UNITED STATES
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant ☒ | Filed by a Party other than the Registrant ☐ |
Check the appropriate box:
☐ | Preliminary Proxy Statement | |||
☐ | Confidential for Use of the Commission Only (as permitted by Rule | |||
☒ | Definitive Proxy Statement | |||
☐ | Definitive Additional Materials | |||
☐ | Soliciting Material under §240.14a-12 |
FORTUNE BRANDS INNOVATIONS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
☒ | No fee required | |||
☐ | ||||
Fee paid previously with preliminary materials | ||||
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules |
520 Lake Cook Road, Deerfield, Illinois 60015
NOTICE OF ANNUAL MEETINGNotice of Annual Meeting
AND PROXY STATEMENTand Proxy Statement
March 30, 202322, 2024
Dear Fellow Stockholders:
We are pleased to invite you to the 20232024 Annual Meeting of Stockholders (“Annual Meeting”) of Fortune Brands Innovations, Inc. (“("Fortune Brands”Brands" or “the Company”"the Company") on Tuesday, May 16, 20237, 2024 at 8:00 a.m. (CDT) at the 520 Lake Cook Road, Deerfield, Illinois. The following matters will be considered at the Annual Meeting:
Proposal 1: | Election of the three director nominees identified in this Proxy Statement for a three-year term expiring at the | |
Proposal 2: | Ratification of the appointment by the Company’s Audit Committee of PricewaterhouseCoopers LLP as our independent registered public accounting firm for | |
Proposal 3: | Advisory vote to approve the compensation paid to the Company’s named executive officers (see page | |
Proposal 4: | Advisory vote to approve the frequency of |
such other business as may properly come before the Annual Meeting.
Stockholders of record at the close of business on March 17, 2023,8, 2024, the record date for the Annual Meeting, are entitled to vote. For information about attending our Annual Meeting and for voting instructions, please see pages 59-63.64-68.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE.This Notice of Annual Meeting and Proxy Statement and accompanying proxy are first being distributed on or about March 30, 2023.22, 2024.
Hiranda S. Donoghue |
Executive Vice President, Chief Legal Officer and Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials
for the 20232024 Annual Meeting of Stockholders to be Held on Tuesday, May 16, 2023.7, 2024.
This Notice of Annual Meeting and Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 202230, 2023 (“Form 10-K”) are available at www.proxyvote.com..
TABLEOF CONTENTSTable Of Contents
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Proxy Summary | |
Proxy Summary
Annual Meeting Information
| Time and Date |
| Location* |
| Record Date | |||||||
Tuesday, May at 8:00 a.m. (CDT) | 500 Corporate Center Starlight Cafe entrance 520 Lake Cook Road, Deerfield, Illinois | March | 8, 2024 |
Agenda and Voting Recommendations
This Proxy Summary highlights selected information in this Proxy Statement and does not contain all of the information that you should consider in deciding how to vote. Please read the complete Proxy Statement carefully before voting. The following table summarizes the items that will be voted on at our 20232024 Annual Meeting of Stockholders (the “Annual Meeting”"Annual Meeting"), along with the Board’s voting recommendations.recommendations of the Board of Directors (the "Board").
Proposal
| Description of Proposal | Board Recommendation | Page Number | Description of Proposal | Board | Page | |||||||||
1 | Election of three Class I Directors | FOR | 7-12 | ||||||||||||
1 | Election of three Class III Directors Nicholas I. Fink, A.D. David Mackay and Stephanie Pugliese
| FOR each Nominee | 6-11 | ||||||||||||
2 | Ratify the appointment of the independent auditor Pricewaterhouse Coopers LLP for fiscal year 2024 | FOR | 59 | ||||||||||||
2 | Ratify the appointment of the independent auditor Pricewaterhouse Coopers for 2023
| FOR | 53 | ||||||||||||
3 | Advisory vote to approve named executive officer compensation | FOR | 60 | ||||||||||||
3 | Advisory vote to approve named executive officer compensation
| FOR | 54 | ||||||||||||
4 | Advisory vote to approve the frequency of voting on named executive officer compensation |
| ONE YEAR | 61 | |||||||||||
4 | Approval of an amendment to the Restated Certificate of Incorporation to provide for exculpation of officers
| FOR | 55 |
See pages 59-6364-68 for instructions on how to vote your shares.
BUSINESS HIGHLIGHTS
Our 2022 TransformationBusiness and Operational Highlights
2022 wasFortune Brands is a transformative year forbrand, innovation and channel leader focused on growth opportunities in the home, security and commercial building markets. We operate in the large and proven growth categories of water, outdoors and security, which are powered by strong secular tailwinds and are underpinned by our Company. It was also a challenging year for our Company and the market for our products. In the second half of 2022, the market experienced a sudden slow down, driven by higher interest rates and affordability concerns, which impacted Company results. In addition, the Company was also impacted by continued inflation and inventory pressures as we saw typical seasonality return to the business. Notwithstanding this challenging environment, our teams delivered a significant transformation of our businesses. We also took decisive actions to reduce our fixed cost base and to preserve our margin while maintaining investments in our key strategic initiatives, including our digital transformation, brand-building, and incremental capacity critical to our long-term growth. Our team executed the following transformational initiatives during 2022:leading brands.
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1FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary | |
We
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary |3 |
Over the past two years, the Company and its management team executed several significant transformative initiatives in the face of a challenging external environment. In 2022, we successfully executed the separation of our Cabinets business, which represented approximately 40% of the Company's net sales, into its own publicly traded company, MasterBrand, Inc., through a tax-free spin-off (the “Separation”). The Separation enabled us to focus on and invest in Fortune Brands’ unique growth opportunities and unlock greater shareholder value. In 2022, we also rebranded our Company with a new identityfrom Fortune Brands Home & Security, Inc., to Fortune Brands Innovations, Inc., to reflect our evolution as a business focused on driving accelerated growth in our categories through brandbrands and innovation. Our name was changed to Fortune Brands Innovations, Inc. and our NYSE ticker symbol is now FBIN.
WeFinally, we reorganized the Company from a decentralized structure of separate businesses to a more aligned and efficient operating model designed to support our focus on brands, innovation and channel leadership and enable accelerated growth.
While 2022 was a year of transformation, 2023 was a year of execution, refinement and integration of the significant actions taken in 2022. In 2023, we continued to prioritize activities that are core to brand, innovation,long-term sales growth, margin preservation, and channel. This change also placed our global supply chain resources under one leadership team to fully leverage the scale and execution of our total business.
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We preserved margins in the face of a challenging macroeconomic environment.
Amidstcash generation amid a challenging external macro environment that negatively impactedenvironment.
Importantly, we also made key investments in brand-building and innovation, our results, we believe thaton-going digital transformation and in long-term capacity additions. Today, our teams’ strong performance executing our transformative initiatives, while reducing cost and increasing efficiency, has positioned the Company for long-term growth. Our 2022 results were:
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The New Fortune Brands: Fortune Brands Innovations, Inc.
Fortune Brands Innovations is powered by our brands, innovation, and service that provides a unique value to our customers. Following the Separation, our product portfolio is focused on Water, Outdoors and Security, and is now more heavily weighted toward smaller ticket repair and remodel items and less exposed to market cyclicality. Our focus on innovative products and operations are drivers of our growth, productivity enhancement, and margin expansion. Our category management expertise and strong customer relationships enables us to provide greater consistency and pricing discipline.
We believe the Fortune Brands Advantage a set of unifying capabilities leveragedare more effectively deployed across the Company, enablesorganization, allowing us to drive category management performance, simplify workstreamsadvance our growth and margin journeys, and enabling growth in supercharged categories, such as connected products, luxury, and outdoor living & material conversion. Our organization’s aligned structure and the work we conducted in 2023 to better enable efficiencies, reduce costsstreamline internal planning processes and systems enabled us to deploy capital more effectively to the internal priorities with the highest potential rate of return. Our businesses are now more appropriately supported by leveraging our globalbest-in-class centers of excellence, which have generated cohesive branding strategies and accelerated new product developments. Our centralized supply chain and enableorganization is more effectively leveraging the advancementfull scale of our digital strategyCompany, which has improved our strategic sourcing and capabilities.planning, increased efficiency, and resulted in our 2023 working capital efficiency performance. These are just some of the ways in which we are harnessing the power of our newly aligned organizational structure, and we believe more is yet to come.
During 2023, we also completed the strategic acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business and the U.S. and Canadian Yale and August residential smart locks business (the "Emtek and Yale Business"). These brands are strong additions to our connected products and luxury portfolios, which we believe have the potential to be key accelerants for growth. Our recently established Transformation Management Office has enabled us to rapidly integrate these newly acquired businesses. We also established a connected products group in support of our growing connected products portfolio.
2In 2023, we made great progress transforming Fortune Brands into an even more growth-focused, highly innovative company. We believe that Fortune Brands is uniquely positioned – now more than ever – to deliver on our commitment of long-term growth and sustained value creation.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary | |
We continue to be driven by our cultureBoard of doing the right thing, as evidenced by our safety records, Environmental, Social and Governance (“ESG”) programs and our focus on innovating products that help address some of the world’s most pressing sustainability and safety issues.Directors
2024 Director Nominees | |||||
Name and Principal Occupation | Age | Director Since | Independent | Board Committees | Other Public |
Amee Chande Strategy Consultant | 50 | 2023 | ✓ | Audit Nominating, Environmental, Social & Governance | Air Canada Algonquin Power & Utilities Corp. |
Ann F. Hackett Former Strategy Consulting Partner and Co-Founder, Personal Pathways LLC | 70 | 2011 | ✓ | Compensation Nominating, Environmental, Social & Governance | Capital One Financial Corp. MasterBrand, Inc. |
Jeffery S. Perry Founder and Chief Executive Officer, Lead Mandates LLC | 58 | 2020 | ✓ | Audit Nominating, Environmental, Social & Governance | MasterBrand, Inc. Equitable Funds |
BOARD OF DIRECTORS
2023 Director Nominees – Class III – Term Expiring 2026 | ||||||||||
Name and Principal Occupation | Age | Director Since | Independent | Board Committees | Other Public Company Boards | |||||
Nicholas I. Fink Chief Executive Officer of Fortune Brands | 48 | 2020 | Executive | Constellation Brands, Inc. | ||||||
Stephanie Pugliese Former President, Americas, Under Armour, Inc. | 52 | 2023 | ✓ | Audit Nominating, Environmental, Social & Governance | None | |||||
A. D. David Mackay Former Chairman and Chief Executive Officer, Kellogg Company | 67 | 2011 | ✓ | Audit Compensation (Chair) | The Clorox Company |
SUCCESSION AND REFRESHMENTInMr. Ronald V. Waters and Mr. John G. Morikis will retire from the Board of Directors following the end of their term and immediately following the Annual Meeting. Mr. Waters is retiring in accordance with the Board’s retirement age policy after twelve years of dedicated service to the Board didCompany, during which time he served as the Chairman of the Audit Committee. Mr. Morikis has decided not nominate Mr. Thomas to stand for re-election at the Annual Meeting.Meeting after twelve years of service to the Company. We thank both Mr. Waters and Mr. Morikis for their valuable contributions and years of dedicated service to the Company and to the Board.
During 2023, the Board appointed two new Board members as part of its long-term succession planning process. Ms. Stephanie Pugliese was appointed in March 2023 in anticipation of Mr. David Thomas' retirement in May 2023. In anticipation of Mr. Thomas’Waters' retirement fromin May 2024, the Board appointed Amee Chande in June 2023. Ms. Chande's experience as a strategic business leader with large, global, technology retailers like ChargePoint, a leading provider of networked charging solutions for electronic vehicles, Waymo, an autonomous driving technology subsidiary of Google, and Alibaba Group, one of the world's largest e-commerce companies, brings a valuable perspective to our Board welcomed Stephanie Pugliese as a Class III director in March 2023,the Company becomes an increasingly digitally enabled company. Ms. Chande is serving on our Audit Committee and Nominating, Environmental, Social and Governance Committee (the "NESG Committee").
Both appointments were made following a thoughtful and comprehensive board succession planning process led by our Nominating, Environmental, Social & Governance Committee (the “NESG Committee”).NESG Committee. With the additions of Ms. Pugliese’s experience as a commercialChande and strategic business leader with oversight of digital and e-commerce businesses at Under Armour, Inc. and Duluth Holdings, Inc. brings valuable perspective to our Board. Ms. Pugliese is serving on our Audit Committee and NESG Committee.
The addition of Ms. Pugliese to our Board increases the Board’sduring 2023, our Board continues to show its commitment to increasing Board diversity. Following Mr. Thomas’ retirementWaters' and Mr. Morikis' retirements from our Board in May 2023,2024, our Board composition will be:
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3FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary | |
Corporate Governance Highlights
CORPORATE GOVERNANCE HIGHLIGHTS
Our Board is committed to maintaining a strong corporate governance program designed to promote the long-term interests of our stockholders and strengthen Board and management accountability. As a company, we are committed to core values that reflect a strong culture of integrity and accountability. These practices are reflected in our corporate governance policies, which are described in more detail on pages 12-2013-24 of the Proxy Statement and highlighted below:
• Independent Board (90%), except our CEO | • Independent Chair of the Board | |
• Women represent 44% of directors and | • Regular executive sessions of non-management directors | |
• Six new Board members added since 2019 demonstrating the Board’s commitment to Board refreshment and succession planning | • Proxy access bylaw allows for 3% stockholders to nominate the greater of two directors or 20% of the board | |
• The Board has a policy that it generally will not re-nominate a director for election following her or his |
• Majority vote in uncontested director elections, with a resignation policy | |
• Annual Board and | • Board oversight of ESG programs and related risks and publication of ESG report | |
• Robust stock ownership guidelines for directors and executives and prohibition on hedging and pledging of Company |
• Active engagement and oversight by Board of Company strategies and |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTSEnvironmental, Social and Governance Highlights
We continue to be driven by our culture of doing the right thing, as evidenced by our safety records, Environmental, Social and Governance ("ESG") programs and our focus on innovating products that help address some of the world’s most pressing sustainability and safety issues. Our Board of Directors is committed to overseeing our ESG initiatives throughout Fortune Brands. We dedicate significant resources toward developing innovative products that positively impact the lives of our consumers, and to produce these products using increasingly sustainable methods. We are committed to being a good corporate citizen by ensuring high safety standards for our associates, fostering an inclusive culture and giving back to our larger communities. We believe that the high standards by which we conduct our business will help us to build on our strengths and continually improve how we measure and monitor our progress on ESG-related initiatives.ESG-related initiatives.
Our philosophy is to have a holistic ESG program, integrated throughout our businesses, that focuses on what matters to our Company and its stakeholders, with the goal of continual improvement. |
SafetySafetyAssociate safety is integral to Company culture and is a top priority, as reflected in our goal of zero safety incidents and through our efforts to create an injury-free workplace.Two of our primary safety measures are the Total Recordable Incidence Rate ("TRIR") and Lost Time Rate ("LTR"). For 2023 our TRIR was 0.99, compared to 1.16 for 2022, and our LTR was 0.31, compared to 0.45 for 2022 (excludes the Emtek and Yale Business).
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proxy Summary |6 |
Diversity, Equity& Inclusion (“DEI”) We continued to advance our DEI strategy and initiatives during 2022.2023. Recent additions to the Company’s Board of Directors and leadership team shows the Board’s and management’sour continued commitment to increasing representation of professionals of color and women. In addition, over the past year we expanded our employee resource groups and continued to offer unconscious bias learning programs throughoutgroups. In 2023, the organization during 2022. We are committed to makingCompany made its employment data publicly available to our stakeholders and will make our by posting its EE0-1 report available on our website later this year and following our next filing with the U.S. Equal Employment Opportunity Commission.its website.
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Please see the resources available on our website at https://www.fbin.com/corporate-responsibility/esg-reporting. Our 2022 ESG Report will be available on our website in the second quarter of 2023. Information provided on the Company’s website is not incorporated by reference into this Proxy Statement.
COMPENSATION HIGHLIGHTS
Compensation Highlights
PAYFOR PERFORMANCEPay for Performance Our executive compensation program is designed to reward named executive officers (“NEOs”) for the achievement of both strategic and operational goals that support the creation of long-term stockholder value. The vast majority of each NEO’s annual target compensation is at-risk because most compensation paid to our NEOs is and dependent upon Company performance and/or stock price. In 2022:2023:
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Over the past five years, our stockholders have overwhelmingly supported our executive compensation program, with an average approval of approximately
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• Long-term focus and stockholder alignment through equity compensation | • No problematic pay practices and historically strong stockholder support for say on pay | |
• Robust stock ownership guidelines | • Prohibition on hedging and pledging of Company | |
• Executive compensation subject to a mandatory clawback policy | • No single trigger change in control severance arrangements | |
• Limited perquisites | • No excise tax gross ups |
5FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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Proposal 1 – Election of Directors
Summary of Qualification of Directors
The Board has identified certain qualifications that are required of all directors. Additionally, the Board seeks to maintain a diverse set of skills, knowledge, experiences, backgrounds and viewpoints represented on our Board as a whole, but not necessarily by each individual director.
Qualifications Required of All Directors
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Experience | Personal Attributes | ||||||||||
• Extensive executive leadership experience or business management experience | • Excellent business judgment and high level of | ||||||||||
• Knowledge about issues affecting, or that may in the future affect, the Company | • Strong commitment to the Company’s goal of |
Specific Qualifications, Expertise and Key Skills Represented on the Board
Qualifications, Expertise and Key Skills |
• Consumer products expertise • Financial and/or accounting expertise • Public company experience as a chief executive, chief operating or chief financial officer • Public company board experience • Diversity of skill, background, race, gender and viewpoint |
Election of Directors
The Board currently consists of 11eleven members and is divided into three classes, each having three-year terms that expire in successive years. Ms. Stephanie PuglieseAmee Chande was appointed by the Board to serve as a Class IIII Director effective in MarchJune 2023. The term of each director currently serving in Class III (Messrs. Nicholas I. Fink, A.D. David Mackay, David M. ThomasI (Mses. Amee Chande and Ms. Pugliese)Ann F. Hackett and Messrs. John G. Morikis, Jeffery S. Perry and Ronald V. Waters) expires at the Annual Meeting. The Board has nominated Messrs. FinkMses. Chande and MackayHackett and Ms. PuglieseMr. Perry for a new term of three years expiring at the 20262027 Annual Meeting of Stockholders and until their successors are duly elected and qualified. In accordance with our retirement age policy, Mr. ThomasWaters will not stand for re-election and will retire immediately following the Annual Meeting. Mr. ThomasMorikis has served as a valuable memberdecided not to stand for re-election and will also retire immediately following the Annual Meeting. Following the retirements of our Board since 2011, serving in positions as non-executive chairman, lead independent directorMessrs. Morikis and chair of the NESG Committee over the course of his tenure. We thank him for his dedicated service to the Company and the Board. Following Mr. Thomas’ retirement,Waters, the number of directors will be reduced from 11eleven to 10nine members.
Each of the nominees has consented to be named as a nominee and to serve as a director, if elected. If any of them should become unavailable to serve as a director (which is not now expected), the Board may designate a substitute nominee. In that case, the persons named in the enclosed proxy card will vote for the substitute nominee designated by the Board. Shares cannot be voted for more than the number of nominees proposed for re-election.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 8 |
The names of the nominees (Class III)I) and the current Class III and Class IIIII directors, along with their present positions, their principal occupations and employment during the last five years, any directorships held with other public companies or registered investment firms during the past five years, their ages and the year first elected as a director of the Company, are set forth below. Each director’s individual qualifications and experiences that contribute to the Board’s effectiveness as a whole are also described in the following paragraphs.
