Ferguson Enterprises Inc. /DE/
For the period ended Jul 31, 2025. Filed Oct 15, 2025.
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Jul 31, 2025 · Filed Oct 15, 2025
Contents
Long-Term Equity-Based Incentive Program
We believe that providing a significant portion of our Executive Officers’ total compensation package in long-term equity-based compensation aligns the incentives of our Executive Officers with the interests of our shareholders and with our long-term corporate success. Additionally, we believe that equity-based compensation awards enable us to attract, retain, motivate and fairly compensate executive talent.
Our Executive Officers were eligible in fiscal 2025 to participate in the following share plans maintained by the Company:
the Omnibus Plan; and
The Ferguson Enterprises Inc. Employee Share Purchase Plan 2021 (“ESPP”).
Following the approval by Ferguson shareholders of the Omnibus Plan at the 2023 annual general meeting held on November 28, 2023, Ferguson no longer grants awards under The Ferguson Enterprises Inc. Long-Term Incentive Plan 2019 (“LTIP”), The Ferguson Enterprises Inc. Performance Ordinary Share Plan 2019 (“POSP”) or The Ferguson Enterprises Inc. Ordinary Share Plan 2019 (“OSP”) (collectively, LTIP, POSP and OSP, the “Legacy Share Plans”, and collectively, Legacy Share Plans, Omnibus Plan and ESPP, the "Company Employee Share Plans"); however, our Executive Officers, including our NEOs, continue to hold outstanding awards under the Legacy Share Plans. In addition, all Executive Officers are eligible to participate in the ESPP on a voluntary basis.
A summary of each of these plans and the awards provided thereunder (the “long-term incentive” or “LTI”) is provided below in “—General Information on Share Plans.”
Our Legacy Share Plans are generally aligned with U.K. market practice, while the Omnibus Plan and ESPP are generally aligned with U.S. market practice. Specific information on fiscal 2025 grants issued and vestings under our LTI plans is detailed in this section, including the following:
fiscal 2025 award mix;
fiscal 2025 target award opportunities;
fiscal 2025 awards performance metrics and weighting;
fiscal 2025 awards under the Omnibus Plan (restricted stock units (“RSUs”), performance stock units (“PSUs”) and stock options ("SOs"); and
shares earned with respect to awards granted during fiscal 2022 and fiscal 2023 under the LTIP, OSP and POSP that vested during fiscal 2025 and during the transition period in October 2025, respectively.
Fiscal 2025 Award Mix
The Compensation Committee established the following mix of LTI awards for our NEOs for fiscal 2025. This mix may change in future fiscal years as we continue to evolve the business and execute on our strategic initiatives.
| Performance-Based · Time-Based | |||
|---|---|---|---|
| PSU | SO | RSU | |
| All NEOs | 50% | 20% | 30% |
The LTI design for fiscal 2025 for each Executive Officer was comprised of 50% PSUs, 30% RSUs and 20% SOs. This change in fiscal 2025 to grant 70% performance-based awards (PSUs and SOs) and 30% time-based awards (RSUs) across all Executive Officers was to align the CEO's and CFO's award mix with the other Executive Officers and U.S. market practice. The performance based awards incentivize our Executive Officers to focus on objectives that are expected to drive sustainable shareholder value. All PSUs granted for Executive Officers will vest subject to achievement of relative total shareholder return (“TSR”), adjusted earnings per share (“EPS”) growth (diluted) and return on capital employed (“ROCE”) metrics, each such metric having a weighting of 33.3%. The realized value for stock option awards is based on the increase in the market value of our common stock relative to the value when the award was granted. Performance metrics are discussed in more detail in the sections below.
