DEF 14A 1 hd-2020proxystatement.htm DEF 14A Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
SCHEDULE 14A
 
 
 
INFORMATION REQUIRED IN PROXY STATEMENT
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THE HOME DEPOT
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PROXY STATEMENT
AND
NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS
 
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Thursday, May 21, 2020
 
at 9:00 a.m., Eastern Time
 
COBB GALLERIA CENTRE,
 
ATLANTA, GA



INVESTOR FACTSHEET

Strategy
Our One Home Depot strategy aims to deliver shareholder value and grow our market share by providing best-in-class customer service through a seamless, interconnected shopping experience for our customers. We are continuously improving our online and in-store experience and providing enhanced training for our associates. In addition, to ensure we are the product authority in home improvement, we strive to provide unique and comprehensive product offerings, continued innovation, and exceptional convenience and value.
To execute our strategy, we have committed approximately $11 billion over a multi-year period to investments in our stores, associates, interconnected and digital experience, pro customer experience, services business, supply chain, and product and innovation.
Shareholder Return Principles
Our first priority for our use of cash is investing in our business, as reflected by our One Home Depot strategy. Our use of the remainder of our cash is guided by our shareholder return principles:
Dividend Principle: Look to increase the dividend every year as we grow earnings
Return on Invested Capital Principle: Maintain a high return on invested capital, benchmarking all uses of excess liquidity against value created for shareholders through share repurchases
Share Repurchase Principle: After meeting the needs of the business, look to return excess cash to shareholders in the form of share repurchases
Key Financial Performance Metrics
Set forth below are key financial performance metrics for the indicated fiscal years.
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*
ROIC is defined as net operating profit after tax, a non-GAAP financial measure, for the most recent twelve-month period, divided by the average of beginning and ending long-term debt (including current installments) and equity for the most recent twelve-month period. For a reconciliation of net operating profit after tax to net earnings, the most comparable GAAP financial measure, and our calculation of ROIC, see “Non-GAAP Financial Measures” on page 24 of our 2019 Form 10-K.



DEAR FELLOW SHAREHOLDERS:
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Your Board and management team are committed to creating long-term value for our shareholders. This commitment is reflected in our core values, which provide the foundation for our business and reflect the culture that was built by our founders over 40 years ago. We have highlighted for you below some actions we took in Fiscal 2019 to ensure we are optimizing our governance practices to support continued value creation over the long term. And while this letter focuses primarily on Fiscal 2019, as a result of the COVID-19 pandemic, our focus today is on operating our business while taking care of our customers and associates. Our Board is engaged to oversee and support our response, and we thank our associates for their hard work and dedication to taking care of our customers and each other.
Strategic Engagement and Oversight. In late 2017, we outlined our long-term plan to create the One Home Depot experience, including a multi-year investment of approximately $11 billion. The Board’s engagement with management to address both the short-term needs and long-term strategies necessary to meet our customers’ expectations in a rapidly evolving retail landscape helped to shape this plan, and as the Company has progressed through the first two years of implementation, the Board’s oversight and engagement has helped to continue to refine it. Company strategy is discussed regularly at Board meetings, and directors annually participate in an in-depth strategy session with management. Through these strategy sessions we tap into the ideas, viewpoints and experiences of our diverse and highly-skilled board members.
Board Composition. Over the last several years, the Board has actively focused on refreshment to align its strengths with the evolving retail landscape. This focus has led to the addition of six new directors in the past six years, including two new directors in Fiscal 2018. Collectively, the new directors have provided additional skills in the areas of e-commerce, IT and cybersecurity, strategic management, and customer experience, among other areas, all of which are valuable skill sets as we implement our One Home Depot strategy. While no new directors were added to our Board in Fiscal 2019, our Board, with the assistance of the NCG Committee, continues to assess its composition so that it is prepared to make any future changes that are appropriate.
Shareholder Engagement and Governance. Recognizing the growing interest of our investors, the Company initiated an expanded environmental, social and governance engagement program with our institutional shareholders in Fiscal 2018, and that program continued in Fiscal 2019. Feedback from those engagements, combined with the Company’s commitment to governance best practices, led to a number of changes that the Board approved in Fiscal 2018 and 2019. These changes include enhanced disclosure of the ethnic and gender diversity of our U.S. workforce, a reduction in the percentage of outstanding shares required to call a special meeting of shareholders from 25% to 15%, an updated executive compensation clawback policy that specifically includes conduct that causes significant reputational harm to the Company, and a change to the Company’s overboarding policy that reduces the number of outside public company boards on which our directors can serve.
Underpinning all of these actions is a commitment to our shareholders, which is in turn embodied in the shareholder return principles that we have consistently outlined for our investor community. By following these principles, we were able to return $13.0 billion to our shareholders in Fiscal 2019 through dividends and share repurchases.
We hope you will be able to join us for our 2020 Annual Meeting of Shareholders on Thursday, May 21, 2020. You will find information about the Meeting, including the matters to be voted on at the Meeting, in the enclosed Notice of Meeting and Proxy Statement. The Meeting will also include a report on the Company’s performance and operations and a question and answer session. As noted in the Notice of Meeting and Proxy Statement, while we hope that we can hold the Meeting in person, in light of COVID-19 concerns, we are prepared to do so online if it is prudent based on conditions at that time. On behalf of our over 400,000 associates and our Board, we thank you for your support of The Home Depot.
Sincerely,
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Craig A. Menear
 
Gregory D. Brenneman
Chairman, Chief Executive Officer and President
 
Independent Lead Director






























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THE HOME DEPOT, INC.
2455 Paces Ferry Road
Atlanta, Georgia 30339
NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS
DATE:
 
Thursday, May 21, 2020
TIME:
 
9:00 a.m., Eastern Time
PLACE:*
 
Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339
 
 
 
ITEMS OF BUSINESS:
 
(1)
To elect as directors of the Company the 12 persons named in the accompanying Proxy Statement for terms expiring at the 2021 Annual Meeting of Shareholders;
 
 
 
 
 
 
(2)
To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2021;
 
 
 
 
 
 
(3)
To cast an advisory vote to approve executive compensation (“Say-on-Pay”);
 
 
 
 
 
 
(4)
To act on four shareholder proposals described in the Proxy Statement, if properly presented; and
 
 
 
 
 
 
(5)
To transact any other business properly brought before the Meeting.
 
 
 
 
WHO MAY VOTE:
 
Shareholders of record as of the close of business on March 23, 2020 are entitled to vote.
 
 
 
 
ANNUAL MEETING MATERIALS:
 
A copy of this Proxy Statement and our 2019 Annual Report are available on our Investor Relations website at https://ir.homedepot.com under “Financial Reports.”
 
 
 
 
DATE OF MAILING:
 
A Notice of Internet Availability of Proxy Materials or this Proxy Statement is first being sent to shareholders on or about April 6, 2020.
 
 
 
 
The enclosed Proxy Statement contains important information, including a description of the business that will be acted upon at the Meeting, voting procedures, and documentation required to attend the Meeting. If you will need special assistance or seating, please contact Allison Spicer at (770) 384-2015.
If you are unable to attend the Meeting, you can listen to the Meeting and view the presentation on the Company’s performance through the live webcast on the Internet. Visit our Investor Relations website at https://ir.homedepot.com and click on “Events and Presentations” for details. The webcast will be archived and available for replay beginning shortly after the Meeting.
*As part of our precautions regarding the novel coronavirus COVID-19, we are planning for the possibility that the Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance on our Investor Relations website at https://ir.homedepot.com/shareholder-services/annual-meeting, and details on how to participate, vote, and examine the list of shareholders as of the record date will be issued by press release, posted at that location on our website, and filed with the SEC as additional proxy material. You will need the 16-digit control number found on your proxy card, the Notice of Internet Availability of Proxy Materials, or the voting information form provided by your bank or broker, to participate, vote or view the shareholder list at the Meeting if we take this step. Please monitor our Investor Relations website at https://ir.homedepot.com/shareholder-services/annual-meeting for updated information. If you are planning to attend our Meeting, please check the website one week prior to the Meeting date.
 
By Order of the Board of Directors,
 
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Teresa Wynn Roseborough
Corporate Secretary






























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TABLE OF CONTENTS

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9
10
10
10
11
23
23

The Home Depot 2020 Proxy Statement
i

COMMONLY USED OR DEFINED TERMS

TERM
 
DEFINITION
1997 Plan
 
1997 Omnibus Stock Incentive Plan
2019 annual meeting
 
Annual meeting of shareholders on May 23, 2019
2019 Form 10-K
 
Annual Report on Form 10-K as filed with the SEC on March 25, 2020
Board
 
Board of Directors of the Company
By-Laws
 
By-Laws of the Company (amended and restated effective February 28, 2019)
CDP
 
The not-for-profit organization formerly known as the Carbon Disclosure Project
CEO
 
Chief Executive Officer
CFO
 
Chief Financial Officer
Company
 
The Home Depot, Inc. and its consolidated subsidiaries
Directors Plan
 
Nonemployee Directors’ Deferred Stock Compensation Plan
ERC
 
Enterprise Risk Council
ESG
 
Environmental, social and governance
ESPP
 
Amended and Restated Employee Stock Purchase Plan
EVP-HR
 
Executive Vice President – Human Resources
Exchange Act
 
The Securities Exchange Act of 1934, as amended
FASB ASC Topic 718
 
Financial Accounting Standards Board Accounting Standards Codification Topic 718
FCPA
 
U.S. Foreign Corrupt Practices Act
Fiscal 2020
 
Fiscal year ended January 31, 2021
Fiscal 2019
 
Fiscal year ended February 2, 2020
Fiscal 2018
 
Fiscal year ended February 3, 2019
Fiscal 2017
 
Fiscal year ended January 28, 2018
Fiscal 2013
 
Fiscal year ended February 2, 2014
IT
 
Information technology
KPMG
 
KPMG LLP, the Company’s independent registered public accounting firm
LDC Committee
 
Leadership Development and Compensation Committee
Meeting
 
2020 Annual Meeting of Shareholders of the Company
MIP
 
Management Incentive Plan
NACD
 
National Association of Corporate Directors
NCG Committee
 
Nominating and Corporate Governance Committee
NEO
 
Named executive officer
Non-U.S. ESPP
 
Non-U.S. Employee Stock Purchase Plan
Notice
 
Notice of Internet Availability of Proxy Materials
NYSE
 
New York Stock Exchange
Omnibus Plan
 
Amended and Restated 2005 Omnibus Stock Incentive Plan
Pay Governance
 
Pay Governance LLC, the LDC Committee’s independent compensation consultant
Restoration Plan
 
FutureBuilder Restoration Plan
ROIC
 
Return on invested capital
SASB
 
Sustainability Accounting Standards Board
Say-on-Pay
 
Advisory vote to approve executive compensation
SEC
 
The Securities and Exchange Commission
TCFD
 
Task Force on Climate-related Financial Disclosures

We include website addresses throughout this Proxy Statement for reference only. The information contained in these websites is not incorporated by reference into this Proxy Statement.

ii
The Home Depot 2020 Proxy Statement

THE HOME DEPOT 2020 PROXY STATEMENT SUMMARY

This summary highlights information contained in this Proxy Statement. This summary does not contain all of the information you should consider. Please read the entire Proxy Statement carefully before voting as it contains important information about matters upon which you are being asked to vote.
2020 ANNUAL MEETING INFORMATION (see pages 72-76)
 
Date:
Thursday, May 21, 2020
Time:
9:00 a.m., Eastern Time
Location:*
Cobb Galleria Centre, Two Galleria Parkway, Atlanta, Georgia 30339
Record Date:
March 23, 2020
Admission:
To attend the Meeting in person, you will need proof of your share ownership and valid picture identification
Meeting Webcast:
https://ir.homedepot.com under “Events and Presentations” beginning at 9:00 a.m., Eastern Time, on May 21, 2020
*As part of our precautions regarding the novel coronavirus COVID-19, we are planning for the possibility that the Meeting may be held solely by means of remote communication. If we take this step, we will announce the decision to do so in advance on our Investor Relations website at https://ir.homedepot.com/shareholder-services/annual-meeting, and details on how to participate will be issued by press release, posted at this location on our website, and filed with the SEC as additional proxy material. You will need the 16-digit control number found on your proxy card, the Notice, or the voting information form provided by your bank or broker, to participate, vote or view the shareholder list at the Meeting if we take this step. Please monitor our Investor Relations website at https://ir.homedepot.com/shareholder-services/annual-meeting for updated information. If you are planning to attend our Meeting, please check the website one week prior to the Meeting date.
ITEMS OF BUSINESS
 
Proposal
 
Board
Recommendation
Page
Number
1.
Election of 12 directors named in this Proxy Statement for one-year terms
For each nominee
2.
Ratification of appointment of KPMG LLP as our independent registered public accounting firm
For
3.
Advisory vote to approve executive compensation (“Say-on-Pay”)
For
4.
Shareholder proposal regarding amendment of shareholder written consent right
Against
5.
Shareholder proposal regarding EEO-1 disclosure
Against
6.
Shareholder proposal regarding executive ownership guidelines
Against
7.
Shareholder proposal regarding electioneering contributions congruency analysis
Against
Vote by Internet
Vote by telephone
Vote by mail
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www.proxyvote.com
a2018proxy7.jpg
1-800-690-6903
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Complete and mail your proxy card
Your vote is important. Whether or not you plan to attend the Meeting,
we urge you to vote and submit your proxy over the Internet,
by telephone or by mail.

The Home Depot 2020 Proxy Statement
iii


COMPANY CULTURE: DOING THE RIGHT THING (see page 6)
 
The Company’s culture is based on our servant leadership philosophy represented by the inverted pyramid, which puts primary importance on our customers and our associates by positioning them at the top, with senior management at the base in a support role. Our culture is brought to life through our core values, which serve as the foundation of our business and the guiding principles behind the decisions we make every single day. We believe our culture helps set us apart and provides a distinct competitive advantage for The Home Depot.

We empower our associates to deliver a superior customer experience, and we reward associates when they provide excellent customer service and embody The Home Depot values. We routinely measure our culture and values through associate surveys and by using our values as a basis for our associate performance reviews. Our officers and other leaders also participate in programs designed to build and strengthen our culture and to help it support the organizational changes necessary to create the One Home Depot experience. The Board and its committees provide oversight and guidance to support the continued focus on and importance of culture to our Company.
FISCAL 2019 COMPANY PERFORMANCE HIGHLIGHTS (see page 36)
 
Strong execution of our strategic initiatives resulted in solid performance in Fiscal 2019. Highlights include:
Increased net sales by 1.9% to $110.2 billion. Fiscal 2019 was a 52-week year, compared to Fiscal 2018, which was a 53-week year. The extra week in Fiscal 2018 added approximately $1.7 billion of net sales to Fiscal 2018.
Increased operating income by 2.0% to $15.8 billion.
Increased net earnings by 1.1% to $11.2 billion and diluted earnings per share by 5.3% to $10.25.
Generated $13.7 billion in operating cash flow.
Returned value to shareholders during Fiscal 2019 through $6.0 billion in dividends and $7.0 billion in share repurchases.
Increased ROIC from 44.8% to 45.4%. ROIC is defined as net operating profit after tax, a non-GAAP financial measure, for the most recent twelve-month period, divided by the average of beginning and ending long-term debt (including current installments) and equity for the most recent twelve-month period. For a reconciliation of net operating profit after tax to net earnings, the most comparable GAAP financial measure, and our calculation of ROIC, see “Non-GAAP Financial Measures” on page 24 of the 2019 Form 10-K.
FISCAL 2019 EXECUTIVE COMPENSATION HIGHLIGHTS (see pages 35-49)
 
We pay for performance:
A significant portion of our NEOs’ target compensation is linked to Company performance:
¢ Approximately 88% for our CEO
¢ Approximately 79% for our other NEOs
100% of NEO annual cash incentive compensation and 80% of NEO annual equity compensation are tied to Company performance against pre-established, specific, measurable financial performance goals
We seek to mitigate compensation-related risk through a variety of means:
Annual compensation risk assessment
Compensation recoupment policy applicable to all executive officers and clawback provisions in all equity awards
Anti-hedging policy applicable to all associates, officers, and directors
Stock ownership and retention guidelines for executive officers
No change in control agreements

iv
The Home Depot 2020 Proxy Statement


CORPORATE GOVERNANCE BEST PRACTICES (see pages 1-11)
 
Our corporate governance policies reflect best practices:
ü
Annual election of directors
ü
Majority voting standard in uncontested director elections
ü
Shareholder ability to act by written consent and call special meetings
ü
A market standard shareholder right of proxy access
ü
Independent Lead Director
ü
Approximately 92% of directors and all Board committee members are independent
ü
Independent directors meet without management
ü
Director mandatory retirement age (age 72)
ü
Annual Board strategy session and review of the Company’s strategic plan
ü
Director overboarding policy
ü
No shareholder rights plan, also referred to as a “poison pill”
ü
Director store walk policy
ü
Board education and orientation program
ü
Management succession policy set forth in Corporate Governance Guidelines
ü
Annual Board and committee self evaluations, including individual director interviews

SHAREHOLDER ENGAGEMENT AND FEEDBACK (see page 7)
 
 
The Company values the views of its shareholders. Beginning in Fiscal 2018, the Company initiated an expanded ESG engagement program with institutional shareholders representing over 40% of our outstanding shares, and we continued that program in Fiscal 2019. Feedback from those engagements, combined with the Company’s commitment to governance best practices, led to a number of changes in Fiscal 2018 and 2019. These changes include:
Updating our Investor Relations website to provide a page dedicated to disclosure of ESG matters, which can be found at https://ir.homedepot.com/esg-investors, to better enable our investors to access key information about oversight and management of these areas.
Making significant enhancements to our annual Responsibility Report, including specifically addressing key ESG touchpoints for the Company, presenting our goals related to those touchpoints as well as performance against those goals, and providing three years of quantitative metrics relevant to those touchpoints. In developing those touchpoints and related goals, we were informed by several ESG reporting frameworks, including SASB standards and the TCFD framework.
Providing enhanced disclosure of the ethnic and gender diversity of our U.S. workforce, which can be found on our ESG Investor webpage and in our 2019 Responsibility Report.
Amending our By-Laws to reduce the percentage of outstanding shares required to call a special meeting of shareholders from 25% to 15%.
Updating our executive compensation clawback policy to specifically address conduct that causes significant reputational harm to the Company.
Updating our Company’s outside board policy to reduce the number of outside public company boards on which our directors can serve.
We look forward to continuing our engagement program in the future.

The Home Depot 2020 Proxy Statement
v


2020 DIRECTOR NOMINEES (see pages 13-20)
 
Director Nominees
Board Committee
Composition
Name
Director
Since
Position
Audit
LDCC
NCGC
Finance
Gerard J. Arpey*
2015
Partner, Emerald Creek Group, LLC
 
 
ü
ü
Ari Bousbib*
2007
Chairman and Chief Executive Officer, IQVIA Holdings Inc.
ü
 
 
Chair
Jeffery H. Boyd*
2016
Chairman, Booking Holdings Inc.
 
 
ü
ü
Gregory D. Brenneman*
Lead Director
2000
Executive Chairman, CCMP Capital Advisors, LLC
 
 
 
 
J. Frank Brown*
Audit Committee 
Financial Expert
2011
Managing Director and Chief Risk Officer, General Atlantic LLC
Chair
 
 
ü
Albert P. Carey*
2008
Former Chief Executive Officer, PepsiCo North America
 
Chair
ü
 
Helena B. Foulkes*
2013
Former Chief Executive Officer, Hudson’s Bay Company
 
 
Chair
ü
Linda R. Gooden*
Audit Committee 
Financial Expert
2015
Former Executive Vice President, Information Systems & Global Solutions, Lockheed Martin Corporation
ü
ü
 
 
Wayne M. Hewett*
2014
Chairman, DiversiTech Corporation and Cambrex Corporation
ü
ü
 
 
Manuel Kadre*
2018
Chairman and Chief Executive Officer, MBB Auto Group
ü
 
 
ü
Stephanie C. Linnartz*
2018
Group President, Consumer Operations, Technology and Emerging Businesses, Marriott International, Inc.
 
