UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.        )

 

 

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Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material Pursuant to §240.14a-12

MASCO CORPORATION

(Name of Registrant as Specified In Its Charter)

 

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

Payment of Filing Fee (Check the appropriate box):

 

☒		No fee required.
☐		Fee paid previously with preliminary materials.
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

MASCO 2022		A LETTER FROM THE CHAIR OF OUR BOARD

 

Masco Corporation  

17450 College Parkway  

Livonia, MI 48152  

313-274-7400  

www.masco.com  

 

March 25, 2022   Dear Masco Stockholders:

I’m pleased to write to you this year in advance of our Annual Meeting, and honored to have provided Board leadership to Masco during my first year as Chair.

The safety and comfort of home have never felt more critical than they do now, and Masco’s role in providing home improvement and building products that enhance the way consumers experience and enjoy their living spaces has never been more important. Thanks to the strength, resilience and outstanding efforts of our 20,000 employees globally, as well as our management team, we delivered value for our customers and our shareholders in 2021. We did this despite the ongoing impact of the global pandemic, significant supply chain challenges and inflation headwinds.

Our strong results in 2021 included sales growth of 17% and an 8% increase in our operating profit. We also executed on our commitment to return capital to shareholders over the course of year, with approximately $1.2 billion returned in 2021. This included paying approximately $211 million in dividends, reflecting a quarterly dividend increase of 68%.

Your Board continues to provide robust oversight of our overall enterprise strategy and significant risks, as well as our sustainability initiatives. We are proud of our progress in the following areas:

 

•

With new COVID variants emerging over the past year, we’ve promoted the health and well-being of our employees and ensured we’ve taken appropriate measures to support a safe work environment.

 

•

Knowing that our strength comes from our employees, we have remained committed to supporting a diverse and engaged workforce. To this end, we have disclosed our employee demographic data and workforce representation goals, as well as a description of our DE&I programs and initiatives.

 

A LETTER FROM THE CHAIR OF OUR BOARD			MASCO 2022

 

•

We continuously strive to deliver better living possibilities—for our homes, our environment and our community. This includes creating sustainable products for consumers. We offer paints that meet certain environmentally-friendly performance requirements and low VOC emissions standards, lighting fixtures using LED technology, and plumbing products that meet water flow rate standards. In 2021, a significant portion of our revenue came from the sale of sustainable products.

I am pleased to invite you to attend Masco Corporation’s Annual Meeting of Stockholders. Our meeting will be held at 9:30 a.m. Eastern Time on Thursday, May 12, 2022 at our corporate office in Livonia, Michigan. Your vote is important to us, and I urge you to read this proxy statement as we ask for your voting support on the items described in the following pages. On behalf of the entire Board, thank you for your continued investment in and support of Masco.

 

		Sincerely,       Lisa A. Payne Chair of the Board

 

 

THIS PROXY STATEMENT AND THE ENCLOSED PROXY CARD ARE BEING MAILED OR OTHERWISE MADE AVAILABLE TO STOCKHOLDERS ON OR ABOUT MARCH 25, 2022.

 

MASCO 2022		NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

		MASCO CORPORATION NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Stockholders of record at the close of business on March 18, 2022 are entitled to vote at the Annual Meeting or any adjournment or postponement of the meeting. Whether or not you plan to attend the Annual Meeting, you can ensure that your shares are represented at the meeting by promptly voting by internet or by telephone, or by completing, signing, dating and returning your proxy card in the enclosed postage prepaid envelope. Instructions for each of these methods and the control number that you will need to vote are provided on the proxy card. You may withdraw your proxy before it is exercised by following the directions in the proxy statement. Alternatively, you may vote at the meeting.

By Order of the Board of Directors,

 

Kenneth G. Cole

Vice President, General Counsel and Secretary

 

		ANNUAL MEETING INFORMATION:
		Date:		May 12, 2022
		Time:		9:30 a.m. Eastern Time
		Place:		Masco Corporation Corporate Office 17450 College Parkway Livonia, MI 48152
		ANNUAL MEETING ITEMS OF BUSINESS:   1. To elect three Class I directors;   2. To consider and act upon a proposal to approve the compensation paid to our named executive officers;   3. To ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for 2022; and   4. To transact such other business as may properly come before the meeting.						The Company recommends that you vote as follows:   FOR each Class I director nominee;   FOR the approval of the compensation paid to our named executive officers; and   FOR the selection of PricewaterhouseCoopers LLP as our independent auditors for 2022.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 12, 2022: THIS PROXY STATEMENT AND THE MASCO CORPORATION 2021 ANNUAL REPORT TO STOCKHOLDERS, WHICH INCLUDES THE COMPANY’S ANNUAL REPORT ON FORM 10-K, ARE AVAILABLE AT:   http://www.ezodproxy.com/masco/2022   THE COMPANY WILL PROVIDE A COPY OF ITS ANNUAL REPORT ON FORM 10-K, WITHOUT CHARGE, UPON A STOCKHOLDER’S WRITTEN REQUEST TO: INVESTOR RELATIONS, MASCO CORPORATION, 17450 COLLEGE PARKWAY, LIVONIA, MICHIGAN 48152.

 

MASCO 2022		2022 PROXY STATEMENT SUMMARY

 

		2022 PROXY STATEMENT SUMMARY

We delivered strong results in 2021 despite the challenges of an ever-changing environment due to the continuing COVID-19 pandemic, supply chain disruptions and constraints and increasing costs for commodities and transportation. We focused on continuing to protect the health and safety of our employees, driving new organic and inorganic growth opportunities and managing costs. Our ability to execute on these priorities, coupled with strong consumer demand for our repair and remodel-oriented products, resulted in top-line growth in both our Plumbing Products segment and Decorative Architectural Products segment.

 

 

 

 

2022 PROXY STATEMENT SUMMARY			MASCO 2022

 

 

MASCO 2022		TABLE OF CONTENTS

 

TABLE OF CONTENTS

 

PART I—CORPORATE GOVERNANCE
Director and Director Nominees			1
Director Nominees for Class I (Term Expiring at Annual Meeting in 2025)			2
Class II Directors (Term Expiring at the Annual Meeting in 2023)			4
Class III Directors (Term Expiring at the Annual Meeting in 2024)			6
Board of Directors			8
Structure of our Board of Directors			8
Our Board’s Leadership Structure			8
Director Independence			8
Board Refreshment			9
Board Membership and Composition			9
Board Self-Evaluation Process			10
Risk Oversight			11
Board Meetings and Attendance			12
Communications with our Board of Directors			12
Committees of our Board of Directors			13
Director Compensation Program			16
Related Person Transactions			18
Proposal 1: Election of Class I Director Nominees			19
PART II—COMPENSATION DISCUSSION AND ANALYSIS
Compensation Program Highlights			20
Compensation Decisions in 2021			24
Our 2021 Performance			24
How We Performed Against our Performance Compensation Goals			24
Our 2021 Annual Performance Program			24
Our Long-Term Incentive Program			27
Stock Options Granted in 2021			29
Other Components of our Executive Compensation Program			29
Our Executive Compensation Program Highlights			31
We Provide Long-Term Equity Incentives to Align the Interests of Our Executive Officers With Our Shareholders			31
We Can Clawback Incentive Compensation			31
We Require Minimum Levels of Stock Ownership by our Executives			31
Our Equity Awards Have Double-Trigger Change of Control Provisions			32
Our Compensation Committee Oversees an Annual Compensation Risk Evaluation			32
Our Compensation Programs Encourage Executive Retention and Protect Us			32
We Prohibit Excise Tax Gross-Up Payments			32
We Prohibit Hedging and Pledging			32
We Do Not Have Employment Agreements			32
Our Annual Compensation Review Process			33
Annual Management Talent Review and Development Process			33
Compensation Data Considered by our Compensation Committee			33
Our Peer Group			34
Retention of Discretion by our Compensation Committee			34
Outside Compensation Consultant			35
Tax Treatment			35
Compensation Committee Report			36
Proposal 2: Advisory Vote to Approve the Compensation of Our Named Executive Officers			37

 

TABLE OF CONTENTS			MASCO 2022

 

PART III—COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table		38
Grants of Plan-Based Awards		40
Outstanding Equity Awards at Fiscal Year-End		41
Option Exercises and Stock Vested		43
Retirement Plans		43
Payment Upon Change in Control		46
Payment Upon Retirement, Termination, Disability or Death		47
CEO Pay Ratio		49
PART IV—AUDIT MATTERS
Audit Committee Report		50
PricewaterhouseCoopers LLP Fees		51
Audit Committee Pre-Approval Policies and Procedures		51
Proposal 3: Ratification of Selection of Independent Auditors		52
PART V—EXECUTIVE OFFICERS AND BENEFICIAL OWNERSHIP
Executive Officers		53
Security Ownership of Management and Certain Beneficial Owners		54
PART VI—GENERAL INFORMATION
2022 Annual Meeting of Stockholders		56
Who is entitled to vote at the Annual Meeting?		56
What is the difference between holding shares as a record holder and as a beneficial owner?		56
What is a broker non-vote?		56
How are abstentions and broker non-votes treated?		57
What constitutes a quorum?		57
How can I submit my vote?		57
How many votes are needed for each proposal to pass?		57
Is my proxy revocable?		57
Who is paying for the expenses involved in preparing and mailing this proxy statement?		58
What happens if additional matters are presented at the Annual Meeting?		58
What is “householding” and how does it affect me?		58
Our Website		58
2023 Annual Meeting of Stockholders		59
Other Matters		60

 

PART I - CORPORATE GOVERNANCE			MASCO 2022

 

		CORPORATE GOVERNANCE

This section of our proxy statement provides information on the qualifications and experience of our director nominees and incumbent directors, the structure and responsibilities of our Board and its Committees, our Board’s self-evaluation and risk oversight processes, and other important corporate governance matters.

