Johnson Controls International plc
For the period ended Mar 13, 2024. Filed Jan 19, 2024.
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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.
Mar 13, 2024 · Filed Jan 19, 2024
Contents
Proxy Statement Summary
PROXY SUMMARY
This proxy summary is intended to provide a broad overview of our 2023 performance, corporate governance and compensation highlights. As this is only a summary, we encourage you to read the entire Proxy Statement for more information prior to voting.
Annual General Meeting of Shareholders
| Date and Time 3:00 pm, local time March 13, 2024 | Place The Merrion Hotel 24 Upper Merrion Street Dublin 2, Ireland | Record Date January 8, 2024 |
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Admission. All shareholders are invited to attend. Registration will occur on day of meeting. Your vote is important and we encourage you to submit your proxy as soon as possible so that your shares will be represented at the meeting. This can be done in advance of the Annual General Meeting by availing of one of the voting options detailed in this Proxy Statement. In addition, details of the business to be presented at the meeting can also be found in this Proxy Statement.
Meeting Agenda and Voting Matters
| Proposal | Board’s VotingRecommendation | PageReference | |
|---|---|---|---|
| No. 1 | Election of Directors | ✓ FOR (each nominee) | p. 9 |
| No. 2 | Ratify appointment of independent auditors and authorize audit committee to set auditors’ remuneration | ✓ FOR (both 2(a) and 2(b)) | p. 15 |
| No. 3 | Authorize market purchases of Company shares by the Company and/or any subsidiary | ✓ FOR | p. 18 |
| No. 4 | Determine the price range to re-allot treasury shares | ✓ FOR | p. 19 |
| No. 5 | Advisory vote to approve executive compensation | ✓ FOR | p. 20 |
| No. 6 | Approve the allotment of up to 20% of issued share capital | ✓ FOR | p. 21 |
| No. 7 | Approve the waiver of statutory pre-emption rights | ✓ FOR | p. 22 |
2024 Notice and Proxy Statement 1
Proxy Summary › Fiscal Year 2023 In Review
Fiscal Year 2023 In Review
- See Annex A to this Proxy Statement for a reconciliation of adjusted EPS from continuing operations, organic revenue and free cash flow to our results for the most directly comparable financial measure as reported under GAAP in the United States.
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Proxy Summary › Sustainability Leadership
Sustainability Leadership At Johnson Controls we transform the environments where people live, work, learn, and play. As a global leader in smart, healthy, and sustainable buildings, our mission is to reimagine the performance of buildings. With a global team of nearly 100,000 experts in more than 150 countries, Johnson Controls offers the world’s largest portfolio of building technology, software, and services to help our customers achieve their sustainability goals. With nearly 40 percent of global greenhouse gas emissions coming from buildings, Johnson Controls is committed to leading and addressing climate change and helping our customers and industries around the world pursue goals for best-in-class environmental targets for carbon and water consumption. Since 2020, we have been transforming our business to focus on building decarbonization through the trifecta of low-carbon, energy efficient products, electrification, and digitalization. We are committed to spending no less than 75% of our new product research and development investment annually on developing and delivering sustainable products and services.
