UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

 

 

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Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

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☒		Definitive Proxy Statement
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☐		Soliciting Material Pursuant to § 240.14a-12

LOWE’S COMPANIES, INC.

 

 

(Name of Registrant as Specified In Its Charter)

 

          

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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☐		Fee paid previously with preliminary materials.
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

Dear Fellow Shareholders:

We thank you for your continued investment in Lowe’s. 2021 was Lowe’s centennial, a year in which we celebrated our remarkable growth from a small-town hardware store in Wilkesboro, North Carolina, to one of the world’s largest home improvement retailers. We extend our appreciation to our customers, our business partners and the more than 300,000 associates who demonstrated an unwavering commitment to delivering exceptional customer service and results in 2021.

We would like to highlight several of the ways the Board and management team have been working on your behalf this past year.

Oversight of Company Strategy: The Board has been actively engaged with management to implement our Total Home strategy, which is focused on providing our customers with the products and services they need for every project in the home. In 2021, the successful execution of our strategic priorities has enabled us to increase sales to our Pro and DIY customers and to continue to grow our market share. We delivered outstanding results this past year, with total sales growth of 7.4%, driven by comparable sales growth of 6.9%. Importantly, we drove improvements in two of our key growth areas, with consolidated Pro customer sales up 24% and Lowes.com sales up 18%. At the same time, we drove more than 170 basis points of operating margin improvement with our relentless focus on productivity improvements. The combination of higher sales and greater operating productivity resulted in a 55% increase in diluted earnings per share to $12.04 and a 36% increase compared to adjusted diluted earnings per share last year of $8.86.*

Board Composition: The Board is focused on maintaining a balance of distinguished leadership, diverse perspectives, strategic skill sets and professional experience relevant to its oversight of Lowe’s strategic objectives. Ten of our 11 director nominees are independent, 36% are women and 45% are racially or ethnically diverse. The Board is mindful of refreshing its membership, with more than half of the independent directors nominated for election at the Annual Meeting having joined the Board in the last six years.

Robust Shareholder Engagement Program: In 2021, we continued our robust shareholder engagement program, meeting with a broad range of shareholders throughout the year. This past winter, as part of our ESG-focused engagement efforts, we reached out to 34 investors, representing approximately 45% of shares outstanding at the time of outreach and met with 18 investors, representing approximately 32% of shares outstanding. These conversations focused on our strategy, human capital management efforts, diversity and inclusion programs and initiatives, Board composition, environmental sustainability and our corporate governance and executive compensation practices.

Focus on Operating Responsibly and Sustainably: The Board is focused on providing strong oversight of Lowe’s corporate responsibility efforts. The full Board provides oversight of overall sustainability risks, and the Sustainability Committee of the Board directly oversees Lowe’s corporate sustainability strategies. Our sustainability strategies and goals are based on commitments across three pillars: Our People & Our Communities, Product Sustainability and Operational Excellence. We are proud to share that we have committed to setting a science based net-zero target in 2022.

We value your continued engagement and support for Lowe’s. We encourage you to vote your shares at our Annual Meeting on Friday, May 27, 2022.

Sincerely,

 

Marvin R. Ellison Chairman, President and Chief Executive Officer		Richard W. Dreiling Lead Independent Director

 

 

*	Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to Appendix A for a reconciliation of non-GAAP financial measures.

 

 

 

 

LOWE’S COMPANIES, INC.

1000 Lowes Boulevard

Mooresville, North Carolina 28117

(704) 758-1000

Notice of 2022 Annual Meeting of Shareholders

April 14, 2022

The 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Lowe’s Companies, Inc. (the “Company”) will be held online via audio webcast at 10:00 a.m., Eastern Time, on Friday, May 27, 2022 at www..virtualshareholdermeeting.com/LOW2022, for the purpose of voting on the following matters:

 

1.	To elect the 11 candidates nominated by the Board of Directors and named in the Proxy Statement for election as directors;

 

2.	To approve, on an advisory basis, the Company’s named executive officer compensation in fiscal 2021;

 

3.	To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal 2022;

 

4.	To approve the Amended and Restated Lowe’s Companies, Inc. 2006 Long Term Incentive Plan;

 

5.	To consider and vote upon five shareholder proposals set forth in the accompanying Proxy Statement, if properly presented at the Annual Meeting; and

 

6.	To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

The Board of Directors unanimously recommends a vote “FOR” each of the director nominees in proposal 1, “FOR” proposals 2, 3 and 4 and a vote “AGAINST” the shareholder proposals. The persons named as proxies will use their discretion to vote on other matters that may properly arise at the Annual Meeting or any adjournment or postponement thereof.

Only shareholders of record as of the close of business on March 21, 2022 will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

We are holding the Annual Meeting in an online-only format. You will not be able to attend the Annual Meeting in person. To attend the Annual Meeting, vote and submit your questions during the Annual Meeting, you will need to visit the Annual Meeting website noted above and enter your 16-digit control number found on your proxy card, voting instruction form, Notice of Internet Availability of Proxy Materials or legal proxy, as applicable. Shareholders of record may follow these same instructions during the Annual Meeting to view the list of shareholders of record entitled to notice of the meeting. Prior to the Annual Meeting, you will be able to vote at www..proxyvote.com using your 16-digit control number or by the other methods described in the Proxy Statement. For more information about the online-only meeting format, please see pages 83 to 84 of the Proxy Statement.

Your vote is important. Whether or not you plan to attend the Annual Meeting, you are encouraged to vote as soon as possible to ensure that your shares are represented at the meeting.

Sincerely,

 

Ross W. McCanless

Executive Vice President, General Counsel and Corporate Secretary

 

 

 

 

Table of Contents

 

 

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believe,” “expect,” “anticipate,” “plan,” “project,” “estimate,” “intend,” “will,” “should,” “could,” “would,” “may,” “strategy,” “potential,” “opportunity,” “outlook,” “guidance,” “scenario” and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections and assumptions about future priorities, shareholder value, Lowe’s strategic initiatives and our environmental, social and other sustainability plans and goals. Such statements involve risks and uncertainties and we can give no assurance that they will prove to be correct. Actual results and outcomes may differ materially from those expressed or implied in such statements. Investors should carefully consider the risk and uncertainties described in “Item 1A – Risk Factors” in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the Securities and Exchange Commission (the “SEC”). All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law. Inclusion of information in this Proxy Statement is not an indication that the subject or information is material to our business or operating results. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.

 

PROXY SUMMARY

 

 

 

We seek to generate sustainable shareholder value by driving operational excellence throughout the enterprise, consistently generating high levels of cash flow and optimizing our capital deployment. We have demonstrated a strong commitment to returning capital to our shareholders and continued dividend growth since 1961.

 

$36.7 Billion		35.3%
CASH FLOWS FROM OPERATIONS IN THE LAST FIVE YEARS		2021 RETURN ON                                 INVESTED CAPITAL*

 

30.4%		$8.0 Billion		$28.6 Billion
2021 PER SHARE INCREASE IN ANNUAL DIVIDEND		DIVIDENDS PAID IN THE LAST FIVE YEARS		SHARES REPURCHASED IN THE LAST FIVE YEARS

 

 

This summary highlights certain information for your review in connection with the Annual Meeting. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. References to “Lowe’s,” the “Company,” “we,” “us,” “our” and similar terms refer to Lowe’s Companies, Inc.

FISCAL 2021 FINANCIAL HIGHLIGHTS

 

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		i

    

 

 

 

LAUNCHING OUR TOTAL HOME STRATEGY

At the end of 2020, we launched the next chapter in our evolution to becoming a best-in-class omnichannel retailer. Building on the success of our Retail Fundamentals strategy, the Lowe’s Total Home strategy is focused on accelerating market share gains by providing do-it-yourself (“DIY”), do-it-for-me (“DIFM”) and Pro customers the products and services they need to complete the entire project.