DIRECTORS AND DIRECTOR NOMINEES

Our Board is currently composed of nine directors; eight of whom are independent directors. Our directors possess a wide array of skills and experience that provide a strong source of strategic oversight, advice and guidance to our management team.

The following director skills matrix highlights the balanced mix of skills and experience that are most relevant and important to our Company. The skills and experience identified for each independent director are those we believe are key and unique to each director’s contribution to our Board. This matrix is not meant to encompass or reflect all of the skills and experience possessed by each director. See the following pages for a full biography of each of our continuing directors.

 

Alexander

Ffolkes

O’Herlihy

Parfet

Payne

Plant

Stevens

Turner

Business Operations and Leadership

M&A

Risk Management

Finance and Accounting

Product Innovation

International Business

Manufacturing

Marketing and Brand Management

Talent Management

 

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MASCO 2022		PART I - CORPORATE GOVERNANCE

 

DIRECTOR NOMINEES FOR CLASS I

(Term Expiring at the Annual Meeting in 2025)

 

Donald R. Parfet		Lisa A. Payne
AGE: 69		AGE: 63
DIRECTOR SINCE: 2012		DIRECTOR SINCE: 2006
POSITION: • Managing Director, Apjohn Group, LLC, a business development company, since 2000 • General Partner, Apjohn Ventures Fund, Limited Partnership, a venture capital fund, since 2003		POSITION: • The Chair of our Board • Former Vice Chair and Chief Financial Officer of Taubman Centers, Inc., a real estate investment trust
RELEVANT SKILLS AND EXPERIENCE:		RELEVANT SKILLS AND EXPERIENCE:
As an executive with responsibilities for numerous global businesses, Mr. Parfet brings extensive financial and operating experience to our Board, particularly in areas of financial and corporate staff management and senior operational practices for multiple global business units. His experience in business development and venture capital firms provides our Board with a valued perspective on growth and strategy. He is also experienced in leading strategic planning, risk assessment, human capital management and financial planning and controls. His global operating experience, strong financial background and proven leadership capabilities are especially important to our Board’s consideration of product and geographic expansion and business development opportunities.		Ms. Payne provides leadership and executive management experience to our Board. She also possesses substantial financial, accounting and corporate finance expertise gained through her experience as Chief Financial Officer of Taubman Centers and as an investment banker. Her financial focus and proficiency helped guide Taubman Centers through the economic recession and increase shareholder value. She brings to our Board an understanding of growth strategy. In addition, Ms. Payne’s extensive experience in real estate investment, development and acquisition gives her an informed and thorough understanding of macroeconomic factors that may impact our business.
BUSINESS EXPERIENCE:		BUSINESS EXPERIENCE:
• Chair of the Board of Kelly Services, Inc. and Lead Independent Director of Rockwell Automation, Inc. • Chair of the Board of Sierra Oncology, Inc. (2017-2019) • Senior Vice President, Pharmacia Corporation, a pharmaceutical company, from which he retired in 2000 • Served as a senior corporate officer of Pharmacia & Upjohn and The Upjohn Company, predecessors of Pharmacia Corporation • Director and trustee of a number of charitable and civic organizations		• Director of Rockwell Automation, Inc. • Director of Leaf Home Solutions LLC, a privately-held provider of technology-enabled home solutions • Director of J.C. Penney Company (2016-2020) • Chair of the Board of Soave Enterprises, LLC, a privately held diversified management and investment company (2016-2017) • President of Soave Real Estate Group (2016-2017) • Taubman Centers, Inc.: • Vice Chair (2005-2016) • Chief Financial Officer (2005-2015) • Executive Vice President and Chief Financial and Administrative Officer (1997-2005) • Investment banker, Goldman, Sachs & Co. (1987-1997)

 

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PART I - CORPORATE GOVERNANCE			MASCO 2022

 

Reginald M. Turner

AGE: 62

DIRECTOR SINCE: 2015

POSITION: Attorney and Member, Clark Hill PLC, a Detroit, Michigan-based law firm, since 2000, and currently serves on its Executive Committee

RELEVANT SKILLS AND EXPERIENCE:

As an accomplished litigator and legal advisor with expertise in labor and employment law and government relations, Mr. Turner brings to our Board substantial insight in these areas. His background, coupled with his service as a director of a financial institution and a member of its enterprise risk committee, make him a valuable asset to our Board in the areas of risk management and finance. Mr. Turner has numerous and varied experiences in business, civic and charitable leadership roles, and his skills and insight benefit our Board as it considers issues of risk management, talent management, corporate governance and legal risk.

BUSINESS EXPERIENCE:

• Director of Comerica Incorporated since 2005, where he currently serves on that board’s Enterprise Risk Committee, Audit Committee and Qualified Legal Compliance Committee • President of the American Bar Association (2021-2022) • Past President of the National Bar Association and past President of the State Bar of Michigan • Active in public service and with civic and charitable organizations, serving in leadership positions with the Detroit Public Safety Foundation, the Detroit Institute of Arts, and the Community Foundation for Southeast Michigan • Past Chair of the United Way for Southeastern Michigan

 

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MASCO 2022		PART I - CORPORATE GOVERNANCE

 

CLASS II DIRECTORS

(Term Expiring at the Annual Meeting in 2023)

 

Keith J. Allman		Christopher A. O’Herlihy
AGE: 59		AGE: 58
DIRECTOR SINCE: 2014		DIRECTOR SINCE: 2013
POSITION: Our President and Chief Executive Officer, since 2014		POSITION: Vice Chair of Illinois Tool Works Inc., a global diversified industrial manufacturer of specialized industrial equipment, consumables, and related service businesses, since 2015
RELEVANT SKILLS AND EXPERIENCE:		RELEVANT SKILLS AND EXPERIENCE:
Mr. Allman brings to our Board strong business leadership skills, hands-on operational experience with our businesses and valuable insight into our Company’s culture. He played an integral role in developing our strategies to strengthen our brands, innovation and service and improve our execution, which has helped to provide the foundation for the current direction of our Company. His key leadership positions within our Company have given him deep knowledge of all aspects of our business, and he possesses a significant understanding of, and experience with, complex operations as well as company-specific customer expertise.		Mr. O’Herlihy joined Illinois Tool Works Inc. in 1989. In his over 30 years with Illinois Tool Works, he has held several executive positions through which he has acquired extensive knowledge and experience in all aspects of business, including business strategy, international business operations, mergers and acquisitions, emerging markets, financial performance and structure, legal matters, human resources and talent management. His current responsibilities include developing and executing that company’s overall corporate growth strategy. He brings to our Board strategic insight and understanding of complex business and manufacturing operations, as well as a valuable perspective on developing innovative products, gained through his experience with a multi-billion dollar diversified global organization.
BUSINESS EXPERIENCE:		BUSINESS EXPERIENCE:
• Masco Corporation: • Group President (2011-2014) • President, Delta Faucet (2007-2011) • Executive Vice President, Builder Cabinet Group (2004-2007) • Served in various management positions of increasing responsibility at Merillat Industries (1998-2003) • Director of Oshkosh Corporation		• Illinois Tool Works Inc.: • Executive Vice President, with worldwide responsibility for Illinois Tool Works’ Food Equipment Group (2010-2015) • Group President—Food Equipment Group Worldwide (2010) • Group President—Food Equipment Group International (2009-2010) • For over 30 years, served in various positions of increasing responsibility, including as Group President of the Polymers and Fluids Group

 

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PART I - CORPORATE GOVERNANCE			MASCO 2022

 

Charles K. Stevens, III

AGE: 62

DIRECTOR SINCE: 2018

POSITION: Retired Executive Vice President and Chief Financial Officer of General Motors Company, a global automotive company

RELEVANT SKILLS AND EXPERIENCE:

Mr. Stevens joined General Motors Company in 1983 with the Buick Motor Division. In his over 30 years with General Motors Company, Mr. Stevens acquired significant leadership experience in financial and accounting operations. His extensive background and expertise provide to our management and Board a valuable understanding of finance, financial operations, international financial matters, risk evaluation and management, mergers and acquisitions and consumer goods. His past responsibilities include being a vital contributor to developing and executing business strategies to drive profitable growth, which benefit our Board as it oversees our strategy.

