DEF 14A 1 clorox3644521-def14a.htm DEFINITIVE PROXY STATEMENT

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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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[   ]        Preliminary Proxy Statement
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[X]   Definitive Proxy Statement
[   ]   Definitive Additional Materials
[   ]   Soliciting Material Pursuant to §240.14a-12

  THE CLOROX COMPANY  
  (Name of Registrant as Specified In Its Charter)  
 
       
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 

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To Our Fellow Shareholders

Dear Shareholders:

I am pleased to invite you to attend our 2019 Annual Meeting of Shareholders.

As we enter the final year of our 2020 Strategy, we remain committed to Good Growth – our philosophy that profitable, sustainable and responsible growth is a requirement for success in today’s marketplace – while also looking beyond the horizon, as we roll out our new IGNITE Strategy. By imagining new ways of earning customer loyalty and infusing our brands with bold ideas, we aim to continue to deliver not only superior consumer value but also the required performance to earn our shareholders’ continued trust.

Environmental, social and governance matters, including inclusion and diversity, continue to be top priorities for us, guiding us in making decisions that effectively serve the needs of our diverse consumer base. We have also continued our strong commitment to reducing the environmental impact of our operations and improving the sustainability of our supply chain and products, while also making a positive difference in the global communities in which we operate.

Our Board continues to provide excellent guidance and leadership, setting the right tone for the organization. Whether through strategic oversight, risk management, or people management and culture, the Board is constantly thinking about how we can meet the needs of our consumers with strong investment in brands that offer superior value, innovation and technology transformation, in ways that are responsible, in order to continue to generate long-term financial returns for you, our shareholders.

We look forward to sharing our progress and results with you at our Annual Meeting. Thank you for your continued support and investment in Clorox.

Sincerely,
Benno Dorer
Chair and Chief Executive Officer

Dear Shareholders:

As Lead Independent Director of Clorox, it is my honor to serve with our other independent directors as the independent voices representing you, our shareholders, to help ensure that the Company continues to be managed with integrity, strong corporate governance, and appropriate oversight of strategy, risks and corporate culture.

Over the past fiscal year, I have had the opportunity to deepen my role and involvement with the Company and also to meet and engage more directly with our shareholders, customers and employees. I strongly believe that our people are the primary ambassadors of our brands, and as a result, it is important for our people to feel proud of Clorox and what it stands for.

Inclusion and diversity remain key priorities for the Board. The diverse backgrounds, skills and experiences of the Board enable us to provide strong guidance to Clorox in these key areas, as well as in our oversight of strategy and risks. We believe that a diverse Board, management team and workforce that is reflective of our diverse consumer base position us to better understand consumers’ wants and needs – which we believe drives our ability to deliver superior consumer value and successfully innovate. Diverse perspectives in the boardroom also allow us to evaluate issues through different experiences and perspectives and help us to guide the Company in a thoughtful way.

Once again in fiscal year 2019, I participated in outreach meetings with our shareholders to better understand the issues that are most important to you. As a Board, we continue to regularly discuss and consider investor feedback on a wide variety of business and environmental, social and governance issues, as we continue to strive to be responsible stewards of the Company.

On behalf of the independent directors, thank you for your confidence and your support.

Sincerely,
Pamela Thomas-Graham
Lead Independent Director


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Notice of Annual Meeting of Shareholders

To be held on November 20, 2019

The 2019 Annual Meeting of Shareholders (the Annual Meeting) of The Clorox Company (Clorox or the Company) will be held at 9:00 a.m. Pacific time on Wednesday, November 20, 2019, at the Company’s Pleasanton, CA offices, 4900 Johnson Drive, Pleasanton, CA 94588, for the following purposes:

1. To elect the eleven director nominees named in the proxy statement;
2. To hold an advisory vote to approve executive compensation;
3. To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm; and
4. To approve an amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting provision.

Shareholders also will consider and act upon such other business as may properly come before the Annual Meeting or any adjournment or postponement.

Shareholders of record at the close of business on September 23, 2019, are entitled to vote at the Annual Meeting and any adjournment or postponement.

Proof of share ownership as of the record date will be required to attend the Annual Meeting. Please see the Attending the Annual Meeting section of the proxy statement for more information.

On or about October 2, 2019, we began mailing a Notice of Internet Availability of Proxy Materials to our shareholders informing them that our Proxy Statement, Integrated Annual Report – Executive Summary, and voting instructions are available on the Internet as of the same date.

Your vote is very important. Even if you plan to attend the Annual Meeting, we hope that you will read the proxy statement and vote your proxy by telephone, via the Internet, or by signing, dating, and returning the proxy card in the envelope provided.

By Order of the Board of Directors,
Angela C. Hilt
Vice President – Corporate Secretary
& Deputy General Counsel
The Clorox Company
1221 Broadway
Oakland, California 94612

October 2, 2019

Important Notice Regarding the Availability of Proxy Materials for The Clorox Company Shareholders Meeting to be Held on November 20, 2019: The Notice of Annual Meeting, Proxy Statement, and 2019 Integrated Annual Report – Executive Summary are available at www.edocumentview.com/CLX.

THE CLOROX COMPANY - 2019 Proxy Statement

        


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YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN

If you have questions about how to vote your shares, or need additional assistance, please contact Innisfree M&A Incorporated, who is assisting us in the solicitation of proxies:


501 Madison Avenue, 20th Floor
New York, New York 10022

Shareholders may call toll-free at (877) 750-9499

Banks and brokers may call collect at (212) 750-5833


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        Leveraging Environmental, Social and Governance (ESG) Performance to Drive
Long-Term, Sustainable Value
      1
BOARD OF DIRECTORS 3
Proposal 1: Election of Directors 3
Our Director Nominees 3
How We Identify, Evaluate and Nominate Our Directors 10
Director Skills & Experience 10
Diverse Backgrounds & Tenure 12
How Our Directors Are Elected 12
Vote Required 12
Board’s Recommendation 12
How You Can Communicate With Us 13
Shareholder Recommendations and Nominations of Director Candidates 13
Director Communications 13
Corporate Governance 15
Corporate Governance Philosophy and Strengths 15
Corporate Governance Strengths 15
Our Commitment to Corporate Responsibility 15
Integrated Annual Reporting 16
The Clorox Company Governance Guidelines 16
The Board’s Role and Oversight 17
Our Corporate Governance Process 17
Shareholder Engagement 17
The Board’s Role in Risk Management and Culture Oversight 18
Board Meeting Attendance 19
Director Independence 19
Related Person Transaction and Conflict of Interest Policies and Procedures 19
Code of Conduct 20
Board Leadership Structure and Diversity 20
Board Committees 21
Annual Board and Director Evaluation Process 23
Director Compensation 23
STOCK OWNERSHIP INFORMATION 26
Beneficial Ownership of Voting Securities 26
EXECUTIVE COMPENSATION 28
Proposal 2: Advisory Vote to Approve Executive Compensation 28
Board’s Recommendation 28
Vote Required 29


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        Compensation Discussion and Analysis       30
Executive Summary 30
What We Pay: Components of Our Compensation Program 31
How We Make Compensation Decisions 39
Fiscal Year 2019 Compensation of Our Named Executive Officers 40
The Management Development and Compensation Committee Report 43
Compensation Committee Interlocks and Insider Participation 43
Compensation Discussion and Analysis Tables 44
Fiscal Year 2019 CEO Pay Ratio 57
Equity Compensation Plan Information 58
AUDIT COMMITTEE MATTERS 59
Proposal 3: Ratification of Independent Registered Public Accounting Firm 59
Board’s Recommendation 59
Vote Required 59
Audit Committee Report 60
Fees of the Independent Registered Public Accounting Firm 61
ADDITIONAL ITEMS TO BE VOTED ON 62
Proposal 4:  Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provision 62
Board’s Recommendation 63
Vote Required 63
INFORMATION ABOUT THE ANNUAL MEETING 64
Delivery of Proxy Materials 64
Voting Information 64
Form 10-K, Financial Statements, and Integrated Annual Report – Executive Summary 66
Solicitation of Proxies 66
Shareholder Proposals and Director Nominations for the 2020 Annual Meeting 67
Eliminating Duplicative Proxy Materials 68
Attending the Annual Meeting 69
Appendix A  Proposed Amendment to the Company’s Restated Certificate of Incorporation A-1
Appendix B  Management’s Discussion and Analysis of Financial Condition and Results of Operations, Audited Financial Statements, and Other Selected Financial Information B-1


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  Leveraging Environmental, Social and Governance (ESG) Performance to Drive Long-Term, Sustainable Value

We are dedicated to being leaders in ESG performance, including:

supporting our employees, so they can develop as leaders and advance in their careers,
creating a respectful and safe work environment,
promoting a dynamic culture that enables personal and professional growth, with inclusion and diversity as central to these commitments,
supporting the communities where we live and work,
reducing our carbon footprint, and
minimizing our operational footprint and enhancing the sustainability of our products.

We recognize that these commitments are all key to Good Growth – our philosophy that profitable, sustainable and responsible growth are requirements for success in today’s marketplace.

Our new IGNITE Strategy includes ESG goals that build on the fundamentals and successes of our 2020 Strategy and a continued focus on Good Growth by continuing to integrate our business strategy with our core ESG strategic goals of People, Planet and Products, along with a continued focus on best-in-class corporate governance and senior management incentives tied to successful strategy execution.



    

PEOPLE

WE STRIVE TO HELP OUR CONSUMERS AND EMPLOYEES THROUGH PURPOSE-LED CHOICES THAT ENHANCE WELL-BEING.


Ethnically diverse and female representation on our Board has consistently exceeded average representation at other Fortune 500 companies. We are also leaders in encouraging diversity of all types at senior levels.
27% of our director nominees, 36% of our Executive Committee, and 43% of our global non-production managers are women.
36% of our director nominees and 28% of our U.S. non-production managers are ethnically diverse.
Two members of our Executive Committee identify as LGBTQ.
We have received a perfect score on the Human Rights Campaign’s Corporate Equality Index, a recognition we have received each year since 2006.
For the past two years, we have been included on Bloomberg’s Gender-Equality Index, an index of companies that are committed to transparency in gender reporting and advancing women’s equality in the workplace.
We spent nearly $136 million in fiscal year 2019 with diverse suppliers in the U.S., which include businesses owned by ethnically diverse individuals, women, service personnel and veterans, and individuals who identify as LGBTQ.



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PLANET

WE STRIVE TO BE A LEADER IN ESTABLISHING THE CIRCULAR ECONOMY THROUGH RADICAL MATERIAL REDUCTION IN VIRGIN PACKAGING (PLASTIC AND FIBER), AND TO DRIVE SCIENCE-BASED CLIMATE ACTION AGAINST OUR VALUE CHAIN.


We have exceeded the 20% reduction goals we set in our 2020 Strategy for greenhouse gas emissions (33% reduction), solid-waste-to-landfill (21% reduction), and water use (21% reduction).
We have cut energy usage by 18% and are on track to meet our reduction goal by the end of 2020.
100% of our Glad facilities worldwide achieved zero waste-to-landfill status in the 2019 fiscal year, bringing our total to 13 global company sites versus our goal of 10.
More than 99% of directly purchased paper-based packaging is now made from recycled or certified sustainable virgin fiber.
Our new IGNITE Strategy includes sustainability goals with a dual focus on plastic and waste, and climate stewardship, including 100% renewable electricity by 2030 for our operations in the U.S. and Canada, global zero-waste-to-landfill across our organization, and science-based targets for greenhouse gas emissions.



    

PRODUCTS

WE STRIVE TO BE A LEADER IN RESPONSIBLE PRODUCT STEWARDSHIP WITH A FOCUS ON PROGRESSIVE ACTIONS TO ENHANCE THE PRACTICES OF OUR COMPANY AND THE CONSUMER PACKAGED GOODS INDUSTRY OVERALL.


We surpassed our product sustainability goal two years early, having made sustainability improvements to 58% of our product portfolio versus our goal of 50% by 2020.
Across our portfolio, 92% of our primary packaging is recyclable and 85% of our domestic retail sales volume carries the How2Recycle label.
We’ve eliminated 100% of polyvinyl chloride (PVC) in our U.S. packaging and are on track to achieve our goal to eliminate PVC in packaging globally by the end of 2020.
In May 2019, leaders from our Burt’s Bees and Glad businesses participated in the inaugural Ocean Plastics Leadership Summit, a forum for developing innovative solutions to the causes of plastic waste.
Our new IGNITE Strategy furthers our commitment to sustainable products and packaging and includes goals of reducing virgin packaging by 50%, and using 100% recyclable, reusable or compostable packaging and also plastic post-consumer recycled content in packaging.

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  Board of Directors

  Proposal 1:
Election of Directors

The Board, upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee (NGCRC), has nominated the eleven people listed below for election at the Annual Meeting to serve until the 2020 Annual Meeting of Shareholders, and until their respective successors are duly elected and qualified.

Carolyn Ticknor, who has served on the Board since 2005, is not being re-nominated for re-election in accordance with the Board’s retirement age policy and, therefore, will be retiring from the Board on the date of the Annual Meeting.



Our Director Nominees

We invite you to read about our director nominees below. Our director nominees represent diverse perspectives and experiences and bring core strategic, operating, financial and governance skills as well as consumer product

expertise to our Board. Each of the director nominees has agreed to be named in this proxy statement and to serve as a director if elected, and is currently serving as a director of the Company.


Director Since Name, Principal Occupation, and Other Information
2016 Amy Banse
     

Amy Banse has served as managing director and head of funds of Comcast Ventures LLC, the venture capital arm of Comcast Corporation, a global media and technology company, since August 2011. Under her leadership, Comcast Ventures has grown the size and diversity of its portfolio, making it one of the country’s most active corporate venture arms, investing in early-and later-stage companies across a wide spectrum of industries, including commerce, digital media, cybersecurity, SaaS, enterprise, and autonomous vehicles. From 2005 to 2011, Banse was senior vice president, Comcast Corporation and president, Comcast Interactive Media, a division of Comcast responsible for developing online strategy and operating the company’s digital properties. In this role, she drove the acquisition of a number of digital properties, including Fandango, and, together with her team, oversaw the development of Xfinity TV. Since joining Comcast in 1991, Banse has held various positions at the company, including content development, programming investments and overseeing the development and acquisition of Comcast’s cable network portfolio. Earlier in her career, Ms. Banse was an associate at Drinker, Biddle & Reath LLP.

Other Public Company Boards:
Banse serves as a director of Adobe, Inc. (May 2012 to present).

Nonprofit/Other Boards:
Banse serves on the boards of a number of Comcast Ventures’ portfolio companies, including Quantifind, Inc. and Nextdoor, and on the board of Tipping Point Community.

Director Qualifications:
Banse’s expertise in media and technology enables her to contribute valuable insights into digital media and online business. Her experience in starting, investing in and building businesses provides her with deep strategic and financial understanding, and her previous executive leadership roles contribute to her management and operational knowledge. Age: 60.

Committee Membership:
Audit Committee.


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Director Since Name, Principal Occupation, and Other Information
2007 Richard H. Carmona, M.D., M.P.H., F.A.C.S.
     

Richard Carmona has been chief of health innovations of Canyon Ranch Inc., a life-enhancement company, since August 2017. He previously served as vice chairman of Canyon Ranch, chief executive officer of the Canyon Ranch health division, and president of the nonprofit Canyon Ranch Institute from October 2006 to August 2017. He is the first distinguished professor of public health at the Mel and Enid Zuckerman College of Public Health at the University of Arizona. Prior to joining Canyon Ranch, Carmona served as the 17th Surgeon General of the United States from 2002 through 2006, achieving the rank of vice admiral. Previously, he was chairman of the State of Arizona Southern Regional Emergency Medical System, a professor of surgery, public health, and family and community medicine at the University of Arizona, and surgeon and deputy sheriff of the Pima County, Arizona,  Sheriff’s Department. Carmona served in the United States Army and the Army’s Special Forces.

Other Public Company Boards:
Carmona serves as a director of Axon Enterprise, Inc. (formerly Taser International, March 2007 to present) and Herbalife Ltd. (October 2013 to present).

Nonprofit/Other Boards:
Carmona serves on the boards of NuvOX Pharma LLC, DermSpectra LLC, TherimuneX Pharmaceuticals, Inc., Ross University and Health Literacy Media.

Director Qualifications:
Carmona’s experience as the Surgeon General of the United States and extensive background in public health, including as CEO of a hospital and healthcare system, provide him with a valuable perspective on health and wellness matters as well as insight into regulatory organizations and institutions, which are important to the Company’s business strategy. In addition, his executive leadership background, including with a global lifestyle enhancement company, provides him with international experience and enables him to make valuable contributions to the Company’s international growth strategies. Carmona’s experience in the United States Army and in academia also strengthens the Board’s collective qualifications, skills and experience. Age: 69.

Committee Membership:
Nominating, Governance and Corporate Responsibility Committee (Chair); Management Development and Compensation Committee.


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Board of Directors

Director Since Name, Principal Occupation, and Other Information
2014 Benno Dorer
     

Benno Dorer has served as chief executive officer (CEO) of the Company since November 2014 and was appointed chair of the Board in August 2016. Prior to becoming CEO, Dorer was executive vice president and chief operating officer – Cleaning, International and Corporate Strategy since January 2013, with responsibility for the Laundry, Home Care, and International businesses as well as Corporate Strategy and Growth. He previously served as senior vice president – Cleaning Division and Canada from 2011 through 2012, senior vice president – Cleaning Division from 2009 to 2011, and vice president & general manager – Cleaning Division from 2007 to 2009. Dorer joined Clorox in 2005 as vice president & general manager – Glad® Products. Prior to that role, he worked for The Procter & Gamble Company for 14 years, leading the marketing organization for the Glad® products joint venture since its inception and holding marketing positions across a range of categories and countries.

Other Public Company Boards:
Dorer serves as a director of VF Corporation (February 2017 to present).

Nonprofit/Other Boards:
Dorer serves as the vice chair of the executive committee of the board of GMA (Grocery Manufacturers Association).

Director Qualifications:
Dorer’s leadership experience and his in-depth knowledge of the consumer packaged goods industry, the Company’s businesses and his leadership in developing the Company’s 2020 Strategy and its new IGNITE Strategy enable him to provide valuable contributions with respect to strategy, growth and long-range plans. Additionally, his extensive international background provides him with a broad perspective on international customer and consumer dynamics and business strategy. Age: 55.

 
2015       Spencer C. Fleischer

Spencer Fleischer is managing partner of FFL Partners, L.P. (FFL), a private equity firm, where he has served in various roles since co-founding FFL in 1997. Before co-founding FFL, Fleischer spent 19 years with Morgan Stanley & Company as an investment banker and manager. At Morgan Stanley & Company, he was a member of the worldwide Investment Banking Operating Committee and also held roles including head of investment banking in Asia and head of corporate finance for Europe.

Other Public Company Boards:
Fleischer is a director of Levi Strauss & Co. (July 2013 to present). He was previously a director of Banner Corporation (October 2015 to December 2016).

Nonprofit/Other Boards:
Fleischer is a director of Eyemart Express Holdings LLC and Americans for Oxford, Inc.

Director Qualifications:
Fleischer brings to the Board more than 35 years of financial and operational expertise as well as deep international experience. His significant experience in both private equity and investment banking enables him to contribute valuable insights into strategic planning, mergers and acquisitions and operating expertise to the Company. His leadership role at FFL also allows him to provide significant experience in compensation matters. Age: 66.

Committee Membership:
Management Development and Compensation Committee (Chair).


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Director Since Name, Principal Occupation, and Other Information
2013 Esther Lee
     

Esther Lee has served as executive vice president – global chief marketing officer at MetLife Inc., an insurance, annuities, and employee benefits company, since January 2015. Previously, Lee served as senior vice president – brand marketing, advertising and sponsorships for AT&T from 2009 to December 2014. From 2007 to 2008 she served as CEO of North America and president of global brands for Euro RSCG Worldwide. Prior to that, she served for five years as global chief creative officer for The Coca-Cola Company. Earlier in her career, Lee worked in several leadership positions in the advertising industry, including as co-founder of DiNoto Lee. In this capacity, Lee worked with several consumer packaged goods companies, including The Procter & Gamble Company, Unilever and Nestle.

Nonprofit/Other Boards:
Lee serves on the boards of the MetLife Foundation and HATCH, a non-profit organization that connects people to resources and a global network to accelerate ideas into solutions, and on the advisory board of Kairos, a venture capital fund that builds and funds companies that make life more affordable.

Director Qualifications:
Lee brings to the Company significant executive and marketing expertise, focused on developing customer strategies to drive growth, building high-performing teams, and driving customer-centric innovation and transformation. Her current and prior executive leadership roles in global brand marketing, advertising, media and sponsorship have afforded her expertise in consumer engagement, creativity and digital transformation, as well as the operating models in these areas, that enable her to provide valuable contributions to the Company’s business strategies. Age: 60.

Committee Membership:
Nominating, Governance and Corporate Responsibility Committee.

 
2016 A. D. David Mackay
     

David Mackay served as president and chief executive officer of Kellogg Company, a food manufacturing company, from 2006 until his retirement in 2011. From 2003 to 2006, he served as the company’s president and chief operating officer. Prior to that, Mackay held a number of other leadership positions at Kellogg, including roles at Kellogg Australia, United Kingdom and Republic of Ireland. He also previously served as managing director of Sara Lee Corporation in Australia and held various positions at Mars, Inc.

Other Public Company Boards:
Mackay is a director of Fortune Brands Home and Security (September 2011 to present). Mackay previously served as a director of Keurig Green Mountain, Inc. (December 2012 to March 2016).

Nonprofit/Other Boards:
Mackay serves on the boards of FSHD Global Research Foundation Ltd., Facio Therapies, and Tropic Sport LLC.

Director Qualifications:
Mackay brings significant strategic leadership and operational experience to the Board. His extensive consumer products background and his international experience allow him to contribute valuable insights regarding the Company’s industry, operations and international businesses. In addition, his previous leadership roles provide him with expertise in executive compensation and succession planning matters. Age: 64.

Committee Membership:
Audit Committee; Management Development and Compensation Committee.


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Board of Directors

Director Since       
Name, Principal Occupation, and Other Information
1999
Robert W. Matschullat
Robert Matschullat served as independent lead director of the Board from November 2012 until July 2015. He was interim chairman and interim chief executive officer of the Company from March 2006 through October 2006, served as presiding director of the Board from January 2005 through March 2006 and served as chairman of the Board from January 2004 through January 2005. Previously, he was the vice chairman and chief financial officer of The Seagram Company Ltd., a global company with entertainment and beverage operations. Prior to joining The Seagram Company Ltd., Matschullat served as head of worldwide investment banking for Morgan Stanley & Co. Incorporated, and was on the Morgan Stanley Group board of directors.

Other Public Company Boards:
Matschullat serves on the board of Visa, Inc. (October 2007 to present), having served as chairman of the board of Visa, Inc. from April 2013 to April 2019. He previously served on the board of The Walt Disney Company, Inc. (December 2002 to March 2018).

Director Qualifications:
Matschullat brings to the Company a wealth of public company leadership experience at the Board and executive levels. Matschullat’s executive leadership experience includes service as the chief financial officer of a major global company and as the division head of a major financial institution, providing him with expertise in business and financial matters as well as broad international experience. In addition, Matschullat has an extensive understanding of the Company’s business, having served on the Board since 1999, including in the leadership roles of independent lead director, non-executive chairman and presiding director of the Board. Matschullat also served as the Company’s interim chief executive officer. These experiences have provided him with a long-term perspective, as well as valuable management, governance and leadership experience. Age: 71.

Committee Membership:
Nominating, Governance and Corporate Responsibility Committee.
 
