AOS AO Smith Corp

 

 

PROXY STATEMENT FOR 2025 ANNUAL MEETING

TABLE OF CONTENTS

PROXY STATEMENT

2025 ANNUAL MEETING

GENERAL INFORMATION

This Proxy Statement is furnished to stockholders of A. O. Smith Corporation in connection with the solicitation by its Board of Directors of proxies for use at the Annual Meeting of Stockholders of our company to be held on April 8, 2025, at 8:00 a.m. (EDT). The Annual Meeting will be at the National Association of Manufacturers, 733 10th Street NW, Suite 700, Washington, D.C.

Under rules of the Securities and Exchange Commission, or “SEC,” we are furnishing proxy materials, which include our Proxy Statement and Annual Report, to our stockholders over the Internet and providing an Important Notice Regarding the Availability of Proxy Materials (the “Notice”) by mail. You will not receive a printed copy of the proxy materials unless you request to receive these materials in hard copy by following the instructions provided in the Notice. Instead, the Notice will instruct you how you may access and review all of the important information contained in the proxy materials. The Notice also instructs you how you may submit your proxy via the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice.

The company is mailing the Notice on or about February 27, 2025, to each stockholder at the holder’s address of record.

Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting to be held on April 8, 2025: The Notice of 2025 Annual Meeting of Stockholders, this Proxy Statement and our 2024 Annual Report are also available at www.proxydocs.com/aos.

Record Date

The record date for stockholders entitled to notice of and to vote at the meeting is the close of business on February 18, 2025 (the “Record Date”). As of the Record Date, we had issued 26,000,449 shares of Class A Common Stock, par value $5 per share, 25,870,069 shares of which were outstanding and entitled to one (1) vote each for Class A Common Stock directors and other matters. As of the Record Date, we had issued 164,707,144 shares of Common Stock, par value $1 per share, 117,658,994 shares of which were outstanding and entitled to one (1) vote each for Common Stock directors and one-tenth (1/10^th) vote each for other matters.

Class Voting for Directors

Under our Restated Certificate of Incorporation, as long as the number of outstanding shares of our Common Stock is at least 10% of the aggregate number of outstanding shares of our Class A Common Stock and Common Stock, the holders of the Class A Common Stock and holders of the Common Stock vote as separate classes in the election of directors. The holders of our Common Stock are entitled to elect, as a class, 33 1/3% of our entire Board of Directors, rounded up to the next whole director, and the holders of our Class A Common Stock are entitled to elect the remainder of the Board. The holders of our Class A Common Stock have the right to elect the remainder of the directors of the Board pursuant to the preceding sentence as long as the number of outstanding shares of our Class A Common Stock is 12.5% or more of the aggregate number of outstanding shares of our Class A Common Stock and Common Stock. Stockholders are entitled to one (1) vote per share in the election of directors for their class of stock. As a result of these provisions and the shares of the two classes of our stock that are outstanding, holders of Common Stock will elect four directors at the Annual Meeting and holders of Class A Common Stock will elect six directors.

Quorum

A majority of the outstanding shares entitled to vote must be represented in person or by proxy at the meeting to constitute a quorum for purposes of holding the Annual Meeting. The voting by stockholders at the meeting is

2025 Proxy Statement  1

Proxy Statement 2025 Annual Meeting

conducted by the inspectors of election. Abstentions and broker non-votes, if any, are counted as present in determining whether the quorum requirement is met.

Required Vote

Directors are elected by a plurality of the votes cast, by proxy (whether by Internet, telephone or mail) or in person, with the holders voting as separate classes. This means that the nominees who receive the greatest number of votes cast are elected as directors. Consequently, any shares that are not voted, whether by abstention, broker non-votes or otherwise, will have no effect on the election of directors.

For all other matters considered at the meeting, both classes of stock vote together as a single class, with the Class A Common Stock entitled to one (1) vote per share and the Common Stock entitled to one-tenth (1/10^th) vote per share. The proposal to approve the compensation of our named executive officers by advisory vote, the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm and the stockholder proposal, if properly presented at the meeting, requesting a Board report on our hiring practices with respect to formerly incarcerated people will be approved if a majority of the votes present or represented at the meeting and entitled to vote on the matter are cast in favor of the matter. On all such other matters, an abstention will have the same effect as a vote “against” but, because shares held by brokers will not be considered entitled to vote on matters as to which the beneficial owners withhold authority, a broker non-vote will have no effect on the vote.

Cost of Soliciting Proxies

The cost of soliciting proxies, including preparing, assembling and mailing the Proxy Statement, form of proxy and other soliciting materials, as well as the cost of forwarding such material to the beneficial owners of stock, will be paid by us, except for some costs associated with individual stockholders’ use of the Internet or telephone. In addition to solicitation by mail, directors, officers, regular employees and others may also, but without compensation other than their regular compensation, solicit proxies personally or by telephone or other means of electronic communication. We may reimburse brokers and others holding stock in their names or in the names of nominees for their reasonable out-of-pocket expenses in sending proxy materials to principals and beneficial owners.

How to Vote

Via the Internet – Stockholders of record can simplify their voting by voting their shares via the Internet as instructed in the Important Notice Regarding the Availability of Proxy Materials. The Internet procedures are designed to authenticate a stockholder’s identity to allow stockholders to vote their shares and confirm that their instructions have been properly recorded. Internet voting for stockholders of record is available 24 hours a day and will close at 11:59 p.m. (CDT) on April 7, 2025.

By Telephone – Stockholders of record who received a paper Proxy Card can vote their shares by a toll-free telephone number on the Proxy Card or in the voting instruction form sent by their broker, bank or other agent. Telephone voting for stockholders of record is available 24 hours a day and will close at 11:59 p.m. (CDT) on April 7, 2025.

By Mail – Stockholders of record who have received a paper Proxy Card may vote by completing, signing and dating their Proxy Card and mailing it in the pre-addressed envelope. Proxy Cards submitted by mail must be received by April 7, 2025, for your shares to be voted. Stockholders who hold shares beneficially in street name and received a voting instruction form from their broker, bank or other agent may vote by completing, signing and dating the instruction form provided by the broker, bank or other agent and mailing it in the pre-addressed envelope provided.

If you vote via the Internet, by telephone or by mailing a Proxy Card, we will vote your shares as you direct. For the election of directors, you can specify whether your shares should be voted “for” all or some of the nominees for

2  A. O. Smith Corporation

Proxy Statement 2025 Annual Meeting

director listed or you may “withhold” your vote from all or some of the nominees for director. With respect to the proposal to approve the compensation of our named executive officers by advisory vote, the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm and the stockholder proposal, if properly presented at the meeting, requesting a Board report on our hiring practices with respect to formerly incarcerated people, you may vote “for” or “against” any proposal or you may “abstain” from voting on any proposal.

If you submit a proxy via the Internet, by telephone or by mailing a Proxy Card without indicating your instructions, we will vote your shares consistent with the recommendations of our Board of Directors as stated in this Proxy Statement. Specifically, we will vote in favor of our nominees for directors, in favor of approving the compensation of our named executive officers, in favor of the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm and against the stockholder proposal, if properly presented at the meeting, requesting a Board report on our hiring practices with respect to formerly incarcerated people. If any other matters are properly presented at the Annual Meeting for consideration, then our officers named on your proxy will have discretion to vote for you on those matters. As of the date of the Notice of 2025 Annual Meeting of Stockholders, we knew of no other matters to be presented at the Annual Meeting.

At the Annual Meeting – Shares held in your name as the stockholder of record may be voted by you at the Annual Meeting. Shares held beneficially in street name may be voted by you at the Annual Meeting only if you obtain a legal proxy from the broker or other agent that holds your shares giving you the right to vote the shares. Whether you hold stock in your name or as a beneficial owner, you will need to register in advance to vote at the Annual Meeting as described below under “Attendance at Annual Meeting.”

