerate Mr. Barker’s RSUs granted in May 2020 that were scheduled to vest a few days after his separation from our Board. In accelerating the vesting, the Compensation Committee noted that he had served nearly the entire one-year term for which he had been elected by stockholders.
| | | 48Avery Dennison Corporation | 2024 Proxy Statement
| | 2022 Proxy Statement | Avery Dennison Corporation49
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ITEM 2 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION After considering the preliminary voting results of the advisory vote on the frequency of our say-on-pay vote votes at the 20172023 Annual Meeting, our Board determined to hold continue holding say-on-pay votes annually, at least until the next advisory vote on the frequency of our say-on-pay vote (which will take place at the 2023 Annual Meeting). annually. The advisory vote is a vote to approve the compensation of our NEOs, as described in the Compensation Discussion and Analysis and Executive Compensation Tables sections of this proxy statement. It is not a vote on our general compensation policies or any specific element of compensation, the compensation of our non-employee directors, our CEO pay ratio or pay vs. performance disclosures, or the features of our compensation program designed to preventthat mitigate excessive risk-taking as described in the Risks Associated with Compensation Policies and Practices section of this proxy statement. Recommendation of Board of Directors
We are committed to maintaining ongoing engagement with our stockholders to seek their feedback and discuss why we believe our executive compensation program aligns with our strategies and incents our leaders to deliver strong financial performance and consistent ESG progress, creating superior long-term, sustainable value for our customers, employees, investors and communities. Our Board recommends that you vote FOR approval, on an advisory basis, of our executive compensation. Properly dated and signed proxies will be so voted unless you specify otherwise.
Meaning of Advisory Voterisk-taking.
The results of the advisory vote are not binding on our Board. However, in accordanceconsistent with SEC regulations,its historical practice, the Compensation Committee will disclose its consideration of the vote results of the vote in the Compensation Discussion and Analysis section of our 20232025 proxy statement. Board Recommendation We are committed to maintaining ongoing engagement with our investors to discuss the alignment of our executive compensation program with our strategies and the incentives it provides our leaders to deliver strong financial performance and continuous sustainability progress, creating superior long-term, sustainable value for our customers, investors, employees and communities. | | | Avery Dennison Corporation | 2022 Proxy Statement
| | 49Our Board recommends that you vote FOR approval, on an advisory basis, of our executive compensation.
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TALENT AND COMPENSATION COMMITTEE REPORT
The TalentProperly dated and Compensation Committee (referred to in this report as the “Committee”) of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis (CD&A) required by Item 402(b) of Regulation S-K with management and, based on its review and those discussions, has recommended to our Board of Directors that the CD&Asigned proxies will be included in our 2022 proxy statement and incorporated by reference into our 2021 Annual Report on Form 10-K.
The Committee welcomes feedback regarding our executive compensation program. Stockholders may communicate with the Committee by writing to the Talent and Compensation Committee Chair, c/o Corporate Secretary, 8080 Norton Parkway, Mentor, Ohio 44060.
Julia A. Stewart, Chair
Bradley A. Alford
Mark J. Barrenechea
Ken C. Hicksso voted unless you specify otherwise.
| | | 50 | | 20222024 Proxy Statement | Avery Dennison Corporation
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A) This CD&A* describes our executive compensation program and the decisions of our Board’s Talent andthe Compensation Committee (referred to in this CD&A as the “Committee”) on 2021regarding 2023 executive compensation. It includes the sections shown below. EXECUTIVE SUMMARY Business Strategy Overview
Our strategic pillars and related 2023 achievements are described in the proxy summary.We have consistently executed our business strategies, delivering long-term, sustainable value for our employees, customers and investors and improving the communities in which we operate. From our investors’ perspective, weinvestors. We believe that this value is best measured by our total stockholder return (TSR)TSR and cumulative economic value added (EVA),EVA, both of which are performance objectives used in our long-term incentive (LTI)LTI program and inform how we set our goals for sales growth, operating margin improvement, asset efficiency, return on total capital (ROTC)ROTC and capital allocation. Our key strategies and 2021 achievementsHighlights of our financial performance are shown on the following page.below. Our overriding focus remains on ensuring the long-term success of all of our stakeholders, and, as described in the proxy summary, we have a clear set of strategies to deliver for them.
Progress Toward 2025 Financial Targets In March 2021, we announced financial targets through 2025. Given the challenges we experienced in 2023, our progress toward these long-term targets slowed during the year; however, we expect significant progress in 2024 as label and apparel markets rebound and growth in our Intelligent Labels business accelerates. | * | This CD&A contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from the expected results, performance or achievements expressed or implied thereby. For a detailed discussion of these risks, see Part I, Item 1a, “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our 20212023 Annual Report on Form 10-K, filed on February 23, 2022 with the SEC (our “2021 Annual Report”). Stockholders should note that statementsReport. Statements contained in this CD&A regarding our company and business performance targets and goals should not be interpreted as management’s expectations, estimates of future results or other guidance. |
| | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 51 |
Drive outsized growth in high-value categories
We seek to increase the proportion of our portfolio in high-value products and solutions, both organically and through acquisitions; high-value categories serve markets that are growing faster than GDP, represent large pools of potential profit and leverage our core capabilities. These products and solutions include our specialty and durable label materials, graphics and reflective solutions, industrial tapes, Intelligent Labels that use RFID tags and inlays, external embellishments, and, with our recent acquisition of Vestcom, shelf-edge pricing, productivity and consumer engagement solutions.
In 2021, we achieved organic sales change in high-value product categories that outpaced that of our base businesses by a high-single digit rate driven by growth in specialty labels, external embellishments and Intelligent Labels; added to our capabilities and expanded our position in high-value product categories through our acquisition of Vestcom; and more than tripled the size of our Intelligent Labels platform over the last five years, reaching net sales of $0.7 billion in 2021 Grow profitability in our base businesses
We strive to grow profitability in our base businesses by carefully balancing volume, price and mix, reducing complexity and tailoring our go-to-market strategies
In 2021, we heightened our focus on material reengineering to drive productivity and mitigate the impact of rising input costs
Focus relentlessly on productivity
We employ product reengineering and enterprise lean sigma to expand our margins, enhance our competitiveness (particularly in our base businesses) and provide a funding source for reinvestment
In 2021, we continued expanding operating margins, with approximately $65 million in savings from restructuring, net of transition costs
Allocate capital effectively
We balance our investments in organic growth, productivity, and acquisitions and venture investments, while continuing to return cash to stockholders through dividends and share repurchases
In 2021, leveraging our strong balance sheet, we invested $272.1 million in fixed and IT capital expenditures to support organic growth; completed three acquisitions and made three venture investments for a total of $1.48 billion; increased our quarterly dividend rate by ~10%; and repurchased $180.9 million in shares of our common stock
Lead in an environmentally and socially responsible manner
We aim to deliver innovations that advance the circular economy and reduce the environmental impact of our operations; build a more diverse workforce and inclusive and equitable culture; maintain operations that promote health and safety; and support our communities through contributions from the Avery Dennison Foundation (ADF), supplemented by contributions from our company
In 2021, we continued to make progress toward our 2025 sustainability goals, reducing the environmental impact of our operations and investing in strategic innovation platforms focused on material circularity and waste reduction/elimination; continuing to drive sustainable change in diversity, equity and inclusion (DE+I), with a sharpened focus on increasing workforce racial/ethnic diversity, as well as representation from other underrepresented communities such as LGBTQ+, veteran or disabled individuals; and using the $10 million we contributed to ADF in 2020 to significantly increase grant-making in our communities, resulting in over $6 million of charitable contributions from ADF and our company in 2021. We also announced more ambitious 2030 sustainability goals.
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| | 2022 Proxy Statement | Avery Dennison Corporation
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Delivering Financial Targets
Our objective is to deliver GDP+ growth and top-quartile returns on capital to create superior value over the long term. In March 2017, we announced five-year financial targets through 2021. As shown below, we exceeded each of these commitments we made to our investors.
Sales change ex. currency, organic sales change, adjusted EPS and ROTC, including and excluding acquisition amortization – as well as free cash flow and adjusted EBITDA margin, which are referenced later in this CD&A – are non-GAAP financial measures we provide investors to assist them in assessing our performance and operating trends. These non-GAAP financial measures are not a substitute for or superior to progress toward the comparable financial measures under GAAP and are defined, qualified and reconciled from GAAP in the last section of this proxy statement.
For the 2017-2021 period,2021-2023, on a five-yearthree-year compound annual basis (with 2016 as the base period), GAAP reported net sales, net income and EPS increased by 6.7%, 18.2% and 20.1%, respectively.
| | | | | | | 2017-2021 Targets | | 2017-2021 Results(1) | | | | Sales Growth(2)
| | 5%+ ex. currency(3)4%+ organic
| | 6.6% ex. currency4.6% organic
| | | | GAAP Operating Margin
| | 11%+ in 2021 | | 12.6% in 2021 | | | | Adjusted EPS Growth(2)
| | 10%+ | | 17.3% | | | | ROTC incl. Acquisition Amortization
| | 17%+ in 2021 | | 18.4% in 2021 | | EXCEEDED 2017-2021 FINANCIAL TARGETS | (1) Results for non-GAAP measures are reconciled from GAAP in the last section of this proxy statement.
(2) Percentages for targets and results reflect five-year compound annual growth rates, with 2016 as the base period.
(3) Target for sales growth ex. currency reflects the impact of completed acquisitions as of March 2017 of approximately one point.
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In March 2021, we announced five-year financial targets through 2025. As shown below, based on the first year of this five-year period, we are on track to achieve these commitments.
In 2021 (with 2020 as the base period), GAAP reported net sales increased by 6.3%, while GAAP operating income, net income and EPS increaseddecreased by 20.6%1.1%, 33.1%3.3% and 33.6%2.1%, respectively. GAAP reported operating margin in 2023 was 9.4%.
| | | | | | | | 2021-2025 Targets | | 2021 Results(1) | | | | Sales Growth(2) | | 5%+ ex. currency(3) | | 18.6% ex. currency 15.6% organic | | | | Adjusted EBITDA Margin | | 16%+ in 2025 | | 15.6% in 2021 | | | | Adjusted EPS Growth(2) | | 10% | | 25% | | | | ROTC excl. Acquisition Amortization | | 18%+ in 2025 | | 19.1% in 2021 | | | | ON TRACK TO ACHIEVE 2021-2025 FINANCIAL TARGETS | (1) Results for non-GAAP measures are reconciled from GAAP in the last section of this proxy statement. (2) Percentages for targets reflect five-year compound annual growth rates, with 2020 as the base period. Percentages for results reflect one-year annual growth rates, with 2020 as the base period. (3) Target for sales growth ex. currency reflects the impact of completed acquisitions as of March 10, 2021, which represents (0.2)%. |
| | | | | | | | | | | | 2021-2025 Targets | | 2021-2023 Results(1) | | | | Sales Change Ex. Currency(2) | | 5%+ | | 7.7% | | | | Adjusted EBITDA Growth(2)(3) | | 6.5% | | 5.7% | | | | Adjusted EBITDA Margin | | 16%+ in 2025 | | 15.1% in 2023 | | | | Adjusted EPS Growth(2) | | 10% | | 3.6% | | | | ROTC | | 18%+ | | 12.4% in 2023 |
| (1) | Results for non-GAAP measures are reconciled from GAAP in Appendix A of this proxy statement. | |
| (2) | Percentages for targets reflect five-year compound annual growth rates, with 2020 as the base period. Percentages for results reflect three-year compound annual growth rates, with 2020 as the base period. | |
| (3) | Although adjusted EBITDA growth was not one of our original financial targets, it was implied by our sales change ex. currency and adjusted EBITDA margin targets. The foreign currency translation impact to EBITDA was a benefit of approximately $38 million in 2021 and a headwind of approximately $81 million and $20 million in 2022 and 2023, respectively. | |
2023 Financial Performance In fiscalAlthough a lower demand environment driven primarily by inventory destocking downstream from our company resulted in a challenging year 2021,in which we did not realize our annual performance expectations, we delivered another year of strong top-sequential improvement each quarter and bottom-linecontinued advancement in key growth expanded operating margins and record free cash flow. We substantially exceeded our goalsareas such as Intelligent Labels. Key financial results for the year achieving the financial resultsare shown on the following page.below.
| | | | | | | 2023 FINANCIAL RESULTS | | Avery Dennison Corporation | | | |
| Net Sales | | Reported EPS | | Cash From Operating Activities | | Net Income | | | | | | $8.4B | | $6.20 | | $826.0M | | $503.0M | Reported net sales decreased by 7.5% from $9.0 billion in 2022, Proxy Statementreflecting lower volume primarily as a result of inventory destocking; sales ex. currency declined by 6.9% | | Reported EPS decreased from $9.21 in 2022; adjusted EPS decreased from $9.15 in 2022 to $7.90, primarily reflecting lower volume, partially offset by productivity and restructuring actions | | 53
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| | | | | | | | | | | | | | | | | NET SALES
$8.41B
Reported sales increased by ~21%, reflecting volume growth across our businesses and prior-year impact of COVID-19; sales ex. currency increased by ~19% and organic sales increased by ~16% driven by strong demand for consumer packaged goods and accelerated shift to e-commerce in LGM and significant organic sales growth in Intelligent Labels
| | | | | | REPORTED EPS
$8.83
Reported EPS substantially increased by ~34%, in part due to prior-year impact of COVID-19;We used adjusted EPS increased by ~25% to $8.91 driven by strong growth and operating margin expansion; adjusted EPS substantially exceeded top end of February 2021 guidance range
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CASH FROM OPERATING ACTIVITIES
$1,046.8M
Freefree cash flow of $797.7$591.9 million was used to fundacquire three acquisitions and threecompanies, make one venture investments,investment, pay dividends of $220+$256+ million and repurchase 0.9$137+ million in shares of our common stock
| | | | | | NET INCOME
$740.1M
AchievedDelivered ROTC including acquisition amortization of ~18% and ROTC excluding acquisition amortization of ~19%
| | 12.4% |
Effective Capital Allocation We have been consistently effective in executing our capital allocation strategy, balancing our investments in organic growth, productivity, and acquisitions and venture investments with continuing to return cash to stockholders through dividends and share repurchases. In 2021, we invested $272.1 million in fixed and IT capital expenditures to support future growth and further productivity improvement and allocated $1.48 billion to acquisitions and venture investments; we also paid $220.6 million in dividends and repurchased $180.9 million in shares of our common stock.
We have invested in our businesses to support organic growth and pursued complementaryacquired companies that expand our capabilities in high-value product categories, increase our pace of innovation and synergistic acquisitions.advance our sustainability priorities. Our fixed and IT capital spending in 20212023 of $285.1 million was nearly 25% higher than in 2020,comparable to 2022, reflecting our continued investment in high-value categories, includingparticularly our fast-growing Intelligent Labels platform, and lower-than-planned capital expenditures in 2020 to mitigatebusiness. During the impact of COVID-19. During 2021,year, we acquired Vestcom, an Arkansas-based provider of shelf-edge pricing, productivityThermopatch, Lion Brothers and consumer engagement solutions for retailers and consumer packaged goods companies, for $1.47 billion, as well as ZippyYum, a California-based developer of software products usedSilver Crystal; together, these acquisitions expand the external embellishments portfolio in the food service and food preparation industries, and JDC, a Tennessee-based manufacturer of pressure-sensitive specialty tapes, collectively for approximately $43 million. During 2021, weour Solutions Group. We also made threeone venture investmentsinvestment in companiesa company developing innovative technological solutions that we believe have the potential to advance our businesses.strategies. In 2021,2023, we deployed $401.5paid $256.7 million to payin dividends of $2.66$3.18 per share and repurchase 0.9repurchased 0.8 million shares of our common stock. We raised our quarterly dividend rate by approximately 10%~8% in April 2021. 2023. | | | 52 | | 2024 Proxy Statement | Avery Dennison Corporation |
As shown on the following page, below, over the last five years, we have allocateddeployed over $2 billion to acquisitions (including venture investments) and venture investments and nearlyreturned over $2 billion to stockholders in dividends and share repurchases. | | | 54
CAPITAL ALLOCATION HIGHLIGHTS | | 2022 Proxy Statement | Avery Dennison Corporation
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* Includes venture investments
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Longer-Term TSR Outperformance By generating substantial EVA, we drove strongAlthough our TSR in 2021 despite2023 was modestly below the uncertain macroeconomic environment during the year due to the continued impact of COVID-19 and related supply chain, labor, freight and inflationary challenges. Our TSR of over 40% outperformed the S&P 500 and the median of the S&P 500 Index and the S&P 500 Industrials Index and Materials subsets. More important, both modestly above the Dow Jones U.S. Container & Packaging Index, our three-year and five-year cumulative TSR substantiallysignificantly outperformed all three of these two comparator groups.
5-Year Cumulative TSR
1-, 3- and 5-Year TSR
| | | | | | | | | | AVY | | S&P 500 | | S&P Indus. & Mats.* | 2017 | | 67% | | 22% | | 28% | 2018 | | (20)% | | (4)% | | (14)% | 2019 | | 49% | | 32% | | 34% | 2020 | | 21% | | 18% | | 17% | 2021 | | 41% | | 29% | | 24% | 3-Year TSR | | 154% | | 100% | | 94% | 5-Year TSR | | 237% | | 133% | | 122% |
| | * | Based on median of companies in both subsets as of December 31, 20211-, 3- AND 5-YEAR TSR
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| | | | | | | | | | | | AVY | | S&P 500 Index | | S&P 500 Industrials Index | | Dow Jones U.S. Container &
Packaging Index | | | | | | 2019 | | 49% | | 31% | | 29% | | 29% | | | | | | 2020 | | 21% | | 18% | | 11% | | 21% | | | | | | 2021 | | 41% | | 29% | | 21% | | 11% | | | | | | 2022 | | (15)% | | (18)% | | (5)% | | (18)% | | | | | | 2023 | | 14% | | 26% | | 18% | | 8% | | | | | | 3-Year TSR | | 37% | | 33% | | 35% | | (2)% | | | | | | 5-Year TSR | | 145% | | 107% | | 94% | | 53% |
2021 2023 Say-on-Pay Vote and Feedback During Stockholder Engagement
In 2021,At the 2023 Annual Meeting, ~93% of our stockholders approved our executive compensation. The level of support we maintained proactive engagementreceived was relatively consistent with stockholders regarding executive compensation and talent management. the high approval rates we received in recent years. The Committee regularly reviewsbelieves that our strong say-on-pay vote results, as well as the feedback related to our executive compensation program makingwe have received during our engagements with investors, demonstrate overall support of our program.
The Committee makes changes to our executive compensation program as neededappropriate to address feedback from our stockholders or more closely align the programensure it aligns with our evolving financial profile, business strategies and ESG priorities.sustainability priorities or address feedback from our investors. We believe that this processongoing review and the specific actions taken over time demonstrate the Committee’s commitment to paying for performance and being responsive to investor feedback.In 2021, during our ongoing stockholder engagement program, we discussed elements of our executive compensation program with some of our stockholders, who generally expressed support for its structure. Results and Analysis of 2021 Vote
At the 2021 Annual Meeting, nearly 96% of our stockholders approved, on an advisory basis, our executive compensation. The level of strong support we received was consistent with the high approval rates we have received in recent years. The Committee believes that these strong say-on-pay vote results, as well as the generally positive feedback we have received during our ongoing engagement with stockholders, reflects strong support of our executive compensation program and our consistently improving CD&A disclosure.
Stockholder Engagement
We actively solicit feedback through stockholder engagement to ensure that we reflect not only our evolving business strategies but also the expectations of our investors. In addition to our extensive investor relations program through which members of management engage with our investors throughout the year, this supplemental engagement program
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is depicted – and the feedback we received on executive compensation, social sustainability and talent management are described – in the proxy summary.
Strong ESG-Executive Compensation Linkage
Information on our ESG progress may be found in the proxy summary and the Environmental and Social Sustainability section of this proxy statement. Additional information may be found in our 2021 integrated sustainability and annual report and our March 2022 ESG Download being published concurrently with this proxy statement, as well as on our ESG website at esg.averydennison.com. The 2021 integrated sustainability and annual report, March 2022 ESG Download and other information on our website are not and should not be considered part of, nor are they incorporated by reference into, this proxy statement.
The stockholders with whom we spoke during 2021 asked about the Committee’s consideration of ESG matters in our executive compensation program. In recent years, the Committee has engaged in frequent discussions with its compensation consultant, WTW, and management regarding ESG–executive compensation linkage, in part due to increasing investor interest in the topic, and reviewed market practices to explore the potential to further incorporate ESG into our program. The Committee noted that our key company strategies include leading in an environmentally and socially responsible manner, and that the committee seeks to approve executive compensation that reflects company strategy and incents achievement of company goals.
The Committee has determined that our existing compensation practices and talent management priorities reflect our ESG strategies, hold our leaders accountable and reward results. The Committee noted, among other things, the items described below.
Nearly half of the measures on our annual business group scorecards using the objectives, goals, strategies and measures (OGSM) framework are ESG-related, aligning our leaders with these objectives and providing visibility and accountability to enable continuous improvement. With their concise format and use of color-coding to indicate progress, these OGSMs surface ESG underperformance relative to our goals and offer an assessment tool in year-end discussions with our business leaders on their annual performance.
Our senior leadership, including our2023 NEOs and Vice Presidents, have accountability for driving our ESG progress, with responsibility for executing toward our goals and targets cascaded throughout our organization. People managers are expected to discuss the progress their team members make toward their annual goals as part of our performance evaluation process. In approving base salary increases, AIP award individual modifiers, structural pay increases and promotions, our managers consider not only financial or business achievements, but also a leader’s success in advancing our ESG priorities, consistent with our company’s strategies and values.
Although the financial modifier in the AIP does not include ESG metrics, our financial performance in part reflects our ESG progress and a key component in determining an AIP award is the individual modifier, which relies on a qualitative assessment of annual performance. For our leaders, this process includes consideration of their ESG-related contributions. In determining their 2021 AIP awards, the Committee discussed the ESG achievements of our CEO and other NEOs in assessing their performance and determining their individual modifiers.
Diversity and Sustainability are two of our company’s values, reflecting the priority with which we hold ESG matters. Our annual Leadership Excellence Awards are granted to teams globally in each of these categories, with winners receiving at least a 120% individual modifier on their AIP award, subject to the overall AIP award cap of 200%. In 2021, over 70 employees globally received awards for diversity and sustainability, a substantial increase from the 10 awards granted in 2018; over 20 additional individuals received awards related to their leadership in the community.
As described in this proxy statement, we have made substantial ESG progress in recent years, and our Board and the Committee are committed to delivering for all our stakeholders. The Committee shares our Board’s view that our financial success in recent years has been inextricably linked to our ESGprogress. We have consistently delivered more sustainable solutions, which have provided significant competitive advantage, fueling our success in the marketplace and strong financial performance. While our compensation programs have played an important part in advancing our ESG initiatives, ESG has become embedded into our workplace culture. We are working diligently to advance our journey because we believe that our company can have a long-term positive impact on people and our planet.
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After reviewing benchmark data on current market practices, the Committee noted that, consistent with our existing practice, the majority of S&P 500 companies consider ESG performance in their executive compensation programs, with most doing so in ways similar to the way in which we do. The Committee is committed to regularly reviewing stakeholder expectations and market practices, and pressure testing the continued appropriateness of its current approach, in consultation with management and WTW. If or when the Committee determines to include additional ESG metrics as performance objectives in any of our incentive programs, it would establish targets that are as rigorous and objectively measurable as our financial performance objectives.
2021 Named Executive Officers (NEOs)
In this CD&A and the Executive Compensation Tables section of this proxy statement, we provide compensation information for our 20212023 NEOs who are identifiedshown below. | | | | | | | | | | | | | | | | | | 2023 NEOs | | | | | | Name | | Title at YE | | NEO Type | | Executive Level | | U.S./Non-U.S. | 1 | | 
| | Deon M. Stander | | President & CEO | | Corporate | | 1 | | U.S. | | 2 | |  | | Mitchell R. Butier | | Executive Chairman (former CEO) | | Corporate | | 1 | | U.S. | | 3 | |  | | Gregory S. Lovins | | SVP & CFO | | Corporate | | 2 | | U.S. | | 4 | |  | | Francisco Melo | | President, Solutions Group
(Solutions) | | Solutions | | 2 | | Non-U.S. | | 5 | |  | | Deena Baker-Nel | | SVP & CHRO | | Corporate | | 3 | | U.S. | | 6 | |  | | Nicholas R. Colisto | | SVP & CIO | | Corporate | | 3 | | U.S. |
Leadership Transition As discussed in the chart below. Subsequent to year-end 2021, Mr. Stander waselected byproxy summary, our Board executed a well-developed CEO succession planning process in May 2023, appointing Mr. Stander as President/CEO and Mr. Butier as Executive Chairman, in each case effective September 1, 2023. In connection with their transition to servethese roles, giving consideration to the advice of its independent compensation consultant, WTW, the Committee made the decisions described below related to their compensation. Given the timing of the CEO transition, the compensation of Messrs. Stander and Butier for 2023 largely reflected their compensation as PresidentPresident/COO and Chief Operating OfficerCEO, respectively. | • | | For Mr. Stander, increased his annual base salary from $700,000 to $1.1 million and his target AIP opportunity from 75% to 135% of base salary, in each case effective September 1, 2023 (with his 2023 AIP award to be prorated based on the portion of the year in which he served as COO and the portion of the year in which he served as CEO). The Compensation Committee preliminarily aligned to increase his target LTI opportunity from 300% to 550% of base salary, effective with the annual LTI award on March 1, 2024, subject to its review of market pay for similar roles at that time. In addition, the Committee approved a special promotion award to Mr. Stander on September 1, 2023 of stock options with a grant date fair value of approximately $3 million, 50% of which vests on each of the third and fourth anniversaries of the grant date, subject to his continued service. Mr. Stander’s annualized target TDC of $8.6 million (excluding the special promotion award) was set less than the market median; the Committee believed that positioning his compensation at the market 40th percentile compensated him within a reasonable CEO market range but reflected that he was new to the CEO role. |
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For Mr. Butier, reduced his annual base salary from $1.3 million to $1 million and his target AIP opportunity from 160% to 120% of base salary, in each case effective MarchSeptember 1, 2022;2023 (with his 2023 AIP award to be prorated based on the portion of the year in which he served as CEO and the portion of the year in which he served as Executive Chairman). He received no special LTI award in connection with this election,his role change. The Committee set Mr. Butier ceased serving in Butier’s annualized target TDC consistent with the capacity of President. References in this proxy statementmarket median for an executive chairman role, reflecting the mentorship and guidance he would be providing to Level 2 NEOs are to Messrs. Lovins and Stander and references to Level 3 NEOs are to Ms. Baker-Nel and Mr. Walker.help ensure a smooth CEO transition. | | | | NEOs | | | Name | | Title in 2021 | | | Mitchell R. Butier
| | Chairman, President & Chief Executive Officer | | | Gregory S. Lovins
| | Senior Vice President & Chief Financial Officer | | | Deena Baker-Nel
| | Vice President & Chief Human Resources Officer | | | Deon M. Stander
| | Vice President & General Manager, RBIS | | | Ignacio J. Walker
| | Vice President & Chief Legal Officer |
Overview of Pay Philosophy and Executive Compensation Components Our executive compensation program reflects the Committee’s philosophy that a substantial majority of compensation should be tied to our success in achieving our financial objectives and creating stockholder value, providing higher realized compensation when we deliver superior, sustained performance. The objectives of this strategy are to motivate our executives to achieve our annual and long-term financial goals, giving consideration to their contributions to delivering strong performance. In support of our increased focus on ESG matters and greater transparency with all our stakeholders, the Committee considers our ESG progress in evaluating the individual performance of our CEO and other NEOs.goals. The Committee implements its pay-for-performance philosophy as follows: | | • | | Establishing target total direct compensation (TDC)TDC to incent strong operational and financial performance and stockholder value creation,, giving consideration to median pay at similarly sizedsimilar-size companies, role responsibilities, individual performance, tenure, retention and succession | |
| | • | | Aligning our annual incentives for executives with our company’s annual operating plan and financial goals for the year | |
| | • | | Rewarding long-term performance using absolute and relative TSR, as well as cumulative EVA, to focus our executives on delivering consistent and sustainable stockholder value creation | |
The substantial majority of target TDC is performance-based, meaning that our NEOs ultimately may not realize the value of at-risk components if we fail to achieve the designated performance objectives.Incentive compensation consists of target award opportunities under our AIP and our LTI compensation program, with payouts determined based on our performance against objectivesthe threshold, target and maximum levels established by the Committee. The Committee structures annual incentive compensation to reward NEOs primarily based on corporate and/company or business performance to align their compensation with stockholder interests, giving consideration to their individual contributions to our performance. AIP targetsinterests. The mix and elements of NEO target TDC are established at or above the midpoint of the guidance we give to our stockholders on our anticipated performance for the year and consistent with achieving our long-term financial goals. Our LTI awards provide higher realized compensation for exceeding performance targets and downside risk (up to and including cancellation) for failing to achieve threshold performance, with EVA targets that are consistent with our long-term goals for earnings growth and ROTC. shown below. | | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 5755
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ELEMENTS OF TARGET TDC FOR CORPORATE NEOs
| | | | | | | | | | | | | | | | | | | | | ANNUALIZED TARGET TDC MIX | | | | | | 2023 TARGET TDC MIX | | | CEO* | |
| | | | Avg. of Other NEOs** | |
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| * | Mr. Stander’s annualized target TDC reflects his compensation package as CEO, excluding his special promotion award of stock options with a grant date fair value of approximately $3 million. | |
| ** | Mr. Butier is excluded because his target 2023 TDC primarily reflected his compensation as CEO given the timing of our leadership transition. Mr. Melo’s target TDC mix included in the average reflects his target TDC as President, Solutions Group. | |
| | | | | | | | | ELEMENTS OF NEO TARGET TDC | | | | | LTI Compensation | | PUs | | Corporate NEOs | | Solutions NEO | | • 50% of LTI with payout = 0% to 200% of target award • 3-year performance period - Company EVA (50%) - Company Relative TSR (50%) | | • 50% of LTI with payout = 0% to 200% of target award • 3-year performance period - Solutions Group EVA (75%) - Company Relative TSR (25%) | | | | • Relative TSR payout capped at 100% if absolute TSR is negative | | MSUs | | • 50% of LTI with payout = 0% to 200% of target award • 100% Absolute TSR(3) • 1-, 2-, 3- and 4-year performance periods | | Annual Incentive Compensation | | AIP Award* | |
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| | • Drives performance consistent with annual company or business financial goals • Individual performance modifier based on achievement against predetermined strategic and sustainability objectives (generally capped at 100% for NEOs) | | | | | | Base Salary | | • Annual fixed-cash compensation generally set around market median |
| * | AIP award for Solutions NEO (Mr. Melo) reflects his performance objectives and weightings for the nine months of the year he served as President, Solutions Group. He had different performance objectives and weightings for the three months of the year he served as SVP/GM, Avery Dennison Smartrac. His 2023 AIP award would have been prorated to reflect the respective performance objectives and weightings had not the payout been zero. | |
As shown inIn the graph below, the substantial majorityCEO compensation for 2019 through 2022 reflects Mr. Butier’s compensation as reported in our Summary Compensation Tables for those years and, for 2023, Mr. Stander’s compensation as reported in our 2023 Summary Compensation Table. Our CEO pay has generally reflected our cumulative TSR except that Mr. Stander’s pay in 2023 was substantially lower than prior-year amounts for Mr. Butier because it primarily reflected his compensation as COO, which was significantly lower than Mr. Butier’s as CEO, as well as his special award of each of our NEOs’ 2021 target TDC was performance-based, meaning that they may not ultimately realize thestock options with a grant date fair value of the at-risk components of TDC if we failapproximately $3 million granted in connection with his promotion to achieve the designated performance objectives. As a business NEO in 2021, Mr. Stander’s AIP award and PUs had different performance objectives than those of our corporate NEOs.
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As shown in the graph below, in recent years, our CEO’s compensation increased commensurate with our cumulative TSR, with his 2021 pay reflecting the longer-term approach to CEO compensation described below.
Change in Approach to CEO Compensation
In the few years prior to 2021, the Committee discussed how best to ensure that it was compensating our CEO optimally and in alignment with the long-term interests of our stockholders. The Committee’s objectives were to:
Recognize our company’s performance and delivery of value to our customers, employees, investors and communities during his tenure as our CEO
Enhance his incentive to continue creating value for these stakeholders, including by driving superior TSR
Encourage his retention for the long term
The Committee sought to maintain market-competitive target TDC for our CEO well-aligned with our company’s performance and ensure that his target TDC did not fall substantially below the median of similarly sized companies, without relying on the traditional approach of annual review and periodic increase to the components of his TDC – base salary, target AIP opportunity and target LTI opportunity – to maintain consistency with continually rising market CEO pay.
With expert advice and guidance from its independent compensation consultant, WTW, and giving consideration to the feedback received in 2020 and 2021 during engagement with our investors, the Committee determined to shift from considering annual increases to our CEO’s base salary and target AIP and LTI opportunities to a longer-term approach that generally holds his target TDC constant for a three-year period. At the end of the period, the Committee will evaluate both his and our company’s performance, as well as market conditions, before determining the appropriate level of his go-forward compensation, continuing to give consideration to factors such as tenure, retention and succession. The Committee intends for this approach to CEO compensation to be more consistent with the long-term approach we take to planning our strategies, setting our financial targets and sustainability goals, and creating value for all our stakeholders.
To ensure our CEO’s compensation remained competitive and mitigate the potential for his target TDC to substantially fall behind his peers over the next three years, the Committee set our CEO’s compensation roughly halfway between the 50th and 75th percentiles of companies with annual revenues between $6 billion and $10 billion, reflecting his strong performance during his tenure in the role, during which our company consistently delivered top quartile performance. The Committee’s expectation is that – at the end of the three-year period during which our CEO’s compensation is expected not to increase – his TDC would be at or around the median pay at similarly sized companies.
Reviewing 2020 benchmark data and projected 2021 pay rates, the Committee targeted our CEO’s TDC for the year at $9.9 million by increasing (i) his base salary by 6% to $1.2 million; (ii) his target AIP opportunity from 125% of base salary to 140% of base salary; and (iii) his target LTI opportunity from 475% of base salary to 585% of base salary. The Committee noted that our CEO had delivered strong value creation for all our stakeholders by leading the development and execution of our strategies during his tenure in the role and successfully navigated the impact ofCOVID-19 in 2020. Nearly 90% of his target TDC consists of at-risk, performance-based compensation; his realized compensation depends on our company continuing to deliver strong TSR performance, achieving our 2021 and 2025 financial targets and our 2025 and 2030 sustainability goals, and continuing to engage our employees, serve our customers, deliver for our investors and support the communities in which we operate.