2018
Matthew J. Shattock
Matthew Shattock has served as non-executive chairman of the board of Beam Suntory Inc., the world’s third largest premium spirits company, since April 2019. He previously served as chairman and CEO of Beam Suntory, having joined Beam in March 2009 as president & CEO and led the company’s successful growth strategy transformation and subsequent integration of the Beam and Suntory spirits businesses following Beam’s acquisition by Suntory in 2014. Prior to joining Beam, he spent six years at Cadbury plc, an international confectionary manufacturer, where he led its businesses first in The Americas and then in the Europe, Middle East & Africa region. Prior to Cadbury, Shattock spent 16 years at Unilever, an international manufacturer of food, home care and personal care products, in various leadership roles, culminating in his role as chief operating officer of Unilever Best Foods North America.

Other Public Company Boards:
Shattock serves as a director of VF Corporation (February 2013 to present).

Nonprofit/Other Boards:
Shattock serves as a director of Suntory Holdings Ltd. and Beam Suntory Inc. and is a member of the board of The Boys and Girls Club of Lake County, Illinois.

Director Qualifications:
Shattock brings significant experience in the consumer packaged goods industry to the Board. His current and prior leadership roles, including overseeing the successful growth, integration and strategy transformation of a global spirits company, enable him to provide valuable insights to the Company’s business. Shattock has a strong track record of driving growth through innovation, brand communication and operational excellence. Age: 57.

Committee Membership:
Audit Committee.

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Director Since       
Name, Principal Occupation, and Other Information
2005
Pamela Thomas-Graham
Pamela Thomas-Graham is the lead independent director for the Company. She is the founder and chief executive officer of Dandelion Chandelier LLC, a private digital media enterprise focused on the world of luxury. Prior to founding Dandelion Chandelier in August 2016, she served as chair, new markets, of Credit Suisse Group AG, a global financial services company, from October 2015 to June 2016. She served as chief marketing and talent officer, head of private banking & wealth management new markets, and member of the executive board of Credit Suisse from January 2010 to October 2015. From 2008 to 2009, she served as a managing director in the private equity group at Angelo, Gordon & Co. From 2005 to 2007, Thomas-Graham held the position of group president at Liz Claiborne, Inc. She served as chairman, president and chief executive officer of CNBC from 2001 to 2005. Previously, Thomas-Graham served as an executive vice president of NBC and as president and chief executive officer of CNBC.com. Prior to joining NBC, Thomas-Graham was a partner at McKinsey & Company.

Other Public Company Boards:
Thomas-Graham serves on the boards of Bank of N.T. Butterfield & Son (December 2017 to present), Peloton Interactive, Inc. (March 2018 to present), and Norwegian Cruise Line Holdings Ltd. (April 2018 to present).

Nonprofit/Other Boards:
Thomas-Graham serves on the board of the Parsons School of Design.

Director Qualifications:
Thomas-Graham brings to the Company significant executive expertise, including as a current and former CEO. Her current and prior executive leadership roles enable her to provide valuable contributions with respect to management, operations, growth and long-range plans. In addition, Thomas-Graham brings to the Company significant experience in the area of branding. Her prior experience as a management consultant also enables her to provide valuable contributions to the Company’s business strategies and mergers and acquisitions activities. Additionally, her leadership experience in banking and private equity provides her with financial and accounting expertise, enabling her to contribute to the oversight of the Company. Age: 56.

Committee Membership:
Nominating, Governance and Corporate Responsibility Committee.
 
2017
Russell J. Weiner
Russell J. Weiner is chief operating officer and president of the Americas for Domino’s Pizza, Inc., a restaurant chain, a role he assumed in July 2018. Before assuming this position, he served as president of Domino’s USA from September 2014 through June 2018. Prior to his role as president of Domino’s USA, he served as the company’s executive vice president, chief marketing officer, starting in 2008. Before joining Domino’s, he was vice president of marketing, Colas at Pepsi-Cola North America from 2005 to 2008. During his tenure at Pepsi-Cola North America, which commenced in 1998, Weiner held a number of leadership roles in marketing and brand management.

Director Qualifications:
Weiner’s experience in digital innovation enables him to help the Company maintain its leadership position in digital technology within the consumer packaged goods industry. In addition, his executive leadership experience in the food and consumer packaged goods industries enables him to contribute his deep knowledge of brand building, marketing, operations and consumer insights. Age: 51.

Committee Membership:
Audit Committee; Management Development and Compensation Committee.

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Board of Directors

Director Since       
Name, Principal Occupation, and Other Information
2015
Christopher J. Williams
Christopher Williams has served as the chairman and chief executive officer of The Williams Capital Group, L.P. and Williams Capital Management, LLC (Williams Capital), an investment banking and financial services firm, since the company’s formation in 1994. Prior to founding Williams Capital, Williams managed the derivatives and structured finance division of Jefferies & Company. He previously worked at Lehman Brothers, where his roles included managing groups in the corporate debt capital markets and derivatives structuring and trading.

Other Public Company Boards:
Williams is a director of Ameriprise Financial, Inc. (September 2016 to present). He previously served on the boards of Caesars Entertainment Corporation (April 2008 to March 2019) and Wal-Mart Stores Inc. (June 2004 to June 2014).

Nonprofit/Other Boards:
Williams serves on the boards of Cox Enterprises Inc., Lincoln Center for the Performing Arts, and The Partnership for New York City.

Director Qualifications:
Williams brings a wealth of financial, accounting, and strategic knowledge to the Board with his years of experience in investment banking and finance, and as the former chair of the audit committee of a Fortune 100 company. He also contributes important executive management and leadership experience as the chairman and chief executive officer of an investment management firm. As a current and former director of several public and private companies, he brings a valuable perspective for the Company’s strategy and operations as well as extensive customer insights. Age: 61.

Committee Membership:
Audit Committee (Chair – effective as of this Annual Meeting, subject to his re-election to the Board).

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How We Identify, Evaluate and Nominate Our Directors

The NGCRC engages in continuous Board succession planning and Board refreshment, working closely with our Board in determining the skills, experiences, and characteristics desired for the Board as a whole and for its individual members, and also screening and recommending candidates for nomination by the full Board.

While the Board has not established any specific minimum qualifications that a potential nominee must possess, director candidates, including incumbent directors, are assessed based upon criteria established by the NGCRC in light of the Company’s long-term strategy, the skills and backgrounds currently represented on the Board, and any specific needs identified in the Committee’s evaluation of Board composition. Criteria include broad-based leadership and business skills and experience, prominence and reputation in their professions, global business and social perspective, ability to effectively represent the long-term interests of our shareholders and other stakeholders, personal integrity and judgment, and diversity of thought, background and experience. The NGCRC works to ensure that any slate of director candidates that it presents to the Board includes diverse candidates.
The NGCRC focuses on achieving the right balance of tenure of our directors to obtain a Board with a mix of fresh perspectives and institutional memory of longer-tenured directors who have seen issues arise over time and have worked with different CEOs and management teams to guide the Company.

The ability of incumbent directors to continue to contribute to the Board and the Company’s evolving needs is also carefully considered in connection with the renominating process. Further, under the Company’s Corporate Governance Guidelines (Governance Guidelines), non-management directors whose personal circumstances change in a manner that affects their ability to contribute to the Company, including a change in their primary job responsibilities, must offer their resignation for the Board’s consideration, to ensure that the individual is still qualified to perform their duties as a director of the Company.

Director Skills & Experience

The following experience and skills, among others, have been specifically identified by the NGCRC as being important in creating a diverse and well-rounded Board:

Consumer packaged goods or relevant industry expertise
Brand-building/marketing/digital/e-commerce experience
 
Significant M&A/financial/accounting expertise
 
Operational experience
 
Regulatory, scientific or R&D experience
 
Human capital and culture experience
 

Emerging technology/innovation experience
 
Retail/customer experience
 
International experience
 
Experience in product development or supply chain management
 
ESG experience (sustainability, social responsibility, public issues expertise)
 
Cybersecurity/information technology knowledge
 

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Board of Directors

Consumer Packaged Goods or Relevant Industry Expertise helps a director provide guidance on the Company’s strategy and position in our industry, in addition to providing market insights.
Emerging Technology and Innovation Experience supports the Company’s strategy, innovation and business operations – emerging technologies and innovation can disrupt a business strategy, and a director who is able to identify and understand emerging technologies can support the development and execution of our corporate strategy.
Brand Building / Marketing Experience, including digital marketing and e-commerce experience, enables a director to provide insight on building our brands and marketing to consumers in an ever-evolving digital and e-commerce landscape.
Retail and Customer Experience allows a director to provide insights on consumer engagement and customer relations, in addition to a comprehensive understanding of industry trends.
Significant Mergers and Acquisitions / Strategy Experience and Financial / Accounting Expertise enables a director to provide perspective on the Company’s merger and acquisitions, operational integration, partnership, and adjacency strategies, and to analyze and oversee the Company’s financial position, financial statements and reporting, and results of operations.
International Experience supports the Company’s global business strategy by drawing upon a director’s experience managing international operations or exposure to different cultural perspectives and practices to ensure that we have the tools to fully understand the wants and needs of our diverse consumer base.
Operational Experience enables a director to contribute to the Company’s management expertise, operations, strategy, growth, and long-range plans.
Experience in Product Development / Supply Chain Management supports the Company’s strategy and operations, enabling a director to provide insight
in identifying and developing new products and identifying new areas for existing products and also anticipating and managing supply chain and manufacturing disruptions and issues.
Regulatory, Scientific or Research & Development Experience supports the Company’s brand and intellectual property portfolio and allows a director to provide insights on navigating the regulatory environment in the U.S. and in international markets, including in highly regulated sectors, such as health and wellness.
Environmental, Social and Governance (ESG) Experience, including sustainability, social responsibility, and public issues experience, allows a director to appropriately consider and address business, social and environmental challenges and the priorities of stakeholders, while also mitigating risks and unlocking opportunities for long-term sustainable growth. This experience enables a director to help the Company navigate its emerging business imperatives.
Human Capital and Culture Experience allows a director to help ensure our culture reflects our mission and values and that our employees and other people who touch our business are appropriately considered in corporate decisions.
Cybersecurity and Information Technology Knowledge allows a director to effectively oversee and advise on the Company’s cybersecurity and risk management programs.

To enhance and expand on the key skills and experiences relevant to the Company’s industry, our directors regularly participate in external continuing education programs and presentations developed internally and given by external expert speakers. New directors also participate in comprehensive orientation sessions that provide them with a robust overview of the Company’s business and strategies as well as a thorough understanding of their fiduciary duties, which allows new directors to begin making contributions to the Board at the start of their service.



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Diverse Backgrounds & Tenure

Our director nominees represent diverse perspectives and experiences, and we regularly assess our Board to ensure that we have a mix of tenures balancing fresh perspectives with institutional memory of longer-tenured directors who have seen issues arise over time and have worked with different CEOs and management teams to guide the Company.


Clorox is committed to inclusion and diversity throughout our organization from the boardroom to the factory floor. As highlighted in our Governance Guidelines, the Board values diversity and recognizes the importance of having unique and complementary backgrounds and perspectives in the boardroom. The Board believes that setting the tone at the top – that people of all backgrounds are welcome and empowered – helps the Company attract and retain the best talent and also helps lead to a better strategy that resonates with our customers and consumers. The Board endeavors to bring together diverse skills, professional

experience, perspectives, age, race, ethnicity, gender, sexual identity and orientation, and cultural backgrounds that reflect the Company’s diverse consumer and investor base, and to guide the Company in a way that reflects the best interests of all of our shareholders and considers the impact on other stakeholders. The NGCRC assesses the effectiveness of these efforts by examining the overall composition of the Board, assessing how individual director candidates, including incumbent directors, can contribute to the overall success of the Board, and reviewing individual, committee, and Board evaluation results.




How Our Directors Are Elected

Vote Required

The Company’s Bylaws require each director to be elected by a majority of the votes cast with respect to such director in uncontested elections—the number of shares voted FOR a director must exceed the number of shares voted AGAINST that director.

The people designated in the proxy and voting instruction card intend to vote your shares represented by proxy FOR the election of each of these nominees, unless you include instructions to the contrary. In the event any director nominee is unable to serve or for good cause will not serve, the persons named as proxies may vote for a substitute nominee recommended by the Board, or the Board may reduce the size of the Board or leave a vacancy.

Under the Company’s Bylaws, any director who fails to be elected by a majority of the votes cast in an uncontested election must tender their resignation to the Board. The NGCRC would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board would act on the NGCRC’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from

the date the election results are certified. A director who tenders their resignation would not participate in the Board’s decision.

Board’s Recommendation

The Board unanimously recommends a vote FOR each of the Board’s eleven nominees for director listed above. The Board believes that each nominee listed above is highly qualified and has the background, skills, experience, and attributes that qualify each nominee to serve as a director of the Company. See each nominee’s biographical information and the How We Identify, Evaluate and Nominate our Directors section above for more information. The Board’s recommendation is based on its carefully considered judgment that the background, skills, experience, and attributes of the nominees make them the best candidates to serve on the Board.



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Board of Directors


How You Can Communicate With Us

Shareholder Recommendations and Nominations of Director Candidates

The NGCRC considers recommendations from many sources, including shareholders, regarding possible candidates for director. Such recommendations, together with biographical and business experience information (similar to that required to be disclosed under the applicable Securities and Exchange Commission (SEC) rules and regulations) regarding the candidate, should be submitted to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The NGCRC evaluates all candidates for the Board in the same manner, including those suggested by shareholders.

In addition, our Bylaws permit a shareholder or group of up to 20 shareholders who have owned at least 3% of the outstanding shares of the Company’s common stock (Common Stock) for at least three years to submit director nominees (up to 20% of the Board) for inclusion in the Company’s proxy statement and form of proxy used in connection with the Annual Meeting (proxy materials) if the shareholder(s) provide(s) timely written notice of such

nomination(s) and the shareholder(s) and the nominee(s) satisfy the requirements specified in the Company’s Bylaws. Shareholders who wish to nominate directors for inclusion in the Company’s proxy materials or directly at an annual meeting of shareholders in accordance with the procedures in our Bylaws should follow the instructions under the Shareholder Proposals and Director Nominations for the 2020 Annual Meeting section of this proxy statement.

Director Communications

Shareholders and interested parties may direct communications to individual directors, including the lead independent director, to a Board committee, to the independent directors as a group, or to the Board as a whole, by addressing the communications to the appropriate party and sending them to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The Corporate Secretary will review all communications so addressed and will forward to the addressee(s) all communications determined to bear substantively on the business, management, or governance of the Company.



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Message from Rich Carmona, Chair of the Nominating, Governance and Corporate Responsibility Committee


Dear Shareholders:

A key priority of the NGCRC is ensuring that we have the right people in the boardroom for the Company and its shareholders. We regularly assess our Board composition for strong, independent leadership, skills and expertise tailored to our business strategy and needs and a mix of tenures to ensure that we have continuously fresh perspectives, as well as deep knowledge of the Company, and diverse voices and backgrounds that are reflective of the diverse populations that we have the privilege of serving. You’ll see this independence and balanced mix reflected in the biographies of our director nominees above. We believe that the diversity of our Board not only aligns with our values and culture but also provides us with a strong strategic advantage by allowing us to have a more comprehensive understanding of how we can better serve the needs of our diverse consumer base.

We believe that consistently reviewing and refreshing the Board’s skill sets and perspectives is important to ensure that the Board is prepared to anticipate and face the challenges presented by the dynamic industry and changing external environment in which we operate, both now and as we look down the road.

Another key role of the NGCRC—and which is reflected in our decision a few years ago to expand the name and mandate of the NGCRC from the Nominating and Governance Committee—is overseeing Clorox’s corporate responsibility programs. The other NGCRC members and I meet with management to review and discuss corporate responsibility initiatives, challenges and opportunities, so that we can advise on key corporate responsibility matters that affect all of Clorox’s stakeholders. Whether it is helping guide Clorox’s environmental, social and governance strategies, including important environmental topics such as climate change and plastic waste, or discussing insights on corporate culture and inclusion and diversity, the NGCRC takes seriously its responsibility to ensure that the Company is responsible, and we remain committed and accountable to you, our shareholders.

After nearly fourteen years of service, Carolyn Ticknor will not be standing for re-election and is retiring from the Board on the date of the Annual Meeting, in accordance with the Governance Guidelines. We sincerely thank Ms. Ticknor for her contributions to the Board and the Company during her tenure.

Sincerely,


Rich Carmona
Chair, Nominating, Governance and Corporate Responsibility Committee

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  Corporate Governance

Corporate Governance Philosophy and Strengths

Consistent with our focus on Good Growth, we are committed to strong corporate governance and corporate responsibility. We regularly review our policies and practices to ensure that they further the interests of our shareholders, promote the long-term health of our business, provide effective oversight of management, and encourage responsible and ethical behavior by our directors and employees. Our Governance Guidelines, Code of Conduct, and other company policies establish a framework to further these goals and guide our decisions, as described in greater detail below.

Corporate Governance Strengths

All of our director nominees are independent, except for our CEO
Annual election of all directors
Diverse Board with effective mix of skills, experiences, and perspectives
Active Board refreshment and average board tenure of 7.4 years*
100% independent Board committee members
Diverse Board committee leadership
Majority voting and director resignation policy in uncontested director elections
Strong lead independent director with ability to call special meetings of the Board and active supervision of meeting materials, agendas and schedules
Proactive shareholder engagement
Proxy access right for shareholders
Special meeting right for shareholders
Robust Code of Conduct applicable to directors, officers, and employees
Effective annual Board, Board committee, and individual director evaluation process
Rigorous stock ownership guidelines for directors and executives
Employees, directors and officers prohibited from hedging our stock

*

As of August 30, 2019.

Our Commitment to Corporate Responsibility

Doing the right thing is one of Clorox’s corporate values – we believe that the long-term health of the Company depends on our integrity and are proud of our tradition of honesty, fair dealing and ethical practices. As a result, corporate responsibility is foundational to our operations, and we consider it integral to our business.
In furtherance of our focus on corporate responsibility, in fiscal year 2017, we changed the name of our Nominating and Governance Committee to include Corporate Responsibility and enhanced the NGCRC’s charter in the areas of corporate responsibility and sustainability to reflect the work that was already being done by this committee. The revised charter expands the Committee’s responsibilities to include oversight of corporate responsibility, including with regard to culture and human capital, and sustainability matters. While the committee as well as the full Board has historically provided oversight in these areas, the Board felt it was important to formalize these responsibilities, reflecting our long-standing values and commitment to best practices in corporate responsibility and sustainability. The NGCRC considers and discusses environmental, health, safety and social matters each time it meets.

In 2015, we became a signatory to the United Nations Global Compact, which is the world’s largest corporate responsibility initiative. As a signatory, we pledged to support and promote 10 principles in the areas of human rights, labor, the environment and anti-corruption. Our commitment to sustainability includes:

Making responsible products responsibly;
Shrinking our environmental footprint while we grow; and
Reducing the environmental impact of our operations, improving the sustainability of our upstream supply chain and reducing the impact of our products and packaging once used by consumers.

In the seventh year of our sustainability goal period, we have already exceeded the 20% reduction goals we set in our 2020 Strategy for greenhouse gas emissions (33% reduction), solid-waste-to-landfill (21% reduction) and water use (21% reduction), and all of our Glad® facilities achieved zero waste-to-landfill status (bringing our total to 13 global company sites versus our goal of 10). More than 99% of directly purchased paper-based packaging is now made from recycled or certified sustainable virgin fiber – which was one of our 2020 goals for product and packaging sustainability, aimed at reducing the pressure on natural forests and related impacts on climate change. We also spent nearly $136 million with diverse suppliers in the U.S. during fiscal year 2019, which include businesses owned by minorities, women, service personnel and veterans, and individuals who identify as LGBTQ.


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Our new IGNITE Strategy includes a continued focus on Good Growth by continuing to integrate our business strategy with our core ESG strategic goals of People, Planet and Products, along with a continued focus on best-in-class corporate governance and senior management incentives tied to successful strategy execution. See the Leveraging Environmental, Social and Governance (ESG) Performance to Drive Long-Term, Sustainable Value section of this proxy statement for additional information.

We are also committed to helping communities and safeguarding families through initiatives that promote health, education and safety. Some initiatives from fiscal year 2019 include:

Encouraging our employees to support causes of their choosing by participating in our workplace giving program, which also allows eligible charities to receive matching funds from Clorox.
Donating thousands of cases of Clorox, Glad, Kingsford and Burt’s Bees products, working with our partner, the American Red Cross, in response to natural disasters such as hurricanes Florence and Michael and Midwest U.S. flooding.
Kicking off the Rainbow Light Shine Your Light™ campaign in April 2019 to make Rainbow Light®-brand vitamin drops for Vitamin Angels, a nonprofit organization providing lifesaving vitamins to mothers and children at risk of malnutrition, that will be distributed in 25 women’s shelters coast-to-coast to celebrate Rainbow Light® and Vitamin Angels’ 25-year partnership.

We believe our financial performance and commitment to corporate responsibility go hand in hand. Each year, we publish an integrated report that highlights the intersection of our business and corporate responsibility commitments by reporting our financial and ESG performance as described below.

Integrated Annual Reporting

Clorox was among the first U.S. companies to pursue integrated annual reporting, which we adopted in 2011. Our integrated annual report uses the Global Reporting Initiative framework, as well as reports against the Ten Principles of the United Nations Global Compact. We engage a third party to review certain non-financial key performance indicators, and we continue to look for opportunities to provide metrics that provide further insight into how we create value for all our stakeholders. This year, as part of our ongoing efforts to implement best practices and provide additional information that our shareholders
may find helpful, we are including certain information aligned with the Sustainability Accounting Standards Board (SASB) reporting framework. This is the first year that we will be reporting certain information aligned with SASB, and we hope to continue making more disclosures in the future pursuant to this framework as standards continue to formalize and collecting and validating data for relevant industry classifications becomes more commonplace and comprehensive. We look forward to receiving feedback from our stakeholders and continuing to collect and disclose information that is as useful and meaningful as possible, and also to continuing the journey to providing additional relevant data for key ESG indicators and helping establish more uniform ESG reporting standards for our industry generally. Clorox’s use of SASB-aligned disclosure this year in our integrated annual report is an important step.

The Clorox Company Governance Guidelines

The Board has adopted Governance Guidelines to reflect the Board’s view and the Company’s policy regarding significant corporate governance matters, which the Board believes are best practice. The Governance Guidelines present a framework for the governance of the Company by setting forth the Board’s and the Board committees’ responsibilities, qualifications, and operational matters and describing key matters, such as the evaluation of the CEO and ordinary-course and emergency succession planning. The NGCRC reviews the Governance Guidelines on, at least, an annual basis and recommends changes to the Board based on current corporate governance best practices.

The Governance Guidelines can be found in the Corporate Governance section on the Company’s website at https://www.thecloroxcompany.com/who-we-are/corporategovernance/governance-guidelines/, and are available in print to any shareholder who requests them from The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.


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Corporate Governance


The Board’s Role and Oversight

Our Corporate Governance Process

We believe that a critical component of meaningful corporate governance is a robust annual process (as presented in the graphic below) that includes active and transparent shareholder engagement. In addition to our regularly scheduled governance cadence described below, our Board reviews, considers, and acts, as necessary, upon ESG matters throughout the year.

Shareholder Engagement

We maintain active, year-round engagement with our shareholders. During the past fiscal year, our directors and management met with investors to discuss key corporate governance, executive compensation, corporate responsibility, and ESG topics. In addition to highlighting our progress particularly with respect to diversity and environmental sustainability, these meetings allow for two-way dialogue between our shareholders and our Board and management, and for our management and Board to listen to our shareholders’ perspectives and understand any concerns they may have.
The Board considers shareholder feedback from these meetings, along with best practices, market standards, policies at other companies, and Clorox’s shareholder base and circumstances, and the feedback we have received from our shareholder engagement activities has informed the Board’s decisions and deliberations. For example, as a result of shareholder feedback, the Board has determined that elimination of the supermajority voting provision in our Company charter, as proposed in Proposal 4, is appropriate for the Company and our shareholders. Our Board also considered shareholder input in reviewing the Company’s compensation plan design and metrics, as described in greater detail in the Compensation Discussion and Analysis section of this proxy statement, and in other key areas.


