DEF 14A 1 smg-2023xproxy.htm DEF 14A Document
        


INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )
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Filed by a Party other than the Registrant   ¨
Check the appropriate box:
¨     Preliminary Proxy Statement
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þ     Definitive Proxy Statement
¨     Definitive Additional Materials
¨     Soliciting Material Pursuant to §240.14a-12
The Scotts Miracle-Gro Company
(Name of Registrant as Specified In Its Charter)
 (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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¨Fee computed on table in index required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.





        


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The Scotts Miracle-Gro Company
Proxy Statement for 2023 Annual Meeting of Shareholders



        


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14111 Scottslawn Road
Marysville, Ohio 43041

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Monday, January 23, 2023

NOTICE IS HEREBY GIVEN by The Scotts Miracle-Gro Company (the “Company”) that the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) will be held on Monday, January 23, 2023, at 9:00 A.M., Eastern Time. The Annual Meeting is a virtual meeting of shareholders which means that you are able to participate in the Annual Meeting, and vote and submit your questions during the Annual Meeting via live webcast by visiting http://www.virtualshareholdermeeting.com/SMG2023. Because the Annual Meeting is virtual and being conducted electronically, shareholders may not attend the Annual Meeting in person.

The Annual Meeting is being held for the following purposes:

1.    To elect four directors, each to serve for a three-year term expiring at the 2026 Annual Meeting of Shareholders.

2.    To conduct an advisory vote on the compensation of the Company’s named executive officers.

3.    To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2023.

4.    To approve an amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan to,
among other things, increase the maximum number of common shares available for grant to participants.

5.    To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

The Proxy Statement accompanying this Notice of Annual Meeting describes each of these items in detail. The Company has not received notice of any other matters that may be properly presented at the Annual Meeting.

Only shareholders of record at the close of business on Tuesday, November 29, 2022, the date established by the Company’s Board of Directors as the record date, are entitled to receive notice of, and to vote at, the Annual Meeting.

On or about December 14, 2022, the Company is first mailing to shareholders either: (1) a copy of the accompanying Proxy Statement, a form of proxy and the Company’s 2022 Annual Report; or (2) a Notice of Internet Availability of Proxy Materials, which indicates how to access the Company’s proxy materials and 2022 Annual Report on the Internet.

Your vote is very important. Please vote as soon as possible.

By Order of the Board of Directors,
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JAMES HAGEDORN
Chief Executive Officer
and Chairman of the Board
December 14, 2022


        


Proxy Statement for
Annual Meeting of Shareholders of
THE SCOTTS MIRACLE-GRO COMPANY
To Be Held on Monday, January 23, 2023

TABLE OF CONTENTS
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14111 Scottslawn Road
Marysville, Ohio 43041

PROXY STATEMENT
for
Annual Meeting of Shareholders
To Be Held on Monday, January 23, 2023

GENERAL INFORMATION ABOUT VOTING

This Proxy Statement and the accompanying form of proxy are being furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board”) of The Scotts Miracle-Gro Company (the “Company”) for use at the Company’s 2023 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on Monday, January 23, 2023, at 9:00 A.M., Eastern Time, and at any adjournment or postponement thereof. This Proxy Statement and the accompanying form of proxy are first being sent on or about December 14, 2022. The Annual Meeting is a virtual meeting of shareholders, which means that the Annual Meeting will be conducted live via the Internet and that you will be able to participate in the Annual Meeting, and vote and submit your questions during the Annual Meeting, by visiting
http://www.virtualshareholdermeeting.com/SMG2023. If you do not have your 16-digit control number that is printed on your Notice of Internet Availability of Proxy Materials or your form of proxy (if you received a paper or electronic copy of the proxy materials), you will only be able to listen to the Annual Meeting. Each reference in this Proxy Statement to a “fiscal” year is to our fiscal year ended or ending, as applicable, on September 30 of the referenced year. Because the Annual Meeting is virtual and being conducted electronically, shareholders may not attend the Annual Meeting in person.

Only holders of record of the Company’s common shares (the “Common Shares”) at the close of business on Tuesday, November 29, 2022 (the “Record Date”) are entitled to receive notice of and to vote at the Annual Meeting. As of the Record Date, there were 55,464,721 Common Shares outstanding. Holders of Common Shares as of the Record Date are entitled to one vote for each Common Share held. There are no cumulative voting rights.

The Company is furnishing proxy materials over the Internet as permitted under the rules of the Securities and Exchange Commission (the “SEC”). Under these rules, many of the Company’s shareholders will receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the Notice of Annual Meeting of Shareholders, this Proxy Statement, a form of proxy and the Company’s 2022 Annual Report. The Notice of Internet Availability of Proxy Materials contains instructions on how to access the proxy materials over the Internet and how shareholders can receive a paper copy of such materials. Shareholders who do not receive a Notice of Internet Availability of Proxy Materials will receive a paper or electronic copy of the proxy materials. The Company believes this process conserves natural resources and reduces the costs of printing and distributing proxy materials. Shareholders who receive a Notice of Internet Availability of Proxy Materials are reminded that the Notice itself is not a form of proxy.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders To Be Held on January 23, 2023: The Notice of Annual Meeting of Shareholders, this Proxy Statement and the Company’s 2022 Annual Report are available at www.proxyvote.com. At www.proxyvote.com, shareholders can view the proxy materials, cast their vote and request to receive proxy materials in paper form by mail or electronically by e-mail on a going-forward basis.

If you received a copy of the proxy materials by mail, a form of proxy, also known as a proxy card, for use at the Annual Meeting was included. You may ensure your representation at the Annual Meeting by completing, signing, dating and promptly returning the form of proxy. A return envelope, which requires no postage if mailed in the United States, has been provided for your use. Alternatively, if you received a copy of the proxy materials by mail or electronically by e-mail or if you received the Notice of Internet Availability of Proxy Materials, as applicable, you may transmit your voting instructions electronically at www.proxyvote.com or by using the toll-free telephone number stated on the form of proxy or the Notice of Internet Availability of Proxy Materials. The deadline for transmitting voting instructions electronically or telephonically before the Annual Meeting is 11:59 P.M., Eastern Time, on January 22, 2023. You may also vote during the Annual Meeting via the Internet by going to http://www.virtualshareholdermeeting.com/SMG2023 and following the instructions printed on your form of proxy or Notice of Internet Availability of Proxy Materials. The Internet and telephone voting procedures are


        


designed to authenticate shareholders’ identities, allow shareholders to give voting instructions and confirm that such voting instructions have been properly recorded.

If you are a registered shareholder, you may revoke your proxy at any time before it is voted at the Annual Meeting by: (i) giving written notice of revocation to the Corporate Secretary of the Company; (ii) revoking via the Internet site; (iii) using the toll-free telephone number stated on the form of proxy or the Notice of Internet Availability of Proxy Materials and electing “revocation” as instructed; or (iv) participating in the Annual Meeting virtually and voting again. If you are a registered shareholder, you may change your vote at or prior to the Annual Meeting by: (1) executing and returning to the Company a later-dated form of proxy; (2) submitting a later-dated electronic vote through the Internet site; (3) voting by telephone at a later date; or (4) participating in the Annual Meeting virtually and voting again.

If you hold your Common Shares in “street name” with a broker/dealer, financial institution or other nominee or holder of record, you are urged to carefully review the information provided to you by the broker/dealer, financial institution or other nominee or holder of record. This information will describe the procedures you must follow to instruct the holder of record how to vote your Common Shares held in “street name” and how to revoke any previously-given voting instructions. If you do not provide voting instructions to your broker/dealer, financial institution or other nominee or holder of record within the required time frame before the Annual Meeting, your Common Shares will not be voted by the broker/dealer, financial institution or other nominee or holder of record on any matters considered non-routine, including the election of directors, the advisory vote on the compensation of the Company’s named executive officers, and the approval of the amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan. Your broker/dealer, financial institution or other nominee or holder of record will have discretion to vote your Common Shares on routine matters, including the ratification of the selection of the Company’s independent registered public accounting firm.

The Company will bear the costs of soliciting proxies on behalf of the Board and tabulating your votes. The Company has retained Broadridge Financial Solutions, Inc. to assist in distributing the proxy materials. Directors, officers and certain employees of the Company may solicit your votes personally, by telephone, by e-mail or otherwise, in each case without additional compensation. If you provide voting instructions or participate in the Annual Meeting through the Internet, you may incur costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, which the Company will not reimburse. The Company will reimburse its transfer agent, EQ Shareowner Services, as well as broker/dealers, financial institutions and other custodians, nominees and fiduciaries, for forwarding proxy materials to shareholders, according to certain regulatory fee schedules.

If you participate in The Scotts Company LLC Retirement Savings Plan (the “Retirement Savings Plan” or “RSP”), a qualified 401(k) plan, and Common Shares have been allocated to your account in the RSP, you are entitled to instruct the trustee of the RSP how to vote such Common Shares. You may receive your form of proxy with respect to your RSP Common Shares separately. If you do not give the trustee of the RSP voting instructions, the trustee will not vote such Common Shares at the Annual Meeting.

If you participate in The Scotts Miracle-Gro Company Discounted Stock Purchase Plan (the “Discounted Stock Purchase Plan”), you are entitled to vote the number of Common Shares credited to your custodial account. If you do not vote, the custodian under the Discounted Stock Purchase Plan will vote the Common Shares credited to your custodial account in accordance with any stock exchange or other rules governing the custodian in the voting of Common Shares held for customer accounts.

Under the Company’s Code of Regulations, the presence, in person or by proxy, of the holders of a majority of the outstanding Common Shares entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Common Shares represented by properly executed forms of proxy, including proxies reflecting abstentions, which are returned to the Company prior to the Annual Meeting or represented by properly authenticated voting instructions timely recorded through the Internet or by telephone will be counted toward the establishment of a quorum. Broker non-votes, where broker/dealers, financial institutions or other nominees or holders of record who hold their beneficial shareholder customers’ Common Shares in “street name” sign and submit proxies for such Common Shares but fail to vote on non-routine matters because they were not given instructions from their customers, are also counted for the purpose of establishing a quorum.

The results of shareholder voting at the Annual Meeting will be tabulated by or under the direction of the inspector of election appointed by the Board for the Annual Meeting.


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Common Shares represented by properly executed forms of proxy returned to the Company prior to the Annual Meeting or represented by properly authenticated voting instructions timely recorded through the Internet or by telephone will be voted as specified by the shareholder. Common Shares represented by valid proxies timely received prior to the Annual Meeting that do not specify how the Common Shares should be voted will, to the extent permitted by applicable law, be voted by the proxies:

1.FOR the election as directors of the Company of each of the four nominees of the Board listed below under the caption “PROPOSAL NUMBER 1 — ELECTION OF DIRECTORS”;

2.FOR the approval, on an advisory basis, of the compensation of the Company’s named executive officers as described below under the caption “PROPOSAL NUMBER 2 — ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”)”;

3.FOR the ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2023 as described below under the caption “PROPOSAL NUMBER 3 — RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM”; and

4.FOR the approval of the amendment and restatement of The Scotts Miracle-Gro Company Long-Term Incentive Plan to, among other things, increase the maximum number of common shares available for grant to participants under the plan as described below under the caption “PROPOSAL NUMBER 4 — APPROVAL OF AMENDMENT AND RESTATEMENT OF THE SCOTTS MIRACLE-GRO COMPANY LONG-TERM INCENTIVE PLAN.”

No appraisal rights exist for any action proposed to be taken at the Annual Meeting.


THE BOARD OF DIRECTORS

Current Composition

There are currently twelve individuals serving on the Board, which is divided into three classes, with each class serving a three-year term on a staggered basis. The Class I directors hold office for terms expiring at the Annual Meeting, the Class II directors hold office for terms expiring in 2024 and the Class III directors hold office for terms expiring in 2025.

Experiences, Skills and Qualifications

The Nominating and Governance Committee (the “Governance Committee”) is responsible for identifying candidates to become directors and recommending director nominees to the Board. In reviewing Board candidates, the Governance Committee evaluates a candidate’s overall credentials and background but does not have any specific eligibility requirements or minimum qualifications. In general, directors are expected to have the education, business and other experience and current insight necessary to contribute to the Board’s performance of its functions, the interest and time to be actively engaged with the Company’s management team, and the functional skills, leadership, diversity, experience and other attributes that the Board believes will contribute to the development and expansion of the Board’s knowledge and capabilities.

The strength of the Board is its combined experiences and its collaborative and engaged spirit. The Board includes professionals with a broad range of experiences including business and military leaders, bankers, regulators and advertisers.

Set forth below is a general description of the types of experiences the Board and the Governance Committee believe are particularly relevant to the Company:

Leadership Experience — Directors who have significant leadership experience in major organizations over an extended period of time, such as corporate or governmental senior executives, provide the Company with valuable insights gained through years of managing complex organizations. These individuals understand both the day-to-day operational responsibilities that senior management handles and the role directors play in overseeing the affairs of large organizations. Almost every current director has significant experience leading complex organizations.

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Marketing — Directors with experience understanding consumers’ desires and preferences and the rapidly changing ways in which consumers — young and old alike — receive information, as well as form and convey those preferences, deliver valuable marketing insights that can benefit the Company’s performance, especially as consumers shift to non-traditional media and formats.

Retail Experience — Directors with significant experience in the retail industry bring valuable insights that can assist the Company in managing its relationships with its largest retail customers. In addition, directors with experience and insight on traditional and developing routes to the consumer can help the Company excel.

Innovation and Technology Experience — Directors with innovation and technology experience add significant value to the Board, especially in light of the Company’s continued focus on driving innovation in product development and design, communications, and business operations.

Financial Experience — Directors with an understanding of accounting, finance and financial reporting processes, particularly as they relate to a large, complex business, are critical to the Company. Accurate financial reporting is a cornerstone of the Company’s success, and directors with financial expertise help provide effective oversight of the Company’s financial measures and processes.
Governmental Experience — Directors with governmental experience are beneficial because our industry is heavily regulated and is directly affected by actions and decisions of federal, state, local, and other governmental agencies. The Company recognizes the importance of working constructively with governments, and directors with governmental experience offer valuable insight in this regard.

Consumer Industry Experience — Directors with experience identifying and developing products that are desirable to consumers in an evolving marketplace and in emerging product categories, including the hydroponic and indoor growing space, bring valuable skills that can positively impact the Company’s performance.

A description of the most relevant experiences, skills, attributes and qualifications that qualify each director to serve as a member of the Board is included in the director biographies.

Diversity

The Board believes that diversity is one of many important considerations in board composition. When identifying and evaluating potential candidates for the Board, the Governance Committee will consider any combination of desirable qualities including, without limitation: independence; judgment; character, ethics and integrity; diversity (including diversity of race, ethnicity, gender, education, experience, viewpoints, background and skills); business or other relevant experience, skills and knowledge useful to the oversight of the Company’s business, experience with businesses and organizations of comparable size or scope, experience as an executive of, or adviser to, a publicly traded or private company, experience, skills and knowledge relative to other Board members, and specialized experience, skills or knowledge; and such other factors deemed appropriate, in each case, in light of the Board’s needs. The Governance Committee will actively seek to identify minorities and women to include in the pool of potential candidates for the Board.

The Governance Committee believes that the Company’s current directors, as a group, reflect a diverse mix of skills, experiences, backgrounds and opinions helpful to foster an effective decision-making environment and promote the Company’s culture. Board member experiences cover a wide range of industries and sectors, including consumer products, manufacturing, technology, financial services, military, media, regulatory and consulting. Two of the twelve directors are women, each of whom chairs one of the Board’s five standing committees: the Audit Committee (Nancy G. Mistretta) and the Finance Committee (Katherine Hagedorn Littlefield) with Ms. Littlefield also having served as Vice Chair of the Board since 2013. In addition, Governor Sandoval self-identifies as Hispanic/Latino and Edith Avilés, a director nominee, self-identifies as Hispanic/Latina.

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Leadership Structure

The Company’s governance documents provide the Board with flexibility to select the leadership structure that the Board believes is most appropriate for and in the best interests of the Company and its shareholders. The Board regularly evaluates the Company’s leadership structure and has concluded that the Company and its shareholders are best served by not having a formal policy regarding whether the same individual should serve as both Chairman of the Board and Chief Executive Officer (“CEO”). This approach allows the Board to elect the most qualified director as Chairman of the Board, while maintaining the ability to separate the Chairman of the Board and CEO roles when deemed appropriate.

Currently, the Company is led by Mr. J. Hagedorn, who has served as CEO since May 2001 and Chairman of the Board since January 2003. The Board believes that combining the roles of Chairman of the Board and CEO is in the best interests of the Company and its shareholders at this time as this structure fully utilizes the talent and experience of Mr. J. Hagedorn. The Board believes its decision to appoint Mr. J. Hagedorn to lead the Board promotes unification and direction, allowing for increased operational effectiveness and strong, efficient leadership.

In addition to Mr. J. Hagedorn, the Board is currently comprised of eleven non-employee directors, nine of whom qualify as independent. In accordance with the Company’s Corporate Governance Guidelines and applicable sections of the New York Stock Exchange (“NYSE”) Listed Company Manual (the “NYSE Rules”), the non-employee directors of the Company regularly meet in executive session. These meetings allow non-employee directors to discuss issues of importance to the Company, including the business and affairs of the Company as well as matters concerning management, without any member of management present. In addition, the independent directors of the Company meet in executive session at least annually and more frequently as matters appropriate for their consideration arise.

The directors have elected Lieutenant General (retired) John R. Vines to serve as the Company’s Lead Independent Director in each year since 2014. As Lead Independent Director, General Vines:

has the ability to call meetings of independent and/or non-employee directors;

presides at meetings of non-employee and/or independent directors;

consults with the Chairman of the Board and CEO with respect to appropriate agenda items for meetings of the Board;

serves as a liaison between the Chairman of the Board and the independent directors;

has the ability, in consultation with the Vice Chair, to approve the retention of outside advisors and consultants who report directly to the Board on critical issues;

has the ability to approve the retention of outside advisors and consultants who report directly to the independent directors of the Board on critical issues, as needed or deemed appropriate;

can be contacted directly by shareholders; and

performs such other duties as the Board may delegate to him from time to time.

In addition, the directors have elected Ms. Littlefield to serve as Vice Chair of the Board in each year since 2013. As Vice Chair, Ms. Littlefield:

presides at meetings of the Board in the Chairman of the Board’s absence;

presides at meetings of the shareholders in the Chairman of the Board’s absence;

has the ability, in consultation with the Lead Independent Director, to approve the retention of outside advisors and consultants who report directly to the Board on critical issues; and

performs such other duties as the Board may delegate to her from time to time.


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The Board has established five standing committees to assist with its oversight responsibilities: (1) the Audit Committee; (2) the Compensation and Organization Committee (the “Compensation Committee”); (3) the Governance Committee; (4) the Finance Committee; and (5) the Innovation and Technology Committee. Each of the Audit Committee, Compensation Committee, and Governance Committee is comprised entirely of independent directors.

The Board believes that its current leadership structure — including combined Chairman of the Board and CEO roles, a Lead Independent Director, a Vice Chair of the Board, and key committees comprised solely of independent directors — provides an appropriate balance among strategy development, operational execution and independent oversight, and is in the best interests of the Company and its shareholders.

Board Role in Risk Oversight

It is management’s responsibility to develop and implement the Company’s strategic plans and to identify, evaluate, manage and mitigate the risks inherent in those plans. It is the Board’s responsibility to oversee the Company’s strategic plans and to ensure that management is taking appropriate action to identify, evaluate, manage and mitigate the associated risks. The Board administers its risk oversight responsibilities both through active review and discussion of enterprise-wide risks and by delegating certain risk oversight responsibilities to Board committees for further consideration and evaluation. The decision to administer the Board’s oversight responsibilities in this manner significantly impacts the Board’s leadership and committee structure.

As the roles of Chairman of the Board and CEO are combined, the directors annually elect a Lead Independent Director to enhance oversight of management and the potential risks facing the Company. In addition, the Board is comprised of predominantly independent directors and all members of the Board’s required committees — the Audit Committee, the Compensation Committee, and the Governance Committee — are independent. The checks and balances provided by our leadership structure help to ensure that key decisions made by the Company’s senior management, up to and including the CEO, are reviewed and overseen by independent directors of the Board.