Our 2023 highlights include:
| • | Named to Fortune’s 2023 Change the World List for our innovative and transformative heat pump technology. Heat pumps are recognized as a critical tool for reducing greenhouse gas emissions by the International Energy Agency and national and subnational governments across the globe. As the HVAC industry evolves to meet the needs of building decarbonization, our portfolio of residential, commercial, and industrial heat pumps is uniquely positioned to revolutionize the sustainable infrastructure industry. |
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| • | The launch of the YORK YVWH water-to-water heat pump, which uses the ultra-low GWP refrigerant R1234ze and produces industry-leading hot water temperatures up to 176 degrees Fahrenheit. We also introduced the Hitachi air365 Hybrid dual fuel system, which combines a heat pump and furnace to provide efficient, economical home comfort year-round while reducing carbon emissions. |
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| • | We continue to partner with our customers to deliver deep decarbonization and cost savings. For example, we entered into a 20-year energy savings performance contract with NRG Park in Harris County, Texas, providing infrastructure updates that will be funded by energy savings. This project alone is expected to reduce carbon dioxide emissions by more than 241,000 metric tons annually. |
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| • | We are actively engaged with leaders around the world to address urgent climate action. Our CEO George Oliver was invited to the White House to discuss the importance of energy sustainability and security, including our continued plans to invest in heat pump production. Mr. Oliver also chairs the Sustainable Buildings Task Force of the Sustainable Markets Initiative, which is made up of global CEOs across the buildings industry, working together to accelerate the delivery of net zero buildings. |
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| • | Through global volunteerism and philanthropy, Johnson Controls helps build smart, healthy and sustainable communities our employees call home. For example, the Johnson Controls Community College Partnership Program is on track to donate up to $15 million by the end of 2026 to expand access to educational programs in the HVAC, fire, security, and digital disciplines. In 2023, the program expanded in North America and India in cities where we have a significant consumer base and employee presence. |
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| • | We are honored to be recognized for our ongoing innovation and leadership across environment, social, and governance: |
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| ¡ | Fortune’s 2023 Change the World List |
| ¡ | TIME’s World’s Best Companies 2023 List |
| ¡ | EcoVadis Platinum, top 1% of more than 100,000 companies assessed |
| ¡ | World’s Most Ethical Companies by Ethisphere for the 16th time |
| ¡ | Leadership rating in CDP Climate Change, A- |
| ¡ | Clean200 for the 8th consecutive year, the top 200 companies leading the transition to a sustainable global economy |
2024 Notice and Proxy Statement 3
Proxy Summary › Zero Harm Vision
Zero Harm Vision Since bringing our Zero Harm to People and the Environment vison to life in 2017, Johnson Controls has demonstrated step change improvement in safety performance and has improved its Total Recordable Incident Rate (TRIR) by over 35%. Within each Zero Harm pillar, “Safety”, “Health & Wellness” and “Environment”, corporate and business stakeholders collaborate to define and implement new initiatives to achieve our vision. This includes collaboration with leaders across business operations, environmental health and safety, human resources, and sustainability. The Board of Directors and the Governance and Sustainability Committee provide oversight over our Zero Harm Vision, with the Governance and Sustainability Committee receiving regular updates on Zero Harm initiatives and progress and the full Board regularly reviewing enterprise-wide health and safety data. During fiscal year 2023 the company delivered an 8% improvement in Total Recordable Incident Rate (TRIR), ending the fiscal year with a record low TRIR of 0.37 (per 200,000 workhours). Significant Injury Frequency (SIF) also improved year-over-year reflecting a 19% improvement with a SIF of 0.23 (per 1,000,000 workhours).
As a learning organization we employ the Deming Cycle(Plan-Do-Check-Act) to continuously improve our Environment, Health and Safety performance by constantly refining Zero Harm initiatives based on performance and changes in risk profile.
Learnings during fiscal year 2023 drove a renewed focus on significant injury risk and contractor safety performance, including an enhanced effort to reduce risk associated with six Zero Harm critical programs: Electrical Safety, Control of Hazardous Energy, Working at Heights, Crane Operations, Forklift Operations and Confined Space Entry. These Critical Six programs have the greatest opportunity to reduce significant injury and fatality. This enhanced focus is successfully integrated with our 3 rd party subcontractor management process and in so doing drives our Zero Harm vision by reducing unsupervised subcontractor significant injury risk while improving our collaborative safety performance.
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Proxy Summary › Our Director Nominees
Our Director Nominees
Executive Leadership Experience Directors with significant leadership experience over an extended period, including as chief executive officer or chief financial officer, provide the Company with special insight into how large organizations operate, including strategy, productivity, regulatory concerns, talent development and risk management.
Experience Leading Global Teams Directors who have worked in global companies have experience in markets outside of the United States and bring valuable knowledge to the Company, including exposure to different cultural perspectives and practices, and provide critical insight in light of the Company’s global operations.
Financial and Accounting Expertise Directors with an understanding of accounting and financial reporting processes, particularly in large global businesses, provide an important oversight role.