Revocation of Proxies

You may revoke your proxy at any time before the Annual Meeting by delivering written notice of revocation or a duly executed proxy bearing a later date to the Corporate Secretary of our company or by registering in advance to vote at the Annual Meeting as described below under “Attendance at Annual Meeting” and voting at that time.

Stockholders Sharing the Same Address

SEC rules permit us to deliver only one copy of a single set of proxy materials to multiple stockholders sharing the same address. Upon written or oral request, we will promptly deliver a separate copy of our Annual Report and/or this Proxy Statement to any stockholder at a shared address to which a single copy of each document was delivered. Stockholders may notify our company of their requests by calling or writing Helen E. Gurholt, Vice President – Investor Relations and Financial Planning & Analysis, A. O. Smith Corporation, 11270 West Park Place, Milwaukee, Wisconsin 53224; 414-359-4000.

Attendance at Annual Meeting

All stockholders as of the Record Date, or their duly appointed proxies, may attend the Annual Meeting. You must pre-register to attend. To pre-register, please contact us by email at jstern@aosmith.com or by telephone at 414-359-4000 and provide your name, address, telephone number and indicate that you plan to attend the Annual Meeting.

We will respond to all pre-registration requests and will maintain a list of verified stockholders at the Annual Meeting. To gain admission at the meeting, you must present a government-issued photo identification showing your name, address and signature for admission.

Annual Meeting pre-registration requests must be received by the end of business on Friday, April 4, 2025.

2025 Proxy Statement  3

PRINCIPAL STOCKHOLDERS

The following table shows persons who may be deemed to be beneficial owners (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of more than 5% of any class of our stock. Unless otherwise noted, the table reflects beneficial ownership as of December 31, 2024.

Information on beneficial ownership is based upon Schedules 13D or 13G filed with the SEC and any additional information that any beneficial owners may have provided to us.

The Smith family has a special interest in the long-term success of our company and their interest provides stability in the face of short-term market pressures and outside influences. As we celebrate over 150 years of our company’s existence, the Smith family has remained steadfastly committed to our company’s long-term success. The Smith family and other Class A Common stockholders have shepherded our company from its beginnings as an auto frame supplier, to a diversified manufacturer, and then to a leading global water technology company. In recent years, certain proxy advisors have been critical of members of our Board of Directors for maintaining a dual class stock structure. While we understand and appreciate the reasons behind these policies generally, we believe the long history of Smith family involvement and ownership in the company is one of our company’s greatest strengths, allowing us to thrive for over 150 years. At the same time, the role of the Smith family is limited to guidance and support. For more than 40 years, the company’s chief executive officer has not been a Smith family member. In addition, the company’s Board committees are comprised of independent directors and the company has not sought to utilize the “controlled company exemption” under the New York Stock Exchange (“NYSE”) rules in any respect. We respectfully request that you consider these factors in casting your vote for our director nominees.

4  A. O. Smith Corporation

ELECTION OF DIRECTORS

The Board of Directors reflects the company’s unique history and structure. In addition to a member of the Smith family (who is independent), our Board is carefully balanced with a majority of independent directors who reflect the global strength and diversity of our business, including two new directors in 2021, one new director in 2023, two new directors in 2024 and an additional new director in 2025 to replace Ajita G. Rajendra after his retirement, if elected at the Annual Meeting. All of these directors bring fresh perspectives to the Board. Finally, the Board is rounded out with our current Chief Executive Officer, who ensures consistency in the oversight of the business and complements the perspectives of our independent directors.

2025 Proxy Statement  5

Election of Directors

The Board of Directors currently consists of ten directors. At the 2025 Annual Meeting, ten directors are to be elected to serve until the next succeeding Annual Meeting of Stockholders and thereafter until their respective successors are duly elected and qualified. Owners of Common Stock are entitled to elect four directors, and owners of Class A Common Stock are entitled to elect the six remaining directors.

It is intended that proxies we are soliciting will be voted for the election of the nominees named below. Proxies will not be voted for a greater number of persons than the ten nominees named below. All nominees have consented to being named in this Proxy Statement and to serve if elected. If any nominee for election as a director shall become unavailable to serve as a director, then proxies will be voted for such substitute nominee as the Board of Directors may nominate.

The Board of Directors has nominated Mr. Adrian I. Peace, who has not previously served as a director on our Board, for election at the Annual Meeting as a Common Stock director. Mr. Rajendra, who is currently a director, has reached the mandatory director retirement age under our Corporate Governance Guidelines and, therefore, will not be nominated for re-election at the Annual Meeting and is retiring as a result. Our company and the Board would like to thank Mr. Rajendra for his many contributions during his 20 years with the company beginning with his leadership running A. O. Smith’s water products division, his time at the helm of A. O. Smith as chief executive officer and president and his 14 years on our Board. Mr. Rajendra’s inspiring and visionary leadership was integral in making A. O. Smith the innovative global water technology company it is today.

Set forth below is information regarding the business experience of each nominee for director that has been furnished to us by the respective nominee. Each nominee has been principally engaged in the employment indicated for the last five years unless otherwise stated. Also set forth below for each nominee is a discussion of the experience, qualifications, attributes or skills that led to the conclusion that the nominee should serve as a director.

6  A. O. Smith Corporation

Election of Directors

NOMINEES – CLASS A COMMON STOCK

2025 Proxy Statement  7

Election of Directors

8  A. O. Smith Corporation

Election of Directors

2025 Proxy Statement  9

Election of Directors

NOMINEES – COMMON STOCK

10  A. O. Smith Corporation

Election of Directors

2025 Proxy Statement  11

GOVERNANCE OF OUR COMPANY

The Board of Directors

Our business is managed under the direction and oversight of the Board of Directors, who are elected by the stockholders. Directors meet their responsibilities by participating in meetings of the Board of Directors and Board Committees on which they sit, through communication with our chairman and chief executive officer and other officers and employees, by consulting with our independent registered public accounting firm and other third parties, by reviewing materials provided to them and by visiting our offices and plants. During 2024, the Board held five regular Board meetings and no special meetings. The standing Committees of the Board of Directors held a total of 18 meetings, including two special meetings. All directors attended all of the meetings of the Board and Committees on which they served during 2024, with the sole exception of one director who had an unavoidable business conflict with part of one meeting. Although we have no formal policy on director attendance, all continuing directors attended our 2024 Annual Meeting of Stockholders.

The nonmanagement directors of the Board met in executive session without management present five times in 2024 in conjunction with each of its regular meetings. The Presiding Director presides at such meetings. The Presiding Director serves for a two-year term (assuming re-election as a director) and the position rotates among the chairpersons of the following Committees in the following order: Audit Committee, Personnel and Compensation Committee, and Nominating and Governance Committee. The Presiding Director from April 2022 to April 2024 was Idelle K. Wolf, the chairperson of the Audit Committee. Ronald D. Brown, the chairperson of the Personnel and Compensation Committee, is currently serving as the Presiding Director from April 2024 to April 2026. Any party wishing to communicate with the Presiding Director may send correspondence to the Presiding Director, c/o James F. Stern, Corporate Secretary, A. O. Smith Corporation, 11270 West Park Place, Milwaukee, Wisconsin 53224.

Director Independence and Financial Literacy. The Smith Family Voting Trust has the power to elect a majority of our Class A Directors, who make up a majority of the Board. As of December 31, 2024, the Smith Family Voting Trust directly or beneficially owned 96.9% of Class A Common Stock and, therefore, 96.9% of voting power with respect to the election of the Class A Directors. Since the Board is currently composed of six Class A Directors and four Common Stock Directors, the Smith Family Voting Trust effectively exercises control over voting power for a majority of the members of our Board of Directors and, therefore, we have qualified as a “controlled company” under the NYSE rules. As a controlled company, under NYSE rules, we may choose to not have a majority of independent directors or compensation or governance committees consisting solely of independent directors. Notwithstanding our status as a controlled company, the Board has not elected to utilize the “controlled company” exemption in any respect because, as described below, we have a Board in which a majority of our members consist of independent directors and all members of the Audit Committee, Personnel and Compensation Committee, and Nominating and Governance Committee are independent for SEC and NYSE purposes.