The RSUs and SOs awarded will vest in three equal installments beginning on the one-year anniversary of the date of grant, while the PSUs cliff vest on the three-year anniversary of the date of grant. Dividend equivalents will accrue in shares during the vesting period on the RSUs and PSUs for Executive Officers, but are not paid until the underlying awards vest.
| 2025 PROXY STATEMENT | 47 |
Fiscal 2025 Target Award Opportunities
For fiscal 2025, changes were made to target award opportunities to better align with U.S. benchmarking and market practices for these roles. Based on a review of individual performance, the competitive market for talent and overall value to the organization, the Compensation Committee approved the following total LTI target opportunities for our NEOs as shown in the table below:
| Name | TargetLTI (% ofBase Salary) | Target LTI |
|---|---|---|
| Kevin Murphy | 650% | $9,750,000 |
| Bill Brundage | 350% | $2,921,648 |
| Ian Graham | 190% | $1,229,614 |
| Andy Paisley | 190% | $1,232,910 |
| Bill Thees | 190% | $1,258,412 |
| Garland Williams | 190% | $1,099,669 |
Fiscal 2025 PSU Awards Performance Metrics and Weightings
For fiscal 2025, we reviewed the performance metrics for our PSU awards provided to the NEOs and determined that relative TSR, adjusted EPS growth (diluted) and ROCE continued to be appropriate performance metrics, as they closely match the shareholder value creation experience.
The metrics used for the NEO's PSU awards and their weightings for fiscal 2025 are shown below. The PSU awards vest on October 15, 2027, contingent on achievement of performance conditions and, except under certain circumstances described below in “—General Information on Share Plans,” service conditions. Actual goals for each metric will be disclosed when the performance period is completed.
| Metric | Weighting | Definition | Rationale |
|---|---|---|---|
| TSR Relative to S&P 500 Industrials | TSR Relative to S&P 500 Industrial Constituents as of August 1, 2024. | Relative TSR is a commonly used LTI measure.Relative calibration can mitigate impact of broader stock market impact and/or sector volatility and it provides an objective measure of shareholder value creation, including that created by M&A. | |
| Adjusted EPS Growth (diluted) | Adjusted U.S. GAAP EPS – Growth over three-year performance period using the adjusted EPS growth (diluted) for the year ended July 31, 2024, as the starting point and July 31, 2027, as the end point.Adjusted EPS – diluted is defined as adjusted net income divided by the weighted average diluted shares outstanding. Adjusted net income is defined as income from continuing operations before amortization of acquired intangible assets (net of tax), discrete tax items and other items that are non-recurring (net of tax), as further described in the section titled “Non-GAAP Reconciliations and Supplementary Information.” | Commonly used LTI measure, which is simple and transparent and has a strong line of sight. Investor orientated metric, closely aligned with shareholder interests. | |
| ROCE | Adjusted earnings before interest and taxes (Adjusted EBIT) divided by average capital employed. Adjusted EBIT is defined as operating profit excluding certain non-recurring (non-GAAP adjustments), as further described in the section titled “Non-GAAP Reconciliations and Supplementary Information,” and including the impact of acquisition related intangible amortization. Average capital employed is defined as the sum of average net debt and average shareholders’ equity and excludes certain assets held for sale. | Commonly used and well understood externally LTI measure, encourages strong capital discipline. |
| 48 | 2025 PROXY STATEMENT |
Below are the target PSUs awarded to our NEOs in fiscal 2025:
| Name | PSUs Awarded |
|---|---|
| Kevin Murphy | 24,207 |
| Bill Brundage | 7,254 |
| Ian Graham | 3,052 |
| Andy Paisley | 3,061 |
| Bill Thees | 3,124 |
| Garland Williams | 2,730 |
Fiscal 2025 RSU and SO awards under the Omnibus Plan
Fiscal 2025 RSU and SO awards granted under the Omnibus Plan will vest in three equal annual installments beginning on October 15, 2025, the one-year anniversary of the date of grant, subject to continued service except under certain circumstances described below in “—General Information on Share Plans.”