Public Policy Experience Directors with public policy and government experience have key insight into the role of regulatory issues and government affairs affecting the Company.
Cybersecurity, Technology and Innovation Directors who have expertise in cybersecurity, IT, technology fields and/or driving technological innovation are important as we continue to transform and evolve our business through digital solutions and services.
Manufacturing and Industry Experience Directors who have experience in the industry and markets served by the Company offer valuable perspective for operations.
Corporate Governance Experience Directors with experience in corporate governance, such as service on boards and board committees, or as governance executives of other large, public companies, are familiar with the dynamics and operation of a board of directors and the impact that governance policies have on the Company.
Corporate Responsibility/Sustainability Directors with experience in corporate responsibility initiatives, including sustainability, help drive our mission to create smart and sustainable buildings for the communities in which we live, work, learn and play.
M&A Experience Directors with experience in M&A provide key insights relevant to our business portfolio and our long-term strategic planning.
2024 Notice and Proxy Statement 5
Proxy Summary › Our Director Nominees
We are asking you to vote FOR all the Director nominees listed below. All current Directors attended at least 75% of the Board and committee meetings on which he or she sits during fiscal year 2023. Detailed information regarding these individuals is set forth in this Proxy Summary and under Proposal Number One. The Governance and Sustainability Committee and the Board believe that the qualifications, skills, experience and attributes set forth in this Proxy Statement for all individuals nominated for election support the conclusion that these individuals are qualified to serve as Directors and collectively possess a variety of skills, professional experience, and diversity of backgrounds that align with our needs and allow our Board to effectively oversee our business. As previously disclosed, Michael Daniels will retire from the Board at the 2024 Annual General Meeting.
Summary information on our Director nominees is set forth below.
| Current Committee Membership | ||||||||
|---|---|---|---|---|---|---|---|---|
| Nominee | Age | Director Since | Principal Occupation | Independent | AC | CC | EC | GC |
| Timothy Archer* | 56 | N/A | President and Chief Executive Officer of Lam Research Corporation | ● | ||||
| Jean Blackwell | 69 | 2018 | Retired Executive Vice President & Chief Financial Officer of Cummins Inc. | ● | ● | Chair | ||
| Pierre Cohade | 62 | 2018 | Former Chief Executive Officer of Triangle Tyre Co. Ltd. | ● | ● | |||
| W. Roy Dunbar | 62 | 2017 | Retired CEO and Chairman of Network Solutions | ● | ● | |||
| Gretchen R. Haggerty | 68 | 2018 | Retired Executive Vice President & Chief Financial Officer of United States Steel Corporation | ● | Chair | ● | ||
| Seetarama (Swamy) Kotagiri* | 55 | N/A | Chief Executive Officer of Magna International Inc. | ● | ||||
| Ayesha Khanna | 50 | 2023 | Co-Founder and Chief Executive Officer of Addo | ● | ● | |||
| Simone Menne | 63 | 2018 | Former Chief Financial Officer, Boehringer Ingelheim | ● | ● | |||
| George R. Oliver | 63 | 2012 | Chairman and Chief Executive Officer of Johnson Controls | ● | ||||
| Jürgen Tinggren** | 65 | 2014 | Retired Chief Executive Officer and Director of Schindler Group | ● | ● | ● | ||
| Mark Vergnano | 65 | 2016 | Retired Chief Executive Officer and Chairman of The Chemours Company | ● | ● | |||
| John D. Young | 59 | 2018 | Retired Chief Business Officer, Pfizer Inc. | ● | ● | |||
AC = Audit Committee
CC = Compensation and Talent Development Committee
EC = Executive Committee
GC = Governance and Sustainability Committee
| * | New Director nominee |
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| ** | Independent Lead Director |
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Proxy Summary › Corporate Governance Snapshot
Corporate Governance Snapshot
We are committed to maintaining robust governance practices and a strong ethical culture that benefit the long-term interests of our shareholders. We, with the oversight of our Board, regularly review, update and enhance our corporate governance practices and compliance and training programs, as appropriate, in light of shareholder interests, changes in applicable laws, regulations and stock exchange requirements, and the evolving needs of our business. Our corporate governance and compliance practices include:
| Director Independence & Board Leadership | • 11 of 12 Director nominees are independent • 3 fully independent Board committees • Strong, independent Lead Director with significant governance duties, including chairing regular executive sessions of independent Directors and hosting regular Board update calls • Independent Directors regularly meet in executive session |