ü
ü
 
Craig A. Menear
2014
Chairman, Chief Executive Officer and President, The Home Depot, Inc.
 
 
 
 
*   All director nominees are independent except Mr. Menear, our Chairman, Chief Executive Officer and President.
LDCC = Leadership Development and Compensation Committee
 
NCGC = Nominating and Corporate Governance Committee

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The Home Depot 2020 Proxy Statement

CORPORATE GOVERNANCE

The Company has a long-standing commitment to strong corporate governance. Strong corporate governance promotes the long-term interests of shareholders, strengthens Board and management accountability, and helps build public trust in the Company. The Board has adopted policies and processes that foster effective Board oversight of critical matters such as strategy, risk management, financial and other controls, compliance, culture and management succession planning. The Board reviews our major governance documents, policies and processes regularly in the context of current corporate governance trends, regulatory changes and recognized best practices. The following sections provide an overview of our corporate governance structure, policies and processes, including key aspects of our Board operations.
BOARD OF DIRECTORS
 
Our Board currently has 12 members: Gerard J. Arpey, Ari Bousbib, Jeffery H. Boyd, Gregory D. Brenneman, J. Frank Brown, Albert P. Carey, Helena B. Foulkes, Linda R. Gooden, Wayne M. Hewett, Manuel Kadre, Stephanie C. Linnartz and Craig A. Menear. Each director who served during Fiscal 2019 was, and each current director continues to be, independent other than Mr. Menear, our Chairman, CEO and President.
BOARD LEADERSHIP
 
We believe that having a combined Chairman, CEO and President, an independent Lead Director, and Board committees composed entirely of independent directors currently provides the best Board leadership structure for the Company. This structure, together with our other robust corporate governance practices, provides strong independent oversight of management while ensuring clear strategic alignment throughout the Company. Specifically, Mr. Menear, with input from our Lead Director, proposes strategic priorities to the Board, communicates the Board’s guidance to management, and is ultimately responsible for implementing the Company’s key strategic initiatives.
At the same time, the Company recognizes the importance of providing independent oversight of the Board. Accordingly, since 1998, the Company has had a Lead Director. Our Lead Director is an independent director elected annually by the independent members of the Board. Gregory D. Brenneman currently serves as our Lead Director. Our Lead Director:
Chairs Board meetings when the Chairman is not present, including presiding at executive sessions of the Board (without management present) at every regularly scheduled Board meeting;
Works with management to determine the information and materials provided to Board members;
Approves Board meeting agendas, schedules and other information provided to the Board;
Consults regularly with the Chairman on other matters that are pertinent to the Board and the Company;
Has the authority to call meetings of the independent directors;
Is available for communication and consultation with major shareholders upon request;
Serves as liaison between the Chairman and the independent directors; and
Conducts annual interviews of each independent director as part of the annual evaluation process.
To maximize the effectiveness of the Lead Director role, our Lead Director does not serve on any standing Board committees but is available to attend meetings of any of our Board committees and serve as a resource for the committees as needed.
COMMITTEES OF THE BOARD OF DIRECTORS
 
During Fiscal 2019, the Board had standing Audit, Nominating and Corporate Governance, Leadership Development and Compensation, and Finance Committees. The charters for each of the committees are available on the Company’s Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Committee Members & Charters.” The current members of our committees, the principal functions of each committee and the number of meetings held in Fiscal 2019 are shown below. Each member of each committee during Fiscal 2019 was, and each current member continues to be, independent under our Director Independence Standards, as well as applicable SEC rules and NYSE listing standards.

The Home Depot 2020 Proxy Statement
1


Name of Committee 
and Current Members
 
Committee Functions
Audit:
J. Frank Brown, Chair
Ari Bousbib
Linda R. Gooden
Wayne M. Hewett
Manuel Kadre
 
Number of Meetings:
8
Oversees the Company’s accounting and financial reporting process, as well as the integrity of the Company’s consolidated financial statements and its internal control over financial reporting, including the audits thereof
Has primary responsibility for overseeing risk assessment and risk management
Has primary responsibility for overseeing data protection and cybersecurity risks
Reviews the Company’s compliance with legal and regulatory requirements, including the FCPA and other anti-bribery laws
Reviews the qualifications, performance and independence of the Company’s independent registered public accounting firm
Oversees the performance of the Company’s internal audit function
Reviews the Company’s compliance programs, including the whistleblower program, and the Company’s monitoring of such programs
Leadership Development and Compensation:
Albert P. Carey, Chair
Linda R. Gooden
Wayne M. Hewett
Stephanie C. Linnartz
 
Number of Meetings:
5
Reviews and evaluates the performance of executive officers
Reviews and recommends compensation of directors and the CEO and approves compensation of other executive officers
Reviews and recommends policies, practices and procedures concerning compensation strategy and other human capital management matters
Administers stock incentive and stock purchase plans, including determining grants of equity awards under the plans
Undertakes annual review and risk assessment of compensation policies and practices
Oversees senior management succession planning policies and procedures
Monitors the independence of its compensation consultant
Nominating and Corporate Governance:
Helena B. Foulkes, Chair
Gerard J. Arpey
Jeffery H. Boyd
Albert P. Carey
Stephanie C. Linnartz
 
Number of Meetings:
4

Develops the Company’s corporate governance practices and procedures and oversees the related risks
Reviews and makes recommendations on significant Company policies affecting corporate and social issues, including general ESG oversight
Reviews and monitors the performance and composition of the Board and its committees
Makes recommendations for director nominees
Reviews the independence of directors
Oversees communications between directors and shareholders
Reviews and approves or ratifies related-party transactions involving executive officers and directors
Oversees director engagement, education and orientation activities
Finance:
Ari Bousbib, Chair
Gerard J. Arpey
Jeffery H. Boyd
J. Frank Brown
Helena B. Foulkes
Manuel Kadre
 
Number of Meetings:
4
Oversees the management of the Company’s long-range financial outlook and finance-related risks
Reviews and recommends policies, practices and strategies concerning financial matters, including the Company’s capital structure, investments, use of derivatives, share repurchases, credit programs, credit ratings, and insurance
Oversees the Company’s annual capital plan, significant capital investments, and strategies with respect to mergers and acquisitions activity
 
 

2
The Home Depot 2020 Proxy Statement


In determining the composition of the committees, the Board and the NCG Committee considered directors’ skills and qualifications in key areas relevant to the Company and each committee’s responsibilities. The table below lists the key skills, qualifications and attributes held by the members of our committees. For more information about the skills and qualifications of our Board members, see “2020 Director Nominees” beginning on page 13.
Audit
 
Leadership Development and Compensation
 
Nominating and Corporate Governance
 
Finance
Strategic Management
 
Strategic Management
 
Strategic Management
 
Strategic Management
Retail/Merchandising
 
Retail/Merchandising
 
Retail/Merchandising
 
Retail/Merchandising
CEO Experience
 
CEO Experience
 
CEO Experience
 
CEO Experience
Supply Chain
 
Supply Chain
 
Supply Chain
 
Supply Chain
IT
 
IT
 
IT
 
IT
Risk Management
 
E-commerce
 
E-commerce
 
E-commerce
Finance
 
Human Capital Management
 
Governance
 
Finance
Cybersecurity
 
Marketing/Communications
 
Marketing/Communications
 
Real Estate
International
 
International
 
International
 
International
Diversity
 
Diversity
 
Diversity
 
Diversity
ATTENDANCE AT BOARD, COMMITTEE AND ANNUAL SHAREHOLDER MEETINGS
 
The Board met seven times during Fiscal 2019. The number of times that each standing committee of the Board met in Fiscal 2019 is shown in the previous section. Each incumbent director attended at least 75% of the meetings of the Board and of the committees of which he or she was a member during Fiscal 2019. Every director serving on our Board at the time of the 2019 annual meeting attended that meeting except for Armando Codina and Mark Vadon, whose service on the Board ended at that meeting.
BOARD ROLE IN STRATEGIC PLANNING
 
The Company’s strategy is rooted in enhancing our interconnected retail experience to better meet our customers’ changing needs and expectations. Our Board plays an important role in the continued evolution of the Company’s strategic planning process. At a dedicated strategy session each fall and through regular discussions at each quarterly Board meeting, our Board reviews the Company’s strategy and capabilities and actively engages with management to ensure that the Company is well-positioned to continue creating shareholder value. In Fiscal 2019, those discussions helped to refine our long-term strategy of investing in the One Home Depot experience. As discussed in “Election of Directors” beginning on page 12, each director nominee possesses specific skills and qualifications that provide the Company with key insights into elements necessary to build our One Home Depot experience. As a result of our focus on Board composition, we believe we have a Board with an appropriate mix of skills, backgrounds and experiences that leverages its cognitive diversity to effectively oversee our strategy as the Company positions itself to remain agile in a dynamic retail environment.
BOARD OVERSIGHT OF RISK
 
The Board’s oversight of risk is accomplished through the identification of key risks facing the Company and the mapping of those risks to the appropriate Board committee and/or to the full Board, based on the nature of the risk. Our enterprise risk framework used to identify and manage those key risks considers a number of enterprise-level risks, including competitive environment, brand and reputation, regulatory and compliance, and security, as well as external and internal factors that could distract the Company from our business or derail our strategic objectives. The Board reviews these key risks and the related framework annually, including periodic surveys of Board members and senior management to identify and assess key enterprise risks. The Board or appropriate Board committees discuss selected risks in more detail throughout the year, including the COVID-19 pandemic and its related risks.


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The table below identifies key risk areas overseen by the Board and its committees.
Key Areas of Risk Oversight
Full Board
Has primary responsibility for risk oversight, including approval of strategic objectives and defining risk appetite
Delegates oversight of management of certain risks to Board committees
Receives regular reports from the committees regarding risk-related matters
Audit
LDC Committee
NCG Committee
Finance
Overall risk assessment and management
Senior executive compensation
Corporate governance
Long-range strategic planning
Financial exposures, statements, controls, systems, and reporting
Senior executive succession planning
Director succession planning and board composition
Long-range financial outlook and finance-related risks
Regulatory and compliance, including FCPA/anti-bribery and our whistleblower program
Overall risk related to the Company’s compensation policies and practices
Political spending and payments to trade associations
Capital structure, including investments and shareholder return principles
Data protection and cybersecurity
Human capital management
Environmental and social initiatives
Annual capital plan and key capital investments
Internal audit and related investigatory matters
Non-employee director compensation
Related party transactions
Merger and acquisition strategy
Quality, safety and responsible sourcing
 
 
 
 
 
 
As part of our risk assessment process, the Board and each committee receive presentations throughout the year from management regarding specific potential risks and trends as necessary. At each Board meeting, our Chairman, CEO and President has the opportunity to discuss in a directors-only session matters of particular importance or concern, including any significant, evolving or nascent risks that may be of concern to the Board or the Company, and our Lead Director presides over an executive session of our independent directors at which risks faced by the Company may be discussed. Additionally, during Board-level review of the Company’s short- and long-term strategies, as discussed in more detail above, the Board considers significant risks facing the Company, as well as emerging risks and current trends, and their potential impact. We believe that the practices described above and our current leadership structure facilitate effective Board oversight of our significant risks.
Certain of the risk areas identified in the table above are discussed in more detail below.
Enterprise Risk Management
In accordance with NYSE requirements and our Audit Committee charter, our Audit Committee has primary responsibility for overseeing risk assessment and management, including the Company’s major financial exposures and compliance risks and the steps management has taken to monitor and control those exposures and risks. The Audit Committee stays apprised of significant actual and potential risks faced by the Company in part through review of quarterly reports from our Enterprise Risk Council, or ERC. Our ERC is composed of leaders from the principal functional areas of the Company and meets at least quarterly to discuss key risks and mitigation activities. The quarterly ERC reports identify the Company’s top risks and denote whether primary oversight of each risk resides with a particular Board committee or the full Board. The chair of the ERC, who is also our Vice President of Internal Audit and Corporate Compliance, reports the ERC’s risk analyses to senior management regularly, attends each quarterly Audit Committee meeting, and leads the Board’s annual review of our risk framework.
Data Protection and Cybersecurity
The Audit Committee also has primary responsibility for overseeing risks related to data protection and cybersecurity, although the full Board also exercises oversight over these risks. This oversight includes detailed reports to the Audit Committee and/or the full Board on data protection and cybersecurity matters from senior members of our IT department, including our Chief Information Officer and Chief Information Security Officer.

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The topics covered by these reports include risk identification and management strategies, consumer data protection, the Company’s ongoing risk mitigation activities, results of third party assessments and testing, updates on annual associate training and other specific training initiatives, and cybersecurity strategy and governance structure. In addition, our internal audit department routinely performs audits on various aspects of data protection and cybersecurity and reports the results of these audits in its quarterly internal audit report to the Audit Committee.
The chair of the ERC also chairs our Data Security and Privacy Governance Committee, which is composed of leaders from the functional areas of the Company. The Data Security and Privacy Governance Committee was created to provide enterprise-wide oversight and governance over data protection and cybersecurity, including oversight of related risks, mitigation and incident response plans, awareness and training programs, and regulatory compliance. Its activities are reported to the Audit Committee and/or full Board in the detailed reports referred to above.
FCPA and Anti-Bribery
The Audit Committee is also responsible for oversight of risks relating to bribery, corruption and FCPA compliance, in part through quarterly reports from our FCPA Oversight Committee, which oversees enterprise-wide compliance with the FCPA and the anti-bribery laws of the other jurisdictions in which we conduct business. The FCPA Oversight Committee is composed of our Executive Vice President, General Counsel and Corporate Secretary, who chairs the committee; our Executive Vice President and CFO; our Vice President of Internal Audit and Corporate Compliance; and representatives from each non-U.S. division, the business functions responsible for administration of our policies, and the business functions that manage our transactions outside of the U.S.
Environmental, Social and Governance
We believe that attention to material ESG matters is a foundational element of how we run our business and aligns closely with our corporate values. Because it encompasses such a broad area, ESG oversight is divided among several committees and the full Board.
The LDC Committee oversees risks related to human capital management, including matters relating to associate compensation and benefits, associate engagement and training, and diversity and inclusion. The LDC Committee was directly engaged in overseeing the disclosure of additional workforce diversity statistics beginning in late 2018.
The Audit Committee oversees our responsible sourcing program and related supply chain risks.
The NCG Committee has primary responsibility for oversight of ESG matters generally. This oversight includes reviewing and making recommendations to the Board regarding our environmental, social and governance practices as well as corporate political activity and payments to trade associations. The NCG Committee receives regular reports on ESG engagements with shareholders and related investor feedback, as well as information on recent developments with respect to ESG matters.
Each year, the full Board receives a report on our sustainability strategy and activities, including a discussion of our ESG communications and our annual Responsibility Report. Our annual Responsibility Report describes key corporate social responsibility and sustainability issues relevant to the Company, our initiatives and goals related to those issues, and our progress with respect to those initiatives. The Responsibility Report is available on our website at https://corporate.homedepot.com/responsibility.
In Fiscal 2018, in response to feedback from investors and other stakeholders, the Company formed an ESG Communication Task Force focused on identifying key ESG-related issues of concern to our stakeholders and developing strategies to better communicate the Company’s ESG efforts. As a result of those efforts, the Company created a dedicated web page to provide access to information about the Company’s ESG efforts, which can be found at https://ir.homedepot.com/esg-investors. The 2019 Responsibility Report is also available on this dedicated ESG investor web page. The Company made several enhancements to our Responsibility Report in 2019, including specifically addressing key ESG touchpoints for the Company, presenting our goals related to those touchpoints as well as performance against those goals, and providing three years of quantitative metrics relevant to those touchpoints. The Company was named to CDP’s 2019 “A” List for its leadership in environmental transparency and action.

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COMPANY CULTURE: DOING THE RIGHT THING
 
The Home Depot has a strong commitment to ethics and integrity, and we are a values- and culture-centric business. Our values are present in the way we do business and are more formally codified in the Company’s Business Code of Conduct and Ethics. These values and our culture are also reflected in our 2019 Responsibility Report, which can be found on our website at https://corporate.homedepot.com/responsibility.

Inverted Pyramid and Values Wheel
The Company’s culture is based on our servant leadership philosophy represented by the inverted pyramid, which puts primary importance on our customers and our associates by positioning them at the top, with senior management at the base in a support role. We bring our culture to life through our core values, which serve as the foundation of our business and the guiding principles behind the decisions we make every single day. We believe our culture helps set us apart and provides a distinct competitive advantage for The Home Depot.
a2018proxy11.gif
We empower our associates to deliver a superior customer experience, and we reward associates when they provide excellent customer service and embody The Home Depot values. We routinely measure our culture and values through associate surveys, which are done on an annual or more frequent basis, and by using our values as a basis for our associate performance reviews. Our officers and other leaders also participate in programs designed to build and strengthen our culture and to help it support the organizational changes necessary to create the One Home Depot experience. These programs include training on leadership skills, cross-functional collaboration, inclusiveness, sexual harassment prevention, unconscious bias, and associate engagement. The Board and its committees provide oversight and guidance to support the continued focus on and importance of culture to our Company.
Business Code of Conduct and Ethics
The Company has a Business Code of Conduct and Ethics that is applicable to all directors, officers and associates of the Company, including the CEO and the CFO. The Business Code of Conduct and Ethics reflects our strong commitment to ethics and integrity, and provides guidance on making decisions that align with our core values. The complete text of the code is available on the Company’s Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Overview” and is also available in print upon request at no charge. The Company will post any amendments to or waivers from the Business Code of Conduct and Ethics (to the extent applicable to the Company’s executive officers and directors) at this location on its website.

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The Home Depot 2020 Proxy Statement


SHAREHOLDER OUTREACH AND ENGAGEMENT
 
We approach shareholder engagement as an integrated, year-round process involving senior management, our investor relations team and our corporate governance team, as well as other subject matter experts as appropriate. As discussed in the Proxy Statement Summary, beginning in Fiscal 2018 we enhanced our shareholder engagement process, with a specific focus on ESG matters. Pursuant to this engagement program, which we continued in Fiscal 2019, we engaged with holders of at least 40% of our outstanding shares to discuss ESG topics as well as the matters raised by the shareholder proposals on the ballot at our annual meetings. The Board values our shareholders’ perspectives, and feedback from our shareholders on our business, corporate governance, executive compensation and sustainability practices have been important considerations for Board discussions throughout the year. The feedback we received from our engagements over the past two years, combined with the Company’s commitment to governance best practices, influenced several changes, including:
Updating our Investor Relations website to provide a page dedicated to disclosure of ESG matters, which can be found at https://ir.homedepot.com/esg-investors, to better enable our investors to access key information about oversight and management of these areas.
Making significant enhancements to our annual Responsibility Report, including specifically addressing key ESG touchpoints for the Company, presenting our goals related to those touchpoints as well as performance against those goals, and providing three years of quantitative metrics relevant to those touchpoints. In developing those touchpoints and related goals, we were informed by several ESG reporting frameworks, including SASB standards and the TCFD framework.
Providing enhanced disclosure of the ethnic and gender diversity of our U.S. workforce, which can be found on our ESG Investor webpage and in our 2019 Responsibility Report.
Amending our By-Laws to reduce the percentage of outstanding shares required to call a special meeting of shareholders from 25% to 15%.
Updating our executive compensation clawback policy to specifically address conduct that causes significant reputational harm to the Company.
Updating our Company’s outside board policy to reduce the number of outside public company boards on which our directors can serve.
We plan to continue this enhanced program of ESG engagement going forward.
GOVERNANCE BEST PRACTICES
 
Our Board believes that effective governance means regular and thoughtful evaluation of the Company’s governance policies and processes in light of the broader governance landscape. As a result, our governance framework contains a variety of methods for shareholder engagement, as well as mechanisms to ensure effective Board operations.