2024 NOMINEES FOR ELECTION – CLASS I DIRECTORS – TERM EXPIRING 2027
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| Director since:2023 Independent Age: 50 Committees: Audit; NESG | |
Biography: Strategy consultant from 2020 to present. Senior advisor and strategy consultant of ChargePoint, a leading provider of networked charging solutions for electric vehicles, from 2020 to 2022. Chief Commercial Officer for Waymo, an autonomous driving technology subsidiary of Google LLC during 2019. Managing Director of Alibaba Group Holding Limited, an e-commerce company, prior thereto. Current Public Company Boards: Air Canada and Algonquin Power & Utilities Corp. Former Public Company Boards: Signature Aviation plc | ||
Skills & Qualifications: | ||
Ms. Chande has extensive experience in leading large, global companies through technological disruption and leading them to embrace technology driven innovation that meets consumers' needs. Her experience is particularly helpful to the Board as Fortune Brands becomes an increasingly digitally enabled company. Ms. Chande led ChargePoint's efforts to build its fleet business’ electric vehicle charging infrastructure and has experience in implementing global strategy efforts in her roles as Chief Commercial Officer of Waymo and Managing Director at Alibaba Group. She also has experience as an executive of large, global retailers, including Chief Executive Officer for NutriCentre, Chief Executive Officer for Staples UK and Vice President of New Business at Wal-Mart USA. Ms. Chande began her career as a strategy consultant with McKinsey & Company. She also serves on the boards of Air Canada and Algonquin Power & Utilities Corp. |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | |
Ann Fritz Hackett | ||
| Director since: 2011 Independent Age: 70 Committees: Compensation; NESG | |
Biography: Retired since January 2020. Strategy Consulting Partner and Co-founder of Personal Pathways, LLC, a company providing web-based enterprise collaboration platforms, from 2015 through January 2020. Prior to her role at Personal Pathways, she was President of Horizon Consulting Group, LLC, a strategy consulting firm founded by Ms. Hackett in 1996. Current Public Company Boards: Capital One Financial Corporation and MasterBrand, Inc. | ||
Skills & Qualifications: | ||
Ms. Hackett has extensive experience in leading companies that provided strategy and human capital consulting services to boards of directors and senior management teams in consumer products and services companies, as well as other industries. She brings to our board insights and experience from leading strategy development, change initiatives, risk management, talent management and succession planning and in creating performance-based compensation programs. Ms. Hackett also has significant technology and international experience and experience with large scale transformations. In addition, she brings extensive public company board experience, including serving as chair of compensation committees. Currently she serves as the lead independent director and chair of the governance and nominating committee of Capital One Financial Corporation. |
Jeffery S. Perry | ||
| Director since: 2020 Independent Age: 58 Committees: | |
Biography: Founder and CEO of Lead Mandates LLC, a business and leadership advisory firm; EY Global Client Service Partner for major consumer product accounts of Ernst & Young LLP, a leading global professional services firm, from 2014 until his retirement in 2020. Current Public Company and Registered Investment Company Boards: MasterBrand, Inc. and Equitable Funds | ||
Skills & Qualifications: | ||
Mr. Perry has extensive experience as a strategic, operational and financial advisor helping boards of directors and management teams. He held several senior positions with Ernst & Young and A.T. Kearney Inc. and is the founder and Chief Executive Officer of Lead Mandates LLC. Mr. Perry brings to our Board relevant experience and perspective in advising on mergers, acquisitions, integrations, divestitures, business transformations of consumer products companies. He serves as chair of the nominating committee of MasterBrand, Inc. and as a Board member of the Chicago Chapter of the National Association of Corporate Directors and other non-profit organizations. |
The Board of Directors recommends that you vote FOR the election of |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 10 |
CLASS II DIRECTORS – TERM EXPIRING 2025
Amit Banati | ||
| Director since: 2020 Independent Age: 55 Committees: Audit; Compensation | |
Biography: Vice Chair and Chief Financial Officer of Kellanova (formerly Kellogg Company), a leader in global snacking, international cereal, noodles and frozen foods, from January 2023 to Present; Senior Vice President and Chief Financial Officer of Kellogg Company from July 2019 to January 2023; President - Asia Pacific, Middle East, Africa of Kellogg Company prior thereto. | ||
Skills & Qualifications | ||
Mr. Banati has extensive executive leadership and operations experience in leading consumer products companies and also brings significant financial management and accounting expertise to our Board. He brings to our Board the perspective of a leader with significant domestic and international experience in the consumer products industry. His financial and accounting expertise, global operations leadership and management experience, as well as his experience executing transformational public company initiatives brings valuable insight to our Board. |
Irial Finan | ||
| Director since: 2019 Independent Age: 66 Committees: Compensation; NESG | |
Biography: Retired since April 2018; Consultant to the CEO of The Coca-Cola Company, a beverage company, from January 2018 to March 2018; Executive Vice President of The Coca-Cola Company and President of Coca-Cola Bottling Investments Group, a bottling operations company, prior thereto. Current Public Company Boards: Smurfit Kappa Group plc Former Public Company Boards: Coca-Cola European Partners plc and Coca-Cola Bottlers Japan Holdings, Inc. | ||
Skills & Qualifications | ||
Mr. Finan’s extensive operations and strategy experience with The Coca-Cola Company and its worldwide bottling operations for more than 30 years, brings to our Board the perspective of a leader with significant international executive and operational experience in a consumer products industry. Mr. Finan's board experience, including serving as Chair of Smurfit Kappa Group plc., provides him with valuable insight into board operations. He also serves on multiple non-profit boards. |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | 11 |
Susan S. Kilsby | ||
| Director since: 2015 Independent, Non-Executive Chair Age: 65 Committees: Compensation; NESG (Chair); Executive (Chair) | |
Biography: Retired since May 2014; Senior Advisor at Credit Suisse AG, an investment banking firm, prior thereto. Current Public Company Boards: Diageo plc and Unilever plc Former Public Company Boards: Shire plc, BBA Aviation plc, BHP Group plc and BHP Limited | ||
Skills & Qualifications | ||
Ms. Kilsby has a distinguished global career in investment banking and brings extensive merger and acquisition, finance and international business experience to the Board. In addition to serving as a Senior Advisor, Ms. Kilsby also served as Managing Director of European Mergers and Acquisitions at Credit Suisse. She also held a variety of senior positions with The First Boston Corporation, Bankers Trust and Barclays de Zoete Wedd. Ms. Kilsby also has extensive board experience, including serving as Chair of Shire plc for 5 years. She also serves on multiple non-profit boards and as a member of the Takeover Panel, a UK independent body that regulates takeovers in the United Kingdom for the purpose of ensuring fair treatment for shareholders and an orderly framework for takeover bids. Her extensive history of board and committee service provides her with expertise in board oversight and function of board committees. |
CLASS III DIRECTORS – TERM EXPIRING 2026
Nicholas I. Fink | ||
| Director since: 2020 Age: 49 Committees: Executive | |
Biography: Chief Executive Officer of Fortune Brands Innovations, Inc. since January 2020; President & Chief Operating Officer of Fortune Brands from March 2019 to January 2020; President of Fortune Brands Global Plumbing Group prior thereto. Current Public Company Boards: Constellation Brands, Inc. | ||
Skills & Qualifications | ||
Mr. Fink’s leadership as Chief Executive Officer of the Company and his significant international and consumer brand and business operating experience, as well as his mergers and acquisitions and strategy expertise provide him with intimate knowledge of our operations, the opportunities for growth and the challenges faced by the Company. He joined the Company as Senior Vice President, Global Growth & Corporate Development in June 2015 and held several leadership positions within the |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 1 – Election of Directors | |
A.D. David Mackay | ||
| Director since: 2011 Independent Age: 68 Committees: Audit, Compensation (Chair); Executive | |
Biography: Retired since January 2011; President and Chief Executive Officer of Kellogg Company, a packaged foods manufacturer, prior thereto. Current Public Company Boards: The Clorox Company | ||
Skills & Qualifications | ||
Mr. Mackay held various key executive positions with Kellogg Company including Chief Executive Officer and Chief Operating Officer, bringing to our Board the perspective of a leader who faced a similar set of external economic, social and governance issues to those that face our Company. Mr. Mackay also has significant international business experience, as well as extensive board experience. His prior Board experience serving as both an executive Chairman |
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Stephanie Pugliese | ||
| Director since: 2023 Independent Age: 53 Committees: Audit; NESG | |
Biography: Former President, Americas of Under Armour, Inc., a global sportswear brand, from September 2019 to March 2023; President and Chief Executive Officer of Duluth Holdings, Inc., a U.S. retailer of casual wear, workwear, and accessories, prior thereto. Former Public Company Boards: Duluth Holdings, Inc. | ||
Skills & Qualifications | ||
Ms. Pugliese held various key executive positions with Under Armour, Inc. and Duluth Holdings, Inc., bringing to our Board the perspective of |
The Board of Directors recommends, during the time that you vote FOR the election of each nominee named above.
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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Fortune Brands is committed to maintaining strong corporate governance practices that are good for our stockholders and our Company. We are dedicated to maintaining these practices and upholding high standards of conduct.
Corporate Governance Principles
The Board maintains a set of Corporate Governance Principles which describe our corporate governance practices and assist the Board in exercising its responsibilities. The Corporate Governance Principles address corporate governance issuesmatters such as Board composition, Board performance and responsibilities, Board meeting and Board committee procedures, the establishmentoversight of Board committees,the management succession planning process and review of Company risks. The Corporate Governance Principles which were enhanced in December 2022, most notably toalso include a Director Code of Conduct, are availableConduct. A copy of the Corporate Governance Principles can be found at https://ir.fbin.com/governing-high-standards.
Director Independence
The Company’s Corporate Governance Principles provide that a majority of the members of the Board shall be independent directors. New York Stock Exchange requirements, as well as the Company’s committee charters, require that each member of the Audit, Compensation and NESG Committees be independent. The Board applies the | ||
definition of independence found in the New York Stock Exchange Listed Company Manual in determining which directors are independent. When determining each director’s independence, the Board also considered charitable contributions made by the Company to organizations with which each director is affiliated. The |
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Applying that definition, Messrs. Banati, Finan, Mackay, Morikis, Perry, Thomas, Waters and Mses. Chande, Hackett, Kilsby and Pugliese were affirmatively determined by the Board to be independent. Due to Mr. Fink’s employment with the Company, he is not considered independent.
Policies with Respect to Transactions with Related Persons
The Board adopted a Code of Business Conduct and Ethics which sets forth various policies and procedures intended to promote the ethical behavior of all of the Company’s employees, officers and directors (the “Code of Conduct”). The Board has established a Compliance Committee (comprised of management) which is responsible for administering and monitoring compliance with the Code of Conduct (other than monitoring director compliance which is the responsibility of the NESG Committee). The Compliance Committee periodically reports on the Company’s compliance efforts to the Audit Committee and the Board.
The Board has also established a Conflicts of Interest Committee (comprised of management) which is responsible for administering, interpreting and applying the Company’s Conflicts of Interest Policy, which describes the types of relationships that may constitute a conflict of interest with the Company. Under the Conflicts of Interest Policy, directors and executive officers are responsible for reporting any potential related person transaction (as defined in Item 404 of Regulation S-K) to the Conflicts of Interest Committee in advance of commencing a potential transaction. The Conflicts of Interest Committee will present to the Audit Committee any potential related party transaction. The Audit Committee will evaluate the transaction, determine whether the interest of the related person is material and approve or ratify, as the case may be, the transaction. In addition, the Company’s executive officers and directors annually complete a questionnaire on which they are required to disclose any related person transactions and potential conflicts of interest. The General Counsel reviews the responses to the questionnaires, and, if a related person transaction is reported by a director or executive officer, submits the transaction for review by the Audit Committee. The Conflicts of Interest Committee also reviews potential conflicts of interest and reports findings involving any director of the Company to the NESG Committee.
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The NESG Committee will review any potential conflict of interest involving a member of the Board to determine whether such potential conflict would affect that director’s independence.
Certain Relationships and Related Transactions
Since January 1, 2022, the Company did not participate in any transactions in which any of its directors or executive officers, any immediate family member of any of its directors or executive officers, or any beneficial owner of more than 5% of the Company’s common stock, had a direct or indirect material interest.
Anti-Hedging and Anti-Pledging Policy
The Company has a policy prohibiting directors and executives from hedging or pledging Company stock, including Company stock held indirectly, and from engaging in any derivative transactions designed to offset the decrease or increase in the market value of the Company’s stock.
Board Refreshment and Succession
BOARD COMPOSITION* | ||||
Since 2019 | ||||
+6 | -5 | 44% | 33% | 5.7 yrs |
Members Added | Members Retired | Female | Racial/Ethnic Diversity | Average Tenure |
*Represents composition following Messrs. Morikis and Waters retirements after the conclusion of the Annual Meeting.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 14 |
The Board believes that Board refreshment and director succession are important to ensuring that Board composition is aligned with the needs of the Company and the Board. The Board also believes that continuity is critical to the effectiveness of the Board as a group over time and allows directors to develop a deeper understanding of the Company. The NESG Committee assesses the composition of the Board and aims to strike a balance between Board members with longer term service and newer members who bring a fresh perspective.
As part of the Board’sBoard's succession planning process and in anticipation of Mr. Thomas’Waters' retirement from the Board following the Annual Meeting, the Board appointed Stephanie PuglieseAmee Chande as a Class IIII director. The Board’sBoard's strong commitment to succession and refreshment have been demonstrated over the last fourfive years by adding five newsix directors. The majority of the director appointments over this period of time also demonstrates the Board’sBoard's commitment to increasing racial and gender diversity. As a result of the Board's succession planning process, the Board's gender diversity has increased to 44% and ethnicity/racial diversity has increased to 33% when taking into account Messrs. Morikis' and Waters' retirements immediately following the Annual Meeting.
Board Leadership Structure
The Board of Directors has determined that is in the best interests of our stockholders to have an independent, non-executive chair serve as the Company’s Board Chair at this time. This leadership structure aids the Board’s oversight of management and allows our Chief Executive Officer ("CEO") to focus primarily on his management responsibilities. The non-executive Chair has the responsibility of presiding over all meetings of the Board, consulting with the CEO on Board meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the CEO and advising him or her on the efficiency of Board meetings, facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that are more fully described in the Company’s Corporate Governance Principles. In addition, the Company’s non-executive Chair facilitates the Board’s annual performance assessment of the CEO.
The Board does not believe that a single leadership structure is right at all times, so the Board periodically reviews its leadership structure to determine, based on the circumstances at the time, whether other leadership structures might be appropriate for the Company. The Board has been and remains committed to maintaining strong corporate governance practices and appropriate independent oversight of management. If, in the future, the Board appoints an executive chair or any other non-independent director as chair, the Board will elect an independent director to serve as the Lead Director. The duties of the Chair of the Board and Lead Director are further described in our Corporate Governance Principles.
Executive Sessions
Pursuant to the Company’s Corporate Governance Principles, non-management directors of the Board are required to meet on a regularly scheduled basis without the presence of management and are led by the Non-Executive Chair. During 2023, Ms. Kilsby led these sessions. In addition, Board committees also met in executive session periodically throughout the year, as deemed appropriate by such committee.
Director Nomination Process
The NESG Committee is responsible for, among other things, screening potential director candidates, recommending qualified candidates to the Board for nomination, assessing director independence and evaluating whether the Board and its committees are functioning effectively. The nomination process is designed to ensure that the NESG Committee fulfills its responsibility to recommend candidates that are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established under the Company’s Corporate Governance Principles. The NESG Committee uses the following process when recommending candidates:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 15 |
When identifying director candidates, the NESG Committee determinesevaluates the composition of the Board to determine whether there are any evolving needs that require an expert in a particular field or other specific skills or experiences. When evaluating director candidates, the NESG Committee first considers a candidate’s management experience and then considers issues of judgment, background, stature, leadership, conflicts of interest, integrity, ethics, original thinking and commitment to the goal of maximizing stockholder value, as well as diversity of background and experiences of the Board as a whole. The Committee also focuses on education, professional experience and differences in viewpoints and skills. The NESG Committee engaged a search firm to assist in identifying and evaluating potential director candidates during 2023. To align with the Company’s DEI initiatives and investor priorities,Board’s intent to increase diverse representation, the NESG Committee instructed its search firm was instructed to include a diverse slate of candidates by including individuals thatwho are diverse in gender and race when searching for new director candidates during 2022.2023. Ms. Pugliese was identified as a potential director candidate through a third-party search firm. Asfirm and Ms. Chande was first identified as a result ofpotential director candidate by a non-management director. Both candidates, along with other potential candidates, underwent a rigorous background check and interview process led by the Board’s succession planning process,search firm before being presented to the Board appointed an additional female director, increasing the Board’s gender diversity to 30% when taking into account Mr. Thomas’s planned retirement at the Annual Meeting.NESG Committee for consideration.
With respect to the nomination of continuing directors for re-election, the individual’s contributions to the Board are considered. The Board generally will not re-nominate a director at the annual meeting of stockholders following his or her 72nd72nd birthday; however, the Board has the discretion to re-nominate a director after reaching age 72 if it believes that nomination is in the best interest of the Company’s stockholders.
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In connection with future director elections, or any time there is a vacancy on the Board, the NESG Committee may retain a third-party search firm to assist in identifying qualified candidates who meet the needs of the Board at that time. The Board is committed to the inclusion of diverse candidatscandidates when conducting a director candidate search; however, in considering candidates for the Board, the NESG Committee considers the entirety of each candidate’s credentials in the context of these standards.
It is the NESG Committee’s policy to consider director candidates recommended by stockholders, if such recommendations are properly submitted to the Company. Stockholders that wish to recommend an individual as a director candidate for consideration by the NESG Committee can do so by writing to the Secretary of Fortune Brands at 520 Lake Cook Road, Deerfield, Illinois 60015. Recommendations must include the recommended candidate’s name, biographical data and qualifications, as well as other information that would be required if the stockholder were actually nominating the recommended candidate pursuant to the procedures for such nominations provided in our Bylaws. The NESG Committee will consider the candidate and the candidate’s qualifications in the same manner in which it evaluates nominees identified by the NESG Committee. The NESG Committee may contact the stockholder making the recommendation to discuss the qualifications of the candidate and the stockholder’s reasons for making the recommendation. Members of the NESG Committee may then interview the candidate if the committee deems the candidate to be appropriate. The NESG Committee may use the services of a third-party search firm to provide additional information about the candidate prior to making a recommendation to the Board. For a stockholder to directly nominate a candidate for director, such stockholder must follow the procedures set forth in the Company’s Bylaws.
The nomination process is designed to ensure that the NESG Committee fulfills its responsibility to recommend candidates that are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established under the Company’s Corporate Governance Principles.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 16 |
Board and Committee Evaluation Process
To increase the effectiveness and provide an opportunity to improve processes and effectiveness, the NESG and the Chair of the Board facilitate an annual evaluation of the Board and its committees. The evaluation typically includes both an interview of each director relating to topics including the function and culture of the Board and its committee’s and performance, the Board’s oversight, responsibilities and resources. In 2022, the Chair of the Board led this process, the results of which were discussed with the Board.
Review of Evaluation Process Annually, in December, the NESG Committee reviews the process used for the annual evaluation of the Board and its committees. It considers whether to make adjustments to the approach used to facilitate meaningful feedback and the topics to cover during the evaluation. In 2024, the NESG Committee adjusted its typical approach by including feedback from the Company's management team about 2023 Board and committee process. |
Feedback Following the executive session discussion, the Board aligns on how to incorporate feedback throughout the coming year and works with the management team to implement changes, if any. | ||
Conduct Board and Committee Evaluations The evaluation typically includes an interview of each director covering topics relating to the function, culture and performance of the Board and its committees, Board oversight, responsibilities and resources. The Chair of the Board (who also serves as the Chair of the NESG Committee) leads this process. In 2024, Ms. Kilsby interviewed each board member and certain members of the management team relating to 2023 Board and committee evaluations. | |||
Summary of Evaluations After interviewing each Board member and certain members of management, the Chair summarizes the feedback received. | |||
Review Results in Executive Session The independent members of the Board of Directors meet to discuss the summary of the results of the evaluation. | |||
Director Orientation and Continuing Education
New directors participate in comprehensive orientation sessions that are designed to familiarize them with the Company’s strategic plans, operations, financial information and governance, board and committee operations, among other relevant topics. This orientation program is considered an essential part of the director onboarding process. New director orientation is tailored to complement the background of the new director.
The Board is briefed regularly on a variety of topics such as industry updates, corporate governance developments, the Company’s regulatory environment, applicable federal securities and state corporate laws, financial principles and standard accounting procedures. In addition, the Corporate Governance Principles provide for the Company to make external continuing education opportunities available to directors and reimburse costs incurred while furthering their education. New directors participate in comprehensive orientation sessions that are designed to familiarize them with the Company’s strategic plans, operations, financial information and governance, among other relevant topics. This orientation program is considered an essential part of the director onboarding process. New director orientation is tailored to complement the background of the new director. These activities are designed to ensure that the Board remains knowledgeable about the most important issues affecting our Company and its businesses.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 17 |
In 2022,2023, management brought in a third-party advisor to provide education to our Board on artificial intelligence, including the risks and opportunities it provides to our Company and our industry. In addition, severaldirectors participated in external continuing education focused on a variety of topics, including corporate governance, ESG developments, leadership succession planning, the lead director function, audit committee functions, and enterprise risk management process and innovation. Ms. Chande obtained a third-party certification in cyber-security oversight in 2023.
Policies with Respect to Transactions with Related Persons
14The Board adopted a Code of Business Conduct and Ethics which sets forth various policies and procedures intended to promote the ethical behavior of all of the Company’s employees, officers and directors (the “Code of Conduct”). The Board has established a Compliance Committee (comprised of management) which is responsible for administering and monitoring compliance with the Code of Conduct (other than monitoring director compliance which is the responsibility of the NESG Committee). The Compliance Committee meets quarterly and periodically reports on the Company’s compliance efforts to the Audit Committee and the Board.
The Board has also established a Conflicts of Interest Committee (comprised of management) which is responsible for administering, interpreting and applying the Company’s Conflicts of Interest Policy, which describes the types of relationships that may constitute a conflict of interest with the Company. Under the Conflicts of Interest Policy, directors and executive officers are responsible for reporting any potential related person transaction (as defined in Item 404 of Regulation S-K) to the Conflicts of Interest Committee in advance of commencing a potential transaction. The Conflicts of Interest Committee will present to the Audit Committee any potential related party transaction. The Audit Committee will evaluate the transaction, determine whether the interest of the related person is material and approve or ratify, as the case may be, the transaction. In addition, the Company’s executive officers and directors annually complete a questionnaire on which they are required to disclose any related person transactions and potential conflicts of interest. The Company's Chief Legal Officer reviews the responses to the questionnaires, and, if a related person transaction is reported by a director or executive officer, submits the transaction for review by the Audit Committee. The Conflicts of Interest Committee also reviews potential conflicts of interest and reports findings involving any director of the Company to the NESG Committee. The NESG Committee will review any potential conflict of interest involving a member of the Board to determine whether such potential conflict would affect that director’s independence.
Since January 1, 2023, the Company did not participate in any transactions in which any of its directors or executive officers, any immediate family member of any of its directors or executive officers, or any beneficial owner of more than 5% of the Company’s Stock, had a direct or indirect material interest. |
Communication with the Board
The Board and management encourage communication from the Company’s stockholders. Stockholders who wish to communicate with the Company’s management should direct their communication to the Chief Executive OfficerCEO or the Secretary of Fortune Brands at 520 Lake Cook Road, Deerfield, Illinois 60015. Stockholders, or other interested parties, who wish to communicate with the non-management directors or any individual director should direct their communication c/o the Secretary at the address above. The Secretary will forward communications intended for the Board to the Chairman of the Board, or, if intended for an individual director, to that director. If multiple communications are received on a similar topic, the Secretary may, in his or her discretion, forward only representative correspondence. Any communications that are abusive, in bad taste or present safety or security concerns may be handled differently.
FORTUNE BRANDS INNOVATIONSBoard Leadership Structure•2024 PROXY STATEMENT
The Board of Directors has determined that is in the best interests of our stockholders to have an independent, non-executive chair serve as the Company’s Board Chair at this time. This leadership structure aids the Board’s oversight of management and allows our Chief Executive Officer to focus primarily on his management responsibilities. The non-executive Chair has the responsibility of presiding over all meetings of the Board, consulting with the Chief Executive Officer on Board meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chief Executive Officer and advising him or her on the efficiency of Board meetings, facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that are more fully described in the Company’s Corporate Governance Principles. In addition, the Company’s non-executive Chair facilitates the Board’s annual performance assessment of the Chief Executive Officer.
The Board does not believe that a single leadership structure is right at all times, so the Board periodically reviews its leadership structure to determine, based on the circumstances at the time, whether other leadership structures might be appropriate for the Company. The Board has been and remains committed to maintaining strong corporate governance practices and appropriate independent oversight of management. If, in the future, the Board appoints an executive chair or any other non-independent director as chair, the Board will elect an independent director to serve as the Lead Director. The duties of the Chair of the Board and Lead Director are further described in our Corporate Governance Principles.
Executive Sessions
Corporate Governance | 18Pursuant to the Company’s Corporate Governance Principles, non-management directors of the Board are required to meet on a regularly scheduled basis without the presence of management and are led by the Non-Executive Chair. During 2022, Ms. Kilsby led these sessions. In addition, Board committees also meet in executive session periodically as deemed appropriate by such committee.
Risk Management
The responsibility for the day-to-day management of risks lies with the Company’s management team; however, the Board has an active role, as a whole and also at the committee level, in overseeing the strategy and process for managing the Company’s risks. Management regularly reviews information regarding the Company’s business strategy, resource allocation, credit, liquidity and operations, talent development, succession and DEI, as well as the risks associated with each, with the full Board. The Company’s overall risk management program consists of periodic management discussions analyzing and mitigating risks, an annual review of risks associated with each of the Company’s businesses and an annual review of risks related to the Company’s compensation programs and practices.
The Audit Committee oversees management of the Company’s financial and operational risks. In addition, the Audit Committee oversees the enterprise risk management program, which identifies both external risks (i.e., economic) and internal risks (i.e., strategic, operational, financial and compliance, including climate-related),
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assesses and ranks these risks according to the likelihood of occurrence and the potential monetary impact. It also assesses the Company’s plans to mitigate such risks. Annually, management identifies and assesses the enterprise risk management program, which the Audit Committee reviews. Cybersecurity-related risks and certain climate-related risks, such as physical risk to our operations and supply chains and commodity price volatility resulting from severe weather events caused climate change and new regulations designed to protect the environment, are some of the external risks assessed in the enterprise risk management program. Management also provides the Audit Committee with quarterly updates on the Company’s risks. The Company has a comprehensive enterprise-wide cybersecurity program aligned to the U.S. Department of Commerce National Institute of Standards and Technology Cybersecurity Framework industry standards and maintains security risk insurance coverage to defray the costs of potential information security breaches. The Company conducts automated online training twice a year for its employees and mock phishing campaigns on a regular basis throughout the year. The Company’s cybersecurity team provides regular updates to our senior executives and typically reports twice a year to the Audit Committee on the status of the Company’s security posture and our efforts to identify and mitigate cybersecurity risks. In 2022, the Company’s chief information officer also reported to the full Board on the Company’s cybersecurity programs and risk mitigation efforts.
