DEF 14A 1 clorox3806961-def14a.htm DEFINITIVE PROXY STATEMENT

Table of Contents

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.            )
 
Filed by the Registrant [X]
Filed by a Party other than the Registrant [   ] 
 
Check the appropriate box:
 
[   ]        Preliminary Proxy Statement
[   ]   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[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)
 

Payment of Filing Fee (Check the appropriate box):
[X]        No fee required.
[   ]
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
    1)         Title of each class of securities to which transaction applies:
         
2) Aggregate number of securities to which transaction applies:
 
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
4) Proposed maximum aggregate value of transaction:
 
5) Total fee paid:
 
[   ]
 
Fee paid previously with preliminary materials.
 
[   ]
 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
    1)   Amount Previously Paid:
         
  2)   Form, Schedule or Registration Statement No.:
         
  3)   Filing Party:
         
  4)   Date Filed:
 


Table of Contents




Table of Contents

To Our Fellow Shareholders


I am pleased to invite you to attend our 2020 Annual Meeting of Shareholders – our first meeting to be held virtually.

The past year has been a challenging one. Amid the COVID-19 global pandemic, The Clorox Company has been guided by our IGNITE strategy. When we launched our IGNITE strategy last year, we did not know how prescient it would be, but it has grounded us and provided the framework for us to act quickly and boldly – not only in overcoming the challenges we have faced due to COVID-19 but also in confronting the systemic racial injustice that has plagued our nation for centuries.

By integrating environmental, social and governance (ESG) goals into our IGNITE strategy, we put Planet, Product, People and Governance squarely at the center of our roadmap for the near term. These core facets of our strategy have guided our priorities during this time – maximizing supply to get our products where they’re needed; protecting the health, safety and well-being of our employees; supporting caregivers and people most impacted by COVID-19; and donating to community-based racial justice initiatives. And we are committed to enhancing our leadership in these areas through an unwavering commitment to strong ESG performance overseen by our board of directors.

As of September 14, 2020, I stepped down as CEO, and Linda Rendle stepped into this role. Linda has been with Clorox for 17 years and was a key part of the team that developed our IGNITE strategy. With her outstanding track record of achieving results and her deep business and functional experience, I am confident Linda will lead the company’s ongoing progress against our IGNITE strategy and ESG goals – and will continue to make bold decisions, guided by Clorox’s core value, Do the Right Thing.

I am so proud of what we, as a team, have accomplished for our shareholders, as well as for our employees, consumers and communities, during my tenure as CEO – and we look forward to sharing that progress with you at our annual meeting. Thank you for your continued support and investment in Clorox.

Sincerely,


Benno Dorer
Executive Chair

As lead independent director of The Clorox Company, 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 and strong corporate governance.

The board of directors was faced with significant challenges this past year in overseeing and navigating the new risks presented by the COVID-19 pandemic as well as by the reawakening of deep wounds created by longstanding and systemic racial injustices. Clorox’s core value, Do the Right Thing, has been a beacon for the board of directors during this challenging time, guiding our work of overseeing strategy, risks and corporate culture.

During the COVID-19 pandemic, my role as liaison between the CEO and the other independent directors has become even more important in ensuring appropriate board oversight of risks. Benno and I have met at least weekly as the situation has progressed to ensure connectivity with and input from the Board. This work with Benno will continue, even as he steps into his new executive chair role. In addition, this year, as in past years, I participated in valuable discussions with a number of shareholders, particularly around our ESG efforts. I always appreciate the opportunity to hear their perspectives and feedback, which I share with the rest of the Clorox board and management.

As Benno recently transitioned to the role of executive chair, our new CEO, Linda Rendle, began assuming her new responsibilities. I worked closely with the executive committee and the other independent directors on her appointment, and I am very excited and proud that our thoughtful, long-term succession planning positioned us to name the company’s first female CEO.

The board of directors, upon recommendation of the Nominating, Governance and Corporate Responsibility Committee, has also nominated Linda for election to the board, along with four other female director nominees, putting our director nominee slate at 38% female. The director nominee slate is also ethnically diverse, with 31% of our director nominees self-identifying as an ethnic minority.

Inclusion and diversity is an important priority at Clorox – a priority that is encapsulated in the ESG goals of the company’s IGNITE strategy. This commitment starts at the top, with our board of directors, which is why we adopted a Board Diversity Policy over the last fiscal year, formalizing our historical practice of considering many forms of diversity to ensure we have the optimal mix of perspectives for effective governance.

On behalf of the independent directors, thank you for your continued confidence and support. We look forward to engaging with you at our annual meeting.

Sincerely,


Pamela Thomas-Graham
Lead Independent Director


THE CLOROX COMPANY - 2020 Proxy Statement

     i


Table of Contents

Message from Linda Rendle, Director and CEO


Dear Shareholders:

As a longtime Clorox employee and your new chief executive officer, I am honored to write my first letter to you.

If the pandemic and societal shifts of 2020 have shown us anything, it’s that crises do not create leaders; they reveal them — all over our company. During COVID-19 we needed to find creative ways to protect our people’s health and safety while asking them to work around the clock on the front lines to produce record numbers of disinfecting and essential household products. We have aggressively expanded our production capacity, simultaneously reshaping and redeploying our output to focus on people who needed our products most, including healthcare workers. Continuing this expansion, while keeping our employees safe, remains our highest priority.

Throughout this period, we’ve never lost focus on the bigger picture: our commitment to Good Growth – growth that’s profitable, sustainable and responsible. It starts with continuing to serve more consumers through our global portfolio of trusted brands; helping people feel safer and more confident in public spaces as communities begin to reopen; making supply chain enhancements, including running some plants 24/7 to get as much of our products to people who need them most; and continuing to make progress in inclusion and diversity so that our employees and management team increasingly reflect the diverse make up of our consumers and communities.

It is in recognition of these things that the July 2020 Axios-Harris Poll 100, which surveyed about 35,000 Americans, ranked The Clorox Company No. 1 for corporate reputation based on vision, growth, products, culture, ethics and citizenship. Recent months have showcased my teammates’ courage, creativity and leadership; I take very seriously my responsibility to protect, enable and learn from them as we move forward together.

Sincerely,


Linda Rendle
Director and Chief Executive Officer

ii     

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Notice of Annual Meeting of Shareholders

The 2020 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 18, 2020, for the following purposes:

1. To elect the thirteen 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.

Due to concerns relating to the coronavirus (COVID-19) pandemic, and to support the health and well-being of our employees and shareholders, this year’s Annual Meeting will be virtual and will be held entirely online via live webcast at www.meetingcenter.io/246179169 (password: ‘CLX2020’). There will not be an option to attend the meeting in person.

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 25, 2020, are entitled to vote at the Annual Meeting and any adjournment or postponement.

While you will not be able to attend the Annual Meeting at a physical location, we have designed the virtual Annual Meeting to ensure that our shareholders are given the same rights and opportunities to actively participate in the Annual Meeting as they would at an in-person meeting, using online tools to facilitate shareholder access and participation.

How to Attend the 2020 Virtual Annual Meeting. This year’s Annual Meeting will be virtual and held online via live webcast. In order to attend the Annual Meeting, you will need to visit www.meetingcenter.io/246179169, and you will be required to enter the meeting password ‘CLX2020’ and the 15-digit control number included on your Notice of Internet Availability of Proxy Materials, on your proxy card (if you received a printed copy of the proxy materials), or on the instructions that accompanied your proxy materials to access the meeting. 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 register in advance to gain access to the Annual Meeting and to vote your shares or ask questions during the Annual Meeting. Please see the Attending the Virtual Annual Meeting section of the proxy statement for more information. Whether or not you plan to attend the virtual Annual Meeting, we encourage you to vote and submit your proxy in advance of the meeting by one of the methods described on pages 72-73. You may also vote online and examine our shareholder list during the Annual Meeting by following the instructions provided on the meeting website during the Annual Meeting. To vote at the meeting, visit www.meetingcenter.io/246179169 and log in using the aforementioned information.

On or about October 6, 2020, 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 virtual 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 6, 2020

Important Notice Regarding the Availability of Proxy Materials for The Clorox Company Shareholders Meeting to be Held on November 18, 2020: The Notice of Annual Meeting, Proxy Statement, and 2020 Integrated Annual Report – Executive Summary will be available at www.edocumentview.com/CLX.

THE CLOROX COMPANY - 2020 Proxy Statement

      


Table of Contents

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


Table of Contents

Table of Contents

        Proxy Summary       1
BOARD OF DIRECTORS 5
Proposal 1: Election of Directors 5
Who We Are: Our Director Nominees 5
Shareholder Engagement 14
Shareholder Outreach and Communications 14
Shareholder Recommendations and Nominations of Director Candidates 14
Director Communications 14
How We Identify, Evaluate and Nominate Our Directors 15
Director Skills & Experience 15
Director Continuing Education and New Director Orientation 16
Diverse Backgrounds & Experiences 17
Board Diversity Policy 18
Board Leadership Structure 18
Annual Board and Director Evaluation Process 19
How Our Directors Are Elected 20
Vote Required 20
Board’s Recommendation 20
How Our Directors Govern 20
The Clorox Company Governance Guidelines 20
Our Corporate Governance Process 21
The Board’s Role in Risk Management and Culture Oversight 22
Board Meeting Attendance 22
Director Independence 23
Related Person Transaction and Conflict of Interest Policies and Procedures 23
Code of Conduct 24
Board Committees 24
How Our Directors Are Paid 26
Cash Compensation 27
Equity Compensation 27
Fiscal Year 2021 Compensation Changes 28
Stock Ownership Philosophy and Guidelines for Directors 28
OUR COMPANY 29
Fiscal Year 2020 Performance 29
IGNITE Strategy Guided by ESG Principles 30
STOCK OWNERSHIP INFORMATION 34
Beneficial Ownership of Voting Securities 34
EXECUTIVE COMPENSATION 36
Proposal 2: Advisory Vote to Approve Executive Compensation 36
Board’s Recommendation 36
Vote Required 37


Table of Contents

       COMPENSATION DISCUSSION AND ANALYSIS       38
Executive Summary 38
Components of Our Executive Compensation Program 39
Fiscal Year 2020 Performance Highlights 40
How Pay Was Tied to the Company’s Performance in Fiscal Year 2020 40
Fiscal Year 2020 Compensation of Our Named Executive Officers 40
What We Pay: Components of Our Compensation Program 41
Retirement Plans 46
Post-Termination Compensation 47
Perquisites 47
Compensation Philosophy 47
What We Have and Don’t Have – Elements of Our Executive Compensation Program   48
How We Make Compensation Decisions 48
Roles and Responsibilities in Setting Executive Compensation 48
Independence of the Compensation Consultant 49
Our Peer Group 49
Other Executive Compensation Policies and Practices 50
The Management Development and Compensation Committee Report 52
Compensation Committee Interlocks and Insider Participation 52
Compensation Discussion and Analysis Tables 53
Fiscal Year 2020 Summary Compensation Table 53
Fiscal Year 2020 Grants of Plan-Based Awards 55
Outstanding Equity Awards at Fiscal 2020 Year-End 56
Fiscal Year 2020 Option Exercises and Stock Vested 58
Fiscal Year 2020 Pension Benefits Table 59
Fiscal Year 2020 Nonqualified Deferred Compensation 60
Potential Payments Upon Termination or Change in Control 60
Potential Payments Upon Change in Control 62
Fiscal Year 2020 Termination Table 63
Fiscal Year 2020 CEO Pay Ratio 65
EQUITY COMPENSATION PLAN INFORMATION 66
AUDIT COMMITTEE MATTERS 67
Proposal 3: Ratification of Independent Registered Public Accounting Firm 67
Board’s Recommendation 67
Vote Required 67
Audit Committee Report 68
Fees of the Independent Registered Public Accounting Firm 69
ADDITIONAL ITEMS TO BE VOTED ON 70
Proposal 4:  Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provision 70
Board’s Recommendation 71
Vote Required 71
INFORMATION ABOUT THE VIRTUAL ANNUAL MEETING 72
Delivery of Proxy Materials 72
Voting Information 72
Form 10-K, Financial Statements, and Integrated Annual Report – Executive Summary 74
Solicitation of Proxies 74
Shareholder Proposals and Director Nominations for the 2021 Annual Meeting 75
Eliminating Duplicative Proxy Materials 76
Attending the Virtual Annual Meeting 77
Submitting Questions for the Virtual Annual Meeting 77
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


Table of Contents

  Proxy Summary

This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. Please review the entire proxy statement before voting.