 

Lowe’s Total Home strategy has enabled us to increase sales to our DIY and Pro customers and to continue to grow our market share in 2021. As a result of our outstanding financial performance, we were able to deliver value to shareholders through the payment of $2.0 billion in dividends and the repurchase of $13.1 billion of our common stock this fiscal year. We are confident that we are making the right investments in the business to generate long-term growth and continue to create sustainable shareholder value.

OVERVIEW OF OUR EXECUTIVE COMPENSATION PROGRAM

Our Executive Compensation Program is Linked to Our Strategy

Our executive compensation program is designed to drive long-term shareholder value by aligning executive pay with our strategy and shareholder interests and attracting and retaining talented executives. Lowe’s has a long-standing commitment to pay for performance and provides a significant portion of compensation opportunities through variable pay arrangements. The Board of Directors (the “Board”) places significant emphasis on the long-term success of the Company and strong alignment with the interests of all stakeholders, including shareholders, customers, our associates and the communities in which we operate.

 

ii		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

 

 

 

Our executive compensation program is designed to reward executives for growth in the Company’s sales and earnings, the creation of long-term shareholder value and the effective execution of our business strategies and operating priorities. The primary objectives of our program are to:

 

•

Attract and retain executives who have the requisite leadership skills to support the Company’s culture and strategic growth priorities;

 

•

Maximize long-term shareholder value through alignment of executive and shareholder interests;

 

•

Align executive compensation with the Company’s business strategies, which are focused on driving operational excellence and better serving our customers; and

 

•

Provide market competitive total compensation with an opportunity to earn above market median pay when the Company delivers results that exceed performance targets, and below median pay when the Company falls short of performance targets.

Key Elements of Our 2021 Executive Compensation Program

Lowe’s compensation mix is heavily performance-based with 72% of the CEO’s and 67% of the other named executive officers’ (“NEOs”) annualized target compensation at-risk and contingent upon the achievement of performance objectives or relative and absolute share price performance. Additionally, 71% of the CEO’s and 65% of the other NEOs’ compensation is in the form of long-term incentives.

 

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		iii

    

 

 

 

Compensation Best Practices

 

 

CORPORATE RESPONSIBILITY

Corporate responsibility is a cornerstone of our Company and a key focus of management and the Board. We are committed to our people, communities and planet. The Sustainability Committee of the Board oversees Lowe’s environmental and social strategies, and our Sustainability Steering Committee, which is composed of executives and subject matter experts from across the Company, leads the Company’s efforts to integrate corporate responsibility into our business. In 2020, we refreshed our relevant priorities, which help to inform our sustainability strategies and goals. We are focused on our commitments across three pillars – Our People & Our Communities, Product Sustainability and Operational Excellence.

 

 

iv		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

 

 

 

Our People & Our Communities

Human Capital

The full Board oversees and regularly engages with our Chairman, President and Chief Executive Officer, our Executive Vice President, Human Resources and senior leadership on a broad range of human capital management topics, including culture, talent management and succession planning, compensation and benefits, diversity and inclusion and feedback gathered from the Company’s annual Building Engagement and Success Together (“BEST”) associate engagement survey. The full Board reviews talent management topics as standing agenda items, including CEO and senior management succession planning, diversity and inclusion and culture.

Lowe’s strives to be an employer of choice. We are committed to creating valuable career opportunities for our associates, supporting them and the communities where they live, and cultivating a culture that invites and encourages diverse opinions and ideas. We enable associates to build meaningful careers that unlock their potential in an inclusive workplace as we work together to deliver the right home improvement products to our customers, with the best service and value, across every channel and community we serve.

 

Diversity and Inclusion

We believe that, by building diverse and inclusive teams, we drive better ideas, positive business results and improve service through a deeper connection with our customers. We continue to execute on our multi-year program to integrate diversity and inclusion initiatives into our corporate strategy across three key areas: talent, culture and business. In our efforts to foster an inclusive culture, we launched a new multigenerational business resource group (“BRG”) in 2021, building upon the seven existing associate-led BRGs that are sponsored by our executive leadership team. We have also introduced badges for our store uniforms that identify the store associates who speak Spanish or American Sign Language. In 2021, we held our ninth annual Women’s Leadership Summit, focused on developing women leaders across our corporate and field locations. Additionally, Lowe’s joined the OneTen Coalition in 2020, with the joint commitment to advance the careers of one million Black Americans over the next 10 years.

In 2021, we continued to make progress with respect to diverse candidate slates for director-level-and-above positions, and we are partnering with our talent acquisition team and hiring managers to promote diverse interview panels for all open roles. Additionally, diversity is now integrated into quarterly business reviews, so leaders have visibility into their team’s actions and progress on driving Lowe’s culture, diversity and inclusion strategy.

In 2021, we published our inaugural diversity report, the 2020 Culture, Diversity & Inclusion Update, which highlights our diversity and inclusion initiatives and opportunities and provides additional information on how we assess diversity among our associates. We plan on publishing these reports annually to keep our stakeholders abreast of our strategy and results. In addition, we began publicly disclosing our consolidated EEO-1 report data in 2021.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		v

    

 

 

 

Below please find the diverse composition of our director nominees and executive officers.

 

Talent Development

We are committed to securing top talent and providing ongoing training and other developmental opportunities to facilitate meaningful careers at Lowe’s. In 2021, we enhanced our onboarding process so that new hires can quickly learn the skills needed for their position. We also offer a variety of leadership and development programs that develop skills and capabilities from product knowledge in our stores to advanced leadership principles for our leaders.

This year we expanded Lowe’s University Academies offerings and included certification programs for store and technology associates that further develop their skills and knowledge base.

Additionally, through Lowe’s Track to the Trades program, we provide tuition reimbursement to our associates, encouraging them to complete apprentice certifications in carpentry, plumbing, electrical, heat, air ventilation and cooling (“HVAC”) or appliance repair.

Total Rewards and Wellness

In the spirit of building the best team and providing them with the best care, we are proud of the financial and well-being benefits we offer to our associates. We have a strong track record of investing in our workforce by offering locally competitive salaries and wages. We offer a wide variety of health, welfare and financial benefits to our full-time and part-time associates, including health care and insurance benefits, retirement plans, an employee stock purchase plan, paid time off, leave programs and tuition assistance, among many others.

 

vi		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

 

 

 

In response to the evolving COVID-19 pandemic, we continued to evolve our benefits and wellness programs to increase access to care. We waived co-payments on pharmacy home deliveries, covered 100% of COVID-19 testing and vaccines, continued to operate our onsite clinics in a virtual care model and launched a new virtual behavioral health app. In partnership with CVS retail pharmacy and Premise onsite clinics, we launched a vaccine program, providing onsite access to sites across the country. In 2021, we also continued to offer emergency paid leave for associates who are suffering from COVID-19.

Store and Workplace Safety

Our associates and customers drive our success. Providing them with a safe environment for both working and shopping is essential. We strive to maintain a culture of safety which begins with our leaders modeling the behaviors we want our associates to adopt. We embed safety into associate onboarding, developmental e-learning and on-the-job training. In response to the COVID-19 pandemic, we instituted rigorous safety standards in support of social distancing and enhanced sanitizing and cleaning.

Product Sustainability

Lowe’s strives to put the customer first by providing high quality items that our customers can feel good about purchasing. We offer products and select vendors that promote human and environmental health. We are also expanding our pursuit of innovative, more efficient eco-products and educating customers on how to reduce their footprint at home.

