ILLINOIS TOOL WORKS INC
For the period ended May 2, 2025. Filed Mar 21, 2025.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 2, 2025 · Filed Mar 21, 2025
Contents
Pay Versus Performance
As required by Item 402(v) of Regulation S-K, we are providing the following information on the relationship between Compensation Actually Paid (CAP) and ITW performance for our NEOs (including the Principal Executive Officer, or PEO). The definition of CAP is mandated by the SEC, and it is not used by the Compensation Committee in its pay-for-performance assessments. See our "Compensation Discussion and Analysis" section for our robust discussion on ITW's executive compensation philosophy, our incentive programs with rigorous performance measures, and practices and policies that align the interests of our NEOs to those of our stockholders.
| Average · Average · Value of Initial Fixed $100Investment Based On: | ||||||||
|---|---|---|---|---|---|---|---|---|
| Year | SummaryCompensationTable Totalfor PEO($) | CompensationActually Paidto PEO($)(1,2) | SummaryCompensationTable Total forNon-PEOs ($) | CompensationActually Paidto Non-PEOs($)(1,2) | TotalShareholderReturn(3) | Peer GroupTotalShareholderReturn(3,5) | Net Income ($)(in millions) | After-TaxROIC(4) |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) |
| 2024 | $10,932,645 | $10,957,848 | $3,797,000 | $2,364,323 | $158.55 | $192.35 | $3,488 | 31.2% |
| 2023 | $22,507,817 | $34,771,926 | $4,752,472 | $7,292,609 | $160.11 | $157.77 | $2,957 | 30.4% |
| 2022 | $22,234,230 | $18,730,022 | $4,328,857 | $3,805,988 | $131.72 | $137.00 | $3,034 | 29.1% |
| 2021 | $20,787,622 | $41,769,292 | $5,010,034 | $9,056,648 | $143.87 | $143.81 | $2,694 | 29.5% |
| 2020 | $14,007,356 | $19,593,737 | $3,374,951 | $4,317,669 | $116.40 | $119.83 | $2,109 | 26.2% |
(1)
The table below reconciles the PEO and average non-PEO compensation as it appears in the Summary Compensation Table (SCT) to the Compensation Actually Paid (CAP) in the Pay Versus Performance Table.
| PEO(a) | AverageNon-PEO NEO(a) | |
|---|---|---|
| Christopher A. O'Herlihy | Michael M. Larsen, Axel R.J. Beck, T. Kenneth Escoe, Mary K. Lawler, E. Scott Santi (retired) | |
| SCT Total | $10,932,645 | $3,797,000 |
| Reported fair value of equity awards granted during fiscal year(b) | $(6,562,418) | $(1,324,327) |
| Fair value as of the end of year for equity awards granted during the year | $7,519,880 | $1,417,835 |
| Fair value of equity compensation granted during the year that vested during the year | $— | $86,982 |
| Change in fair value from end of prior fiscal year to vesting date for awards made in prior years that vested during the covered year | $(256,407) | $(276,667) |
| Change in fair value from end of prior year to end of covered year for awards made in prior fiscal years that were unvested at end of covered year | $(519,225) | $(576,041) |
| Deduction of fair value for awards forfeited during the covered year(c) | $— | $(708,797) |
| Dividends or other earnings paid on unvested awards otherwise not reflected in total compensation | $— | $— |
| Pension values reported in SCT(d) | $(156,627) | $(84,303) |
| Pension values attributable to covered year's service | $— | $32,641 |
| Change in pension value attributable to plan amendments made in the covered year | $— | $— |
| CAP Total | $10,957,848 | $2,364,323 |
(a)
E. Scott Santi served as our PEO from 2020 through 2023. In 2024, Christopher A. O'Herlihy served as our PEO. For 2020, our non-PEO NEOs included Michael M. Larsen, Christopher A. O'Herlihy, Steven L. Martindale and John R. Hartnett. For 2021, our non-PEO NEOs included Michael M. Larsen, Christopher A. O'Herlihy, John R. Hartnett and Mary K. Lawler. For 2022, our non-PEO NEOs included Michael M. Larsen, Christopher A. O'Herlihy, Mary K. Lawler, Michael R. Zimmerman and Lei Z. Schlitz. For 2023, our non-PEO NEOs included Christopher A. O'Herlihy, Michael M. Larsen, Mary K. Lawler and Axel R.J. Beck. For 2024, our non-PEO NEOs included Michael M. Larsen, Axel R.J. Beck, T. Kenneth Escoe, Mary K. Lawler and E. Scott Santi.