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The Board’s Role in Risk Management and Culture Oversight

While the Company’s management is responsible for the day-to-day risk management process, the Board has ultimate responsibility for the oversight of the Company’s risk management and setting the right tone for integrity, ethics and culture. The Company has instituted a robust, comprehensive enterprise risk management program, which involves Board oversight, and an Enterprise Risk Management Steering Committee (ERM Committee), which consists of a cross-functional team of senior leaders and key executives. The ERM Committee oversees the annual key risk identification process, whereby it identifies the top risks that the Company faces with respect to its business, operations, strategy, and other factors, as well as key mitigation strategies and risk owners. The Company’s management reports and discusses identified risks and risk mitigation and management efforts with the Board, at minimum, on an annual basis and typically in connection with the Board’s annual strategy meeting.

The Board also oversees risk management through its committees by allocating certain matters to the Board committees based on expertise, and these committees report on risk exposure during its regular reports to the full Board to facilitate proper risk oversight by the entire Board.

The Audit Committee oversees the integrity of the financial statements, the Company’s accounting and financial controls, including the independent and internal auditors, risk management policies and compliance relating to accounting and financial reporting matters.
The Management Development and Compensation Committee (MDCC) oversees management development and succession planning processes and approves compensation for executive officers and various benefit plans for the Company as a whole.
The NGCRC oversees the Company’s corporate governance practices, director nominations, Board, Committee, director and peer evaluations, corporate responsibility, sustainability and political contribution matters, shareholder engagement, and compliance and ethics program.

For example, the Audit Committee reviews compliance and risk management related to accounting and financial reporting matters and financial risk management and also receives quarterly cybersecurity updates, and the MDCC reviews the risks related to the executive compensation structure.

Furthermore, as part of its responsibilities, the MDCC periodically reviews the Company’s compensation policies and programs to ensure that compensation offers
performance incentives to employees and executives, while mitigating excessive risk-taking. The overall executive compensation program contains various provisions that mitigate against excessive risk-taking, including:

Balancing cash compensation under the Annual Incentive Plan and equity compensation;
Capping the payouts under executive and non-executive incentive plans, which protect against executives taking short-term actions to maximize bonuses that are not supportive of long-term objectives;
Utilizing weighted financial metrics under the Annual Incentive Plan that are intended to discourage revenue generation at the expense of profitability and profitable growth, and vice versa;
Using different financial metrics under our Annual Incentive Plan and long-term performance shares;
Including clawback provisions that allow the recapture of compensation paid to current and former executives, which serve as a deterrent to inappropriate risk-taking activities; and
Implementing and enforcing stock ownership guidelines that require executive officers to accumulate meaningful levels of equity ownership in the Company, which align executives’ short- and long-term interests with those of the Company’s shareholders.

Based on its review and the analysis provided by its independent compensation consultant, FW Cook, the MDCC has determined that the risks arising from the Company’s compensation policies and practices for its employees, including executive officers, are not reasonably likely to have a material adverse effect on the Company.

In overseeing culture, the Board also receives information through a number of channels, including updates from the Chief People Officer, such as data and metrics from our annual employee engagement survey and also relating to inclusion and diversity, as well as updates from the General Counsel on any significant compliance, discrimination and harassment complaints.

The Company also has formalized governance structure and reporting channel policies that require management to notify the Board of, among other things, any instances of significant threatened or actual litigation, significant governmental or regulatory inquiry or proceeding, and any events or occurrences that could materially impact the Company’s reputation, including any cyber-related issues that could involve the significant misappropriation of personal or sensitive/valuable company data, or that may have significant operational, financial, legal or reputational impacts.


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Corporate Governance

Board Meeting Attendance

The Board held seven meetings during fiscal year 2019. All incumbent directors attended at least 75% of the meetings of the Board and committees of which they were members during fiscal year 2019 during the period in which they served on the Board. All members of the Board are expected to attend the Annual Meeting of Shareholders. Each of the twelve members of the Board at the time of the Company’s 2018 Annual Meeting of Shareholders attended that meeting.

Director Independence

The Governance Guidelines provide that a substantial majority of the Board must consist of independent directors. The Board determines whether individual Board members are independent, as defined by the New York Stock Exchange (NYSE). The Board has adopted director independence standards, which are set forth in the Governance Guidelines, to assist it in assessing the independence of directors. The Board makes an affirmative determination regarding the independence of each director annually, based upon the recommendation of the NGCRC.

The Board has determined that each of our directors who served during the 2019 fiscal year (Messrs. Fleischer, Mackay, Matschullat, Shattock, Weiner, and Williams, Mmes. Banse, Lee, Thomas-Graham, and Ticknor, and Dr. Carmona) is independent under the NYSE listing standards and the independence standards set forth in the Governance Guidelines, except for Mr. Dorer as a result of his service as the Company’s CEO. The Board’s determination considered the impact of tenure on a director’s independence, particularly with respect to directors with 10 or more years of Board service, and the Board concluded that such longer-tenured directors, based on their communications and interactions with management, their decisions, and their adherence to their fiduciary duties to shareholders, have demonstrated their independence from management.

The independent directors generally meet in executive session at each regularly scheduled Board meeting without the presence of management directors or employees of the Company to discuss various matters related to the oversight of the Company, the management of the Board’s affairs, and the CEO’s performance. The lead independent director chairs the independent executive sessions.


Related Person Transaction and Conflict of Interest Policies and Procedures

The Company has a written policy regarding review and approval of related person transactions by the Audit Committee (Related Person Policy). The Related Person Policy defines an “Interested Transaction” as any transaction, arrangement, or relationship or series of similar transactions, arrangements, or relationships (including any indebtedness or guarantee of indebtedness) in which (i) the aggregate amount involved since the beginning of the Company’s last completed fiscal year will or may be expected to exceed $120,000 (including any periodic payments or installments due on or after the beginning of the Company’s last completed fiscal year and, in the case of indebtedness, the largest amount expected to be outstanding and the amount of annual interest thereon), (ii) the Company is a participant, and (iii) any Related Person (as defined below) has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of an equity interest in another entity).

A “Related Person” is (i) any person who is or was (since the beginning of the Company’s last fiscal year, even if they do not presently serve in that role) an executive officer, director, or nominee for election as a director, (ii) a beneficial owner of more than 5% of the Company’s Common Stock, or (iii) an immediate family member of any of the foregoing. For purposes of this definition, “immediate

family member” includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers-and fathers-in-law, sons- and daughters-in-law, brothers-and sisters-in-law, and anyone residing in such person’s home (other than a tenant or employee).

Under the Related Person Policy, if a new Interested Transaction is identified for approval, it is brought to the Audit Committee to determine if the proposed transaction is reasonable and fair to the Company. The Audit Committee will review the material facts of all Interested Transactions that require its approval and either approve or disapprove of the entry into the Interested Transaction.

The Related Person Policy also contains categories of preapproved transactions that the Board has identified as not having a significant potential for an actual or potential conflict of interest or improper benefit.

In determining whether to approve or ratify an Interested Transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction.



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No director participates in any discussion or approval of an Interested Transaction for which he or she (or an immediate family member) is a Related Person, except that the director will provide all material information concerning the Interested Transaction to the Audit Committee. There have been no transactions considered to be an Interested Transaction since the beginning of the Company’s 2019 fiscal year.
Additionally, the Company’s Code of Conduct has a detailed provision prohibiting its directors, officers, and employees from entering into transactions that are an actual or potential conflict of interest and is available on the Company’s website at https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct.


Code of Conduct

The Company has adopted a Code of Conduct, which can be found in the Corporate Governance section of the Company’s website, https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct, or obtained in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.

The Code of Conduct applies to all of the Company’s employees, including executives, as well as directors. We require that all Board members and employees complete

training and certify compliance with the Code of Conduct annually. We also perform an annual audit of internal compliance with our Code of Conduct.

We also have established a separate Business Partner Code of Conduct outlining our standards and expectations of our suppliers and other business partners, which can also be found at https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct.



Board Leadership Structure and Diversity

The Board believes it is in the best interests of the Company and its shareholders for the Board to have flexibility in determining the Board leadership structure of the Company based on the Company’s current circumstances and anticipated needs. Over the years, the Board has had a variety of leadership structures and has determined that a combined chair and CEO role with a strong lead independent director is in the best interest of the Company and its shareholders at this time.

As part of our ongoing, proactive efforts to implement effective and progressive corporate governance practices, the NGCRC regularly reviews the leadership structure of the Board in addition to its annual review of the Company’s Governance Guidelines, taking into account the Company and its needs, market practices, investor feedback, and corporate governance studies and expert commentary, among other things. Since August 2016, the Board leadership structure has consisted of a combined Chair and CEO role held by Mr. Dorer, a strong lead independent director position held by Ms. Thomas-Graham, and strong independent committee chairs. The Board is committed to continuously evaluating this structure to ensure that it promotes effective governance.

The Board believes that Mr. Dorer’s leadership in developing the Company’s 2020 Strategy and its new IGNITE Strategy, his in-depth knowledge of the Company’s operations, and his strong working relationship with the independent members of the Board make him best-suited to chair the regular Board meetings as key business and strategic issues are discussed and to serve as Chair of the Board at this time. This role allows him to drive execution of the Company’s strategic plans and facilitate effective communication between management and the Board, to bring key issues to the Board’s attention, and to see that the Board’s guidance and decisions are implemented effectively by management.

Further, the Board believes that Ms. Thomas-Graham’s strong leadership and qualifications, including her prior experience as a CEO and her tenure on the Board, among other factors, contribute to her ability to fulfill the role of lead independent director effectively.

The Company’s Governance Guidelines require an independent director to serve as a lead director if the position of Chair is held by a management director. In order to ensure that the lead independent director has the skills and qualifications necessary to serve as a strong leader,


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Corporate Governance

the Company has created clearly delimited comprehensive duties and responsibilities for the lead independent director, as outlined below.

The lead independent director is elected annually by and from the independent directors. In order to qualify as lead independent director, a director must have served as a member of the Board for at least three years. The duties of the lead independent director include coordinating the activities of the independent directors and serving as a liaison between the Chair and the independent directors. In addition, the lead independent director:

has the ability to call special meetings of the Board;
presides at executive sessions of the independent directors and has the authority to call additional executive sessions or meetings of the independent directors;
presides at Board meetings in the Chair’s absence;
approves information sent to the Board;
reviews and provides feedback on meeting agendas and approves meeting schedules for the Board to ensure that appropriate topics are being addressed and there is sufficient time allocated for discussion of agenda items;
is available for consultation and direct communication with major shareholders, if requested;
meets with Company employees and employee resource groups (ERGs) with and without management present to foster mentorship and dialogue with diverse employees;
evaluates the performance of the CEO, along with the members of the MDCC and the other independent directors and helps oversee CEO succession planning; and
assists the Board and Company officers in promoting compliance with and implementation of the Governance Guidelines.
In addition to the duties listed above, Ms. Thomas-Graham has taken an active role in the Company’s diversity efforts and outreach to employees, including hosting small group meetings with high-potential, diverse employees and holding employee town hall meetings. She also actively participates in shareholder engagement and meets with many of the Company’s major shareholders.

Lastly, the Board is guided by strong, independent committee chairs, with Dr. Carmona leading the NGCRC, Mr. Fleischer leading the MDCC, and Ms. Ticknor serving as the Audit Committee chair for several years. Since Ms. Ticknor is not standing for re-election at this Annual Meeting, Mr. Williams has agreed to serve as the new Audit Committee chair, pending his re-election to the Board.

While our Board is diverse by many traditional metrics, our Board leadership positions also reflect this diversity, as Ms. Thomas-Graham, Dr. Carmona, and Mr. Williams are each ethnically diverse.

Other than Mr. Dorer, all of the Company’s directors are “independent” as defined by the NYSE rules. The Board believes that this structure promotes effective governance and that the leadership structure described above is in the best interests of the Company and its shareholders, in light of current circumstances.




Board Committees

The Board has established three standing committees: the Audit Committee, the NGCRC, and the MDCC. Each of these committees consists only of non-management directors whom the Board has determined are independent under the NYSE listing standards and the Board’s independence standards set forth in the Company’s Governance Guidelines. Directors who serve on the Audit Committee and the MDCC must meet additional, heightened independence and qualification criteria applicable to directors serving on these committees under the NYSE listing standards. The charters for these committees are available in the Corporate Governance section of the Company’s website at https://www.thecloroxcompany.com/who-we-are/corporate-governance/committee-charters, or in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.

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The table below indicates the current members of each standing Board committee as of the date of the Annual Meeting:

Director       Audit       Nominating,
Governance and
Corporate Responsibility
      Management
Development and
Compensation
Amy Banse    
Richard H. Carmona Chair
Benno Dorer    
Spencer C. Fleischer Chair
Esther Lee
A.D. David Mackay
Robert W. Matschullat  
Matthew J. Shattock
Pamela Thomas-Graham  
Russell J. Weiner
Christopher J. Williams1 Chair
Number of meetings in fiscal year 2019 9 5 4

1Effective as of this Annual Meeting, Carolyn Ticknor will no longer serving as Audit Committee chair, since she is not standing for re-election at this Annual Meeting. Chris Williams has been nominated to serve as Audit Committee chair, subject to his re-election to the Board.

Audit Committee. The Audit Committee is the principal link between the Board and the Company’s independent registered public accounting firm. The Audit Committee has the functions and duties set forth in its charter, including:

representing and assisting the Board in overseeing:
the integrity of the Company’s financial statements;
the independent registered public accounting firm’s qualifications, independence, and performance;
the performance of the Company’s internal audit function;
the Company’s system of disclosure controls and procedures and system of internal control over financial reporting;
the Company’s compliance with legal and regulatory requirements relating to accounting and financial reporting matters;
the Company’s framework and guidelines with respect to risk assessment and risk management; and
the Company’s material financial policies and actions.
preparing the report required by the SEC proxy rules to be included in the Company’s annual proxy statement.

The Board has determined that, with respect to fiscal year 2019, directors Ms. Ticknor and Mr. Williams are audit committee financial experts, as defined by SEC rules, and each member of the Audit Committee is financially literate, as defined by NYSE rules.

Nominating, Governance and Corporate Responsibility Committee. The NGCRC has the functions and duties set forth in its charter, including:

identifying and recruiting individuals qualified to become Board members and recruiting them for membership on the Board;
recommending to the Board individuals to be selected as director nominees for the annual meeting of shareholders and any individuals to be elected by the Board between annual meetings;
reviewing and recommending to the Board changes in the Governance Guidelines and the Code of Conduct;
overseeing the Company’s ethics and compliance program, including the Company’s compliance with legal and regulatory requirements relating to matters other than accounting and financial reporting matters;
performing a leadership role in shaping the Company’s corporate governance and overseeing the evaluation of the Board and its committees;
assisting the Board in overseeing the Company’s corporate responsibility and sustainability program; and
assisting the Board in overseeing the Company’s engagement efforts with shareholders and other key stakeholders.


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Management Development and Compensation Committee. The MDCC has the functions and duties set forth in its charter, including:

assisting the Board in discharging its responsibilities relating to compensation of the CEO and other executive officers;
reviewing and approving the Company’s compensation policies, plans and goals and objectives for the executive officers and directors;
overseeing the Company’s management development succession planning processes; and
evaluating, making recommendations and taking appropriate action in response to the shareholders’ advisory “say on pay” vote.



Annual Board and Director Evaluation Process

The NGCRC is responsible for overseeing the Board, committee, and individual director evaluation process. Under the Governance Guidelines, the Board and each Board committee are required to conduct an annual self-evaluation. The evaluations include a range of issues designed to assess Board and committee performance, including Board and committee composition, structure, information received, accountability, and effectiveness, among other topics.

Evaluations are conducted through individual director interviews as part of its evaluation process. Each director provides an individual assessment as well as any feedback they may have on other Board members’ performance on an annual basis. The individual assessments are conducted by the chair of the NGCRC, who summarizes and reports the results and any related recommendations to the NGCRC and the full Board.

As a result of the evaluation process, the Board has made a number of changes, including, for example, adding regular cybersecurity updates to Audit Committee meeting agendas, adding new topics or devoting more time to particular topics and businesses of interest, incorporating external speakers on certain topics, meeting with high potential employees below the executive level to develop relationships and become familiar with the potential internal management succession pipeline, revising the format and focus of Board materials, adding periodic updates that continue focusing on digital engagement and corporate development topics, and identifying the skills and expertise desired for future director candidates.


Director Compensation

Only our non-employee directors receive compensation for their services as directors. The Company’s non-employee director compensation program is comprised of cash compensation and an annual grant of deferred stock units.

The MDCC has the responsibility for making recommendations regarding non-employee director compensation. The MDCC reviews the form and amount of compensation of non-employee directors at least once a year to ensure that the Company’s non-employee directors are being compensated appropriately relative to peer companies. The MDCC retains the services of an independent compensation consulting firm to assist it in
the performance of its duties. During fiscal year 2019, the MDCC used the services of Frederic W. Cook & Co., Inc. (FW Cook). FW Cook’s work with the MDCC included data analysis and guidance and recommendations regarding compensation levels relative to our compensation peer group (see discussion regarding the peer group in the Compensation Discussion and Analysis section below) as well as trends and recent developments in the area of non-employee director compensation. Clorox generally aims to compensate non-employee directors at or near the median of the compensation peer group.


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The following table sets forth information regarding compensation for each of the Company’s non-employee directors during fiscal year 2019.

Name       Fees Earned
or Paid in Cash
($)(2)
      Stock
Awards
($)(3)
      Total
($)
Amy Banse 100,000 152,500 252,500
Richard H. Carmona 115,000 152,500 267,500
Spencer C. Fleischer 112,609 152,500 265,109
Esther Lee 100,000 152,500 252,500
A. D. David Mackay 100,000 152,500 252,500
Robert W. Matschullat 100,000 152,500 252,500
Jeffrey Noddle(1) 44,348 38,125 82,473
Matthew J. Shattock 91,304 114,375 205,679
Pamela Thomas-Graham 150,000 152,500 302,500
Carolyn M. Ticknor 120,000 152,500 272,500
Russell J. Weiner 100,000 152,500 252,500
Christopher J. Williams 100,000 152,500 252,500

(1)Mr. Noddle retired from the Board effective November 14, 2018.
(2)The amounts reported in the Fees Earned or Paid in Cash column reflect the total annual cash retainer and other cash compensation earned by each director in fiscal year 2019 and include amounts deferred into cash or deferred stock units and/or amounts issued in Common Stock in lieu of cash, as elected by the director. The annual cash retainer is paid to each director in quarterly installments.
(3)The amounts reported reflect the grant-date fair value for financial statement reporting purposes of the annual grant of deferred stock units. Deferred stock units are shares of the Company’s Common Stock that the director receives only upon terminating their service with the Company. Awards are granted on an annual basis at the end of each calendar year. Refer to Note 14 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, for a discussion of the relevant assumptions used in calculating the grant-date fair value under applicable accounting guidance. As of June 30, 2019, the following directors had the indicated aggregate number of deferred stock units accumulated in their deferred accounts for all years of service as a director, which includes deferrals of cash compensation used to acquire deferred stock units, annual awards of deferred stock units made by the Company, and additional deferred stock units credited as a result of dividend equivalents earned with respect to the deferred stock units: Ms. Banse – 2,346 units; Dr. Carmona – 20,317 units; Mr. Fleischer – 6,971 units; Ms. Lee – 6,116 units; Mr. Mackay – 2,346 units; Mr. Matschullat – 86,245 units; Mr. Shattock – 838 units; Ms. Thomas-Graham 24,662–units; Ms. Ticknor – 31,799 units; Mr. Weiner – 3,484 units; and Mr. Williams – 6,889 units.

Cash Compensation

Directors receive cash compensation, which consists of annual cash retainer amounts and any special assignment fees. The following table lists the various retainers paid for Board service and service as the lead independent director or a committee chair during fiscal year 2019:

Annual director retainer $ 100,000
Lead independent director retainer 50,000
Committee chair retainers:
Nominating, Governance and Corporate Responsibility Committee 15,000
Audit Committee 20,000
Management Development and Compensation Committee 20,000

Directors who serve as a Board member, lead independent director, or committee chair for less than the full fiscal year receive pro-rated retainer amounts based on the number of days they served in such position during the fiscal year. In addition to the retainer amounts, each non-employee director is entitled to receive a fee of $2,500 per day for any special assignment requested by the Board. No special assignment fees were paid in fiscal year 2019.

Payment Elections

Under the Company’s Independent Directors’ Deferred Compensation Plan, a director may annually elect to receive all or a portion of their cash compensation in the form of cash, Common Stock, deferred cash, or deferred stock units.


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Payment in Stock. Directors who elect to receive cash compensation amounts in the form of Common Stock are issued shares of Common Stock based on the fair market value of the Common Stock as determined by the closing price of the Common Stock on the last trading day of the quarter for which the fees were earned.

Elective Deferral Program: Deferred Cash. For directors who elect deferred cash, the amount deferred is credited to an unfunded cash account that is credited with interest at an annual interest rate equal to Wells Fargo Bank, N.A.’s prime lending rate in effect on January 1 of each year. Upon termination of service as a director, the amounts credited to the director’s deferred cash account are paid out in five annual cash installments or in one lump-sum cash payment, as elected by the director.

Elective Deferral Program: Deferred Stock Units. For directors who elect deferred stock units, the amount deferred is credited to an unfunded account in the form of units equivalent to the fair market value of the Common Stock on the last trading day of the quarter for which the fees were earned. When dividends are declared, additional deferred stock units are allocated to the director’s deferred stock unit account in amounts equivalent to the dollar amount of Common Stock dividends paid by the Company divided by the fair market value of the Common Stock on the date the dividends are paid. Upon termination of service as a director, the amounts credited to the deferred stock unit account, which include any elective deferrals and the annual deferred stock unit grants described above, are paid out in shares of Common Stock in five annual installments or in one lump sum, as elected by the director. Deferred stock units may only be settled in shares of Common Stock.

Equity Compensation

Each non-employee director receives a majority of their annual compensation in the form of deferred stock units. Deferred stock units are shares of the Company’s Common Stock that the director receives only upon terminating their service with the Company. Each non-employee director receives an annual grant of deferred stock units. The value of the deferred stock unit award amount earned by a non-employee director serving for the full fiscal year 2019 was $152,500. Awards are made as of the last business day in the calendar year and represent payment for services provided during such calendar year. The dollar value of an annual grant of deferred stock units was not increased for calendar year 2019.

The Company believes that the use of deferred stock units provides a stronger alignment between directors and the Company’s shareholders compared to outright stock ownership since directors have no ability to sell the deferred stock units while they remain on the Board. The Company has maintained the deferred stock unit program for its directors for over 20 years.
Directors who serve as non-employee Board members for less than the full calendar year receive pro-rated awards based on the number of full fiscal quarters they served as a non-employee Board member during the calendar year. Deferred stock units accrue dividend equivalents and the balance of a director’s deferred stock unit account is paid out in Common Stock only following the director’s termination of service, as described in greater detail under Payment Elections above.

Fiscal Year 2020 Compensation Changes

As discussed above, the MDCC reviews the form and amount of compensation of non-employee directors at least once a year to ensure that the Company’s non-employee directors are being compensated appropriately relative to peer companies. The MDCC again reviewed non-employee director compensation in September 2019. As part of its review, the MDCC considered the data provided by FW Cook as well as its guidance and recommendations regarding compensation levels relative to our compensation peer group as well as trends and recent developments in the area of non-employee director compensation. After taking all of this information into account, the MDCC has recommended, and the Board agreed, to increase the annual director cash retainer to $103,000 from $100,000, the annual compensation in the form of deferred stock units to $157,000 from $152,500, and the annual Audit Committee chair retainer to $25,000 from $20,000, effective as of October 2019. No other changes were made to the Company’s director compensation program.