We focus our product sustainability efforts on supplier social and environmental practices, responsible sourcing of natural resources and improvements to the environmental performance of our products. These include promoting compliance with our Vendor Code of Conduct, Human Rights Policy and Conflict Minerals Compliance Programs, pursuing our commitment to responsible wood sourcing, seeking to maintain products that are safe and compliant with applicable industry standards and state and federal regulations and increasing our offering of independently-certified products that have validated environmental claims.

Operational Excellence

We are focused on strengthening our business resilience and improving operational efficiency to reduce our impact on the environment. Our Board and the Sustainability Committee monitor and oversee progress toward our climate-related goals and targets, while our Sustainability Steering Committee leads the Company’s efforts to integrate corporate responsibility into our business, and our retail facilities and sustainability teams manage and track our operational energy use. Lowe’s actively combats climate change by working to lower operational and transportation-related energy use and greenhouse gas (“GHG”) emissions. In January 2022, building on our long-standing commitment to protect the climate, we announced a commitment to set a science based net-zero target in 2022, which will include near and long-term GHG emissions reduction goals for our full value chain, including Scopes 1, 2 and 3.

Lowe’s participates in the CDP’s climate, forestry and water security questionnaires to benchmark and quantify our environmental practices, to provide transparency on our progress and assist in the reduction of our contributions to climate change. We continue to align our sustainability reporting with the appropriate Sustainable Accounting Standards Board (“SASB”) standards for our industry, the Global Reporting Initiative (“GRI”) and the UN Sustainable Development Goals (“SDGs”). We also published our first Task Force on Climate-related Financial Disclosures (“TCFD”) report in 2021 to assess our climate-related risks and opportunities and better understand the potential impacts on our value chain.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		vii

    

 

 

 

More information about Lowe’s corporate responsibility efforts and initiatives, including our Corporate Responsibility Report and Culture, Diversity & Inclusion Report, our sustainability policies and disclosure along sustainability frameworks is available on the Company’s website. Our corporate responsibility goals are aspirational and may change, and statements regarding our goals are not guarantees or promises that they will be met.

SHAREHOLDER ENGAGEMENT

Lowe’s recognizes the value of and is committed to engaging with our shareholders and soliciting their views and input. This past year, members of Lowe’s management and the Board continued our long-standing practice of shareholder engagement, reinforcing our commitment to building strong, long-term relationships with our shareholders. We conduct shareholder outreach throughout the year to ensure that we understand and consider the issues of importance to our shareholders and are able to address them appropriately.

 

Key Items Discussed with Shareholders in 2021 and 2022
Board Leadership Structure		Business Performance and Strategic Direction
Human Capital Management Efforts		Diversity and Inclusion Programs and Initiatives
Board Composition and Risk Oversight		Environmental Sustainability and GHG Emission Reduction Goals
Executive Compensation Program Design and Link to Strategy		Corporate Governance Practices

Since the beginning of fiscal 2021, we have met with shareholders representing approximately 70% of our institutionally-held shares in a number of forums, including as part of our regular investor relations outreach efforts and environmental, social and governance (“ESG”)-focused dialogues. We report the feedback from our shareholders on a regular cadence to the full Board and its relevant committees, who have used this information to inform numerous changes to enhance our compensation, governance and sustainability efforts, including:

 

•

the amendment of our Bylaws in 2020 to reduce the ownership threshold to call shareholder special meetings to 15% of outstanding shares;

 

•

the annual release of our consolidated EEO-1 report data beginning in 2021; and

 

•

our commitment to set a science based net-zero target including our emissions reduction goals for Lowe’s full value chain in 2022.

The following diagram provides an overview of Lowe’s shareholder engagement cycle:

 

 

viii		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

 

 

 

This past winter, we conducted a round of investor engagement focused primarily on ESG topics, including our strategy, human capital management efforts, diversity and inclusion programs and initiatives, Board composition, environmental sustainability and our corporate governance and executive compensation practices. As part of this engagement effort, we contacted 34 investors, representing approximately 45% of our outstanding shares at the time of outreach and met with 18 investors, representing approximately 32% of our outstanding shares. Our Lead Independent Director met with shareholders representing approximately 21% of our outstanding shares to provide a direct line of communication between our shareholders and the Board of Directors. Overall, we received generally positive feedback on our current governance, compensation and sustainability practices. We plan to continue robust ESG-focused investor engagement going forward.

Winter 2021 – 2022 ESG Engagement^*

 

                        

*Percentages of outstanding shares are as of the time of outreach.

CORPORATE GOVERNANCE BEST PRACTICES

Sound and Effective Board Practices

 

Active Board oversight of Lowe’s strategy, business initiatives, industry positioning, human capital management, diversity and inclusion and environmental and social topics

 

Active Board oversight of risk management, including cybersecurity and data protection

 

Robust shareholder engagement program, including participation of independent directors

 

Active Board engagement in succession planning of executive officers

 

Annual Board, committee, individual director and CEO evaluations

Engaged Board with Demonstrated Commitment to Refreshment and Independence

 

10 out of 11 director nominees (91%) are independent

 

Annual review of Board leadership structure

 

Lead Independent Director with robust and well-defined responsibilities

 

Audit, Compensation, Nominating and Governance, Sustainability and Technology Committees are composed solely of independent directors

 

Executive sessions of independent directors led by the Lead Independent Director at each Board meeting

 

Director mandatory retirement age of 75 years old

 

Proactive Board and committee refreshment with focus on optimal mix of skills and experience

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		ix

    

 

 

 

Commitment to Shareholder Rights

 

Shareholder ability to call special meetings (reduced ownership threshold to 15% in 2020)

 

Market standard shareholder right of proxy access

 

Directors elected annually to serve one-year terms

 

Majority voting standard in uncontested director elections

 

No shareholder rights plan

 

Robust year-round shareholder engagement process

 

2022 PROPOSALS		Board Recommends					See Page
Proposal 1:  Election of Directors									1
Proposal 2:  Advisory Vote to Approve the Company’s Named Executive Officer Compensation in Fiscal 2021									58
Proposal 3:  Ratification of the Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal 2022									59
Proposal 4:  Approval of the Amended and Restated Lowe’s Companies, Inc. 2006 Long Term Incentive Plan									60
Proposal 5:  Shareholder Proposal Requesting a Report on Median and Adjusted Pay Gaps Across Race and Gender									67
Proposal 6:  Shareholder Proposal Regarding Amending the Company’s Proxy Access Bylaw to Remove Shareholder Aggregation Limits									70
Proposal 7:  Shareholder Proposal Requesting a Report on Risks of State Policies Restricting Reproductive Health Care									73
Proposal 8:  Shareholder Proposal Requesting a Civil Rights and Non-Discrimination Audit and Report									76
Proposal 9:  Shareholder Proposal Requesting a Report on Risks from Worker Misclassification by Certain Company Vendors									79

 

 

x		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Proposal 1: Election of Directors

 

 

Proxy Statement

The Board of Directors of Lowe’s Companies, Inc. is providing these materials to you in connection with the 2022 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting will be held online via audio webcast at 10:00 a.m., Eastern Time, on Friday, May 27, 2022 at www..virtualshareholdermeeting..com/LOW2022. This Proxy Statement and related materials were first made available starting April 14, 2022.

Proposal 1: Election of Directors

We are asking our shareholders to vote on the election of the 11 candidates nominated by the Board of Directors for election as directors.

The Board has nominated the 11 candidates named in this proposal for election as directors at the Annual Meeting. If elected, each nominee will serve until his or her term expires at the 2023 Annual Meeting of Shareholders or until his or her successor is duly elected and qualified. Each nominee has agreed to be named in this Proxy Statement and to serve if elected. All of the nominees are currently serving as directors except Colleen Taylor, whose Board service would commence upon her election at the 2022 Annual Meeting of Shareholders. The other current directors were elected to the Board at the 2021 Annual Meeting of Shareholders.