Proposals to be Voted on and Board Voting Recommendations

More
information
       Board’s voting
recommendation
PROPOSAL 1     Election of Directors Page 5 FOR EACH NOMINEE
PROPOSAL 2 Advisory Vote to Approve Executive Compensation Page 36 FOR
PROPOSAL 3 Ratification of Independent Registered Public Accounting Firm Page 67 FOR
PROPOSAL 4 Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provision Page 70 FOR


Our Director Nominees

The following table provides summary information about each director nominee as of the date of the Annual Meeting.

Name Age Director
Since
Principal Occupation Independent Committee
Memberships
Amy Banse       61       2016       Senior Adviser to the Executive Committee, Comcast Corporation            
AC
Richard H. Carmona 70 2007 Chief of Health Innovations, Canyon Ranch
NGCRC (Chair)
MDCC
Benno Dorer 56 2014 Executive Chair, Clorox
Spencer C. Fleischer 67 2015 Managing Partner, FFL Partners, L.P.
MDCC (Chair)
Esther Lee 61 2013 Executive Vice President – Global Chief Marketing Officer, MetLife Inc.
NGCRC
A. D. David Mackay 65 2016 Former President and Chief Executive Officer, Kellogg Company
AC
MDCC
Paul Parker 57 Senior Vice President, Strategy and Corporate Development, Thermo Fisher Scientific Inc.
(1)
Linda Rendle 42 2020 Chief Executive Officer, Clorox
Matthew J. Shattock 58 2018 Non-Executive Chairman, Beam Suntory Inc.
AC
Kathryn Tesija 57 2020 Senior Adviser / Consultant, Simpactful LLC
MDCC
Pamela Thomas-Graham
Lead Independent Director
57 2005 Lead Independent Director, Clorox
NGCRC
Russell J. Weiner 52 2017 Chief Operating Officer and President of Domino’s US, Domino's Pizza, Inc.
AC
MDCC
Christopher J. Williams 62 2015 Chairman, Siebert, Williams, and Shank LLC
AC (Chair)

(1) Mr. Parker’s committee memberships will be determined upon his election to the board of directors.

AC Audit Committee
NGCRC          Nominating, Governance and Corporate Responsibility Committee
MDCC Management Development and Compensation Committee

Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       1


Table of Contents


IGNITE Strategy and ESG Highlights

Last year, we announced our IGNITE strategy which includes a commitment to Good Growth – profitable, sustainable and responsible growth. IGNITE also puts environmental, social and governance (ESG) priorities at the forefront of our decision-making to ensure Clorox remains a leader in corporate responsibility.

ESG Goals

Our ESG goals are organized around the themes of Planet, Product and People and are integrated with the strategic choices of our IGNITE strategy.

     

Planet: We strive to be a leader in environmental sustainability with a focus on plastic and other waste reduction and science-based climate action.

Product: We strive to be a leader in responsible product stewardship, with a focus on progressive actions to enhance our own and the consumer packaged goods industry’s practices.

People: We strive to help our consumers and employees through purpose-led choices that enhance well-being.

Our integrated IGNITE strategy is supported by an unwavering commitment to strong ESG performance overseen by the Board and NGCRC, and executed by our management team.

ESG Accomplishments and Recognition

Just a year after launching our IGNITE strategy, we are already making progress on our ESG goals – and being recognized for our performance to date.

During fiscal year 2020, we launched two major projects, bleach compaction (a conversion process that went forward despite the COVID-19 pandemic, demonstrating our commitment to sustainability) and conversion to 100% recycled fiber cartons in our Glad business, which is projected to contribute approximately 15% of our goal to reduce our virgin plastic and fiber packaging by 50%, by 2030. We also entered into a virtual power purchase agreement for the purchase of renewable energy starting in 2021, which is expected to help us achieve our goal of 100% renewable electricity in our U.S. and Canadian operations in 2021, four years ahead of our original plan.

We are also proud of the diversity across our organization. Our CEO is a woman – one of 38 among the Fortune 500 -- and our Lead Independent Director is a black woman. In 2020, Forbes also ranked Clorox as one of America’s Best Employers for Diversity, and Parity.org named Clorox one of The Best Companies for Women to Advance. As of the Annual Meeting date, women comprise 38% of our director nominees and 46% of our executive committee, and 31% of our director nominees and 23% of our executive committee are comprised of ethnic minorities. Two of our executive committee members openly identify as LGBTQ. As part of our continued commitment to transparency and progress in our inclusion and diversity efforts, we have shared our Employer Equal Opportunity data (EEO-1 data) which is submitted annually to the U.S. Equal Employment Opportunity Commission and is available in our 2020 integrated annual report.

2       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Proxy Summary


Corporate Governance Strengths

Board Structure and Independence
All of our director nominees are independent, except for our CEO and Executive Chair
Split chair and CEO roles
100% independent Board committee members
Strong lead independent director can call special meetings of the Board and actively supervises meeting materials, agendas and schedules
Robust code of conduct applicable to directors, officers and employees

Board Oversight
Strong Board and management succession planning process
Rigorous stock ownership guidelines for directors and executives
Employees, directors and officers prohibited from hedging our stock, and Section 16 insiders are prohibited from pledging our stock under our insider trading policy
Shareholder Rights and Accountability
Special meeting right for shareholders
Annual election of all directors
Proactive shareholder engagement
Proxy access right for shareholders
Management proposal to remove the supermajority voting provision from the Company’s charter, consistent with governance best practices

Board Composition
Diverse Board with effective mix of skills, experiences, and perspectives
Diverse Board leadership on committees and in lead independent director role
Adopted formal Board diversity policy in fiscal year 2020
Active Board refreshment and average board tenure of 5.3 years (as of the Annual Meeting date, assuming election of all director nominees)
Effective annual Board, Board committee, and individual director evaluation process
Majority voting and director resignation policy in uncontested director elections



Business Performance and Executive Compensation Highlights

FY2020 Business Performance

The past fiscal year was like no other in our 107-year history. In the first half of fiscal year 2020, we set the stage for growth with strong investments in our robust innovation and distribution plans. Amid a global health crisis and significant social change, our management team and dedicated global workforce successfully rose to the challenge to be a force for good for millions of consumers.

Successes for the Company in fiscal year 2020 included:

Net sales growth of 8%, reflecting gains across all reportable segments;
A 16% increase in diluted earnings per share to $7.36 from $6.32 in the prior fiscal year;
Continued focus on driving profitable sales growth, leveraging strong demand-building investments and product innovation to support category growth and market share;
Record cost savings with the Company’s 13th consecutive year of cost savings in excess of $100 million;
External recognition for our leadership in corporate
  responsibility (Axios-Harris Poll 100), inclusion and diversity (Forbes America’s Best Employers for Diversity), and sustainability efforts (Barron’s 100 Most Sustainable Companies in America); and
$533 million in cash dividends paid to stockholders, including a 5% increase in the quarterly dividend announced in May 2020

FY2020 Pay for Performance

We received strong shareholder support with approximately 92% say on pay support at the 2019 Annual Meeting of Shareholders. This vote is a positive endorsement of the Company’s pay for performance philosophy and executive compensation decisions.

Our fiscal year 2020 results and compensation decisions continue to illustrate the application of our pay-for-performance philosophy, with pay being driven by performance in the following ways:

Fiscal Year 2020 Annual Incentive Payout. The annual incentive payout for each of our named executive officers (NEOs) exceeded target due to the company funding at the maximum funding level with a 200% company multiplier.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       3


Table of Contents

  Through the efforts of our employees across the globe in response to the COVID-19 pandemic, the Company significantly over-delivered on all of its FY20 financial goals, growing net sales, net earnings and gross margins versus the prior fiscal year, as well as exceeding the annual targets established at the beginning of the 2020 fiscal year and generating very strong results on our ESG- and people-related goals as part of our IGNITE strategy, in addition to delivering strong shareholder returns.
Impacts of COVID-19 Pandemic on Compensation. When considering the individual performance multiplier portion of the annual incentive program, the Board specifically considered the management team’s actions during the
  COVID-19 pandemic, including their efforts to care for our employees and our communities, as well as to maintain a safe and efficient supply of our products to benefit the greater population.
Fiscal Year 2020 Long-Term Incentive Payout. These awards were granted in September 2017, and payment was determined in August 2020, based on performance over the period commencing July 1, 2017, and ending June 30, 2020. Our three-year performance share results were above the financial target for the three-year average annual economic profit growth rate and yielded a payout of 129% of target.

See the Compensation Discussion and Analysis section of this proxy statement for additional information.



What We Pay: Components of Our Compensation Program

Compensation Mix. A substantial portion of our target total direct compensation for our executives is at-risk variable compensation, with 86% of compensation for our CEO and 76% of compensation for all of our other NEOs 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 2020:

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 2020. Refer to the Fiscal Year 2020 Summary Compensation Table in the Compensation Discussion and Analysis section for further details on actual compensation.

Annual incentive. Our annual incentive program balances financial performance with the individual performance of each of our named executive officers. Our financial metrics include net sales (weighted at 50%), net earnings (weighted at 30%) and gross margin (weighted at 20%). Individual performance for each of our NEOs is evaluated holistically and for 2020 included how each executive addressed challenges posed by COVID-19, their management of human capital including diversity & inclusion, management of environmental risks, contributions to company operations and strategy, as well as position-specific business outcomes.
  
Long-term incentive. We orient our executive team towards long-term shareholder value creation by providing the majority of their target compensation through long-term equity awards. We align our executive team with our shareholders by providing each executive’s long-term incentive through performance shares and stock options, and starting in fiscal year 2021, restricted stock units. For fiscal year 2021, the composition of long-term incentive for executives will be 60% performance shares, 20% stock options and 20% restricted stock units. The performance shares are tied to economic profit, a measure of profitability that takes into account the expected return of all capital providers.

4       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

  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 thirteen people listed below for election at the Annual Meeting to serve until the 2021 Annual Meeting of Shareholders, and until their respective successors are duly elected and qualified. All of the director nominees, except Paul Parker, currently serve on the Board.

The NGCRC annually examines the overall composition of the Board to assess the skills and characteristics that are currently represented on the Board, and in incumbent Board members, as well as the skills and characteristics that the Board may find valuable in the future in light of the Company’s strategic and anticipated business needs.

Consistent with the foregoing, Kathryn Tesija was appointed to the Board during calendar year 2020, and both she and Mr. Parker are being nominated by the Board for election by the shareholders for the first time. In separate search processes, Ms. Tesija and Mr. Parker were recommended to the NGCRC, along with other candidates, through a targeted, Company-led internal search process, with guidance from the NGCRC as to the parameters and criteria for candidates for membership on the Board. The NGCRC reviewed and evaluated the qualifications of all candidates identified and referred to them through such search process.

Robert Matschullat, who has served on the Board since 1999, 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.



Who We Are: 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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       5


Table of Contents

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

Amy Banse has served as senior adviser to the executive committee of Comcast Corporation, a global media and technology company (including Comcast Ventures, LLC, its venture capital arm), since September 2020. She previously served as executive vice president, Comcast Corporation, from January 2020 to September 2020 and as managing director and head of funds at Comcast Ventures LLC from August 2011 to September 2020. Under her leadership, Comcast Ventures grew 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 and on the board of Tipping Point Community.

Director Qualifications:
Banse’s experience in starting, investing in and building businesses provides her with deep strategic and financial expertise, and her executive leadership roles contribute to her management and operational knowledge. Banse’s deep expertise in media and technology also enables her to contribute valuable insights into digital media and online business. Age: 61.

Committee Membership:
Audit Committee.


6       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

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, Compassionate Care, DSI (Digital Skin Imaging), TherimuneX Pharmaceuticals, Inc., Better Therapeutics, LLC, 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 public health and wellness matters, as well as insight into regulatory organizations and institutions, all of 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: 70.

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


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       7


Table of Contents

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

Benno Dorer is executive chair of the Board, a role he assumed on September 14, 2020. He served as chief executive officer (CEO) of the Company from November 2014 to September 2020, and became chair of the board effective August 2016. Prior to becoming CEO, Dorer was executive vice president and chief operating officer – Cleaning, International and Corporate Strategy since 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 board of CBA (Consumer Brands 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: 56.

 
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: 67.

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


8       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

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 board of the MetLife Foundation.

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: 61.

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: 65.

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


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       9


Table of Contents

Director Since

     

Name, Principal Occupation, and Other Information

Paul Parker

Paul Parker has served as senior vice president, strategy and corporate development for Thermo Fisher Scientific Inc. since April 2020, with responsibility for corporate strategy, mergers and acquisitions, corporate social responsibility, government relations, and digital marketing.

Parker has 35 years of M&A banking experience in multiple sectors and geographies. Prior to joining Thermo Fisher, Parker served as Co-Chairman of the Global Mergers and Acquisitions Group for Goldman Sachs & Co. from August 2014 to March 2020, and also served on the firm's Partnership Committee and the Investment Banking Senior Leadership Council.