In some cases, risk oversight is addressed by the full Board as part of its engagement with the CEO and other members of senior management. For example, the full Board conducts a comprehensive annual review of the Company’s overall strategic plan and the plans for each of the Company’s business units, including associated risks. In connection with the Board’s risk oversight responsibilities, management periodically provides the Board with reports regarding the significant risks facing the Company and how the Company is seeking to control or mitigate those risks. The Board also has responsibility for ensuring that the Company maintains appropriate succession plans for its senior officers and conducts an annual review of succession planning.

In other cases, the Board has delegated risk management oversight responsibilities to certain committees, each of which reports regularly to the full Board.

The Audit Committee oversees the Company’s compliance with legal and regulatory requirements and its overall risk management process and has oversight responsibility for financial risks and cyber and information security risks. As part of its oversight role, the Audit Committee regularly reviews risks relating to the Company’s key accounting policies and receives reports regarding the Company’s most significant internal controls and compliance risks from the Company’s Chief Financial Officer as well as its internal auditors. Representatives of the Company’s independent registered public accounting firm attend each Audit Committee meeting, regularly make presentations to the Audit Committee, and comment on management presentations. In addition, the Company’s Chief Financial Officer and internal auditors, as well as representatives of the Company’s independent registered public accounting firm, individually meet in private session with the Audit Committee on a regular basis, affording ample opportunity to raise any concerns with respect to the Company’s risk management practices.

The Compensation Committee oversees risks relating to the Company’s compensation programs and practices. As discussed in more detail in the section captioned “Our Compensation Practices — Role of Outside Consultants” within the Compensation Discussion and Analysis, the Compensation Committee employs an independent compensation consultant to assist it in reviewing the Company’s compensation programs, including the potential risks created by and other impacts of these programs.


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The Governance Committee oversees issues related to the Company’s governance structure and other corporate governance matters and processes, as well as non-financial risks and compliance matters. The Governance Committee is also charged with overseeing compliance with the Company’s Related Person Transaction Policy. The Governance Committee regularly reviews the Company’s key corporate governance documents, including the Corporate Governance Guidelines, the Related Person Transaction Policy and the Insider Trading Policy, to ensure the documents continue to comply with the changing legal and regulatory environment and appropriately enable the Board to fulfill its oversight responsibilities.

Information Security Matters

The Audit Committee is responsible for oversight of the Company’s cyber and information security program. The Audit Committee receives reports regarding the program on at least a quarterly basis from the Company’s cyber-security and information technology leadership as well as other members of management. The reports address significant threats facing the Company and key risks and mitigation efforts undertaken by management, including the suitability of self- or third-party insurance.

The Company executes a multi-faceted program to continuously evaluate and update its information security program, and mandates information security and cyber risks training for all newly hired associates. In addition, the Company works with outside email and enterprise security vendors to regularly conduct simulated attack exercises to identify additional needs for training and overall program refinement. The Company’s information security team also provides regular security training and awareness content for all associates. Information security consultants engaged by management perform periodic external assessments of the Company’s cybersecurity program applying recognized industry frameworks (e.g., the NIST Cybersecurity Framework). In addition, the Company’s information security team monitors program maturity by, among other things, performing annual reviews to assess progress against the Capability Maturity Model Integration framework. As a precaution, the Company does not otherwise publicly disclose a specific approach to identifying and mitigating information security risks.
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PROPOSAL NUMBER 1

ELECTION OF DIRECTORS

At the Annual Meeting, four Class I directors will be elected. Three of the four individuals nominated by the Board for election as directors at the Annual Meeting are currently serving as Class I directors — James Hagedorn, Nancy G. Mistretta, and Gerald Volas. On November 4, 2022, Brian D. Finn informed the Company and the Board of his decision to not stand for re-election as a Class I director at the Annual Meeting. The Board has nominated Edith Avilés for election as a Class I director. The nomination of each individual was recommended to the Board by the Governance Committee.

The individuals elected as Class I directors at the Annual Meeting will hold office for a three-year term expiring at the 2026 Annual Meeting and until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal. The individuals designated as proxy holders in the form of proxy intend to vote the Common Shares represented by the proxies received under this solicitation for the Board’s nominees, unless otherwise instructed on the form of proxy or through the telephone or Internet voting procedures. The Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director of the Company if elected. If any nominee becomes unable to serve or for good cause will not serve as a candidate for election as a director, then the individuals designated as proxy holders reserve full discretion to vote the Common Shares represented by the proxies they hold for the election of the remaining nominees and for the election of any substitute nominee designated by the Board following recommendation by the Governance Committee. The individuals designated as proxy holders cannot vote for more than four nominees for election as Class I directors at the Annual Meeting.

The following information, as of December 9, 2022, with respect to the age, principal occupation or employment, other affiliations and business experience of each continuing director or nominee for election as a director, has been furnished to the Company by each such director or nominee.

Nominees Standing for Election to the Board of Directors

Class I — Terms to Expire at the 2023 Annual Meeting

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James Hagedorn, age 67, Director of the Company since 1995 and Chairman of the Board since 2003
Mr. J. Hagedorn has served as CEO of the Company since May 2001 and Chairman of the Board since January 2003. In addition to serving as CEO and Chairman of the Board, he served as President of the Company from October 2015 until February 2016. Mr. J. Hagedorn is the brother of Katherine Hagedorn Littlefield, a director of the Company.

Having joined the Company in 1987 and the Board in 1995, and with service as CEO and Chairman of the Board for nearly two decades, Mr. J. Hagedorn has more working knowledge of the Company and its products than any other individual. During his career at the Company, Mr. J. Hagedorn has developed extensive leadership, international, and marketing/consumer industry experience that has proven invaluable as he leads the Board through a wide range of issues.
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Edith Avilés, age 57, Nominee for Election as a Director of the Company
Ms. Avilés is a Managing Director, Global Investor Relations of Clayton, Dubilier & Rice (“CDR”), a private equity firm with offices in New York and London. Prior to joining CDR in February 2022, Ms. Avilés served as Vice Chair and Executive Committee Member, Americas of Natixis, a French corporate and investment bank.

Ms. Avilés has over 30 years of experience in the finance industry, where she has cultivated key client relationships and executed growth strategies delivering strong financial performance across complex global organizations. While at Natixis, Ms. Avilés held several senior management roles including Global Co-Head of Financial Sponsor Coverage responsible for teams managing relationships with private equity clients across Europe, Asia and the USA. She was also Head of Coverage leading teams across the Americas and Canada in client development and diversification across industries. Before joining Natixis, Ms. Avilés held several senior management and investment banking positions at BNP Paribas, including Regional Head of Hispanic Latin America and Country Head of Mexico. Ms. Avilés’ extensive leadership experience at large financial and strategic organizations is expected to provide valuable benefits to the Board.
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Nancy G. Mistretta, age 68, Director of the Company since 2007
Ms. Mistretta is a director of HSBC North America Holdings, Inc., HSBC USA Inc., and HSBC Bank USA, N.A., where she serves on the Audit Committee and Risk Committee and chairs the Nominating & Governance Committee. In addition, Ms. Mistretta is a member of the Board of Directors of GAM Holding AG in Zurich, Switzerland, where she chairs the Compensation Committee and serves on the Governance and Nominating Committee.

Ms. Mistretta is a retired partner of Russell Reynolds Associates (“Russell Reynolds”), an executive search firm, where she served as a partner from February 2005 until June 2009. She was a member of Russell Reynolds’ Not-For-Profit Sector and was responsible for managing executive officer searches for many large philanthropic organizations, with a particular focus on searches for presidents, deans and financial officers of educational institutions. Based in New York City, she also was active in the CEO/Board Services Practice of Russell Reynolds. Prior to joining Russell Reynolds, Ms. Mistretta was with JPMorgan Chase & Co. and its heritage institutions (collectively, “JPMorgan”) for 29 years and served as a Managing Director in Investment Banking from 1991 to 2005.

Throughout her nearly 30-year career at JPMorgan, Ms. Mistretta demonstrated a range of skills including leadership, international, marketing/consumer industry, retail and financial experience, including through roles as Managing Director responsible for Investment Bank Marketing and Communications, industry head responsible for the Global Diversified Industries group and industry head responsible for the Diversified, Consumer Products and Retail Industries group. Ms. Mistretta qualifies as an “audit committee financial expert” as that term is defined in the applicable SEC Rules and her financial experience is particularly valuable to the Board in her service as Chair of the Audit Committee and member of the Compensation Committee.

Committee Memberships: Audit (Chair); Compensation
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Gerald Volas, age 68, Director of the Company since 2021
Mr. Volas served as Chief Executive Officer and a director of TopBuild Corp., a leading installer and distributor of insulation products, between June 2015 and December 2020. Mr. Volas is also a director of Trex Company.

Mr. Volas’ professional experience as a public company chief executive officer and as a senior executive of Masco Corporation, a consumer products company, brings critical operational expertise to the Board. In addition, his extensive financial experience on a range of issues relevant to public companies provides additional support to the Board’s oversight function. Mr. Volas qualifies as an “audit committee financial expert” as that term is defined in the applicable SEC Rules and his financial experience is also particularly valuable to the Board in his service as a member of the Audit Committee and the Finance Committee.

Committee Memberships: Audit; Finance

Class II — Terms to Expire at the 2024 Annual Meeting

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Thomas N. Kelly Jr., age 75, Director of the Company since 2006
Mr. Kelly is a former director of GameStop Corp., where he also chaired the Compensation Committee. Mr. Kelly also served as Executive Vice President, Transition Integration of Sprint Communications (“Sprint”), a global communications company, from December 2005 until April 2006. He served as the Chief Strategy Officer of Sprint from August 2005 until December 2005. He served as the Executive Vice President and Chief Operating Officer of Nextel Communications, Inc., which became Sprint, from February 2003 until August 2005, and as Executive Vice President and Chief Marketing Officer of Nextel Communications, Inc. from 1996 until February 2003.

Having served at various times as Chief Strategy Officer, Chief Operating Officer and Chief Marketing Officer of Sprint, Mr. Kelly brings an extensive skill set to the boardroom. His blend of leadership, innovation and technology, international, marketing/consumer industry and financial experience make him a key advisor to the Board on a full range of consumer and strategy-related matters.

Committee Memberships: Innovation and Technology (Chair); Audit; Compensation
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Brian E. Sandoval, age 59, Director of the Company since 2022
Governor Sandoval has served as President of the University of Nevada, Reno since September 2020.

Governor Sandoval served two terms as the 29th Governor of the State of Nevada, having held office from 2011 to 2019. Prior to serving as Governor, he served as a Judge of the U.S. District Court for the District of Nevada, Attorney General of Nevada and four years in the Nevada Assembly. He served as Chairman of the National Governors Association from 2017 to 2018. In addition, Governor Sandoval was a member of the Board of Directors of Coeur Mining, Inc. from 2019 to 2020 where he also served on the Environmental Health Safety and Corporate Responsibility Committee and Audit Committee, and the President of Global Gaming Development of MGM Resorts International from 2019 to 2020.

As a former governor and current leader of a major educational institution, we believe Governor Sandoval’s experience leading large complex organizations will provide benefits to the Board and the Company’s shareholders.

Committee Memberships: Innovation and Technology; Governance

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Peter E. Shumlin, age 66, Director of the Company since 2017
Governor Shumlin is a director of Putney Student Travel, National Geographic Student Expeditions and New York Times Student Journeys which provide educational summer programs for students around the globe. He is a principal in numerous real estate partnerships specializing in commercial and residential properties.

Governor Shumlin served three terms as the 81st Governor of the State of Vermont, having held office from 2011 to 2017. Prior to serving as Governor, he served two terms in the Vermont House of Representatives and 14 non-consecutive years in the Vermont Senate, serving on the Rules Committee, the Finance Committee, the Transportation Committee, the Appropriations Committee and as Senate President Pro Tempore.

Governor Shumlin’s lengthy public service career provides in-depth knowledge of government, public policy, legal, finance, governance and leadership matters. We believe his unique experience and skill set make him a valuable asset to the Board.

Committee Memberships: Compensation (Chair); Finance; Governance
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 John R. Vines, age 73, Director of the Company since 2013 and Lead Independent Director since 2014
Lieutenant General (retired) Vines has been a partner of McChrystal Group since 2016 and was previously a Senior Advisor to McChrystal Group beginning in 2011. General Vines retired in 2007 from the U.S. Army after 35 years active service. He was in continuous command for his last six years of service, including as Commander, U.S. Army’s XVIII Airborne Corps and Multi-National Corps Iraq. In addition, he commanded the Combined Joint Task Force 180 Afghanistan. General Vines also served as the Senior Defense Representative to Afghanistan and Pakistan and previously commanded the 82nd Airborne Division, which included a year-long deployment in Afghanistan. Following retirement, General Vines acted as a Department of Defense Senior Mentor to U.S. Army and joint senior leadership and deploying combat units, a member of the Defense Service Board and a member of the Army DARPA Senior Advisory Group.

With more than 35 years of active military service and significant management consulting experience, General Vines brings extensive leadership, strategy and innovation experience to the Board.

Committee Membership: Governance

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Class III — Terms to Expire at the 2025 Annual Meeting

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David C. Evans, age 59, Director of the Company since 2018
Mr. Evans is a director of Cardinal Health Inc. (“Cardinal Health”), a global integrated healthcare services and products company. Mr. Evans served as Executive Vice President and Interim Chief Financial Officer of the Company from August 2022 until November 2022.

Mr. Evans served as the Interim Chief Financial Officer of Cardinal Health from September 2019 until May 2020, after a transition role beginning in July 2019. Mr. Evans previously served as Executive Vice President and Chief Financial Officer of Battelle Memorial Institute (“Battelle”), a private research and development organization, from March 2013 until January 2018. Mr. Evans’ responsibilities at Battelle included strategy, information technology and cybersecurity. Prior to joining Battelle, Mr. Evans served in various managerial roles at the Company, including, most recently, Chief Financial Officer and Executive Vice President, Strategy and Business Development.

Mr. Evans’ financial acumen and intimate familiarity with the Company makes him uniquely qualified to serve as a member of the Board. Mr. Evans qualifies as an “audit committee financial expert” as that term is defined in the applicable rules and regulations of the SEC (“SEC Rules”) and his financial experience is particularly valuable to the Board in his role as a member of the Audit Committee and the Finance Committee.

Committee Memberships: Audit; Finance

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Adam Hanft, age 72, Director of the Company since 2010
Mr. Hanft is the founder and Chief Executive Officer of Hanft Ideas LLC (“Hanft Ideas”), a strategic consultancy that provides marketing and branding advice and insights to leading consumer and business-to-business companies, including many leading digital brands ranging from cybersecurity to artificial intelligence, digital health, fintech, foodtech and adtech. He writes broadly about the consumer culture for numerous publications, is a podcast co-host, and is the co-author of “Dictionary of the Future.” He is also a frequent commentator on marketing and branding issues. Mr. Hanft previously served as founder and Chief Executive Officer of Hanft Unlimited, Inc., a marketing organization created in 2004 that included an advertising agency, strategic consultancy and custom-publishing operation. Mr. Hanft also serves as a director for 1-800-FLOWERS.COM Inc., and sits on a number of start-up boards as well as advisory boards, including Sensory Cloud, named one of the Fast Company’s most innovative companies.

As the Chief Executive Officer of Hanft Ideas, Mr. Hanft brings his extensive leadership and experience in the marketing and advertising industry, as well as his digital technology experience to the Board. His knowledge of the consumer and retail landscape; the rapidly changing media environment including social media; agtech and the cannabis industry; and the consumer acquisition ecosystem, have proven to be particularly valuable to the Board.

Committee Membership: Innovation and Technology

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Stephen L. Johnson, age 71, Director of the Company since 2010
Mr. Johnson is the President and Chief Executive Officer of Stephen L. Johnson and Associates Strategic Consulting, LLC (“Johnson and Associates”), a strategic provider of business, research and financial management and consulting services formed in 2009. Prior to forming Johnson and Associates, Mr. Johnson worked for the U.S. Environmental Protection Agency for 30 years, where he became the first career employee and scientist to serve as Administrator, a position he held from January 2005 until January 2009. Mr. Johnson serves as a director of Frederick Memorial Hospital and as a Trustee of Taylor University.

As President and Chief Executive Officer of Johnson and Associates and the former Administrator of the U.S. Environmental Protection Agency, as well as a lifelong scientist, Mr. Johnson brings considerable leadership and innovation and technology experience to the Board and fulfills the Board’s need for regulatory and environmental expertise as identified by the Governance Committee.

Committee Memberships: Governance (Chair); Compensation; Innovation and Technology

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Katherine Hagedorn Littlefield, age 67, Director of the Company since 2000
Ms. Littlefield is a general partner of the Hagedorn Partnership, L.P. She also serves on the board for the Hagedorn Family Foundation, Inc., a charitable organization. She is the sister of James Hagedorn, the Company’s CEO and Chairman of the Board. Ms. Littlefield is a member of the Board of Trustees at Delaware Valley University.

As a general partner and former Chair of the Hagedorn Partnership, L.P., the Company's largest shareholder, Ms. Littlefield brings a strong shareholder voice to the boardroom. She also has significant innovation and technology experience, having served on the Company's Innovation and Technology Committee (and its predecessors) since May 2004, as well as on the Innovation Advisory Board from its formation in 2001 until January 2014 when it was retired.

Committee Memberships: Finance (Chair); Innovation and Technology


Recommendation and Vote

Under Ohio law and the Company’s Code of Regulations, the four nominees for election as Class I directors receiving the greatest number of votes FOR election will be elected as directors of the Company. Common Shares represented by properly executed and returned forms of proxy or properly authenticated voting instructions recorded through the Internet or by telephone will be voted FOR the election of the Board’s nominees, unless otherwise specified. Broker non-votes will not be counted toward the election of directors or toward the election of the individual nominees of the Board, as applicable.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF ALL OF THE ABOVE-NAMED CLASS I DIRECTOR NOMINEES.



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MEETINGS AND COMMITTEES OF THE BOARD

Meetings of the Board and Board Member Attendance at Annual Meeting of Shareholders

The Board held fifteen meetings during the 2022 fiscal year. During the 2022 fiscal year, each Board member attended at least 75% of the aggregate number of Board and applicable committee meetings.

Although the Company does not have a formal policy regarding Board members attendance at annual shareholder meetings, the Company encourages all directors to attend each such annual meeting. With the exception of one director, all of our then current directors attended the 2022 Annual Meeting of Shareholders held on Monday, January 24, 2022.

Committees of the Board

The Board has established five standing committees to assist with its oversight responsibilities: (1) the Audit Committee; (2) the Compensation Committee; (3) the Governance Committee; (4) the Finance Committee; and (5) the Innovation and Technology Committee. Membership on each of these committees, as of December 14, 2022, is shown in the following chart:
AuditCompensation and
Organization
Nominating and GovernanceFinanceInnovation and Technology
Nancy G. Mistretta (Chair)Peter E. Shumlin (Chair)Stephen L. Johnson (Chair)Katherine Hagedorn Littlefield (Chair)Thomas N. Kelly Jr. (Chair)
David C. EvansStephen L. JohnsonBrian E. SandovalDavid C. EvansAdam Hanft
Thomas N. Kelly Jr.Thomas N. Kelly Jr.Peter E. ShumlinBrian D. FinnStephen L. Johnson
Gerald VolasNancy G. MistrettaJohn R. VinesPeter E. ShumlinKatherine Hagedorn Littlefield
Gerald VolasBrian E. Sandoval

Audit Committee

The Audit Committee, which was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is organized and conducts its business pursuant to a written charter adopted by the Board. A copy of the Audit Committee charter is posted under the “Corporate Governance” link on the Company’s website at http://investor.scotts.com. At least annually, in consultation with the Governance Committee, the Audit Committee evaluates its performance, reviews and assesses the adequacy of its charter and recommends to the Board any proposed changes thereto as may be necessary or desirable.