The Compensation Committee is responsible for overseeing the management of risks relating to the compensation paid to the Company’s executives and the Company’s compensation plans. Annually, the Compensation Committee’s independent compensation consultant conducts an assessment of the risks associated with the Company’s executive compensation policies and practices. The compensation consultant conducts a more extensive review of all of the Company’s broad-based compensation incentive arrangements every few years. In 2022, the compensation consultant conducted a review of the Company’s executive compensation arrangements. For more information about that assessment see “Compensation Risks” below.
The NESG Committee manages risks associated with the independence of the Board, potential conflicts of interest of Board members and the Company’s corporate governance structure. In addition, the NESG Committee oversees the Company’s ESG programs, initiatives and related risks, which include the Company’s environmental, health and safety, DEI, philanthropy, global citizenship and other social and governance programs and policies. Management reports to the NESG Committee on the Company’s safety programs and statistics as well as the Company’s DEI strategy and goals.
While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about all of the risks described above.below. The Board’s assignment of responsibility for the oversight of specific risks to its committees enables the entire Board, under the leadership of the Chair and the Chief Executive Officer,CEO, to better monitor the risks of the Company and more effectively develop strategic direction, taking into account the magnitude of the various risks facing the Company.
BOARD OF DIRECTORS The Board is responsible for overseeing the strategy and process for managing the Company's risks, including risks relating to the Company’s business strategy, resource allocation, credit, liquidity and operations, talent development and succession programs and practices. | |||
AUDIT Oversees management of the Company’s financial and operational risks and the Enterprise Risk Management ("ERM") program. Oversees cybersecurity-related risks and certain climate-related risks, such as physical risk to our operations and supply chains and commodity price volatility resulting from severe weather events caused by climate change and regulations designed to protect the environment. Annually review the ERM program. Review ERM and Cybersecurity updates on a quarterly basis, if applicable. | COMPENSATION Oversees management of risks relating to the compensation paid to the Company’s executives and the Company’s compensation plans. Annually, the Compensation Committee’s independent compensation consultant conducts an assessment of the risks associated with the Company’s executive compensation policies and practices. | NESG Oversees management of risks associated with the independence of the Board, potential conflicts of interest of Board members and the Company’s corporate governance structure. Oversees the Company’s ESG programs, initiatives and related risks, which include the Company’s environmental, health and safety, DEI, philanthropy, global citizenship and other social and governance programs and policies. | |
MANAGEMENT Management is responsible for identifying, assessing, mitigating and managing risks. The Company’s overall ERM program identifies both external risks (i.e., economic) and internal risks (i.e., strategic, operational, financial and compliance, including climate-related), assesses and ranks these risks according to the likelihood of occurrence and the potential monetary impact. It also assesses the Company’s plans to mitigate such risks. Management regularly reviews and discusses risks and mitigation efforts associated with each of the Company’s businesses with the Board of Directors. | |||
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 19 |
Cybersecurity Risks
The Company has a comprehensive enterprise-wide cybersecurity program informed by the U.S. Department of Commerce National Institute of Standards and Technology Cybersecurity Framework and maintains security risk insurance coverage to defray the costs of potential information security breaches. The Company conducts automated online training annually for its employees and mock phishing campaigns throughout the year. The Company’s cybersecurity team provides regular updates to our senior executives and the chief information officer typically reports twice a year to the Audit Committee on the status of the Company’s data security positions, results for third-party assessments, our incident response plan, and any material cybersecurity threats and developments. In 2023, the Company’s chief information officer reported to the full Board on the Company’s cybersecurity programs and risk mitigation efforts. Beginning in 2024, cybersecurity updates are scheduled to be provided to the Audit Committee on a quarterly basis. For more information on cybersecurity oversight, please refer to Item 1C, "Cybersecurity" in our most recent Annual Report on Form 10-K.
Compensation Risks
The Compensation Committee’s compensation consultant, Willis Towers Watson (“WTW”("WTW") conductsconducted an annual assessment of the risks associated with the compensation policies and practices used to compensate the Company’s executives and reports on the assessment to the Compensation Committee. In 2022,2023, the Company’s compensation consultant analyzed the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk taking and whether incentive designs include appropriate risk-mitigation provisions. After reviewing the compensation consultant’s analysis, the Compensation Committee concluded that none of the Company’s compensation arrangements encourage excessive risk taking and are consistent with the structure and design of other companies of similar size and industry sector. The Company utilizes the following risk-mitigating design features:
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As described in our CD&A, compensation decisions are made using a combination of objective and subjective considerations designed to mitigate excessive risk taking by executives.
FORTUNE BRANDS INNOVATIONSMeeting Attendance•2024 PROXY STATEMENT
Corporate Governance | 20 |
Meeting Attendance Each director nominee and continuing director attended more than 90% of the total meetings of the Board and committees of the Board of which the director was a member during 2023. Pursuant to the Company’s Corporate Governance Principles, all directors are encouraged to attend the Annual Meeting of Stockholders. All of the Company's then-serving directors attended our 2023 Annual Stockholder Meeting, with the exception of Mr. Thomas, who retired immediately following the meeting. Board Committees The Board has established an Audit Committee, a Compensation Committee, an Executive Committee and a NESG Committee. A list of current Committee memberships may be found on the Company’s website at https://ir.fbin.com/committees-and-charters. The Committee memberships as of the date of this Proxy Statement are set forth below: |
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Amit Banati | • | • |
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Amee Chande | • |
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Irial Finan |
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Nicolas I. Fink |
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Ann F. Hackett |
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Susan S. Kilsby |
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A. D. David Mackay | • | « |
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John G. Morikis | • | • |
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Jeffery S. Perry | • |
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Stephanie Pugliese | • |
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Ronald V. Waters, III | « |
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2023 Meetings | 10 | 5 | 4 | 0 |
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Each director attended more than 90% of the total meetings of the Board and committees of the Board of which the director was a member during 2022. The Board and its committees held the following number of meetings during 2022:FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Pursuant to the Company’s Corporate Governance Principles, all directors are encouraged to attend the Annual Meeting of Stockholders. All of the Company’s then-serving directors attended our 2022 Annual Stockholder Meeting.
Board Committees
Corporate Governance | 21 |
The Board has established an Audit Committee, a Compensation Committee, an Executive Committee and an NESG Committee. A list of current Committee memberships may be found on the Company’s website at
https://ir.fbin.com/committees-and-charters. The Committee memberships as of the date of this Proxy Statement are set forth below:
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2023 Meetings 10 Chair Ronald Waters Members Amit Banati Amee Chande A.D. David Mackay John Morikis Jeffery Perry Stephanie Pugliese |
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Each member of the Audit Committee is financially literate. In addition, Messrs. Banati, Mackay and Waters each have accounting or financial management expertise and is an audit committee financial expert as defined in Item 407(d)(5)(ii) and (iii) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each Audit Committee member has also been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual. | ||||||||||||||||||||
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2023 Meetings
Chair A. D. David Mackay Members Amit Banati Irial Finan Ann Hackett Susan Kilsby John Morikis |
| Roles and Responsibilities
Each member of the Compensation Committee has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual. | ||||||||||||||||||||
An “X” indicates membership on the committee.
A “C” indicates that the director serves as the chair of the committee.
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Corporate Governance | |
Audit Committee
The Audit Committee’s primary function is to assist the Board in overseeing the (i) integrity of the Company’s financial statements, the financial reporting process and the Company’s system of internal controls; (ii) the Company’s compliance with legal and regulatory requirements; (iii) independence and qualifications of the Company’s external auditors; (iv) performance of the Company’s external and internal auditors; and (v) the Company’s enterprise risk management program, which includes oversight of cybersecurity related risks.
Each member of the Audit Committee (Messrs. Banati, Mackay, Morikis, Perry, Thomas and Waters and Ms. Pugliese) is financially literate. In addition, Messrs. Banati, Mackay, Perry, Thomas and Waters each have accounting or financial management expertise and is an audit committee financial expert as defined in Item 407(d)(5)(ii) and (iii) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As required by its charter, each Audit Committee member has also been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.
Compensation Committee
The Compensation Committee’s primary function is to assist the Board in attracting and retaining high quality leadership by (i) developing and critically reviewing the Company’s executive compensation program design and pay philosophy; and (ii) setting the compensation of the Company’s executive officers in a manner that is consistent with competitive practices and Company, business segment and individual performance.
As required by its charter, each member of the Compensation Committee (Messrs. Banati, Finan, Mackay and Morikis and Mses. Hackett and Kilsby) has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee has (i) served as one of the Company’s officers or employees, or (ii) had a relationship requiring disclosure under Item 404 of Regulation S-K.
Compensation Committee Procedures
The Compensation Committee directs management to prepare financial data to be used by the Compensation Committee in determining executive compensation. In addition, members of the Company’s human resources department assist in the preparation of executive compensation tally sheets and historical information describing compensation paid to executives, program design and plan provisions, and the Compensation Committee’s independent consultant provides market data for use in determining executive compensation. The Compensation Committee is presented with recommendations from management and from the Committee’s independent compensation consultant as to the level and type of compensation and related program designs provided to the Company’s executive officers. Members of the Company’s legal department provide the Compensation Committee with general advice on laws applicable to executive compensation.
The Chief Executive Officer attends meetings of the Compensation Committee, except for portions of meetings where his performance or compensation is being discussed. The Chief Executive Officer’s feedback on each officer’s performance is essential in the Compensation Committee’s determination of the officer’s salary, target annual incentive and long-term equity compensation determinations. See pages 23-35 of this Proxy Statement for more information about how the Compensation Committee determined the executive officers’ compensation in 2022.
18
Compensation Committee Interlocks and Insider Participation
Compensation Committee Procedures The Compensation Committee directs management to prepare financial data to be used by the Compensation Committee in determining executive compensation. In addition, members of the Company’s human resources department assist in the preparation of executive compensation tally sheets and historical information describing compensation paid to executives, program design and plan provisions, and the Compensation Committee’s independent consultant provides market data for use in determining executive compensation. The Compensation Committee is presented with recommendations from management and from the Committee’s independent compensation consultant as to the level and type of compensation and related program designs provided to the Company’s executive officers. Members of the Company’s legal department provide the Compensation Committee with general advice on laws applicable to executive compensation. |
The CEO attends meetings of the Compensation Committee, except for portions of meetings where his performance or compensation is being discussed. The CEO’s feedback on each officer’s performance is essential in the Compensation Committee’s determination of the officer’s salary, target annual incentive and long-term -equity compensation determinations. See pages 27-42 of this Proxy Statement for more information about how the Compensation Committee determined executive officer compensation in 2023.
Compensation Committee Consultant
WTW has served as the Compensation Committee's independent compensation consultant since 2020. In 2023, WTW received fees of approximately $261,000 for executive compensation related services provided to the Compensation Committee. In their capacity as independent compensation consultant, WTW reported directly to the Compensation Committee and provided the following services and information to the Compensation Committee:
WTW has served as the Compensation Committee’s outside compensation consultant since 2020. In 2022, WTW received fees of approximately $586,000 for executive compensation-related services provided to the Compensation Committee. WTW also provided certain human capital, benefits and corporate risk and brokering services to the Company for which WTW received approximately $1.28 million. The Compensation Committee did not review or approve these additional services provided by WTW to the Company because they are of the type directly secured by management in the ordinary course of business. In their capacity as outside compensation consultant, WTW reported directly to the Compensation Committee and provided the following services and information to the Compensation Committee:
Made recommendations as to best practices for structuring executive pay arrangements and executive compensation (including the amount and form of compensation) consistent with the Company’s business needs, pay philosophy, market trends and latest legal, regulatory and governance considerations;
Performed an assessment of the Company’s compensation peers;
Made recommendations as to best practices for structuring executive pay arrangements and executive compensation (including the amount and form of compensation) consistent with the Company’s business needs, pay philosophy, market trends and latest legal, regulatory and governance considerations; • Performed an assessment of the Company’s compensation peers; • Made recommendations as to non-employee director and executive compensation best practices, pay arrangements, short and long term incentive program design, and equity compensation; • Provided market data (including compiling compensation data and • Performed an assessment of risks associated with the Company’s compensation • Attended Compensation Committee meetings (including executive sessions without the presence of management) and summarized alternatives for compensation arrangements that may have been considered in formulating final recommendations, as well as the consultant’s rationale for supporting or opposing management’s proposals. WTW was also engaged separately by management to provide certain human capital, benefits and corporate risk and brokering services to the | |||||
Provided market data (including compiling compensation data and related performance data) as background for decisions regarding the compensation of the Chief Executive Officer and other executive officers;
Performed an assessment of risks associated with the Company’s compensation structure and design; and
Attended Compensation Committee meetings (including executive sessions without the presence of management) and summarized alternatives for compensation arrangements that may have been considered in formulating final recommendations, as well as the consultant’s rationale for supporting or opposing management’s proposals.
Executive Committee
The Executive Committee has all the authority of the full Board, except for specific powers that are required by law to be exercised by the full Board. The Executive Committee may not amend the Company’s charter, adopt an agreement of merger, recommend actions for stockholder approval, amend or repeal the Bylaws, elect or appoint any director or remove an officer or director, amend or repeal any resolutions of the Board, fix the Board’s compensation, and unless expressly authorized by the Board, declare a dividend, authorize the issuance of stock or adopt a certificate of merger.FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Nominating, Environmental, Social and Governance Committee
The NESG Committee’s primary functions are to (i) provide recommendations to the Board with respect to the organization and function of the Board and its committees; (ii) recruit, identify and recommend qualified potential director candidates and nominees; (iii) review the qualifications and independence of directors and provide recommendations to the Board regarding composition of the committees; (iv) develop and recommend to the Board a set of corporate governance principles; (v) oversee the process of the evaluation of the Board and management; and (vi) oversee the Company’s environmental, social and governance programs, policies and related risks. The NESG Committee also makes recommendations to the Board regarding the level and composition of compensation for non-employee directors and grants annual equity awards to non-employee directors.
As required by its charter, each member of the NESG Committee (Messrs. Finan, Perry, Thomas and Waters and Mses. Hackett, Kilsby and Pugliese) has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.
19
Corporate Governance | |
NESG COMMITTEE | |||||
2023 Meetings 4 Chair Susan Kilsby Members Amee Chande Irial Finan Ann Hackett Jeffery Perry Stephanie Pugliese Ronald Waters | Roles and Responsibilities The NESG Committee’s primary functions are to (i) provide recommendations to the Board with respect to the organization and function of the Board and its committees; (ii) recruit, identify and recommend qualified potential director candidates and nominees; (iii) review the qualifications and independence of directors and provide recommendations to the Board regarding composition of the committees; (iv) develop and recommend to the Board a set of corporate governance principles; (v) oversee the process of the evaluation of the Board and management; and (vi) oversee the Company’s environmental, social and governance programs, policies and related risks. The NESG Committee also makes recommendations to the Board regarding the level and composition of compensation for non-employee directors and grants annual equity awards to non-employee directors. Each member of the NESG Committee has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual. | ||||
EXECUTIVE COMMITTEE | ||
Role The purpose of the Executive Committee is to act in lieu of the full Board, when and if necessary. The Executive Committee has the same authority of the full Board, with the exception of specific powers that are required by Delaware law to be exercised by the full Board. In 2023, there were no actions that required the Executive Committee to meet in place of the full Board. The Executive Committee may not amend the Company’s charter, adopt an agreement of merger, recommend actions for stockholder approval, amend or repeal the Bylaws, elect or appoint any director or remove an officer or director, amend or repeal any resolutions of the Board, fix the Board’s compensation, and unless expressly authorized by the Board, declare a dividend, authorize the issuance of stock or adopt a certificate of merger. | ||
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Corporate Governance | 24 |
Other Corporate Governance Resources The Company’s Corporate Governance Principles, the Company’s Code of Business Conduct and Ethics and the Company’s Code of Ethics for Senior Financial | |||
Officers are available on the Company’s website at https://ir.fbin.com/governing-high-standards. |
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The charters of each committee are also available on the Company’s website at https://ir.fbin.com/committees-and-charters. A copy of our ESG report and other ESG resources are also available on the Company’s website at https://www.fbin.com/corporate-responsibility. |
20FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Director Compensation | |
Director Compensation
Fortune Brands is committed to attracting and retaining qualified and experienced directors to contribute to the Board’s effectiveness and the Company’s goal of maximizing stockholder value. To accomplish this, the Company maintains a non-employee director compensation program that consists of cash retainers and Company stock. equity retainers.
During 2022 and in connection with the Separation and establishment of a new compensation peer group, the NESG Committee assessed the Board's compensation program, elements of compensation and amounts paid. Based on this assessment and with the assistance of WTW, the Board modified the non-employee director compensation program, effective January 1, 2023, to (i) eliminate committee membership fees; (ii) increase the value of the annual cash retainer from $100,000 to $120,000; and (iii) increase the value of the annual equity retainer from $145,000 to $160,000.
Compensation Elements
Below is a description of the 2022 2023 non-employee director compensation program.
Compensation Element* | Compensation Amount | |||||
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| $ | |||||
Equity Retainer | $160,000 in Company Stock | |||||
Committee Chair Fee | $15,000 for service as Chair of the Audit Committee, Compensation Committee or the NESG Committee | |||||
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Board Chair Fee | $200,000 | |||||
Stock Ownership | Ownership of |
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No changes were made to the non-employee director compensation program during 2022. In May 2022, each non-employee director received an annual stock grant that was determined by dividing the dollar value of the annual stock grant ($145,000) by the closing price of the Company’s stock on the grant date ($73.94), rounded to the nearest share. Accordingly, 1,961 shares of Company stock were granted to each of the then serving non-employee directors.
Due to the Separation and the establishment of a new compensation peer group, the NESG Committee, with the assistance of WTW, assessed the Board’s compensation program, its elements and amounts paid. Based on this assessment, effective beginning in January 2023, the Board eliminated committee membership fees, increased the annual cash retainer to $120,000 per year and increased the value of the annual equity retainer to $160,000.
In connection with the Separation, Ms. Hackett was credited with one notional share of MasterBrand stock under the MasterBrand non-employee director compensation plan for every notional share held in Ms. Hackett’s deferral account under the Company’s Non-Employee Director Deferred Compensation Plan, to reflect her continuing role as a director of the Company andCompany.
** Cash compensation elements are pro-rated to reflect the portion of the year the director served on the Board or committee, or as Chair of a directorcommittee.
*** All of MasterBrand.our directors currently meet the multiple or fall within the five-year time period allowed to meet the multiple under the Stock Ownership Guidelines.
Director Stock Ownership Guidelines
To further align the Board’s interests with those of our stockholders, the Board maintains Stock Ownership Guidelines for non-employee directors. The guidelines encourage non-employee directors to own Company stockStock with a fair market value equal to five times the annual cash retainer (for 2022, $500,000)($600,000) and allow directors five years from the date of election to meet the guidelines. Shares owned directly by a director, the director’s spouse,
21
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minor children sharing the same home and any shares held in trust in whichfor the benefit of the director is a trustee with voting and/or investment power,his/her family, as well as any shares that have been granted to a director, but receipt has been deferred pursuant to the Company’s Deferred Compensation Plans, are counted towards ownership. For information about the beneficial ownership of the Company’s securities held by directors and executive officers, see “Certain Information Regarding Security Holdings” on pages 57-58.62-63.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Director Compensation | 26 |
Anti-Hedging and Anti-Pledging Policy
The Company has a policy prohibiting directors and executives from hedging or pledging Company Stock, including Company Stock held indirectly, and from engaging in any derivative transactions designed to offset the decrease or increase in the market value of the Company’s stock.
2022 DIRECTOR COMPENSATION* | |||||||||||||||||||||||||||||||||||||||
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2023 DIRECTOR COMPENSATION* |
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Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(2) | Total ($) |
| Fees |
| Stock |
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| Option |
| Non-Equity |
| Change in |
| All Other | Total |
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Amit Banati | $115,000 | $144,996 | n/a | n/a | n/a | $5,750 | $265,746 |
| $ | 120,000 |
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| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 6,432 |
|
| $ | 286,426 |
| |||||||||
Amee Chande |
| $ | 69,863 |
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| $ | 149,479 |
|
| n/a |
| n/a |
| n/a |
| $ | 11,205 |
|
| $ | 230,547 |
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Irial Finan | $115,000 | $144,996 | n/a | n/a | n/a | $ 750 | $260,746 |
| $ | 120,000 |
|
|
| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 1,455 |
|
| $ | 281,449 |
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Ann F. Hackett | $115,000 | $144,996 | n/a | n/a | n/a | $1,300 | $261,296 |
| $ | 120,000 |
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| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 1,455 |
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| $ | 281,449 |
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Susan S. Kilsby | $315,000 | $144,996 | n/a | n/a | n/a | $ 812 | $460,808 |
| $ | 327,500 |
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| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 6,451 |
|
| $ | 493,945 |
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A.D. David Mackay | $130,000 | $144,996 | n/a | n/a | n/a | $ 750 | $275,746 |
| $ | 135,000 |
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| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 6,432 |
|
| $ | 301,426 |
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John G. Morikis | $115,000 | $144,996 | n/a | n/a | n/a | $5,750 | $265,746 |
| $ | 120,000 |
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|
| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 6,455 |
|
| $ | 286,449 |
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Jeffery S. Perry | $115,000 | $144,996 | n/a | n/a | n/a | $5,750 | $265,746 |
| $ | 120,000 |
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| $ | 159,994 |
|
| n/a |
| n/a |
| n/a |
| $ | 6,455 |
|
| $ | 286,449 |
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Stephanie L. Pugliese |
| $ | 98,667 |
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| $ | 188,199 |
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| n/a |
| n/a |
| n/a |
| $ | 6,356 |
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| $ | 293,222 |
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David M. Thomas | $130,000 | $144,996 | n/a | n/a | n/a | $5,750 | $280,746 |
| $ | 50,625 |
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| $ | — |
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| n/a |
| n/a |
| n/a |
| $ | 6,209 |
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| $ | 56,834 |
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Ronald V. Waters | $130,000 | $144,996 | n/a | n/a | n/a | $5,750 | $280,746 |
| $ | 135,000 |
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| $ | 159,994 |
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| n/a |
| n/a |
| n/a |
| $ | 11,702 |
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| $ | 306,696 |
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* Although Mr. Fink serves as member of the Board, he does not receive any additional compensation for such service. Mr. David M. Thomas retired from the Board in May 2023. Ms. Pugliese and Ms. Chande were appointed to the Board effective March 6, 2023 and June 1, 2023, respectively.
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22FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis | |
Compensation Discussion and Analysis
This CD&A describes the Fortune Brands’ executive compensation program and explains how the Compensation Committee made compensation decisions for the following NEOs in 20222023*:
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Nicholas I. Fink | David V. Barry |
| Cheri M. Phyfer | Hiranda S. Donoghue | Sheri R. Grissom | |||
Chief Executive Officer | Executive Vice President & Chief Financial Officer | Executive Vice President, Group President | Executive Vice President, Chief Legal Officer & Secretary |
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* | Mr. Hallinan, |
This CD&A is divided into the following sections:
Section | Page Number | |
27 | ||
30 | ||
30 | ||
36 |
EXECUTIVE SUMMARYExecutive Summary
Business and Operational Highlights
During 2022,As discussed in the Proxy Summary above, the Company and its management team executed on keyseveral significant transformative initiatives in the face of a challenging economic environment. Despite a slowing market due to interest rate increases and inflation,external environment over the past two years. In 2022, we successfully completed the Separation of our Cabinets business, which represented approximately 40% of the Company's net sales and rebranded our Company to reflect our evolution as a business focused on driving accelerated growth through brands and innovation. We also reorganized the Company from a decentralized structure of separate businesses to a more aligned and efficient operating model designed to support our focus on brands, innovation and channel leadership.