As described in the Corporate Governance Guidelines available on our website, www.aosmith.com, we apply the NYSE rules to determine director independence. The Nominating and Governance Committee (“Committee”) annually evaluates the independence of each director and makes recommendations to the Board. As part of this process, the Committee evaluates any related party transactions disclosed by directors in the detailed Directors’ and Officers’ Questionnaires completed annually by each director. There were no transactions above the reporting threshold for related party transactions under SEC rules. In making its recommendations, the Committee also applied the NYSE rules and evaluated any other legal, accounting and family relationships between directors and our company. In particular, the Board and Committee considered that director Victoria Holt is a director of Waste Management, Inc., from which we purchase services and supplies in arm’s length transactions in the ordinary course of business. Since her interest arises solely from her director position, the Board and the Committee determined that this relationship is not material and does not affect her independence. In addition, the Board and Committee considered that director nominee, Adrian Peace, is an executive officer of Modine Manufacturing Company and a director of Essentra plc, both from which we purchase services and supplies in arm’s length transactions in the ordinary course of business that preceded his nomination as a director. The Board and the Committee determined that this relationship is not material and does not affect his independence.

12  A. O. Smith Corporation

Governance of Our Company

The Committee and the Board also considered that Mark Smith is a trustee of the Smith Family Voting Trust and that he and his descendants are also beneficiaries of material economic interests associated with the Class A Common Stock subject to this Trust. The members of the Committee and Board (other than Mr. Smith) concluded that such voting power and interests do not impair the independence of Mr. Smith and that the economic interests in stock of the company of which he and his descendants are beneficiaries align his interests with those of stockholders generally, consistent with NYSE Commentary to Rule 303A.02 (Independence Tests) which states that “the Exchange does not view ownership of even a significant amount of stock, by itself, as a bar to an independence finding.”

The Board has determined that Messrs. Brown, Fister, Larsen, Mapes and Smith, Dr. Kadri and Mses. Holt and Martin meet the NYSE independence requirements. With respect to Mr. Peace, new director nominee, the Board determined that he meets the NYSE independence requirements. Finally, Mr. Wheeler is considered a management director by virtue of his current position as an executive officer of our company.

The Board recognizes that the NYSE rules require financial literacy of Audit Committee members only. Notwithstanding that, as a best practice, the Board has reviewed the qualifications and experience of all of the Board members and Mr. Peace as a nominee and determined that each director and Mr. Peace are financially literate within the meaning of the NYSE rules.

Board Composition. We believe that the makeup of the Board should be tailored to our company’s evolving needs. Our goal is a mix of tenure, diversity, skills and experience on the Board, with a balance of longer-tenured, experienced directors and newer directors with fresh perspectives. Our Nominating and Governance Committee regularly reviews the experience and expertise of our Board and considers the ongoing and evolving needs of the company as well as appropriate changes based on those needs and the requirements of our Corporate Governance Guidelines, including those mandating that, absent a waiver by the Board, directors not stand for election beyond age 72. The addition of Ms. Holt and Mr. Larsen in 2021, Mr. Mapes in 2023 and Mr. Fister and Ms. Martin in 2024 brought fresh perspectives to our Board, as will Mr. Peace, assuming he is elected by our stockholders at our 2025 Annual Meeting.

We believe that we have an appropriate mix of shorter-tenured directors who bring a fresh perspective and longer-tenured directors with experience and institutional knowledge. Our commitment to Board refreshment is reflected in the fact that the average director tenure has been reduced from 14.1 in 2020 to 7.7 this year, presuming our director nominee is elected by our stockholders at our 2025 Annual Meeting. With respect to our longer-tenured directors, we believe their long-term perspective has been an advantage to us as we entered new markets, providing both historical perspective and a better understanding of upcoming challenges. Further, we believe that long-term service does not adversely affect director independence. With their in-depth knowledge of the company, these directors are comfortable speaking up and asking probing questions, which we believe improves the ability of the Board to provide constructive guidance and informed oversight. Further, given the voting power exercised by the Smith Family Voting Trust, representation of Mark Smith on our Board works to align the interests of our largest stockholder with those of the Board, through his exposure to the company’s strategic and operational planning and decision-making, and his active participation in the governance of the company. To balance our three longer-tenured independent directors, we will have six independent directors (assuming Mr. Peace, the new director nominee, is elected at the Annual Meeting) who joined our Board within the last four years. They have brought new skills, fresh perspectives and diversity to our Board. For all these reasons, we believe that our Board has struck the right balance as to director tenure.

2025 Proxy Statement  13

Governance of Our Company

Board Information and Stockholder Communications. We are committed to making our corporate governance information accessible to stockholders and other interested parties. Accordingly, on our website, www.aosmith.com, under the “Investors” heading, and then “Governance” subheading, we have published the A. O. Smith Corporation Guiding Principles and the Financial Code of Ethics and provided a link entitled “Stockholder Contacts” to communicate with directors. Likewise, under “Investors,” “Governance” and then “Board of Directors,” we have provided a list of the members of our Board of Directors. Further, under the “Board Committees and Charters” subheading, we have Committee Assignments; the Charters for the Audit, Nominating and Governance, and Personnel and Compensation Committees; Corporate Governance Guidelines and Criteria for Selecting Board of Director Candidates. Finally, SEC filings, including our Form 10-K, Forms 10-Q, Forms 8-K, Proxy Statement and Section 16 filings, are available for review on this website under the heading “Investors” and then “SEC Filings” subheading. Stockholders may also request that these documents be mailed by sending their request to the address provided below.

We encourage communication with our directors. Any interested party may communicate with a particular director, all directors, nonmanagement or independent directors as a group or the Presiding Director by mail or courier addressed to him/her or the entire Board in care of the Corporate Secretary at the following address:

c/o James F. Stern, Corporate Secretary

A. O. Smith Corporation

11270 West Park Place

Milwaukee, WI 53224

The Corporate Secretary will forward this communication unopened to the addressed director.

Procedure for Review of Related Party Transactions. Potential conflicts of interest must be approved in advance, including related party transactions reportable under SEC rules, or related to the Smith family, in accordance with our Corporate Governance Guidelines. We have a detailed code of conduct, the A. O. Smith Corporation Guiding Principles, which applies to all employees, officers and directors and specifically addresses conflicts of interest. There has been no waiver of the code of conduct, requested or granted, for any directors or officers. Further, the Corporate Governance Guidelines provide the procedure for review of related party transactions reportable under SEC rules, with approval by the Nominating and Governance Committee required if any such transaction involves a

14  A. O. Smith Corporation

Governance of Our Company

director, executive officer or his/her immediate family members. Other than the matters identified in “Director Independence and Financial Literacy,” each of which was reviewed by the Nominating and Governance Committee and the Board and determined to not be material, there have been no related party transactions.

Potential Director Candidates. The Nominating and Governance Committee will consider any candidate recommended by stockholders, directors, officers, third-party search firms and other sources for nomination as a director. The Committee considers the needs of the Board and evaluates each director candidate in light of, among other things, the candidate’s qualifications. All candidates’ minimum qualifications are identified in the Corporate Governance Guidelines and the Criteria for Selecting Board of Director Candidates, both of which can be found on our website by clicking on “Investors,” then “Governance” followed by “Board Committees and Charters.” To summarize, all nonmanagement candidates should be independent and possess substantial and significant experience which would be of value to our company in the performance of the duties of a director. Recommended candidates must be of the highest character and integrity, free of any conflicts of interest, have an inquiring mind and vision, and possess the ability to work collaboratively with others. Further, directors should have diverse backgrounds and expertise, including diversity of gender and race, required for the Board to fulfill its duties. Each candidate must have the time available to devote to Board activities and be of an age that, if elected, the candidate could serve on the Board for at least five years before reaching the mandatory retirement age, which is 72, absent a waiver approved by the Board. Finally, we believe it appropriate for certain key members of our management to participate as members of the Board, while recognizing that a majority of independent directors must be maintained at all times. All candidates will be reviewed in the same manner, regardless of the source of the recommendation. Although not part of any formal policy, our goal is a balanced and diverse Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business.