BUSINESS EXPERIENCE:

• Director of Eastman Chemical Company, Flex, Ltd. and Tenneco Inc. • General Motors Company: • Executive Vice President and Chief Financial Officer (2014-2018) • Chief Financial Officer of GM North America (2010-2014) • Interim Chief Financial Officer of GM South America (2011-2013) • Chief Financial Officer of GM de Mexico (2008-2010) • Chief Financial Officer of GM Canada (2006-2008) • For more than 30 years, served in various positions of increasing responsibility, including several leadership positions with GM’s Asia Pacific region including China, Singapore, Indonesia and Thailand

 

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MASCO 2022		PART I - CORPORATE GOVERNANCE

 

CLASS III DIRECTORS

(Term Expiring at the Annual Meeting in 2024)

 

Mark R. Alexander		Marie A. Ffolkes
AGE: 57		AGE: 50
DIRECTOR SINCE: 2014		DIRECTOR SINCE: 2017
POSITION: Chief Executive Officer, Icelandic Provisions, Inc., a provider of Icelandic dairy products, since 2019		POSITION: Former Chief Executive Officer, TriMark USA, LLC, a provider of design services, equipment and supplies to the food service industry
RELEVANT SKILLS AND EXPERIENCE:		RELEVANT SKILLS AND EXPERIENCE:
Through his experience as a current CEO and as the former President of Campbell Soup Company’s largest division, Mr. Alexander brings to our Board strong leadership skills and experience in developing and executing business growth strategies, including through innovation and mergers and acquisitions. His past business responsibilities include investing in brand-building, innovation and expanded distribution, which correspond to areas of focus at our business operations. His extensive international experience with consumer branded products and his background in marketing and customer relations also provide our Board with expertise and insight as we leverage our consumer brands in the global market.		Through her experience as a CEO and as the former President, Industrial Gases, Americas for Air Products & Chemicals, Inc., Ms. Ffolkes brings to our Board extensive experience in developing and leading strategy implementation and driving profitability. Ms. Ffolkes’ strong leadership experience allows her to provide valuable contributions and perspectives to our Board in areas important to our performance including operations, finance, international markets, marketing and personnel.
BUSINESS EXPERIENCE:		BUSINESS EXPERIENCE:
• Campbell Soup Company: • Senior Vice President (2009-2018) • President of Americas Simple Meals and Beverages (2015-2018) • President of Campbell North America (2012-2015), Campbell International (2010-2012) and Asia Pacific (2006-2009) • Chief Customer Officer and President—North America Baking & Snacking (2009-2010) • Served in various marketing, sales and management roles in the United States, Canada, Europe and Asia since 1989		• Chief Executive Officer, TriMark USA, LLC (2020-2021) • President, Industrial Gases, Americas of Air Products & Chemicals, Inc. (2015-2020) • Tenneco: • Global Vice President and General Manager, Ride Performance Group (2013-2015) • Vice President and General Manager, Global Elastomers (2011-2013) • Johnson Controls International plc (formerly, Johnson Controls): • Vice President & General Manager South America Region, Automotive Group (2010-2011) • Vice President and General Manager, Hyundai-Kia Customer Business Unit (2008-2010) • Global Vice President, Japan (2006-2008) • Director of National Association of Manufacturers

 

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PART I - CORPORATE GOVERNANCE			MASCO 2022

 

John C. Plant

AGE: 68

DIRECTOR SINCE: 2012

POSITION: Chair of the Board and Chief Executive Officer, Howmet Aerospace Inc., a global supplier of engineered metal products, since 2020.

RELEVANT SKILLS AND EXPERIENCE:

Based on his leadership positions with multi-billion dollar diversified global companies, Mr. Plant brings to our Board strategic insight and understanding of complex operations as well as a valuable perspective of international business. He understands how to manage a company through economic cycles and major transactions. He has a strong background in finance and extensive knowledge and experience in all aspects of business, including operations and manufacturing, business development matters, mergers and acquisitions, financial performance and structure, legal matters and human resources.

BUSINESS EXPERIENCE:

• Director of Jabil Inc. • Chief Executive Officer (2019-2020) and Chair of the Board (2017-2020) of Arconic Inc. • Director of Gates Industrial Corporation plc (2017-2019) • TRW Automotive Holdings Corp.: • Chair of the Board (2011-2015) • President and Chief Executive Officer and Director (2003-2015) • Co-member of the Chief Executive Office of TRW Inc. and the President and Chief Executive Officer of the automotive business of TRW Inc. (2001-2003) • Director Emeritus of the Automotive Safety Council

 

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MASCO 2022		PART I - CORPORATE GOVERNANCE

 

BOARD OF DIRECTORS

Our Board of Directors is committed to maintaining our high standards of ethical business conduct and corporate governance principles and practices.

Structure of our Board of Directors

Our Board of Directors is comprised of nine directors and is divided into three classes. Each class has a term of three years and each year the term of office of one class expires. Each director will hold office for the term to which he or she is elected or until his or her respective successor is elected and qualified.

Our Board’s Leadership Structure

Ms. Lisa Payne was appointed as Chair of our Board on May 12, 2021. At that time, Ms. Payne also became the Chair of our Governance Committee. Ms. Payne has served on our Board since 2006, including as the Chair of our Audit Committee from 2015-2021.

Effective Oversight of our Company

The responsibilities, among others, of the independent Chair of our Board include:

 

•

presiding at Board meetings and at executive sessions of the independent directors;

 

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providing advice to our CEO;

 

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discussing with management and approving our Board’s meeting agendas and assuring that there is sufficient time for discussion of all agenda items;

 

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in preparation for Board meetings, consulting with management on information to be provided to our Board;

 

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overseeing the Board’s annual review of our strategic plan and its execution; and

 

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calling meetings of our independent directors, as necessary.

Separation of our Chair of the Board and CEO Roles

Our Board believes that its leadership structure is in the best interests of the Company and our stockholders at this time; however, our Board has no policy with respect to the separation of the roles of CEO and Chair. Our Board believes that this matter should be discussed and determined by our Board from time to time, based on all of the then-current facts and circumstances. If the roles of Board Chair and CEO are combined in the future, then a majority of our independent directors will elect a Lead Independent Director for a renewable one-year term.

Director Independence

Our Corporate Governance Guidelines require that a majority of our directors qualify as “independent” under the requirements of applicable law and the New York Stock Exchange’s listing standards.

Director Independence Standards

For a director to be considered independent, our Board must determine that the director does not have any direct or indirect material relationship with us. Our Board has adopted standards to assist it in making a determination of independence for directors. These standards are posted on our website at www.masco.com.

 

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PART I - CORPORATE GOVERNANCE			MASCO 2022

 

Assessment of our Directors’ Independence

Our Board has determined that eight of our nine directors, including all of our non-employee directors, are independent. As an employee, Mr. Allman, our President and Chief Executive Officer, is not an independent director.

In making its independence determinations, our Board reviewed all transactions, relationships and arrangements for the last three fiscal years involving each non-employee director and the Company.

 

•

In evaluating Mr. O’Herlihy’s independence, our Board considered our purchases of goods from his employer, Illinois Tool Works Inc. and its subsidiaries. The aggregate amount of these purchases was approximately $60,000 in 2021. Illinois Tool Works has reported revenue of $14.5 billion in 2021. Our Board does not believe that Mr. O’Herlihy has a material interest in these transactions.

Our Board also determined that we did not make any discretionary charitable contributions exceeding the greater of $1 million or 2% of the revenues of any charitable organization in which any of our directors, or an immediate family member of any of our directors, was an executive officer and actively involved in the day-to-day operations.

Committee Member Independence Assessment

Our Board has determined that each member of our Audit Committee, Compensation Committee and Governance Committee qualifies as independent under the requirements of applicable law and the New York Stock Exchange’s listing standards.

Board Refreshment

Our Governance Committee periodically assesses the composition of our Board by reviewing our directors’ skills and expertise and reviews current director tenure, including whether any vacancies are expected on our Board due to retirement or otherwise. Our Board completes a director skill-set analysis from time to time to provide our Governance Committee insight into our Board’s composition. The Committee uses this information to evaluate the skills and experience represented on our Board and to identify anticipated skills and experience that would be valuable to our Board in the future to best support our Company’s strategic objectives.

Board Membership and Composition

Board Membership

Our Governance Committee believes that directors should possess exemplary personal and professional reputations, reflecting high ethical standards and values. The expertise and experience of directors should provide a source of strategic oversight, advice and guidance to our management. A director’s judgment should demonstrate an inquisitive and independent perspective with intelligence and practical wisdom. Directors should be free of any significant business relationships which would result in a potential conflict in judgment between our interests and the interests of those with whom we do business. Each director should be committed to serving on our Board for an extended period of time and to devoting sufficient time to carry out the director’s duties and responsibilities in an effective manner for the benefit of our stockholders.

Our Governance Committee also considers additional criteria adopted by our Board for director nominees and the independence, financial literacy and financial expertise standards required by applicable law and by the New York Stock Exchange.

Board Composition

As part of its assessment of board composition and evaluation of potential director candidates, our Governance Committee considers whether our directors hold diverse viewpoints, professional experiences, education and other skills and attributes that are necessary to enhance our Board’s effectiveness. In addition, our Governance Committee

 

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MASCO 2022		PART I - CORPORATE GOVERNANCE

 

believes that it is desirable for directors to possess diverse characteristics of gender, race, national origin, ethnicity and age, and considers such factors in its evaluation of candidates for board membership. Neither our Board nor our Governance Committee has adopted a formal Board diversity policy.

Director Candidate Recommendations

The Governance Committee uses a number of sources to identify and evaluate director nominees. It is the Governance Committee’s policy to consider director candidates recommended by stockholders. All Board candidates, including those recommended by stockholders, are evaluated against the criteria described above. Stockholders wishing to have the Governance Committee consider a candidate should submit the candidate’s name and pertinent background information to our Secretary at the address stated below in “Communications with our Board of Directors.” Stockholders who wish to nominate director candidates for election to our Board should follow the procedures set forth in our Certificate of Incorporation and Bylaws.

BOARD SELF-EVALUATION PROCESS

Our Governance Committee is responsible for the oversight of our Board’s annual self-evaluation, including establishing evaluation criteria and reporting on the process and results of the evaluation, including any recommendations for proposed changes, to the Board. Our Board’s self-evaluation process includes the following components:

Survey

Each year our directors undertake an anonymous self-evaluation to assess our Board’s performance. The directors provide feedback on:

 

•

The responsibilities of the Board;

 

•

Board meetings;

 

•

Board engagement with management; and

 

•

Board and Committee structure and composition.

Periodically, our directors also undertake a board planning survey, including a skill-set analysis that assesses the current and desired director skills and experience, which facilitates director succession planning.