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Strong Compensation Governance Practices Our executive compensation program incorporates the best practices shown below, which the Committee believes ensure that it serves the long-term interests of our stockholders. | | | | | Policy or Best Practice | Description and Stockholder Benefit | | | PAY FOR PERFORMANCE | | | Compensation Primarily Performance-Based | | ✓ 88% 87% of 2021 CEOCEO’s annualized target TDC and 70%69% of average 20212023 target TDC of other NEOs tied to company and/or business performance(excluding Mr. Butier) | | | Capped Annual Incentive
Set At or Above
Midpoint ofConsidering Guidance
and Long-Term Targets | | ✓ AIP award based on achievement of performance objectives setachieving adjusted EPS at or above midpoint of annual guidance and other performance objectives consistent with long-termannual financial targets,goals, subject to limited upward and unlimited downward discretion based on Committee’s assessment of CEO’s performance of our CEO against predetermined strategic objectives and other NEOs’ individual contributions; awards capped at 200% of target and individual modifiers for NEOs generally capped at 100% | | | Majority Long-Term Equity
Incentive Compensation | | ✓ LTI awards prioritize long-term performance,longer-term stockholder value creation, with PUs cliff-vesting in 3 yearsat end of 3-year period and MSUs vesting in tranches over 4 years; realized compensation based on long-term1-, 2-, 3- and 4-year performance and stockholder value creationperiods | | | | Strategic Targeting | | ✓ Target TDC (base salary + target AIP opportunity + target LTI opportunity) set to incent strong performance and value creation, giving consideration to median pay at similarly sizedsimilar-size companies, role responsibilities, performance, tenure, retention and succession | | | COMPENSATION BEST PRACTICES | | | No Annual Stock OptionsEmployment Contracts | | ✓ Last made regular grant of stock options NEOs employed without contract unless required by applicable laws in 2012, though stock options may be granted for special purposes such as promotiontheir home country | | | COMPENSATION BEST PRACTICES | | No Employment Contracts | | ✓ NEOs employed at-will
| | | Rigorous Stock
Ownership Policy | | ✓ CEO required to maintain ownership of 6x his base salary;salary and owned 10x this requirement at YE 2021, he owned 8x his requirement;2023; Executive Chairman, Level 2 NEOs and Level 3 NEOs required to maintain ownership of6x, 3x and 2x of base salary, respectively | | | | No Hedging or Pledging | | ✓ Insider trading policy prohibits officers from engaging in short sale, option, hedging and employees from hedging – and officers from pledging – AVYtransactions in our common stock and all NEOs complied during 20212023 | | | | Limited Trading Windows | | ✓ NEOs may only transact in our commoncompany stock during approved trading windows after satisfying clearancepreclearance requirements, including certifying continued compliance with our stock ownership policy | | | | Median Burn Rate | | ✓ Three-year average burn rate of 0.58%0.50% at YE 2021,2023, in line with 50th50th percentile of S&P 500 companies | | | Clawback PolicyCompensation Clawbacks | | ✓ Cash and equity incentive Incentive compensation determined to be erroneously received by executive officers subject to clawback in event of fraud or other intentional misconduct that necessitates accounting restatement | | | | No Excise Tax Gross Ups | | ✓ No gross-up payments for excise taxes for termination following change of control | | | Double Trigger Equity Vesting | | ✓ Equity awards not accelerated onupon change of control unless NEO is terminated without cause or terminatesterminate employment for good reason within 24 months followingof change of control | | | No Repricing/Exchange of
Underwater Stock OptionsLimited Perquisites | | ✓ No repricing or exchange of underwater options without stockholder approval | | | Limited Perquisites | | ✓ Other than capped financial planning reimbursement only for certainCEO and Level 2 NEOs and payment for annual physical examinations, U.S. NEOs receive flat taxable executive benefit allowancesallowance not subject to tax gross-up
| | | Reasonable
Severance Benefits | | ✓ Severance formula for qualifying termination: CEO: CEO: 2x (annual salary + target AIP award for year of termination + cash value of annual health insurance premium)
All other NEOs:NEOs (excl. Mr. Butier): 1x (annual salary + target AIP award for year of termination + cash value of annual health insurance premium) | | | Reasonable Limited Change of
Control Benefits | | ✓ Severance formula Enhanced severance for qualifying termination of certain NEOs within 24 months following a change of control: CEO:CEO: 3x (annual salary + target AIP award for year of termination + cash value of annual health insurance premium) + prorated target AIP award for year of termination Level 2 NEOs: only: 2x (annual salary + target AIP award for year of termination + cash value of annual health insurance premium) + prorated target AIP award for year of termination | | | STRONG GOVERNANCE | | STRONG GOVERNANCE | | | | Independent Oversight | | ✓ Committee comprising independent directors with executive compensation decisions reviewed and ratified by all independent directors | | | Expert Compensation Consultant | | ✓ WTW is independent, free of conflicts of interest and provides Committee with expert executive compensation advice |
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Integration of Sustainability Progress Tied to Strategy In recent years, the Committee has engaged in discussions with its compensation consultant, WTW, and management and reviewed market practices regarding the integration of our sustainability progress into our executive compensation program. The Committee noted that one of our strategic pillars is leading in an environmentally and socially responsible manner, and its aim is to approve executive compensation that reflects our strategies and incents achievement of company goals. The Committee has determined that our executive compensation program holds our leaders accountable and rewards their delivery of sustainability-related results. The Committee has noted, among other things, the factors described below. | • | | Approximatelyone-quarter of the measures on our 2023 business group scorecards related to sustainability, incenting our leaders to achieve these objectives and providing visibility and accountability to ensure continuous advancement. These scorecards help surface underperforming progress and offer an assessment tool in year-end performance discussions. |
| • | | Our senior leadership, including our NEOs and Vice Presidents, is accountable for driving our sustainability progress. In making their compensation decisions, managers consider not only financial or business achievements, but also an individual’s success in advancing our sustainability goals, consistent with our company’s values and strategies. |
| • | | Although the AIP financial modifier does not include quantitative sustainability-related measures, our financial performance in part reflects the success of our sustainability-driven products and solutions. In addition, a component in determining an AIP award is the individual modifier, which reflects a qualitative assessment of overall performance, including sustainability-related achievements, and can increase or decrease an executive’s AIP award. |
| • | | Diversity and Sustainability are two of our company’s values. Our annual Leadership Excellence Awards are granted to individuals and teams globally in each of these categories, with recipients generally receiving at least a 120% individual modifier on their AIP award. In 2023, 38 employees received awards for either diversity or sustainability, with 17 additional individuals recognized for their work in their communities. |
The Committee recognizes that our sustainability progress has helped us deliver financial success in recent years. We have consistently innovated more sustainable solutions, which have provided significant competitive advantage, helping drive our success in the marketplace and deliver for our stakeholders. The Committee has committed to regularly reviewing evolving stakeholder expectations and market practices, and reevaluating the continued appropriateness of its approach to the integration of sustainability progress in executive compensation. Reviewing benchmark data on market practices with management and WTW, the Committee observed that the majority of S&P 500 companies report considering sustainability performance in their executive compensation programs, with most doing so similarly to the way we do. In 2023, during its discussion of the feedback from our 2023 stockholder engagements, the Committee aligned to maintain its approach to the consideration of sustainability matters in setting and approving executive compensation, noting that certain investors had advised caution in incorporating quantitative sustainability targets, which can be difficult to objectively measure. | | | 58 | | 2024 Proxy Statement | Avery Dennison Corporation |
SUMMARY OF 2023 COMPENSATION DECISIONS FOR 2021 The Committee approves executive compensation to pay for performance, with the target TDC of NEOs established to incent strong financial performance and stockholder value creation. Compensation is primarily performance-based,predominantly performance based, meaning that our executives may not ultimately realize some or all of the at-risk components of TDC if we fail to achieve our financial objectives. In 2021, approximately 88% and 70% of the target TDC of our CEO and the average of our other NEOs, respectively, was performance-based. In determining 20212023 NEO compensation, – in addition to the continued impact of COVID-19, and related supply chain, labor, freight and inflationary challenges, on our businesses and our leaders’ continuous efforts during the year to address and mitigate these matters – the Committee considered the factors described below. Company/Business Performance – Our company’s financial performance, including our 2021 adjusted sales growth, adjusted EPS and free cash flow for corporate NEOs, and, for our business NEO, the performance of RBIS
| • | | Annual Company Performance – For Corporate NEOs, our company’s 2023 adjusted sales growth, adjusted EPS and adjusted free cash flow; for our Solutions NEO, primarily the adjusted net income and adjusted free cash flow of his business and secondarily adjusted EPS |
Stockholder Returns – Our TSR on an absolute basis, as well as relative to a designated group of peer companies
| • | | Stockholder Returns – Our TSR on an absolute basis, as well as relative to a designated group of peer companies |
Individual Performance – Our CEO’s performance against the predetermined strategic objectives established for him at the beginning of the year and the individual contributions of our other NEOs
| • | | Individual Performance – Our CEO’s performance against the predetermined strategic objectives established for him at the beginning of the year and the individual contributions of our other NEOs |
Competitiveness – Pay practices and company performance relative to the market
| • | | Market Competitiveness – Pay practices and company performance relative to the market |
Investor Feedback – The results of our 2021 say-on-pay vote and feedback on executive compensation received during our ongoing stockholder engagement program
| • | | Investor Feedback – The results of our 2023 say-on-pay vote and the feedback on executive compensation received during our stockholder engagement program |
The key elements of 20212023 NEO target TDC are described in the table shown below and on the following page. below. While we provide consistent, market-competitive target TDC opportunities for our NEOs, the actual compensation they realize each year varies year-to-yearbased primarily on company and business performance.our financial performance. | | | | | 20212023 EXECUTIVE COMPENSATION SUMMARY | | | | Component | | RationaleDecisions Impacting 2023 Compensation | | | BASE SALARY 13% of annualized CEO TDC; Avg. 31% of 2023 TDC for
Other NEOs (excl. Butier) | | Decisions Impacting 2021 CompensationEffective April 2023, Mr. Butier received a base salary increase of ~8% and Ms. Baker-Nel and Messrs. Stander and Lovins each received base salary increases of ~7%, in each case to more closely align them with market data for similar roles; Mr. Colisto received a base salary increase of 3.5% consistent with the average increase for our U.S. employees. Based on their previously increased base salaries (as applicable), Mr. Melo’s base salary increased by ~19% when he became Solutions President effective April 2023, and Mr. Stander’s base salary increased by ~47% when he became CEO and Mr. Butier’s base salary decreased by ~23% when he became Executive Chairman, in each case effective September 2023. | | | | FIXEDTARGET AIP AWARD
Base Salary
12%17% of TDC for CEO;annualized CEO TDC;
Avg. 30%19% of 2023 TDC for Other NEOs (excl. Butier) | | Provides fixed, market competitive monthly income for performing day-to-day responsibilities
| | As partThe following NEO target AIP opportunities changed due to promotion: Mr. Melo’s increased from 50% to 60% of the longer-term compensation approach implemented for our CEO, his base salary when he became Solutions President, effective April 2023, and Mr. Stander’s increased by 6%. Thefrom 75% to 135% of base salaries of our other NEOs increased by 2.5%, consistent with the average merit increase for our U.S. employees, except thatsalary when he became CEO, effective September 2023. When he was CEO, Mr. Lovins received an increase of 7% to be more consistent with the market.
| | | | PERFORMANCE-BASED
SHORT-TERM CASH
Target
AIP Award
17% of TDC for CEO;
Avg. 18% of TDC for
Other NEOs
Capped at 200% of
target
| | Provides variable, cash-based incentive to motivate executives to grow sales, increase profitability and deliver strong free cash flow consistent with our annual financial goals
Target AIP opportunity based on market survey data; financial modifier based on company and/or business performance; individual modifier based on CEO’s achievement against predetermined strategic objectives and other NEOs’ individual contributions
| | As part of longer-term compensation approach implemented for our CEO, hisButier’s 2023 target AIP opportunity increased from 125%140% to 160% of base salary to 140%position his pay at the 70th percentile of market data for companies with annual revenues of $10 billion, acknowledging his strong performance delivering top-quartile TSR and mitigating the chance that his target TDC would fall below the market median before 2026, the next time the Committee planned to review his compensation, consistent with its approach of doing so every three years. Although our CEO transition occurred later in 2023, at the time of approval the Committee was focused on appropriately compensating Mr. Butier as a long-serving, highly successful CEO. Mr. Butier’s target AIP opportunity subsequently decreased from 160% to 120% of base salary. There were no other changes to NEO targetsalary when he became Executive Chairman, effective September 2023. The 2023 AIP opportunities.awards for Messrs. Stander, Butier and Melo would have been prorated based on their previous opportunities of 75%, 160% and 50% of base salary, respectively, and their fiscal year-end opportunities of 135%, 120% and 60% of base salary, respectively, had the payouts not been zero.
Company and/or Solutions performance resulted in financial modifiermodifiers of 200%0% for corporateall NEOs. Financial modifier for business NEO was 186% based 75% on RBIS performance and 25% on company performance. Individual modifiers for all NEOs, which had no impact on AIP payouts given the 0% financial modifiers, were 100%. None of our NEOs received an AIP award for 2023. |
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| | | | | 20212023 EXECUTIVE COMPENSATION SUMMARY | | | | | Component | | Rationale | | Decisions Impacting 20212023 Compensation | | | | PERFORMANCE-BASEDTARGET LTI AWARD
LONG-TERM EQUITY
Target LTI Award
(50% PUs, 50% MSUs) 71%70% of TDC for CEO;CEO annualized TDC;
Avg. 52%50% of 2023 TDC for Other NEOs (excl. Butier) | | Provides variable, equity-based incentive compensation to align NEO interests with stockholder interests and drive long-term value creation
Target LTI opportunity based on market survey data; award vehicles, performance criteria and weightings determined with advice from WTW
| | Annual LTI Awards Granted in 20212023 • As part of the longer-term compensation approach implemented for ourWhen he was CEO, hisMr. Butier’s 2023 target LTI opportunity increased from 475%585% to 700% of base salary to 585%position his pay at the 70th percentile of market data for companies with annual revenues of $10 billion, acknowledging his strong performance delivering top-quartile TSR and mitigating the chance that his target TDC would fall below the market median before 2026, the next time the Committee planned to review his compensation, consistent with its approach of doing so every three years. Although our CEO transition occurred later in 2023, at the time of approval the Committee was focused on appropriately compensating Mr. Butier as a long-serving, highly successful CEO. Mr. Butier’s target LTI opportunity as Executive Chairman had not been determined at the time of his role change. In connection with his promotion to Solutions President, Mr. Melo’s target LTI opportunity increased from 120% to 180% of base salary.salary effective March 2023. The Committee preliminarily aligned to increase Mr. Stander’s target LTI opportunity from 300% to 550% of base salary, effective March 2024, subject to its review of market pay for similar roles at that time. There were no other changes to NEO target LTI opportunities.opportunities in 2023. • 50% in PUs that cliff-vest at the end of three-year period with payouts ranging from zero to 200% based on the achievement of the respective cumulative EVA and relative TSR performance objectives. Payout for the TSR component is capped at 100% of target for any three-year performance period in which absolute TSR is negative. There were no changes to the PU performance objectives or weightings for 2021.Corporate NEOs in 2023. • 50% in MSUs that vest based on absolute TSR over one-1-, two-2-, three- 3- and four-year4-year performance periods, with an average performance period of 2.5 years. Performance criteria are as follows:years, based on the following performance levels and criteria: (i) threshold performance level, which results in payout at vesting of 85%, is TSR of (15)%; (ii) target performance level, which results in a payout at vesting of 100%, requires TSR of 10%; and (iii) maximum performance level, which results in payout at vesting of 200%, requires TSR of 75%. There were no changes to MSU performance criteria for 2021.2023. Special LTI Awards Granted in 2023 • In 2023, the Committee approved special LTI for Ms. Baker-Nel and Messrs. Lovins and Colisto in the form of RSUs with grant date fair values of approximately $600,000, $1.5 million and $200,000, respectively; Mr. Lovins’ RSUs cliff-vest on the third anniversary of the grant date and Ms. Baker-Nel and Mr. Colisto’s RSUs cliff-vest on April 1, 2025, in each case subject to their continued service. In approving these awards, the Committee determined to provide additional incentive for Mr. Lovins to drive results in a challenging business environment; for Ms. Baker-Nel to ensure smooth key senior leadership transitions, accelerate our executive succession focus and enhance Company Leadership Team effectiveness; and for Mr. Colisto to incent advancement of cybersecurity preparedness and oversight of critical enterprise resource planning implementations. In connection with his promotion to CEO, Mr. Stander was granted a special award of stock options with a grant date fair value of approximately $3 million, 50% of which vests on each of the third and fourth anniversaries of the grant date, subject to his continued service. Mr. Butier did not receive a special LTI award when he became Executive Chairman. | | | | | | | | LTI Awards Vesting at YE 20212023 • 2019-2021Annual Award of 2021-2023 PUs: Our 2019-20212021-2023 TSR was at the 9390rdth percentile ofrelative to the objectively determined peer group established in February 2019,2021, resulting in a payout of 200% on that performance objective for all NEOs. CumulativeOur company’s cumulative EVA for our company was $1,132.0$1,216.3 million, resulting in a payout of 176%166% on that performance objective for corporate NEOs.the annual award of 2021-2023 PUs for all NEOs other than Messrs. Stander and Melo. Cumulative EVA for RBISwhat is now Solutions was 94%96% of target, resulting in a payout of 87%97% on that performance objective for ourthe annual award of 2021-2023 PUs for Messrs. Stander and Melo, whose PUs were tied to that business NEO. 2019-2021at the time of grant. The annual awards of 2021-2023 PUs paid out at 188%based on weighted averages of target123% for corporate NEOsMessrs. Stander and 115%Melo and 183% for all other NEOs. • Special Award of target2021-2023 PUs: For retention purposes and to further incent him to contribute to the results for our total company – including by continuing to transform our Solutions business NEO.and driving our sustainability progress as then-leader of our enterprise-wide Sustainability Council – Mr. Stander was granted a one-time award of PUs in February 2021 with a grant date fair value of approximately $500,000 with the same performance objectives and weightings as the annual award of 2021-2023 PUs for Corporate NEOs. Consistent with the above, these PUs paid out based on a weighted average of 183%. |
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| | | 2023 EXECUTIVE COMPENSATION SUMMARY | | | | Component | | Decisions Impacting 2023 Compensation | | | LTI Awards Vesting at YE 20212023 • MSUs • 4th Tranche of MSUs granted in 20182020 2018-20212020-2023 Absolute TSR of 87%62% Paid out at 200%Payout of 180% of target • 3rdTranche of MSUs granted in 2019 2019-2021 Absolute TSR of 131%
Paid out at 200% of target
• 2nd Tranche of MSUs granted in 2020
2020-2021 Absolute TSR of 64%
Paid out at 183% of target
• 1st Tranche of MSUs granted in 2021
20212021-2023 Absolute TSR of 33%32% Paid out at 135%Payout of 134% of target • 2nd Tranche of MSUs granted in 2022 2022-2023 Absolute TSR of (1)% Payout of 94% of target • 1st Tranche of MSUs granted in 2023 2023 Absolute TSR of 7% Payout of 98% of target |
In addition to the elements of our executive compensation program described above, weWe also provide our NEOs with limited perquisites and benefits that the Committee believes are comparable to those offered by other multinational public companies.
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DISCUSSION OF 2023 COMPENSATION COMPONENTS AND DECISIONS IMPACTING 2021 EXECUTIVE COMPENSATION The Committee aims to have base salaries at or around median pay at similarly sizedsimilar-size companies, with the substantial majority of NEO compensation consisting of incentive compensation to advance the Committee’s pay-for-performance philosophy, drivingthat delivers higher realized compensation when our financial and ESG performance is stronger and lower realized compensation when our financial and ESG performance is weaker. Base Salary Changes to NEO base salaries approved by the Committee are described in the 2023 Executive Compensation Summary. Increases in base salary for NEOs are generally based on the average merit increase given to our U.S. employees, subject to increase based on the NEO’s performance and market comparisons for positions with similar scope and responsibility. As part of the longer-term compensation approach implemented for our CEO, his base salary increased by 6% in 2021. The Committee approved base salary increases of 2.5% for our other NEOs, consistent with the average merit increase for our U.S. employees, except that Mr. Lovins’ base salary increased by 7% to be more consistent with the market. NEO base salaries at year-end 2021 were as follows: Mr. Butier – $1,200,000; Mr. Lovins – $661,260; Ms. Baker-Nel – $416,000; Mr. Stander – $569,007; and Mr. Walker – $425,375.
| | | | | | | | | | NEO BASE SALARIES | | | | | | NEO | | Executive Level | | 2023 YE Base Salary | | | | | Stander | | 1 | | $ | 1,100,000 | | | | | Butier | | 1 | | $ | 1,000,000 | | | | | Lovins | | 2 | | $ | 750,000 | | | | | Melo(1) | | 2 | | $ | 518,219 | | | | | Baker-Nel | | 3 | | $ | 490,000 | | | | | Colisto | | 3 | | $ | 456,770 | |
| (1) | Amount for Mr. Melo was converted from euros using the average monthly exchange rate for December 2023. | |
20212023 AIP Awards
The 20212023 AIP was designed to incent management to create long-term stockholder value.achieve our financial goals for the year. NEOs are not eligible for guaranteed AIP awards. AIP awards are determined for each fiscal year using the formula below. Individual modifiers for NEOs are generally capped at 100% although the Committee retains the discretion to determine higher individual modifiers to reward individualexceptional performance, including for their ESG-related achievements, up to 150%. 
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Target AIP Opportunities As a percentage of base salary, 2021 target AIP opportunities were 140% for Mr. Butier, 75% for Mr. Lovins, 60% for Mr. Stander and 50% for Ms. Baker-Nel and Mr. Walker. As part of the longer-term compensation approach implemented for our CEO, his target AIP increased from 125% of base salary. There were no other changesChanges to NEO target AIP opportunities.opportunities approved by the Committee are described in the 2023 Executive Compensation Summary.
| | | | | | | | | | NEO TARGET AIP OPPORTUNITIES | | | | | | NEO | | Executive Level | | 2023 Opportunity (% of Base Salary) | | | | | Stander | | 1 | | | 95 | %* | | | | Butier | | 1 | | | ~147 | %* | | | | Lovins | | 2 | | | 75 | % | | | | Melo | | 2 | | | ~58 | %* | | | | Baker-Nel | | 3 | | | 50 | % | | | | Colisto | | 3 | | | 50 | % |
| * | Target AIP opportunities for Messrs. Stander, Butier and Melo were prorated based on their previous opportunities of 75%, 160% and 50% of base salary, respectively, and their year-end opportunities of 135%, 120% and 60% of base salary, respectively. | |
AIP Performance Objectives and Weightings;Objectives; Target-Setting Principles The following performance objectives and weightings for the 20212023 AIP for Corporate NEOs, which were consistent with the prior year, were established by the Committee which were the same ones used for the 2020 AIP to continue incenting our NEOsthem to increasegrow sales, on an organic basis, improve adjusted EPSprofitability and generate strong free cash flow. Our CEO, CFO and CHRO participated during portions of the meetings during which the Committee reviewed and recommended performance objectives for the AIP and analyzed our performance against these objectives. | | | Avery Dennison Corporation | 2022 Proxy Statement
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For our business NEO, the Committee determined to link 75% of his AIP financial modifier to RBIS’ results and 25% to corporate results. RBIS’ performance objectives were designed to provide realized compensation only if the business improved upon its 2020 performance and delivered results consistent with delivering its 2017-2021 financial targets.
| | | | | 20212023 AIP TARGETSPERFORMANCE OBJECTIVES FOR CORPORATE NEOs
| Objective | | Description | | Linkage
| | | | Adjusted Sales Growth (20%) | | Focuses management on top-line organic growth, a key contributor to sustained long-term value creation | | | Adjusted EPS (60%) | | • Tied to total company for corporate NEOs (Butier, Lovins, Baker-Nel and Walker)
• Tied to RBIS for business NEO (Stander)
| | | | Profitability
(60%)
| | Primary driver of stockholder value creation and measure usedwe use to provide annual guidance to investors; focuses management on profitable growth and expense control | | | Adjusted Free Cash Flow (20%) | | • For corporate NEOs, based on our total company adjusted EPS
• For business NEO (as a proportion of profitability objective) based:
• 42% on total company adjusted EPS
• 58% on RBIS’ adjusted net income
| | | | Free Cash Flow
(20%)
| | Cash available after investment in our business, which we can be deployeddeploy for acquisitions, venture investments, dividends and share repurchases; focuses management on improving capital efficiency, including working capital | | • Tied to total company for corporate NEOs
• Tied to RBIS for business NEO
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The Committee determined to link the AIP financial modifier for our Solutions NEO primarily to his business’ results, based 45% on adjusted net income and 40% on adjusted free cash flow; the remaining 15% was linked to adjusted EPS. The Solutions objectives were designed to be achievable only if the business improved upon its 2022 performance and delivered results consistent with its 2023 goals. The threshold payout level for the adjusted EPS performance objective for all NEOs was set at 0%. The threshold payout level for the other two performance objectives for Corporate NEOs was set at 50%. For our Solutions NEO, the threshold payout level for the adjusted net income performance objective was set at 0% and the threshold payout level for the adjusted free cash flow performance objective was set at 50%. For all performance objectives for all NEOs, the target payout level was 100% and the maximum payout level was 200%. In setting 20212023 AIP targets for Corporate NEOs, the Committee aimed to ensure consistency with our 2017-20212021-2025 financial targets, and require improvement over the prior year, consideringgiving consideration to the factors described below.Results in 2020 were significantly impacted by COVID-19, resulting in targets and results that were significantly higher than prior years. Beginning in 2021, the Committee reduced the threshold payout level for the AIP’s profitability performance objective(s) from 50% to 0% to heighten management’s focus on improving profitability and more closely align with market practices. Target adjusted sales growth, reflecting sales growth ex. currency excluding the impact of 5.5%acquisitions completed after the targets were set, of 3.5% ($9,285M) was set aboveless than both our 2017-20212021-2025 sales growth ex. currency target of at least 4%5%+ and our 20202022 sales growth ex. currency result of 13.1% because 2022 results were largely driven by our customers building up inventory when supply chains were constrained and the pricing actions we took to address significant inflation. For 2023, we expected that we would pass some of (3.4)%.the benefit from the anticipated easing of inflation to our customers. Target adjusted EPS of $7.90$9.50 was set above the midpoint and near the high end of the annual guidance we provided to investors in February 2021 and consistent with2023. Due to anticipated inventory destocking, target was set lower than our 2017-20212021-2025 compound annual growth target of over 10%, representing an 11% increase from and 4% higher than our 2020 results.2022 result of $9.15. | | | 62 | | 2024 Proxy Statement | Avery Dennison Corporation |
Although we did not externally communicate a 2021-2025 adjusted free cash flow target, as part of our 2017-2021 financial goals, our outlook at the beginning of 2021plan for 2023 was to deliver adjusted free cash flow of at least $600 million. Our 2021 target$740 million with solid net income growth and working capital productivity, partially offset by higher planned capital expenditures and restructuring actions. Target for corporateadjusted free cash flow was 11% higher thanabove the recordadjusted free cash flow we generatedachieved in 2020, despite higher planned fixed and IT capital investments to support our future growth and profitability.2022. | | | | | | | CORPORATE 2021 AIP TARGETS VS. LONG-TERM TARGETS AND 2020 RESULTS | | | | 2017-2021 Long-Term Target | | 2020 Results | | 2021 AIP Target | | | | | Adjusted Sales Growth | | 4%+ | | (3.4)% | | 5.5% | | | | | Adjusted EPS Growth | | 10%+ | | $7.10 | | $7.90
(11% over 2020 results) | | | | | Free Cash Flow | | N/A | | $548M | | $610M
(11% over 2020 results) |
| | | | | | | | | 2023 AIP TARGETS VS. LONG-TERM TARGETS AND 2022 RESULTS | | | | 2021-2025 Long-Term Target | | 2022 Results | | 2023 AIP Target | | | | | Sales Growth Ex. Currency | | 5%+ | | 13.1% | | 3.5% ($9,285M)* | | | | | Adjusted EPS Growth | | 10% | | $9.15 | | $9.50
(4% over 2022 results) | | | | | Adjusted Free Cash Flow | | N/A | | $667M | | $740M (11% over 2022 results) | * Represents AIP target for adjusted sales growth |
Financial Modifiers AIP financial modifiers are capped at 200%. In evaluating our achievement of these performance objectives,determining financial modifiers, the Committee has the discretion to exclude the impact, positive or negative, of extraordinary items such as acquisitions and divestitures; restructuring and integration actions not included in our annual net income plan; currency translation fluctuations; changes in accounting principles, tax codes or related regulations and rulings; extraordinary events such as natural disasters, outbreaks of epidemiological disease, terrorism and war; costs related to the early extinguishment of debt and pension plan terminations; costs of litigation outside the normal course of business; and non-cash charges associated with the impairment of long-lived assets.assets such as goodwill. | | | 64
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The table below shows the 2021calculation of 2023 AIP financial modifiers. As shown, the threshold level of performance was not achieved for any of the performance objectives for Corporate NEOs or our Solutions NEO, resulting in weighted average AIP financial modifiers for our NEOs. As shown, the maximum level was exceededof 0% for all three performance objectives established for our corporate NEOs and three of the four performance objectives established for our business NEO; the fourth performance objective for our business NEO was in excess of the target level.. | | | | | | | | | | | | | | | | | | | 2021 AIP FINANCIAL MODIFIERS | | | | | | | | | | | NEO(s) | | Performance Objective | | Weighting | | Threshold
(50%) | | Target
(100%) | | Maximum
(200%) | | 2021
Actual | | Modifier | | Weighted
Average
Modifier | | | | | | | | | | Butier Lovins Baker-Nel Walker | | Total Company
Adjusted Sales Growth(1) | | 20% | | 3.0% | | 5.5% | | 9.0% | | 15.6% | | 200% | | 40% | | | Total Company
Adjusted EPS(2) | | 60% | | $7.60 | | $7.90 | | $8.60 | | $8.78 | | 200% | | 120% | | | Total Company
Free Cash Flow(3) | | 20% | | $550M | | $610M | | $730M | | $754M | | 200% | | 40% | Corporate NEO Financial Modifier | | 200% | | | | | | | | | | Stander | | Total Company
Adjusted EPS(2) | | 25% | | $7.60 | | $7.90 | | $8.60 | | $8.78 | | 200% | | 50% | | | | | | | | | | | | RBIS
Adjusted Sales Growth(4) | | 20% | | 6.0% | | 11.0% | | 15.0% | | 25.2% | | 200% | | 40% | | | | | | | | | | | | RBIS
Adjusted Net Income(4) (5) | | 35% | | $135.3M | | $147.6M | | $162.3M | | $177.6M | | 200% | | 70% | | | | | | | | | | | | | RBIS
Free Cash Flow(4) (6) | | 20% | | $133M | | $159M | | $212M | | $175M | | 130% | | 26% | Business NEO Financial Modifier | | 186% |
| | | | | | | | | | | | | | | | | | | | 2023 AIP FINANCIAL MODIFIERS | | | | | | | | | | | | | Performance Objective | | Weighting | | Threshold(1) | | Target
(100%) | | Maximum
(200%) | | 2023
Actual | | Modifier | | Weighted Average
Modifier | Mr. Stander Mr. Butier Mr. Lovins Ms. Baker-Nel Mr. Colisto | | Adjusted Sales Growth(3) | | 20% | | $9,059M | | $9,285M | | $9,550M | | $8,285M | | 0% | | 0% | | | Adjusted EPS(4) | | 60% | | $9.00 | | $9.50 | | $10.00 | | $7.86 | | 0% | | 0% | | | Adjusted Free Cash Flow(5) | | 20% | | $670M | | $740M | | $800M | | $588M | | 0% | | 0% | Corporate NEO Financial Modifier | | | | | | | | | | | | | | 0% | Mr. Melo(2) | | Adjusted EPS(4) | | 15% | | $9.00 | | $9.50 | | $10.00 | | $7.86 | | 0% | | 0% | | | Solutions Adjusted Net Income(6)(7) | | 45% | | $232.0M | | $244.2M | | $268.6M | | $155.5M | | 0% | | 0% | | | Solutions Adjusted Free Cash Flow(7) | | 40% | | $123M | | $153M | | $183M | | $40M | | 0% | | 0% | Solutions NEO Financial Modifier | | | | | | | | | | | | | | 0% |
| | (1) | Total Company Adjusted Sales Growth refers to reported sales growth of 20.6%,EPS and adjusted net income thresholds set at 0%; thresholds for the impact of currency translation of (3.4%), acquisitions and product line divestitures of (3.1%) and impact of 53rd week in 2020 of 1.4%all other performance objectives set at 50%. Total does not sum due to rounding.
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| | (2) | Total Company AdjustedPerformance objectives and weightings for Mr. Melo reflect those tied to his service as Solutions President for the last nine months of the year. His performance objectives for the first three months of the year when he served as SVP/GM, Avery Dennison Smartrac, were adjusted EPS refers(weighted 15%), enterprise Intelligent Labels sales (weighted 40%), enterprise Intelligent Labels EBIT (weighted 25%); enterprise Intelligent Labels adjusted free cash flow (weighted 10%); and Solutions adjusted free cash flow (weighted 10%). Sales, EBIT and adjusted free cash flow targets and results at the business unit level are not disclosed due to their competitively sensitive nature. Additionally, the Committee determined that the financial modifier for all NEOs should be zero given 2023 performance.
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| (3) | Reflects reported net sales of $8,364.3 million, removing the $5.1 million impact of foreign currency translation since the target was set and the $74.4 million impact of new acquisitions. |
| (4) | Reflects reported net income per common share, assuming dilution, of $8.83,$6.20, adjusted for restructuring charges and other items of $0.08$1.70 and removing the ($0.04) impact of acquisitions completed sinceafter the target was set of ($0.13).targets were set. |
| | (3)(5) | Total Company Free Cash Flow refers toReflects net cash provided by operationsoperating activities of $1,046.8$826.0 million, minus purchases of property, plant and equipment of $255.0$265.3 million and software and other deferred charges of $17.1$19.8 million, plus proceeds from sales of property, plant and equipment of $1.1$1.0 million, plus proceeds from insurance and sales (purchases) of investments, net, of $3.1$1.9 million, minus the impactplus proceeds from company-owned life insurance policies of free$48.1 million, plus payments for certain acquisition-related costs of $5.3 million, less cash flow from new acquisitions net of acquisition costs, completed since the targets were set of $25.1$9.3 million.
|
| | (4)(6) | Adjusted sales growth,net income refers to income before taxes, tax-effected at the adjusted tax rate, and adjusted for tax-effected restructuring charges and other items. Adjusted tax rate is the full-year GAAP tax rate, adjusted to exclude certain unusual or infrequent events that are expected to significantly impact that rate, such as effects of certain discrete tax planning actions, impacts related to enactments of comprehensive tax law changes, and other items. |
| (7) | Adjusted net income and adjusted free cash flow measures at the segment level are internal metrics. These metrics that exclude or make simplifying assumptions for items that cannot be allocated precisely by segment, such as interest and income tax expense,expenses, and related balance sheet accounts, such as deferred tax assets and liabilities, income tax payables and receivables, and short- and long-term debt. Certain balance sheet accounts such as pension and other postretirement benefits and insurance that are generally managed at the corporate level, as well as the impact of foreign currency translation, are also excluded from the calculation of these metrics atmeasures for the segment level.segments. In certain limited circumstances, one-time items may be excluded from segment adjusted net income. The impact of intercompany sales is included in segment metrics.measures. |
| | | Avery Dennison Corporation | 2024 Proxy Statement | (5) | Adjusted net income refers to income before taxes, tax-effected at the adjusted tax rate, and adjusted for tax-effected restructuring charges and other items, as well as the impact of acquisitions completed since the targets were set. Adjusted tax rate is the full-year GAAP tax rate, excluding certain unusual or infrequent events that are expected to significantly impact the GAAP tax rate, such as effects of discrete tax structuring and planning actions.63
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| (6) | RBIS free cash flow payout reflects impact of corporate capital specifically allocated to support future RBIS growth.
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NEO Performance Evaluations and Individual Modifiers Our NEOs are evaluated on their individual performance for the year. The Committee approves our CEO’sapproved the strategic objectives of our then-CEOand then-COO,our CEO approvesthen-COO approved the goals of our Solutions NEO and our then-CEO approved the goals of the other NEOs, in each case in February with2023. In February 2024, the Committee evaluated the performance of all NEOs evaluated in February of the following year. The Committee evaluates our CEO’s performanceCEO against his predetermined strategic objectives; for our NEOs other than the CEO,NEOs, this assessment considersconsidered the totality of their performance. While the goal-setting process in 2021 was consistent with prior years, ensuring the safety and well-being ofour employees and navigating the uncertain macroeconomic environment caused by COVID-19 and related supply chain, labor, freight and inflationary challenges to deliver for our customers were the primary objectives for all our leaders who continually adjusted our COVID-19 response in the face of continuously evolving health information, governmental regulations and economic conditions.
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Individual modifiers for all participants are capped at 150%, subject to the total cap on AIP awards of 200%. Although it retains the discretion to determine individual modifiers of up to 150%, the Committee has determined that the individual modifiers for our CEO and other NEOs should generally be capped at 100%. The individual modifiers for all NEOs for 2021 were 100%. The Committee evaluated the 2023 performance of our CEO’s annual performance,CEO, giving consideration to his success inleadership navigating the impactlower demand environment driven primarily by downstream inventory destocking; our financial results for the year in which we did not deliver our annual operating plan or achieve the threshold levels of COVID-19 on our employees and customers, constrained raw material, freight and labor availability, and persistent inflation duringperformance established for the year;2023 AIP; his performance against his predetermined strategic objectives established in February 2021;2023; and the self-assessment of his performance self-assessment discussed with the Committee in February 2022.2024. The Committee determined the individual modifier for our CEO based on its assessment of his performance.The Committee Chair, together with our Lead Independent Director, discussed with In addition to navigating the dynamic and challenging environment, our CEO had the feedback from discussions by the Committee and our full Board regarding his 2021 performance. For 2021, the Committee evaluated the performance of our CEO against his strategic objectives for 2023 shown below with the year, determining that he substantially achieved or exceeded them, as shown in the chart below. In contrast to prior years, our CEO’sCommittee’s evaluation of his performance. These strategic objectives for 2021 had nodid not have assigned weightings, reflecting the Committee’s expectation that Mr. Butier delverhe deliver on all fronts given the uncertain economic environment as a result of COVID-19.fronts.
| | | 2023 CEO PERFORMANCE EVALUATION | | Strategic Objective | | Evaluation | | | CEO readiness– Continue progressing Board-aligned readiness plan; engage in quarterly earnings process; and lead strategic planning process | | Progressed readiness plan consistent with Board expectations; engaged in quarterly earnings process beginning in 4Q22, leading process starting in 2Q23; and led 2023 strategic planning process across business segments and enterprise-wide, including related discussions with Board | | | Drive outsized growth in high-value categories– Deliver above-average organic growth rate in LGM’sMaterials’ graphics and specialty product categories;labels businesses; achieve targeted percentagespercentage of growth in Solutions’ external embellishments business; deliver successful Solutions’ shelf edge label productivity pilot with large retailer; and reach $1 billion in RBIS and inenterprise-wide Intelligent Labels; and manage IHM through challenging macroeconomic environmentLabels sales | | Significantly grew
In challenging lower volume environment driven primarily by inventory destocking, delivered modest organic growth in Materials’ graphics and decline in Materials’ specialty product categorieslabels businesses, in LGM; substantially exceeded growth targetseach case in RBIS’line with overall market performance; grew Solutions’ external embellishments but below targeted percentage given declining apparel import environment; progressed Solutions’ shelf edge label productivity pilot consistent with expectations; and, although its enterprise-wide sales target was not reached, delivered low-double digit growth in Intelligent Labels; and managed IHM through challenging macroeconomic environment, with significant improvement in Industrial and Automotive market segments compared to prior yearLabels | | | Grow profitably in our base businesses – Manage market segmentEnhance share position in LGM’s regional businesses; protectMaterials’ North America and Europe, Middle East and North Africa (EMENA) regions and maintain share position in RBIS’other Materials regions and base productSolutions categories (adjusted for RFID);Intelligent Labels) | | Enhanced share position in Materials’ North America and accelerate near-termEMENA regions and base Solutions categories (adjusted for Intelligent Labels), while also maintaining share position in other Materials regions | | | Focus relentlessly on productivity – Deliver targeted amount of savings from restructuring actions and achieve productivity targets in IHMboth Materials and Solutions | | Managed LGM regional share positions wellExceeded targeted amount of savings from restructuring actions by ~50%, having accelerated certain actions given constrained raw material availabilityweaker-than- anticipated demand; and inflationary environment; expanded shareachieved productivity targets in RBIS’ base business with sales substantially increasing over prior year;both Materials and although its margins expanded in recent years, IHM did not achieve targeted 2021 operating marginSolutions
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| | | Focus relentlessly on productivity – Achieve targeted restructuring savings in LGM and RBIS and execute designated significant projects in each reportable segment64
| | Significantly exceeded targeted restructuring savings and successfully executed designated significant projects, realizing savings in excess of target2024 Proxy Statement | Avery Dennison Corporation
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| | | 2023 CEO PERFORMANCE EVALUATION | | Strategic Objective | | Evaluation | | | Allocate capital effectively–Invest in capital expenditures within targeted range to enable future growth;of capital expenditures; continue to build M&A pipeline and integrate acquisitions;driving operating working capital productivity; invest targeted amount in accelerated growth platforms;platforms of Intelligent Labels, innovation and repurchase shares as appropriate digital infrastructure; invest targeted amount in Intelligent Labels capital expenditures, including achieve milestones related to key strategic project; and continue building M&A pipeline and integrating acquisitions | | Invested $270+ million in fixed and IT
Given lower demand driven primarily by downstream inventory destocking, appropriately reduced capital expendituresspending below low end of targeted range, while still investing at level consistent with prior year to enable futuresupport organic growth; improved operating working capital; completed 3 acquisitions, made 3 venturecapital productivity; appropriately reduced spending on growth investments, and continuedwhile continuing to ensure robust M&A pipeline; exceeded target for investmentstrategically invest in accelerated growth platforms;platforms of Intelligent Labels, innovation and repurchased $180+ million in sharesdigital infrastructure; appropriately delayed strategic Intelligent Labels project, achieving milestones consistent with adjusted timeline; and completed acquisitions of Thermopatch, Lion Brothers and Silver Crystal, expanding Solutions’ external embellishments portfolio | | | Lead in an environmentally and socially responsible manner– Progress innovation strategy and deployment program;program with emphasis on environmental sustainability and digital solutions; continue to reducereducing Scope 1 and 2 GHG emissions; developemissions and begin executing Scope 3 emissions reduction plan; deploy accelerated roadmap to enable greater recyclability of consumer packaged goodsplastics in LGM;Materials ecosystem; and further increaseenhance leadership diversity; and expand ESG reporting and transparency, improving ESG rating agency scores diversity | | Developed scorecard
Progressed innovation strategy and defined innovation pipelinedeployment program, including with respect to continue progressing innovation strategy; set bolderenvironmental sustainability and digital solutions; significantly reduced Scope 1 and 2 GHG emissions and began executing plan to achieve 2030 targets forScope 3 GHG emissions reduction including new Scope 3 targettarget; completed gap assessment and net zero ambition by 2050; advanced two strategic innovation platforms focused on material circularitydeveloped accelerated roadmap to enable greater recyclability of plastics in Materials ecosystem; and, waste reduction/elimination;while manager+ gender diversity percentage of 36% was unchanged from prior year, increased representation of women in manager-level and above roles to 35% and continued to advance DE+I for members of other underrepresented communities; and published second integrated report and 2021 ESG Downloads, with improved scores from key ESG rating agenciesat VP+ level | | | Refine/Execute leadership succession plansuccession/development – Progress CEO succession to ensure ready-now successors over multiple time horizons, and refine/execute executive leadership development plans | | Progressed CEO succession strategy, ensuring ready-now successors over multiple time horizons, and refined and executedRefine/Execute development plans for leadership, resultingwith particular focus on Materials and Solutions leaders, and enhance digital leadership
| | Executed leadership succession transitions in seasoned executives being promoted to serve as President/COOMaterials and leadersSolutions; advanced succession and development plans of RBIS Apparel Solutionsother members of Company Leadership Team; and IHM businessesbegan strengthening digital leadership | | | CEO Individual Modifier Based on Evaluation
| | 100% |
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The Committee Chair, together with our Lead Independent Director, separately discussed with our CEO and our Executive Chairman the feedback from discussions of the Committee and our full Board regarding their 2023 performance.Our CEO recommended to the Committee the individual modifiers for our other NEOs based on his assessment of their 20212023 performance. The Committee considered our CEO’s assessments and recommendations, retaining the discretion to approve individual modifiers for them different than what our CEO had recommended. Other than discussing with our CEO their performance against their individual performance, plans, our other NEOs played no role in their compensation determinations. In determining the individual modifiers for our other NEOs, the Committee noted the highlights of their 20212023 performance describedshown below. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 65 |
Mr. Lovins – Led our global finance function, including overseeing our strong controllership environment and our tax, treasury and operational finance teams; ensuring we delivered 2021 results that exceeded our annual goals for adjusted EPS and free cash flow while continuing to make progress toward our long-term financial targets and sustainability goals, despite the challenging macroeconomic environment caused by persistent inflation and supply chain disruptions; and ensuring our balance sheet remained strong as we continued to invest in our businesses, both organically and through acquisitions, while also returning cash to stockholders. In addition, Mr. Lovins continued to serve
| • | | Led enterprise finance function, including overseeing controllership, tax, treasury, financial planning and operational finance teams |
| • | | Critical support to CEO transition on financial planning and reporting, investor relations and other key finance areas |
| • | | Drove significant productivity benefits to mitigate impact of lower demand driven primarily by inventory destocking |
| • | | Delivered strong adjusted free cash flow and adjusted free cash flow conversion greater than 100% through improved working capital |
| • | | Enhanced macro environment analytics and increased forecasting rigor |
| • | | Continued driving strong global controllership |
| • | | Advanced finance system standardization through enterprise resource planning rollouts across business units |
| • | | Continued driving ongoing scenario planning to ensure achievement of long-term financial targets |
| • | | Oversaw continued expansion of sustainability reporting |
| • | | Maintained strong balance sheet, investing organically and acquiring three companies, while also returning cash to stockholders through share repurchases and a growing dividend |
| • | | Ensured effective capital allocation to deliver strong returns and EVA growth over long term |
Served as the interim leader of our IHM business through the end of 2021, achieving strong top-line and operating income growth, and oversaw the continued expansion of our ESG disclosures. Mr. Lovins also served as a member of theADF Board of Trustees of the Avery Dennison Foundation (ADF). Mr. Melo | • | | Successfully transitioned to Solutions President role, improving cross-business collaboration and advancing customer-centricity |
| • | | Delivered low-double-digit growth in Intelligent Labels, expanding into new segments with significant wins in Logistics and Food and executing world’s largest single-wave RFID deployment |
| • | | Navigated challenging low volume year, executing cost-reduction initiatives to improve profitability and optimize cost-to-serve |
| • | | Expanded high-value external embellishments capabilities with three strategic acquisitions, enabling significant growth in team sports |
| • | | Evolved and led Digital Advisory Council, informing continued expansion of digital capabilities and building on atma.io connected product cloud platform |
| • | | Expanded Solutions’ portfolio to include more products meeting Sustainable ADvantage Standard and improved recycling of waste |
Ms. Baker-Nel – Led our global human resources, communications and community investment functions, prioritizing the safety, health and well-being of our teams as we continued navigating the impacts of COVID-19; facilitating senior leadership succession, including the appointments of our new President/COO and the new leaders of our RBIS Apparel and IHM businesses; developing our go-forward DE+I strategy and increasing transparency on our progress; onboarding approximately 1,400 new team members from the three acquisitions we completed in 2021; formalizing the guiding principles around the future of work in support of greater workplace flexibility and effectiveness; and fostering employee engagement and enhanced dialogue around key areas of talent management such as DE+I and employee well-being. Ms. Baker-Nel also served
| • | | Led enterprise human resources, communications and community investment functions |
| • | | Guided CEO and segment leader transitions and advanced Company Leadership Team succession plans |
| • | | Renewed focus on senior leadership effectiveness and complementarity, driving greater clarity on accountability |
| • | | Facilitated Board refreshment planning and Governance Committee’s new director search process |
| • | | Deployed digitally-enabled employee listening tool, enhancing insights and analytics and establishing new baselines for employee engagement and inclusion |
| • | | Finalized enterprise competency model to serve as consistent global standard against which we hire, develop, promote and reward talent |
| • | | Published inaugural DEI Synopsis report to enhance social sustainability transparency and progressed pay equity and transparency |
Served as a member of theADF Board of Trustees of ADF. Mr. Stander – Led our global RBIS business through another challenging year, ensuring continued elevation of global service and flexibility for customers while delivering record growth and margin expansion; investing in and continuing to grow the high-value categories of Intelligent Labels and external embellishments; and ensuring the safety of an engaged and diverse global team. In addition, Mr. Stander led our successful acquisition of Vestcom, further accelerating our position in high-value categories, and continued leading our enterprise-wide Sustainability Council, overseeing our progress toward our 2025 sustainability goals, developing and beginning to track progress toward our 2030 sustainability goals, and implementing enhanced ESG reporting protocols. Mr. Stander also served as a member of the Board of Trustees of ADF.Colisto
Mr. Walker – Led our global legal function, advising our Board and management on acquisitions and venture investments, litigation, intellectual property and footprint optimization projects; overseeing our Values & Ethics and risk management functions, securities and governance work, and government relations efforts; implementing a new functional operational model to accelerate productivity, standardize processes and deploy best practices; developing strategic priorities for his department that align with our company’s values and strategies; designing and executing projects to progress the department’s strategic priorities of business risk optimization, people and culture, operational efficiency, and sustainability; and leading training and career development sessions to enhance engagement across his global team.