Stock Ownership Philosophy and Guidelines for Directors

The Board believes that the alignment of directors’ interests with those of shareholders is strengthened when Board members are also shareholders. The Board therefore requires that each non-employee director, within five years of first being elected, own Common Stock or deferred stock units that are settled only in Common Stock having a market value of at least five times their annual cash retainer. This program is designed to ensure that directors acquire a meaningful and significant ownership interest in the Company during their tenure on the Board. Furthermore, as directors must hold the deferred stock units until termination of their service on the Board, they have aligned interests and appropriate incentives to promote long-term value for shareholders during their service as a director. As of August 30, 2019, each non-employee director was in compliance with the guidelines, and in fact, the majority of our directors held Common Stock or deferred stock units with value far in excess of this amount.


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  Stock Ownership Information

Beneficial Ownership of Voting Securities

The following table shows, as of August 30, 2019 (except as otherwise indicated below), the holdings of Common Stock by (i) any entity or person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director and nominee for director and each of the five individuals named in the Summary Compensation Table (the named executive officers), and (iii) all directors and executive
officers of the Company as a group. As discussed in the Director Compensation section of this proxy statement, the majority of director compensation is delivered in the form of deferred stock units, which are paid out in Common Stock following a director’s termination of service. Because the directors cannot dispose of those shares while they serve on the Board, they are not reflected in this table. See footnote 2 below.


Name of Beneficial Owner

     

Amount and Nature
of Beneficial Ownership(1)(2)

     

Percent of Class(3)
The Vanguard Group, Inc.(4)
     100 Vanguard Blvd.
     Malvern, PA 19355 15,378,583 12.26
BlackRock, Inc.(5)
     55 East 52nd Street
     New York, NY 10055 10,555,837 8.41
State Street Corporation(6)
     One Lincoln Street
     Boston, MA 02111 7,855,221 6.26
Amy Banse(2) 0 *
Richard H. Carmona(2) 0 *
Benno Dorer 727,586 *
Spencer C. Fleischer(2) 0 *
Kevin Jacobsen 59,412 *
Esther Lee(2) 0 *
A. D. David Mackay(2) 1,600 *
Robert W. Matschullat(2) 1,324 *
Linda Rendle 57,672 *
Eric Reynolds 50,207 *
Matthew J. Shattock(8) 0 *
Laura Stein 186,801 *
Pamela Thomas-Graham(2) 1,778 *
Carolyn M. Ticknor(2) 0 *
Russell J. Weiner(2) 0 *
Christopher J. Williams(2) 0 *
All directors and executive officers as a group (25 persons)(7) 1,442,274 1.14

* Does not exceed 1% of the outstanding shares.
(1) Unless otherwise indicated, each beneficial owner listed has sole voting and dispositive power concerning the shares indicated. These totals include the following numbers of shares of Common Stock that such persons have the right to acquire through stock options exercisable within 60 days of August 30, 2019, or with respect to which such persons have shared voting or dispositive power: Mr. Dorer – 685,167 options; Mr. Jacobsen – 53,800 options and shared voting and dispositive power with respect to 3,145 shares held in family trust; Ms. Rendle – 50,757 options; Mr. Reynolds – 38,362 options; Ms. Stein – 157,100 options; and all directors and executive officers as a group – 1,282,216 options. The numbers in the table above do not include the following numbers of shares of Common Stock that the executive officers have the right to acquire upon the termination of their service as employees pursuant to vested performance units that were deferred at the executive officers’ election: Mr. Dorer – 43,327; Mr. Jacobsen – 3,420; Ms. Rendle – 1,746; Mr. Reynolds – 6,993; Ms. Stein – 34,194; and all executive officers as a group –108,229.
(2) The numbers in the table above do not include the following numbers of shares of Common Stock that the non-management directors have the right to acquire upon the termination of their service as directors pursuant to deferred stock units granted under the Independent Directors’ Stock-Based Compensation Plan: Ms. Banse – 2,346 shares of Common Stock; Dr. Carmona – 20,317 shares of Common Stock; Mr. Fleischer – 6,971 shares of Common Stock; Ms. Lee – 6,116 shares of Common Stock; Mr. Mackay – 2,346 shares of Common Stock; Mr. Matschullat – 86,245 shares of Common Stock; Mr. Shattock – 838 shares of Common Stock; Ms. Thomas-Graham – 24,662 shares of Common Stock; Ms. Ticknor – 31,799 shares of Common Stock; Mr. Weiner – 3,484 shares of Common Stock; and Mr. Williams – 6,889

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shares of Common Stock. Deferred stock units are shares of the Company’s Common Stock that the director receives only upon terminating their service with the Company. Please refer to the Director Compensation section in this proxy statement for further details on the deferred stock units held by non-management directors. The total financial commitment of each non-management director in the Company’s Common Stock is more fully appreciated if the number of shares of Common Stock listed above in the column entitled “Amount and Nature of Beneficial Ownership” is added to the number of deferred stock units set forth in this footnote.

(3)

On August 30, 2019, there were 125,467,200 shares of Common Stock outstanding.

(4)

Based on information contained in a report on Schedule 13G/A filed with the SEC on February 11, 2019, The Vanguard Group reported, as of December 31, 2018, sole voting power with respect to 155,570 shares, sole dispositive power with respect to 15,178,541 shares, shared voting power with respect to 44,679 shares and shared dispositive power with respect to 200,042 shares.

(5)

Based on information contained in a report on Schedule 13G/A filed with the SEC on February 4, 2019, BlackRock, Inc. reported, as of December 31, 2018, sole voting power with respect to 9,254,591 shares and sole dispositive power with respect to all shares reported.

(6)

Based on information contained in a report on Schedule 13G filed with the SEC on February 14, 2019, State Street Corporation reported, as of December 31, 2018, shared voting power with respect to 6,376,264 shares and shared dispositive power with respect to 7,853,345 shares.

(7)

Pursuant to Rule 3b-7 of the Securities Exchange Act of 1934, as amended (Exchange Act), executive officers include the Company’s CEO and all executive vice presidents and senior vice presidents.


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  Executive Compensation

  Proposal 2:
Advisory Vote to Approve Executive Compensation

We are seeking a non-binding, advisory vote from our shareholders to approve the compensation of our named executive officers that are listed in the Compensation Discussion and Analysis section of this proxy statement. This proposal gives our shareholders the opportunity to express their views on the Company’s executive compensation, and is commonly referred to as a “say-on-pay” proposal. This vote is only advisory and will not be binding upon the Company or the Board. However, the MDCC, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by shareholders and encourages all shareholders to vote their shares on this matter.

As discussed in the Compensation Discussion and Analysis section of this proxy statement, which begins on page 30, the Company’s compensation programs are designed to align pay with short- and long-term financial and strategic objectives to build shareholder value, while providing
a competitive level of compensation to recruit, retain, and motivate talented executives. The Board urges you to consider the factors discussed in the Compensation Discussion and Analysis section when deciding how to vote on this Proposal 2.

At our 2018 Annual Meeting of Shareholders, our shareholders overwhelmingly approved our executive compensation policies, with approximately 93% of votes cast in favor of our proposal. We value this positive endorsement by our shareholders and believe that the outcome signals our shareholders’ support of our compensation program and continued our general approach to compensation for fiscal year 2019. We provide our shareholders the opportunity to vote on the compensation of our named executive officers every year. It is expected that the next vote on executive compensation will be at the 2020 Annual Meeting of Shareholders.


Board’s Recommendation

The Board recommends a vote FOR the advisory vote to approve executive compensation. The Company is asking its shareholders to support the compensation of the named executive officers as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers in fiscal year 2019 and the philosophy, policies, and practices underlying that compensation, which are described in this proxy statement. The Board believes that the Company’s overall compensation process effectively implements its compensation philosophy and achieves its goals.
Accordingly, the Board recommends a vote FOR the adoption of the following advisory resolution, which will be presented at the Annual Meeting:

“RESOLVED, that the shareholders of The Clorox Company approve, on an advisory basis, the compensation of the named executive officers, as disclosed in The Clorox Company’s Proxy Statement for the 2019 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure.”

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Vote Required

The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve this proposal.

This vote is advisory, and therefore not binding on the Company, the Board, or the MDCC. However, the Board and the MDCC value the opinions of the Company’s shareholders and, to the extent there is any significant vote against the named executive officers’ compensation as disclosed in the proxy statement, we will consider such shareholders’ concerns, and the MDCC will evaluate whether any actions are necessary to address those concerns.

The people designated in the proxy and voting instruction card will vote your shares FOR approval unless you include instructions to the contrary.

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  Compensation Discussion and Analysis

Executive Summary

This Compensation Discussion and Analysis (CD&A) describes our executive compensation philosophy and program, the compensation decisions made under this program and the specific factors we considered in making those decisions. This CD&A focuses on the compensation of our “named executive officers” for fiscal year 2019, who were:

Benno Dorer – Chair and Chief Executive Officer (CEO);
Kevin B. Jacobsen – Executive Vice President, Chief Financial Officer (CFO);
Laura Stein – Executive Vice President, General Counsel and Corporate Affairs;
Linda Rendle – Executive Vice President, Strategy and Operations; and
Eric Reynolds – Executive Vice President, Cleaning and Burt’s Bees.

Components of Our Executive Compensation Program

The table below outlines the components of our executive compensation program, their characteristics and summary description of these components.

Component       Characteristics       Description
Base Salary Fixed component. Based on role and level of responsibilities, as well as individual performance.
Annual Incentives(1) Performance-based cash bonus opportunity. Based on Company’s annual net sales (50%), net earnings from continuing operations (30%) and gross margin (20%) and individual objectives with payouts for the Company performance ranging from 0 to 200% of target and the individual factor modifying the Company score.
Long-Term Incentives(1) Performance share grants and stock option awards. Initial grant is based on individual performance and potential. Value at vesting is based on actual company financial and stock price performance.
Other programs provided include Retirement Plans, Post-Termination Compensation and Perquisites

(1) Payouts under the annual and long-term incentive plans are determined based on the achievement of objectives established by the MDCC at the beginning of the performance period. The performance period is one year for the cash awarded under the Annual Incentive Plan and three years for the performance shares awarded under the long-term incentive plan, both of which are further described in What We Pay: Components of Our Compensation Program. Specific financial goals cannot be changed during the performance period, except in accordance with principles set by the MDCC at the time the goals were established, which, in the case of our performance share awards, provide for adjustments in limited circumstances, including acquisitions, restructuring charges, or significant changes to generally accepted accounting principles, and only if the adjustments exceed a specified minimum financial impact to the Company.

Fiscal Year 2019 Performance Highlights

In fiscal year 2019, Clorox delivered mixed results with fiscal year net sales growth of 1% in a macroeconomic environment that included high levels of competition in select categories, increasingly competitive retail dynamics, significantly rising logistics and commodity costs and global inflationary pressures. The Company also grew diluted net earnings per share (EPS) from continuing operations by 1%. In addition, the Company maintained its focus on operational efficiencies including maintaining discipline on selling and administrative expenses, delivering cost savings, and continuing to make progress toward its product sustainability improvement and green-house gas emissions, water energy, and waste reduction goals.

The Company’s 2020 Strategy, which we introduced in 2013, aims to accelerate profitable growth by engaging employees as business owners, increasing brand investment behind superior products and technology that reach consumers in a dynamic marketplace, expanding its brands into new categories and channels, and driving out waste in its work, processes, and products. Successes for the Company in fiscal year 2019 included:

Achieving $122 million in cost savings, the Company’s 12th consecutive year of cost savings in excess of $100 million;
Achieving increased net sales growth of 1%, reflecting gains in Lifestyle and Cleaning reportable segments with partial offsets by lower sales in the Household and International reportable segments;

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Increasing diluted EPS from continuing operations by 1% to $6.32 from $6.26 in the prior year;
Leveraging incremental demand-building investments, including product innovation, to support category growth and market share;
Launching new products in numerous categories and countries, including the Brita® Premium Filtering Water Bottle, Burt’sBees® lip oils, Burt’s Bees® liquid lipsticks, Clorox® Ultra Clean disinfecting wipes, Clorox Scentiva™ disinfecting mopping cloths, Clorox Healthcare® VersaSure™ cleaner disinfectant wipes, Clorox® disinfecting bio stain & odor remover; Clorox® Ropa Quitamanchas Blanco Supremo; Fresh Step® Clean Paws® cat litter in new unscented and Mediterranean Lavender scent; Glad® 4-gallon bags in Beachside Breeze and Sweet Citron and Lime scents; Hidden Valley® Ranch ready-to-eat dips; Kingsford® 100% natural hardwood briquets; NeoCell® collagen protein peptides: unflavored, pomegranate açai and mandarin orange flavors; NeoCell® Gummy Glow; and Rainbow Light® prenatal Precious Gems™ gummies;
Continuing to receive external recognition for our leadership in corporate responsibility, inclusion and diversity, and sustainability efforts; and
Returning excess capital to stockholders through $660 million of stock repurchases and paying $490 million in cash dividends to stockholders, including a 10% increase in the quarterly dividend announced in May 2019.
How Pay Was Tied to the Company’s Performance in Fiscal Year 2019

Our fiscal year 2019 results and compensation decisions continue to illustrate application of our pay-for-performance philosophy, with pay being driven by performance in the following ways:

Fiscal Year 2019 Annual Incentive Payout. The annual incentive payout for each of our named executive officers was below target. Although the Company grew net sales and gross margins versus the prior fiscal year, net earnings fell versus the prior fiscal year, and net sales and net earnings fell short of the targets established at the beginning of the 2019 fiscal year. The Company’s gross margin met the target for the fiscal year.
Fiscal Year 2019 Long-Term Incentive Payout. Our three-year performance share results were above the financial target for cumulative economic profit (EP) and yielded a 104% payout. These awards were granted in September 2016, and payment was determined in August 2019, based on performance over the period commencing July 1, 2016, and ending June 30, 2019. Fiscal year 2017 had especially strong results.


 

What We Pay: Components of Our Compensation Program

Compensation Mix. A substantial portion of our targeted direct compensation for our executives is at-risk variable compensation, with 86% of compensation for our CEO and 72% of compensation for all of our other named executive officers being at-risk. Base salary is the only fixed direct compensation component, as outlined in the following charts, which reflect target compensation for fiscal year 2019.


Compensation Mix - CEO(1) Compensation Mix - Average of All Other NEOs(1)

(1) Compensation mix represents the actual base salary, target annual incentive award, and actual long-term incentives granted in fiscal year 2019. Refer to the Summary Compensation Table below for further details on actual compensation.

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Additional elements of our executive compensation program include retirement plans, post-termination compensation, and perquisites as appropriate to support our executive compensation philosophy. Further detail about each element is provided in the discussion below:

Base Salary. The MDCC generally seeks to establish base salaries for our named executive officers within 15% of the median of the compensation peer group. The MDCC considered factors such as the executive’s specific role, level of experience, and sustained performance, as well as the compensation peer group data, in determining each named executive officer’s base salary for fiscal year 2019. Changes in base salary are approved by the MDCC in September and become effective in October of each year. All base salaries that went into effect in October 2018 for the named executive officers, who were executive officers at the time, were within this target pay range.

After conducting a review for Mr. Dorer and evaluating his performance and overall Company performance for fiscal year 2018 in light of his competitive pay positioning, the MDCC approved a base salary increase of 11.6% to $1,200,000 effective October 2018. The annual base salary increases for our named executive officers represented a combination of merit increases and market adjustments in light of competitive pay positioning, and other than for our CEO, ranged from 3.4% to 10% with an average increase of 5.8%. The actual base salaries earned by our named executive officers in fiscal year 2019 are listed in the Salary column of the Summary Compensation Table.

Annual Incentives. The Company provides annual incentive awards to our named executive officers under the Company’s Executive Incentive Compensation Plan (Annual Incentive Plan). Payouts under the Annual Incentive Plan are based on the level of achievement of

Company performance goals set annually by the MDCC, not to exceed the stockholder-approved maximums. These performance goals are tied to Board-approved corporate financial performance goals and individual objectives, which are described below.

Annual Incentive Design. The amounts actually paid under the Annual Incentive Plan are based on the following factors:

(1) A target award for each named executive officer, which is the base salary multiplied by the annual incentive target (Target Award).
(2) The Company’s performance measured against pre-established corporate financial goals (Financial Performance Multiplier). The Financial Performance Multiplier can range from 0% to 200% based on an objective assessment of Company performance versus goals established by the MDCC at the beginning of the year.
(3) The named executive officer’s individual performance (Individual Performance Multiplier) is based primarily on the performance of the operations or functions under the individual’s responsibility and can range from 0% to 150%. The Individual Performance Multiplier is also determined by the MDCC and typically has a much narrower range, which makes its impact on the total payout significantly smaller than the Financial Performance Multiplier. Historically, the MDCC approved individual multipliers for the CEO at no more than 110% over the previous 5 years. For fiscal year 2019, the MDCC approved multiplier for the CEO was 100%.

The final individual Annual Incentive Plan payout is determined by the following formula:


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Over the past three years, the range for the Individual Performance Multipliers for the named executive officers was 90% to 115%. By comparison, the range for the Financial Performance Multiplier during this same time period was 67% to 96%.

Each of the elements of the annual incentive formula is further described below.

Base Salary. The named executive officer’s actual fiscal year 2019 base salary is the starting point for the annual incentive calculation.

Annual Incentive Target. Each year, the MDCC sets an annual incentive target level for each named executive officer as a percentage of their base salary, based on an assessment of median bonus targets in the compensation peer group and other factors such as individual experience, as noted above. The annual incentive target level is generally set near the median of bonus targets for comparable positions in the compensation peer group. The table below sets forth the targets for the fiscal year 2019 annual incentive awards.

Named Executive Officer Annual Incentive
Target (% of
Base Salary)
Benno Dorer – Chair and Chief Executive Officer 150%
Kevin B. Jacobsen – Executive Vice President, Chief Financial Officer(1) 85%
Laura Stein – Executive Vice President, General Counsel and Corporate Affairs 70%
Linda Rendle – Executive Vice President, Strategy and Operations(2) 80%
Eric Reynolds – Executive Vice President, Cleaning and Burt’s Bees(3) 75%

(1) Mr. Jacobsen’s target was increased from 80% to 85% at the beginning of fiscal year 2019.
(2) Ms. Rendle’s target was increased from 75% to 80% with her promotion in January 2019.
(3) Mr. Reynolds’ target was increased from 65% to 75% with his promotion in January 2019.

Financial Performance Multiplier. At the beginning of each fiscal year, the MDCC sets financial goals for the Annual Incentive Plan based on targets approved by the Board which consider guidance provided to investors. At the end of the year, the MDCC reviews the Company’s results against the goals set at the beginning of the year.

For fiscal year 2019, the MDCC established financial goals with a focus on increasing net sales, net earnings from continuing operations, and gross margin, as described in greater detail below, in order to drive sustainable, profitable growth and short- and long-term total stockholder returns. The Financial Performance Multiplier is based on the following metrics.

Net Sales weighted at 50%,
Net Earnings from Continued Operations weighted at 30% and
Gross Margin weighted at 20%.
The MDCC believes this mix effectively balances a focus on both top-line and bottom-line performance. In selecting the metrics and setting the financial goals of the Annual Incentive Plan, the MDCC carefully considered whether the goals appropriately align with the goals of the long-term incentive program so that the overall compensation design does not encourage participants to take unnecessary or excessive risk or actions that are inconsistent with the Company’s short- and long-term strategic and financial objectives.
For fiscal year 2019, the financial goals for the Annual Incentive Plan, the potential range of payouts for achieving those goals, and the actual results as determined by the MDCC were as follows:


Annual Incentive
Financial Goals (in millions)
Goal       0%
(Minimum)
      100%   
(Target)
(1)
      200%
(Maximum)
      Actual(2)
Net Sales (weighted 50%)      $ 6,117    $ 6,306       $ 6,495    $ 6,202
Net Earnings from Continued Operations (weighted 30%) $ 755 $ 803 $ 851 $ 796
Gross Margin (weighted 20%) 41.8 % 43.8 % 45.8 % 43.8 %

(1) The target for net earnings was set lower than prior year’s result largely driven by lapping the impact of the Tax Cuts and Jobs Act, as well as higher interest expense associated with the $2 billion share repurchase program.
(2) Results exclude the impact of the change in accounting for share-based payments (ASU 2016-09), US and Argentina tax reform, hurricane insurance claim, Nutranext acquisition, and Aplicare and Healthlink divestitures on net sales, net earnings from continuing operations and gross margin. Results include certain net adjustments related to certain trade expenses.

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For fiscal year 2019, the Financial Performance Multiplier was 67%, primarily driven by below-target sales growth, inclusive of unfavorable foreign currency exchange rates, mainly in Argentina. Additionally, net earnings from continuing operations was below target. Gross margin was at target reflecting the benefit of price increases and cost savings, partially offset by higher manufacturing and logistics costs and unfavorable rising commodity.

Individual Performance Multiplier. Consistent with our pay-for-performance philosophy, the annual incentive payouts are determined by financial results multiplied by an Individual Performance Multiplier. Based on its evaluation of individual performance, the MDCC reviewed and approved the Individual Performance Multiplier for each named executive officer to reflect the officer’s individual contributions in fiscal year 2019. In determining the multiplier for individual performance, the MDCC carefully
evaluates several performance factors against objectives established at the beginning of the year. For our CEO, the MDCC conducts a detailed evaluation covering the key categories of strategy, people, operations, and overall performance, with specific goals within each category. For our other named executive officers, the CEO recommends an individual performance multiplier based on each officer’s contribution in those key categories relevant to their roles.

To set specific targets for our CEO, the MDCC uses a balanced scorecard covering key categories of strategy, people, operations, and overall performance, with specific metrics and targets within each key category. These targets are used to measure the CEO’s performance twice a year, with a mid-year review and a year-end evaluation. This assessment is then used to determine the appropriate individual multiplier for the fiscal year performance.

The individual multipliers for fiscal year 2019 are provided in the table below along with a performance summary for each named executive officer.

Named Executive Officer       Individual
Performance
Multiplier
      Performance Summary
Benno Dorer – Chair and Chief Executive Officer 100% Strong overall performance across strategy, operations and people with targeted operational challenges appropriately reflected in the Financial Performance Multiplier of 67%.
Kevin B. Jacobsen – Executive Vice President,
Chief Financial Officer
90% Strong contributions to strategy and people results; however the Company missed two of three key financial metrics.
Laura Stein – Executive Vice President,
General Counsel and Corporate Affairs
105% Excellent outcomes related to litigation, governance, external engagement and overall ESG strategy.
Linda Rendle – Executive Vice President,
Strategy and Operations
105% Enterprise leadership across strategy, people and operations, as well as leadership across functions to drive operational excellence.
Eric Reynolds – Executive Vice President,
Cleaning and Burt’s Bees
105% Strong finish in Chief Marketing Officer role. Business results in Cleaning and Burt’s Bees met or exceeded target.

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Final Individual Annual Incentive Plan Payouts. In accordance with the formula described above, the final annual incentive calculations and payouts for our named executive officers in fiscal year 2019 are found in the table below. The Financial Performance Multiplier was 67% in fiscal year 2019, which resulted in final payouts that were below target. These payouts are also reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.