Individual Discussions

The Chair of our Board reviews a summary of the self-evaluation results and holds one-on-one discussions with each director to discuss feedback on the topics included in the annual self-evaluation and to engage in in-depth discussions regarding the functions of the Board.

Review and Discussion

Our Governance Committee discusses the self-evaluation results and considers recommendations. These results and recommendations are then discussed by the full Board.

Consider Feedback

Director feedback is considered by the Board and the Committees, and Board and Committee policies and practices are updated as appropriate.

 

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PART I - CORPORATE GOVERNANCE			MASCO 2022

 

RISK OVERSIGHT

Our Board has a thorough approach to the oversight of our risk management practices, both directly and through its Committees. Our Board reviews and discusses with management comprehensive analyses describing the material risks facing us and the actions we are taking to mitigate these risks. Management provides updates regarding these risks and mitigation activities to the Board throughout the year, as necessary.

Our Board’s key risk oversight activities include:

 

Strategic risk oversight:

Each year our Board holds a strategy session in which management and our directors discuss how we are executing our current strategic objectives and developing our long-term strategy. In 2021, our Board’s strategy session included discussions with the General Managers of Delta Faucet Company, Hansgrohe, Behr Paint Company and Watkins Wellness. The session also included a discussion with a housing market expert to provide our directors with an external perspective of us, our industry and macroeconomic factors that may impact us.

 

Enterprise risk oversight:

Each year our Board and management discuss our enterprise risk management profile and assessment, which includes financial, operational, legal, regulatory, ethics and compliance risks that are material to us.

 

Cybersecurity risk oversight:

Our Board oversees our cybersecurity risk. In 2021, our Board met twice with our Vice President, Information Technology and our Director, Enterprise Security to discuss our IT enterprise strategy, our enterprise security program, an assessment of our cybersecurity risk and how we are managing that risk (which includes regular training of our employees), and how we are implementing cybersecurity compliance.

 

Environmental, Social and Governance (ESG) risk oversight:

Our Board oversees our ESG enterprise strategy, strategic initiatives and disclosure, and in 2021, our Board met twice with management to discuss these items, as well as our Corporate Sustainability Report. Our Board has delegated oversight responsibility of certain specific ESG matters to our Committees, as described below.

Our Board has delegated certain oversight responsibilities to our Board Committees, as follows:

 

Audit Committee:				Compensation Committee:				Governance Committee:
•  Financial reporting   •  Internal controls over financial reporting   •  Legal and regulatory compliance, including for environmental claims and liabilities   •  Ethics and compliance program   •  Risk disclosure				•  Executive compensation programs and policies   •  CEO and executive management succession planning   •  Enterprise talent strategy, including leadership and future workforce   •  Diversity, equity and inclusion (DE&I) strategy, initiatives and goals				•  Governance structure   •  Board composition, including refreshment and diversity   •  Board self-evaluation process   •  Director orientation and continuing education   •  Governance trends and best practices   •  Political contributions

For more information on the risk oversight activities of our Board Committees, see the “Committees of our Board of Directors” section.

 

11

MASCO 2022		PART I - CORPORATE GOVERNANCE

 

Board Meetings and Attendance

Our Board held six meetings in 2021. Each director attended at least 75% of our Board meetings and applicable committee meetings that were held in 2021. It is our policy to encourage directors to attend our Annual Meeting of Stockholders, and all of our directors attended our 2021 Annual Meeting. Our independent directors meet separately at least once per year. Ms. Payne, as the Chair of our Board, presides over these executive sessions.

Communications with our Board of Directors

If you are interested in contacting the Chair of our Board, an individual director, our Board as a group, our independent directors as a group, or a specific Board committee, you may send a communication, specifying the individual or group you wish to contact, in care of: Kenneth G. Cole, Secretary, Masco Corporation, 17450 College Parkway, Livonia, Michigan 48152.

 

12

PART I - CORPORATE GOVERNANCE			MASCO 2022

 

COMMITTEES OF OUR BOARD OF DIRECTORS

The standing committees of our Board are the Audit Committee, the Compensation Committee and the Governance Committee. These committees function pursuant to written charters adopted by our Board. The committee charters, as well as our Corporate Governance Guidelines and our Code of Ethics, are posted on our website at www.masco.com and are available to you in print from our website or upon request.

Audit Committee

 

Charles K. Stevens Chair

Mark R. Alexander

John C. Plant

Reginald M. Turner

5 meetings in 2021

All members are independent and financially literate

Messrs. Alexander, Plant and Stevens qualify as “audit committee financial experts” as defined in Item 407(d)(5)(ii) of Regulation S-K

 

Audit Committee responsibilities include assisting the Board in its oversight of the:   • integrity of our financial statements   • effectiveness of our internal controls over financial reporting   • qualifications, independence, performance and remuneration of our independent auditors   • performance of our internal audit function   • compliance with legal and regulatory requirements, including our employees’ and directors’ compliance with our Code of Ethics   In addition, our Audit Committee reviews and discusses with management certain key financial and non-financial risks.		Audit Committee key activities in 2021:   •  reviewed and approved our 2020 Form 10-K   •  reviewed our Form 10-Qs   •  discussed with management quarterly updates on our internal controls over financial reporting   •  reviewed with management quarterly updates on ethics hotline matters   •  discussed with management certain risk management practices, including employee health and welfare benefit matters and treasury matters   •  discussed with management our Ethics and Compliance Program, including Program goals, objectives and initiatives   •  reviewed the performance of our internal and independent auditors   •  reviewed and approved our independent auditor’s 2022 integrated audit plan and service fees   •  reviewed and approved our 2022 internal audit annual operating plan

 

13

MASCO 2022		PART I - CORPORATE GOVERNANCE

 

Organization and Compensation Committee

 

Christopher A. O’Herlihy Chair

Mark A. Alexander

Marie A. Ffolkes

Donald R. Parfet

Reginald M. Turner

6 meetings in 2021

All members are independent

 

Our Compensation Committee is responsible for the following:   • the oversight of our executive compensation programs   • determining the goals and objectives applicable to the compensation of our CEO and evaluating our CEO’s performance in light of those goals   • reviewing our executive succession plan, including periodically reviewing our CEO’s evaluation and recommendation of a potential successor   • determining and administering equity awards granted under our stock incentive plan   • administering our annual and long-term performance compensation programs   • reviewing and establishing our peer group   In addition, our Compensation Committee evaluates risks arising from our compensation policies and practices and has determined that such risks are not reasonably likely to have a material adverse effect on us. Our executive officers and other members of management report to the Compensation Committee on executive compensation programs at our business units to assess whether these programs or practices expose us to excessive risk.		Compensation Committee key activities in 2021:   • reviewed and approved the incentive compensation paid to our executive officers for 2020 performance   • reviewed with management a pay-for-performance analysis of our CEO’s compensation as compared to our peer group   • established the 2021 performance goals for our 2021 Annual Incentive Program, which included the addition of an individual performance modifier for each executive officer, and 2021-2023 Long-Term Incentive Program   • discussed with management an organization and talent update and our talent strategy   • discussed with management our diversity, equity and inclusion strategy and initiatives, including our human capital management disclosure included in our 2021 Form 10-K   • discussed with management and the Committee’s outside compensation consultant executive compensation trends   • reviewed with management our 2021 stockholder engagement activities

 

14

PART I - CORPORATE GOVERNANCE			MASCO 2022

 

Corporate Governance and Nominating Committee

 

Lisa Payne Chair

Marie A. Ffolkes

Donald R. Parfet

John C. Plant

5 meetings in 2021

All members are independent

 

Our Governance Committee is responsible for the following:   • advising our Board on the governance structure and conduct of our Board   • developing and recommending to our Board appropriate corporate governance guidelines and policies   • Board succession planning, including reviewing our Board’s structure and composition and the tenure of our directors   • reviewing the independence of our directors   • identifying and recommending qualified individuals for nomination and re-nomination to our Board   • recommending directors for appointment and re-appointment to Board committees   • reviewing and recommending to the Board our director compensation		Governance Committee key activities in 2021:   • reviewed the results of our Board’s 2021 self-evaluation   • engaged in board leadership succession planning, resulting in the Board’s selection of Lisa Payne as our new Board Chair as of May 2021 and new Chair assignments for each of our Board’s Committees   • reviewed with management our 2021 stockholder engagement activities   • reviewed and recommended an amendment to our bylaws to include a proxy access provision, which was adopted by our Board   • engaged a third party firm, Spencer Stuart, to assist in a director candidate search process   • discussed with management significant corporate governance trends   • reviewed 2020 political contributions in accordance with our Political Contributions Policy

 

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MASCO 2022		PART I - CORPORATE GOVERNANCE

 

DIRECTOR COMPENSATION PROGRAM

Our non-employee directors receive the following compensation for service on our Board:

 

Compensation Element		Amount
Annual Cash Retainer		$130,000
Annual Equity Retainer (a)		Restricted stock units with a value of $160,000 that vest in three equal installments over three years
Annual Chair of the Board Cash Retainer		$200,000
Annual Committee Chair Cash Retainer (b)		$25,000 for the Audit Committee $20,000 for the Compensation Committee $15,000 for the Governance Committee
Meeting Fee (c)		None
Stock Retention Guideline		Directors must retain at least 50% of the equity they receive from us until their service as a director concludes

Annual Equity Retainer (row a): In 2021, the annual equity retainer was paid in the form of restricted stock units granted under our Non-Employee Director Equity Program. Our Non-Employee Director Equity Program imposes a limit on the amount of equity a director may receive during a year of the greater of 25,000 restricted stock units or equity with a grant date value of $500,000.