| • | | Led enterprise IT function, including management of IT infrastructure, cybersecurity, data analytics and business software initiatives |
| • | | Delivered strong performance in challenging environment, managing increasing cybersecurity threats and accelerating IT modernization to drive innovation and growth |
| • | | Enhanced digitizing business processes, delivering enterprise resource planning systems and enabling improved efficiency and data-driven decision-making |
| • | | Advanced digital customer engagement platforms, improving customer experience and business resilience |
| • | | Developed technology investment allocation strategy to maximize returns and support future growth |
| • | | Educated global teams on artificial intelligence, identifying most promising use cases and unlocking potential avenues for process innovation and efficiency |
| • | | Served as executive sponsor of women in leadership, advancing DEI by empowering female leaders |
Based on these assessments and after giving consideration to the recommendations of our CEO (other than with respect to himself), the Committee approved individual modifiers of 100% for all NEOs.NEOs, which had no impact on their AIP payouts given the 0% financial modifiers. | | | Avery Dennison Corporation | 2022 Proxy Statement66
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AIP Awards OurAs shown below, our NEOs received theno AIP awards shown in the table below for 2021, based on their respective year-end base salary, AIP opportunity, financial modifier and individual modifier.2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 AIP AWARDS | | | | | | | | | NEO | | 2021 YE
Base Salary | | AIP
Opportunity | | Target
AIP Award | | Financial
Modifier | | Individual
Modifier | | AIP
Award | Butier | | | $ | 1,200,000 | | | | | 140 | % | | | $ | 1,680,000 | | | | | 200 | % | | | | 100 | % | | | $ | 3,360,000 | | Lovins | | | $ | 661,260 | | | | | 75 | % | | | $ | 495,945 | | | | | 200 | % | | | | 100 | % | | | $ | 991,890 | | Baker-Nel | | | $ | 416,000 | | | | | 50 | % | | | $ | 208,000 | | | | | 200 | % | | | | 100 | % | | | $ | 416,000 | | Stander | | | $ | 569,007 | | | | | 60 | % | | | $ | 341,404 | | | | | 186 | % | | | | 100 | % | | | $ | 635,011 | | Walker | | | $ | 425,375 | | | | | 50 | % | | | $ | 212,687 | | | | | 200 | % | | | | 100 | % | | | $ | 425,374 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2023 AIP AWARDS | | | | | | | | | | | 2023 YE
Base Salary | | Target AIP
Opportunity | | Target
AIP Award | | Financial
Modifier | | Individual
Modifier | | AIP
Award | Stander(1) | | | $ | 1,100,000 | | | | | 95 | % | | | $ | 1,045,000 | | | | | 0% | | | | | 100% | | | | $ | 0 | | Butier(2) | | | $ | 1,000,000 | | | | | ~147 | % | | | $ | 1,466,667 | | | | | 0% | | | | | 100% | | | | $ | 0 | | Lovins | | | $ | 750,000 | | | | | 75 | % | | | $ | 562,500 | | | | | 0% | | | | | 100% | | | | $ | 0 | | Melo(3)(4) | | | $ | 518,219 | | | | | ~58 | % | | | $ | 297,976 | | | | | 0% | | | | | 100% | | | | $ | 0 | | Baker-Nel | | | $ | 490,000 | | | | | 50 | % | | | $ | 245,000 | | | | | 0% | | | | | 100% | | | | $ | 0 | | Colisto | | | $ | 456,770 | | | | | 50 | % | | | $ | 228,385 | | | | | 0% | | | | | 100% | | | | $ | 0 | |
| (1) | Mr. Stander’s target AIP opportunity was prorated based on his opportunity as COO of 75% of base salary for the first eight months of the year and his opportunity as CEO of 135% of base salary for the last four months of the year. | |
| (2) | Mr. Butier’s target AIP opportunity was prorated based on his opportunity as CEO of 160% of base salary for the first eight months of the year and his opportunity as Executive Chairman of 120% of base salary for the last four months of the year. | |
| (3) | Amounts for Mr. Melo were converted from euros using the average monthly exchange rate for December 2023. | |
| (4) | Mr. Melo’s target AIP opportunity was prorated based on his opportunity as SVP/GM, Avery Dennison Smartrac, of 50% of base salary for the first three months of the year and his opportunity as Solutions President, of 60% of base salary for the last nine months of the year. | |
20212023 GRANTS OF LTI AWARDS
Our LTI program provides variable incentive compensation to enhance alignment of executive interests with stockholder interests and drive long-term value creation. The annual and special LTI awards granted to NEOs in 20212023 were fully performance-basedperformance based and delivered through the equity vehicles described below. 50% in PUs that cliff-vest at the end of a three-year period subject to the achievement of the respective cumulative EVA and relative TSR performance objectives established for the award 50% in MSUs that vest at the end of the one-, two-, three- and four-year performance periods, with an average performance period of 2.5 years, based solely on our absolute TSR
| • | | 50% in MSUs that vest at the end of the 1-, 2-, 3- and 4-year performance periods, with an average performance period of 2.5 years, based on our absolute TSR |
Annual LTI awards were granted on March 1, 2021.2023. Actual amounts, if any, realized by our NEOs from the vesting of these awards will be based on our performance, as well as our stock price at the time of vesting. The Committee does not offset the loss or gain of prior year grants in determining current year grants, as doing so would compromise the intended risk/reward nature of these incentives. Special LTI awards may be granted by the Committee for hiring, promotion, retention and/orand other incentive purposes, with the awards granted on the first day of the last month of the quarter following the event or decision to make a grant. For retention purposesThe four special LTI awards approved by the Committee in 2023 are described in the 2023 Executive Compensation Summary and to further incent Mr. Stander to contribute to our total company – including by driving our ESG progress as leader of our enterprise-wide Sustainability Council and continuing to transform our RBIS business – Mr. Stander was grantedshown in a special one-time award of PUs with a grant date fair value of approximately $500,000 based 50% on our relative TSR and 50% of total company EVA, the same performance objectives, weightings and targets, and over the same performance period, as the 2021-2023 PUs granted to our corporate NEOs. Target LTI Opportunity
As a percentage of base salary, the 2021 target LTI opportunities for our NEOs were 585% for Mr. Butier; 250% for Mr. Lovins; 180% for Mr. Stander; and 120% for Ms. Baker-Nel and Mr. Walker. Target LTI award opportunities represented 71% and 52%, respectively, of our CEO’s and other NEOs’ average performance-based incentive compensation. As part of the longer-term compensation approach implemented for our CEOchart later in 2021, Mr. Butier’s target LTI opportunity increased from 475% of base salary.this section.
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Target LTI Opportunity
Changes to NEO target LTI award opportunities approved by the Committee are described in the 2023 Executive Compensation Summary. | | | | | | | | | | | | | NEO 2023 TARGET LTI OPPORTUNITIES | | | | | NEO | | Executive Level | | LTI Opportunity | | | | Stander(1) | | | | 1 | | | | | 300% | | | | | Butier(2) | | | | 1 | | | | | 700% | | | | | Lovins | | | | 2 | | | | | 250% | | | | | Melo(3) | | | | 2 | | | | | 180% | | Baker-Nel | | | | 3 | | | | | 120% | | | | | Colisto | | | | 3 | | | | | 120% | |
| | (1) Mr. Stander’s target LTI opportunity reflects opportunity as COO since his role change occurred after the March 1, 2023 grant date. The Committee preliminarily aligned in May 2023 to increase Mr. Stander’s target LTI opportunity to 550% effective March 1, 2024, subject to its review of market pay for similar roles at that time. (2) When he was serving as CEO, Mr. Butier’s target LTI opportunity was increased from 585% of base salary to 700% of base salary effective March 1, 2023 to be more consistent with market data for companies with revenues of $10 billion and to acknowledge his delivery of top-quartile TSR during his tenure. At the time of his role change, the Committee had not determined his target LTI opportunity as Executive Chairman. (3) Mr. Melo’s target LTI opportunity reflects opportunity as Solutions President, since his role change effective April 1, 2023 had been determined before the March 1, 2023 grant date. |
Performance Units (PUs) PUs cliff-vest in shares of our common stock after the end of a three-year period at threshold (50% payout), target (100% payout) and maximum (200% payout) levels based on our achievement of the performance objectives established for the award. PUs do not accrue dividend equivalents and are not counted for purposes of our stock ownership policy. The Committee established the following performance objectives for the 2021-20232023-2025 PUs. The Committee believes that these objectives align executive compensation with the long-term interests of our stockholders because delivering cumulative EVA and strong TSR relative to peer companies reflects the value we create for our investors. Cumulative EVA, weighted 50% for our corporate NEOs (based on our total company) and 75% for our business NEO (based on RBIS’ cumulative EVA). EVA is a measure of financial performance calculated by deducting the economic cost associated with the use of capital (weighted average cost of capital multiplied by average invested capital) from after-tax operating profit, with the cost of capital fixed over the performance period. The Committee established cumulative EVA targets for our corporate NEOs consistent with our 2017-2021 financial goals for earnings growth and ROTC and our primary objective of delivering superior TSR, with the target payout at or slightly above the midpoint of these targets and the maximum payout exceeding the high end of these targets. The cumulative EVA target for our business NEO focused on RBIS’ EVA change compared to the prior three-year period, with the target payout at the top end of its 2017-2021 targets. In contrast to the AIP, cash restructuring charges – which include severance and related costs and exclude asset impairment charges and lease and other contract cancellation costs – are included in EVA calculations as the Committee expects these investments to generate a return over the three-year performance period (in contrast to the AIP, which measures performance over one year). Whether linked to corporate or business results, the 2021-2023 cumulative EVA targets require continued improvement in financial performance.
| • | | Cumulative EVA, weighted 50% for Corporate NEOs (based on company EVA) and 75% for our Solutions NEO (based on segment EVA). EVA is calculated by deducting the economic cost associated with the use of capital (weighted average cost of capital multiplied by average invested capital) from after-tax operating profit, with the cost of capital fixed over the performance period. The Committee established EVA targets for Corporate NEOs consistent with our 2021-2025 financial goals for earnings growth and ROTC and our primary objective of delivering superior TSR, with the target payout set at or a near the high end of these goals and the maximum payout exceeding the high end of these goals. EVA targets for our Solutions NEO focused on the business’ EVA change compared to the prior three-year period, with the cost of capital fixed over the performance period. Whether linked to company or business results, achievement of 2023-2025 cumulative EVA targets requires significant improvement in our financial performance. |
| | • | | Relative TSR compared to an objectively determined peer group of companies, weighted 50% for our corporateCorporate NEOs and 25% for our businessSolutions NEO. TSR measures the return that we provide to our stockholders, including stock price appreciation and dividends paid (assuming reinvestment of dividends). Consistent with its pay-for-performance philosophy, theThe Committee designed the TSR objective to provide realized compensation only if our stockholder value creation compares favorably relative to the designated peer group.group, the names of which are listed under Peer Groups later in this CD&A. The Committee set the threshold payout at TSR at the 40th percentile, target payout at TSR at the 50th percentile and maximum payout at TSR at the 80th percentile, which were the same levels used for the 2020-20222022-2024 PUs. Payouts for the relative TSR component of PUs are capped at 100% of target if our absolute TSR is negative for the 2021-2023 performance period.negative. In assessing the rigor of the TSR objectives, the Committee noted that our stock price and TSR had significantly increased in the second half of 2020; as a result, performing at the median relative to our peers over the 2021-20232023-2025 period would represent solid performance particularly in light of continued uncertainty regarding the impact of COVID-19, as well as our relatively high exposure to the impact ofanticipated headwinds from foreign currency translationfluctuations, inflationary pressures and the geopolitical and trade-related uncertainty at that time. |
Consistent with the 2020-2022 PUs and with the advice of WTW, to benchmark TSR, the Committee utilized a peer group† comprised of U.S. companies (i) in similar industries based on their classification in one of five GICS groups (diversified chemicals, specialty chemicals, metal and glass containers, paper packaging, and paper products) and (ii) with revenues during the last 12 months of $1 billion to $20 billion. Applying this same criteria, the peer group changed from the prior year as follows: (A) Pactiv Evergreen Inc. was added following a merger; (B) Quaker Chemical Corporation was added because its GICS classification changed; and (C) Ferro Corporation and GCP Applied Technologies were deleted because each of their last 12 months’ revenues was less than $1 billion.
† | The following companies comprised the peer group for the 2021-2023 PUs at the end of fiscal year 2021: Albermarle Corporation; AptarGroup, Inc.; Ashland Global Holdings Inc.; Axalta Coating Systems Ltd.; Avient Corporation (formerly known as PolyOne Corporation); Ball Corporation; Berry Global Group, Inc.; Celanese Corporation; Clearwater Paper Corporation; Crown Holdings, Inc.; Eastman Chemical Company; Ecolab Inc.; Ecovyst Inc. (formerly PQ Group Holdings Inc.); Element Solutions Inc.; Graphic Packaging Holding Company; Greif, Inc.; H.B. Fuller Company; Huntsman Corporation; Ingevity Corporation; Innospec Inc.; International Flavors & Fragrances Inc.; Kraton Corporation; Minerals Technologies Inc.; NewMarket Corporation; O-I Glass Inc.; Packaging Corporation of America; Pactive Evergreen; PPG Industries, Inc.; Quaker Chemical Corporation; Rayonier Advanced Materials Inc.; RPM International Inc.; Schweitzer-Maudit International Inc.; Sealed Air Corporation; Sensient Technologies Corporation; Silgan Holdings Inc.; Sonoco Products Company; Stepan Company; The Chemours Company; The Sherwin-Williams Company; Valhi, Inc.; Verso Corporation; and WestRock Company.supply chain challenges.
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| | | | | | | | 2023-2025 PUs | | 2021-2023 PUs | | | | | NEONEOs | | Performance Objectives | | Weighting | | | | |  | | Butier
LovinsStander
Butier Lovins Baker-Nel
Walker Colisto | | Total Company Cumulative EVA
Relative TSR | | 50% 50% | | | | | Stander
| | RBIS Cumulative EVAMelo | | 75% | | Solutions Cumulative EVA Relative TSR | | 75% 25% |
Market-leveraged Stock Units (MSUs) MSUs are performance-based LTI awards tied to our absolute TSR performance, which represents appreciation in our stock price and dividends paid. TSR. MSUs are designed to achieve the Committee’s combined objectives of retention and higher incentive compensation driven by stock price appreciation. appreciation. MSUs vest based on ourthe performance over periods as shown in the graph below, with the number of shares paid out at vesting based solely on our absolute TSR and the value realized reflecting both the number of shares paid out as well as our stock price at the time of vesting. Although dividend equivalents accrue on MSUs during the performance period, they are earned and paid only at vesting; if the threshold level of performance is not achieved, any dividend equivalents accrued during the performance period are cancelled.cancelled with the tranche of awards subject to vesting. The performance criteria for MSUs are shown in the chart below. Every 1% increase in TSR above 10% increases the payout by 1.54%. The Committee determined to maintain the same MSU performance objectives for 2021 given that the program is accomplishing2023 because they are achieving the Committee’s goal of incenting strong performance and value creation. | | | | | | | | | 
| | | | MSU PERFORMANCE CRITERIA | | | | | | | Absolute TSR | | Unit Payout | | | | | Cancelled | | <(15)% | | 0% | | | | | Threshold | | (15)% | | 85% | | | | | Target | | 10% | | 100% | | | | | Above Target | | >10% | | >100% | | | | | Maximum | | 75% | | 200% |
Annual LTI Awards Our NEOs were granted the annual LTI awards shown in the table below in February 2021. Except as noted, theMarch 2023. The number of awards granted was based on the respective NEO’s base salary at year-end 2020 2022 and target 2023 target LTI opportunity. Consistent with our historical practice, theThe number of PUs granted for the EVA component was based on the average closing price for shares of our common stock during the first 10 trading days of February 20212023; the numbers of PUs granted for the relative TSR component and the number of MSUs granted waswere based on a grant date fair value using the Monte-Carlo simulation method described in footnote (2) of the 20212023 Summary Compensation Table. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 ANNUAL LTI AWARDS | | | | | | | | | | NEO | | 2020 YE
Base Salary | | Target LTI
Opportunity | | PUs (#) | | PUs ($) | | MSUs (#) | | MSUs ($) | | LTI Value | Butier(1) | | | $ | 1,200,000 | | | | | 585 | % | | | | 17,886 | | | | $ | 3,537,766 | | | | | 16,245 | | | | $ | 3,509,903 | | | | $ | 7,047,669 | | Lovins | | | $ | 618,000 | | | | | 250 | % | | | | 3,936 | | | | $ | 778,523 | | | | | 3,575 | | | | $ | 772,438 | | | | $ | 1,550,961 | | Baker-Nel | | | $ | 400,000 | | | | | 120 | % | | | | 1,223 | | | | $ | 241,884 | | | | | 1,111 | | | | $ | 240,066 | | | | $ | 481,950 | | Stander(2) | | | $ | 555,129 | | | | | 180 | % | | | | 2,750 | | | | $ | 505,487 | | | | | 2,312 | | | | $ | 499,531 | | | | $ | 1,005,018 | | Walker | | | $ | 415,000 | | | | | 120 | % | | | | 1,269 | | | | $ | 251,026 | | | | | 1,152 | | | | $ | 248,901 | | | | $ | 499,927 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2023 ANNUAL LTI AWARDS | | | | | | | | | | | | 2022 YE Base Salary | | Target LTI
Opportunity | | PUs (#) | | PUs ($) | | MSUs (#) | | MSUs ($) | | LTI Value | Stander | | | $ | 700,000 | | | | | 300% | | | | | 5,623 | | | | $ | 1,021,274 | | | | | 5,454 | | | | $ | 1,050,095 | | | | $ | 2,071,369 | | Butier | | | $ | 1,200,000 | | | | | 700% | | | | | 22,493 | | | | $ | 4,085,287 | | | | | 21,816 | | | | $ | 4,200,125 | | | | $ | 8,285,412 | | Lovins | | | $ | 700,000 | | | | | 250% | | | | | 4,686 | | | | $ | 851,096 | | | | | 4,545 | | | | $ | 875,058 | | | | $ | 1,726,154 | | Melo(1) | | | $ | 416,465 | | | | | 180% | | | | | 2,401 | | | | $ | 426,661 | | | | | 2,311 | | | | $ | 445,020 | | | | $ | 871,681 | | Baker-Nel | | | $ | 457,600 | | | | | 120% | | | | | 1,471 | | | | $ | 267,167 | | | | | 1,426 | | | | $ | 274,604 | | | | $ | 541,771 | | Colisto | | | $ | 441,324 | | | | | 120% | | | | | 1,418 | | | | $ | 257,543 | | | | | 1,375 | | | | $ | 264,816 | | | | $ | 522,359 | |
| | (1) | For Mr. Butier, the Committee determined to use his increasedMelo’s base salary approved in February 2021 to give effect towas converted from euros using the longer-term compensation approach it approvedaverage monthly exchange rate for him at that time.December 2022.
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SPECIAL LTI AWARDS Ms. Baker Nel and Messrs. Stander, Lovins and Colisto were granted special one-time LTI awards in 2023 as shown in the table below. The Committee’s rationale for the awards to Ms. Baker-Nel and Messrs. Lovins and Colisto is described in the 2023 Executive Compensation Summary. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Options (#) | | Exercise Price ($) | | RSUs (#) | | LTI Value | Stander(1) | | 62,955 | | $190.54 | | – | | | $ | 3,000,025 | | Lovins(2) | | – | | – | | 8,230 | | | $ | 1,430,732 | | Baker-Nel(2) | | – | | – | | 3,292 | | | $ | 578,870 | | Colisto(2) | | – | | – | | 1,097 | | | $ | 192,898 | |
| (1) | Stock options awarded to Mr. Stander in connection with his promotion to CEO vest 50% on each of the third and fourth anniversaries of the grant date, subject to his continued service. | |
| | (2) | On March 1, 2021, in additionRSUs awarded to his annual award of PUs tied primarily to RBIS’ performance, Mr. Stander received a one-time special award of 2,547 PUs with a fair market value $503,784 basedLovins cliff-vest on the same performance objectives, weightingsthird anniversary of the grant date and targets as the annual award of PUs grantedRSUs awarded to our corporate NEOs (50% relative TSRMs. Baker-Nel and 50% total company EVA).
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Mr. Colisto cliff-vest on April 1, 2025, in each case subject to their continued service. | | 2022 Proxy Statement | Avery Dennison Corporation
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20212023 VESTING OF PREVIOUSLY GRANTED ANNUAL LTI AWARDS
2019-2021Annual Award of 2021-2023 PUs Eligible for Vesting
The annual award of PUs granted to our NEOs in February 20192021 for the three-year period ending in 2023 were eligible to vest at the end of 2021 based (i) for our corporate NEOs other than Messrs. Stander and Melo, 50% on our company’scompany cumulative three-year EVA and 50% on our three-year relative TSR compared to a peer group§ of companies, determined using the same criteria used for the 2021-2023 PUs;names of which are listed under Peer Groups later in this CD&A; and (ii) for our business NEO,Messrs. Stander and Melo, 75% on RBIS’the cumulative three-year EVA of what is now our Solutions Group and 25% on our relative TSR. The key goal-setting principle in setting company cumulative EVA targets was consistency with our 2017-20212021-2025 financial targets for earnings growth and ROTC, which the Committee believes translates into delivering above-average TSR. The company cumulative EVA target of $1,081$1,150 million for the annual award of PUs to our corporate NEOs other than Messrs. Melo and Stander was consistent with our 2017-2021long-term financial goals for organic sales growth and operating margin expansion and recognized that increasing sales and operating margin, together with balance sheet efficiency, are key drivers of EVA improvement. TheOur company cumulative EVA target was approximately 43%~26% higher than the cumulative EVA we achieved fordelivered in the three-year period ending in 2018.2020. The company cumulative EVA of $1,250 million required for maximum payout – cumulative EVA of $1,148 million – was consistent with the high end of our long-term growth and operating margin targets. As shown below, we delivered cumulative EVA of $1,132$1,216.3 million for the 2019-20212021-2023 performance period, resulting in a payout of 176%166% for the EVAthat component for our corporate NEOs.NEOsother than Messrs. Stander and Melo. | | | | | | | | | | | | | | | | | 2019-2021 PUS: CORPORATE CUMULATIVE EVA | | (In millions) | | 2019 | | | 2020 | | | 2021 | | | Cumulative EVA | | Adjusted EBIT(1) | | $ | 777.0 | | | $ | 810.8 | | | $ | 1,012.1 | | | | | | Taxes(2) | | | (191.1 | ) | | | (195.4 | ) | | | (253.0 | ) | | | | | Equity method investment net losses | | | (2.6 | ) | | | (3.7 | ) | | | (3.9 | ) | | | | | | | | | | | | | | | | | | | | | | | | | 583.3 | | | | 611.7 | | | | 755.2 | | | | | | Capital charge(3) | | | (260.9 | ) | | | (281.7 | ) | | | (275.6 | ) | | | | | | | | | | | | | | | | | | | | | | EVA | | $ | 322.4 | | | $ | 330.0 | | | $ | 479.6 | | | | $1,132.0 | | (1) Adjusted EBIT is a non-GAAP financial measure defined and reconciled from GAAP in the last section of this proxy statement. (2) The GAAP tax rates for 2019, 2020, and 2021 were (22.7)%, 24.1% and 25.0%, respectively. Taxes shown in the table are based on adjusted tax rates of 24.6%, 24.1% and 25.0% for 2019, 2020 and 2021, respectively. The adjusted tax rate represents the full-year GAAP rate, excluding certain unusual or infrequent events that are expected to significantly impact the GAAP tax rate, such as impacts related to the termination of our U.S. pension plan and the effects of discrete tax structuring and planning transactions. (3) 8.5% of average invested capital of $3.07 billion, $3.31 billion and $3.24 billion for 2019, 2020 and 2021, respectively, using an annual five-point average (December of prior year and March, June, September and December of current year) of short- and long-term debt plus equity, adjusted to exclude the impact of acquisitions completed since the target was set. | |
| | | | | | | | | | | | | | | | | | | | | 2021-2023 PUs: COMPANY CUMULATIVE EVA | ($M) | | 2021 | | 2022 | | 2023 | | Cumulative EVA | Adjusted EBIT(1) | | | $ | 1,044.3 | | | | $ | 1,008.0 | | | | $ | 824.1 | | | | | | | Taxes(2) | | | | (261.1 | ) | | | | (249.0 | ) | | | | (212.6 | ) | | | | | | Equity method investment net losses | | | | (3.9 | ) | | | | – | | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 779.3 | | | | | 759.0 | | | | | 611.5 | | | | | | | Capital charge(3) | | | | (306.9 | ) | | | | (307.9 | ) | | | | (318.7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | EVA | | | $ | 472.4 | | | | $ | 451.1 | | | | $ | 292.8 | | | | | $1,216.3 | |
| §(1) | Adjusted EBIT is a non-GAAP financial measure defined and reconciled from GAAP in Appendix A of this proxy statement. | |
| (2) | GAAP tax rates for 2021, 2022 and 2023 were 25.0%, 24.2% and 27.6%, respectively. Taxes are shown based on adjusted tax rates of 25.0%, 24.7% and 25.8% for 2021, 2021 and 2023, respectively. The following companies comprisedadjusted tax rate represents the peer group forfull-year GAAP tax rate, adjusted to exclude certain unusual or infrequent events that are expected to significantly impact that rate, such as the 2019-2021 PUs ateffects of certain discrete tax planning actions, impacts related to enactments of comprehensive tax law changes, and other items. | |
| (3) | 8.5% of average invested capital of $3.61 billion in 2021, $3.62 billion in 2022 and $3.75 billion in 2023, in each case using an annual five-point average (December of prior year and March, June, September and December of current year) of short- and long-term debt plus equity, adjusted to exclude the timeimpact of payout: Albermarle Corporation; AptarGroup, Inc.; Ashland Global Holdings Inc.; Axalta Coating Systems Ltd.; Avient Corporation (formerly known as PolyOne Corporation); Ball Corporation; Berry Global Corp., Inc.; Celanese Corporation; Clearwater Paper Corporation; Crown Holdings Inc.; Eastman Chemical Company; Ecolab Inc.; Ecovyst Inc. (formerly PQ Group Holdings Inc.); Element Solutions Inc.; Ferro Corporation; GCP Applied Technologies Inc.; Graphic Packaging Holding Company; Greif Inc.; H.B. Fuller Company; Huntsman Corporation; Ingevity Corporation; Innospec Inc.; International Flavors & Fragrances Inc.; Kraton Corporation; Minerals Technologies Inc.; Neenah, Inc.; NewMarket Corporation; O-I Glass, Inc.; Packaging Corporation of America; PH Glatfelter Company; PPG Industries Inc.; Rayonier Advanced Materials Inc.; RPM International Inc.; Schweitzer- Mauduit International, Inc.; Sealed Air Corporation; Sensient Technologies Corporation; Silgan Holdings Inc.; Sonoco Products Company; Stepan Company; The Chemours Company; The Sherwin-Williams Company; Valhi Inc.; and WestRock Company.acquisitions completed since the target was set. | |
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Solutions cumulative EVA for the annual award of PUs for the 2021-2023 performance period was 96% of the target level of performance, resulting in a payout of 97% on that performance objective for Messrs. Stander and Melo. EVA targets and results at the segment level are not disclosed due to their competitively sensitive nature.Relative TSR for the 2019-20212021-2023 performance period was at the 9390rdth percentile of the designated peer group, resulting in a 200% payout for thisthat component for all NEOs. PUs for 2019-2021the 2021-2023 performance period paid out at 188%based on weighted averages of 123% for our corporate NEOsMessrs. Stander and 115%Melo and 183% for our business NEO.all other NEOs.    
Special Award of 2021-2023 PUs For retention purposes and to further incent him to contribute to the results for our total company – including by continuing to transform our Solutions business and driving our sustainability progress as then-leader of our enterprise-wide Sustainability Council – Mr. Stander was granted a one-time award of PUs in February 2021 with a grant date fair value of approximately $500,000 with the same performance objectives and weightings as the annual award of 2021-2023 PUs for Corporate NEOs. Consistent with the above, these PUs paid out based on a weighted average of 183%. MSUs Eligible for Vesting at YE 20212023 Four tranches of MSUs were eligible for vesting at the end of 20212023 based on our absolute TSR for the four-, three-, two- and one-year performance periods shown below, with the number of shares paid out at vesting determined in accordance with the formula shown below. | | | | | | | | | | | | | | | | | | | Stock price at settlement (avg. closing price for trading days of January 2022)2024) + reinvested dividends during period | | | | | | | | Stock price at grant (avg. closing price for trading days of January of year of grant) | | | | | | | | Payout at vesting | | | | | ÷ | | | | | | = | | | | | | | | | | | | | | | |
| | | | | | | | 4TH TRANCHE OF MSUs GRANTED IN 20182020 | | | | 3RD TRANCHE OF MSUs GRANTED IN 20192021 | | | | Performance period of 4 years | | | | Performance period of 3 years | | | | 2018-20212020-2023 Absolute TSR of 87%62%
| | | | 2019-20212021-2023 Absolute TSR of 131%32%
| | | | Paid out at 200%180% of target | | | | Paid out at 200%134% of target | | | | 2ND TRANCHE OF MSUs GRANTED IN 20202022 | | | | 1ST TRANCHE OF MSUs GRANTED IN 20212023 | | | | Performance period of 2 years | | | | Performance period of 1 year | | | | 2020-20212022-2023 Absolute TSR of 64%(1)%
| | | | 20212023 Absolute TSR of 33%7%
| | | | Paid out at 183%94% of target | | | | Paid out at 135%98% of target |
PERQUISITES
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Perquisites Our NEOs receive the perquisites shown in the chart below. We do not reimburse our NEOs for the tax consequences of their receipt of these perquisites. | | | | | LIMITED PERQUISITES | Perquisite | | Description and Limitations | | Benefit to Stockholders | Executive Benefit Allowance | | $70,000 for CEO, $65,000 for our Level 2 NEOsMr. Lovins and $50,000 for our Level 3 NEOs; amounts have never increased since program inception; taxable with no gross-up | | Flat allowance reduces expense of administering a variety of separate perquisites | Financial Planning | | Annual reimbursement of up to $25,000 for our CEO and $15,000 for our Level 2 NEOs; taxable with no gross-up | | Allows most senior executives to focus on job duties | Annual Physical Examination | | Paid directly to the service provider only to the extent received; as such,provider; not taxable | | Helps ensure company leaders maintain good overall health |
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GENERAL BENEFITSGeneral Benefits
Nonqualified Deferred Compensation Benefits Our U.S. NEOs are eligible to participate in our nonqualified deferred compensation plan, which allows eligible U.S. employees to defer up to 75% of their base salary and up to 90% of their AIP award. The plan provides these NEOs and other eligible U.S. employees with a long-term capital accumulation opportunity because deferred amounts accumulate on a pre-tax basis. Participating executivesParticipants may select from a number of investment options,. with deferrals 100% vested. Our deferred compensation plan does not offer above-market interest rates.Deferrals are 100% vested. WeOur company made an annuala contribution effective as of January 1, 2021the first business day of 2023 to the deferred compensation accounts of our U.S. NEOseligible participants for (i) 401(k) eligible earnings and deferred compensationpay in 20202022 in excess of the Internal Revenue Code of 1986, as amended (the “Code”) compensation limit.limit, and (ii) their respective deferred compensation deferrals. This annual contribution, providedwhich is designed to supplement 401(k) contributions that are limited under the Code, provides an automatic contribution of 3% of deferred and eligible pay and a matching contribution of up to 50% of the first 7% of deferrable and eligible pay above the Code compensation limit. This benefit is designed to supplement 401(k) contributions that are limited under the Code.
For additional information regarding our deferred compensation plan and accrued NEO benefits thereunder, see 20212023 Nonqualified Deferred Compensation in Executive Compensation Tables. RetirementPension Benefits
Of our NEOs, only Messrs. Butier and Lovins wereare our only NEOs eligible, for retirement benefits under our U.S. pension plan and are eligible for retirement benefits under our benefit restoration plan, a nonqualified excess benefit plan, in each case subject to the same terms and conditions as our other eligible U.S. employees. We terminatedemployees, for pension benefits under our U.S. pensionbenefit restoration plan, in September 2018 and, becausea nonqualified excess benefit plan. Because the accrual of benefits under the benefit restoration plan was frozen as of year-end 2010, noneneither of our eligible NEOs accrued additional retirementpension benefits during 2021.2023. For additional information regarding the benefit restoration plan and accrued NEO benefits thereunder, see 20212023 Pension Benefits in Executive Compensation Tables.
Defined Contribution Benefits Our U.S. NEOs are eligible to participate in our employee savings plan, a qualified 401(k) plan that permitsallows U.S. employees to defer up to 100% of their eligible earnings less payroll deductions on a pre-tax basis and 25% of their eligible earnings on an after-tax basis, subject to the annual limit prescribed by the Internal Revenue Service (IRS) for the aggregate of company contributions and employee pre- and post-tax contributions. Employee deferrals are immediately vested upon contribution. In 2021,2023, we contributed up to 6.5% of an employee’s eligible compensation, 3% of which was an automatic contribution and up to 3.5% of which was a matching contribution of 50% of the employee’s contributions up to 7% of pay, subject to the federalCode compensation limit. Participants vest in companyour contributions to their savings plan account after two years of service. Employees are immediately eligible to participateAll U.S. NEOs participated in the savings plan and all NEOs participated in 2021. Our NEOs participate in the plan2023, subject onto the terms and conditions as our other U.S. employees.employees, and are fully vested.
Executive Life Insurance Benefits In addition to the $50,000 in life insurance benefits we provide to all U.S. employees, our NEOsU.S. executives are provided with supplemental life insurance benefits equal to three times the NEO’stheir base salary less $50,000, up to a maximum coverage amount of $1 million. | | | 72 | | 2024 Proxy Statement | Avery Dennison Corporation |
Executive Long-Term Disability Insurance Benefits If our NEOsthey elect to enroll in executive long-term disability coverage, theirour U.S. NEOs’ long-term disability benefit is equal to 65% of their eligible pre-disability monthly earnings up to a maximum of $25,000 per month. Coverage is available only for the NEO; theirindividual; dependents are not covered. PersonalExecutive Excess Liability Insurance Benefits
We provide $3 million of personal excess liability insurance coverage to our NEOs.U.S. executives. Personal excess liability coverage provides an additional layer of liability coverage that supplements the coverage provided by the individual’s personal liability insurance. To receive any benefit from this excess liability insurance the NEO mustprovided that they maintain certain minimum coverage requirements under his or her personal liability policy.requirements. | | | Avery Dennison Corporation | 2022 Proxy Statement
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Charitable Match Benefits We match up to $10,000 of our CEO’s and our Executive Chairman’s and $5,000 of our other NEOs’ annual documented contributions to charitable organizations or educational institutions. SEVERANCE BENEFITSSeverance Benefits
None of our NEOs has an employment contract, and each is employed at-will, which reflects our pay-for-performance philosophy; if an NEO is no longer performing at the expected level, he or she can be terminated immediately without receiving a contractually guaranteed payment. However, consistentConsistent with market practices, the Committee believes that providing our executives with severance benefits helps ensure that they act in the best interests of our company and stockholders, even if doing so may be contrary to their personal interests, such as where it could lead to termination of their employment or a change of control of our company.