A stockholder recommendation of a director candidate must be received no later than the date for submission of stockholder proposals. Please see the section of this Proxy Statement entitled “Dates for Stockholder Proposals.” The recommendation letter should be sent by mail to the Chairperson, Nominating and Governance Committee, c/o James F. Stern, Corporate Secretary, A. O. Smith Corporation, 11270 West Park Place, Milwaukee, Wisconsin 53224.

The recommendation letter must, at a minimum, provide the stockholder’s name, address, the number and class of shares owned; the candidate’s biographical information, including name, residential and business addresses, telephone number, age, education, accomplishments, employment history (including positions held and current position), and current and former directorships; and the stockholder’s opinion as to whether the stockholder recommended candidate meets the definitions of “independent” and “financially literate” under the NYSE rules. In addition, the recommendation letter must provide the information that would be required to be disclosed in the solicitation of proxies for election of directors under federal securities laws. The stockholder must include the candidate’s statement that he/she meets these requirements and those identified on our website; is willing to promptly complete the Questionnaire required of all officers, directors and candidates for nomination to the Board; will provide such other information as the Committee may reasonably request; and consents to serve on the Board if elected.

A stockholder who desires to nominate a candidate for election as a director must comply with the provisions of our By-laws described under the section of this Proxy Statement entitled “Dates for Stockholder Proposals.”

2025 Proxy Statement  15

Governance of Our Company

Board Committees

The Board of Directors has delegated some of its authority to Committees of the Board. There are three standing Committees: the Audit Committee, the Personnel and Compensation Committee, and the Nominating and Governance Committee. Each standing committee is discussed below. The Board has approved changes in Committee membership and chairpersons assuming the director nominees are elected by stockholders at the Annual Meeting. These anticipated Committee assignments are also discussed below.

16  A. O. Smith Corporation

Governance of Our Company

2025 Proxy Statement  17

Governance of Our Company

Our Leadership Structure

Kevin J. Wheeler holds the combined position of chairman and chief executive officer. He assumed the role of chairman in 2020 in addition to chief executive officer, which he became in 2018. This structure completed a long planned and orderly succession process of our company leadership, as a result of which we have a single strong leader who represents our company. We have traditionally used this leadership structure, which we believe benefits our stockholders, customers and other key stakeholders by having a single well-recognized and regarded leader.

While we realize that the chairman position is held by an executive officer, we believe the independent members of our Board and the three standing Board Committees provide appropriate oversight. In this regard, the Audit Committee oversees the accounting and financial reporting processes, as well as legal and compliance matters. The Personnel and Compensation Committee oversees the annual performance of our chairman and chief executive officer, as well as our executive compensation program, and oversees our retirement and savings plans. The Nominating and Governance Committee evaluates independence issues and monitors matters such as the composition and performance of the Board and its Committees, as well as the company’s Environmental, Social and Governance program. Each Committee is led by an independent chairperson other than the chairman and chief executive officer and, as discussed in more detail in this Proxy Statement, the entire Board of Directors is actively involved in overseeing our risk management. Altogether, we believe this framework strikes a sound balance with appropriate oversight.

Further, we have a Presiding Director who is an independent director and chairs meetings of all nonmanagement directors in executive session, and consults with the chairman on Board agendas, materials and topics, as well as provides feedback from the meeting of the independent directors. In 2024, each regular Board meeting included a

18  A. O. Smith Corporation

Governance of Our Company

nonmanagement directors’ session. This allows directors to speak candidly on any matter of interest, without the chairman and chief executive officer or other management present. In accordance with our Corporate Governance Guidelines, the role of Presiding Director rotates among committee chairs every two years, to provide continuity in director oversight. We believe this structure provides consistent and effective oversight of our management and our company.

Our directors bring a broad range of leadership experience to the boardroom and regularly contribute to the thoughtful discussion involved in overseeing the affairs of our company. We believe all Board members are well-engaged in their responsibilities, and all Board members express their views and are open to the opinions expressed by other directors. We conduct a robust evaluation of our Board annually to help ensure that the Board is open and well-functioning and to identify and address any director concerns. We do not believe that appointing an independent board chairman, or a permanent Presiding Director, would improve the performance of the Board.

2025 Proxy Statement  19

Governance of Our Company

Our Commitment to Corporate Responsibility and Sustainability

We are committed to growing our business in a sustainable and socially responsible manner consistent with our Guiding Principles. This commitment has driven us to design, engineer and manufacture highly innovative and efficient products in an environmentally responsible manner that helps reduce energy consumption, conserve water and improve drinking water quality and public health. Consistent with this commitment, we issue our sustainability report biennially detailing our company’s historical and current efforts. We issued our fourth report, the 2024 Sustainability Report in December 2024, documenting our sustainability activities over the two years prior to the report. This report details the positive impact of our highly efficient products, highlights our company’s commitment to employees and the communities in which we operate, and reports on our progress toward our goals. We are proud to have been recognized in 2024 as one of the World’s Most Ethical Companies by Ethisphere®, a global leader in defining and advancing corporate ethical standards.   In 2024, we continued to report on our greenhouse gas emissions reduction goal of 10% by 2025 and also announced our first public water stewardship goal: an annual water savings of 40 million gallons by 2030. Our scorecard reflecting our progress is available on our website.   To hold ourselves accountable, we have established sustainability oversight at the Board and management levels. Our Company formed an Environmental, Social and Governance (“ESG”) Council comprised of a cross-section of leaders from operations; product engineering; environment, health and safety; legal affairs; investor relations; human resources and supply chain. The Council makes recommendations about sustainability priorities and goals, key performance indicators and potential reporting enhancements, while also identifying improvement areas regarding our sustainability activities. Our director of ESG manages the Council and reports directly to our executive vice president and chief financial officer, who chairs the ESG Council. Our ESG Council is accountable to our chief executive officer and our Board. The Board provides oversight of the company’s sustainability efforts, receives annual sustainability updates, and reviews the company’s sustainability efforts, including its periodic Sustainability Reports. In 2024, the Board received one comprehensive briefing on sustainability reporting and initiatives.   Starting in 2023, the Board added an element to the executive long-term incentive compensation program to reward our executives for performance against critical strategic issues facing our company. For 2023, that measure was the greenhouse gas emission reduction goal established in our 2020 Sustainability Report. For 2024, the measure was progress towards the water reduction goal announced in our 2024 Sustainability Report. For 2025, the waste reduction goal is based on achievement of a landfill diversion target.   Our Sustainability Reports are available on our website, www.aosmith.com, the contents of which are not incorporated by reference into this Proxy Statement.

22  A. O. Smith Corporation

Governance of Our Company

Public Policy and Regulatory Advocacy

As a leading, global water technology manufacturing company, we believe we have a responsibility as a good corporate citizen to participate in the public policy and regulatory process. Accordingly, we engage and advocate on public policy and regulatory issues that are core to our businesses through ongoing, constructive and transparent interactions with government officials, policymakers, industry and trade associations and other stakeholder groups. These engagements are grounded in and guided by our commitment to strong corporate governance, compliance with our Guiding Principles and respect and adherence to applicable laws in the jurisdictions in which we operate globally.