The Nominating and Governance Committee identifies, considers and recommends to the Board director candidates who have expertise that would complement and enhance the current Board’s skills and experience. It also reviews the existing time commitments of director candidates to confirm that they do not have any obligations that would conflict with the time commitments of a director of the Company. The Nominating and Governance Committee also looks to recruit candidates with different perspectives so that they can contribute to the cognitive diversity on the Board, while also recognizing the importance of having diversity of age, gender, race and ethnicity on the Board. The Nominating and Governance Committee considers a diverse slate of candidates for nomination to the Board from a number of sources, including third-party search firms and, from time to time, business and organizational contacts of the directors and management.

Among our 11 nominees for election to the Board, four self-identify as women and five self-identify as people of color (meaning an individual who self-identifies as Black or African American, Hispanic or Latino, Asian, Native Hawaiian or Other Pacific Islander or American Indian or Alaska Native).

The Board has remained mindful of refreshing its membership, with more than half of the independent directors nominated for election at the Annual Meeting having joined the Board in the last six years. At the same time, the Company also believes that it benefits from having several longer tenured directors on the Board, including our Lead Independent Director, who are familiar with the Company’s business and can help facilitate the transfer of institutional knowledge. We believe the average tenure for our independent director nominees of 5.2 years reflects the appropriate balance the Board seeks between different perspectives brought by longer-serving and new directors.

Although the Company knows of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxy holders intend to vote your shares for any substitute nominee proposed by the Board. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the 11 nominees named in this Proxy Statement.

 

 

 

		The Board of Directors unanimously recommends a vote “FOR” the election of each of the 11 nominees named in this proposal.

 

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		1

Proposal 1: Election of Directors

 

IDENTIFYING AND EVALUATING DIRECTOR NOMINEES

 

IDENTIFYING AND EVALUATING DIRECTOR NOMINEES

 

 

 

2		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Proposal 1: Election of Directors

 

IDENTIFYING AND EVALUATING DIRECTOR NOMINEES

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		3

Proposal 1: Election of Directors

 

IDENTIFYING AND EVALUATING DIRECTOR NOMINEES

 

 

4		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Proposal 1: Election of Directors

 

IDENTIFYING AND EVALUATING DIRECTOR NOMINEES

 

Director Nominees’ Skills, Backgrounds and Expertise

Our director nominees possess a balance of distinguished leadership, diverse perspectives, strategic skill sets, backgrounds and professional experience relevant to our business and strategic objectives.

 

Knowledge, Skills and Experience

Corporate Governance/Regulatory/Risk Management   Corporate governance experience as a director or officer of a public company, legal/regulatory experience and/or risk management experience

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Finance   Experience in positions requiring financial knowledge and analysis. An understanding of financial reporting and controls, planning and capital allocation

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Marketing/Brand Management   Marketing or managing well-known brands and the types of consumer products and services we sell

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Human Capital Management   Experience in organizational management and talent development providing key insights into developing and investing in our associates

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Technology and E-Commerce   Leadership and understanding of technology and data security. Expertise in digital platforms and new media supporting omnichannel strategy

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Senior Leadership   Experience as a senior level business leader and/or senior government leader

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Retail Industry Experience   An understanding of operational, financial and strategic issues facing large retail companies

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Gender

M

M

F

F

M

M

M

M

M

F

F

Racial/Ethnic Diversity

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Tenure

12

4

6

7

10

4

1

4

7

0

1

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		5

Proposal 1: Election of Directors

 

DIRECTOR NOMINEES

 

DIRECTOR NOMINEES

 

 

6		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Proposal 1: Election of Directors

 

DIRECTOR NOMINEES

 

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		7

Proposal 1: Election of Directors

 

DIRECTOR NOMINEES

 

 

8		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Proposal 1: Election of Directors

 

DIRECTOR NOMINEES

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		9

Proposal 1: Election of Directors

 

DIRECTOR NOMINEES

 

 

10		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Proposal 1: Election of Directors

 

DIRECTOR NOMINEES

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		11

Corporate Governance

 

CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS CONDUCT AND ETHICS

 

 

12		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Corporate Governance

 

COMPENSATION OF DIRECTORS

 

 

COMPENSATION OF DIRECTORS

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		13

Corporate Governance

 

COMPENSATION OF DIRECTORS

 

2022 Compensation

Effective for fiscal 2022, the Board, upon recommendation of the Compensation Committee following its review of the Company’s Peer Group and broader market data prepared by the Compensation Committee’s independent compensation consultant, approved the following changes to non-employee director fees and stock awards:

•  The annual retainer for each non-employee director was set at $100,000 and the annual deferred stock unit equity award for non-employee directors was set at $200,000 to bring the total annual compensation paid to each non-employee director closer to the Peer Group and market median practice, and

•  The additional annual retainer for the Chairs of the Nominating and Governance Committee, the Sustainability Committee and the Technology Committee was set at $20,000 and the additional cash retainer for the Lead Independent Director was set at $100,000 to align with the scope of responsibilities and activity level of the roles at the Company.

Deferral of Annual Retainer Fees

Each non-employee director may elect to defer receipt of all, or a portion in 25% increments, of the annual retainer and any committee Chair, Lead Independent Director or, if applicable, Chairman fees otherwise payable to the director in cash. Deferrals are credited to a bookkeeping account as of the date retainers or fees would have otherwise been paid, and account values are adjusted based on the investment alternative selected by the director. One investment alternative adjusts the account value based on interest calculated in the same manner and at the same rate as interest on amounts invested in the short-term interest fund option available to employees participating in the Lowe’s 401(k) Plan, a tax-qualified, defined contribution plan sponsored by the Company. The other investment alternative assumes that the deferrals are invested in Common Stock with reinvestment of all dividends. At the end of each year, a director participating in the plan makes an election to allocate the fees deferred for the following year between the two investment alternatives in 25% increments. Account balances may not be reallocated between the investment alternatives. Account balances are paid in cash in a single sum payment following the termination of a director’s service.

Fiscal 2021 Compensation

The following table shows the compensation paid to each non-employee director who served on the Board in fiscal 2021:

 

Name		Fees Earned or Paid in Cash ($)					Stock Awards ($)(1)					All Other Compensation ($)(2)					Total ($)
Raul Alvarez				103,750					175,347										279,097
David H. Batchelder				90,000					175,347										265,347
Angela F. Braly(3)				82,500					175,347										257,847
Sandra B. Cochran				97,500					175,347										272,847
Laurie Z. Douglas				105,000					175,347										280,347
Richard W. Dreiling				160,000					331,211										491,211
Daniel J. Heinrich				67,500					175,347										242,847
Brian C. Rogers				105,000					175,347										280,347
Bertram L. Scott				115,000					175,347										290,347
Lisa W. Wardell(4)				45,000					0					25,000					70,000
Mary Beth West				67,500					175,347										242,847
Eric C. Wiseman(4)				52,500					0					25,000					77,500

 

(1)

The dollar amount shown for these stock awards represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 “Compensation—Stock Compensation” (“FASB ASC Topic 718”) for 900 deferred stock units granted to each non-employee director and an additional 800 deferred stock units granted to Mr. Dreiling, who served as the Independent Chairman and the Lead Independent Director during fiscal 2021. See Note 11, “Share-Based Payments” to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the fiscal year ended January 28, 2022 for additional information about the Company’s accounting for share-based compensation arrangements, including the assumptions used for calculating the grant date value of the deferred stock units. These amounts do not correspond to the actual value that may be recognized by a director with respect to these awards when they are paid in the form of Common Stock after the termination of the director’s service.

 

(2)	Under a director legacy gift program, the Company makes a charitable contribution on behalf of directors who retire from the Board.

 

(3)	Ms. Braly resigned from the Board on July 29, 2021.