Annual Governance Committee Chair Cash Retainer (row b): The Governance Committee Chair retainer is not paid if the director who chairs that committee also serves as the Chair of our Board. Currently Ms. Payne serves as both the Chair of our Board and our Governance Committee Chair, so she does not receive the Governance Committee Chair retainer.

Meeting Fee (row c): Our Board may approve the payment of meeting fees to directors serving on three or more standing committees or serving as members of a special committee constituted by our Board. No such fees were paid for 2021.

Other Compensation

Our non-employee directors may also receive the following benefits, which are available to all of our employees:

 

•

Matching gifts program under which we will match up to $5,000 of a director’s contributions to eligible 501(c)(3) tax-exempt organizations each year. Non-employee directors may participate in the matching gifts program until December 31 of the year in which their service as a director ends.

 

•

Employee purchase program under which a director may obtain rebates on certain of our products purchased for their personal use.

In addition, if space is available, a director’s spouse is permitted to accompany a director who travels on Company aircraft to attend Board or committee meetings.

Annual Review of our Director Compensation Program

Our Governance Committee reviews our director compensation program annually, including reviewing an analysis of the competitiveness of the program, and recommends any changes to our Board. In 2021, the Committee recommended to the Board that it increase the equity retainer paid to our non-employee directors by $20,000 to $160,000, and increase the retainer paid to our Audit Committee Chair by $3,000 to $25,000. Our Board approved these recommendations.

 

16

PART I - CORPORATE GOVERNANCE			MASCO 2022

 

DIRECTOR COMPENSATION TABLE

The following table reflects 2021 compensation paid to our directors, other than Mr. Allman, who is also a Company employee and receives no additional compensation for his service as a director.

2021 Director Compensation

 

Name		Cash Fees Earned ($)					Restricted Stock Units ($) (a)					All Other Compensation ($) (b)					Total ($)
Mark R. Alexander		130,000					160,270					—					290,270
Marie A. Ffolkes		130,000					160,270					—					290,270
J. Michael Losh		82,500					—					5,000					87,500
Richard A. Manoogian		32,500					—					—					32,500
Christopher A. O’Herlihy		145,000					160,270					5,000					310,270
Donald R. Parfet		135,000					160,270					5,000					300,270
Lisa A. Payne		285,500					160,270					—					445,770
John C. Plant		130,000					160,270					—					290,270
Charles K. Stevens		148,750					160,270					—					309,020
Reginald M. Turner		130,000					160,270					—					290,270

Restricted Stock Units (column a): In May 2021, we granted 2,580 restricted stock units to each non-employee director, except for Mr. Losh and Mr. Manoogian, who each concluded service on our Board in May 2021. The amounts reported in this column reflect the aggregate grant date fair value of the restricted stock units, calculated in accordance with accounting guidance. Directors realize the value of these grants over time because the vesting occurs pro rata over three years, and one-half of the restricted stock each of our directors receives as compensation must be retained until completion of their service on our Board.

All Other Compensation (column b): The amounts reported in this column reflect our contributions in 2021 to eligible tax-exempt organizations under our matching gifts program, as described above, for which directors receive no direct financial benefit.

Unvested Restricted Shares and Units: The following table reports the unvested restricted shares and units held on December 31, 2021 by each non-employee director who was serving on that date.

 

Director		Unvested Restricted Shares  and Units (#)
Mark R. Alexander		6,150
Marie A. Ffolkes		6,150
Christopher A. O’Herlihy		6,150
Donald R. Parfet		6,150
Lisa A. Payne		6,150
John C. Plant		6,150
Charles K. Stevens		6,150
Reginald M. Turner		6,150

 

17

MASCO 2022		PART I - CORPORATE GOVERNANCE

 

RELATED PERSON TRANSACTIONS

Our Board of Directors has adopted a Related Person Transaction Policy that requires our Board or a committee of independent directors to approve or ratify any transaction involving us in which any director, director nominee, executive officer, 5% beneficial owner or any of his or her immediate family members has a direct or indirect material interest.

Related Persons Transaction Policy

Our policy covers:

 

•

financial transactions and arrangements;

 

•

indebtedness and guarantees of indebtedness; and

 

•

transactions involving employment.

Our policy excludes transactions determined by our Board not to involve a material interest of the related person, such as:

 

•

ordinary course of business transactions of $120,000 or less;

 

•

transactions in which the related person’s interest is derived from service as a director of another entity or ownership of less than 10% of another entity’s stock; and

 

•

transactions in which the related person’s interest is derived from service as a director, trustee or officer of a not-for-profit organization or charity that receives donations from us, which are made in accordance with our matching gifts program.

Assessing Related Person Transactions

Our policy requires directors, director nominees and executive officers to provide prompt written notice to our Secretary of any related transaction so it can be reviewed by our Governance Committee. If our Governance Committee determines that the related person has a direct or indirect material interest in the transaction, it will consider all relevant information to assess whether the transaction is in, or not inconsistent with, our best interests and the best interests of our stockholders. Our Governance Committee annually reviews previously-approved ongoing related transactions to determine whether the transactions should continue.

Related Persons Transactions for 2021

There are no transactions required to be described in this proxy statement other than as stated below.

On-Going Related Person Transactions

Our Governance Committee previously approved the on-going related transaction described below.

Transactions with Mr. Richard A. Manoogian in 2021

In accordance with the terms of our 2009 agreement with Mr. Manoogian, who transitioned to Chair Emeritus in 2012, in 2021 we provided him with an administrative assistant for his personal use and a subscription allowance, which together aggregated approximately $179,000. Mr. Manoogian concluded his service as a director in May 2021.

 

18

PART I - CORPORATE GOVERNANCE			MASCO 2022

 

PROPOSAL 1: ELECTION OF CLASS I DIRECTOR NOMINEES

The term of office of our Class I Directors, who are Donald R. Parfet, Lisa A. Payne and Reginald M. Turner, expires at this meeting.

Our Board proposes the re-election of Mr. Parfet, Ms. Payne and Mr. Turner to serve as Class I Directors. The term of the Class I Directors elected at this Annual Meeting will expire at the Annual Meeting of Stockholders in 2025, or when their respective successors are elected and qualified.

Our Board expects that the persons named as proxy holders on the proxy card will vote the shares represented by each proxy for the election of each director nominee unless a contrary direction is given. If, prior to the meeting, a nominee is unable or unwilling to serve as a director, which our Board does not expect, the proxy holders may vote for an alternate nominee recommended by our Board, or our Board may reduce its size.

Information regarding each of our director nominees can be found above in “Director Nominees for Class I.”

Our Board recommends a vote FOR the election to our Board of Directors of each of the following Class I Director nominees:

 

Name		Director Since		Occupation
Donald R. Parfet		2012		• Managing Director, Apjohn Group, LLC, a business development company, since 2000 • General Partner, Apjohn Ventures Fund, Limited Partnership, a venture capital fund, since 2003
Lisa A. Payne		2006		• Chair of our Board • Former Vice Chair and Chief Financial Officer of Taubman Centers, Inc., a real estate investment trust
Reginald M. Turner		2015		Attorney and Member, Clark Hill PLC, a Detroit, Michigan-based law firm, since 2000, and currently serves on its Executive Committee

The affirmative vote of a majority of the votes cast by shares is required for the election of directors. Abstentions and broker non-votes are not counted as votes cast, and therefore do not affect the outcome of the election. If an incumbent Director nominee fails to receive a majority of the votes cast, the Director is required to give his or her resignation to our Board. Our Board has 90 days after certification of the election results to decide whether to accept the Director’s resignation.

 

19

MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

		COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION PROGRAM HIGHLIGHTS

 

•

We delivered strong performance in 2021. Reported sales for the full year increased 17% to $8.4 billion and operating profit for the full year increased by 8% to $1.4 billion. We continued to return value to our shareholders by repurchasing approximately 17.6 million shares of our common stock and increasing our quarterly dividend by approximately 68%.

 

•

Our leadership effectively navigated the challenges and uncertainties we experienced in 2021. In 2021, we experienced workplace restrictions and labor challenges resulting from the global pandemic, substantial disruptions in the supply of raw materials and other supply chain constraints and increasing costs for commodities and transportation. Despite these challenges, our executive management team executed on our strategic initiatives and delivered sales and profit growth in 2021.

 

•

Our compensation program is designed to emphasize pay-for-performance. We make pay dependent on performance through traditional means such as annual cash incentives, long-term performance-based awards, and stock options that vest over 3 years. In addition, and different from most other companies, we formulaically base the size of our annual restricted stock unit award on delivered performance.

 

•

We achieved 171% of our annual performance program’s financial performance target. In 2021, our annual incentives were based on the financial metrics of operating profit, working capital as a percent of sales and an individual performance modifier based on individualized goals for each executive officer. As a result of our strong performance in 2021, our executive officers earned 171% of target under our annual performance program, and received a cash bonus and an award of restricted stock units (“RSUs”) consistent with this performance. While most companies grant RSUs each year without a direct link to company performance, our program requires executives to earn their RSU grant each year through annual performance.

 

•

Our 2019-2021 Long-term incentive program (“LTIP”) paid above target, at 152%. Our average Return on Invested Capital (“ROIC”) over the three years was 18.8%, topping our target of 17.5%.

 

•

We continue to engage with stockholders and improve our compensation program. At last year’s Annual Meeting, our executive compensation program received more than 92% stockholder support, consistent with levels we have received in recent years. We continue to seek feedback from shareholders and, as appropriate, make adjustments to our program to make it even more aligned with long-term value creation.