Prior to Goldman Sachs, Parker worked at Barclays from September 2008 to July 2014 where he served as Chairman and Head of Global M&A, and subsequently adding responsibilities as Head of Corporate Finance. From 1995 to 2008, Parker was an investment banker at Lehman Brothers in several leadership positions, ultimately serving as Head of Global M&A from January 2008 to September 2008. He served on the Executive Committee for the Investment Banking Division of both companies and on the Americas Management Committee for Barclays Group. Between 1985 to 1995, Parker held positions at a number of financial institutions.

Other Public Company Boards:
Parker does not serve on any other public company boards.

Nonprofit/Other Boards:
Parker has previously served on the Board of New York City Outward Bound and is active in philanthropy supporting veterans’ issues, domestic violence victim support, and women’s healthcare initiatives.

Director Qualifications:
Parker brings deep financial, accounting and strategic expertise to the Board based on 35 years working in the banking and finance industries, as well as his experience leading strategy and corporate development for a major multi-national public company. His long experience in investment banking and expertise in mergers and acquisitions enable him to provide important insights to the Company on strategy and growth. Age: 57.

Committee Membership:
The Board will determine committee membership for Parker upon his election.

     

2020

     

Linda Rendle

Linda Rendle is chief executive officer of the Company, a role she assumed September 14, 2020. Previously, she served as president of the Company from May 2020 to September 2020. Before becoming president, she served as executive vice president – Cleaning, International, strategy and operations from July 2019 to May 2020, and executive vice president – strategy and operations from January 2019 to July 2019. Previously, she was executive vice president – Cleaning and strategy from June 2018 to January 2019, and she served as senior vice president and general manager – Cleaning, from August 2016 to June 2018, with additional responsibility for Professional Products as of April 2017. She served as vice president and general manager – Home Care from October 2014 to August 2016. She began her Clorox career in 2003 in the Sales division, where she served in various positions of increasing responsibility in sales planning and supply chain, culminating in her role as vice president – Sales – Cleaning, from 2012 to 2014. Before joining Clorox, Rendle worked for Procter & Gamble, where she held several positions in sales management in the Boston and Charlotte markets.

Director Qualifications:
Rendle’s long tenure at the Company and deep understanding of the consumer packaged goods industry, the Company’s businesses and her instrumental role in developing the Company’s IGNITE Strategy enable her to provide valuable contributions with respect to strategy, growth and long-range plans. Additionally, her track record of outstanding business results and values-led leadership across many of the Company’s businesses provide her with a diverse perspective on global sales, product innovation and business strategy. Age: 42.


10       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

Director Since

     

Name, Principal Occupation, and Other Information

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), and as Chairman of Domino’s Pizza Group plc (March 2020 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 operational and executive leadership experience in the consumer packaged goods industry to the Board. His current and prior leadership roles, including overseeing the successful growth, integration and strategic 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: 58.

Committee Membership:
Audit Committee.

 

2020

Kathryn Tesija

Kathryn (Kathee) Tesija has served as a senior adviser and consultant at Simpactful LLC, a consumer packaged goods and retail consultancy firm, since April 2016. Previously, she served as executive vice president and chief merchandising and supply chain officer for Target Corporation, the second-largest discount retailer in the United States, from 2008 to 2015. In this role, she oversaw all functions of product design and development, sourcing, merchandising, presentation, inventory management, operations, and global supply chain for Target.com and nearly 1,800 retail stores. During her tenure at Target beginning in 1986, she served in numerous positions of responsibility, including director, merchandise planning and senior vice president, merchandising. She continued to serve Target as a strategic advisor from July 2015 to March 2016.

Other Public Company Boards:
Tesija serves on the board of Woolworths Group Limited (May 2016 to present). She previously served on the board of Verizon Communications (December 2012 to May 2020).

Director Qualifications:
Tesija brings to Clorox large-scale global merchandising and supply chain experience as well as operational and strategic planning expertise. Her tenure as a retail industry executive allows her to provide insights into customer and consumer behavior. This experience, together with her expertise in digital, innovation and marketing, allows her to provide valuable perspective on the company’s strategic priorities to innovate brand and shopping experiences. Age: 57.

Committee Membership:
Management Development and Compensation Committee.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       11


Table of Contents

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 boards of Bumble, an online dating company and Compass, a real estate technology company.

Director Qualifications:
Thomas-Graham brings to the Company significant experience as an executive, 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 expertise in 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: 57.

Committee Membership:
Nominating, Governance and Corporate Responsibility Committee.


12       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

Director Since

     

Name, Principal Occupation, and Other Information

2017

Russell J. Weiner

Russell J. Weiner has served as chief operating officer for Domino’s Pizza, Inc., a restaurant chain, since July 2018, and president of Domino’s US since July 2020, having also served as president of the Americas from July 2018 to July 2020. Previously, he was chief operating officer and president of the Americas for Domino's Pizza, Inc. from July 2018 to July 2020. 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 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. In addition, his experience in digital innovation enables him to help the Company maintain its leadership position in digital technology within the consumer packaged goods industry. Age: 52.

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

 

2015

Christopher J. Williams

Christopher Williams is chairman of Siebert, Williams, and Shank LLC, an investment banking and financial services company. Previously, Williams was 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 until it merged with Siebert Cisneros Shank to form Siebert, Williams, and Shank in November 2019. 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) and of Union Pacific Corporation (November 2019 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 expertise 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: 62.

Committee Membership:
Audit Committee (Chair).


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       13


Table of Contents


Shareholder Engagement

Shareholder Outreach and Communications

We maintain active, year-round engagement with our shareholders. During the past fiscal year, our directors and management met with many of our investors to discuss key corporate governance, executive compensation, corporate responsibility, culture and other important ESG topics. These meetings enable two-way dialogue between our shareholders and our Board and management, and for our leadership to listen to our shareholders’ perspectives and understand any concerns or feedback they may have.

The Board considers shareholder feedback from these meetings, along with emerging best practices, market standards, and policies at other companies in its perspectives. The feedback we have received from our shareholder engagement activities has informed the Board’s decisions and deliberations as well as our disclosures. For example, shareholder feedback helped inform the Board’s determination 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. Additionally, as part of the Company’s recent CEO succession process and the NGCRC’s evaluation of the Board’s leadership structure, as discussed in more detail on page 18, the NGCRC considered shareholder feedback as to whether separating the chief executive officer and chair roles would be in the Company’s best interest. We have also expanded some of our disclosures based on helpful feedback from our shareholders, including expanding our disclosures regarding diversity and inclusion, such as our EEO-1 data which is available in our 2020 integrated annual report, as well as regarding the skills and experience identified by the Board as being important in creating a diverse and well-rounded Board, among other areas.

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 2021 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.


14       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors


How We Identify, Evaluate and Nominate Our Directors

The NGCRC engages in continuous Board succession planning and evaluation of Board composition, 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 Board also adopted a Board Diversity Policy during fiscal year 2020, which requires the NGCRC to include, and to have any search firm they engage include, diverse candidates who meet the Board membership criteria set forth in the Governance

Guidelines, in any pool from which the NGCRC selects director candidates. See Board Diversity Policy below for more information.

The NGCRC focuses on achieving the right balance of tenure of our directors to obtain a Board with a combination of fresh perspectives and the 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:

Brand-building/marketing/digital/e-commerce experience
Consumer packaged goods or relevant industry expertise
Cybersecurity/information technology knowledge
Emerging technology/innovation experience
ESG experience (sustainability, social responsibility, public issues expertise)
Experience in product development or supply chain management
Human capital and culture experience
International experience
Operational experience
Regulatory, scientific or R&D experience
Retail/customer experience
Risk Management Oversight
Significant M&A/financial/accounting expertise


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       15


Table of Contents

Brand Building / Marketing Experience. Organic sales growth is one of our key financial metrics, and directors with experience in developing strategies to grow sales and market share and build brand awareness and equity, in addition to digital and social media and e-commerce experience, provide important perspectives on fueling growth, one of the core strategic choices of our IGNITE strategy.
Consumer Packaged Goods or Relevant Industry Expertise. As a company that relies on the strengths of our branded consumer products, we seek directors who are familiar with the consumer packaged goods and health and wellness industries; they are able to provide guidance on the Company’s strategy and position in our industry, in addition to providing market insights.
Cybersecurity, Data Privacy and Information Technology Knowledge. Cyber and information security are vital to the Company’s operations, and experience and knowledge in this area allow directors to effectively oversee and advise on our risk management programs.
Emerging Technology and Innovation Experience. Directors with technology and innovation experience and knowledge (including digital and social media, e-commerce and the sharing economy) are able to identify and understand emerging technologies; have a deeper perspective on the disruptive forces in our industry; and can support the development of our business strategy, including with respect to corporate innovation.
Environmental, Social and Governance (ESG) Experience. ESG priorities form a core part of our IGNITE Strategy, and accordingly, we seek directors with sustainability, social responsibility, and public issues experience, allowing them 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.
Experience in Product Development / Supply Chain Management. Innovation, product development and supply chain management are critical areas for the Company in helping us continue to successfully develop and manufacture products to satisfy consumer demand and preferences.
Human Capital and Culture Experience. Experience in attracting, developing and retaining qualified personnel and fostering a corporate culture that reflects our values and encourages inclusion, diversity and performance is especially valuable to Clorox, especially within the context of the highly competitive talent market in which we operate and as we continue to reimagine work, a core strategic choice of our IGNITE strategy.
International Experience. Directors with global experience and perspective help us make key strategic and operational decisions in international markets, and help us market and sell to our diverse consumer base.
Operational Experience. We believe directors who have served in senior management roles can contribute insight into strategy and operations, and provide market insights that can help deliver cost savings and fuel growth.
Regulatory, Scientific or Research & Development Experience. We seek directors who have knowledge and experience in navigating regulatory environments both in the U.S. and globally, especially in health and wellness and other relevant regulated sectors.
Retail or Customer Experience. Innovating brand and shopping experiences is another core strategic choice of our IGNITE strategy, and directors with insights on consumer engagement and industry trends will be key in helping us execute this strategy.
Risk Management Oversight. Directors with risk management experience guide the Board in executing its responsibility to understand and oversee the various risks facing the Company and ensure there are appropriate mechanisms and policies in place to mitigate and manage those risks.
Significant Mergers and Acquisitions / Strategy Experience and Financial / Accounting Expertise. M&A, partnerships, strategy, accounting and financial reporting experience enable a director to provide perspective on the Company’s strategic transactions and to oversee the Company’s financial reporting and compliance.

Director Continuing Education and New Director Orientation

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



16       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

Diverse Backgrounds & Experiences

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.

5/13 women* 4/13 ethnically diverse** 11/13 independent 5.3 average tenure

Note: As of the Annual Meeting date, assuming election of all director nominees.

* The women on our Board are Ms. Banse, Ms. Lee, Ms. Rendle, Ms. Tesija and Ms. Thomas.
** Dr. Carmona identifies as Hispanic/Latino. Ms. Lee identifies as Asian-American, and both Ms. Thomas-Graham and Mr. Williams identify as Black.

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 also actively seeks refreshment of the Board with directors who can add strong and unique value to our ever-evolving business through skills highly relevant to our corporate strategy.

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 business strategy and execution. 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 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. Furthermore, we are very

proud that our commitment to diversity does not end with just representation; diverse directors hold key leadership roles on our Board – our Lead Independent Director is a Black woman, our NGCRC chair is Hispanic, and our Audit Committee Chair is Black.

Clorox’s commitment to inclusion and diversity also forms a key part of our IGNITE strategy. Ethnic minorities represent 34% of our nonproduction employees and 30% of our nonproduction managers in the US, and women represent 51% of our nonproduction employees and 44% of our nonproduction managers globally. We are committed to inclusion and diversity because we fundamentally believe that diversity leads to better outcomes for our business; we are in 9 of 10 US households and empowering diverse thinking enables us to better meet the needs of our loyal and diverse consumers. We have also seen the value of diversity during times of uncertainty when different ways of thinking enables us to be nimble, creative, and step up to meet challenges.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       17


Table of Contents

Board Diversity Policy

The Board regards diversity as an important consideration for determining the optimal Board composition and adopted a Board diversity policy during fiscal year 2020, formalizing and reinforcing the NGCRC’s long-existing practice of considering diversity as an important factor in the director selection process in accordance with our Board membership criteria.

The NGCRC has oversight over the implementation and delivery of the Board Diversity Policy, which guides and helps drive the Board’s commitment to actively seek out diverse director candidates. This policy requires that women and people of color are included in each slate of potential

directors the Board considers in director searches. The policy recognizes that in considering director candidates for the Board, the NGCRC considers many forms of diversity, such as, diversity of skills, professional experience, perspective, age, race, ethnicity, gender, sexual identity and orientation and cultural backgrounds, and considers whether the diversity of the Board is appropriately reflective of the diversity of the Company’s stakeholders.