 

(4)	Ms. Wardell and Mr. Wiseman retired from the Board on May 28, 2021 and did not receive a grant of deferred stock units in 2021.

 

14		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

The following table shows the number of deferred stock units held by each non-employee director as of January 28, 2022:

 

Name		Deferred Stock Units(#)
Raul Alvarez				34,448
David H. Batchelder				6,337
Sandra B. Cochran				10,817
Laurie Z. Douglas				13,283
Richard W. Dreiling				32,647
Daniel J. Heinrich				906
Brian C. Rogers				6,337
Bertram L. Scott				10,817
Mary Beth West				906

 

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		15

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

 

16		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

In order to ensure independent leadership, the Board has a robust set of responsibilities for the Lead Independent Director role as outlined below.

 

The Board will review its leadership structure at least once a year, and otherwise as appropriate, to help it maintain a leadership model best suited to the Company and our shareholders.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		17

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

 

ACTIVE BOARD OVERSIGHT CORPORATE STRATEGY HUMAN CAPITAL MANAGEMENT ENVIRONMENTAL AND SOCIAL ISSUES POLITICAL ADVOCACY RISK MANAGEMENT CYBERSECURITY AND DATA PRIVACY

Board’s Role in Corporate Strategy

Our Board is actively involved in overseeing, reviewing and guiding our corporate strategy. Our Board formally reviews our Company’s business strategy, including the risks and opportunities facing the Company and its portfolio, at an annual strategic planning session. In addition, long-range strategic issues, including the performance and strategic fit of our businesses, are discussed as a matter of course at Board meetings. Our Board regularly discusses corporate strategy throughout the year with management formally as well as informally and during executive sessions of the Board as appropriate. As discussed in “Board’s Role in Risk Oversight” below, our Board views risk management and oversight as an integral part of our strategic planning process, including mapping key risks to our corporate strategy and seeking to manage and mitigate risk. Our Board also views its own composition as a critical component to effective strategic oversight. Accordingly, our Board and relevant Board committees consider our business strategy and the Company’s regulatory, geographic and market environments when assessing Board composition, director succession, executive compensation, human capital management, diversity and inclusion, environmental and social issues and other matters of importance.

Board’s Role in Human Capital Management

The Board views effective human capital management as key to the Company’s ability to execute its long-term strategy. As a result, the full Board oversees and regularly engages with our Chairman, President and Chief Executive Officer, our Executive Vice President, Human Resources and senior leadership on a broad range of human capital management topics, including culture, talent management and succession planning, compensation and benefits, diversity and inclusion and feedback gathered from the Company’s annual associate engagement survey. The full Board reviews talent management topics as standing agenda items, including CEO and senior management succession planning, diversity and inclusion and culture.

Board’s Role in Environmental and Social Issues

The Board views oversight and effective management of environmental and social issues and their related risks as important to the Company’s ability to execute its strategy and achieve long-term sustainable growth. The Board receives regular updates on environmental and social topics from our Vice President, Corporate Sustainability. In addition to oversight by the full Board, the Board has also delegated primary responsibility for more frequent and in-depth oversight of the Company’s environmental and social strategy to the Sustainability Committee. The Board also coordinates with its other committees to provide active Board- and committee-level oversight of the Company’s management of environmental and social related risks across the relevant committees.

Board’s Role in Oversight of Political Advocacy

The Nominating and Governance Committee has oversight of Lowe’s political advocacy activities, including political contributions, trade association memberships, lobbying priorities and the Lowe’s Companies, Inc. Political Action Committee (“LOWPAC”). As part of its oversight role, it reviews our political engagement and contribution policy and monitors our ongoing political strategy as it relates to the overall public policy objectives for the Company. Lowe’s generally does not make contributions from corporate funds to political campaigns, super political action committees or political parties. Political contributions made by LOWPAC are approved by its advisory board, which consists of members of management across corporate and operational roles. All political advocacy is conducted to promote the interests of the Company and is made without regard for the private political preferences of Lowe’s directors or executives. In 2021 and 2020, we ranked in the First Tier of the CPA-Zicklin Index, an annual assessment which benchmarks political disclosure and accountability policies and practices for election-related spending of leading U.S. public companies.

 

18		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

Board’s Role in Risk Oversight

Overview

A summary of the current allocation of general risk oversight functions among management, the Board and its committees is as follows:

 

The primary responsibility for the identification, assessment and management of the various risks that we face begins with management. At the management level, risks are prioritized and assigned to senior leaders based on the risk’s relationship to the leader’s business area and focus. Those senior leaders develop plans to respond to the risks and measure the progress of risk management efforts. Our General Counsel provides centralized oversight of Lowe’s enterprise risk management program, which includes the Enterprise Risk Council (“ERC”) comprised of senior leaders with broad enterprise experience. The ERC supports the execution of the enterprise risk management program by working to identify, assess and categorize existing risks faced by the Company and evaluating action plans to appropriately respond to those risks. Additionally, the ERC identifies and assesses emerging risks in partnership with other senior leaders in alignment with new strategic initiatives and in response to an evolving business and industry landscape.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		19

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

The Audit Committee coordinates the Board’s and each committee’s risk oversight. The Board’s oversight of risks is designed to confirm that management has processes in place to deal appropriately with risk and is integral to the oversight of the business as a whole. For example, our principal strategic risks are reviewed as part of the Board’s regular discussion of our strategy and alignment of specific initiatives with that strategy. Similarly, at every meeting the Board reviews the principal factors influencing our operating results, including the competitive environment, and discusses the major events, activities and challenges affecting the Company with our senior executive officers.

The Board’s ongoing oversight of risk also occurs at the Board committee level on a more focused basis as detailed above. The General Counsel annually presents an overview of the enterprise risk management program to the full Board of Directors and provides the Board with regular updates on the program and status of key risks facing the business. The Audit Committee regularly receives updates on key risk areas from members of management with primary responsibility for managing those risk areas and receives regular updates from the General Counsel and Chief Compliance Officer on legal and regulatory risk and compliance matters.

Cybersecurity and Data Protection Risk Oversight

Securing the information our customers, associates, vendors and other third parties entrust to Lowe’s is important to us. We have adopted physical, technological and administrative controls on data security, and have a defined procedure for data incident detection, containment, response and remediation. While everyone at Lowe’s plays a part in managing these risks, oversight responsibility is shared by the Board, the Audit Committee and management.

Our Chief Information Officer or Chief Information Security Officer provide regular cybersecurity updates in the form of written reports and presentations to the Audit Committee at every quarterly meeting. The Audit Committee regularly reviews metrics about cyber threat response preparedness, program maturity milestones, risk mitigation status and the current and emerging threat landscape. As part of our enterprise risk management program, Lowe’s receives external assessment for Payment Card Industry Data Security Standards compliance. Additionally, we leverage the National Institute of Standards and Technology security framework to drive strategic direction and maturity improvement and engage third-party security experts for risk assessments and program enhancements. We also maintain information security risk insurance coverage.

Compensation Committee Advisors

The Compensation Committee has sole authority under its charter to retain compensation consultants and other advisors and to approve such consultants’ and advisors’ fees and retention terms. In 2021, Semler Brossy Consulting Group, LLC acted as the independent compensation consultant and provided the Compensation Committee with advice and support on executive compensation issues. The compensation consultant assists with peer group identification and benchmarking, design of the Company’s executive compensation program and conduct of an annual risk assessment related thereto, review of compensation-related disclosures and related services. A more detailed description of the services performed by the Compensation Committee’s compensation consultant in fiscal 2021 is included in the “Compensation Discussion and Analysis” section of this Proxy Statement.

The Compensation Committee has reviewed and confirmed the independence of its compensation consultant. Neither the compensation consultant nor any of its affiliates provide any services to the Company except for services provided to the Compensation Committee.