The Audit Committee is responsible for: (1) overseeing the accounting and financial reporting processes of the Company, including the audits of the Company’s consolidated financial statements; (2) appointing, compensating and overseeing the work of the independent registered public accounting firm employed by the Company; (3) establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, auditing matters or other compliance matters; (4) assisting the Board in its oversight of (a) the integrity of the Company’s consolidated financial statements, (b) the Company’s compliance with applicable laws, rules and regulations, including applicable NYSE Rules, (c) the independent registered public accounting firm’s qualifications and independence, and (d) the performance of the Company’s internal audit function; (5) overseeing the Company’s risk management protocols including the establishment of policies and guidelines, the identification of major risk exposures and monitoring and mitigation efforts with respect to such risks; and (6) undertaking the other matters required by applicable NYSE Rules and SEC Rules.

Pursuant to its charter, the Audit Committee has the authority to engage and compensate such independent counsel and other advisors as the Audit Committee deems necessary to carry out its duties.

The Board has determined that each member of the Audit Committee satisfies the applicable independence requirements set forth in the NYSE Rules and under Rule 10A-3 promulgated by the SEC under the Exchange Act. The Board believes each member of the Audit Committee is qualified to discharge his or her duties on behalf of the Company and its subsidiaries and satisfies the financial literacy requirement of the NYSE Rules. The Board has determined that David C. Evans, Nancy G. Mistretta and Gerald Volas each qualify as an “audit committee financial expert” as that term is defined in the applicable SEC Rules. None of the current members of the Audit Committee serves on the audit committee of more than two other public companies.

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The Audit Committee met eight times during the 2022 fiscal year.

The following directors served on the Audit Committee during the 2022 fiscal year: David C. Evans, Thomas N. Kelly Jr., Nancy G. Mistretta and Gerald Volas.

The Report of the Audit Committee begins on page 81.

Compensation and Organization Committee

The Compensation Committee is organized and conducts its business pursuant to a written charter adopted by the Board. A copy of the Compensation Committee charter is posted under the “Corporate Governance” link on the Company’s website located at http://investor.scotts.com. At least annually, in consultation with the Governance Committee, the Compensation Committee evaluates its performance, reviews and assesses the adequacy of its charter and recommends to the Board any proposed changes thereto as may be necessary or desirable.

The Compensation Committee is responsible for determining all elements of executive compensation and benefits for our CEO and other key executives of the Company and its subsidiaries, including the executive officers named in the Summary Compensation Table (the “NEOs”). As part of this process, the Compensation Committee determines the general compensation philosophy applicable to these individuals. In addition, the Compensation Committee advises the Board regarding executive officer organizational issues and succession plans. The Compensation Committee also acts upon all matters concerning, and exercises such authority as is delegated to it under the provisions of, any benefit or retirement plan maintained by the Company, and administers The Scotts Miracle-Gro Company Long-Term Incentive Plan (the “Long-Term Incentive Plan”), The Scotts Company LLC Executive Incentive Plan (the “EIP”), the Discounted Stock Purchase Plan and The Scotts Company LLC Executive Retirement Plan (the “ERP”).

Pursuant to its charter, the Compensation Committee has authority to retain special counsel, compensation consultants and other experts or consultants as it deems appropriate to carry out its functions and to approve the fees and other retention terms of any such counsel, consultants or experts. During the 2022 fiscal year, the Compensation Committee engaged ClearBridge Compensation Group (“ClearBridge”) and Frederic W. Cook & Co., Inc. (“FW Cook”) as independent compensation consultants to advise the Compensation Committee with respect to best practices and competitive trends in the area of executive compensation, as well as ongoing regulatory considerations. Both ClearBridge and FW Cook provided guidance to assist the Compensation Committee in determining the compensation structure for our NEOs and other key management employees but did not provide any consulting services directly to management. The role of ClearBridge and FW Cook is further described in the section captioned “Our Compensation Practices — Role of Outside Consultants” within the Compensation Discussion and Analysis.

The Board has determined that each member of the Compensation Committee satisfies the applicable independence requirements set forth in the NYSE Rules and under Rule 10C-1 promulgated by the SEC under the Exchange Act and as a non-employee director for purposes of Rule 16b-3 under the Exchange Act.

The Compensation Committee met seven times during the 2022 fiscal year.

The following directors served on the Compensation Committee during the 2022 fiscal year: Stephen L. Johnson, Thomas N. Kelly Jr., Nancy G. Mistretta and Peter E. Shumlin.

The Compensation Discussion and Analysis begins on page 24. The Compensation Committee Report appears on page 39.

Nominating and Governance Committee

The Governance Committee is organized and conducts its business pursuant to a written charter adopted by the Board. A copy of the Governance Committee charter is posted under the “Corporate Governance” link on the Company’s website located at http://investor.scotts.com. At least annually, the Governance Committee evaluates its performance, reviews and assesses the adequacy of its charter and recommends to the Board any proposed changes thereto as may be necessary or desirable.

The Governance Committee recommends nominees for membership on the Board as well as policies regarding the composition of the Board generally. The Governance Committee also makes recommendations to the Board regarding committee selection, including committee chairs and rotation practices, the overall effectiveness of the Board and of management (in the areas of Board relations and corporate governance), director compensation and developments in corporate
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governance practices. The Governance Committee is responsible for developing a policy regarding the consideration of candidates recommended by shareholders for election or appointment to the Board and procedures to be followed by shareholders in submitting such recommendations, consistent with any shareholder nomination requirements that may be set forth in the Company’s Code of Regulations and applicable laws, rules and regulations. In considering potential nominees for election or appointment to the Board, the Governance Committee conducts its own search for available, qualified nominees and will consider candidates from any reasonable source, including shareholder recommendations. The Governance Committee is also responsible for developing and recommending to the Board corporate governance guidelines applicable to the Company and overseeing the evaluation of the Board. Finally, the Governance Committee is responsible for overseeing the Company’s corporate social responsibility programs and goals and the Company progress toward achieving those goals.

The Board has determined that each member of the Governance Committee satisfies the applicable independence requirements set forth in the NYSE Rules.

The Governance Committee met six times during the 2022 fiscal year.

The following directors served on the Governance Committee during the 2022 fiscal year: Stephen L. Johnson, Brian E. Sandoval, Peter E. Shumlin and John R. Vines.

Finance Committee

The Finance Committee is organized and conducts its business pursuant to a written charter adopted by the Board. A copy of the Finance Committee charter is posted under the “Corporate Governance” link on the Company’s website located at http://investor.scotts.com. At least annually, in consultation with the Governance Committee, the Finance Committee evaluates its performance, reviews and assesses the adequacy of its charter and recommends to the Board any proposed changes thereto as may be necessary or desirable.

The Finance Committee assists the Board in the oversight of the finance and investment functions of the Company, the Company’s capital structure and the financing and financial structure of proposed acquisitions and divestitures in which the Company engages as part of its business strategy from time to time. In discharging these duties, the Finance Committee oversees a broad range of financial matters, including the Company’s capital expenditures budget, investment policies, stock repurchase programs, dividend payments, cash management and corporate financing matters. The Finance Committee also advises the Board with respect to acquisitions, divestitures, other significant corporate transactions, and integration of acquired businesses and business development opportunities. Pursuant to its charter, and delegation approved by the Board, the Finance Committee is responsible for approving certain acquisition, divestiture and corporate financing transactions.

The Finance Committee met eight times during the 2022 fiscal year.

The following directors served on the Finance Committee during the 2022 fiscal year: David C. Evans, Brian D. Finn, Katherine Hagedorn Littlefield, Peter E. Shumlin and Gerald Volas.

Innovation and Technology Committee

The Innovation and Technology Committee is organized and conducts its business pursuant to a written charter adopted by the Board. A copy of the Innovation and Technology Committee charter is posted under the “Corporate Governance” link on the Company’s website located at http://investor.scotts.com. At least annually, in consultation with the Governance Committee, the Innovation and Technology Committee evaluates its performance, reviews and assesses the adequacy of its charter and recommends to the Board any proposed changes thereto as may be necessary or desirable.

The Innovation and Technology Committee assists the Board in its oversight of management’s activities and processes related to the development of the Company’s technology plans, commercial and technical innovation strategies, and in consultation with the Governance Committee, providing guidance with regard to the Company’s sustainability policies and practices as they relate to the Company’s existing and new product technologies and its marketing and branding programs.

The Innovation and Technology Committee met three times during the 2022 fiscal year.

The following directors served on the Innovation and Technology Committee during the 2022 fiscal year: Adam Hanft, Stephen L. Johnson, Thomas N. Kelly Jr., Katherine Hagedorn Littlefield and Brian E. Sandoval.

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Compensation and Organization Committee Interlocks and Insider Participation

With respect to the 2022 fiscal year and from October 1, 2022 through the date of this Proxy Statement, there were no interlocking relationships between any executive officer of the Company and any entity, one of whose executive officers served on the Company’s Compensation Committee or Board, or any other relationship required to be disclosed in this section under applicable SEC Rules.


CORPORATE GOVERNANCE

Corporate Governance Guidelines

In accordance with applicable sections of the NYSE Rules, the Board has adopted Corporate Governance Guidelines to promote the effective functioning of the Board and its committees. The Board, with the assistance of the Governance Committee, periodically reviews the Corporate Governance Guidelines to ensure they remain in compliance with all applicable requirements and appropriately address evolving corporate governance issues.

The Corporate Governance Guidelines are posted under the “Corporate Governance” link on the Company’s website located at http://investor.scotts.com.

Director Independence

In consultation with the Governance Committee, the Board has reviewed, considered and discussed the relationships, both direct and indirect, of each current director or nominee for election as a director with the Company and its subsidiaries, including those listed under the section captioned “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,” and the compensation and other payments each director and each nominee has, both directly and indirectly, received from or made to the Company and its subsidiaries, to determine whether such director or nominee satisfies the applicable independence requirements set forth in the NYSE Rules and the SEC Rules. As part of its independence analysis, the Board considers all commercial, industrial, banking, consulting, legal, accounting, charitable, familial or other business relationships any director or nominee may have with the Company.

Based upon the recommendation of the Governance Committee and its own review, consideration and discussion, the Board has determined that the following Board members serving at any time during the 2022 fiscal year satisfy the applicable independence requirements set forth in the NYSE Rules and the SEC Rules and are, therefore, “independent” directors:
(1) David C. Evans(6) Brian E. Sandoval
(2) Brian D. Finn(7)  Peter E. Shumlin
(3)  Stephen L. Johnson(8) John R. Vines
(4) Thomas N. Kelly Jr.(9) Gerald Volas
(5)  Nancy G. Mistretta

The Board determined that: (a) Mr. J. Hagedorn is not independent because he is the Company’s CEO; (b) Ms. Littlefield is not independent because she is the sister of Mr. J. Hagedorn; and (c) Mr. Hanft is not independent because he has received consulting compensation from the Company within the last three years that exceeds the applicable threshold for determining whether a director can be considered independent. The Board also determined that Ms. Avilés, a director nominee, satisfies the applicable independence requirements set forth in the NYSE Rules and the SEC Rules and would be an “independent” director if elected by the shareholders.

Nominations of Directors

The Board, taking into account the recommendations of the Governance Committee, selects nominees to stand for election to the Board. The Governance Committee considers candidates for the Board from any reasonable source, including current director, management and shareholder recommendations, and does not evaluate candidates differently based on the source of the recommendation. Pursuant to its written charter, the Governance Committee has the authority to retain consultants and search firms to assist in the process of identifying and evaluating director candidates and to approve the fees and other retention terms of any such consultant or search firm.

Shareholders may recommend director candidates for consideration by the Governance Committee by giving written notice of the recommendation to the Corporate Secretary of the Company. The recommendation must include the candidate’s
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name, age, business address and principal occupation or employment, as well as a description of the candidate’s qualifications, attributes and other skills. A written statement from the candidate consenting to serve as a director, if so elected, must accompany any such recommendation.

The Company’s Corporate Governance Guidelines specify that, in general, a director should not stand for re-election once he or she has reached the age of 72, but provide the Board with flexibility to nominate a director who is age 72 or older based on individual circumstances.

Communications with the Board

The Board believes it is important for shareholders and other interested persons to have a process pursuant to which they can send communications to the Board and its individual members, including the Lead Independent Director. Accordingly, shareholders and other interested persons who wish to communicate with the Board, the Lead Independent Director, the non-employee directors as a group, the independent directors as a group or any particular director may do so by addressing such correspondence to the name(s) of the specific director(s), to the “Lead Independent Director,” to the “Non-employee Directors” or “Independent Directors” as a group or to the “Board of Directors” as a whole, and sending it in care of the Company to the Company’s principal corporate offices at 14111 Scottslawn Road, Marysville, Ohio 43041. All such correspondence should identify the author as a shareholder or other interested person, explain such person’s interest and clearly indicate to whom the correspondence is directed. Correspondence marked “personal and confidential” will be delivered to the intended recipient(s) without opening. Copies of all correspondence will be circulated to the appropriate director or directors. There is no screening process in respect of communications from shareholders and other interested persons.

Code of Business Conduct and Ethics

All employees of the Company and its subsidiaries, including each NEO, and all directors of the Company are required to comply with the Company’s Code of Business Conduct and Ethics. The Sarbanes-Oxley Act of 2002 and the SEC Rules promulgated thereunder require companies to have procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. The procedures for addressing these matters are set forth in the Company’s Code of Business Conduct and Ethics.

In accordance with applicable NYSE Rules and SEC Rules, the Board has adopted The Scotts Miracle-Gro Company Code of Business Conduct and Ethics, which is available under the “Corporate Governance” link on the Company’s website located at http://investor.scotts.com.


NON-EMPLOYEE DIRECTOR COMPENSATION

Benchmarking Non-Employee Director Compensation

The Board believes that non-employee director compensation should be competitive with similarly situated companies and encourage high levels of ownership of Common Shares. To ensure that non-employee director compensation remains competitive, the Board periodically engages an independent outside consultant to conduct a benchmark study. The most recent benchmark study was conducted by ClearBridge in 2021 (the “2021 Benchmark Study”) that compared each element of non-employee director compensation against the then-current peer group used to benchmark NEO compensation (the “Compensation Peer Group”). Based on the 2021 Benchmark Study, the overall compensation for our non-employee directors, excluding the Lead Independent Director, compares at the median of the Compensation Peer Group. For further discussion of the Compensation Peer Group, see the section of this Proxy Statement captioned “Our Compensation Practices — Compensation Peer Group” within the Compensation Discussion and Analysis. The 2021 Benchmark Study was the basis for establishing the non-employee director compensation level for 2022. The Company’s non-employee director compensation level has not changed since 2017 (when the value of the annual stock unit grant was increased by $15,000) and has been substantially similar since 2014. Based on the 2021 Benchmark Study, the competitive market for director compensation has increased significantly over the past several years as the demands on board members has also risen, and our Board concluded that the non-employee director compensation, while competitive, was not appropriately aligned with the time commitment required for service on our Board. Accordingly, the Board approved changes to the compensation structure of our non-employee directors for the 2022 calendar year, which are discussed in more detail below. Although the Board establishes the non-employee director compensation on a calendar year basis, except as otherwise specifically provided, director compensation amounts are presented on a fiscal year basis in this Proxy Statement.

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Non-Employee Director Compensation Structure for 2022

The annual Board retainer paid by the Company to the non-employee directors consists of a quarterly cash retainer and an annual grant of restricted stock units (“RSUs”). No additional compensation is provided for serving as a committee chair, serving as a committee member, or attending Board or committee meetings. The Lead Independent Director receives additional cash compensation and RSUs for serving in that role, as reflected in the table below. The Company believes this retainer structure reflects the additional responsibilities that the Company expects each non-employee director to assume, facilitates the rotation of directors among the various Board committees and ensures that the Company continues to provide a competitive level of compensation to its non-employee directors. By delivering approximately two-thirds of the annual Board retainer in the form of equity-based compensation, the compensation structure also strengthens the alignment between the interests of the Company’s non-employee directors and its shareholders. For the 2023 calendar year, the Company is considering changing the compensation structure for non-employee directors to consist solely of an annual grant of RSUs, as part of the Company’s emphasis across the enterprise on reducing its debt leverage ratio and ensuring compliance with the debt leverage covenant under our credit facility.

The 2022 calendar year compensation structure for non-employee directors was increased by $15,000 in cash retainer and $25,000 in restricted stock unit value and is as follows:
Pay ElementsAmount
Annual Board Retainer:
(all non-employee directors)
Cash Retainer ($28,750 per quarter)$115,000 
Restricted Stock Units (annual)$210,000 
Committee Chair/Membership FeesN/A
Lead Independent Director: (supplemental compensation)
Additional Cash Retainer ($3,750 per quarter)$15,000 
Additional Restricted Stock Units (annual)$35,000 
To better leverage the collective skills and experience of the Company’s non-employee directors, the Company expects each non-employee director to dedicate significant time beyond Board and committee meetings to Board service. In addition to participating at Board and committee meetings, the Company expects the non-employee directors to spend several days each year “in the field” immersing themselves in the Company’s business to gain additional insights and perspective regarding the Company’s operations, partners, customers and consumers. In evaluating the compensation level for our non-employee directors, the Board considers the number of Board and committee meetings that are typically held each year, as well as the additional days the Company expects the non-employee directors to immerse in the business, when determining the structure and overall magnitude of compensation for the non-employee directors. Over the past several years, the expected engagement of each of our non-employee directors has continued to increase as our business has continued to grow and evolve in complexity (including increased oversight-related engagement with management related to operational challenges facing the Company), yet, other than a $15,000 increase in the annual stock unit grant in January 2017, the compensation structure for non-employee directors has remained unchanged since the 2014 calendar year. Given these factors, the Board concluded that a compensation increase was appropriate for 2022.

In addition to the cash and equity-based compensation elements, non-employee directors also receive reimbursement of all reasonable travel and other expenses for attending Board meetings, Board committee meetings or other Company-related functions. As circumstances permit, we also allow family members to accompany directors on business-related flights on the corporate aircraft. There is no incremental cost to the Company for such allowances.

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Aligning Non-Employee Director Compensation and Shareholder Interests

Our non-employee director compensation program contains several design elements intended to strengthen the alignment between the interests of our non-employee directors and our shareholders:
Design ElementHow it Aligns to Shareholder Interests
• Approximately 2/3 of annual compensation is equity based
• Significant portion of director pay is directly linked to long-term share price performance
• Deferred settlement of equity based compensation
• Mandatory two-year holding period after vesting aligns our directors with a long-term view
• Mandatory share-based dividend equivalents on equity awards granted to directors
• Dividend equivalents automatically convert to additional shares rather than paid in cash
• Robust stock ownership guidelines (5x cash retainer)
• Directors must retain 50% of each equity grant until the stock ownership guidelines have been met to ensure that our directors maintain a significant investment in the Company

Equity-Based Compensation — Key Provisions

For the 2022 calendar year, the equity-based compensation for non-employee directors was granted in the form of RSUs. Each whole RSU represents a contingent right to receive one full Common Share. The Board determines the number of RSUs granted by dividing the intended grant value by the closing price of one Common Share on NYSE on the applicable grant date, and rounding up to the next whole share.

Dividend Equivalents

Each RSU is granted with a related dividend equivalent, which represents the right to receive additional RSUs in respect of dividends that are declared and paid in cash in respect of the Common Shares underlying the RSUs, during the period beginning on the grant date and ending on the settlement date. Such cash dividends are converted to RSUs based on the fair value of Common Shares on the date the dividend is paid. Dividends declared and paid in the form of Common Shares are converted to RSUs in proportion to the dividends paid per Common Share.

Vesting and Settlement

The Board typically approves RSU grants for non-employee directors at a meeting held around the time of the annual meeting of shareholders. Consistent with the Company’s grant date protocol, the grant date is set as the second or third trading day following the Company’s first quarter earnings release. For the 2022 calendar year, RSUs were granted to the non-employee directors on February 4, 2022, with the exception of Governor Sandoval who received an RSU grant on June 10, 2022 upon his appointment to the Board.