Shareholder Rights
Our shareholders have the following important rights:
Right to call a special meeting of shareholders. In early 2019, based on feedback from our expanded ESG shareholder engagement program, we amended our By-Laws to reduce the threshold for calling a special meeting to holders of 15% or more of our common stock, from the prior 25%.
Right to act by majority written consent in lieu of a meeting.
A market standard “proxy access” right. This right permits a shareholder, or group of up to 20 shareholders, owning at least 3% of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the shareholders and the nominees satisfy the requirements specified in the Company’s By-Laws.
In addition, as described in more detail starting on page 10, shareholders may recommend Board candidates for consideration by our NCG Committee.

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Corporate Governance Guidelines
The Company maintains Corporate Governance Guidelines that establish a common set of expectations to assist the Board and its committees in performing their duties. The table below provides an overview of several key elements of our Guidelines, which are available on the Company’s Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Overview” and in print at no charge upon request.
Key Corporate Governance Guidelines Provisions
Outside Board Policy
 
We limit the number of other public company boards our directors may join to ensure that a director is not “overboarded” and is able to devote the appropriate amount of time and attention to the oversight of the Company. In Fiscal 2019, based on a assessment of the overboarding policies of a number of our institutional shareholders, we updated our outside board policy to reduce the number of outside public company boards on which our directors may serve. A director who is an executive officer with another public company may only serve on the board of that company in addition to service on the Company’s board. Other directors may not serve on more than three other public company boards, and no member of the Company’s Audit Committee may serve on more than two other public company audit committees. In addition, Mr. Menear, our Chairman, CEO and President, may not serve on more than one other public company board. Any director seeking to join the board of directors of another public company or for-profit organization must first notify the NCG Committee and obtain its approval to continue as a member of our Board.
Succession Planning
 
A key responsibility of the Board is overseeing the identification and development of senior leadership. Both the Board and LDC Committee are actively engaged in succession planning. The LDC Committee oversees the development and implementation of succession plans for senior leadership positions. This process includes review and discussion of the performance and development of senior leadership on a regular basis, along with management’s evaluation and recommendations for senior leadership succession. The Board also annually reviews succession plans for senior management and the CEO, including both a long-term succession plan and an emergency succession plan. To assist the Board, our CEO annually provides his assessment of senior leaders and their potential to succeed at key senior management positions. The Board meets potential leaders at many levels across the organization through formal presentations and informal events throughout the year, including through the store walks and management meetings that are part of our director engagement program.
Director Engagement, Education and Orientation Program
 
The NCG Committee oversees the director engagement, continuing education and orientation program, which includes both internal activities and access to external programming. Our ongoing engagement program includes periodic walks of our stores and other facilities and in-depth meetings with management to provide our directors with the opportunity to observe our strategic initiatives in action and to expand their insight into business operations and activities. We also have a structured director orientation program for new directors during their first year on the Board. This program includes information sessions with committee chairs and senior management and visits to our stores and facilities to accelerate their on-boarding. We also provide all directors with membership in the NACD and continuing education opportunities.
Board Self-Evaluations
 
Each year, the Board, as required by our Corporate Governance Guidelines, conducts an evaluation of its performance and effectiveness. As set forth in its charter, the NCG Committee oversee this process, which includes two key components. First, the Board and each committee conduct self-evaluations in executive session, generally at the first regularly scheduled meetings of the fiscal year. These self-evaluations solicit feedback on a range of issues, including Board and committee structure, culture and dynamics; meeting content; and interactions with management. Second, our Lead Director conducts individual interviews with each of the directors. These interviews address similar topics, with the one-on-one setting permitting more detailed feedback on Board operations and director performance, as well as providing opportunities for mentoring newer directors. The feedback from these interviews is discussed with the full Board at its February meeting.

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The Home Depot 2020 Proxy Statement


DIRECTOR INDEPENDENCE
 
The Director Independence Standards in our Corporate Governance Guidelines, which are available on the Company’s Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Overview,” exceed the independence standards adopted by the NYSE. Pursuant to these Guidelines, the Board and the NCG Committee reviewed the independence of each current director in early 2020. During this review, the Board and the NCG Committee considered all relevant facts and circumstances related to transactions and relationships between each director (and his or her immediate family and affiliates) and the Company and its management to determine whether any such relationship or transaction would prohibit a director from being independent under SEC rules, NYSE listing standards and the Company’s Director Independence Standards.
Based on this review and the recommendation of the NCG Committee, the Board affirmatively determined that all of our current directors and director nominees are independent except Craig A. Menear, our Chairman, CEO and President.
The Company has purchase, sale and other transactions and relationships in the normal course of business with companies with which certain Company directors are associated but which our Board determined are not material to our Company, the directors or, except as otherwise indicated below, the companies with which the directors are associated. These transactions were reviewed and considered by the Board and the NCG Committee in determining the independence of Company directors. In particular, the Board and the NCG Committee took into account the following transactions during Fiscal 2019:
Mr. Arpey served as a director of S.C. Johnson & Son, Inc., from which we purchased cleaning supply merchandise.
Mr. Boyd served as Chairman of Booking Holdings Inc., from which we purchased travel-related services, and as a director of CLEAR, LLC, from which we purchased travel-related services.
Mr. Brenneman served as Executive Chairman of CCMP Capital Advisors, LLC, which manages funds that have or had an equity interest in (1) The Hillman Companies, Inc. (“Hillman”), from which we purchased fasteners and other small hardware items; and (2) Shoes for Crews, from which we purchased footwear. In Fiscal 2019, the Company was one of Hillman’s largest customers. Mr. Brenneman does not serve as a director or officer of either of these portfolio companies.
Mr. Brown served as Managing Director and Chief Risk Officer of General Atlantic LLC, which manages funds that have or had an equity interest in (1) Absolute Barbecue, from which we purchased food items; (2) Airbnb, Inc., from which we purchased lodging services; (3) Crowdstrike Holdings, Inc., from which we purchased cybersecurity technology services; (4) Flipp Corporation, from which we purchased digital retail services; (5) Grupo Axo, from which we purchased gifts and apparel; (6) Mi9 Retail, Inc., from which we purchased software; (7) Mu Sigma Inc., from which we purchased data analytics consulting services; (8) Slack Technologies, Inc., from which we purchased collaboration technology services; (9) Snap, Inc. from which we purchased media services; (10) Torchy’s Tacos, from which we purchased food items; (11) Typeform S.L., from which we purchased data collection software services; (12) Uber Technologies, Inc., from which we purchased transportation services; and (13) Wish, from which we purchased gifts. Mr. Brown does not serve as a director or officer of any of these portfolio companies.
Mr. Carey served as Chief Executive Officer of PepsiCo North America, from which we purchased food and beverage products.
Ms. Foulkes served as Chief Executive Officer and a member of the board of directors of Hudson’s Bay Company, from which we purchased gifts and apparel.
Ms. Gooden served as a director of Automatic Data Processing, Inc., from which we purchased payroll and tax services, and as a director of General Motors Company, from which we purchased automobile-related services.
Mr. Hewett served as Chairman of DiversiTech Corporation, from which we purchased heating, ventilating, air conditioning, refrigeration and other related merchandise; and as a director of Wells Fargo & Company, from which we obtained banking services.
Mr. Kadre served as a director of Republic Services, Inc., from which we purchased waste management services.

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Ms. Linnartz served as Group President – Consumer Operations, Technology and Emerging Businesses of Marriott International, Inc., from which we purchased lodging and event-related services.

In each instance described above, the amount of payments made and received by each entity represented an immaterial percentage of the Company’s and, except as otherwise stated above, the other entity’s revenues. The Board and the NCG Committee believe that all of the transactions and relationships during Fiscal 2019 described above were on arm’s-length terms that were reasonable and competitive and that the directors did not participate in or receive any direct personal benefit from these transactions.
RELATED-PARTY TRANSACTIONS
 
The NCG Committee reviews all related-party transactions involving a Board member or executive officer of the Company subject to Section 16 of the Exchange Act. To help identify related-party transactions, each director and executive officer completes a questionnaire that requires the disclosure of any transaction that the person, or any member of his or her immediate family, has or will have with the Company. Our General Counsel also conducts an independent investigation that includes a review of the Company’s financial systems to determine if a director or executive officer, or a company with which he or she is affiliated, engaged in transactions with the Company during the fiscal year.
In accordance with its charter, the NCG Committee reviews and approves, ratifies or rejects any transaction involving a related party that is identified. In approving, ratifying or rejecting a related-party transaction, the NCG Committee considers such information as it deems important to determine whether the transaction is on reasonable and competitive terms and is fair to the Company. Transactions that are determined to be directly or indirectly material to the Company or a related party are disclosed in the Company’s Proxy Statement. During Fiscal 2019, there were no related-party transactions that require disclosure in this Proxy Statement.
SELECTING NOMINEES TO THE BOARD OF DIRECTORS
 
The NCG Committee is responsible for considering candidates for the Board and recommending director nominees to the Board. All members of the NCG Committee have been determined to be independent by the Board pursuant to SEC rules, NYSE listing standards and the Company’s Director Independence Standards.
The NCG Committee considers candidates for nomination to the Board from a number of sources. Current members of the Board are considered for re-election unless they have notified the Company that they do not wish to stand for re-election and provided they have not reached age 72 by the calendar year-end immediately preceding the Company’s next annual meeting of shareholders. The NCG Committee may also consider candidates recommended by current members of the Board, members of management, and shareholders, as discussed below under “Director Candidates Recommended by Shareholders.”
From time to time, the NCG Committee engages independent search firms to assist in identifying potential Board candidates. Services provided by the search firms include identifying and assessing potential director candidates meeting criteria established by the NCG Committee, verifying information about the prospective candidate’s credentials, and obtaining a preliminary indication of interest and willingness to serve as a Board member.
The NCG Committee evaluates all candidates, regardless of who recommended the candidate, based on the same criteria. The criteria and the process by which director nominees are considered and selected are discussed further below under “Election of Directors.”
DIRECTOR CANDIDATES RECOMMENDED BY SHAREHOLDERS
 
The NCG Committee will consider all candidates recommended by a shareholder (or group of shareholders) who owns at least 1% of the Company’s outstanding shares of common stock and who has held such shares for at least one year as of the date of the recommendation. If the shareholder does not meet these requirements, the NCG Committee may, but is not obligated to, evaluate the candidate and consider him or her for nomination to the Board. A shareholder wishing to recommend a candidate must submit the following documents to the Corporate Secretary, The Home Depot, Inc., 2455 Paces Ferry Road, Building C-22, Atlanta, Georgia 30339 not

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The Home Depot 2020 Proxy Statement


less than 120 calendar days prior to the anniversary of the date on which the Company’s Proxy Statement was released to shareholders in connection with the previous year’s annual meeting of shareholders:
A recommendation that identifies the candidate and provides contact information for that candidate;
The written consent of the candidate to serve as a director of the Company, if elected; and
Documentation establishing that the shareholder making the recommendation meets the ownership requirements set forth above.
If the candidate is to be evaluated by the NCG Committee, the Corporate Secretary will request from the candidate a detailed résumé, an autobiographical statement explaining the candidate’s interest in serving as a director of the Company, a completed statement regarding conflicts of interest, and a waiver of liability for a background check. These documents must be received from the candidate before the first day of February preceding the annual meeting of shareholders.
COMMUNICATING WITH THE BOARD
 
Shareholders and others who are interested in communicating directly with the Board, our Lead Director, or other independent directors, including those wishing to express concerns relating to accounting, internal controls, audit matters, fraud or unethical behavior, may do so by e-mail at HD_Directors@homedepot.com or by writing to the directors at the following address:
[Name of Director or Directors]
c/o Corporate Secretary
The Home Depot, Inc.
2455 Paces Ferry Road
Building C-22
Atlanta, Georgia 30339

The Corporate Secretary reviews and provides the Board and the NCG Committee with a summary of all such communications and a copy of any correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or the standing committees of the Board or that otherwise requires the attention of the Board and the NCG Committee. Correspondence relating to accounting, internal controls or auditing matters is brought to the attention of the Company’s internal audit department and, if appropriate, to the Audit Committee. All communications are treated confidentially.

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ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)

The Board is elected annually by shareholders to oversee the long-term health and the overall success and financial strength of the Company’s business. The NCG Committee is responsible for considering candidates for the Board and recommending director nominees for the Board.
DIRECTOR CRITERIA AND QUALIFICATIONS
 
The NCG Committee, when considering the composition of our Board, focuses on ensuring a mix of directors that collectively possess the breadth of expertise and experience appropriate for a retailer of our size and geographic scope. The Company is the world’s largest home improvement retailer, with more than 2,290 retail stores in the United States, Canada and Mexico, and our business involves all facets of retail, including merchandising, supply chain, finance, real estate, human capital management, information technology and cybersecurity, e-commerce, strategic management, marketing and communications, international commerce, and corporate governance. The NCG Committee evaluates each director candidate on the basis of the length, breadth and quality of the candidate’s business experience, the applicability of the candidate’s skills and expertise to the Company’s business and strategic direction, the perspectives that the candidate would bring to the entire Board, and the personality or “fit” of the candidate with existing members of the Board and management.
The NCG Committee seeks directors who can:
Demonstrate integrity, accountability, informed judgment, financial literacy, creativity and vision;
Be prepared to represent the best interests of all Company shareholders and not just one particular constituency;
Demonstrate a record of professional accomplishment in his or her chosen field; and
Be prepared and able to participate fully in Board activities, including membership on at least two committees.
BOARD REFRESHMENT AND DIVERSITY
 
We routinely assess the composition of the Board and aim to strike a balance between the knowledge and understanding of the business that comes from longer-term service on the Board and the fresh ideas and perspective that can come from adding new members. We also consider the expertise and cognitive diversity that is needed as our business changes and expands. As explained in more detail below, we also recognize the importance of having diversity of age, gender, race and ethnicity on the Board.
Our independent director nominees have a balance of tenure, age and diversity, which provides our Board with an effective mix of experience and fresh perspective
feb2020proxygraphic03242001.jpg

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The Home Depot 2020 Proxy Statement


The retail landscape has rapidly evolved over the past ten years, and the pace of change is expected to accelerate in the future. We believe that Board refreshment is critical as the Company’s business strategy continues to evolve with the competitive landscape, particularly as we build the One Home Depot experience. In the past six years, we have added six new independent directors, comprising 50% of our current Board. Several of these directors have first-hand experience building an interconnected experience for their own companies’ customers.
At the same time, we believe that we benefit from having several seasoned directors, including our Lead Director, who are well-versed in the Company’s business and help facilitate the transfer of institutional knowledge. Having a tenured Lead Director who has served with four of our CEOs and through several different business cycles has proven extremely valuable, particularly as we have added new Board members and experienced senior management transitions. We believe the average tenure of our independent directors reflects the balance the Board seeks between different perspectives brought by long-serving and new directors.
In addition, the NCG Committee recognizes the importance of selecting directors from various backgrounds and professions to ensure that the Board as a whole has a wealth of experiences and perspectives to inform its decisions and enhance its cognitive diversity. We believe diversity makes our business stronger and more innovative. In addition to focusing on the skills and experience necessary to meet the core needs of the Company, the NCG Committee considers the ability of the candidate to contribute to the Board by leveraging and valuing a broad set of experiences, including the director’s ethnic, gender, generational, and racial diversity.
To accomplish this goal, the NCG Committee is committed to including in each director search candidates who reflect diverse backgrounds, including diversity of race and gender. The NCG Committee assesses the composition, including the diversity, of the Board at least once a year and more frequently as needed, particularly when considering potential new candidates.
2020 DIRECTOR NOMINEES
 
After evaluating the performance and experience of each of the current directors and the composition of the full Board, the NCG Committee and the Board have recommended the election of all 12 of incumbent Board members.
As detailed in the table below and in each director’s biography below, our Board collectively
leverages its strengths in the following areas:
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The table below summarizes why these skills, qualifications and attributes are important to us and how the composition of our nominees for the Board, as a whole, meets these needs.
Qualifications and Attributes
 
Relevance to The Home Depot
 
Board Composition
Retail/Merchandising
 
Experience in the retail industry provides a relevant understanding of our business, strategy and marketplace dynamics.
 
6 of 12
Strategic Management
 
We allocate capital and undertake new initiatives to run our operations, grow our business, and return value to shareholders.
 
11 of 12
Supply Chain
 
Directors with expertise in the management of relationships with suppliers and customers provide important perspectives on achieving efficient operations and building partnerships to support growth.
 
5 of 12
Marketing/Communications
 
Directors with this expertise provide important perspective on expanding market share and communicating with our customers and other stakeholders.
 
6 of 12
E-Commerce
 
E-commerce is an essential part of the Company’s One Home Depot strategy for growth and optimizing the customer experience.
 
4 of 12
Real Estate
 
Given our significant physical footprint, directors with real estate experience can provide insight on opportunities and managing our locations.
 
2 of 12
Human Capital Management
 
With our significant associate population, directors with experience in organizational management and talent development provide key insights into developing and investing in our associates.
 
12 of 12
Information Technology
 
We rely on technology to manage customer, associate and supplier data and deliver products and services to the market.
 
4 of 12
Data Protection/Cybersecurity
 
The protection of customer, associate, and supplier data is of the utmost importance and will continue to grow in importance as we expand technological capabilities.
 
2 of 12
International
 
With global operations in several countries, international experience helps us understand opportunities and challenges.
 
9 of 12
Finance
 
Our business involves complex financial transactions and reporting requirements.
 
8 of 12
Governance
 
As a public company, we and our shareholders expect effective oversight and transparency.
 
6 of 12
CEO Experience
 
The significant leadership experience that comes from a CEO role can provide insight on business operations, driving growth, and building and strengthening corporate culture.
 
9 of 12
Diversity
 
We believe diversity strengthens our competitive advantage and reflects the customers we serve.
 
5 of 12
Each of the 12 individuals nominated for election to the Board would hold office until the 2021 Annual Meeting of Shareholders and until his or her successor is elected and qualified. Each nominee has agreed to serve as a director if elected. If for some unforeseen reason a nominee becomes unwilling or unable to serve, the Board may reduce the number of directors that serve on the Board or choose a substitute nominee in accordance with our By-Laws. If a substitute nominee is chosen and you have submitted your proxy, the proxy holders may vote your shares for the substitute nominee in their discretion.