How to Communicate with the Board of Directors and Independent Directors

Shareholders and other interested parties can communicate directly with the Board by sending a written communication addressed to the Board or to any member individually in care of Lowe’s Companies, Inc., 1000 Lowes Boulevard, Mooresville, North Carolina 28117. Shareholders and other interested parties wishing to communicate with Mr. Dreiling, as Lead Independent Director, or with the independent directors as a group may do so by sending a written communication addressed to Mr. Dreiling, in care of Lowe’s Companies, Inc. at the above address. Any communication addressed to a director that is received at Lowe’s principal executive offices will be delivered or forwarded to the individual director as soon as practicable. Lowe’s will forward all communications received from its

 

20		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

shareholders or other interested parties that are addressed simply to the Board, to the Chairman, to the Lead Independent Director or to the Chair of the committee of the Board whose purpose and function is most closely related to the subject matter of the communication. All such communications are promptly reviewed before being forwarded to the addressee. Lowe’s generally will not forward to directors a shareholder communication that it determines to be primarily commercial in nature or that relates to an improper or irrelevant topic or requests general information about the Company.

Board Committees

The Board has five current standing committees: the Audit Committee, the Compensation Committee, the Nominating and Governance Committee, the Sustainability Committee and the Technology Committee. The Board may also establish other committees from time to time as it deems necessary. Committee members and committee chairs are appointed by the Board. The members of these committees as of January 28, 2022 are identified in the following table:

Member

 

 

Raul Alvarez(1)				Chair
David H. Batchelder
Sandra B. Cochran(2)								Chair
Laurie Z. Douglas										Chair
Richard W. Dreiling
Marvin R. Ellison
Daniel J. Heinrich
Brian C. Rogers						Chair
Bertram L. Scott		Chair
Mary Beth West
Number of Meetings in Fiscal 2021		6		6		5		2		2

 

(1)	Mr. Alvarez was appointed Chair of the Compensation Committee on August 13, 2021.

 

(2)	Ms. Cochran was appointed Chair of the Sustainability Committee on August 13, 2021.

Each of the current committees acts pursuant to a written charter adopted by the Board. A copy of each committee charter and the Corporate Governance Guidelines are available on the Company’s website at ir.lowes.com.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		21

Corporate Governance

 

BOARD MEETINGS, BOARD LEADERSHIP STRUCTURE, KEY BOARD RESPONSIBILITIES AND COMMITTEES

 

The following table provides information about the operation and key functions of each of the current standing Board committees, each of which report regularly to the full Board:

 

Committee		Key Functions and Additional Information
Audit Committee		•  Oversees the Company’s accounting and financial reporting processes, internal controls and internal audit functions.   •  Reviews and discusses with management and the independent registered public accounting firm the annual and quarterly financial statements and earnings press releases.   •  Reviews and discusses the Company’s major financial risk exposures, and practices with respect to risk assessment and management, including data protection, privacy, cybersecurity, business continuity and operational risks, and the steps management has taken to identify, assess, monitor, control, remediate and report such exposures.   •  Oversees the Company’s compliance program with respect to legal and regulatory requirements, including the Company’s Code of Business Conduct and Ethics and the Company’s policies and procedures for monitoring compliance, and meets at least annually with the Company’s General Counsel and Chief Compliance Officer to review the implementation and effectiveness of the Company’s compliance program.   •  Reviews and pre-approves all audit and permitted non-audit services proposed to be performed by the independent registered public accounting firm.   •  The Board has determined that three of the five members of the Audit Committee, Messrs. Rogers and Scott and Ms. Cochran, are each “audit committee financial experts” within the meaning of the SEC rules and that each of the members of the Audit Committee has accounting and related financial management expertise in accordance with the NYSE rules.
Compensation Committee		•  Reviews and approves on an annual basis the corporate goals and objectives related to the compensation for the Chief Executive Officer and other executive officers, evaluates at least once a year the Chief Executive Officer’s performance in light of these established goals and objectives and, based upon this evaluation, recommends the Chief Executive Officer’s compensation to the Board for approval by the independent directors.   •  Reviews and approves the compensation for the other executive officers.   •  Makes recommendations to the Board with respect to incentive compensation and equity-based plans that are subject to Board and shareholder approval.   •  Reviews and approves all annual incentive plans for executives and all awards to executives under multi-year incentive plans, including equity-based incentive arrangements authorized under the Company’s equity incentive compensation plans.   •  Oversees and considers regulatory compliance and any other risks arising from the Company’s compensation policies and practices.
Nominating and Governance Committee		•  Develops and recommends to the Board for its approval criteria and qualifications for potential candidates for the Board and its committees.   •  Reviews and makes recommendations to the Board about the size, structure, composition and functioning of the Board and its committees, including a recommendation to the independent directors regarding the appointment of a Lead Independent Director whenever the Board has selected a Chairman who is not an independent director.   •  Assists Board in determining and monitoring director and prospective director independence.   •  Identifies, evaluates and recommends director candidates to the Board.   •  Oversees annual performance evaluation of the Board, the committees of the Board, each individual director and management.   •  Develops, recommends, assesses at least annually and recommends changes to the Board regarding, the Corporate Governance Guidelines applicable to the Company.   •  Reviews and approves or disapproves related person transactions.   •  Considers and recommends to the Board other actions relating to corporate governance.
Sustainability Committee		•  Assists the Board in discharging its responsibilities relating to oversight of the Company’s sustainability strategies and initiatives and to review the Company’s position on significant environmental and social issues.   •  Assists the Board by evaluating and monitoring environmental, social and related public policy trends.   •  Reviews, discusses and provides feedback to management on the Company’s programs, policies and practices pertaining to the Company’s environmental and social responsibility issues and impacts to support the sustainable growth of the Company.   •  Monitors the Company’s performance against relevant external sustainability indices and reviews the Company’s annual Corporate Responsibility Report.   •  Reviews and makes recommendations to the Board regarding responses to shareholder proposals encompassing matters overseen by the Committee.
Technology Committee		•  Oversees matters of technology, e-commerce and related innovation.   •  Reviews and discusses management’s reports and recommendations on topics related to the Company’s approach to technology, ecommerce and related innovation strategy in support of the Company’s objectives.

 

22		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Security Ownership of Certain Beneficial Owners and Management

 

 

Security Ownership of Certain Beneficial Owners and Management

The following table provides information about the beneficial ownership of Common Stock as of March 21, 2022, except as otherwise noted, by each person known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock as well as each director, nominee for director, named executive officer and all current directors and executive officers as a group. Except as otherwise indicated below, each of the persons named in the table has sole voting and investment power with respect to the securities indicated as beneficially owned by such person, subject to community property laws where applicable. Unless otherwise indicated, the address for each of the beneficial owners is c/o Lowe’s Companies, Inc., 1000 Lowes Boulevard, Mooresville, North Carolina 28117.

 

Name or Number of Persons in Group		Number of Shares(1)				Percent of   Class
Raul Alvarez			34,565				*
David H. Batchelder			34,608				*
William P. Boltz			138,891				*
Sandra B. Cochran			12,354				*
David M. Denton			200,435				*
Laurie Z. Douglas			13,328				*
Richard W. Dreiling			32,758				*
Marvin R. Ellison			529,596				*
Seemantini Godbole			91,970				*
Daniel J. Heinrich			1,169				*
Joseph M. McFarland III			161,695				*
Brian C. Rogers			16,358				*
Bertram L. Scott			10,854				*
Colleen Taylor			29				*
Mary Beth West			909				*
Current Directors and Executive Officers as a Group (18 total)			1,580,644	(2)			*
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355			57,697,261				8.7	%(3)
BlackRock, Inc. 55 East 52nd Street New York, NY 10055			46,706,387				7.1	%(4)

 

*	Represents holdings of less than 1%.

