UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Amendment No.    )

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Eaton Corporation plc

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Notice of Eaton Corporation plc’s Annual General Meeting

MEETING AGENDA:

1.

Electing the 12 director nominees named in the proxy statement;

2.

Approving the appointment of Ernst & Young as independent auditor for 2022 and authorizing the Audit Committee of the Board of Directors to set its remuneration;

3.

Approving, on an advisory basis, the Company’s executive compensation;

4.

Approving a proposal to grant the Board authority to issue shares under Irish law;

5.

Approving a proposal to grant the Board authority to opt-out of pre-emption rights under Irish law;

6.

Authorizing the Company and any subsidiary of the Company to make overseas market purchases of Company shares;

7.

Approving (a) a capitalization and (b) related capital reduction to create distributable reserves under Irish Law; and

8.

Transacting any other business that may properly come before the meeting.

Proposals 1, 2, 3, 4, 6 and 7(a) are ordinary resolutions requiring a simple majority of the votes cast at the meeting or by proxy. Proposals 5 and 7(b) are special resolutions requiring the affirmative vote of at least 75% of the votes cast at the meeting or by proxy. Each proposal is more fully described in the accompanying proxy statement.

Also during the meeting, management will present Eaton’s Irish Statutory Accounts for the fiscal year ended December 31, 2021 along with the related directors’ and auditor’s reports.

If you hold your shares through a broker, bank or other nominee in “street name” (instead of as a registered holder) and you wish to vote during the Annual General Meeting, you will need a legal proxy from your broker, bank or other nominee that you must follow for your shares to be voted.

By order of the Board of Directors,

Nigel Crawford
Vice President and Secretary

March 18, 2022

Important Notice Regarding Internet Availability of Proxy Materials for the Annual General Meeting of Shareholders to be held on April 27, 2022: This proxy statement, the Company’s 2021 Annual Report to Shareholders and our Irish Statutory Accounts for the year ended December 31, 2021 are available at www.proxyvote.com.

Table of Contents

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Proxy Summary

This summary provides an overview of the items that you will find elsewhere in this proxy statement. We encourage you to read the entire proxy statement for more information about these topics before voting.

This proxy statement, Eaton’s annual report for the year ended December 31, 2021 and our Irish Statutory Accounts for the year ended December 31, 2021 will be made available or sent to shareholders commencing on or about March 18, 2022.

Throughout this proxy statement, all references to our Board of Directors or officers for periods prior to November 30, 2012, are references to the Board of Directors or officers of Eaton Corporation, our predecessor. Similarly, all references to the Company for such periods refer to Eaton Corporation.

MEETING AGENDA VOTING MATTERS

This year there are seven proposals on the agenda. Adoption of Proposals 1, 2, 3, 4, 6 and 7(a) requires the affirmative vote of a majority of the votes cast in person or by proxy. Adoption of Proposals 5 and 7(b) requires the affirmative vote of at least 75% of the votes cast in person or by proxy.

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BOARD AND GOVERNANCE FACTS

In addition to executive compensation practices that strongly link pay and performance, Eaton’s Code of Ethics and Board of Directors Governance Guidelines help to ensure that we “do business right.” For more information about our governance programs and Board of Directors, see Proposal 1 beginning on page 6.

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DIRECTOR NOMINEES

Each director nominee is elected annually by a majority of votes cast. For more information about our nominees, see pages 6 through 11 of this proxy statement.

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LINKING PAY WITH PERFORMANCE

Pay for Performance Culture

Our executive compensation programs reflect the belief that the amount earned by our executives must, to a significant extent, depend on achieving rigorous Company, business unit and individual performance objectives designed to enhance shareholder value. The chart below shows the payouts as a percentage of target under our performance-based short- and long-term incentive programs and total return to shareholders over Mr. Arnold’s tenure as CEO, illustrating the strong correlation between pay and the performance we are delivering to our shareholders.

TOTAL SHAREHOLDER RETURN AND PERFORMANCE-BASED INCENTIVE PLAN PAYOUTS

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EXECUTIVE COMPENSATION

We design our executive compensation plans and programs to help us attract, motivate, reward, and retain highly qualified executives who are capable of creating and sustaining value for our shareholders over the long term. We endorse compensation actions that fairly reflect company performance as well as the responsibilities and personal performance of individual executives.

Executive Compensation Program Highlights

Our executive compensation programs are intended to align the interests of our executives with those of our stakeholders and are structured to reflect best practices. Some features of our programs are included in the following chart.

2021 EXECUTIVE COMPENSATION PRACTICES

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Proposal 1:  Election of Directors

Our Board of Directors is currently comprised of 12 members. Each Director is being nominated for election for a one-year term ending at the 2023 Annual General Meeting. All nominees are currently Eaton directors who were elected by shareholders at the 2021 Annual General Meeting, except for Robert V. Pragada and Darryl L. Wilson, who were appointed to the Board by the Board of Directors on April 28, 2021.

If any of the nominees becomes unable or declines to serve, the individuals acting as proxies will have the authority to vote for any substitutes who may be nominated in accordance with our Articles of Association. However, we have no reason to believe that this will occur.

OUR NOMINEES

Craig Arnold Chairman, Eaton Corporation plc and Chief Executive Officer, Eaton Corporation Craig Arnold is Chairman of the Company and Chief Executive Officer of Eaton Corporation. Mr. Arnold joined Eaton in 2000 as senior vice president and group executive of the Fluid Power Group. He was Vice Chairman and Chief Operating Officer of the Industrial Sector until August 2015 and President and Chief Operating Officer until June 2016. Mr. Arnold currently serves on the boards of Medtronic plc, The Business Roundtable and University Hospitals Health System. He serves as a director of The Greater Cleveland Partnership and United Way of Greater Cleveland. Mr. Arnold is also a member of The Business Council and the advisory board of The Salvation Army of Greater Cleveland. Director Skills and Qualifications: Mr. Arnold’s years of senior management and executive leadership experience at Eaton provide important insight into the Company to the benefit of the Board of Directors. Mr. Arnold has gained detailed knowledge of Eaton’s businesses, customers, end markets, sales and marketing, technology innovation and new product development, supply chains, manufacturing operations, talent development, policies and internal functions through his service in a wide range of management roles within the Industrial Sector, and as President and Chief Operating Officer of the Company. Further, he possesses significant corporate governance knowledge developed by current and past service on the boards of other publicly traded companies, most notably for Medtronic plc, a publicly traded company domiciled in Ireland.

Director Since 2015 Age 61

Christopher M. Connor Retired Chairman and Chief Executive Officer, The Sherwin-Williams Company Christopher M. Connor is the retired Chairman and Chief Executive Officer of The Sherwin-Williams Company, a global manufacturer of paint, architectural coatings, industrial finishes and associated supplies. Mr. Connor held a number of executive positions at Sherwin-Williams from 1983 through 2016. He became Chief Executive Officer in 1999, Chairman and Chief Executive Officer in 2000, and Executive Chairman in 2016, and retired as Executive Chairman in December 2016. Mr. Connor currently serves on the boards of Yum! Brands, Inc., International Paper Company, Playhouse Square Foundation, and The Rock and Roll Hall of Fame. Director Skills and Qualifications: As the retired Chairman and former CEO of a Fortune 500 company, Mr. Connor has leadership experience and is thoroughly knowledgeable in marketing, talent development, planning, and operational and financial processes. In particular, he has had extensive sales and marketing experience in both direct and distribution channels, and brings broad knowledge of construction, automotive and industrial markets, all areas of strategic importance to Eaton. His background and broad experience are of particular benefit to Eaton in his role as Lead Director.

Lead Director Director since 2006 Age 65

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Olivier Leonetti Executive Vice President and Chief Financial Officer, Johnson Controls International plc Olivier Leonetti is Executive Vice President and Chief Financial Officer of Johnson Controls International plc, a global leader in building technology and connected solutions for fire, HVAC and security equipment for buildings. Prior to joining Johnson Controls in 2020, he served as chief financial officer of Zebra Technologies Corporation, a global provider of enterprise solutions software, services and products from November 2016 through August 2020 and as chief financial officer of Western Digital Corporation, an industry leading provider of storage technologies and solutions, from 2014 to 2016. Mr. Leonetti served as Vice President, Finance – Global Commercial Organization at Amgen, Inc. from 2011 to 2014. From 1997 to 2011, he served in various senior finance positions with increasing responsibility at Dell Inc., including as Vice President, Finance. He is a board member of Junior Achievement of Chicago. Director Skills and Qualifications: Mr. Leonetti has comprehensive knowledge of financial accounting standards and extensive experience in accounting, tax, treasury, financial planning and investor relations. He has significant experience of importance to the Company, including management of global businesses in various industries, oversight of large corporate transactions, experience with capital markets, global corporate strategy, management of business services and IT functions, and leadership of operational excellence initiatives. Mr. Leonetti’s experience with technological products and information technology is of particular importance to Eaton as our products evolve to meet customer needs.

Director since 2019 Age 57

Deborah L. McCoy Independent aviation safety consultant Deborah L. McCoy is an independent aviation safety consultant. She retired from Continental Airlines, Inc. in 2005, where she had served as Senior Vice President, Flight Operations since 1999. During part of 2005, Ms. McCoy also briefly served as the Chief Executive Officer of DJ Air Group, a start-up commercial airline company. Director Skills and Qualifications: Ms. McCoy has extensive experience in the commercial aerospace markets and brings an understanding of aircraft design and performance, global airline operations and the strategic issues and direction of the aerospace industry. In addition, Ms. McCoy has extensive experience in safety initiatives, Federal regulatory compliance, labor relations, talent management, and risk analysis and mitigation. All of these attributes are of benefit to Eaton’s Board in its oversight role across the enterprise.

Director since 2000 Age 67

Silvio Napoli Chairman and Chief Executive Officer, Schindler Holding Ltd. Silvio Napoli is Chairman and Chief Executive Officer of Schindler Holding Ltd., one of the world’s leading providers of elevators, escalators and related services. He joined the Schindler Group in 1994. During his time with the company, he served in a number of leadership roles including director of corporate development, president and chief executive officer of Schindler India, president of Asia-Pacific, and as the company’s chief executive officer. He previously worked for The Dow Chemical Company in Europe. Mr. Napoli also serves as chairman and president of the Board of Directors of the Swiss-American Chamber of Commerce. Director Skills and Qualifications: As the executive chairman of a large global industrial company, Mr. Napoli has extensive executive leadership experience and is very knowledgeable in the management of industrial products and services. In particular, he has considerable experience in the areas of talent development, financial management, manufacturing and product innovation, and risk management. Mr. Napoli also brings a dynamic international business perspective and global corporate strategy experience to the Board.