In addition to our direct advocacy, we believe that involvement in industry and trade associations is beneficial to our business and, therefore, we participate as a member in a number of these organizations. Our participation in an organization may be, in whole or in part, to promote collaborative and constructive approaches to industry engagement with policymakers and other stakeholders to help advance the company’s business goals. We pay membership dues to a number of trade associations and industry groups that may use these funds at their discretion to fund political activities. However, our membership in an organization does not imply our endorsement of all of the policy positions of that particular group. We review these memberships annually to assess their business value and alignment with the company’s overall public policy agenda.

We also maintain and administer the A. O. Smith Political Action Committee (“AOSPAC”). The AOSPAC was created to allow eligible employees and directors to act together in supporting publicly elected officials who seek to advance public policies that are supportive of our employees, products and the communities in which we live and work. Governed by a board of directors and a set of bylaws, the AOSPAC complies with applicable laws, including with respect to registration and the filing of required information with the Federal Election Commission.

2025 Proxy Statement  23

DIRECTOR COMPENSATION

Overview

The Nominating and Governance Committee of the Board of Directors is responsible for reviewing and making recommendations to the Board as to director compensation, which is reviewed annually. Nonemployee directors are compensated in the form of cash and shares of Common Stock. Management directors receive no compensation for their service on our Board.

For 2024, the Board approved the Committee’s recommendation to make no changes in its director compensation program. However, following its review of the annual benchmarking of director compensation conducted by Willis Towers Watson (“WTW”), the Committee recommended, and the Board approved at its October 2024 meeting, changes to certain elements of board compensation to keep pace with market practice. The Board approved increases to the annual stock retainer and the annual retainers for committee chairpersons, as shown in the table below. These changes will take effect on April 8, 2025.

The table below provides current director compensation and the compensation effective April 8, 2025. All cash retainers are paid quarterly. The equity retainer is paid in the form of shares of our Common Stock upon a director’s election to the Board.

NONEMPLOYEE DIRECTOR COMPENSATION STRUCTURE

Director Compensation

24  A. O. Smith Corporation

Director Compensation

The Board requires that every new director participate in a detailed orientation, including visits to our key operations. This encompasses a review of business and financial operations, meetings with business executives and others, and an overview of our corporate governance policies and procedures. New directors receive no additional compensation for their participation in orientation matters.

The stock ownership requirement for directors is five times the applicable cash retainer received by the director in the last year. Each director is required to acquire beneficial ownership of A. O. Smith Corporation Common Stock having an aggregate value equal to this stock ownership requirement within five years of his or her election as a new director. All directors have met this requirement.

Certain directors have elected to defer receipt of Common Stock shares under the A. O. Smith Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan allows directors to defer all or a portion (not less than 25%) of their fees until a later date, but not later than the year in which the director ceases service as a director. Payments can be made in a lump sum or in not more than 10 annual installments. This is handled as a bookkeeping entry, with gains and losses credited to the director’s account each month based on the director’s crediting election. The crediting election is used to designate the investment fund(s) as the basis for calculating the rate of return equivalent for the director’s account. Mr. Brown, Ms. Holt and Mr. Larsen have deferred receipt of their stock awards in 2024, which consequently are treated as restricted stock units. Dividends on stock which have been deferred as restricted stock units are also received in the form of restricted stock units based on the average of the high and low price of our Common Stock on the date of the dividend.

2025 Proxy Statement  25

STOCK OWNERSHIP

Security Ownership of Directors and Management

The following table shows, as of December 31, 2024, the Class A Common Stock and Common Stock of our company beneficially owned by each director, each nominee for director, each named executive officer in the “Summary Compensation Table” and by all directors and executive officers as a group.

26  A. O. Smith Corporation

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

2025 Proxy Statement  27

Executive Compensation

Compensation Philosophy

We believe that effective executive compensation programs are critical to our long-term success. We have developed compensation programs with the following objectives:

Our long-term incentive opportunities link a significant portion of executive compensation to our performance through restricted stock unit and performance stock awards. Executive officers also are expected to comply with established stock ownership guidelines which require acquisition and retention of specific levels of our Common Stock. Our view is that this stock ownership aligns the interests of our management team with our stockholders and encourages executive performance but discourages executives from taking undue risk.

We believe executive total compensation opportunity should increase commensurate with responsibility and capacity to influence our results. Additionally, as responsibility and accountability increase, so should the portion of compensation which is at risk. Therefore, not only do base salaries increase with position and responsibility, but short-term and long-term incentive opportunities as a percentage of total compensation increase as well.

Our executive compensation package is designed to strike a balance between short-term cash compensation in the form of fixed salaries and variable annual incentive plans and long-term compensation in the form of cash-based performance units and equity awards with three-year vesting periods. For the chairman and chief executive officer, approximately 14% of 2024 total target compensation was comprised of base salary, with the remaining 86% being variable compensation dependent on our company performance. The variable compensation was divided so that approximately 18% of total target compensation was attributable to annual incentive bonus and approximately 68% was long-term incentive compensation.

For the other named executive officers, approximately 20-35% of total target compensation was comprised of base salary, with the remaining 65-80% being based on our company performance. The variable compensation is structured so that approximately 14-21% of total target compensation represents annual incentive bonus, with roughly 47-65% attributable to long-term incentive compensation.

EXECUTIVE COMPENSATION MIX

The Personnel and Compensation Committee (“PCC”) approved a long-term incentive plan for 2024 which targeted 65% of the chairman and chief executive officer’s long-term incentives, or approximately 44% of total compensation, as equity-based awards. The PCC targeted 65% of the long-term incentives, or approximately 30-42% of total target compensation, as equity-based awards for the other named executive officers.

28  A. O. Smith Corporation

Executive Compensation

EXECUTIVE CASH / EQUITY MIX

We believe this combination results in a competitive compensation package that provides an incentive for our executives to lead with a focus on short-term results, while positioning us for long-term sustained performance. With approximately 30-44% of their total compensation tied to equity awards, we believe the decisions of named executive officers are aligned with the best interests of our stockholders. We believe this combination of base pay and short-term and long-term incentives supports our objectives of pay-for-performance, while mitigating the potential for undue risk-taking because it ties a significant portion of the executive officer’s compensation to sustained, long-term performance.

Outside Consultants

Just as we compete for market share in highly competitive global markets, we compete for talent in equally competitive labor environments. To attract and retain critical leadership in these competitive environments, we strive to provide a comprehensive and competitive total compensation package. We utilize the resources of an independent compensation consultant to aid in establishing our programs and to monitor how they compare with the marketplace. Specifically, the PCC has retained WTW, a leading global executive compensation consulting group, to advise the PCC on market trends relative to executive compensation, provide market data, as requested, and share input and views on issues being discussed by the PCC.

The PCC has sole authority to approve the independent compensation consultant’s fees and terms of engagement on executive compensation matters. The PCC annually reviews its relationship with WTW to ensure its independence on executive compensation matters, taking into account the independence analysis and recommendation of the Nominating and Governance Committee (“NGC”). In making its recommendation, the NGC reviewed the independence of WTW and the individual representatives of WTW who served as the PCC’s advisors, considering the following specific factors: (i) other services provided to us by WTW; (ii) fees paid by us to WTW as a percentage of WTW’s total revenue; (iii) policies and procedures maintained by WTW that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual representatives of WTW who advised the PCC and any member of the PCC; (v) any shares of our company’s Common Stock owned by the individual representatives; and (vi) any business or personal relationships between our executive officers and WTW or the individual representatives.

We paid WTW $90,592 in fees in 2024 for consulting services provided to the PCC regarding executive compensation matters and to the NGC regarding director compensation benchmarking. Management subscribes to various WTW compensation databases. Additionally, management utilizes WTW in various consulting capacities related to employee benefits programs and nonexecutive salaried employee compensation. The following table sets forth the fees we paid to WTW in 2024 for services other than those provided to the PCC.

2025 Proxy Statement  29

Executive Compensation

WTW has informed us that the WTW personnel who provide advice to us on executive and director compensation matters are separate from and do not provide other compensation services to our company, nor do they serve as our account manager. The PCC does not approve the services provided by WTW outside the executive compensation advisory role to the PCC but is aware these services are provided.