While 2022 was a year of transformation, 2023 was a year of execution, refinement and integration of the significant actions taken in 2022. During 2023, our first full year post-Separation, we prioritized long-term sales growth, margin preservation and cash generation, all while continuing to prioritize key investments, including brand building, thoughtful capacity additions, meaningful innovation, and our digital transformation amid a challenging external environment. We also executed on the strategic acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business model under a centralized leadership team. Whileand the U.S. and Canadian Yale and August residential smart locks business (the "Emtek and Yale Business").
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |28 |
These brands are strong additions to our connected products and luxury portfolios and we believe that they have the potential to be key accelerants for growth.
Our teams have implemented and led through this period of immense change, overseeing our day-to-day operations while also executing on our growth strategy and continuing to implement transformative initiatives, we also reduced our fixed cost base and maintained investments in our key strategic initiatives, including our digital transformation, brand-building, and incremental capacity, which are viewed as critical to our long-term growth. Our 2022 results were:
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We believe our compensation program is designed to and links compensation to performance as reflected by the impact of the economic environment on our 2022 financial results and compensation earned by NEOs in 2022.initiatives. We believe that the actions taken by the leadership team in 20222023 have positioned the Company to continue to grow and create long-term value for our stockholders. We also believe that our compensation program and the goals used within our program continue to incentivize and reward performance.
23
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20222023 Compensation Highlights
The Company’s compensation programs and practices are designed to pay for performance and to align management’s interests with those of the Company’s stockholders while attracting, motivating and retaining superior talent to lead our Company. The Compensation Committee believes that our compensation program incentivizes highstrong performance by (i) providing a significant amount of compensation asin the form of Company equity, (ii) utilizing both short-term and long-term incentives tied to Company performance and (iii) balancing fixed (base salary) and variable (annual cash incentive and equity) compensation. The material components of our 20222023 executive compensation program are summarized in the following chart:
Pay Element | Purpose / Metrics* |
Base Salary | Fixed level of cash compensation designed to attract and retain talent |
Annual Incentive Plan (“Bonus”) | Variable cash compensation designed to recognize annual financial and operating performance. Metrics were: |
• Earnings Per Share (“EPS”) (weighted 60%) | |
• Operating Income Margin Percent (“OIMP”) (weighted 20%) | |
• Working Capital Efficiency (“WCE”) (weighted 20%) | |
Long-Term Incentive Plan (“LTI”) | Variable stock compensation composed of three equity vehicles, each designed to focus management on delivering long-term stockholder value. |
• Performance Share Awards (“PSAs”) granted with a three-year performance cycles. Metrics for the 2023-2025 performance period were: o EBITDA Margin Percent (weighted 75%) o Return On Invested Capital ("ROIC") (weighted 25%) | |
• Restricted Stock Units (“RSUs”) subject to vesting in three annual installments | |
• Stock Options with a ten-year exercise period and subject to vesting in three annual installments |
In connection with the Separation, equity awards were adjusted*All references to preserve the intrinsic valuemetrics used to determine incentive compensation are shown in this CD&A on an unaudited and before charges/gains basis. See Appendix A for definitions and a description of the awards held bymethodology of these non-GAAP measures used to determine incentive compensation.
To support our restructured, centralized organization, the NEOs, with unvested PSAs being converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period. Each outstanding equity award remains subject to continued employment through the vesting date of the original awards. Mr. Banyard’s outstanding equity awards were converted into equity awards of MasterBrand, with his unvested Fortune Brands PSAs converting into MasterBrand RSUs based on the same methodology described above.
The Compensation Committee approved a changechanges to the metrics used in our 2023 annual incentive plan, program by aligningas compared to our 2022 annual incentive plan, to align the performance metrics for all NEOs. Historically, the annual incentive plan design utilized varying metrics with performance metrics for corporate-based NEOs being based on overall Company financial results while NEOs serving in business unit roles had annual incentive performance metrics tied to specific business unit financial and operating results. Beginning in 2023, the annual incentive award performance metrics for all of the Company's executive officers, including all of the NEOs, were based on EPS (weighted 60%), WCE (weighted 20%) and OIMP (weighted 20%). In addition to establishing a unified set of performance metrics for the NEOs, the Compensation Committee replaced the use of return on net tangible assets ("RONTA"), which was a performance metric under the same consolidated corporate wide metrics for all executive officers in order to support the Company’s restructured organization beginning in 2023.2022 annual incentive plan award plan, with OIMP. The
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24FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis | |
change in this metric was made to further focus management on delivering the appropriate incremental or decremental margins, which the Compensation Committee believes will drive value creation over time.
The Compensation Committee also approved changes to the metrics used in our PSAs. Beginning with the 2023-2025 performance period, the performance goals were based on three-year cumulative EBITDA Margin Percent (weighted 75%) and ROIC (weighted 25%). The change from the use of EBIDTA to EBITDA Margin Percent was made to further focus management on delivering long-term incremental margin growth. In addition, in order to energize and retain our most critical senior leaders and in recognition of their essential role in leading the business through the Company’s strategic transformation following the Separation and to drive further growth over the next several years, the Compensation Committee approved an increase in the payout opportunity for the 2023 PSAs. The Company's PSAs are generally structured to provide payouts ranging from 0% to 200% of the target award. For one performance cycle (the 2023-2025 performance period), however, the Compensation Committee modified the structure to provide for the potential to earn up to 300% of the target award for the achievement of stretch goals relating to 3-year EBITDA Margin Percent and ROIC, which if achieved would represent a significant increase in sales growth as well as strong operating income performance over the course of the performance period. The Compensation Committee believes that this long-term opportunity will incentivize management to deliver strong performance during this period of strategic transformation and require that the Company deliver exceptional performance in order to receive the maximum payout level of the stretch goals. The maximum payout level has reverted back to 200% of target beginning with the 2024-2026 performance period.
20222023 NEO Annual Total Target Compensation
The following chart summarizes annual total target compensation awarded to each NEO in 2022:2023:
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Summary of 2023 NEO Annual Total Target Compensation | |||||||||||||||||||||
Named Executive Officer |
| 2023 Annual | 2023 Annual | 2023 Long- | 2023 Total Target | ||||||||||||||||
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Nicholas I. Fink |
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| $ | 1,250,000 |
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| $ | 1,625,000 |
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| $ | 8,000,000 |
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| $ | 10,875,000 |
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David V. Barry |
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| $ | 620,000 |
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| $ | 427,293 |
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| $ | 1,350,000 |
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| $ | 2,397,293 |
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Cheri M. Phyfer |
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| $ | 765,000 |
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| $ | 726,750 |
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| $ | 2,225,000 |
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| $ | 3,716,750 |
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Hiranda S. Donoghue |
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| $ | 525,000 |
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| $ | 393,750 |
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| $ | 1,000,000 |
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| $ | 1,918,750 |
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Sheri R. Grissom |
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| $ | 525,000 |
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| $ | 393,750 |
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| $ | 1,000,000 |
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| $ | 1,918,750 |
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Patrick D. Hallinan |
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| $ | 700,000 |
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| $ | 630,000 |
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| $ | 0 |
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| $ | 1,330,000 |
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FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Summary of 2022 NEO Annual Total Target Compensation | ||||||||||||||||
Named Executive Officer | 2022 Annual Base Salary(1) | 2022 Annual Incentive Target Value | 2022 Long- Award Target Value(2) | 2022 Total Target Compensation | ||||||||||||
Nicholas I. Fink |
| $1,200,000 |
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| $1,560,000 |
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| $7,150,000 |
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| $9,910,000 |
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Patrick D. Hallinan |
| $700,000 |
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| $630,000 |
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| $2,000,000 |
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| $3,330,000 |
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Cheri M. Phyfer |
| $725,000 |
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| $582,978 |
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| $1,700,000 |
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| $3,007,978 |
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Sheri R. Grissom |
| $505,000 |
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| $353,500 |
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| $900,000 |
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| $1,758,500 |
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Hiranda S. Donoghue |
| $500,000 |
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| $350,000 |
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| $900,000 |
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| $1,750,000 |
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R. David Banyard, Jr. |
| $755,000 |
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| $641,750 |
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| $2,225,000 |
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| $3,621,750 |
| ||||
Brett E. Finley |
| $620,000 |
|
| $496,000 |
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| $1,475,000 |
|
| $2,591,000 |
|
|
|
RESULTS OF THE 2022 SAY ON PAY VOTEResults of the 2023 Say on Pay Vote
| The Compensation Committee and Board value the input of our stockholders. The Compensation Committee interpreted the high level of stockholder support as endorsement of the Company's executive compensation program and did not make any changes to the Company’s executive compensation program in response to the 2023 Say on Pay vote. |
Over the past five years, our stockholders have overwhelmingly supported our executive compensation program, with an average approval of approximately |
the Company’s annual say on pay vote. |
|
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PHILOSOPHY AND PROCESS FOR AWARDING NEO COMPENSATION
Philosophy of the Executive Compensation Program
Our executive compensation program is designed to reward NEOs for the achievement of both short-term and long-term financial, strategic and operational goals that lead to the creation of long-term stockholder value. The 20222023 executive compensation program was designed to:
Compensation Decision-Making
2022As illustrated in the table below, all NEOs undergo an annual performance assessment. For Mr. Fink, the Board conducted a formal evaluation of his performance against certain financial, operational, business strategy (which included advancing the Company’s ESG and DEI strategies) and personal development objectives established at the beginning of the year. Progress on such objectives is regularly reviewed throughout the year with the Board. At the end of each year, the Board discusses the CEO’s accomplishments and achievement of the goals with the CEO and in executive session without the presence of the CEO. Following the annual performance review, the Compensation Committee utilizes the market data described below that is provided by WTW to set the CEO’s annual total target compensation based on the results of the performance assessment. For the other NEOs, the CEO reviews and evaluates each of their performance against strategic, financial and operational goals established at the beginning of the year and then presents his evaluations to the Compensation Committee. The Compensation Committee reviews the CEO’s recommendations and market data from WTW and then independently sets each of the other NEO’s annual total target compensation. The CEO does not make any recommendation concerning his own compensation.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |31 |
While the Compensation Committee considers the input of our CEO and management in the compensation decision-making process, the Compensation Committee is responsible for overseeing our executive compensation program, which includes our annual incentive and long-term incentive programs. The Compensation Committee considers all elements of the Company’s executive compensation program in total, as well as individual performance, Company-wide performance and internal equity and market compensation considerations, when making executive compensation-related decisions.
MARKET REVIEW Performed by independent compensation consultant Considers peer and market practices Provides competitive market positioning for executive roles Influences program design | INTERNAL REVIEW CEO evaluates performance CEO and CHRO review market data and internal comparable roles CEO and CHRO recommend to the Compensation Committee pay adjustments for NEOs (other than himself) CEO, CFO and CHRO recommend to the Compensation Committee program changes to align with business objectives, including performance metrics and targets | PAY DECISIONS Compensation Committee carefully considers historical and current market practices, performance, internal pay equity and market trends Compensation Committee approves program, performance targets and pay levels for the applicable fiscal year | |
2023 Compensation Peer Group and Market Data
The Compensation Committee uses compensation data from a group of similarly sized peer companies to evaluate our compensation arrangements (the “Peer Group”).arrangements. With the help of the Compensation Committee’s consultant, each year the Compensation Committee reviews the Peer Group and decides whether any changes should be made. As recommended by
In anticipation of the Separation in late 2022, the Compensation Committee determined that the existing peer group would need to be adjusted to align with the Company's market and projected revenue following completion of the Separation. In selecting the Peer Group to be used when setting 2023 compensation (the “2023 Peer Group”), the Compensation Committee focused on including companies that were more closely aligned with our industry and our business strategies, such as companies that manufacture household products and provide specialized consumer services, including security and alarm services, and companies with strong brand recognition and technology enabled products. Based on this criteria, the 2023 Peer Group excluded eight prior peer group businesses with less relevance to our Company's business strategies following the Separation (specifically, Ball Corp., Borgwarner Inc., Dover Corp., JELD-WEN Holding, Inc., Parker-Hannifin Corp., Pentair plc, RPM International and The Sherwin-Williams Company). The criteria used to evaluate and select the 2023 Peer Group also included the Company's projected revenue size following the Separation. With the assistance of WTW, the Compensation Committee did not make any changes toapproved the following 2023 Peer Group used to evaluate 2022for use in connection with 2023 compensation decisions. The Peer Group consisted of the following companies:decisions:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |32 |
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• Allegion plc | • A.O. Smith Corporation • ADT Inc. • Church & Dwight Co., Inc. • Leggett & Platt, Incorporated • Lennox International Inc. • Masco Corporation | |||
| • | |||
| Mohawk Industries, Inc. | • | ||
| Newell Brands Inc. | • Owens Corning • Resideo Technologies, Inc. • Roper Technologies, Inc. • Snap-On Incorporated • Stanley Black & Decker, Inc. | ||
| • | Tempur Sealy International Inc. • The Clorox Company • Trane Technologies plc | ||
• | Whirlpool Corporation | |||
• | Xylem Inc. • | |||
| ||||
Zurn Elkay Water Solutions Corporation |
WTW provided the Compensation Committee with market data to consider in setting each element ofuse when considering 2023 NEO compensation of the NEOs for 2022.adjustments. This market data primarily consisted of revenue-size-adjustedrevenue size adjusted general industry data received from WTW, supplemented with peer group proxy data.data described above.
The Compensation Committee believes that compensation decisions are complex and require a deliberate review of Company performance, peer compensation levels, experience and impact of individual executives, and individual performance. In determining executive compensation, the Compensation Committee considers all forms of compensation and uses tools – such as tally sheets and market data – to review the value delivered by each component of compensation. When evaluating total target compensation, the Compensation Committee generally strives to set NEO compensation around the 50th percentile of the market data. The Compensation Committee may, however, determine that it is appropriate for total target compensation or any particular element of compensation to exceed or fall below the 50th percentile of the market data for an NEO. The factors that might influence the amount of compensation awarded include market competition for a particular position, the strategic importance of the position, requirements of the position relative to benchmark norms, retention considerations, an individual’s performance, possession of a unique skill or knowledge set, proven leadership capabilities and internal pay equity.
26
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20232024 Compensation Peer Group and Market Data
In 2022,2023, the Compensation Committee determined that the Peer Group would needpeer group to be adjustedused when evaluating 2024 compensation decisions should be refined to more closely align with the Company’s refinedCompany's business focus and to take into account the size of the business following the acquisition of the Emtek and Yale Business and the Company's projected revenue and market and peerscapitalization following the completion of the Separation. The criteria used to evaluate and selectWTW reassessed the 2023 Peer Group included comparable sized companies (based on revenue) that were more alignedusing the same industry and business criteria as in the prior year, with our business strategies, such as companies that manufacture household products and provide specialized consumer services, including security and alarm services, andcomparably-sized companies with strong brand recognitionrevenues of 0.5 to 2.5 times the Company and technology enabled products. The criteria useda market capitalization of 0.5 to evaluate and select4.0 times the 2023 Peer Group also eliminated businesses with less relevance to our Company’s business strategies, such as those in the auto parts and equipment and specialty chemical industries.Company. With the assistance of WTW, the Compensation Committee approvedrefined the following2023 Peer Group to remove Trane Technologies and to add Griffon Corporation and Pentair plc (the “2024 Peer Group”). The 2024 Peer Group approved for use in connection with 20232024 compensation decisions:decisions is:
| |||||
| |||||
• Allegion plc • A.O. Smith Corporation | • | ||||
ADT Inc. | • | ||||
Church & Dwight Co., Inc. | • | Griffon Corporation • | |||
Leggett & Platt, Incorporated • Lennox International Inc. | • Masco Corporation • Mohawk Industries, Inc. • Newell Brands Inc. • Owens Corning • Pentair plc • Resideo Technologies, Inc. • Roper Technologies, Inc. | • Snap-On Incorporated • Stanley Black & Decker, Inc. • Tempur Sealy International Inc. • The Clorox Company • Whirlpool Corporation • Xylem Inc. | |||
• | Zurn Elkay Water Solutions Corporation | ||||
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Evaluating NEO Performance
All NEOs undergo an annualFORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |33 |
Target Setting Process
Our executive compensation program is designed to create and reinforce a pay for performance appraisal. Forculture and incentivize performance without encouraging excessive risk, while recognizing the evaluationcyclical nature of our CEO,business. In addition, a significant element of our executive compensation program is delivered in the Board conductedform of equity to align the interests of our executive officers with our stockholders through the risks and rewards of equity ownership.
Beginning in 2023, our Compensation Committee made a formal evaluationfundamental design change to our executive compensation program to align all members of senior management around common performance goals. The Compensation Committee selects performance goals that it believes are core drivers of the CEO’sCompany’s performance and success and are aligned with the interests of our various stakeholders, including employees, customers, and stockholders. By using performance goals under the Company’s incentive programs that are based on EPS, WCE, OIMP, EBITDA Margin and ROIC, the Compensation Committee believes that the program reflects an appropriate balance with respect to incentivizing top-line growth, profitability and efficiency.
The Committee recognizes the importance of achieving an appropriate balance between rewarding executives for strong performance over both the short-term and long-term and establishing realistic but rigorous targets that continue to attract, motivate and retain executives. In 2023, the Compensation Committee dedicated time to assessing the robustness and rigor of our incentive design, considering the following:
In addition, when establishing the performance goals, the Compensation Committee seeks to establish goals that measure the Company’s operating results and the success of our management team in achieving our annual operating plan and long-term growth plan. As a result, the key financial measures in our annual and long-term incentive plans are measured on a non-GAAP basis. The Committee may make certain adjustments when calculating these results, such as for the impact of foreign currency exchange rate fluctuations and other significant unusual and/or infrequent events that do not impact the Company’s on-going earnings and cash generation including changes in laws, regulations, and accounting principles, actuarial gains/losses related to defined benefit plan accounting, impairment and restructuring related charges/gains and discontinued operations. For 2023, no adjustments were made to the results.
Once goals have been established and in order to drive performance against certain financial, operational, business strategy (including advancingprogram goals, when communicating the Company’s ESG and DEI strategies) and personal development objectives established atgoals to the beginningsenior management team, the Company includes communications on what members of senior management, together with their teams, can do to impact achievement of these goals. We believe this understanding of the year. Progress on such objectives is regularly reviewed throughoutlink between individual/team performance and the year with the Board. At the end of the year, the Board discusses the CEO’s accomplishments and achievement of the Company’s performance goals withhelps the entire organization focus on those actions that have the greatest potential to drive top-line growth, profitability and efficiency.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |34 |
Leadership Succession and Talent Management
The Board and the Compensation Committee recognize that retention of highly-qualified leadership talent is critical to our continued strong performance and to successful succession planning. The Board is responsible for the succession planning of the CEO and inthe Company's executive session without the presenceofficers and oversees talent development of the CEO. Following the annualsenior leaders.
As part of this process, succession candidates for senior leadership positions are considered, taking into account demonstrated performance, review,leadership qualities, institutional knowledge, and potential to take on more complex responsibilities. The Board and the Compensation Committee utilizes market data provided byconsider various succession-related factors, including: (i) the compensation consultant to setpotential retention risk regarding incumbent senior executives and the CEO’s annual total target compensation based onidentified succession candidates; (ii) the resultsimportance of the performance assessment. Forrole within the other NEOs,organization and the CEO reviewsinstitutional knowledge of each executive; (iii) the competitive landscape for executive talent; (iv) the specific succession planning time horizon for each senior executive position; and evaluates each(v) the extent of their performance against strategic, financialdisruption likely to be caused by unplanned attrition. In addition, in administering the Company’s executive compensation program, the Compensation Committee is mindful of our unique operating structure, history as well as the growth strategy of our Company and operational goals established atits businesses. Although the beginningCompany is smaller in size following the successful Separation in 2022, we are cognizant that to attract and retain the superior talent deemed necessary to operate and grow our businesses, we often have to compensate our executives with a view to the scope and complexity of the year and then presents his evaluationsbusiness we expect them to manage, rather than the Compensation Committee. The Compensation Committee reviews the CEO’s recommendations and market data from the compensation consultant and then independently sets eachsize of the other NEO’s annual total target compensation.business they currently manage; this became particularly true following the Separation.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |35 |
Maintaining Best Practices
The Compensation Committee maintains policies to protect the interests of our stockholders and follows commonly viewed compensation best practices in corporate governance.practices. The chart below summarizes these policies.
What We Do | ||||||
✓ | Pay for Performance A vast majority of NEO annual total target compensation is tied to Company performance. In | ✓ |
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✓ | Long-Term Equity Awards 50% of the annual target equity award is made in the form of PSAs based on three year performance; 25% is made in RSUs that vest in three annual installments and 25% is made in stock options that vest in three annual installments, each subject to continued employment. | ✓ |
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✓ | Double-Trigger in Change in Control Severance benefits are payable upon a change in control only if there is also a qualifying termination of employment. Our equity award agreements also include double-trigger provisions. | ✓ |
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✓ | Maximum Payouts on Incentives | Annual cash incentive awards and PSAs have maximum payout caps. | ✓ | Executive SessionsThe Compensation Committee periodically meets in executive session without the presence of management. |
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What We Don’t Do | |||||
× |
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× |
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× |
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TYPES AND AMOUNTS OF NEO COMPENSATION AWARDED IN 2022
Pay-at-Risk Compensation
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |36 |
Types and Amounts of NEO Compensation Awarded in 2023
Pay-at-Risk Compensation
As part of 20222023 annual target compensation, the Company provided both fixed (base salary) and variable (annual bonus, PSAs, RSUs and stock options) compensation to the NEOs. The vast majority of annual target compensation is at riskpay-at-risk because the compensation that is actually paid is dependent upon the Company’s performance or stock price. As a result, the amount of compensation actually paid to an NEO may significantly vary from the NEO’s target compensation.
The following charts show each element of 20222023 annual target compensation, including the mix of short-term and long-term incentives, as well as the amount of pay-at-risk for the CEO and the average for the other continuing NEOs. These charts illustrate annual target compensation.*
* Mr. Hallinan has been excluded from the Other NEO calculations of Pay-at-Risk compensation as his resignation from the Company was effective in March 2023 and he did not receive any equity awards under the Company's long-term incentive program during 2023.
As shown in the charts above, a significant portion of the compensation granted to our NEOs was made in the form of equity awards and pay-at-risk. Equity grantsawards represented 72%74% of Mr. Fink’s 2023 annual total target compensation and 56%55% (on average) of the other continuing NEOs’ 2023 annual total target compensation. 89% of Mr. Fink’s 2023 annual total target compensation for 2022. 88% of Mr. Fink’s annual total target compensation for 2022 was pay-at-risk and 75% (on average) of the other continuing NEOs’ 2023 annual total target compensation for 2022 was pay-at-risk.
28
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20222023 Compensation
Base Salary
Base salaries provide a fixed level of cash compensation and are paid in ordernecessary to attract and retain our NEOs. The Compensation Committee sets each NEO’s base salary to be appropriate and commensurate with the NEO’s position, experience, and performance.