Below are the RSUs and SOs awarded to our NEOs in fiscal 2025:
| Name | RSUs Awarded | SOs Awarded |
|---|---|---|
| Kevin Murphy | 14,524 | 30,991 |
| Bill Brundage | 4,352 | 9,286 |
| Ian Graham | 1,831 | 3,908 |
| Andy Paisley | 1,836 | 3,918 |
| Bill Thees | 1,874 | 4,000 |
| Garland Williams | 1,638 | 3,495 |
Shares Earned with Respect to Fiscal 2022 LTIP Awards
The fiscal 2022 LTIP awards previously granted to certain of our Executive Officers were eligible to vest following a three-year performance period that commenced on August 1, 2021 (the first day of fiscal 2022) and ended on July 31, 2024 (the last day of fiscal 2024). The performance metrics for the fiscal 2022 LTIP awards were as follows:
| Metric | Weighting | Definition | Rationale |
|---|---|---|---|
| TSR Relative to the FTSE 100 | TSR Relative to FTSE 100 constituents as of the beginning of the performance period. | Relative TSR is a commonly used LTI measure.Relative calibration can mitigate impact of broader stock market impact and/or sector volatility, it provides an objective measure of shareholder value creation, including that created by M&A. | |
| Adjusted EPS | Total margin of adjusted EPS growth (diluted) over U.S. inflation after three years. | Commonly used LTI measure, which is simple and transparent and has a strong line of sight. Investor orientated metric, closely aligned with shareholder interests. | |
| Cumulative Cash Flow from Operating Activities | Cash flow from operating activities is generated before interest and tax, excluding the effect of the following items to the extent already included in cash generated from operations: cash flows from exceptional items; cash flows arising from special contributions to pension plans made under a deficit recovery plan; and cash flows from non-ongoing and discontinued businesses. | Encourages long-term generation of cash to fund investment and returns to shareholders. |
| 2025 PROXY STATEMENT | 49 |
The following table details the threshold, target and maximum goals, as well as the actual results, for the performance conditions relating to the fiscal 2022 LTIP awards. The fiscal 2022 LTIP awards vested on October 14, 2024 for Messrs. Murphy and Brundage, in each case, at slightly below maximum performance level.
Relative TSR achievement — Ferguson was in the 88.2% quartile against the FTSE 100 comparator group equating to maximum vesting of this element of the award.
Adjusted EPS performance of $9.69, which equates to 43.6% growth (maximum set at 30.0% - U.S. Consumer Price Index (“CPI”) was 15.2%).
Three-year cumulative cash flow from operating activities was $8,266 million, $1,874 million in excess of maximum.
| Performance Metric | LTIP Weighting | Threshold | Between Threshold and Maximum | Maximum | Actual | Achievement as a % of Target |
|---|---|---|---|---|---|---|
| Percent of Target | 50% | 50%-200% | 200% | 196% | ||
| Relative Total Shareholder Return(1) | 33.3% | Median | Between Median and Upper Quartile | Upper Quartile | Upper Quartile (88th %ile) | 200% |
| Adjusted EPS(1) | 33.3% | U.S. CPI + 3% | Between U.S. CPI + 3% and U.S. CPI + 30% | U.S. CPI + 30% | U.S. GAAP EPS diluted of $9.69 (43.6% growth) | 188% |
| Cumulative Cash Flow from Operating Activities(1) | 33.3% | $5.487 million | Between $5.487 million & $6,392 million | $6,392 million | $8,266 million | 200% |
Messrs. Murphy and Brundage received awards under the fiscal 2022 LTIP. The number of shares vested for fiscal 2022 LTIP are shown in the table below.
| Name | LTIP Shares Vested | |
|---|---|---|
| Kevin Murphy | 29,921 | (1) |
| Bill Brundage | 11,928 | (2) |
(1)Includes 1,786 shares of dividend equivalents that vested when the underlying LTIP award vested.