 

(1)

Includes shares that may be acquired or issued within 60 days through exercise of stock options or settlement of deferred stock units upon termination of employment or Board service under the Company’s stock plans as follows: Mr. Alvarez — 34,565 shares; Mr. Batchelder — 6,358 shares; Mr. Boltz — 115,033 shares; Ms. Cochran — 10,854 shares; Mr. Denton — 166,112 shares; Ms. Douglas — 13,328 shares; Mr. Dreiling — 32,758 shares; Mr. Ellison — 421,161 shares; Ms. Godbole — 65,411 shares; Mr. Heinrich — 909 shares; Mr. McFarland III — 134,925 shares; Mr. Rogers — 6,358 shares; Mr. Scott — 10,854 shares; Ms. West — 909 shares; and current directors and executive officers as a group (18 total) — 1,240,319 shares.

 

(2)	Includes 301,154 shares beneficially owned by other current executive officers not individually listed in the table.

 

(3)

Shares held at December 31, 2021, according to a Schedule 13G/A filed with the SEC on February 10, 2022 by The Vanguard Group, Inc. (“Vanguard”). The Schedule 13G/A reports that Vanguard has sole voting power over no shares, shared voting power over 1,175,116 shares, sole investment power over 54,820,784 shares and shared investment power over 2,876,477 shares.

 

(4)

Shares held at December 31, 2021, according to a Schedule 13G/A filed with the SEC on February 1, 2022 by BlackRock, Inc. (“BlackRock”). The Schedule 13G/A reports that BlackRock has sole voting power over 39,629,351 shares, shared voting power over no shares, sole investment power over 46,706,387 shares and shared investment power over no shares.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		23

Compensation Discussion and Analysis

 

 

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) explains the key elements of our executive compensation program and compensation decisions as they relate to the following named executive officers (“NEOs”) of the Company in the 2021 fiscal year:

 

Marvin R. Ellison		Chairman, President and Chief Executive Officer
David M. Denton		Executive Vice President, Chief Financial Officer
Joseph M. McFarland III		Executive Vice President, Stores
William P. Boltz		Executive Vice President, Merchandising
Seemantini Godbole		Executive Vice President, Chief Information Officer

Our CD&A is organized as follows:

 

I.       Executive Summary		25
Fiscal 2021 Financial Highlights		25
Continuing to Support Our Front-Line Associates and Rewarding Outperformance		26
Launching Our Total Home Strategy		26
Compensation Philosophy and Objectives		27
Annual Say-on-Pay Vote and Shareholder Engagement		27
2021 Executive Compensation		28
How Our Executive Compensation is Tied to Performance		29
Pay Decisions and Compensation Governance Practices		30
II.       Compensation Elements		30
III.      Compensation Decision-Making Process		33
Role of the Compensation Committee		33
Role of the Independent Compensation Consultant		33
Role of Management		33
Compensation Market Data and Peer Group		34
IV.      2021 Compensation Actions		35
Base Salary Adjustments		35
Annual Incentive Awards		35
Long-Term Equity Awards		39
Benefit Restoration Plan		41
Severance Arrangements		41
Perquisites		41
V.      Other Compensation Policies		42
Compensation Risk Assessment		42
Stock Ownership Guidelines		42
Oversight of Stock Ownership, No Hedging or Pledging and Clawback of Incentive Compensation		42
VI.      Compensation Committee Report		43

 

24		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Compensation Discussion and Analysis

 

EXECUTIVE SUMMARY

 

I. EXECUTIVE SUMMARY

 

 

We seek to generate sustainable shareholder value by driving operational excellence throughout the enterprise, consistently generating high levels of cash flow and optimizing our capital deployment. We have demonstrated a strong commitment to returning capital to our shareholders and continued dividend growth since 1961.

 

$36.7 Billion		35.3%
CASH FLOWS FROM OPERATIONS                        IN THE LAST FIVE YEARS		2021 ROIC*

 

30.4%		$8.0 Billion		$28.6 Billion
2021 PER SHARE INCREASE IN ANNUAL DIVIDEND		DIVIDENDS PAID IN THE LAST FIVE YEARS		SHARES REPURCHASED IN THE LAST FIVE YEARS

 

 

Our Total Shareholder Return (“TSR”) results over the last 1-, 3- and 5-years outperformed peers and the broader market.

 

            TSR data is as of January 28, 2022, the Company’s fiscal year end.

⁽¹⁾ Includes companies in the Peer Group identified on page 34.                

Fiscal 2021 Financial Highlights

In fiscal 2021, we delivered another year of outstanding financial performance, with a 55% increase in diluted EPS to $12.04 and a 36% increase compared to adjusted diluted EPS last year of $8.86,* driven by total sales growth of 7.4%, with comparable sales growth of 6.9%, and a 25% increase in operating income. Through disciplined execution of our Total Home strategy, we delivered growth in consolidated Pro customer sales of 24% and growth in Lowes.com sales of 18%. We also delivered over 7% growth in our Home Décor merchandise division as we expanded our private brand offerings for our DIY customers to appeal to a wide array of tastes and styles. At the same time, our focus on our Perpetual Productivity Improvement initiatives generated over 170 basis points of operating margin improvement.

 

*	ROIC is calculated using a non-GAAP financial measure, and adjusted diluted EPS is a non-GAAP financial measure. Refer to Appendix A for the calculation of ROIC and a reconciliation of non-GAAP measures.

 

						NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022		25

Compensation Discussion and Analysis

 

EXECUTIVE SUMMARY

 

Continuing to Support Our Front-Line Associates and Rewarding Outperformance

Our highest priority is providing our customers and associates with a safe store environment as we continue to navigate the challenges posed by the ongoing pandemic. We continue to provide associates with emergency paid leave to recover from the effects of COVID-19.

In every quarter of 2021, 100% of our stores earned the Winning Together profit-sharing bonuses for front-line associates, with a total payout of $475 million. Given our better than expected performance, this represented an incremental $184 million over the target payment level. Additionally, in recognition of their commitment and hard work throughout 2021, we rewarded our front-line associates with a year-end special discretionary bonus totaling $265 million.

In September 2021, all of our corporate bonus-eligible associates below the Senior Vice President level received a mid-year annual incentive award payout equal to approximately 190% of the target payout level given achievement of pre-defined semi-annual performance goals for the annual incentive plan. The payment was prorated for active days in the first half of the fiscal year.

Supporting our associates is a critical aspect of our Company’s culture and strategy. In 2020 and 2021, we made a total of over $1 billion in discretionary payments directly to associates, in addition to quarterly Winning Together profit-sharing bonuses, which have totaled more than $850 million since 2020. Additionally, Lowe’s has invested well over $2 billion in incremental wage and equity programs to front-line associates since 2018.

Launching our Total Home Strategy

At the end of 2020, we launched the next chapter in our evolution to becoming a best-in-class omnichannel retailer. Building on the success of our Retail Fundamentals strategy, the Lowe’s Total Home strategy is focused on accelerating market share gains by providing DIY, DIFM, and Pro customers the products and services they need to complete the entire project.

 

 

26		NOTICE OF ANNUAL MEETING AND PROXY STATEMENT 2022

Compensation Discussion and Analysis

 

EXECUTIVE SUMMARY

 

Lowe’s Total Home strategy has enabled us to increase sales to our DIY and Pro customers and to continue to grow our market share in 2021. As a result of our outstanding financial performance, we were able to deliver value to shareholders through the payment of $2.0 billion in dividends and the repurchase of $13.1 billion of our Common Stock this fiscal year. We are confident that we are making the right investments in the business to generate long-term growth and continue to create sustainable shareholder value.