The PCC concluded, based on the evaluation described above and recommendation from the NGC, that these nonexecutive compensation services performed by WTW did not raise a conflict of interest or impair WTW’s ability to provide independent advice to the PCC regarding executive compensation matters. The PCC’s conclusion was based on a representation letter provided by WTW, the limited scope of the other services provided to us by WTW, the small percentage of WTW’s revenues represented by the fees paid by us, the separation within WTW between its compensation consulting business and its other businesses, the absence of any conflicting relationships between the individual representatives of WTW who provided advice to the PCC or WTW, on the one hand, and members of the PCC or our executive officers, on the other, and review of director and executive officer responses to our annual Directors’ and Officers’ Questionnaire.

Benchmarking

We endeavor to benchmark our executive compensation against similarly situated executives in comparably sized organizations. We believe we compete for executive resources with other nonfinancial institutions across multiple industrial segments. With that in mind, our consultants utilize broad-based, general industry salary surveys and regress their data to organizations with revenues similar to A. O. Smith. We believe market median is an appropriate target for our total compensation program. We attempt to design both short-term and long-term incentives to produce rewards in excess of median market levels when company performance is better than target. The PCC authorized WTW to perform a detailed analysis of our executive compensation levels in 2024, as we do each year.

As we describe below, the PCC asked WTW to provide input on marketplace trends in executive compensation, and overall compensation and components of compensation for 13 executive positions.

We utilize WTW because we believe its survey resources ensure consistent and statistically valid data that is representative of the market in which we compete for executive talent. Its database includes a broad array of over 800 companies. We did not rely on a specific subgroup of peer companies within that database. In working with WTW, we played no role in selecting the companies for which the data was obtained.

For 2024 compensation, WTW performed a regression analysis to reflect base pay levels of an organization with $3.75 billion in revenue and reported its findings to the PCC in October 2023. Its comparison focused on overall compensation, as well as base salary, annual incentive bonus, equity awards and each of the other compensation elements discussed below. We believe its methodology provides appropriate comparisons by utilizing industrial companies of comparable size and referencing databases with comparable executive officer positions.

For 2024, the PCC generally targeted our overall compensation and benefits programs and each element of compensation at the median level of the surveyed companies. Since a number of variables can influence the relationship of an individual executive’s pay components to the survey median data, the PCC considers a range of 80% to 120% of median generally to be appropriate when reviewing total compensation. Although the PCC generally attempts to have each component of compensation in this target range, the PCC puts greater emphasis on achieving the target at the total compensation level. Variables considered include, but are not limited to, education, position tenure, previous experience, level of performance, additional responsibilities and, as appropriate, recruitment considerations, and as described further below in the discussion of individual compensation elements, the PCC will set compensation outside of its typical target range in special circumstances to the extent it believes such an action is appropriate based on these variables and the expected future contributions of an individual executive to our company.

For 2025, we compared ourselves to the market median of other companies with revenues of $3.85 billion, which represents our reported revenues in 2023.

30  A. O. Smith Corporation

Executive Compensation

Consideration of Stockholder Vote on Executive Compensation

At our 2024 Annual Meeting, our stockholders approved the compensation of our named executive officers by approximately 97% of the votes cast, which was consistent with previous years. The PCC considered this vote when setting 2025 compensation levels for our named executive officers and other executives and, as discussed below, made very few changes to the 2025 program.

Role of Executives in Compensation Decisions

The PCC annually reviews the chairman and chief executive officer performance and makes recommendations regarding his compensation for consideration by the full Board. The chairman and chief executive officer is not present during discussions regarding his compensation, and he does not play any role in determining his own compensation. As it deems appropriate, the PCC utilizes the WTW compensation data and directs the senior vice president – human resources and public affairs to prepare computations for its consideration. With respect to other executives, the chairman and chief executive officer annually reviews performance and makes compensation recommendations to the PCC. The chairman and chief executive officer reviews compensation data provided by WTW, consults with the senior vice president – human resources and public affairs and considers the individual factors listed above before making his recommendations. The PCC can exercise its discretion to modify any recommended compensation to such executives.

Compensation Elements

The PCC takes a balanced approach to executive compensation. Our executive compensation package is comprised of several key components which are designed to work together to provide executives with a total compensation package that is competitive with industry norms. For 2024, total compensation included:

Each of these components of the executive compensation package is discussed below.

Base Salary

Base salary provides the executive with a consistent, market competitive stream of income on a semimonthly basis. Absent unusual circumstances, we review base salary levels annually, with adjustments effective January 1. The chairman and chief executive officer considers each senior executive individually for base salary actions and recommends appropriate adjustments. The PCC annually evaluates the appropriate base salary for the chairman and chief executive officer and reviews and approves the chairman and chief executive officer’s recommendations for the other named executive officers. When considering base salary increases, consideration is given to experience, individual performance, level of contribution, pay levels relative to market pay practices, as well as our overall financial condition. While the chairman and chief executive officer recommends compensation adjustments for the other named executive officers, his recommendations must be approved and authorized by the PCC. The chairman and chief executive officer and the PCC rely upon competitive survey data from WTW and their own diverse experiences with executive compensation when making compensation decisions.

2025 Proxy Statement  31

Executive Compensation

In reviewing and approving individual base salary adjustments for the named executive officers for 2024, the PCC relied upon salary data for comparable positions from the 2023 WTW Executive Compensation Database, which was aged 4.0% to reflect anticipated market movement from the 2023 survey through year-end 2024. Effective January 1, 2024, the PCC authorized increases of 4.0% to Messrs. Wheeler, Lauber, Stern, and Petrarca. Mr. O’Brien received an increase of 21.6% as he was promoted to president of the North America Water Heating business unit. Mr. Shafer joined the company on March 18, 2024. In light of his unique skills and expected future contributions to our organization, we set Mr. Shafer’s salary at a level higher than our typical target range for base salary of 80% to 120% of the market median.

In reviewing 2025 base salaries at its December 2024 meeting, the PCC approved increases of 3.5% for Messrs. Wheeler, Lauber, Shafer, and Stern. Mr. O’Brien received an increase of 8.5% recognizing continued advancement in his relatively new role. Mr. Petrarca retired from the company on September 3, 2024. Based upon input from WTW, we believe that the 2025 base salaries for our named executive officers are in the aggregate approximately 112% of the projected market median. Excluding Mr. Shafer, we estimate 2025 salaries to be at 105% of projected market median. This is within our desired target range of 80% to 120%. Further, we anticipate the market increase for base salaries to average 3.5% in 2025, which we took into account in determining 2025 salaries. 

Executive Incentive Compensation

We include both annual and long-term incentives in our executive compensation package. The goal of our incentive plans is to focus executives on both short-term financial and strategic objectives, while ensuring their commitment to our long-term growth and stability. Our incentive plans tie financial awards to our financial and strategic success and the interests of our stockholders, and provide compensation in addition to annual base salary when warranted by corporate financial performance.

Annual Incentive Compensation

Each year, the PCC reviews and approves our financial objectives for both the company and its business units. The executive annual incentive bonus is tied to achieving those objectives. The better we perform relative to these objectives, the higher the incentive bonus payment.

The annual target incentive bonus typically is calculated as a percent of annual base pay for the performance year. The target percent for incentive compensation, like base salary, is determined through periodic benchmarking and review of the median level survey data provided by WTW. Annual incentive compensation represents an “at risk” component of the executive compensation package. Actual incentive bonus amounts are dependent upon performance against specific measurements and may vary from 0% to 200% of targeted amounts.