Director since 2019 Age 56

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Gregory R. Page Retired Chairman and Chief Executive Officer, Cargill Gregory R. Page is the retired Chairman and Chief Executive Officer of Cargill, an international marketer, processor and distributor of agricultural, food, financial and industrial products and services. He was named Corporate Vice President & Sector President, Financial Markets and Red Meat Group of Cargill in 1998, Corporate Executive Vice President, Financial Markets and Red Meat Group in 1999, and President and Chief Operating Officer in 2000. He became Chairman and Chief Executive Officer in 2007 and was named Executive Chairman in 2013. Mr. Page served as Executive Director from 2015 to 2016, after which he retired from the Cargill Board. He is a director of 3M and Deere & Company and is non-executive chairman and a director of Corteva, Inc. Mr. Page is past Chairman and current board member of Big Brothers Big Sisters of America, past President and a board member of the Northern Star Council of the Boy Scouts of America, and a board member of Alight (fka the American Refugee Committee). Director Skills and Qualifications: As the retired Chairman and former Chief Executive Officer of one of the largest global corporations, Mr. Page brings extensive leadership and global business experience, in-depth knowledge of commodity markets, and a thorough familiarity with the key operating processes of a major corporation, including financial systems and processes, global market dynamics and succession management. Mr. Page’s experience and expertise enable him to provide him valuable insight on financial, operational and strategic matters. His senior leadership experience is of particular benefit to Eaton in his role as Chair of the Compensation and Organization Committee.

Director since 2003 Age 70

Sandra Pianalto Retired President and Chief Executive Officer of the Federal Reserve Bank of Cleveland Sandra Pianalto served as President and Chief Executive Officer of the Federal Reserve Bank of Cleveland from February 2003 until her retirement in June 2014. She joined the Bank in 1983 as an economist in the research department and was appointed Assistant Vice President of public affairs in 1984, Vice President and Secretary to the board of directors in 1988, and Vice President and Chief Operating Officer in 1993. Before joining the Bank, Ms. Pianalto was an economist at the Federal Reserve Board of Governors and served on the staff of the Budget Committee of the U.S. House of Representatives. She is currently a director of The J.M. Smucker Company and Prudential Financial, Inc. Ms. Pianalto is an Executive in Residence at the University of Akron. She is a lifetime trustee and past chair of the board of University Hospitals Health System and life director and past chair of the board of United Way of Greater Cleveland. Director Skills and Qualifications: Ms. Pianalto has extensive experience in monetary policy and financial services and brings to Eaton wide-ranging leadership and operating skills through her former roles with the Federal Reserve Bank of Cleveland. As Chief Executive Officer of the Bank, she developed expertise in economic research, management of financial institutions, and payment services to banks and the U.S. Treasury. Ms. Pianalto’s comprehensive experience qualifies her to provide substantial guidance and oversight to the Board in her role as Chair of the Finance Committee.

Director since 2014 Age 67

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Robert V. Pragada President and Chief Operating Officer, Jacobs Engineering Group, Inc. Robert V. Pragada is the president and chief operating officer of Jacobs Engineering Group, a professional and technical solutions company that provides consulting, technical, scientific and project delivery services for the government and private sector. In this role, he has executive oversight of the company’s global operations, which consist of the Aerospace, Technology, and Nuclear, and Buildings, Infrastructure and Advanced Facilities lines of business. Prior to joining Jacobs in 2016, Mr. Pragada served as president and chief executive officer of The Brock Group, Inc. from 2014-2016. He also served in various senior management roles for Jacobs from 2006-2014 and for Kinetic Systems, Inc. from 1998-2006. Mr. Pragada was a naval officer in the United States Navy from 1990-1998. He serves on the boards of Dallas Regional Chamber and the US Naval Academy Foundation. Director Skills and Qualifications: As the Chief Operating Officer of a Fortune 500 company, Mr. Pragada has strong business, technology, and executive leadership skills. He also brings to Eaton extensive experience in mergers, acquisitions, and large-scale integrations. Mr. Pragada also has significant experience of importance to the Company, including excellent business and cultural transformation capabilities with proven results and deep expertise in organizational management and dynamics.

Director since 2021 Age 53

Lori J. Ryerkerk Chairman, Chief Executive Officer and President, Celanese Corporation Lori J. Ryerkerk is the Chairman, Chief Executive Officer and President and a director of Celanese Corporation, a Fortune 500 global chemical and specialty materials company. Prior to joining Celanese in May 2019, she was the Executive Vice President of Global Manufacturing of Shell Downstream Inc. Ms. Ryerkerk joined Shell in May 2010 as Regional Vice President of Manufacturing in Europe and Africa. In October 2013, she was named Executive Vice President of Global Manufacturing. Before joining Shell, Ms. Ryerkerk was Senior Vice President, Refining, Supply and Terminals at Hess Corporation from 2008 through 2010. Prior to that, she spent 24 years with ExxonMobil and served in a variety of operational and senior leadership roles. Ms. Ryerkerk served on the board of Axalta Coating Systems Limited from 2015 through 2019. Director Skills and Qualifications: As the Chief Executive Officer and a director of a company with global engineering and manufacturing operations, Ms. Ryerkerk has executive leadership experience in the area of industrial materials and products production. In particular, she has considerable experience in leading global operations and managing complex technologies, engineering and supply chain systems. Ms. Ryerkerk also brings an international business perspective, having previously spent time in roles in Europe and Africa. Her experience with industrial companies and in responding to changing market conditions are of particular benefit to Eaton.

Director since 2020 Age 59

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Gerald B. Smith Chairman and Chief Executive Officer, Smith Graham & Co. Gerald B. Smith was a director of Cooper Industries plc from 2000 until 2012 and served as lead independent director of Cooper Industries plc from 2007 to 2012. Mr. Smith joined the Board effective upon the close of the Cooper acquisition. He is Chairman and Chief Executive Officer of Smith Graham & Co., an investment management firm that he founded in 1990. Prior to launching Smith Graham, he served as Senior Vice President and Director of Fixed Income for Underwood Neuhaus & Company. He was a member of the Board of Trustees and chair of the Investment Oversight Committee for The Charles Schwab Family of Funds from 1990 until 2020. Mr. Smith also serves as a director of ONEOK, Inc., a New York Stock Exchange listed natural gas diversified company, and a director and chair of the Investment Committee of the New York Life Insurance Company. He serves as Chairman of the Texas Southern University Foundation and a director of the Federal Reserve Bank of Dallas, and a member of the Board of Trustees of Rice University’s Baker Institute for Public Policy. Director Skills and Qualifications: Mr. Smith has expertise in finance, portfolio management and marketing through executive positions in the financial services industry, including being founder, Chairman and Chief Executive Officer of Smith Graham & Co. His experience as a director of companies in the oil and gas and energy services businesses has provided him with valuable insight into markets in which Eaton also participates. Mr. Smith’s past experience as lead independent director of Cooper provides ongoing institutional knowledge of legacy Cooper businesses and has benefited the process of integrating Cooper into Eaton. His experience and expertise provide him valuable insight on financial, operational and strategic matters in his role as Chair of the Audit Committee.

Director since 2012 Age 71

Dorothy C. Thompson Retired Chief Executive, Drax Group plc Dorothy C. Thompson CBE is the retired Chief Executive and director of Drax Group plc, an international electricity and energy company, where she served from 2005 until her retirement in 2017. Before joining Drax, Ms. Thompson managed InterGen NV’s European power business, was assistant group treasurer at Powergen plc and worked at CDC Capital Partners, the private sector arm of the British Government’s aid program. Ms. Thompson is a member of the Court of Directors of the Bank of England, where she is also Chair of the Audit and Risk Committee and Senior Independent Director. She served from 2018 through 2021 as the non-executive chair of Tullow Oil plc, the London Stock Exchange listed oil exploration and production company. She was also a director of Johnson Matthey Plc from 2007 through 2016. Director Skills and Qualifications: As the Chief Executive of Drax, Ms. Thompson gained unique insight into the sourcing, generation and supply of sustainable and renewable energy. She also brings to the Board vast experience in all aspects of finance as well as an international business perspective. Ms. Thompson’s work as Chair of the Audit and Risk Committee of the Bank of England and as Chair of Tullow Oil plc provide valuable financial and governance insight and experience to the Board and Audit Committee of the Company. Her extensive experience is of particular benefit to Eaton in her role as Chair of the Governance Committee.

Director since 2016 Age 61

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Darryl L. Wilson Founder, Chairman and President, The Wilson Collective Darryl L. Wilson is the founder, chairman and president of The Wilson Collective, a business advisory and investment firm that invests in startup companies and provides advisory services to clients in the power generation, industrial, material supply and consumer segments. Prior to founding the organization in 2018, he worked for more than 25 years in global leadership roles at General Electric Company and held a number of leadership positions of increasing responsibility, including vice president of commercial, GE Power division, vice president and chief commercial officer of GE Energy Connections, and president and chief executive officer of GE Aeroderivative Gas Turbines. He is director of NextEra Energy, Inc. and is a member of the board of the Federal Reserve Bank of Dallas, Houston branch, and Genserve, Inc. He also serves on the boards of The Kinkaid School, the Houston Endowment and Good Reason Houston. Director Skills and Qualifications: Mr. Wilson has extensive leadership experience in operations and commercial management in global manufacturing and services businesses. As a result of his senior leadership roles for a global manufacturer and service provider of electrical power generation and distribution equipment, Mr. Wilson brings extensive electrical industry experience to Eaton. He also has significant experience of importance to the Company, including management of global businesses in various industries.

Director since 2021 Age 58

The Board of Directors recommends a vote FOR each of the director nominees.

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HOW NOMINEES ARE CHOSEN

Director Nomination Process

The Governance Committee of the Board, composed entirely of directors who meet the independence standards of the Board of Directors and the New York Stock Exchange, is responsible for overseeing the process of nominating individuals to stand for election as directors. The Governance Committee charter is available on our website at www.eaton.com/governance.

The Governance Committee will consider director candidates recommended by our shareholders, consistent with the process used for all candidates. To learn how to submit a shareholder recommendation, see below under “Shareholder Recommendations of Director Candidates.”

The Governance Committee Chair reviews all potential director candidates in consultation with the Chairman, typically with the assistance of a professional search firm retained by the Committee. The Committee decides whether to recommend one or more candidates to the Board of Directors for nomination. Candidates who are ultimately nominated by the Board stand for election by the shareholders at the Annual General Meeting. Between Annual General Meetings, nominees may also be elected by the Board itself.

