Parker Hannifin CORP DEF 14A Filing

Ticker: PH · Form: DEF 14A · Filed: Sep 20, 2024 · CIK: 76334

Sentiment: neutral

Filing Stats: 4,289 words · 17 min read · ~14 pages · Grade level 18.7 · Accepted 2024-09-20 09:00:40

Key Financial Figures

Filing Documents

Executive Compensation Highlights

Executive Compensation Highlights 5 Environment, Social and Governance Highlights 10 Shareholder Engagement Highlights 11 Proxy 12 Item 1 – Election of Directors 13 Director Selection and Nomination, Qualifications and Diversity 14 Director Skills/Experience/Diversity 16 Director Biographies 16 Nominees for Election as Directors for Terms Expiring in 2025 21 Director Independence 21 Annual Elections; Majority Voting; No Cumulative Voting 21 New Elections and Departures 22 Corporate Governance 22 Board and Committee Structure 22 Current Leadership Structure 23 Board Committees; Committee Charters 25 Meetings and Attendance; Executive Sessions 25 Director Education and Orientation Program 26 Board and Committee Evaluations 27 Board Strategic and Risk Oversight 27 Board's Role in Strategic Oversight 28 Board's Role in Risk Oversight 29 Spotlight: ESG Oversight 29 Communications with Directors 30 Other Governance Matters 30 Review and Approval of Transactions with Related Persons 30 Proxy Access 31 Stock Ownership Guidelines 31 Insider Trading and Prohibited Transactions in Company Securities 31 Governance Documents 32 Director Compensation 32 Compensation of Directors 33 Director Compensation for Fiscal Year 2024 34 Executive Compensation 34

- Advisory

Item 2 - Advisory Vote to Approve Named Executive Officer Compensation 35 Compensation Discussion & Analysis 35 Named Executive Officers 35 Executive Summary 40 Compensation Setting Process 45 Principal Elements of Executive Compensation 56 Other Compensation Policies and Practices 58 Accounting and Tax Considerations 58 Compensation Committee Report 59 Compensation Tables 59 Summary Compensation Table for Fiscal Year 2024 61 Grants of Plan-Based Awards for Fiscal Year 2024 62 Outstanding Equity Awards at June 30, 2024 64 Option Exercises and Stock Vested for Fiscal Year 2024 65 Pension Benefits for Fiscal Year 2024 66 Nonqualified Deferred Compensation for Fiscal Year 2024 67 Potential Payments Upon Termination or Change of Control at June 28, 2024 75 Chief Executive Officer Pay Ratio 76 Pay Versus Performance Disclosure 76 Pay Versus Performance Table 79 2024 Performance Measures 80

- Ratification

Item 3 - Ratification of the Independent Registered Public Accounting Firm 80 Audit Fees and All Other Fees 81 Audit Committee Pre-Approval Policies and Procedures 81 Report of the Audit Committee 82 Beneficial 82 Principal Shareholders 84 General Information About the Annual Meeting 85 Other Matters 85 General 87 Shareholders' Proposals 87 Shareholder Recommendations for Director Nominees 2 Table of Contents Our Company Parker-Hannifin Corporation is a Fortune 250 global leader in motion and control technologies. For more than a century, the Company has engineered the success of its customers in a wide range of diversified industrial and aerospace markets. The following sections provide highlights from our fiscal year 2024 across matters of importance to our shareholders, including business and financial performance, executive compensation, our environment, social and governance ("ESG") program and shareholder engagement. Business and Performance Highlights Parker Delivered a Record Year in Fiscal 2024 $19.9B TOTAL NET SALES WERE A RECORD AT $19.9 BILLION $3.4B CASH FLOW FROM OPERATING ACTIVITIES WAS 17% OF SALES AT A RECORD $3.4 BILLION $21.84 EARNINGS PER SHARE (AS REPORTED) WERE A RECORD AT $21.84 68 th YEAR INCREASED ANNUAL DIVIDEND PER SHARE FOR THE 68 TH YEAR IN A ROW Fiscal year 2024 underscored Parker's transformation. Our people, portfolio and strategy drove record financial performance, including sales, cash flow from operations and earnings per share ("EPS"), all while continuing to reduce debt from our acquisition of Meggitt plc ("Meggitt"). Against a macroeconomic backdrop of continued challenges, including inflation, supply chain constraints, and ongoing international conflict and geopolitical tensions, our unwavering commitment to The Win Strategy drove sustained profitable growth and strong financial performance and showcased the increasing resilience of our b

Executive Compensation Highlights

Executive Compensation Highlights The tables below highlight the performance-based nature of our compensation program and how our program aligns with what we view as executive compensation best practices. Elements of Executive Compensation Elements of Compensation Purpose Fixed Base Salary Attracts, retains and motivates the highly-talented and values-driven individuals we need to advance the goals of The Win Strategy Annual Cash Incentive Officer Annual Cash Incentive Plan ("Officer ACIP") Incentivizes executive officers to maximize segment operating income, sales revenue and cash flow margin, metrics we believe align closely with total shareholder return and overall shareholder value, by focusing on key business strategies such as profitable and sustainable sales growth, value pricing, strategic supply chain, market-driven innovation, system solutions, strong distribution channels, lean initiatives, inventory control, strong receivable and payable controls, and ESG-related initiatives Variable/ At-Risk Long-Term Equity Incentive Long Term Incentive Performance ("LTIP") Awards Incentivizes executive officers to maximize long-term revenue growth, EPS growth, and growth in average return on invested capital ("ROIC") by focusing on key business strategies such as market-driven innovation, on-time delivery of quality products, value-added services and systems, strategic supply chain, lean enterprise, value pricing and profitable growth Stock Incentives/ Stock Appreciation Rights ("SARs") Incentivizes executive officers to maximize our stock price by focusing on various key business strategies such as sustained profitable growth and financial and operational performance that contribute to appreciation of our stock price