The RSUs granted to non-employee directors in the 2022 calendar year, including dividend equivalents converted to RSUs, vest on the first anniversary of the grant date. The RSUs (and related dividend equivalents) become 100% vested if a non-employee director’s service on the Board terminates as a result of his or her death or becoming totally disabled. The unvested RSUs (and related dividend equivalents) are immediately forfeited if the service of a non-employee director terminates prior to the vesting date for any reason other than a change in control of the Company (except as provided above for death or disability). Subject to the terms of the Long-Term Incentive Plan, whole vested RSUs are settled in Common Shares and fractional vested RSUs are settled in cash as soon as administratively practicable following the earliest to occur of: (i) termination of service as a director; (ii) death; (iii) disability; or (iv) the third anniversary of the grant date. Upon a change in control of the Company, each non-employee director’s outstanding RSUs vest on the date of the change in control, and settle as described above. For the 2022 calendar year, the non-employee directors had the option to elect, in advance, to defer settlement of their vested RSUs to the third anniversary of the grant date regardless of the reason for termination. For the 2022 calendar year, only Mr. Evans chose this election. Until the RSUs are settled, a non-employee director has none of the rights of a shareholder with respect to the Common Shares underlying the RSUs.

Deferral of Cash-Based Retainers

For the 2022 calendar year, the non-employee directors had the option to elect, in advance, to receive up to 100% of their quarterly cash retainers in cash or fully-vested deferred stock units (“DSUs”). If DSUs were elected, the non-employee director
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received the number of DSUs determined by dividing the deferral amount by the closing price of one Common Share on NYSE on the applicable grant date, and rounding up to the next whole share. In general, DSUs granted in connection with deferral elections will be settled on the same terms as RSUs. For the 2022 calendar year, the following non-employee directors elected to receive the respective portion of their quarterly cash retainers in fully vested DSUs: Mr. Finn, 100%; and Governor Shumlin, 100%. None of the other non-employee directors elected to defer any portion of their 2022 calendar year cash retainer.

Non-Employee Director Stock Ownership Guidelines

The Board believes that ownership of Common Shares strengthens our directors’ commitment to the long-term future of the Company and further aligns their interests with those of the Company’s shareholders. Accordingly, the Board has adopted stock ownership guidelines applicable to all non-employee directors. Under the stock ownership guidelines, each non-employee director is expected to own Common Shares having a value of at least five times the annual cash retainer. For purposes of determining compliance with the stock ownership guidelines, the value of beneficially-owned shares is determined as follows:

100% of the value of Common Shares directly registered to the director and/or held in a brokerage account;

60% of the “in-the-money” portion of any non-qualified stock option (“NSO”), whether vested or unvested; and

60% of the value of unsettled full-value awards (e.g., DSUs and RSUs), whether vested or unvested.

The stock ownership guidelines require each non-employee director to retain 50% of any individual equity-based awards until the ownership guideline has been achieved.

Non-Employee Director Compensation Table

The following table sets forth the compensation awarded to, or earned by, each of the non-employee directors of the Company for the 2022 fiscal year. Mr. J. Hagedorn did not receive any additional compensation for his services as a director or as Chairman of the Board. Mr. Evans served as the Company’s Executive Vice President & Interim Chief Financial Officer during part of the 2022 fiscal year and received additional compensation that is separate from the compensation reported below for his service as a non-employee director. Accordingly, Mr. J. Hagedorn’s compensation as well as the compensation that Mr. Evans received in connection with his interim assignment, is reported in the section captioned “EXECUTIVE COMPENSATION” and is not included in the table below.

Non-Employee Director Compensation Table
NameFees
Earned or
Paid in
Cash ($)(1)
Stock
Awards
($)(2)(3)
Total ($)
David C. Evans111,250 210,067 321,317
Brian D. Finn111,250 210,067 321,317
Adam Hanft111,250 (4)210,067 321,317
Stephen L. Johnson111,250 210,067 321,317
Thomas N. Kelly Jr.111,250 210,067 321,317
Katherine Hagedorn Littlefield111,250 210,067 321,317
Nancy G. Mistretta111,250 210,067 321,317
Brian E. Sandoval38,333 (5)122,506 (6)160,839
Peter E. Shumlin111,250 210,067 321,317
John R. Vines126,250 (7)245,012 (8)371,262
Gerald Volas111,250 210,067 321,317
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(1)    Reflects the cash-based retainer earned for services rendered during the 2022 fiscal year, paid at a rate of $25,000 for the period from October 1, 2021 to December 31, 2021, and $28,750 per quarter for the period from January 1, 2022 to September 30, 2022. With respect to Mr. Finn's election to defer 100% of his cash-based retainer for both the 2021 calendar year and the 2022 calendar year, the amount reported includes a total of $111,250 in cash fees from October 1, 2021 through September 30, 2022 that were deferred and awarded in the form of fully vested DSUs on October 1, 2021, February 4, 2022, April 1, 2022 and July 1, 2022.

With respect to Governor Shumlin’s election to defer 100% of his cash-based retainer for the 2022 calendar year only, the amount reported includes a total of $86,250 in cash fees from January 1, 2022 through September 30, 2022 that were deferred and awarded in the form of fully vested DSUs on February 4, 2022, April 1, 2022 and July 1, 2022.

With respect to Mr. Johnson's election to defer 25% his cash-based retainer for the 2021 calendar year only, the amount reported includes a total of $6,250 in cash fees from October 1, 2021 through December 31, 2021 that were deferred and awarded in the form of fully vested DSUs on October 1, 2021.

(2)    Reflects the aggregate grant date fair value of RSUs granted during the 2022 fiscal year. The grant date fair value of each RSU, except for Governor Sandoval, was determined using the value of the underlying Common Shares on the date of grant, February 4, 2022, and was calculated in accordance with the equity compensation accounting provisions of FASB ASC Topic 718, without respect to forfeiture assumptions. For Governor Sandoval, the grant date fair value of each RSU was determined using the value of the underlying Common Shares on the date of grant, June 10, 2022, and was calculated in accordance with the equity compensation accounting provisions of FASB ASC Topic 718, without respect to forfeiture assumptions.

(3)    The aggregate number of Common Shares subject to RSUs and related dividend equivalents (including both vested and unvested) and vested DSUs and related dividend equivalents outstanding as of September 30, 2022 was as follows:
Name
Aggregate Number of
Common Shares
Subject to Stock
Awards Outstanding
as of September 30, 2022
David C. Evans4,060
Brian D. Finn6,271
Adam Hanft (includes RSUs received in connection with consulting agreement)7,145
Stephen L. Johnson4,400
Thomas N. Kelly Jr.4,060
Katherine Hagedorn Littlefield4,060
Nancy G. Mistretta4,060
Brian E. Sandoval1,379
Peter E. Shumlin5,747
John R. Vines4,792
Gerald Volas2,070
(4)    In addition to the cash-based retainer and RSUs granted to Mr. Hanft for his service on the Board, he earned an additional $900,000 in cash-based consulting fees and received a grant of $400,072 in RSUs for the provision of strategic marketing consulting services to the Company. The grant date fair value of the RSUs was determined using the value of the underlying Common Shares on the date of grant, February 4, 2022, and was calculated in accordance with the equity compensation accounting provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation — Stock Compensation (“Topic 718”), without respect to forfeiture assumptions.
(5)    Reflects pro-rated cash-based retainer for Governor Sandoval for his service on the Board from June 10, 2022 through September 30, 2022.

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(6)    Reflects the aggregate grant date fair value of the RSUs granted to Governor Sandoval upon his appointment to the Board on June 10, 2022. The amount reported represents approximately 7/12ths of the value awarded to other non-employee directors for the full calendar year.

(7)    With respect to General Vines, reflects an additional cash-based retainer of $15,000, paid at a rate of $3,750 per quarter, for his service as the Company’s Lead Independent Director during the 2022 fiscal year.

(8)    Reflects an additional grant of $35,000 in RSUs for General Vines’ service as the Company’s Lead Independent Director during the 2022 fiscal year.



EXECUTIVE OFFICERS

The executive officers of the Company who are not directors, their positions and, as of December 9, 2022, their ages and years with the Company (and its predecessors) are set forth below. Information for Mr. J. Hagedorn, our Chief Executive Officer and Chairman of the Board, can be found under “PROPOSAL NUMBER 1 — ELECTION OF DIRECTORS.”
Name Age Position(s) Held Years with Company
Michael C. Lukemire64 President and Chief Operating Officer26
Christopher J. Hagedorn38 Division President11
Matthew E. Garth48 Executive Vice President and Chief Financial Officer1
Denise S. Stump68 Executive Vice President, Global Human Resources and Chief Ethics Officer22
Dimiter Todorov50 Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer14

Executive officers serve at the discretion of the Board and pursuant to executive severance agreements or other arrangements. The business experience of each of the individuals listed above during at least the past five years is as follows:
Mr. Lukemire was named President and Chief Operating Officer of the Company in February 2016. Prior to this appointment, Mr. Lukemire held several senior leadership positions at the Company.
Mr. C. Hagedorn was named Division President of Scotts Miracle-Gro in January 2021. Prior to this appointment, Mr. C. Hagedorn served as Senior Vice President and General Manager, Hawthorne, a position he held since January 2017. Mr. C. Hagedorn is the son of Mr. J. Hagedorn, the Chairman and CEO of Scotts Miracle-Gro.
Mr. Garth was named Executive Vice President and Chief Financial Officer of the Company in December 2022. Prior to his appointment, Mr. Garth served as Senior Vice President, Finance and Treasury, and Chief Financial Officer for Mineral Technologies Inc., a specialty mineral company.
Ms. Stump was named Executive Vice President, Global Human Resources of the Company’s predecessor in February 2003 and Chief Ethics Officer of the Company in October 2013. Prior to these appointments, Ms. Stump held several senior leadership positions at the Company.
Mr. Todorov was named Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer of the Company in December 2022. Prior to this appointment, Mr. Todorov served as Vice President, Legal, a position he held since June 2015.


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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Discussion and Analysis (the “CD&A”) provides insight to our shareholders regarding our executive compensation philosophy, the structure of our executive compensation programs and the factors that we consider when making compensation decisions for the executive officers named in the Summary Compensation Table (“NEOs”).

Executive Summary

The Company believes its compensation practices and overall level of executive compensation are competitive when compared with our Compensation Peer Group and reflect fair pay relative to the Company’s financial performance. Our compensation programs align our NEOs’ interests with those of our shareholders by rewarding performance that meets or exceeds the targets the Compensation Committee establishes with the objective of increasing shareholder value. We also recognize that the leadership qualities demonstrated by our NEOs drive business performance and should be rewarded along with financial results. Finally, the Compensation Committee strives to ensure that our executive compensation levels are competitive with companies of a like nature. In short, we pay for performance: our NEOs receive higher incentive payouts when financial targets and leadership objectives are met or exceeded, and lower incentive payouts, if any, when financial targets and leadership objectives are not met.

Following the record sales and earnings levels achieved by the Company in both the 2020 and 2021 fiscal years, the Company faced a sharp and unexpected downturn in its business results during the 2022 fiscal year, missing both its top line sales and bottom-line profitability goals. As a result, and consistent with our pay-for-performance philosophy, none of our NEOs received an incentive payout for the 2022 fiscal year. The Compensation Committee believes the levels of executive compensation reported for our NEOs in the Summary Compensation Table reflect our pay-for-performance philosophy and are appropriate given the results the Company achieved.

“PROPOSAL NUMBER 2 — ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS (“SAY-ON-PAY”),” found on page 63, provides shareholders an opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs as set forth in this Proxy Statement, a so-called “Say-on-Pay” vote. At our 2022 Annual Meeting of Shareholders held on January 24, 2022, approximately 98% of the votes cast by our shareholders were in favor of our “Say-on-Pay” vote. Accordingly, the Compensation Committee believes that shareholders support our approach to executive compensation. None of the changes to our compensation structure in 2022 were attributed to the “Say-on-Pay” vote, but are part of continuous efforts to evaluate and improve our compensation programs.

We Believe in Linking Pay to Shareholder Value Creation

Linking executive pay to shareholder value creation and attracting and retaining top performers are central to the design of our executive compensation programs. The Compensation Committee strives to achieve these goals through our short-term and long-term compensation plans and exercises its discretion to make adjustments to the design of our programs to ensure that our executives are rewarded fairly, over time, relative to the shareholder value they help create. We believe shareholder value is ultimately created by sustained sales and profitability growth, increased cash flow and demonstrated leadership by our NEOs. To that end, our compensation programs for the 2022 fiscal year include a mix of cash flow, profitability and sales metrics, directly linking executive pay to key drivers of shareholder value creation over both a short-term and a long-term horizon. Our NEOs are directly aligned with, and invested in, the success of our business because the majority of their compensation is impacted positively or negatively by our business results and share price. Specifically, an average of approximately 75% of the annual total direct compensation opportunity for our NEOs, including the CEO, is tied directly to both short-term and long-term financial performance or long-term share price performance, directly aligning the interests of the NEOs with our shareholders.
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Executive Compensation Reflects Financial Performance and Fair Target Setting

The pre-defined performance goals for the 2022 fiscal year were established by the Compensation Committee amidst the unprecedented uncertainties associated with the continuing COVID-19 pandemic, significant cost pressures, and the need for increased staffing and capital expenditures to enhance our supply chain operations to meet increased inventory demand. Considering the immense growth we experienced in the prior two years, the Compensation Committee believed simply maintaining the status quo in the 2022 fiscal year would be a challenge. For these reasons, the Compensation Committee set more conservative goals for the threshold and target levels of performance; however, consistent with past practice, the Compensation Committee set aggressive goals for the maximum performance level by requiring a 15% growth in earnings over the record profitability for the prior year.

Consistent with our executive compensation program design and pay-for-performance philosophy, our compensation program results* for the 2022 fiscal year reflect the fact that the Company did not achieve its predefined financial objectives. Accordingly, none of our NEOs received an incentive payout for the 2022 fiscal year.

The target performance level for the 2022 fiscal year annual incentive plan was set based on an expectation that the Company would maintain its consolidated adjusted earnings before interest, taxes and amortization (“Non-GAAP Adjusted EBITA”) plus Joint Venture Earnings at a level that was flat to the record earnings achieved in the prior fiscal year. Likewise, the target level of performance for the Net Sales metric was set at a level equal to the record sales achieved in the prior fiscal year. The maximum performance goals were set at a level that required the Company to deliver profitability growth of 15% and Net Sales growth of 6% vs. the record levels achieved in the prior fiscal year.

Non-GAAP Adjusted EBITA plus Joint Venture Earnings, weighted at 75% under the annual incentive plan for the 2022 fiscal year, declined by over 40% compared to the prior year, to $441.5 million. In addition, the Company delivered $3.92 billion in Net Sales, weighted at 25% under the annual incentive plan for the 2022 fiscal year, which was below the minimum performance goal of $4.82 billion.
________________________

*    Plan results are derived from financial measures that are not calculated in accordance with the U.S. generally accepted accounting principles (“GAAP”). A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures are presented further herein. There may be differences between the Company’s reported financial results and the amounts used for purposes of calculating incentive payments under the annual incentive compensation program since the calculations reflect currency translation based on budgeted, rather than actual, exchange rates and other adjustments the Compensation Committee may make based on individual facts and circumstances.

Compensation Design Reflects Key Market Practices

We believe our compensation design and practices align our executive compensation with our shareholders’ interests and reflect current market practices, including:

Performance-Based Pay: Performance should be the primary driver of compensation decisions. Consistent with this philosophy, an average of approximately 75% of the annual total direct compensation opportunity for our NEOs, including our CEO, is delivered in the form of variable pay tied to financial and/or share price performance.

No Employment Agreements: The Company does not maintain employment agreements with any of the NEOs. Severance benefits for our CEO are provided under a separate severance agreement, and severance benefits for all other NEOs are provided under an executive severance plan. The Company has entered into arbitration agreements with our NEOs and other associates as a means to address certain potential employment issues that may arise.

Limited Executive Perquisites: The Company does not offer cash-based executive perquisites, such as car allowances and financial planning services.

Double-Trigger Change in Control Provisions: Our plans include “double-trigger” change in control provisions for equity-based awards that are assumed or substituted in the change in control transaction or that continue in effect after the transaction if there is an involuntary termination of employment within 24 months after a change in control.
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We believe that a double-trigger provision is appropriate because it provides protection for our impacted executives while protecting the interests of shareholders.

Clawback Provisions: All of our equity-based awards and annual incentive awards include provisions designed to recoup such awards for violation of non-compete covenants or other post-employment obligations to the Company, or otherwise engaging in certain conduct that is detrimental to the Company. In addition, our Executive Compensation Recovery Policy allows the Company to recover annual incentive award payments and equity award distributions in the event of a required accounting restatement due to material non-compliance with any applicable financial reporting requirement.

Stock Ownership Guidelines: We require our NEOs to meet stock ownership guidelines. Our stock ownership guidelines are designed to align the interests of each NEO with the long-term interests of the shareholders by ensuring that a material amount of each NEO’s accumulated wealth is maintained in the form of Common Shares. The ownership guidelines, which are competitive with the guidelines maintained by our Compensation Peer Group, are: 10 times base salary for the CEO, 5 times base salary for the COO and 3 times base salary for all other NEOs.

No Repricing or Backdating: We do not reprice underwater stock options or backdate options.

No Excess Benefit Retirement Plan: Our excess benefit plan was frozen effective December 31, 1997 and the only NEO who was enrolled in this plan before it was frozen is our CEO.

Independent Consultants: Our Compensation Committee engages independent consultants to advise with respect to executive compensation levels and practices. The consultants provide no services to management and had no prior relationship with any of our NEOs.

Anti-Hedging Policy: Our Insider Trading Policy prohibits all Company employees, including our NEOs, and members of the Board, from engaging in certain hedging transactions relating to Company securities held by them, including short sales, the purchase of puts, calls or listed options and hedging transactions such as prepaid variable forwards, equity swaps, caps, collars and exchange funds.

Our Compensation Philosophy and Objectives

Philosophy: Our executive compensation philosophy is based on the following principles:

Align our executives’ interests with the long-term interests of our shareholders;

Performance should be the primary driver of compensation decisions;

Place greater emphasis on variable pay versus fixed pay; and

In setting total compensation levels, we consider the competitive market range for similar executive roles. We generally view the competitive market range as the pay range between the 25th percentile and the 75th percentile of the Compensation Peer Group (the “Competitive Market Range”). While we view the Competitive Market Range as a guide for positioning total compensation levels for our NEOs, our NEOs’ current and historic job performance, unique knowledge of the Company and our business, organizational impact and expected contribution to future success ultimately drive our compensation decisions.

Objectives: The culture of our Company is based on a strong bias for action aimed at delivering sustainable results and driving value to our shareholders. Our compensation programs are structured to promote accountability and to promote our business objectives and shareholder alignment by:

Attracting, retaining and motivating high-caliber leadership;

Linking compensation to Company, functional and individual achievements;

Emphasizing pay-for-performance to motivate both short-term and long-term performance for the benefit of shareholders; and

Providing the opportunity for meaningful wealth accumulation over time, tied directly to shareholder value creation.
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Setting Pay Levels and Pay Mix: The Compensation Committee exercises its discretion to position individual pay levels and pay mix (i.e., how much of the pay opportunity is allocated among base salary, target incentive opportunity and long-term value) relative to the Competitive Market Range based on a subjective assessment of individual facts and circumstances, including:

The relative degree of organizational impact and influence of the role (what we refer to as “role-based pay”);

The executive’s capability, experience and skill level;

The executive’s unique knowledge of our Company and our business; and

The overall level of personal performance, both historic and current, and expected contribution to our business’ future success.

Elements of Executive Compensation

To best promote the objectives of our executive compensation program, the Compensation Committee has selected a mix consisting of the following five principal short-term and long-term compensation elements:

Base salary;

Annual cash incentive compensation;

Long-term equity-based incentive awards;

Executive perquisites and other benefits; and

Retirement plans and deferred compensation benefits.

The Compensation Committee has responsibility for determining all elements of compensation granted to our NEOs and other key management employees. On an annual basis, the Compensation Committee reviews the relative mix or weighting between short-term and long-term compensation elements to ensure that the structure of our executive compensation is consistent with our compensation philosophy and objectives.