Director Qualifications and Board Diversity

The Board of Directors recognizes the value of nominating director candidates who bring diverse opinions, perspectives, skills, experiences, and backgrounds to Board deliberations. The Governance Committee uses a rigorous process for identifying and evaluating director nominees. In order to be recommended by the Committee, a candidate must have the following minimum qualifications, as described in the Board of Directors Governance Guidelines: personal ability, integrity, intelligence, relevant business background, independence, experience and expertise in areas of importance to our objectives, and a sensitivity to our corporate responsibilities. In addition, the Committee looks for individuals with specific qualifications so that the Board as a whole has diversity in experience, international perspective, background, expertise, skills, age, gender, and ethnicity. These specific qualifications may vary from year to year, depending upon the composition of the Board at that time.

The Governance Committee is responsible for ensuring that director qualifications are met and Board balance and diversity objectives are considered during its review of director candidates. The Committee annually evaluates the extent to which these goals are satisfied as part of its yearly assessment of the skills and experience of each of the current directors using a director skills matrix and a Board evaluation process.

The skills included in the director skills matrix are Cybersecurity, Executive Compensation, Financial, Global, Human Resources, Innovation & Technology, M&A, Operations & Manufacturing, Regulatory / Government, and Risk Management. The Board evaluation process includes evaluation of the Board as a whole, the Committees and a self-evaluation by the independent directors. The process includes individual evaluation meetings between the Lead Director and each of the independent directors. Separately, the Chairs of each of our Committees each lead an annual Committee evaluation at the October Committee meetings. The Board evaluation process is designed to elicit each director’s thoughts about his or her contributions in light of the needs of the Board and the Company. The evaluation is focused on opportunities for further improvement in effectiveness, indication of preferences in future Board committee rotation, identification of board matter priorities, including educational and orientation priorities and information, and requests for Company specific information. The Board evaluation process is typically conducted between the April and October meetings. At the conclusion of the evaluation process, the Board discusses the results of the evaluations at the October Board meeting and the Lead Director separately provides specific feedback to the individual directors relative to further performance improvement, educational opportunities, and other counsel.

Upon completion of the skills matrix and the evaluation process, the Governance Committee identifies areas of director knowledge and experience that may benefit the Board in the future and uses that information as part of the director search and nomination efforts, as well as further Board improvements.

The Board of Directors Governance Guidelines are available on our website at www.eaton.com/governance.

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Shareholder Recommendations of Director Candidates

The Governance Committee will consider director candidates who are recommended to it in writing by any Eaton shareholder who submits a recommendation by following the procedures required under our Articles of Association for nominating director candidates. Accordingly, any shareholder wishing to recommend an individual as a nominee for election at the 2023 Annual General Meeting should send a signed letter of recommendation to the following address: Eaton Corporation plc, Attention: Company Secretary, Eaton House, 30 Pembroke Road, Dublin 4, Ireland D04 Y0C2. Recommendation letters must be received no earlier than November 18, 2022, and no later than December 18, 2022, and must include the reasons for the recommendation, the full name, age and address of each proposed nominee, a brief biographical history setting forth past and present directorships, past and present positions held, occupations and civic activities, and details of Company shares owned by each proposed nominee. The recommendation letter should be accompanied by a written statement from the proposed nominee consenting to be nominated and, if nominated and elected, to serve as a director.

Any shareholder wishing to recommend an individual as a nominee for election as a director must also describe in a detailed writing any financial agreement, arrangement or understanding between the nominee and any party other than the Company relating to such nominee’s potential service as a director, and details of any compensation or other payment received from any such third party relating to such nominee’s potential service as a director.

DIRECTOR INDEPENDENCE

The Board of Directors Governance Guidelines provide that all of our non-employee directors should be independent. The listing standards of the New York Stock Exchange state that no director can qualify as independent unless the Board of Directors affirmatively determines that he or she has no material relationship with the Company. Additional, and more stringent, standards of independence are required of Audit Committee members. Our annual proxy statement discloses the Board’s determination as to the independence of the Audit Committee members and of all non-employee directors. For our current non-employee directors and nominees, we describe these determinations here.

As permitted by the New York Stock Exchange listing standards, the Board of Directors has determined that certain categories of relationships between a non-employee director and the Company will be treated as immaterial for purposes of determining a director’s independence. These “categorical” standards are included in the Board of Directors’ independence criteria. The independence criteria for non-employee directors and members of the Audit Committee are available on our website at www.eaton.com/governance.

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Because director independence may be influenced by the use of Company aircraft and other Company-paid transportation, the Board has adopted a policy on this subject.

In their review of director and nominee independence, the Board of Directors and its Governance Committee have considered the following circumstances:

After reviewing the circumstances described above (which are the only relevant circumstances known to the Board of Directors), the Board has affirmatively determined that none of our non-employee directors has a material relationship with the Company other than in his or her capacity as a director, and that all of our non-employee directors qualify as independent under the Board’s independence criteria and the New York Stock Exchange standards. All members of the Audit, Compensation and Organization, Finance, Governance, and Innovation and Technology Committees qualify as independent under the standards described above.

The Board also has affirmatively determined that each member of the Audit Committee — O. Leonetti, D. McCoy, S. Pianalto, G. Smith, D. Thompson and D. Wilson — meets not only our Board’s independence criteria but the special independence standards required by the New York Stock Exchange and the Sarbanes-Oxley Act of 2002 and the related rules adopted by the Securities and Exchange Commission.

Review of Related Person Transactions

Our Board of Directors has adopted a written policy to identify and evaluate “related person transactions,” that is, transactions between us and any of our executive officers, directors, director nominees, 5%-plus security holders or members of their “immediate families,” or organizations where they or their family members serve as officers or employees. The Board policy calls for the disinterested members of the Board’s Governance Committee to conduct an annual review of all such transactions. At the Committee’s direction, a survey is conducted annually of all transactions involving related persons, and the Committee reviews the results in February of each year. The Committee is responsible for determining whether any “related person transaction” (i) poses a significant risk of impairing, or appearing to impair, the judgment or objectivity of the individuals involved; (ii) poses a significant risk of impairing, or appearing to impair, the independence of an outside director or director nominee; or (iii) has terms that are less favorable to us than those generally available in the marketplace. Depending upon the Committee’s assessment of these risks, the Committee will respond appropriately. In addition, as required by the rules of the Securities and Exchange Commission, any transactions that are material to a related person are disclosed in our proxy statement.

As disclosed above, the Governance Committee is charged with reviewing issues involving director independence and all related persons transactions. The Committee and the Board have determined that since the beginning of 2021, the only related person transactions were those described above under the heading “Director Independence” and that none of our executive officers engaged in any such transactions. The Committee also concluded that none of the related person transactions posed risks to the Company in any of the areas described above.

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BOARD COMMITTEES

The Board of Directors has the following standing committees: Audit, Compensation and Organization, Executive, Finance, Innovation and Technology, and Governance.

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Committee Charters and Guidelines

The Board committee charters are available on our website at www.eaton.com/governance.

In addition to the Board of Directors Governance Guidelines, certain other policies relating to corporate governance matters are adopted from time to time by Board committees, or by the Board itself upon recommendation of the committees.

BOARD MEETINGS AND ATTENDANCE AT ANNUAL GENERAL MEETING

The Board of Directors held five meetings in 2021. Each of the directors attended at least 83.3% of the meetings of the Board and the committees on which he or she served. The average rate of attendance for all directors was 97%.

The policy of the Board of Directors is that all directors, absent exigent circumstances, should attend the Annual General Meetings. Nine out of ten of our directors at the time of the 2021 Annual General Meeting were in attendance.

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BOARD GOVERNANCE GUIDELINES

The Board revised the Board of Directors Governance Guidelines most recently in October 2021, as recommended by the Governance Committee of the Board. The revised Governance Guidelines are available on our website at www.eaton.com/governance.

EXECUTIVE SESSIONS OF THE NON-EMPLOYEE DIRECTORS

The Board’s policy is that the non-employee directors, all of whom qualify as “independent” under the criteria of the Board of Directors and the New York Stock Exchange, meet in Executive Session at each regular Board meeting, without the Chairman or other members of management present, to discuss topics they deem appropriate. As described more fully in “Leadership Structure” below, the Lead Director chairs these Executive Sessions.

At each meeting of the Audit, Compensation and Organization, Finance, Governance, and Innovation and Technology Committees, the Committee members (all of whom qualify as independent) hold an Executive Session, without any members of our management present, to discuss topics they deem appropriate.

LEADERSHIP STRUCTURE

Our governance structure follows a successful leadership model under which the Chief Executive Officer of Eaton Corporation also serves as Chairman of the Board of the Company. Recognizing that different leadership models may work well for other companies at different times depending upon individual circumstances, we believe that our Company has been well served by the combined Chief Executive Officer and Chairman leadership structure and that this approach has continued to be highly effective with the presence of a Lead Director. We believe we have benefited greatly from having a Chairman who sets the tone and direction for the Company while also having the primary responsibility as Chief Executive Officer for managing Eaton’s day-to-day operations, and allowing the Board to carry out its strategic, governance, oversight and decision-making responsibilities with the equal involvement of each director.

Our Board is currently composed of independent directors, except for our Chairman, Mr. Arnold. Of our eleven non-employee director nominees, five are currently serving or have served as a chief executive officer and/or chair of a publicly traded company. The Audit, Compensation and Organization, Finance, Governance, and Innovation and Technology Committees are chaired by independent directors. Our Chairman has benefited from the extensive leadership experience represented on our Board of Directors.

The Board evaluates the leadership structure annually, and it will continue to do so as circumstances change. In its most recent annual evaluation, the Board concluded that the current leadership structure — under which the Chief Executive Officer of Eaton Corporation serves as Chairman of the Board of the Company, our Board committees are chaired by independent directors, and a Lead Director assumes specific responsibilities on behalf of the independent directors — remains the optimal board leadership structure for our Company and our shareholders at the present time.

Lead Director

Christopher M. Connor, who has served on Eaton’s Board since 2006, was first elected Lead Director by our independent directors in 2016. The Lead Director has specific responsibilities, including chairing meetings of the Board at which the Chairman is not present (including Executive Sessions of the Board), approving the agenda and schedule for Board meetings on behalf of the independent directors, approving information sent to the Board, serving as liaison between the Chairman and the independent directors, and being available for consultation and direct communications with shareholders and other Company stakeholders. The Lead Director has the authority to call meetings of the independent directors and to retain outside advisors who report directly to the Board of Directors. The Lead Director’s performance is assessed annually by the Board in a process led by the Chair of the Governance Committee, and the position of Lead Director is elected annually by our independent directors.

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SHAREHOLDER ENGAGEMENT

We regularly seek the perspectives of our shareholders on issues important to them, including to identify and address potential risks to our long-term financial viability. Additionally, we engage with many of our largest shareholders regarding ESG topics. We pursue ongoing engagement with our shareholders through:

For additional information related to our stakeholder engagement, please visit our website at www.eaton.com.