(b)
Represents the total amounts reported in the "Stock Awards" and "Option Awards" columns in the SCT in the covered year.
(c)
Amount for average non-PEO NEOs includes awards forfeited by E. Scott Santi in connection with his retirement.
(d)
Represents the change in actuarial present value of the accumulated pension benefit reported in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings" column in the SCT in the covered year. Excess interest earnings on the ECRIP that are reported in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings" in the SCT have not been subtracted to determine CAP.
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Pay Versus Performance
(2)
In determining CAP, ITW calculated the fair value of outstanding and vested equity awards in the applicable fiscal year in accordance with SEC rules for CAP, and computed in a manner consistent with the methodology used for financial reporting purposes. For performance share units (PSUs), CAP values are based on year-end share price (or the price on the vesting date for vested awards), and estimates as to the number of PSUs that were likely to vest at the conclusion of the performance period. For stock options, the valuations are based on a lattice-based option pricing model that incorporates a range of assumptions for inputs to determine the fair value for CAP purposes.
(3)
Total shareholder return assumes $100 invested on December 31, 2019, including reinvestment of dividends. Total shareholder return prior to 2024 were adjusted to reflect a spin-off transaction from one of our peers.
(4)
After-tax return on average invested capital (After-tax ROIC) is a non-GAAP measure. See Appendix A for information regarding non-GAAP measures. After-tax ROIC is an important financial performance measure used by ITW to measure financial performance and link executive compensation to company performance.
(5)
The table below details the peer group used in the Pay Versus Performance table above and is the same peer group used to show our performance in our Annual Report on Form 10-K for purposes of Item 201(e) of Regulation S-K. The peer group consists of the same companies for 2020, 2021, 2022, 2023, and 2024. As disclosed in our 2020 Form 10-K, in 2020, Ecolab Inc., which meets the Company's industry and size criteria, and Trane Technologies plc, which is the company resulting from the spin-off of Ingersoll-Rand plc and its combination with certain businesses of Gardner Denver, Inc., were added to the peer group, while Ingersoll-Rand plc and Raytheon Company, which merged with United Technologies Corporation and no longer meets the Company's industry and size criteria, were removed.
Peer Group
| 3M Company | Ecolab Inc. | Parker-Hannifin Corporation |
|---|---|---|
| Caterpillar Inc. | Emerson Electric Co. | PPG Industries, Inc. |
| Cummins Inc. | Fortive Corporation | Rockwell Automation, Inc. |
| Deere & Company | General Dynamics Corporation | Stanley Black & Decker, Inc. |
| Dover Corporation | Honeywell International Inc. | Trane Technologies plc |
| Eaton Corporation plc | Johnson Controls International plc |
Tabular List of Performance Measures
The table below represents the most important financial performance measures used by ITW to link compensation actually paid to our NEOs to Company performance, for the most recently completed fiscal year.
After-tax ROIC
Operating Margin
EPS Growth
Organic Revenue Growth
Operating Income Growth vs. Prior Year
| 2025 PROXY STATEMENT | 63 |
|---|
Pay Versus Performance
Relationship Between Compensation Actually Paid (CAP) and Performance Metrics
The charts below illustrate the relationship between Compensation Actually Paid to both the PEO and average Non-PEO to performance metrics required for disclosure: (a) TSR based on the value of an initial fixed $100 invested in ITW Common Stock and ITW's 2024 Peer Group, including the reinvestment of dividends, (b) net income, and (c) After-tax ROIC.
| Compensation Actually Paid vs TSR | Compensation Actually Paid vs Net Income | Compensation Actually Paid vs After-tax ROIC* |
|---|---|---|
| * After-tax ROIC is a non-GAAP measure. See Appendix A for information regarding this non-GAAP measure. | ||
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