 

20

PART II - COMPENSATION DISCUSSION AND ANALYSIS			MASCO 2022

 

OUR NAMED EXECUTIVE OFFICERS

This Compensation Discussion and Analysis (“CD&A”) covers the elements of compensation awarded to, earned by or paid to the company’s named executive officers (who we generally refer to as our “executive officers”) during 2021 and focuses on the principles underlying the company’s executive compensation policies and decisions. The CD&A explains the compensation for the following individuals:

 

Name		Position
Keith J. Allman		President and Chief Executive Officer
John G. Sznewajs		Vice President, Chief Financial Officer
Richard A. O’Reagan		Group President
Jai Shah		Group President
Kenneth G. Cole		Vice President, General Counsel and Secretary

OUR 2021 PERFORMANCE COMPENSATION PROGRAMS

Based on our strong performance in 2021, our executive officers earned incentive compensation under our performance-based compensation programs, which include:

 

•

An annual performance program under which we pay cash bonuses and grant RSUs to our executive officers if we meet annual performance goals; and

 

•

An LTIP under which our executive officers earn a stock award if we meet performance goals over a three-year period.

OUR EXECUTIVE OFFICERS’ PERFORMANCE-BASED TARGET COMPENSATION

Our target compensation mix for our CEO and our other executive officers reflects our emphasis on long-term, performance-based compensation that incentivizes our executive officers to make strategic decisions that will strengthen our business and create long-term value for our stockholders. In 2021, 87% of our CEO’s target compensation (as compared to 86% in 2020) and 74% of our other executive officers’ target compensation was performance-based, as shown in the graphs below.

 

 

21

MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

PERFORMANCE COMPENSATION WE PAID UNDER OUR PROGRAMS

 

2021 ANNUAL PERFORMANCE PROGRAM																2019-2021 LTIP
Performance Metric		Target					Performance   (as adjusted)					Performance   Percentage										Performance Metric		Target					Performance   (as adjusted)					Performance Percentage
Operating Profit (in millions)		$1,340-$1,350					$1,412					131%										Return on Invested Capital		17.5%					18.8%					152%
Working Capital as a Percent of Sales		16.9%					16.2%					40%
Total Performance Percentage												171%

 

•

See “Our 2021 Annual Performance Program” and “Our Long-Term Incentive Program” below for a description of our calculation of operating profit, working capital as a percent of sales and ROIC performance.

Based on this performance, our executive officers earned the following compensation under our 2021 annual performance program and 2019-2021 LTIP:

 

Name		Cash Bonus ($)		Restricted Stock Unit Award ($)		2019-2021 LTIP-Stock Earned ($)		Total ($)
Keith J. Allman		3,268,700		3,813,400		4,602,343		11,684,443
John G. Sznewajs		995,800		996,086		1,212,812		3,204,698
Richard A. O’Reagan		811,200		810,946		950,304		2,572,450
Jai Shah		753,500		753,571		905,350		2,412,421
Kenneth G. Cole		567,600		567,840		698,562		1,834,002

OTHER PERFORMANCE COMPENSATION WE PAID IN 2021

We grant stock options annually to our executive officers to align their long-term interests with those of our stockholders by reinforcing the goal of long-term share price appreciation. These stock options will provide value to our executive officers only if the price of our common stock increases above the option exercise price. In 2021, our Compensation Committee awarded to our executive officers the following stock options that vest ratably over three years:

 

Name		Stock Options Awarded (#)					Option Exercise Price ($ per share)					Value of Stock Options Awarded ($)
Keith J. Allman		163,870					56.29					2,230,172
John G. Sznewajs		41,140					56.29					559,891
Richard A. O’Reagan		32,230					56.29					438,631
Jai Shah		29,800					56.29					405,560
Kenneth G. Cole		23,680					56.29					322,271

 

•

The value of the stock options awarded is the aggregate grant date fair value of stock options, calculated in accordance with accounting guidance.

 

22

PART II - COMPENSATION DISCUSSION AND ANALYSIS			MASCO 2022

 

Our compensation practices include:

 

ü

Long-Term Incentives—Our compensation programs are weighted toward long-term incentives. We give approximately equal weight to RSUs, stock options and our three-year incentive program, under which we grant performance-based restricted stock units (“PRSUs”).

 

ü

Annual Restricted Stock Units Granted Only When Earned—Our annual grant of RSUs is based on our executive officers’ target opportunities and the achievement of our performance goals under our annual performance program. While most companies grant RSUs each year without a direct link to company performance, our program requires executives to earn their RSU grant each year through annual performance.

 

ü

Long-Term Performance Program—A significant portion of our executive officers’ compensation opportunity is based on the achievement of a three-year performance goal.

 

ü

Clawback Policy—If we restate our financial statements, other than as a result of changes to accounting rules or regulations, our clawback policy allows us to recover incentive compensation paid to our executives in the three-year period prior to the restatement, regardless of whether misconduct caused the restatement.

 

ü

Stock Ownership Requirements—We have minimum stock ownership requirements for our executive officers, including requiring our CEO to own stock valued at six times his base salary. As of December 31, 2021, each of our executive officers met his or her stock ownership requirement.

 

ü

Double-Trigger Vesting—We have double-trigger vesting of equity on a change in control.

 

ü

Tally Sheets and Risk Assessment—Our Compensation Committee uses tally sheets and oversees a risk assessment to evaluate whether our compensation programs present undue risk to us.

 

ü

Competitive Analysis—On an annual basis, our Compensation Committee reviews a market analysis of executive compensation paid by our peer companies and published survey data for comparably-sized companies.

 

ü

Limited Perquisites—We provide limited perquisites to our executive officers.

Our compensation practices do not include:

 

×

Excise Tax Gross-Ups—We eliminated the excise tax gross-up feature on all of the equity grants made since 2012.

 

×

Hedging or Pledging—Our policy prohibits executives and directors from hedging our stock and from making future pledges of our stock.

 

×

Employment Agreements—We have no change in control agreements, contractual severance agreements or employment agreements providing for severance payments with our executive officers.

 

×

Option Repricing—Our equity plan prohibits the repricing of options without stockholder approval.

 

23

MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

COMPENSATION DECISIONS IN 2021

Our 2021 Performance

We delivered strong results in 2021 despite the challenges of an ever-changing environment due to the continuing COVID-19 pandemic, supply chain disruptions and constraints and increasing costs for commodities and transportation. We focused on continuing to protect the health and safety of our employees, driving new organic and inorganic growth opportunities and managing costs. Our ability to execute on these priorities, coupled with strong consumer demand for our repair and remodel-oriented products, resulted in top-line growth in both our Plumbing Products segment and Decorative Architectural Products segment.

 

 

In addition, we purchased a 75.1% equity interest in Easy Sanitary Solutions B.V., a Netherlands-based developer and manufacturer of high-style linear drain solutions and acquired Steamist, Inc., a leading manufacturer of residential steam bath products. We continued to return value to our shareholders by repurchasing approximately 17.6 million shares of our common stock and increasing our quarterly dividend by approximately 68%.

How We Performed Against our Performance Compensation Goals

Our 2021 annual performance program was based on operating profit and working capital as a percent of sales metrics and an individual performance modifier based on individualized goals relevant to each executive officer’s area of responsibility. We achieved performance levels consistent with an overall payout of 171% of our target opportunity for our financial metrics. Consistent with our commitment to pay for performance, each of our executive officers earned cash bonuses and awards of restricted stock units based on this achievement and his or her individual performance modifier (see “Our 2021 Annual Performance Program” below).

Our LTIP for the three-year performance period of 2019 to 2021 was based on a ROIC metric. Our adjusted ROIC in 2021, 2020 and 2019 was 21.7%, 19.7% and 15.0%, respectively, for an average adjusted ROIC of 18.8% over the three-year performance period. This level of performance exceeded the target ROIC goal for this program, and we achieved a performance percentage of 152% (see “Our Long-Term Incentive Program” below).

Our 2021 Annual Performance Program

Program Opportunities

We provide annual performance-based cash bonus and restricted stock unit opportunities to our executive officers to incentivize them to achieve rigorous annual performance goals and our strategic business objectives and to align our executive officers’ interests with those of our stockholders.

Our Compensation Committee establishes the cash bonus and restricted stock unit opportunities available to each executive officer as a percentage of the officer’s annual base salary. Under our annual performance program, if the threshold goal is not achieved, our executive officers do not earn a payout. If the maximum goal is exceeded, the payout percentage is capped at 200% of the target opportunity.

 

24

PART II - COMPENSATION DISCUSSION AND ANALYSIS			MASCO 2022

 

Our executive officers had the following target opportunities in 2021 under our annual performance program:

 

Name		Target Opportunity for     Cash Bonus as a % of     Annual Base Salary					Target Opportunity for     Restricted Stock Units as     a % of Annual Base Salary (a)
Keith J. Allman		150%					175%
John G. Sznewajs		75%					75%
Richard A. O’Reagan		75%					75%
Jai Shah		75%					75%
Kenneth G. Cole		65%					65%

Target Opportunity for Restricted Stock Units as a % of Annual Base Salary (column a): Mr. Allman’s target opportunity for restricted stock units as a percent of his annual base salary increased from 167% in 2020 to 175% in 2021 to better align his compensation with market practice. Mr. Allman did not receive a base salary increase in 2021.

Performance Metrics

Our Compensation Committee selected the financial metrics of operating profit (weighted at 80%) and working capital as a percent of sales (weighted at 20%) for our 2021 annual performance program because it believed that improvement in these metrics would continue to reinforce our executive officers’ focus on long-term growth and capital efficiency and drive stockholder value. These metrics are easily derived from our audited financial statements, which our Compensation Committee believes provides transparency both for our stockholders (as requested from stockholders when we sought feedback) and our executive officers.