OVERSIGHT OF RISK MANAGEMENT

Our Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management, while our management is responsible for the day-to-day management of the material risks facing the Company. The Board has chosen to retain overall responsibility for risk assessment and oversight at the Board level in light of the interrelated nature of the elements of risk, rather than delegating this responsibility to a Board committee.

The Board is also responsible for oversight of Eaton’s Enterprise Risk Management program (“ERM”), which identifies, assesses and mitigates our top risks. As part of our ERM program, we seek input from our businesses, regions and corporate functions and regularly update the Board on such risks.

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OVERSIGHT OF ESG 

As noted above, our Board has ultimate oversight of our risk management and the Company’s strategic direction, both of which drive our efforts related to environmental, social and governance (ESG) matters. The Board’s oversight of ESG includes review of environmental, community affairs, corporate governance, health and safety, diversity and inclusion, culture and human capital management matters. With the support and oversight of our Board of Directors, our Sustainability Executive Council, which is chaired by our Chairman and also includes our Chief Operating Officers, Chief Financial Officer, Chief Legal Officer, Chief Sustainability Officer and Chief Human Resources Officer, is responsible for developing and executing on our ESG strategy.

COMMITMENT TO SUSTAINABILITY AND ESG

At Eaton, sustainability is at the core of our mission – to improve the quality of life and protect the environment for people everywhere. Our ambitious 2030 sustainability goals outline our long-term strategy to ensure a healthy planet that supports all our stakeholders – including employees, customers, shareholders, suppliers, and our communities.

2030 Sustainability Targets
	Creating sustainable solutions			Engaging our employees and communities
	•  15% reduction in Scope 3 emissions			•  80%+ employee engagement rating
	•  $3 billion in sustainability R&D			•  12 hours training and development per employee each year
				•  250,000 hours of volunteer time per year
	Reducing our footprint			Doing business right and transparency
	•  50% reduction in carbon emissions			•  50%+ improvement in safety metrics
	•  Carbon neutral by 2030			•  No human rights violations from key suppliers
	•  100% manufacturing sites zero waste-to-landfill certified			•  Report ESG material issues per SASB and TCFD requirements
	•  10% manufacturing sites zero water discharge certified			•  Disclose U.S. minority and gender pay equity assurance results

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We have been transparent about our commitment to sustainability since our inaugural sustainability report in 2006 and have continued to report our progress annually. We align our Sustainability Report to the guidelines of the Sustainability Accounting Standards Board (SASB) and the Task Force for Climate-Related Financial Disclosures (TCFD). Committed to providing more ESG transparency, in 2021 we released our first ever standalone TCFD report for governance, strategy, risk management, and metrics and targets related to our climate risks and opportunities.

Our efforts are aligned with the world’s leading sustainability experts, which is why we became a signatory of the United Nations Global Compact, a move that conveys our commitment to doing business responsibly and advancing broader societal goals. In 2021, we also announced our commitment to Business Ambition for 1.5°C, a United Nations backed campaign which aligns with our goal to reach science-based targets and net-zero emissions in our operations by 2030. This also makes us a member of the United Nations-backed Race to Zero campaign for climate action. We joined this initiative by setting science-based emissions reduction targets consistent with keeping global warming to 1.5°C above pre-industrial levels.

Further, we have reported energy and emissions data to the Carbon Disclosure Project (CDP), an international nonprofit environmental reporting organization, since 2006. In 2021, we again received an A- from CDP on our Climate Change Score, which ranks us among the leaders in our peer group.

Additionally, in relation to our human capital management efforts, and as part of our continued commitment to transparency about our progress in our inclusion and diversity efforts, in 2021, we published our inaugural Global Inclusion and Diversity Transparency Report, which includes our inclusion and diversity metrics. We have long believed an inclusive and diverse workplace is a better one. Today, we remain deeply committed to putting diverse perspectives to work and becoming a model of inclusion and diversity in our industry.

To learn more about our sustainability and ESG efforts, please visit our website at www.eaton.com, where our current Sustainability Report, TCFD Report, CDP responses, and Global Inclusion and Diversity Transparency Report can be found. Please note that the information on or accessible through our website is not part of, nor incorporated by reference into, this proxy statement.

CODE OF ETHICS

We have a Code of Ethics that was approved by the Board of Directors. We provide training globally for all employees on our Code of Ethics. We require that all directors, officers and employees of the Company, and our subsidiaries and affiliates abide by our Code of Ethics, which is available on our website at www.eaton.com/governance. In addition, we will disclose on our website any waiver of or amendment to our Code of Ethics requiring disclosure under applicable rules.

COMMUNICATING WITH THE BOARD

The Board of Directors provides a process for shareholders and other interested parties to send communications to the Board, individual directors or the non-employee directors as a group. Shareholders and other interested parties may send such communications by mail or courier delivery addressed as follows:

Company Secretary
Eaton Corporation plc
Eaton House
30 Pembroke Road
Dublin 4, Ireland
D04 Y0C2

Email messages to the directors may be sent to Board@eaton.com.

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Generally, the Company Secretary forwards all such communications to the Lead Director. The Lead Director determines whether the communications should be forwarded to other members of the Board and forwards them accordingly. For communications addressed to a particular member of the Board, the Chair of a particular Board committee or the non-employee directors as a group, the Company Secretary forwards those communications directly to those individuals.

Alternatively, correspondence may be sent to:

Lead Director
Eaton Corporation plc
Eaton House
30 Pembroke Road
Dublin 4, Ireland
D04 Y0C2

The Secretary maintains a log of all correspondence addressed to the Board and, except as noted below, forwards all communications to the interested directors. For example, correspondence on a financial topic would be sent to the Chair of the Finance or Audit Committees, and correspondence on governance topics to the Lead Director or Chair of the Governance Committee.

The Secretary makes periodic reports to the Governance Committee regarding correspondence from shareholders and other interested parties.

Derivative shareholder communications and demands for inspection of company records should be sent to the Secretary who will promptly disseminate such communications to the entire Board. The Board will consult with the Chief Legal Officer or her designee to determine appropriate action.

The Directors have requested that communications that do not directly relate to their duties and responsibilities as our directors be excluded from distribution and deleted from email that they access directly. Such excluded items include “spam,” advertisements, mass mailings, form letters and email campaigns that involve unduly large numbers of similar communications, solicitations for goods, services, employment or contributions, surveys and individual product inquiries or complaints. Additionally, communications that appear to be unduly hostile, intimidating, threatening, illegal or similarly inappropriate will be screened for omission. Any omitted or deleted communications will be made available to any Director upon request.

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Proposal 2:  Appointment of Independent Auditor and Authorization of Audit Committee to Set Auditor Remuneration

Shareholders are being asked to approve the appointment of our independent auditor and to authorize the Audit Committee of our Board of Directors to set the auditor’s remuneration. Appointment of the independent auditor and authorization of the Audit Committee to set its remuneration require the affirmative vote of a majority of the votes cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy. The Audit Committee and the Board recommend that shareholders reappoint Ernst & Young as our independent auditor to audit our accounts for the fiscal year ending December 31, 2022 and authorize the Audit Committee of the Board to set the auditor’s remuneration.

A representative of Ernst & Young will be present at the Annual General Meeting to answer any questions
concerning the independent auditor’s areas of responsibility and will have an opportunity to make a statement if he or she desires to do so.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors is responsible for assisting the Board in overseeing: (1) the integrity of the Company’s consolidated financial statements and its systems of internal accounting and financial controls, (2) the independence, qualifications and performance of the Company’s independent auditor, (3) the performance of the Company’s internal auditors, and (4) the Company’s compliance with legal and regulatory requirements. The Committee’s specific responsibilities, as described in its charter, include the sole authority to appoint, terminate and compensate the Company’s independent auditor, and to pre-approve all audit services and other permitted non-audit services to be provided to the Company by the independent auditor. The Committee is currently comprised of six directors, all of whom are independent under the Sarbanes-Oxley Act of 2002, the rules of the Securities and Exchange Commission and the Board of Directors’ own independence criteria.

The Board of Directors amended the Committee’s charter most recently on October 27, 2021. A copy of the charter is available on the Company’s website at www.eaton.com/governance.

The Audit Committee has retained Ernst & Young as Eaton’s independent auditor for 2022. Ernst & Young has been the independent auditor for the Company or its predecessor since 1923. The members of the Audit Committee and the Board believe that due to Ernst & Young’s deep knowledge of the Company and of the industries in which the Company operates, it is in the best interests of the Company and its shareholders to continue retention of Ernst & Young to serve as Eaton’s independent auditor.

In carrying out its responsibilities, the Audit Committee has reviewed, and has discussed with the Company’s management and independent auditor, the Company’s 2021 audited consolidated financial statements and the assessment of the Company’s internal control over financial reporting.

The Committee has also discussed with Ernst & Young the matters required to be discussed by applicable auditing standards.

The Committee has received the written disclosures from Ernst & Young regarding their independence from the Company that are required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, has discussed with Ernst & Young their independence and has considered whether their provision of non-audit services to the Company is compatible with their independence.

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For 2021 and 2020, Ernst & Young’s fees to the Company and certain of its subsidiaries were as follows:

The Audit Committee approved all of the services shown in the above categories in accordance with the Audit Committee’s pre-approval process. The Audit Committee did not approve any of the services shown in the above categories through the use of the “de minimis” exception permitted by Securities and Exchange Commission rules.

The Audit Committee has adopted the following procedure for pre-approving audit services and other services to be provided by the Company’s independent auditor: specific services are pre-approved from time to time by the Committee or by the Committee Chair on its behalf. As to any services approved by the Committee Chair, the approval is reported to the Committee at the following meeting of the Committee.

Based upon the Committee’s reviews and discussions referred to above, and in reliance upon them, the Committee has recommended to the Board of Directors that the Company’s audited consolidated financial statements for 2021 be included in the Company’s annual report on Form 10-K, and the Board has approved their inclusion.

Respectfully submitted to the Company’s shareholders by the Audit Committee of the Board of Directors.

The Board of Directors recommends a vote FOR this proposal to approve the appointment of the independent auditor and to authorize the Audit Committee to set auditor remuneration.

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Proposal 3:  Advisory Approval of the Company’s Executive Compensation

We are asking our shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Although this is an advisory vote, and therefore not binding on our Board of Directors, the Board and the Compensation and Organization Committee will review and consider the voting results when making future decisions regarding our executive compensation programs.

This say-on-pay vote is required under U.S. law, and we consider it to be a matter of good corporate governance. This vote takes place annually and the next advisory vote to approve the Company’s executive compensation will occur at the 2023 Annual General Meeting.