Named Executive Officer Base
Salary
Annual Incentive
Target (As a %
of Base Salary)
Financial
Performance
Multiplier
Individual
Performance
Multiplier
Final Annual
Incentive
Plan Payout
Benno Dorer - Chair and Chief Executive Officer $ 1,200,000                     150% 67% 100%       $ 1,206,000

Kevin B. Jacobsen - Executive Vice President,
Chief Financial Officer

$ 550,000 85% 67% 90% $ 281,903
Laura Stein - Executive Vice President,
General Counsel and Corporate Affairs
$ 640,000 70% 67% 105% $ 315,168
Linda Rendle - Executive Vice President,
Strategy and Operations
$ 560,000 80% 67% 105% $ 290,318
Eric Reynolds - Executive Vice President,
Cleaning and Burt’s Bees(3)
$ 490,000 75% 67% 105% $ 230,363

Long-Term Incentives. Each year, we provide long-term incentive compensation to our named executive officers. These awards have been made in the form of performance shares and stock options, which we believe align Company performance and executive officer compensation with the interests of our stockholders. These incentive awards also support the achievement of our long-term corporate financial goals.

We use time-based restricted stock for non-executive officer employees and occasionally for special purposes for executive officers, such as in connection with a promotion or as a replacement for compensation forfeited by an externally recruited executive at a prior employer.

The MDCC annually reviews the costs of, and potential stockholder dilution attributable to, our long-term incentive program to ensure that the overall program is financially efficient and in line with that of our compensation peer group. The MDCC also seeks to calibrate the long-term incentive program design to drive performance and deliver appropriate rewards relative to the compensation peer group. In determining the total value of the long-term incentive opportunity for each named executive officer, the MDCC reviews the compensation peer group data presented by both management and the independent compensation consultant on a role-by-role basis and considers recommendations by our CEO for the other named executive officers.

The MDCC’s goal is to target long-term incentive awards in amounts that are generally competitive with the median of the compensation peer group. Actual long-term incentive award target levels for individual named executive officers may vary from the median based on a variety of factors, such as the named executive officer’s sustained performance, individual experience, critical nature of their role, and expected future contributions. Like the annual incentive awards, actual payouts under the long-term

incentive awards will vary from the target based on how the Company performs against pre-established targets. The value of payouts will also vary based on changes in the market price of our Common Stock.

The MDCC determined that our named executive officers would receive 50% of the value of their total annual long-term incentive award granted in fiscal year 2019 in performance shares and 50% in stock options. The MDCC believes this mix of equity awards supports several important objectives, including compensating named executive officers for achievement of long-term goals tied to our business strategy, rewarding named executive officers for sustained increases in the price of our Common Stock, enhancing retention by mitigating the impact of price fluctuations of our Common Stock in the overall long-term incentive value, and ensuring that the overall cost of the program is aligned with the compensation realized by the named executive officers and the performance delivered to stockholders. The MDCC does not consider the amount of outstanding performance shares, stock options, and restricted stock currently held by a named executive officer when making annual awards of performance shares and stock options because such amounts represent compensation attributable to prior years.

Long-Term Incentive Award. The long-term incentive awards granted to our named executive officers for fiscal year 2019 were made in September 2018. The MDCC considered factors such as the executive’s role, level of experience, and sustained performance, as well as the compensation peer group market data, in determining each named executive officer’s long-term incentive award. For fiscal year 2019, the long-term incentives for our named executive officers (including the off-cycle awards discussed below), excluding our CEO, ranged in value from $900,000 to $1,300,000. Mr. Dorer received a long-term incentive award valued at $5,750,000. Our


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EVP – Strategy & Operations, Ms. Rendle, and our EVP – Cleaning and Burt’s Bees, Mr. Reynolds received off-cycle performance share and stock option grants in connection with their promotions in January 2019 based on competitive market pay and an approximate proration of their new total direct compensation. The performance shares are subject to the same terms and conditions as the September 2018 performance shares. The stock options are subject to the same terms and conditions as the annual grants. The exercise price for the stock options was equal to the closing price of our Common Stock on the date of grant. The long-term incentives awarded to our named executive officers in fiscal year 2019 are listed in the Stock Awards and Option Awards columns of the Summary Compensation Table.

Performance Shares. Performance shares are grants of restricted stock units that pay out after a three-year performance period only if the Company meets pre-established financial performance goals, which are described below. Economic profit (EP) performance is measured to a three-year annual growth rate that is established at the beginning of the cycle and held constant. For purposes of the performance shares, EP is defined as earnings before interest and taxes, adjusted for non-cash restructuring charges, times one minus the tax rate, less capital charge. The potential payout can range from 0% to 200% of target.

We believe that performance shares align the interests of our named executive officers with the interests of our stockholders because the number of shares earned and the shares’ potential value are tied to the achievement of performance targets. As discussed above, the performance target for the awards granted in September 2018 is a three-year annual EP growth rate target informed by our three-year financial long-range plan and the budget developed by management, which is reviewed and approved by the Board. In setting the performance targets for the performance shares, the MDCC reviews the budget and long-range plan and seeks to appropriately align the performance goals with the objectives of the Annual Incentive Plan, so that the overall compensation design does not encourage participants to take unnecessary or excessive risk or actions that are inconsistent with the Company’s short- and long-term strategic and financial objectives. The MDCC believes its use of growth in EP as a metric provides rigor and an ability to align performance with pay over the three-year performance period.

The payout of the performance share awards granted in September 2018 is subject solely to the Company’s achievement of a three-year EP annual growth rate target during the performance period of July 2018 through June 2021. The percentage range for payouts is from 0%, if the minimum EP target is not met, to a maximum of 200% of the target number of shares.

For the grant made in September 2016, which was based on a performance period of July 2016 through June 2019 and paid out in August 2019, the MDCC established cumulative EP targets and set various payout levels tied to cumulative EP for the performance period. For the September 2016 grant, the cumulative EP target was set so a payout of 100% would be made if the Company achieved adjusted cumulative EP growth of approximately 5% per year during the performance period. The MDCC believes this metric directly supports the Company’s corporate strategy and long-term financial goals and correlates to stock price performance.

In August 2019, the MDCC certified the results of the September 2016 grant for the July 2016 to June 2019 performance period. The adjusted financial target for the grant was a cumulative EP of $1.750 billion over the three-year performance period for a 100% payout. The cumulative EP target was adjusted in accordance with predetermined criteria established by the MDCC at the time initial grants were approved as set forth in the grant agreements for the impact of the adoption of a change to the accounting standards for share-based payments under ASU 2016-09, as well as for the acquisition of Nutranext in April 2018, fiscal year 2018 net impact of hurricanes, Argentina tax reform and the Tax Cuts and Jobs Act that went into effect January 1, 2018. The cumulative EP target also reflects the inclusion of certain net adjustments related to certain trade expenses. The Company’s actual cumulative EP, inclusive of the predetermined adjustments, of $1.754 billion was above the target amount of $1.750 billion, resulting in the MDCC certifying a payout of 104% for the 2016 grants.

Stock Options. Stock options align the interests of our named executive officers with those of our stockholders because the options only have value if the price of the Company’s stock increases after the stock options are granted. Stock options vest in 25% increments over a four-year period (beginning one year from the date of grant) and expire 10 years from the date of grant. In fiscal year 2019, the MDCC awarded stock options to our named executive officers as part of our annual long-term incentive plan. Information on all stock option grants is shown in the Grants of Plan-Based Awards table.

Retirement Plans

Our named executive officers participate in the same tax-qualified retirement benefit programs available to all other United States-based salaried and non-collectively bargained hourly employees. The Company’s retirement plans are designed to provide replacement income upon retirement and to be competitive with programs offered by our peers.

In addition, because the IRC limits the amount of benefits that can be contributed to and paid from a tax-qualified retirement plan, the Company also provides our executive officers,


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including our named executive officers, with additional retirement benefits intended to restore amounts that would otherwise be payable under the Company’s tax-qualified retirement plans if the IRC did not have limits on includable compensation and maximum benefits. We call these plans “restoration plans” because they restore total executive retirement benefits to the same percentage level provided to our salaried employees who are not limited by IRC restrictions.

A brief description of each of our retirement programs is set forth below. Each of our named executive officers participates in these retirement programs with the exception of the Supplemental Executive Retirement Plan.

The Clorox Company Pension Plan. The Clorox Company Pension Plan (the Pension Plan) is a cash balance pension plan that was frozen effective June 30, 2011. This freeze did not affect the benefits previously accrued under the Pension Plan, which remain fully funded.

The Clorox Company 401(k) Plan. After the Pension Plan was frozen in June 2011, the Clorox Company 401(k) Plan (the 401(k) Plan) became the primary retirement plan for the Company. The Company makes an annual fixed contribution of 6% of eligible pay and a matching contribution of up to 4% of eligible pay to eligible employees.

Nonqualified Deferred Compensation Plan. Under the Nonqualified Deferred Compensation Plan (the NQDC), eligible employees may voluntarily defer receipt of up to 50% of base salary and up to 100% of their annual incentive awards. In fiscal year 2019, deferred amounts could be invested in a manner that generally mirrored the funds available in the 401(k) Plan. The NQDC permits the Company to contribute amounts that exceed the IRC compensation limits in the tax-qualified plans through a 401(k) restoration provision for those employees deferring at required levels in the plan.

Supplemental Executive Retirement Plan. The Supplemental Executive Retirement Plan (the SERP), a defined benefit plan, was closed to new participants effective April 2007 and, effective June 30, 2011, was frozen with regard to pay and offsets, while still accruing age and service credits. Benefits under the SERP have historically been calculated as an annuity based on a percentage of average compensation adjusted by age and years of service and offset by the annuity value of Company contributions to the tax-qualified retirement plans and by Social Security. Effective July 1, 2011, the SERP was replaced by the Executive Retirement Plan (the ERP) (described below). Moving from the SERP to the ERP created a defined contribution structure that is more closely aligned

with the benefits provided by the Company’s compensation peer group. In March 2018, the SERP was amended to provide that designated participants whose service as an executive of the Company is succeeded by service as a consultant or advisor will be entitled to receive age and service credits while serving as a consultant or advisor for purposes of accruing an early retirement benefit under the SERP, provided that they have attained a minimum of 25 years of service and be at least 50 years old at the time that service as a consultant or advisor commences. As of July 1, 2019, only two of our named executive officers are still eligible for the SERP.

Executive Retirement Plan. Our executive officers (including named executive officers) participate in the ERP. Under the ERP, the Company makes an annual contribution of 5% of an eligible participant’s base salary and annual incentive award into the plan.

Further details about the provisions of the Pension Plan, NQDC, SERP, and ERP are provided in the Overview of Pension Benefits and the Overview of the Nonqualified Deferred Compensation Plans sections below.

Post-Termination Compensation

The Company has a severance plan (the Severance Plan) that provides our named executive officers with post-termination payments if the named executive officers’ employment is terminated by the Company other than for cause. These payments are intended to provide a measure of financial security following the loss of employment, which we believe is important to attract and retain executives. The severance benefits are designed to be competitive with the compensation peer group and external market practices.

The Company also has an Executive Change in Control Severance Plan (the CIC Plan), which provides severance benefits to certain eligible executives of the Company, including all of the Company’s named executive officers, if their employment with the Company is involuntarily terminated in connection with a change in control of the Company. In addition to helping mitigate the financial impact associated with termination after a change in control, these benefits further align the interests of our executive officers with the interests of our stockholders by providing incentives for retention, for business continuity purposes. Under the CIC Plan, a named executive officer is eligible for change in control severance benefits if their employment is terminated in connection with a change in control, either by the Company without cause or by the named executive officer for good reason. See the Potential Payments Upon Termination or Change in Control section of the CD&A for additional information.


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Perquisites

We provide our named executive officers with other limited benefits we believe are competitive with the compensation peer group and consistent with the Company’s overall executive compensation program. These benefits allow our named executive officers to proactively manage their health, work more efficiently, and, in the case of the financial planning program, help them optimize the value received from our compensation and benefits programs. These perquisites are a Company car or car allowance, paid parking at the Company’s headquarters, an annual executive physical exam, reimbursement for health club membership, and financial planning services.

Compensation Philosophy

A core principle of our compensation philosophy is to align pay with performance. We do so by delivering the majority of executive pay through “at-risk” variable incentive awards that help ensure realized pay is tied to attainment of critical operational goals and sustainable appreciation in stockholder value. In fiscal year 2019, approximately 86% of the targeted compensation for our CEO and approximately 72% of the targeted compensation for our other named executive officers was directly tied to the achievement of short- and long-term operating goals and total stockholder return. This approach is designed to accomplish the following:


Element       Objective
Pay for Performance

Reward performance that drives achievement of the Company’s short- and long-term goals and, ultimately, stockholder value.

Align Management and Stockholder Interests Align the interests of our executive officers with our stockholders by using long-term, equity-based incentives, encourage a culture of ownership with stock retention guidelines, and reward executive officers for sustained Company performance as measured by operating results and total stockholder return.
Attract, Retain, and Motivate Talented Executives Maintain market-based pay targets and program design that allow the Company to be a magnet for high-performing executives.
Address Risk-Management Considerations Motivate our executives to create long-term stockholder value and discourage behavior that could lead to unnecessary or excessive risk-taking by providing a balance of fixed and at-risk pay, and short-term and long-term performance horizons, using a variety of metrics tied to key drivers of sustainable value creation.
Support Financial Efficiency Help ensure that cash- and equity-based incentive payouts are appropriately supported by performance, and design awards in a way that is intended to minimize unnecessary accounting charges and maximize the extent to which payments are tax-deductible to the Company compensation.

What We Have and Don’t Have – Elements of Our Executive Compensation Program

The following elements of our executive compensation program reflect our continued commitment to our compensation philosophy:

What We Have

An executive compensation program designed to further the Company’s strategy and mitigate inappropriate risk;
Different performance horizons for the goals within our annual and long-term incentive plans;
Use of economic profit as a rigorous long-term incentive metric and net sales, net earnings and gross margin for our annual incentive metrics;
Stringent stock ownership and retention guidelines for all of our executives;
A prohibition on speculative transactions involving the Company’s stock, including hedging and pledging;
Stock options that vest over a four-year period and have an exercise price equal to fair market value of our Common Stock on the date of grant;
Clawback provisions in both our annual and long-term incentive plans;
Double-trigger change in control provisions for all equity awards;
Reasonable cash severance provisions to support talent retention and attraction objectives, promote orderly succession planning, and avoid individual negotiation with exiting executives, thus eliminating the need for individual employment agreements;
Modest perquisites supported by sound business rationale;
Annual review of our executive compensation program by the MDCC, which yielded changes to the annual and long-term incentive programs effective in fiscal year 2019; and
Use of an independent compensation consultant who does not provide any additional consulting services to the Company.

What We Don’t Have

ø Employment contracts for any executives;
ø Stock option re-pricing without stockholder approval;
ø Payment of dividends or dividend equivalents on unvested or unearned performance shares or restricted stock; and
ø Tax gross-ups for any executive officers.


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How We Make Compensation Decisions

Roles and Responsibilities in Setting Executive Compensation

Management Development and Compensation Committee. The MDCC is made up entirely of independent directors as defined by our Governance Guidelines and NYSE listing standards. The MDCC regularly reviews the design and implementation of our executive compensation program and reports on its discussions and actions to the Board. In particular, the MDCC (i) oversees our executive compensation program, (ii) approves the performance goals and strategic objectives for our named executive officers, evaluates results against those targets each year, and determines and approves the compensation of our CEO (after consulting with the other independent members of the Board) and our other named executive officers, as well as officers at or above the level of senior vice president and any other officers covered by Section 16 of the Exchange Act, and (iii) makes recommendations to the Board with respect to the structure of overall incentive and equity-based plans.

The MDCC makes its determinations regarding executive compensation after consulting with management and the MDCC’s independent compensation consultant (as further described below), and its decisions are based on a variety of factors, including the Company’s performance, individual executives’ performance, peer group data, and input and recommendations from the independent compensation consultant.

The MDCC evaluates individual performance based on the performance of the business or operations for which the executive is responsible, the individual’s skill set relative to industry peers, overall experience and time in the position, the critical nature of the individual’s role, difficulty of replacement, expected future contributions, readiness for promotion to a higher level, and role relative to that of other executive officers.

In determining the compensation package for each of our named executive officers other than our CEO, the MDCC receives input and recommendations from our CEO and our Executive Vice President – Chief People Officer. Named executive officers do not have a role in the determination of their own compensation, but named executive officers other than our CEO do discuss their individual performance objectives and results with our CEO.

Board of Directors. The independent members of the Board undertake a thorough process during which they review our CEO’s annual performance, and each independent director provides candid feedback and

observations that are shared in aggregate with our CEO. The Board considers a variety of substantive factors it has identified as being most important for effective CEO performance, with a focus on strategy, people, and operations. The full Board discusses the evaluations of our CEO’s performance against these factors and then provides its compensation recommendations to the MDCC. The MDCC, after evaluating the Board’s recommendations and receiving input from the independent compensation consultant, then makes a final determination on our CEO’s compensation. Our CEO does not have a role in his own compensation determination other than participating in a discussion with the Board regarding his performance relative to specific targets and strategic objectives set at the beginning of the fiscal year, which the Board considers in both its compensation determination and when setting performance targets for the upcoming fiscal year.

Independent Compensation Consultant. The MDCC retains the services of an independent compensation consulting firm to assist it in the performance of its duties. During fiscal year 2019, the MDCC used the services of Frederic W. Cook & Co., Inc. (FW Cook). FW Cook’s work with the MDCC included data analysis and guidance and recommendations on the following topics: compensation levels relative to our peers, market trends in incentive plan design, risk and reward structure of executive compensation plans, and other policies and practices, including the policies and views of third-party proxy advisory firms. FW Cook also assisted in the evaluation and implementation of changes to the Company’s incentive plans, which were effective with fiscal year 2019 and are described under the What We Pay: Components of Our Compensation Program section of this CD&A. See the Independence of the Compensation Consultant section below for a discussion of FW Cook’s independence from management.

Chief Executive Officer. Our CEO makes compensation recommendations to the MDCC for all executive officers other than himself. In making these recommendations, our CEO evaluates the performance of each executive officer and considers their responsibilities as well as the compensation analysis provided by the independent compensation consultant.

Other Members of Management. Senior human resources management provides analyses regarding competitive practices and pay ranges, compensation and benefit plans, policies and procedures for equity awards, perquisites, general compensation, and benefits philosophy. Senior human resources, legal, and, from time to time, finance executives attend non-executive sessions of the MDCC meetings to provide additional perspective and expertise.


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Independence of the Compensation Consultant

Pursuant to its charter, the MDCC is authorized to retain, oversee, and terminate any consultants as it deems necessary, as well as to approve the fees and other retention terms of any such consultants. Prior to retaining a compensation consultant or any other external advisor, from time to time as the MDCC deems appropriate but at least annually, the MDCC assesses the independence of the advisor from management. In evaluating FW Cook, the MDCC’s compensation consultant, the MDCC took into consideration all factors relevant to FW Cook’s independence, including the following factors specified in the NYSE listing standards:

other services provided to the Company by FW Cook or any of its affiliates;
the fees paid by the Company to FW Cook as a percentage of FW Cook’s total revenue;
the policies and procedures of FW Cook that are designed to prevent a conflict of interest;
any business or personal relationship between individuals at FW Cook performing consulting services for the MDCC and an MDCC member;
any ownership of Company stock by the individuals at FW Cook performing consulting services for the MDCC; and
any business or personal relationship between FW Cook or individuals at FW Cook performing consulting services for the MDCC and an executive officer of the Company.

FW Cook has provided the MDCC with appropriate assurances and confirmation of its independent status in accordance with the MDCC’s charter and other considerations. The MDCC believes that FW Cook has been independent throughout its service to the MDCC and that there is no conflict of interest between FW Cook or individuals at FW Cook and the MDCC, the Company’s executive officers, or the Company.

Our Peer Group

The MDCC uses a peer group of consumer products companies (the compensation peer group) to help determine competitive compensation rates for the Company’s executive officers, including the named executive officers. The compensation peer group was selected by the MDCC based on the factors described below, with input from FW Cook. The compensation peer group is used to evaluate both the levels of executive compensation and compensation practices within the consumer products industry.

For fiscal year 2019, the compensation peer group was composed of the following 18 companies:

Avon Products, Inc. The Estee Lauder Companies Inc. McCormick & Company, Incorporated
Campbell Soup Company General Mills, Inc. Molson Coors Brewing Company
Church & Dwight Co., Inc. The Hershey Company Newell Rubbermaid Inc.
Colgate-Palmolive Company Hormel Foods Corporation Revlon, Inc.
Keurig Dr. Pepper The J.M. Smucker Company S.C. Johnson & Son, Inc.
Edgewell Personal Care Kellogg Company Tupperware Brands Corporation

To determine the compensation peer group for each year, the MDCC considers companies that:

hold leadership positions in branded consumer products;
are of reasonably similar size based on market capitalization and revenue;
compete with the Company for executive talent; and
have executive positions similar in breadth, complexity, and scope of responsibility to those of the Company.

The MDCC annually reviews and makes adjustments to the compensation peer group as appropriate to ensure that the peer group companies continue to meet the relevant criteria. As of July 31, 2019, the Company was at the 33rd percentile for revenue, 55th percentile for net income, and 61st percentile for market capitalization compared with the compensation peer group.




Fiscal Year 2019 Compensation of Our Named Executive Officers

For fiscal year 2019, management engaged Aon Hewitt to obtain and aggregate compensation data for the compensation peer group. This data was used to advise the MDCC on setting target compensation for our named executive officers. FW Cook reviewed this information

and performed an independent compensation analysis of the compensation peer group data to advise the MDCC. Although each individual component of executive compensation is reviewed, particular emphasis is placed on targeting total compensation within 15% of the median


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target dollar amounts of compensation of the compensation peer group. Other factors, such as an executive’s level of experience, may result in target total compensation for individual named executive officers being set above or below this median range. For fiscal year 2019, each named executive officer’s target total compensation is within 15% of the compensation peer group median, with the exception of Mr. Jacobsen, who was promoted to CFO in fiscal year 2018 and falls below the indicated range due to his short tenure in the role.

Other Executive Compensation Policies and Practices

Tally Sheets. To help ensure that our executive compensation design is aligned with our overall compensation philosophy of pay for performance and that total compensation levels are appropriate, the MDCC annually reviews compensation tally sheets for each of our named executive officers. These tally sheets outline current target total compensation (including the compensation elements described above), the potential wealth creation of long-term incentive awards granted to our officers under various potential stock prices, and the potential value of payouts under various termination scenarios. As such, these tally sheets help provide the MDCC with a comprehensive understanding of all elements of the Company’s compensation program and enable the MDCC to consider changes to the Company’s compensation program, arrangements, and plans in light of best practices and emerging trends. The MDCC may consider the information presented in the tally sheets in determining future compensation.

Results of 2018 Advisory Vote on Executive Compensation. At our 2018 Annual Meeting of Stockholders held on November 14, 2018, we asked our stockholders to approve, on an advisory basis, our fiscal year 2018 compensation awarded to our named executive officers, commonly referred to as a “say-on-pay” vote. Our stockholders overwhelmingly approved the compensation to our named executive officers, with approximately 93% of votes cast in favor of our proposal. We value this positive endorsement by our stockholders of our 2018 executive compensation policies and believe that the outcome signals our stockholders’ support of our compensation program. We continued our general approach to compensation for fiscal year 2018, specifically our pay-for-performance philosophy and our efforts to attract, retain, and motivate our named executive officers, taking into account the say-on-pay results as well as specific feedback from our stockholders. We value the opinions of our stockholders and will continue to consider the results from this year’s and future advisory votes on executive compensation, as well as feedback received throughout the year, when making compensation decisions for our named executive officers.

Stock Award Granting Practices. The Company awards long-term incentive grants each September at a regularly scheduled MDCC meeting, which typically occurs during the third week of the month, or about six weeks after the Company has publicly reported its annual earnings. The meeting date is the effective grant date for the awards, and the exercise/grant price is equal to the closing price of our Common Stock on that date.

The MDCC may also make occasional grants of stock options and other equity-based awards at other times to recognize, retain, or recruit executive officers.