Base Salary (short-term compensation element)

Base salary is the primary fixed element of total compensation and serves as the foundation of the total compensation structure, since most of the variable compensation elements are linked directly or indirectly to the base salary level. Base salaries of the NEOs are reviewed on an annual basis. The Compensation Committee exercises its discretion to position individual base salary levels for the NEOs relative to the Competitive Market Range based on a subjective assessment of organizational and individual qualities and characteristics, including the strategic importance of the individual’s job function to the Company, as well as an NEO’s experience, competency, skill level, overall contribution to the success of our business and potential to make significant contributions to the Company in the future.

The Company undertook several initiatives across the enterprise during the latter half of the 2022 fiscal year to reduce expenses, to reduce our debt leverage ratio and help ensure compliance with the debt leverage covenants under our credit facility. In connection with these initiatives, Mr. J. Hagedorn elected to forgo all but $4,000 (to cover benefit costs and required withholding) of his $100,000 monthly salary and his $83,333 Company-paid deferred compensation contribution for the month of September 2022; and Mr. C. Hagedorn elected to forgo all but $4,000 (to cover benefit costs and required withholding) of his $54,167 monthly salary for the month of September 2022. The Compensation Committee was supportive of these voluntary decisions given the near-term debt leverage challenges the Company was facing at that time. As the Company has continued to emphasize reducing its debt leverage ratio in the 2023 fiscal year, Mr. J. Hagedorn and Mr. C. Hagedorn have continued to voluntarily forgo the majority of their base salaries during the first quarter of the 2023 fiscal year, and Mr. J. Hagedorn has elected to forgo the majority of his Company-paid deferred compensation contribution. The Company will continue to emphasize reducing its debt leverage ratio through its incentive plans and other initiatives for the 2023 fiscal year.

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Annual Cash Incentive Compensation (short-term compensation element)

The Scotts Company LLC Executive Incentive Plan (“EIP”) provides annual cash incentive compensation opportunities for our NEOs and other key management employees. For the 2022 fiscal year, the Compensation Committee selected Non-GAAP Adjusted Earnings, Net Sales and the leadership attributes demonstrated by our NEOs (quantified in the Personal Performance Factor (“PPF”) described below), because we believe these performance measures drive shareholder value. Beyond the components selected for determining the payout under the EIP, the Compensation Committee may adjust an NEO’s payout, in its discretion, based on individual facts and circumstances.

For the 2022 fiscal year only, the Compensation Committee approved a Supplemental Incentive Plan (“SIP”) in March 2022 tied to the revised Non-GAAP Adjusted EPS (as defined below) guidance of $8.00 issued by the Company on March 8, 2022 (compared to the original Non-GAAP Adjusted EPS guidance in the $8.50 to $8.90 range for the 2022 fiscal year). The SIP contained a single performance measurement, Non-GAAP Adjusted EPS. The performance goals under the SIP were set at a level that would provide a payout of 50% of Target if the Company achieved a Non-GAAP Adjusted EPS of $8.00 for the 2022 fiscal year, and a maximum payout equal to 100% of Target if the Company achieved a Non-GAAP Adjusted EPS of $8.50. Given the sharp and unexpected downturn in the Company’s financial results for the 2022 fiscal year, the Compensation Committee decided to implement the SIP to drive associate engagement to help ensure the Company achieved the best possible financial results for the year, and to promote associate retention since the external job market was quite robust at the time. For the 2022 fiscal year, the Company achieved a Non-GAAP Adjusted EPS of $4.10.

EIP Business Performance Factors: Payouts based on the Business Performance Factors range from 0% to 250% of the incentive target set by the Compensation Committee. For the 2022 fiscal year, the incentive awards were based on a combination of Non-GAAP Adjusted Earnings (75% weighting) and Net Sales (25% weighting), calculated at the consolidated Company level, as follows:

Non-GAAP Adjusted Earnings (Non-GAAP Adjusted EBITA plus Joint Venture Earnings) — Non-GAAP Adjusted EBITA is calculated as net income attributable to controlling interest before interest, taxes, amortization expense within selling, general and administrative expenses, equity in income of unconsolidated affiliates, charges or credits related to impairments, restructurings, discontinued operations, and other unusual items which include costs or gains related to discrete projects or transactions and are excluded because they are not comparable from one period to the next and are not part of the ongoing operations of our underlying business. This measure is adjusted to exclude acquisitions and divestitures during the year unless their expected results are reflected in our annual budget. This measure is also subject to further adjustments by the Compensation Committee, based on individual facts and circumstances. Joint Venture Earnings represent the Company’s proportionate share of the earnings and losses of equity method investments reported below the EBITA line.

Net Sales — This measure is aligned to the Total Company Reported Net Sales defined by GAAP as gross sales minus returns, allowances and discounts.

The Compensation Committee establishes challenging and demanding performance goals for the Business Performance Factors, while responsibly balancing the known risks associated with anticipated business conditions or customer changes. As reflected in the table below, a threshold payout of 50% of target can be achieved at a Non-GAAP Adjusted Earnings level that is approximately 2.5% below the prior year, and a Net Sales level that is approximately 2.0% below the prior year. Meeting or exceeding target performance goals established by the Compensation Committee provides our NEOs with: (i) a payout equal to 100% of target if the Company achieves Non-GAAP Adjusted Earnings that is roughly flat versus the prior year, and Net Sales that are flat versus the record sales level achieved in the 2021 fiscal year; and (ii) a maximum payout of 250% of target if the Company achieves Non-GAAP Adjusted Earnings growth of approximately 15% versus the prior year, and Net Sales that are approximately 6.0% higher than the record sales level achieved in the 2021 fiscal year. The Compensation Committee set the maximum performance goals at levels that it believed to be achievable under optimal business conditions with superior leadership and execution across all levels of the enterprise.

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The consolidated Company-level performance goals for the EIP Business Performance Factors and actual performance results for the 2022 fiscal year (with dollars in millions) were:
 
Metric
Weighting
Payout Level
Performance
Results*
Weighted
Payout %
Metric50.0%100.0%150.0%200.0%250.0%
Non-GAAP Adjusted Earnings75%$777.7 $797.6 $837.5 $877.4 $917.2 $441.5 0%
Net Sales25%$4,826.5 $4,925.0 $5,023.5 $5,122.0 $5,220.5 $3,924.1 0%
Total0%

SIP Performance Goals

Payouts based on the SIP performance goals range from 0% to 100% of the incentive target set by the Compensation Committee. For the 2022 fiscal year, the SIP incentive awards were based entirely on Non-GAAP Adjusted EPS, defined as diluted net income or loss per common share from continuing operations excluding impairment, restructuring and other charges / recoveries, costs related to refinancing and certain other non-operating income / expense items, each net of tax.

The consolidated Company-level performance goals for the SIP and actual performance results for the 2022 fiscal year were:
 
Metric
Weighting
Payout Level
Performance
Results*
Weighted
Payout %
Metric50.0%100.0%150.0%200.0%250.0%
Non-GAAP Adjusted EPS100%$8.00 $8.50 N/AN/AN/A$4.10 0%
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*    The Compensation Committee believes that the performance metrics should not be influenced by currency fluctuations and, therefore, where applicable, the EIP metrics reflect currency translation based on budgeted exchange rates, which is in contrast to actual exchange rates employed for currency conversions used for GAAP reporting. In addition, the Compensation Committee exercises its discretion to adjust the amounts used for purposes of calculating incentive payouts under the EIP based on individual facts and circumstances. As a result, there could be a difference between the Company’s reported financial results and the amounts shown in this Proxy Statement. Reconciliations of Non-GAAP Adjusted Earnings and Net Sales to the most directly comparable GAAP measures are presented in the following tables:
Year ended September 30, 2022
(in millions)
Net loss attributable to controlling interest (GAAP)$(437.5)
Impairment, restructuring and other charges852.2 
Interest expense118.1 
Amortization expense (in SG&A)31.0 
Income tax benefit from continuing operations(120.6)
Other(1.7)
Adjusted Earnings (Non-GAAP)$441.5 

Year ended September 30, 2022
Diluted loss per common share from continuing operations (GAAP)$(7.88)
Impairment, restructuring and other charges15.19 
Adjustment to income tax benefit from continuing operations(3.29)
Adjusted diluted income per common share from continuing operations (Non-GAAP)**$4.10 
**    Due to the GAAP net loss for the 2022 fiscal year, diluted average common shares used in the GAAP diluted loss per common share calculation were 55.5 million, which excluded potential Common Shares of 0.6 million because
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the effect of their inclusion would be anti-dilutive. Diluted average common shares used in the fiscal 2022 non-GAAP adjusted diluted income per common share calculation, and the calculation of the fiscal 2022 earnings per share impact from the GAAP to non-GAAP reconciling items, were 56.1 million, which included dilutive potential Common Shares of 0.6 million.

Funding Trigger: Payouts under the EIP and the SIP are subject to the Company remaining in compliance with the quarterly debt covenant requirements under its credit facility. This requirement was met for the 2022 fiscal year; however, no payouts were achieved based on the EIP and SIP results.

Personal Performance Factor: To ensure we recognize and reward desired behaviors and not just financial results, the EIP includes a discretionary PPF. The PPF is a multiplier on each NEO’s calculated annual cash incentive payout amount and is intended to reward and motivate our top performers by facilitating a meaningful differentiation of payouts based on personal goal achievement and demonstrated leadership and cultural attributes. The Compensation Committee considers financial results along with a qualitative assessment of effective leadership attributes such as team development, embodiment of the Company’s culture and personal development and growth, to determine the PPF multiplier for each NEO, which can range from 0% to 150%. After applying the PPF, an individual participant could receive a total incentive payout that differs from the payout calculated based solely on achievement of the Business Performance Factors under the EIP.

In September 2022, former Chief Financial Officer Cory J. Miller was involuntarily terminated without Cause, triggering a benefit under the Company’s Executive Severance Plan. More information on the terms of Mr. Miller’s separation can be found in the section captioned “SEVERANCE AND CHANGE IN CONTROL (CIC) ARRANGEMENTS — Miller Separation Agreement.” Board member David C. Evans, who previously served as Chief Financial Officer of the Company from September 2006 to February 2013, assumed the Chief Financial Officer role on an interim basis. Due to the interim nature of his assignment, Mr. Evans was not a participant in either the EIP or the SIP for the 2022 fiscal year.

Based on the Company’s financial results for the 2022 fiscal year, no payouts were awarded to the NEOs under either the EIP or the SIP.

Long-Term Equity-Based Incentive Awards (long-term compensation element)

Long-term incentive compensation is an integral part of total compensation for Company executives and directly ties rewards to performance that creates and enhances shareholder value. Consistent with the Company’s performance-based pay philosophy, the Compensation Committee exercises its discretion to position the target grant value of individual equity-based incentive awards relative to the Competitive Market Range based on a subjective assessment of organizational and individual qualities and characteristics, including the strategic importance of the individual’s job function to the Company, as well as an NEO’s experience, competency, skill level, overall contribution to the success of our business and the potential of the individual to make significant contributions to the Company in the future.

For the 2022 fiscal year, approximately 50% of the value of long-term equity-based awards granted to the NEOs (other than Mr. Evans, who only received RSUs) were performance-based, granted as three-year performance units (“PUs”), and the remaining 50% of the long-term grant value was awarded in three-year service-based restricted stock units (“RSUs”).

Performance Units: The PUs are structured to reward our NEOs for achieving the predefined performance criteria over the three-year period from October 1, 2021 through September 30, 2024 (the “FY22-FY24 Performance Period”). Specifically, all PUs granted to the NEOs in the 2022 fiscal year are subject to three-year, time-based cliff vesting, with a provision for accelerated vesting in the event of retirement, death or disability, provided the Company achieves the pre-defined performance criteria indicated below for the FY22-FY24 Performance Period.

FY22-FY24 PU Performance Goals: The Compensation Committee established the following performance metrics and
goals for purposes of determining payouts of the PUs granted in the 2022 fiscal year:

Metric (with dollars in millions)Metric Weighting50%100%150%200%250%
Non-GAAP Cumulative Operating Cash Flow60%$1,080.0$1,275.0$1,438.0$1,519.0$1,600.0
Cumulative Net Sales40%$14,250.0$15,000.0$15,750.0$16,125.0$16,500.0

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The Compensation Committee believes that Non-GAAP Cumulative Operating Cash Flow is a key driver of long-term value creation and maintains consistency with the cumulative cash flow measurements in prior performance-based awards under the LTIP. The Compensation Committee’s decision to incorporate the Cumulative Net Sales metric aligns with the Company’s long-term strategic objective to increase value by driving top line sales growth. The performance goals established for a 100% target level payout are calibrated based on the Company’s internal operating plan for the 2022 fiscal year, assuming that the level of Operating Cash Flow and Net Sales would maintain a relatively consistent level for the three-year performance period. The performance goals for payouts in excess of 100% factor in growth assumptions that align to our long-term planning assumptions and may require optimal business conditions to achieve. The performance goals to trigger a 50% threshold level payout approximates the Company’s average annual performance for the 2019 through 2021 fiscal years.

The performance metrics for the FY22-FY24 Performance Period are defined as follows:

Non-GAAP Cumulative Operating Cash Flow: Defined as cash provided by operating activities, adjusted to exclude discontinued operations and certain other one-time charges, subject to further adjustments by the Compensation Committee based on individual facts and circumstances. The calculation excludes capital expenditure investments but maintains a working capital management aspect over the performance period.

Cumulative Net Sales: Defined as Total Company Net Sales aligned with external reporting (defined by GAAP as gross sales minus returns, allowances, and discounts).

Each PU granted to the NEOs in the 2022 fiscal year also includes a dividend equivalent right entitling the NEO to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the settlement date.

Failure to achieve the specified Non-GAAP Cumulative Operating Cash Flow or the Cumulative Net Sales for the FY22-FY24 Performance Period would result in forfeiture of the PUs, even if the service-based vesting requirements are ultimately satisfied.

Service-Based Restricted Stock Units: During the 2022 fiscal year each NEO, other than Mr. Evans, received a grant of service-based RSUs structured to promote retention and continuity (with a grant date value that approximated 50% of the applicable target annual LTI value determined for each NEO). The RSUs are service-based and are subject to three-year, time-based cliff-vesting, with a provision for accelerated vesting in the event of retirement, death or disability. Each RSU granted to the NEOs in the 2022 fiscal year also includes a dividend equivalent right entitling the NEO to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the settlement date.

In connection with his appointment as Executive Vice President and Interim Chief Financial Officer, Mr. Evans received a one-time grant of RSUs, with a grant date value of $1,075,000. Per the terms of Mr. Evans’ RSU grant, he is eligible for ratable vesting at the rate of 1/7th of the RSUs granted for each month or partial month of service in the interim role between September 1, 2022 and March 31, 2023, subject to the discretion of the Compensation Committee to award additional vesting on a facts-and-circumstances basis if his interim assignment was completed prior to March 31, 2023. Similar to the RSUs granted to the other NEOs, Mr. Evans’ RSUs also include a dividend equivalent right entitling him to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the settlement date.

Information regarding our equity grant practices, including the determination of exercise price, can be found in the section captioned “Other Executive Compensation Policies, Practices and Guidelines — Practices Regarding Equity-Based Awards.

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Executive Perquisites and Other Benefits (short-term compensation element)

The Company maintains traditional health and welfare benefit plans and The Scotts Company LLC Retirement Savings Plan (the “RSP”), a qualified 401(k) plan, which are generally offered to all employees (subject to basic plan eligibility requirements) and are consistent with the types of benefits offered by other similar corporations. With the exception of a Company-paid annual physical examination and limited personal use of Company aircraft as provided below, none of the NEOs other than the CEO receive executive perquisites or benefits beyond those generally offered to all employees. From time to time, family members of the NEOs are accommodated as passengers on business-related flights on Company aircraft. There is no incremental cost to the Company for this perquisite.

All of the NEOs with the exception of Mr. Evans are entitled to limited personal use of Company aircraft at their own expense. Specifically, Mr. J. Hagedorn has an option to purchase up to 150 flight hours per year for personal use at the Company’s incremental direct operating cost per flight hour. Mr. Lukemire is entitled to purchase up to 50 flight hours per year, and all other NEOs are entitled to purchase up to 25 flight hours per year. There is no incremental cost to the Company for this perquisite other than the partial loss of a tax deduction of certain aircraft-related costs as a result of personal use of Company aircraft. Since Company aircraft are used primarily for business travel, the determination of the direct operating cost per flight hour excludes the fixed costs that do not change based on usage, such as pilots’ salaries, the purchase cost of Company aircraft and the cost of maintenance not related to personal trips.

Given the unique nature of Mr. Evans’ interim appointment, he was eligible for limited company-paid commuting and personal flights on Company aircraft. His eligibility for this limited perquisite was subject to the approval of the Chief Executive Officer on a flight-by-flight basis and required Mr. Evans to bear any tax consequences associated with any approved personal flights. Mr. Evans did not take any personal flights during the 2022 fiscal year.

As an additional perquisite, Mr. J. Hagedorn has access to the services of the Company’s aviation mechanics and pilots in circumstances involving commuting flights on personal aircraft. Since the Company’s aviation mechanics and pilots are paid on a salary basis, there is no incremental cost to the Company for this perquisite. To the extent Mr. J. Hagedorn utilizes the Company’s aviation mechanics and pilots in connection with non-commuting flights on his personal aircraft, he reimburses the Company for a pro-rata portion of their salaries and fringe benefit costs. For further discussion, see section captioned “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.”

Retirement Plans and Deferred Compensation Benefits (long-term compensation element)

Executive Retirement Plan

The Scotts Company LLC Executive Retirement Plan (the “ERP”) is a non-qualified deferred compensation plan that provides executives the opportunity to: (1) defer compensation with respect to salary and amounts received in lieu of salary; and (2) defer compensation with respect to any Performance Award (as defined in the ERP). The ERP consists of the following five parts:

Compensation Deferral, which allows continued deferral of up to 75% of salary and amounts received in lieu of salary;

Performance Award Deferral, which allows the deferral of up to 100% of any cash incentive compensation earned under the EIP;

Retention Awards, which reflect the Company’s contribution to the ERP for retention awards;

Supplemental Retirement Awards, which reflect Company directed contributions to the ERP, subject to the approval of the Compensation Committee; and

Crediting of Company matching contributions on qualifying deferrals.

The Supplemental Retirement Awards (“SRA”) provide a tax deferred approach to award additional compensation to the NEOs and other key management employees of the Company. The SRA contributions, which are subject to the discretion of the Compensation Committee, are funded on a monthly basis. While the awards are fully vested at the time of contribution, the SRA account balance cannot be distributed to the recipient for a minimum of six months following the termination of employment. During the 2022 fiscal year, the Compensation Committee awarded the following SRAs:

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Mr. J. Hagedorn was entitled to receive an annualized SRA contribution of $1.0 million (payable in monthly installments of $83,333), awarded in January 2014 in connection with the negotiation of the severance agreement between The Scotts Company LLC (“Scotts LLC”) and Mr. J. Hagedorn (the “Hagedorn Severance Agreement”). Mr. J. Hagedorn elected to forgo his entire SRA contribution of $83,333 for the month of September to assist the Company in ensuring compliance with the debt leverage covenants under our credit facility.

Mr. Lukemire received an annualized SRA contribution of $300,000 (payable in monthly installments of $25,000), which has been in place since January 2019.

Ms. Stump received an annualized SRA contribution of $310,000 (payable in monthly installments of $25,833), awarded in May 2018 in conjunction with the approval of the Stump Retention Agreement, which is described in more detail below.

The Company matching contributions to the ERP were based on the same contribution formulae as those used for the RSP. Specifically, the Company will match participant contributions at a rate of 200% for the first 3% of eligible earnings contributed to the ERP and 50% for the next 3% of eligible earnings contributed to the ERP. As a result, if a participant contributes at least 6% of their pay to the ERP, the Company matching contribution would be equal to 7.5%. Company matching contributions to the ERP are not funded until the first quarter of the subsequent calendar year, provided the individual is actively employed by the Company as of December 31.