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| Board and Committee Self Evaluations | • Annual Board and committee self-assessments • Lead Director and the Chair of the Governance and Sustainability Committee consult with each Director supplementing formal evaluations |
| Tenure | • Balance of new and experienced Directors. 67% of Director nominees have tenures of less than 6 years and average tenure is < 6 yrs • Directors may not stand for reelection after age 75 |
| Best Practices | • Absolute majority voting for Directors in uncontested elections • A comprehensive anti-hedging and anti-pledging policy is in place under our Insider Trading Policy • Clawback policy providing for the mandatory recoupment of incentive compensation for financial restatements, discretionary recoupment of incentive based and equity compensation for misconduct that has the potential to cause material reputational harm and discretionary recoupment of certain compensation from culpable individuals in certain circumstances • Maintain an equity award grant policy establishing standard, predetermined equity grant practices to avoid any actual or perceived market timing of equity awards |
| Risk Oversight | • Risk oversight by the Board and its committees • Board and committee oversight of sustainability and other environmental, social and governance matters • Board and committee oversight of cybersecurity |
| Share Ownership Requirements | • Robust executive share ownership requirements (6x of base salary for the CEO, 3x base salary for all other NEOs) • Robust Director stock ownership requirements (5x of annual retainer) |
Our Board adopted our Corporate Governance Guidelines, Code of Conduct, and charters for our Governance and Sustainability Committee, Audit Committee, Compensation and Talent Development Committee and Executive Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of the Company. You can access our current committee charters, our Corporate Governance Guidelines and our Code of Conduct in the “Corporate Governance” section of the “Investor Relations” page of our website.
2024 Notice and Proxy Statement 7
Proxy Summary › Non-Binding Advisory Vote on Executive Compensation
Non-Binding Advisory Vote on Executive Compensation
Proposal Number Five is our annual advisory vote on the Company’s executive compensation philosophy and program. Detailed information regarding these matters is included under the heading “Compensation Discussion & Analysis,” and we urge you to read it in its entirety. Our compensation philosophy and structure for executive officers remains dedicated to the concept of paying for performance and continues to be heavily weighted with performance-based awards.
| Pay-for-performance | • Set majority of compensation as variable and at-risk • Tie incentives to performance against financial, operational, strategic and individual goals • Use quantifiable and measurable performance metrics and goals that are clearly disclosed • Provide significant upside and downside potential for superior and low performance |
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| Target pay appropriately | • Conduct competitive market based total compensation benchmark analysis against similarly sized industrial companies for comparable positions |
| Align interests with our stakeholders | • Design programs that discourage unnecessary or excessive risk-taking • Cap payout opportunities under the incentive plans • Require minimum vesting periods for equity awards • Reward long-term financial results that drive value creation through a balanced equity mix • Operate meaningful share ownership guidelines • Maintain a pay recoupment (i.e., clawback) policy that exceeds regulatory requirements • Maintain an equity award grant policy establishing standard, predetermined equity grant practices • Prohibit insider trading, hedging and pledging of Company stock • Engage with shareholders on executive compensation matters • Engage an independent compensation consultant to provide analysis and advice • Conduct an annual say-on-pay vote |
| Avoid poor governance practices | • No tax gross-ups on any change-in-control benefits • No single-trigger accelerated vesting on a change-in-control (double-trigger provisions) • No discounting, reloading or re-pricing of share options without shareholder approval • No guaranteed compensation or guaranteed increases • No excessive perquisites • No employment agreements with executive officers, except where legally required, in which case they follow market norms • No dividends paid on unvested restricted share units or performance share units until such awards vest |
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