Executive Stock Ownership Guidelines. To maintain alignment of the interests of the Company’s executive officers and our stockholders, all executive officers, including the named executive officers, are expected to build and maintain a significant level of direct stock ownership. Ownership levels can be achieved over time in a variety of ways, such as by retaining stock received upon the exercise of stock options or the vesting of stock awards or by purchasing stock in the open market. At a minimum, executive officers are expected to establish and maintain direct ownership of Common Stock having a value, based on the closing market price of the stock on the first business day of fiscal year 2019, equal to a multiple of each executive officer’s annual base salary. The current minimum ownership guidelines are as follows:

Chief Executive Officer 6x annual base salary
Executive Officers (other than the CEO) 3x annual base salary
Other Senior Executives 2x annual base salary

Ownership levels are based on shares of Common Stock owned by the named executive officer or held pursuant to Company plans, including performance shares that have vested and been deferred for settlement. Unexercised stock options and shares that have not vested due to time or performance restrictions are excluded from the ownership calculations.

As of the date of this proxy statement, Messer. Dorer and Reynolds and Ms. Stein have met the required ownership levels. Ms. Rendle and Mr. Jacobsen became subject to a higher threshold with their promotions to the Executive Committee in fiscal years 2017 and 2018, respectively, and their ownership threshold increased from 2 times annual base salary to 3 times annual base salary required for executive officers other than the CEO.


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Retention Ratios. Executive officers, including our named executive officers, are required to retain a certain percentage of shares obtained upon either the exercise of stock options or the release of restrictions on performance shares and restricted stock, after satisfying applicable taxes. Our CEO is expected to retain 75% of shares acquired (after taxes) until the minimum ownership level is met. After attaining the minimum ownership level, our CEO must retain 50% of any additional shares acquired (after taxes) until retirement or termination. Other executive officers must retain 75% of shares acquired (after taxes) until the minimum ownership levels are met and thereafter must retain 25% of shares acquired (after taxes) for one year after receipt.

Securities Trading Policy; Prohibition on Hedging and Pledging. To ensure alignment of the interests of our stockholders with all of our directors, officers, employees and consultants, including our named executive officers, the Company’s Insider Trading Policy does not permit any director, officer, employee or consultant of the Company, including any of the Company’s executive officers, either (1) to trade in the stock or other securities of any company when aware of material nonpublic information about that company, including the Company as well as any customers or suppliers of the Company or firms with which the Company may be negotiating a major transaction or (2) to engage in short-term or speculative transactions or derivative transactions involving the Company’s stock and includes prohibitions on options trading and hedging. Restrictions and cautions have also been set forth in this Policy on pledging the Company’s stock as collateral.

The Policy’s prohibition on engaging in hedging transactions in Company securities covers the purchase of a financial transaction instrument, or otherwise engaging in a transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of the Company’s equity securities that were granted as part of the individual’s compensation or that the individual holds directly or indirectly. The following transactions are expressly prohibited by the Policy: (1) short sales (selling Company securities you do not own), (2) transactions involving publicly traded options or other derivatives whose value is tied to the Company’s securities, including trading in or writing puts or calls on the Company’s securities, (3) pre-paid forward contracts and (4) collars. Directors, executive officers, the principal accounting officer and 10% beneficial owners of the Company’s common stock are also prohibited from borrowing against the value of any Company stock that they own through the use of a margin account or other pledge of Company stock as collateral.

Trading of the Company’s securities by directors, executive officers and certain other employees who are so designated from time to time and are informed of their status by the office of the Company’s General Counsel is permitted only during announced trading periods or in accordance with a previously established trading plan that meets SEC

requirements. At all times, including during announced trading periods, directors, executive officers and certain other employees notified by the office of the Company’s General Counsel are required to obtain preclearance from the Company’s General Counsel or Corporate Secretary prior to entering into any transactions in Company securities, unless those sales occur in accordance with a previously established trading plan that meets SEC requirements.

Clawback Provisions. Under our Annual Incentive Plan and long-term incentive plan, in the event of a restatement of financial results to correct a material error or other factors as described in the long-term incentive plan, the MDCC is authorized to reduce or recoup an executive officer’s award, as applicable, to the extent that the MDCC determines such executive officer’s fraud or intentional misconduct was a significant contributing factor to the need for a restatement.

Tax Deductibility Limits on Executive Compensation. Section 162(m) limits the federal income tax deductibility of compensation paid to our CEO and the three other most highly compensated named executive officers employed at the end of the year (other than the CFO) to $1 million per year, unless such amounts are determined to be performance-based compensation awarded on or before November 2, 2017. Our policy with respect to Section 162(m) seeks to balance the interests of the Company in maintaining flexible incentive plans against the possible loss of a tax deduction when taxable compensation for any of the executive officers subject to Section 162(m) exceeds $1 million per year. The rules and regulations promulgated under Section 162(m) are complex and subject to change from time to time, sometimes with retroactive effect. There can be no guarantee, therefore, that amounts potentially subject to the Section 162(m) limitations and awarded on or before November 2, 2017 will be treated by the Internal Revenue Service as “qualified performance-based compensation” under Section 162(m) and/or deductible by the Company.

With the enactment of the Tax Cuts and Jobs Act in December 2017, for taxable years beginning after December 31, 2017, which includes our 2019 fiscal year, the deductibility exemption for performance-based compensation under Section 162(m) has been eliminated. As a result, compensation in excess of $1 million paid to covered executive officers generally is not deductible unless the compensation qualifies for certain transition relief under the Tax Cuts and Jobs Act. As a result, the Company has assessed, and continues to assess how the amendments to Section 162(m) affect its annual and long-term incentive compensation. Given the commitment of the Company and the MDCC to tying the compensation of its executives to the performance of the Company, to date there have not been, and we do not expect there to be in the future material changes made to the manner in which the Company awards its incentive compensation.


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The Management Development and Compensation Committee Report

As detailed in its charter, the Management Development and Compensation Committee of the Board oversees the Company’s executive compensation program and policies. As part of this function, the MDCC discussed, and reviewed with management, the CD&A. Based on this review and discussion, we have recommended to the Board that the CD&A be included in the proxy statement.

THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

Spencer C. Fleischer, Chair
Richard H. Carmona
David Mackay
Russell J. Weiner


Compensation Committee Interlocks and Insider Participation

Each of Dr. Carmona and Messrs. Fleischer, Mackay, Weiner and Jeffrey Noddle served as a member of the MDCC during part or all of fiscal year 2019. None of the members was an officer or employee of the Company or any of its subsidiaries during fiscal year 2019 or in any prior fiscal year. No executive officer of the Company served on the board of directors or compensation committee of any other entity that has or had one or more executive officers who served as a member of the Board or MDCC during fiscal year 2019.

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FISCAL YEAR 2019 SUMMARY COMPENSATION TABLE

The following table sets forth the compensation earned, paid, or awarded to our named executive officers for the fiscal years ended June 30, 2019, 2018, and 2017.

Name and Principal
Position
    Year     Salary
($)(1)
    Stock
Awards
($)(2)(3)
    Option
Awards
($)(2)
    Non-Equity
Incentive Plan
Compensation
($)(4)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
    All Other
Compensation
($)(6)
    Total
($)
Benno Dorer 2019   $ 1,166,346   $ 2,874,521   $ 2,874,816        $ 1,206,000          $ 859,528          $ 381,504 $ 9,362,715
Chair and Chief 2018 1,061,538 2,624,635 2,625,829 1,269,840 131,210 420,015 8,133,067
Executive Officer 2017 1,010,577 2,374,406 2,374,959 1,569,480 188,548 550,919 8,068,890
Kevin Jacobsen 2019 536,539 649,918 649,958 331,650 4,612 122,077 2,294,753
Executive Vice President 2018 388,463 349,952 350,091 168,040 7,476 107,965 1,371,987
— Chief Financial Officer
Laura Stein 2019 632,461 549,697 549,965 315,168 787,857 133,721 2,968,869
Executive Vice President 2018 607,288 500,253 500,093 321,300 177,933 2,106,867
— General Counsel and 2017 590,317 412,352 412,475 399,500 227,339 2,041,983
Corporate Affairs
Linda Rendle(7) 2019 523,965 600,194 600,006 290,311 1,572 144,820 2,160,869
Executive Vice President 2018 435,923 563,379 312,577 271,900 1,401 117,181 1,702,362
— Strategy and Operations
Eric Reynolds(8) 2019 462,788 450,587 450,016 230,362 3,120 119,035 1,715,909
Executive Vice President
—Cleaning and Burt's Bees

(1) Reflects actual salary earned for fiscal years 2019, 2018, and 2017.
(2) The amounts reflected in these columns are the values determined under FASB ASC Topic 718 for the awards granted in the fiscal years ended June 30, 2019, 2018, and 2017, in accordance with the applicable accounting standard. The assumptions made in valuing stock awards and option awards reported in these columns are discussed in Note 1, Summary of Significant Accounting Policies under subsection “Stock-Based Compensation”, and in Note 16, Stock-Based Compensation Plans, to the Company’s consolidated financial statements for the three years in the period ended June 30, 2019, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019. Additional information regarding the stock awards and option awards granted to our named executive officers during fiscal year 2019 is set forth in the Grants of Plan-Based Awards Table.
(3) The grant date fair value of the performance share awards reflected in this column is the target payout based on the probable outcome of the performance-based conditions, determined as of the grant date. The maximum potential payout of the stock awards would be 200% of the target shares awarded on the grant date. The maximum value of the performance share award for 2019 determined as of the date of grant would be as follows for each respective named executive officer: Mr. Dorer – $5,749,041; Mr. Jacobsen – $1,299,836; Ms. Stein – $1,099,394; Ms. Rendle – $1,200,389; and Mr. Reynolds – $901,174. See the Grants of Plan-Based Awards Table for more information about the performance shares granted under the 2005 Stock Incentive Plan.
(4) Reflects annual incentive awards earned for fiscal years 2019, 2018, and 2017 and paid out in September 2019, September 2018, and September 2017, respectively, under the Annual Incentive Plan. Information about the Annual Incentive Plan is set forth in the Compensation Discussion and Analysis under the Annual Incentives section of this CD&A.

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(5) The amounts reflect the aggregate change in the present value of accumulated benefits during fiscal years 2019, 2018, and 2017 under the SERP, the Pension Plan, and the cash balance restoration benefit of the NQDC (note that the SERP, the Pension Plan, and the cash balance restoration benefit of the NQDC are all frozen benefits; refer to the Pension Benefits Table for further information). Each plan amount in fiscal year 2019 is set forth in the following table:

      Benno
Dorer
      Kevin
Jacobsen
      Laura
Stein
      Linda
Rendle
      Eric
Reynolds
The Pension Plan $ 1,744       $ 4,151 $ 4,322   $ 1,572      $ 3,078
SERP 848,102 759,013
Cash Balance Restoration Benefit 9,682 461 24,522 42
Total $ 859,528 $ 4,612 $ 787,857 $ 1,572 $ 3,120

(6) The amounts shown in the All Other Compensation column represent (i) actual Company contributions under the Company’s 401(k) Plan, (ii) nonqualified contributions under the NQDC and ERP, and (iii) perquisites utilized by our named executive officers of the Company:

      Benno
Dorer
      Kevin
Jacobsen
      Laura
Stein
      Linda
Rendle
      Eric
Reynolds
The Clorox Company 401(k) Plan $ 28,004    $ 26,840 $ 27,758   $ 26,314   $ 26,791
Nonqualified Deferred Compensation Plan and ERP 329,899 68,694 86,874 83,562 63,278
Company Paid Perquisites 23,601 26,543 19,089 34,944 28,966
Total $ 381,504 $ 122,077 $ 133,721 $ 144,820 $ 119,035

The following table sets forth the perquisites utilized by our named executive officers and the cost to the Company for providing these perquisites during fiscal year 2019. The amounts shown in the Other Perquisites row consist of paid parking at the Company’s headquarters, health club reimbursement, and an annual executive physical.

      Benno
Dorer
      Kevin
Jacobsen
      Laura
Stein
      Linda
Rendle
      Eric
Reynolds
Executive Automobile Program   $ 13,200      $ 5,432   $ 13,200   $ 13,200    $ 13,200
Basic Financial Planning 3,545 16,500 16,500 12,186
Non-Business Use of Company Aircraft
Other Perquisites 6,856 4,611 5,889 5,244 3,580
Total $ 23,601 $ 26,543 $ 19,089 $ 34,944 $ 28,966

(7) In July 2019, Ms. Rendle was promoted to Executive Vice President, Cleaning, International, Strategy and Operations.
(8) In July 2019, Mr. Reynolds was promoted to Executive Vice President, Household and Lifestyle.

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FISCAL YEAR 2019 GRANTS OF PLAN BASED AWARDS

This tables shows grants of plan-based awards to the named executive officers during fiscal year 2019.





Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
Estimated Possible Payouts
Under Equity Incentive Plan
Awards
All Other
Stock
Awards:
Number
of Shares
if Stock or
Units
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/Sh)
   Grant Date
Fair Value
of Stock
and Option
Awards
($)
Name       Grant
Date
      Threshold
($)
      Target
($)
      Maximum
($)
      Threshold
(#)
      Target
(#)
      Maximum
(#)
                       
Benno Dorer
Annual Incentive Plan(1)    $ 1,800,000   $ 5,400,000
Performance Shares(2) 9/18/2018             18,930 37,860   $ 2,874,521
Stock Options(3) 9/18/2018 128,800    $ 151.85 2,874,816
Kevin Jacobsen
Annual Incentive Plan(1) 467,500 1,402,500
Performance Shares(2) 9/18/2018 4,280 8,560 649,918
Stock Options(3) 9/18/2018 29,120 $ 151.85 649,958
Laura Stein
Annual Incentive Plan(1) 448,000 1,344,000
Performance Shares(2) 9/18/2018 3,620 7,240 549,697
Stock Options(3) 9/18/2018 24,640 $ 151.85 549,965
Linda Rendle
Annual Incentive Plan(1) 412,667 1,238,001
Performance Shares(2) 9/18/2018 2,800 5,600 425,180
1/7/2019 1,130 2,260 175,014
Stock Options(3) 9/18/2018 19,040 $ 151.85 424,973
1/7/2019 6,932 $ 154.88 175,033
Eric Reynolds
Annual Incentive Plan(1) 327,452 982,356
Performance Shares(2) 9/18/2018 1,980 3,960 300,663
1/7/2019 968 1,936 149,924
Stock Options(3) 9/18/2018 13,440 $ 151.85 299,981
1/7/2019 5,942 $ 154.88 150,036

(1) Represents estimated possible payouts of annual incentive awards for fiscal year 2019 under the Annual Incentive Plan for each of our named executive officers. The Annual Incentive Plan is an annual cash incentive opportunity and, therefore, awards are earned in the year of grant. The target amounts represent the potential payout if both Company performance, including financial and strategic metrics, and individual performance are at target levels. The maximum amount represents maximum payout in the Annual Incentive Plan utilizing a Company performance multiplier of 200% and an individual performance multiplier of 150%. See the Summary Compensation Table for the actual payout amounts in fiscal year 2019 under the Annual Incentive Plan. See “Annual Incentives” in the Compensation Discussion and Analysis for additional information about the Annual Incentive Plan.
(2) Represents possible future payouts of Common Stock underlying performance shares awarded in fiscal year 2019 to each of our named executive officers as part of their participation in the 2005 Stock Incentive Plan. These awards will vest upon the achievement of performance measures based on average economic profit growth over a three-year period, with the threshold, target, and maximum awards equal to 0%, 100%, and 200%, respectively, of the number of performance shares granted. If the minimum financial goals are not met at the end of the three-year period, no awards will be paid out under the 2005 Stock Incentive Plan. See “Long-Term Incentives” in the Compensation Discussion and Analysis for additional information.
(3) Represents stock options awarded to each of our named executive officers under the 2005 Stock Incentive Plan. All stock options vest in equal installments on the first, second, third, and fourth anniversaries of the grant date.

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OUTSTANDING EQUITY AWARDS AT FISCAL 2019 YEAR-END

The following equity awards granted to our named executive officers were outstanding as of the end of fiscal year 2019.

Option Awards Stock Awards
Number of
Securities
Underlying
Unexercised
Options-
Exercisable
Number of
Securities
Underlying
Unexercised
Options-
Unexercisable
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
Option
Exercise
Price
Option
Expiration
Number of
Shares or
Units of Stock
That Have Not
Vested
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
Name         (#)         (#)         (#)         ($)         Date         (#)         ($)         (#)         ($)(1)
Benno Dorer         
Stock Options(2) 50,780 $ 89.82 9/17/2024    
221,170 $ 100.24 11/20/2024
124,050 41,350 (3) $ 111.60 9/15/2025
86,425 86,425 (4) $ 123.09 9/13/2026
42,990 128,970 (5) $ 135.57 9/12/2027
128,800 (6) $ 151.85 9/18/2028
Performance Shares(2) 20,062 (9)       $ 3,071,632
19,360 (10) $ 2,964,210
18,930 (11) $ 2,898,372
Kevin Jacobsen
Stock Options(2) 3,585 $ 84.45 9/17/2023
15,630 $ 89.82 9/17/2024
8,557 2,853 (3) $ 111.60 9/15/2025
5,460 5,460 (4)     $ 123.09 9/13/2026
2,457 7,373 (5) $ 135.57 9/12/2027
2,790 8,370 (7) $ 128.69 4/2/2028
29,120 (6) $ 151.85 9/18/2028
Performance Shares(2) 1,269 (9) 194,266
1,110 (10) 169,952
1,550 (11) 237,321
4,280 (12) 655,311
Laura Stein
Stock Options(2) 39,960 $ 84.45 9/17/2023
41,670 $ 89.82 9/17/2024
22,815 7,605 (3) $ 111.60 9/15/2025
15,010 15,010 (4) $ 123.09 9/13/2026
8,187 24,563 (5) $ 135.57 9/12/2027
24,640 (6) $ 151.85 9/18/2028
Performance Shares(2) 3,484 (9) 533,435
3,690 (10) 564,976
3,620 (11) 554,258

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Option Awards Stock Awards
Number of
Securities
Underlying
Unexercised
Options-
Exercisable
Number of
Securities
Underlying
Unexercised
Options-
Unexercisable
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
Option
Exercise
Price
Option
Expiration
Number of
Shares or
Units of Stock
That Have Not
Vested
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
Name         (#)         (#)         (#)         ($)         Date         (#)         ($)         (#)         ($)(1)
Linda Rendle
Stock Options(2) 1,697 $ 72.11 9/11/2022
2,935 $ 84.45 9/17/2023
7,850 $ 89.82 9/17/2024
9,270 3,090 (3) $ 111.60 9/15/2025
7,280 7,280 (4) $ 123.09 9/13/2026
5,117 15,353 (5) $ 135.57 9/12/2027
19,040 (6) $ 151.85 9/18/2028
6,932 (8) $ 154.88 1/7/2029
Performance Shares(2) 1,685 (9) 257,960
2,310 (10) 353,684
2,800 (11) 428,708
1,130 (13) 173,014
Restricted Shares(2) 1,490 (14) $ 228,134
1,850 (15) $ 283,254
 
Eric Reynolds
Stock Options(2) 11,407 3,803 (3) $ 111.60 9/15/2025
7,735 7,735 (4) $ 123.09 9/13/2026
4,095 12,285 (5) $ 135.57 9/12/2027
13,440 (6) $ 151.85 9/18/2028
5,942 (8)    $ 154.88 1/7/2029
Performance Shares(2) 1,799 (9) 275,476
1,840 (10) 281,722
1,980 (11) 303,158
968 (13) 148,210
Restricted Shares(2) 1,490 (14)   $ 228,134

(1) Represents unvested “target” number of performance shares under the 2005 Stock Incentive Plan multiplied by the closing price of our Common Stock on June 28, 2019, except as noted below in footnote (8). The ultimate value will depend on whether performance criteria are met and the value of our Common Stock on the actual vesting date.
(2) Grants were made under the 2005 Stock Incentive Plan.
(3) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 15, 2015.
(4) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 13, 2016.
(5) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 12, 2017.
(6) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 18, 2018.
(7) Represents unvested portion of off-cycle stock options granted to Mr. Jacobsen when he was promoted to Senior Vice President, Chief Financial Officer, effective April 1, 2018. Options vest in four equal installments beginning one year from the grant date of April 2, 2018.

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(8) Represents unvested portion of off-cycle stock options granted to Mr. Reynolds when he was promoted to Executive Vice President, Cleaning and Burt's Bees, effective January 7, 2019. Options vest in four equal installments beginning one year from the grant date of January 7, 2019.
(9) Represents the actual number of performance shares that were paid out under our 2005 Stock Incentive Plan. The grants from the plan have a three-year performance period (fiscal years 2017 through 2019). Performance is based on achievement of cumulative economic profit growth. After completion of fiscal year 2019, the MDCC determined whether the performance measures had been achieved and based on the results, on August 15, 2019, the MDCC approved the payout of this award at 104% of target.
(10) Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The grants from the plan have a three-year performance period (fiscal years 2018 through 2020). Performance is based on achievement of cumulative economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2020.
(11) Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The grants from the plan have a three-year performance period (fiscal years 2019 through 2021). Performance is based on achievement of average economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2021.
(12) Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The off-cycle grants from the plan, which was granted to Mr. Jacobsen when he was promoted to Senior Vice President, Chief Financial Officer, effective April 1, 2018, have a three-year performance period (fiscal years 2018 through 2020). Performance is based on achievement of average economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2020.
(13) Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The off-cycle grants from the plan, which were granted to Ms. Rendle and Mr. Reynolds when they were promoted to Executive Vice President, Strategy and Operations and Executive Vice President, Cleaning and Burt's Bees, respectively, effective January 7, 2019, have a three-year performance period (fiscal years 2019 through 2021). Performance is based on achievement of average economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2021.
(14) Represents unvested one-time off-cycle restricted stock grants that were granted to Ms. Rendle when she became the Senior Vice President – GM, Cleaning Division & PPD effective April 3, 2017 and to Mr. Reynolds in conjunction with leadership changes effective April 3, 2017. Restricted stock units vest three years from the anniversary of the grant date.
(15) Represents unvested one-time off-cycle restricted stock grant that was granted to Ms. Rendle when she became the Executive Vice President – Cleaning & Strategy effective June 29, 2018. Restricted stock units vest three years from the anniversary of the grant date.

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FISCAL YEAR 2019 OPTION EXERCISES AND STOCK VESTED

This table shows stock options exercised and stock vested for the named executive officers during fiscal year 2019.

Option Awards Stock Awards
Name Number
of Shares
Acquired
on Exercise
(#)
Value
Realized on
Exercise
($)(1)
Number of
Shares
Acquired
on Vesting
(#)
Value
Realized on
Vesting
($)(2)
Benno Dorer       165,470 (3)          $ 15,114,202       31,216 (4)           $ 4,581,572
Kevin Jacobsen (3) 2,146 (4)(5) 314,968
Laura Stein 13,650 (3) 983,362 5,734 (4) 841,579
Linda Rendle (3) 2,338 (4) 343,148
Eric Reynolds 41,925 (3) 983,362 2,867 (4)(5) 420,790
(1) The dollar value realized reflects the difference between the market price of the Common Stock upon exercise and the stock option exercise price.
(2) The dollar value realized reflects the market value of the vested shares and dividend equivalent units based on the closing price of the Common Stock on the vesting date.
(3) The number represents the exercise of nonqualified stock options granted in previous years under the Company’s 2005 Stock Incentive Plan.
(4) The number of stock awards listed represent the vesting of performance shares and dividend equivalent units at 150% of target, granted through participation in the Company's 2005 Stock Incentive Plan. The grant from the plan had a three-year performance period (fiscal years 2015 through 2018). Performance is based on the achievement of cumulative economic profit growth. On August 16, 2018, the MDCC approved the payout of this award at 150% of target and the award was settled on August 20, 2018.
(5) These shares have been deferred and will be distributed over 5 annual installments after separation for Mr. Jacobsen and in a single installment 3 years after vesting for Mr. Reynolds.