The compensation of our NEOs in the event of termination not for cause is governed by our Amended and Restated Executive Severance Plan (the “Severance Plan”) and, as applicable, our Amended and Restated Key Employee Change of Control Severance Plan (the “COC Severance Plan”). We use these plans rather than individually negotiated agreements to provideallow us with the flexibility to change the severance benefits for which applicable NEOs are eligible to reflect market practices without the need to obtain their individual consent. In addition, this plan-based approach eliminates the time and expense it would requireneed to individually negotiate separation paymentsseverance arrangements and ensures that eligible NEOs receive benefits on the same terms and conditions as employees with similar levels of responsibility. Receipt of benefits under these plans is conditioned on the executive signing a waiver and general release of claims against our company, as well as agreeing to non-competition, non-solicitation, and non-disclosurecertain restrictive covenants in favor of our company. Any violation of these covenants could result in our company seeking to recover some or all severance benefits previously paid or pursuing any other claims that may be appropriate under the circumstances. Unvested equity awards outstanding on the date of termination are generally cancelled, except for employees who qualify as retirement eligible under the terms of our equity incentive plans,plan, whose awards are accelerated upon termination of service. Mr. Stander was the only NEO who qualified as retirement eligible at year-end 2023. For additional information regarding potential NEO benefits under these plans, including the treatment of equity awards under various termination scenarios, see Payments Upon Termination as of January 1, 2022December 30, 2023 in Executive Compensation Tables. Severance Following Involuntary Termination Not for Cause Our NEOs (excluding Mr. Butier) are eligible to receive severance benefits upon involuntary termination not for “cause,” in accordance with the terms and conditions of the Severance Plan. In the event of a qualifying termination, our CEO would be eligible to receive two times the sum of his annual salary, target AIP award for the year of termination and the cash value of 12 months of his qualified medical and dental insurance premiums; our other eligible NEOs would be eligible to receive one times their respective sum of these amounts. NEOsamounts. They would also be eligible to receive up to $25,000 in outplacement services for up to one year following termination of employment. Any payments made under the Severance Plan would be offset by any payments received by the NEO under any statutory, legislative and regulatory requirement or, if applicable, the COC Severance Plan. Severance Following Change of Control Messrs. Butier,Stander, Lovins and StanderMelo are our only NEOs eligible for enhanced severance payments upon termination not for “cause”cause or by the executive for “good reason”good reason within 24 months of a “changechange of control”control of our company, in accordance with the terms and conditions of the COC Severance Plan. As Level 3 NEOs, Ms. Baker-Nel and Mr. Walker are not eligible for benefits under this plan. In the event of a qualifying termination following a change of control, our CEO would be eligible to receive three times the sum of his annual salary, target AIP award for the year of termination and the cash value of 12 months of his qualified medical and dental insurance premiums; our Level 2 NEOs would be eligible to receive two times their respective sum of these amounts.amounts. These NEOs would also be eligible to receive a | | | Avery Dennison Corporation | 2024 Proxy Statement | | 73 |
prorated AIP award for the year of termination and up to $25,000 in outplacement services for up to one year following termination of employment. Any payments under the COC Severance Plan would be offset by any payments received by the NEO under the Severance Plan and any other statutory, legislative and regulatory requirement. Under In the event of termination following a change of control, our equity incentive plans, unvested equity awards granted to ourLevel 3 NEOs would generally vest only ifbe entitled to receive benefits under the NEO is terminated without “cause” or resigns for “good reason” within 24 months after the change of control. Outstanding PUs and MSUs vest based on actual performance, if determinable, and otherwise based on target performance.Severance Plan described above.
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Participating NEOs are not eligible to receive any excise tax gross-up on amounts payable under the COC Severance Plan. If the NEO would otherwise incur excise taxes under Section 4999 of the Code, payments under the COC Severance Plan would be reduced so that no excise taxes would be due if the reduction results in a greater after-tax benefit to the NEO. Under our equity incentive plans, unvested equity awards would generally vest only if our NEOs are terminated without cause or resign for good reason within 24 months after the change of control. Outstanding PUs and MSUs vest based on actual performance, if determinable, and otherwise based on target performance. COMPENSATION-SETTING TOOLS Market Survey Data The Committee annually considers market survey data to target TDC, looking atconsidering companies of similar size based on annual revenues that spanacross all industries to reflect the broad talent market across which we seek our executives. The Committee reviews results from a third-party survey to understand market compensation practices and assess our competitiveness, narrowing the scope of the results to account for variations caused by company size. In February 2021,2023, the Committee was presented with industry-wide data from the most recent WTW U.S. Compensation General Industry Database, which was narrowed in scope to focus on dataExecutive Compensation Survey. Primary market rates referenced were companies with annual revenues of $10 billion, as predicted either by regression analysis or estimated as the 68 participantsaverage of companies with annual revenues of (i) $6 billion to $10 billion and (ii) $10 billion to $20 billion. Recognizing our company’s growth trajectory and top quartile performance in recent years, the Committee determined it was appropriate to assess market competitiveness for our CEO and Executive Chairman at the $10 billion level rather than the $6 billion to $10 billion range it used previously; the Committee primarily used the previous range for assessing the market competitiveness for our other NEOs, while also referencing data for companies with annual revenue. revenues of $10 billion. The Committee reviewed the data with executive matches based on job and functional responsibility on an aggregated basis, with no consideration of the survey’s component companies, which were not determined or known by the Committee. The Committee uses the survey data as a reference point to target TDC and the components thereof, giving consideration to median pay at similarly sized companies, responsibilities, individual performance, tenure, retention and succession. Peer Groups
For determining our relative TSR for purposes of the vesting of the 2019-2021 PUs and the grant of the 2021-2023 PUs, the Committee used a peer group comprised of U.S. companies satisfying objective criteria for industry classification and revenue size, the names of which are disclosed earlier in this CD&A. The Committee does not utilize a peer group for any other purpose.
Tally Sheets The Committee annually reviews tally sheets that reflect the components of each NEO’s compensation. The tally sheets reviewed in February 20222024 included the information shown below for each of the most recent three fiscal years. Compensation history, including annual cashCash compensation (base salary and AIP awards), LTI awards, value of vested LTI awards, and annualized cost of benefits and perquisites
Expected valueValue of annual compensation, including base salary, AIP award and grant date fair value of LTI awards
Accumulated value of compensation, including total accumulated value ofoutstanding LTI awards and accumulated benefit values under retirementpension and deferred compensation plans Potential payments under various termination scenarios Compliance with our stock ownership policy The Committee believes that reviewing tally sheets is useful in determining executive compensation because they provide a historical perspective on NEO compensation and include information that will be contained in our proxy statement.
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Peer Groups Beginning in 2023, for determining relative TSR, the Committee used the following objective criteria for purposes of identifying the peer group: public companies primarily listed on a U.S. stock exchange (previous criterion was headquartered in the U.S.) (i) in similar industries based on their classification in one of five GICS groups (diversified chemicals, specialty chemicals, metal and glass containers, paper packaging, and paper products) and (ii) with market capitalization of at least $1.5 billion and revenues during the last 12 months of $3 billion to $30 billion (previous criterion was only revenues during the last 12 months of $1 billion to $20 billion). | | | | | | | | PEER GROUP FOR DETERMINING RELATIVE TSR FOR PUs | | 2023-2025 PUs AT FYE 2023 (31 companies) | | 2021-2023 PUs AT TIME OF PAYOUT (39 companies) | Albermarle Corporation Amcor plc AptarGroup, Inc. Ardagh Metal Packaging S.A. Avient Corporation Axalta Coating Systems Ltd. Ball Corporation Berry Global Group, Inc. Celanese Corporation Crown Holdings, Inc. Dupont de Nemours, Inc. Eastman Chemical Company Ecolab Inc. Graphic Packaging International, LLC Greif, Inc. H.B. Fuller Company | | Huntsman Corporation International Flavors & Fragrances Inc. International Paper Company O-I Glass, Inc. Packaging Corporation of America Pactiv Evergreen Inc. PPG Industries, Inc. RPM International Inc. Sealed Air Corporation Silgan Holdings Inc. Sonoco Products Company Sylvamo Corporation The Chemours Company The Sherwin-Williams Company Westrock Company | | Albermarle Corporation AptarGroup, Inc. Ashland Global Holdings Inc. Axalta Coating Systems Ltd. Avient Corporation Ball Corporation Berry Global Group, Inc. Celanese Corporation Clearwater Paper Corporation Crown Holdings, Inc. Eastman Chemical Company Ecolab Inc. Ecovyst Inc. Element Solutions Inc. Graphic Packaging International, LLC Greif, Inc. H.B. Fuller Company Huntsman Corporation Ingevity Corporation Innospec Inc. | | International Flavors & Fragrances Inc. Minerals Technologies Inc. NewMarket Corporation O-I Glass, Inc. Packaging Corporation of America Pactiv Evergreen Inc. PPG Industries, Inc. Quaker Chemical Corporation Rayonier Inc. RPM International Inc. Sealed Air Corporation Sensient Technologies Corporation Silgan Holdings Inc. Sonoco Products Company Stepan Company The Chemours Company The Sherwin-Williams Company Valhi, Inc. WestRock Company |
INDEPENDENT OVERSIGHT AND EXPERTISE Our Board believes that retaining our executives and providing them with market-competitive compensation are essential to the success of our company and advancing the interests of our stockholders. The Committee, which is comprisedcomposed solely of independent directors, is responsible for approving executive compensation. The Committee may delegate authority to subcommittees or, in certain circumstances not relatedunrelated to the compensation of our executive officers, to our CEO. Under its charter, the Committee has authority, in its sole discretion and at our expense, to obtain advice and assistance from external advisors. The Committee may retain and terminate any compensation consultant or other external advisor at our expense and has sole authority to approve the advisor’s fees and other terms and conditions of the retention. In retainingThe Committee annually considers the independence of its advisors, theadvisors. The Committee considers each advisor’s independence from management, as required by NYSE listing standards. | | | Avery Dennison Corporation | 2022 Proxy Statement
| | 75
|
During 2021, the Committeehas retained WTW as its independent compensation consultant, with the firm performing the services described below for or at the Committee.request of the Committee in 2023.
| 2023 WTW SERVICES | | WTW 2021 SERVICES • Advised on CEO succession and other leadership transitions | • Assisted with setting target TDC for ourBenchmarked CEO including the longer-termand Executive Chairman compensation approach implemented in 2021 | | • Evaluated a proxy advisory firm’s pay-for-performance analysisProvided strategic review of executive compensation program | | • Commented on our 2021 CD&A
| | • Provided incentive compensation advice (including recommending relative TSRrevised criteria for determining peer group for the 2021-2023measuring relative TSR component of PUs) | | • Conducted analyses of share utilization and stockholder value transfer related to LTI compensation | • Commented on our 2023 CD&A and certain other proxy statement disclosures | • Analyzed a proxy advisory firm’s projected pay-for-performance analysis | • Advised on executive compensation for our non-employee directorstrends and regulatory updates | | • Advised on incentive compensation related to our Vestcom acquisition
| | • Prepared for, attended and reviewed documentation for Committee meetings |
| | | Avery Dennison Corporation | 2024 Proxy Statement | | 75 |
In 2021,2023, WTW received $127,927$344,972 in compensation from our company for professional services performed for or at the request of the Committee. We also reimbursed the firm for its reasonable out-of-pocketexpenses. The Committee conducted its annual assessment of WTW’s performance in October 2021,December 2023, which included an evaluation of its services and fees year-to-date, and the additionalfirm’s service delivery provided during the year, as well as the criteria described below. | | • | | Experience – The firm’s depth and breadth of executive compensation and board advisory knowledge and experience; qualificationqualifications as a board-level consultant; quality of resources available;available, including staff and data; and understanding of our business strategy, issues,challenges, industry, performance drivers and human capitaltalent considerations |
| | • | | Independence –The firm’s objectivity in giving advice and making recommendations, and its willingness to provide candid feedback regarding management and Committee proposals, questions and concerns |
| | • | | Preparation – The quality and timeliness of the firm’s reports, including accuracy, type and amount of information, clear communication and responsiveness to issues);issues; its review and feedback on management proposals; and the firm’s preparation with the Committee Chair and our management, as appropriate |
| | • | | Committee Relationship – The accessibility and availability and communication effectiveness of members of the engagement team;team and the firm’s reporting relationship with the Committee Chair and its working relationship with our human resources team; and the effectiveness of its communicationmanagement |
Based on this evaluation, the Committee determined that it remained satisfiedexpressed its continued satisfaction with the performance of WTW and the individual members of the engagement team servingadvising the Committee. The Committee Chair discussed with the lead members of the engagement team the Committee’s feedback on their performance, including potential improvement opportunities. Advisor Independence WTW and the Committee have had the following protocols in place since the engagement commenced to ensure the firm’s independence from management: the Committee has the sole authority to select, retain and terminate WTW and, acting through its Chair, authorize the firm’s fees, and determine the terms and conditions that govern the engagement; the Committee directs and direct WTW on the process for delivery and communication of its work product, including its analyses, findings, conclusions and recommendations; product; inthe performance and evaluation of its duties, WTW is accountable, and reports directly, to the Committee; and members of the Committee may consult with WTW at any time, with or without members of management present, atin their sole discretion. As required by SEC regulations and NYSE listing standards, theThe Committee considered the independence of its advisors – including WTW and the law firms providing executive compensation counsel to the Committee and/or our company – in October 2021.December 2023. The Committee reviewedhas noted the information provided by WTWfactors described below.below in assessing the independence of WTW.
WTW performed no servicesonly two discrete projects for our company in 2021 other than2023 outside of the executive compensation services it performed for or at the request of the Committee Fees from our company reflected approximately 0.001%0.004% of WTW’s revenue for its fiscal year ended December 31, 20212023 | | | 76
| | 2022 Proxy Statement | Avery Dennison Corporation
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WTW has several policies and procedures to ensure its advice is objective and independent, including a comprehensive code of conduct and ethics and quality policies that mandate rigorous work reviews and periodic compliance reviews, which the firm has represented to the Committee are highly effective Based on disclosures from WTW and members of the Committee, there are no business or personal relationships between them No members of the WTW team serving the Committee own stock in our company, other than potentially through investments in mutual or other funds managed without the member’s input Based on disclosures from the firm and our executive officers, there are no business or personal relationships between WTW or the members of the engagement team advising the Committee with any executive officer of our company OTHER CONSIDERATIONS
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Clawback Policy
COMPENSATION CLAWBACK POLICIES In October 2023, our Board adopted a Policy for Recovery of Erroneously Awarded Compensation (“Section 16 Clawback”) to implement rules issued by the SEC. The Section 16 Clawback applies to our current and former executive officers, including all NEOs, and subjects their incentive-based compensation received on or after October 2, 2023 to clawback in the event our company is required to prepare an accounting restatement to correct material noncompliance with any financial reporting requirement under U.S. securities laws, including restatements that correct an error in previously issued financial statements that (i) is material to the previously issued financial statements or (ii) would result in a material misstatement if the error were corrected or left uncorrected in the current period. In these circumstances, the Section 16 Clawback requires our company to recover, reasonably promptly, the portion of incentive-based compensation that is deemed to have been erroneously awarded, unless the Committee (which administers the policy) has determined that recovery would be impracticable and that one or more of the allowable impracticability conditions under SEC rules has been met. Recovery is required whether or not the applicable officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement. Each of our executive officers, including all NEOs, has agreed to the terms of the Section 16 Clawback and acknowledged that their compensation may be subject to reduction, cancellation, forfeiture and/or recoupment as required thereby. At the time it recommended to our Board the adoption of the Section 16 Clawback, the Committee recommended that our existing clawback policy remain in effect. This clawback policy applicable to all AIP and LTI recipients requires that, in the event of fraud or other intentional misconduct on the part of an NEOawardee that necessitates a restatement of our financial results (including, without limitation, any accounting restatement due to material noncompliance with any financial reporting requirement), the NEO would be required toCommittee may require that the awardee reimburse our company for any AIP or LTI awards paid or granted in excess of the amount that would have been paid or granted based on the restated financial results. These remedies would be in addition to, not instead of, any other actions taken by our company (through the imposition of any discipline up to and including termination), law enforcement agencies, regulators or other authorities. This more widely applicable clawback policy is contractually acknowledged by our NEOs upon the execution of their LTI award agreements. Our clawback policy is designed to subject incentive compensation to forfeiture if our financial results are not achieved consistent with our high ethical standards. This policy ishas been expressly incorporated into our AIPannual and long-term incentive plans and is contractually agreed to by LTI plans. The Committee will revise the policy as necessary to comply with final rules issued by the SEC, which are currently expected to be issued in 2022.
Tax Implications of Executive Compensation
The Committee aims to compensate ourrecipients, including all NEOs, in a manner that is tax effective for our company. However, the Committee may, in its discretion, adopt or implement compensation programs and/or practices that are not fully tax deductible if it believes that doing so is in the best interests of our company and stockholders.
Section 162(m) of the Code
Following the enactment of the Tax Cuts and Jobs Act (TCJA), for taxable years beginning on or after January 1, 2018, compensation in excess of $1 million paid to executive officers covered by Section 162(m) of the Code (“Section 162(m)”) generally is not deductible, unless it qualifies for limited transition relief under the TCJA. To qualify for transition relief, compensation must, among other things, have been payable pursuant to a written binding contract that was in effect on November 2, 2017 and not subsequently modified in any material respect.
While in the past we have structured certain of our incentive compensation in a manner intended to be tax-deductible for purposes of Section 162(m), due to the TCJA and the uncertainties in the application of Section 162(m), as amended by the TCJA, and the regulations thereunder, there is no guarantee that any deductions claimed under Section 162(m) will not be challenged or disallowed by the IRS and our ability to deduct compensation under Section 162(m) may be restricted. Furthermore, although the Committee believes that the deductibility of executive compensation is a relevant consideration and may continue to consider the effects of Section 162(m) on our future pay practices, it reserves the right to approve incentive compensation that is not fully tax deductible, and/or modify executive compensation without regard to tax deductibility, if it believes that doing so is in the best interests of our company and stockholders.
Section 409A of the Code
Nonqualified deferred compensation must be deferred and paid under plans or arrangements that satisfy the requirements of Section 409A of the Code with respect to the timing of deferral elections and payments and certain other matters. Failure to satisfy these requirements could expose individuals to accelerated income tax liabilities, penalty taxes and interest on their compensation deferred under these plans. As a general matter, we design and administer our compensation and benefit plans and arrangements in a manner intended to cause them to be either exempt from, or satisfy the requirements of, Section 409A of the Code.annual award agreements.
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TALENT AND COMPENSATION COMMITTEE REPORT The Talent and Compensation Committee (referred to in this report as the “Committee”) of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis (CD&A) required by Item 402(b) of Regulation S-K with management and, based on its review and those discussions, has recommended to our Board of Directors that the CD&A be included in our 2024 proxy statement and incorporated by reference into our 2023 Annual Report. The Committee welcomes feedback regarding our executive compensation program. Stockholders may communicate with the Committee by writing to the Compensation Committee Chair, c/o Corporate Secretary, 8080 Norton Parkway, Mentor, Ohio 44060. | | | | | | | | | Julia A. Stewart,
Chair | | Bradley A. Alford | | Ken C. Hicks | | Andres A. Lopez | | Francesca Reverberi | | | | | |  | |  | |  | |  | |  |
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EXECUTIVE COMPENSATION TABLES 2021
2023 SUMMARY COMPENSATION TABLE This table shows the compensation of our NEOs in accordance with SEC regulations. Compensation as shown in the table does not reflect the compensation actually realized by our NEOs for these years.
| Name and
Principal Position | | Year | | Salary(1) | | Stock
Awards(2) | | Non-Equity
Incentive Plan
Compensation(3) | | Change In
Pension Value
and NQDC
Earnings | | All Other
Compensation(4) | | Total | | Year | | Salary(1) | | Stock
Awards(2) | | Option
Awards(3) | | Non-Equity
Incentive Plan
Compensation(4) | | Change In
Pension Value
and NQDC
Earnings | | All Other
Compensation(5) | | Total | | | Mitchell R. Butier | | | | | | | | | | | | | | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | | Chairman, President & | | | 2021 | | | $ | 1,183,250 | | | $ | 7,047,669 | | | $ | 3,360,000 | | | $ | 662,480 | | | $ | 180,322 | | | $ | 12,433,721 | | President & | | President & | | President & | | President & | | | | 2023 | | | $ | 844,231 | | | $ | 2,071,369 | | | $ | 3,000,025 | | | $ | 0 | | | | – | | | $ | 155,337 | | | $ | 6,070,962 | | | Chief Executive Officer | | Chief Executive Officer | | Chief Executive Officer | | Chief Executive Officer | | | 2020 | | | $ | 1,133,000 | | | $ | 5,598,133 | | | $ | 1,331,275 | | | $ | 464,100 | | | $ | 182,840 | | | $ | 8,709,348 | | | | 2022 | | | $ | 664,706 | | | $ | 3,454,633 | | | | – | | | $ | 304,500 | | | | – | | | $ | 125,982 | | | $ | 4,549,821 | | | | | | | 2019 | | | $ | 1,133,000 | | | $ | 5,358,043 | | | $ | 1,288,788 | | | $ | 508,024 | | | $ | 207,177 | | | $ | 8,495,032 | | | | | | | | | | | 2021 | | | $ | 565,537 | | | $ | 1,508,802 | | | | – | | | $ | 635,012 | | | $ | 142,139 | | | $ | 124,331 | | | $ | 2,975,821 | | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | | Executive Chairman; | | Executive Chairman; | | Executive Chairman; | | Executive Chairman; | | | | 2023 | | | $ | 1,180,769 | | | $ | 8,285,412 | | | | – | | | $ | 0 | | | $ | 5,812 | | | $ | 228,115 | | | $ | 9,700,108 | | | Former Chief Executive Officer | | Former Chief Executive Officer | | Former Chief Executive Officer | | Former Chief Executive Officer | | | | 2022 | | | $ | 1,176,923 | | | $ | 6,769,541 | | | | – | | | $ | 974,400 | | | | – | | | $ | 186,875 | | | $ | 9,107,739 | | | | | | | | | | | | | | | | | 2021 | | | $ | 1,183,250 | | | $ | 7,047,669 | | | | – | | | $ | 3,360,000 | | | $ | 662,480 | | | $ | 180,322 | | | $ | 12,433,721 | | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | | | | | | | | | | | | | | | Senior Vice President & | | | 2021 | | | $ | 650,445 | | | $ | 1,550,961 | | | $ | 991,890 | | | $ | 133,115 | | | $ | 126,497 | | | $ | 3,452,908 | | Senior Vice President & | | Senior Vice President & | | Senior Vice President & | | | | 2023 | | | $ | 736,539 | | | $ | 3,156,886 | | | | – | | | $ | 0 | | | $ | 821 | | | $ | 156,649 | | | $ | 4,050,895 | | | Chief Financial Officer | | Chief Financial Officer | | Chief Financial Officer | | Chief Financial Officer | | | 2020 | | | $ | 618,000 | | | $ | 1,232,041 | | | $ | 653,535 | | | $ | 76,327 | | | $ | 125,223 | | | $ | 2,705,126 | | | | 2022 | | | $ | 690,315 | | | $ | 1,594,295 | | | | – | | | $ | 304,500 | | | | – | | | $ | 136,184 | | | $ | 2,725,295 | | | | | | | 2019 | | | $ | 613,500 | | | $ | 1,493,462 | | | $ | 421,785 | | | $ | 81,676 | | | $ | 126,425 | | | $ | 2,736,848 | | | Deena Baker-Nel(5) | | | 2021 | | | $ | 412,000 | | | $ | 481,950 | | | $ | 416,000 | | | $ | 87,340 | | | $ | 104,164 | | | $ | 1,501,454 | | | Vice President & Chief HR Officer | | | Deon M. Stander | | | | | | | | | | | | | | | | Vice President & | | | 2021 | | | $ | 565,537 | | | $ | 1,508,802 | | | $ | 635,012 | | | $ | 142,139 | | | $ | 124,331 | | | $ | 2,975,821 | | | General Manager, RBIS | | | 2020 | | | $ | 555,129 | | | $ | 791,699 | | | $ | 379,708 | | | $ | 120,727 | | | $ | 122,642 | | | $ | 1,969,906 | | | | | | | 2019 | | | $ | 551,086 | | | $ | 963,728 | | | $ | 363,887 | | | $ | 105,550 | | | $ | 143,172 | | | $ | 2,127,423 | | | | 2021 | | | $ | 650,445 | | | $ | 1,550,961 | | | | – | | | $ | 991,890 | | | $ | 133,115 | | | $ | 126,497 | | | $ | 3,452,908 | | | Ignacio J. Walker(5) | | | 2021 | | | $ | 422,781 | | | $ | 499,927 | | | $ | 425,375 | | | $ | 320 | | | $ | 91,282 | | | $ | 1,439,685 | | Francisco Melo(6) (7) | | Francisco Melo(6) (7) | | Francisco Melo(6) (7) | | Francisco Melo(6) (7) | | | Vice President & Chief Legal Officer | | President, | | President, | | President, | | President, | | | | 2023 | | | $ | 492,075 | | | $ | 871,680 | | | | – | | | $ | 0 | | | | – | | | $ | 21,169 | | | $ | 1,384,924 | | | Solutions Group | | Solutions Group | | Solutions Group | | Solutions Group | | | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | | Senior Vice President & | | Senior Vice President & | | Senior Vice President & | | Senior Vice President & | | | | 2023 | | | $ | 481,277 | | | $ | 1,120,641 | | | | – | | | $ | 0 | | | | – | | | $ | 114,973 | | | $ | 1,716,891 | | | Chief Human Resources Officer | | Chief Human Resources Officer | | Chief Human Resources Officer | | Chief Human Resources Officer | | | | 2022 | | | $ | 447,200 | | | $ | 481,408 | | | | – | | | $ | 132,704 | | | | – | | | $ | 104,697 | | | $ | 1,166,009 | | | | | | | | | | | | | | | | | 2021 | | | $ | 412,000 | | | $ | 481,950 | | | | – | | | $ | 416,000 | | | $ | 87,340 | | | $ | 104,164 | | | $ | 1,501,454 | | | Nicholas R. Colisto(7) | | Nicholas R. Colisto(7) | | Nicholas R. Colisto(7) | | Nicholas R. Colisto(7) | | | Senior Vice President & | | Senior Vice President & | | Senior Vice President & | | Senior Vice President & | | | | 2023 | | | $ | 452,612 | | | $ | 715,257 | | | | – | | | $ | 0 | | | | – | | | $ | 110,828 | | | $ | 1,278,697 | | | Chief Information Officer | | Chief Information Officer | | Chief Information Officer | | Chief Information Officer | | |
| | (1) | Amounts include any portions of salary contributed to our employee savings plan or deferred under our deferred compensation plan. Changes in base salary,Salary adjustments, if any, generally become effective in April.April unless a change in role leads to an adjustment at a different time of year. |
| | (2) | Amounts in 20212023 include the grant date fair value of PUs, which are paid out in shares of our common stockeligible for vesting at the end of a three-year period provided that the designated performance objectives are achieved as of the end of the period. The number of shares paid out at vesting can range from 0% to 200% of the target units aton the time of grant.grant date. The performance objectives that determine the number of shares that may be earned for the PUs granted in 20212023 to Corporate NEOs (Ms. Baker-Nel and Messrs. Stander, Butier, Lovins and Colisto) are (i) company cumulative EVA (weighted 50% based on our total company for our corporate NEOs and 75% based on our RBIS business for our business NEO)), which is a performance condition under Accounting Standards Codification Topic 718, Compensation-Stock Compensation (ASC 718), and (ii) relative TSR (weighted 50% for our corporate NEOs and 25% for our business NEO)), compared to a designated peer group, of companies determined based on GICS code and revenue size, which is a market condition under ASC 718, in each case computed over the 2021-20232023-2025 performance period. For our Solutions NEO (Mr. Melo), the performance objectives are Solutions cumulative EVA (weighted 75%) and relative TSR (weighted 25%), in each case computed over the 2023-2025 performance period. The fair values of the performance condition component of the fair value of PUs waswere determined based on the fair market value of our common stock on the grant date, adjusted for foregone dividends during the performance period. The maximum grant date fair values of the performance condition component of PUs were $3,565,710, $784,659, $761,308$992,646, $3,970,585, $827,147, $631,052 and $252,853$250,335 for Messrs. Stander, Butier, Lovins, StanderMelo and WalkerColisto, respectively, and $243,921$259,722 for Ms. Baker-Nel. The fair values of the market condition component of the fair value of PUs waswere determined as of the date of grant using the Monte-Carlo simulation method, which utilizes multiple input variables to estimate the probability of meetingachieving the performance objectives established for the award, including the expected volatility of our stock price relative to the group ofdesignated peer companies listed on page 69 of this proxy statementgroup at the end of the three-year performance period and a risk-free interest rate of 0.23%4.35% derived from linear interpolation of the term structure of Treasury Constant Maturities yield rates for the period; as such, their maximum grant date fair values were the same as their target grant date fair values shown in the table.period. Based on the Monte-Carlo simulation method, the grant date fair value of the market condition component of the PUs was 131.65% of our average stock price on the grant date. The grant date fair values of the market condition component of the PUs were $1,754,911, $386,188, $374,733105.23% of our average stock price on the grant date. Target grant date fair values of the market condition component of PUs were $524,951, $2,099,994, $437,523, $111,135 and $124,599$132,376 for Messrs. Stander, Butier, Lovins, StanderMelo and Walker,Colisto, respectively, and $119,924$137,307 for Ms. Baker-Nel. Maximum grant date fair values were the same as target grant date fair values. |
| | | Amounts in 20212023 also include the grant date fair value of MSUs, which are paid out in shares of our common stockeligible for vesting over one-1-, two-2-, three-3- and four-year4-year performance periods provided that the designated performance objective is achieved as of the end of each period. The number of shares paid out at each vesting date can range from 0% to 200% of one-quarter of the target units on the grant date. The singlesole performance objective that determines the number of units that may be paid outearned for MSUs is our absolute TSR, which is a market condition under ASC 718; as such, their maximum grant date fair values were the same as their target grant date fair values shown in the table.718. The grant date fair value was 121.68%106.82% of our average stock price on the grant date and determined using the Monte-Carlo simulation method, which utilizes multiple input variables to estimate the probability of meetingachieving the performance objective established for the award, including the expected volatility of our stock price and risk-free interest rates of 0.08%4.95%, 0.12%4.58%, 0.23%4.35% and 0.42%4.20% for the first, second, third and fourth MSU tranches, respectively, derived from linear interpolation of the term structure of Treasury Constant Maturities yield rates for the respective performance periods. TheTarget grant date fair values of MSUs were $3,509,903, $772,438, $499,531$1,050,094, $4,200,125, $875,058, $445,020 and $248,901$264,816 for Messrs. Stander, Butier, Lovins, StanderMelo and Walker,Colisto, respectively, and $240,066$274,604 for Ms. Baker-Nel. Maximum grant date fair values were the same as target grant date fair values. |
| | | AmountAmounts in 2023 for Mr. StanderMs. Baker-Nel and Messrs. Lovins and Colisto also includes grant date for value of additional PUs granted in 2021. The performance objectives, weightings and targets for this special one-time award were the same as the 2021-2023 PUs granted to our corporate NEOs described above. The maximum grant date fair value of the performance condition component of these 2021-2023 PUs was $507,767 andinclude the grant date fair valuevalues of RSUs, without adjustment for forfeitures. RSUs awarded to Mr. Lovins cliff-vest on the third anniversary of the market condition componentgrant date and RSUs awarded to Ms. Baker-Nel and Mr. Colisto cliff-vest on April 1, 2025, in each case subject to their continued service. The fair values of these PUs was $249,900.RSUs were determined based on the closing price of our common stock on the grant date, adjusted for foregone dividends. The grant date fair values of these RSUs were $578,870, $1,430,732 and $192,898, respectively.
|
| | (3) | Amount in 2023 for Mr. Stander reflects the aggregate grant date fair value of stock options, without adjustment for forfeitures, which vest 50% on each of the third and fourth anniversaries of the grant date, in each case subject to his continued service. The grant date fair value of stock options was estimated using the Black-Scholes pricing model. For information regarding the assumptions we use to determine grant date fair value, see Note 12, “Long-Term Incentive Compensation,” to the consolidated financial statements contained in our 2023 Annual Report. |
| (4) | Amounts reflect cash AIP awards for the applicable year, which are determined in February and paid in March of the following year. |
| | (4)(5) | The table shown on the following pagebelow shows the components of these amounts for 2021.2023. |
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|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Perquisites | | | | | Benefits | | | | | | Name | | Executive
Benefit
Allowance | | | Financial
Planning | | | Executive
Physical | | | Other | | | | | Company
Contribution/
Match,
Savings
Plan | | | Company
Contributions,
Deferred
Comp. Plan | | | Company
Match
Charitable
Contribution | | | Excess
Life
Insurance | | | Executive
Long-Term
Disability
Insurance | | | Executive
Group
Term Life
Insurance | | | Excess
Executive
Liability
Insurance | | | Total | | | | | | | | | | | | | | | | Butier | | $ | 70,000 | | | | – | | | | – | | | – | | | | | | $ | 18,850 | | | $ | 73,387 | | | $ | 10,000 | | | $ | 1,944 | | | $ | 2,619 | | | $ | 2,622 | | | $ | 900 | | | $ | 180,322 | | | | | | | | | | | | | | | | Lovins | | $ | 65,000 | | | | – | | | | – | | | – | | | | | | $ | 18,850 | | | $ | 31,927 | | | $ | 3,547 | | | $ | 1,944 | | | $ | 2,619 | | | $ | 1,710 | | | $ | 900 | | | $ | 126,497 | | | | | | | | | | | | | | | | Baker-Nel | | $ | 50,000 | | | | – | | | | – | | | $3,795* | | | | | | $ | 18,850 | | | $ | 18,783 | | | $ | 5,000 | | | $ | 1,944 | | | $ | 2,270 | | | $ | 2,622 | | | $ | 900 | | | $ | 104,164 | | | | | | | | | | | | | | | | Stander | | $ | 65,000 | | | | – | | | | – | | | – | | | | | | $ | 18,462 | | | $ | 32,784 | | | | – | | | $ | 1,944 | | | $ | 2,619 | | | $ | 2,622 | | | $ | 900 | | | $ | 124,331 | | | | | | | | | | | | | | | | Walker | | $ | 50,000 | | | | – | | | $ | 3,125 | | | – | | | | | | $ | 18,850 | | | $ | 14,446 | | | | – | | | $ | 1,944 | | | $ | 307 | | | $ | 1,710 | | | $ | 900 | | | $ | 91,282 | |
| * | Other for Ms. Baker-Nel reflects miscellaneous carryover living expenses related to her previous international assignment in the Netherlands, which includes $1,025 tax equalization gross-up.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Perquisites | | | | | | | | Benefits | | | | | | Name | | Executive
Benefit
Allowance | | | Executive
Physical | | Financial
Planning | | | Company
Automobile | | | | | | | | Company
Contribution/
Match,
Savings
Plan | | | Company
Contributions,
Deferred
Comp. Plan | | | Company
Match,
Charitable
Contribution | | | Executive
Long-Term
Disability
Insurance | | | Executive
Life
Insurance | | |
Executive
Liability
Insurance | | | Total | | | | | | | | | | | | | | | | Stander | | $ | 66,538 | | | $2,800 | | $ | 4,410 | | | | – | | | | | | | | | $ | 21,450 | | | $ | 49,786 | | | | – | | | $ | 2,631 | | | $ | 4,902 | | | $ | 2,820 | | | $ | 155,337 | | | | | | | | | | | | | | | | Butier | | $ | 48,462 | | | – | | | – | | | | – | | | | | | | | | $ | 21,450 | | | $ | 140,130 | | | $ | 10,000 | | | $ | 2,631 | | | $ | 2,622 | | | $ | 2,820 | | | $ | 228,115 | | | | | | | | | | | | | | | | Lovins | | $ | 65,000 | | | $4,623 | | | – | | | | – | | | | | | | | | $ | 21,450 | | | $ | 54,503 | | | $ | 3,000 | | | $ | 2,631 | | | $ | 2,622 | | | $ | 2,820 | | | $ | 156,649 | | | | | | | | | | | | | | | | Melo | | | – | | | – | | | – | | | $ | 16,169 | | | | | | | | | | – | | | | – | | | $ | 5,000 | | | | – | | | | – | | | | – | | | $ | 21,169 | | | | | | | | | | | | | | | | Baker-Nel | | $ | 50,000 | | | – | | | – | | | | – | | | | | | | | | $ | 21,450 | | | $ | 30,473 | | | $ | 5,000 | | | $ | 2,608 | | | $ | 2,622 | | | $ | 2,820 | | | $ | 114,973 | | | | | | | | | | | | | | | | Colisto | | $ | 50,000 | | | $3,242 | | | – | | | | – | | | | | | | | | $ | 19,913 | | | $ | 29,951 | | | | – | | | | – | | | | $4,902 | | | $ | 2,820 | | | $ | 110,828 | |
| | (5)(6) | Ms. Baker-NelMessrs. Melo and Mr. Walker becameColisto were first-time NEOs in 2021.2023. As permitted by SEC rules, the table shows their compensation beginning in the year in which they became NEOs.only for 2023.
|
2021
| (7) | Amounts for Mr. Melo were converted from euros using the average monthly exchange rate for 2023. |
| | | 80 | | 2024 Proxy Statement | Avery Dennison Corporation |
2023 GRANTS OF PLAN-BASED AWARDS The table below provides information regarding grants of plan-based incentive awards made to our NEOs during 2021.
| | | | | | | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards ($)(1) | | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards (#)(2) | | All Other
Stock
Awards:
Number of
Shares of Stock
Units(#) | | Grant Date
Fair Value
of Stock and Option
Awards ($)(3) | | | | | | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards ($)(1) | | | | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards (#)(2) | | | All Other
Stock
Awards:
Number of
Shares of Stock
Units (#) | | Exercise or
Base Price
of Option
Award ($) | | Grant Date
Fair Value of Stock and Option
Awards ($)(3) | | | Name | | Award
Type | | Grant
Date | | Threshold | | Target | | Maximum | | | | Threshold | | Target | | Maximum | | Award
Type | | Grant
Date | | Threshold | | Target | | Maximum | | | | Threshold | | Target | | Maximum | | Deon M. Stander | | | | | | MSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | 4,636 | | | 5,454 | | | 10,908 | | | | – | | | | – | | | $ | 1,050,094 | | | | | | PUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | 2,812 | | | 5,623 | | | 11,246 | | | | – | | | | – | | | $ | 1,021,274 | | | | | | Options | | | | 09/01/23 | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 62,955 | | | | $190.54 | | | | $3,000,025 | | | | | | AIP Award | | | | – | | | $ | 209,000 | | | $ | 1,045,000 | | | $ | 2,090,000 | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Mitchell R. Butier | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 13,808 | | | 16,245 | | | 32,490 | | | | – | | | $ | 3,509,903 | | | MSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 18,544 | | | 21,816 | | | 43,632 | | | | – | | | | – | | | $ | 4,200,125 | | | | PUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 8,943 | | | 17,886 | | | 35,772 | | | | – | | | $ | 3,537,766 | | | PUs | | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 11,247 | | | | 22,493 | | | | 44,986 | | | | – | | | | – | | | $ | 4,085,287 | | | | | | AIP Award | | | | – | | | $ | 336,000 | | | $ | 1,680,000 | | | $ | 3,360,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | AIP Award | | | | – | | | $ | 293,333 | | | $ | 1,466,667 | | | $ | 2,933,934 | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Gregory S. Lovins | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 3,039 | | | 3,575 | | | 7,150 | | | | – | | | $ | 772,438 | | | MSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 3,863 | | | 4,545 | | | 9,090 | | | | – | | | | – | | | $ | 875,058 | | | | PUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 1,968 | | | 3,936 | | | 7,872 | | | | – | | | $ | 778,523 | | | PUs | | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 2,343 | | | | 4,686 | | | | 9,372 | | | | – | | | | – | | | $ | 851,096 | | | | | | AIP Award | | | | – | | | $ | 99,189 | | | $ | 495,945 | | | $ | 991,890 | | | | – | | | | – | | | | – | | | | – | | | | – | | | RSUs | | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | 8,230 | | | | – | | | | $1,430,732 | | | | | | AIP Award | | | | – | | | $112,500 | | | $ 562,500 | | | $1,125,000 | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Francisco Melo | | | | | | MSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | 1,964 | | | 2,311 | | | 4,622 | | | | – | | | | – | | | $ | 445,020 | | | | | | PUs | | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 1,201 | | | | 2,401 | | | | 4,802 | | | | – | | | | – | | | $ | 426,661 | | | | | | AIP Award | | | | – | | | $ | 67,445 | | | $ | 297,976 | | | $ | 595,952 | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Deena Baker-Nel | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 944 | | | 1,111 | | | 2,222 | | | | – | | | $ | 240,066 | | | MSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 1,212 | | | 1,426 | | | 2,852 | | | | – | | | | – | | | $ | 274,604 | | | | PUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 611 | | | 1,223 | | | 2,446 | | | | – | | | $ | 241,884 | | | PUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 736 | | | 1,471 | | | 2,942 | | | | – | | | | – | | | $ | 267,168 | | | | | | AIP Award | | | | – | | | $ | 41,600 | | | $ | 208,000 | | | $ | 416,000 | | | | – | | | | – | | | | – | | | | – | | | | – | | | RSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | 3,292 | | | | – | | | $ | 578,870 | | Deon M. Stander(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | AIP Award | | | | – | | | $ | 49,000 | | | $ 245,000 | | | $ | 490,000 | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Nicholas R. Colisto | | | | MSUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 1,965 | | | 2,312 | | | 4,624 | | | | – | | | $ | 499,531 | | | MSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 1,169 | | | 1,375 | | | 2,750 | | | | – | | | | – | | | $ | 264,816 | | | | PUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 1,375 | | | 2,750 | | | 5,500 | | | | – | | | $ | 505,487 | | | PUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | 709 | | | 1,418 | | | 2,836 | | | | – | | | | – | | | $ | 257,543 | | | | Special PUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 1,273 | | | 2,547 | | | 5,094 | | | | | $ | 503,784 | | | RSUs | | | 03/01/23 | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | 1,097 | | | | – | | | $ | 192,898 | | | | | | AIP Award | | | | – | | | $ | 42,538 | | | $ | 341,404 | | | $ | 682,808 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | AIP Award | | | | – | | | $ | 45,677 | | | $ | 228,385 | | | $ | 456,770 | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | Ignacio J. Walker | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 979 | | | 1,152 | | | 2,304 | | | | – | | | $ | 248,901 | | | | PUs | | | 03/01/21 | | | | – | | | | – | | | | – | | | | | 634 | | | 1,269 | | | 2,538 | | | | – | | | $ | 251,026 | | | | | | AIP Award | | | | – | | | $ | 68,281 | | | $ | 212,688 | | | $ | 425,376 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | (1) | Amounts represent threshold, target and maximum opportunities under the 20212023 AIP. Target AIP awards are establishedwere determined by multiplying each NEO’s year-endbase salary at the end of 2021 by the following target opportunities: 140%95% for Mr. Stander; ~147% for Mr. Butier; 75% for Mr. Lovins; 60%~58% for Mr. Stander;Melo; and 50% for Ms. Baker-Nel and Mr. Walker. Payout levels rangeColisto. Target AIP opportunities for Messrs. Stander, Butier and Melo reflect previous opportunities of 75%, 160% and 50%, respectively, and year-end opportunities of 135%, 120% and 60%, respectively, in each case prorated for the months of their service in their respective roles during the year. The AIP payout for Corporate NEOs (Ms. Baker-Nel and Messrs. Stander, Butier, Lovins and Colisto) ranges from zero for below-threshold performance; 20% for threshold performance based on a threshold of 0% for profitabilitythe adjusted EPS performance objective(s)objective and a threshold of 50% for otherthe adjusted sales growth and adjusted free cash flow performance objectives; 100% for target performance with respect to each of the performance objectives; and 200% for maximum performance with respect to each of the performance objectives. The AIP payout for our Solutions NEO (Mr. Melo) ranges from zero for below-threshold performance; 22.5% for threshold performance based on thresholds of 0% for the adjusted EPS and adjusted net income performance objectives and 50% for the adjusted sales growth and adjusted free cash flow performance objectives; 100% for target performance with respect to each of the performance objectives; and 200% for maximum performance with respect to each of the performance objectives. |
| | (2) | Amounts for MSUs represent threshold, target and maximum opportunities, which are paid out in shares of our common stock over one-1-, two-2-, three- 3- and four-year4-year performance periods provided that the absolute TSR performance objective is achieved as of the end of each period. The actual number of shares paid outeligible for vesting at each vesting date can rangeranges from 0% to 200% of one-fourthone-quarter of the target number of units on the grant date, with a threshold payout of 85%. MSUs accrue dividend equivalents during the performance period, which are earned and paid only at vesting. |
| | | Amounts for PUs represent threshold, target and maximum opportunities for the 2021-20232023-2025 PUs, which are paid out in shares of our common stock at the end of the three-year performance period provided that the respective cumulative EVA and relative TSR performance objectives are achieved at the end of the period. Cumulative EVA is weighted 50% for Corporate NEOs (based on company EVA) and 75% for our Solutions NEO (based on segment EVA) and relative TSR is weighted 50% for our Corporate NEOs and 25% for our Solutions NEO. The actual number of shares paid out can rangeeligible for vesting ranges from 0% to 200% of the target number of units on the grant date, with a payout of 50% if threshold performance is achieved with respect to each of the performance objectives. |
| | | RSUs awarded to Mr. Lovins cliff-vest on the third anniversary of the grant date and RSUs awarded to Ms. Baker-Nel and Mr. Colisto cliff-vest on April 1, 2025, in each case subject to their continued service. |
| (3) | The grant date fair valuevalues of MSUs waswere determined using the Monte-Carlo simulation method, which utilizes multiple input variables, including expected volatility of our stock price and other assumptions appropriate for determining fair value, to estimate the probability of satisfying the performance objective established for the award. |
| | | The grant date fair valuevalues for the performance condition component of PUs waswere determined based on the fair market value of our common stock on the grant date, adjusted for foregone dividends during the performance period. The grant date fair valuevalues for the market condition component of PUs waswere determined as of the grant date using the Monte-Carlo simulation method described above. |
| | | The grant date fair values of stock options were estimated using the Black-Scholes option-pricing model. |
| | The grant date fair values of RSUs were determined based on the fair market value of our common stock on the grant date, adjusted for foregone dividends. |
| | For more information on the inputs to the Monte-Carlo simulation method,determinations of grant date fair values, see footnote (2) of the 20212023 Summary Compensation Table. For additional information regarding the assumptions we use for our stock-based compensation, see Note 12, “Long-Term Incentive Compensation,” to the consolidated financial statements contained in our 20212023 Annual Report. |
| | (4) | On March 1, 2021, in addition to his annual grant of PUs tied primarily to RBIS’ performance, Mr. Stander was granted a special one-time award of 2021-2023 PUs with a fair market value of $503,784 based 50% on our relative TSR and 50% on our total company EVA, the same performance objectives, weightings and targets as the 2021-2023 PUs granted to our corporate NEOs.
| | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 7981
|
20212023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The table below shows NEO equity awards outstanding as of January 1, 2022, the end of our 2021 fiscal year.
| | | | | | Option Awards | | | | Stock Awards | | | | | Option Awards | | | | | Stock Awards | | | Name | | Grant Date | | Number of
Securities
Underlying
Unexercised
Options –
Exercisable (#) | | Number of
Securities
Underlying
Unexercised
Options –
Unexercisable (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)(1) | | Grant Date | | Number of
Securities
Underlying
Unexercised
Options –
Exercisable (#) | | Number of
Securities
Underlying
Unexercised
Options –
Unexercisable (#) | | Option
Exercise
Price ($) | | Option
Expiration
Date | | | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#) | | Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)(1) | | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | | | 02/27/20 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | | 1,897 | (2) | | $ | 383,497 | | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 3,218 | (3) | | $ | 650,551 | | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 4,591 | (3) | | $ | 928,117 | | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,985 | (2) | | $ | 401,287 | | | | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 9,117 | (3) | | $ | 1,843,093 | | | | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 5,637 | (2) | | $ | 1,139,576 | | | | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | 5,862(4) | | $1,185,062 | | | – | | | $ | 1,185,062 | | | | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 8,391 | (3) | | $ | 1,696,324 | | | | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 5,523 | (2) | | $ | 1,116,530 | | | | | | 09/01/23 | | | | – | | | | 62,955 | | | $ | 190.54 | | | 09/01/33 | | | | | | – | | – | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | 62,955 | | | 5,862 | | $1,185,062 | | | 40,359 | | | $ | 9,344,037 | | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | | | | | | | | | | | | | | | | | | | | | | 06/01/16 | | | | 141,108 | | | | – | | | $ | 73.96 | | | 06/01/26 | | | | | | – | | – | | | – | | | | – | | | | | 06/01/16 | | | | 141,108 | | | | – | | | $ | 73.96 | | | | 06/01/26 | | | | | | – | | | | – | | | | – | | | | – | | | 02/27/20 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 13,214 | (2) | | $ | 2,671,342 | | | | | 02/22/18 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 11,848 | (2) | | $ | 2,565,921 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 32,243 | (3) | | $ | 6,518,245 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 45,071 | (3) | | $ | 9,761,027 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 13,949 | (2) | | $ | 2,819,930 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 20,333 | (2) | | $ | 4,403,518 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 30,477 | (3) | | $ | 6,161,230 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 38,182 | (3) | | $ | 8,269,076 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 18,823 | (2) | | $ | 3,805,258 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 32,406 | (2) | | $ | 7,018,167 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 33,566 | (3) | | $ | 6,785,702 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 35,772 | (3) | | $ | 7,747,142 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 22,093 | (2) | | $ | 4,466,321 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 30,061 | (2) | | $ | 6,510,311 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 141,108 | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | | 213,673 | | | $ | 46,275,162 | | | | | | | | | 141,108 | | | | – | | | – | | – | | | 164,365 | | | $ | 33,228,028 | | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | | | | | | | | | | | | | | | | | | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 2,933 | (2) | | $ | 592,934 | | | | | 02/22/18 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,424 | (2) | | $ | 524,966 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 7,095 | (3) | | $ | 1,434,325 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 12,562 | (3) | | $ | 2,720,552 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 3,071 | (2) | | $ | 620,834 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 5,668 | (2) | | $ | 1,227,519 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 7,178 | (3) | | $ | 1,451,105 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 10,960 | (3) | | $ | 2,373,607 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 4,433 | (2) | | $ | 896,175 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 9,312 | (2) | | $ | 2,016,700 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 6,993 | (3) | | $ | 1,413,705 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 7,872 | (3) | | $ | 1,704,839 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 4,603 | (2) | | $ | 930,543 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 6,616 | (2) | | $ | 1,432,827 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | 8,230(4) | | $1,663,777 | | | – | | | $ | 1,663,777 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 55,414 | | | $ | 12,001,010 | | | | | | | | | | | | | | | | – | | | | – | | | 8,230 | | $1,663,777 | | | 36,306 | | | $ | 9,003,398 | | | Francisco Melo | | Francisco Melo | | Francisco Melo | | Francisco Melo | | | | 02/27/20 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 582 | (2) | | $ | 117,657 | | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,477 | (3) | | $ | 298,590 | | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 913 | (2) | | $ | 184,572 | | | | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 28,016 | (3) | | $ | 5,663,715 | | | | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,267 | (2) | | $ | 256,137 | | | | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 2,987 | (3) | | $ | 603,852 | | | | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 2,340 | (2) | | $ | 473,054 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | – | | – | | | 37,582 | | | $ | 7,597,577 | | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | | | | | | | | | | | | | | | | | | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 766 | (2) | | $ | 154,855 | | | | | 02/22/18 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 631 | (2) | | $ | 136,656 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 2,205 | (3) | | $ | 445,763 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 3,340 | (3) | | $ | 723,344 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 956 | (2) | | $ | 193,265 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 1,358 | (2) | | $ | 294,102 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 2,168 | (3) | | $ | 438,283 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,864 | (3) | | $ | 620,256 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,334 | (2) | | $ | 269,681 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,432 | (2) | | $ | 526,698 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 2,195 | (3) | | $ | 443,741 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,446 | (2) | | $ | 529,730 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,444 | (2) | | $ | 291,919 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,056 | (3) | | $ | 445,268 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | 3,292(4) | | $ 665,511 | | | – | | | $ | 665,511 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | | | | | | | – | | | | – | | | | 15,127 | | | $ | 3,276,054 | | Deon M. Stander | | | | | | | | | | | | | | | | | | | | | | | | 02/22/18 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 1,939 | (2) | | $ | 419,929 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 8,176 | (3) | | $ | 1,770,676 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 3,667 | (2) | | $ | 794,162 | | | | – | | | | – | | | 3,292 | | $ 665,511 | | | 11,068 | | | $ | 2,903,018 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 7,174 | (3) | | $ | 1,553,673 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 6,022 | (2) | | $ | 1,304,185 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 5,500 | (3) | | $ | 1,191,135 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 5,094 | (3) | | $ | 1,103,208 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 4,278 | (2) | | $ | 926,486 | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | | 41,850 | | | $ | 9,063,454 | | Ignacio J. Walker | | | | | | | | | | | | | | | | | | | | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | | | 02/27/20 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 789 | (2) | | $ | 159,504 | | | | | 02/22/18 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 791 | (2) | | $ | 171,307 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,911 | (3) | | $ | 386,328 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 3,092 | (3) | | $ | 669,634 | | | 03/01/21 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 828 | (2) | | $ | 167,388 | | | | | 02/28/19 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 1,397 | (2) | | $ | 302,548 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,852 | (3) | | $ | 374,400 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,698 | (3) | | $ | 584,306 | | | 03/01/22 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,145 | (2) | | $ | 231,473 | | | | | 02/27/20 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,293 | (2) | | $ | 496,595 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | | 2,116 | (3) | | $ | 427,771 | | | | | 09/01/20 | | | | – | | | | – | | | | – | | | | – | | | | | | 1,734 | | | | $375,532 | | | | – | | | | – | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | – | | – | | 1,392 | (2) | | $ | 281,407 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,538 | (3) | | $ | 549,655 | | | 03/01/23 | | | | – | | | | – | | | | – | | | – | | | | | | 1,097(4) | | $ 221,770 | | | – | | | $ | 221,770 | | | | | 03/01/21 | | | | – | | | | – | | | | – | | | | – | | | | | | – | | | | – | | | 2,132 | (2) | | $ | 461,727 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | | | 1,734 | | | | $375,532 | | | | 14,941 | | | $ | 3,235,772 | | | | | | | | | | – | | | | – | | | 1,097 | | $ 221,770 | | | 10,033 | | | $ | 2,250,041 | |
| (1) | Market value calculated based on the closing price of our common stock of $216.57$202.16 on December 31, 2021,29, 2023, the last trading day of our 20212023 fiscal year. |
| (2) | MSUs are eligible for vesting over one-1-, two-2-, three-3- and four-year4-year performance periods, subject to achievement of the absolute TSR performance objective established for the award.objective. Amounts are shown at (i) 200%180%, 200%134%, 183%94% and 135%98% of target for the vesting tranches of the MSUs granted in 2018, 2019, 2020, 2021, 2022 and 2021,2023, respectively, the payouts for all NEOs based on our actual performance for the respective performance periods as determined by the Compensation Committee in February 2022 and2024; (ii) the maximum level of performance for the remaining tranches of the MSUs granted in 2019, 2020 and 2021, as actual performance through January 1, 2022December 30, 2023 would result in above-target payouts; and (iii) at target level of performance for the remaining tranches of the MSUs granted in 2022 and 2023, as actual performance through December 30, 2023 would result in below-target payouts. |
| (3) | PUs are eligible for vesting at the end of a three-year performance period, subject to achievement of the respective cumulative EVA and relative TSR performance objectives establishedobjectives. Amounts reflect the cumulative EVA component of PUs for the award. Amounts are shownannual award of 2021-2023 PUs at (i) 188%166% of target for the 2019-2021Corporate NEOs (except Messrs. Stander and Melo whose annual award of 2021-2023 PUs for corporate NEOs,were tied to Solutions Group) and 115%97% of target for the 2019-2021 PUs for our business NEO,Messrs. Stander and Melo, in each case which were the payouts based on our actual performance for the period as determined by the Compensation Committee in February 20222024. Amount for the cumulative EVA component of the special award of 2021-2023 PUs granted to Mr. Stander reflects 166% of target, based on actual performance as determined by the Compensation Committee in February 2024. Amounts for all NEOs for the 2022-2024 PUs and (ii)2023-2025 PUs reflect the target level of performance as actual performance through December 30, 2023 would result in below-target payouts. Amounts for the TSR component of PUs reflect 200% of target for the 2021-2023 PUs for all NEOs which were the payouts based on actual performance as determined by the Compensation Committee in February 2024. Amounts for all NEOs for the 2022-2024 PUs and 2023-2025 PUs reflect the maximum level of performance, for (A) the 2020-2022 PUs and 2021-2023 PUs for all NEOs and (B) the special one-time award of PUs granted to Mr. Stander in 2021, as actual performance through January 1, 2022December 30, 2023 would result in above-target payouts. |
| (4) | RSUs awarded to Messrs. Stander and Lovins cliff-vest on the third anniversary of the grant date and RSUs awarded to Ms. Baker-Nel and Mr. Colisto cliff-vest on April 1, 2025, in each case subject to their continued service. |
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| | 20222024 Proxy Statement | Avery Dennison Corporation
|
20212023 OPTION EXERCISES AND STOCK VESTED
The table below provides information regarding the number of shares acquired and the value realized by our NEOs upon the vesting of stockequity awards during 2021.2023. | | | | Option Awards | | | | Stock Awards | | Option Awards | | | | | | Stock Awards | | | Name | | Number of Shares
Acquired on Exercise (#) | | Value Realized on Exercise ($) | | | | Number of Shares
Acquired
on Vesting (#) | | Value Realized on Vesting ($)(1) | | Number of Shares
Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | | | Number of Shares
Acquired on Vesting (#) | | | Value Realized on
Vesting ($)(1) | | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | | | – | | | | – | | | | | | | | 13,256 | | | $ | 2,416,171 | | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | | | – | | | | | – | | | | | | | 73,772 | | | | $ | 13,090,841 | | | | – | | | | – | | | | | | | | 68,949 | | | $ | 12,567,334 | | | Gregory S. Lovins | | | | – | | | | | – | | | | | | | 16,477 | | | | $ | 2,993,224 | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | | | – | | | | – | | | | | | | | 19,070 | | | $ | 3,475,889 | | | Francisco Melo | | Francisco Melo | | Francisco Melo | | Francisco Melo | | | | – | | | | – | | | | | | | | 16,184 | | | $ | 2,949,858 | | | Deena Baker-Nel | | | | – | | | | | – | | | | | | | 4,523 | | | | $ | 802,606 | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | | | – | | | | – | | | | | | | | 5,027 | | | $ | 916,271 | | | Deon M. Stander | | | | – | | | | | – | | | | | | | 10,591 | | | | $ | 1,879,373 | | | Ignacio J. Walker | | | | – | | | | | – | | | | | | | 5,932 | | | | $ | 1,093,985 | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | | | – | | | | – | | | | | | 5,112 | | | $ | 931,764 | |
| | (1) | Amounts reflect the number of shares acquired on vesting multiplied by the fair market value of our common stock on the vesting date and, include thefor vesting of the following stock awards. The number of shares acquired on vesting for MSUs, includesinclude the payout of accrued dividend equivalents. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Award
Type | | Grant
Date | | Number of
Units
Subject to
Vesting (#) | | Performance
Modifier (%) | | Number of
Shares
Acquired on
Vesting (#) | | Fair
Market
Value on
Vesting
Date ($) | | Value
Realized on
Vesting ($) | Butier | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | | | 02/23/17 | | | | | 6,394 | | | | | 200 | % | | | | 13,812 | | | | $ | 177.45 | | | | $ | 2,450,939 | | | | | | MSUs | | | | | 02/22/18 | | | | | 5,713 | | | | | 146 | % | | | | 8,842 | | | | $ | 177.45 | | | | $ | 1,569,013 | | | | | | MSUs | | | | | 02/28/19 | | | | | 4,952 | | | | | 197 | % | | | | 10,139 | | | | $ | 177.45 | | | | $ | 1,799,166 | | | | | | MSUs | | | | | 02/27/20 | | | | | 5,462 | | | | | 120 | % | | | | 6,693 | | | | $ | 177.45 | | | | $ | 1,187,673 | | | | | | | PUs | | | | | 02/22/18 | | | | | 23,324 | | | | | 147 | % | | | | 34,286 | | | | $ | 177.45 | | | | $ | 6,084,051 | | Lovins | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | RSUs | | | | | 09/01/17 | | | | | 1,453 | | | | | – | | | | | 1,453 | | | | $ | 225.20 | | | | $ | 327,215 | | | | | | MSUs | | | | | 02/23/17 | | | | | 676 | | | | | 200 | % | | | | 1,462 | | | | $ | 177.45 | | | | $ | 259,432 | | | | | | MSUs | | | | | 02/22/18 | | | | | 1,168 | | | | | 146 | % | | | | 1,806 | | | | $ | 177.45 | | | | $ | 320,475 | | | | | | MSUs | | | | | 02/28/19 | | | | | 1,380 | | | | | 197 | % | | | | 2,826 | | | | $ | 177.45 | | | | $ | 501,474 | | | | | | MSUs | | | | | 02/27/20 | | | | | 1,571 | | | | | 120 | % | | | | 1,921 | | | | $ | 177.45 | | | | $ | 340,881 | | | | | | | PUs | | | | | 02/22/18 | | | | | 4,768 | | | | | 147 | % | | | | 7,009 | | | | $ | 177.45 | | | | $ | 1,243,747 | | Baker-Nel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | | | 02/23/17 | | | | | 190 | | | | | 200 | % | | | | 413 | | | | $ | 177.45 | | | | $ | 73,287 | | | | | | MSUs | | | | | 02/22/18 | | | | | 304 | | | | | 146 | % | | | | 469 | | | | $ | 177.45 | | | | $ | 83,224 | | | | | | MSUs | | | | | 02/28/19 | | | | | 331 | | | | | 197 | % | | | | 676 | | | | $ | 177.45 | | | | $ | 119,956 | | | | | | MSUs | | | | | 02/27/20 | | | | | 410 | | | | | 120 | % | | | | 502 | | | | $ | 177.45 | | | | $ | 89,080 | | | | | | | PUs | | | | | 02/22/18 | | | | | 1,239 | | | | | 199 | % | | | | 2,463 | | | | $ | 177.45 | | | | $ | 437,059 | | Stander | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | MSUs | | | | | 02/23/17 | | | | | 586 | | | | | 200 | % | | | | 1,266 | | | | $ | 177.45 | | | | $ | 224,652 | | | | | | MSUs | | | | | 02/22/18 | | | | | 935 | | | | | 146 | % | | | | 1,447 | | | | $ | 177.45 | | | | $ | 256,770 | | | | | | MSUs | | | | | 02/28/19 | | | | | 893 | | | | | 197 | % | | | | 1,827 | | | | $ | 177.45 | | | | $ | 324,201 | | | | | | MSUs | | | | | 02/27/20 | | | | | 1,016 | | | | | 120 | % | | | | 1,242 | | | | $ | 177.45 | | | | $ | 220,393 | | | | | | | PUs | | | | | 02/22/18 | | | | | 3,817 | | | | | 126 | % | | | | 4,809 | | | | $ | 177.45 | | | | $ | 853,357 | | Walker | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | RSUs | | | | | 09/01/20 | | | | | 866 | | | | | – | | | | | 866 | | | | $ | 225.20 | | | | $ | 195,023 | | | | | | MSUs | | | | | 02/23/17 | | | | | 476 | | | | | 200 | % | | | | 1,028 | | | | $ | 177.45 | | | | $ | 182,419 | | | | | | MSUs | | | | | 02/22/18 | | | | | 381 | | | | | 146 | % | | | | 588 | | | | $ | 177.45 | | | | $ | 104,341 | | | | | | MSUs | | | | | 02/28/19 | | | | | 340 | | | | | 197 | % | | | | 694 | | | | $ | 177.45 | | | | $ | 123,150 | | | | | | MSUs | | | | | 02/27/20 | | | | | 387 | | | | | 120 | % | | | | 472 | | | | $ | 177.45 | | | | $ | 83,756 | | | | | | | PUs | | | | | 02/22/18 | | | | | 1,554 | | | | | 147 | % | | | | 2,284 | | | | $ | 177.45 | | | | $ | 405,296 | |
| | | Avery Dennison Corporation | 2022 Proxy Statement
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20212023 PENSION BENEFITS
The present value of accumulated pension benefits shown in the table below has beenwas calculated based on the assumptions we used to calculate our pension benefit obligations in the consolidated financial statements contained in our 20212023 Annual Report. Amounts shown reflect the lump-sum present value of the pension benefits accumulated as of December 30, 2023, the last day of our fiscal year. Ms. Baker-Nel and Messrs. Stander, Melo and WalkerColisto are not included in the table because they have no accumulated pension benefits. Amounts shown reflect the lump-sum present value of the pension benefits accumulated as of January 1, 2022, the last day of our fiscal year.
| | Name | | Plan Name | | Number of Years of Credited Service(#) | | Present Value of Accumulated
Benefit(1)($) | | Payments During Last Fiscal
Year(1)($) | | Plan Name | | Number of Years of
Credited Service (#) | | Present Value of
Accumulated
Benefit ($)(1) | | Payments During
Last Fiscal
Year ($)(1) | | | Mitchell R. Butier | | Benefit Restoration Plan | | | 9.33 | | | $ | 362,434 | | | | – | | Mitchell R. Butier | | | Benefit Restoration Plan | | | 9.33 | | | $ | 230,075 | | | | – | | | Gregory S. Lovins | | Benefit Restoration Plan | | | 15.58 | | | $ | 48,937 | | | | – | | Gregory S. Lovins | | | Benefit Restoration Plan | | | 15.58 | | | $ | 30,454 | | | | – | |
| | (1) | The Benefit Restoration Plan allows for lump-sum payment. For information regarding the assumptions we use to determine the present value of accumulated benefits for our pension plans,plan benefits, see Note 6, “Pension and Other Postretirement Benefits,” to the consolidated financial statements contained in our 20212023 Annual Report. | |
Benefit Restoration Plan Our Benefit Restoration Plan (BRP) is a nonqualified excess benefit plan that provides for the payment of supplemental retirement benefits to eligible participants in an amount equal to the amount by which their benefits payable under our now terminatedformer U.S. pension plan would have been reduced under the Code. Messrs. Butier and Lovins are our only NEOs eligible to receive benefits under the BRP. No accruals were made during 2021.2023 as the plan was frozen in 2010. Compensation covered by the BRP includes base salary and AIP awards through the date the plan was frozen, up to applicable statutory limitations each plan year. Employees vested in the BRP after five years of service, or at age 55 upon termination of employment. Benefits under the BRP are based on pensionable earnings, length of service, when benefits commence and how they are paid. Benefits are calculated separately for each year of applicable service using a formula equal to 1.25% times compensation up to the breakpoint (which for each year prior to our freezing the accrual of additional benefits was the average of the Social Security wage bases for the preceding 35 years) plus 1.75% times compensation in excess of the breakpoint. The results of the calculation for each year of service are added together to determine the annual single life annuity benefit under the BRP for an employee at normal retirement (generallyat age 65),65, which is not subject to reduction for Social Security payments. Payments are made in a lump-sum distribution generally payable upon the formlater of a lump-sum distribution,separation from service and age 55, unless a timely election is made for monthly payments over the lifetime of the participant and, if applicable, a designated beneficiary, generally payable upon the later of separation from service and age 55.beneficiary. | | | 82Avery Dennison Corporation | 2024 Proxy Statement
| | 2022 Proxy Statement | Avery Dennison Corporation83
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20212023 NONQUALIFIED DEFERRED COMPENSATION
The table below provides information regarding NEOexecutive and company contributions to our Executive Variable Deferred Retirement Plan (EVDRP). by our U.S. NEOs. Under the EVDRP, participants may choose among publicly available funds ranging from money market and bond funds to index and other equity/mutual funds. Their rate of return depends on the funds selected bythey select. Mr. Melo is excluded from the participant.table because, as a non-U.S. NEO, he is not eligible to participate in the EVDRP. | | Name | | Executive
Contributions
in Last FY ($) | | Registrant
Contributions
in Last FY ($)(1) | | Aggregate
Earnings
in Last FY ($)(2) | | Aggregate
Withdrawals/
Distributions ($) | | Aggregate
Balance At
Last FYE ($) | | Executive
Contributions
in Last FY ($) | | Registrant
Contributions
in Last FY ($)(1) | | Aggregate
Earnings
in Last FY ($)(2) | | Aggregate
Balance at
Last FYE ($) | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | Deon M. Stander | | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | Mitchell R. Butier | | | | – | | | | $ | 73,387 | | | | $ | 662,480 | | | | | – | | | | $ | 3,373,198 | | | Gregory S. Lovins | | | | – | | | | $ | 31,927 | | | | $ | 133,115 | | | | | – | | | | $ | 596,615 | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | Gregory S. Lovins | | | Deena Baker-Nel | | | $ | 40,388 | | | | $ | 18,783 | | | | $ | 87,340 | | | | | – | | | | $ | 760,929 | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | Deena Baker-Nel | | | Deon M. Stander | | | $ | 132,495 | | | | $ | 32,784 | | | | $ | 142,088 | | | | | – | | | | $ | 1,178,921 | | | Ignacio J. Walker | | | | – | | | | $ | 14,446 | | | | $ | 320 | | | | | – | | | | $ | 89,077 | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | |
| | (1) | Company contributions to the EVDRP are included in the “AllAll Other Compensation”Compensation column of the 20212023 Summary Compensation Table. |
| | (2) | Amounts reflect EVDRP vested account balances as of January 1, 2022,December 30, 2023, the last day of our 20212023 fiscal year. Because the amounts do not represent above-market earnings, they are not reported in the 20212023 Summary Compensation Table. The amounts shown below were reported underin the “AllAll Other Compensation”Compensation column of the Summary Compensation TableTables in previous proxy statements. |
| | Name | | Aggregate Company Contributions
Previously Reported ($) | | Aggregate Company Contributions
Previously Reported ($) | | | Stander | | Stander | | Stander | | Stander | | | $ | 178,291 | | | Butier | | Butier | | Butier | | Butier | | $ | 756,247 | | | $ | 905,805 | | | Lovins | | $ | 147,788 | | Lovins | | Lovins | | Lovins | | | $ | 219,583 | | | Baker-Nel | | | – | | Baker-Nel | | Baker-Nel | | Baker-Nel | | | $ | 41,349 | | | Stander | | $ | 111,777 | | | Walker | | | – | | Colisto | | Colisto | | Colisto | | Colisto | | | | – | |
Executive Variable Deferred Retirement Plan TheUnder the EVDRP, is the only active deferred compensation plan available to our eligible U.S. employees.employees can defer up to 75% of their salary and 90% of their AIP award. Deferrals are immediately vested. Earnings are based on a fixed rate and/or the performance of variable bond and equity funds selected by the participant from the available options. options. The EVDRP does not offer investment options that provide above-market interest rates.
Eligible employees are able to defer U.S. taxes until their investment isdeferrals are withdrawn, providing them an opportunity for them to accumulate savings on a pre-tax basis. We also benefit from this arrangement because we can use this cash for other corporate purposes until a deferred compensation account is paid to a participant based on his or her election to receive withdrawals either in-service withdrawals or after termination of employment. All deferred compensation accounts are unfunded obligations of our company and subject to the same risks as any of our general debts and obligations. As a result, these accounts help mitigate risk-seeking behavior by management that could be detrimental to the long-term health of our company. Employee Contributions
Under the EVDRP, eligible employees can defer up to 75% of their salary and 90% of their AIP award. Deferrals are immediately vested.
Company Contribution
As of January 1, 2021,the first business day of our 2023 fiscal year, we made a contribution to the deferred compensation accounts of eligible employeesparticipants, including all U.S. NEOs, based on 401(k) eligible earningspay in excess of the federal compensation limit and deferred compensation in 2020.2022. This annual contribution, providedwhich is designated to supplement 401(k) contributions that are limited under the Code, provides an automatic contribution of 3% of deferred and eligible pay plus a matching contribution of up to 50% on the first 7% of deferrable and eligible pay not covered by company contributions to our 401(k) Plan. This contribution was added to the deferred compensation accounts of eligible employees employed at year-end 2020, which included all our NEOs. This benefit is designed to supplement 401(k) contributions that are limited under federal law. Withdrawals/Distributions
Contributions to deferred compensation accounts are required to be distributed following an eligible employee’s separation from service. Subject to Section 409A of the Code, eligible employees may elect to receive separation from | | | Avery Dennison Corporation | 2022 Proxy Statement
| | 83
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service withdrawals in the form of a lump-sum payment or monthly installments over two to 20 years. Eligible employees may change the method in which payments are distributed provided that they do so at least 12 months before the date of distribution; however, any change results in the distribution occurring or beginning five years later than it would have otherwise. All NEOs are “specified employees” under Section 409A. Distributions to specified employees409A; as a result, their distributions cannot be made until at least the seventh monthseven months after separation from service, except in the event of death.
| | | 84 | | 2024 Proxy Statement | Avery Dennison Corporation |
PAYMENTS UPON TERMINATION AS OF JANUARY 1, 2022DECEMBER 30, 2023 The table below shows the potential benefits that would have been payable to our NEOs in the event of terminationhad they been terminated on January 1, 2022,December 30, 2023, the last day of our 2021 fiscal year. Amounts paid or distributed upon actual termination may differ from amounts shown due to timing and any future changes to our benefit plans. | | | | | | | | | | Termination Scenarios as of End of Fiscal Year 2021 | | | | | | Termination Scenarios as of End of Fiscal Year 2023 | | | Name | | | | Benefit | | Death | | Qualifying
Disability | | Qualifying
Retirement | | Involuntary
Termination
Not for
Cause | | Termination
within 24 Mos.