For 2022,2023, the Compensation Committee increased the annual base salaries for each continuing NEO, other than Ms. Donoghue, to better align with the competitive market data, and in recognition of each individual’s prior year performance.performance, and for Ms. Donoghue’s initial base salary was determined atPhyfer and Ms. Grissom, to recognize changes in the time she joined the Company in December 2021 based on the competitive market data, the compensation received from Ms. Donoghue’s prior employer and to be comensurate with her experience. As a resultscope of the Company’s transformation and reorganization,their roles. Ms. Phyfer was promoted to a newly created position, Executive Vice President andthe role of Group President where she is responsible forin September 2022. Ms. Grissom assumed the commercial businesses, brands, innovation and product development across our organization.additional role of Transformation Officer in November 2022. In connection with herMr. Barry's promotion to this positionthe role of Chief Financial Officer in September 2022, she received an increase to herMarch 2023, Mr. Barry's base salary of 12%was increased to bring her compensation in linebe commensurate with market data for a position of similar scope.chief financial officer position. Below are the 20222023 and 20212022 annual base salaries for each NEO, effective as of December 31st of the applicable year (or, in the case of Mr. Banyard, his last day of employment with the Company):year:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Named Executive Officer | December 31, 2021 | December 31, 2022 | ||||||
Nicholas I. Fink |
| $1,160,000 |
|
| $1,200,000 |
| ||
Patrick D. Hallinan |
| $680,000 |
|
| $700,000 |
| ||
Cheri M. Phyfer |
| $630,000 |
|
| $725,000 |
| ||
Sheri R. Grissom |
| $490,000 |
|
| $505,000 |
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Hiranda S. Donoghue |
| $500,000 |
|
| $500,000 |
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R. David Banyard, Jr. |
| $740,000 |
|
| $755,000 |
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Brett E. Finley |
| $600,000 |
|
| $620,000 |
|
Compensation Discussion and Analysis |37 |
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Named Executive Officer |
| December 31, 2022 | December 30, 2023 | ||||||||
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Nicholas I. Fink |
|
| $ | 1,200,000 |
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| $ | 1,250,000 |
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David V. Barry |
|
| $ | 447,200 |
|
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| $ | 620,000 |
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Cheri M. Phyfer |
|
| $ | 725,000 |
|
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| $ | 765,000 |
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Hiranda S. Donoghue |
|
| $ | 500,000 |
|
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| $ | 525,000 |
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Sheri R. Grissom |
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| $ | 505,000 |
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| $ | 525,000 |
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Annual Cash Incentive
The Compensation Committee believes that annual cash incentive awards (“bonus”) reinforce a pay for performance culture because the payment is based on the achievement of the Company’s financial and operational results. Each year, the Compensation Committee sets a percentage of base salary to determine each NEO’s bonus payout at 100% of target.
The Compensation Committee increased the percentage of base salary used to determine the 20222023 bonus awards for Messrs. Fink, Hallinan and Banyard and Mses. Phyfer and Grissomall continuing NEOs (other than Mr. Fink) from the percentage of base salary used to determine their 20212022 bonus awards. TheFor Mses. Phyfer, Donoghue and Grissom, the increases were made to better align with market data and for internal pay equity purposes. The Committee did not make any adjustment todata. For Mr. Barry, the target bonus opportunities for any of the other NEOs. Ms. Donoghue’s annual incentive targetopportunity was established at the time she joined the Companyincreased in December 2021 based on the competitive market data and the Company’s internal pay practices. In connection with Ms. Phyfer’shis promotion in September 2022, her target percentage was increased from 85% to 90% to bring herhis compensation in line with market data for a chief financial officer position (from 50% of similar scope. As a result, Ms. Phyfer’s 2022 annual cash incentive award was pro-rated to reflect the portion of the year in which her target was set at 85% and 90%, respectively.base salary). The target annual bonus opportunities for each of the NEOs in 2022,2023, reflected as a percentage of base salary, were:
Named Executive Officer | Target Bonus | ||
Nicholas I. Fink | 130% | ||
David V. Barry | 75% | ||
Cheri M. Phyfer | 95% | ||
Hiranda S. Donoghue | 75% | ||
Sheri R. Grissom | 75% | ||
Patrick D. Hallinan | 90% |
The Compensation Committee approved changes to the metrics used in our annual incentive plan by aligning the performance metrics for all NEOs to support our restructured centralized organization. Historically, the annual incentive performance metrics for corporate-based NEOs were based on overall Company financial results while NEOs serving in business unit roles had annual incentive performance metrics tied to specific business unit financial and operating results. Beginning in 2023, the annual incentive award performance goals for all of the Company's executive officers, including all of the NEOs, were based on EPS (weighted 60%), OIMP (weighted 20%) and WCE (weighted 20%). In addition, the Compensation Committee replaced the use of RONTA with OIMP. The change in this metric was made to focus management on delivering the appropriate incremental or decremental margins, which the Compensation Committee believes will drive value creation over time.
To establish challenging performance goals under the annual cash incentive program, the Compensation Committee reviewed the target performance goals and actual results for awards paid in 2022, as well as the 2023 expected market growth rate in the home products market and the Company’s annual operating plan.In addition, the 2023 annual
29FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis | |
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incentive targets reflect the impact of the Separation, with the EPS and WCE targets set below last year’s actual performance to reflect the reduced size and scale of the Company immediately following the Separation. Bonus payouts under the annual cash incentive awards were based on the achievement of applicable performance goals and could have ranged from 0% to 200% of target. To establish challenging
The following table sets forth the performance goals under the annual cash incentive program, the Compensation Committee reviewed themetrics at minimum (0% payout), target performance goals(100% payout) and actual results for awards paid in 2021,maximum (200% payout), as well as the 2022 expected growth rate in the home products market, the Company’s three-year operating plan and key assumptions relating to share gains, pricing, material inflation and productivity. For 2022,weighting of each metric, as approved by the Compensation Committee approvedfor the following2023 annual cash incentive award:
Performance Metric |
| Metric |
| Threshold | Target |
| Maximum |
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| Actual |
| Actual Payout |
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EPS (1) |
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| 60% |
| $ | 2.96 |
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| $ | 3.70 |
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| $ | 4.43 |
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| $ | 3.91 |
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OIMP |
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| 20% |
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| 15.4 | % |
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| 16.5 | % |
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| 17.4 | % |
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| 16.0 | % |
| 121.4 | % |
WCE |
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| 20% |
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| 26.7 | % |
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| 26.7 | % |
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| 21.5 | % |
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| 21.8 | % |
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The bonus awards for each of Messrs. Fink and Hallinan and Mses. Grissom and DonoghueNEO were subject entirely to the satisfaction of corporate performance metrics described above whileand reflect a payout percent of 121.4% of target. The following table sets forth the target bonus awardsamount and the amount actually paid to each NEO for each of Messrs. Banyard and Finley were subject entirely to the satisfaction of their respective business segment performance metrics set forth above. Ms. Phyfer’s2023 annual cash incentive awards:
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Named Executive Officer |
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| Target |
| Bonus Payout Amount |
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Nicholas I. Fink |
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| $ | 1,625,000 |
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| $ | 1,972,750 |
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David V. Barry (1) |
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| $ | 427,293 |
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| $ | 518,734 |
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Cheri M. Phyfer |
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| $ | 726,750 |
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| $ | 882,275 |
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Hiranda S. Donoghue |
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| $ | 393,750 |
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| $ | 478,013 |
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Sheri R Grissom |
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| $ | 393,750 |
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| $ | 478,013 |
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Patrick D. Hallinan(2) |
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| $ | 630,000 |
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| $ | 140,421 |
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The Compensation Committee believes that the performance measures chosen for the 20222023).
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2022 Annual Cash Incentive Performance Goals and Results
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Performance and Goals(1) | Results and Awards | |||||||||||||
Named Executive Officer | Performance Metric | Minimum Performance Measure | Target Performance Measure | Maximum Performance Measure | Actual Performance(2) | % Payout | Amount Paid | |||||||
Nicholas I. Fink | EPS(60%) | $5.44 | $6.45 | $7.45 | $6.36 | |||||||||
RONTA(20%) | 48.2% | 56.4% | 64.6% | 46.3% | 57.7% | $900,120 | ||||||||
WCE(20%) | 18.3% | 16.6% | 15.2% | 20.2% | ||||||||||
Patrick D. Hallinan | EPS(60%) | $5.44 | $6.45 | $7.45 | $6.36 | |||||||||
RONTA(20%) | 48.2% | 56.4% | 64.6% | 46.3% | 57.7% | $363,510 | ||||||||
WCE(20%) | 18.3% | 16.6% | 15.2% | 20.2% | ||||||||||
Cheri M. Phyfer | OI(60%) | $602.0 | $688.6 | $775.3 | $624.3 | |||||||||
Water Innovations | SALES(20%) | 1.9% | 3.9% | 5.9% | -6.6% | 24.5% | ||||||||
WCE(20%) | 19.3% | 17.5% | 16.0% | 23.5% | $212,086 | |||||||||
Corporate | EPS(60%) | $5.44 | $6.45 | $7.45 | $6.36 | |||||||||
RONTA(20%) | 48.2% | 56.4% | 64.6% | 46.3% | 57.7% | |||||||||
WCE(20%) | 18.3% | 16.6% | 15.2% | 20.2% | ||||||||||
Sheri R Grissom | EPS(60%) | $5.44 | $6.45 | $7.45 | $6.36 | |||||||||
RONTA(20%) | 48.2% | 56.4% | 64.6% | 46.3% | 57.7% | $203,970 | ||||||||
WCE(20%) | 18.3% | 16.6% | 15.2% | 20.2% | ||||||||||
Hiranda S. Donoghue | EPS(60%) | $5.44 | $6.45 | $7.45 | $6.36 | |||||||||
RONTA(20%) | 48.2% | 56.4% | 64.6% | 46.3% | 57.7% | $201,950 | ||||||||
WCE(20%) | 18.3% | 16.6% | 15.2% | 20.2% | ||||||||||
R. David Banyard, Jr. | OI(60%) | $275.7 | $344.7 | $413.6 | $376.4 | |||||||||
OM(20%) | 10.1% | 11.5% | 12.6% | 11.5% | 93.1% | $623,100 | ||||||||
WCE(20%) | 14.0% | 12.7% | 11.6% | 14.7% | ||||||||||
Brett E. Finley | OI(60%) | $318.8 | $373.8 | $428.7 | $312.8 | |||||||||
OM(20%) | 15.6% | 16.6% | 17.6% | 14.5% | 0.0% | $0 | ||||||||
WCE(20%) | 22.5% | 20.4% | 18.7% | 24.8% |
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Long-Term Equity Awards
The Compensation Committee believes that equity compensation reinforces a pay for performance culture and aligns the interests of management with those of our stockholders. Annually, the Compensation Committee sets a target equity award value and determines the types of equity to award.
The 20222023 annual equity award for NEOs consisted of 50% PSAs, 25% RSUs and 25% stock options.
In setting 20222023 target long-term equity award values, the Compensation Committee considered competitive market data, and the individual performance of each NEO.NEO and for Ms. Phyfer and Ms. Grissom, the expansion of their roles. The Compensation Committee increased the target long-term equity award values granted to all continuing NEOs other than Ms. Donoghue, from the 20212022 target long-term equity award valuevalues. The award values for Mr. Fink and Ms. Phyfer were increased in recognition of prior year performance. In addition, the award values for Messrs. Finkperformance and Hallinan and Ms. Phyfer were increased to better align with market data for similar positions. For Mr. Barry, the increase was made in connection with his promotion to bring his compensation in line with market data for a chief financial officer position. The increase in the award value for Ms. Donoghue’s 2022 target annual equityDonoghue was in recognition of prior year performance. The increase in the award value for Ms. Grissom was established atin recognition of prior year performance and the time she joined the Company in December 2021.increased scope of her role. Below are the target equity award values for 20222023 and 20212022 for each continuing NEO:
31FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis | |
Named Executive Officer | 2021 Target Annual Equity Award Value | 2022 Target Annual Equity Award Value | ||
Nicholas I. Fink | $6,150,000 | $7,150,000 | ||
Patrick D. Hallinan | $1,900,000 | $2,000,000 | ||
Cheri M. Phyfer | $1,575,000 | $1,700,000 | ||
Sheri R. Grissom | $850,000 | $900,000 | ||
Hiranda S. Donoghue1 | N/A | $900,000 | ||
R. David Banyard, Jr. | $2,150,000 | $2,225,000 | ||
Brett E. Finley2 | $1,375,000 | $1,475,000 |
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| ||
Named Executive Officer |
| 2022 Target | 2023 Target | ||||||||
|
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| ||
Nicholas I. Fink |
|
| $ | 7,150,000 |
|
|
| $ | 8,000,000 |
|
|
David V. Barry |
|
| $ | 400,000 |
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|
| $ | 1,350,000 |
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|
Cheri M. Phyfer |
|
| $ | 2,000,000 |
|
|
| $ | 2,225,000 |
|
|
Hiranda S. Donoghue |
|
| $ | 900,000 |
|
|
| $ | 1,000,000 |
|
|
Sheri R. Grissom |
|
| $ | 900,000 |
|
|
| $ | 1,000,000 |
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In anticipation ofAs an incentive to retain Ms. Grissom’s plannedGrissom to continue service beyond her originally intended retirement, the Compensation Committee granted her equity award was granted solely in all three forms of equity, but with the RSUs that were scheduled to vestand stock options vesting on December 28, 2022,27, 2023, subject to her continued employment through such date, in order to support a smooth transition of her role by retaining Ms. Grissom through 2022. As the Company’s Separation and reorganization projects developed over the second half of the year, Ms. Grissom’s retirement was delayed in order to assist the Company and to have her lead its transformation and reorganization projects.date.
Performance Share Awards: PSAs awarded to the NEOs in 20222023 were awarded to be settled in shares of the Company’s common stockCompany Stock based on earnings before interest, taxes, depreciation and amortization (“EBITDA”)the Company's EBITDA Margin Percent (weighted 75%) and return on invested capital (“ROIC”)ROIC (weighted 25%) performance for the three-year performance period from January 1, 20222023 to December 31, 2024,2025, with payouts that could range from 0% to 200%300% of the target award based on performance. The Compensation Committee approved a change in the use of EBITDA to EBITDA Margin Percent, which was made to focus management on delivering long-term incremental margin growth. Under the original terms of the PSAs, if the Company failedfails to achieve the minimum performance threshold, none of the PSAs wouldwill vest. See below for further information regarding the treatment of the 2022 PSAs, along with all other outstanding PSAs for prior performance periods, in connection with the Separation.
The Compensation Committee based the performance goals on EBITDA Margin Percent and ROIC because it believes that these metrics incentivize management to grow earnings and aligns the interests of management with our stockholders. The Compensation Committee believes that awarding PSAs with a cumulative three-year performance goalgoals drives long-term sustained growth and, as a result, management is rewarded if the long-term growth goals are exceeded. In establishing performance goals for PSAs, the Compensation Committee considered the Company’s strategic operating plan, and the expected three-year compound market growth rate,rate.
For one performance cycle (the 2023-2025 performance period), the Compensation Committee modified the structure of the PSAs to provide for the potential to earn up to 300% of the target award for the achievement of stretch goals relating to 3-year EBITDA Margin Percent and ROIC, which if achieved would represent a significant increase in sales growth as well as key assumptions relatingstrong operating income performance over the course of the performance period. Payments above 200% of target will only be made if revenue growth exceeds industry peers, to share gains, pricing, material inflationencourage not only margin improvement but also top-line revenue growth. The potential for an increased maximum payout was instituted to provide an increased incentive for management to focus on the potential benefits of the organizational transformation. The Compensation Committee believes that this long-term opportunity will incentivize management to deliver strong performance during this period of strategic transformation following the Separation and productivity.requires the Company to deliver exceptional long-term performance in order to receive the maximum payout level of the stretch goals. The maximum payout level has reverted back to 200% of target beginning with the 2024-2026 performance period.
At the time of the Separation, three outstanding PSA cycles were converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period had the Separation not occurred. The converted RSUs will continue to vest in accordance with the original vesting schedule. At that time and based on results through September 30, 2022, the Compensation Committee approved a 200% achievement of the January 2021-December 2023 performance period. Based on the approved achievement, the following number of RSUs were awarded:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |40 |
Named Executive Officer | RSUs | |
Nicholas I. Fink | 80,053 | |
David V. Barry | 3,254 | |
Cheri M. Phyfer | 20,502 | |
Sheri R. Grissom | 10,621 | |
Patrick D. Hallinan | 24,732 |
RSUs and Stock Options: The Compensation Committee believes that both RSUs and stock options incentincentivize NEOs to increase stockholder returns and align thealigns their interests of NEOs with our stockholders. Other than with respect to Ms. Grissom's RSU grant as described above, RSUs granted to the NEOs generally vest in three equal annual installments, assuming the NEO remains employed through each annual vesting date. RSUs serve as a long-term retention tool in a cyclical business because the NEO must remain employed with the Company through each of the three annual vesting dates to receive all of the shares. As noted above, Ms. Grissom’s 2022 RSU grant vested on December 28, 2022, subject to her continued employment through such date. The Compensation Committee believes that RSUs represent at-risk compensation since their value is linked directly to share price.
32
|
Stock options allow an NEO to purchase a specific number of shares of Company stockStock at a fixed price (i.e., the share price set on the grant date). The 2022Other than with respect to Ms. Grissom's stock option grant as described above, the 2023 stock options generally vest in three equal annual installments, assuming the NEO remains employed through each vesting date, and expire ten years from the grant date. The Compensation Committee believes that stock options are performance-based and at-risk because the NEO only realizes value to the extent the Company’s stock price increases after the grant date.
Impact of the Separation on Company Equity Awards
Consistent with the treatment of other Fortune Brands employees, each outstanding RSU and stock option held by the NEOs (other than Mr. Banyard) immediately prior to the Separation was adjusted to preserve the intrinsic value of the awards. Each outstanding RSU and stock option remain subject to continued employment through the vesting date of the original awards. Consistent with the treatment of other employees who remained with MasterBrand, Mr. Banyard’s outstanding RSUs and stock options were converted into RSUs and stock options of MasterBrand in a manner intended to preserve the value of the awards prior to the Separation.
The Compensation Committee assessed the actual performance achievement of each outstanding PSA performance cycle through September 30, 2022 and determined that it was appropriate to recognize the performance achieved through such date given the proximity to the conclusion of the 2020-2022 and 2021-2023 PSA cycles and that such performance would have been materially above target had the cycles completed. The Compensation Committee determined that it would be more appropriate to reward performance by converting all three outstanding PSA cycles based on projected performance rather than attempt to meaningfully adjust the goals or convert the PSAs to RSUs at target performance. As a result of this assessment and as permitted under the terms of the underlying equity plans and award agreements, all unvested PSAs were converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period had the Separation not occurred. Each PSA converted into an RSU, which will vest in accordance with the original vesting schedule. Consistent with the treatment of other employees who remained with MasterBrand, Mr. Banyard’s outstanding PSAs were converted into MasterBrand RSUs using the same methodology described above.
At the time of the Separation there were three outstanding PSA performance cycles: 2020-2022; 2021-2023 and 2022-2024. The PSA performance achievement approved by the Compensation Committee based on performance through September 30, 2022 and projected performance through the end of each performance period for each outstanding performance cycle was:
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Based on the approved achievement, the PSAs for all outstanding cycles were converted into the following number of Company RSUs:
| ||
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|
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|
| |
| ||
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33
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Benefits
Retirement
All of the NEOs are eligible for retirement benefits through the Fortune Brands Innovations Retirement Savings Plan (the “Qualified Savings Plan”), a tax-qualified defined contribution 401(k) plan. The Compensation Committee believes that the Qualified Savings Plan benefits are consistent with competitive pay practices and are an important element in attracting and retaining talent in a competitive market.
In addition to the Qualified Savings Plan, the Company provides non-qualified retirement benefits for contributions that would have been made under the tax-qualified plan but for limitations imposed by the Internal Revenue Code (the “Code”). Please see the narratives and the “2022“2023 Nonqualified Deferred Compensation” table on pages 41-42page 47 of this Proxy Statement for further information regarding these retirement benefits.
The Company froze pension plan benefit accruals in 2016 and as a result none of the NEOs are entitled to a benefit under these plans. Mr. Hallinan retained a retirement benefit that accrued while he was an employee of MasterBrand from 2005 through 2008, which was transferred to MasterBrand as a result of the Separation.
Severance
The Company has Agreements for the Payment of Benefits Following Termination of Employment (the “Severance Agreements”) with each NEO. Under the terms of the Severance Agreements, each NEO is entitled to severance benefits upon a “qualifying termination of employment” (i.e., termination by the Company without “cause” or by the NEO for “good reason”) or in the event of a qualifying termination of employment following a change in control.
The Compensation Committee believes that it is appropriate to provide NEOs with the protections afforded under these Severance Agreements and that doing so helps the Company remain competitive with market practices and attract and retain superior talent. The Compensation Committee also believes that these Severance Agreements promote management independence and keep management focused on the Company’s business in the face of any potential change in control events.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Compensation Discussion and Analysis |41 |
All of the Severance Agreements contain “double-trigger” change in control provisions, which means that there must be both a change in control of the Company (or applicable business) and a qualifying termination of employment (i.e., termination by the Company without “cause” or by the NEO for “good reason”) before any enhanced benefits can be paid following a change in control. The NEOs are not entitled to any tax gross ups under the Severance Agreements, including those related to the change-in-control related excise taxes imposed under the Code.
In connection with the Company’s reorganization, Mr. Finley’s position was eliminated and he stepped down as an executive officer of the Company on September 6, 2022, continuing to serve the Company in an advisory capacity until December 31, 2022. In connection with his departure, Mr. Finley became eligible to receive separation benefits under his Severance Agreement following his separation of employment on December 31, 2022. In connection with his separation, the Compensation Committee also approved an extension of the post-termination option exercise period for Mr. Finley’s outstanding stock options for 24 months.
Neither Mr. Banyard nor Mr. Hallinan werewas not eligible to receive severance benefits under theirhis Severance Agreements with the CompanyAgreement in connection with their resignationshis resignation from the Company.
See the “2022"2023 Potential Payments Upon Termination or Change in Control”Control" table on page 4348 below for further details regarding the Severance Agreements, including a quantification of the benefits to be received by Mr. Finley in connection with his departure from the Company.
34
Agreements. |
Perquisites
All NEOs were provided with a cyber-security privacy protection service benefit and an executive health service program that provides all NEOs with annual medical examinations and cybersecurity privacy protection services.examinations. The Company also provides certain broad-based plans, which are generally available to employees, such as matching on charitable contributions and company product purchase programs. In 2022,2023, the Company provided a limited number of perquisites to the NEOs, which included limited use of Company aircraft by Messrs.Mr. Fink and Hallinan (the costs of which were reimbursed to the Company based on the cost of a first classfirst-class airplane ticket for each passenger on a personal flight). and to Ms. Phyfer.
Policies
Clawback Policy
The Company hasIn 2023, the Compensation Committee approved a policy that allows itrevised Clawback Policy designed to recoup all or part of annual cash incentives or PSAs if there is: (1) a significant or material restatementbe compliant with New York Stock Exchange listing standards implementing Section 954 of the Company’sDodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The policy requires that the Company recoup erroneously awarded incentive-based compensation received by current and former executive officers following certain financial statements coveringrestatements, and applies to any of the three fiscal years preceding the grantincentive-based compensation received by a covered executive on or payment; or (2) a restatement of the Company’s financial statements for any year which results from fraud or willful misconduct committed by an award holder. An executive’s unvested RSUs and PSAs and both unvested and vested but unexercised stock options are forfeited and cancelled in the event an executive’s employment is terminated for cause under the terms and conditions of these awards.after October 2, 2023.