Overview of Pension Benefits

Historically, pension benefits have been paid to the named executive officers under the following plans: (i) the Pension Plan, (ii) the cash balance restoration provision in the NQDC, and (iii) the SERP. Effective June 30, 2011, the Pension Plan and the cash balance restoration provision under the NQDC were frozen. The SERP was also frozen as of June 30, 2011, with regard to pay and offsets, while still allowing age and service credits, as most recently amended in March 2018, as described in the Retirement Plans section of the CD&A.

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FISCAL YEAR 2019 PENSION BENEFITS TABLE

The following table sets forth each named executive officer’s pension benefits under the Company’s pension plans for fiscal year 2019.

Name       Plan Name       Number of Years
of Credited
Service
(#)(1)
      Present Value
of Accumulated
Benefit
($)(2)
      Payments
During Last
Fiscal Year
($)
Benno Dorer The Clorox Company Pension Plan(3) 14         $ 56,869  $—
SERP(4) 14 3,476,005
Cash Balance Restoration(5) 14 157,121
Kevin Jacobsen The Clorox Company Pension Plan(3) 23 135,347
SERP(4) 23
Cash Balance Restoration(5) 23 50,393
Laura Stein The Clorox Company Pension Plan(3) 22 140,929
SERP(4) 22 5,066,447
Cash Balance Restoration(5) 22 292,667
Linda Rendle The Clorox Company Pension Plan(3) 16 51,289
SERP(4) 16
Cash Balance Restoration(5) 16
Eric Reynolds The Clorox Company Pension Plan(3) 20 100,382
SERP(4) 20
Cash Balance Restoration(5) 20 1,948
(1) Number of years of credited service is rounded down to the nearest whole number.
(2) Present value of the accumulated benefit was calculated using the following assumptions: mortality table: MILES-CGFD; discount rate: 3.40%; and age at June 30, 2019.
(3) The Pension Plan was frozen effective July 1, 2011. Participants keep their accumulated pay credits and receive only quarterly interest credits after that date.
(4) The SERP was frozen with regards to pay and offsets effective June 30, 2011. Age and service credits continue to accrue. Mr. Dorer and Ms. Stein are the only named executive officers eligible for the SERP.
(5) The cash balance restoration provision in the NQDC was eliminated effective July 1, 2011, when the Pension Plan was frozen. Participants keep their accumulated pay credits but no contributions were made under this provision after July 1, 2011.

Overview of the Nonqualified Deferred Compensation Plans

Executive Retirement Plan. Our executive officers (including each of our named executive officers) are eligible for participation in the ERP. The ERP provides that the Company will make an annual contribution of 5% of an eligible participant’s base salary plus an annual incentive payment into the plan. Company contributions will vest over a three-year period and will fully vest upon the participant’s attainment of age 62 with 10 years of service with the Company (at which time the individuals are considered retirement-eligible under the ERP). An eligible participant can elect distribution in a lump sum or up to 15 annual installments upon a qualifying payment event.

Nonqualified Deferred Compensation Plan. Under the NQDC, participants, including each of our named executive officers, may voluntarily defer the receipt of up to 50% of their base salary and up to 100% of their annual incentive award. In addition, the NQDC offers a 401(k) restoration provision for those who defer at a required

level. All Company retirement contributions are made in the form of (i) a fixed 6% employer annual contribution and (ii) an employer match of up to 4% of pay into the 401(k) Plan, subject to IRC compensation limits. Contributions on eligible compensation that exceed the IRC compensation limits are contributed into a participant’s NQDC account under the 401(k) restoration provision.

Participants in the NQDC may elect to receive benefits from the NQDC either in a lump sum or up to 15 annual payments upon a qualifying payment event. Participants may choose from an array of investment crediting rates that generally mirror the investment fund options available in the 401(k) Plan. The NQDC uses the same benefit formulas, types of compensation to determine benefits, and vesting requirements as our tax-qualified 401(k) plan. The responsibility to pay benefits under the NQDC is an unfunded and unsecured obligation of the Company.

The following table provides information regarding the accounts of the named executive officers under the NQDC and ERP in fiscal year 2019.


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FISCAL YEAR 2019 NONQUALIFIED DEFERRED COMPENSATION

Name       Executive
Contributions
in Last FY
($)(1)
      Registrant
Contributions
in Last FY
($)(2)
      Aggregate
Earnings
in Last FY
($)(3)
      Aggregate
Balance
at Last FYE
($)(4)(5)
Benno Dorer           $ 91,784         $ 329,899     $ 251,515 $ 3,791,125
Kevin Jacobsen 68,972 68,694 43,258 855,193
Laura Stein 86,874 322,627 4,943,260
Linda Rendle 53,086 83,562 30,068 457,089
Eric Reynolds 54,689 63,278 12,493 323,861

(1)

Amounts represent the annual base salary and incentive award that each executive deferred during fiscal year 2019. Deferred base salary is also reported in the Summary Compensation Table – Salary. Deferred annual incentive awards are also reported in the Summary Compensation Table – Non-Equity Incentive Plan Compensation.

(2)

Represents that portion of the Company’s 401(k) match and Company contribution of up to 10% of eligible compensation that is in excess of IRC compensation limits pursuant to the 401(k) restoration provision of the NQDC and the Company’s contribution under the ERP. These contributions are also reported in the Summary Compensation Table – All Other Compensation and are included under the caption “Nonqualified Deferred Compensation Plan” in footnote (6) to the Summary Compensation Table.

(3)

Earnings are based on an array of investment options that generally mirror the 401(k) Plan. Earnings vary based on participant investment elections.

(4)

Reflects aggregate balances under the restoration provision of the NQDC and any deferred base salary and annual incentive awards as of the end of fiscal year 2019.

(5)

The executive and registrant contribution total amounts in the table below are also reported as compensation in the Summary Compensation Table in the years indicated:


Fiscal Year       Benno
Dorer
      Kevin
Jacobsen
      Laura
Stein
      Linda
Rendle
      Eric
Reynolds
2019 $ 329,899    $ 68,694 $ 86,874 $ 83,562     $ 63,278
2018 $ 423,145 $ 113,227 $ 172,578 $ 112,495
2017 $ 620,819 $ 222,120

Potential Payments Upon Termination or Change in Control

Payments Upon Termination

Severance Plan for Named Executive Officers. Under the terms of the Severance Plan, our named executive officers are eligible to receive benefits if their employment is terminated by the Company without cause (other than in connection with a change in control). No benefits are payable under the terms of the Severance Plan if the Company terminates the employment of the named executive officer for cause or if the named executive officer voluntarily resigns.

Regardless of the manner in which a named executive officer’s employment terminates, each named executive officer would retain the amounts he or she had earned over the course of their employment prior to the termination event, such as balances under the NQDC, vested and accrued retirement benefits, and previously vested stock options, except as outlined below under Termination for Misconduct. For further information about previously earned amounts, see the Summary Compensation Table, Outstanding Equity Awards at Fiscal 2019 Year-End Table, Option Exercises and Stock Vested Table, Pension Benefits Table, and Nonqualified Deferred Compensation Table.

Under the Severance Plan, each named executive officer agrees to return and not to use or disclose proprietary information of the Company and, for two years following any such termination, the named executive officer is also prohibited from soliciting for employment any employee of the Company.

Termination benefits under the Severance Plan for our named executive officers are as follows:

Involuntary Termination Without Cause. If the Company terminates the employment of a named executive officer (other than the CEO) without cause, the Severance Plan entitles the named executive officer to receive a lump-sum severance payment after termination equal to two times the named executive officer’s then-current base salary. In the case of the CEO, the severance amount is equal to the sum of (i) two times the CEO’s base salary and (ii) two times the CEO’s three-year average annual bonus multiplied by 75%. Under the Severance Plan, a named executive officer (other than the CEO) is also entitled to an amount equal to 75% of their Annual Incentive Plan award for the fiscal year in which he or she was terminated. The CEO is entitled to an amount equal to 100% of his Annual Incentive Plan award for the fiscal year in which he was terminated.


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Compensation Discussion and Analysis

The amount of severance paid is calculated using the actual Company Financial Performance Multiplier and assumes an Individual Performance Multiplier of 100%, prorated to the date of termination. If the named executive officer is retirement-eligible under the terms of the Annual Incentive Plan, the executive would be eligible for either the treatment under the Severance Plan or retirement treatment for purposes of the Annual Incentive Plan award payout (retirement treatment would be 100%, versus 75%, of their Annual Incentive Plan award for the fiscal year in which he or she was terminated, prorated to the date of termination). It is the MDCC’s decision as to which treatment to apply.

The Severance Plan provides that the named executive officer is entitled to continue to participate in the Company’s medical, vision, and dental insurance programs for up to two years following termination on the same terms as active employees. In addition, at the end of this coverage, a named executive officer will be eligible to participate in the Company’s medical, vision, and/or dental plans offered to former employees who retire at age 55 or older, provided the executive has completed at least 10 years of service, on the same terms as such other former employees. If eligible, this coverage will continue until the named executive officer turns age 65. Thereafter, the named executive officer may participate in the Company’s general retiree health plan as it may exist in the future, if otherwise eligible. If the named executive officer will be age 55 or older and will have completed at least 10 years of service at the end of, and including, the two-year period following termination, the named executive officer will be deemed to be age 55 and/or to have 10 years of service under any pre-65 retiree health plan as well as the SERP.

The above severance-related benefits are provided only if the named executive officer executes a general release prepared by the Company.

Termination Due to Retirement. Under the Company’s policy applicable to all employees, upon retirement the named executive officer is entitled to their salary through the last day of employment and is eligible for a pro-rata portion of the Annual Incentive Plan award for the fiscal year in which their retirement occurs. Based on the provisions of the respective plans, he or she will also be eligible to receive SERP, ERP, and other benefits under applicable Company retirement plans. In addition to the amounts that the named executive officer has earned or accrued over the course of their employment under the Company’s qualified and nonqualified plans, a named executive officer who is at least age 55 with 10 years of service or who has 20 years of service regardless of age is eligible to receive retirement-related benefits under the long-term incentive program. Stock options held for longer than six months will vest in full and remain exercisable for five years following the named executive officer’s retirement, or until the expiration date, whichever is sooner, and performance

shares will be paid out on a pro-rata basis at the end of the relevant performance period based on the actual level of performance achieved during that period.

Termination Due to Death or Disability. Under the Company’s policy applicable to all employees, if the named executive officer’s employment is terminated due to their death, the named executive officer’s beneficiary or estate is entitled to (i) the named executive officer’s salary through the date of their death, (ii) a pro-rata portion of the named executive officer’s actual Annual Incentive Plan award for the fiscal year of their death, (iii) a pro-rata portion of the named executive officer’s 6% annual contribution to the 401(k) plan for the fiscal year of their death, and (iv) benefits pursuant to the Company’s life insurance plan. Stock options and restricted stock units will vest in full, and all vested options remain exercisable for an additional year following the named executive officer’s death or until the expiration date, whichever is earlier, and all performance shares will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period.

If the named executive officer begins to receive benefits under the Company’s long-term disability plan, the Company may terminate the named executive officer’s employment at any time, in which case the named executive officer will receive their salary through the date of their termination and will also be entitled to a pro-rata portion of their actual Annual Incentive Plan award for the fiscal year of their termination. Stock options will vest in full, and all vested options will remain exercisable for an additional year following the named executive officer’s disability or until the expiration date, whichever is earlier, and all performance shares will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period.

Termination for Misconduct. The Company may terminate a named executive officer’s employment for misconduct at any time without notice. Upon the named executive officer’s termination for misconduct, the named executive officer is entitled to their salary through the date of their termination, but is not entitled to any Annual Incentive Plan award for the fiscal year in which their termination for misconduct occurs. “Misconduct” under the Severance Plan means: (i) the willful and continued neglect of significant duties or willful and continued violation of a material Company policy after having been warned in writing, (ii) a material act of dishonesty, fraud, misrepresentation, or other act of moral turpitude, (iii) gross negligence in the course of employment, (iv) the failure to obey a lawful direction of the Board or a corporate officer to whom the named executive officer reports, directly or indirectly, or (v) an action that is inconsistent with the Company’s best interests and values. All outstanding stock option and restricted stock units grants are forfeited upon a termination for


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misconduct. In addition, any retirement-related benefits a named executive officer would normally receive related to performance shares are also forfeited upon a termination for misconduct.

Voluntary Termination. A named executive officer may resign from their employment at any time. Upon the named executive officer’s voluntary resignation, the named executive officer is entitled to their salary through the date of termination, but is not entitled to any Annual Incentive Plan award for the fiscal year of termination. All unvested outstanding stock options, restricted stock units, and performance share grants are forfeited upon voluntary termination.

The Company also maintains the CIC Plan for the benefit of each of our named executive officers. Please see the Potential Payments Upon Termination or Change in Control section below for further details on the CIC Plan.

Potential Payments Upon Change in Control

Change in Control Severance Plan for Named Executive Officers. Under the CIC Plan, executives are eligible for change in control severance benefits, subject to the execution of a waiver and release, if they are terminated without cause or resign for good reason (each as defined under the CIC Plan and as further described below) during (i) the two-year period following a change in control or (ii) a period of up to one year prior to the change in control in limited circumstances where the executive’s termination is directly related to or in anticipation of a change in control.

The severance benefits under the CIC Plan include (i) a lump-sum severance payment equal to two times (or, in the case of the CEO, three times) the sum of (a) the executive’s base salary and (b) average Annual Incentive Plan award for the three completed fiscal years prior to termination, (ii) a lump-sum amount equal to the difference between the actuarial equivalent of the benefit the named executive officer would have been entitled to receive if their employment had continued until the second anniversary of the date of termination and the actuarial equivalent of the aggregate benefits paid or payable as of the date of termination under the qualified and nonqualified retirement plans, (iii) continuation of healthcare benefits for a maximum of two (or, in the case of the CEO, three) years following a severance-qualifying termination, (iv) continued financial planning services for the year of termination, (v) vesting of all outstanding equity awards granted prior to the change in control, and (vi) an amount equal to the average Annual Incentive Plan award for the three completed fiscal years preceding termination prorated for the number of days employed in the fiscal year during which termination occurred. In addition, the CIC Plan provides for an excise tax cutback such that the excise tax under Sections 280G

and 4999 of the IRC would not apply (unless the executive would receive a greater amount of severance benefits on an after-tax basis without a cutback, in which case the cutback would not apply). The CIC Plan permits the MDCC to make changes to the CIC Plan that are adverse to covered executives with 12 months’ advance notice. If a change in control of the Company occurs during that 12-month period, then such changes would not become effective. Each participant under the CIC Plan is subject to certain restrictive covenants including confidentiality and non-disparagement provisions and a non-solicitation and non-diversion of business provision during the term of their employment and for two years thereafter.

“Cause” is generally defined as (i) willful and continued failure to substantially perform duties upon written demand or (ii) willfully engaging in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. A termination for cause requires a vote of 75% of the Board at a meeting after notice to the executive has been given and the executive has had an opportunity to be heard.

“Good Reason” is generally defined as (i) an assignment of duties inconsistent with the executive officer’s position (including offices and reporting requirements), authority, duties, or responsibilities (other than reassignments with a substantially similar level and scope of authority, duties, responsibilities, and reporting relationships), (ii) any failure to substantially comply with any of the material provisions of compensation plans, programs, agreements, or arrangements as in effect immediately prior to the change in control, which material provisions consist of base salary, cash incentive compensation target bonus opportunity, equity compensation opportunity in the aggregate, savings and retirement benefits in the aggregate, and welfare benefits (including medical, dental, life, disability, and severance benefits) in the aggregate, (iii) relocation of principal place of employment that increases the executive officer’s commuting distance by more than 50 miles, (iv) termination of employment by the Company other than as expressly permitted by the CIC Plan, or (v) failure of a successor company to assume the CIC Plan.

Estimated Potential Payments Upon Termination or Change in Control

The following table reflects the estimated amount of compensation payable to each of the Company’s named executive officers upon termination of the named executive officer’s employment under various scenarios. The amounts exclude earned amounts such as vested or accrued benefits, other than benefits vested under the Company’s SERP. If a named executive officer is eligible for their SERP benefit as of the assumed termination date, the respective SERP benefit amount reported under the Retirement column


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is also included in the scenarios for Involuntary Termination Without Cause and Involuntary Termination After Change in Control on the Retirement Plan Benefits line.

The amounts shown are calculated using an assumed termination date effective as of the last business day of fiscal year 2019 (June 28, 2019) and the closing trading price of our Common Stock of $153.11 on such date. Although the calculations are intended to provide reasonable estimates of the potential compensation payable upon termination, they are based on assumptions outlined in the footnotes
of the table and may not represent the actual amount the named executive officer would receive if an eligible termination event were to occur.

The table does not include compensation or benefits provided under plans or arrangements that are generally available to all salaried employees. Amounts reflected for change in control assume that each named executive officer is involuntarily terminated by the Company without cause or voluntarily terminates for good reason within two years after a change in control.

FISCAL YEAR 2019 TERMINATION TABLE

The following table sets forth the compensation earned, paid or awarded to our named executive officers for the fiscal years ended June 30, 2019, 2018, 2017.

Name and Benefits    Involuntary
Termination
Without Cause
      Involuntary
Termination
After Change
In Control
      Retirement       Disability          Death
Benno Dorer
Cash Payment        $ 6,854,270 (1)      $ 10,708,540 (2)  $ (3)  $ (4)  $ (4) 
Stock Options 11,451,059 (16)  11,451,059 (5)  11,451,059 (16)  11,451,059 (6)  11,451,059 (6) 
Restricted Stock
Performance Shares 6,185,063 (17)  9,183,544 (7)  6,185,063 (17)  9,183,544 (8)  9,183,544 (8) 
Retirement Plan Benefits 4,345,240 (18)  4,891,995 (19)  4,345,240 (18)  3,711,112 (9)  2,324,330 (10) 
Health & Welfare Benefits 22,368 (11)  33,552 (12) 
Financial Planning 16,500 (13) 
     Total Estimated Value $ 28,857,999 $ 36,285,190 $ 21,981,361 $ 24,345,715 $ 22,958,933
Kevin Jacobsen
Cash Payment    $ 1,567,500 (14)  $ 1,990,066 (15)  $ (3)  $ (4)  $ (4) 
Stock Options 1,447,085 (16)  1,447,085 (5)  1,447,085 (16)  1,447,085 (6)  1,447,085 (6) 
Restricted Stock
Performance Shares 702,469 (17)  1,288,195 (7)  702,469 (17)  1,288,195 (8)  1,288,195 (8) 
Retirement Plan Benefits
Health & Welfare Benefits 35,856 (11)  35,856 (12) 
Financial Planning 16,500 (13) 
     Total Estimated Value $ 3,752,910 $ 4,777,702 $ 2,149,554 $ 2,735,280 $ 2,735,280
Laura Stein
Cash Payment $ 1,728,000 (14)  $ 2,755,780 (15)  $ (3)  $ (4)  $ (4) 
Stock Options 2,119,988 (16)  2,119,988 (5)  2,119,988 (16)  2,119,988 (6)  2,119,988 (6) 
Restricted Stock
Performance Shares   1,126,300 (17)  1,699,051 (7)  1,126,300 (17)  1,699,051 (8)  1,699,051 (8) 
Retirement Plan Benefits 6,424,460 (18)  6,809,392 (19)  6,424,460 (18)  5,207,376 (9)  2,805,214 (10) 
Health & Welfare Benefits 13,344 (11)  13,344 (12) 
Financial Planning 16,500 (13) 
     Total Estimated Value $ 11,412,092 $ 13,414,055 $ 9,670,748 $ 9,026,415 $ 3,819,039

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Name and Benefits    Involuntary
Termination
Without Cause
      Involuntary
Termination
After Change
In Control
      Retirement       Disability          Death
Linda Rendle
Cash Payment $ 1,456,000 (14)  $ 1,939,750 (15)  $ (3)  $ (4)  $ (4) 
Stock Options 640,094 (5)  950,288 (6)  950,288 (6) 
Restricted Stock 511,387 (20)  511,387 (20)  511,387 (20) 
Performance Shares 1,244,393 (7)  1,244,393 (8)  1,244,393 (8) 
Retirement Plan Benefits
Health & Welfare Benefits 22,332 (11)  22,332 (12) 
Financial Planning 16,500 (13) 
     Total Estimated Value $ 1,478,332 $ 4,374,456 $ $ 2,706,069 $ 2,706,069
Eric Reynolds
Cash Payment $   1,347,500 (14) $   1,877,913 (15) $ (3) $ (4) $ (4)
Stock Options 1,093,033 (16) 1,217,285 (5)   1,093,033 (16)   1,217,285 (6)   1,217,285 (6)
Restricted Stock 228,134 (20) 228,134 (20) 228,134 (20)
Performance Shares 630,436 (17) 1,034,271 (7) 630,436 (17) 1,034,271 (8) 1,034,271 (8)
Retirement Plan Benefits
Health & Welfare Benefits 12,396 (11) 12,396 (12)
Financial Planning 16,500 (13)
     Total Estimated Value $   3,083,365 $   4,386,499 $   1,723,469 $   2,479,689 $ 2,479,689

(1) This amount reflects two times Mr. Dorer’s current base salary plus two times 75% of his average Annual Incentive Plan awards from the preceding three years. In addition, the amount includes 100% of his current year target Annual Incentive Plan award, pro-rated to the date of termination.
(2) This amount represents three times Mr. Dorer’s current base salary, plus three times the average Annual Incentive Plan awards for the preceding three years, plus the average Annual Incentive Plan awards for the preceding three years, pro-rated to the date of termination, subject to the excise tax cut back provision in the Change in Control Severance Plan.
(3) Messrs. Dorer, Jacobsen and Reynolds, and Ms. Stein are retirement-eligible and thus are eligible for a pro-rata Annual Incentive Plan award upon retirement. However, all bonus-eligible employees active as of June 30, 2019 are eligible to receive an annual incentive award, so a pro-rata Annual Incentive Plan award would not be applicable as of this date as the assumed termination date is June 30, 2019. Ms. Rendle is not retirement-eligible and thus not eligible for an annual incentive award upon retirement.
(4) Named executive officers whose termination is the result of disability or death are eligible to receive a pro-rata Annual Incentive Plan award through the date of termination. However, all bonus-eligible employees active as of June 30, 2019 are eligible to receive an annual incentive award, so a pro-rata Annual Incentive Plan award would not be applicable since the assumed termination date is June 30, 2019.
(5) For Messrs. Dorer, Jacobsen and Reynolds, and Ms. Stein who are retirement-eligible, this amount represents the expected value of the accelerated vesting of all outstanding stock options, and assumes a five-year expected life, or the remaining original term, whichever is sooner. For Ms. Rendle, this amount represents the intrinsic value of the accelerated vesting of all outstanding stock options (based on the provision that non-retirement eligible executives exercise stock options within 90 days of termination), calculated as the difference between the June 28, 2019 closing Common Stock price of $153.11 and the exercise price for each option.
(6) For Messrs. Dorer, Jacobsen and Reynolds, and Ms. Stein who are retirement-eligible, this amount represents the expected value of the accelerated vesting of all outstanding stock options upon the named executive officer’s termination of employment due to disability or death, and assumes a five-year expected life, or the remaining original term, whichever is sooner. For Ms. Rendle, this amount represents the expected value of the accelerated vesting of all outstanding stock options (based on the provision that non-retirement eligible executives exercise stock options within one-year of death or disability), calculated as the difference between the June 28, 2019 closing Common Stock price of $153.11 and the exercise price for each option.
(7) Performance shares will vest based on performance through the day of the change in control. This amount assumes a pro-rated targeted payout and is valued at the closing price of our Common Stock on June 28, 2019 of $153.11.
(8) This amount represents the value of the accelerated vesting of performance shares upon a death or disability, assuming a target payout and valued at the closing price of our Common Stock on June 28, 2019 of $153.11. Upon a death or disability termination, the entire performance share grant will vest. The actual payout will not be determined until the end of the performance period.
(9) This amount represents the present value of the SERP benefit payable to the named executive officer at the time of termination due to disability.
(10) This amount represents the present value of the SERP benefit payable to the named executive officer’s beneficiary at the time of death.
(11) This amount represents the estimated Company cost of providing welfare benefits, including medical, dental, and vision, for the two-year period following termination.
(12) For Messrs. Jacobsen and Reynolds, and Mses. Stein and Rendle, this amount represents the estimated Company cost of providing welfare benefits, including medical, dental, and vision, for the two-year period following a qualifying termination after a change in control. For Mr. Dorer, this amount represents the estimated Company cost of providing welfare benefits, including medical, dental, and vision, for the three-year period following a qualifying termination after a change in control.
(13) This amount represents the cost of providing financial planning for the year of termination.
(14) This amount reflects two times the named executive officer’s current base salary. In addition, for Messrs. Jacobsen and Reynolds and Ms. Stein who are retirement-eligible, this amount includes 100% of their current year target Annual Incentive Plan award pro-rated to the date of termination. For Ms. Rendle, this amount includes 75% of their current year's target Annual Incentive Plan award, pro-rated to the date of termination.