As a general principle, the portion of an executive’s compensation tied to incentive compensation increases with the executive’s level of responsibility. Thus, the chairman and chief executive officer’s annual incentive opportunity is greater than that of the other named executive officers. We targeted an annual incentive opportunity for the

32  A. O. Smith Corporation

Executive Compensation

chairman and chief executive officer at 125% of base pay in 2024 based upon WTW survey data for comparably situated executives. The relationship of our incentive targets to market median comparisons as of year end is illustrated in the following table. Mr. Shafer joined A. O. Smith in March 2024. His annual incentive compensation target was set at a level above our target range to reflect his unique skill set and expected future contributions to the company.

For 2024, the PCC again aligned our incentives with our focus on improving growth of stockholder value through profitable revenue growth. Our 2024 annual incentive plan for corporate executives was based on achieving a combination of two financial measures, corporate EBIT of $799.1 million and corporate net sales of $4.0258 billion. The goal of the plan was to keep our management focused on providing value to stockholders by incorporating both a profitability measure and a growth measure. Eighty percent (80%) of the incentive opportunity was based on EBIT and twenty percent (20%) on net sales. EBIT is calculated by subtracting our cost of goods sold and operating expenses from revenue before interest and taxes. Net sales is calculated by subtracting returns, allowances and discounts from gross sales. The PCC took into account market practice in the choice and number of measures, and we believe that limiting the net sales measure to twenty percent (20%) of the total incentive opportunity mitigates the risk of executives focusing on growth at the expense of profitability. We expect to use these financial measures for 2025.

We followed a similar approach for our business unit executives. As a business unit executive, seventy percent (70%) of Mr. O’Brien’s annual incentive for 2024 was based on two business unit-based measures: business unit PEBIT weighted at eighty percent (80%) and business unit net sales weighted at twenty percent (20%) of this portion. The balance of Mr. O’Brien’s annual incentive was linked to our corporate EBIT and corporate net sales goals.

We achieved 68.1% of the corporate EBIT incentive bonus target and 72.7% of the corporate net sales incentive bonus target, for an overall corporate bonus achievement of 69.0%. The North America Water Heating business unit achieved 74.6% of its PEBIT incentive bonus target and 74.5% of its net sales incentive target, with an overall achievement of 74.5%. Accordingly, the named executive officers were awarded incentive compensation bonuses set forth in the table below.

2024 Annual Incentive Awards

2025 Proxy Statement  33

Executive Compensation

Long-Term Incentive Compensation

Long-term incentive compensation consists of restricted stock units, performance cash and performance stock, all of which are focused on ensuring sustained performance or achievement of strategic goals over a multi-year period. We believe strongly that equity-based long-term incentives effectively link the interests of senior management to the interests of our stockholders. The allocation of total value between each of the long-term incentive components may vary from year-to-year based on our focus, as determined by the PCC. The long-term incentive portion of an executive’s compensation is “at risk” and is dependent upon corporate performance and growth in stock value.

The stated purpose of the Combined Incentive Compensation Plan, which is the vehicle for awarding long-term incentives, is to provide compensation as an incentive to induce key employees to remain in our employ and to encourage them to secure or increase their stock ownership in our company or to otherwise align their interests with our stockholders. The Combined Incentive Compensation Plan motivates behavior through growth-related incentives to achieve long-range revenue and profitability goals.

The total target value of all long-term incentive components is compared to comparable positions in the marketplace. Again, the PCC utilizes WTW to assist in benchmarking against the median level of surveyed companies to determine market competitive long-term incentive targets for executive positions.

Based upon the analysis that WTW provided in October 2023 for the existing executives and in early 2024 for Mr. Shafer who joined A. O. Smith in March 2024, the long-term incentive grants to our named executive officers were valued in the aggregate at 118% of market median and 104% excluding Mr. Shafer. We set Mr. Shafer’s long-term incentive target above our typical target range relative to market median to reflect the unique skills he brings to the role and his anticipated future contributions. Mr. O’Brien’s long-term incentive target reflects his recent promotion to his role.

The following table shows long-term incentive grants to named executive officers in 2024, and compares such grants to market median.

Emphasis on Performance-Based Awards

Our approach is to structure our awards so that restricted stock units represent 50% of our long-term incentive awards, performance cash 35% and performance stock 15%. All three components have a financial or strategic performance metric associated with them.

Restricted stock units entitle the executive to receive a share of Common Stock for each unit when the restricted stock unit vests. Restricted stock units are time-based but have a minimum performance threshold based on average Return on Equity that must be achieved in order to vest. The average Return on Equity is calculated by dividing net income by stockholder equity, adjusted to exclude certain extraordinary and nonrecurring items,

34  A. O. Smith Corporation

Executive Compensation

averaged over the three-year vesting period. We use average Return on Equity because we believe it represents a sound measure of our performance that is easily recognized and readily used by investors and that links executive performance to stockholder interest over the three-year performance period of the award. The value to the executive of restricted stock units is dependent upon the value of our Common Stock at the time of vesting. Restricted stock units are used to provide a combination of retention value and incremental performance incentives. For 2024, the minimum average Return on Equity for restricted stock unit payouts was 5%.

Performance cash is valued at $100 per unit at the time of grant. The value to the executive is dependent upon return on invested capital (or ROIC) performance over a three-year vesting period. [We calculate ROIC by taking net operating profit after taxes and dividing it by total capital.] The 2024 performance cash award uses ROIC to measure how effectively executives manage capital. The goal for achieving 100% of target is based on an average of the company’s last five years of ROIC achievement. The threshold and maximum performance levels are based on a market reference point: the five-year average of median ROIC for the S&P 500 Industrials Index. The threshold for achieving any payout is 125% of this reference point, and the maximum payout is achieved at 225% of the reference point. Target value payouts will be earned at 30.8% performance over the course of the measurement period and a maximum payout of 200% of target will be earned should we return 36.5% ROIC as a percent of the Cost of Capital between January 1, 2024, and December 31, 2026. As with annual incentive compensation objectives, the PCC sets targets at levels that are difficult to achieve, but with the expectation they are attainable.

Through December 2024, which includes one year of the three-year performance period, the performance cash granted in February 2024 had an estimated value of approximately 195.6% of target value. Through December 2024, which includes two years of the three-year performance period, the performance cash granted in February 2023 had an estimated value of approximately 167.5% of target value.

The 2024 performance stock has a three-year performance and vesting period with payout based on achievement of the company’s strategic water savings target. This target, defined as a 16-million-gallon savings in water usage by the third quarter of 2026 from the baseline set using the 12 months ending September 30, 2023, is part of a longer-term water reduction target outlined in the company’s 2024 sustainability report. Water savings is reduction in water usage plus water recycled. Achievement of a 16-million-gallon reduction provides 100% of the target shares, and a reduction of 20-million-gallons will provide the maximum number of shares at 150% of target.

Through December 2024, the performance stock we granted in 2024 had an estimated value of approximately 150.0% of shares granted.

At target, the combined value of the three components of executive long-term incentives (restricted stock units, performance cash and performance stock) should represent long-term incentive awards levels within a range around market median consistent with the WTW survey, subject to limited exceptions for special circumstances. Based upon the PCC’s October 2024 analysis, target long-term incentives for our named executive officers compared to market median are reflected on the table in the Long-Term Incentive Compensation discussion above.

2025 Proxy Statement  35

Executive Compensation

2025 Long-Term Incentive Award

In 2025, the PCC will follow the same structure for the long-term incentive award as in 2024. The restricted stock unit and performance cash components of the 2025 long-term incentive award will comprise 50% and 35% of the award, respectively, with performance criteria set following the process outlined for the 2024 award.

The 2025 performance stock will again have a three-year performance period based on a strategic ESG goal and will constitute 15% of the total long-term incentive. The 2025 award will be a waste reduction goal based on achievement of a landfill diversion target. This target, defined as reducing 525,000 pounds of waste at our seven largest North American plants through landfill diversion by year-end 2027 from the baseline set in 2024. Landfill diversion will be achieved through waste reduction, recycling or energy recovery. Achieving the target of 525,000 pounds diverted provides 100% of the target shares, and a diversion of 787,500 pounds will provide the maximum number of shares at 150% of target.