Executive Stock Ownership Guidelines
The Company maintains stock ownership guidelines for NEOs and other Company executives, which require them to hold a number of shares equal to a multiple of their annual base salary. The ownership guidelines are as follows:
Position | Stock Ownership | ||
|
| ||
CEO | 6 | ||
Officers that report directly to the CEO | 3 | ||
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| ||
|
|
Executives have five years from the date of hire or date of promotion to acquire the requisite amount of Company stock and are required to hold 50% of net shares acquired from the vesting of PSAs and RSUs until the ownership guidelines are met. Shares owned directly by an executive, the executive’s spouse, children sharing the same home and any shares held in trust for the benefit of the executive or his/her family, as well as any unvested, time-based RSUs, shares that are held in the Company's employee stock purchase plan, 401(k) plan, or any shares that have been deferred pursuant to the Company’s Deferred Compensation Plan, are counted towards ownership. All of the continuing NEOs currently meet their applicable multiple threshold or fall within the time period allowed to meet the multiple threshold under the stock ownership guidelines.
FORTUNE BRANDS INNOVATIONSCOMPENSATION COMMITTEE REPORT•2024 PROXY STATEMENT
Compensation Discussion and Analysis |42 |
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.30, 2023.
Compensation Committee
A.D. David Mackay, Chair
Amit Banati
Irial Finan
Ann F. Hackett
Susan S. Kilsby
John G. Morikis
35
Compensation Committee |
2022 SUMMARY COMPENSATION TABLE
| ||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(3) | Non- Plan | Change in Pension Value & Nonqualified Deferred Compen- sation Earnings ($)(5) | All Other | Total ($) | |||||||||||||||||||||||||||
A | B | C | D | E | F | G | H | I | ||||||||||||||||||||||||||||
Nicholas I. Fink |
| 2022 |
|
| 1,192,308 |
|
| 0 |
|
| 5,362,469 |
|
| 1,787,499 |
|
| 900,120 |
|
| 0 |
|
| 357,601 |
|
| 9,599,997 |
| |||||||||
Chief Executive Officer |
| 2021 |
|
| 1,148,462 |
|
| 0 |
|
| 4,612,510 |
|
| 1,537,493 |
|
| 2,534,600 |
|
| 0 |
|
| 337,316 |
|
| 10,170,381 |
| |||||||||
| 2020 |
|
| 1,097,138 |
|
| 0 |
|
| 4,643,703 |
|
| 1,881,263 |
|
| 1,765,088 |
|
| 0 |
|
| 228,782 |
|
| 9,615,974 |
| ||||||||||
Patrick D. Hallinan |
| 2022 |
|
| 696,154 |
|
| 0 |
|
| 1,499,998 |
|
| 499,994 |
|
| 363,510 |
|
| 0 |
|
| 156,341 |
|
| 3,215,997 |
| |||||||||
Executive Vice President and Chief Financial Officer |
| 2021 |
|
| 671,346 |
|
| 0 |
|
| 1,424,973 |
|
| 474,993 |
|
| 950,912 |
|
| 0 |
|
| 128,554 |
|
| 3,650,778 |
| |||||||||
| 2020 |
|
| 630,897 |
|
| 0 |
|
| 1,525,010 |
|
| 675,011 |
|
| 655,828 |
|
| 18,000 |
|
| 116,932 |
|
| 3,621,678 |
| ||||||||||
Cheri M. Phyfer |
| 2022 |
|
| 655,000 |
|
| 0 |
|
| 1,274,964 |
|
| 425,001 |
|
| 212,086 |
|
| 0 |
|
| 95,559 |
|
| 2,662,610 |
| |||||||||
Executive Vice President, Group President |
| 2021 |
|
| 623,077 |
|
| 0 |
|
| 1,181,260 |
|
| 393,757 |
|
| 923,832 |
|
| 0 |
|
| 69,466 |
|
| 3,191,392 |
| |||||||||
| 2020 |
|
| 575,229 |
|
| 0 |
|
| 1,512,464 |
|
| 537,486 |
|
| 673,485 |
|
| 0 |
|
| 53,862 |
|
| 3,352,526 |
| ||||||||||
Sheri R. Grissom |
| 2022 |
|
| 502,115 |
|
| 0 |
|
| 899,964 |
|
| 0 |
|
| 203,970 |
|
| 0 |
|
| 104,613 |
|
| 1,710,662 |
| |||||||||
Executive Vice President, Chief Human Resources & Transformation Officer | ||||||||||||||||||||||||||||||||||||
Hiranda S. Donoghue |
| 2022 |
|
| 500,000 |
|
| 0 |
|
| 675,016 |
|
| 225,004 |
|
| 201,950 |
|
| 0 |
|
| 61,204 |
|
| 1,663,174 |
| |||||||||
Executive Vice President, Chief Legal Officer and Secretary | ||||||||||||||||||||||||||||||||||||
R. David Banyard, Jr. |
| 2022 |
|
| 754,943 |
|
| 0 |
|
| 1,668,753 |
|
| 556,257 |
|
| 623,100 |
|
| 0 |
|
| 21,773 |
|
| 3,624,826 |
| |||||||||
Former President, Cabinets |
| 2021 |
|
| 736,154 |
|
| 0 |
|
| 1,612,465 |
|
| 537,498 |
|
| 460,576 |
|
| 0 |
|
| 19,700 |
|
| 3,366,393 |
| |||||||||
| 2020 |
|
| 720,000 |
|
| 0 |
|
| 1,724,968 |
|
| 725,011 |
|
| 471,744 |
|
| 0 |
|
| 17,142 |
|
| 3,658,865 |
| ||||||||||
Brett E. Finley Former President, Outdoors & Security |
| 2022 |
|
| 616,538 |
|
| 0 |
|
| 1,181,280 |
|
| 746,170 |
|
| 0 |
|
| 0 |
|
| 38,539 |
|
| 2,582,527 |
| |||||||||
| 2021 |
|
| 597,750 |
|
| 0 |
|
| 1,031,249 |
|
| 343,749 |
|
| 442,080 |
|
| 0 |
|
| 148,002 |
|
| 2,562,830 |
| ||||||||||
| 2020 |
|
| 555,856 |
|
| 0 |
|
| 1,125,017 |
|
| 474,995 |
|
| 561,759 |
|
| 0 |
|
| 68,663 |
|
| 2,786,290 |
|
|
A.D. David Mackay, Chair | |
Amit Banati | |
| |
Ann F. Hackett | |
Susan S. Kilsby | |
John G. Morikis |
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
|
2023 Executive Compensation | |
2023 Executive Compensation |
(1) Salary: Base salaries shown for all NEOs represent the actual amount paid during the year. (2) Stock Awards: The amounts listed in column D for 2023 represent the aggregate grant date fair values calculated in accordance with FASB ASC Topic 718 for RSUs and PSAs granted in 2023. For assumptions used in determining these values, see note 13 to the consolidated financial statements contained in the Company’s Form 10-K. The amounts included in this column for the PSAs granted during 2023 are calculated based on the probable outcome at the time of the grant, which was that the target performance level would be achieved. Assuming the highest level of achievement was achieved with respect to the 2023 PSAs, the maximum value of the awards as of the grant date would be as follows: $12,000,072 for Mr. Fink, $2,025,078 for Mr. Barry, $3,337,500 for Ms. Phyfer, $1,499,964 for Ms. Donoghue, and $1,499,964 for Ms. Grissom. (3) Option Awards: The amounts listed in column E for 2023 reflect the aggregate grant date fair values calculated in accordance with FASB ASC Topic 718 for stock options granted in 2023. For assumptions used in determining these values, see note 13 to the consolidated financial statements contained in the Company’s Form 10-K. (4) Non-Equity Incentive Plans: Column F lists amounts earned under the annual cash incentive plan. Please see the CD&A for further details regarding these awards. (5) Change in Actuarial Value of Pension Benefits: The Summary Compensation Table previously included the aggregate change in actuarial value |
36
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2022 GRANTS OF PLAN-BASED AWARDS |
| |||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other or Units | All Other Options | Exercise Awards | Grant Awards | |||||||||||||||||||||||||||||||||||
Name and Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||
Nicholas I. Fink | ||||||||||||||||||||||||||||||||||||||||
2/28/22(2) | $ | 0 | $ | 1,560,000 | $ | 3,120,000 | ||||||||||||||||||||||||||||||||||
2/28/22(3) | 68,909 | $ | 86.90 | $ | 1,787,499 | |||||||||||||||||||||||||||||||||||
2/28/22(4) | 20,644 | $ | 1,787,461 | |||||||||||||||||||||||||||||||||||||
2/28/22(5) | 0 | 41,289 | 82,578 | $ | 3,575,008 | |||||||||||||||||||||||||||||||||||
Patrick D. Hallinan | ||||||||||||||||||||||||||||||||||||||||
2/28/22(2) | $ | 0 |
| $ | 630,000 |
| $ | 1,260,000 |
| |||||||||||||||||||||||||||||||
2/28/22(3) |
| 19,275 |
| $ | 86.90 |
| $ | 499,994 |
| |||||||||||||||||||||||||||||||
2/28/22(4) |
| 5,775 |
| $ | 500,028 |
| ||||||||||||||||||||||||||||||||||
2/28/22(5) |
| 0 |
|
| 11,549 |
|
| 23,098 |
| $ | 999,970 |
| ||||||||||||||||||||||||||||
Cheri M. Phyfer | ||||||||||||||||||||||||||||||||||||||||
2/22/22(2) | $ | 0 | $ | 582,978 | $ | 1,165,957 | ||||||||||||||||||||||||||||||||||
2/22/22(3) | 16,384 | $ | 86.90 | $ | 425,001 | |||||||||||||||||||||||||||||||||||
2/22/22(4) | 4,908 | $ | 424,959 | |||||||||||||||||||||||||||||||||||||
2/22/21(5) | 0 | 9,817 | 19,634 | $ | 850,005 | |||||||||||||||||||||||||||||||||||
Sheri R. Grissom | ||||||||||||||||||||||||||||||||||||||||
2/28/22(2) | $ | 0 |
| $ | 353,500 |
| $ | 707,000 |
| |||||||||||||||||||||||||||||||
2/28/22(4) |
| 10,394 |
| $ | 899,964 |
| ||||||||||||||||||||||||||||||||||
12/14/22(6) | ||||||||||||||||||||||||||||||||||||||||
Hiranda S. Donoghue | ||||||||||||||||||||||||||||||||||||||||
2/28/22(2) | $ | 0 |
| $ | 350,000 |
| $ | 700,000 |
| |||||||||||||||||||||||||||||||
2/28/22(3) | 8,674 | $ | 86.90 | $ | 225,004 | |||||||||||||||||||||||||||||||||||
2/28/22(4) | 2,599 | $ | 225,034 | |||||||||||||||||||||||||||||||||||||
2/28/22(5) | 0 | 5,197 | 10,394 | $ | 449,982 | |||||||||||||||||||||||||||||||||||
R. David Banyard, Jr. | ||||||||||||||||||||||||||||||||||||||||
2/28/22(2) | $ | 0 |
| $ | 641,750 |
| $ | 1,283,500 |
| |||||||||||||||||||||||||||||||
2/28/22(3) |
| 21,444 |
| $ | 86.90 |
| $ | 556,257 |
| |||||||||||||||||||||||||||||||
2/28/22(4) |
| 6,424 |
| $ | 556,222 |
| ||||||||||||||||||||||||||||||||||
2/28/22(5) |
| 0 |
|
| 12,849 |
|
| 25,698 |
| $ | 1,112,531 |
| ||||||||||||||||||||||||||||
Brett E. Finley | ||||||||||||||||||||||||||||||||||||||||
2/28/22(2) | $ | 0 |
| $ | 496,000 |
| $ | 992,000 |
| |||||||||||||||||||||||||||||||
2/28/22(3) | 15,179 | $ | 86.90 | $ | 393,743 | |||||||||||||||||||||||||||||||||||
2/28/22(4) | 4,548 | $ | 393,789 | |||||||||||||||||||||||||||||||||||||
2/28/22(5) | 0 | 9,095 | 18,190 | $ | 787,491 | |||||||||||||||||||||||||||||||||||
11/21/22(6) | 81,771 | $ | 352,427 |
37
|
|
|
|
|
|
|
38
|
OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END1 |
| |||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable (2) | Number of Securities Underlying Unexercised Options (#) Unexercisable (3) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock Held that Have Not Vested (#)(4) | Market Value of Shares or Units of Stock Held that Have Not Vested ($)(5) | 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 (#) | |||||||||||||||||||||||
Nicholas I. Fink |
| 31,314 |
|
| 0 |
|
| $44.27 |
| 2/28/26 |
| 166,240 |
|
| $9,493,966 |
| 0 |
| $0 |
| ||||||||||||
| 30,930 |
|
| 0 |
|
| $51.31 |
| 2/27/27 | |||||||||||||||||||||||
| 32,074 |
|
| 0 |
|
| $55.98 |
| 2/26/28 | |||||||||||||||||||||||
| 75,977 |
|
| 0 |
|
| $41.42 |
| 3/5/29 | |||||||||||||||||||||||
| 74,308 |
|
| 37,155 |
|
| $61.12 |
| 2/24/30 | |||||||||||||||||||||||
| 12,392 |
|
| 12,392 |
|
| $73.22 |
| 12/7/30 | |||||||||||||||||||||||
| 23,685 |
|
| 47,371 |
|
| $76.63 |
| 2/22/31 | |||||||||||||||||||||||
| 0 |
|
| 78,184 |
|
| $76.60 |
| 2/28/32 | |||||||||||||||||||||||
Patrick D. Hallinan |
| 8,906 |
|
| 0 |
|
| $42.20 |
| 2/23/25 |
| 50,200 |
|
| $2,866,922 |
| 0 |
| $0 |
| ||||||||||||
| 9,644 |
|
| 0 |
|
| $44.27 |
| 2/28/26 | |||||||||||||||||||||||
| 18,277 |
|
| 0 |
|
| $51.31 |
| 2/27/27 | |||||||||||||||||||||||
| 5,860 |
|
| 0 |
|
| $57.66 |
| 7/3/27 | |||||||||||||||||||||||
| 36,082 |
|
| 0 |
|
| $55.98 |
| 2/26/28 | |||||||||||||||||||||||
| 39,846 |
|
| 0 |
|
| $42.30 |
| 2/21/29 | |||||||||||||||||||||||
| 22,864 |
|
| 11,432 |
|
| $61.12 |
| 2/24/30 | |||||||||||||||||||||||
| 6,196 |
|
| 6,196 |
|
| $73.22 |
| 12/7/30 | |||||||||||||||||||||||
| 7,317 |
|
| 14,635 |
|
| $76.63 |
| 2/22/31 | |||||||||||||||||||||||
| 0 |
|
| 21,869 |
|
| $76.60 |
| 2/28/32 | |||||||||||||||||||||||
Cheri M. Phyfer |
| 8,441 |
|
| 0 |
|
| $41.42 |
| 3/5/29 |
| 46,777 |
|
| $2,671,434 |
| 0 |
| $0 |
| ||||||||||||
| 18,156 |
|
| 9,078 |
|
| $61.12 |
| 2/24/30 | |||||||||||||||||||||||
| 4,956 |
|
| 4,957 |
|
| $73.22 |
| 12/7/30 | |||||||||||||||||||||||
| 6,065 |
|
| 12,132 |
|
| $76.63 |
| 2/22/31 | |||||||||||||||||||||||
| 0 |
|
| 18,589 |
|
| $76.60 |
| 2/28/32 | |||||||||||||||||||||||
Sheri R. Grissom |
| 13,047 |
|
| 0 |
|
| $42.20 |
| 2/23/25 |
| 14,797 |
|
| $845,057 |
| 0 |
| $0 |
| ||||||||||||
| 13,728 |
|
| 0 |
|
| $44.27 |
| 2/28/26 | |||||||||||||||||||||||
| 15,465 |
|
| 0 |
|
| $51.31 |
| 2/27/27 | |||||||||||||||||||||||
| 16,838 |
|
| 0 |
|
| $55.98 |
| 2/26/28 | |||||||||||||||||||||||
| 17,431 |
|
| 0 |
|
| $42.30 |
| 2/21/29 | |||||||||||||||||||||||
| 10,087 |
|
| 5,044 |
|
| $61.12 |
| 2/24/30 | |||||||||||||||||||||||
| 3,098 |
|
| 3,098 |
|
| $73.22 |
| 12/7/30 | |||||||||||||||||||||||
| 3,273 |
|
| 6,548 |
|
| $76.63 |
| 2/22/31 | |||||||||||||||||||||||
Hiranda S. Donoghue |
| 0 |
|
| 9,841 |
|
| $76.60 |
| 2/28/32 |
| 14,787 |
| $ | 844,486 |
| 0 |
| $0 |
| ||||||||||||
Brett E. Finley |
| 25,391 |
|
| 0 |
|
| $55.98 |
| 12/31/24 |
| 0 |
|
| $0 |
| 0 |
| $0 |
| ||||||||||||
| 29,884 |
|
| 0 |
|
| $42.30 |
| 12/31/24 | |||||||||||||||||||||||
| 17,484 |
|
| 0 |
|
| $61.12 |
| 12/31/24 | |||||||||||||||||||||||
| 3,717 |
|
| 0 |
|
| $73.22 |
| 12/31/24 | |||||||||||||||||||||||
| 5,295 |
|
| 0 |
|
| $76.63 |
| 12/31/24 |
|
|
39
|
|
Number of Options Vesting by Year | ||||||||||||
Name | 2023 | 2024 | 2025 | |||||||||
Nicholas I. Fink |
| 99,293 |
|
| 49,747 |
|
| 26,062 |
| |||
Patrick D. Hallinan |
| 32,234 |
|
| 14,608 |
|
| 7,290 |
| |||
Cheri M. Phyfer |
| 26,297 |
|
| 12,262 |
|
| 6,197 |
| |||
Sheri R. Grissom |
| 11,416 |
|
| 3,274 |
|
| 0 |
| |||
Hiranda S. Donoghue |
| 3,280 |
|
| 3,280 |
|
| 3,281 |
|
|
Number of RSUs Vesting by Year | ||||||||||||
Name | 2023 | 2024 | 2025 | |||||||||
Nicholas I. Fink |
| 25,485 |
|
| 94,533 |
|
| 46,222 |
| |||
Patrick D. Hallinan |
| 8,292 |
|
| 28,978 |
|
| 12,930 |
| |||
Cheri M. Phyfer |
| 11,719 |
|
| 24,067 |
|
| 10,991 |
| |||
Sheri R. Grissom |
| 2,810 |
|
| 11,987 |
|
| 0 |
| |||
Hiranda S. Donoghue |
| 4,484 |
|
| 4,484 |
|
| 5,819 |
|
|
2022 OPTION EXERCISES AND STOCK VESTED1 | ||||||||
Stock Awards
| ||||||||
Name | Number of Shares Acquired on Vesting (#)(2) | Value Realized Upon Vesting ($)(3) | ||||||
Nicholas I. Fink |
| 112,025 |
|
| $6,925,526 |
| ||
Patrick D. Hallinan |
| 36,313 |
|
| $2,270,995 |
| ||
Cheri M. Phyfer |
| 28,443 |
|
| $1,768,922 |
| ||
Sheri R Grissom |
| 27,010 |
|
| $1,543,267 |
| ||
Hiranda S. Donoghue |
| 3,499 |
|
| $197,484 |
| ||
R. David Banyard, Jr. |
| 18,968 |
|
| $1,262,936 |
| ||
Brett E. Finley |
| 27,369 |
|
| $1,895,554 |
|
|
|
|
40
|
Legacy Tax-Qualified and Non-Qualified Pension Benefits
The Company maintains legacy tax-qualified pension plans and supplemental non-qualified pension plans. Benefit accruals under these plans were frozen in 2016 and employees who were hired or transferred (as applicable) after the date the plans were frozen were not eligible to receive a benefit. As a result, none of our NEOs participate in our legacy tax-qualified defined benefit pension plans or supplemental non-qualified pension plans.