Executive Compensation Practices

Executive Compensation Practices What We Do What We Don't Do

Executive compensation program with pay-for-performance structure aligned with The Win Strategy

Executive compensation program with pay-for-performance structure aligned with The Win Strategy The target total direct compensation package for our Chief Executive Officer is a mix of 9% fixed and 91% at-risk, and for our other Named Executive Officers is an average mix of 19% fixed and 81% at-risk Annual advisory vote on executive compensation with consistent high degree of approval One-year minimum vesting or performance period requirements for equity incentives under our 2023 Omnibus Stock Incentive Plan Clawback policies and provisions to recover or withhold incentive-based compensation to executive officers in certain circumstances Anti-hedging and anti-pledging policy for Directors and executive officers Robust Stock Ownership Guidelines for Directors and executive officers Offer employment agreements to our executives Offer above-market earnings on contributions to deferred compensation accounts Grant stock options or SARs with an exercise price less than the fair market value of Parker's common stock on the date of grant Re-price stock options or SARs Cash out underwater stock options or SARs Include reload provisions in any stock option or SAR grant Permit Directors or employees, or their respective related persons, to engage in short sales of Parker's stock or to trade in instruments designed to hedge against price declines in Parker's stock Permit Directors or executive officers to hold Parker securities in margin accounts or to pledge Parker securities as collateral for loans or other obligations 4 Table of Contents Our Company Environment, Social and Governance Highlights Our ESG program includes a range of initiatives around corporate social responsibility and sustainability, taking into account the interests of our key stakeholders, including our shareholders, team members, customers and communities. Issues that we focus on include, among others, workplace health and safety, climate risk, water conservation, huma

– Election of Directors

Item 1 – Election of Directors Shareholder approval is sought to elect the following directors for a term that will expire at our Annual Meeting of Shareholders in 2025: Denise Russell Fleming Lance M. Fritz Linda A. Harty Kevin A. Lobo Jennifer A. Parmentier E. Jean Savage Joseph Scaminace Laura K. Thompson James R. Verrier James L. Wainscott The Board of Directors unanimously recommends a vote "FOR" each of the nominees to the Board of Directors. See page 12 for details

– Proposal to Approve the Compensation of our Named Executive Officers on a Non-Binding, Advisory Basis

Item 2 – Proposal to Approve the Compensation of our Named Executive Officers on a Non-Binding, Advisory Basis In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934 and the related SEC rules, we are providing our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of the Named Executive Officers as disclosed in this Proxy Statement. We encourage our shareholders to carefully read this Proxy Statement in its entirety before deciding whether or not to vote for or against this Item. The Board of Directors unanimously recommends a vote "FOR" the approval of the compensation of the Named Executive Officers as disclosed in this Proxy Statement on a non-binding, advisory basis. See page 34 for details

– Ratification of the Appointment of Independent Registered Public Accounting Firm

Item 3 – Ratification of the Appointment of Independent Registered Public Accounting Firm The Audit Committee recommends ratification of its appointment of Deloitte and Touche LLP ("D&T") as the independent registered public accounting firm to audit our financial statements as of and for the fiscal year ending June 30, 2025. D&T served as the independent registered public accounting firm to audit our financial statements as of and for the fiscal year ended June 30, 2024, and has served as our independent auditor since fiscal year 2008. The Board of Directors unanimously recommends a vote "FOR" the proposal to ratify the appointment of D&T as our independent registered public accounting firm for the fiscal year ending June 30, 2025 . See page 80 for details 2024 Proxy Statement 11 Table of Contents

– Election of Directors

Item 1 – Election of Directors Shareholder approval is sought to elect Denise Russell Fleming, Lance M. Fritz, Linda A. Harty, Kevin A. Lobo, Jennifer A. Parmentier, E. Jean Savage, Joseph Scaminace, Laura K. Thompson, James R. Verrier, and James L. Wainscott as Directors for a term that will expire at our Annual Meeting of Shareholders in 2025. Our Board of Directors has concluded that the nominees presented in this "Item 1—Election of Directors" collectively represent a highly-qualified and diverse group of individuals who will effectively serve the long-term interests of our business, our team members and our shareholders. Our Board of Directors believes that each nominee should serve on our Board for the coming year based on his or her record of effective past service on our Board and the specific experiences, qualifications, attributes and skills described in his or her biographical information presented in this "Item 1—Election of Directors" section. Should any nominee become unable to accept nomination or election, the proxies will be voted for the election of another person as our Board of Directors may recommend. However, our Board of Directors has no reason to believe that this circumstance will occur. B

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