14
The Home Depot 2020 Proxy Statement


The 12 nominees for election to the Board are set forth below.
GERARD J. ARPEY
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Mr. Arpey has been a partner in Emerald Creek Group, LLC, a private equity firm based in Southern California, since 2012. Prior to his retirement in November 2011, Mr. Arpey served as Chief Executive Officer of AMR Corporation, a global airline holding company, and its subsidiary American Airlines, from 2003 through November 2011, immediately prior to their voluntary filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code. From 2004 through November 2011, he was also Chairman of the AMR Board of Directors. Mr. Arpey previously served as American Airlines’ President and Chief Operating Officer, Senior Vice President of Finance and Planning, and Chief Financial Officer. Mr. Arpey currently serves on the board of directors of S. C. Johnson & Son, Inc., a privately-held company. He is also a trustee of the American Beacon Funds.
Skills and qualifications: Mr. Arpey brings to the Board extensive organizational management, strategic, financial, IT, governance, and international experience from his service as chairman, chief executive officer, and chief financial officer of one of the largest global airlines and service as a director of public and private companies.
Other U.S. Public Company Board Memberships in Past Five Years:
 
None
Director since: 2015
Age: 61
Committees:
Nominating and Corporate Governance
Finance

 
 
ARI BOUSBIB
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Mr. Bousbib serves as Chairman and Chief Executive Officer of IQVIA Holdings Inc., a leading global provider of advanced analytics, technology solutions and contracted research services to the life sciences industry. He assumed this position in October 2016 following the merger of IMS Health Holdings, Inc. (“IMS Holdings”) and Quintiles Transnational Holdings, Inc. From 2010 to October 2016, Mr. Bousbib served as Chairman and Chief Executive Officer of IMS Health Incorporated, a subsidiary of IMS Holdings, and he also served as Chairman, Chief Executive Officer and President of IMS Holdings since its initial public offering in 2014. Prior to joining IMS Health, Mr. Bousbib spent 14 years at United Technologies Corporation (“UTC”), a commercial aerospace, defense and building industries company. From 2008 until 2010, he served as President of UTC’s Commercial Companies, including Otis Elevator Company (“Otis”), Carrier Corporation, UTC Fire & Security and UTC Power. From 2002 until 2008, Mr. Bousbib was President of Otis, and from 2000 until 2002, he served as its Chief Operating Officer. Prior to joining UTC, Mr. Bousbib was a partner at Booz Allen Hamilton, a global management and technology consulting firm.
Skills and qualifications: In serving on our Board, Mr. Bousbib draws from his experience with managing large, sophisticated businesses, including oversight of extensive global operations, as well as strategic, finance, supply chain and IT matters. He plays a key role in the Board’s oversight of the Company’s supply chain, IT, international and finance matters, as well as providing insight into the development of corporate strategy.

Other U.S. Public Company Board Memberships in Past Five Years:
IQVIA Holdings Inc. (2016 to present)
IMS Health Holdings, Inc. (2014-2016)
Director since: 2007
Age: 59
Committees:
Audit
Finance (Chair)


The Home Depot 2020 Proxy Statement
15


JEFFERY H. BOYD
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Mr. Boyd has served in a number of senior executive positions during his long and successful tenure at Booking Holdings Inc. (“Booking”) (formerly known as The Priceline Group, Inc.), a leading provider of online travel and related services. His strategic leadership at Booking guided the company to grow from a loss in 2002 to a multi-billion dollar profitable business. Since June 2018, he has served as Chairman of the Board of Booking, and from January 2017 to June 2018, he served as Booking’s Executive Chairman. Prior to January 2017, Mr. Boyd served in a number of roles of increasing responsibility at Booking, including most recently as its President and Chief Executive Officer from November 2002 until December 2013, Chairman from January 2013 to December 2016, and interim Chief Executive Officer and President during a portion of 2016. Mr. Boyd was Booking’s President and Co-Chief Executive Officer from August 2002 to November 2002; its Chief Operating Officer from November 2000 to August 2002; and its Executive Vice President, General Counsel and Secretary from January 2000 to October 2000. Prior to joining Booking, Mr. Boyd was Executive Vice President, General Counsel and Secretary of Oxford Health Plans, Inc.
Skills and qualifications: Mr. Boyd brings to our Board extensive experience in global e-commerce, sales, and digital marketing, as well as proven leadership, corporate governance and strategic management skills. His e-commerce experience provides valuable insights into the continued execution and evolution of our interconnected retail strategy.
Other U.S. Public Company Board Memberships in Past Five Years:

Booking Holdings Inc. (2001 to present)
Director since: 2016
Age: 63
Committees:
Nominating and Corporate Governance
Finance
 
 
GREGORY D. BRENNEMAN
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Mr. Brenneman, our Lead Director, serves as Executive Chairman of CCMP Capital Advisors, LLC (“CCMP”), a private equity firm with over $3 billion under management, a position he has held since October 2016. Previously, he served as Chairman of CCMP from 2008 until October 2016 and as its President and Chief Executive Officer from February 2015 until October 2016. He is also Chairman and Chief Executive Officer of TurnWorks, Inc., a private equity firm focusing on corporate turnarounds, which he founded in 1994. Prior to joining CCMP, Mr. Brenneman led restructuring and turnaround efforts at Quiznos, Burger King Corporation, PwC Consulting, a division of PricewaterhouseCoopers (“PwC”), and Continental Airlines, Inc. that resulted in improved customer service, profitability, and financial returns.
Skills and qualifications: As a successful business leader who has been involved in several well-known corporate spin-off and turnaround-driven transformations, Mr. Brenneman has an extensive background in general management of large organizations and expertise in accounting and corporate finance, retail, supply chain, marketing, and international matters. In addition, his directorships at other public companies provide him with broad experience on governance issues.
Other U.S. Public Company Board Memberships in Past Five Years:
 
PQ Group Holdings Inc. (2017 to present)
Baker Hughes, a GE company (2017 to present)
Baker Hughes Incorporated (2014-2017)
Milacron Holdings Corp. (2015-2017)
Francesca’s Holdings Corporation (2010-2015)

Director since: 2000
Age: 58
Lead Director







16
The Home Depot 2020 Proxy Statement


J. FRANK BROWN
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Mr. Brown currently serves as Managing Director and Chief Risk Officer of General Atlantic LLC, a global growth equity firm, which he joined in 2011. He served as Managing Director and Chief Operating Officer of General Atlantic from 2011 through 2019. From 2006 to 2011, Mr. Brown was Dean of INSEAD, an international business school with campuses in France, Singapore and Abu Dhabi. Before his appointment as Dean of INSEAD, he served as a member of its Board and as Chairman of its U.S. Council. Prior to his tenure at INSEAD, Mr. Brown spent 26 years at PwC, where he held a series of leadership roles, including head of its Assurance and Business Advisory Service, Transactions Services, and Corporate Development practices, and most recently the leader of the $3.5 billion Advisory Services operating unit of PwC. He also launched PwC’s Genesis Park, a leadership development program to train the next generation of global leaders within the firm. Mr. Brown is a trustee of The Asia Society and a member of the American Institute of Certified Public Accountants. He is also an author and frequent speaker on leadership.
Skills and qualifications: Mr. Brown is a seasoned international business and academic leader whose strong technical expertise in financial and accounting matters qualifies him as an “audit committee financial expert” under SEC guidelines, as described in the “Audit Committee Report” on page 22 of this Proxy Statement, and he serves in such capacity on our Audit Committee.
Other U.S. Public Company Board Memberships in Past Five Years:
 
None
Director since: 2011
Age: 63
Audit Committee Financial Expert
Committees:
Audit (Chair)
Finance
 
 
ALBERT P. CAREY
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Prior to his retirement in early 2019, Mr. Carey served as Chief Executive Officer of PepsiCo North America, a consumer products company, from 2016 to March 2019. In this role, he was responsible for leading PepsiCo’s beverages, Frito-Lay and Quaker Foods businesses in North America. Previously, he was Chief Executive Officer of PepsiCo North America Beverages from 2011 to 2016, and President and Chief Executive Officer of Frito-Lay North America, the largest North American business division of PepsiCo, from 2006 to 2011. He also served as President of PepsiCo Sales, the sales division of PepsiCo, from 2003 to 2006, in charge of PepsiCo’s sales and customer management for its retail, food service and fountain businesses. Other positions that Mr. Carey has held at PepsiCo include Chief Operating Officer of PepsiCo Beverages & Foods North America, and Chief Operating Officer of Frito-Lay North America. Prior to his career at PepsiCo, Mr. Carey spent seven years at The Procter & Gamble Company.
Skills and qualifications: Having served in a number of senior executive positions at PepsiCo, Mr. Carey enhances our Board’s experience in and oversight of retail, supply chain and marketing matters, as well as contributing to the general management and strategic business development skills of our Board.
Other U.S. Public Company Board Memberships in Past Five Years:
 
Unifi, Inc. (2018 to present)
Director since: 2008
Age: 68
Committees:
Leadership
Development and
Compensation (Chair)
Nominating and
Corporate Governance

The Home Depot 2020 Proxy Statement
17


HELENA B. FOULKES
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Ms. Foulkes is a seasoned retail executive who most recently served as the Chief Executive Officer and a member of the board of directors of Hudson’s Bay Company (“HBC”), a multinational retailer, a position she held from February 2018 to March 2020. Prior to HBC, she served as Executive Vice President of CVS Health Corporation (“CVS”), an integrated pharmacy health care provider and retailer, and President of CVS Pharmacy, from 2014 to February 2018. At CVS, Ms. Foulkes also served as Executive Vice President and Chief Health Care Strategy and Marketing Officer from 2011 to 2013; Executive Vice President and Chief Marketing Officer from 2009 to 2011; Senior Vice President of Health Services of CVS Pharmacy from 2007 to 2009; Senior Vice President, Marketing and Operations Services during a portion of 2007; and Senior Vice President, Advertising and Marketing from 2002 to 2007. Additionally, Ms. Foulkes held positions in Strategic Planning, Visual Merchandising, and Category Management during her 20-plus years with CVS.
Skills and qualifications: With a deep retail background, Ms. Foulkes brings to our Board significant experience in innovative marketing strategies, retail operations, merchandising, e-commerce, and real estate. In addition, her tenure with CVS provides insight into healthcare and associate wellness-related issues.
Other U.S. Public Company Board Memberships in Past Five Years:
 
None
Director since: 2013
Age: 55
Committees:
Nominating and Corporate Governance (Chair)
Finance
 
 
LINDA R. GOODEN
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Ms. Gooden enjoyed a 30-plus year career in various senior leadership roles with Lockheed Martin Corporation (“Lockheed”), a global aerospace, defense, security and advanced technologies company. Before her retirement, she most recently served as Executive Vice President, Information Systems & Global Solutions (“IS&GS”) of Lockheed from 2007 to 2013. Under her leadership as Executive Vice President of IS&GS, Lockheed expanded its IT capabilities beyond government customers to international and commercial markets. She also served as Lockheed’s Deputy Executive Vice President, Information and Technology Services from October to December 2006 and its President, Information Technology from 1997 to December 2006. In her role as President of Lockheed’s IT division, Ms. Gooden grew the business over a 10-year period to become a multibillion dollar business.
Skills and qualifications: Ms. Gooden brings to our Board her strong leadership capability demonstrated through her career at Lockheed. She has an extensive background in IT and cybersecurity (including achievement of a Cyber Risk Oversight Certification from NACD in 2018), significant operations and strategic planning expertise, and experience in business restructuring, finance, communications and risk management. She also brings to our Board her experience as a director at other public companies, particularly in the areas of finance, audit, strategic investments, acquisitions and divestitures. She serves as an “audit committee financial expert” on our Audit Committee, as described in the “Audit Committee Report” on page 22 of this Proxy Statement, and takes regular courses for audit committee members to deepen her financial expertise.
Other U.S. Public Company Board Memberships in Past Five Years:
 
Automatic Data Processing, Inc. (2009 to 2019)
General Motors Company (2015 to present)
WGL Holdings, Inc. (2013 to 2018)

Director since: 2015
Age: 66
Audit Committee Financial Expert
Committees:
Audit
Leadership
Development and
Compensation


18
The Home Depot 2020 Proxy Statement


 
WAYNE M. HEWETT
 
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Mr. Hewett is a seasoned executive leader who has worked across a number of industries. Since March 2018, he has served as a senior advisor to Permira, a global private equity firm, and as Chairman of DiversiTech Corporation, a manufacturer and supplier of HVAC equipment and a portfolio company of the Permira funds. Since December 2019, he has also served as Chairman of Cambrex Corporation, a contract developer and manufacturer of small molecules, also a Permira portfolio company. From August 2015 to November 2017, Mr. Hewett served as Chief Executive Officer of Klöckner Pentaplast Group, a leading supplier of packaging and specialty films. From January 2010 to February 2015, he served as President, Chief Executive Officer and a member of the board of directors of Arysta LifeScience Corporation (“Arysta”), one of the world’s largest privately held crop protection and life science companies. In February 2015, Arysta was acquired by Platform Specialty Products Corporation (“Platform”), a global producer of high technology specialty chemical products, and Mr. Hewett served as President of Platform until August 2015. Prior to joining Arysta in 2009, Mr. Hewett served as a senior consultant to GenNx360, a private equity firm, from February to August 2009. Mr. Hewett’s career has also included over 20 years with General Electric Company (“GE”), including roles as GE’s Vice-President, Supply Chain and Operations; President and Chief Executive Officer of GE Advanced Materials; President of GE Plastics Pacific; President of GE Toshiba Silicones; and membership on GE’s Corporate Executive Council.
Skills and qualifications: Mr. Hewett brings to our Board extensive experience in general management, finance, supply chain, operational and international matters. He has significant experience executing company-wide initiatives across large organizations, developing proprietary products, optimizing a supply chain, and using emerging technologies to provide new products and services to customers.
Other U.S. Public Company Board Memberships in Past Five Years:
 Wells Fargo & Company (2019 to present)
Ingredion Incorporated (2010-2015)
Platform Specialty Products Corporation (2015)
 
Director since: 2014
 
Age: 55
 
Committees:
Audit
Leadership
Development and
Compensation
 
 
 
 
MANUEL KADRE
 
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Mr. Kadre is Chairman and Chief Executive Officer of MBB Auto Group, a premium luxury retail automotive group with a number of dealerships in the Northeast, a position he has held since 2012. Mr. Kadre also serves as Chairman of the Board of Republic Services, Inc., an industry leader in U.S. recycling and non-hazardous solid waste. Prior to his current role, he was the Chief Executive Officer of Gold Coast Caribbean Importers, LLC from July 2009 until 2014. From 1995 until July 2009, Mr. Kadre served in various roles, including President, Vice President, General Counsel and Secretary, for CC1 Companies, Inc., a distributor of beverage products in markets throughout the Caribbean. Mr. Kadre also serves on the Board of Trustees of the University of Miami.
Skills and qualifications: Mr. Kadre brings significant chief executive and senior management expertise to our Board, together with financial, strategic, environmental, and real estate experience. His service on other boards, including service as chairman and lead independent director of two public companies, enhances our Board’s capabilities in the areas of management oversight, corporate governance and board dynamics.
Other U.S. Public Company Board Memberships in Past Five Years:
Republic Services, Inc. (2014 to present)
Mednax, Inc. (2007 to present)
 
Director since: 2018
 
Age: 54
 
Committees:
Audit
Finance
 

The Home Depot 2020 Proxy Statement
19


STEPHANIE C. LINNARTZ
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Ms. Linnartz is Group President, Consumer Operations, Technology & Emerging Businesses for Marriott International, Inc. (“Marriott”), a worldwide operator, franchisor, and licensor of hotels and timeshare properties. Prior to her current role, she served as Marriott’s Executive Vice President and Global Chief Commercial Officer from 2013 to 2019. Ms. Linnartz joined Marriott as a financial analyst in 1997, and held several positions in finance before moving into sales and marketing. Her prior roles in the company include Global Officer, Sales & Revenue Management; Senior Vice President, Global Sales; Senior Vice President, Sales & Marketing Support; and Vice President, Sales & Marketing Channel Strategy & Analysis. Prior to Marriott, Ms. Linnartz worked for the Hilton Hotels Corporation.
Skills and qualifications: In her current role, Ms. Linnartz is responsible for providing strategic leadership to the brand management, sales (including e-commerce), marketing, revenue management, distribution, customer experience and innovation, information technology and digital functions. In addition, she has responsibility for Marriott Bonvoy, one of the largest global loyalty programs, and developing, incubating, and running new lines of business that focus on consumer interaction with Marriott Bonvoy. This experience, along with her strong financial background, will enhance the Board’s oversight of our interconnected retail strategy and the investments we are making for the “One Home Depot” experience for our customers.
Other U.S. Public Company Board Memberships in Past Five Years:
 
None
Director since: 2018
Age: 52
Committees:
Leadership
Development and
Compensation
Nominating and Corporate Governance
 
 
CRAIG A. MENEAR
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Mr. Menear has served as our Chief Executive Officer and President since November 2014 and our Chairman since February 2015. He previously served as our President, U.S. Retail from February 2014 to October 2014. In that role Mr. Menear was responsible for oversight of store operations and all merchandising departments, services and strategy; the Company’s supply chain network and global sourcing and vendor management programs; and the Company’s marketing and online business activities. From 2007 to February 2014, Mr. Menear served as our Executive Vice President – Merchandising, where he led our merchandising and supply chain transformations. From 2003 to 2007, he served as Senior Vice President – Merchandising, and from 1997 to 2003, he held several positions of increasing responsibility in the Company’s Merchandising department, including Merchandising Vice President of Hardware, Merchandising Vice President of the Southwest Division and Divisional Merchandise Manager of the Southwest Division. Prior to joining the Company in 1997, Mr. Menear held various merchandising positions within the retail industry with companies such as IKEA, Builders Emporium, Grace Home Centers and Montgomery Ward, as well as operating an independent retail business.
Skills and qualifications: With more than three decades of experience in the retail and hardware home improvement industry, Mr. Menear brings to our Board extensive retail experience and knowledge of our business, including leadership experience in retail operations, merchandising, marketing, e-commerce, supply chain, vendor management, and organizational development.
Other U.S. Public Company Board Memberships in Past Five Years:
 
None
Director since: 2014
Age: 62
Chairman, CEO and President


WE RECOMMEND THAT YOU VOTE “FOR” THE ELECTION OF EACH
NOMINEE TO THE BOARD OF DIRECTORS.


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The Home Depot 2020 Proxy Statement

RATIFICATION OF THE APPOINTMENT OF KPMG LLP
(ITEM 2 ON THE PROXY CARD)

The Audit Committee is directly responsible for the appointment, compensation, retention, evaluation and oversight of the Company’s independent registered public accounting firm. As part of this responsibility, the Audit Committee annually evaluates the independent registered public accounting firm’s qualifications, performance and independence and assesses whether to continue to retain the firm or select a different firm. The Audit Committee and its Chair are also involved in and approve the selection of the lead audit partner, who is limited to no more than five consecutive years in that role before the position must be rotated in accordance with SEC rules. Pursuant to these requirements, we had a new lead partner on the KPMG audit team for Fiscal 2019. The Audit Committee was directly involved in the selection of the new lead partner.
The Audit Committee has appointed KPMG to serve as the Company’s independent registered public accounting firm for Fiscal 2020. KPMG (or its predecessor firms) has served in that capacity for the Company since 1979. The Audit Committee and the Board believe that the continued retention of KPMG as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. Although we are not required to submit this matter to shareholders, the Board believes that it is a sound corporate governance practice to seek shareholder ratification of the appointment of KPMG. If shareholders do not ratify the appointment of KPMG, the Audit Committee will reconsider the appointment. Even if the appointment of KPMG is ratified by shareholders, the Audit Committee in its discretion may change the appointment at any time if it determines that such a change would be in the best interests of the Company.
One or more representatives of KPMG will be present at the Meeting. The representatives will have an opportunity to make a statement if they desire and will be available to respond to questions from shareholders.
WE RECOMMEND THAT YOU VOTE “FOR” THE RATIFICATION OF
KPMG LLP AS THE COMPANY’S FISCAL 2020 INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.