All accounts under the ERP are bookkeeping accounts and do not represent claims against specific assets of the Company. Each participant may select one or more investment funds, including a Company stock fund, against which to benchmark such participant’s ERP accounts. The investment options under the ERP are substantially consistent with the investment options permitted under the RSP. Accordingly, there were no above-market or preferential earnings on investments associated with the ERP for any of the NEOs for the 2022 fiscal year.

Other Retirement and Deferred Compensation Plans

The Scotts Company LLC Excess Benefit Plan for Non Grandfathered Associates (the “Excess Pension Plan”) is an unfunded plan that provides benefits that cannot be provided under The Scotts Company LLC Associates’ Pension Plan (the “Associates’ Pension Plan”) due to specified statutory limits. The Associates’ Pension Plan and related Excess Pension Plan were frozen effective December 31, 1997 and, therefore, no additional benefits have accrued after that date under either plan. However, continued service taken into account for vesting purposes under the Associates’ Pension Plan is recognized with respect to the entitlement to, and the calculation of, subsidized early retirement benefits under the Excess Pension Plan. Based on their tenure, Mr. J. Hagedorn and Mr. Lukemire are the only NEOs who participate in the Associates’ Pension Plan. Based on his tenure, Mr. J. Hagedorn is the only NEO who participates in the Excess Pension Plan. For further details regarding the Excess Pension Plan, see section captioned “EXECUTIVE COMPENSATION TABLES — Pension Benefits Table.”

Our Compensation Practices

Determining Executive Officer Compensation

The Compensation Committee is responsible for determining all elements of compensation for our NEOs and other key executives, and may consider a wide variety of factors in doing so. As explained more fully below, in determining our NEOs’ compensation, the Compensation Committee considers individual performance, Company performance against pre-determined performance goals, the level of their compensation when compared to the Competitive Market Range for their role, and other factors specific to the individual and role such as their unique knowledge of our Company and business. With respect to the annual incentive compensation plan, the Compensation Committee has responsibility for approving the overall plan design as well as the performance metrics, performance goals and payout levels.

The Compensation Committee is also responsible for administering or overseeing all equity-based incentive plans. Under the terms of these plans, the Compensation Committee has sole discretion and authority to determine the size and type of all equity-based awards, as well as the period of vesting and all other key terms and conditions of the awards.

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Role of Outside Consultants

During the 2022 fiscal year, the Compensation Committee engaged ClearBridge Compensation Group (“ClearBridge”) and Frederic W. Cook & Co., Inc. (“FW Cook”) as independent compensation consultants to advise the Compensation Committee with respect to best practices and competitive trends in the area of executive compensation, as well as ongoing regulatory considerations. Both ClearBridge and FW Cook provided guidance to assist the Compensation Committee in determining the compensation structure for our NEOs and other key management employees but did not provide any consulting services directly to management. The Compensation Committee assessed the independence of ClearBridge and FW Cook as required by NYSE Rules and SEC Rules and concluded that ClearBridge’s and FW Cook’s work for the Compensation Committee did not raise any conflict of interest.

During the 2022 fiscal year, the Company engaged various compensation consultants, including Mercer Global, Willis Towers Watson and Aon Consulting, Inc. to work directly with management to advise the Company on best practices and competitive trends, as well as ongoing regulatory considerations with respect to executive compensation. None of the consulting firms engaged by management provided consulting services directly to the Compensation Committee or the Board.

Compensation Peer Group

For the purpose of enabling the Company to benchmark our compensation practices, as well as the total compensation packages of our NEOs, the Company uses a customized Compensation Peer Group, established by the Compensation Committee with its independent compensation consultant. The Compensation Committee believes that the companies chosen for the Compensation Peer Group (listed below) reflect the types of highly regarded consumer products-oriented companies with which the Company typically competes to attract and retain executive talent. The following Compensation Peer Group was utilized to benchmark our compensation practices for the 2022 fiscal year:

Central Garden & Pet CompanyChurch & Dwight Co., Inc.The Clorox Company
Constellation Brands, Inc.Energizer Holdings, Inc.FMC Corporation
Herbalife Nutrition Ltd.Masco CorporationNu Skin Enterprises, Inc.
Newell Brands, Inc.Rollins, Inc.RPM International, Inc.
The J. M. Smucker CompanySpectrum Brands Holdings, Inc.The Toro Company
Molson Coors Beverage CompanyThe Boston Beer Company, Inc.

The Compensation Committee believes this Compensation Peer Group reflects the pay practices of the broader consumer products industry and is reflective of the size and complexity of the Company. The Compensation Peer Group includes companies that ranged between $2.1 billion and $9.8 billion of annual revenues at the time they were selected, with a median annual revenue of approximately $5.0 billion.

Looking ahead to the 2023 fiscal year, the Compensation Committee made no changes to the Compensation Peer Group.

Role of Management in Compensation Decisions

The Compensation Committee is responsible for establishing performance objectives for our CEO and completing an annual assessment of his performance. Our CEO is responsible for establishing performance objectives and conducting annual performance reviews for all of the other NEOs. The Compensation Committee believes that performance evaluation and goal-setting are critical to the overall compensation-setting process because the personal performance level of each NEO is one of the most heavily weighted factors considered by the Compensation Committee when making compensation decisions.

In conjunction with the Company’s outside consultants from Willis Towers Watson and Aon Consulting, Inc., management conducts annual market surveys of the base salary levels, short-term incentives and long-term incentives for each of our NEOs, with the goal of helping to ensure that executive compensation levels remain competitive with the benchmark compensation data, which facilitates our ability to retain and motivate key executive talent. The benchmark compensation data provided by Willis Towers Watson and Aon Consulting, Inc. reflects several hundred general industry companies, representing a wide range of annual revenue, who voluntarily participate in the surveys and are not selected by the Company. To account for the wide range of companies included in the surveys, the data is statistically adjusted by the Company’s compensation consultants to more closely reflect the relative size of the Company based on revenue.

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Setting Compensation Levels for CEO and Other NEOs

The compensation structure for our CEO and our other NEOs, other than Mr. Evans, is designed to deliver approximately 75% of the target annual compensation opportunity in the form of variable pay (i.e., annual incentive compensation and long-term equity-based compensation) and the remainder in the form of fixed pay (i.e., base salary and SRA contributions). The Compensation Committee believes that the pay mix and overall levels of pay are generally in line with the pay mix for similar positions within our Compensation Peer Group.

Once a year, the Compensation Committee completes an evaluation of our CEO’s performance with respect to the Company’s goals and objectives and makes a report of its evaluation to the Board. When evaluating potential changes to Mr. J. Hagedorn’s total level of compensation for the 2022 fiscal year, the Compensation Committee considered Mr. J. Hagedorn’s personal performance against pre-established goals and objectives, the Company’s performance and relative shareholder return, and the compensation of CEOs at comparable companies, as reflected in the benchmark compensation data.

Based on their assessment of the competitive market trends and the individual performance level of each NEO, our CEO and the Executive Vice President, Global Human Resources make specific recommendations to the Compensation Committee with respect to each element of compensation for each of the other NEOs. In evaluating these compensation recommendations, the Compensation Committee considers information such as the Company’s financial performance as well as the compensation of similarly situated executive officers as determined by the Competitive Market Range for each role. The Compensation Committee strives to deliver a competitive level of total compensation to each of them by evaluating and balancing the strategic importance of the position within our executive ranks, the overall performance level and expected contribution of the individual to the Company’s business results, industry compensation practices (including companies within our Compensation Peer Group), internal pay equity, and our executive compensation structure and philosophy.

Consistent with our role-based pay approach, which is intended to distinguish the overall level of and mix of pay for those roles that have a higher degree of organizational impact and influence, the Compensation Committee determines the overall pay levels for the CEO and each of the other NEOs relative to the Competitive Market Range to reflect the impact they believe that each of these individuals brings to our Company. In its determination of pay, the Compensation Committee also considers the personal performance of each of the NEOs as well as the extended time that certain NEOs have served in their respective roles.

After applying the above guidelines, the Compensation Committee decided to maintain the target annual cash compensation for each of our NEOs, other than Mr. Evans, but increased their respective target annual LTI values to put more emphasis on long-term Company performance. Consistent with our pay-for-performance philosophy, the ability for our NEOs to realize the LTI value is dependent on future business results and share price. Total direct compensation elements for the CEO and each of the other NEOs are shown in the table below.
Fixed Elements of CompensationVariable Elements of CompensationTotal Direct Compensation (TDC)(3)
Annual BonusTarget Annual Long-Term Incentive Value(2)
Base Salary Other Comp(1)Fixed % of TDC Target %Target $  Variable % of TDC
Mr. J. Hagedorn 2022 TDC$1,200,000 $1,000,000 21%175%$2,100,000 $6,000,000 79%$10,300,000 
2021 TDC$1,200,000 $1,000,000 24%175%$2,100,000 $5,000,000 76%$9,300,000 
Mr. Evans (4)2022 TDC$1,687,500 $— 61%—%$— $1,075,000 39%$2,762,500 
Mr. Lukemire 2022 TDC$720,000 $300,000 26%125%$900,000 $2,000,000 74%$3,920,000 
2021 TDC$720,000 $300,000 28%125%$900,000 $1,750,000 72%$3,670,000 
Mr. C. Hagedorn 2022 TDC$650,000 $— 29%90%$585,000 $1,000,000 71%$2,235,000 
2021 TDC$650,000 $— 29%90%$585,000 $1,000,000 71%$2,235,000 
Ms. Stump 2022 TDC$650,000 $310,000 42%90%$585,000 $750,000 58%$2,295,000 
2021 TDC$650,000 $310,000 44%90%$585,000 $620,000 56%$2,165,000 
Mr. Miller2022 TDC$600,000 $— 26%90%$540,000 $1,200,000 74%$2,340,000 
2021 TDC$600,000 $— 32%90%$540,000 $750,000 68%$1,890,000 
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________________________

(1)    Other Compensation reflects the annualized values of the SRA Contributions, applicable to each NEO, as noted in the section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element).

(2)    The actual grant value awarded to each of the NEOs, other than Mr. Evans (who only received RSUs), during the 2022 fiscal year was granted in the form of PUs and service-based RSUs. For additional details on grant values see the section captioned “Elements of Executive Compensation — Long-Term Equity-Based Incentive Awards (long-term compensation element).”

(3)    TDC reflects the annualized total direct compensation opportunity at target, based on pay changes approved by the Compensation Committee in January 2022 (excluding Mr. Evans, who was not an NEO at the time), and does not necessarily tie to the actual compensation earned in the 2022 fiscal year as reported in the Summary Compensation Table.

(4)    The Compensation Committee believes the TDC structure for Mr. Evans was appropriate given the interim nature of his assignment. The structure was designed to provide cash compensation at an annualized rate and long-term incentive value appropriate for the Chief Financial Officer role, and Mr. Evans was not eligible to participate in our annual incentive program.

Mr. J. Hagedorn, Mr. Lukemire and Ms. Stump are at or above the 75th percentile of the Competitive Market Range due to their personal performance as well as the extended time they have served in their respective roles. At the time their compensation was approved, Mr. C. Hagedorn and Mr. Miller were positioned between the 50th and 75th percentiles of the Competitive Market Range for their respective roles. The Compensation Committee believes that each element of total direct compensation reflected above, as well as the overall level of compensation for each of the NEOs, suitably recognizes their personal performance and unique skill sets and is appropriate relative to the Competitive Market Range for their respective roles.

Other Executive Compensation Policies, Practices and Guidelines

Practices Regarding Equity-Based Awards

In general, all employees are eligible to receive grants of equity-based awards; however, the Compensation Committee typically limits participation to the NEOs and other key management employees. The decision to grant equity-based awards to certain key management employees reflects competitive market practice and serves to reward those individuals for their past and anticipated future positive impact on our business results.

The Company typically grants equity-based awards at the Compensation Committee meeting in January and the grant date is the second or third trading day following the Company’s first quarter earnings release.

The exercise price for non-qualified stock options (“NSOs”), when granted, is equal to the closing price of a Common Share on NYSE on the grant date. If the grant date is not a trading day on NYSE, the exercise price is equal to the closing price on the next trading day.

Stock Ownership Guidelines

The Compensation Committee has established stock ownership guidelines that each NEO must meet. The purpose of these guidelines is to align the interests of each NEO with the long-term interests of the shareholders by ensuring that a material amount of each NEO’s accumulated wealth is maintained in the form of Common Shares. The minimum target levels of stock ownership are as follows:

CEO10 times base salary
COO5 times base salary
Other NEOs3 times base salary
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The Compensation Committee believes that these stock ownership guidelines reflect the practices of our Compensation Peer Group and are even more stringent for our CEO. For purposes of determining compliance with the stock ownership guidelines, the value of beneficially-owned shares is determined as follows:

100% of the value of Common Shares directly registered to the NEO and/or held in a brokerage account;

100% of the value of shares or stock-settled units held in retirement plans such as the RSP, the Discounted Stock Purchase Plan or the ERP;

60% of the “in-the-money” portion of an NSO, whether vested or unvested; and

60% of the value of unsettled full-value awards (e.g., RSUs, performance units, etc.).

The stock ownership guidelines require each NEO to retain 50% of the net shares realized from equity-based awards (after covering any exercise cost and the required tax withholding obligations) until the applicable ownership guideline has been achieved. The Company’s Insider Trading Policy prohibits any person subject to the policy, which includes all NEOs, among others, from engaging in short sales of the Company’s securities.

Recoupment/Clawback Policies

To protect the interests of the Company and its shareholders, subject to applicable law, all equity-based awards and all amounts paid under the EIP contain recoupment provisions (known as clawback provisions) designed to enable the Company to recoup amounts earned or received under such awards or the EIP based on subsequent events, such as violation of non-compete covenants or engaging in conduct that is deemed to be detrimental to the Company (as outlined in the underlying plan and/or award agreement).

Consistent with the terms of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Compensation Committee approved an Executive Compensation Recovery Policy (the “Recovery Policy”) on September 22, 2010, which is intended to supplement the existing recoupment provisions contained within the equity award agreements and the EIP. The Recovery Policy allows the Company to recover incentive award payments and equity award distributions made to covered executives in the event of a required accounting restatement due to material non-compliance with any financial reporting requirement under U.S. securities laws. The Recovery Policy provides for the mandatory recovery of incentive amounts in excess of what would have been paid under the restated financial statements.

The Recovery Policy is applicable to all current and former incentive-eligible executive officers, within a qualifying three-year look-back period, and applies to all incentive awards paid or distributed in 2010 or thereafter, except to the extent required by SEC regulations.

Guidelines with Respect to Tax Deductibility and Accounting Treatment

Internal Revenue Code of 1986, as amended (the “IRC”) § 162(m) generally disallows a federal income tax deduction to publicly-traded companies for compensation in excess of $1.0 million per year paid to an individual who served as the company’s chief executive officer or chief financial officer, or was one of the company’s three other most highly compensated executives, in each case, at any time since 2017. Mr. J. Hagedorn, Mr. Lukemire and Ms. Stump had non-performance based compensation in excess of $1.0 million, attributed to their respective base salary level, settlement of service-based RSUs and the value of their respective Company SRA contributions made to the ERP.

The Company accounts for equity-based compensation, including option awards and stock awards, in accordance with GAAP. Prior to making decisions to grant equity-based awards, the Compensation Committee reviews pro forma expense estimates for the awards as well as an analysis of the potential dilutive effect such awards could have on existing shareholders. Where appropriate, the proposed level of the equity-based awards may be adjusted to balance these objectives.

Decisions regarding the design, structure and operation of the Company’s incentive plans, including the EIP and the equity-based incentive plans, contemplate an appropriate balance between the underlying objectives of each plan and the resulting accounting and tax implications to the Company.

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Risk Assessment in Compensation Programs

The Company strives to ensure its compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. To that end, management and the Compensation Committee evaluate the compensation plans and arrangements that represent material sources of variable pay. In particular:

Annual cash incentive compensation plans — The Company’s annual incentive compensation program incorporates a funding trigger that conditions payout on meeting the debt covenants in the Company’s credit facility. This trigger is designed to mitigate the potential risk associated with plan participants making short-term decisions that may not be in the best interests of the Company or its shareholders.

Equity-based compensation plans — The Company generally utilizes a mix of performance-based and service-based equity awards, which helps ensure that management maintains a responsible level of sensitivity to the impact of decision-making on share price. Since the equity-based awards are generally subject to three-year time-based cliff vesting or performance-based vesting criteria, the Company believes the risks of focusing on short-term share price increases rather than long-term value creation are mitigated. In addition, the use of a similar cash flow metric in both the annual compensation program performance units awarded under the Long-Term Incentive Plan is intended to mitigate the risk of short-term decisions that are not in the long-term interests of our shareholders.

Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company as a whole and are supported by the oversight and administration of the Compensation Committee with regard to executive compensation programs.

Anti-Hedging Policy

Our Insider Trading Policy prohibits all Company employees, including our NEOs and members of the Board, from engaging in certain hedging transactions relating to Company securities held by them, including short sales, the purchase or sale of puts, calls or listed options and hedging transactions such as prepaid variable forwards, equity swaps, caps, collars and exchange funds.


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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors (and the Board of Directors approved) that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the Compensation Committee of the Board of Directors of the Company:

Peter E. Shumlin, Chair
Stephen L. Johnson
Thomas N. Kelly Jr.
Nancy G. Mistretta



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EXECUTIVE COMPENSATION TABLES

The Company’s NEOs for the 2022 fiscal year are as follows:

James Hagedorn, the Company’s Chief Executive Officer and Chairman of the Board;

David C. Evans, the Company’s Interim Chief Financial Officer, who first became an NEO on August 30, 2022;

Michael C. Lukemire, the Company’s President and Chief Operating Officer;

Christopher J. Hagedorn, the Company’s Division President;

Denise S. Stump, the Company’s Executive Vice President, Global Human Resources and Chief Ethics Officer; and

Cory J. Miller, the Company’s former Executive Vice President and Chief Financial Officer, who served as an NEO from October 1, 2021 to August 29, 2022.

Summary Compensation Table

The following table summarizes the total compensation paid to, awarded to or earned by each of the NEOs for the fiscal years shown. The amounts shown include all forms of compensation provided to the NEOs, including amounts that may have been deferred. Since the table includes equity-based compensation costs and changes in the actuarial present value of the NEOs’ accumulated pension benefits, the total compensation amounts may be greater than the compensation that was actually paid to the NEOs during each of the fiscal years.

Summary Compensation Table for 2022 Fiscal Year
Name and Principal
 Position
YearSalary
($)(1)
Bonus
($)
 Stock
Awards
($)(2)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)(3)
 Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings
($)(4)
 All Other
Compensation
($)(6)
Total
($)
James Hagedorn
Chief Executive Officer and Chairman of the Board
20221,104,000 — 6,000,143 — — — (5)1,065,718 8,169,861 
20211,200,000 — 2,500,122 2,400,932 3,465,000 — (5)1,147,858 10,713,912 
20201,175,000 — 2,500,114 — 7,450,820 39,282 (5)1,124,210 12,289,426 
David C. Evans
Interim Chief Financial Officer (7)
2022153,606 — 1,075,015 — — — — 1,228,621 
Michael C. Lukemire
President and Chief Operating Officer
2022720,000 — 2,000,225 — — — (5)462,172 3,182,397 
2021720,000 — 875,161 840,323 1,485,000 — (5)599,553 4,520,037 
2020720,000  — 875,071 — 3,273,197 3,207 (5)467,787 5,339,261 
Christopher J. Hagedorn Division President2022599,833 — 1,000,245 — — — 22,875 1,622,953 
2021637,180 500,024 480,211 1,022,752 — 21,750 2,661,917 
Denise S. Stump Executive Vice President, Global Human Resources and Chief Ethics Officer2022650,000 — 750,184 — — — 424,895 1,825,079 
2021650,000 — 310,091 297,739 877,500 — 516,449 2,651,779 
2020650,000 — 310,022 — 2,101,844 — 422,675 3,484,541 
Cory J. Miller Former Executive Vice President and Chief Financial Officer2022552,308 — 1,200,082 — — — 138,259 1,890,649 
2021492,676 — 1,375,147 360,174 614,492 — 66,401 2,908,890 
________________________

(1)    Reflects the amount of base salary received by each NEO for the applicable fiscal years. Due to the timing of pay changes, the amount reported may be less than the base salary rate as of the end of each fiscal year. For Mr. J. Hagedorn, the amount reported reflects his decision to forgo $96,000 of salary for September 2022 (all but $4,000 of his monthly salary, which was paid to cover benefit costs and required withholding). For Mr. C. Hagedorn, the amount shown
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reflects his decision to forgo $50,167 of his salary for September 2022 (all but $4,000 of his monthly salary, which was paid to cover benefit costs and required withholding). Mr. J. Hagedorn and Mr. C. Hagedorn have continued to voluntarily forgo the majority of their base salaries during the first quarter of the 2023 fiscal year, and Mr. J. Hagedorn has elected to forgo the majority of his Company-paid deferred compensation contribution.