In 2021, our Compensation Committee added an individual performance modifier as a component of our annual performance program. The individual performance modifier component was comprised of four goals for each executive officer: a Masco Operating System goal, a diversity, equity and inclusion goal and two strategic initiative goals based on the executive officer’s area of responsibility. This component may increase or decrease the performance percentage achieved by each executive officer by up to 10% based on an assessment of that executive officer’s achievement of his or her individual performance goals.

We calculate the cash bonuses to be paid and restricted stock units to be granted to our executive officers under the annual performance program by multiplying each executive officer’s base salary by his or her target opportunity, multiplying that result by the program performance percentage achieved, and multiplying that result by each executive officer’s individual performance modifier. The total payout for each executive officer will be limited to 200% of target opportunity.

 

Base Salary

X

Target Opportunity

X

Financial Metrics

X

Individual Performance Modifier 90% - 110%

=

Annual Performance Percentage

Operating Profit 80% + Working Capital 20%

Program Targets and Achievement

Our performance targets are designed to be challenging, and our Compensation Committee has a robust process for establishing our targets, which includes reviewing our operating profit forecast for the year, taking into account analyst forecasts, shareholder expectations, and general economic and industry conditions. In 2021, while the factors considered by our Compensation Committee included an expectation of lower consumer demand and increased input costs related to materials and transportation, the established targets exceeded our 2020 performance.

 

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MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

In 2021, we achieved 164% of our operating profit target and 200% of our working capital as a percent of sales target. After weighting the operating profit metric at 80% and the working capital as a percent of sales metric at 20%, our performance percentage for the 2021 annual performance program was 171% of target.

 

To calculate achievement of our operating profit performance target, we adjusted our 2021 reported operating profit from continuing operations of $1,405 million to exclude the effects of expense recognized due to restructuring and rationalization charges ($7 million). Our operating profit for purposes of the annual performance program was $1,412 million.

To determine achievement of our working capital as a percent of sales performance target, we define working capital as a percent of sales as a twelve-month average of our reported accounts receivable and inventories, less accounts payable, divided by our reported sales for the year. For 2021, our working capital as a percent of sales was 16.2%.

The Compensation Committee (in consultation with Mr. Allman for his direct reports) assessed the individual performance of each of our executive officers to determine each executive officer’s individual performance modifier (a percentage between 90% and 110%). The assessment is based on a qualitative evaluation of the executive officer’s achievement and performance relative to his or her individual performance goals established at the beginning of the year. Mr. Allman’s individual performance modifier was assessed at 100%. The average individual performance modifier for our other NEOs, excluding the CEO, was 101.9%

Compensation Paid Under the 2021 Annual Performance Program

We calculated the actual cash bonuses to be paid and restricted stock units to be granted to our executive officers as follows:

 

Name		Amount of  Cash Bonus ($)					Value of Restricted Stock Unit  Award ($) (a)					Total 2021 Annual Performance Compensation ($)
Keith J. Allman		3,268,700					3,813,400					7,082,100
John G. Sznewajs		995,800					996,086					1,991,886
Richard A. O’Reagan		811,200					810,946					1,622,146
Jai Shah		753,500					753,571					1,507,071
Kenneth G. Cole		567,600					567,840					1,135,440

Value of Restricted Stock Unit Award (column a): The number of restricted stock units granted is determined by dividing the value of the restricted stock unit award by the closing price of our common stock on the grant date and rounding to the nearest ten shares. If the grant date occurs within ten days prior to the release of our financial results, the grant is effective at the end of the first trading day after the release of our financial results and priced based on the closing

 

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price of our common stock on that date. The amount reflected in this column is the value of the restricted stock units on the grant date. These restricted stock units vest in equal installments over three years following the grant date, so our executive officers do not realize the value of these awards until they vest.

Our Long-Term Incentive Program

Program Opportunities

Our Compensation Committee believes a long-term incentive program provides a meaningful incentive for our executive officers to achieve long-term growth and profitability. Under our LTIP, PRSUs are granted to our executive officers at the beginning of each three-year performance period. This grant of PRSUs entitles our executive officers to receive shares of our stock if at least the threshold performance goals over the three-year period are achieved. If the threshold goals are not achieved, our executive officers do not earn a payout. If the maximum goals are exceeded, the payout percentage is capped at 200% of the target opportunity.

Our Compensation Committee establishes the LTIP opportunity available to each executive officer as a percent of the executive officer’s annual base salary at the beginning of each three-year performance period. Our executive officers had the following LTIP target opportunities under the 2019-2021 LTIP:

 

Name		Target Opportunity Under      2019-2021 LTIP as a % of      Annual Base Salary
Keith J. Allman		167%
John G. Sznewajs		75%
Richard A. O’Reagan		75%
Jai Shah		65%
Kenneth G. Cole		65%

Performance Metrics

Our Compensation Committee chose the ROIC performance metric for the 2019-2021 LTIP because it believes ROIC effectively measures management’s ability to sustainably deliver returns in excess of the company’s cost of capital, which drives value for our shareholders.

In 2020, our Compensation Committee added a cumulative EPS metric to our LTIP program for three-year periods beginning in 2020. Our Compensation Committee believes that a combination of ROIC and earnings per share (“EPS”) will reinforce our executive officers’ focus on earnings, capital efficiency and consistent return on capital and will further encourage our executive officers to make new, profitable investments. Our Compensation Committee established a weighting of 60% for EPS and 40% for ROIC.

Program Targets and Achievement

Our Compensation Committee established the following ROIC goals and corresponding payout percentages for the 2019-2021 LTIP performance period. These performance goals were consistent with our long-range business plan and required a high level of performance to achieve:

 

		Three-Year Average ROIC
LTIP Performance Period		Threshold   (40% Payout)					Target   (100% Payout)					Maximum   (200% Payout)
2019-2021		16.0%					17.5%					20.0%

 

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MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

We achieved adjusted ROIC of 15.0% in 2019, 19.7% in 2020 and 21.7% in 2021. Under the LTIP, we use the annual ROIC performance averaged over a three-year period to determine the award amount. Our average adjusted ROIC was 18.8% for the 2019-2021 performance period, resulting in a performance percentage of 152%.

 

Under the 2019-2021 LTIP, we define ROIC as after-tax operating profit from continuing operations adjusted to exclude the effect of special charges and certain other non-recurring income and expenses, divided by adjusted invested capital. Adjusted invested capital includes shareholders’ equity, which we adjust to add back the cumulative after-tax impact of goodwill and intangible asset impairment charges and to exclude the impact of certain non-operating income and expenses and the effects of special charges, plus short-term and long-term debt minus cash.

For the calculation of ROIC for the 2019-2021 performance period, cash was adjusted for the final contributions we made to settle our qualified domestic defined benefit plan ($94 million), as this transaction was not anticipated at the time the ROIC goals were established.

The following shows our ROIC in 2019, 2020 and 2021 taking these adjustments into account:

 

		ROIC As Reported					ROIC     As Adjusted Under LTIP
2019		35.7%					15.0%
2020		49.0%					19.7%
2021		52.3%					21.7%
2019-2021 Three-Year Average							18.8%

Compensation Paid Under the 2019-2021 LTIP

The following table reflects the PRSUs granted to our executive officers at the beginning of the 2019-2021 three-year performance period, and the amount of stock earned by our executive officers at the end of the three-year period under the 2019-2021 LTIP. We calculated the number of shares earned by multiplying the number of PRSUs granted to each executive officer at the beginning of the three-year performance period by 152%, the performance percentage achieved. The value of the stock earned is based upon the number of shares granted on February 8, 2022, at the closing stock price of our common stock. Based on SEC rules, this component of our executive’s compensation was reflected in our 2019 Summary Compensation Table, the year in which the PRSUs were granted under the 2019-2021 LTIP, assuming the target award would be earned at the end of the three-year period.

 

Name		2019-2021 LTIP PRSU Grant (#)										Payout Percentage										2019-2021 LTIP- Stock Earned (#)										Stock Price on 2/8/2022 ($)										2019-2021 LTIP- Stock Earned ($)
Keith J. Allman		51,190					×					152%					=					77,808					×					59.15					=					4,602,343
John G. Sznewajs		13,490					×					152%					=					20,504					×					59.15					=					1,212,812
Richard A. O’Reagan		10,570					×					152%					=					16,066					×					59.15					=					950,304
Jai Shah		10,070					×					152%					=					15,306					×					59.15					=					905,350
Kenneth G. Cole		7,770					×					152%					=					11,810					×					59.15					=					698,562

PRSUs Granted Under the 2021-2023 LTIP

The following table reflects the PRSUs granted to our executive officers under the 2021-2023 LTIP. The amounts reflected in the PRSU Grant column are based upon the number of PRSUs granted on February 25, 2021, which we valued at $52.93 per share, the closing price of our stock on the grant date and rounded to the nearest ten shares,

 

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assuming the target award would be earned at the end of the three-year performance period. The actual number of shares of stock awarded, if any, will be determined after the three-year performance period concludes on December 31, 2023.

 

Name		Target   Opportunity   (a)										Base Salary as   of 2/25/2021 ($)										Stock Price   on 2/25/2021 ($)										2021-2023 LTIP   PRSU Grant (#)
Keith J. Allman		175%					×					1,274,353					÷					52.93					=					42,130
John G. Sznewajs		75%					×					746,560					÷					52.93					=					10,580
Richard A. O’Reagan		75%					×					584,880					÷					52.93					=					8,290
Jai Shah		75%					×					540,750					÷					52.93					=					7,660
Kenneth G. Cole		65%					×					495,760					÷					52.93					=					6,090

Target Opportunity (column a): Mr. Allman’s target opportunity under the LTIP increased from 167% of his base salary in 2020 to 175% in 2021 to better align his compensation with market practice. Mr. Allman did not receive a base salary increase in 2021.