The Home Depot 2020 Proxy Statement
21

AUDIT COMMITTEE REPORT

Each member of the Audit Committee is independent under SEC rules, the NYSE listing standards and the Director Independence Standards set forth in the Company’s Corporate Governance Guidelines. The Board has determined that Mr. Brown and Ms. Gooden are “audit committee financial experts” as such term is defined in SEC rules.
The Audit Committee acts under a written charter, which sets forth its responsibilities and duties, as well as requirements for the Audit Committee’s composition and meetings. The Audit Committee charter is available on the Company’s Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Committee Members & Charters” and is also available in print at no charge upon request.
The Audit Committee has:
Reviewed and discussed the audited consolidated financial statements with the Company’s management and discussed with KPMG LLP, independent registered public accounting firm for the Company, the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees;
Received from KPMG the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s independence, discussed with KPMG its independence, and concluded that KPMG is independent from the Company and its management;
After review and discussions with management and KPMG, recommended to the Board that the audited consolidated financial statements for the Company be included in the Company’s Annual Report on Form 10-K for Fiscal 2019 for filing with the SEC; and
Reviewed and discussed the fees billed to the Company by KPMG for audit, audit-related, tax and all other services provided during Fiscal 2019, which are set forth below under “Independent Registered Public Accounting Firm’s Fees,” and determined that the provision of non-audit services is compatible with KPMG’s independence.
This report has been furnished by the current members of the Audit Committee:
J. Frank Brown, Chair
Ari Bousbib
Linda R. Gooden
Wayne M. Hewett
Manuel Kadre



22
The Home Depot 2020 Proxy Statement

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS FEES


AUDIT AND OTHER FEES
 
The following table presents fees billed or expected to be billed for services rendered by KPMG during Fiscal 2019 and Fiscal 2018 (amounts in thousands):
 
Fiscal 2019

Fiscal 2018

Audit Fees
$
5,831

$
5,623

Audit-Related Fees
233

222

Tax Fees
1,254

392

All Other Fees


Total Fees
$
7,318

$
6,237


Audit fees consist of fees for the annual audit of the Company’s consolidated financial statements included in its Annual Report on Form 10-K, the annual audit of the Company’s internal control over financial reporting, the quarterly reviews of the Company’s consolidated financial statements included in its Quarterly Reports on Form 10-Q, services related to other regulatory filings made with the SEC, comfort letters and statutory audits of certain subsidiaries.
Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the consolidated financial statements but are not reported in the prior paragraph. These fees are related to the Company’s employee benefit plan audits.
Tax fees for Fiscal 2019 consist of fees of $372,000 for tax compliance and preparation services and $882,000 for tax planning, advisory and consulting services. Tax fees for Fiscal 2018 consist of fees of $392,000 for tax compliance and preparation services and did not include any fees for tax planning, advisory and consulting services.
PRE-APPROVAL POLICY AND PROCEDURES
 
The Audit Committee has adopted a policy regarding the retention of the independent registered public accounting firm that requires pre-approval of all services by the Audit Committee or by the Chair of the Audit Committee. Prior to the engagement of our independent registered public accounting firm, our Audit Committee pre-approves the above-described services by category of service and maximum amount of fees per category. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval or for services in excess of the originally pre-approved amount. In those instances, our Audit Committee requires that we obtain specific pre-approval for those services. If pre-approval is required between Audit Committee meetings, the Chair of the Audit Committee may pre-approve the services, provided that notice of such pre-approval is given to the other members of the Audit Committee and presented to the full Audit Committee at its next regularly scheduled meeting.

The Home Depot 2020 Proxy Statement
23

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
(“S
AY-ON-PAY”) (ITEM 3 ON THE PROXY CARD)

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the Exchange Act, the Company provides its shareholders with the opportunity each year to vote to approve, on an advisory basis, the compensation of our named executive officers. The Company recommends that you vote for the approval of the compensation of our NEOs as described in this Proxy Statement. Accordingly, you may vote on the following resolution at the Meeting:
RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders.
As described in the Compensation Discussion and Analysis beginning on page 35 and our “Fiscal 2019 Executive Compensation Report Card” on page 37, the Company’s compensation philosophy is to align executive pay with Company performance. We believe that this alignment motivates our executives to achieve our key financial and strategic goals, creating long-term shareholder value.
Our executive compensation program links pay to performance and reflects best practices as follows:
ü
Approximately 88.4% of the Fiscal 2019 target compensation for our CEO and approximately 78.7% of the Fiscal 2019 target compensation for our other NEOs was variable and paid based upon attainment of our pre-determined corporate performance objectives or the performance of our common stock.
ü
For Fiscal 2019, approximately 65.2% of our CEO’s target compensation and approximately 57.4% of the target compensation of our other NEOs was equity-based and paid in a mix of performance shares, performance-based restricted stock, and options.
ü
Our NEOs do not receive tax reimbursements (also known as “gross-ups”), supplemental executive retirement plans, defined benefit pension plans, guaranteed salary increases or guaranteed bonuses and have limited perquisites.
ü
We employ a number of mechanisms to mitigate the chance of our compensation programs encouraging excessive risk taking, including an annual review and risk assessment of all elements of compensation by the LDC Committee, a compensation recoupment policy, stock ownership guidelines, and an anti-hedging policy.
Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any NEO and will not be binding on or overrule any decisions by the LDC Committee or the Board. Because we value our shareholders’ views, however, the LDC Committee and the Board will consider the results of this advisory vote when formulating future executive compensation policy. As noted on page 41 in the Compensation Discussion and Analysis, the LDC Committee considered the result of last year’s vote, in which approximately 97% of the shares voted were voted in support of the compensation of the Company’s NEOs. Your advisory vote serves as an additional tool to guide the LDC Committee and the Board in continuing to align the Company’s executive compensation program with the interests of the Company and its shareholders and is consistent with our commitment to high standards of corporate governance.
This vote is not intended to express a view on any specific element of compensation, but rather on the overall NEO compensation program and philosophy as described in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure as set forth below under “Executive Compensation.” We encourage you to carefully review these disclosures and to indicate your support for NEO compensation program.
WE RECOMMEND THAT YOU VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS AS PRESENTED IN THIS PROXY STATEMENT.

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The Home Depot 2020 Proxy Statement

SHAREHOLDER PROPOSAL REGARDING AMENDMENT OF SHAREHOLDER WRITTEN CONSENT RIGHT (ITEM 4 ON THE PROXY CARD)

Mr. John Chevedden, located at 2215 Nelson Avenue, No. 205, Redondo Beach, California 90278, is the beneficial owner of at least 100 shares of the Company’s common stock and has notified the Company of his intention to present the following proposal at the Meeting. The Company is not responsible for the accuracy or content of the proposal, which is presented as received from the proponent in accordance with SEC rules.
Proposal 4 – Initiate Meaningful Shareholder Written Consent
Shareholders request that our board of directors take the steps necessary to add these words to our bylaws:
“Any stockholder of record, seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice delivered to the secretary of the corporation, request the board of directors to fix a record date.”
This proposal includes taking the steps necessary to make each change in our governing documents needed to be consistent with the above text. The above quoted words are from the bylaws of a $60 Billion company.
When Home Depot directors adopted a shareholder right to act by written consent the Home Depot directors put in a hurdle to make written consent meaningless at Home Depot. Home Depot directors made it necessary for 25% of Home Depot shares to simply request a record date.
In other words Home Depot shareholders need the backing of $60 Billion of HD shares to simply ask for a record date. And once the owners of $60 Billion of HD stock provide management with their mandated direct contact information then it is easy for HD management to defeat written consent by using shareholder money to pressure the initial sponsoring shareholders to revoke their written consents.
While the owners of $60 Billion of HD stock are scrambling to get the support of a mandated $121 Billion of HD stock, HD management has a fish-in-a-barrel chance of casting doubt in the initial $60 Billion owners of HD stock. It is so easy because management has their direct contact information.
Thus a critical mass of the initial sponsors of written consent could be easily pressured to revoke their written consents while the clock is running for them to obtain the support of $121 billion of HD stock.
It makes no sense to require 25% of shares ($60 Billion of HD shares) to just get started to act by written consent when 3% of HD shares can put a proxy access candidate on the HD annual meeting ballot. Presently it takes the backing of $60 Billion of HD stock to get only the equivalent of a ticket to the parking lot of the stadium.
Please vote yes:
Initiate Meaningful Shareholder Written Consent – Proposal 4

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25

RESPONSE TO PROPOSAL REGARDING AMENDMENT OF SHAREHOLDER WRITTEN CONSENT RIGHT

The Company recommends that you vote against this shareholder proposal. This proposal asks the Company to amend our written consent right to permit a single shareholder to initiate a written consent solicitation. We believe such an amendment would create a significant risk of abuse of this right by a shareholder or small group of shareholders with special interests, to the detriment of our other shareholders and our Company. A consent solicitation can generate significant costs, require diversion of corporate resources, and require the time and attention of management and the Board, all of which impacts the Company and ultimately our shareholders as a whole. We believe that if a meaningful number of shareholders agree to initiate that consent action, then such a use of corporate resources is appropriate. But we do not believe that it is in the best interest of our Company or our shareholders for a single shareholder, acting alone, to initiate an action that could impose a significant burden on the Company’s resources.
When our shareholders approved the Company’s proposal to implement a written consent right in 2011, with 96% of voted shares voting in favor, they approved as part of that right a basic requirement that holders of at least 25% of our outstanding shares must first request that our Board set a record date determining which shareholders are entitled to act. This requirement ensures that the matter is of interest to more than just a single shareholder or small minority of our shareholders. During the process of considering how to implement our written consent right, we solicited input from many of the Company’s large institutional investors, who supported this important shareholder protection.
Furthermore, we believe that our written consent right should be viewed in light of our robust corporate governance standards, including other shareholder protections that we have adopted. As noted in our Corporate Governance Factsheet, located on our Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Factsheet,” we have adopted extensive governance best practices, including:
Majority voting for directors in uncontested elections,
Annual director elections,
A market standard proxy access right,
Shareholder right to call a special meeting, and
Shareholder right to act by majority written consent.
Reflecting these high standards of corporate governance, Institutional Shareholder Services (ISS) has consistently rated us as having a low corporate governance risk under its QualityScore governance rating system. 
This shareholder proposal ignores our robust corporate governance standards and would remove important protections that our written consent right provides for our shareholders. Without this protection, a single shareholder would be able to initiate a consent solicitation to advocate a special interest at the expense of our shareholders as a whole. We therefore recommend that you vote against this shareholder proposal.
WE RECOMMEND THAT YOU
VOTE “AGAINST” THE ADOPTION OF
THIS SHAREHOLDER PROPOSAL.

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The Home Depot 2020 Proxy Statement

SHAREHOLDER PROPOSAL REGARDING EEO-1 DISCLOSURE
(ITEM 5 ON THE PROXY CARD)

The Congregation of Benedictine Sisters, Boerne, Texas, located at 285 Oblate Drive, San Antonio, Texas 78216, is the beneficial owner of more than $2,000 in shares of the Company’s common stock and has notified the Company of its intention to present the following proposal at the Meeting as lead proponent along with several other co-proponents. We will provide the name, address and amount of shares held by the co-proponents to shareholders promptly upon oral or written request. The Company is not responsible for the accuracy or content of the proposal, which is presented as received from the proponents in accordance with SEC rules.
2020 Home Depot, Inc. EEO-1 Disclosure
WHEREAS: Equal employment opportunity (EEO) is a fair employment practice and an investment issue. We believe companies with good EEO records have a competitive advantage in recruiting/retaining employees. We believe Home Depot customers are increasingly diverse. A diverse work force is more likely to anticipate and respond effectively to consumer demand.
EEO practices have economic relevance. Home Depot annually files an EEO-1 report with the Equal Employment Opportunity Commission. This information could be available to shareholders at a minimal additional cost. In 2001, Home Depot provided EEO information to investors upon request. Since then, Home Depot reversed policy on its disclosure of this information.
Allegations of discrimination in the workplace burden shareholders with costly litigation/fines which can damage a company's reputation.
Home Depot has paid out $100 million plus to settle discrimination lawsuits, including $87 million in a 1997 settlement and $5.5 million to settle charges of class-wide gender, race and national origin discrimination at 30 Colorado stores.
In 2015, Home Depot settled a gender discrimination lawsuit for $83,400, alleging that women who were qualified for sales positions were relegated to cashier jobs rather than sales jobs.
In 2016, Judge David Carter approved a $3 million Home Depot class action lawsuit settlement, ending allegations that Home Depot violated the Fair Credit Reporting Act (FCRA) by using improper background check forms on job applications. Home Depot agreed to comply with FCRA.
In 2018, an EEOC lawsuit was resolved with Home Depot paying $100,000 for failing to accommodate and then firing an employee with a disability-related emergency. The Peru, Illinois store is required to provide ADA training and semi-annual reporting to the EEOC.
In 2019, 33.08% of Home Depot shares voted (counting votes for and against) supported this proposal.
RESOLVED:
Shareholders request that Home Depot prepare a diversity report, at reasonable cost and omitting confidential information, available to investors by September 2020, including the following:
1. A chart identifying employees according to their gender and race in the nine major EEOC-defined job categories for the last three years, listing numbers or percentages in each category;
2. A summary description of any affirmative action policies and programs to improve performance, including job categories where women and minorities are underutilized;
3. A description of policies/programs oriented toward increasing diversity in the workplace.
SUPPORTING STATEMENT:
In 2015, the U.S. Equal Employment Opportunity Commission reported racial minorities comprised 37.2 percent of the private industry workforce, but just 14.01 percent of executives and managers. Women represented 47.85 percent of the workforce, but just 29.73 percent of executives and managers.
We agree with a recommendation of the 1995 bipartisan Glass Ceiling Commission that “public disclosure of diversity data—specifically data on the most senior positions—is an effective incentive to develop and maintain innovative, effective programs to break the glass ceiling barriers.” Home Depot has demonstrated leadership on many corporate social responsibility issues. We ask the company to demonstrate leadership in diversity by committing to EEO disclosure.

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27

RESPONSE TO PROPOSAL REGARDING EEO-1 DISCLOSURE

The Board recommends that you vote against this shareholder proposal. We believe that the Company is already addressing the principal concerns of this proposal. For the past two years the Company has publicly disclosed gender and ethnicity statistics for our U.S. workforce. This information can be found on our ESG Investor page on our website at https://ir.homedepot.com/esg-investors, as well as in our 2019 Responsibility Report on our website at https://corporate.homedepot.com/responsibility. Going forward, we will include three rolling years of this diversity data in our annual responsibility reports, which will address the proponents’ request for this data over a three-year period. Furthermore, we believe that our diversity disclosure addresses shareholders’ concerns because it aligns with our corporate structure better than EEO-1 reporting, reflects feedback from many of our shareholders, and provides a more useful comparison for shareholders.
As previously discussed in this Proxy Statement, beginning in 2018, we launched an enhanced ESG engagement program with shareholders representing over 40% of our outstanding shares to discuss a number of environmental, social and governance matters, including our disclosures regarding diversity and inclusion. The general feedback that we received from those engagements was that while our shareholders desired disclosure of diversity data at some level, the narrow, prescribed EEO-1 categories were not specifically what they were looking for. Instead, they wanted disclosure that is relevant to the Company; is structured in a way that is more aligned with how the Board, the LDC Committee, and management view our diversity and inclusion initiatives; and is easily understood and comparable to information provided by other similarly situated companies.
In response to this feedback, in late 2018 we released a diversity report disclosing gender and ethnicity statistics for our U.S. workforce, including (1) U.S. associates as a whole, (2) those at the manager level and above (excluding officers), (3) officers, and (4) our Board. We then included two years of this data in our 2019 Responsibility Report, in addition to our existing disclosures regarding our diversity and inclusion initiatives. In future responsibility reports, we plan to include three years of this data, consistent with other data in that report.
With this disclosure, we believe that we have substantially addressed the concerns put forward by the proponent. We are providing a report regarding the diversity of our workforce, addressing both gender and ethnicity, in a format that better aligns to our organization’s titles and reporting structure than the EEO-1 categories. Moreover, we are including this information in the context of a broader report that provides extensive additional information about our diversity and inclusion programs and initiatives as a whole, as discussed in more detail below.
As detailed in our 2019 Responsibility Report, we are committed to maintaining a diverse and inclusive environment for our associates. This commitment reflects one of our core values, “Respect for All People.” We are also focused on attracting, retaining and developing diverse talent, which ensures that the composition of our customers and our communities are reflected and represented in our Company. We maintain a team of associates led by our Chief Diversity Officer that provides focused leadership in developing a diverse and inclusive work environment in which all associates are valued, respected, encouraged and supported to do their best work. Our commitment to diversity is also reflected in the makeup of our senior leadership team and our Board. In 2017, our CEO joined the CEO Action for Diversity & Inclusion, pledging our commitment to ensure the continued advancement of diversity and inclusion in the workplace. We have also taken a number of other steps to promote our diversity and inclusion initiatives within our strategic framework, including the following:
We maintain a diversity microsite on The Home Depot careers website, available at careers.homedepot.com > Culture > Diversity, which provides potential candidates with a unique perspective into our diverse and inclusive culture and workforce. In addition, we use an employment marketing strategy that enables us to source and recruit diverse associates through such avenues as national and local career fairs, social media, and multilingual ads and flyers.
We partner with several diverse local and national organizations, such as Catalyst, the National Association for the Advancement of Colored People (NAACP), National Urban League, Hispanic Association on Corporate Responsibility and the National Association of Chinese Americans, to promote community involvement and both attract and develop diverse talent.
Our internal communication strategy includes diversity and inclusion messaging focused on increasing cultural awareness and reiterating the importance of diversity and inclusion as core values. This includes focused communications in our stores and featured articles on our internal website showcasing associate accomplishments and opportunities for growth and development.

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The Home Depot 2020 Proxy Statement


We engage our associates through our seven Associate Resource Groups (“ARGs”), which are comprised of associates with an interest in the following dimensions of diversity: African-American, Disabled, Hispanic/Latino, LGBT (Lesbian, Gay, Bisexual and Transgender), Military, Pan-Asian and Women. Our ARGs are committed to supporting the Company’s business objectives and driving associate engagement through professional development, cultural awareness and community outreach.
In addition to diversity and inclusion training for all leaders, we develop our leaders’ capabilities through our Leaders Inclusion Network. This program builds on our Women in Leadership efforts with a gender-balanced approach to promote inclusion and empower leaders to champion diverse talent. We also provide unconscious bias training for all officers.
Our diversity and inclusion team partners with our HR department and functional leaders to continuously foster and improve inclusiveness within training programs, benefits, succession planning, and other operations and processes.
Our annual associate survey provides insight on our associates’ assessment of our workplace, including our diversity and inclusion practices, and their feedback is used to improve associate experiences.
Our LDC Committee, which oversees our diversity and inclusion efforts, is committed to promoting diversity throughout the Company. The LDC Committee reviews our diversity and inclusion strategy and initiatives on at least an annual basis.
The Board does not believe adoption of this proposal would enhance the Company’s existing commitment to diversity and inclusion in any meaningful way. Several of the items requested by the proponent are duplicative of matters discussed in our 2019 Responsibility Report. With respect to EEO-1 data, we do not believe that public dissemination of this information would promote the goal of increasing diversity. A Form EEO-1 is a confidential standardized form that requires companies to categorize their workforce solely by gender and race according to EEOC-defined generalized job categories. While management does track and review these categories for compliance purposes, they do not reflect the way we monitor the Company’s progress against its diversity and inclusion initiatives. Moreover, the information cited as justification for the shareholder proposal does not support the requested disclosure. One of the referenced matters is more than 20 years old, and another, the FCRA case, is not even related to diversity or anti-discrimination. The remainder involve isolated legal claims that, for a company with more than 400,000 employees, are not in any way representative of our culture or commitment to diversity and inclusion or reflective of our legal compliance.
We believe that the diversity data we currently provide, along with the information provided above and in our Responsibility Report, better reflects our diversity and inclusion commitment and initiatives. We also believe this disclosure is more consistent with the data provided by our peers, to the extent they provide diversity statistics at all, and accordingly presents a more useful comparison for our shareholders to review.
WE RECOMMEND THAT YOU
VOTE “AGAINST” THE ADOPTION OF
THIS SHAREHOLDER PROPOSAL.