As we explain in the Compensation Discussion and Analysis that follows, our executive compensation programs are designed to attract, motivate, reward, and retain our named executive officers, who are critical to the success of our Company. Our programs reward our named executive officers for achieving specific annual, long-term and strategic goals, and also for increasing shareholder value.

NAMED EXECUTIVE OFFICERS’ COMPENSATION PROGRAM HIGHLIGHTS

The Compensation and Organization Committee continually reviews the compensation programs for our named executive officers to ensure that they achieve the desired goals of aligning our executive compensation structure with our shareholders’ interests and current market practices. All Committee members are independent directors committed to applying sound governance practices to compensation decisions.

We strongly encourage you to review the Compensation Discussion and Analysis that follows. It contains information about the extensive processes the Committee follows, and the factors it considers, when establishing performance and pay targets and approving actual payments from our short- and long-term performance-based incentive plans. The Committee’s process includes reviewing a variety of reports and analyses such as market survey data, compensation tally sheets, compensation at peer companies, and reports from proxy advisory firms. The Compensation Discussion and Analysis also describes the structure of our compensation programs and the 2021 compensation of our named executive officers.

We believe that our executive compensation design and strategy is a critical factor in motivating our executives to seek innovative solutions that contribute to Eaton’s continued success. We are therefore asking shareholders to approve the following advisory resolution at the 2022 Annual General Meeting:

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2022 Annual General Meeting of shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the 2021 Summary Compensation Table and the other related tables and disclosure.”

The Board of Directors recommends a vote FOR advisory approval of executive compensation.

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Executive Compensation Table of Contents

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Compensation Discussion and Analysis

In this Compensation Discussion and Analysis (CD&A), we discuss our pay for performance philosophy, our pay-setting process, the components of our executive compensation program, and the compensation of our named executive officers for 2021. We also explain our performance metrics in detail and review our executive compensation policies.

Please note that the use of “we,” “us” or “our” throughout this CD&A refers to the Company, its subsidiaries or its management. In addition, the use of “Chairman and Chief Executive Officer” or “CEO” throughout this CD&A refers to Craig Arnold, Chairman of the Company and Chief Executive Officer of Eaton Corporation.

EXECUTIVE SUMMARY

This section provides a summary of the performance metrics and actual results for the incentive plans in which our named executive officers and other executives participated for the year ending December 31, 2021. For 2021, our named executive officers are:

Executive Compensation Philosophy

We design our executive compensation plans and programs to help attract, motivate, reward, and retain highly qualified executives who are capable of creating and sustaining value for our shareholders over the long term. We endorse compensation actions that fairly reflect Company performance as well as the responsibilities and personal performance of individual executives.

Our executive compensation programs are intended to align the interests of our executives with those of our stakeholders and are structured to reflect best practices. On average, at target approximately 80% of our named executive officers’ compensation is performance-based and tied to our short- and long-term incentive programs. Key features of these programs include:

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Pay for Performance Culture

Our executive compensation programs reflect the belief that the amount earned by our executives must, to a significant extent, depend on achieving rigorous Company, business unit and individual performance objectives designed to enhance shareholder value. The chart below shows the payouts as a percentage of target under our performance-based short- and long-term incentive programs and total return to shareholders over Mr. Arnold’s tenure as CEO, illustrating the strong correlation between pay and the performance we are delivering to our shareholders. More information about our short- and long-term incentive programs begins on page 37.

Total Shareholder Return and Performance-Based Incentive Plan Payouts

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Summary of 2021 Performance-Based Incentive Plan Payouts

Short-Term Incentives

The corporate performance factor under our short-term incentive plan was 125%. In February 2021, the Committee determined it was appropriate to replace the Cash Flow Return on Gross Capital measure, which had been used in our annual incentive plan since 1993, with an Adjusted Operating Cash Flow (OCF) measure. At that time, the Committee also established Adjusted Earnings Per Share (EPS) and Adjusted OCF goals for 2021. Adjusted EPS excludes acquisition and divestiture charges, restructuring charges, and intangibles amortization expense from net income per share. Adjusted OCF equals the sum of operating cash flow, U.S. qualified pension contributions, and taxes paid on the sale of our Hydraulics business. The 2021 target Adjusted EPS and Adjusted OCF objectives were $5.60 and $2,500 million, respectively. Actual Adjusted EPS and Adjusted OCF were $6.62 and $2,703 million, respectively, which generated a calculated payout of 177% of target. However, management recommended and the Committee approved adjusting the formulaic payout to 125% to remove the positive impact of acquisition and divestiture timing that was not controlled by management. More information about our short-term incentive plan and the change to the Adjusted OCF measure can be found on page 37.

2021 EXECUTIVE INCENTIVE COMPENSATION PLAN GOALS AND RESULTS

Long-Term Incentives

2019-2021 ESIP: Our 2019-2021 long-term, performance-based Executive Strategic Incentive Plan (“ESIP”) is fully based on Total Shareholder Return (TSR) relative to a group of peers. Our 2019-2021 ESIP was earned at 189% of target. The performance criteria under our long-term incentive plan is based on the rank of our Total Shareholder Return (TSR) relative to a group of peers. The results for the 2019-2021 award period are summarized below.

2019-2021 ESIP opportunities took the form of PSUs and were settled in Eaton ordinary shares. Dividend equivalents were paid in cash based on the earned number of share units and the aggregate dividend paid to our shareholders over the award period. Additional information about the 2019-2021 ESIP awards can be found on page 39.

Review of 2021 Advisory Vote on Executive Compensation

The Board of Directors is committed to understanding the views of our shareholders by providing an opportunity to endorse our executive compensation through an advisory, non-binding vote. In 2021, our shareholders approved our executives’ compensation by a vote of 92%.

The Committee considered these voting results, shareholder feedback, and a comprehensive assessment of Eaton’s executive compensation programs and did not make substantive changes to our executive compensation plans or programs in response to last year’s say-on-pay vote in light of the support we received from shareholders in 2021. The Committee will continue to review our compensation programs each year in light of the annual say-on-pay voting results and shareholder feedback.

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2021 CEO REALIZED PAY AND OUR PERFORMANCE

Our compensation programs for Mr. Arnold and the other named executive officers are heavily weighted toward performance-based opportunities that are at-risk and subject to our performance.

The table below illustrates the relationship between Mr. Arnold’s target award opportunity and the amounts he actually earned based on our performance against the metrics established for the short- and long-term incentive plans that ended on December 31, 2021. Short- and long-term incentive plan metrics are intended to drive results that create value for our shareholders. This table supplements, but is not a substitute for, the information contained in the Summary Compensation Table on page 49. Each pay component shown below is discussed in more detail in the CD&A that follows.

COMPENSATION REALIZED BY OUR CHIEF EXECUTIVE OFFICER IN 2021

The realized pay table differs from the Summary Compensation Table in a number of ways, including:

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ROLE OF THE COMPENSATION AND ORGANIZATION COMMITTEE

Membership and Responsibilities

The Compensation and Organization Committee of the Board of Directors in 2021 consisted of 5 independent non-employee directors and is supported by our human resources department. As discussed below, the Committee also may retain one or more independent compensation consultants to assist it.

The Committee is responsible for handling a variety of organizational and compensation matters pertaining to Eaton’s leadership, including those shown in the table below. The Committee’s charter is available on our website at http://www.eaton.com/governance.

Use of Consultants

The Committee retained Meridian Compensation Partners as its independent executive compensation consultant to support the Committee’s oversight and management of our executive compensation programs. The consultant’s duties include helping the Committee validate our executive compensation plans and programs through periodic comprehensive studies. The consultant performed a variety of work for the Committee, including assessing Eaton’s executive compensation programs relative to market trends and best-in-class governance practices, providing independent feedback on our analytical work, and assisting the Committee in its review and discussion of material agenda items and its decision-making about our executive compensation programs and individual compensation opportunities. The consultant also coordinated and supported the annual performance appraisal for Mr. Arnold. The Committee used this appraisal as one of several factors in determining his payout under our short-term incentive plan for 2021 and also considered it in determining whether to adjust his base salary or his short- and long-term incentive targets for the next year.

The Committee’s written policies require the Company to obtain its review and approval before awarding any material consulting assignment to a firm that the Committee already has engaged. This policy ensures that the Committee’s consultants are well positioned to provide independent and impartial advice on executive compensation and governance matters.

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HOW WE ESTABLISH AND VALIDATE PAY

This section explains the Committee’s process for establishing and validating our pay targets. As shown in the table and described in detail below, this process involves several important analyses:

Total Compensation Analysis and Planning Process (November–February)

We target total compensation to be within the median range of compensation paid by similarly sized industrial companies. We continually monitor and assess the competitive retention and recruiting pressures in the industries and markets where we compete for executive talent. As a result, the Committee periodically has exercised its judgment to set target compensation levels of certain executives above the market median to foster retention.

Several analyses play a role in the Committee’s Total Compensation Analysis and Annual Planning Process:

Market Analysis — In the fourth quarter of each year, our human resources department conducts a market analysis. First, we align our executives’ positions with comparable positions as reported in surveys published by two national consulting firms, Aon and Willis Towers Watson. We also review the compensation data that is publicly reported by the companies that comprise our compensation peer group described on page 35. Then, in February, we prepare a comprehensive report for the Committee, which also is reviewed by its independent consultant, that compares our executives’ compensation to the compensation peer group median and the average of the surveys’ median compensation data. This helps the Committee determine how each executive officer’s compensation compares to current market practices.

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In preparing our comparison for 2021, we used the survey results for “industrial” companies (as categorized by the survey vendors), whether publicly or privately held, with revenues between $10 billion and $50 billion. The group contains between 100 and 150 companies with revenues ranging from approximately one-half to two times our revenue. We believe this comparator group adequately represents the market in which we compete for talent. The companies participating in each survey vary, and we are not able to determine which of the companies reported data for each position and each component of pay.

Analysis of Internal Pay Equity and our Current Pay Levels — Internal equity among similarly situated positions is an important consideration in establishing individual pay targets. We maintain internal equity by establishing approximately the same target incentive opportunities for similarly situated positions. When determining what positions are similarly situated, we consider the following aspects of each position: its essential functions, the ability of the position holder to influence our overall results, any educational requirements, where the position stands in our leadership ranks, and job demands such as frequent travel and the responsibility to respond to business matters at any time and under any circumstances.

Tally Sheets — In addition to the market analysis, each February we provide the Committee with a comprehensive compensation Tally Sheet for each named executive officer. These Tally Sheets, which also are reviewed by the Committee’s independent consultant, help the Committee evaluate total remuneration and internal pay equity. The Committee reviews them before making decisions about the compensation of the named executive officers for the next year. Each Tally Sheet includes all components of the executive’s current compensation, including base salary, short-term incentive compensation, equity incentive compensation, retirement savings programs, health and welfare programs, and the cost of personal executive benefits. The Committee also reviews potential payments under various termination scenarios.