The Board believes this policy supports the Company’s commitment to inclusion and diversity and its ability to adapt to ever-changing business and policy environments.



Board Leadership Structure

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, taking into account the Company and its needs, market practices, board skills and experiences, investor feedback, and corporate governance perspectives, among other things. 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 these factors. Accordingly, over the years, the Board has had a variety of leadership structures.

In August 2020, as part of the Company's recent CEO succession planning process, the Board created a new leadership structure, with a new executive chair, a continuing strong lead independent director, a new separate chief executive officer and continuing strong independent committee chairs.

After careful consideration the NGCRC and the Board determined that having separate chief executive officer and chair roles, with Ms. Rendle serving as CEO and Mr. Dorer serving as Executive Chair, would be in the best interests of the Company and its shareholders at this time. As CEO, Ms. Rendle is responsible for developing and overseeing the Company's business strategy and culture as well as managing the day-to-day operations of the Company and the Company's relationships with stakeholders. With Mr. Dorer serving as Executive Chair, the Company continues to leverage his significant experience and strong working relationships with the independent members of the Board. This role allows him to facilitate effective communication between management and the Board and to bring key issues to the Board's attention.
Because our Executive Chair is not independent, in accordance with the Company’s Corporate Governance Guidelines, the independent Board members have appointed Ms. Thomas-Graham as Lead Independent Director. The Board believes that having a strong lead independent director and strong independent committee chairs, along with an executive chair and a separate chief executive officer, provides an effective balance between strong company leadership and independent oversight. The Board is committed to continuously evaluating this structure to ensure that it promotes effective governance.

The duties of the executive chair include advising the CEO in connection with matters relating to the Board. In addition, the executive chair, among other responsibilities:

presides at all meetings of the Board;

is available for consultation and direct communication with major shareholders, if requested;

works with the lead director and members of management to establish meeting agendas and meeting schedules;

advises the CEO and other members of management on information sent to the Board; and

provides feedback on the CEO’s performance.


Further, the Board believes that Ms. Thomas-Graham’s strong leadership and qualifications, including her executive experience and her tenure on the Board, among other factors, contribute to her ability to fulfill the role of lead independent director effectively. In order to ensure that the lead independent director has the skills and qualifications necessary to serve as a strong leader, the Company has created clearly delineated comprehensive duties and responsibilities for the lead independent director, as outlined below.


18       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

The lead independent director is elected annually by and from the independent directors. The duties of the lead independent director include coordinating the activities of the independent directors and serving as a liaison between the CEO or Chair, and the independent directors. In addition, the lead independent director:

assists the Board, the CEO and other members of management in promoting compliance with and implementation of the Governance Guidelines;

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;

reviews and approves information sent to the Board;

reviews and approves Board agendas, including meeting schedules to ensure sufficient time for discussion of all agenda items;

is available for consultation and direct communication with major shareholders, if requested; and

monitors and evaluates the performance of the CEO, along with the members of the MDCC and the other independent directors.

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 participating in and speaking at events with our employee resource and affinity groups and meeting with high-potential employees of color. She also actively participates in discussions with shareholders, particularly around our ESG efforts, and shares feedback from these meetings with the Board and executive committee. During the COVID-19 pandemic, Ms. Thomas-Graham has met at least weekly with the CEO, to ensure connectivity with and input from the Board.

Lastly, the Board is guided by strong, independent committee chairs, with Dr. Carmona leading the NGCRC, Mr. Fleischer leading the MDCC, and Mr. Williams serving as the Audit Committee chair.

Other than Mr. Dorer and Ms. Rendle, 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.



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 each quarterly Audit Committee meeting agenda many years ago, 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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       19


Table of Contents


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 as to 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 thirteen 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.



How Our Directors Govern

The Clorox Company Governance Guidelines

The Board has adopted Governance Guidelines to reflect the Board’s views and the Company’s policies 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/corporate-governance/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.


20       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

Our Corporate Governance Process

We believe that a critical component of meaningful corporate governance is a robust annual process 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.

Our annual engagement process typically includes the following:

Q1

Meeting with many large investors to seek feedback on ESG topics, with our Lead Independent Director participating in some of these meetings.

Board discussion of board and committee composition and succession.

Publication of proxy statement and integrated annual report.

Q2

Hosting shareholders (virtually or in person) at our annual meeting of shareholders.

Q3

Board review of key governance policies.

Annual committee self-assessment process.

Q4

Multi-day Board strategy meeting, focusing on talent, diversity, succession planning, ESG strategy and enterprise risks.

Annual director self-assessment process. The chair of the NGCRC meets with each director to receive feedback on the Board´s performance, discusses each director´s self-assessment and receives feedback on other directors.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       21


Table of Contents

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 and compliance relating to accounting and financial reporting matters, and receives quarterly cybersecurity updates.
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, also assessing risks relating to our compensation structure.
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.

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 Executive Incentive Compensation Plan (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, Frederic W. Cook & Co., Inc. (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 cybersecurity-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.

Board Meeting Attendance

The Board held nine meetings during fiscal year 2020. All incumbent directors attended at least 75% of the meetings of the Board and committees of which they were members during fiscal year 2020 during the period in which they served on the Board. All members of the Board are expected to attend the Annual Meeting. Each of the eleven members of the Board at the time of the Company’s 2019 Annual Meeting of Shareholders attended that meeting.


22       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors


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 (Messrs. Fleischer, Mackay, Matschullat, Shattock, Weiner, and Williams, Mmes. Banse, Lee, Tesija, and Thomas-Graham, and Dr. Carmona) and our director nominee (Mr. Parker) are independent under the NYSE listing standards and the independence standards set forth in the Governance Guidelines, except for Mr. Dorer and Ms. Rendle as a result

of being employees of the Company. In addition, Ms. Ticknor was independent under the NYSE listing standards and the independence standards set forth in the Governance Guidelines during the period in fiscal year 2020 during which she served. 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 on that amount), (ii) the Company or any of its subsidiaries 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. 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 2020 fiscal year.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       23


Table of Contents

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 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.


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
Paul Parker*  
Linda Rendle
Matthew J. Shattock  
Kathryn Tesija
Pamela Thomas-Graham
Russell J. Weiner
Christopher J. Williams Chair
Number of meetings in fiscal year 2020 9 6 6

* The Board will determine committee assignments for Mr. Parker, upon his election to the Board.

24       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

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 2020, director Mr. Williams is an audit committee financial expert, 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.

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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       25


Table of Contents


How Our Directors Are Paid

Only our non-employee directors receive compensation for their service 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 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 2020, 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.


The following table sets forth information regarding compensation for each of the Company’s non-employee directors during fiscal year 2020.

Name       Fees Earned
or Paid in Cash
($)(2)
      Stock
Awards
($)(3)
      Total
($)
Amy Banse 102,250 155,875 258,125
Richard H. Carmona 117,250 155,875 273,125
Spencer C. Fleischer 122,250 155,875 278,125
Esther Lee 102,250 155,875 258,125
A. D. David Mackay 102,250 155,875 258,125
Robert W. Matschullat 102,250 155,875 258,125
Matthew J. Shattock 102,250 155,875 258,125
Kathryn Tesija 12,451 0 12,451
Pamela Thomas-Graham 152,250 155,875 308,125
Carolyn M. Ticknor(1) 47,391 38,125 85,516
Russell J. Weiner 102,250 155,875 258,125
Christopher J. Williams 117,603 155,875 273,478

(1) Ms. Ticknor retired from the Board effective November 20, 2019.
(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 2020 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, 2020, for a discussion of the relevant assumptions used in calculating the grant-date fair value under applicable accounting guidance. As of June 30, 2020, 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 – 3,431 units; Dr. Carmona – 21,865 units; Mr. Fleischer – 8,719 units; Ms. Lee – 7,298 units; Mr. Mackay – 3,431 units; Mr. Matschullat – 89,491 units; Mr. Shattock – 2,489 units; Ms. Tesija – 56 units; Ms. Thomas-Graham – 26,322 units; Ms. Ticknor – 12,427 units; Mr. Weiner – 5,202 units; and Mr. Williams – 8,779 units.

26       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Board of Directors

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 2020:

Annual director retainer(1)       $102,250
Lead independent director retainer 50,000
Committee chair retainers:
Nominating, Governance and Corporate Responsibility Committee 15,000
Audit Committee(2) 23,750
Management Development and Compensation Committee 20,000

(1) The annual director retainer through September 30, 2019 was $100,000. The annual director retainer was increased to $103,000 effective October 1, 2019. The aggregate amount of the annual retainer for board service in fiscal year 2020 was $102,250.
(2) The annual Audit Committee chair retainer through September 30, 2019 was $20,000. The annual Audit Committee chair retainer was increased to $25,000 effective October 1, 2019. The aggregate amount of the annual retainer for service as chair of the Audit Committee in fiscal year 2020 was $23,750.

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 2020.

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.

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 which was increased from $152,500 to $157,000 effective October 1, 2019. The aggregate value of the deferred stock unit award amount earned by a non-employee director serving for the full fiscal year 2020 was $155,875. Awards are made as of the last business day in the calendar year and represent payment for services provided during such calendar year.

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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       27


Table of Contents

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 2021 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 2020. 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 recommended, and the Board agreed, not to increase director compensation or make other changes to the director compensation program. 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 31, 2020, 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.


28       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

  Our Company

Clorox is a leading multinational manufacturer and marketer of consumer and professional products with fiscal year 2020 net sales of $6.7 billion and approximately 8,800 employees worldwide as of June 30, 2020. Clorox sells its products primarily through mass retailers, grocery outlets, warehouse clubs, dollar stores, home hardware centers, drug, pet stores, military stores, third-party and owned e-commerce channels, and distributors. Clorox markets some of the most trusted and recognized consumer brand names, including its namesake bleach and cleaning products; Pine-Sol® cleaners; Liquid-Plumr® clog removers; Poett® home care products; Fresh Step® cat litter; Glad® bags and wraps; Kingsford® grilling products; Hidden
Valley® dressings; Brita® water-filtration systems and filters; Burt’s Bees® natural personal care products; and RenewLife®, Rainbow Light®, Natural Vitality®, NeoCell® and Stop Aging Now® vitamins, minerals and supplements. The Company also markets industry-leading products and technologies for professional customers, including those sold under the CloroxPro™ and Clorox Healthcare® brand names. More than 80% of the Company’s sales are generated from brands that hold the No. 1 or No. 2 market share positions in their categories. The Company was founded in Oakland, California, in 1913 and is incorporated in Delaware.



Fiscal Year 2020 Performance

The Company’s role as a health and wellness company has never been clearer. The global COVID-19 pandemic has created unprecedented demand for our products as consumers turn to trusted sources and brands to support their safety.

Thanks to the heroic work of our entire Clorox team, especially our production employees on the front lines making and shipping our products, we were able to rise to the occasion and contribute to the safety and wellbeing of people around the globe. Our product supply team reacted early to increase production and simplify our product assortment, and we partnered with our suppliers and retailers to get product where it’s needed most.

Our performance in fiscal year 2020 was strong – we delivered sales growth of 8% and organic sales growth of 10%.

Our efforts and hard work during the COVID-19 pandemic earned us high marks among rankings and ratings organizations. We were named to the No. 1 spot in the Axios-Harris Poll 100 reputation rankings, which lists the top 100 most visible companies in the U.S. based on consumer polling, largely due to our response to the COVID-19 pandemic, and the No. 2 spot in The Harris Poll Essential 100, a ranking of corporate response to the global pandemic.




THE CLOROX COMPANY - 2020 Proxy Statement

       29


Table of Contents

We have also continued to demonstrate a strong trend of cash returned to shareholders2, with nearly $4 billion returned over the past five years. We also have a long track record of strong shareholder returns, as shown in the graph below.


Note: $1 invested on June 1, 2000, in Clorox stock compared to the S&P 500 index, including reinvestment of dividends

IGNITE Strategy Guided by ESG Principles

Last year, we announced our IGNITE strategy with the objective of maximizing economic profit while maintaining a commitment to Good Growth — profitable, sustainable and responsible growth. Under IGNITE, we laid out four strategic choices integrated with our ESG goals—organized around the themes of Planet, Product and People— to

sustain Good Growth over the long term. IGNITE has been a beacon helping us navigate through the uncharted territory of the COVID-19 pandemic, guiding our decision-making and allowing us to pivot quickly and respond to unprecedented demand.