of Change of
Control | Mitchell R. Butier | | Name | | | | | Benefit | | Death | | Qualifying
Disability | | Qualifying
Retirement(2) | | Involuntary
Termination
Not for
Cause | | Termination within 24 Months
of Change of
Control | | Deon M. Stander | | Deon M. Stander | | | | | | Severance Payment | | | | – | | | | – | | | | – | | | $ | 5,808,720 | | | $ | 8,713,079 | | | | Severance Payment | | | – | | | | – | | | | – | | | $ | 4,345,365 | | | $ | 6,518,048 | | | | | | Unvested PUs(1) | | | $ | 4,047,549 | | | $ | 4,047,549 | | | | – | | | | – | | | $ | 8,008,109 | | | | Unvested Stock Options(1) | | | – | | | | – | | | | – | | | | – | | | $ | 731,537 | | | | | | Unvested MSUs(1) | | | $ | 3,240,074 | | | $ | 3,240,074 | | | | – | | | | – | | | $ | 6,249,951 | | | | Unvested RSUs(1) | | $ | 1,777,593 | | | $ | 1,777,593 | | | $ | 1,777,593 | | | $ | 1,777,593 | | | $ | 1,777,593 | | | | | | Outplacement | | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | Unvested PUs(1) | | $ | 1,871,799 | | | $ | 1,871,799 | | | $ | 2,372,695 | | | $ | 2,372,695 | | | $ | 3,409,024 | | | | | | | | | | | | | | | | | | | | | | | | | Unvested MSUs(1) | | $ | 1,271,676 | | | $ | 1,271,676 | | | $ | 1,469,341 | | | $ | 1,469,341 | | | $ | 2,746,456 | | | | | | Total | | | $ | 7,287,623 | | | $ | 7,287,623 | | | | – | | | $ | 5,833,720 | | | $ | 22,996,139 | | | | Outplacement | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 4,921,068 | | | $ | 4,921,068 | | | $ | 5,619,629 | | | $ | 9,989,994 | | | $ | 15,207,658 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Elimination of Excise Tax Liability | | | – | | | | – | | | | – | | | | – | | | $ | (2,050,831 | ) | | | | | | | Forfeited Equity(1) | | $ | (3,743,542 | ) | | $ | (3,743,542 | ) | | $ | (3,044,981 | ) | | $ | (3,044,981 | ) | | | – | | Mitchell R. Butier | | Mitchell R. Butier | | | | | | | Unvested PUs(1) | | $ | 6,293,241 | | | $ | 6,293,241 | | | | – | | | | – | | | $ | 12,179,129 | | | | | | | Unvested MSUs(1) | | $ | 5,484,047 | | | $ | 5,484,047 | | | | – | | | | – | | | $ | 11,263,626 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 11,777,288 | | | $ | 11,777,288 | | | | – | | | | – | | | $ | 23,442,755 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Forfeited Equity(1) | | $ | (11,777,288 | ) | | $ | (11,777,288 | ) | | $ | (23,442,755 | ) | | $ | (23,442,755 | ) | | | – | | Gregory S. Lovins | Gregory S. Lovins | | Gregory S. Lovins | | | | | | | Severance Payment | | | – | | | | – | | | | – | | | $ | 1,340,183 | | | $ | 2,680,365 | | | | | | | Unvested RSUs(1) | | | – | | | | – | | | | – | | | | – | | | $ | 1,663,777 | | | | | | | Unvested PUs(1) | | $ | 1,426,306 | | | $ | 1,426,306 | | | | – | | | | – | | | $ | 2,688,930 | | | | | | | Unvested MSUs(1) | | $ | 1,329,675 | | | $ | 1,329,675 | | | | – | | | | – | | | $ | 2,565,664 | | | | | | | Outplacement | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 2,755,981 | | | $ | 2,755,981 | | | | – | | | $ | 1,365,183 | | | $ | 9,623,736 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Forfeited Equity(1) | | $ | (4,162,390 | ) | | $ | (4,162,390 | ) | | $ | (6,918,371 | ) | | $ | (6,918,371 | ) | | | – | | Francisco Melo | | Francisco Melo | | | | | | | Severance Payment | | | – | | | | – | | | | – | | | $ | 817,168 | | | $ | 1,634,336 | | | | | | Severance Payment | | | | – | | | | – | | | | – | | | $ | 1,181,565 | | | $ | 2,363,130 | | | | Unvested PUs(1) | | $ | 3,094,564 | | | $ | 3,094,564 | | | | – | | | | – | | | $ | 6,332,258 | | | | | | Unvested PUs(1) | | | $ | 1,075,342 | | | $ | 1,075,342 | | | | – | | | | – | | | $ | 2,039,223 | | | | Unvested MSUs(1) | | $ | 354,222 | | | $ | 354,222 | | | | – | | | | – | | | $ | 916,161 | | | | | | Unvested MSUs(1) | | | $ | 858,595 | | | $ | 858,595 | | | | – | | | | – | | | $ | 1,606,267 | | | | Outplacement | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | Outplacement | | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 3,448,786 | | | $ | 3,448,786 | | | | – | | | $ | 842,168 | | | $ | 8,907,755 | | | | | | Total | | | $ | 1,933,937 | | | $ | 1,933,937 | | | | – | | | $ | 1,206,565 | | | $ | 6,033,620 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Elimination of Excise Tax Liability | | | – | | | | – | | | | – | | | | – | | | $ | (1,682,566 | ) | | | | | | Forfeited Equity(1) | | $ | (3,799,632 | ) | | $ | (3,799,632 | ) | | $ | (1,078,117 | ) | | $ | (1,078,117 | ) | | | – | | Deena Baker-Nel | Deena Baker-Nel | | Deena Baker-Nel | | | | | | Severance Payment | | | | – | | | | – | | | | – | | | $ | 648,360 | | | $ | 648,360 | | | | Severance Payment | | | – | | | | – | | | | – | | | $ | 762,683 | | | $ | 762,683 | | | | | | Unvested PUs(1) | | | $ | 295,041 | | | $ | 295,041 | | | | – | | | | – | | | $ | 574,993 | | | | Unvested RSUs(1) | | | – | | | | – | | | | – | | | | – | | | $ | 665,511 | | | | | | Unvested MSUs(1) | | | $ | 229,875 | | | $ | 229,875 | | | | – | | | | – | | | $ | 442,299 | | | | Unvested PUs(1) | | $ | 437,676 | | | $ | 437,676 | | | | – | | | | – | | | $ | 830,271 | | | | | | Outplacement | | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | Unvested MSUs(1) | | $ | 389,982 | | | $ | 389,982 | | | | – | | | | – | | | $ | 774,395 | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | Total | | | $ | 524,916 | | | $ | 524,916 | | | | – | | | $ | 673,360 | | | $ | 1,690,652 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | $ | 827,658 | | | $ | 827,658 | | | | – | | | $ | 787,683 | | | $ | 3,057,860 | | | | | | | | | | | | | | | | | | | | | | Deon M. Stander | | | | | | Severance Payment | | | | – | | | | – | | | | – | | | $ | 934,771 | | | $ | 1,869,542 | | | | | Forfeited Equity(1) | | $ | (1,442,518 | ) | | $ | (1,442,518 | ) | | $ | (2,270,177 | ) | | $ | (2,270,177 | ) | | | – | | | | | | Unvested PUs(1) | | | $ | 900,281 | | | $ | 900,281 | | | | – | | | | – | | | $ | 1,924,008 | | | | | | Unvested MSUs(1) | | | $ | 555,627 | | | $ | 555,627 | | | | – | | | | – | | | $ | 1,039,203 | | | | | | Outplacement | | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | $ | 1,455,908 | | | $ | 1,455,908 | | | | – | | | $ | 959,771 | | | $ | 4,857,753 | | | | | | | | | | | | | | | | | | | | | | | | | Ignacio J. Walker | | Nicholas R. Colisto | | Nicholas R. Colisto | | | | | | Severance Payment | | | | – | | | | – | | | | – | | | | 662,423 | | | $ | 662,423 | | | | Severance Payment | | | – | | | | – | | | | – | | | $ | 710,486 | | | $ | 710,486 | | | | | | Unvested RSUs(1) | | | $ | 375,532 | | | $ | 375,532 | | | | – | | | | – | | | $ | 375,532 | | | | Unvested RSUs(1) | | | – | | | | – | | | | – | | | | – | | | $ | 221,770 | | | | | | Unvested PUs(1) | | | $ | 286,378 | | | $ | 286,378 | | | | – | | | | – | | | $ | 566,980 | | | | Unvested PUs(1) | | $ | 376,961 | | | $ | 376,961 | | | | – | | | | – | | | $ | 744,960 | | | | | | Unvested MSUs(1) | | | $ | 227,997 | | | $ | 227,997 | | | | – | | | | – | | | $ | 440,873 | | | | Unvested MSUs(1) | | $ | 350,675 | | | $ | 350,675 | | | | – | | | | – | | | $ | 711,814 | | | | | | Outplacement | | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | Outplacement | | | – | | | | – | | | | – | | | $ | 25,000 | | | $ | 25,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | $ | 889,907 | | | $ | 889,907 | | | | – | | | $ | 687,423 | | | $ | 2,070,808 | | | | Total | | $ | 727,636 | | | $ | 727,636 | | | | – | | | $ | 735,486 | | | $ | 2,414,030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Forfeited Equity(1) | | $ | (950,907 | ) | | $ | (950,907 | ) | | $ | (1,678,543 | ) | | $ | (1,768,543) | | | | – | | (1) Values for equity awards were determined as follows: (i) for stock options, the number of shares that would have been exercisable multiplied by the difference between the fair market value of our common stock of $202.16 on December 29, 2023, the last trading day of our 2023 fiscal year, and the applicable exercise price; and (ii) for RSUs, PUs and MSUs, the number of shares that would have been acquired or forfeited on vesting multiplied by $202.16. (2) Only Mr. Stander qualified as retirement eligible at the end of fiscal year 2023 because he had reached the age of 55 and had over 10 years of service with our company. As a result, in every termination scenario, all of his unvested equity awards would vest, with PUs and MSUs vesting on a prorated basis after the end of their respective performance period based on actual performance. | | (1) Values for equity awards were determined as follows: (i) for stock options, the number of shares that would have been exercisable multiplied by the difference between the fair market value of our common stock of $202.16 on December 29, 2023, the last trading day of our 2023 fiscal year, and the applicable exercise price; and (ii) for RSUs, PUs and MSUs, the number of shares that would have been acquired or forfeited on vesting multiplied by $202.16. (2) Only Mr. Stander qualified as retirement eligible at the end of fiscal year 2023 because he had reached the age of 55 and had over 10 years of service with our company. As a result, in every termination scenario, all of his unvested equity awards would vest, with PUs and MSUs vesting on a prorated basis after the end of their respective performance period based on actual performance. | |
| | (1) | Values for PUs, MSUs and RSUs determined based on the number of shares that would have been acquired or forfeited on vesting multiplied by the fair market value of our common stock on December 31, 2021.
| | | 84Avery Dennison Corporation | 2024 Proxy Statement
| | 2022 Proxy Statement | Avery Dennison Corporation85
|
In the event of termination, our eligible NEOs would be entitled to receive their accrued balance under the EVDRP. These amounts would be determined and paiddistributed in accordance with the participant’s distribution election and the terms and conditions of the plan, and are not included in the table. See 20212023 Nonqualified Deferred Compensation for more information. None of our NEOs has an employment contract, and all of them are employed at-will; if an NEO were no longer performing at the expected level, he or she could be terminated for cause immediately without receiving a contractually guaranteed payment. The other potential payments upon termination or a change of control are described below.
Executive Severance Plan OurAll NEOs (excluding Mr. Butier, who ceased being eligible when he became Executive Chairman in September 2023) are eligible participants under the Severance Plan. Upon involuntary termination not for cause, our NEOsthey would be entitled to the benefits shown below.
| | | | | | | | | | | | | | | | | | | Lump-sum payment equal to annual
base salary
+ target AIP award for year
of termination +
cash value of 12 months
of employer and employee
medical and
dental insurance premiums | | | | | | | | 2For our CEO | | | | | | | | Outplacement services of up to $25,000 for up to one year | | | | | × | | | | | | | | + | | | | | | | | | | | 1For all other eligible NEOs | | | | | | |
Benefits Not Subject to Gross-up. Benefits are subject to withholding for all applicable taxes and not grossed-up for taxes. Trigger for Benefits. Involuntary termination, which excludes termination for cause or due to disability, death, voluntary resignation, or an executive declining simultaneous or continuing employment in a comparable position. Definition of Cause. Cause is defined as (i) commission of a crime or other act that could materially damage the reputation of our company or its subsidiaries; (ii) theft, misappropriation, or embezzlement of company or subsidiary property; (iii) falsification of company or subsidiary records; (iv) substantial failure to comply with written policies and procedures; (v) misconduct; or (vi) substantial failure to perform material job duties not cured within 30 days after written notice. Key Executive Change of Control Severance Plan The COC Severance Plan is designedprovides enhanced severance benefits for key executives to retain certain key executivesincent their retention during a period in which a change of control transaction is being negotiated or a hostile takeover is being attempted. Messrs. Butier,Stander, Lovins and StanderMelo are theour only NEOs eligible participants underto participate in the COC Severance Plan. These NEOs are entitledPlan, which entitles them to benefits only if they are terminated not for “cause” or terminate employment for “good reason” within 24 months of the change of control (a “double trigger”).In these circumstances, these NEOs would be entitled to the benefits shown below. In the event of termination following a change of control, our Level 3 NEOs would be entitled to receive benefits under the Severance Plan described above. Mr. Butier ceased being eligible to participate in the COC Severance Plan when he became Executive Chairman in September 2023. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Lump-sum payment equal to annual
base salary + target AIP award for year
of termination + cash value of
12 months of employer and employee
medical and dental insurance premiums | | | | ×
| | | | 3For our CEO | | | | +
| | | | Prorated target AIP award for year in which termination occurs | | | | +
| | | | Outplacement services of up to $25,000 for up to one year | | | | | | | | | | | | | | | | | | | | | | 2For Level 2 NEOs | | | | | | | | |
Benefits Not Subject to Gross-up.Benefits are subject to withholding for all applicable taxes and not grossed-up for excise or other taxes. However, if the payment would trigger an excise tax, for athe participating NEO, the NEO can elect to receive (i) his full benefits, with him responsibleretaining responsibility for paying any applicable excise taxes, or (ii) reduced benefits to an amount sufficient to eliminate any excise tax liability. In the 2023 termination payments table, we assume that these NEOsCOC payments would elect to reduce their respective benefits.only have triggered an excise tax for Messrs. Stander and Melo.
| | | 86 | | 2024 Proxy Statement | Avery Dennison Corporation |
Definition of Change of Control. Change of control is defined as (i) replacement of a majority of our Board during any 12-month period by directors whose appointment or election was not endorsed by a majority of the members of our Board; or (ii) acquisition by any person, group or corporation that has entered into a merger, acquisition, consolidation, purchase, stock acquisition, asset acquisition or similar business transaction with our company, of (A) together with any of our company’s stock previously held, more than 50% of the total fair market value or the total voting power of our company’s stock; (B) 30% or more of the total voting power of our company’s stock during any 12-month period; or (C) assets of our company having a total gross fair market value of 40% or more of the total gross fair market value of all of our company’s assets during any 12-month period. | | | Avery Dennison Corporation | 2022 Proxy Statement
| | 85
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Definition of Cause. Cause is defined as it is under the Severance Plan. Definition of Good Reason. Good reason is defined as (i) material diminution in base compensation; (ii) material diminution in authority, duties or responsibilities or supervisor’s authority, duties or responsibilities; (iii) material change in geographic job location; or (iv) any other action or inaction that constitutes a material breach by our company. Equity Incentive Plans Under our 2017 Incentive Award Plan, approved by stockholders in April 2017, unvested equity awards held by our NEOs on the date of termination would vest as shown in the table below.below, subject to the plan’s one-year minimum vesting requirement. Mr. Stander was the only NEO who qualified as retirement eligible at year-end 2023. | | | | | | | | | | VESTING OF EQUITY AWARDS ON TERMINATION EVENTS | | | | PUs | | MSUs | | RSUs | | Stock Options | | | | | | Resignation/Resignation or
Involuntary Termination, Whether or Not for Cause | | Cancelled | | Cancelled | | Cancelled | | Cancelled | | | | | | Death | | Vest at time of event on prorated basis based on target performance | | Vest at time of event on prorated basis based on target performance | | Vest | | Cancelled | | | | | | Qualifying Disability | | Same as
deathVest at time of event on prorated basis based on target performance
| | Same as
deathVest at time of event on prorated basis based on target performance
| | Vest | | Cancelled | | | | | | Qualifying Retirement | | Vest after end of performance period on prorated basis based on actual performance | | Vest after end of performance period on prorated basis based on actual performance | | Vest | | Vest and exercisable for term of option | | | | | | Change of Control | | Vest based on actual, if determinable, and otherwise target performance only in event of termination without cause or for good reason within 24 months after change of control | | Vest based on actual, if determinable, and otherwise target performance only in event of termination without cause or for good reason within 24 months of change of control | | Vest only in event of termination without cause or for good reason within 24 months after change of control | | Vest only in event of termination without cause or for good reason within 24 months after change of control |
| | | Avery Dennison Corporation | 2024 Proxy Statement | | 87 |
EQUITY COMPENSATION PLAN INFORMATION AS OF JANUARY 1, 2022DECEMBER 30, 2023 | | Plan Category | | Number of Securities
to Be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights (A) | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights (B) | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (A)) (C) | | Number of Securities
to Be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights (A) | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights (B) | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (A)) (C) | | Equity compensation plans approved by security holders | | Equity compensation plans approved by security holders | | Equity compensation plans approved by security holders | | Equity compensation plans approved by security holders | | Equity compensation plans approved by security holders | | Equity compensation plans approved by security holders | Equity compensation plans approved by security holders | | | | | | Amended and Restated Stock
Option and Incentive Plan(1) | | | 141,932 | | | $ | 73.76 | | | | – | | 2017 Incentive Award Plan(2) | | 1,146,041 | | | | – | | | 3,759,493 | | | | | | | | | | | | | | | | | | | | | Total | | | 1,287,973 | | | $ | 73.76 | | | | 3,759,493 | | | | 1,024,726 | | | $ | 109.92 | | | | 2,608,120 | |
| (1) | Our Amended and Restated Stock Option and Incentive Plan was last approved by stockholders in April 2012. We ceased issuing awards under this plan in March 2017. Under this plan, shares issuable under outstanding equity awards only includesinclude stock options for non-employee directors, officers and other eligible employees.officers. Amount in column (A) reflects 141,932141,108 stock options. |
| (2) | Our 2017 Incentive Award Plan was approved by our stockholders in April 2017. We began issuing awards under this plan in May 2017. Under this plan, sharesShares issuable under outstanding equity awards granted under this plan include (i) RSUs and DSUs for non-employee directors and (ii) restricted stock awards (RSAs), RSUs, PUs and MSUs for officers and other eligible employees. Amount in column (A) includes 65,929 RSAs, 36,09066,540 RSUs, 104,809109,702 DSUs, 390,356238,882 MSUs (including accrued dividend equivalents and reflecting the tranches granted in 2019, 20202021, 2022 and 2023), 405,539 PUs (reflecting the tranches granted in 2021, 2022 and 2023) and 62,955 stock options. For awards subject to vesting as of January 1, 2022 at 200%, 183% and 135%, respectively, theDecember 30, 2023, payouts were based on our actual performance. For unvested awards as of December 30, 2023, awards with projected performance at or below target were calculated at the target level of performance and the unvested tranches of these MSUsawards with projected performance above target were calculated at the maximum level of performance as actual performance would result in above-target payouts); 548,857 PUs (reflecting the relative TSR component of the 2019-2021 PUs subject to vesting as of January 1, 2022 at 188%, the payout based on our actual performance, the maximum level of performance for the relative TSR component of the 2020-2022 and 2021-2023 PUs as actual performance would result in above-target payouts, and a weighted-average of 126%, 200% and 198%, respectively, for the cumulative EVA components of the PUs granted in 2019, 2020 and 2021).performance. Amount in column (C) represents the aggregate number of shares available for future issuance, with each full-value award decreasing the number of shares available for future issuance by 1.5 shares. |
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| | 20222024 Proxy Statement | Avery Dennison Corporation
|
CEO
PAY RATIOThis disclosure comparesVS. PERFORMANCE DISCLOSURE
The table below reflects information regarding the median annual total compensation of our employeesNEOs for the last four fiscal years, as well as our financial performance for those fiscal years, in accordance with SEC rules. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Summary Compensation Table Total for Stander ($) (1) | | Compensation Actually Paid to Stander ($) (2) | | Summary Compensation Table Total for Butier ($) (1) | | Compensation Actually Paid to Butier ($) (2) | | Average Summary Compensation Table Total for Non-CEO | | Average
Compensation
Actually Paid to | | Value of Initial Fixed $100
Investments Based on: | | | | | | | Total
Stockholder
Return ($) | | Peer Group Total Stockholder Return ($) (3) | | Former Peer Group Total Stockholder Return ($) (3) | | | | | | | | | | | | | | | | $ | 6,070,962 | | | | $ | 7,216,077 | | | | $ | 9,700,108 | | | | $ | 10,879,032 | | | | $ | 2,107,852 | | | | $ | 351,353 | | | | $ | 165.02 | | | | $ | 118.91 | | | | $ | 158.44 | | | | $ | 502,988,000 | | | | $ | 7.90 | | | | | | | | | | | | | | | | | | – | | | | | – | | | | $ | 9,107,739 | | | | $ | 7,588,568 | | | | $ | 2,405,277 | | | | $ | 2,220,289 | | | | $ | 145.19 | | | | $ | 110.49 | | | | $ | 133.60 | | | | $ | 757,092,000 | | | | $ | 9.15 | | | | | | | | | | | | | | | | | | – | | | | | – | | | | $ | 12,433,721 | | | | $ | 31,508,041 | | | | $ | 2,342,467 | | | | $ | 5,263,092 | | | | $ | 170.89 | | | | $ | 134.41 | | | | $ | 151.44 | | | | $ | 740,087,000 | | | | $ | 8.91 | | | | | | | | | | | | | | | | | | – | | | | | – | | | | $ | 8,709,348 | | | | $ | 13,337,289 | | | | $ | 2,248,966 | | | | $ | 2,725,777 | | | | $ | 120.83 | | | | $ | 121.14 | | | | $ | 117.22 | | | | $ | 555,863,000 | | | | $ | 7.10 | |
| (1) | For each fiscal year, represents amount reported for our CEO(s) and average amount reported for ournon-CEO NEOs, in each case in the Total column of the Summary Compensation Table. Our NEOs for each of these fiscal years are shown below. |
| | | | | | | | | | | 2023 | | Deon Stander/Mitchell Butier | | Gregory Lovins, Francisco Melo, Deena Baker-Nel and Nicholas Colisto | | 2022 | | Mitchell Butier | | Deon Stander, Gregory Lovins, Deena Baker-Nel and Ignacio Walker | | 2021 | | Mitchell Butier | | Deon Stander, Gregory Lovins, Deena Baker-Nel and Ignacio Walker | | 2020 | | Mitchell Butier | | Deon Stander, Gregory Lovins, Anne Hill and Susan Miller |
| (2) | Amounts represent Compensation Actually Paid to our CEO(s) and the average Compensation Actually Paid to ournon-CEO NEOs for the relevant fiscal year. Compensation Actually Paid represents the amount reported in the Total column of the Summary Compensation Table for the applicable fiscal year. For 2023, amounts were adjusted as shown below. Fair value or change in fair value, as applicable, of equity awards in the Compensation Actually Paid columns was determined as follows: (i) for RSUs, the closing price of our common stock on the fiscalyear-end date, or, in the case of vesting RSUs, the closing price of our common stock on the applicable vesting date; (ii) for the performance condition component of PUs, the same valuation methodology as RSUs except thatyear-end values were multiplied by a factor reflecting achievement of the probable outcome of the respective cumulative EVA performance objective as of the applicable measurement date; and (iii) for the market condition component of PUs and for MSUs, using theMonte-Carlo simulation method, which utilizes multiple input variables, including expected volatility of our stock price and other assumptions appropriate for determining fair value to estimate the probability of achieving the respective performance objective as of the applicable measurement date. For information on the inputs to our Monte-Carlo simulations, see the footnotes of our 2023 Summary Compensation Table. For these purposes, awards for retirement-eligible NEOs are considered vested only at the time of retirement. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Decrease for amounts reported under Stock Awards and Option Awards columns in 2023 Summary Compensation Table | | | $ | (5,071,394 | ) | | | $ | (8,285,412 | ) | | | $ | (1,466,116 | ) | | | | | | Increase based on ASC 718 fair value of awards granted during fiscal year 2023 that remained unvested as of fiscal year-end 2023, determined as of fiscalyear-end 2023 | | | | 6,275,523 | | | | | 8,478,701 | | | | | 1,475,171 | | | | | | | Increase based on ASC 718 fair value of awards granted during fiscal year 2023 that vested during fiscal year, determined as of vesting date | | | | 274,937 | | | | | 1,099,647 | | | | | 121,693 | | | | | | | Increase/Decrease for awards granted during prior fiscal years that were outstanding and unvested as of fiscal year-end 2023, determined based on change in ASC 718 fair value from prior fiscalyear-end to fiscalyear-end 2023 | | | | (354,708 | ) | | | | (1,784,812 | ) | | | | (2,025,711 | ) | | | | | | Increase/Decrease for awards granted during prior fiscal years that vested during fiscal year 2023, determined based on change in ASC 718 fair value from prior fiscal year-end to vesting date | | | | 20,757 | | | | | 1,676,612 | | | | | 138,669 | | | | | | | Decrease for change in the actuarial present values reported under Change in Pension Value and NQDC Earnings column of 2023 Summary Compensation Table | | | | – | | | | | (5,812 | ) | | | | (205 | ) | | | | | | Increase for service cost and, if applicable, prior service cost, for pension plans | | | | – | | | | | – | | | | | – | | | | | | | | | | | | | | | | | | | | | |
| (3) | In 2023, we modified our peer group to show our relative performance more consistent with the methodology used by peer companies. For the relevant fiscal year, represents the cumulative TSR of the Dow Jones U.S. Containers & Packaging Index (the “Peer Group”), of which we are a member. Our former peer group (the “Former Peer Group”), which represents the cumulative TSR of the average return (weighted by market capitalization) of the S&P 500 Industrials and Materials subsets, is also presented in accordance with SEC guidance. |
| (4) | Adjusted EPS is anon-GAAP financial measure reconciled from GAAP in Appendix A of this proxy statement. |
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Relationship Between Financial Performance Measures The graphs below compare the Compensation Actually Paid to our CEO(s) and the average of the Compensation Actually Paid to ournon-CEO NEOs with our (i) TSR, Peer Group TSR and Former Peer Group TSR, (ii) net income and (iii) adjusted EPS, in each case for our 2020, 2021, 2022 and 2023 fiscal years. TSR amounts assume $100 invested on December 31, 2020 and reinvestment of dividends. Reflecting the Compensation Committee’s philosophy of paying for performance and incenting our executives using long-term equity awards primarily tied to our stock price and TSR, the Compensation Actually Paid to our NEOs was generally aligned with our TSR performance. non-CEO NEOs also increased. In 2022, when our TSR decreased, the Compensation Actually Paid also decreased. While our TSR modestly increased in 2023 and the Compensation Actually Paid to Mr. Butier increased as well, the average Compensation Actually Paid to ournon-CEO NEOs substantially decreased due to the impact of the adjustments shown in footnote (2) above. We believe that the inclusion of both absolute and relative TSR as performance objectives in our annual totalLTI awards to NEOs, which comprises the majority of their compensation, ensures ongoing alignment of Compensation Actually Paid to our TSR performance.The growth in our net income from 2020 through 2022 did not directly align with Compensation Actually Paid. In each of those three years, our net income grew; however, our Compensation Actually Paid varied over the period. Net income declined in 2023, while Compensation Actually Paid to Mr. Butier increased and Compensation Actually Paid to ournon-CEO NEOs substantially decreased due to the impact of the adjustments shown in footnote (2) above. Compensation Actually Paid is less sensitive to net income because our executive compensation program prioritizes longer-term equity compensation primarily tied to our stock price and TSR and secondarily to cumulative EVA, each of which we expect will continue to have a much greater impact than net income on Compensation Actually Paid. Outside of our TSR performance, we believe that adjusted EPS is the most important financial measure that ties the compensation of NEOs to our CEO.performance. Adjusted EPS is the primary driver of stockholder value creation; it is also the measure we use to provide guidance to our investors on our anticipated annual performance. Despite the importance of adjusted EPS as a performance objective under our annual incentive compensation program, the impact of adjusted EPS on Compensation Actually Paid is moderated by the much stronger correlation Compensation Actually Paid has with our stock price and TSR performance as a result of the emphasis in our executive compensation program on longer-term equity awards. | | | | | 2024 Proxy Statement | Avery Dennison Corporation |
Pay vs. Performance Financial Performance Measures We believe the financial performance measures shown below, all of which are performance objectives used in our executive compensation program, were the most important in linking Compensation Actually Paid to our NEOs for 2023. For additional information regarding these measures, including reconciliations ofnon-GAAP financial measures from GAAP,see theCompensationand Discussion Analysis Appendix A sections of this proxy statement. Absolute TSR and Relative TSR Adjusted EPS Cumulative EVA Adjusted Sales Growth Adjusted Free Cash Flow | | | Avery Dennison Corporation | 2024 Proxy Statement | | |
CEO PAY RATIO With approximately 75%~69% of our 20212023 revenues originating outside the U.S. and approximately half~40% of our revenues having originatedoriginating in emerging markets (Asia Pacific, Latin America, Eastern Europe and Middle East/Northern Africa), our employees are located in overmore than 50 countries to best serve our customers. Approximately 84%At year-end 2023, ~83% of our employees at year-end 2021 were located outside the U.S. and approximately 68%~66% were located in emerging markets, where median compensation is substantially lower than it is in the U.S. The charts shown below show the demographics of our global employee populationworkforce by region and function. Approximately 21,055At year-end 2023, ~20,000 of our approximately 36,000 employees at year-end 2021, representing approximately 58% of our global workforce, were in Asia Pacific, serving our customers in thatthe region. In addition, approximately 67% of our global workforce~22,500 employees at that time worked in the operations of our manufacturing facilities or in positions directly supporting them from other locations.    
Our compensation philosophy is toWe offer market-based, competitive wages and benefits in all the markets where we compete for talent. All of our employees were paid at least the applicable legal minimum wage, and 96%over 98% of our employees were paid above the applicable legal minimum wage at year-end 2021. Our CEO’s 2023.
Effective September 2023, Mr. Stander was appointed as our new CEO. In accordance with SEC rules, we have annualized Mr. Stander’s compensation is substantially driven by pay-for-performance incentive compensation, consistent with U.S. market practices.for purposes of calculating our CEO pay ratio. 20212023 PAY RATIO
The annual total compensation of our median employee (among all employees except for our CEO) was $15,256.
| | • | | Our CEO’s annualThe 2023 total compensation of our median employee (among all employees except our year-end CEO) was $15,679.
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| • | | The compensation of our year-end CEO of $6,070,962, as reported in the Total column of the 20212023 Summary Compensation Table, was $12,433,721.adjusted to annualize his base salary to $1.1 million, resulting in total compensation of $6,323,731. |
Based on this information, a reasonable estimate of the 20212023 ratio of the annual total compensation of our CEO to the annual total compensation of our median employee was approximately 815403 to 1. We calculated this ratio based on theSEC rules and guidance, provided by the SEC. SEC ruleswhich allow for varying methodologies for companies to use in identifyingvarying methodologies to identify their median employee; otheremployee. Other companies may have different workforce demographics and employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculatingassumptions. As a result, their CEO pay ratios. As a result, the CEO pay ratios reported by other companies may not be meaningful comparisonsmeaningfully compare to our CEO pay ratio.ours. IDENTIFICATION OF MEDIAN EMPLOYEE ToDue to changes in our global workforce from prior year, we determined a new median employee for purposes of calculating our 2023 CEO pay ratio. Consistent with our prior practice, to identify our median employee, we considered annual base compensation, which is the most common pay element for all our employees, as reflected in our global human resources information system. We selected this compensation element because it represents the principal broad-based compensation element for the vast majority of our employees globally. We measured compensation for purposes of determining the median employee using the 12-month period ended December 31, 2021,2023, making no cost-of-living adjustments.
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We selected January 1, 2022December 19, 2023 as the date on which to determine our median employee. As of that date, we had 35,97134,472 employees, 30,32028,743 of which were located outside of the U.S. and 24,57122,751 of which were located in emerging markets. We utilized the de minimis exemption to eliminate thoseexclude the following countries representing no more than 5% of our | | | 92 | | 2024 Proxy Statement | Avery Dennison Corporation |
global population in the aggregate. The countries excluded wereaggregate: Kenya (15 employees), Mauritius (19 employees), the Dominican Republic (120(18 employees), Pakistan (353(345 employees), Indonesia (527(473 employees) and Sri Lanka (669(523 employees), representing approximately 0.1%0.04%, 0.3%0.05%, 1.0%, 1.5%1.37% and 1.9%1.52%, respectively, of our global workforce.workforce at that time. To determine our medianable group, we used a statistical sampling approach known as stratified sampling to concentrate on medianable employees, which were those within a narrow range of the estimated median annual salary of $10,645,$13,017, because these employees were all reasonably likely to be our median employee. As a result of this statistical sampling process, weWe identified 819405 employees with aan annual salary within $500 of this amount. EmployeesBecause employees from China represented approximately 58%46% of the medianable group; as a result,group, we narrowed the medianable group to those 478185 employees. Finally, we identified the 5six employees who were potentiallyhad the potential to be our median employee by analyzing additional qualitative and quantitative characteristics, including pay volatility. MEDIAN EMPLOYEE COMPENSATION Our median employee was a full-time, salaried employee working at a manufacturing facility in China, with annual base compensation of $10,198.$12,960. For purposes of this disclosure, we converted the employee’s annual base compensation from Chinese Yuan to U.S. dollars using the average monthly exchange rate during 20212023 of 0.1548281792.0.14128373. As required by SEC rules, inIn determining the annual total compensation of $15,256$15,679 for our median employee, we calculated the employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K, consistent with how we determined our CEO’s total compensation for the 20212023 Summary Compensation Table.
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ITEM 3 – APPROVAL OF CERTIFICATE OF AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION After careful consideration and upon the recommendation of the Governance Committee, our Board has determined it to be advisable and has approved, and recommends that our stockholders approve at the Annual Meeting, a Certificate of Amendment (the “Charter Amendment”) to our Amended and Restated Certificate of Incorporation (“Charter”) to provide stockholders of record holding, in the aggregate, at least 25% of the voting power of our outstanding common stock the right to request that our Corporate Secretary call special meetings of stockholders. If stockholders approve the Charter Amendment, which is described below and included in its entirety in Appendix B of this proxy statement, our Board will amend our Bylaws to specify the notice, information and other requirements for stockholders to request that our Corporate Secretary call a special meeting of stockholders that will become effective upon the effectiveness of the Charter Amendment. Pursuant to our Charter, stockholders currently do not have the right to request that we call special meetings of stockholders. Based on its ongoing review of our governance program and the feedback received during our 2023 engagements with investors, the Governance Committee and our Board have recognized that providing stockholders with the ability to request that special meetings be called is considered by various stakeholders to be an important element of a strong governance program. Our Board considers special meetings to be extraordinary events that should be held only when significant strategic concerns or other similar considerations require that the matters to be addressed not be delayed until our next Annual Meeting. Our investor relations and stockholder engagement programs provide forums in which stockholders may communicate directly with our Board and members of management throughout the year on topics of interest to them. Because special meetings would be expensive and time-consuming for our company and potentially disrupt our normal business operations, our Board believes that a small percentage of stockholders should not be entitled to request that special meetings be called for their own interests, which may not be shared by the majority of our stockholders. To better inform our Board’s recommendation, we considered feedback from our investors, and while they expressed a variety of preferences and thresholds either during engagement or in their published policies, we found broad support for a 25% minimum ownership threshold for stockholders to be able to request that special meetings be called. Our Board believes that this threshold is appropriate as it would provide stockholders with a meaningful right to request that a special meeting be called while mitigating the risk that company resources are expended to serve the narrow self-interests of a few minority stockholders. The Charter Amendment makes only one additional change, which is to remove out-of-date references to the declassification of our Board that had been fully implemented by April 2014, providing that directors shall be elected annually for one-year terms, consistent with existing Charter provisions and best practices. In light of these considerations, our Board believes that the adoption of a right for stockholders to request that a special meeting be called as set forth in the Charter Amendment establishes the appropriate balance between enhancing stockholder rights and protecting stockholder interests. Board Recommendation Our Board recommends that you vote FOR a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to provide that stockholders holding at least 25% of our common stock have the right to request that we call special meetings of stockholders. Properly dated and signed proxies will be so voted unless you specify otherwise. | | | 94 | | 2024 Proxy Statement | Avery Dennison Corporation |
Complete Text of Proposed Charter Amendment The foregoing description is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the proposed Charter Amendment attached to this proxy statement as Appendix B. Conforming Changes to the Bylaws If the Charter Amendment is approved by stockholders at the Annual Meeting, our Board will amend our Bylaws to specify the procedural and related requirements for stockholder-requested special meetings. These procedural amendments are intended to ensure that our company and stockholders receive appropriate information about the special meeting and that the special meeting is not duplicative of matters that were, or in the near term could be, covered at an Annual Meeting. A summary of the planned amendments to our Bylaws is set forth below. | • | | Ownership Provisions. We will be required to call a special meeting of stockholders upon the written request of one or more stockholders of record who “own” (as defined in our Bylaws) shares representing at least 25% of the voting power of our outstanding common stock. Multiple special meeting requests will be considered together for purposes of the 25% ownership threshold if they identify substantially the same purpose and are dated and delivered to our Corporate Secretary within 60 days of the first date on which a special meeting request was properly delivered to our company. |
| • | | Information Provisions. The special meeting request must include, among other things, certain information, statements, representations, agreements and other documents as set forth in our Bylaws, including such items as would be required if the proponent were seeking to nominate directors or propose other business at an Annual Meeting under the advance notice provisions of our Bylaws. This is intended to provide our company and stockholders with the same information about matters that a stockholder seeks to present for stockholder vote, whether the stockholder is using the advance notice process or requesting that a special meeting be called. |
| • | | Additional Provisions. A special meeting would be required to be held not more than 90 days after we receive a valid special meeting request at such time, date and place, if any, as determined by our Board. The amendments to our Bylaws will set forth certain procedural requirements that our Board believes are appropriate to avoid duplicative or unnecessary special meetings. Under these provisions, a special meeting request would not be valid if: |
| ¡ | | It does not comply with the requirements pertaining to special meeting requests set forth in our Bylaws |
| ¡ | | It relates to an item of business that is not the proper subject of stockholder action under applicable laws |
| ¡ | | It is delivered during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding Annual Meeting and ending on the date of the next Annual Meeting |
| ¡ | | An identical or substantially similar item (a “Similar Item”), other than the election of directors, was presented at an annual or special meeting of stockholders held not more than 12 months before the special meeting request is delivered |
| ¡ | | A Similar Item was presented at an annual or special meeting of stockholders held not more than 90 days before the special meeting request is delivered |
| ¡ | | A Similar Item is included in our company’s notice of meeting as an item of business to be brought before an annual or special meeting of stockholders that has been called but not yet held or that is called for a date within 90 days of the receipt by our company of the special meeting request |
| ¡ | | The special meeting request was made in a manner that violated Regulation 14A under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) (as defined in Section 12) or other applicable laws |
The amendments to our Bylaws will specify that the business to be transacted at a stockholder-requested special meeting will be limited to the business stated in a valid special meeting request and any additional business that our Board determines to include in the notice for the special meeting. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 95 |
ITEM 4 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee – which is directly responsible for the appointment, compensation (including approval of audit and non-audit fees) and evaluation of the independent registered public accounting firm that audits our financial statements and internal control over financial reporting – has appointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for fiscal year 20222024 and our Board is seeking stockholder ratification of the appointment. Stockholder ratification is not required by our Bylaws or applicable laws and regulations. However, our Board annually submits the appointment for stockholder ratification as an elementpart of our strong governance program. If stockholders were not to ratify the appointment, the Audit Committee would reconsider whether or not to retain PwC, but could determine to do so in the committee’sits discretion. In addition, even if the appointment is ratified, the Audit Committee could subsequently appoint a different independent registered public accounting firm without stockholder approvalratification at that time if the committee were to determine that doing so was in the best interests of our company and stockholders. Although no formal statement fromRepresentatives of PwC is planned, representatives of the firm will be available during the Annual Meeting to answer questions from stockholders.