(2)Includes 712 shares of dividend equivalents that vested when the underlying LTIP award vested.
| 50 | 2025 PROXY STATEMENT |
Shares Earned with Respect to Fiscal 2022 POSP Awards
The fiscal 2022 POSP awards previously granted to certain of our NEOs were eligible to vest following a three-year performance period that commenced on August 1, 2021 (the first day of fiscal 2022) and ended on July 31, 2024 (the last day of fiscal 2024). The performance metrics for the fiscal 2022 POSP awards were as follows:
| Metric | Weighting | Definition | Rationale |
|---|---|---|---|
| Adjusted Operating Profit Growth | Three-year spot adjusted operating profit growth, using adjusted operating profit for the year ended July 31, 2021, as the starting point, and for the year ended July 31, 2024, as the end point.Adjusted operating profit is operating profit before acquisition related intangible amortization and certain other non-GAAP adjustments, as further described in the section titled “Non-GAAP Reconciliations and Supplementary Information.” | Adjusted operating profit is an important measure of business performance as it rewards revenue growth, gross margin improvement and appropriate cost control, and demonstrates the profitability of our core operations.Using adjusted operating profit growth provides a simple, transparent and easily understood performance condition and provides a clear line of sight compared to TSR and EPS. |
The fiscal 2022 POSP awards vested on October 14, 2024 at maximum performance level with the adjusted operating profit growth exceeding maximum performance level as shown in the table below, which details the threshold, target and maximum goals, as well as the actual results, for the fiscal 2022 POSP awards.
| Performance Metric(1) | Weighting | Threshold | Between Threshold and Maximum | Maximum | Actual |
|---|---|---|---|---|---|
| Percent of Target | 50% | 50%-200% | 200% | 200% | |
| Adjusted Operating Profit Growth | 100% | 0.01% | Between 0.01% and 25.0% | 25% | 35% |
The number of shares vested for fiscal 2022 POSP are shown in the table below.
| Name | POSP Shares Vested |
|---|---|
| Ian Graham | 8,005 |
| Andy Paisley | — |
| Bill Thees | 7,612 |
| Garland Williams | 3,180 |
Shares Earned with Respect to Fiscal 2022 OSP Awards
The fiscal 2022 OSP awards vested on October 14, 2024. The number of shares vested for fiscal 2022 OSP are shown in the table below.
| Name | OSP Shares Vested |
|---|---|
| Ian Graham | 1,715 |
| Andy Paisley | — |
| Bill Thees | 1,631 |
| Garland Williams | 681 |
| 2025 PROXY STATEMENT | 51 |
Shares Earned with Respect to Fiscal 2023 LTIP Awards
The fiscal 2023 LTIP awards ("FY23 LTIP Awards") previously granted to certain of our Executive Officers were eligible to vest following a three-year performance period that commenced on August 1, 2022 (the first day of fiscal 2023) and ended on July 31, 2025 (the last day of fiscal 2025). The performance metrics for the FY23 LTIP Awards were as follows: TSR relative to the S&P 500 Industrials, Total margin of adjusted EPS growth (diluted) over U.S. inflation after three years and return on capital employed, as defined above in "—Fiscal 2025 PSU Awards Performance Metrics and Weightings."
The following table details the threshold, target and maximum goals, as well as the actual results, for the performance conditions relating to the FY23 LTIP Awards. The actual achievement as a percentage of Target for the FY23 LTIP Awards was 91%. The FY23 LTIP Awards vested on October 13, 2025 for Messrs. Murphy and Brundage at the performance levels set forth below for each metric.
| PerformanceMetric | LTIPWeighting | Threshold | Between Thresholdand Maximum | Maximum | Actual | Achievement as a% of Target |
|---|---|---|---|---|---|---|
| Percent of Target | 50% | 50%-200% | 200% | 91% | ||
| Relative Total Shareholder Return(1) | 33.3% | Median | Between Median and Upper Quartile | Upper Quartile | 74.2th %ile | 194% |
| Adjusted EPS(1) | 33.3% | $11.43 | $11.43-$14.05 | $14.05 | $9.94 | —% |
| Return on Capital Employed | 33.3% | 30.0% | 30.0%-36.0% | 36.0% | 31.7% | 79% |
Messrs. Murphy and Brundage received FY23 LTIP Awards. The number of shares vested for FY23 LTIP Awards are shown in the table below.
| Name | LTIP Shares Vested | |
|---|---|---|
| Kevin Murphy | 26,663 | (1) |
| Bill Brundage | 9,938 | (2) |
(1)Includes 1,689 shares of dividend equivalents, including those accrued subsequent to July 31, 2025 but prior to October 13, 2025, that vested when the underlying LTIP award vested.