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29

SHAREHOLDER PROPOSAL REGARDING EXECUTIVE OWNERSHIP GUIDELINES (ITEM 6 ON THE PROXY CARD)

The Lynne M Gerber Traditional Beneficial IRA of Judith S Gerber, together with other co-filers, represented by As You Sow, located at 2150 Kittredge St., Suite 450, Berkeley, CA 94704, has notified the Company of its intention to present the following proposal at the Meeting. The Lynne M Gerber Traditional Beneficial IRA of Judith S Gerber is the beneficial owner of more than $2,000 in shares of the Company’s common stock. We will provide the name, address and amount of shares held by the co-proponents to shareholders promptly upon oral or written request. The Company is not responsible for the accuracy or content of the proposal, which is presented as received from the proponent in accordance with SEC rules.
BE IT RESOLVED: The shareholders of Home Depot urge the Compensation Committee of the Board of Directors to adopt a policy, applicable to future grants and awards of equity compensation, requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs for a significant period of time following the termination of their employment (through retirement or otherwise). The policy shall apply to future grants and awards of equity compensation.
SUPPORTING STATEMENT: Requiring senior executives to hold a significant portion of shares obtained through compensation plans after the termination of employment is an evolving best practice. For example, CalPERS recently updated its Governance and Sustainability Principles to include language suggesting that equity compensation earned by executives should be held for a minimum of two years after they retire or separate from the company.
Such a policy would help focus the attention of Home Depot executives on long term success and better align executive interests with those of Home Depot’s shareholders. One reason boards provide incentives with stock is to create such long-term alignment. Awards that fail to include sufficient holding requirements instead allow executives to cash out options near or at the top of the market [sic]
A CEO’s stake in a company should grow larger with time. In 2018, yet Home Depot Chair, President and CEO Craig exercised 231,014 option shares realizing value of over $35.6 million dollars. In 2017 he exercised 231,033 options realizing value over $29 million dollars. Menear did not invest a significant portion of this $60 million into company stock: his beneficial ownership increased only slightly over this time period.
In addition, The Washington Post identified Menear as one of more than 50 executives who sold during company buyback programs. According to the Post, “[i]n a 27-day period that included the dates Menear and Tome [sic] sold, as Home Depot later reported to the SEC, it purchased $96.2 million of its stock, adding to demand for the stock. Public filings do not show – and companies are not obliged to tell – whether the company was buying on the exact days its executives sold.”
Shareholders believe it is important for the company to promote long-term and sustainable value creation that can withstand predictable long-term risks.
We view a more rigorous retention requirement as superior to the current stock ownership guidelines.
We urge shareholders to vote for this proposal.


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The Home Depot 2020 Proxy Statement

RESPONSE TO PROPOSAL REGARDING EXECUTIVE OWNERSHIP GUIDELINES

The Board recommends that you vote against this shareholder proposal. We believe that our executives are already subject to meaningful ownership guidelines and currently hold significant amounts of Company stock, such that their interests are well aligned with our shareholders interests. Moreover, expanding our stock retention requirements past termination of employment (due to retirement or otherwise), as proposed by the proponent, would put us at risk from a competitive standpoint in attracting top talent, since very few of our peer companies have similar requirements for their executives.
As discussed in this Proxy Statement in the Compensation Discussion and Analysis under “Management of Compensation-Related Risk,” the Company currently has in place Executive Stock Ownership and Retention Guidelines that require our CEO, executive vice presidents, and any other other Section 16 officers to hold shares of common stock equal to a specified multiple of base salary. This program assists the Company in focusing executives on long-term success and shareholder value. Our NCG Committee monitors compliance with these guidelines annually. The Stock Ownership and Retention Guidelines are available on our website at https://ir.homedepot.com/corporate-governance/overview.
As shown in the table on page 48 of this Proxy Statement, as of March 6, 2020, all of our NEOs not only complied with their stock ownership and retention guidelines, but in each case also exceeded those guidelines. Mr. Menear, for example, is required to hold at least 6x his base salary, but as of March 6, 2020 he held 32x, or approximately $42 million. Ms. Tomé, prior to her retirement, held over 90x her base salary, and as of March 6, 2020, still held stock valued at over 80x her final base salary. Furthermore, the proponent’s statements about our CEO’s option exercises fail to take into account the fact that options make up the smallest proportion of his equity awards (currently only 20%) and that his total stock holdings have increased throughout his tenure as CEO, from 10x his base salary to 32x.
Our equity awards are also designed with a long-term focus on pay for performance and alignment with shareholder interest. Our awards have longer vesting periods than many of our peers, with the performance-based restricted stock and stock options vesting over five years and the performance shares cliff vesting after three years (subject to achievement of performance goals). Furthermore, for executive officers who have reached retirement eligibility (age 60 with at least five years of service), while their awards are no longer forfeitable upon retirement or termination without cause, they remain subject to continued vesting requirements post retirement. The value of equity subject to continued vesting requirements as of fiscal year end for Mr. Menear and Mr. Holifield was $30.8 million and $9.0 million, respectively, and for Ms. Tomé at the time of her retirement was $21.9 million, as set forth on page 61 under “Executive Compensation—Potential Payments Upon Termination or Change in Control.”
As an additional risk mitigation measure, we also have an executive compensation clawback policy, which we updated in early 2019 to include reputational as well as financial harm. This policy, which is discussed in more detail in the Compensation Discussion and Analysis under “Management of Compensation-Related Risk,” applies to bonus, incentive payment, equity award or other compensation awarded to or received by an executive officer if the compensation was based on any financial results or operating metrics that were achieved as a result of that executive officer’s knowing or intentional fraudulent or illegal conduct or if the executive officer engaged in any intentional misconduct that caused the Company material financial or reputational harm. We also have a robust anti-hedging policy, which prohibits all associates, officers and directors from entering into hedging or monetization transactions designed to limit the financial risk of owning Company stock, as discussed in the Compensation Discussion and Analysis under “Management of Compensation Related Risk.”
Furthermore, the proponent’s statements about our share buyback program fail to take into account the structure of and our transparency with respect to our program. We have clear capital allocation principles that incorporate our views and approach to our share buyback program, as discussed in the Investor Factsheet at the beginning of this Proxy Statement. Those principles state that after investing in the business and paying our dividend, we use excess cash to repurchase shares. At the start of our fiscal year, in the guidance we provide in our earnings release, we discuss how much we plan to repurchase for the year. We then use a programmatic, price agnostic approach to complete the return of the excess capital, such that we are in the market repurchasing shares throughout the year. We have taken this approach for the last ten years and will continue to do so as long as market conditions and operating results warrant. Therefore, because under normal circumstances we are in the

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31


market consistently regardless of whether or not an executives sells shares, there is a level playing field for all market participants.
Our compensation programs are aimed at ensuring executives focus on long-term success and shareholder value and discourage excessive risk-taking while they are in leadership roles. We believe that our stock ownership and retention guidelines, the structure of our equity awards, our clawback policy, and our anti-hedging policy, as well as the structure of our share repurchase program, are sufficient to manage compensation-related risks and maintain alignment between executives and shareholders.
WE RECOMMEND THAT YOU
VOTE “AGAINST” THE ADOPTION OF
THIS SHAREHOLDER PROPOSAL.


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The Home Depot 2020 Proxy Statement

SHAREHOLDER PROPOSAL REGARDING ELECTIONEERING CONTRIBUTIONS CONGRUENCY ANALYSIS (ITEM 7 ON THE PROXY CARD)

Tara Health Foundation, located at 47 Kearny Street, San Francisco, CA 94108, is the beneficial owner of more than $2,000 in shares of the Company’s common stock and has notified the Company of its intention to present the following proposal at the Meeting. The Company is not responsible for the accuracy or content of the proposal, which is presented as received from the proponent in accordance with SEC rules.
Shareholder Proposal on Electioneering Contributions
Whereas:
The Home Depot's Nominating and Corporate Governance Committee annually reviews our company's political contributions. Home Depot has stated, “In an effort to ensure that the federal, state and local governments of those countries in which we conduct business act responsibly and in the best interest of our customers and associates, Home Depot actively participates, and encourages its associates to participate, in the political process.”
Home Depot sponsors a political action committee (PAC) which “supports public officials and candidates who understand the issues affecting Home Depot and promote a favorable business climate for the Company.”
However, Home Depot's politically focused expenditures appear to be misaligned with its public statements of its views and operational practices. For example, Home Depot has committed to achieving a 50% reduction in carbon emissions by 2035, yet is a member of the U.S. Chamber of Commerce, which has long and consistently lobbied to roll back specific US climate regulations and promoted regulatory frameworks that would significantly slow a transition away from a GHG emission-intense energy mix.
In addition, Home Depot has evidenced a strong commitment to gender diversity through its support of a women's employee resource group, a “Women in Leadership” curriculum, and other actions, including the provision of strong reproductive health and maternity benefits. Yet based on public data, the proponent estimates that in the last two election cycles, Home Depot and The Home Depot Political Action Committee (PAC) has made political donations totaling $4.9 million to politicians and political organizations working to weaken access to abortion.
If the company's actions appear to conflict with its expressions of social and environmental intention, stakeholders may become concerned that its statements are “corporate puffery,” language described by the United States Federal Trade Commission as marketing exaggerations intended to "puff up" products and not able to be relied upon by consumers and investors.
Proponents believe Home Depot should establish policies and reporting systems that minimize risk to the firm's reputation and brand by addressing possible missteps in corporate electioneering and political spending that are in conflict with company values and policies on such issues as diversity and environmental protection.
Resolved:
The Home Depot publish, at least annually, a report prepared at reasonable expense analyzing the congruency of political and electioneering expenditures during the preceding year against publicly stated company values and policies.
Supporting Statement:
Proponents recommend that such report also contain management's analysis of risks to our company's brand, reputation, or shareholder value of expenditures in conflict with company values. “Expenditures for electioneering communications” means spending, from the corporate treasury and from the PAC, directly or through a third party, at any time during the year, on printed, internet or broadcast communications, which are reasonably susceptible to interpretation as in support of or opposition to a specific candidate.


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33

RESPONSE TO PROPOSAL REGARDING ELECTIONEERING CONTRIBUTIONS CONGRUENCY ANALYSIS

The Board recommends that you vote against this shareholder proposal. As the world’s largest home improvement retailer, we participate in the political process in a bipartisan manner to support policies that further our business interests and create shareholder value. We are committed to complying with all laws governing our participation in the political process and conducting our activities in a transparent manner. We believe that our current practices, as described below, provide transparency and accountability with respect to our political spending.
We maintain a Political Activity and Government Relations Policy (the “Policy”), available on our Investor Relations website at https://ir.homedepot.com under “Corporate Governance > Overview,” that sets forth the standards for participation in the political process by the Company and its associates. The Policy contains links to two reports, which are also available on our ESG Investor page of our website at https://ir.homedepot.com/esg-investors. The first is an annual report of the Company’s political contributions. This information is also available through the Federal Election Commission’s website at http://www.fec.gov, as is information about the political action committee sponsored by the Company. The second is an annual report providing the aggregate dues paid to trade associations that engage in lobbying activities, including the amount spent on those activities, and a list of any of these organizations to which the Company makes yearly payments of $5,000 or more. Collectively, this information provides transparency about the Company’s political contributions and trade association activities.
The Policy also provides a review process for all political expenditures, addressing both corporate political contributions and any electioneering activity. As part of that process, the NCG Committee conducts an annual review of the Company’s political contributions and payments to trade associations that engage in lobbying activities.
With respect to electioneering, the Policy provides that the NCG Committee must approve in advance any public advertisement directly or indirectly paid for by the Company that expressly advocates the election or defeat of a candidate in which the Company is identified specifically as an advocate of such election or defeat. To date, the Company has not made any expenditure for such electioneering communications, and has no present plans to make any such expenditures.
We believe that participating in the political process in a bipartisan and transparent manner, together with our encouragement of our associates to participate in the political process to address their own diverse interests and priorities, both enhances shareholder value and promotes good corporate citizenship. We do not believe, however, that implementing the annual reporting requested by the proponent would provide shareholders with any more beneficial information than is already available.
WE RECOMMEND THAT YOU
VOTE “AGAINST” THE ADOPTION OF
THIS SHAREHOLDER PROPOSAL.


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The Home Depot 2020 Proxy Statement

EXECUTIVE COMPENSATION


COMPENSATION DISCUSSION AND ANALYSIS
 
This section of the Proxy Statement provides our discussion and analysis of the Company’s Fiscal 2019 executive compensation program, focusing on the compensation of our named executive officers, or “NEOs.” Our NEOs for Fiscal 2019 were:
Craig A. Menear, Chairman, CEO and President;
Richard V. McPhail, Executive Vice President and CFO, who was promoted to this role on September 1, 2019;
Mark Q. Holifield, Executive Vice President – Supply Chain and Product Development;
Edward P. Decker, Executive Vice President – Merchandising;
Ann-Marie Campbell, Executive Vice President – U.S. Stores; and
Carol B. Tomé, former CFO and Executive Vice President – Corporate Services, who served in this role until her retirement on August 31, 2019.
In Fiscal 2019, all of the Executive Vice Presidents listed above reported directly to the CEO.

The Compensation Discussion and Analysis is organized as follows:
EXECUTIVE SUMMARY
36
Fiscal 2019 Company Business Objectives and Performance
36
Compensation Philosophy and Objectives: Pay for Performance
36
Fiscal 2019 Executive Compensation Report Card: The Home Depot Pays for Performance
37
Performance-Based Features of Fiscal 2019 Compensation
38
Impact of Fiscal 2019 Business Results on Executive Compensation
38
Opportunity for Shareholder Feedback
38
COMPENSATION DETERMINATION PROCESS
39
Benchmarking
40
Mitigating Compensation Risk
40
Consideration of Last Year’s Say-on-Pay Vote
41
ELEMENTS OF OUR COMPENSATION PROGRAMS
42
Base Salaries
42
Annual Incentive
42
Long-Term Incentives
44
Deferred Compensation Plans
46
Perquisites
47
Other Benefits
47
MANAGEMENT OF COMPENSATION-RELATED RISK
47
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
48
TAX DEDUCTIBILITY CONSIDERATIONS
48
 
 


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35


EXECUTIVE SUMMARY
 
Fiscal 2019 Company Business Objectives and Performance
Over the past several years, the retail landscape has been changing at an unprecedented rate. To address these changes and continue to grow our business, we began a multi-year investment program in Fiscal 2018 to create what we call the One Home Depot experience. Simply put, our vision for One Home Depot is a frictionless shopping experience that is aimed at allowing our customers to engage with us seamlessly across multiple channels. To accomplish this, we are investing approximately $11 billion over a multi-year period in our stores, associates, interconnected and digital experience, pro customer experience, services business, supply chain, and product and innovation. This process is supported by five core strategies aimed at connecting the business end to end. The five strategies, which are discussed in more detail in our 2019 Form 10-K, are:
Connect Associates to Customer Needs
Interconnected Experience: Connect Store to Online, Online to Store
Connect Products and Services to Customer Needs
Connect Product to Shelf, Site and Customer
Innovate Our Business Model and Value Chain
Throughout Fiscal 2019, we executed against these strategic initiatives as we continued on our journey to create the One Home Depot experience. Highlights of our 2019 performance include the following:
Increased net sales by 1.9% to $110.2 billion. Fiscal 2019 was a 52-week year, compared to Fiscal 2018, which was a 53-week year. The extra week in Fiscal 2018 added approximately $1.7 billion of net sales to Fiscal 2018.
Increased operating income by 2.0% to $15.8 billion.
Increased net earnings by 1.1% to $11.2 billion and diluted earnings per share by 5.3% to $10.25.
Generated $13.7 billion in operating cash flow.
Increased ROIC from 44.8% to 45.4%.
As a result of our significant cash flow from operations and disciplined capital allocation, we were also able to return value to our shareholders during Fiscal 2019 through $6.0 billion in dividends and $7.0 billion in share repurchases. Our stock price increased 24% from the beginning of Fiscal 2019, and our one-, three- and five-year total shareholder return, or TSR, was 27.1%, 77.1% and 144.5%, respectively.
Compensation Philosophy and Objectives: Pay for Performance
We designed our compensation program for associates at all levels with the intent to align pay with performance. By doing so, we seek to motivate associate performance and enhance morale, which drives a superior customer experience. We believe this alignment encourages achievement of our strategic goals and creation of long-term shareholder value.
The principal elements of our compensation program for executive officers are base salary, annual incentives and long-term incentives. We use a number of the financial metrics highlighted above, which drive shareholder value, as the key performance metrics in our compensation programs. This congruency aligns both pay with performance and executive interests with shareholder interests. The following Executive Compensation Report Card highlights the alignment between pay and performance for each of these elements of our compensation program for Fiscal 2019.

36
The Home Depot 2020 Proxy Statement


FISCAL 2019 EXECUTIVE COMPENSATION REPORT CARD:
THE HOME DEPOT PAYS FOR PERFORMANCE
Approximately 88.4% of our CEO’s target compensation for Fiscal 2019 (approximately 78.7% on average for our other active NEOs who served in their current role for the full fiscal year) was at risk and contingent upon the achievement of corporate performance objectives and/or share price performance. The components of total target compensation for Fiscal 2019 were:
proxystexeccom2202001.jpg
Below are the variable components of Fiscal 2019 total target compensation, including the performance measures used for each, the actual Company performance in Fiscal 2019 relevant to those measures, and the resulting compensation paid to our NEOs.
Fiscal 2019 Performance Measures and Actual Performance
 
Executive Compensation Results
Management Incentive Plan:
 
 
 
 
($ in billions)
Metrics
Threshold

Target

Maximum

Actual*

 
NEO
Performance as
% of Target

MIP Payout

Sales (45%)

$106.15


$111.74


$134.09


$110.25

 
C. Menear
79.6
%

$2,070,472

Operating Profit (45%)

$14.45


$16.06


$19.27


$15.85

 
R. McPhail
79.6
%

$476,142

Inventory Turns (10%)
4.60

5.11

6.14

4.88

 
M. Holifield
79.5
%

$667,640

 
 
 
 
 
 
E. Decker
79.5
%

$663,666

 
 
 
 
 
 
A. Campbell
79.5
%

$615,977

 
 
 
 
 
 
C. Tomé
79.6
%

$661,954

 
 
 
 
 
 
 
 
 
Fiscal 2019-2021 Performance Share Award:
 
 
 
 
($ in billions)
Metrics
Threshold

Target

Maximum

Results as of FYE2019*

 
At the end of the first year of the three-year performance cycle, results are tracking between threshold and target.
Three-Year Average ROIC (50%)
41.5
%
46.1
%
50.7
%
45.4
%
 
Shares are received following the end of the three-year performance period, if and to the extent the performance measures are met.
Three-Year Average Operating Profit (50%)
$15.25
$16.95
$18.64
$15.85
 
Payout as a Percent of Target
25%

100%

200%

n/a

 
 
 
 
 
 
 
 
 
 
 
 
 
Performance-Based Restricted Stock:
 
 
 
 
Restricted stock is forfeited if Fiscal 2019 operating profit is not at least 90% of the MIP target.
 