Performance Assessments — Assessments of executive performance are another key part of the Committee’s Total Compensation Analysis and Planning Process. Mr. Arnold meets individually with his direct reports, including the named executive officers, to discuss the performance assessments for their respective direct reports and to formulate initial recommendations for an appropriate total compensation plan for each executive. No member of management, including Mr. Arnold, makes recommendations regarding his or her own pay. The Committee meets with its independent consultant in Executive Session (with no members of management in attendance) to review Mr. Arnold’s performance assessment, the comprehensive market data for his position, and his Tally Sheet to establish his total compensation plan.

Evaluating Pay

In July of each year, the Committee evaluates pay relative to external market data to validate the individual compensation opportunities that were established in February, and also considers whether we are setting appropriate performance criteria. This process involves collecting and reviewing peer group information and third-party survey data and analyzing it as described below.

PEER GROUP ANALYSIS

Peer Group Selection — In 2016 the Committee began using proxy compensation data reported by a compensation peer group together with the survey data described under “market analysis” to set each named executive officer’s base salary, short-, and long-term incentive targets. The Committee adopted a compensation peer group in order to have additional data points to consider when setting pay and evaluating compensation programs. The Committee chose the companies in the compensation peer group based on revenue size, market capitalization, and industry. The compensation peer group also represents a sample of companies with whom we compete for talent. Eaton’s revenue and market cap are approximately aligned with the median revenue and market cap of the compensation peer group.

With input from Meridian Compensation Partners, the Committee’s independent consultant, the Committee chose the companies listed in the following table as the compensation peer group:

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In July 2021, the Committee asked Meridian to conduct an in-depth analysis of the peer group considering both COVID-related market volatility, the impact of divestitures of Eaton’s Lighting and Hydraulics businesses, Eaton’s acquisitions in its Electrical and Aerospace segments, and acquisition and divestiture activity among the compensation peers listed above.  In its review, Meridian evaluated current peer companies against specific characteristics such as, but not limited to: trailing twelve months revenue; market cap and revenue in the range of one-third to three-times those of Eaton’s; number of employees; financial performance; industry; total non-U.S. revenue; number of reporting segments; and whether the company includes Eaton in its own peer group.

Based on the scorecard results, Meridian recommended and the Committee approved removing the following companies: Danaher Corporation, Halliburton Company, Raytheon Technologies Corporation, and Union Pacific Corporation and adding the following companies: Aptiv plc, Carrier Global Corporation, Otis Worldwide Corporation, and TE Connectivity Ltd.  With these changes, Eaton’s trailing twelve-month revenue is better aligned with the median of the revised peer group.  The peer industry mix of the new compensation peer group remains focused on diversified industrial companies that are operationally and strategically similar to Eaton.  The 23 companies that comprise Eaton’s compensation peer group that will be used for benchmarking executive pay in 2022 are:

The compensation peer group does not replace Eaton’s strategic peer group that is used by the Board in setting the Company’s strategic plan. The publicly traded companies in the strategic peer group continue to serve as the relative peer group for purposes of comparing total shareholder return as it relates to Eaton’s long-term performance-based incentive plan. The strategic peers were chosen based on their industry segment, among other considerations, so that the overall revenue of each segment would approximate Eaton’s revenues for each segment (Aerospace, Electrical, Vehicle) versus overall revenue for the entire enterprise. The revenue of many companies in the strategic peer group is smaller than Eaton’s and given that there is a correlation between the revenue size of a company and the pay it delivers, the Committee determined that the strategic peer group would not serve as an appropriate peer group for purposes of setting pay.

Peer Pay Analysis — Each year we provide the Committee with an analysis that includes the compensation reported by each publicly traded peer in its annual proxy statement and market survey data for positions that are equivalent to positions held by our named executive officers. The Committee uses this analysis in reviewing and establishing our stretch incentive plan goals and in answering whether our compensation targets are appropriate relative to market comparators. In 2021, this review of survey and peer proxy data confirmed that Eaton’s compensation opportunities were aligned with the external data points.

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Executive Compensation Program Audit — Each October, the Committee’s independent consultant prepares a report that compares Eaton’s executive compensation programs to prevalent practices in the external market. This review includes, but is not limited to, the design of our short- and long-term incentive plans, deferral plan design, severance and change of control practices, executive benefits and perquisites, stock ownership requirements, and clawback policies. The Committee uses this report to determine whether any changes are needed to any of our executive compensation programs to better align with market and governance practices.

COMPONENTS OF COMPENSATION

In this section, we describe the main components of our compensation, including the plan design and metrics we use in our performance-based incentive plans. The charts below illustrate the mix of pay at target for our CEO and the average of the other named executive officers. Items reported as All Other Compensation and the Change in Pension Values in the Summary Compensation Table are not included in the following charts. The Committee reviews compensation that is reported as All Other Compensation and compensation based upon the change in pension values as part of the Tally Sheet review discussed on page 34 in the context of a competitive overall benefit design and not as an element of its annual compensation decisions.

OVERVIEW OF OUR PRIMARY COMPENSATION COMPONENTS

Component			Description		Form/Timing of Payout
Base salary			Levels reflect job responsibilities and market competition		Paid in cash throughout the year
Short-term incentive			Executive Incentive Compensation Plan (EIC) – Cash incentive tied to the following performance metrics: Adjusted Earnings Per Share (EPS) and Adjusted Operating Cash Flow (OCF)(1) goals as well as business unit and individual performance criteria which include environmental, social and governance measures		Paid in cash after the year has ended and performance has been measured Executives can choose to defer payments under our Deferred Incentive Compensation Plan II
Long-term incentives			Executive Strategic Incentive Program (ESIP) – Long-term performance-based incentive tied to:
		50% Performance- Based Long-Term Incentive (ESIP)	Relative Total Shareholder Return ESIP opportunities are denominated in performance share units (PSUs) and settled in Eaton ordinary shares Value realization depends on our stock performance		Awards are distributed in Eaton ordinary shares after the 3-year award period has ended and performance has been measured
		25% RSUs 25% stock options	Restricted Share Units (RSUs) and stock options – Long-term incentives that vest over time based on continued service to our company Value realization depends on our stock performance		Vesting in approximately equal annual installments over 3 years
Other performance and retention grants			Retention restricted share units – Granted on rare occasions to foster engagement and retention May be tied to achievement of performance objectives Value realization depends on our stock performance		Vesting periods range from 3 to 10 years
(1) Please see discussion on page 37 regarding the replacement of Cash Flow Return on Gross Capital (CFR) with Adjusted Operating Cash Flow going forward.

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Base Salary

We pay a competitive base salary to our executive officers in recognition of their job responsibilities. In general, the Committee sets base salaries at approximately the market median as described under “Total Compensation Analysis and Planning Process” on page 33. On occasion, the Committee may set an executive’s base salary above the reported market median to foster retention and/or recognize superior performance. Executives must demonstrate consistently effective individual performance in order to be eligible for a base salary increase. In making salary adjustments, the Committee considers the executive’s base salary and total compensation relative to the market median and other factors such as individual performance against business plans, initiative, leadership, experience, knowledge, and success in building organizational capability.

2021 BASE SALARY

During the February 2021 Total Compensation Analysis and Planning Process, the Committee reviewed each executive’s base salary relative to the market data as described under “Total Compensation Analysis and Planning Process,” as well as the executive’s individual performance over the prior year. After discussing these items, the Committee determined it was appropriate to deliver merit increases on March 1, 2021, to Messrs. Arnold, Yadav, Monesmith and Brickhouse. Mr. Okray was hired on January 18, 2021 and received a 3.13% increase on March 1, 2021 in consideration of his promotion to Chief Financial Officer. Mr. Fearon did not receive a salary increase in 2021 due to his planned retirement.

Short-Term Performance-Based Compensation

We establish a competitive annual cash incentive opportunity for each named executive officer which is intended to align with the market median short-term incentive target (expressed as a percentage of base salary) as determined in our annual market analysis. The Committee determines target opportunities for each executive in February during its Total Compensation Analysis and Planning Process.

CHANGES TO METRICS

In February 2021, the Committee decided to replace the Cash Flow Return on Gross Capital (CFR) metric that had been used in our annual incentive plan since 1993 with an Adjusted Operating Cash Flow (OCF) metric. While CFR is partly a measure of cash flow and has been an effective internal measure for many years, it is a complex, proprietary measure that contains competitive information and is not disclosed publicly. Thus, management recommended and the Committee agreed it was appropriate to introduce a different, more contemporary metric and selected Adjusted Operating Cash Flow. For purposes of this plan, Adjusted OCF equals Operating Cash Flow plus U.S. Qualified Pension Contributions and the taxes paid on the sale of our Hydraulics business.

The Committee selected Adjusted OCF because:

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Metrics, Goals and Results — In February 2021, the Committee established Adjusted EPS and Adjusted OCF goals based on its review of market analyses, our annual profit plan as approved by the Board of Directors, external research reports, and analyses of peer group data. The Committee also considered Adjusted EPS growth rate guidance for us and our strategic peers as a key starting point for setting aggressive performance objectives for our short-term incentive plan. The Adjusted EPS metric measures earnings growth, while the new Adjusted OCF metric is a direct measure of our company’s ability to produce cash that is available to drive shareholder value through acquisitions, dividends, share buybacks, repayment of debt, and other strategic initiatives. We and the Committee believe these are appropriate metrics because of their link to shareholder value creation. The Committee believes that the target level Adjusted EPS and Adjusted OCF goals established at the beginning of 2021 were demanding but attainable.

The following table shows the 2021 goals and our actual results for the year. Adjusted EPS (which excludes from net income acquisition and divestiture charges, restructuring charges and intangibles amortization expense) and Adjusted OCF (which equals operating cash flow, U.S. qualified pension contributions, and taxes paid on the sale of our Hydraulics business) results were $6.62 and $2,703 million, respectively. The results generated a calculated payout of 177%, but management recommended and the Committee agreed it was appropriate to adjust the formula driven payout to 125% of target to remove the positive impact of acquisition and divestiture timing that was not controlled by management.

2021 EXECUTIVE INCENTIVE COMPENSATION PLAN GOALS AND RESULTS

2021 SHORT-TERM INCENTIVE AWARDS

In February 2021, in addition to establishing EIC Plan performance objectives, the Committee also established an individual target award opportunity for each executive that reflected the market median target annual incentive opportunity as determined in our annual market analysis as described on page 33. At the end of the award period, the Committee considered the following items in determining individual payouts:

Environmental, Social and Governance measures in categories such as ethics, sustainability, and diversity and inclusion, have been embedded in our short-term incentive plan for more than ten years. These measures are factored into the growth, operational excellence and building organizational capacity goals that influence the individual performance factor.

