APPLIED INDUSTRIAL TECHNOLOGIES INC
For the period ended Oct 22, 2024. Filed Sep 16, 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.
Oct 22, 2024 · Filed Sep 16, 2024
Contents
Proxy Statement Highlights
This proxy statement, the accompanying proxy card, and our Annual Report on Form 10-K are being sent to shareholders beginning on or about September 16, 2024. The highlights below include information that you will find elsewhere in this proxy statement. The highlights do not contain all the information that you should consider, and you should read the entire proxy statement carefully before voting. Information regarding the logistics of the 2024 annual meeting of shareholders (the “Annual Meeting”) begins on page 5.
Proposals and Board Recommendations
Applied’s Board of Directors (the “Board”) makes the following voting recommendations to shareholders for the Annual Meeting:
| Proposal | Board’s VotingRecommendation | Page |
|---|---|---|
| Item 1: Election of Directors | FOR each CompanyDirector Nominee | 8 |
| Item 2: Advisory (Nonbinding) Vote to Approve Executive Compensation | FOR | 61 |
| Item 3: Vote to Ratify Appointment of Independent Auditors | FOR | 64 |
Company Director Nominees
| Nominee | Age | Director Since | Principal Occupation | Independent |
|---|---|---|---|---|
| Madhuri A. Andrews | 57 | 2019 | Executive Vice President and Chief Information Officer, MKS Instruments, Inc. | Yes |
| Shelly M. Chadwick | 52 | 2022 | Vice President, Finance and Chief Financial Officer, Materion Corporation | Yes |
| Vincent K. Petrella | 64 | 2012 | Former Executive Vice President, Chief Financial Officer and Treasurer, Lincoln Electric Holdings, Inc. | Yes |
Additional information about the nominees and the other continuing directors can be found on pages 9-13.
| 2 | Applied Industrial Technologies 2024 Proxy Statement |
Corporate Governance Highlights
| Independence | ✓ The Board Chairman is an independent director. ✓ All directors are independent, except for our Chief Executive Officer. ✓ The independent directors meet regularly in private executive sessions without management. ✓ The Board’s Audit, Corporate Governance & Sustainability, and Executive Organization & Compensation Committees are each composed solely of independent directors. |
|---|---|
| Board Oversight of Risk Management | ✓ The Board, as a whole and through its committees, oversees and monitors risk management. In this role, the Board is responsible for determining that the risk management processes designed and implemented by management are adequate and functioning as designed. ✓ We have four Audit Committee financial experts continuing to serve on the Audit Committee after the Annual Meeting. |
| Board Evaluations, Refreshment, and Composition | ✓ Our Board and its key committees perform annual self-evaluations. ✓ The evaluations contribute to efforts to ensure that the Board continues to be composed of members with diverse experiences, attributes, and skills. ✓ Six directors are actively employed public company executives. ✓ Four current or former public company chief executive officers currently serve on the Board. ✓ We limit the number of other public company boards on which our directors may serve. ✓ Director tenures for directors serving after the Annual Meeting range from 0 to 19 years, average of eight years. ✓ Director ages for directors serving after the Annual Meeting range from 52 to 70 years, average of 61 years. |
| Stock Ownership Guidelines | ✓ We expect each non-employee director to own, within five years after joining the Board, Applied shares valued at a minimum of 5x their annual retainer fees. ✓ Executive officers are expected not to dispose of stock unless their “owned” shares’ market value equals or exceeds the following annual base salary multiples immediately after the disposition: 5x for the Chief Executive Officer, 3x for other executive officers. |
Additional information about our corporate governance is on pages 14-19.
| Applied Industrial Technologies 2024 Proxy Statement | 3 |
|---|
Business Performance Highlights
Applied achieved record sales and net income during its 2024 fiscal year, providing strong evidence of the benefits of Applied’s strategy, ongoing evolution, and operational diligence.
| NET SALES (RECORD) $4.5 BILLION | CASH PROVIDED BY OPERATING ACTIVITIES $371.4 MILLION |
|---|---|
| NET INCOME (RECORD) $385.8 MILLION | CASH RETURNED TO SHAREHOLDERS (Dividends + Share Repurchases) $129.3 MILLION |
For a detailed review of our performance, see Applied’s 2024 Annual Report on Form 10-K.
Executive Compensation Highlights
Our executive pay is targeted to be competitive with market medians for similar positions in peer distribution industry companies. Actual pay depends in large part on performance relative to goals and how our stock price performs in response.
The chart below shows the mix of targeted opportunities provided in 2024 to our Chief Executive Officer, Neil A. Schrimsher, in the forms of base salary, annual incentive pay, and long-term incentive pay (awarded in equity-based instruments).
In line with results that were generally consistent withpre-established annual target incentive goals, the named executive officers earned annual incentive pay at an average of 101.2% of their individual target values. 2024 achievements under the three-year performance share programs averaged 147.5% of target shares.
For a detailed review of our executive compensation, see pages 23-60 of this proxy statement.
Approval of the Compensation of the Named Executive Officers
We provide shareholders the annual opportunity to approve, through a nonbinding, advisory vote, the compensation of our named executive officers as disclosed in our proxy statement, including, among other things, our executive compensation objectives, policies, and practices. The proposal is described on pages 61-63.
Ratification of Appointment of Independent Auditors
Subject to shareholder ratification, the Board’s Audit Committee appointed Deloitte & Touche LLP (“Deloitte”) to serve as independent auditors for the fiscal year ending June 30, 2025. The committee made the appointment after evaluating the firm and its performance. We seek the shareholders’ ratification of the appointment as described on page 64.
| 4 | Applied Industrial Technologies 2024 Proxy Statement |
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