     

IGNITE Strategic Choices

Our IGNITE Strategy centers around four strategic choices:

Fuel Growth in our brands
Innovate brand and shopping
 Experiences of the future
Reimagine how we Work
Evolve our Portfolio

IGNITE ESG goals:

Our ESG goals — organized around the themes of Planet, Product, People — are integrated with the four strategic choices set forth above and guide the Company in pursuing innovative ways to meet consumer needs, helping to address some of the planet’s most pressing environmental challenges, doing more with less, and doing more to create value for all stakeholders.

Planet: We strive to be a leader in environmental sustainability with a focus on plastic and other waste reduction and science-based climate action.

Virgin packaging reduction. During fiscal year 2020, we set a goal of a 50% combined reduction in virgin plastic and fiber packaging by 2030 and launched two major projects, bleach compaction — a conversion


2

Cash returned to shareholders is defined as cash dividends paid plus treasury stock purchased, as outlined in the statements of cash flows


30       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Our Company

process that went forward despite the pandemic, demonstrating our commitment to sustainability – and a move to 100% recycled fiber cartons in our Glad business, which is projected to contribute approximately 15% of our reduction target.

Zero waste to landfill. 38% of our plants are currently zero waste to landfill, with a goal of 100% global plants achieving zero-waste-to-landfill status by 2025.

Renewable energy. As part of our IGNITE Strategy, we have committed to achieving 100% renewable electricity in our operations in the US and in Canada by 2025, and in November 2019, we signed a 12-year, 70-megawatt virtual power purchase agreement (VPPA) for the purchase of renewable energy beginning in 2021. This VPPA represents about half of our 100% renewable electricity goal for our operations in the U.S. and Canada and is expected to help us achieve our goal of 100% renewable electricity in our U.S. and Canadian operations in 2021, four years ahead of our original plan.

Greenhouse gas emission reduction. We’ve committed to setting and achieving greenhouse gas emission reduction targets in our operations and across our value chain that are consistent with climate science and the goals of the 2015 Paris Agreement. Reduction goals will be set in coordination with and be approved by the Science-Based Target Initiative (a partnership between UN Global Compact and other environmental non-governmental organizations) by October 2021.

Product: We strive to be a leader in responsible product stewardship, with a focus on progressive actions to enhance our own and the consumer packaged goods industry’s practices.

End animal testing. For decades, Clorox has been actively working toward a future where animal testing has no role in product development. Clorox participates in U.S. government activities to develop predictive toxicity methods to replace animal tests and holds meetings with state regulatory agencies to facilitate acceptance of animal testing alternatives. We have recently set our sights on eliminating the current regulation that requires conducting animal testing on EPA-registered disinfecting products. For example, Clorox is currently leading efforts to develop alternatives for certain safety testing protocols in collaboration with scientific experts, regulatory agencies and industry stakeholders.

Ingredient transparency. We transitioned ingredient listings for our U.S. cleaning products to the online industry portal SmartLabel, where users will now find ingredient information as well as expanded directions for use and safety data sheets. We also announced a commitment to voluntarily list ingredients on the labels of our household disinfecting products, which goes above and beyond the labeling law requirement that will take effect in 2021.

People: We strive to help our consumers and employees through purpose-led choices that enhance well-being.

Consumer well-being. Clorox is a health and wellness company at heart, and since fiscal year 2019 the number of our wellness-related product categories in U.S. households has grown by 6.5 million.

Board and executive committee diversity. Our board and executive committee are highly diverse by race, ethnicity, gender and other protected categories. Our CEO is a woman – one of 38 among the Fortune 500 -- and our Lead Independent Director is a Black woman. As of the Annual Meeting date, women comprise 38% of our director nominees and 46% of our executive committee, and 31% of our director nominees and 23% of our executive committee are comprised of ethnic minorities. Two of our executive committee members openly identify as LGBTQ.

Workforce diversity. Our 8,800 employees come from diverse backgrounds – 30% of our nonproduction managers and more than one-third of our nonproduction employees in the U.S. are ethnic minorities, and globally 44% of our nonproduction managers and over half of our nonproduction employees are women. In fact, in 2020 Forbes ranked Clorox as one of America’s Best Employers for Diversity, and Parity.org named Clorox one of The Best Companies for Women to Advance.

Clorox is committed to an inclusive and diverse workplace where people feel respected, valued and seen at all levels of the company – from our Board to our production teams. As part of our continued commitment to transparency and progress in our inclusion and diversity efforts, we have shared our Employer Equal Opportunity data, or EEO-1 data, which is submitted annually to the U.S. Equal Employment Opportunity Commission. Clorox’s EEO-1 data is available in our 2020 integrated annual report at annualreport.thecloroxcompany.com



Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       31


Table of Contents


Employee health and safety. During fiscal year 2020, we continued to invest in our No. 1 resource – our people – through wellness initiatives, such as enhanced benefits to support our employees’ total well-being, including operational safety, inclusion and engagement in the workplace, and retirement readiness. During the COVID-19 pandemic, we have prioritized our employees’ health and safety, and also offered a special incentive for our frontline teams who have been working around the clock to make and ship products to our consumers.

Employee engagement. During fiscal year 2020, we again had best-in-class employee engagement – 88% of our employees reported that they have pride in the Company, intend to stay, get intrinsic motivation from their work and would refer to the Company as a good place to work, based on our annual employee engagement survey.4

Community investment. During fiscal year 2020, Clorox donated more than $25 million in cash and product to COVID-19 relief, racial justice initiatives and community building in fiscal year 2020 in communities where we have facilities and our employees live and work.

Standing up for racial justice. Clorox has deep roots in Oakland, California (our corporate headquarters for 107 years) and Atlanta, Georgia (home of our largest manufacturing operations). In fiscal year 2020, we pledged financial donations of $3.1 million to support Black businesses in our communities, engage Black youth who represent our future and accelerate Black community access to justice and criminal justice reform. We have also developed good governance practices to determine when and how we speak out as a company on social issues, in consultation with our Board and senior management. It is important to us that when Clorox and our brands choose to take a public stance on a social issue, it demonstrates our

core value, Do the Right Thing, is undertaken with our strategic goals in mind and is impactful to our business interests.

As part of our commitment to trust and transparency, in our integrated annual report we have chosen to report our ESG performance against voluntary frameworks – namely, the Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD) and the United Nations Global Compact’s (UNGC) Ten Principles.

Governance

Our integrated IGNITE strategy is supported by an unwavering commitment to strong ESG performance overseen by the Board and NGCRC, and executed by our management team.

The NGCRC has primary responsibility for oversight of ESG matters – a responsibility that we formalized in fiscal year 2017 when we expanded the name of this committee to include “corporate responsibility” and account for the work that was already being done by this committee.
In addition to supporting the Board in its oversight of ESG progress and risk management, the NGCRC meets with management to review and discuss ESG initiatives, challenges and opportunities, so that it can advise on key ESG matters that affect all of Clorox’s stakeholders, and also briefs the Board on ESG priorities and progress on a periodic basis.
This process also incorporates feedback from shareholders and other key stakeholders on ESG priorities that we gather during our year-round engagement with our shareholders and others.

We believe that this structure reflects our long-standing values and commitment to best practices in ESG.


4 As compared to 84% for consumer goods companies and 85% for Fortune 500 Perceptyx benchmark.

32       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Our Company

Our governance guidelines, code of conduct and other company policies, consistent with our focus on Good Growth, also establish a framework to guide our decisions and lead with our actions. Our governance profile includes these features:

Board Structure and Independence
All of our director nominees are independent, except for our CEO and Executive Chair
Split chair and CEO roles
100% independent Board committee members
Strong lead independent director can call special meetings of the Board and actively supervises meeting materials, agendas and schedules
Robust code of conduct applicable to directors, officers and employees

Board Oversight
Strong Board and management succession planning process
Rigorous stock ownership guidelines for directors and executives
Employees, directors and officers prohibited from hedging our stock, and Section 16 insiders are prohibited from pledging our stock under our insider trading policy
Shareholder Rights and Accountability
Special meeting right for shareholders
Annual election of all directors
Proactive shareholder engagement
Proxy access right for shareholders
Management proposal to remove the supermajority voting provision from the Company’s charter, consistent with governance best practices

Board Composition
Diverse Board with effective mix of skills, experiences, and perspectives
Diverse Board leadership on committees and in lead independent director role
Adopted formal Board diversity policy in fiscal year 2020
Active Board refreshment and average board tenure of 5.3 years (as of the Annual Meeting date, assuming election of all director nominees)
Effective annual Board, Board committee, and individual director evaluation process
Majority voting and director resignation policy in uncontested director elections


THE CLOROX COMPANY - 2020 Proxy Statement

       33


Table of Contents

  Stock Ownership Information

Beneficial Ownership of Voting Securities

The following table shows, as of August 31, 2020 (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 director nominee and each of the five individuals named in the Summary Compensation Table (the NEOs), 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 15,841,012 12.57
BlackRock, Inc.(5)
    55 East 52nd Street
    New York, NY 10055 10,685,218 8.48
State Street Corporation(6)
    One Lincoln Street
    Boston, MA 02111 8,463,983 6.72
Amy Banse(2) 0 *
Richard H. Carmona(2) 0 *
Benno Dorer 643,279 *
Spencer C. Fleischer(2) 317 *
Kevin Jacobsen 68,347 *
Esther Lee(2) 0 *
A. D. David Mackay(2) 1,600 *
Paul Parker(7) 10 *
Linda Rendle 84,952 *
Eric Reynolds 72,287 *
Matthew J. Shattock(2) 0 *
Laura Stein 219,638 *
Kathryn Tesija(2) 0
Pamela Thomas-Graham(2) 1,778 *
Russell J. Weiner(2) 0 *
Christopher J. Williams(2) 0 *
All directors and executive officers as a group (25 persons)(8) 1,385,881 1.09

* 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 31, 2020, or with respect to which such persons have shared voting or dispositive power: Mr. Dorer – 568,461 options; Mr. Jacobsen – 58,584 options and shared voting and dispositive power with respect to 3,145 shares held in family trust; Ms. Rendle – 78,495 options; Mr. Reynolds – 59,287 options; Ms. Stein – 186,757 options; and all directors and executive officers as a group – 1,176,604 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 – 6,769; Ms. Rendle – 4,806; Mr. Reynolds – 6,993; Ms. Stein – 34,194; and all executive officers as a group – 114,539.
(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 – 3,431 shares of Common Stock; Dr. Carmona – 21,865 shares of Common Stock; Mr. Fleischer – 8,579 shares of Common Stock; Ms. Lee – 7,298 shares of Common Stock; Mr. Mackay – 3,431 shares of Common Stock; Mr. Shattock – 2,489 shares of Common Stock; Ms. Tesija – 56 shares of Common Stock; Ms. Thomas-Graham – 26,322 shares of Common Stock; Mr. Weiner – 5,202 shares of Common Stock; and Mr. Williams – 8,779 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


34       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Stock Ownership Information

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 31, 2020, there were 125,977,040 shares of Common Stock outstanding.
(4)

Based on information contained in a report on Schedule 13G/A filed with the SEC on February 11, 2020, The Vanguard Group reported, as of December 31, 2019, sole voting power with respect to 193,921 shares, sole dispositive power with respect to 15,606,565 shares, shared voting power with respect to 50,352 shares and shared dispositive power with respect to 234,447 shares.

(5)

Based on information contained in a report on Schedule 13G/A filed with the SEC on February 5, 2020, BlackRock, Inc. reported, as of December 31, 2019, sole voting power with respect to 9,258,789 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, 2020, State Street Corporation reported, as of December 31, 2019, shared voting power with respect to 6,941,472 shares and shared dispositive power with respect to 8,450,087 shares.

(7)

Mr. Parker will become a director, effective as of November 18, 2020, upon his election to the Board.

(8)

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.


THE CLOROX COMPANY - 2020 Proxy Statement

       35


Table of Contents

  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 NEOs 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 38, 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 2019 Annual Meeting of Shareholders, our shareholders overwhelmingly approved our executive compensation policies, with approximately 92% 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 2020. 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 2021 Annual Meeting of Shareholders.



Board’s Recommendation

The Board unanimously 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 2020 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 2020 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.”



36       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Executive Compensation


Vote Required

The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote on the matter 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.

THE CLOROX COMPANY - 2020 Proxy Statement

       37


Table of Contents

  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 2020, who were:

Benno Dorer(1) – Chair and Chief Executive Officer (CEO)
Kevin B. Jacobsen – Executive Vice President – Chief Financial Officer (CFO)
Linda Rendle(2) – President
Laura Stein – Executive Vice President – General Counsel and Corporate Affairs
Eric Reynolds(3) – Executive Vice President – Household and Lifestyle

(1)

Mr. Dorer stepped down as Chief Executive Officer and began serving as Executive Chair of the Board effective September 14, 2020.