AUDIT COMMITTEE EVALUATIONAudit Committee Evaluation
In determining whether to reappoint PwC, the Audit Committee considered itsthe firm’s qualifications, performance, independence and independence,tenure, as well as thosethe performance of the audit engagement team;team serving our company; the quality of its discussions with PwC; and the fees charged by PwC for the quality and scope of services provided. In connection with the 20222024 appointment, the Audit Committee considered, among other things, the factors described below. Audit Quality – The quality of PwC’s audit and non-audit work based on its oversight of the firm’s work product, considering the firm’s (i) compliance with accounting, auditing and regulatory requirements; (ii) deep and broad understanding of our businesses and the financial environments in which we operate; (iii) use of its experience to identify and resolve issues in a timely manner; and (iv) exercise of integrity, objectivity and professional skepticism when performing our audits, as well as the committee’s discussions with management in executive session without PwC present and its discussions with PwC in executive session without management present
| • | | Audit Quality – The quality of PwC’s audit and non-audit work based on its oversight of its work product, considering the firm’s (i) compliance with accounting, auditing and regulatory requirements; (ii) understanding of our businesses and the financial environments in which we operate; (iii) identification and resolution of issues in a timely manner; and (iv) integrity, objectivity and professional skepticism in performing our audits, as well as its 2023 Audit Quality Report presented to the Audit Committee in February 2024 |
Performance – PwC’s performance during our 2021 and prior-year audits, noting the firm’s agility and continued satisfactory performance in 2021 despite the impact of COVID-19
| • | | Performance – PwC’s effectiveness during its prior-year audits, noting the firm’s agility and strong performance in 2023, as well as its engagement of subject matter experts from the firm to deliver additional value |
Qualitative Review – The results of our global survey of members of management and the Audit Committee evaluating PwC’s (i) expertise and resources; (ii) quality and timeliness of audit planning; (iii) communication and interaction; (iv) independence, objectivity and professional skepticism; and (v) value from fees
| • | | Qualitative Review – The results of our survey of members of management and the Audit Committee evaluating PwC’s (i) expertise and resources; (ii) quality and timeliness of audit planning; (iii) communication and interaction; (iv) independence, objectivity and professional skepticism; and (v) value from fees, noting identified strengths and accomplished improvements, as well as suggestions for further improvement across the surveyed categories |
Self-Assessment – PwC’s self-assessment of its performance in connection with the 2021 audit, its satisfaction of the service needs and expectations of the Audit Committee and management, and areas of strength and improvement opportunities
| • | | Self-Assessment – PwC’s self-assessment of its performance and its satisfaction of the service needs and expectations of the Audit Committee and management during the 2023 audit |
Regulatory Reviews – External data on the firm’s audit quality and performance, including the most recent Public Company Accounting Oversight Board (PCAOB) report on PwC
| • | | Regulatory Reviews – External data on PwC’s audit quality and performance, including the most recent Public Company Accounting Oversight Board (PCAOB) report on the firm provided to the Audit Committee in January 2024 |
Fees – The reasonableness of PwC’s fees for audit and non-audit services, both on an absolute basis and relative to peer firms
| • | | Fees – The reasonableness of PwC’s fees for audit and non-audit services, both on an absolute basis and relative to peer firms, including management’s benchmarking of our audit fees relative to those of peer companies, the key drivers of variances and the firm’s targeted areas of increased productivity |
Independence – PwC’s processes to ensure it maintains independence, written disclosures from the firm and the independence letter required by the PCAOB
| • | | Independence – PwC’s processes to ensure it maintains independence, including required independence training for all partners and staff and global deployment of an independence monitoring system for their personal affiliations; written disclosures from the firm; and the independence letter required by the PCAOB |
| • | | Tenure – PwC’s tenure as our independent auditor, reflecting on the feedback from certain of our investors counterbalanced against the benefits of having a longer-tenured auditor, as well as the controls the Audit Committee and PwC have in place to mitigate potential independence risk. In 2022, the Audit Committee deliberated on conducting a formal process to consider the selection of a new independent auditor, determining not to do so given its continued overall satisfaction with PwC’s effectiveness and performance; our multiple engagements of other registered public accounting firms to perform various non-audit services for our company, which could impair their independence and limit their ability to serve as our independent registered public accounting firm; the Committee’s adherence to regular rotation of PwC’s lead engagement |
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Tenure – PwC’s tenure as our independent auditor, including related feedback from certain of our investors and the benefits of having a longer-tenured auditor, as well as the controls we and PwC have in place to mitigate any potential independence risk
| partner and lead relationship partner; and potential risks to audit quality and timeliness. In 2023, it noted that a new lead relationship partner began working with the Audit Committee in 2022 and a new lead engagement partner would begin overseeing the audit in 2024, in each case bringing fresh perspective. |
The Audit Committee has determined that the appointment of PwC is in the best interest of our company and stockholders. The Audit Committee has appointed PwC as our independent registered public accounting firm for fiscal year 20222024 and our Board recommends that stockholders ratify the appointment. RECOMMENDATION OF BOARD OF DIRECTORSBoard Recommendation
Our Board recommends that you vote FOR ratification of the appointment of PwC as our independent registered public accounting firm for fiscal year 2022. 2024. Properly dated and signed proxies will be so voted unless you specify otherwise. | | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 8997
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AUDIT MATTERS AUDITOR TENURE PwC has been our independent registered public accounting firm since 1998 and served in that capacity during fiscal year 2021.2023. Through its predecessor entities, the firm has served as our independent auditor since at least 1960, which was the year our financial statements were first subject1954 based on records we have been able to SEC reporting requirements. Welocate; we have been unable to determine the exact year PwC began serving as theour independent auditor for our company.auditor. PwC is well-qualified to continue serving as our independent registered public accounting firm, has a deep understanding ofunderstands our operations and accounting practices, and maintains rigorous procedures to ensure auditor independence. Some governance stakeholders, including certainindependence, which are discussed with and evaluated by the Audit Committee. A few of our investors have suggested that, because longer tenure poses a risk to auditor independence, the Audit Committee should consider rotating firms.appointing a different firm. After giving these views due consideration, the Audit Committee most recently determined not to undertake a formal process to potentially select a new firm in 2022. The committee determined to reappoint PwC for 2024 because it continues to believe that PwC’s years of experience auditing our company confers significant benefits, including those describedPwC provides, high-quality audit services on the scale and with the effectiveness and independence the committee requires, giving consideration to the factors shown below. Audit Quality – PwC has deep institutional knowledge regarding our operations, businesses, and accounting policies and practices, and optimizes its people and technology to deliver quality assurance services
| • | | Audit Quality and Performance – PwC has deep institutional knowledge regarding our operations, businesses, and accounting policies and practices, and optimizes its people and technology to deliver quality assurance services and consistently improve its performance |
Scale – PwC has a global presence with resources in virtually all of the countries in which we do business, enabling the firm to cost-effectively perform statutory audit work on our subsidiary accounts
| • | | Scale – PwC has a global presence with resources in virtually all of the countries in which we do business, enabling the firm to perform statutory audit work on our subsidiary accounts |
Capability – PwC’s capability and experience handling the breadth and complexity of our global operations, including our phased worldwide implementation of a new enterprise resource planning system over the next several years
| • | | Capability –PwC’s capability and experience understanding the breadth and complexity of our global operations |
Efficiency – PwC brings customized knowledge incorporating independent judgment tailored to our audits, allowing for significant time savings
| • | | Fresh Perspective –The appointments of a new lead engagement partner for the 2024 audit and a new lead relationship partner in 2022, each of whom brings fresh perspective |
| • | | Efficiency – PwC brings customized knowledge using judgment tailored to our audits, allowing for significant time savings |
Cost – PwC is able to effectively perform audit, audit-related, tax compliance, tax planning and other services cost-competitively
| • | | Cost-Effectiveness –PwC’s ability to cost-effectively perform audit, audit-related, tax compliance, tax planning and other services |
In conducting its regular review of whether to appoint a new independent registered public accounting firm, among other things, the Audit Committee considers the fact that onboarding a new firm would require a significant time commitment on the part of management, potentially distracting from the paramount focus on financial reporting and internal controls, without necessarily increasing audit quality. The Audit Committee has noted thatrecognized PwC’s advanced technologicaluse of digital tools have substantially improvedto improve efficiencies in the efficiencyareas of business performance analytics and effectivenessauditing of the consolidation process, as well as the expanded use of its assurance procedures, enhancing the qualitytool for gathering and managing audit requests. In addition, PwC has continued to improve utilization of its auditglobal deliverable model to manage service delivery cost, drive standardization and making it less burdensome for our team members. These digital advancements were particularly valuable during 2021 when the firm continued to leverage technology to plan and complete many of its audit procedures remotely asexecute a result of the continued impact of COVID-19.quality audit. In addition,PwC has continuously provided management andprovides the Audit Committee and management with accounting/financial reporting insights and best practices relevant to our business, as well as advance notice of legislative and regulatory developments that could have the potential to significantlya significant impact on our company.
The Audit Committee has several controls in place to mitigate any potential independence risk related to auditor tenure, including those described below and on the following page.below. Annual Review of Performance and Independence – In addition to its ongoing assessment and real-time feedback provided to PwC, the Audit Committee formally evaluates both the performance and independence of PwC in determining whether or not to appoint the firm for the following year
Limits on Non-Audit Services – The Audit Committee assesses the impact providing non-audit services may have on PwC’s independence each time it approves the firm’s provision of these services, as well as during its annual assessment of the firm’s independence; our company regularly uses other independent registered public accounting firms to provide non-audit services, engaging PwC only where doing so confers significant benefits given its role as our independent auditor
| • | | Annual Review of Performance and Independence – In addition to its ongoing assessment and feedback provided to PwC, the Audit Committee evaluates the firm’s performance and independence, as well as other factors such as auditor tenure, in determining whether or not to reappoint the firm for the following year |
| • | | Limits on Non-Audit Services – The Audit Committee assesses the impact providing non-audit services may have on PwC’s independence each time it approves the firm’s provision of these services, as well as during its annual assessment of the firm’s independence; our company regularly uses other independent registered public accounting firms to provide non-audit services, engaging PwC only if permissible and where doing so confers significant benefits given its role as our independent auditor |
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Regular Consideration of Auditor Rotation – The Audit Committee regularly considers whether to change the independent registered public accounting firm based on its assessment of PwC’s audit quality, performance, compensation and independence, having most recently done so in February 2020
| • | | Regular Consideration of Auditor Rotation – The Audit Committee regularly considers whether to change the independent registered public accounting firm based on its assessment of PwC’s audit quality, performance, compensation, independence and tenure, having most recently done so in 2022 |
Executive Sessions – The Audit Committee meets regularly both with PwC without management present and with management without PwC present
| • | | Executive Sessions – The Audit Committee meets regularly both with PwC without management present and with management without PwC present |
Lead Engagement Partner Rotation and Selection – To regularly bring a fresh perspective to the audit, a new lead engagement partner is designated at least every five years; a new lead engagement partner was most recently designated in advance of the 2019 audit. The Audit Committee interviewed the partner prior to his designation, and the Audit Committee was directly responsible for making the selection, in consultation with management and representatives from PwC. The Audit Committee anticipates that it will begin discussions with the firm regarding the next lead engagement partner in late 2022.
| • | | Lead Engagement Partner Rotation and Selection – A new lead engagement partner is designated at least every five years, with the current partner having been designated in advance of the 2019 audit. The Audit Committee began discussions with the firm regarding the next lead engagement partner in mid-2022 and has selected the individual who will begin leading the audit in 2024. In both cases, the Audit Committee interviewed the partner prior to his designation, and the Audit Committee was directly responsible for making the selection, in consultation with management and representatives from PwC. |
| • | | Oversight by Lead Relationship Partner – PwC designates a separate lead relationship partner to provide additional assurance and objective oversight; this partner meets at least annually with the Audit Committee and is available as needed to resolve any issues that may arise. A new lead relationship partner was designated in 2022, having been selected by the Audit Committee in consultation with PwC leadership. This additional oversight and escalation point to address issues that may arise strengthens the independence of the audit engagement team and helps ensure continuous improvement in service quality. |
Oversight by Lead Relationship Partner – PwC designates a separate lead relationship partner to provide additional assurance and objective oversight; this partner meets at least annually with the Audit Committee and is available as needed to resolve any issues that may arise.
AUDITOR INDEPENDENCE PwC has advised us that neither the firm nor any member thereof has any financial interest, direct or indirect, in our company or our subsidiaries, confirming to the Audit Committee that it is in compliance with the rules, standards and policies of the PCAOB and the regulations of the SEC governing auditor independence. In February 2022,2024, the Audit Committee reviewed the non-audit services approved by the committee and provided by PwC during 2021,2023, including the related fees and determined thatassociated with previously pre-approved services, in assessing whether the firm’s provision of these services did not impairimpaired PwC’s independence. The Audit Committee discussed with PwC its independence from our company, Board and management and concluded that PwC was independent during 2021.2023. AUDITOR COMPENSATION In approving PwC’s services and fees, the Audit Committee considers whether PwC is best positioned to provide the services effectively and efficiently due to its familiarity with our operations, businesses, accounting policies and practices, internal controls, and financial and information technology systems, as well as whether the services enhance our ability to manage control risks and maintain audit quality. The Audit Committee regularly receives updates on the services provided by, and fees paid to, PwC to ensure that they are within the parameters approved by the Audit Committee.Committee; in the event that fees are expected to exceed what was pre-approved by the Audit Committee at the beginning of the audit, additional committee approval is required. COMMITTEE APPROVAL OF SERVICES AND FEES The Audit Committee has adopted procedures for the pre-approval of all audit and non-audit services and fees provided by the independent registered public accounting firm. In the fourth quarter of 2020,2022, the Audit Committee approved the (i) audit, audit-related and other services PwC wouldcould perform in the 2021 audit2023 and (ii) permissible tax services the firm could provide during the year. The Audit Committee pre-approved PwC’s budgeted fees for audit, audit-related, tax compliance, tax planning and other services in February 2021,April 2023 (having approved interim fees for services through that time), received updates on year-to-date fees incurred in July and October of that year,November, and assessed the final fees in connection with its review of theaudit results of the audit in February 2022.2024. These procedures include reviewing and approving a plan for audit and permitted non-audit services, which includes a description of, and estimated fees for, each category of audit and non-audit services. Additional Audit Committee approval is required for services not included in the initial plan or substantially in excess offor fees exceeding the budgeted amount for thea particular category of services. The Audit Committee has delegated interim pre-approval authority to its Chair for additional services not included in the audit plan;that may become necessary; these services are presented for approval toby the entire Audit Committee at a subsequent meeting. | | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 9199
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AUDIT FEES In fiscal years 20212023 and 2020,2022, PwC provided the services shown below for our company – all of which were approved by the Audit Committee underin accordance with the procedures described above – for which we paid the firm the fees indicated. | | | | | | | 2023 | | | 2022 | | | | | 2021 | | | 2020 | | Audit Fees(1) | | $ | 8,690,000 | | | $ | 8,455,000 | | Audit Fees(1) | | Audit Fees(1) | | Audit Fees(1) | | | $ | 9,623,000 | | | $ | 9,158,000 | | | Audit-Related Fees(2) | | | 236,000 | | | | 173,000 | | Audit-Related Fees(2) | | Audit-Related Fees(2) | | Audit-Related Fees(2) | | | | 207,000 | | | | 203,000 | | | Tax Fees: | | | | | Tax Fees: | | Tax Fees: | | Tax Fees: | | | Tax Compliance(3) | | | 2,610,000 | | | | 2,190,000 | | Tax Compliance(3) | | Tax Compliance(3) | | Tax Compliance(3) | | | | 2,940,000 | | | | 2,212,000 | | | Tax Planning(4) | | | 1,647,000 | | | | 1,984,000 | | Tax Planning(4) | | Tax Planning(4) | | Tax Planning(4) | | | | 900,000 | | | | 2,062,000 | | | All Other Fees(5) | | All Other Fees(5) | | All Other Fees(5) | | All Other Fees(5) | | | 16,000 | | | | 15,000 | | | | 16,000 | | | | 15,000 | | | | | | | | | | | | | | | Total | | $ | 13,199,000 | | | $ | 12,817,000 | | (1) Includes fees for services performed to comply with the standards established by the PCAOB, including the audit of our financial statements and the effectiveness of our internal control over financial reporting; audits in connection with statutory filings; and other services that the principal independent registered public accounting firm most effectively and efficiently can provide, such as procedures related to comfort letters, consents and review of our SEC filings. (2) Includes fees associated with assurance and related services traditionally performed by the independent registered public accounting firm and reasonably related to the performance of the audit or review of our financial statements, including assistance in financial due diligence related to acquisitions and divestitures and the audit or compliance services not required by applicable statutes or regulations. This category also includes audits of pension and other employee benefit plans, as well as the audit or review of information technology systems and internal controls unrelated to the audit of the financial statements. (3) Includes fees associated with tax compliance such as preparation of tax returns in foreign jurisdictions, tax audits and transfer pricing documentation. (4) Includes fees for domestic and international tax planning, and tax planning related to restructuring actions, acquisitions and divestitures. (5) Includes fees for any services other than those described in the above categories. In both years, included subscriptions and licenses to accounting and tax resources and other permissible services. | | Total | | Total | | Total | | | $ | 13,686,000 | | | $ | 13,650,000 | | (1) Includes fees for services performed to comply with the standards established by the PCAOB, including the audits of our financial statements and internal control over financial reporting; audits in connection with statutory filings; and other services that the principal independent registered public accounting firm can most effectively and efficiently provide, such as procedures related to comfort letters, consents and reviews of our SEC filings. (2) Includes fees associated with assurance and related services traditionally performed by the independent registered public accounting firm and reasonably related to the performance of the audit or review of our financial statements, including assistance in financial due diligence related to acquisitions and divestitures and the audit or compliance services not required by applicable statutes or regulations. This category also includes audits of pension and other employee benefit plans, as well as the audit or review of information technology systems and internal controls unrelated to the audit of the financial statements. (3) Includes fees associated with tax compliance such as preparation of tax returns in foreign jurisdictions, tax audits and transfer pricing documentation. (4) Includes fees for U.S. and non-U.S. tax planning, as well as tax planning related to restructuring actions, acquisitions and divestitures. (5) Includes fees for any services other than those described in the above categories. In both years, included subscriptions and licenses to accounting and tax resources and other permissible services. | | (1) Includes fees for services performed to comply with the standards established by the PCAOB, including the audits of our financial statements and internal control over financial reporting; audits in connection with statutory filings; and other services that the principal independent registered public accounting firm can most effectively and efficiently provide, such as procedures related to comfort letters, consents and reviews of our SEC filings. (2) Includes fees associated with assurance and related services traditionally performed by the independent registered public accounting firm and reasonably related to the performance of the audit or review of our financial statements, including assistance in financial due diligence related to acquisitions and divestitures and the audit or compliance services not required by applicable statutes or regulations. This category also includes audits of pension and other employee benefit plans, as well as the audit or review of information technology systems and internal controls unrelated to the audit of the financial statements. (3) Includes fees associated with tax compliance such as preparation of tax returns in foreign jurisdictions, tax audits and transfer pricing documentation. (4) Includes fees for U.S. and non-U.S. tax planning, as well as tax planning related to restructuring actions, acquisitions and divestitures. (5) Includes fees for any services other than those described in the above categories. In both years, included subscriptions and licenses to accounting and tax resources and other permissible services. | |
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| | 20222024 Proxy Statement | Avery Dennison Corporation
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AUDIT AND FINANCE COMMITTEE REPORT COMPOSITION AND QUALIFICATIONS The Audit and Finance Committee (referred to in this report as the “Committee”) of our Board of Directors (our “Board”) is comprisedcomposed of the directors named at the end of this report, each of whom meets the enhanced independence and experience standards for audit committee members required by Securities and Exchange Commission (SEC)SEC rules and New York Stock Exchange (NYSE)NYSE listing standards. Our Board has determined all members to be financially literate and designated each of Anthony Anderson and Patrick Siewert as an “audit committee financial expert” under applicable SEC regulations. Members of the Committee are prohibited from sitting on the audit committee of more than two other public companies, and all members are in compliance with this restriction. PRIMARY RESPONSIBILITIES The Committee has a written charter adoptedapproved by our Board, which is available under Corporate Governance in the investors section of our website. The Committee annually reviews theits charter and recommends changes to the Board for approval. The charter was lastmost recently amended in February 2021.December 2023. During fiscal year 2021,2023, the Committee primarily performed the activities described below on behalf of our Board. Reviewed and discussed with management and the independent registered public accounting firm our quarterly and annual financial results, earnings release documentation and the related reports we file with the SEC Reviewed and discussed with management, our Vice President of Internal Audit leader and the independent registered public accounting firm our internal controls report and the independent registered public accounting firm’s attestation thereof Evaluated the qualifications, performance and independence of the independent registered public accounting firm and met with representatives of the firm to discuss the scope, budget, staffing and progress of its audit Maintained responsibility for the compensation and oversight of the work of the independent auditor for the purpose of preparing or issuing its audit report or related work, as well as for approving the compensation of and engagement of any other registered public accounting firm preparing or issuing an audit report or related work or performing other audit or attest services Supervised our Vice President of Internal Audit leader with respect to the scope, budget, staffing and progress of the internal audit and evaluated his personalindividual performance, as well as the performance of his function Discussed significant financial risk exposures, including our cybersecurity risk management program and risks related to our company’s information technology controls and security, and the steps taken by management to monitor and control these exposures OVERSIGHT OF CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for our consolidated financial statements, accounting and financial reporting policies, internal control over financial reporting, and disclosure controls and procedures. The Committee appointed the independent registered public accounting firm of PricewaterhouseCoopers LLP (PwC) to provide audit, audit-related and tax compliance services, with limited tax planning and other services to the extent approved by the Committee. PwC performed an independent auditaudits of our 20212023 consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and issued, issuing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America (GAAP). The Committee’s responsibility is to monitor and oversee our accounting and financial reporting processes and the audits of our consolidated financial statements and internal control over financial reporting. The members of the Committee are not professionally engaged in the practice of auditing or accounting and rely without independent verification on the information provided to them and the representations made by management and PwC. The Committee reviewed and discussed our consolidated financial statements and related footnotes for the fiscal year ended January 1, 2022December 30, 2023 – including our company’s critical accounting policies and management’s significant estimates and judgments – with management and PwC, as well as PwC’s report and unqualified opinion on the audit.its audits. Management represented to the Committee and PwC that our consolidated financial statements were prepared in accordance with GAAP. PwC presented the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees. The Committee received these written disclosures and the letters from PwC required by the applicable requirements of the PCAOB regarding communications concerning independence – including Rule 3524, Audit Committee Pre-approval of Certain Tax Services, and Rule 3526, Communication with Audit Committees Concerning Independence – and discussed with PwC its independence from our company, Board and management. | | | Avery Dennison Corporation | 2022 2024 Proxy Statement | | 93101
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Based on the Committee’s review and discussions with management and PwC, described above, as well as the Committee’s review of the representations of management and the audit report and unqualified opinion of PwC, the Committee recommended that our Board approve the inclusion of the audited consolidated financial statements for our fiscal year ended January 1, 2022 in our Annual Report on Form 10-K filed with for the SEC.fiscal year ended December 30, 2023. OVERSIGHT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Committee is responsible for appointing the independent registered public accounting firm and monitoring and overseeing the firm’s qualifications, compensation, performance and independence. In this capacity, the Committee reviewed with PwC the overall scope of services and fees for its audit and monitored the progress of PwC’s audit in assessing our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including the firm’s findings and required resources. PwC provided to the Committee the written disclosures and independence letter required by the PCAOB. The Committee discussed with PwC its independence from our company and management and concluded that PwC was independent during fiscal year 2021.2023. The Committee has a policy requiring pre-approval of fees for audit, audit-related, tax compliance, tax planning and other services and has concluded that PwC’s provision of limited non-audit services to our company in 2021 was compatible with maintaining2023 did not impair its independence. Under its charter, the Committee is required to regularly consider whether it is appropriate to change the independent registered public accounting firm, having most recently formally evaluated with management whether it may be appropriate to do so in February 2020. With2022, with a view to ensuring that audit quality would continue to be paramountparamount. Recognizing that – aided by the regular rotation of both the lead engagement partner and recognizing thatthe lead relationship partner – PwC was continuinghas continued to independently and appropriately challengeexercise independence in challenging management, the Committee determined at that time to retain PwC, noting the firm’s strong performanceaudit effectiveness and consistently improving service delivery.delivery. The Committee has determined that the appointment of PwC as our independent registered public accounting firm for fiscal year 20222024 is in the best interest of our company and stockholders. The Committee has appointed PwC in this capacity and recommendsour Board has recommended that stockholders ratify the appointment. OVERSIGHT OF INTERNAL AUDIT The Committee’s responsibility is to monitor and oversee our internal audit function, reviewing the significant audit results reported to management and management’s responses thereto. In this capacity, the Committee reviews with our Vice President of Internal Audit leader the overall scope and budget for the internal audit, and regularly monitors the progress of the internal audit in assessing our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, including key findings and required resources. The Committee supervises our Vice President of Internal Audit leader in the conduct of his operational responsibilities and evaluates his individual performance as well as that of the entire internal audit function. EXECUTIVE SESSIONS The Committee regularly meets separately in executive session without management present with each of our Vice President of Internal Audit leader and PwC to review and discuss their evaluations of the overall quality of our accounting and financial reporting and internal control. The Committee also regularly meets, without PwC or our Vice President of Internal Audit leader present, with management, our CFO and our Controller/CAO,Controller, and meets as needed with other members of management such as our CEO and our CLO, to discuss, among other things, significant risk exposures impacting our financial statements and accounting policies. | | | 102 | | 2024 Proxy Statement | Avery Dennison Corporation |
STOCKHOLDER FEEDBACK The Audit Committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints regarding our accounting, internal controls and auditing matters. See Complaint Procedures for Accounting and Auditing Matters in the Governance section of this proxy statement. The Committee welcomes feedback regarding its oversight of our audit and finance programs.program. Stockholders may communicate with the Committee by writing to the Audit and Finance Committee Chair, c/o Corporate Secretary, 8080 Norton Parkway, Mentor, Ohio 44060. Martha N. Sullivan, Chair
Former director Anthony K. Anderson Andres A. Lopez
Patrick T. Siewert served on the Audit Committee through July 2023 and new director Maria Fernanda Mejia was appointed to the Audit Committee in February 2024. Neither Mr. Anderson nor Ms. Mejia participated in the review, discussions and recommendations reflected in this Audit Committee Report.
| | | | | | | 94Martha N. Sullivan, Chair
| | 2022 Proxy Statement |Andres A. Lopez
| | Patrick T. Siewert | | William R. Wagner | 
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SECURITY OWNERSHIP INFORMATION SECURITY OWNERSHIP OF MANAGEMENT AND SIGNIFICANT STOCKHOLDERS The table below shows the number of shares of our common stock beneficially owned by our (i) current directors; (ii) NEOs; (iii) current directors and executive officers as a group; and (iv) greater-than-five-percent, or “significant,” stockholders, in each case as of the February 28, 202226, 2024 record date for the Annual Meeting. Beneficial ownership means that the individual, group or entity, directly or indirectly, has or shares with others the power to vote (or direct the voting of) or the power to dispose of (or direct the disposition of) the shares; the individual, group or entity may or may not have any economic interest in the shares. The inclusion of information in the table does not constitute an admission that the individual, group or entity is, for purposes of Section 13 or 16 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the beneficial owner of the shares shown. | | Name of Beneficial Owner | | Common
Stock(1) | | Number of Rights Exercisable and
Vesting within 60 Days(2) | | Number of Shares
Beneficially Owned | | Percent of Class(3) | | Common Stock(1) | | Number of Rights Exercisable and Vesting
within 60 Days(2) | | Number of Shares Beneficially Owned | | Percent of Class(3) | | Directors | | | | | | | | | Current Directors | | Current Directors | | Current Directors | | Current Directors | | Current Directors | | Bradley A. Alford | | 21,563 | | | 20,575 | | | 42,138 | | | * | | Anthony K. Anderson | | 3,382 | | | 11,895 | | | 15,277 | | | * | | Mark J. Barrenechea | | 3,744 | | | 2,356 | | | 6,100 | | | * | | Mitchell R. Butier | | 243,041 | | | 226,442 | | | 469,483 | | | * | | Ken C. Hicks | | 28,210 | | | 14,808 | | | 43,018 | | | * | | Andres A. Lopez | | 6,323 | | | 1,275 | | | 7,598 | | | * | | Maria Fernanda Mejia | | Francesca Reverberi | | Patrick T. Siewert | | 16,050 | | | | – | | | 16,050 | | | * | | Julia A. Stewart | | 20,850 | | | 41,829 | | | 62,679 | | | * | | Deon M. Stander | | Martha N. Sullivan | | | 15,868 | | | | 12,891 | | | | 28,759 | | | | * | | | Non-director NEOs | | | | | | | | | William R. Wagner | | William R. Wagner | | William R. Wagner | | William R. Wagner | | William R. Wagner | | Non-Director NEOs | | Gregory S. Lovins | | 38,948 | | | 22,169 | | | 62,117 | | | * | | Francisco Melo | | Deena Baker-Nel | | 2,363 | | | 5,844 | | | 8,207 | | | * | | Deon M. Stander | | 31,623 | | | 11,650 | | | 43,273 | | | * | | Ignacio J. Walker | | | 3,529 | | | | 5,749 | | | | 9,278 | | | | * | | | All current directors and executive officers as a group (15 persons) | | | 465,131 | | | | 390,794 | | | | 855,925 | | | | 1.0 | % | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | Nicholas R. Colisto | | | All current directors and executive officers as a group (17 persons) | | All current directors and executive officers as a group (17 persons) | | All current directors and executive officers as a group (17 persons) | | All current directors and executive officers as a group (17 persons) | | All current directors and executive officers as a group (17 persons) | | | | 561,632 | | | | 342,584 | | | | 904,216 | | | | 1.1 | % | Significant stockholders | | | | | | | | | The Vanguard Group(4) | | 9,649,647 | | | | – | | | 9,649,647 | | | 11.7 | % | | | 9,623,611 | | | | | – | | | | 9,623,611 | | | | | 12.0 | % | BlackRock, Inc.(5) | | 6,726,210 | | | | – | | | 6,726,210 | | | 8.2 | % | | | 7,381,914 | | | | | – | | | | 7,381,914 | | | | | 9.2 | % | T. Rowe Price Associates, Inc.(6) | | | 5,486,584 | | | | – | | | | 5,486,584 | | | | 6.7 | % | T. Rowe Price Investment Management, Inc.(6) | | | | 4,276,716 | | | | – | | | | 4,276,716 | | | | 5.3 | % |
| | (1) | Except as otherwise noted herein, eachEach current director,non-director NEO and current executive officer has sole voting and investment power with respect to thetheir respective shares indicated and no shares have been pledged as security by any such person. Includes for the following beneficial owners the following amounts of shares held in our employee savings plan as of February 28, 2022:26, 2024: Butier – 4,010,4,150, Lovins – 2,086, 2,159, Baker-Nel – 1,213, Walker – 545,1,413, and all current directors and executive officers as a group – 10,189.–8,649. Their business address is 8080 Norton Parkway, Mentor, Ohio 44060.
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| | (2) | Numbers reported in this column are not entitled to vote during the Annual Meeting. Includes the following number of DSUs deferred through the DDECP by the following directors as of February 28, 2022,26, 2024, as to which they have no voting or investment power: Alford – 20,575; Anderson – 11,895; Barrenechea – 2,356;22,398; Hicks – 14,808;15,330; Lopez – 1,275;1,649; Stewart – 41,829;43,303; and Sullivan – 12,067.13,864. DSUs are included as beneficially owned because, if the director were to resign or retire fromleave our Board, his or her DDECP account would be valued as of the date of separation and the equivalent number of shares of our common stock, less fractional shares, would be issued to the separating director. For Messrs. Butier and Stander and all non-director NEOs and executive officers, includes PUs and MSUs vesting within 60 days of February 26, 2024. | |
| | (3) | Percent of class based on 82,355,33380,520,396 shares of our common stock outstanding as of February 28, 2022.26, 2024. Individuals with an (*) beneficially own less than 1% of our outstanding common stock. | |
| | (4) | Number of shares beneficially owned based on information as of December 31, 20212023 contained in Amendment No. 1113 to Schedule 13G filed with the SEC on February 9, 2022.13, 2024. The Vanguard Group has sole voting power with respect to no shares; shared voting power with respect to 136,002102,691 shares; sole dispositive power with respect to 9,310,5839,281,495 shares; and shared dispositive power with respect to 339,064342,116 shares. The Vanguard Group is an investment adviser, in accordance with Rule 13d-1(b)(1)(ii)(E) of the Exchange Act, with a business address of 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. | |
| | (5) | Number of shares beneficially owned based on information as of December 31, 20212023 contained in Amendment No. 1315 to Schedule 13G filed with the SEC on February 1, 2022.January 24, 2024. BlackRock, Inc. has sole voting power with respect to 5,702,277 shares and6,640,110 shares; shared voting power with respect to no shares; sole dispositive power with respect to all 6,726,2107,381,914 shares; and shared dispositive power with respect to no shares. BlackRock, Inc. is a parent holding company or control person, in accordance with Rule 13d-1(b)(1)(ii)(G) of the Exchange Act, with a business address of 55 East 52nd Street,50 Hudson Yards, New York, New York 10055.10001. | |
| | (6) | Number of shares beneficially owned based on information as of December 31, 20212023 contained in Amendment No. 3 to Schedule 13013G filed with the SEC on February 14, 2022.2024. T. Rowe Price Associates,Investment Management, Inc. has sole voting power with respect to 1,842,064 shares and1,881,941 shares; shared voting power with respect to no shares; sole dispositive power with respect to all 5,486,5844,276,716 shares; and shared dispositive power with respect to no shares. T. Rowe Price Associates,Investment Management, Inc. is an investment adviser in accordance with Rule 13d-1(b)(1)(ii)(E)registered under Section 203 of the ExchangeInvestment Advisers Act of 1940, with a business address of 100 East101 E. Pratt Street, Baltimore, Maryland 21202.21201. | |
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RELATED PERSON TRANSACTIONS Both our Code of Conduct and our Conflict of Interest Policy (“COI Policy”) provide that conflicts of interest should be avoided. Under our Governance Guidelines, Board members are expected to comply with our Code of Conduct and avoid any action, position or interest that conflicts or may appear to conflict with those of our company, or gives the appearancecompany. The Governance Committee oversees our conflict of a conflict. Our COI Policy proscribes any ofinterest policy, which prohibits our officers (including ourall executive officers) orand employees – or any of their immediate family members – from directly or indirectly doing business, seeking to do business or owning an interest in an entity that does business or seeks to do business with our company without approval in writing from the Governance Committee. Under our COI Policy, anyhaving received prior written approval. Any officer or employee who has a question as to the interpretation of the policy or its application to a specific activity, transaction or situation may submit the question in writing to our Chief Compliance Officer or Chief Legal Officerlaw department for any further review necessary review by the Governance Committee.
Generally on an annual basis, allAll employees at the level of manager and above and all non-supervisory professionals are regularly required to complete a compliance certification in which they must (i) disclose, among other things, whether they or any of their immediate family members have a job, contract or other position with an entity that has commercial dealings with our company and (ii) certify that they have complied with our Code of Conduct and key company policies. All disclosuresDisclosures are reviewed by our compliance and law departments in consultation with senior management to determine whether the activity has the potential to significantly influence our business. The Governance Committee receivesreceived a report from our Chief Compliance Officer on the disclosures elicited in the 2022 compliance certification and, in early 2023. We plan to conduct the compliance certification process later this year, after which results will be discussed with the Governance Committee. In the event that an unresolved disclosure potentially gives rise to a significant conflict of interest, the committee determines whether a conflict of interest exists or whether there is a reasonable likelihood that the activity, transaction or situation would influence the individual’s judgment or actions in performing his or her duties for our company. In 2021, we temporarily suspended the compliance certification process to allow our Corporate Compliance team to implement improvement opportunities aligned upon with an independent third party expert we engaged to benchmark our compliance program. We plan on launching the improved certification process in 2022.duties.
In addition, each of our directors and executive officers annually completes a questionnaire designed to solicit information about any potential related person transactions. Transactions involving directors are reviewed with the Governance Committee by our Corporate Secretary in connection with theits annual assessment of director independence. Responses from executive officers are reviewed by our Corporate Secretary with oversight by the Governance Committee in the event any such transactions are identified. We review internal financial records to identify transactions with security holders known by us from information contained in Schedules 13D or 13G filed with the SEC to be beneficial owners of more than five percent5% of our common stock to determine whether we have any relationships with the security holders that might constitute related person transactions under Item 404(a) of Regulation S-K. Our Corporate Secretary discusses any such findingsrelationships constituting related person transactions with the Governance Committee. During fiscal year 2021,2023, there were no related person transactions requiring disclosure under SEC rules and regulations. To our knowledge,regulations and all related person transactions were reviewed under ourin accordance with the policies and procedures.procedures described above. | | | 96Avery Dennison Corporation | 2024 Proxy Statement
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VOTING AND MEETING Q&A ANNUAL REPORT AND PROXY MATERIALS WHEN WILL I RECEIVE THE 2021 ANNUAL REPORT?
We expect to mail or make available our 2021 Annual Report to all stockholders of record on or about March 15, 2022.
HOW DO I ACCESS THE 20222023 ANNUAL REPORT AND 2024 PROXY MATERIALS? We have elected to provide access to our proxy materials on the internet. Accordingly, we are sending the Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders of record. Brokers, banks and other nominees (collectively, “nominees”) who hold shares on behalf of beneficial owners (also called “street name” holders) will send a similar notice. You will have the ability to access our proxy materials on the website referred to in the Notice. Instructions on how to request printed proxy materials by mail, including an option to receive paper copies in the future, may be found in the Notice and on the website referred to in the Notice. On or about March 15, 2022, [●], 2024, we intend towill make this proxy statement and 2023 Annual Report available online and mailbegin mailing the Notice to all stockholders entitled to vote. On or about the same date, we intend to mail thiswill begin mailing our 2023 Integrated Report, which includes our 2023 Annual Report and 2024 notice and proxy statement, together with a proxy card, to stockholders entitled to vote during the Annual Meeting who have previously requested paper copies. In addition, if you request paper copies of these materials for the first time, they will be mailed within three business days of your request. If you hold your shares in street name, you may request paper copies of the proxy statement and proxy card from your nominee by following the instructions on the notice your nominee provides to you. Stockholders of record may obtain a copy of this proxy statement without charge by writing to our Corporate Secretary at 8080 Norton Parkway, Mentor, Ohio 44060. WHAT IS HOUSEHOLDING? We will deliver a singleone copy of our 2021 integrated sustainability and annual report, which includes our 2022 notice and proxy statement,2023 Integrated Report to stockholders sharing the same address. Householding allows us to reduce our printing and postage costs and prevents duplicative informationmultiple proxy materials from being received at your household and impacts only the delivery of proxy materials;household; it does not impact the delivery of dividend checks. For holders who share a singlean address, we are sending only one integrated report2023 Integrated Report to that address unless we have received instructions to the contrary from any stockholder at that address. If you wish to receive an additional copy of our integrated report,2023 Integrated Report, or if you receive multiple copies of our integrated report and wish to receive a single copy in the future, you may make your request by writing to our Corporate Secretary at 8080 Norton Parkway, Mentor, Ohio 44060. If you are a street name holder and wish to revoke your consent to householding and receive separate copies of our proxy statement and annual report in future years, you may call Broadridge Investor Communications Services toll-free at 866.540.7095 in the U.S. and Canada or write them c/o Householding Department, 51 Mercedes Way, Edgewood, New York 11717. HOW CAN I ACCESS THE ANNUAL REPORT AND PROXY MATERIALS ELECTRONICALLY? Instead of receiving paper copies of proxy statements and annual reports and proxy materials by mail in the future, you can elect to receive an email that will providewith a link to these documents on the internet. By electinginternet, which allows you to access proxy materials online, you can access them more quickly, save us the cost of printing and mailing them to you, reduce the amount of mail you receive from us and help us preserve environmental resources. You may enroll to access proxy materials and annual reports electronically for future Annual Meetings by registering online at the following website: https://enroll.icsdelivery.com/avy. If you are voting online, you can follow the links on the voting website to reach the electronic enrollment website. | | | Avery Dennison Corporation | 2022 Proxy Statement106
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VOTING
VOTINGWHO IS SOLICITING MY VOTE?