The following table illustrates each named executive officer’s 2021 award opportunity and his actual EIC award relative to that opportunity. Messrs. Arnold’s, Okray’s, Monesmith’s, Yadav’s, and Fearon’s awards are subject to the corporate and individual performance factors described above. Mr. Brickhouse leads a reporting segment and his award is subject to corporate, business unit, and individual performance factors. The awards shown below are rounded to the nearest whole dollar. Each named executive officer’s short-term incentive award is reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

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Long-Term Incentive Compensation

The Committee establishes a target long-term incentive opportunity for each executive that is intended to align with the market median values as determined in our annual market analysis. We provide long-term incentive compensation to our executive officers in two components that generally are weighted as follows:

We believe that this “portfolio approach” to structuring long-term incentives provides an appropriate balance that focuses executives on both an external and internal measure of our success. In limited circumstances, the Committee provides retention restricted share unit grants to foster engagement and retention. The Committee’s independent compensation consultant has confirmed that this approach is appropriate to delivering long-term compensation and is consistent with market practices. No named executive officers received retention grants in 2021.

Equity Grant Practices — We typically grant equity-based awards in February. However, in 2021, Mr. Okray received his annual equity grants in April upon becoming our Chief Financial Officer, following Mr. Fearon’s retirement. Mr. Okray’s grants are subject to the same terms and performance criteria as the equity awards granted to the other named executive officers in February 2021. The Committee has the authority to fix the date and all terms and conditions of equity grants to executive officers and other employees under our various stock plans, all of which have been approved by our shareholders. Our equity program adheres to the following best practices:

PERFORMANCE-BASED LONG-TERM INCENTIVES FOR THE PERIOD ENDING DECEMBER 31, 2021

2019-2021 ESIP Performance Criteria: The Committee adopted relative TSR as the performance criteria for the 2019-2021 ESIP period. The Committee began using a relative TSR metric in 2016 to foster a stronger sense of relative peer performance and to alleviate the increasingly difficult market calibration issues that we faced in prior years when the plan was tied to earnings per share growth and cash flow return on gross capital metrics. We and the Committee believe a short-term plan with earnings growth and operating cash flow metrics (via the Adjusted EPS and Adjusted OCF goals) complemented by a TSR-driven long-term plan is an effective combination that will enhance shareholder value.

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The 2019-2021 ESIP was designed such that our TSR rank among a TSR Peer Group would determine an adjustment factor which could range from 0% to 200%. Ranking in between the threshold, target and maximum performance levels results in linear interpolation of the percentage earned.

Additionally, if our TSR was positive but ranked the lowest among the peer group, the maximum payout that could be earned was 25% of target. If our TSR was the highest when compared to that of the peer companies, but was negative, then the maximum payout that could be earned was 100% of target. Consistent with our historical practice, awards under this plan design were capped at 200% of target.

The TSR Peer Group for the 2019-2021 award period was comprised of twenty companies (excluding Eaton), fourteen of which are direct peers in either the Electrical, Aerospace or Vehicle segments and six of which are indirect but relevant peers. The revenue of the directly competitive peers in each segment expressed as a percentage of total peer group revenue roughly equated to the percentage of revenue each such segment represented of total Eaton revenue at the beginning of the award period (with the indirect peers added to the direct Electrical peers). During 2020, two of our TSR peers, Ingersoll-Rand plc and United Technologies Corporation changed due to spinoff and mergers. Ingersoll-Rand plc now operates as Trane Technologies plc after spinning-off its industrial business at the end of February 2020 and United Technologies Corporation now operates as Raytheon Technologies Corporation after spinning off its Otis and Carrier businesses and merging with Raytheon Company in April 2020. These companies in their new form are no longer strategic TSR peers. Furthermore, their TSR performance was skewed by the share distributions and conversions resulting from the spinoff and mergers. When the Committee approved the goals for the 2019-2021 award period, they reserved the right to exclude from the TSR ranking for the full award period any companies who merge or who are acquired. In light of the foregoing, the Committee has exercised their right to remove these companies from the TSR Peer group. Following the removal, the remaining companies were re-ranked.

2019-2021 ESIP Awards — Awards for the 2019-2021 award period were determined based on our TSR ranking among the TSR Peer Group. For ESIP TSR calculation purposes, our stock price at the beginning of the award period was $66.12, (adjusted to reflect dividend reinvestments over the period) and our stock price at the end of the award period was $168.80. This resulted in TSR of 155.3%. As described above, per the rights granted under our plan, the Committee determined it was appropriate to exclude from the TSR ranking for the full period those companies who merged during the period. Excluding Ingersoll-Rand plc and United Technologies Corporation, Eaton had an absolute ranking among the remaining peers at two out of nineteen, and a percentile ranking at the 94.4th percentile. This percentile ranking resulted in a performance adjustment factor of 189% of target (rounded up to a whole percentage from 188.8%). The results are shown in the following tables.

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Final awards were determined by multiplying the target number of performance share units by the calculated performance factor of 189% and rounding up to the nearest whole share. The earned number of performance share units vested on February 22, 2022 and will be reported in the Options Exercised and Stock Vested Table in our proxy statement for our 2023 Annual General Meeting. Dividend equivalents were also paid in cash based on the aggregate dividend paid over the period ($8.80) and the final number of share units that were earned.

Awards earned by our named executive officers for the 2019-2021 ESIP Period are shown below.

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Long-Term Incentives Granted in 2021

Establishment of Performance Criteria for the 2021-2023 ESIP — Awards for the 2021-2023 ESIP award period will be determined based on our TSR relative to that of the TSR Peer Group as described on the following page. The structure of our 2021-2023 ESIP is identical to that of the 2019-2021 ESIP described on page 39. That is, TSR is calculated by taking the total of share price appreciation and dividends (assuming immediate reinvestment of dividends) over the three-year period compared to our share price at the beginning of the period. Our TSR rank among the TSR Peer Group will determine an adjustment factor which can range from 0% to 200%, such that executives will earn an award if our TSR ranks as follows:

Additionally, if our TSR is positive but ranked the lowest among the peer group, the maximum payout that can be earned is 25% of target. If our TSR is the highest when compared to that of the TSR Peer Group, but is negative, then the maximum payout that can be earned is 100% of target. The payout between threshold and maximum will be interpolated based on the rank of our TSR among the peer companies.

With the sale of our Lighting and Hydraulics business in 2020 and 2021, respectively, and the recent acquisitions within our Electrical and Aerospace businesses, our revenue mix has changed since we last established our TSR Peer Group in 2016. For our 2021-2023 award period, we established a new TSR peer group that includes sixteen companies, eleven of which are direct peers in either the Electrical, Aerospace or Vehicle segments and five of which are diversified but relevant peers. The revenue of the directly competitive peers in each segment expressed as a percentage of total peer group revenue roughly equates to the percentage of revenue each such segment represented of total Eaton revenue (with the indirect peers added to the direct Electrical peers). The companies included in the TSR Peer Group are:

Performance Share Units Granted for the 2021-2023 ESIP  — In February 2021, the Committee established total long-term incentive opportunities, expressed as a cash value, for each executive. Targets are intended to align with the market median long-term incentive value as determined during our annual market analysis described on page 33. Half of the total long-term incentive target was converted to a number of performance share units based on the 30-day average closing price of our ordinary shares at the beginning of the award period. At the end of the award period, the number of performance share units will be adjusted up or down based on achievement of our TSR rank relative to that of the peers as previously described. The adjusted number of share units, if any, will be distributed to participants in the form of our ordinary shares. An accumulated dividend equivalent covering the performance period will be paid in cash based on the number of share units actually earned.

RSUs Granted in 2021 — In February 2021, the Committee approved RSU grants that represented approximately 25% of each named executive officer’s target total long-term incentive opportunity. These RSUs vest in approximately equal installments over three years, subject to continued employment with us. We pay dividend equivalents on the earned number of RSUs at the time the shares vest.

Stock Options Granted in 2021 — The Committee approved Stock option grants which make up the remaining 25% of each named executive officer’s total target long-term incentive opportunity. The stock options granted in 2021 will vest in substantially equal annual installments over three years, subject to the executive’s continued employment with us, and have a strike price equal to the closing price of our ordinary shares on the date of the grant.

Long-Term Incentive Grants — Each named executive officer’s target long-term incentive opportunity and mix of grant types is shown below. The Committee considered Mr. Okray’s targets in February in anticipation of him becoming Chief Financial Officer; however, he did not receive his grants until he became the Chief Financial Officer in April 2021. The target amounts shown below differ from the amounts reported in the Summary Compensation Table, which reports the grant date fair value determined in accordance with ASC Topic 718.

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In addition to the annual grants listed above that are intended to reward and recognize Mr. Okray’s contributions to our results for the award periods that began in 2021, he also received one-time new hire grants of stock options and restricted share units to replace certain long-term incentive opportunities that he forfeited when he left his former employer to join Eaton. These one-time grants are reported in the Stock Awards and Option Awards columns of the Summary Compensation Table along with the annual grants listed above. The methodology we used to buyout Mr. Okray’s forfeited compensation is consistent with the approach we take to replace the value of compensation that is subject to forfeiture for other external hires.

HEALTH AND WELFARE, RETIREMENT AND OTHER BENEFIT PLANS

Health and Welfare Benefits and Retirement Income Plans

We provide our executive officers with the same health and welfare and retirement income benefit programs that we provide to our other salaried employees in the United States, with certain exceptions described below. Our named executive officers may choose to participate in our 401(k) plan and receive Company matching contributions, which are reported as “Other Compensation” in the Summary Compensation Table. We provide 401(k) matching contributions that comply with Internal Revenue Code limits.

In place of typical Company-paid group term life insurance, we provide the named executive officers and approximately 200 other employees who were hired prior to January 1, 2016 with Company-paid life insurance coverage under two separate policies. The aggregate coverage provided by these two policies of approximately one times base salary is consistent with the level of coverage provided through our group term life policy to other non-union and U.S. salaried employees. The majority of the executives’ life insurance (base salary minus $50,000) is covered under an executive-owned individual whole-life policy, with the remaining $50,000 of insurance covered under our group term life policy. The value of the Company-paid premium for the whole life policy is imputed as income to each covered executive. We decided to provide this executive life insurance arrangement to allow each executive to have a paid-up policy at retirement that would mirror Company-provided post-retirement group term life insurance, but with less post-retirement tax complexity for both the executive and the Company.