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Compensation Discussion and Analysis

(15) This amount represents two times the named executive officer’s current base salary, plus two times the average Annual Incentive Plan awards for the preceding three years, subject to the excise tax cut back provision in the Change in Control Severance Plan. For Messrs. Jacobsen and Reynolds and Ms. Stein who are retirement-eligible, this amount also includes 100% of their current year target Annual Incentive Plan award, pro-rated to the date of termination. For Ms. Rendle, this amount includes the average Annual Incentive Plan awards for the preceding three years, pro-rated to the date of termination.
(16) Messrs. Dorer, Jacobsen and Reynolds and Ms. Stein are retirement-eligible and, thus, all unvested stock options held greater than six months will automatically vest upon termination. This amount represents the expected value of the accelerated vesting of the stock options, and assumes a five-year expected life, or the remaining original term, whichever is sooner.
(17) Messrs. Dorer, Jacobsen and Reynolds and Ms. Stein are retirement-eligible and, thus, are entitled to receive a pro-rata portion of all performance shares held at least one year at the date of termination for the September 2016 award and a pro-rata portion of all performance shares for the September 2017 and September 2018 awards, for which no holding period is required. This value represents the full vesting of eligible shares from the September 2016 grant, as with the assumed termination date of June 30, 2019 they would have completed the entire performance period and the pro-rata vesting of the eligible shares from the September 2017 and September 2018 grants, assuming a target payout and valued at the closing price of our Common Stock on June 28, 2019 of $153.11. The actual payout of the shares will not be determined until the end of the performance period. Named executive officers who are not retirement-eligible forfeit shares upon termination under these scenarios.
(18) This amount represents the present value of the Company SERP per the provisions of the Severance Plan for Clorox Executive Committee Members.
(19) This amount represents the difference between the actuarial equivalent of the benefit Mr. Dorer and Ms. Stein would have been eligible to receive if their employment had continued until the second anniversary of the date of termination or the first day of the month following their 65th birthday, if earlier, under the qualified and nonqualified retirement plans and the actuarial equivalent of their actual aggregate benefits paid or payable, if any, as of the date of termination under the qualified and nonqualified retirement plans.
(20) This amount represents value of the restricted stock held by Ms. Rendle and Mr. Reynolds that will vest upon change in control, death or disability.


Fiscal Year 2019 CEO Pay Ratio

Under rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act), we are required to disclose the ratio of the annual total compensation of our Chair & Chief Executive Officer (CEO) to the annual total compensation of our median compensated employee. We identified our median employee utilizing data as of June 30, 2019, by examining the total cash compensation for all individuals, excluding our Chair & CEO, who were employed by us on June 30, 2019. All employees were included, whether they worked on full-time, part-time, or temporary basis. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation. No exclusions were utilized during this process.

After identifying the median employee based on total cash compensation, we calculated annual total compensation for that employee using the same methodology we use for our named executive officers as set forth in the Summary Compensation Table in this proxy statement.

Total compensation for our median employee is $68,441.
Our CEO to median employee pay ratio is 137:1.
The pay ratio reported here is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.

The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies, including our compensation peer group, may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.



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  Equity Compensation Plan Information

The following table sets out the number of shares of Common Stock to be issued upon exercise of outstanding options, warrants, and rights, the weighted-average

exercise price of outstanding options, warrants, and rights, and the number of securities available for future issuance under equity compensation plans as of June 30, 2019.


[a] [b] [c]
Plan category       Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
(in thousands)
      Weighted-average
exercise price per share of
outstanding options,
warrants, and rights
      Number of securities
remaining for future
issuance under non-
qualified stock-based
compensation programs
(excluding securities
reflected in column [a])
(in thousands)
Equity compensation plans approved by security holders 6,722                                        $ 112 7,579
Equity compensation plans not approved by security holders
Total 6,722 $ 112 7,579

Column [a] includes the following outstanding equity-based awards (in thousands):

5,744 stock options
537 performance shares and deferred shares
200 deferred stock units for non-employee directors
241 restricted stock awards

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  Audit Committee Matters

  Proposal 3:
Ratification of Independent Registered Public Accounting Firm

The Audit Committee has the authority to appoint, retain, compensate, and oversee the Company’s independent registered public accounting firm, and the Company’s shareholders must ratify the Audit Committee’s selection and appointment. The Audit Committee has selected Ernst & Young LLP (E&Y) as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2020. E&Y has been engaged since February 15, 2003.


Board’s Recommendation

The Board unanimously recommends that shareholders vote FOR the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2020. While we are not required by law to obtain such ratification from our shareholders, the Board believes it is good practice to do so. The Audit Committee and the Board believe that the continued retention of E&Y as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders.

Representatives of E&Y are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement should they desire to do so.


Vote Required

The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting is required to ratify the appointment of E&Y. If shareholders fail to ratify the appointment of E&Y, the Audit Committee will reconsider the appointment.

The people designated in the proxy and voting instruction card will vote your shares represented by proxy FOR ratification unless you include instructions to the contrary.

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  Audit Committee Report

The Audit Committee assists the Board in its oversight of corporate governance by overseeing the quality and integrity of the accounting, auditing, and reporting practices of the Company, including:

review of reports filed by the Company on Form 10-Q and Form 10-K,
oversight of the financial reporting process,
assessment of the effectiveness of the Company’s internal control over financial reporting and the review of the performance of the internal audit function, and
oversight of the Company’s framework and guidelines with respect to risk assessment and risk management, including the Company’s cybersecurity and information technology risks and initiatives, and disclosure controls and procedures.

The Audit Committee operates in accordance with a written charter, which was adopted and is periodically updated by the Board. Each member of the Audit Committee is “independent,” as required by the applicable listing standards of the NYSE and the rules of the SEC.

While the Company’s management has primary responsibility for the financial statements, the reporting process and the Company’s internal control over financial reporting, the independent registered public accounting firm is responsible for performing an integrated audit of the Company’s financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (the PCAOB). The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or to certify the activities of management or the Company’s independent registered public accounting firm.

The Audit Committee is responsible for the appointment, retention, compensation, and oversight of the Company’s independent registered public accounting firm, including the review of their qualifications, independence and performance, and approval of the audit fee. In this regard, the Audit Committee appointed Ernst & Young LLP (E&Y) to audit the Company’s financial statements as of and for the year ended June 30, 2019, and the effectiveness of the Company’s internal control over financial reporting as of June 30, 2019. E&Y has served as the Company’s independent registered public accounting firm since February 2003. The Audit Committee considered several factors in selecting E&Y as the Company’s independent registered public accounting firm for the year ended June 30, 2019, including the firm’s independence and internal quality controls, the overall depth of talent, their experience with the Company’s industry, and their familiarity with the

Company’s businesses and internal control over financial reporting. In determining whether to reappoint E&Y as the Company’s independent registered public accounting firm for the year ending June 30, 2020, the Audit Committee again took those factors into consideration along with its evaluation of the past performance of E&Y.

The Audit Committee has a policy that requires it to consider and approve, in advance, any audit and permissible non-audit services to be performed by the independent registered public accounting firm. Among the services provided by E&Y in fiscal year 2019, E&Y has issued reports on its review of certain corporate responsibility and sustainability metrics and information provided in the Company’s Integrated Annual Report – Executive Summary. The Audit Committee obtained from E&Y the written disclosures and the letter required by the applicable requirements of the PCAOB regarding communications with the Audit Committee concerning independence of the auditors and discussed with the auditors their independence. In evaluating E&Y’s independence, the Audit Committee considered whether the firm’s provision of any non-audit services impaired or compromised the firm’s independence and concluded that they did not.

Further, in conjunction with the mandated rotation of the auditing firm’s coordinating partner, the Audit Committee and its chairperson oversee and are directly involved in the selection of E&Y’s new coordinating partner. The Audit Committee periodically considers rotation of the registered independent public accounting firm.

In fulfilling its oversight responsibilities, the Audit Committee meets regularly with management and E&Y to discuss, prior to their release to the public, the Company’s financial statements and earnings releases and, as appropriate, other Company public communications containing Company financial information or performance measures. The Audit Committee’s meetings with the independent registered public accounting firm, which are both with and without management present, include discussions about the results of the independent registered public accounting firm’s examinations and evaluations of the quality of the Company’s financial statements and the Company’s internal control over financial reporting.

In this regard, the Audit Committee discussed with management the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2019. This review included a discussion of the quality and the acceptability of the Company’s financial reporting and system of internal controls, including the clarity of disclosures in the financial statements, reasonableness of significant contingency accruals, reserves, allowances


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Audit Committee Report

and other judgments, critical accounting policies and estimates, and risk assessment. In addition, the Audit Committee reviewed and discussed with the Company’s independent registered public accounting firm the audited financial statements of the Company for the fiscal year ended June 30, 2019, the independent registered public accounting firm’s judgments as to the quality and acceptability of the Company’s financial reporting, E&Y’s discussion about critical audit matters in its report on the audited financial statements for the fiscal year ended June 30, 2019, the Company’s critical accounting policies and estimates, the effectiveness of the Company’s internal control over financial reporting and such other matters as are required to be discussed by the applicable requirements of the PCAOB and SEC.

In addition to the regular meetings with the independent registered public accounting firm noted above, the Audit Committee holds private sessions with each of the Company’s General Counsel, Chief Financial Officer, and Vice President of Internal Audit.

Based upon the review and discussions referred to above, the Audit Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, for filing with the SEC.


THE AUDIT COMMITTEE as of June 30, 2019

Carolyn Ticknor, Chair
Amy Banse
A.D. David Mackay
Matthew J. Shattock
Russell J. Weiner
Christopher J. Williams


Fees of the Independent Registered Public Accounting Firm

The table below includes fees related to fiscal years 2019 and 2018 of the Company’s independent registered public accounting firm, Ernst & Young LLP:

2019 2018
Audit Fees(1) $ 5,842,000 $ 5,870,000
Audit-Related Fees(2) 130,000 129,000
Tax Fees(3) 117,000 156,000
All Other Fees(4) 5,000
Total $ 6,094,000 $ 6,155,000

(1) Consists of fees for professional services rendered for the audit of the Company’s annual financial statements and internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, included in the Company’s Annual Reports on Form 10-K for each of the fiscal years ended June 30, 2019 and 2018, and for review of the financial statements included in the Company’s Quarterly Reports on Form 10-Q during those fiscal years.
(2) Consists of fees for assurance and related services (including the Company’s employee benefit plans) not included in the Audit Fees listed above.
(3) Consists of fees for tax compliance, tax  advice,  and tax planning for the fiscal years ended June 30, 2019 and 2018. These services included tax return preparation and review services for foreign subsidiaries and affiliates and advisory services on tax matters.
(4) Consists of fees for all other services not included in the three categories set forth above, primarily related to fees for publications and subscriptions to online content.

The Audit Committee has established a policy that requires it to approve all services provided by the Company’s independent registered public accounting firm before services are provided. The Audit Committee has pre-approved the engagement of the independent registered public accounting firm for audit services, and certain specified audit-related services and tax services within defined limits. The Audit Committee has not pre-approved engagement of the independent registered public accounting firm for any other non-audit services.

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  Additional Items to be Voted On

  Proposal 4:
Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provision

Article Six of the Company’s Restated Certificate of Incorporation (Certificate of Incorporation) currently requires that certain transactions between the Company and a beneficial owner of more than 5% of the Company’s Common Stock (Interested Stockholder) be approved by a vote of 80% of the outstanding shares of Common Stock at the time of the transaction unless (a) the transaction is approved by the Board or (b) the transaction meets certain pricing requirements.

This “interested stockholder” business combination provision, which is the only provision in the Company’s Certificate of Incorporation that requires approval of more than a majority of outstanding shares of Common Stock, requires a vote of 80% of the outstanding shares of Common Stock to be removed from the Company’s Certificate of Incorporation. This supermajority provision is a legacy provision that was designed to protect minority shareholders under circumstances in which a party would seek to acquire the Company through the open market accumulation of shares.

This year, the Company is again submitting a proposal to eliminate the supermajority provisions in the Certificate of Incorporation by deleting in its entirety the text of Article Six. The Company previously submitted an identical proposal for shareholder approval at the Company’s 2018 Annual Meeting of Shareholders. However, the proposal was not approved by the Company’s shareholders as it did not receive the requisite number of votes. After revisiting this topic again this year, the Board continues to believe that this supermajority provision does not substantively enhance the Company’s defense profile. The Board also continues to be mindful of the fact that during the Company’s previous
shareholder engagements, shareholders have expressed disapproval of the Company’s supermajority provisions for “interested stockholder” business combinations, as well as for similar provisions at other companies. The Board also notes that the majority of S&P 500 Companies have, over the past several years, eliminated such supermajority provisions for business combinations.

Further, the Company continues to be subject to and benefit from Section 203 of the Delaware General Corporation Law, which provides that once a stockholder reaches a 15% ownership threshold, such stockholder is prohibited for a period of three years from consummating a broad range of business combination transactions with the Company, unless (a) the business combination is approved by the Board, (b) the business combination is approved by the holders of 2/3 or more of the outstanding voting stock not held by such stockholder, or (c) such stockholder is able to obtain at least 85% of the outstanding shares in one step. Though there are some differences between the Company’s supermajority provision and Section 203, the Board believes that Section 203 provides the Company appropriate protection from unfair acquisition attempts.

Accordingly, the Board is again asking the Company’s shareholders to vote in support of this proposal.

The full text of the proposed amendment to the Certificate of Incorporation, marked to show the proposed deletion of Article Six, is set forth in Appendix A to this Proxy Statement. The general description of the Certificate of Incorporation and the proposed amendment set forth herein are qualified in their entirety by reference to the text of Appendix A.


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Additional Items to be Voted On


Board’s Recommendation

The Board unanimously recommends a vote FOR this proposal to amend the Company’s Certificate of Incorporation to eliminate this supermajority voting provision for the reasons stated above. If the shareholders do not approve the amendment to the Company’s Certificate of Incorporation eliminating this

supermajority voting provision, the provision will continue to remain in existence, and certain Interested Stockholder business combinations will continue to require the approval of 80% of the outstanding shares of Common Stock at the time of the transaction.



Vote Required

The affirmative vote of at least 80% of the then-outstanding voting stock, voting together as a single class, is required to approve this proposal.

The people designated in the proxy and voting instruction card will vote your shares FOR this proposal unless you include instructions to the contrary.

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Annual Meeting Location
4900 Johnson Drive
Pleasanton, CA 94588

  Information About the Annual Meeting

This proxy statement is furnished in connection with the solicitation of proxies by the Board of The Clorox Company (Clorox or the Company), a Delaware corporation, for use at the Annual Meeting, to be held at 9:00 a.m. Pacific time on Wednesday, November 20, 2019, at the Company’s Pleasanton, CA offices, 4900 Johnson Drive, Pleasanton, CA 94588.

Please refer to the Attending the Annual Meeting section of this proxy statement for more information about procedures for attending the Annual Meeting.



Delivery of Proxy Materials

Providing access to proxy materials via the Internet allows us to communicate with our shareholders in the way that is most efficient and convenient for them, and supports us in our efforts to conserve natural resources and reduces the costs of printing and distributing the proxy materials. On or about October 2, 2019, we began mailing a Notice of Internet Availability of Proxy Materials (the Notice) to our shareholders (other than those shareholders who previously requested electronic or paper delivery of communications from us), informing them that our Proxy Statement, Integrated Annual Report – Executive Summary, and voting
instructions are available on the Internet as of the same date. As a shareholder, you may access these materials and vote your shares via the Internet or by telephone; you may also request that a printed copy of the proxy materials be sent to you. You will not receive a printed copy of the proxy materials unless you request one in the manner described in the Notice.

The Notice of Annual Meeting, Proxy Statement, and Integrated Annual Report – Executive Summary are available at www.edocumentview.com/CLX.



Voting Information

Who Is Entitled to Vote

Only shareholders of record at the close of business on September 23, 2019 (the Record Date) are entitled to vote at the Annual Meeting. On that date, there were 125,493,776 shares of Common Stock outstanding and entitled to vote. Holders of Common Stock as of the close of business on the Record Date are entitled to one vote per share on each matter submitted to a vote of shareholders.

How to Vote Before the Annual Meeting

Even if you plan to attend the Annual Meeting, we strongly urge you to vote in advance. You may vote via the Internet or by telephone by following the instructions on your proxy card, voting instruction form or Notice or (if you received a printed copy of the proxy materials) by completing and returning a proxy card or voting instruction form by mail. If you are the beneficial owner of shares held in “street name” (that is, you hold your shares through a broker, bank or other holder of record), you must follow that nominee’s instructions to vote.


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Information About the Annual Meeting

Please note that if you received a Notice, you cannot vote your shares by filling out and returning the Notice. Instead, you should follow the instructions contained in the Notice on how to cast your vote.

How to Vote in Person at the Annual Meeting

You may vote your shares at the Annual Meeting if you attend in person and use a written ballot. However, if your shares are held in the name of a broker, bank, or other nominee, you must obtain and bring with you to the Annual Meeting a legal proxy from that nominee granting you authority to vote your shares directly at the Annual Meeting. If you vote by proxy and also attend the Annual Meeting, you do not need to vote again at the Annual Meeting unless you wish to change your vote.

Voting Shares Held in the Clorox 401(k) Plan

If you are a participant in our 401(k) plan, you will receive a voting instruction card to direct Mercer Trust Company, as trustee of our 401(k) plan, how to vote the shares of our Common Stock attributable to your individual account. Mercer Trust Company will vote shares as instructed by participants prior to 11:59 p.m. Eastern time on November 20, 2019. If you do not provide voting directions to Mercer Trust Company by that time, the shares attributable to your account will not be voted.

How to Revoke Your Proxy or Change Your Vote

If you are a shareholder of record, you may change your vote or revoke your proxy at any time before it is exercised at the Annual Meeting by taking any of the following actions:

submitting written notice of revocation to the Corporate Secretary of the Company;
voting again electronically by telephone or via the Internet or by submitting another proxy card with a later date; or
voting in person at the Annual Meeting.

If you are the beneficial owner of shares held in “street name,” you must follow the instructions of your bank, broker or other nominee to revoke your voting instructions.

Effect of Not Providing Voting Instructions to Your Broker

If you are the beneficial owner of shares held in “street name,” you have the right to direct your bank or broker how to vote your shares, and it is required to vote those shares in accordance with your instructions. Under applicable NYSE rules, if you do not give instructions to your bank or brokerage firm, it will have discretion to vote your shares on “routine” matters, but it will not be permitted to vote your shares on “non-routine” matters. In the case of a non-routine matter, your shares will be considered “broker non-votes” on that proposal.

Proposal 3 (Ratification of Independent Registered Public Accounting Firm) is the only routine matter on the agenda at this year’s Annual Meeting. Thus, the broker is entitled to vote your shares on Proposal 3 even if you do not provide voting instructions to your broker. The broker is not entitled to vote your shares on Proposal 1, 2, or 4 without your instructions.

Quorum

We must have a “quorum” to conduct the Annual Meeting. A quorum is a majority of the outstanding shares of Common Stock entitled to vote at the meeting, present in person or by proxy. Abstentions and broker non-votes (described above) will be counted for the purpose of determining a quorum.

Votes Required; Effect of Abstentions and Broker Non-Votes

Proposal 1 (Election of Directors). A director nominee will be elected if he or she receives a majority of the votes cast in person or represented by proxy. A majority of the votes cast means that the number of shares voted FOR a director must exceed the number of shares voted AGAINST that director. An abstention or a broker non-vote on Proposal 1 will not have any effect on the election of directors and will not be counted in determining the number of votes cast. Your broker is not entitled to vote your shares on Proposal 1 unless you provide voting instructions.

Proposals 2 and 3. Approval of each of Proposals 2 and 3 requires the affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting. Abstentions will have the same effect as a vote against the proposal. Broker non-votes will have no effect and will not be counted, with respect to Proposal 2. There should be no broker non-votes with respect to Proposal 3, since brokers have discretionary voting authority with respect to this proposal.


Continues on next page
 

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Proposal 4. Approval of Proposal 4 requires the affirmative vote of 80% of the then outstanding voting stock, voting together as a single class. Abstentions and broker non-votes will have the same effect as a vote against the proposal.

Board’s Recommendations

The Board recommends that you vote:

FOR the election of each of the eleven nominees for director named in this proxy statement (Proposal 1);
FOR the proposal to approve (on an advisory basis) the compensation of the Company’s named executive officers (Proposal 2);
FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2020 (Proposal 3); and
FOR the amendment to the Company’s charter to eliminate the supermajority provision (Proposal 4).

Other Matters

Management of the Company is not aware of any matters other than those described in this proxy statement that may be presented for action at the Annual Meeting. If any other matters are properly presented at the Annual Meeting for consideration, the proxy holders will have discretion to vote for you on those matters.

Counting Votes; Vote Results

Votes will be counted by Computershare Trust Company, N.A., our inspector of election appointed for the Annual Meeting. We will report final results in a filing with the SEC on Form 8-K, which will be filed within four business days following the Annual Meeting.




Form 10-K, Financial Statements, and Integrated Annual Report – Executive Summary

The following portions of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, are attached as Appendix B to this proxy statement: Management’s Discussion and Analysis of Financial Condition and Results of Operations; Management’s Report on Internal Control over Financial Reporting; Report of Independent Registered Public Accounting Firm; Consolidated Financial Statements; Valuation and Qualifying Accounts and Reserves; and Reconciliation of Economic Profit. The Company’s Form 10-K has been
filed with the SEC and posted on the Company’s website and a copy may be obtained, without charge, by calling Clorox Stockholder Direct at 888-CLX-NYSE (259-6973) toll-free, 24 hours a day, seven days a week, or by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The 2019 Integrated Annual Report – Executive Summary is available with the Proxy Statement at www.edocumentview.com/CLX.



Solicitation of Proxies

We will pay for the entire cost of soliciting proxies on behalf of the Company. We will also reimburse brokerage firms, banks, and other agents for the cost of forwarding the Company’s proxy materials to beneficial owners. Our directors and employees may also solicit proxies in person, by telephone, via the Internet, or by other means of communication, for which they will not be paid any additional compensation. We have retained Innisfree M&A Incorporated (Innisfree) to assist in soliciting proxies for the Annual Meeting at an estimated cost of $50,000 plus out-of-pocket expenses and have agreed to indemnify Innisfree against certain liabilities arising out of or in connection with their engagement.

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Information About the Annual Meeting