Compensation Philosophy and Objectives

Our long-term success depends on our ability to attract and retain highly talented leaders who are committed to our mission, growth and strategy. Our executive compensation program is designed to drive long-term shareholder value by aligning our business strategies and operating priorities with shareholders’ interests and rewarding executives for growth in the Company’s sales and earnings. A significant portion of compensation is based on variable pay arrangements that align pay with performance against metrics tied to our strategy and business plan with a balanced focus on top- and bottom-line growth.

The primary objectives of our program are to:

 

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Attract and retain executives who have the requisite leadership skills to support the Company’s culture and strategic growth priorities;

 

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Maximize long-term shareholder value through alignment of executive and shareholder interests;

 

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Align executive compensation with the Company’s business strategies, which are focused on driving operational excellence and better serving our customers; and

 

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Provide market competitive total compensation with an opportunity to earn above market median pay when the Company delivers results that exceed performance targets, and below median pay when the Company falls short of performance targets.

Annual Say-on-Pay Vote and Shareholder Engagement

The Board and the Compensation Committee carefully consider the results of our shareholders’ annual advisory “say-on-pay” vote. Lowe’s shareholders continue to express strong support for the Company’s executive compensation program with the Company receiving more than 92% advisory approval in 2021. This is consistent with the advisory approval over the past 10 years. In consideration of this continued support and belief that the program continues to support our strategy and drive performance, the Compensation Committee maintained the principal features and performance-based elements of the executive compensation program for 2021. At the Annual Meeting, the Company’s shareholders will again have the opportunity to approve Lowe’s executive compensation program through the advisory say-on-pay vote included as Proposal 2 in this Proxy Statement.

We believe that engaging with investors is fundamental to our commitment to sound governance and is essential to maintaining strong corporate governance practices. Since the beginning of 2021, we have engaged with representatives of approximately 70% of our institutionally-held shares as part of our regular investor relations outreach efforts and ESG-focused dialogue. Understanding the issues that are important to our shareholders is critical to ensuring that our program remains aligned with their interests and that we address any concerns they may have in a meaningful and effective way.

We report the feedback from our shareholders on a regular cadence to the full Board and its relevant committees, who have used this information to inform numerous changes to enhance our compensation, governance and sustainability efforts over the past several years. These have included: the amendment of our Bylaws in 2020 to reduce the ownership threshold to call shareholder special meetings to 15% of outstanding shares, the annual release of our consolidated EEO-1 report data beginning in 2021 and our commitment to set a science based net-zero target including our emissions reduction goals for Lowe’s full value chain in 2022.

This past winter, we conducted a round of investor engagement focused primarily on ESG topics, including strategy, human capital management efforts, diversity and inclusion programs and initiatives, Board composition, environmental sustainability and our corporate governance and executive compensation practices. As part of this engagement effort, we contacted 34 investors, representing approximately 45% of our outstanding shares at the time of outreach and met

 

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Compensation Discussion and Analysis

 

EXECUTIVE SUMMARY

 

with 18 investors, representing approximately 32% of our outstanding shares. Our Lead Independent Director met with shareholders representing approximately 21% of our outstanding shares to provide a direct line of communication between our shareholders and the Board of Directors.

Winter 2021 – 2022 ESG Engagement

 

                        

*Percentages of outstanding shares are as of the time of outreach.

During these meetings, we discussed key corporate governance topics and shared our thoughts on the Compensation Committee’s approach to setting executive compensation. We asked our shareholders whether they had any concerns or feedback about our current executive compensation program. Overall, we received generally positive feedback on the structure, evolution and responsiveness of our compensation program, including the metrics in our annual and long-term incentive plans.

2021 Executive Compensation

Lowe’s has a long-standing commitment to pay for performance and provides a significant portion of compensation opportunities through variable pay arrangements. These arrangements are designed to hold our executive officers accountable for business results and reward them for consistently strong financial performance and the creation of value for our shareholders. To align pay with performance, our incentive compensation programs use objective pre-established performance measures: sales, operating income, inventory turnover and Pro sales growth for our annual incentive plan and ROIC for our performance share units. Each of these performance measures is further described beginning on page 36.

Our 2021 executive compensation program consisted of the following elements:

 

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Base salary

 

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Annual incentive awards

 

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Long-term equity awards granted in the form of:

 

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Performance share unit awards (“PSUs”)

 

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Stock options

 

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Restricted stock awards (“RSAs”)

 

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Retirement, health and severance benefits

 

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Limited perquisites

 

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Compensation Discussion and Analysis

 

EXECUTIVE SUMMARY

 

Lowe’s compensation mix is heavily performance-based with 72% of the CEO’s and 67% of the other NEOs’ annualized target compensation at-risk and contingent upon the achievement of performance objectives or relative and absolute share price performance. Additionally, 71% of the CEO’s and 65% of the other NEOs’ compensation is in the form of long-term incentives.

 

How Our Executive Compensation is Tied to Performance

A significant portion of our executive compensation program is performance-based with a balanced focus on top- and bottom-line growth and strategic initiatives. The metrics determined by the Compensation Committee, as described below, incentivize our executives to focus on operational objectives that are expected to drive shareholder value.

 

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Annual Incentive Awards: Payout is based on the Company’s achievement of financial (sales and operating income) and strategic (inventory turnover and Pro sales growth) goals. Threshold performance objectives must be achieved for any payout to be earned.

 

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PSUs: Payout is based on the Company’s achievement of (i) a three-year average ROIC goal for PSUs and (ii) a relative TSR modifier, which compares the Company’s TSR to the median TSR of companies listed in the S&P 500 Index over a three-year period. Threshold performance objectives must be achieved for any awards to be earned.

 

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Stock Options: 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.

Based on our performance in fiscal 2021, eligible executives received the following payouts of performance-based compensation:

 

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Annual incentive payouts were driven by above maximum performance in sales, operating income and Pro sales growth. Overall award payouts for the NEOs were at 189.76% of target.

 

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PSUs for the 2019-2021 performance period paid out at 200% based on above maximum adjusted ROIC and above median TSR.

 

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Compensation Discussion and Analysis

 

EXECUTIVE SUMMARY

 

Pay Decisions and Compensation Governance Practices

 

		WHAT WE DO						WHAT WE DO NOT DO
		Provide 80% to 90% of total direct compensation opportunity (assuming target performance) for NEOs in the form of annual and long-term incentives						Provide single-trigger severance or tax gross-ups following change-in-control
		Annually assess peer group composition, financial and stock price performance and competitive compensation practices						Permit hedging, pledging or unauthorized trading of the Company’s securities by our employees or directors
		Annually assess compensation-related risks associated with regulatory, shareholder and market changes						Grant discounted stock options, extend the original option term, reprice or exchange underwater options without shareholder approval
		Annually assess the design and alignment of our incentive plans in relation to performance goals, business strategy, organizational priorities and shareholder interests						Provide an evergreen provision in our Long Term Incentive Plan
		The fully independent Compensation Committee retains an independent compensation consultant						Provide employment agreements to executives
		Link incentive compensation to a clawback policy, which was updated in January 2020 to incorporate misconduct that may result in significant financial or reputational harm
		Limit incentive payouts as a percentage of target awards
		Require significant stock ownership by all senior executives
		Provide limited perquisites

II. COMPENSATION ELEMENTS

To support our compensation philosophy and objectives, the Compensation Committee has designed the executive compensation program with an appropriate balance between annual and long-term compensation, as well as between fixed and at-risk pay. The largest portion of our executive compensation program is based upon achieving the Company’s financial and strategic performance objectives and contingent on achievement of challenging performance hurdles.

The Board places significant emphasis on the long-term success of the Company and strong alignment with the interests of all stakeholders, including shareholders, customers, our associates and the communities in which we operate. Accordingly, long-term incentive award opportunities, as a percentage of total compensation, are greater than annual incentive award opportunities.

 

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