Shares of restricted stock were not forfeited, and will vest 50% after 30 months and 50% after 60 months from grant date.
($ in billions)
Metric
Threshold
(90% of Target)
 
Target

Actual*

 
Operating Profit
$
14.45
 

$16.06


$15.85

 
 
 
 
 
 
 
 
Stock Options:
Based on stock price performance – annual grant with an exercise price of $189.25 made on March 27, 2019
 
At the end of Fiscal 2019, options were in-the-money by $38.85 per share.
 
 
Options vest 25% on the second, third, fourth and fifth anniversaries of the grant date.
* See “—Elements of Our Compensation Programs—Adjustments” on page 43 below, “—Elements of Our Compensation Programs—Fiscal 2019 MIP Results” on page 44 below, and “—Elements of Our Compensation Programs—Performance Shares” on page 44 below.

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37


Performance-Based Features of Fiscal 2019 Compensation
The following features of our compensation program for executive officers illustrate our performance-based compensation philosophy and our practice of following compensation best practices:
ü
100% of annual incentive compensation under our Fiscal 2019 MIP was tied to performance against pre-established, specific, measurable financial performance goals.
ü
One half of the annual Fiscal 2019 equity grant was in the form of a three-year performance share award with payout contingent on achieving pre-established average ROIC and operating profit targets over the three-year performance period.
ü
Our performance-based restricted stock awards, which comprised 30% of the annual Fiscal 2019 equity grant, were forfeitable if Fiscal 2019 operating profit had been less than 90% of the MIP target. Dividends on performance-based restricted stock grants are accrued and not paid out to executive officers unless and until the performance goal is met.
ü
Our equity awards have longer vesting periods than many of our peers, with the performance-based restricted stock and stock options vesting over five years and the performance shares cliff vesting after three years (subject to achievement of performance goals), which aligns executive officers’ interests with the interests of our shareholders in the long-term performance of the Company.
ü
Approximately 88.4% of our CEO’s total target compensation was tied to the achievement of corporate performance objectives and/or share price performance.
ü
We do not provide tax reimbursements, also known as “gross-ups,” to executive officers; we have limited perquisites; and we do not have any supplemental executive retirement plans, defined benefit pension plans, guaranteed salary increases or guaranteed bonuses.
ü
We prohibit all associates, officers and directors from entering into hedging or monetization transactions designed to limit the financial risk of owning Company stock.
Impact of Fiscal 2019 Business Results on Executive Compensation
The amount of incentive compensation paid to our executive officers, if any, is determined by our performance against our Fiscal 2019 business plan, a plan intended to be challenging in light of prevailing economic conditions, yet attainable through disciplined execution of our strategic initiatives. The compensation earned by our NEOs in Fiscal 2019 reflects our corporate performance for the fiscal year:
The LDC Committee approved salary increases for the NEOs based on its assessment of individual performance and other factors, as discussed in more detail below.
Our MIP paid out below the target performance level as a result of sales, operating profit and inventory turns performance below target. A number of external headwinds impacted sales and operating profit, including significant lumber price deflation and increased shrink.
The performance condition on the performance-based restricted stock granted in Fiscal 2019 was satisfied, although the shares still remain subject to service-based vesting requirements; and
The NEOs earned approximately 142.8% of their 2017-2019 performance share award because we achieved average ROIC and operating profit over the three-year performance period of 38.0% and $15.25 billion, respectively, reflecting performance in excess of the target level for each metric.

Opportunity for Shareholder Feedback
The LDC Committee carefully considers feedback from our shareholders regarding executive compensation matters. Shareholders are invited to express their views or concerns directly to the LDC Committee or the Board in the manner described under “Communicating with the Board” on page 11 of this Proxy Statement.

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The Home Depot 2020 Proxy Statement


COMPENSATION DETERMINATION PROCESS
 
Participant
 
Role in the Executive Compensation Determination Process
Independent Members of the Board
The independent members of the Board, consisting of all directors other than Mr. Menear, evaluated the performance and determined the compensation of the CEO.
LDC Committee
The LDC Committee evaluated the performance and determined the compensation of our executive officers other than the CEO.
 
The LDC Committee evaluated the CEO’s performance and made recommendations to the independent members of the Board regarding compensation for the CEO.
 
The LDC Committee may delegate its responsibilities to subcommittees, but did not delegate any of its authority with respect to the compensation of any executive officer for Fiscal 2019.
Executive Officers
The CEO and the EVP-HR made recommendations to the LDC Committee as to the amount and form of executive compensation for executive officers (other than the CEO and the EVP-HR).
 
At the request of the LDC Committee, both the EVP-HR and the CEO regularly attended LDC Committee meetings, excluding executive sessions where their respective compensation and other matters were discussed.
Independent Compensation
Consultant
In November 2018, the LDC Committee engaged Pay Governance LLC as its independent compensation consultant for Fiscal 2019 to provide research, market data, survey information and design expertise in developing executive and director compensation programs. Pay Governance provides consulting services solely to compensation committees.
 
A representative of Pay Governance attended LDC Committee meetings in Fiscal 2019 and advised the LDC Committee on all principal aspects of executive compensation, including the competitiveness of program design and award values and specific analyses with respect to the Company’s executive officers, including the CEO. The compensation consultant reports directly to the LDC Committee, and the LDC Committee is free to replace the consultant or hire additional consultants or advisers at any time.
 
Pursuant to the independent compensation consultant policy adopted by the LDC Committee, its compensation consultant provides services solely to the LDC Committee and is prohibited from providing services or products of any kind to the Company. Further, affiliates of the compensation consultant may not receive payments from the Company that would exceed 2% of the consolidated gross revenues of the compensation consultant and its affiliates during any year.
 
Pay Governance provided services solely to the LDC Committee in Fiscal 2019, and none of its affiliates provided any services to the Company. In addition, under the Company’s independent compensation consultant policy, the LDC Committee assessed Pay Governance’s independence and whether its work raised any conflicts of interest, taking into consideration the independence factors set forth in applicable SEC and NYSE rules. Based on that assessment, including review of a letter from Pay Governance addressing each of those factors, the LDC Committee determined that Pay Governance was independent and that its work did not raise any conflicts of interest.

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Benchmarking
We do not target any specific peer group percentile ranking for total compensation or for any particular component of compensation for our NEOs. The LDC Committee considers each executive’s compensation history and peer group market position as reference points in awarding annual compensation. For our CEO, the LDC Committee considered data provided by Pay Governance from two peer groups. The first consisted of the Fortune 50 companies, excluding certain financial services and other companies due to their unique compensation structure. This group reflects companies of similar size and complexity to us. The second group, listed below, consisted of retailers with revenues greater than $10 billion with whom we compete for executive talent.
Retail Peer Group
AutoNation, Inc.
eBay, Inc.
Murphy USA, Inc.
The Gap, Inc.
 
 
 
 
AutoZone, Inc.
Genuine Parts Company
Nordstrom, Inc.
The Kroger Co.
 
 
 
 
Bed Bath & Beyond Inc.
Group 1 Automotive, Inc.
Office Depot, Inc.
The TJX Companies, Inc.
 
 
 
 
Best Buy Co., Inc.
J. C. Penney Company, Inc.
Penske Automotive Group, Inc.
United Natural Foods, Inc.
 
 
 
 
BJ’s Wholesale Club Holdings, Inc.
Kohl’s Corporation
Qurate Retail, Inc.
Walgreens Boots Alliance, Inc.
 
 
 
 
CarMax, Inc.
L Brands, Inc.
Rite Aid Corporation
Wal-Mart Stores, Inc.
 
 
 
 
Costco Wholesale Corporation
Lithia Motors, Inc.
Ross Stores, Inc.
 
 
 
 
 
Dollar General Corporation
Lowe’s Companies, Inc.
Sonic Automotive, Inc.
 
 
 
 
 
Dollar Tree, Inc.
Macy’s, Inc.
Target Corporation
 
The retail peer group remained largely unchanged from Fiscal 2018. We added BJ’s Wholesale Club Holdings, Inc., eBay, Inc., Lithia Motors, Inc., and Sonic Automotive Inc., which met the relevant criteria based on their 2018 revenue, and United Natural Foods, Inc., which met the criteria following its acquisition of SuperValu Inc. We also removed CVS Health Corporation, which is no longer a pure retailer following its acquisition of Aetna, and Sears Holding Corporation, which filed for bankruptcy.
In reviewing the benchmarking data in connection with setting Mr. Menear’s Fiscal 2019 compensation, the LDC Committee and the independent directors also reviewed the percentile ranking of our revenues and Mr. Menear’s target total compensation compared to each of these peer groups, as reflected below:
 
 
Percentile Rank
Category
Fortune 50(2)
 
Retail Peers
Company Revenue(1)
53%
 
89%
CEO Target Total Compensation
4%
 
59%

(1) 
Based on fiscal 2018 revenue as reported in SEC filings.
(2) 
Excludes Bank of America Corporation, Berkshire Hathaway Inc., Citigroup Inc., Fannie Mae, Freddie Mac, JP Morgan Chase & Co., and Wells Fargo & Company. Alphabet Inc., Amazon.com, Inc. and Dell Technologies, Inc. were also excluded due to the atypical compensation structures of their founder/CEOs. State Farm Mutual Automobile Insurance was excluded because it is a private company and did not disclose executive compensation data, and Aetna was excluded because it was acquired by CVS Health Corporation and no longer discloses executive compensation data.
For our other NEOs, the LDC Committee considered data from Korn Ferry Hay Group’s U.S. retail compensation survey, which provides information and comparisons on compensation for executive and industry-specific positions at the corporate and division level of retail companies. This survey data helps the LDC Committee understand the competitive market for the industry in which the Company principally competes for retail-specific talent and for customers.
Mitigating Compensation Risk
In November 2018, the LDC Committee undertook its annual broad-based review and risk assessment of the proposed compensation policies and practices for the Company’s associates, including but not limited to our executive officers, for Fiscal 2019. The assessment considered both qualitative and quantitative factors. Based on that assessment, management and the LDC Committee determined that our proposed compensation policies and practices did not create risks that are reasonably likely to have a material adverse effect on the Company.

40
The Home Depot 2020 Proxy Statement


In reaching that conclusion, management and the LDC Committee considered the following qualitative and quantitative factors:
Qualitative Factors:
ü
Management and the LDC Committee, with the advice of the independent compensation consultant, regularly review our executive compensation programs, with a focus on both their efficacy in driving quality performance and how the programs will be viewed by the investment community and other external constituencies.
ü
The LDC Committee and, for the CEO, the independent members of the Board, provide effective oversight in setting goals and monitoring attainment of those goals.
ü
Robust internal controls are in place to ensure compensation plans are operated as designed and approved.
ü
Compensation programs and pay amounts at multiple levels are routinely analyzed against market data by the LDC Committee and management to ensure compensation is appropriate to the market.
ü
Bonus, incentive and equity awards to executive officers are subject to a recoupment policy, as described below on page 47, to discourage manipulation of incentive program elements.
ü
Stock ownership guidelines are in place to further align the interests of shareholders and executive officers, as described below beginning on page 47.
Quantitative Factors:
ü
Performance and payment time horizons are appropriate, and they are not overweight in short-term incentives.
ü
The relationship between the incremental achievement levels and corresponding payouts in our incentive plans is appropriate, and all incentives, other than equity incentives that are tied to growth in our share price, have payout caps.
ü
Programs employ a reasonable mix of performance metrics and are not overly concentrated on a single metric. Although the operating profit metric is used in more than one incentive, it is a key corporate goal that takes into account both revenue and expense, and the risk of overweighting it is mitigated by using it across different time horizons.
ü
Criteria for payments are closely aligned with our strategic initiatives, our financial plan and shareholder interests.
ü
Payout curves are reasonable and do not contain steep “cliffs” that might encourage unreasonable short-term business decisions to achieve payment thresholds.
ü
Equity for senior officers is paid in a mix of performance shares, performance-based restricted stock, and stock options; other associates receive equity in the form of service-based restricted stock.
Consideration of Last Year’s Say-on-Pay Vote
At our 2019 annual meeting on May 23, 2019, approximately 97% of the shares voted were voted in support of the compensation of the Company’s NEOs. Since then, as part of our regular interaction with our institutional shareholders, we have continued to request input on our compensation practices. In considering the results of the 2019 advisory vote on executive compensation and feedback from these shareholders, the LDC Committee concluded that the compensation paid to our executive officers and the Company’s overall executive pay practices have strong shareholder support and therefore determined to maintain the current overall compensation structure for Fiscal 2019.

Frequency of Say-on-Pay Vote.    At our 2017 annual meeting on May 18, 2017, our shareholders expressed a preference that advisory votes on executive compensation occur every year, as recommended by our Board. Consistent with this preference, the Board implemented an annual advisory vote on executive compensation until the next advisory vote on the frequency of shareholder votes on executive compensation, which will occur no later than the Company’s annual meeting of shareholders in 2023.

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41


ELEMENTS OF OUR COMPENSATION PROGRAMS
 
The principal elements of our compensation programs are discussed below.
Base Salaries
We provide competitive base salaries that allow us to attract and retain a high-performing leadership team. Base salaries for our NEOs are reviewed and generally adjusted annually based on a comprehensive management assessment process. For Fiscal 2019, following discussion with the LDC Committee and based upon a review of competitive market data, the Company’s performance in Fiscal 2018, and assessments of the Company’s business plan and anticipated economic conditions in Fiscal 2019, we established a Company-wide merit increase budget of between 2.5% and 3.0%.
In late February 2019, the LDC Committee performed its annual review of base salaries for Mr. Menear, Mr. Holifield, Mr. Decker, Ms. Campbell and Ms. Tomé, the NEOs who were serving as executive vice presidents at that time. The changes from this salary review were effective in April 2019. In establishing the actual base salaries for these NEOs for Fiscal 2019, the LDC Committee considered total compensation, scope of responsibilities, performance over the previous year, experience, internal pay equity, potential to assume additional responsibilities, and the competitive marketplace. As a result of this assessment, Mr. Holifield, Mr. Decker, Ms. Campbell and Ms. Tomé received annual salary increases in April 2019 of between 0.0% and 3.3%, as set forth in the table below. At Mr. Menear’s request, and following discussion with the LDC Committee and its independent compensation consultant, the independent members of the Board maintained Mr. Menear’s base salary at $1,300,000. His salary has therefore remained unchanged since his appointment to the position of CEO and President effective November 1, 2014.
Name
2019 Base Salary
 
2018 Base Salary
 
Percent Increase

Craig A. Menear
$1,300,000
 
$1,300,000
 

Mark Q. Holifield
$840,000
 
$820,000
 
2.4
%
Edward P. Decker
$835,000
 
$810,000
 
3.1
%
Ann-Marie Campbell
$775,000
 
$750,000
 
3.3
%
Carol B. Tomé
$1,140,000
 
$1,140,000
 

Mr. McPhail was serving as Senior Vice President – Finance Control and Administration at the beginning of Fiscal 2019. As part of his annual salary review in early Fiscal 2019, his base salary increased from $539,150 to $552,625, or 2.5%, in April 2019, reflecting the assessment of his Fiscal 2018 performance and the other factors listed above in connection with the other NEOs. In May 2019, following Ms. Tomé’s announcement of her retirement in August 2019, and the Board’s decision to appoint Mr. McPhail as Executive Vice President and CFO following her retirement, the LDC Committee assessed the scope of his new role and responsibilities, internal pay equity, and the competitive marketplace, and increased Mr. McPhail’s base salary to $700,000 effective September 1, 2019.
Annual Incentive
All NEOs participate in the MIP, our cash-based annual incentive plan. The Fiscal 2019 MIP payout was contingent upon the achievement of financial performance goals set by the LDC Committee at the beginning of the Fiscal 2019 performance period. The LDC Committee bases the payout on achievement of financial metrics to align MIP goals with shareholder value creation and achievement of the Company’s business plan.
Performance Goals.    Set forth below are the MIP financial performance measures and the threshold, target and maximum Company achievement levels selected by the LDC Committee for Fiscal 2019 (dollars in billions): 
Fiscal 2019 Performance Measures
Measure
Weighting

Threshold

% of Target
Goal

% of Target
Payout

Target

Maximum

% of Target
Goal

% of Target
Payout

Sales
45
%

$106.15

95
%
10
%

$111.74


$134.09

120
%
200
%
Operating Profit
45
%

$14.45

90
%
10
%

$16.06


$19.27

120
%
200
%
Inventory Turns
10
%
4.60

90
%
10
%
5.11

6.14

120
%
200
%

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The Home Depot 2020 Proxy Statement


The operating profit threshold must be met for any MIP payout to occur. The relative weighting among the goals was determined by the LDC Committee with input from the CEO and the EVP-HR to reflect the Company’s priorities for Fiscal 2019. Due to the ongoing implementation of the One Supply Chain strategic initiative (which is part of One Home Depot) and the impact of the ongoing supply chain changes and build out on inventory turns, for Fiscal 2019 the LDC Committee decided to reduce the weighting for the inventory turns goal from 20% to 10%. The change maintained visibility and attention on inventory turns while at the same time reducing the impact of this metric because the requirements for successful implementation of the strategic initiatives were likely to create more variability in the metric. The LDC Committee made a corresponding increase of 5% in the weighting of each of the sales and operating profit goals, but maintained the alignment in their respective weightings to emphasize top line sales growth balanced with the Company’s continued focus on profitability as a means to drive bottom line results for shareholders.
Adjustments.    The pre-established definitions of sales and operating profit under the MIP provided for adjustments for the impact of acquisitions or dispositions of businesses with annualized sales of $1 billion or more and for nonrecurring charges and write-offs. The definitions also provided for adjustments in excess of $1 billion in the aggregate for sales and in excess of $50 million in the aggregate for operating profit, in connection with specified types of strategic restructuring transactions or changes in tax laws, accounting principles or other laws that materially impact results. The LDC Committee included the adjustment for restructuring transactions because it believes these types of strategic decisions support the long-term best interests of the Company and should not adversely affect incentive opportunities. The adjustment for changes in laws or accounting principles reflects the fact that these changes are outside of the control of the executive officers, and the LDC Committee similarly believes that they should not affect incentive opportunities (positively or negatively).
As in prior years, the LDC Committee also included in the pre-established definitions of sales and operating profit under the MIP an adjustment to neutralize the impact of any change (positive or negative) in currency exchange rates during the fiscal year. This adjustment reflected the significant volatility in exchange rates and the increase in the value of the U.S. dollar against other currencies, in particular the Canadian dollar and the Mexican peso, that has occurred over the last several years. The LDC Committee noted that adjustments for currency fluctuations are not uncommon for large multinational corporations. These fluctuations represent external, macro-economic influences outside of the control of the executive officers, and the LDC Committee believes that they should not affect incentive opportunities.
Payout Calculations.    For achieving the target level of performance for the Fiscal 2019 MIP, executive officers receive 100% payout. The target performance level was consistent with our 2019 business plan and the forecast disclosed at the beginning of Fiscal 2019. For Fiscal 2019, the LDC Committee set the threshold performance levels at 95%, 90% and 90% of the performance targets for the sales, operating profit and inventory measures, respectively, with a threshold payout at 10% of target payout. The threshold performance level encourages incremental performance even when achievement of the target appears to be unlikely. At the same time, the relatively low level of payout incentivizes performance above the threshold level.
The LDC Committee also sets maximum performance levels to incent participants to achieve and reward them for above-target performance, while at the same time capping payouts to avoid windfalls due to a better than expected external environment. For Fiscal 2019, the LDC Committee set the payout for maximum achievement for the sales, operating profit and inventory turns measures at 200% of target payout, and set the maximum performance goal for those measures at 120% of the target performance goal.
The Company uses interpolation to determine the specific amount of the payout for each NEO with respect to the achievement of financial goals between the various levels. The LDC Committee does not have discretion to increase the MIP payout earned by an NEO, but it may decrease the payout even if the performance goals are achieved.
The annual target payout levels are determined as a percentage of base salary: 200% for the CEO, 100% for Executive Vice Presidents, and 75% for Senior Vice Presidents. Given Ms. Tomé’s role as both CFO and Executive Vice President – Corporate Services, her target payout level was set at 125% of base salary; however, due to her retirement in August 2019, her payout was prorated based on the portion of the year she served in the role until the date of her retirement, in accordance with the terms of the MIP. The amount of Mr. McPhail’s Fiscal