(2)    Reflects the aggregate grant date fair value of service-based RSUs and PUs granted to each NEO (assuming the underlying performance criteria applicable to the PUs will be satisfied at target).

The grant date fair value of the RSUs and PUs was determined using the value of the underlying Common Shares on the date of grant, February 4, 2022 for Mr. J. Hagedorn, Mr. Lukemire, Mr. C. Hagedorn, Ms. Stump and Mr. Miller, and September 1, 2022 for Mr. Evans, and was calculated in accordance with the equity compensation accounting provisions of FASB ASC Topic 718, without respect to forfeiture assumptions. Pursuant to applicable SEC Rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions used in the calculation of these amounts are included in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the 2022 fiscal year.

(3)    Reflects the EIP payouts awarded to the NEOs by the Compensation Committee for the applicable fiscal year, calculated pursuant to the terms of the EIP. For the 2022 fiscal year, no incentive payouts were awarded to any of the NEOs.

(4)    Participant account balances in the ERP are credited to one or more benchmark funds that are substantially consistent with the investment options available under the RSP. Accordingly, there are no above-market or preferential earnings on amounts deferred under the ERP. The Associates’ Pension Plan and the Excess Pension Plan were frozen as of December 31, 1997; therefore, no service credits have been earned since that date by Mr. J. Hagedorn or Mr. Lukemire. No other NEOs were eligible for either the Associates’ Pension Plan or the Excess Pension Plan. For additional information, see the table below captioned “Pension Benefits at 2022 Fiscal Year-End.”

(5)    Reflects the actuarial present value of accumulated benefit for the respective fiscal year under both the Associates’ Pension Plan and the Excess Pension Plan for Mr. J. Hagedorn and under the Associates’ Pension Plan for Mr. Lukemire. With respect to the 2022 fiscal year, the accumulated benefit decreased for both Mr. J. Hagedorn $(104,178) and Mr. Lukemire $(6,151); however, based on applicable SEC guidance, amounts reported in this table cannot be negative.

(6)    Please see the table below captioned “All Other Compensation” for information regarding the components of the “All Other Compensation” column.

(7)    For Mr. Evans, the amounts shown reflect only compensation that he earned in his role as Interim Chief Financial Officer.

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All Other Compensation Table

The following table provides additional detail regarding the amounts included in the column captioned “All Other Compensation” of the Summary Compensation Table for the 2022 fiscal year:

All Other Compensation
 
NameDefined
Contribution
Plans ($)(1)
Deferred
Compensation
Plans ($)(2)
OtherTotal ($)
James Hagedorn22,8751,042,8431,065,718
David C. Evans
Michael C. Lukemire18,484443,688462,172
Christopher J. Hagedorn22,87522,875
Denise S. Stump22,083402,812424,895
Cory J. Miller22,75067,81747,692 (3)138,259
________________________

(1)    Reflects Company matching contributions made under the RSP at the applicable Company matching rate. Additional details about the Company matching formula can be found in the “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element) — Executive Retirement Plan” within the CD&A.

The RSP provides eligible associates, including the NEOs, the opportunity to contribute up to 75% of eligible earnings on a before-tax and/or after-tax basis through payroll deductions up to the specified statutory limits under the IRC. The matching contributions, and any earnings on them, are immediately 100% vested. To ensure that the total Company matching contribution is based on a participant’s total deferrals and total eligible compensation for the calendar year, the RSP includes a “true-up” matching contribution. The “true-up” matching contributions to the RSP for a particular calendar year are not funded until the first quarter of the subsequent calendar year. As a result, amounts reflected in this column do not include the following estimated “true-up” matching contributions with respect to NEO contributions that were made to the RSP between January 1, 2022 and September 30, 2022: Mr. J. Hagedorn, $0; Mr. Evans, $0; Mr. Lukemire, $10,708; Mr. C. Hagedorn, $0; Ms. Stump, $1,531; and Mr. Miller, $2,460.

(2)    Reflects Company matching contributions and discretionary SRA contributions made to the ERP with respect to each NEO during the 2022 fiscal year as follows:
ERP MatchSRA ContributionTotal
James Hagedorn$126,176 $916,667 $1,042,843 
David C. Evans— — — 
Michael C. Lukemire143,688 300,000 443,688 
Christopher J. Hagedorn— — — 
Denise S. Stump92,812 310,000 402,812 
Cory J. Miller67,816 — 67,816 
    
Mr. J. Hagedorn elected to forgo his $83,333 SRA contribution for the month of September 2022. Company matching contributions to the ERP for a particular calendar year are not allocated until the first quarter of the subsequent calendar year. As a result, amounts reflected in this column do not include the following estimated Company matching contributions with respect to NEO contributions that were made to the ERP between January 1, 2022 and September 30, 2022: Mr. J. Hagedorn, $36,659; Mr. Evans, $0; Mr. Lukemire, $17,682; Mr. C. Hagedorn, $0; Ms. Stump, $13,714; and Mr. Miller, $0. Additional details with respect to non-qualified deferred compensation provided for under the ERP are shown in the table captioned “Non-Qualified Deferred Compensation for 2022 Fiscal Year” and the accompanying narrative.

A description of the SRA contributions is set forth in the section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element) — Executive Retirement Plan” within the CD&A.
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(3)     Reflects salary continuation for September 2022 paid on October 25, 2022, pursuant to the Miller Separation Agreement. For additional information on Mr. Miller’s separation benefits see the section captioned “SEVERANCE AND CHANGE IN CONTROL (CIC) ARRANGEMENTS — Miller Separation Agreement.”

Grants of Plan-Based Awards Table

The following table sets forth information concerning equity-based awards made during the 2022 fiscal year as well as the range of potential payouts under the EIP, a non-equity incentive plan, with respect to performance goals for the 2022 fiscal year.

Grants of Plan-Based Awards for 2022 Fiscal Year
NameGrant Date(1)Payouts Under
Non-Equity Incentive
Plan Awards (2)
Payouts Under
Equity Incentive
Plan Awards (shares)

Stock
Awards:
Number of Shares of Stock or Units
(#)
Grant Date Fair Value of Stock and Option Awards (#)(3)
Threshold
($)
Target
($)
Maximum
($)
Min.TargetMax.
James Hagedorn
RSUs2/4/202222,5793,000,072
PUs2/4/202211,29022,57956,4483,000,072
Annual Incentive966,0001,932,0004,830,000
David C. Evans (4)
RSUs9/1/202217,1811,075,015
Michael C. Lukemire
RSUs2/4/20227,5271,000,112
PUs2/4/20223,7647,52718,8181,000,112
Annual Incentive450,000900,0002,250,000
Christopher J. Hagedorn
RSUs2/4/20223,764500,123
PUs2/4/20221,8823,7649,410500,123
Annual Incentive269,925539,8501,349,625
Denise S. Stump
RSUs2/4/20222,823375,092
PUs2/4/20221,4122,8237,058375,092
Annual Incentive292,500585,0001,462,500
Cory J. Miller
RSUs2/4/20224,516600,041
PUs2/4/20222,2584,51611,290600,041
Annual Incentive248,539497,0771,242,693

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________________________

(1)    With the exception of Mr. Evans, the RSU and PU awards were approved by the Compensation Committee on January 19, 2022 with a grant date of February 4, 2022. The grant date was established in accordance with the Company’s grant date protocol establishing an effective date for all annual long-term incentives as the second or third trading day following the first quarter earnings release. With respect to Mr. Evans, the RSU award was approved by the Compensation Committee on August 28, 2022, with a grant date of September 1, 2022. A detailed description of the RSU and PU awards granted to our NEOs during the 2022 fiscal year is provided in the section captioned “Elements of Executive Compensation — Long-Term Equity-Based Incentive Awards (long-term compensation element)” within the CD&A.

(2)    These amounts reflect the threshold (50%), target (100%) and maximum (250%) incentive award payouts that each NEO was eligible to receive based on performance goals set for the EIP Business Performance Factors pursuant to the EIP for the 2022 fiscal year. The amounts shown at the threshold (50%) and target (100%) levels also apply to the potential payout opportunity under the SIP for the 2022 fiscal year. The amounts shown do not consider the potential impact of the PPF that ranges from 0% to 150% which is applied to the final payout as determined based on the financial metric results for the EIP Business Performance Factors. The target payout amount shown for the EIP reflects the pro-rated impact of base pay changes and/or incentive target changes during the 2022 fiscal year, as applicable. A detailed description of the performance goals for the EIP Business Performance Factors and the SIP, and potential incentive award payouts under the EIP and SIP is provided in the section captioned “Elements of Executive Compensation — Annual Cash Incentive Compensation (short-term compensation element)” within the CD&A.

(3)    The grant date fair value of each RSU and PU award was determined using the value of the underlying Common Shares on the date of grant, February 4, 2022, and was calculated in accordance with the equity compensation accounting provisions of FASB ASC Topic 718, without respect to forfeiture assumptions. The service-based RSUs are subject to a three-year cliff vesting requirement. The PUs are subject to a three-year cliff vesting requirement and achievement of the pre-defined performance goals.

(4)    For Mr. Evans, the information reflects equity-based awards made in connection with his role as Interim Chief Financial Officer.

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Outstanding Equity Awards Table

The following table provides information regarding outstanding equity-based awards as of September 30, 2022.

Outstanding Equity Awards at 2022 Fiscal Year-End

  Option AwardsStock Awards
NameGrant
Date
Number of
Securities
Underlying
Unexercised
Options Exercisable 
(#)(1)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)
Option
Exercise
Price 
($)(2)
Option
Expiration
Date
Number of
Shares or
Units That
Have Not
Vested 
(#)(3)
 Market
Value of
Shares or
Units
That Have
Not
Vested 
($)(4)
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares or
Units That
Have Not
Vested
(#)(5)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value Of
Unearned
Shares or
Units
That Have
Not
Vested
($)(6)
James Hagedorn 1/30/2015142,73359.621/30/2025
1/29/2016143,07964.551/29/2026
2/3/202020,185862,909
2/5/202139,263236.532/5/203110,570451,868
2/4/202222,579965,25222,579965,252
David C. Evans (7)9/1/202217,181734,488
Michael C. Lukemire2/3/20207,065302,029
2/5/202113,742236.532/5/20313,700158,175
2/4/20227,527321,7797,527321,779
Christopher J. Hagedorn1/30/20153,56859.621/30/2025
1/29/20165,85764.551/29/2026
2/3/20203,230138,0834,038172,625
2/5/20217,853236.532/5/20312,11490,374
2/4/20223,764160,9113,764160,911
Denise S. Stump 2/3/20202,503107,003
2/5/20214,869236.532/5/20311,31156,045
2/4/20222,823120,6832,823120,683
Cory J. Miller2/3/202080834,5421,01043,178
1/8/20212,430103,883
2/5/202183035,483
2/4/202286236,85186236,851
________________________

(1)    All of the NSOs shown in these two columns have a normal vesting date that is the third anniversary of the grant date shown in the column captioned “Grant Date.”

(2)    Each NSO was granted with an exercise price equal to the closing price of one Common Share on NYSE on the date of grant.

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(3)    This column shows the aggregate number of RSUs outstanding as of September 30, 2022. The normal vesting date for each award based on the listed grant date is as follows:
Award TypeGrant DateNormal Vesting DateVesting Schedule Notes
RSUs
2/3/20202/3/2023
Vests on the third anniversary of the grant date
RSUs1/8/20211/8/2024
Vests on the third anniversary of the grant date
RSUs
2/5/20212/5/2024
Vests on the third anniversary of the grant date
RSUs
2/4/20222/4/2025
Vests on the third anniversary of the grant date

(4)    Reflects the market value of unvested RSUs, computed by multiplying the closing price of our Common Shares on September 30, 2022 of $42.75 by the number of Common Shares underlying such unvested RSUs.

(5)    This column shows the aggregate number of Common Shares underlying the PUs outstanding as of September 30, 2022. In each case the number of Common Shares reported reflects probable payout based on accounting assumptions as of September 30, 2022 as indicated below.

Award TypeGrant DateProbable Payout %
PUs2/3/2020125.0%
PUs2/4/2022100.0%

(6)    Reflects the market value of unvested shares as of September 30, 2022 based on the closing stock price of our Common Shares on September 30, 2022 of $42.75. Value reflects actual or probable payout based on accounting assumptions as of September 30, 2022 as indicated in footnote (5).

(7)    For Mr. Evans, the information reflects outstanding equity-based awards as of September 30, 2022 made in connection with his role as Interim Chief Financial Officer.

Option Exercises and Stock Vested Table

The following table provides information concerning the aggregate amounts realized or received in connection with the exercise or vesting of equity-based awards for each NEO during the 2022 fiscal year.

Option Exercises and Stock Vested for 2022 Fiscal Year
 
 Option AwardsStock Awards
NameNumber of Shares
Acquired on
Exercise (#)
Value Realized
on Exercise
($)(1)
Number of Shares Acquired on Vesting (#)(2)Value Realized
on Vesting 
($)(3)
James Hagedorn463,99069,550,728
David C. Evans (4)
Michael C. Lukemire162,11724,300,489
Christopher J. Hagedorn57,2178,322,590
Denise S. Stump 62,4389,365,656
Cory J. Miller12,5771,767,138
________________________

(1)    The value realized on exercise of NSOs is calculated based on the excess of the closing price of our Common Shares on the date of exercise over the exercise price of the NSO, multiplied by the number of Common Shares acquired upon exercise.

(2)    Reflects the number of shares received for each NEO in connection with the RSU and PU grants as outlined below.

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NEOGrant TypeGrant DateVesting DateSettlement DateShare Price at Settlement
James HagedornPFA (5-year PUs)1/30/201712/1/20211/31/2022$151.20
RSU2/4/20192/4/20222/4/2022$132.87
Michael C. LukemirePFA (5-year PUs)1/30/201712/1/20211/31/2022$151.20
RSU2/4/20192/4/20222/4/2022$132.87
Christopher J. HagedornSpecial PU11/1/201810/26/202110/26/2021$149.58
PU (3-year)2/4/20192/4/20222/4/2022$132.87
RSU2/4/20192/4/20222/4/2022$132.87
Denise S. StumpPFA (5-year PUs)1/30/201712/1/20211/31/2022$151.20
RSU2/4/20192/4/20222/4/2022$132.87
Cory J. MillerSpecial PU11/1/201810/26/202110/26/2021$149.58
PU (3-year)2/4/20192/4/20222/4/2022$132.87
RSU2/4/20192/4/20222/4/2022$132.87
RSU2/4/20192/4/20222/4/2022$132.87

Due to the decline in our share price during the 2022 fiscal year, the actual value of these stock settlements as of the end of the 2022 fiscal year was considerably lower than the taxable value; valued based on our closing share price of $42.75 on September 30, 2022.

(3)    The value realized on the settlement of RSUs described above is calculated by multiplying the number of Common Shares underlying the vested shares or units by the closing price of our Common Shares on the applicable settlement date.

(4)    Mr. Evans did not have any option exercises or stock vested for 2022 Fiscal Year in connection with his service as Interim Chief Financial Officer.

Pension Benefits Table

Scotts LLC maintains the Associates’ Pension Plan, a tax-qualified, non-contributory defined benefit pension plan. Eligibility for and accruals under the Associates’ Pension Plan were frozen as of December 31, 1997. Monthly benefits under the Associates’ Pension Plan upon normal retirement (age 65) are determined under the following formula:

(a)(i) 1.5% of the individual’s highest average annual compensation for 60 consecutive months during the 10-year period ending December 31, 1997; times

(ii) Years of benefit service through December 31, 1997; reduced by

(b)(i) 1.25% of the individual’s primary Social Security benefit (as of December 31, 1997); times

(ii) Years of benefit service through December 31, 1997.

Compensation includes all gross earnings plus 401(k) contributions and salary reduction contributions for welfare benefits (such as medical, dental, vision and flexible spending accounts), but does not include earnings in connection with foreign service, the value of a Company car or separation or other special allowances. An individual’s primary Social Security benefit is based on the Social Security Act as in effect on December 31, 1997, and assumes constant compensation through age 65 and that the individual will not retire earlier than age 65. No more than 40 years of benefit service are taken into account.

For Mr. J. Hagedorn, benefits under the Associates’ Pension Plan are supplemented by benefits under the Excess Pension Plan. The Excess Pension Plan was established October 1, 1993 and was frozen as of December 31, 1997. The Excess Pension Plan provides additional benefits to participants in the Associates’ Pension Plan whose benefits are reduced by limitations imposed under IRC § 415 and § 401(a)(17). Executive officers and certain key employees participating in the Excess Pension Plan will receive, at the time and in the same form as benefits are paid under the Associates’ Pension Plan, additional monthly
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benefits in an amount which, when added to the benefits paid to each participant under the Associates’ Pension Plan, will equal the benefit amount such participant would have earned but for the limitations imposed by the IRC.

The following table shows information related to the Associates’ Pension Plan and the Excess Pension Plan for Mr. J. Hagedorn and Mr. Lukemire, the only two NEOs who participate in either plan. Since both the Associates’ Pension Plan and the Excess Pension Plan were frozen as of December 31, 1997, no further years of credited service have been or may be earned after that date.

Pension Benefits at 2022 Fiscal Year-End
NamePlan NameNumber of
Years Credited
Service (#)(1)
Present Value
of Accumulated
Benefit ($)(2)
James Hagedorn The Scotts Company LLC Associates’ Pension Plan 9.917 242,672 
The Scotts Company LLC Excess Benefit Plan For Non Grandfathered Associates 2.000 46,512 
Total 289,184 
Michael C. LukemireThe Scotts Company LLC Associates’ Pension Plan 0.917 21,490 
________________________

(1)    The number of years of credited service shown for each participant is the applicable service earned under each respective plan as of December 31, 1997, the date each of the plans were frozen. As a result, no additional benefits will be attributed to years of service after such date.

(2)    Assumptions used in the calculation of these amounts are included in Note 10 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the 2022 fiscal year.

Non-Qualified Deferred Compensation Table

The ERP is a non-qualified deferred compensation plan that provides executives, including the NEOs, the opportunity to: (1) defer compensation with respect to salary and amounts received in lieu of salary; and (2) defer compensation with respect to any Performance Award (as defined in the ERP). The ERP also includes Company SRA contributions which may be awarded to the NEOs at the discretion of the Compensation Committee. The ERP is an unfunded plan and is subject to the claims of the Company’s general creditors. For additional discussion, see section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element) — Executive Retirement Plan” within the CD&A.

Non-Qualified Deferred Compensation for 2022 Fiscal Year
NameExecutive
Contributions
in Last Fiscal
Year ($)(1)
Company
Contributions
in Last Fiscal
Year ($)(2)
Aggregate
Earnings
in Last Fiscal
Year ($)(3)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at
Last Fiscal
Year End ($)(4)
James Hagedorn 49,348 1,042,843 (15,871,478)— 8,125,668 
David C. Evans— — — — — 
Michael C. Lukemire292,301 443,688 (1,349,443)— 4,819,197 
Christopher J. Hagedorn— — — — — 
Denise S. Stump 154,142 402,812 (2,421,292)(222,965)4,235,627 
Cory J. Miller91,751 67,816 (153,418)— 566,223 
________________________

(1)    These amounts reflect each NEOs’ contributions to the ERP during the 2022 fiscal year which are also included in the numbers reported in the Summary Compensation Table.