(2)

Ms. Rendle was promoted to Executive Vice President, Cleaning, International, Strategy and Operations in July 2019 and subsequently promoted to President in May 2020. Ms. Rendle was appointed as Chief Executive Officer and elected to the Board of Directors effective September 14, 2020.

(3)

Mr. Reynolds was promoted to Executive Vice President, Household and Lifestyle in July 2019. Mr. Reynolds was named Executive Vice President - Chief Operating Officer effective September 14, 2020.

The Clorox Company was founded more than a century ago. We have successfully managed through significant global challenges during our 107-year history, although the last fiscal year was like no other. With the world experiencing a growing and extreme health crisis, along with significant social issues, our Company rose to the challenge. Early in the fiscal year, we introduced the Company’s IGNITE strategy, designed to continue delivering Good Growth – profitable, sustainable and responsible. Building on the previous 2020 Strategy, IGNITE aims to strengthen our advantage through strategic business choices and fully integrated ESG goals. At the beginning of our third quarter, we saw the early signs of COVID-19. As a result, we anticipated potential increases in demand and started building supply in January, before COVID-19 grew into a global pandemic. As demand grew in March, we quickly responded through substantive efforts across our businesses and every one of our functions. We supplied 100  million more disinfecting products in the first half of 2020 than we did in the same period last year – a 50% increase – along with other essential household products from our trusted brands including Brita®, Glad®, Kingsford®, and more.

We are extremely proud of the role we play, the broad set of stakeholders we’ve served and we’ve been guided by our core values to improve the lives of millions of consumers. We’ve been a force for good, contributing to the well-being of people around the world and prioritizing organizations that serve the public health. We increased our charitable company match this year so that employees could make even more meaningful contributions to the causes they support and we gave more than $25 million in foundation and cash grants, cause marking, and product donations in fiscal year 2020. Simultaneously we have cared for our own employees, over half of whom have done essential on-site work throughout the pandemic. In

these unprecedented times, we quickly responded to the evolving physical, financial and emotional needs of our employees. We provided premium pay to our frontline employees working on-site, paid broad-based incremental cash recognition bonuses, ensured employees had access to company-sponsored health insurance, assumed full cost of coverage for COVID-related testing and treatment, established a COVID relief fund, and enhanced our benefit offerings with additional tools and resources to support the health and emotional wellness of our employees and their families. And, we engaged in strong partnership with customers and supply chain partners (e.g., extending more flexible credit terms to suppliers). During this time, we were recognized as No. 1 in the Axios-Harris Poll 100 corporate reputation rankings, a testament to the breadth of positive impact across all our stakeholders.

Clorox has a long history of principles-based reward decisions and a strong pay-for-performance philosophy. Alignment of executive and employee rewards with shareholder interests is a critical principle of our longtime pay-for-performance philosophy. Over time, awards have fluctuated significantly in line with financial results, resulting in strong collective and individual accountability. In the past ten years, funding (as a percent of target) for our Annual Incentive Plan has ranged from a low of 28% to this year’s high of 200%, with average funding at 114%. Performance share unit payouts for the past 10 cycles have also varied from a 0% payout to 150% of target shares, with an average payout of 95%. While performance share payouts are formulaic, annual incentive awards are a function of both individual and company performance. For each of our named executive officers, individual performance is evaluated holistically and for 2020 included how each executive addressed challenges posed by COVID-19, their management of human capital including inclusion &


38       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

diversity, management of environmental risks, contributions to Company operations and strategy, as well as position-specific business outcomes.

As described above, through the efforts of our employees across the globe, we significantly over-delivered on all of our fiscal year 2020 financial goals and generated very strong results on our ESG- and people-related goals in addition to delivering strong shareholder returns. The payouts for our incentive compensation programs reflect those results. Our Annual Incentive Plan generated a 200% company multiplier, which represents the maximum funding level and reflects significant overachievement on all three performance metrics - net sales, net earnings and gross margin. Performance share units granted in fiscal year 2017 paid out at 129% of target based on overachievement of the economic profit growth target for fiscal years 2018, 2019 and 2020.

In addition to our proactive and comprehensive response to the pandemic and evolving social issues and our outstanding overall financial and strategic performance, we continued our work on leadership succession, which culminated in the promotion of Linda Rendle to CEO effective September 14, 2020 following two earlier promotions that occurred during fiscal year 2020. Our prior CEO, Benno Dorer, remains Executive Chair of the Board, which enables a smooth leadership transition. In addition, we promoted

Eric Reynolds to Executive Vice President, Household and Lifestyle in July 2019 and to Executive Vice President - Chief Operating Officer, which was also effective on September 14, 2020. These promotions reflect our deep commitment to talent development and succession planning, which the Board views as one of its highest priorities, and ensures that the Company has the depth of leadership in place to continue our strong performance into the future.

Effective with his transition to Executive Chair on September 14, 2020, Mr. Dorer’s compensation arrangement will include the following: his base salary will remain at $1,230,000, annual incentive target will remain at 150% of base salary, and he will continue to be eligible for the same level of benefits and perquisites. In addition, he received a one-time grant of restricted stock units (RSU) valued at $500,000 that will vest over four years in equal annual installments. The RSU award was granted on September 22, 2020 at the same time as long-term incentives awards for other executives.

With her appointment to CEO, Ms. Rendle will receive a salary of $1,075,000 with an annual incentive target of 150% of base salary. Her long-term incentive award of $5,000,000 was granted on September 22, 2020 with long-term incentive awards for other executives given in conjunction with the Company’s annual year-end compensation.


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 the Company’s annual net sales (50%), net earnings from continuing operations (30%) and gross margin (20%) with funding ranging from 0 to 200% of target and individual awards modified based on individual performance.
Long-Term Incentives(1) Performance share grants and stock option awards. (2) 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.

(2)

Beginning with fiscal year 2021, the MDCC approved a change in the composition of long-term incentives for executive officers including all named executive officers, increasing the weighting on performance shares to 60%, introducing restricted share units and reducing the weighting on stock options.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       39


Table of Contents

Fiscal Year 2020 Performance Highlights

In the first half of fiscal year 2020, we set the stage for growth in the back half behind strong investments in our robust innovation and distribution plans. We had delivered five consecutive quarters of gross margin expansion, and were on track for record annual cost savings and strong cash flow. As COVID-19 spread and was declared a global pandemic in March, our management team and committed global workforce collectively addressed spikes in demand, rising manufacturing and logistics costs, disruptions to the supply chain, safety and hygiene protocols, and more. Our product supply organization increased capacity of our portfolio of cleaning and disinfecting products, through a variety of strategies including identification of additional suppliers, additional shifts, a simpler product assortment and consolidated lines to reduce the line variation and accelerate output. The Company continued to maintain focus on operational efficiencies through record cost savings and a commitment to strong environmental, social and governance practices in a macroeconomic environment that was dominated by significantly higher demand for essential household products, in which we grew market share as consumers disproportionately chose our trusted brands.

Other successes for the Company in fiscal year 2020 included:

Net sales growth of 8%, reflecting gains across all reportable segments;
A 16% increase in diluted EPS to $7.36 from $6.32 in the prior fiscal year;
Continued focus on driving profitable sales growth, leveraging strong demand-building investments and product innovation to support category growth and market share;
Record cost savings with the Company’s 13th consecutive year of cost savings in excess of $100 million;
External recognition for our leadership in corporate responsibility (Axios-Harris Poll 100), inclusion and diversity (Forbes America’s Best Employers for Diversity), and sustainability efforts (Barron’s 100 Most Sustainable Companies in America); and
$533 million in cash dividends paid to stockholders, including a 5% increase in the quarterly dividend announced in May 2020.

How Pay Was Tied to the Company’s Performance in Fiscal Year 2020

Our fiscal year 2020 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 2020 Annual Incentive Payout. The annual incentive payout for each of our named executive officers exceeded target due to the company funding at the maximum funding level with a 200% company multiplier. Through the efforts of our employees across the globe in response to the COVID-19 pandemic, the Company significantly over-delivered on all of its FY20 financial goals, growing net sales, net earnings and gross margins versus the prior fiscal year, as well as exceeding the annual targets established at the beginning of the 2020 fiscal year and generating very strong results on our ESG- and people-related goals as part of our IGNITE strategy, in addition to delivering strong shareholder returns established at the beginning of the 2020 fiscal year.

Fiscal Year 2020 Long-Term Incentive Payout. These awards were granted in September 2017, and payment was determined in August 2020, based on performance over the period commencing July 1, 2017, and ending June 30, 2020. Our three-year performance share results were above the financial target for the three-year average annual economic profit growth rate and yielded a payout of 129% of target.




Fiscal Year 2020 Compensation of Our Named Executive Officers

For fiscal year 2020, 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 direct compensation within 15% of the median target total direct compensation of the compensation peer group, which we view to be a competitive range around our target positioning. Other factors, such as an executive’s level of experience, may result in target total direct compensation for individual named executive officers being set above or below this median range.


40       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis


What We Pay: Components of Our Compensation Program

Compensation Mix. A substantial portion of our target total direct compensation for our executives is at-risk variable compensation, with 86% of compensation for our CEO and 76% 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 2020.


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 2020. Refer to the Summary Compensation Table below for further details on actual compensation.

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, which we view to be a sufficiently wide competitive range to ensure that salaries vary in relation to each executive’s specific role, level of experience, and sustained performance. For fiscal year 2020, base salary changes within this target pay range were approved by the MDCC in September 2019 and went into effect in September 2019.

After conducting a review for Mr. Dorer and evaluating his performance and overall Company performance for fiscal year 2019 in light of his competitive pay positioning, the MDCC approved a base salary increase of 2.5% to $1,230,000 effective September 2019. The annual base salary increases for our other named executive officers represented a combination of merit increases and market adjustments in light of competitive pay positioning and ranged from 2.5% to 12.2% with an average increase

of 6.5%. The actual base salaries earned by our named executive officers in fiscal year 2020 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 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. Our annual incentive program balances financial performance with the individual performance of each of our named executive officers. Financial metrics include net sales (weighted at 50%), net earnings (weighted at 30%) and gross margin (weighted at 20%). 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).


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       41


Table of Contents

(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 five years. For fiscal year 2020, the MDCC approved individual multiplier for the CEO was 100%.

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


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 200%.

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

Base Salary. The named executive officer’s actual fiscal year 2020 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 2020 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 85 %
Linda Rendle – President(1) 125 %
Laura Stein – Executive Vice President, General Counsel and Corporate Affairs 70 %
Eric Reynolds – Executive Vice President, Household & Lifestyle(2) 100 %

(1) Ms. Rendle’s target increased from 80% to 95% effective July 2019 with her promotion to Executive Vice President, Cleaning, International, Strategy and Operations, and from 95% to 125% with her promotion to President in May 2020. Effective September 14, 2020, Ms. Rendle was appointed to Chief Executive Officer and her annual incentive target increased to 150% at that time.
(2) Mr. Reynolds’ target increased from 75% to 85% effective July 2019 with his promotion to Executive Vice President, Household & Lifestyle, and from 85% to 100% in May 2020. Effective September 14, 2020, Mr. Reynolds was named Executive Vice President - Chief Operating Officer.

42       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

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. 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 2020, the MDCC established financial goals to drive net sales, net earnings, 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 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.

Fiscal year 2020 targets for net sales and net earnings were set slightly above prior year’s actual results, and gross margin target was the same as prior year’s target, reflecting increasingly competitive retail landscape, focus on strategic business choices and driving operational efficiencies. Our strong management planning and crisis management capabilities, our quick response to growing demand, and the heroic efforts of our people around the world to make and ship unprecedented amounts of our products drove performance significantly above those targets and generated commensurate funding for our incentive compensation programs. We funded our Annual Incentive Plan at the maximum funding level with a 200% company multiplier, with significant overachievement on all three performance metrics - net sales, net earnings and gross margin.


Fiscal year 2020 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)
      200%
(Maximum)
      Actual(1)
Net Sales (weighted 50%)    $ 6,115 $ 6,264     $ 6,390 $ 6,740
Net Earnings (weighted 30%) $ 769 $ 800 $ 832 $ 922
Gross Margin (weighted 20%) 41.6 % 43.6 % 45.1 % 45.6 %

(1) 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 and gross margin.

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 2020. In determining the multiplier for individual performance, the MDCC carefully

evaluates several performance factors against objectives established at the beginning of the year. Individual performance for each of our named executive officers is evaluated holistically and for 2020 included how each executive addressed challenges posed by COVID-19, their management of human capital including diversity & inclusion, management of environmental risks, contributions to company operations and strategy, as well as position-specific business outcomes.



Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       43


Table of Contents

The individual multipliers for fiscal year 2020 are provided in the table below along with a performance summary for each named executive officer. While under normal circumstances, individual multipliers would have averaged above 100% given the outstanding individual contributions

by our named executive officers throughout the year, the MDCC elected to apply negative discretion to the Annual Incentive Plan award for the named executive officers by capping the cash awards at a 100% individual multiplier, in recognition of the broader macroeconomic outlook.



Named Executive Officer       Individual
Performance
Multiplier
      Performance Summary
Benno Dorer – Chair and Chief Executive Officer 100% Led the organization through turnarounds on key businesses and proactive preparedness and real-time response to the wide-ranging impacts of the pandemic, resulting in significant increases in production to address consumer demand while keeping our people safe. Delivered outstanding financial results, strong progress across ESG-related goals and successfully completed development of his successor.
Kevin B. Jacobsen – Executive Vice President, Chief Financial Officer 100% Provided strong stewardship related to our success on all financial and cost savings targets in FY20. Created significant value through capital management, restructuring our credit facility, executing a $500M debt offering and extending our payment terms. Led work to accelerate our achievement of 100% renewable energy by a few years to FY21.
Linda Rendle – President 100% Led development and rollout of the IGNITE strategy, positioning the company to accelerate growth while further embedding ESG priorities in the business. Provided outstanding leadership through the pandemic, driving speed and agility while keeping people at the center. Delivered outstanding results across the businesses.
Laura Stein – Executive Vice President, General Counsel and Corporate Affairs 100% Led significant work to successfully manage through the impacts of the pandemic, including strong collaboration with a variety of external stakeholders. Delivered significant value through various legal cases. Led strong progress on our ESG priorities and had an active role in our company’s response to racial injustice, leading key elements of our action plan.
Eric Reynolds – Executive Vice President, Household & Lifestyle 100% Successfully led turnarounds on key businesses (e.g., Kingsford and Glad), with outstanding results across most of his business units. Was a strong contributor to developing and operationalizing the IGNITE strategy, driving Fuel Growth and multi-type innovation. Serves as executive sponsor for sustainability, and progress is strong on key metrics.

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 2020 are found in the table below. The Financial Performance Multiplier was 200% in fiscal year 2020, which resulted in final payouts that exceeded 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    $ 1,230,000                     150 %              200 %              100 %     $ 3,690,000
Kevin B. Jacobsen – Executive Vice President
– Chief Financial Officer
$ 600,000 85 % 200 % 100 % $ 1,020,000
Linda Rendle – President(1) $ 800,000 125 % 200 % 100 % $ 1,343,262
Laura Stein – Executive Vice President,
General Counsel and Corporate Affairs
$ 670,000 70 % 200 % 100 % $ 938,000
Eric Reynolds – Executive Vice President,
Household & Lifestyle(2)
$ 700,000 100 % 200 % 100 % $ 1,028,350

(1) Ms. Rendle’s target is prorated for fiscal year 2020 due to her promotions: from 80% to 95% effective July 2019 with her promotion to Executive Vice President, Cleaning, International, Strategy and Operations and from 95% to 125% with her promotion to President in May 2020.
(2) Mr. Reynolds’ target is prorated for fiscal year 2020 due to his promotion: from 75% to 85% effective July 2019 with his promotion to Executive Vice President, Household & Lifestyle, and from 85% to 100% in May 2020.

44       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

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. For fiscal year 2020, the MDCC determined that our named executive officers would receive 50% of the value of their total annual long-term incentive award granted in performance shares and 50% in stock options. Beginning with fiscal year 2021, the MDCC approved a change in the composition of long-term incentives for executive officers including all named executive officers, to increase the weighting on performance shares from 50% to 60%, reduce the weighting on stock options to 20% and introduce restricted share units at 20% weighting. The new equity mix provides additional balance in the long-term incentive program, increasing the program’s efficiency, improving retention value, and more closely aligning to peers’ weighting for stock options while continuing to reinforce long-term company performance.

From time to time, we grant additional time-based restricted stock units for special purposes for both executive and non-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 for each role and considers recommendations by our CEO for the other named executive officers.

The MDCC’s goal is to make long-term incentive awards 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 annual incentive awards, actual long-term incentive award payouts 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 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 2020 were made in September 2019. 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 2020, the long-term incentives for our named executive officers, excluding our CEO, ranged in value from $1,250,000 to $2,000,000. Mr. Dorer received a long-term incentive award valued at $5,900,000. The long-term incentives awarded to our named executive officers in fiscal year 2020 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 relative to a three-year average 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 2019 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 2019 is subject solely to the Company’s achievement of a three-year EP annual growth rate target



Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       45


Table of Contents

during the performance period of July 2019 through June 2022. The payout percentage ranges from 0%, if the minimum EP growth target is not met, to a maximum of 200% of the target number of shares. For the grant made in September 2017, the MDCC approved payout levels tied to 5.6% average annual EP growth target for the three-year performance period commencing July 2017 through June 2020. The MDCC believes this metric directly supports the Company’s corporate strategy and long-term financial goals and correlates to stock price performance. The 3-year average annual EP target was subsequently adjusted to 6.5% 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 Nutranext acquisition in April 2018, fiscal year 2018 net impact of hurricanes, Argentina tax reform, Healthlink divestiture, the Tax Cuts and Jobs Act that went into effect January 1, 2018, the adoption of Accounting Standard Codification 842 - Leases, and certain net adjustments related to certain trade expenses. In August 2020, the MDCC certified that the average annual EP growth rate for the three-year performance period was 10.9%, inclusive of the predetermined adjustments, which exceeded the adjusted growth rate of 6.5%, resulting in the MDCC certifying a payout of 129% of target for the 2017 grants.


Performance Shares       Target       Adjusted
Target
      Achievement       Payout
3-Year Annual Economic Profit Growth Rate 5.6% 6.5% 10.9% 129%

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 ten years from the date of grant. In fiscal year 2020, 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 Internal Revenue Code (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, 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 2020, 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), which is 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


46       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

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, 2020, 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.

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 2020, 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 compensation payments are tax-deductible to the Company.

Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       47


Table of Contents

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 metrics and 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; and
Use of an independent compensation consultant who does not provide any additional consulting services to the Company.

What We Don’t Have

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



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 other executive officers 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.


48       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

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 2020, the MDCC used the services of 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. 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.

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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       49


Table of Contents

For fiscal year 2020, the compensation peer group was composed of the following 18 companies:

Avon Products, Inc.(1) General Mills, Inc. McCormick & Company, Incorporated
Campbell Soup Company The Hershey Company Molson Coors Beverage Company(1)
Church & Dwight Co., Inc. Hormel Foods Corporation Newell Rubbermaid Inc.
Colgate-Palmolive Company The J.M. Smucker Company Revlon, Inc.
Edgewell Personal Care Kellogg Company S.C. Johnson & Son, Inc.
The Estee Lauder Companies Inc. Keurig Dr. Pepper Tupperware Brands Corporation(1)

(1) In May 2020, the Committee approved changes in the peer group by adding Conagra Brands, Post Holdings and Reynolds Consumer Products, and removing Avon Products Inc., Molson Coors Beverage and Tupperware Brands Corporation, with changes taking effect for fiscal year 2021 and executive compensation decision-making starting with that cycle.

As of June 30, 2020, the Company was at the 35th percentile for revenue, 69th percentile for net income, and 75th percentile for market capitalization compared with the compensation peer group in effect for the fiscal year 2020 compensation analysis.

The MDCC annually reviews and adjusts the compensation peer group as appropriate to ensure that the companies continue to meet the relevant criteria. 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.

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 2019 Advisory Vote on Executive Compensation. At our 2019 Annual Meeting of Stockholders, we asked our stockholders to approve, on an advisory basis, our fiscal year 2019 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 92% of votes cast in favor of our proposal. We value this positive endorsement by our stockholders of our 2019 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 2019, 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


50       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

stock on the first business day of fiscal year 2020, equal to a multiple of each executive officer’s annual base salary. The current minimum ownership guidelines are as follows.

Chief Executive Officer and Executive Chair of the Board 6x annual base salary
Executive Officers 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, Messrs. Dorer, Jacobsen and Reynolds and Ms. Stein have met the required ownership levels. Ms. Rendle became subject to a higher threshold with her promotion to the Executive Committee in fiscal year 2017 and her ownership threshold increased from 2 times annual base salary to 3 times annual base salary required for executive officers other than the CEO. In addition, with her appointment to Chief Executive Officer effective September 14, 2020, Ms. Rendle is now subject to the stock ownership requirement at 6 times her annual base salary.

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 and Executive Chair of the Board are expected to retain 75% of shares acquired (after taxes) until the minimum ownership level is met. After attaining the minimum ownership level, our CEO and Executive Chair of the Board 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) of the IRC limits the federal income tax deductibility of compensation paid to our covered employees to $1  million per year. In setting executive compensation, the MDCC considers Company performance, individual performance and other factors identified in more detail in How We Make Compensation Decisions and does not take this limit on deductibility into account.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       51


Table of Contents


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
Kathryn Tesija
Russell J. Weiner


Compensation Committee Interlocks and Insider Participation

Each of Dr. Carmona and Messrs. Fleischer, Mackay, and Weiner served as a member of the MDCC during part or all of fiscal year 2020. None of the members was an officer or employee of the Company or any of its subsidiaries during fiscal year 2020 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 2020.

52       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis


Compensation Discussion and Analysis Tables

FISCAL YEAR 2020 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, 2020, 2019, and 2018.

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
Chair and Chief
Executive Officer
   2020    $ 1,269,231    $ 2,949,972     $ 2,950,287           $ 3,690,000           $ 1,161,950             $ 402,459    $ 12,423,899
2019 1,166,346 2,874,521 2,874,816 1,206,000 859,528 381,504 9,362,715
2018 1,061,538 2,624,635 2,625,829 1,269,840 131,210 420,015 8,133,067
Kevin Jacobsen
Executive Vice President
— Chief Financial Officer
2020 609,615 699,930 700,059 1,020,000 5,999 154,644 3,190,247
2019 536,539 649,918 649,958 331,650 4,612 122,077 2,294,753
2018 388,463 349,952 350,091 168,040 7,476 107,965 1,371,987
Linda Rendle(7)
President
2020 686,346 999,967 1,000,099 1,343,262 1,313 167,422 4,198,409
2019 523,965 600,194 600,006 291,182 1,572 144,820 2,161,739
2018 435,923 563,379 312,577 271,900 1,401 117,181 1,702,362
Laura Stein
Executive Vice President
— General Counsel and
Corporate Affairs
2020 687,692 624,960 625,044 938,000 1,119,609 139,898 4,135,203
2019 632,461 549,697 549,965 315,168 787,857 133,721 2,968,869
2018 607,288 500,253 500,093 321,300 177,933 2,106,867
Eric Reynolds(8)
Executive Vice President
Household & Cleaning
2020 601,923 649,846 650,049 1,028,350 2,597 142,952 3,075,718
2019 462,788 450,587 450,016 231,071 3,120 119,035 1,716,617
 

(1) Reflects actual salary earned for fiscal years 2020, 2019, and 2018.
(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, 2020, 2019, and 2018, 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 14, Summary of Significant Accounting Policies under subsection “Stock-Based Compensation”, and in Note 14, Stock-Based Compensation Plans, to the Company’s consolidated financial statements for the three years in the period ended June 30, 2020, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020. Additional information regarding the stock awards and option awards granted to our named executive officers during fiscal year 2020 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 2020 determined as of the date of grant would be as follows for each respective named executive officer: Mr. Dorer – $5,899,944; Mr. Jacobsen – $1,399,860; Ms. Stein – $1,249,920; Ms. Rendle – $1,999,934; and Mr. Reynolds – $1,299,692. 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 2020, 2019, and 2018, and paid out in September 2020, September 2019, and September 2018, 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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       53


Table of Contents

(5) The amounts reflect the aggregate change in the present value of accumulated benefits during fiscal years 2020, 2019, and 2018 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 2020 is set forth in the following table:
 
      Benno
Dorer
      Kevin
Jacobsen
      Linda
Rendle
      Laura
Stein
      Eric
Reynolds
The Pension Plan   $ 1,456      $ 3,465   $ 1,313  $ 3,607     $ 2,570
SERP 1,146,388 1,096,626
Cash Balance Restoration Benefit 14,106 2,534 19,376 27
Total $ 1,161,950 $ 5,999 $ 1,313 $ 1,119,609 $ 2,597
 
(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
      Linda
Rendle
      Laura
Stein
      Eric
Reynolds
The Clorox Company 401(k) Plan   $ 28,133      $ 27,832   $ 28,200  $ 28,586     $ 32,574
Nonqualified Deferred Compensation Plan and ERP 334,391 98,548 104,278 89,752 83,960
Company Paid Perquisites 39,935 28,263 34,944 21,560 26,418
Total $ 402,459 $ 154,644 $ 167,422 $ 139,898 $ 142,952

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 2020. 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 where applicable.