Other Retirement and Compensation Arrangements

The 2021 Pension Benefits table on page 55 reports retirement benefits for Mr. Arnold and the other named executive officers who participate in our defined benefit pension plans. Certain provisions of the Internal Revenue Code limit the annual benefits that may be paid from a tax-qualified retirement plan. As permitted under the Code, the Board of Directors has authorized plans under which payment will be made for any benefits that may exceed those limits. If these nonqualified benefits accrued before 2005, executives may choose a lump sum payment or an annuity (unless otherwise determined by the Committee), except that if there is a change of control of the Company, they will be paid at the time of the event (unless otherwise determined by the Board of Directors) in a lump sum. These benefits that accrued after January 1, 2005 will be paid in the form of a single sum at retirement.

In response to market practices and to enhance our ability to attract and retain key executives, the Board of Directors also adopted plans that provide supplemental annual retirement income to certain executives whom we hire mid-career, because they do not have the opportunity to accumulate significant credited service with us under our tax-qualified retirement income or nonqualified restoration plans. These supplemental plans deliver a benefit if the executive either retires at age 55 or older with at least 10 years of service, or at age 65 or older regardless of the years of service. No new participants have been added to this plan since 2011.

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The tax-qualified pension plans that we maintain for our U.S. salaried and non-union employees define the term compensation to include base salary, overtime pay, pay premiums and awards under any short-term variable pay or incentive compensation plans (including amounts deferred for receipt at a later date). We use this same definition for calculating pension benefits under the nonqualified executive retirement income arrangements described in the preceding paragraph. These qualified and nonqualified retirement income plans are the only compensation or benefit plans or programs that we provide to executive officers that consider base salary and earned annual incentive awards in the calculation of the executives’ account balances. Long-term incentives, including cash and amounts realized upon the exercise of stock options and/or vesting of other equity-based awards are not factored into these calculations.

PENSION FREEZE ENACTED DECEMBER 31, 2020

Eaton regularly considers cost savings opportunities in all aspects of how we operate to ensure we remain competitive. Since 2001, we periodically reviewed our pension plan to determine how we compare to companies like ours, particularly diversified industrial companies. Our latest survey found that many large companies, including over half of our peers had already frozen or announced they were freezing their pension plans. Effective December 31, 2020, we froze our qualified pension plans for US non-union employees, including our named executive officers. This freeze affects participants in our Pension Plan for Eaton Corporation Employees. In the first quarter of 2021 we froze, with the same effect and timing, the related nonqualified DB Restoration and Limited Service Supplemental Plans. These plans are referenced on page 53.

At the end of the five-year period, beginning January 1, 2026, these employees will then be eligible to receive the same contribution into the Eaton Savings Plan and Eaton Supplemental Retirement Plan, as applicable, as employees hired April 1, 2013 and following, which is currently a 4% Eaton Retirement Contribution. Any employee hired on or after April 1, 2013 and all U.S. employees of Cooper immediately prior to our acquisition of Cooper receive an additional employer contribution under the Eaton Savings Plan and Eaton Supplemental Retirement Plan, as applicable in lieu of earning a benefit under the aforementioned pension plans.

Deferral Plans

We provide our executives with opportunities to defer the receipt of their earned and otherwise payable awards under our short-term and cash-settled long-term incentive plans. Our deferral plans do not allow executives to defer the receipt of their share-based awards. We offer these deferral arrangements so that our executives have a competitive opportunity to accumulate additional retirement assets and a means to meet our share ownership requirements.

Personal Benefits

We provide our executive officers with limited personal benefits such as reimbursement for financial and estate planning and tax preparation. Personal benefits are treated as taxable income to the executive.

Employment Contracts and Change of Control Agreements

We do not provide our executive officers with employment contracts; however, we do enter into Change of Control Agreements with each executive officer. The agreements do not contain tax gross-up provisions, but do contain double-trigger severance provisions and restrictive covenants. These agreements provide benefits if an executive’s employment is terminated or materially changed for certain reasons following a change of control. We believe that these agreements are in the best interest of our shareholders because they help ensure that we will have the continued dedication and focus of key executives in the event of a change of control of the Company. Details of our Change of

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Control Agreements may be found in the narrative discussion accompanying the Potential Payments Upon Termination beginning on page 57.

Limited Tax Protection for Relocation and Foreign Assignments

We and the Committee believe that tax protection is appropriate in very limited circumstances to avoid the potential for the value of a benefit to be reduced as a result of tax requirements that are beyond an executive’s control. Specifically, we provide tax protection for our employees under our relocation and foreign assignment policies so that they are able to make decisions to accept new assignments without concern that relocating would be a disadvantage from a tax standpoint.

Use of Our Aircraft

We own, operate, and maintain Company aircraft to enhance the ability of our executive officers and other corporate and business leaders to conduct business in an effective manner. This principle guides how the aircraft are used. Our stringent aircraft use policy ensures that the primary use of this mode of transportation is to satisfy business needs and that all aircraft use is accounted for at all times and in accordance with applicable laws. The Board of Directors has directed Mr. Arnold to use our aircraft for his business travel, whenever feasible, to ensure his personal security and enhance his productivity. The policy also allows Mr. Arnold to use our aircraft for personal travel as needed. Our aircraft policy does not permit other executives to use Company-owned aircraft for personal use without the advance approval of the Chief Executive Officer. No named executive officers receive tax protection on the imputed income for personal use of Company-owned aircraft.

EXECUTIVE COMPENSATION POLICIES AND GUIDELINES

Share Ownership Requirements

We expect all of our executive officers and certain other high-level key executives to hold a number of our shares with a value equal to a pre-determined multiple of their base salary. These multiples, as shown below, represent the minimum guidelines and are consistent with trends we have seen in the competitive market. The following shares are considered when measuring each executives ownership compared to the multipe: Eaton stock owned outright, unvested Eaton restricted share awards or units, Eaton stock credited to the executive’s Eaton Savings Plan (ESP) account, and Eaton stock credited to the executive’s deferred compensation account. In addition, each executive is required to own a minimum of 20% of the required shares outright, that includes shares owned directly and shares held in the ESP. Stock options and perfomance share units are not counted toward these requirements.

Executives are expected to hold shares that vest and shares acquired upon the exercise of stock options until these requirements are met. In addition, executives are expected to reach these guidelines within five years of appointment to a new position and are expected to satisfy them for the duration of their employment with the Company.

The Committee reviews each executive officer’s share ownership relative to these levels each February. As of the date this proxy was filed, each of the named executive officers exceeded his ownership and holding requirements.

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Anti-Hedging and Pledging

No Hedging Transactions – Our insider trading policy prohibits all of our officers, including our named executive officers, and directors from engaging in the following types of hedging transactions involving our common stock: (1) any transaction involving the establishment of a short position in Eaton securities; (2) buying or selling puts or calls or other derivatives on Eaton’s securities, or (3) otherwise entering into any hedging arrangements involving Eaton securities.

No Pledging – Our insider trading policy prohibits our employees, including our named executive officers, and directors from holding our common stock in a margin account or pledging it as collateral for a loan.

Clawback Policy

The Board of Directors has adopted a formal policy stating that, if an executive engaged in any fraud, misconduct or other bad-faith action that, directly or indirectly, caused or partially caused the need for a material accounting restatement for any periods as to which a performance-based award was paid or credited to the executive during the 12-month period following the first public issuance of the incorrect financial statement, such award shall be subject to reduction, cancellation or reimbursement to the Company at the Board’s discretion. The clawback policy covers any executive who participates in our ESIP or any successor plans. Our incentive compensation plans, stock plans and deferral plans all include the provisions of this policy. This policy may be found on our website at http://www.eaton.com/governance.

Tax and Accounting Considerations

We carefully monitor and comply with any changes in the laws, regulations, accounting standards and related interpretive guidance that impact our executive compensation plans and programs. Tax and accounting considerations have never played a central role in the process of determining the compensation or benefit plans and programs that are provided to our executives. Instead, the Committee consistently has structured our executive compensation program in a manner intended to ensure that it is competitive in the marketplace for executive talent and provides incentives and rewards that focus our executives on reaching desired internal and external performance levels. Once the appropriate programs and plans are identified, we administer and account for them in accordance with applicable requirements.

RELATIONSHIP BETWEEN COMPENSATION PLANS AND RISK

Compensation and Organization Committee Annual Risk Assessment

Each year, the Committee and management conduct a comprehensive review of our executive and broad-based compensation programs to determine whether any of our compensation programs, either individually or in the aggregate, would encourage employees to undertake excessive risks that are reasonably likely to have a material adverse impact on the Company.

After reviewing an inventory of our 2021 broad-based variable pay and sales commission plans, which included the number of participants in each plan, the participants’ levels within the organization, the target and maximum payment potential, performance criteria under each plan, and the type of plan (for example, management-by-objective and goal sharing), the Committee concluded that none of the broad-based programs would likely give rise to a material risk.

The Committee also applied a risk assessment to the short- and long-term incentive plans that are described in this CD&A. This analysis included, but was not limited to, (a) whether performance goals were balanced and potential payments were reasonable based on potential achievement of those goals at the threshold, target and maximum levels; (b) whether there is a balance between short- and long-term incentive opportunities and that pay is not overly weighted toward annual incentive opportunities; and, (c) how our performance objectives and target award opportunities compared to the objectives and target awards underlying our peers’ incentive programs. The Committee concluded that these short- and long-term incentive plans are not likely to give rise to a material risk.

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CHANGES FOR 2022

ESIP Long-Term Performance Plan

In light of the changes to certain companies in our strategic peer group and Eaton’s changing profile as a result of acquisition and divestiture activities, we have changed the TSR peer group for our 2022-2024 ESIP award period and will describe those changes in the 2023 Proxy Statement.

COMPENSATION AND ORGANIZATION COMMITTEE REPORT

The Compensation and Organization Committee of the Board of Directors has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on this review and discussion, the Compensation and Organization Committee recommends to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION AND ORGANIZATION COMMITTEE

Gregory R. Page, Chair
Christopher M. Connor
Silvio Napoli
Robert Pragada
Lori J. Ryerkerk

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Compensation Tables

2021 SUMMARY COMPENSATION TABLE

This table shows the total compensation of the Company’s Chairman and Chief Executive Officer of Eaton Corporation, the current and former Chief Financial Officer of Eaton Corporation, and our three other most highly compensated executive officers in 2021.

NARRATIVE EXPLANATION OF SUMMARY COMPENSATION TABLE COLUMN INFORMATION:

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2021 SUMMARY COMPENSATION TABLE

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GRANTS OF PLAN-BASED AWARDS IN 2021

The following table summarizes the potential awards payable to named executive officers with respect to the short-term and long-term incentive award opportunities granted in 2021.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2021

The following table summarizes the outstanding equity awards held by the named executive officers at December 31, 2021. The closing price of our ordinary shares on the last trading day in 2021 ($172.82) was used to determine the market value of the unvested RSAs and RSUs shown in the “Market Value of Shares or Units of Stock That Have Not Vested ($)” column.