Payout of 2022-2024 Performance Cash

Performance cash awarded in February 2022 for the period 2022-2024 was paid in February 2025. This award was based upon ROIC as a percent of the Cost of Capital for the three-year period (2022-2024). The cash units originally were valued at $100 per unit. Based upon our performance during the measurement period, our ROIC exceeded the Cost of Capital by 479.5%, which resulted in the performance cash being paid out at 115.9% of the target value.

Timing of Awards

We generally award long-term incentive grants annually in February, shortly after we release earnings for the prior year, although such timing may change from year to year. The PCC also may consider and approve interim or mid-year grants, or grants made on another basis, from time to time based on business needs, changing compensation practices or other factors, at the discretion of the PCC. The chairman and chief executive officer has the authority to implement midyear equity grants as they relate to senior management employee promotions and new hires to align the employees as quickly as possible to stockholder interests and to make equity adjustments if circumstances warrant. This authority does not include midyear grants for executive officers. Neither the PCC nor the chairman and chief executive officer takes into account material nonpublic information in determining the timing and terms of equity-based awards, and we have not timed, nor do we intend to time, the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

Share Ownership Guidelines

We have developed share ownership guidelines requiring minimum levels of Common Stock accumulation and ownership, depending on the executive’s position. Current ownership guidelines applicable to current named executive officers are as follows, based on the average stock price in the prior year:

We target these ownership guidelines to be competitive with comparable positions in the marketplace. They also are intended to align executive interests with those of our stockholders. The PCC periodically monitors ownership guidelines to ensure they are consistent with the market and makes adjustments, as appropriate. We expect

36  A. O. Smith Corporation

Executive Compensation

executives to achieve these ownership guidelines within a reasonable period of time after becoming an executive at our company. Once achieved, the level of ownership must be maintained. Including granted but unvested restricted stock units, all named executive officers with the exception of Mr. O’Brien are in compliance with the ownership guidelines. Mr. O’Brien is new to his role and is on track to meeting his share ownership guideline. Mr. Petrarca retired in September 2024 and is no longer subject to share ownership guidelines.

Consideration of Risk in Executive Compensation Plans

We believe our total compensation package mitigates unreasonable risk-taking by our senior executives. In this regard, we strike a balance between short-term and long-term cash and equity awards. A significant portion of our executives’ pay is linked to the achievement of financial goals directly aligned to stockholder interests: EBIT, net sales, ROIC and return on equity beginning with 2023 awards. The competitive annual incentive plan rewards executives for achieving short-term performance targets, which keeps them focused on day-to-day business fundamentals. On the other hand, our long-term cash and equity awards incent executives to take a long-term view of our company and to assume reasonable risks to develop new products, explore new markets and expand existing businesses.

Further, our executives are stockholders with established share ownership guidelines requiring them to acquire and hold A. O. Smith stock. Their stock grants vest over three-year periods so they are incented to build stockholder value over time. Their performance cash awards also are subject to vesting over a three-year period, and their payout is tied to ROIC over the same period of time.

Our performance-based pay components are tied to company-wide results. We have implemented caps on our annual cash incentive plan, long-term performance cash and performance stock. Our equity programs limit and define the number of shares, but the value of the award is determined by the stock market at the time they vest or are exercised, which we believe provides a strong connection with stockholder interests.

The PCC reviewed the company’s annual and long-term incentive plans at the PCC’s July 2024 meeting. As a result of its review, the PCC concluded that our program is unlikely to place the company at material risk. In this regard, several of our current practices effectively mitigate risk and promote performance.

As part of this process, the PCC reviewed the risk assessment process conducted by WTW at the PCC’s direction and discussed with WTW any changes over the last year that could impact risk. The PCC concluded that no plan changes were implemented in 2024 that would affect the existing risk profile of any of the plans.

In addition, we maintain a Recoupment Policy for Incentive Compensation, which complies with the SEC’s and the NYSE’s clawback policy requirements and requires us to recover from executive officers incentive compensation erroneously awarded in the event of a material accounting restatement. We believe this policy, discussed in greater depth in the section of the Compensation Discussion and Analysis entitled, “Clawbacks – Recoupment Policy for Incentive Compensation,” mitigates the risk of a financial restatement by helping to ensure that our executive officers monitor and maintain the accuracy of our reported financial results and adhere to our Guiding Principles.

Executive Life Insurance

The A. O. Smith Executive Life Insurance Plan is a program intended to provide income security for a named beneficiary in the event of death. The plan generally provides a life insurance benefit equal to three times the executive’s annual base salary during employment and one times the annual base salary after retirement. We may at our discretion transfer ownership of the post-retirement policy equivalent of one times annual base salary to an executive upon retirement.

In 2019, the PCC reviewed and approved freezing and grandfathering the value of the active and post-retirement life insurance at the three times and one times levels described above for executives currently in the life insurance

2025 Proxy Statement  37

Executive Compensation

program. Messrs. Wheeler, Lauber, and Stern are eligible for a grandfathered life insurance benefit. Mr. Petrarca retired in September 2024 with a grandfathered benefit. All new executives, including Messrs. Shafer and O’Brien, will be eligible for a life insurance benefit equal to two times annual base salary during employment.

Executive Retirement Benefits

The retirement plans provided to our executives are consistent with our philosophy of providing competitive retirement benefits for all employees to attract and retain critical talent, as well as ensure a secure retirement for employees who contributed to our success over a sustained period of time.

Executive retirement benefits are provided in one of two ways, depending on when the executive became eligible. Executives hired or promoted into a qualifying executive position prior to July 2010, are covered by a non-qualified supplemental executive retirement plan. This plan was intended to supplement a defined benefit plan that was closed to new entrants in 2010, stopped accruing benefits in 2014 and terminated in 2021. The non-qualified executive retirement plan was not terminated and benefits under the non-qualified plan will be paid following an executive participant’s termination of employment. The only executive in the non-qualified supplemental executive retirement plan is Mr. Stern. Mr. Petrarca retired in September 2024 and will receive his benefit under the supplemental executive retirement plan in March 2025. Executives hired or promoted into a qualifying executive position after July 2010 do not participate in the supplemental executive retirement plan, but are eligible to participate in a defined contribution restoration plan described in the “Defined Contribution Retirement Savings Plan” section below. Messrs. Wheeler, Lauber, Shafer and O’Brien participate in the defined contribution restoration plan.

A detailed discussion of terms of the defined benefit plans follows the “Pension Benefits” Table.

Defined Contribution Retirement Savings Plan

We have a defined contribution 401(k) plan, the A. O. Smith Retirement Security Plan, for all U.S. salaried employees, including the named executive officers. We contribute a 100% match on the first 1% of employee savings and a 50% match on the next 5% of employee savings. We also provide a company contribution under the A. O. Smith Non-qualified Deferred Compensation Plan to executives who contributed the maximum eligible tax-deferred employee contributions allowed by law to the 401(k) plan. The amount of the company contribution to the eligible executives under the Non-qualified Deferred Compensation Plan is the difference between the match the executive would have received without the restrictions placed on compensation eligible for contributions to the 401(k) plan by the Internal Revenue Code and the actual match received under the 401(k) plan.

Under the A. O. Smith Retirement Security Plan, we also make an annual nonmatching company contribution to eligible employees of 3% of employee base salary and bonus up to the compensation limits specified in the Internal Revenue Code. Additionally, the A. O. Smith Non-qualified Deferred Compensation Plan includes a defined contribution restoration component for executives who are not eligible for the supplemental executive retirement plan. They receive an annual company contribution under the A. O. Smith Non-qualified Deferred Compensation Plan of 3% of pay (base plus bonus) based on pay above the Internal Revenue Code pay limit. Messrs. Wheeler, Lauber, Shafer and O’Brien participate in this defined contribution restoration component.