      Benno
Dorer
      Kevin
Jacobsen
      Linda
Rendle
      Laura
Stein
      Eric
Reynolds
Executive Automobile Program   $ 13,200      $ 7,683   $ 13,200  $ 13,200     $ 13,200
Basic Financial Planning 21,125 16,500 16,500 3,560 9,768
Non-Business Use of Company Aircraft
Other Perquisites 5,610 4,080 5,244 4,800 3,450
Total $ 39,935 $ 28,263 $ 34,944 $ 21,560 $ 26,418
 
(7) In May 2020, Ms. Rendle was promoted to President, and effective September 14, 2020, she was named Chief Executive Officer.
(8) In July 2020, Mr. Reynolds was promoted to Executive Vice President, Household and Lifestyle, and effective September 14, 2020, he was named Executive Vice President - Chief Operating Officer.

54       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

FISCAL YEAR 2020 GRANTS OF PLAN-BASED AWARDS

This table shows grants of plan-based awards to the named executive officers during fiscal year 2020.

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) $ 1,845,000 $ 5,535,000
Performance Shares(2) 9/17/2019   18,966 37,932   $ 2,949,972
Stock Options(3) 9/17/2019 147,367   $ 155.54 2,950,287
Kevin Jacobsen
Annual Incentive Plan(1) 510,000 1,530,000
Performance Shares(2) 9/17/2019 4,500 9,000 699,930
Stock Options(3) 9/17/2019 34,968 $ 155.54 700,059
Linda Rendle
Annual Incentive Plan(1) 671,631 2,014,893
Performance Shares(2) 9/17/2019 6,429 12,858 999,967
Stock Options(3) 9/17/2019 49,955 $ 155.54 1,000,099
Laura Stein
Annual Incentive Plan(1) 469,000 1,407,000
Performance Shares(2) 9/17/2019 4,018 8,036 624,960
Stock Options(3) 9/17/2019 31,221 $ 155.54 625,044
Eric Reynolds
Annual Incentive Plan(1) 514,175 1,542,525
Performance Shares(2) 9/17/2019 4,178 8,356 649,846
Stock Options(3) 9/17/2019 32,470 $ 155.54 650,049

(1) Represents estimated possible payouts of annual incentive awards for fiscal year 2020 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% for all executive officers. See the Summary Compensation Table for the actual payout amounts in fiscal year 2020 under the Annual Incentive Plan. See “Annual Incentives” in the Compensation Discussion and Analysis for additional information about the Annual Incentive Plan. Annual incentive target for Ms. Rendle and Mr. Reynolds are based on pro-ration of different target percentages throughout the year due to their promotions.
(2) Represents possible future payouts of Common Stock underlying performance shares awarded in fiscal year 2020 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.

Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       55


Table of Contents

OUTSTANDING EQUITY AWARDS AT FISCAL 2020 YEAR-END

The following equity awards granted to our named executive officers were outstanding as of the end of fiscal year 2020.

Option Awards Stock Awards
Name   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
Date
  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
($)(1)
Benno Dorer  
Stock Options(2)  165,400   $ 111.60 9/15/2025
129,637 43,213 (3)  $ 123.09 9/13/2026
85,980 85,980 (4)  $ 135.57 9/12/2027
32,200 96,600 (5)  $ 151.85 9/18/2028
147,367 (6)  $ 155.54 9/17/2029
Performance
Shares(2) 
24,974 (9)       $ 5,478,634
18,930 (10)  $ 4,152,674
18,966 (11)  $ 4,160,571
Kevin Jacobsen
Stock Options(2)  11,410 $ 111.60 9/15/2025
8,190 2,730 (3)  $ 123.09 9/13/2026
4,915 4,915 (4)  $ 135.57 9/12/2027
5,580 5,580 (7)  $ 128.69 4/2/2028
7,280 21,840 (5)  $ 151.85 9/18/2028
34,968 (6)  $ 155.54 9/17/2029
Performance
Shares(2) 
1,432 (9)  314,116
2,000 (12)  438,630
4,280 (10)  938,904
4,500 (11)  987,165
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
12,360 $ 111.60 9/15/2025
10,920 3,640 (3)  $ 123.09 9/13/2026
10,235 10,235 (4)  $ 135.57 9/12/2027
4,760 14,280 (5)  $ 151.85 9/18/2028
1,733 5,199 (8)  $ 154.88 1/7/2029
49,955 (6)  $ 155.54 9/17/2029
Performance
Shares(2) 
2,980 (9)  653,701
2,800 (10)  614,236
1,130 (13)  247,888
6,429 (11)  1,410,330
Restricted Shares(2)  1,850 (14)  $ 405,835

56       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

Option Awards Stock Awards
Name    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
Date
   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
($)(1)
Laura Stein
Stock Options(2)  39,960 $ 84.45 9/17/2023
41,670 $ 89.82 9/17/2024
30,420 $ 111.60 9/15/2025
22,515 7,505 (3)  $ 123.09 9/13/2026
16,375 16,375 (4)  $ 135.57 9/12/2027
6,160 18,480 (5)  $ 151.85 9/18/2028
31,221 (6)    $ 155.54 9/17/2029
Performance
Shares(2) 
4,760 (9)  1,044,223
3,620 (10)  794,119
4,018 (11)  881,429
Eric Reynolds
Stock Options(2)  15,210 $ 111.60 9/15/2025
11,602 3,868 (3)  $ 123.09 9/13/2026
8,190 8,190 (4)  $ 135.57 9/12/2027
3,360 10,080 (5)  $ 151.85 9/18/2028
1,485 4,457 (8)  $ 154.88 1/7/2029
32,470 (6)  $ 155.54 9/17/2029
Performance
Shares(2) 
2,374 (9)  520,697
1,980 (10)  434,353
968 (13)  212,350
4,178 (11)  916,528
 
(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 30, 2020, except as noted below in footnote (9). 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 13, 2016.
(4) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 12, 2017.
(5) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 18, 2018.
(6) Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 17, 2019.
(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.
(8) Represents unvested portion of off-cycle stock options 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. 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 2018 through 2020). Performance is based on achievement of the three-year average annual economic profit growth. After completion of fiscal year 2020, the MDCC determined whether the performance measures had been achieved and based on the results, on August 13, 2020, the MDCC approved the payout of this award at 129% 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 2019 through 2021). Performance is based on achievement of average annual economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2021.

Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       57


Table of Contents

(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 2020 through 2022). Performance is based on achievement of average annual economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2022.
(12) Represents the actual number of performance shares that were paid out 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 annual economic profit growth. After completion of fiscal year 2020, the Committee determined whether the performance measures had been achieved and based on the results, on August 13, 2020, the Committee approved the payout of this award at 129% of target.
(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 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.

FISCAL YEAR 2020 OPTION EXERCISES AND STOCK VESTED

This table shows stock options exercised and stock vested for the named executive officers during fiscal year 2020.

Option Awards Stock Awards
Number Number of
of Shares Value Shares Value
Acquired Realized on Acquired Realized on
on Exercise Exercise on Vesting Vesting
Name         (#)         ($)(1)         (#)         ($)(2)
Benno Dorer 271,950 (3) $ 19,307,028 22,777 (4)   $ 5,199,989
Kevin Jacobsen 19,215 (3) 2,263,612 1,353 (4)(5) 308,890
Linda Rendle (3) 3,382 (4) 772,111
Laura Stein (3) 3,954 (4) 902,698
Eric Reynolds (3) 1,920 (4)(5) 438,336

(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 104% 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 2016 through 2019). Performance is based on the achievement of cumulative economic profit growth. On August 15, 2019, the MDCC approved the payout of this award at 104% of target and the award was settled on August 26, 2019.
(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.

58       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

FISCAL YEAR 2020 PENSION BENEFITS TABLE

The following table sets forth each named executive officer’s pension benefits under the Company’s pension plans for fiscal year 2020.

Number of Years Present Value Payments
of Credited of Accumulated During Last
Service Benefit Fiscal Year
Name         Plan Name         (#)(1)         ($)(2)         ($)
Benno Dorer The Clorox Company Pension Plan(3) 15        $ 58,325             $—
SERP(4) 15 4,622,393
Cash Balance Restoration(5) 15 171,227
Kevin Jacobsen The Clorox Company Pension Plan(3) 24 138,812
SERP(4) 24
Cash Balance Restoration(5) 24 52,927
Linda Rendle The Clorox Company Pension Plan(3) 17 52,602
SERP(4) 17
Cash Balance Restoration(5) 17
Laura Stein The Clorox Company Pension Plan(3) 23 144,536
SERP(4) 23 6,163,073
Cash Balance Restoration(5) 23 312,043
Eric Reynolds The Clorox Company Pension Plan(3) 21 102,952
SERP(4) 21
Cash Balance Restoration(5) 21 1,975

(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: 2.40%; and age at June 30, 2020.
(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 2020.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       59


Table of Contents

FISCAL YEAR 2020 NONQUALIFIED DEFERRED COMPENSATION

Executive Registrant Aggregate Aggregate
Contributions Contributions Earnings Balance
in Last FY in Last FY in Last FY at Last FYE
Name         ($)(1)         ($)(2)         ($)(3)         ($)(4)(5)
Benno Dorer          $ 97,117          $ 334,391    $ 349,239   $ 4,585,978
Kevin Jacobsen 105,668 98,548 66,927 1,128,871
Linda Rendle 37,870 104,278 34,466 633,703
Laura Stein 33,500 89,752 177,782 5,263,670
Eric Reynolds 80,088 83,960 19,967 507,903

(1) Amounts represent the annual base salary and incentive award that each executive deferred during fiscal year 2020. 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 2020.
(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:

Benno Kevin Linda Laura Eric
Fiscal Year         Dorer         Jacobsen         Rendle         Stein         Reynolds
2020   $ 334,391   $ 98,548   $ 104,278   $ 89,752    $ 83,960
2019 329,899 68,694 83,562 86,874 63,278
2018 423,145 113,227   112,495 172,578

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 2020 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.



60       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

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 in accordance with the original vesting schedule 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. Beginning with the fiscal year 2021 grant, restricted stock units held for longer than six months will vest in full in accordance with the original vesting schedule.

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.


Continues on next page
 

THE CLOROX COMPANY - 2020 Proxy Statement

       61


Table of Contents

All outstanding stock option and restricted stock units grants are forfeited upon a termination for 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) a payment equal to the cost of applicable 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 in any material respects with the executive officer’s position (including offices and reporting requirements), authority, duties, or responsibilities (ii) any failure to substantially comply with, or any reduction by the Company in, any of the material provisions of compensation plans, programs, agreements, or arrangements as in effect immediately prior to the change in control, including any material reduction in base salary, cash incentive compensation target bonus opportunity, equity compensation opportunity in the aggregate, or employee benefits or perquisites in the aggregate, (iii) relocation of principal place of employment that increases the executive officer’s commuting distance by more than 35 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 is also included in the scenarios for Involuntary Termination Without Cause and Involuntary Termination After Change in Control on the Retirement Plan Benefits line.



62       

THE CLOROX COMPANY - 2020 Proxy Statement



Table of Contents

Compensation Discussion and Analysis

The amounts shown are calculated using an assumed termination date effective as of the last business day of fiscal year 2020 (June 30, 2020) and the closing trading price of our Common Stock of $219.37 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 2020 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, 2020.

Name and Benefits       Involuntary
Termination
Without Cause
      Involuntary
Termination
After Change
In Control
  Retirement       Disability       Death
Benno Dorer
Cash Payment      $ 7,072,500 (1)     $ 11,070,000 (2) $ (3) $ (4) $ (4)
Stock Options 23,947,633 (16) 23,947,633 (5) 23,947,633 (16) 23,947,633 (6) 23,947,633 (6)
Restricted Stock
Performance Shares 8,719,807 (17) 12,962,881 (7) 8,719,807 (17) 12,962,881 (8) 12,962,881 (8)
Retirement Plan Benefits 5,369,911 (18) 5,698,108 (19) 5,369,911 (18) 4,680,718 (9) 2,910,445 (10)
Health & Welfare Benefits 22,860 (11) 34,290 (12)
Financial Planning 16,500 (13)
Total Estimated Value $ 45,132,711 $ 53,729,412 $ 38,037,351 $ 41,591,232 $ 39,820,959
Kevin Jacobsen
Cash Payment $ 1,710,000 (14) $ 2,730,000 (15) $ (3)