The Home Depot 2020 Proxy Statement
43


2019 annual incentive award was determined using the applicable target percentage for each of the two roles he held during the year to determine the payout for the portion of the year that he served in each of those roles.
For Mr. Menear, Mr. McPhail and Ms. Tomé, payouts for achievement of the performance goals were based on overall Company performance. For Mr. Holifield, Mr. Decker and Ms. Campbell, payouts were based upon performance of the portion of the Company’s business for which they were accountable. The specific performance levels for the portions of the Company’s business for which Mr. Holifield, Mr. Decker and Ms. Campbell were responsible are not material to an understanding of the Company’s compensation program, and we do not believe disclosure of this information would be meaningful to shareholders since it would not be apparent how this information correlates to our consolidated financial statements.
Fiscal 2019 MIP Results.     For Fiscal 2019, for purposes of determining the achievement of MIP awards, sales were $110.25 billion, operating profit was $15.85 billion and inventory turns were 4.88 times, falling below the target level but above the threshold for the sales, operating profit and inventory turns goals. Pursuant to the pre-established definition of sales under the MIP, sales were adjusted up by $19.8 million for the impact of changes in currency exchange rates in Fiscal 2019. Pursuant to the pre-established definition of operating profit under the MIP, operating profit was adjusted up by $1.8 million due to the impact of changes in currency exchange rates in Fiscal 2019. Actual sales and operating profit without these adjustments were $110.2 billion and $15.84 billion, respectively, which also fell below the target performance level but above the threshold performance level for the sales and operating profit goals.
Based on performance in Fiscal 2019 against the performance goals, the following were the target and actual MIP awards for Fiscal 2019 for each of the NEOs:
 
At Target Performance
 
At Actual Performance
Name
% of Base Salary

Dollar Amount

 
% of Target

Dollar Amount

Craig A. Menear
200
%

$2,600,000

 
79.6
%

$2,070,472

Richard V. McPhail(1)
85
%

$597,917

 
79.6
%

$476,142

Mark Q. Holifield
100
%

$840,000

 
79.5
%

$667,640

Edward P. Decker
100
%

$835,000

 
79.5
%

$663,666

Ann-Marie Campbell
100
%

$775,000

 
79.5
%

$615,977

Carol B. Tomé(2)
73
%

$831,250

 
79.6
%

$661,954

(1) 
Percent of base salary for Mr. McPhail reflects a blended rate based on the portion of the year that he served in each of the roles he held in Fiscal 2019.
(2) 
Because she retired in August 2019, Ms. Tomé’s MIP award was prorated based on the portion of the year she served in her role until the date of her retirement.
Long-Term Incentives
For Fiscal 2019, we awarded the NEOs annual long-term incentives consisting of 50% performance shares, 30% performance-based restricted stock, and 20% stock options. The LDC Committee selected this mix to highlight the focus on pay for performance and alignment with shareholder interests. The LDC Committee also believed that this mix of equity components provided an appropriate mix of mid- and long-term performance measures and retention incentive, without promoting excessive risk-taking.
The total value of the annual equity awards granted in March 2019 was determined by the LDC Committee after considering the value of equity grants of officers with similar responsibilities at peer group companies described under “Benchmarking” in the “Compensation Determination Process” section above and individual performance relating to financial management, leadership, talent management and operational effectiveness, as well as retention risk. For Fiscal 2019, the annual equity award for our CEO at the target level was 562% of his base salary at the time the awards were granted. For the other NEOs, the target equity value for the annual equity grant ranged from 118% to 329% of base salary.

Performance Shares.    The Fiscal 2019-2021 performance share award granted in March 2019 provides for the issuance of shares of our common stock at the end of a three-year period based on the achievement of average ROIC and operating profit goals over that period, as follows (dollars in billions):

44
The Home Depot 2020 Proxy Statement


Fiscal 2019-2021 Performance Shares
Threshold

Target

Maximum

Three-Year Average ROIC
41.5
%
46.1
%
50.7
%
Three-Year Average Operating Profit
$15.25
$16.95
$18.64
Percent of Target Payout
25%

100%

200%

For results between these levels, the number of shares is determined by interpolation. There is no payout for results below the threshold level. Each performance measure is separately determined and equally weighted. ROIC for each year in the performance period is defined as operating profit, net of tax, divided by the average of beginning and ending long-term debt and equity for the relevant fiscal year. The pre-established definitions of operating profit and ROIC include adjustments for acquisitions and dispositions of businesses with annualized sales of $1 billion or more, certain nonrecurring write-offs or charges, changes in tax laws, accounting principles or other laws or provisions which have an impact on reported results that exceed $50 million in the aggregate during any fiscal year, and changes in foreign exchange rates, similar to the 2019 MIP.
In Fiscal 2018 and Fiscal 2017, the LDC Committee also granted performance share awards that were structured similarly to the Fiscal 2019-2021 award. The Fiscal 2018-2020 and Fiscal 2017-2019 awards each provide for the grant of shares of our common stock at the end of the respective three-year period based on the achievement of average ROIC and operating profit goals over that period, as follows (dollars in billions):
Fiscal 2018-2020 Performance Shares
Threshold

Target

Maximum

Three-Year Average ROIC
41.2
%
45.7
%
50.3
%
Three-Year Average Operating Profit
$14.94
$16.60
$18.26
Percent of Target Payout
25
%
100
%
200
%
 
Fiscal 2017-2019 Performance Shares
Threshold

Target

Maximum

Three-Year Average ROIC
32.0
%
35.5
%
39.1
%
Three-Year Average Operating Profit
$13.50
$15.00
$16.49
Percent of Target Payout
25
%
100
%
200
%
The pre-established definitions of operating profit and ROIC for the Fiscal 2018-2020 performance share awards are the same as those used for the Fiscal 2019-2021 awards. The pre-established definition of operating profit for each year in the performance period for the Fiscal 2017-2019 performance share awards is the same as the one used for the MIP for that year. ROIC for each year in the performance period is defined as operating profit (using the same definition as the MIP for that year), net of tax, divided by the average of beginning and ending long-term debt and equity for the relevant fiscal year. The pre-established definition of ROIC also provides for adjustments during the performance period for the impact of acquisitions or dispositions of businesses with annualized sales of $1 billion or more. The LDC Committee adjusted the definitions of operating profit and ROIC for purposes of the Fiscal 2017-2019 performance share awards to exclude the impact of changes in tax laws, accounting principles or other laws or provisions which have an impact on reported results that exceed $50 million in the aggregate during any fiscal year. This change was made to eliminate any windfall to the executive officers resulting from the impacts of 2017 U.S. tax reform. Dividend equivalents accrue on each of the performance share awards (as reinvested shares) and will be paid upon the payout of the award based on the actual number of shares earned.
The performance period for the Fiscal 2017-2019 performance share awards ended on February 2, 2020. Over the three-year period, the Company achieved an average operating profit of $15.25 billion and an average ROIC of 38.0%, as calculated pursuant to the terms of the awards. As a result, the NEOs earned approximately 142.8% of their Fiscal 2017-2019 awards, reflecting performance in excess of the target level for each metric. Pursuant to the pre-established definition of operating profit for the Fiscal 2017-2019 awards, operating profit was adjusted up by $11.1 million due to changes in currency exchange rates in Fiscal 2017, Fiscal 2018 and Fiscal 2019, and adjusted up by $7.5 million for Fiscal 2017 due to the 2014 data breach. Pursuant to the pre-established definition of ROIC for the Fiscal 2017-2019 awards, ROIC was also adjusted by the same amounts for the impact of currency exchange rates and the 2014 data breach, adjusted down by $3.7 billion due to 2017 U.S. tax reform, and adjusted down by $75.0 million for Fiscal 2018 due to the adoption of the new revenue recognition accounting standard in Fiscal 2018. Average operating profit and ROIC over the three-year period without the adjustments

The Home Depot 2020 Proxy Statement
45


were $15.25 billion and 41.1%, respectively, which also exceeded the target level for each goal. The NEOs earned the following shares under the award, which include reinvested accrued dividends:
Name
Value at Date of Grant(1)
(3/22/2017)

Shares Earned at
End of Performance
Period (2/2/2020)

Value at
End of Performance
Period
(2) (2/2/2020)

Craig A. Menear

$3,649,960

37,695


$8,598,331

Richard V. McPhail

$324,929

3,355


$765,446

Mark Q. Holifield

$1,024,889

10,584


$2,414,364

Edward P. Decker

$1,049,940

10,843


$2,473,378

Ann-Marie Campbell

$1,049,940

10,843


$2,473,378

Carol B. Tomé

$1,862,483

19,235


$4,387,513

(1)     Reflects the grant date fair value.
(2)     Reflects the value based upon the closing stock price of $228.10 on January 31, 2020, the last trading day of Fiscal 2019.
Performance-Based Restricted Stock.    In March 2019, we granted performance-based restricted stock awards that were forfeitable if operating profit was less than 90% of the MIP target for Fiscal 2019. Dividends on the restricted stock awards are accrued and not paid out unless the performance goal is met. Once the performance goal is met, cash dividends are then paid currently on the shares of restricted stock. The performance goal was met at the end of Fiscal 2019. As a result, the restricted stock will vest 50% on each of the 30- and 60-month anniversaries of the grant date.
Stock Options.    In March 2019, we granted stock options with an exercise price equal to the fair market value of our stock, which is defined as the market closing price on the date of grant. The options vest 25% on each of the second, third, fourth and fifth anniversaries of the grant date. Option re-pricing is expressly prohibited by our Omnibus Plan without shareholder approval.
Promotional Equity Grants.    In connection with Mr. McPhail’s promotion to Executive Vice President and CFO, the LDC Committee granted him promotional equity awards consisting of $250,000 in restricted stock and $250,000 in stock options. In accordance with our equity grant procedures, the awards were granted on November 21, 2019, the date of the first regularly scheduled LDC Committee meeting following his promotion on September 1, 2019. The restricted stock will vest 50% on each of the 30- and 60-month anniversaries of the grant date, and the options will vest 25% on each of the second, third, fourth and fifth anniversaries of the grant date.
Deferred Compensation Plans
In addition to the FutureBuilder 401(k) Plan (a broad-based tax-qualified plan), we have two nonqualified deferred compensation plans for our management and highly compensated associates, including executive officers:
The Deferred Compensation Plan For Officers (solely funded by the individuals who participate in the plan); and
The Restoration Plan, which provides a Company matching contribution equal to 3.5% of the amount of salary and annual cash incentive earned by a management-level associate in excess of the IRS annual compensation limit for tax-qualified plans, payable in shares of common stock of the Company upon retirement or other employment termination.
The plans are designed to permit participants to accumulate income for retirement and other personal financial goals. The Deferred Compensation Plan For Officers and the Restoration Plan are described in the notes to the Nonqualified Deferred Compensation table on page 60. Deferred compensation arrangements are common executive programs, and we believe that these arrangements help us in the recruitment and retention of executive talent; however, we do not view nonqualified deferred compensation as a significant element of our compensation programs. None of these plans provides above-market or preferential returns.
 

46
The Home Depot 2020 Proxy Statement


Perquisites
We provide very limited perquisites to our executive officers and do not view them as a significant element of our compensation program. We do not provide tax reimbursements, or “gross-ups,” on perquisites.
Our NEOs participate in a death-benefit-only program, under which they are entitled to a $400,000 benefit upon death if they are employed by the Company at that time. In addition, the benefit is continued for life for executive officers with ten years of service with the Company. Currently, all of our NEOs have met this service requirement and are entitled to lifetime death benefit coverage. In Fiscal 2009, we discontinued this benefit for any new executive officers.
The Company requests that Mr. Menear travel by Company aircraft, including travel for personal reasons. We also permit non-business use of Company aircraft by other NEOs on a more limited basis.
Other Benefits
Our NEOs have the option to participate in various employee benefit programs, including medical, dental, disability and life insurance benefit programs. These benefit programs are generally available to all full-time associates. We also provide all associates, including our NEOs, with the opportunity to purchase our common stock through payroll deductions at a 15% discount through our ESPP, a nondiscriminatory, tax-qualified plan. All associates, including our NEOs, are also eligible to participate in our charitable matching gift program through The Home Depot Foundation.
MANAGEMENT OF COMPENSATION-RELATED RISK
 
We employ a number of mechanisms to mitigate the chance of our compensation programs encouraging excessive risk-taking, including those described below.  
Annual Risk Assessment
 
As discussed above under “Mitigating Compensation Risk” on page 40, the LDC Committee undertakes an annual review and risk assessment of our compensation policies and practices.
Compensation Recoupment Policy
 
In February 2019, our Board adopted an updated executive compensation clawback policy, which is set forth in our Corporate Governance Guidelines and LDC Committee charter. Pursuant to the clawback policy, to the extent deemed appropriate and as permitted by law, the Board or the LDC Committee will recover from an executive officer any bonus, incentive payment, equity award or other compensation (in whole or in part) awarded to or received by an executive officer if the compensation was based on any financial results or operating metrics that were achieved as a result of that executive officer’s knowing or intentional fraudulent or illegal conduct or if the executive officer engaged in any intentional misconduct that caused the Company material financial or reputational harm.
Stock Ownership and Retention Guidelines
 
Our Executive Stock Ownership and Retention Guidelines require our NEOs to hold shares of common stock with a value equal to the specified multiples of base salary indicated below. This program assists in focusing executives on long-term success and shareholder value. Shares owned outright, restricted stock, and shares acquired pursuant to the ESPP, the FutureBuilder 401(k) Plan and the Restoration Plan, are counted towards this requirement. Unearned performance shares and unexercised stock options are not counted toward this requirement. Newly hired and promoted executives have four years to satisfy the requirements and must hold all shares received upon vesting of equity awards (net of shares withheld to pay taxes) until the requirements are met.

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47


Stock Ownership and Retention Guidelines (continued)
 
As of March 6, 2020, all of our active NEOs complied with the stock ownership and retention guidelines and held the following multiples of base salary (rounded to the nearest whole multiple):
 
 
 
Multiple of Base Salary
 
 
Name
Current Ownership
Guideline
 
 
Craig A. Menear
32x
6x
 
 
Richard V. McPhail
8x
4x
 
 
Mark Q. Holifield
11x
4x
 
 
Edward P. Decker
22x
4x
 
 
Ann-Marie Campbell
19x
4x
Anti-Hedging Policy
 
The Company has adopted a policy that prohibits all associates, officers and directors from entering into hedging or monetization transactions designed to limit the financial risk of owning Company stock. These include prepaid variable forward contracts, equity swaps, collars, exchange funds and other similar transactions, as well as speculative transactions in derivatives of the Company’s securities, such as puts, calls, options (other than those granted under a Company compensation plan) or other derivatives.
Equity Grant Procedures
 
Company-wide equity grants, including equity grants to NEOs, are awarded annually effective as of the date of the March meeting of the LDC Committee, which is generally scheduled at least a year in advance. Throughout the year, equity awards are made to new hires, promoted employees, and, in rare circumstances, as a reward for exceptional performance. In all cases, the effective grant date for these mid-year awards is the date of the next regularly scheduled quarterly LDC Committee meeting. The exercise price of each of our stock option grants is the market closing price on the effective grant date.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
 
We do not have a severance arrangement with our CEO or any of our other active NEOs. Ms. Tomé did not receive any severance benefits in connection with her retirement on August 31, 2019.
We do not have any change in control agreements with our executives. Our standard form of equity award agreement provides for accelerated vesting if the executive is terminated without cause within 12 months following a change in control. Prior to Fiscal 2013, our equity awards provided for accelerated vesting solely upon a change in control regardless of any termination of employment. The vast majority of these awards have vested in accordance with their terms. In the event the value of any accelerated vesting constitutes an “excess parachute payment,” the executive would be subject to a 20% excise tax on such amount, and the amount would not be tax deductible by the Company.
TAX DEDUCTIBILITY CONSIDERATIONS
 
Section 162(m) of the Internal Revenue Code generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to a company’s NEOs. Prior to enactment of U.S. tax reform in 2017, this limitation did not generally apply to compensation paid to the CFO or individuals who were no longer NEOs, or to compensation paid based on achievement of pre-established performance goals if certain requirements were met. Our performance shares, performance-based restricted stock and option awards granted prior to Fiscal 2018 were intended to qualify as performance-based compensation to qualify for a tax deduction. The LDC Committee reserved the discretion, however, to award compensation that is not exempt from the deduction limits of Section 162(m).
The exemption from Section 162(m)’s deduction limit for performance-based compensation was repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our NEOs, including our CFO, in excess of $1 million in Fiscal 2019 and future years will not be deductible. Certain awards

48
The Home Depot 2020 Proxy Statement


or compensation arrangements granted or entered into prior to November 2, 2017 may still be deductible if they qualify for transition relief applicable to certain compensation arrangements.
Despite the LDC Committee’s efforts to structure prior year awards to be exempt from Section 162(m) and therefore not subject to its deduction limits, there can be no assurance that these awards will be fully deductible because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing the exemption from the deduction limit under Section 162(m). In addition, the LDC Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with the Company’s performance and business objectives.


The Home Depot 2020 Proxy Statement
49


SUMMARY COMPENSATION TABLE
 
The following table sets forth the compensation during the last three fiscal years paid to or earned by (1) our CEO; (2) each of our current and former CFOs; and (3) the three other most highly compensated executive officers who were serving as executive officers as of the end of Fiscal 2019 (collectively referred to as the named executive officers or NEOs).
SUMMARY COMPENSATION TABLE
Name,
Principal
Position and
Year
Salary
($)(1)

Bonus
($)

Stock
Awards
($)(2) (3)

Option
Awards
($)(2)

Non-Equity
Incentive
Plan
Compensation
($)

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)

All Other
Compensation
($)(4) (5)

Total
($)

Craig A. Menear
Chairman, Chief Executive Officer & President
 
 
 
2019
1,300,000


5,961,431

1,459,996

2,070,472


97,934

10,889,833

2018
1,325,000


6,058,925

1,459,983

2,446,686


76,068

11,366,662

2017
1,300,000


5,955,804

1,459,987

2,843,328


81,893

11,641,012

Richard V. McPhail
Executive Vice President & Chief Financial Officer
(6)




2019
612,001


794,469

379,981

476,142


23,386

2,285,979

Mark Q. Holifield
Executive Vice President – Supply Chain & Product Development





2019
835,385


1,808,318

439,990

667,640


28,378

3,779,711

2018
830,769


1,857,012

439,989

821,110


56,916

4,005,796

2017
795,385


1,688,772

409,986

879,812


37,003

3,810,958

Edward P. Decker
Executive Vice President – Merchandising





2019
829,231


1,807,729

439,990

663,666


37,551

3,778,167

2018
820,577


1,855,309

439,989

811,096


60,328

3,987,299

2017
784,231


1,727,715

419,992