Our Board is soliciting your vote in connection with the Annual Meeting. WHO IS ENTITLED TO VOTE? Stockholders of record as of the close of business on February 28, 2022 26, 2024 are entitled to notice of, and to vote at, the Annual Meeting. Our common stock is the only class of shares outstanding, and there were 82,355,33380,520,396 shares of common stock outstanding on February 28, 2022. 26, 2024. The list of stockholders entitled to vote will be available for inspection during the virtual Annual Meeting, as well as starting 10 days before the Annual Meeting during regular business hours at our company headquarters inlocated at 8080 Norton Parkway, Mentor, Ohio.Ohio 44060. You are entitled to one vote for each share of common stock you held on the record date. HOW DO I VOTE? You may vote by submitting a proxy or voting during the Annual Meeting at www.virtualshareholdermeeting.com/AVY2022.AVY2024. If you hold your shares in street name,are a beneficial holder, you may only vote during the meeting if you properly request and receive a legal proxy in your name from the nominee that holds your shares. The method of voting by proxy differs depending on whether you are viewing this proxy statement online or reviewing a paper copy. If you are viewing this proxy statement online, you may vote your shares by (i) submitting a proxy by telephone or online by following the instructions on the website or (ii) requesting a paper copy of the proxy materials and following one of the methods described below. If you are reviewing a paper copy of this proxy statement, you may vote your shares by (i) submitting a proxy by telephone or online by following the instructions on the proxy card or (ii) completing, dating and signing the proxy card included with the proxy statement and returning it in the preaddressed, postage-paid envelope provided. Whether or not you plan to attend the Annual Meeting, we urge you to vote promptly using one of the methods described in the proxy materials.above. We encourage you to vote by telephone or online since these methods immediately record your vote and allow you to confirm that your votes have been properly recorded. Telephone and online votes must be received by 11:59 p.m. Eastern Time on April 27, 2022.24, 2024. WHAT IF MY SHARES WERE ACQUIRED THROUGH THE DIRECT SHARE PURCHASE AND SALE PROGRAM? Shares acquired through our Direct Share Purchase and Sale Program may be voted by following the procedures described above. WHAT IF MY SHARES ARE HELD IN THE EMPLOYEE SAVINGS PLAN? If you hold shares as a participant in our Employee Savings (401(k)) Plan, your vote serves as a voting instruction to Fidelity Management Trust Company, the trustee of the plan, on how to vote your shares. Your voting instruction must be received by the trustee by 11:59 p.m. Eastern Time on April 25, 2022.22, 2024. If the trustee does not receive your instruction in a timely manner, your shares will be voted in the same proportion as the shares voted by plan participants in the plan who timely furnish instructions. Shares of our common stock that have not been allocated to participant accounts will also be voted by the trustee in the same proportion as the shares voted by plan participants in the plan who timely furnish instructions. HOW DO I REVOKE MY PROXY OR CHANGE MY VOTE AFTER I HAVE VOTED? If you give a proxy pursuant to this solicitation, you may revoke it at any time before it is acted upon during the Annual Meeting by (i) submitting another proxy by telephone or online (only your last voting instructions will be counted); (ii) sending a later dated paper proxy; (iii) delivering to our Corporate Secretary a written notice of revocation prior to the voting of the proxy during the Annual Meeting; or (iv)(iii) if you are entitled to do so, voting during the Annual Meeting. Simply attending the Annual Meeting will not revoke your proxy. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 107 |
If your shares are held in street name, you may only change your vote by submitting new voting instructions to your nominee. You must contact your nominee to find out how to change your vote. Shares held in our Employee Savings Plan cannot be changed or revoked after 11:59 p.m. Eastern Time on April 25, 2022,22, 2024, nor can they be voted during the Annual Meeting. | | | 98
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IS MY VOTE CONFIDENTIAL? Except in contested proxy solicitations, when required by law or as authorized by you (such as by making a written comment on your proxy card, in which case the comment, but not your vote, may be shared with our company), your vote or voting instruction is confidential and will not be disclosed other than to the broker, trustee, agent or other entityinspector of election tabulating your vote. HOW WILL VOTES BE COUNTED? Votes cast by proxy or during the Annual Meeting will be tabulated by a representative from Broadridge Financial Solutions, Inc., the independent inspector of election appointed by our Board. The inspector of election will also determine whether a quorum is present. During the Annual Meeting, shares represented by proxies that reflect abstentions or broker non-votes (which are shares held by a nominee that are represented, during the meeting, but with respect to which the nominee neither has discretionary authority to vote nor has been given actual authority to vote on a particular item) will be counted as shares that are present and entitled to vote during the Annual Meeting for purposes of determining the presence of a quorum. Items 1, 2 and 23 are non-routine under the rules of the NYSE and Item 34 is routine. Nominees are prohibited from voting on non-routine items in the absence of instructions from the beneficial owners of the shares; as a result, if you hold your shares in street name and do not timely submit voting instructions to your nominee, your shares will not be voted on Item 1, election of directors, ordirectors; Item 2, approval, on an advisory basis, of our executive compensation. compensation; or Item 3, approval of a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to provide that stockholders holding 25% of our outstanding common stock have the right to request that we call special meetings of stockholders. We urge you to promptly provide voting instructions to your nominee so that your vote is counted. The vote required to approve each of the Annual Meeting business items, as well as the impact of abstentions and broker non-votes, is shown in the chart below. | | | | | | | | | | | Item
ITEM OF BUSINESS | | Vote
RequiredVOTE REQUIRED
| | Impact of
AbstentionsIMPACT OF ABSENTIONS
| | Impact of
Broker Non-VotesIMPACT OF
BROKER NON-VOTES
| | | | | | | 1 | | Election of directors | | Majority of votes cast | | Not counted as votes cast; no impact on outcome | | Not counted as votes cast; no impact on outcome | | | | | | | 2 | | Advisory vote to approve
executive compensation | | Majority of shares represented and entitled to vote | | Negative impact on outcome | | Not counted as represented and entitled to vote;
no impact on outcome | | | | | | | 3 | | Approval of a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to provide that stockholders holding 25% of outstanding common stock have the right to request that we call special meetings of stockholders | | Majority of shares outstanding | | Negative impact on outcome | | Negative impact on outcome | | 3 | | | | | 4 | | Ratification of appointment of PricewaterhouseCoopers LLPPwC as our independent registered public accounting firm for fiscal year 2022FY 2024 | | Majority of shares represented and entitled to vote | | Negative impact on outcome | | Not applicable |
WHAT IF THERE IS ADDITIONAL BUSINESS TO BE VOTED ON? As of the date of this proxy statement, we know of no other business to be presented for consideration during the meeting. If any other business properly comes before the meeting, your vote will be cast on any such other business in accordance with the best judgment ofby the individuals acting pursuant to your proxy.proxy in their best judgment. HOW DO I FIND VOTE RESULTS? We expect to announce preliminary voting results during the Annual Meeting and report final voting results in a Current Report on Form 8-K filed with the SEC on or before May 4, 2022.1, 2024. | | | 108 | | 2024 Proxy Statement | Avery Dennison Corporation |
ANNUAL MEETING INFORMATION WHAT IS THE TIME, DATE AND FORMAT OF THE ANNUAL MEETING? Due to continued public health concerns about large, indoor in-person gatherings given the COVID-19 pandemic, theThe Annual Meeting will take place at 1:2:30 p.m. Eastern Time on April 28, 202225, 2024. To allow stockholders to attend without the time and expense of doing so in person, the meeting will be held virtually, with attendance via the internet.
HOW CAN I ATTEND THE VIRTUAL MEETING? To attend the virtual Annual Meeting, you will need to log in to the virtual meeting website at www.virtualshareholdermeeting.com/AVY2022AVY2024 using the 16-digit control number on theyour Notice, or proxy card mailed or made available to you on or about March 15, 2022. | | | Avery Dennison Corporation | 2022 Proxy Statement
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voting instruction form. Online access to the live audio webcast of the Annual Meeting will open at 1:2:15 p.m. Eastern Time to allow time for you to log in and test your device’s audio system. We encourage you to access the meeting in advance of its designated start time as we plan to begin conducting the meeting promptly. HOW DO I ASK QUESTIONS DURING THE MEETING? We have designed the virtual Annual Meeting to ensure that you have the same rights and opportunities to participate as you would at an in-person meeting, using easy-to-use online tools that allow you to attend, vote and ask questions.questions. Only stockholders as of the record date or their properly appointed proxies may ask questions during the meeting, and our Executive Chairman may limit the length of discussion on any particular matter. On the day of, and during,During the Annual Meeting, you can view our Ground Rules for Conduct of Meeting and submit questions on www.virtualshareholdermeeting.com/AVY2022.the meeting website. After the business portion of the Annual Meeting concludes and the meeting is adjourned, we will hold a Q&A session during which we intend to answer all questions submitted before or during the meetingtimely that are pertinent to our company and the items being brought before stockholder vote, during the Annual Meeting, as time permits and in accordance with our Ground Rules for Conduct of Meeting. Questions and answers will be grouped by topic and substantially similar questions will be answered only once. To promote fairness and ensure all stockholder questions are able to be addressed, we will respond to no more than three questions from any single stockholder. Answers to questions not addressed during the meeting, if any, will be posted promptly after the meeting on the investors section of our website. As a result of time constraints and other considerations, we cannot assure you that every stockholder wishing to address the meeting will have the opportunity to do so. However, all stockholders are invited to direct inquiries or comments regarding business matters to our Investor Relations department by email to investorcom@averydennison.com or by mail to 8080 Norton Parkway, Mentor, Ohio 44060. In addition, stockholders wishing to address matters to our Board or any of its members may do so as described under Contacting Our Board in the Our Board of Directors section of this proxy statement. WHAT DO I DO IF I AM HAVING TECHNICAL ISSUES ACCESSING OR PARTICIPATING IN THE MEETING? Beginning 15 minutes prior to, and during, the Annual Meeting, we will have support available to assist stockholders with any technical difficulties they may have accessing or hearing the virtual meeting. If you encounter any difficulty accessing, or during, the virtual meeting, please call the support team at 1.844.986.0822 (toll-free in the U.S. and Canada) or +1.303.562.9302 (for international participants)all other attendees). HOW ARE PROXIES BEING SOLICITED? We have retained D.F. King & Co., Inc.Morrow Sodali LLC to assist in soliciting proxies for a fee of $12,000, plus reimbursement of out-of-pocket expenses incident to preparing and mailing our proxy materials. SomeCertain of our employees may solicit proxies by telephone or email; these employees will not receive any additional compensation for their proxy solicitation efforts. We will bear allpay the costs related to thisour solicitation of proxies and we will reimburse banks, brokers and other custodians, nominees and fiduciaries for reasonable out-of-pocket expenses they incur in forwarding our proxy materials to beneficial stockholders. You can help reduce these costs in the future by accessingconsenting to access our proxy materials electronically. | | | Avery Dennison Corporation | 2024 Proxy Statement | | 109 |
MATTERS RELATED TO 20232025 ANNUAL MEETING HOW DO I SUBMIT ITEMS FOR POTENTIAL CONSIDERATION AT THE 20232025 ANNUAL MEETING? To propose business otherwise satisfying the eligibility requirements of SEC Rule 14a-8 to be considered for inclusion in our proxy statement for the 20232025 Annual Meeting, you must provide notice of proposed items so they are received at our principal executive offices on or before November 15, 2022.11, 2024. If you wish to nominate persons for election to our Board or bring any other business before an annual meeting under the advancedadvance notice provisions or our Bylaws, you must notify our Corporate Secretary at our principal executive offices in writing 90 to 120 days prior to the first anniversary of the preceding year’s annual meeting (with respect to the 20232025 Annual Meeting, no earlier than December 29, 202226, 2024 and no later than January 28, 2023).25, 2025) and comply with the other requirements set forth in our Bylaws. | | | 100
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Your notice must include, among other things, the information described below.below and in greater detail in Article II, Section 14 of our Bylaws, which are available under Corporate Governance in the investors section of our website. As to each person who you propose to nominate for election or reelection as a director: • All information relating to the person that is required to be disclosed in solicitations of proxies for election of directors in an election contest or is otherwise required pursuant to Regulation 14 under the Exchange Act • The person’s written consent to be named in our proxy statement and accompanying proxy card as a nominee and serve as a director if elected for a full term until the next meeting at which such nominee would face reelection • All information with respect to such person that would be required to be set forth in a stockholder’s notice pursuant to our Bylaws if such person were a stockholder • A description of all direct and indirect material interest in any material relationshipscontract or agreement between you (and your associates and affiliates)or among any stockholder, on the one hand, and the nominee (and his or her associates and affiliates), on the other hand, as more particularly set forth in our Bylaws As to any other item of business you propose to bring before the meeting, a brief description of the business,business; the reasons for conducting the business during the meetingmeeting; a reasonably detailed description of all agreements, arrangements and understandings between or among any stockholders and between or among any stockholder and other person or entity in connection with the proposal of such business by such stockholder; and any material interest you haveother information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business being proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act Your name and address, and the class and number of shares you own beneficially and as of record, as well as information relating to your security ownership in our company as described in greater detail in Article II, Section 14 of our Bylaws, which are available under Corporate Governance in the investors section of our website Stockholder items of business that do not fully comply with the advance notice and other requirements contained in our Bylaws will not be permitted to be brought before the 20232025 Annual Meeting. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the SEC’s universal proxy rules, (once they become effective), stockholders who intend to solicit proxies in support of director nominees other than our company’sBoard’s nominees must provide written notice to our Corporate Secretary at our principal executive offices that includes the information required by Rule 14a-19 under the Exchange Act no later than February 22, 2023.24, 2025. We intend to file a proxy statement and a WHITEwhite proxy card with the SEC in connection with our solicitation of proxies for the 20232025 Annual Meeting. HOW DO I NOMINATE DIRECTORS FOR INCLUSION IN THE 20232025 PROXY STATEMENT? Our Bylaws permit a stockholder, or a group of no more than 20 stockholders, owning at least 3% of our company’s outstanding shares of common stock continuously for at least three years to nominate and include in our annual meeting proxy materials director nominees constituting up to the greater of two nominees or 20% of our Board, subject to the requirements contained in Article II, Section 17 of our Bylaws, which are available under Corporate Governance in the investors section of our website. Notice of proxy access director nominees for the 20232025 Annual Meeting must be delivered to our Corporate Secretary at our principal executive offices no earlier than October 16, 202212, 2024 and no later than November 15, 202211, 2024 and must otherwise comply with the requirements set forth in our Bylaws. | | | Avery Dennison Corporation | 2022 Proxy Statement110
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APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FROM GAAP We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results that are prepared in accordance with GAAP. We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparison to the results of competitors for quarters and year-to-date periods, as applicable. Based on feedback from investors and financial analysts, we believe that the supplemental non-GAAP financial measures we provide are also useful to their assessmentassessments of our performance and operating trends, as well as liquidity. Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. By excluding the accounting effects, both positive or negative, of certain items (such as(e.g., restructuring charges, outcomes of certain legal proceedings, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing. We use these the following non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparison to the results of competitors for quarters and year-to-date periods, as applicable. We use the non-GAAP financial measures described below in this proxy statement.statement, which are reconciled from GAAP on the following pages:
| | • | | Sales change ex. currencyrefers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and,translation; the reclassification of sales between segments; where applicable, an extra week in our fiscal year and the calendar shift resulting from the extra week in the prior fiscal yearyear; and currency adjustmentadjustments for transitional reporting of highly inflationary economies. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior periodprior-period results translated at current period average exchange rates to exclude the effect of foreign currency fluctuations. |
| | • | | Organic sales change refers to sales change ex. currency, excluding the estimated impact of acquisitions and product line divestitures. |
| | | We believe that sales change ex. currency and organic sales change assistsassist investors in evaluating the sales change from the ongoing activities of our businesses and enhance their ability to evaluate our results from period to period. |
| | • | | Adjusted EBITDA margin refers to adjusted EBITDA as a percentage of net sales. Adjusted EBITDA is adjusted operating income before depreciation and amortization. Adjusted operating income is income before taxes; interest expense; other non-operating expense (income), net; and other expense (income), net. We believe that adjusted EBITDA margin assists investors in understanding our core operating trends and comparing our results with those of our competitors. |
| | • | | Adjusted EBITDA margin refers to adjusted EBITDA as a percentage of net sales. |
| | | Adjusted net income per common share, assuming dilution (adjusted EPS), refers to adjusted net income divided by the weighted average number of common shares outstanding, assuming dilution. Adjusted net income is income before taxes, tax-effected at the adjusted tax rate, and adjusted for tax-effected restructuring charges and other items. Adjusted tax rate is the full-year GAAP tax rate, adjusted to exclude certain unusual or infrequent events that are expected to significantly impact that rate, such as effects of certain discrete tax planning actions, impacts related to the enactmentenactments of the U.S. Tax Cuts and Jobs Act (TCJA), where applicable,comprehensive tax law changes, and other items. |
| | | We believe that adjusted EBITDA, adjusted EBITDA margin and adjusted EPS assistsassist investors in understanding our core operating trends and comparing our results with those of our competitors. |
| | • | | FreeAdjusted free cash flowrefers to cash flow provided by operating activities, less payments for property, plant and equipment, software and other deferred charges, plus proceeds from company-owned life insurance policies, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments. FreeWhere applicable, adjusted free cash flow is also adjusted for where applicable, certain acquisition-related transaction costs and the cash contributions related to the termination of our U.S. pension plan.costs. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases, and acquisitions.
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| | • | | Return on total capital incl. acquisition amortization (ROTC) refers to net income excluding theinterest expense and amortization of intangible assets from acquisitions, net of tax benefit, of debt financing divided by the average of beginning and ending invested capital. ROTC excl. acquisition amortization refers to ROTC adjusted for the impact of amortization of intangible assets from acquisitions. We believe that ROTC incl. acquisition amortization and ROTC excl. acquisition amortization assistassists investors in understanding our ability to generate returns from our capital. |
| | • | | Adjusted EBITearnings before interest and taxes (EBIT) refers to earnings before interest expense, other non-operating expense (income), taxes and taxes,equity method investment losses, excluding non-cash restructuring costs, acquisitions completed since the targets were set, and other items. We believe that adjusted EBIT assists investors in understanding our core operating trends and comparing our results with those of our competitors. We use adjusted EBIT to calculate economic value added (EVA), one of the performance objectives used in our long-term incentive compensation program. |
SALES CHANGE EX. CURRENCY AND ORGANIC SALES CHANGE | | ($ in millions) | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | 2017-2021
5-YR CAGR(1) | | | 2021 | | | 2022 | | | 2023 | | | 2021-2023
3-YR CAGR(1) | | Net sales | | $ | 6,613.8 | | | $ | 7,159.0 | | | $ | 7,070.1 | | | $ | 6,971.5 | | | $ | 8,408.3 | | | 6.7% | | Net sales | | Net sales | | Net sales | | | $ | 8,408.3 | | | $ | 9,039.3 | | | $ | 8,364.3 | | | 6.3% | | Reported net sales change | | Reported net sales change | | Reported net sales change | | Reported net sales change | | | 8.7% | | | | 8.2% | | | | (1.2)% | | | | (1.4)% | | | | 20.6% | | | | | | 20.6% | | | | 7.5% | | | | (7.5)% | | | | | Foreign currency translation | | | (0.5)% | | | | (1.4)% | | | | 3.3% | | | | 0.9% | | | | (3.4)% | | | | Foreign currency translation | | Foreign currency translation | | Foreign currency translation | | | | (3.4)% | | | | 5.6% | | | | 0.6% | | | | | Extra week impact | | Extra week impact | | Extra week impact | | Extra week impact | | | – | | | | – | | | | – | | | | (1.3)% | | | | 1.4% | | | | | | 1.4% | | | | – | | | | – | | | | | Sales change ex. currency (non-GAAP)(2) | | | 8.2% | | | | 6.9% | | | | 2.0% | | | | (1.7)% | | | | 18.6% | | | | 6.6% | | Sales change ex. currency (non-GAAP)(2) | | Sales change ex. currency (non-GAAP)(2) | | Sales change ex. currency (non-GAAP)(2) | | | | 18.6% | | | | 13.1% | | | | (6.9)% | | | 7.7% | | Acquisitions and product line divestitures | | | (3.9)% | | | | (1.4)% | | | | – | | | | (1.7)% | | | | (3.1)% | | | | Acquisitions and product line divestiture | | Acquisitions and product line divestiture | | Acquisitions and product line divestiture | | Acquisitions and product line divestiture | | | | (3.1)% | | | | (3.6)% | | | | (0.8)% | | | | | Organic sales change (non-GAAP)(2) | | | 4.2% | | | | 5.5% | | | | 2.0% | | | | (3.4)% | | | | 15.6% | | | | 4.6% | | Organic sales change (non-GAAP)(2) | | Organic sales change (non-GAAP)(2) | | Organic sales change (non-GAAP)(2) | | | | 15.6% | | | | 9.5% | | | | (7.7%) | | | 5.3% |
| | (1) | Reflects five-yearthree-year compound annual growth rate,rates, with 20162020 as the base period. |
| | (2) | Totals may not sum due to rounding and other factors.rounding. |
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN | | | | | | ($ in millions) | | 2021 | | Net sales | | $ | 8,408.3 | | | | Operating income before interest expense, other non-operating expense (income) and taxes, as reported | | $ | 1,058.7 | | | | Operating margin, as reported | | | 12.6% | | | | Non-GAAP adjustments: | | | | | | | Restructuring charges: | | | | | | | Severance and related costs | | $ | 10.5 | | | | Asset impairment and lease cancellation charges | | | 3.1 | | | | Other items(1) | | | (8.0) | | | | Adjusted operating income (non-GAAP) | | $ | 1,064.3 | | | | Adjusted operating margin (non-GAAP) | | | 12.7% | | | | Depreciation and amortization | | $ | 244.1 | | | | Adjusted EBITDA (non-GAAP) | | $ | 1,308.4 | | | | Adjusted EBITDA margin (non-GAAP) | | | 15.6% | |
| (1) | Includes pretax gain on venture investments, gain on sale of product line, outcomes of legal proceedings, transaction and related costs, and other items.
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ADJUSTED EARNINGS PER SHARE (EPS)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2017-2021
5-YR CAGR(1) | | 2020-2021
% Change | | | | | | | | | | As reported net income per common share, assuming dilution | | $ | 3.54 | | | $ | 3.13 | | | $ | 5.28 | | | $ | 3.57 | | | $ | 6.61 | | | $ | 8.83 | | | 20.1% | | 33.6% | | | | | | | | | | Non-GAAP adjustments per common share, net of tax: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restructuring charges and other items(2) | | | 0.48 | | | | 0.29 | | | | 0.68 | | | | 0.47 | | | | 0.48 | | | | 0.05 | | | | | | | | | | | | | | | Pension plan settlement and curtailment losses | | | – | | | | – | | | | 0.84 | | | | 3.12 | | | | 0.01 | | | | 0.03 | | | | | | | | | | | | | | | Tax benefit from discrete foreign tax structuring and planning transactions | | | – | | | | – | | | | (0.35) | | | | (0.56) | | | | – | | | | – | | | | | | | | | | | | | | | TCJA provisional amounts and subsequent adjustments(3) | | | – | | | | 1.91 | | | | (0.39) | | | | – | | | | – | | | | – | | | | | | | | | | | | | | | Impact of previously planned repatriation of foreign earnings for Q4 2017 | | | – | | | | (0.33) | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | | | | | | Adjusted net income per common share, assuming dilution (non-GAAP) | | $ | 4.02 | | | $ | 5.00 | | | $ | 6.06 | | | $ | 6.60 | | | $ | 7.10 | | | $ | 8.91 | | | 17.3% | | 25.4% |
The adjusted tax rates were 32.8%, 28.0%, 25.0%, 24.6%, 24.1% and 25.0% for 2016, 2017, 2018, 2019, 2020 and 2021, respectively.
| | | | | | | | | | | | | | | | ($ in millions) | | 2021 | | | 2022 | | | 2023 | | | 2021-2023
3-YR CAGR(1) | Net sales | | $ | 8,408.3 | | | $ | 9,039.3 | | | $ | 8,364.3 | | | | | | | | | Operating income before interest expense, other non-operating expense (income), taxes, and equity method investment losses, as reported | | $ | 1,058.7 | | | $ | 1,074.0 | | | $ | 782.9 | | | (1.1)% | | | | | | Operating margins, as reported | | | 12.6% | | | | 11.9% | | | | 9.4% | | | | | | | | | Non-GAAP adjustments: | | | | | | | | | | | | | | | | | | | | Restructuring charges: | | | | | | | | | | | | | | | | | | | | Severance and related costs, net of reversals | | $ | 10.5 | | | $ | 7.6 | | | $ | 70.8 | | | | | | | | | Asset impairment and lease cancellation charges | | | 3.1 | | | | 0.1 | | | | 8.6 | | | | | | | | | Other items(2) | | | (8.0) | | | | (8.3) | | | | 101.5 | | | | | | | | | Adjusted operating income (non-GAAP) | | $ | 1,064.3 | | | $ | 1,073.4 | | | $ | 963.8 | | | | | | | | | Adjusted operating margins (non-GAAP) | | | 12.7% | | | | 11.9% | | | | 11.5% | | | | Depreciation and amortization | | $ | 244.1 | | | $ | 290.7 | | | $ | 298.4 | | | | | | | | | Adjusted EBITDA (non-GAAP) | | $ | 1,308.4 | | | $ | 1,364.1 | | | $ | 1,262.2 | | | 5.7% | | | | | | Adjusted EBITDA margins (non-GAAP) | | | 15.6% | | | | 15.1% | | | | 15.1% | | | |
| | (1) | Reflects five-yearthree-year compound annual growth rate,rates, with 20162020 as the base period. |
| | (2) | Includes restructuring charges, transaction and related costs, gain/pre-tax (gain)/loss on venture investments, gain/loss on sale of assets, gain on sale of product line, (gain)/loss on sales of assets, outcomes of legal proceedings, transaction and related costs, and Argentine peso remeasurement transitionloss. The Argentine peso remeasurement loss reversalonly includes the third and fourth quarters of acquisition-related contingent consideration and other items.2023 as prior amounts were not material. |
| | | A-2 | | 2024 Proxy Statement | Avery Dennison Corporation |
ADJUSTED EPS | | | | | | | | | | | | | | | | ($ in millions, except per share amounts) | | 2021 | | | 2022 | | | 2023 | | | 2021-2023
3-YR CAGR(1) | | | | | | As reported net income | | $ | 740.1 | | | $ | 757.1 | | | $ | 503.0 | | | (3.3)% | | | | | | As reported net income per common share, assuming dilution | | $ | 8.83 | | | $ | 9.21 | | | $ | 6.20 | | | (2.1)% | | | | | | Non-GAAP adjustments per common share, net of tax: | | | | | | | | | | | | | | | | | | | | Restructuring charges and other items(2) | | | 0.05 | | | | (0.06 | ) | | | 1.85 | | | | | | | | | Argentine interest income | | | – | | | | – | | | | (0.15) | | | | | | | | | Pension plan settlement and curtailment losses | | | 0.03 | | | | – | | | | – | | | | | | | | | Adjusted net income per common share, assuming dilution (non-GAAP) | | $ | 8.91 | | | $ | 9.15 | | | $ | 7.90 | | | 3.6% |
Adjusted tax rates were 25%, 24.7% and 25.8% for 2021, 2022 and 2023, respectively. | (1) | Reflects three-year compound annual growth rates, with 2020 as the base period. |
| | (3)(2) | InOther items include (gain)/loss on venture investments, gain on sale of product line, (gain)/loss on sales of assets, outcomes of legal proceedings, transaction and related costs, and Argentine peso remeasurement loss. The Argentine peso remeasurement loss only includes the third and fourth quarterquarters of 2018, we finalized our provisional2023 as prior amounts as defined under SEC Staff Accounting Bulletin No. 118 related to the TCJA.were not material.
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ADJUSTED FREE CASH FLOW | | ($ in millions) | | 2019 | | | 2020 | | | 2021 | | | 2021 | | | 2022 | | | 2023 | | | Net cash provided by operating activities | | $ | 746.5 | | | $ | 751.3 | | | $ | 1,046.8 | | Net cash provided by operating activities | | Net cash provided by operating activities | | Net cash provided by operating activities | | | $ | 1,046.8 | | | $ | 961.0 | | | $ | 826.0 | | | Purchases of property, plant and equipment | | Purchases of property, plant and equipment | | Purchases of property, plant and equipment | | Purchases of property, plant and equipment | | | (219.4) | | | | (201.4) | | | | (255.0) | | | | (255.0) | | | | (278.1) | | | | (265.3) | | | Purchases of software and other deferred charges | | | (37.8) | | | | (17.2) | | | | (17.1) | | Purchases of software and other deferred charges | | Purchases of software and other deferred charges | | Purchases of software and other deferred charges | | | | (17.1) | | | | (20.4) | | | | (19.8) | | | Proceeds from company-owned life insurance policies | | Proceeds from company-owned life insurance policies | | Proceeds from company-owned life insurance policies | | Proceeds from company-owned life insurance policies | | | | – | | | | – | | | | 48.1 | | | Proceeds from sales of property, plant and equipment | | Proceeds from sales of property, plant and equipment | | Proceeds from sales of property, plant and equipment | | Proceeds from sales of property, plant and equipment | | | 7.8 | | | | 9.2 | | | | 1.1 | | | | 1.1 | | | | 2.3 | | | | 1.0 | | | Proceeds from insurance and sales (purchases) of investments, net | | | 4.9 | | | | 5.6 | | | | 3.1 | | Proceeds from insurance and sales (purchases) of investments, net | | Proceeds from insurance and sales (purchases) of investments, net | | Proceeds from insurance and sales (purchases) of investments, net | | | | 3.1 | | | | 1.9 | | | | 1.9 | | | Payments for certain acquisition-related transaction costs | | | – | | | | – | | | | 18.8 | | Payments for certain acquisition-related transaction costs | | Payments for certain acquisition-related transaction costs | | Payments for certain acquisition-related transaction costs | | | | 18.8 | | | | 0.6 | | | | – | | | Contributions for U.S. pension plan termination | | | 10.3 | | | | – | | | | – | | | Free cash flow (non-GAAP) | | $ | 512.3 | | | $ | 547.5 | | | $ | 797.7 | | Adjusted free cash flow (non-GAAP) | | Adjusted free cash flow (non-GAAP) | | Adjusted free cash flow (non-GAAP) | | Adjusted free cash flow (non-GAAP) | | | $ | 797.7 | | | $ | 667.3 | | | $ | 591.9 | |
RETURN ON TOTAL CAPITAL (ROTC) | | | | | | | | | | ($ in millions) | | 2022 | | | 2023 | | As reported net income | | $ | 757.1 | | | $ | 503.0 | | | | | Interest expense, net of tax benefit | | | 63.7 | | | | 86.2 | | | | | Intangible amortization, net of tax benefit | | | 62.0 | | | | 62.5 | | | | | Effective tax rate | | | 24.2% | | | | 27.6% | | | | | Net income, excluding interest expense and intangible amortization, net of tax benefit | | $ | 882.8 | | | $ | 651.7 | | | | | Total debt | | $ | 3,102.1 | | | $ | 3,244.3 | | | | | Shareholders’ equity | | $ | 2,032.2 | | | $ | 2,127.9 | | | | | Total debt and shareholders’ equity | | $ | 5,134.3 | | | $ | 5,372.2 | | | | | ROTC (non-GAAP) | | | 17.4% | | | | 12.4% | |
| | | 104Avery Dennison Corporation | 2024 Proxy Statement
| | 2022 Proxy Statement | Avery Dennison CorporationA-3
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RETURN ON TOTAL CAPITALADJUSTED EARNINGS BEFORE INTEREST AND TAXES (EBIT)
| | | | | | | | | | | | | | ($ in millions) | | | | | 2020 | | | 2021 | | As reported net income | | | | | | $ | 555.9 | | | $ | 740.1 | | | | | | Interest expense, net of tax benefit | | | | | | | 53.1 | | | | 52.7 | | | | | | Effective tax rate | | | | | | | 24.1% | | | | 25% | | | | | | Net income, excluding interest expense and tax benefit of debt financing (non-GAAP) | | | | | | | 609.0 | | | | 792.8 | | | | | | Total debt | | | | | | $ | 2,116.8 | | | $ | 3,104.7 | | | | | | Shareholders’ equity | | | | | | | 1,484.9 | | | | 1,924.4 | | | | | | Total debt and shareholders’ equity | | | | | | $ | 3,601.7 | | | $ | 5,029.1 | | | | | | ROTC incl. acquisition amortization (non-GAAP) | | | | | | | 18.1% | | | | 18.4% | | | | | | Intangible amortization, net of tax benefit | | | | | | $ | 15.1 | | | $ | 33.5 | | | | | | Net income, excluding | | | | | | | | | | | | | | | | | Interest expense and tax benefit of debt financing and intangible amortization (non-GAAP) | | | | | | $ | 624.1 | | | $ | 826.3 | | | | | | ROTC excl. acquisition amortization (non-GAAP) | | | | | | | 18.5% | | | | 19.1% | | ADJUSTED EARNINGS BEFORE INTEREST AND TAXES (EBIT) | | | ($ in millions) | | 2019 | | | 2020 | | | 2021 | | As reported net income | | $ | 303.6 | | | $ | 555.9 | | | $ | 740.1 | | | | | | Reconciling items: | | | | | | | | | | | | | | | | | Interest expense | | | 75.8 | | | | 70.0 | | | | 70.2 | | | | | | Provision for (benefit from) income taxes | | | (56.7) | | | | 177.7 | | | | 248.6 | | | | | | Earnings before interest expense and taxes | | $ | 322.7 | | | $ | 803.6 | | | $ | 1,058.9 | | | | | | Adjustments: | | | | | | | | | | | | | | | | | Non-cash restructuring costs | | | 4.8 | | | | 6.2 | | | | 2.4 | | | | | | Other items(1) | | | 449.5 | | | | 1.0 | | | | (49.2) | | | | | | Adjusted earnings before interest expense, taxes, non-cash restructuring costs, acquisitions completed since the targets were set, and other items (non-GAAP) | | $ | 777.0 | | | $ | 810.8 | | | $ | 1,012.1 | |
| | | | | | | | | | | | | | ($ in millions) | | 2021 | | | 2022 | | | 2023 | | As reported net income | | $ | 740.1 | | | $ | 757.1 | | | $ | 503.0 | | Adjustments: | | | | | | | | | | | | | | | | | Interest expense | | | 70.2 | | | | 84.1 | | | | 119.0 | | | | | | Other non-operating expense (income), net | | | (4.1 | ) | | | (9.4 | ) | | | (30.8 | ) | | | | | Provision for income taxes | | | 248.6 | | | | 242.2 | | | | 191.7 | | | | | | Equity method investment losses | | | 3.9 | | | | – | | | | – | | | | | | Operating income before interest expense, other non-operating expense (income), taxes, and equity method investment losses | | $ | 1,058.7 | | | $ | 1,074.0 | | | $ | 782.9 | | | | | | Reconciling items: | | | | | | | | | | | | | | | | | Non-cash restructuring costs | | | 2.4 | | | | 0.1 | | | | 8.3 | | | | | | Other items(1) | | | (16.8 | ) | | | (66.1 | ) | | | 32.9 | | | | | | Adjusted earnings before interest expense, other non-operating expense (income), taxes, equity method investment losses, non-cash restructuring costs, and other items (non-GAAP) | | $ | 1,044.3 | | | $ | 1,008.0 | | | $ | 824.1 | |
| | (1) | Includes pension plan settlement and curtailment losses, transaction and related costs, gain/loss on venture investments, gain/loss on sale of assets, gain on sale of product line, outcomes of legal proceedings, Argentine peso remeasurement transition loss, reversal of acquisition-related contingent consideration, impact of acquisitions completed after targets were set and other items.the Russia-Ukraine war, (gain)/loss on venture investments, gain on sale of product line, (gain)/loss on sales of assets, outcomes of legal proceedings, transaction and related costs, and Argentine peso remeasurement loss. The Argentine peso remeasurement loss only includes the third and fourth quarters of 2023 as prior amounts were not material. |
| | | Avery Dennison Corporation | 2022 Proxy StatementA-4
| | 1052024 Proxy Statement | Avery Dennison Corporation
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APPENDIX B – TEXT OF CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF AVERY DENNISON CORPORATION (Pursuant to Section 242 of the General Corporation Law of the State of Delaware) Avery Dennison Corporation, a Delaware corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that: 1. Article VII of the Amended and Restated Certificate of Incorporation of the Corporation (the “Charter”) is hereby amended in its entirety to read as follows: | | “Directors shall be elected annually for terms of one year and shall hold office until the next succeeding annual meeting and until his or her successor shall be elected and shall qualify, but subject to prior death, resignation, retirement, disqualification or removal from office. Should a vacancy occur or be created, including from an increase in the number of directors, the remaining directors (even though less than a quorum) may fill the vacancy for the remainder of the term in which the vacancy occurs or is created. Any director elected or appointed to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.” |
2. Article X of the Charter is hereby amended in its entirety to read as follows: | | “Special meetings of the stockholders of the Corporation for any purpose or purposes (i) may be called at any time by the Board of Directors, or by a majority of the members of the Board of Directors, or by a committee of the Board of Directors which has been duly designated by the Board of Directors and whose powers and authority, as provided in a resolution of the Board of Directors or in the Bylaws of the Corporation, include the power to call such meetings or (ii) shall be called by the Secretary of the Corporation upon a written request of the holders of record who “own” (as such term is defined in the Bylaws of the Corporation (as they may be amended and/or restated from time to time, the “Bylaws”) at least twenty-five percent (25%) of the outstanding shares of Common Stock and who have complied in full with the requirements set forth in the Bylaws, but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meeting of stockholders may be called by any other person or persons specified in any provision of the Certificate of Incorporation or any amendment thereto or any certificate filed under Section 151(g) of the Delaware General Corporation Law, then such special meeting may also be called by the person or persons, in the manner, at the times and for the purpose so specified.” |
3. The foregoing amendments to the Charter were duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be executed by its duly authorized officer on this day of 2024. | | | | AVERY DENNISON CORPORATION | | | | By: | | | | Name: | | | | Title: | | |
| | | Avery Dennison Corporation | 2024 Proxy Statement | | B-1 |
AVERY DENNISON CORPORATION C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC. P.O. BOX 1342 BRENTWOOD, NY 11717 
VOTE BY INTERNET Before The Meeting-Go towww.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on April 27, 202224, 2024 for shares held directly and by 11:59 p.m. Eastern Time on April 25, 202222, 2024 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. During The Meeting-Go towww.virtualshareholdermeeting.com/AVY2022AVY2024 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 27, 202224, 2024 for shares held directly and by 11:59 p.m. Eastern Time on April 25, 202222, 2024 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | | | | | | | | D71330-P66687V31205-P04377 | | KEEP THIS PORTION FOR YOUR RECORDS |
— — — — — — — — — — — — — — — — —— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | AVERY DENNISON CORPORATION | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR the following: | | | | | | | | | 1. Election of Directors | | | | | | | | | Nominees: | | For | | Against | | Abstain | | | | | | | | 1a. Bradley Alford | | ☐ | | ☐ | | ☐ | | | | | | | | 1b. Anthony Anderson | | ☐ | | ☐ | | ☐ | | | | | | | | 1c. Mitchell Butier
| | ☐ | | ☐ | | ☐ | | | | | | | | 1d.1c. Ken Hicks
| | ☐ | | ☐ | | ☐ | | | | | | | | 1e.1d. Andres Lopez
| | ☐ | | ☐ | | ☐ | | | | | | | | 1e. Maria Fernanda Mejia | | ☐ | | ☐ | | ☐ | | | | | | | | 1f. Francesca Reverberi | | ☐ | | ☐ | | ☐ | | | | | | | | 1g. Patrick Siewert | | ☐ | | ☐ | | ☐ | | | | | | | | 1g. Julia Stewart1h. Deon Stander
| | ☐ | | ☐ | | ☐ | | | | | | | | 1h.1i. Martha Sullivan
| | ☐ | | ☐ | | ☐ | | | | | | | | 1j. William Wagner | | ☐ | | ☐ | | ☐ | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
| | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2, 3 and 3.4. | | For | | ForAgainst | | Against | | Abstain | | | | | 2. Approval, on an advisory basis, of our executive compensation. | | ☐ | | ☐ | | ☐ | | | | | | 3. Approval of a Certificate of Amendment to our Amended and Restated Certificate of Incorporation to provide that stockholders holding at least 25% of our common stock have the right to request that we call special meetings of stockholders. | | | | ☐ | | ☐ | | ☐ | | | | | 4. Ratification of the appointment of PricewaterhouseCoopers LLPPwC as our independent registered public accounting firm for fiscal year 2022.2024. | | ☐ | | ☐ | | ☐ | | | | | NOTE: Such other business as may properly come before the meeting or any adjournment or postponement thereof. | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | �� | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Signature (Joint Owners)Date | | | Date | | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. — — — — — — — — — — — — — — — — —— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — D71331-P66687
V31206-P04377 | | | AVERY DENNISON CORPORATION ANNUAL MEETING OF STOCKHOLDERS APRIL 28, 202225, 2024 AT 2:30 P.M. ET THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS | The undersigned hereby appoints Ignacio Walker and Vikas Arora, or each of them, with full power of substitution, proxies for the undersigned to act and vote at the 20222024 Annual Meeting of Stockholders of Avery Dennison Corporation and at any adjournment or postponement thereof as indicated upon the matters set forth on the reverse side and described in the proxy statement for the meeting, and, in their discretion, upon any other matters that may properly come before the meeting. This card provides voting instructions, as applicable, to (i) the appointed proxies for shares held of record by the undersigned, including those held under the Company’s Direct Share Purchase and Sale Program, and (ii) the Trustee for shares held on behalf of the undersigned in the Company’s Employee Savings Plan. IF NO OTHER INDICATION IS MADE, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL DIRECTOR NOMINEES AND FOR PROPOSALS 2, 3 AND 3.4. Consistent with its fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended, Fidelity Management Trust Company, as Trustee of the Avery Dennison Corporation Employee Savings Plan, will vote shares of Company stock for which timely instructions are not received and shares of Company stock that have not been allocated to the account of any participant in the same proportion in which allocated shares of Company stock are voted by participants who timely furnish voting instructions. The proxy card must be received no later than 5:00 p.m. Eastern Time on April 25, 2022,22, 2024, and telephone and Internet votes must be completed by 11:59 p.m. on the same day. Your voting instructions are confidential and may not be revealed to anyone, except as required by law. Continued and to be signed on reverse side |
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