Stock Options Granted in 2021

We grant stock options annually to our executive officers. The value of the stock option grants approximates the restricted stock unit target opportunity for each executive officer with respect to our annual performance program. Our Compensation Committee believes that stock options are an important component of our executive compensation program because they align our executive officers’ long-term interests with those of our stockholders. Because stock options only confer actual value if our stock price appreciates between the grant date and the exercise date, we believe they reinforce the goal of long-term share price appreciation. In 2021, our Compensation Committee awarded to our executive officers the following stock options that vest in equal installments over three years:

 

Name		Stock Options     Awarded (#)		Option     Exercise Price     ($)		Value of Stock Options     Awarded ($) (a)
Keith J. Allman		163,870		56.29		2,230,172
John G. Sznewajs		41,140		56.29		559,891
Richard A. O’Reagan		32,230		56.29		438,631
Jai Shah		29,800		56.29		405,560
Kenneth G. Cole		23,680		56.29		322,271

Value of Stock Options Awarded (column a): Our stock options are priced based on the closing price on the date of grant, unless the grant date occurs within ten days prior to the release of our financial results. In that event, the grant is effective at the end of the first trading day after the release of our financial results and priced based on the closing price of our common stock on that date. This column shows the aggregate grant date fair value of the stock options awarded, calculated in accordance with accounting guidance.

Other Components of our Executive Compensation Program

Base Salary

We pay our executive officers a base salary to provide each of them with a minimum, base level of cash compensation. In determining the base salary adjustments for our executive officers, our Compensation Committee conducts a review with our CEO of the performance and contributions of our executive officers in the prior year. In addition, in consultation with Semler Brossy, the Committee’s outside compensation consultant, it considers market survey data in published executive compensation surveys for companies with annual revenues similar to ours and significant changes in the scope and complexity of the executive officer’s role.

 

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MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

Based on our Compensation Committee’s review and analysis, our Compensation Committee approved the following base salary increases in 2021, which are competitively positioned and targeted to the median of our peer group:

 

Name		Previous Base     Salary ($)		Salary Increase     Percentage		Current Base     Salary ($)
Keith J. Allman		1,274,353		0%		1,274,353
John G. Sznewajs		746,560		4%		776,417
Richard A. O’Reagan		584,880		3%		602,420
Jai Shah		540,750		6%		573,200
Kenneth G. Cole		495,760		3%		510,630

Perquisites and Other Compensation

We offer a limited number of perquisites to our executive officers, as follows:

 

•

Personal use of our Company aircraft, which we maintain for business purposes. Our Compensation Committee has evaluated our policies and valuation practices for such personal use, and our Board has requested that our CEO use our aircraft for both business and personal travel, with personal travel subject to prior approval by the Chair of our Board. We may occasionally permit other executive officers to use our aircraft for personal travel.

 

•

An estate and financial planning program to assist in financial planning and tax preparation. This program provides up to $10,000 per year.

 

•

Relocation benefits, which may include reimbursement for certain moving and temporary living expenses and incidental costs, and travel allowances.

Retirement Programs

We maintain the following defined contribution retirement plans for all of our employees, including our executive officers:

 

•

401(k) Savings Plan: Our 401(k) Savings Plan is a tax-qualified plan that includes a matching and profit sharing component, if applicable.

 

•

Benefits Restoration Plan (“BRP”): Our BRP enables all of our highly-compensated employees to obtain the full financial benefit of the 401(k) Savings Plan, notwithstanding various limitations imposed on the plan under the Internal Revenue Code (the “Code”).

Our executive officers may also be entitled to receive benefits under the following frozen defined benefit plans:

 

•

Masco Corporation Pension Plan;

 

•

BRP applicable to the Masco Corporation Pension Plan; and

 

•

Supplemental Executive Retirement Plan (“SERP”). Mr. Sznewajs is the only current executive officer eligible to receive benefits under the SERP.

In 2010, we froze accruals in all of the defined benefit plans offered to our U.S. employees. Consequently, the pension benefits ultimately payable to executive officers are essentially fixed, although Mr. Sznewajs’ vesting in the frozen accrued SERP benefit has continued. Mr. Sznewajs will not be fully vested in his frozen SERP benefit unless he continues to be employed with us until he is age 55, or we experience a change in control (see “Payment Upon a Change in Control” below). In December 2019, our Board approved the termination of the Masco Corporation Pension Plan. The termination process was completed in 2021, and as part of this process, all plan participants receiving monthly annuity benefits in 2021 had their annuities placed with an insurance company. All other plan participants had a choice to either receive a lump sum distribution of their benefits or have a deferred or immediate annuity benefit placed with an insurance company. The termination did not include the BRP or SERP.

 

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PART II - COMPENSATION DISCUSSION AND ANALYSIS			MASCO 2022

 

OUR EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS

We Provide Long-Term Equity Incentives to Align the Interests of Our Executive Officers With Our Shareholders

 

•

Awards of restricted stock units and stock options are important components of our executive officers’ compensation.

 

•

Beginning with grants made in 2020, our restricted stock units and stock options vest in equal installments over three years. Grants of restricted stock awards and stock options made prior to 2020 vest in equal installments over five years.

 

•

Beginning with in 2020 (prior three-year periods are based only on ROIC), a significant portion of our executive officers’ compensation opportunity is based on the achievement of two three-year performance goals, ROIC and EPS, under our LTIP. PRSUs are granted to our executive officers at the beginning of each three-year performance period and may entitle our executive officers to receive shares of our stock if we achieve performance goals over the three-year period.

 

•

Upon retirement of our executive officers, equity awards generally continue to vest over the remaining vesting period so that our performance will continue to impact them financially even after they retire.

We Can Clawback Incentive Compensation

If we restate our financial statements, other than as a result of changes to accounting rules or regulations, our Compensation Committee may clawback or recover executive incentive compensation that was paid or granted in the three-year period prior to the restatement, regardless of whether misconduct caused the restatement.

We Require Minimum Levels of Stock Ownership by Our Executives

 

•

Our executive officers are required to maintain a substantial investment in our common stock within three years of becoming subject to them.

 

•

Our Compensation Committee reviews our executive officers’ ownership of our common stock annually to ensure compliance with our stock ownership guidelines.

 

•

Direct stock holdings, unvested restricted stock awards and unvested restricted stock units (but not unvested PRSUs) are counted toward satisfaction of the requirement.

As of December 31, 2021, when the closing price of our common stock was $70.22, each of our executive officers met the stock ownership requirement.

 

		Minimum Stock Ownership Requirements										Actual Ownership
Name		Multiple of Base Salary					Multiple Expressed in Dollars as of 12/31/2021 ($)					Multiple of Base Salary					Value of Shares Held by Executive as of 12/31/2021 ($)
Keith J. Allman		6					7,646,118					17.9					22,800,504
John G. Sznewajs		3					2,329,251					19.6					15,210,073
Richard A. O’Reagan		2					1,204,840					6.4					3,851,005
Jai Shah		2					1,146,400					4.0					2,316,136
Kenneth G. Cole		2					1,021,260					7.9					4,056,961

 

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MASCO 2022		PART II - COMPENSATION DISCUSSION AND ANALYSIS

 

Our Equity Awards Have Double-Trigger Change of Control Provisions

Upon a change of control of our Company, our unvested equity awards will vest only if the recipient of the award:

 

•

is terminated from employment at the time of the change in control or within two years after the change in control;

 

•

terminates employment for good reason (for example, if his or her job duties have been significantly diminished); or

 

•

does not receive comparable replacement awards by the acquiring company.

Our Compensation Committee Oversees an Annual Compensation Risk Evaluation

Our Compensation Committee’s risk assessment of our compensation programs focuses on the program components and analyzes whether those components present undue risk to us and on our material business risks and their potential impact on our compensation programs. Based on the 2021 risk assessment, the Compensation Committee has concluded that our programs do not encourage excessive risk taking.

Our Compensation Programs Encourage Executive Retention and Protect Us

We believe our compensation programs, including the terms and conditions of our equity plan, improve our retention of our executive officers and also reduce the potential that executive officers might engage in post-termination conduct that would be harmful to us. The terms of our equity awards provide that our executive officers:

 

•

forfeit unvested awards of restricted stock and restricted stock units, stock options and PRSUs if their employment terminates prior to being retirement eligible under the applicable award agreement;

 

•

may only exercise vested options for a limited period of time following termination; and

 

•

may not engage in competitive activities with us while they are a holder of the award and for a period of one year thereafter.

We Prohibit Excise Tax Gross-Up Payments

Our Board has adopted a policy prohibiting excise tax gross-up payments, except for such payments committed to in our frozen SERP agreements entered into prior to 2012. The only tax equalization gross-up payments we provide to our employees are those made in connection with reimbursement of relocation or foreign expatriate expenses incurred at our request.

We Prohibit Hedging and Pledging

Our anti-hedging and anti-pledging policy prohibits our directors, executive officers and all other employees subject to our regular quarterly blackout periods from engaging in hedging our Company’s securities. Additionally, such individuals are prohibited from making any future purchases of our securities on margin or from pledging our securities as collateral for a loan, unless the arrangement is preapproved by our Governance Committee for any applicable employee or by our Board for any director.

We Do Not Have Employment Agreements

Our executive officers do not have employment agreements and are “at-will” employees who may be terminated at our discretion. Our executive officers also do not have change in control or severance contracts, although, at our discretion, we may enter into severance agreements with departing executive officers in order to obtain a release of any claims. For further discussion regarding change in control, see “Payment Upon Change In Control” below.

 

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