Mr. Hallinan accumulated a pension benefit that accrued while he was employed by MasterBrand from 2005 through 2008 under the MasterBrand Cabinets Inc. Pension Plan (“MBCI Plan”)(negative values for 2022 and a supplemental pension benefit under2021 of $37,000 and $3,000, respectively). Because the liability of the MasterBrand Cabinets Inc. Supplemental RetirementPension Plan (“MBCI SERP”). The assets and liabilities of the MBCI Plan and the MBCI SERP remained with MasterBrand at the time of the Separation. The present value ofSeparation, the Company is not responsible for any amounts due to Mr. Hallinan’s accumulated benefitsHallinan under the qualifiedplan and non-qualified plans will continuedoes not administer the plan, no change in value is reported during 2023 with respect to fluctuatethe MasterBrand Cabinets Pension Plan.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
RETIREMENT AND POST-RETIREMENT BENEFITS 2022 PENSION BENEFITS | ||||||||||||||
Name
| Plan Name(1)
| Number of
| Present
| Payments
| ||||||||||
Patrick D. Hallinan | MBCI Plan | 3.08 | $ | 58,000 | 0 | |||||||||
MBCI SERP
| 3.08 | $ | 17,000 | 0 |
|
|
Tax
2023 GRANTS OF PLAN-BASED AWARDS |
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
| Estimated Future Payouts Under |
| Estimated Future Payouts Under |
| All Other |
| All Other |
| Exercise |
| Grant |
| ||||||||||||||||||||||||||||||||||||
Name and |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| or Units |
| Options |
| Awards |
| Awards |
| ||||||||||||||||||||||||||||
Nicholas I. Fink |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 1,625,000 |
|
|
| $ | 3,250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 98,039 |
|
|
| $ | 60.80 |
|
|
| $ | 1,999,996 |
| ||||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 32,473 |
|
|
|
|
|
|
|
|
|
|
| $ | 2,000,012 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 64,946 |
|
|
|
| 194,838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 4,000,024 |
| ||||||
David V. Barry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 427,293 |
|
|
| $ | 854,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 16,544 |
|
|
| $ | 60.80 |
|
|
| $ | 337,498 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5,480 |
|
|
|
|
|
|
|
|
|
|
| $ | 337,513 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 10,960 |
|
|
|
| 32,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 675,026 |
| ||||||
Cheri M. Phyfer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 726,750 |
|
|
| $ | 1,453,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 27,267 |
|
|
| $ | 60.80 |
|
|
| $ | 556,247 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 9,031 |
|
|
|
|
|
|
|
|
|
|
| $ | 556,219 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 18,063 |
|
|
|
| 54,189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,112,500 |
| ||||||
Hiranda S. Donoghue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 393,750 |
|
|
| $ | 787,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,255 |
|
|
| $ | 60.80 |
|
|
| $ | 250,002 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,059 |
|
|
|
|
|
|
|
|
|
|
| $ | 249,994 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 8,118 |
|
|
|
| 24,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 499,988 |
| ||||||
Sheri R. Grissom |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 393,750 |
|
|
| $ | 787,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
3/6/23(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 12,255 |
|
|
| $ | 60.80 |
|
|
| $ | 250,002 |
| |||||||
3/6/23(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,059 |
|
|
|
|
|
|
|
|
|
|
| $ | 249,994 |
| ||||||||
3/6/23(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 0 |
|
|
|
| 8,118 |
|
|
|
| 24,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 499,988 |
| ||||||
Patrick D. Hallinan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
(2) |
| $ | 0 |
|
|
| $ | 630,000 |
|
|
| $ | 1,260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END |
| ||||||||||||||||||||||||||||||||
| Option Awards |
| Stock Awards |
| |||||||||||||||||||||||||||||
Name | Number of | Number of | Equity | Option | Option |
| Number | Market | Equity | Equity |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Nicholas I. Fink |
| 0 |
|
|
|
| 98,039 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 173,228 |
|
| $ | 13,189,580 |
|
|
| 64,946 |
|
| $ | 4,944,988 |
|
|
| 26,061 |
|
|
|
| 52,123 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 47,370 |
|
|
|
| 23,686 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 24,784 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 111,463 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 75,977 |
|
|
|
| 0 |
|
|
|
|
| $ | 41.42 |
|
| 3/5/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 32,074 |
|
|
|
| 0 |
|
|
|
|
| $ | 55.98 |
|
| 2/26/28 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 30,930 |
|
|
|
| 0 |
|
|
|
|
| $ | 51.31 |
|
| 2/27/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 31,314 |
|
|
|
| 0 |
|
|
|
|
| $ | 44.27 |
|
| 2/28/26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
David V. Barry |
| 0 |
|
|
|
| 16,544 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 16,640 |
|
| $ | 1,266,970 |
|
|
| 10,960 |
|
| $ | 834,494 |
|
|
| 0 |
|
|
|
| 9,394 |
|
|
|
|
| $ | 53.38 |
|
| 6/29/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 1,457 |
|
|
|
| 2,916 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 1,925 |
|
|
|
| 963 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 4,539 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 1,659 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.30 |
|
| 2/21/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cheri M. Phyfer |
| 0 |
|
|
|
| 27,267 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 44,089 |
|
| $ | 3,356,936 |
|
|
| 18,063 |
|
| $ | 1,375,317 |
|
|
| 6,196 |
|
|
|
| 12,393 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 12,131 |
|
|
|
| 6,066 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 9,913 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 27,234 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 8,441 |
|
|
|
| 0 |
|
|
|
|
| $ | 41.42 |
|
| 3/5/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Hiranda S. Donoghue |
| 0 |
|
|
|
| 12,255 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 14,362 |
|
| $ | 1,093,523 |
|
|
| 8,118 |
|
| $ | 618,105 |
|
|
| 3,280 |
|
|
|
| 6,561 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sheri R. Grissom |
| 12,255 |
|
|
|
| 0 |
|
|
|
|
| $ | 60.80 |
|
| 3/6/33 |
|
| 11,543 |
|
| $ | 878,884 |
|
|
| 8,118 |
|
| $ | 618,105 |
|
|
| 6,547 |
|
|
|
| 3,274 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 6,196 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 15,131 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 17,431 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.30 |
|
| 2/21/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 16,838 |
|
|
|
| 0 |
|
|
|
|
| $ | 55.98 |
|
| 2/26/28 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 15,465 |
|
|
|
| 0 |
|
|
|
|
| $ | 51.31 |
|
| 2/27/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 13,728 |
|
|
|
| 0 |
|
|
|
|
| $ | 44.27 |
|
| 2/28/26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 13,047 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.20 |
|
| 2/23/25 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Patrick D. Hallinan |
| 21,869 |
|
|
|
| 0 |
|
|
|
|
| $ | 76.60 |
|
| 2/28/32 |
|
| 0 |
|
| $ | 0 |
|
|
| 0 |
|
| $ | 0 |
|
|
| 21,952 |
|
|
|
| 0 |
|
|
|
|
| $ | 76.63 |
|
| 2/22/31 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 6,196 |
|
|
|
| 0 |
|
|
|
|
| $ | 73.22 |
|
| 12/7/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 34,296 |
|
|
|
| 0 |
|
|
|
|
| $ | 61.12 |
|
| 2/24/30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 39,846 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.30 |
|
| 2/21/29 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 36,082 |
|
|
|
| 0 |
|
|
|
|
| $ | 55.98 |
|
| 2/26/28 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 5,860 |
|
|
|
| 0 |
|
|
|
|
| $ | 57.66 |
|
| 7/3/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 18,277 |
|
|
|
| 0 |
|
|
|
|
| $ | 51.31 |
|
| 2/27/27 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 9,644 |
|
|
|
| 0 |
|
|
|
|
| $ | 44.27 |
|
| 2/28/26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| 2,906 |
|
|
|
| 0 |
|
|
|
|
| $ | 42.20 |
|
| 2/23/25 |
|
|
|
|
|
|
|
|
|
|
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 46 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
| Number of Options Vesting by Year | ||||||||||||||
Name |
| 2024 |
| 2025 |
| 2026 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nicholas I. Fink |
|
| 82,426 |
|
|
|
| 58,741 |
|
|
|
| 32,681 |
|
|
David V. Barry |
|
| 12,632 |
|
|
|
| 11,670 |
|
|
|
| 5,515 |
|
|
Cheri M. Phyfer |
|
| 21,350 |
|
|
|
| 15,286 |
|
|
|
| 9,090 |
|
|
Hiranda S. Donoghue |
|
| 7,364 |
|
|
|
| 7,366 |
|
|
|
| 4,086 |
|
|
Sheri R. Grissom |
|
| 3,274 |
|
|
|
| 0 |
|
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
| Number of RSUs Vesting by Year | |||||||||||||
Name |
| 2024 |
| 2025 |
| 2026 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nicholas I. Fink |
|
| 143,771 |
|
|
|
| 18,632 |
|
|
|
| 10,825 |
|
|
David V. Barry |
|
| 10,711 |
|
|
|
| 4,102 |
|
|
|
| 1,827 |
|
|
Cheri M. Phyfer |
|
| 36,211 |
|
|
|
| 4,867 |
|
|
|
| 3,011 |
|
|
Hiranda S. Donoghue |
|
| 10,672 |
|
|
|
| 2,336 |
|
|
|
| 1,354 |
|
|
Sheri R. Grissom |
|
| 11,543 |
|
|
|
| 0 |
|
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
2023 OPTION EXERCISES AND STOCK VESTED |
|
| ||||||||||||||||||
| Option Awards |
| Stock Awards | |||||||||||||||||
Name |
| Number of |
| Value |
| Number of |
| Value | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Nicholas I. Fink |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 116,276 |
|
|
| $ | 7,309,902 |
|
|
David V. Barry |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 5,909 |
|
|
| $ | 363,149 |
|
|
Cheri M. Phyfer |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 33,903 |
|
|
| $ | 2,131,915 |
|
|
Hiranda S. Donoghue |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 4,484 |
|
|
| $ | 314,194 |
|
|
Sheri R Grissom |
|
| 0 |
|
|
| $ | 0 |
|
|
|
| 13,791 |
|
|
| $ | 873,440 |
|
|
Patrick D. Hallinan |
|
| 6,000 |
|
|
| $ | 176,513 |
|
|
|
| 76,415 |
|
|
| $ | 4,736,181 |
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | 47 |
Fortune Brands maintains a tax-qualified defined contribution plan (the “Qualified"Qualified Savings Plan”Plan") and each of our businesses make either a matching contribution, a qualified non-elective contribution (“QNEC”) or a profit sharing contribution under the Qualified Savings Plan. In 2022,2023, the eligible profit sharing contribution amount was equal to 6% of compensation up to the Social Security wage base limit, plus 7.5% for amounts above the Social Security wage base, for Messrs. Fink and Hallinan, Ms. Grissom and Ms. Donoghue, and 5% for Ms. Phyfer.each NEO. A portion of the amount of the profit sharing contribution, up to the limitations imposed by the Code, was made to the Qualified Savings Plan. Profit sharing contributions in excess of the limitations imposed by the Code were contributed to the Fortune Brands Supplemental Plan (the “FBIN SERP”"FBIN SERP") on behalf of each NEO. Messrs. Fink and Hallinan,Barry and Ms. Phyfer and to the Water Innovations Supplemental Plan (the “WI SERP”) on behalf of Ms. Phyfer for her compensation above Code limitations while employed by Water Innovations during the year. Mr. Banyard and Mr. Finley did not receive a profit sharing contribution under the Qualified Savings Plan. Mr. Finley received a non-elective contribution to the Therma-Tru Suplemental Executive Retirement Plan equal to 3% of his compensation in excess of the compensation limit under the Code. Messrs. Fink and Hallinan retain accounts under the Water Innovations SERP ("WI SERPSERP") holding supplemental non-qualified profit sharing contributions made to each of them while they were previously employed by Moen.
41
|
FBIN SERP and WI SERP profit sharing accounts are credited with interest monthly, using the Citigroup US Broad Investment-Grade (USBIG) Bond Index. The FBIN SERP and the WI SERP pay any defined contribution benefits, in the form of a lump sum following termination of employment, subject to any delay required under Section 409A of the Code. Participants
2023 NONQUALIFIED DEFERRED COMPENSATION | |||||||||||||||||||||
Name | Plan Name | Executive | Registrant | Aggregate | Aggregate | Aggregate | |||||||||||||||
Nicholas I. Fink | FBIN SERP | $ | 0 |
|
| $ | 135,716 |
|
| $ | 28,563 |
|
| $ | - |
|
| $ | 680,081 |
|
|
| WI SERP | $ | 0 |
|
| N/A |
|
| $ | 3,916 |
|
| $ | - |
|
| $ | 80,270 |
|
| |
David V. Barry | FBIN SERP | $ | 0 |
|
| $ | 28,934 |
|
| $ | 2,196 |
|
| $ | - |
|
| $ | 58,518 |
|
|
| WI SERP | $ | 0 |
|
| N/A |
|
| $ | 1,000 |
|
| $ | - |
|
| $ | 20,503 |
|
| |
Cheri M. Phyfer | FBIN SERP | $ | 0 |
|
| $ | 47,897 |
|
| $ | 305 |
|
| $ | - |
|
| $ | 9,716 |
|
|
| WI SERP | $ | 0 |
|
| N/A |
|
| $ | 6,807 |
|
| $ | - |
|
| $ | 160,686 |
|
| |
Hiranda S. Donoghue | FBIN SERP | $ | 0 |
|
| $ | 29,375 |
|
| $ | 473 |
|
| $ | - |
|
| $ | 15,098 |
|
|
Sheri R. Grissom | FBIN SERP | $ | 0 |
|
| $ | 29,605 |
|
| $ | 11,190 |
|
| $ | - |
|
| $ | 250,204 |
|
|
Patrick D. Hallinan | FBIN SERP | $ | 0 |
|
| $ | 15,487 |
|
| $ | (3,094 | ) |
| $ | 330,819 |
|
| $ | - |
|
|
| WI SERP | $ | 0 |
|
| N/A |
|
| $ | (163 | ) |
| $ | 42,179 |
|
| $ | - |
|
|
2022 NONQUALIFIED DEFERRED COMPENSATION | ||||||||||||||||||||||
Name | Plan 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 ($) | ||||||||||||||||
Nicholas I. Fink | WI SERP |
| $0 |
|
| N/A |
|
| ($12,740) |
|
| $0 |
|
| $76,354 |
| ||||||
FBIN SERP |
| $0 |
|
| $256,643 |
|
| ($60,276) |
|
| $0 |
|
| $394,875 |
| |||||||
Patrick D. Hallinan | FBIN SERP |
| $0 |
|
| $100,655 |
|
| ($36,702) |
|
| $0 |
|
| $233,257 |
| ||||||
WI SERP |
| $0 |
|
| N/A |
|
| ($7,065) |
|
| $0 |
|
| $42,342 |
| |||||||
Cheri M. Phyfer | WI SERP |
| $0 |
|
| $66,829 |
|
| ($14,660) |
|
| $0 |
|
| $96,462 |
| ||||||
Sheri R. Grissom | FBIN SERP |
| $0 |
|
| $56,539 |
|
| ($29,173) |
|
| $0 |
|
| $182,475 |
| ||||||
Hiranda S. Donoghue | FBIN SERP |
| $0 |
|
| $14,625 |
|
| $0 |
|
| $0 |
|
| $0 |
| ||||||
Brett E Finley | Therma-Tru SERP |
| $0 |
|
| $22,609 |
|
| ($49,862) |
|
| $0 |
|
| $284,331 |
|
| ||||||||||||
|
42FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | |
2022 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL(1)(2) | ||||||||||||||||||||||||||||||||
By NEO
| By Employer
| Involuntary Termination | ||||||||||||||||||||||||||||||
For Good | Without Good Reason | For Cause | Without Cause | Death | Disability(3) | Retirement | ||||||||||||||||||||||||||
Cash Severance |
| |||||||||||||||||||||||||||||||
Fink | $ | 6,102,076 | $0 | $0 | $ | 6,102,076 | $ | 0 | $ | 0 | $ | 0 | $ | 9,153,114 | ||||||||||||||||||
Hallinan | $ | 2,197,575 | $0 | $0 | $ | 2,197,575 | $ | 0 | $ | 0 | $ | 0 | $ | 2,930,100 | ||||||||||||||||||
Phyfer | $ | 2,189,369 | $0 | $0 | $ | 2,189,369 | $ | 0 | $ | 0 | $ | 0 | $ | 2,919,158 | ||||||||||||||||||
Grissom | $ | 1,424,151 | $0 | $0 | $ | 1,424,151 | $ | 0 | $ | 0 | $ | 0 | $ | 1,898,868 | ||||||||||||||||||
Donoghue | $ | 1,345,568 | $0 | $0 | $ | 1,345,568 | $ | 0 | $ | 0 | $ | 0 | $ | 1,794,090 | ||||||||||||||||||
Health and Related Benefits(4)
|
| |||||||||||||||||||||||||||||||
Fink | $ | 37,514 | $0 | $0 | $ | 37,514 | $ | 1,200,000 | $ | 0 | $ | 0 | $ | 56,271 | ||||||||||||||||||
Hallinan | $ | 36,568 | $0 | $0 | $ | 36,568 | $ | 700,000 | $ | 0 | $ | 0 | $ | 48,758 | ||||||||||||||||||
Phyfer | $ | 27,381 | $0 | $0 | $ | 27,381 | $ | 725,000 | $ | 0 | $ | 0 | $ | 36,509 | ||||||||||||||||||
Grissom | $ | 19,624 | $0 | $0 | $ | 19,624 | $ | 505,000 | $ | 0 | $ | 0 | $ | 26,166 | ||||||||||||||||||
Donoghue | $ | 29,432 | $0 | $0 | $ | 29,432 | $ | 500,000 | $ | 0 | $ | 0 | $ | 39,243 | ||||||||||||||||||
Options
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Fink | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Hallinan | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Phyfer | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Grissom | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Donoghue | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
RSUs
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Fink | $ | 0 | $0 | $0 | $ | 0 | $ | 9,760,893 | $ | 6,168,341 | $ | 0 | $ | 9,760,893 | ||||||||||||||||||
Hallinan | $ | 0 | $0 | $0 | $ | 0 | $ | 2,948,970 | $ | 1,944,064 | $ | 0 | $ | 2,948,970 | ||||||||||||||||||
Phyfer | $ | 0 | $0 | $0 | $ | 0 | $ | 2,753,019 | $ | 1,898,818 | $ | 0 | $ | 2,753,019 | ||||||||||||||||||
Grissom | $ | 0 | $0 | $0 | $ | 0 | $ | 874,276 | $ | 862,443 | $ | 811,509 | $ | 874,276 | ||||||||||||||||||
Donoghue | $ | 0 | $0 | $0 | $ | 0 | $ | 860,686 | $ | 408,400 | $ | 0 | $ | 860,686 | ||||||||||||||||||
Performance Share Awards
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Fink | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Hallinan | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Phyfer | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Grissom | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Donoghue | $ | 0 | $0 | $0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Total Potential Payments
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| |||||||||||||||||||||||||||||||
Fink | $ | 6,139,590 | $0 | $0 | $ | 6,139,590 | $ | 10,960,893 | $ | 6,168,341 | $ | 0 | $ | 18,970,278 | ||||||||||||||||||
Hallinan | $ | 2,234,143 | $0 | $0 | $ | 2,234,143 | $ | 3,648,970 | $ | 1,944,064 | $ | 0 | $ | 5,927,828 | ||||||||||||||||||
Phyfer | $ | 2,216,750 | $0 | $0 | $ | 2,216,750 | $ | 3,478,019 | $ | 1,898,818 | $ | 0 | $ | 5,708,686 | ||||||||||||||||||
Grissom | $ | 1,443,775 | $0 | $0 | $ | 1,443,775 | $ | 1,379,276 | $ | 862,443 | $ | 811,509 | $ | 2,799,310 | ||||||||||||||||||
Donoghue | $ | 1,375,000 | $0 | $0 | $ | 1,375,000 | $ | 1,360,686 | $ | 408,400 | $ | 0 | $ | 2,694,019 |
2023 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL (1)(2) By NEO By Employer For Without For Without Death Disability(3) Retirement Involuntary Cash Severance Fink $ 6,095,826 $ 0 $ 0 $ 6,095,826 $ 0 $ 0 $ 0 $ 9,143,739 Barry $ 1,670,136 $ 0 $ 0 $ 1,670,136 $ 0 $ 0 $ 0 $ 2,226,848 Phyfer $ 2,365,266 $ 0 $ 0 $ 2,365,266 $ 0 $ 0 $ 0 $ 3,153,688 Donoghue $ 1,474,817 $ 0 $ 0 $ 1,474,817 $ 0 $ 0 $ 0 $ 1,966,422 Grissom $ 1,477,770 $ 0 $ 0 $ 1,477,770 $ 0 $ 0 $ 0 $ 1,970,360 Health and Related Benefits(4) Fink $ 28,125 $ 0 $ 0 $ 28,125 $ 1,250,000 $ 0 $ 0 $ 42,188 Barry $ 29,941 $ 0 $ 0 $ 29,941 $ 620,000 $ 0 $ 0 $ 39,921 Phyfer $ 21,438 $ 0 $ 0 $ 21,438 $ 765,000 $ 0 $ 0 $ 28,584 Donoghue $ 27,536 $ 0 $ 0 $ 27,536 $ 525,000 $ 0 $ 0 $ 36,715 Grissom $ 20,973 $ 0 $ 0 $ 20,973 $ 525,000 $ 0 $ 0 $ 27,964 Options(5) Fink $ 0 $ 0 $ 0 $ 0 $ 1,503,918 $ 0 $ 0 $ 1,503,918 Barry $ 0 $ 0 $ 0 $ 0 $ 467,592 $ 213,807 $ 0 $ 467,592 Phyfer $ 0 $ 0 $ 0 $ 0 $ 418,276 $ 0 $ 0 $ 418,276 Donoghue $ 0 $ 0 $ 0 $ 0 $ 187,992 $ 0 $ 0 $ 187,992 Grissom $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 RSUs Fink $ 0 $ 0 $ 0 $ 0 $ 13,567,386 $ 11,065,016 $ 0 $ 13,567,386 Barry $ 0 $ 0 $ 0 $ 0 $ 1,295,188 $ 872,899 $ 0 $ 1,295,188 Phyfer $ 0 $ 0 $ 0 $ 0 $ 3,452,464 $ 2,756,535 $ 0 $ 3,452,464 Donoghue $ 0 $ 0 $ 0 $ 0 $ 1,108,230 $ 804,467 $ 0 $ 1,108,230 Grissom $ 0 $ 0 $ 0 $ 0 $ 912,324 $ 912,324 $ 912,324 $ 912,324 Performance Share Awards Fink $ 0 $ 0 $ 0 $ 0 $ 5,004,739 $ 0 $ 0 $ 5,004,739 Barry $ 0 $ 0 $ 0 $ 0 $ 844,578 $ 0 $ 0 $ 844,578 Phyfer $ 0 $ 0 $ 0 $ 0 $ 1,391,935 $ 0 $ 0 $ 1,391,935 Donoghue $ 0 $ 0 $ 0 $ 0 $ 625,573 $ 0 $ 0 $ 625,573 Grissom $ 0 $ 0 $ 0 $ 0 $ 625,573 $ 618,105 $ 618,105 $ 625,573 Total Potential Payments Fink $ 6,123,951 $ 0 $ 0 $ 6,123,951 $ 21,326,043 $ 11,065,016 $ 0 $ 29,261,970 Barry $ 1,700,077 $ 0 $ 0 $ 1,700,077 $ 3,227,358 $ 1,086,706 $ 0 $ 4,874,127 Phyfer $ 2,386,704 $ 0 $ 0 $ 2,386,704 $ 6,027,675 $ 2,756,535 $ 0 $ 8,444,947 Donoghue $ 1,502,353 $ 0 $ 0 $ 1,502,353 $ 2,446,795 $ 804,467 $ 0 $ 3,924,932 Grissom $ 1,498,743 $ 0 $ 0 $ 1,498,743 $ 2,062,897 $ 1,530,429 $ 1,530,429 $ 3,536,221 (1) This table assumes the specified termination events occurred on December 30, 2023. The value of the equity that would have vested or been settled in connection with a termination event or a change in control was determined by using the closing price of the Company’s Stock on December 29, 2023 ($76.14 per share). |
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43
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Termination of Employment and Change in Control Arrangements. To protect the Company’s interests in retaining its top talent, the Company has entered into a Severance Agreements with each NEO. Under the terms of the Severance Agreements, each NEO is entitled to severance benefits upon a qualifying termination of employment (i.e., termination by the Company without “cause” or by the NEO for “good reason”). In 2022, the severance benefitsBenefits under the Severance Agreements consist of:
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
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•
•
The Severance Agreements contain various restrictive covenants, including a one year non-solicitation provision, a non-disparagement provision, and a one year non-competition restriction. NEOs are also required to sign a release of legal claims against the Company to receive any severance payments.
All of the Severance Agreements contain provisions which provide for enhanced benefits in the event of a qualifying termination (i.e., termination by the Company without “cause” or by the NEO for “good reason”) following a change in control. The Severance Agreements contain “double triggers,” which means that there must be both a change in control of the Company (or applicable business) and a qualifying termination of employment before any enhanced benefits are paid. In the event Mr. Fink is terminated within two2 years following a change in control, his multiple would increase from two2 years to three3 years. In the event of termination of any of the other NEOs within two2 years following a change in control, the multiple is increased from 1.5 years to two2 years. The Severance Agreements do not allow for excise tax gross ups on these amounts.
Treatment of Equity Awards Following a Termination of Employment (other than in the event of a Change in Control). If a NEO’s employment terminates with or without cause, all unvested PSAs, RSUs and stock options are forfeited. If a NEO dies, becomes disabled or retires, his or her outstanding equity awards vest or are paid as follows:
Treatment of Equity in the Event of Death, Disability or Retirement | |||||||||
Event | Performance Share Awards | Restricted Stock Units | Stock Options | ||||||
| |||||||||
Death | Shares paid at the end of the performance | Outstanding RSUs fully vest. | Unvested stock options fully vest. | ||||||
Disability | Shares paid at the end of the performance | Outstanding RSUs continue to vest according to the vesting schedule. | Unvested stock options continue to vest according to the vesting schedule. | ||||||
Retirement | Shares paid at the end of the performance | Outstanding RSUs fully vest. | Unvested stock options fully vest. |
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(1) In connection with the Separation, unvested PSAs were converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period had the Separation not occurred. The converted time-based RSUs will be settled at the end of the performance period in accordance with the terms of the underlying award agreements. (2) The executive must have one year of service from the grant date prior to the date of disability to be entitled to receive the disability treatment listed above. (3) The executive must be 55 years of age with 5 years of service and generally must also have one year of service from the grant date prior to the date of retirement to be entitled to receive the retirement treatment listed above. This provision is not generally applicable to retention awards or off-cycle awards granted in prior years.