(2)Includes 630 shares of dividend equivalents, including those accrued subsequent to July 31, 2025 but prior to October 13, 2025, that vested when the underlying LTIP award vested.
Shares Earned with Respect to Fiscal 2023 POSP and OSP Awards
The fiscal 2023 POSP awards (the “FY23 POSP Awards”) granted to our NEOs (other than our CEO and CFO) and all other participants of long-term incentive awards were eligible to vest following a three-year performance period that commenced on August 1, 2022 (the first day of fiscal 2023) and ended on July 31, 2025 (the last day of fiscal 2025). The performance metric (AOP Growth) for the fiscal 2023 POSP awards was approved by the Compensation Committee in September 2022 using a three-year spot adjusted operating profit growth, using adjusted operating profit for the year ended July 31, 2022, as the starting point, and for the year ended July 31, 2025, as the end point.
For largely historical reasons while the Company was headquartered in the U.K. and operating under legal U.K.-based equity plans, this was a different metric than those used under the FY23 LTIP Awards for the CEO and CFO. This resulted in a materially different and unintended outcome between the two approaches. In certifying achievement of the FY23 POSP Awards, the Compensation Committee determined it was in the best interests of the Company and our shareholders to exercise discretion to remedy this inequitable discrepancy in payout percentage between the FY23 LTIP Awards and the FY23 POSP Awards, which had resulted from the use of different performance metrics for such awards.
| 52 | 2025 PROXY STATEMENT |
As noted above, achievement of the FY23 LTIP Awards was at 91% of target (based on achievement of FY 2023 LTIP Awards performance metrics: Relative TSR, Adjusted EPS Growth (diluted) and ROCE). The calculated payout for the FY23 POSP Awards was at 0% of target. The Compensation Committee chose to exercise its discretion to adjust the FY23 POSP Awards payout percentage for all eligible participants of these awards to create an equal LTI payout percentage with the CEO and CFO outcomes. The Compensation Committee approved this equitable achievement certification because achievement of the FY23 LTIP Awards performance metrics did not result solely from the performance of our CEO and CFO, such that rewarding all eligible participants is a fair outcome, recognizes loyalty and enhances associate retention as the Company successfully grows during challenging market conditions. In remedying the discrepancy in LTI performance payouts, the Compensation Committee took into account the vesting of the fiscal 2023 OSP time-based awards (“FY23 OSP Awards”) (30% of LTI mix for our non-CEO/CFO participants) and the FY23 POSP Awards (the remaining 70% of LTI mix), so that the total LTI payout percentage across the eligible participants matched the outcome of the FY23 LTIP Awards for our CEO and CFO.
The following table shows the components that comprise the approved FY23 LTI payout percentage under OSP and POSP with respect to those participants who are eligible for the Committee’s use of discretion:
| LTI Component | Approved Certification/Vesting Percentage | % of FY23LTI Award |
|---|---|---|
| FY23 POSP Award | 87% | 70% |
| FY23 OSP Award | 100% | 30% |
| Total FY23 LTI Payout % | 91% |
The FY23 POSP Awards and FY23 OSP Awards vested on October 13, 2025. The goal for the AOP Growth metric for the FY23 POSP awards was set at 0.01% for threshold and 25% at maximum, with straight line interpolation between them. The payout ranged from 0% below threshold to 200% at or above maximum. As discussed above, the payout without the Compensation Committee’s discretion would have been 0%. With the Compensation Committee’s discretion to approve the FY23 POSP Awards vesting at 87% (as described above), the number of shares vested for the FY23 POSP Awards for our NEOs were 5,435 for Mr. Graham, 4,064 for Mr. Paisley, 5,559 for Mr. Thees and 3,187 for Mr. Williams.
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