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44FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
2023 Executive Compensation | |
Treatment of Equity Awards Following a Change in Control and Termination of Employment. In the event a NEO is terminated by the Company without cause or by the NEO for good reason within two (2) years of a change in control, his or her equity awards vest or are paid as follows:
Treatment of Equity In the Event of a Termination Following a Change In Control* | ||
| Treatment | |
PSAs | Shares are paid assuming that target performance was achieved. | |
RSUs | Outstanding RSUs fully vest. | |
Stock Options | Unvested stock options fully vest. |
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* The Board has the ability to exercise its discretion to accelerate outstanding awards in the event of a change in control.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
CEO |
CEO Pay Ratio
The Securities and Exchange Commission (“SEC”) adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the annual total compensation of Mr. Fink, the Company’s chief executive officer.CEO. To understand this disclosure, we think it is important to give context to our operations and recent changes in our employee base. Our corporate headquarters are located in Deerfield, Illinois. Until the Separation in mid-December 2022, approximately 77% of our employees were involved in manufacturing and distributing our products. Following the Separation and asAs of December 31, 2022,30, 2023, approximately 59%60% of our employees were involved in manufacturing our products at 1516 manufacturing facilities and 4142 distribution centers and warehouses worldwide. The majority of our manufacturing and assembly plant locations are located in rural areas while our corporate offices are generally located in urban areas. We strive to create a compensation program that is competitive in terms of both the position and the geographic location in which our employees are located. Accordingly, our pay structures vary amongst employees based on business unit, position and geographic location. While the Separation impacted our employee population, it did not have an impact on the the Company’s employee compensation arrangements.
Identification of Median Employee
As permitted under the SEC disclosure rules, in 2021 we elected to use an employee whose 2020 compensation was substantially similar to the original median employee’s compensation identified in 2020 based on the same compensation measure used to select the original median employee. Since there has been a significant change in the Company’s employee population due to the Separation in mid-December 2022, we have considered whether the exclusion of the Cabinets employees would impact the idenfication of the median employee or the pay ratio which would require us to reidentify the median employee. After analyzing the exclusion of the Cabinets employees, the Company determined that it remained appropriate to use the same previusly identified median employee as the Company’s compensation programs remained the same and excluding the Cabinets employees did not have a significant impact on the pay ratio.
We selected October 1, 20202023 as the date on which to determine our median employee. As of that date, the Company had approximately 25,74211,570 employees (15,885(6,993 in the United States and 9,8574,577 outside of the United States). For purposes of identifying the median employee, we used 20202023 taxable year-to-date compensation and applied a de minimis exemption which allowed us to exclude non-US employees in countries that make up 5% or less of our employee population. The Company excluded 4281 employees in Guatemala, 4South Africa and 29 employees in Hong Kong and 1,037 employees in China.South Korea. After applying these exemptions, the Company used a total of 24,697 11,260employees (15,885(6,993 in the United States and 8,8124,267 outside of the United States) to identify the median employee. In addition, approximately 1,200 employees of Larson Manufacturing were excluded from the calculation because that company was acquired in late 2020, and we have determined that including such employees in the employee population for determining median employees would not significantly impact the pay ratio disclosure.
45
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Using this methodology, we determined that our median employee was a full-time, hourly employee working for our plumbing groupMoen business in a production role. We then determined the median employee’s 20222023 annual total compensation by calculating the employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required pursuant to SEC executive compensation disclosure rules. Under these requirements, the median employee’s 20222023 total compensation included base and overtime pay, bonus, matching contributions to the Company’s 401(k), a profit sharing contribution and a change in the year-over-year actuarial value of the employee’s pension benefit.
20222023 CEO Pay Ratio
CEO Pay Ratio | ||||||||||||
| Total Compensation |
|
| CEO Pay Ratio | ||||||||
Nicholas I. Fink | $ | 9,599,997 | 187:1 |
| $ | 11,487,439 |
|
| 199:1 | |||
Median Employee | $ | 51,306 |
| $ | 57,603 |
|
|
46FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
PAY VERSUS PERFORMANCE | ||||||||||||||||||||||||||||||||||||||||
Value of Initial Fixed $100 Investment Based on: (4) | ||||||||||||||||||||||||||||||||||||||||
Year(1) | Summary Compensation Table Total for Fink ($)(2) | Summary Compensation Table Total for Klein ($)(2) | Compensation Actually Paid to Fink ($)(3) | Compensation Actually Paid to Klein($)(3) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(2) | Average Compensation Actually Paid to Non-PEO NEOs ($)(3) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(5) | Net Income ($)(millions) | EPS ($)(6) | ||||||||||||||||||||||||||||||
2022 | $ 9,599,997 | N/A | ($3,200,386 | ) | N/A | $2,576,333 | ($427,618 | ) | $106.43 | $118.74 | $686.7 | �� | $6.32 | |||||||||||||||||||||||||||
2021 | $10,170,381 | N/A | $15,780,518 | N/A | $3,078,513 | $4,880,126 | $167.58 | $154.73 | $772.4 | $5.73 | ||||||||||||||||||||||||||||||
2020 | $ 9,615,974 | $4,694,510 | $15,223,407 | $10,711,850 | $3,354,840 | $5,368,120 | $132.96 | $114.17 | $553.1 | $4.19 |
Pay Versus Performance | 52 |
Pay versus Performance
PAY VERSUS PERFORMANCE | |||||||||||||||||||||||||||||
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Year(1) |
| Summary Compensation Table Total for Fink ($)(2) |
| Summary Compensation Table Total for Klein ($)(2) |
| Compensation Actually Paid to Fink ($)(3) |
| Compensation Actually Paid to Klein($)(3) |
| Average Summary Compensation Table Total for Non-PEO NEOs ($)(2) |
| Average Compensation Actually Paid to Non-PEO NEOs ($)(3) |
| Total Shareholder Return ($) (4) |
| Peer Group Total Shareholder Return ($)(5) |
| Net Income ($) |
| EPS ($)(7) | |||||||||
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2023 |
| $11,487,439 |
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| N/A |
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| $17,521,908 |
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| N/A |
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| $2,205,833 |
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| $3,014,265 |
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| $143.94 |
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| $159.19 |
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| $404.5 |
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| $3.91 |
2022 |
| $9,599,997 |
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| N/A |
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| ($3,200,386) |
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| N/A |
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| $2,576,333 |
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| ($427,618) |
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| $106.43 |
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| $118.74 |
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| $686.7 |
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| $6.32 |
2021 |
| $10,170,381 |
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| N/A |
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| $15,780,518 |
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| N/A |
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| $3,078,513 |
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| $4,880,126 |
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| $167.58 |
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| $154.73 |
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| $772.4 |
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| $5.73 |
2020 |
| $9,615,974 |
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| $4,694,510 |
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| $15,223,407 |
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| $10,711,850 |
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| $3,354,840 |
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| $5,368,120 |
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| $132.96 |
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| $114.17 |
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| $553.1 |
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| $4.19 |
CAP ADJUSTMENTS | ||||||||||||||||||||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total | (Minus) Aggregate Change in Actuarial Present Value of Accumulated Benefit under Defined Benefit and Actuarial Pension Plans ($)(a) | Plus Service Costs Under Defined Benefit and Actuarial Pension Plans ($)(b) | (Minus) Grant Date Fair Value of Stock Option and Stock Awards Granted in Fiscal Year ($)(c) | Plus Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Option and Stock Awards Granted in Fiscal Year ($)(d) | Plus/(Minus) Change in Fair Value of Outstanding and Unvested Stock Option and Stock Awards Granted in Prior Fiscal Years ($)(e) | Plus Fair Value at Vesting of Stock Option and Stock Awards Granted in Fiscal Year that Vested During Fiscal Year ($)(f) | Plus/(Minus) Change in Fair Value as of Vesting Date of Stock Option and Stock Awards Granted in Prior Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year ($)(g) | (Minus) Fair Value as of Prior Fiscal Year-End of Stock Option and Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year ($)(h) | Plus Dollar Value of Dividends or Other Earnings Paid on Stock Awards in Fiscal Year and Prior to Vesting Date ($)(i) | Plus Changes in Fair Value to Reflect Excess Fair Value Resulting From Modifications to Stock Option and Stock Awards ($)(j) | Equals Compensation Actually Paid ($000) | ||||||||||||||||||||||||||||||||||||
Nicholas I. Fink | ||||||||||||||||||||||||||||||||||||||||||||||||
2022 | $ 9,599,997 | $ 0 | $ 0 | $ 7,149,968 | $ 4,485,181 | ($ 2,656,391 | ) | $ 0 | ($ 7,752,601 | ) | $ 0 | $ 273,395 | $ 0 | ($ 3,200,386 | ) | |||||||||||||||||||||||||||||||||
2021 | $ 10,170,381 | $ 0 | $ 0 | $ 6,150,003 | $ 6,425,887 | $ 3,575,673 | $ 0 | $ 1,608,290 | $ 0 | $ 150,290 | $ 0 | $ 15,780,518 | ||||||||||||||||||||||||||||||||||||
2020 | $ 9,615,974 | $ 0 | $ 0 | $ 6,524,966 | $ 9,038,159 | $ 2,854,850 | $ 0 | $ 435,205 | $ 303,243 | $ 107,428 | $ 0 | $ 15,223,407 | ||||||||||||||||||||||||||||||||||||
Christopher J. Klein | ||||||||||||||||||||||||||||||||||||||||||||||||
2022 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||
2021 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||||||
2020 | $ 4,694,510 | $ 674,000 | $ 0 | $ 1,500,003 | $ 0 | $ 4,211,891 | $ 1,862,267 | $ 3,507,389 | $ 1,516,215 | $ 126,011 | $ 0 | $ 10,711,850 | ||||||||||||||||||||||||||||||||||||
Other NEOs (Average)(k) | ||||||||||||||||||||||||||||||||||||||||||||||||
2022 | $ 2,576,333 | $ 0 | $ 0 | $ 1,549,996 | $ 878,223 | ($ 696,306 | ) | $ 96,699 | ($ 1,853,880 | ) | $ 0 | $ 62,643 | $ 58,667 | ($ 427,618 | ) | |||||||||||||||||||||||||||||||||
2021 | $ 3,078,513 | $ 0 | $ 0 | $ 1,639,989 | $ 1,462,788 | $ 1,031,620 | $ 286,563 | $ 616,027 | $ 0 | $ 44,604 | $ 0 | $ 4,880,126 | ||||||||||||||||||||||||||||||||||||
2020 | $ 3,354,840 | $ 18,000 | $ 0 | $ 2,074,991 | $ 2,824,874 | $ 1,165,802 | $ 0 | $ 238,581 | $ 168,986 | $ 46,000 | $ 0 | $ 5,368,120 |
2023: Nicholas I. Fink served as the Company's PEO for the entirety of 2023. The Company's other NEOs were: David V. Barry, Cheri M. Phyfer, Hiranda S. Donoghue, Sheri R. Grissom and Patrick D. Hallinan.
2022:Nicholas I. Fink served as the Company’s PEO for the entirety of 2022 and the Company’s other NEOs were: Patrick D. Hallinan, Cheri M. Phyfer, Sheri R. Grissom, Hiranda S. Donoghue, R. David Banyard, Jr. and Brett E. Finely.
2021:Nicholas I. Fink served as the Company’s PEO for the entirety of 2021, and the Company’s other NEOs were: Patrick D. Hallinan; R. David Banyard, Jr.; Cheri M. Phyfer; Brett E. Finley; and Robert K. Biggart.
2020:Christopher J. Klein served as the Company’s PEO until January 6, 2020 and Nicholas I. Fink served as the Company’s PEO from January 6, 2020. The Company’s other NEOs for 2020 were: Patrick D. Hallinan; R. David Banyard, Jr.; Cheri M. Phyfer; and Brett E. Finley.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Pay Versus Performance | 53 |
CAP ADJUSTMENTS |
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Year | Summary Compensation Table Total |
| (Minus) |
| Plus |
| (Minus) |
| Plus |
| Plus/(Minus) |
| Plus |
| Plus/(Minus) |
| (Minus) |
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Nicholas I. Fink |
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2023 | $ | 11,487,439 |
| $ | — |
| $ | — |
| $ | 7,923,071 |
| $ | 10,110,614 |
| $ | 3,201,936 |
| $ | — |
| $ | 286,927 |
| $ | — |
| $ | 358,063 |
| $ | — |
| $ | 17,521,908 |
|
2022 | $ | 9,599,997 |
| $ | — |
| $ | — |
| $ | 7,149,968 |
| $ | 4,485,181 |
| $ | (2,656,391 | ) | $ | — |
| $ | (7,752,601 | ) | $ | — |
| $ | 273,395 |
| $ | — |
| $ | (3,200,386 | ) |
2021 | $ | 10,170,381 |
| $ | — |
| $ | — |
| $ | 6,150,003 |
| $ | 6,425,887 |
| $ | 3,575,673 |
| $ | — |
| $ | 1,608,290 |
| $ | — |
| $ | 150,290 |
| $ | — |
| $ | 15,780,518 |
|
2020 | $ | 9,615,974 |
| $ | — |
| $ | — |
| $ | 6,524,966 |
| $ | 9,038,159 |
| $ | 2,854,850 |
| $ | — |
| $ | 435,205 |
| $ | 303,243 |
| $ | 107,428 |
| $ | — |
| $ | 15,223,407 |
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Christopher J. Klein |
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2023 | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
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2022 | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
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2021 | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| ||||||||||||
2020 | $ | 4,694,510 |
| $ | 674,000 |
| $ | — |
| $ | 1,500,003 |
| $ | — |
| $ | 4,211,891 |
| $ | 1,862,267 |
| $ | 3,507,389 |
| $ | 1,516,215 |
| $ | 126,011 |
| $ | — |
| $ | 10,711,850 |
|
Other NEOs (Average) |
| |||||||||||||||||||||||||||||||||||
2023 | $ | 2,205,833 |
| $ | — |
| $ | — |
| $ | 1,104,268 |
| $ | 1,280,015 |
| $ | 318,312 |
| $ | 251,236 |
| $ | 61,662 |
| $ | 36,211 |
| $ | 37,686 |
| $ | — |
| $ | 3,014,265 |
|
2022 | $ | 2,576,333 |
| $ | — |
| $ | — |
| $ | 1,549,996 |
| $ | 878,223 |
| $ | (696,306 | ) | $ | 96,699 |
| $ | (1,853,880 | ) | $ | — |
| $ | 62,643 |
| $ | 58,667 |
| $ | (427,618 | ) |
2021 | $ | 3,078,513 |
| $ | — |
| $ | — |
| $ | 1,639,989 |
| $ | 1,462,788 |
| $ | 1,031,620 |
| $ | 286,563 |
| $ | 616,027 |
| $ | — |
| $ | 44,604 |
| $ | — |
| $ | 4,880,126 |
|
2020 | $ | 3,354,840 |
| $ | 18,000 |
| $ | — |
| $ | 2,074,991 |
| $ | 2,824,874 |
| $ | 1,165,802 |
| $ | — |
| $ | 238,581 |
| $ | 168,986 |
| $ | 46,000 |
| $ | — |
| $ | 5,368,120 |
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Pay Versus Performance | 54 |
Relationship Between Pay and Performance
The following is a list of financial performance measures, which we believe represent the most important financial performance measures used by the Company to link compensation actually paid to the NEOs for 2022.2023. Please see the CD&A for a further description of these metrics and how they are used in the Company’s executive compensation program, including the Annual Incentive Plan and Performance share awards2023 PSAs.
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
EQUITY COMPENSATION PLAN INFORMATION | ||||||||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) (1) | 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) (2) | |||||||||
Equity compensation plans approved by security holders | 3,549,853 | $56.84 | 5,134,561 | |||||||||
Equity compensation plans not approved by security holders | — | n/a | — | |||||||||
Total | 3,549,853 | 5,134,561 |
Equity Compensation Plan Information | |
EQUITY COMPENSATION PLAN INFORMATION | |||||||||
Plan Category |
| Number of |
| Weighted |
| Number of | |||
Equity compensation plans approved by security holders |
| 3,681,811 |
|
| $58.68 |
|
| 4,241,192 |
|
Equity compensation plans not approved by security holders |
| 0 |
|
| n/a |
|
| 0 |
|
Total |
| 3,681,811 |
|
|
|
|
| 4,241,192 |
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Audit Committee Matters | 56 |
Audit Committee Matters
Report of the Audit Committee
The Audit Committee is composed of fiveseven directors thatwho are “independent” as defined under the New York Stock Exchange Listed Company Manual and Rule 10A-3 of the Exchange Act. The Audit Committee has a written charter that has been approved by the Board. A copy of the Audit Committee charter is available on the Company’s website at https://ir.fbin.com/committees-and-charters.
The Audit Committee is responsible for the selection, retention, compensation and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for 2023.2024.
The Audit Committee annually evaluates the independent registered public accounting firm’s qualifications, performance and independence when assessing whether or not to continue to retain or change accounting firms. Factors such as independence, industry knowledge, communication and fees are considered. A performance survey is completed by the Company at the end of each year to evaluate performance of the independent registered public accounting firm in multiple areas including quality of services, sufficiency of audit firm resources, communication and interaction as well as independence, objectivity and professional skepticism. Results are shared with the Audit Committee. Additionally, the independent registered public accounting firm presents to the Audit Committee at the beginning of each year a commitment letter outlining specific areas of focus for continued high quality client service. At the end of each year the independent registered public accounting firm presents to the Audit Committee and the Company, a self-assessment against those commitments which is reviewed and discussed during the Audit Committee meeting.
TheDuring 2023, the Company and the Audit Committee is also involved inmanaged the selectionroutine transition of the independent public accounting firm’s lead audit partner auditing the Company, who is limited by SEC rules to no more than five consecutive years in that role before the position must be rotated. A transition process was developed a year in advance of this transition, which took effect in March 2024. The lead audit partnertransition process was most recently changed in early 2019.executed to mutual satisfaction of the Audit Committee, the independent public accounting firm and the Company.
Management has the responsibility for the Company’s financial statements and overall financial reporting process, including the Company’s systems of internal controls. The independent registered public accounting firm has the responsibility to conduct an independent audit in accordance with generally accepted auditing standards and to issue an opinion on the accuracy of the Company’s financial statements and the effectiveness of the Company’s internal controls. The Audit Committee’s responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has reviewed and discussed the audited financial statements and the Company’s quarterly and annual reports to the SEC with management and the independent registered public accounting firm. Management has confirmed to the Audit Committee that the Company’s financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has met with the independent registered public accounting firm and discussed matters required to be discussed pursuant to the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission. The independent registered public accounting firm has provided an unqualified opinion regarding the Company’s financial statements for the year ended December 31, 2022.30, 2023.
The Company’s independent registered public accounting firm has also provided the Audit Committee with the written disclosures and letter required by the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and the Audit
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Audit Committee Matters | 57 |
Committee has discussed with the independent registered public accounting firm that firm’s independence. The Audit Committee has also reviewed non-audit services provided by the independent registered public accounting firm and has considered the compatibility of these services with maintaining the auditor’s independence.
51
|
Based upon the review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 202230, 2023 for filing with the SEC.
Audit Committee
Ronald V. Waters, III, Chair
Amit Banati
A.D. David Mackay
John G. Morikis
Jeffrey S. Perry
David M. Thomas
Audit Committee | |
Ronald V. Waters, III, Chair | |
Amit Banati | |
Amee Chande | |
A.D. David Mackay | |
John G. Morikis Jeffery S. Perry | |
Stephanie L. Pugliese |
Fees of Independent Registered Public Accounting Firm
PwC served as the Company’s independent registered public accounting firm during the year ended December 31, 2022.30, 2023. All PwC services were approved in advance by the Audit Committee. The aggregate fees billed by PwC during 20222023 and 20212022 are set forth in the table below:
Type of Fee | Year Ended December 31, 2022 | Year Ended December 31, 2021 | Year Ended | Year Ended | ||||||||||||||
|
|
|
|
| ||||||||||||||
Audit Fees(1) | $ | 6,013,000 | $ | 4,314,000 | $ |
| 5,645,000 |
|
| $ |
| 6,013,000 |
|
| ||||
Audit-Related Fees(2) | $ | 5,859,000 | $ | 0 | $ |
| — |
|
| $ |
| 5,859,000 |
|
| ||||
Tax Fees(3) | $ | 458,000 | $ | 341,000 | $ |
| 375,000 |
|
| $ |
| 458,000 |
|
| ||||
All Other Fees(4) | $ | 3,000 | $ | 3,000 | $ |
| 3,000 |
|
| $ |
| 3,000 |
|
|
(1) For both 2023 and 2022, “Audit Fees” represent the aggregate fees for audit services performed by PwC in connection with the audit of the Company’s annual financial statements in its SEC Form 10-K filing and the review of the Company’s quarterly financial information included in its Form 10-Q filings and for audit services performed over statutory reporting, and comfort letters. For 2023, fees include purchase accounting relating to the acquisition of the Emtek and Yale Business. For 2022, fees included purchase accounting relating to the acquisitions of Solar Innovations and Aqualisa. (2) For 2022, "Audit-Related Fees" includes fees for audit related services performed by PwC in connection with the carve out audit procedures in connection with the Separation. (3) For both 2023 and 2022, “Tax Fees” included fees included tax compliance, domestic and international tax consulting, customs and transfer pricing services. (4) For both 2023 and 2022, |
|
|
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Approval of Audit and Non-Audit Services The Audit Committee has adopted policies and procedures for the pre-approval of all audit and permissible non-audit services provided by our independent registered public accounting firm. The Audit Committee annually reviews the audit and non-audit services to be performed by the independent registered public accounting firm during the upcoming year. The Audit Committee considers, among other things, whether the provision of specific non-audit services is permissible under existing law and whether it is consistent with maintaining the auditor’s independence. The Audit Committee then approves the audit services and any permissible non-audit services it deems appropriate for the upcoming year. The Audit Committee’s pre-approval of non-audit services is specific as to the services to be provided and includes pre-set spending limits. The provision of any additional non-audit services during the year, or the provision of services in excess of pre-set spending limits, must be pre-approved by either the Audit Committee or
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 2 – After evaluating PwC’s prior year performance, the Audit Committee appointed PwC as our independent registered public accounting firm for the year ending December
A representative of PwC will attend the Annual Meeting to make a statement if he or she desires and respond to appropriate questions that may be asked by stockholders. In the event the stockholders fail to ratify the appointment of PwC, the Audit Committee may appoint another independent registered public accounting firm or may decide to maintain its appointment of PwC. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change should be made.
As required pursuant to Section 14A of the Exchange Act, the Company is providing stockholders with a vote to approve the compensation of the named executive officers as disclosed in this Proxy Statement, on an advisory, non-binding basis, which is commonly referred to as a “Say on Pay” vote. The Board has decided the advisory vote on executive compensation will be held on an annual basis until the next non-binding stockholder vote on the frequency of the advisory The Company’s compensation programs and practices are designed to pay for performance and
The Company asks that you indicate your approval of the compensation paid to our named executive officers, as described in this Proxy Statement under the headings “Compensation Discussion and Analysis” and “Executive Compensation,” which includes the compensation tables and narratives. For the reasons discussed above, the Board intends to introduce the following resolution at the Annual Meeting: “RESOLVED, that the compensation of the named executive officers of the Company, as disclosed in the Company’s Proxy Statement for the
FORTUNE BRANDS INNOVATIONS•2024 PROXY STATEMENT
Proposal 4 – Advisory Vote to Approve the Frequency of Voting on Named Executive Officer Compensation Pursuant to Section 14A of the Exchange Act, the Company is required to hold an advisory vote at least once every six years regarding the frequency with which the advisory vote to approve named executive officer compensation (“Say-on-Pay”) should be held. The Company last held such a vote at the 2018 Annual Meeting of Stockholders. After this year’s vote, it is expected that the next say-on-pay frequency vote will occur at the 2030 Annual Meeting of Stockholders. The Board
current frequency. The Board believes that
Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. While this vote is non-binding, the Board
Certain Information Regarding Security Holdings We have listed below, as of March
|