(2)    Reflects Company matching contributions and discretionary SRA contributions made to the ERP with respect to each NEO during the 2022 fiscal year as follows:

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ERP MatchSRA ContributionTotal
James Hagedorn$126,176 $916,667 $1,042,843 
David C. Evans— — — 
Michael C. Lukemire143,688 300,000 443,688 
Christopher J. Hagedorn— — — 
Denise S. Stump92,812 310,000 402,812 
Cory J. Miller67,816 — 67,816 

    Mr. J. Hagedorn elected to forgo his $83,333 SRA contribution for the month of September 2022. Company matching contributions to the ERP for a particular calendar year are not allocated until the first quarter of the subsequent calendar year. As a result, amounts reflected in this column do not include the following estimated Company matching contributions with respect to NEO contributions that were made to the ERP between January 1, 2022 and September 30, 2022: Mr. J. Hagedorn, $36,659; Mr. Evans, $0; Mr. Lukemire, $17,682; Mr. C. Hagedorn, $0; Ms. Stump, $13,714; and Mr. Miller, $0. Additional details with respect to non-qualified deferred compensation provided for under the ERP are shown in the table captioned “Non-Qualified Deferred Compensation for 2022 Fiscal Year” and the accompanying narrative.

A description of the SRA contributions is set forth in the section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element) — Executive Retirement Plan” within the CD&A.

(3)    Represents aggregate earnings for the 2022 fiscal year allocated to each NEO’s account in accordance with the ERP. Under the terms of the ERP, each participant has the right to elect investment funds against which amounts allocated to such participant’s account under the ERP will be benchmarked. The investment funds include a Company stock fund and mutual funds that are substantially consistent with the investment options available under the RSP. Because there are no preferential earnings, these amounts are not reflected in the Summary Compensation Table.

(4)    Includes amounts previously reported as compensation to the NEOs in the Summary Compensation Table for the 2021 and 2020 fiscal years as follows: (a) Mr. J. Hagedorn, $2,228,943; (b) Mr. Evans, n/a; (c) Mr. Lukemire, $1,022,087; (d) Mr. C. Hagedorn, n/a; (e) Ms. Stump, $895,263; and (f) Mr. Miller, $41,738. The aggregate balances shown for each of the NEOs is fully vested.


CEO PAY RATIO DISCLOSURE

We are providing the following information regarding the relationship of the annual total compensation of our CEO and that of our “median employee,” as required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K.

Utilizing our defined methodology, we have identified our median employee for the 2022 fiscal year based on our employee population (including full-time, part-time, temporary and seasonal employees located within or outside of the United States, other than the CEO) as of September 30, 2022.

For our 2022 fiscal year, our median employee is a machine operator located in the United States:

The annual total compensation of our median employee, excluding the CEO, was $61,592;

The annual total compensation of our CEO, as reported in the Summary Compensation Table on page 40 of this Proxy Statement, was $8,169,861; and

The ratio of the annual total compensation of our CEO to the annual total compensation of our median employee, excluding the CEO, was 133 to 1.

As of September 30, 2022, the identified population consisted of 6,097 employees. In accordance with the SEC’s de minimis exemption, which, depending on our circumstances, allows us to exclude up to 5% of our non-U.S. based employees. Therefore, we excluded 35 employees in China, 2 employees in the UK and 65 employees in the Netherlands, as they represented less than 2% of our total employee population. Our median employee was identified utilizing calendar year-to-date
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gross wages (annualized for our non-seasonal associates) plus target cash incentive. For employees working outside of the United States, we converted wages to U.S. dollars using budgeted exchange rates. The annual total compensation for our median employee during the 2022 fiscal year was calculated using the same methodology we use for our NEOs, as reported in the Summary Compensation Table on page 40 of this Proxy Statement.

Note that the SEC’s pay ratio disclosure rules provide reporting companies with a great deal of flexibility in determining the methodology used to identify the median employee and the pay ratio. As such, our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures, which may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our industry.


SEVERANCE AND CHANGE IN CONTROL (CIC) ARRANGEMENTS

Introduction

None of our NEOs currently has an employment agreement with the Company. Mr. J. Hagedorn, our CEO, has an executive severance agreement (“Hagedorn Severance Agreement”), which provides for certain compensation and benefits upon termination. Each of the NEOs currently employed by the Company other than Mr. J. Hagedorn is a participant in the Company’s Executive Severance Plan. The Hagedorn Severance Agreement and the Executive Severance Plan are described more fully below. In addition, the Stump Retention Agreement, which is also described more fully below, provides for payments to Denise S. Stump upon termination under certain conditions (“Stump Retention Agreement”). Cory J. Miller departed from the Company effective September 1, 2022, and is a party to a separation agreement with the Company that addresses the payments and benefits to which he is entitled in connection with his departure, the terms of which are summarized below.

Hagedorn Severance Agreement

On December 11, 2013, Scotts LLC entered into the Hagedorn Severance Agreement with Mr. J. Hagedorn that superseded and terminated his then-effective employment agreement. Under the Hagedorn Severance Agreement, in the event of termination by the Company without Cause (as defined below) or by Mr. J. Hagedorn for Good Reason (as defined below), Mr. J. Hagedorn’s severance payments (“Severance Payments”) will equal the sum of (i) a lump sum cash amount equal to three multiplied by the sum of (A) Mr. J. Hagedorn’s base salary in effect immediately prior to the circumstances giving rise to the notice of termination, and (B) the highest annual bonus award paid to Mr. J. Hagedorn in respect of the three completed plan years preceding the termination date, (ii) to the extent permitted under each applicable plan or arrangement, a lump sum cash payment equal to Mr. J. Hagedorn’s accrued benefits as of the termination date under the Company’s pension plans, and (iii) a lump sum cash payment equal to the monthly premiums for a period of three years following the termination date that Mr. J. Hagedorn would incur if he continued coverage under applicable medical, disability and life insurance plans.

The Hagedorn Severance Agreement incorporates restrictive covenants in the form of an Employee Confidentiality, Noncompetition, Nonsolicitation Agreement (the “Hagedorn Noncompetition Agreement”), which is substantially similar to the agreements with the Company’s other executive officers and is broader in scope and applicability than the noncompetition covenant in his former employment agreement. As additional consideration to Mr. J. Hagedorn for expanding the conditions under which restrictive covenants will be enforceable, and subject to repayment upon certain defined circumstances, in the event of termination by the Company without Cause or by Mr. J. Hagedorn for Good Reason, the Hagedorn Severance Agreement provides that Mr. J. Hagedorn shall be entitled to a payment of $100,000 per month over 36 months (the “Noncompetition Payments”). Mr. J. Hagedorn would also be entitled to the Noncompetition Payments if he terminates his employment other than for Good Reason, and the Board, in its sole discretion, notifies Mr. J. Hagedorn that it intends to enforce the noncompetition restrictions set forth in the Hagedorn Noncompetition Agreement.

If Mr. J. Hagedorn is terminated for Cause, all restrictions in the Hagedorn Noncompetition Agreement apply and no Severance Payments or Noncompetition Payments will be made.

Mr. J. Hagedorn will be ineligible for any Severance Payments or Noncompetition Payments if he does not execute, or he revokes, a release substantially in the form attached to the Hagedorn Severance Agreement.

In the event of any termination of Mr. J. Hagedorn’s employment, Mr. J. Hagedorn must immediately resign from any director or employee or officer positions that he holds with the Company Group (as defined below) other than his position as a member of the Board. In addition, if Mr. J. Hagedorn and his affiliates cease to own in the aggregate at least 5% of the voting
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power of the Company’s outstanding securities, Mr. J. Hagedorn must also immediately resign from the Board, if requested by the Board upon a termination of his employment by the Company for Cause.

The Hagedorn Severance Agreement includes a recovery right for incentive-based compensation. To the extent required by applicable law and whether or not then employed, any incentive-based compensation, whether cash or equity, received within the three-year period preceding the event giving rise to a repayment requirement will be repaid or returned by Mr. J. Hagedorn, or the after tax value (to the extent permissible under applicable law) repaid in the event that any equity has then been sold. This repayment/return obligation applies only to cash compensation received or equity awards granted after the effective date of the Hagedorn Severance Agreement, except as otherwise required by applicable law.

The term “Cause” is defined in the Hagedorn Severance Agreement to mean that Mr. J. Hagedorn has: (i) willfully and materially breached the terms of the Hagedorn Noncompetition Agreement; (ii) engaged in willful misconduct that has materially injured the business of the Company, Scotts LLC or any of their subsidiaries or any affiliates of those entities, on a consolidated basis, with the Company or Scotts LLC (collectively, the “Company Group”); (iii) willfully committed a material act of fraud or material breach of his duty of loyalty to the Company Group; (iv) willfully and continually failed to attempt in good faith to perform his duties under the Hagedorn Severance Agreement (other than any such failure resulting from his incapacity due to physical or mental illness); or (v) been convicted, or pled guilty or nolo contendere for the commission of an act or acts constituting a felony under the laws of the United States or any state thereof.

The term “Good Reason” is defined in the Hagedorn Severance Agreement to mean, without Mr. J. Hagedorn’s consent, the existence of one or more of the following conditions: (i) the assignment to Mr. J. Hagedorn of any duties inconsistent with his status as CEO of the Company or a substantial adverse alteration in the nature or status of his responsibilities; (ii) a reduction by the Company of Mr. J. Hagedorn’s total direct compensation at target for a fiscal year in the aggregate, which is equal to the sum of his base salary, target bonus opportunity, and the grant date value of any long-term awards for such year, based on the standard grant practices of the Compensation Committee for such year, to an amount less than $5,328,000; (iii) the requirement by the Company that Mr. J. Hagedorn relocate his primary personal residence; (iv) the failure by the Company, without Mr. J. Hagedorn’s consent, to pay to him any portion of his current compensation, or to pay him any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date such compensation is due; (v) the failure by the Company to continue in effect any compensation or benefit plan in which Mr. J. Hagedorn is entitled to participate as of the effective date of the Hagedorn Severance Agreement or thereafter which is material to his total compensation, unless an equitable arrangement has been made with respect to such plan, or the failure by the Company to continue his participation therein (or in such substitute or alternative plan) on a basis not materially less favorable; (vi) the failure by the Company to continue to provide Mr. J. Hagedorn with benefits substantially similar to those enjoyed by him as of the effective date of the Hagedorn Severance Agreement or thereafter under any of the Company’s pension, life insurance, medical, health and accident, or disability plans in which he is entitled to participate, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive him of any material fringe benefit or perquisite that he enjoys, or the failure by the Company to provide him with the number of paid vacation days to which he is entitled on an annual basis as of the effective date of the Hagedorn Severance Agreement; or (vii) any purported termination of Mr. J. Hagedorn’s employment without Cause that is not effected pursuant to a notice of termination. Mr. J. Hagedorn must provide written notice within 90 days of an event he believes to be Good Reason and the Company is entitled to 30 days to cure after receipt of the Notice.

Executive Severance Plan

The Executive Severance Plan was amended and restated effective April 25, 2017. Under the terms of the Executive Severance Plan, each participant will be eligible to receive severance benefits in the event his or her employment is terminated involuntarily by the Company without Cause (as defined below), or by the participant for Good Reason (as defined below), provided certain conditions are satisfied. Subject to the terms of the Executive Severance Plan, the Compensation Committee designated each of Mr. Lukemire, Mr. C. Hagedorn and Ms. Stump as eligible participants.

The term “Cause” is defined in the Executive Severance Plan as: (a) willful and material breach of the terms of any agreement with the Company; (b) willful misconduct that materially injures the business of the Company or any affiliate; (c) the willful commission of a material act of fraud or a material breach of the duty of loyalty to the Company and its affiliates; (d) the willful failure to substantially perform one’s duties as an employee (for reasons other than physical or mental illness) after reasonable notice of that failure; or (e) conviction or entering into a plea of guilty or nolo contendere for the commission of an act or acts constituting a felony under the laws of the United States or any state thereof.

In order to receive benefits under the Executive Severance Plan as amended, each of Mr. Lukemire, Mr. C. Hagedorn and Ms. Stump (each a “Participant” and collectively the “Participants”) executed a tier 1 participation agreement (the
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“Participation Agreement”) that reflects the terms of the amended plan, the form of which was approved by the Compensation Committee. Mr. Lukemire and Ms. Stump executed their respective Participation Agreements in 2017 and Mr. C. Hagedorn executed his Participation Agreement in 2021. Upon termination, each Participant must also execute a release agreement in favor of the Company as a condition to receive benefits under the Executive Severance Plan.

The Participation Agreement provides for the following severance benefits in the event a Participant’s employment is terminated involuntarily without Cause or the Participant resigns for Good Reason:

a continuation of base salary, in accordance with the Company’s normal payroll practices, for a period of 24 months after the date of termination (the “Severance Period”);

a bonus amount equal to two times the target bonus opportunity for the year in which the termination occurs that is payable in two equal installments on the first and second anniversary of termination, subject to the Participant’s continued compliance with any post-employment obligations to the Company; and

for a period of 24 months, an amount equal to the excess of the then-COBRA premium charged by the Company to terminated employees, over the premium charged to participants for the benefits in which they were enrolled at the effective date of termination (the “Benefits Offset Payment”).

All other benefits to which the Participant has a vested right as of the effective date of termination will be paid or provided according to the provisions of the plans or programs governing such benefits. In addition to the foregoing, in the event termination occurs within two years following a Change in Control (as defined in the Executive Severance Plan), the Participant will also receive a payment equal to the prorated annual bonus for the year in which termination occurs.

The Participation Agreement defines “Good Reason” as the existence of one or more of the following conditions without the Participant’s consent: (a) a material diminution in total direct compensation at target (meaning the sum of base salary, target bonus opportunity and grant date value of any long-term awards for a fiscal year/performance period, based on the standard grant practices of the Compensation Committee), other than as a result of (i) an across-the-board reduction for executives at the Participant’s level or (ii) a reduction in total direct compensation at target as a result of the Participant being on a performance improvement or disciplinary plan or (iii) a reduction in total direct compensation at target by reason of unique, supplemental, additional, or other one-time incentive compensation grants made in a prior year; or (b) a material diminution in authority, duties or responsibilities which shall not include (i) a change in position to another position which is at the same, or higher, officer level, and for which the participant is reasonably qualified by education, skills or experience or (ii) a requirement to be based at a different office of the Company from that to which the Participant was assigned prior to that required move; except in the instance that the Participant terminates service within two years after a Change in Control because of a requirement to perform services at a location that is more than 50 miles away from the location in which services were performed before the Change in Control, such termination shall constitute termination for Good Reason. Under the terms of the Participation Agreement, Good Reason exists only if the Company fails to cure the event giving rise to Good Reason within 30 days after receiving notice thereof from the Participant.

Due to the nature of his appointment as the Interim Chief Financial Officer, Mr. Evans is not a participant in the Executive Severance Plan and is not entitled to any severance benefits in connection with his interim appointment.

Executive Retention Agreements

On July 27, 2018, the Compensation Committee approved a special retention award for Denise S. Stump, pursuant to which Ms. Stump may receive retention benefits (the “Retention Benefits”) in exchange for delaying her planned retirement date until at least December 31, 2020. The Compensation Committee believes it is in the best interest of the Company to retain Ms. Stump, who has served as the Company’s Executive Vice President, Global Human Resources since 2003, and is a valued and trusted business partner. The Company will pay benefits under the Stump Retention Agreement only if either of the following conditions is satisfied: (a) her employment with the Company terminates due to Retirement, as defined in the Stump Retention Agreement, or (b) her employment with the Company terminates at any time due to Disability, as defined in the Stump Retention Agreement. For purposes of the Stump Retention Agreement only, “Retirement” means that Ms. Stump has (i) voluntarily terminated employment with the Company on or after December 31, 2020, and (ii) provided written notice to the Company of her intent to so terminate her employment at least 12 months before her effective date of termination. Also for purposes of the Stump Retention Agreement, “Disability” means a condition for which she qualifies for benefits under The Scotts Miracle-Gro Company’s Long-Term Disability Plan or another long-term disability plan sponsored by the Company.
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Provided Ms. Stump satisfies the conditions for payment under the Stump Retention Agreement, she would be eligible for the following Retention Benefits:

Continuation of base salary, in accordance with the Company’s normal payroll practices, for a period of 24 months;

A bonus multiple of two times the target bonus opportunity for the plan year in which the termination occurs, to be paid in two equal installments on the first and second anniversary of the termination effective date; and

A monthly payment equal to the excess of the then COBRA premium charged by the Company to terminated employees over the premium charged to active employees, for a period of up to 24 months.

If Ms. Stump’s employment with the Company terminates for any reason other than Retirement or Disability, she shall not receive any benefits under the Stump Retention Agreement. However, she may be entitled to receive severance benefits pursuant to the Company’ Executive Severance Plan, depending on the circumstances surrounding her termination. In no event could Ms. Stump receive benefits under both the Executive Severance Plan and the Stump Retention Agreement.

Miller Separation Agreement

Cory J. Miller was involuntarily terminated without Cause as of September 1, 2022 (the “Separation Date”), triggering a benefit under the Company’s Executive Severance Plan. Mr. Miller served as the Company’s Executive Vice President and Chief Financial Officer until August 29, 2022. On October 4, 2022, Scotts LLC entered into a Separation Agreement and Release of All Claims (the “Miller Separation Agreement”) with Mr. Miller. The Miller Separation Agreement addresses the payments and benefits to which Mr. Miller is entitled in connection with his without cause separation.

Pursuant to the terms of the Miller Separation Agreement, Scotts LLC will pay or make the following amounts and benefits available to Mr. Miller: (a) severance pay equal to 24 months of salary, at Mr. Miller’s regular monthly base pay, payable in accordance with Scotts LLC’s standard payroll procedures; (b) a lump sum payment of $24,000 in lieu of outplacement services; (c) for a period of 24 months, a benefits offset payment in an amount equal to the excess of the COBRA premium charged by the Company to terminated employees over the premium Mr. Miller paid as an active employee; and (d) in lieu of an annual bonus award, an amount equal to two times Mr. Miller’s target bonus amount for the Company’s 2022 fiscal year, 50% of which is payable on the first scheduled pay date following the first anniversary of the Separation Date and 50% of which is payable on the first scheduled pay date following the second anniversary of the Separation Date, subject to Mr. Miller’s continued compliance as of the payment date with all of his post-employment obligations to the Company.

The 808 performance units and 808 restricted stock units and related dividend equivalents granted to Mr. Miller on February 3, 2020, will vest and settle on February 3, 2023 in accordance with the terms of the applicable award agreements. Mr. Miller’s other outstanding restricted stock units and performance units (which consist of 4,426 restricted stock units; 1,586 restricted stock units; 4,516 restricted stock units; and 4,516 performance units and, as applicable, related dividend equivalents granted to Mr. Miller on January 8, 2021, February 5, 2021, February 4, 2022 and February 4, 2022, respectively) will vest ratably based on the number of days of active service between the grant date and the Separation Date. The underlying shares will be distributed in accordance with the terms of the applicable Award Agreements. The 5,890 non-qualified stock options granted to Mr. Miller on February 5, 2021 were forfeited on the Separation Date.

The payments and benefits described above are the only amounts to which Mr. Miller is entitled under the Separation Agreement (or any other agreement). He also remains entitled to any vested benefits he had as of the Separation Date under other benefit plans or programs maintained by the Company or its subsidiaries, including The Scotts Company LLC Retirement Savings Plan and The Scotts Company LLC Executive Retirement Plan.

The Separation Agreement, together with the Employee Confidentiality, Noncompetition, Nonsolicitation Agreement previously executed by Mr. Miller on April 18, 2008, which will continue in effect following his departure, also contains various restrictive covenants, including covenants relating to noncompetition, confidentiality, cooperation and nonsolicitation.
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PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL

The Company and its subsidiaries have entered into certain agreements and maintain certain plans that may provide compensation to the NEOs employed by the Company and its subsidiaries in the event of a termination of employment and/or a change in control of the Company and that would provide compensation to the NEOs no longer employed by the Company or its subsidiaries upon termination of employment.

Severance Arrangements: None of our NEOs currently has an employment agreement with the Company. Effective December 11, 2013, Mr. J. Hagedorn entered into the Hagedorn Severance Agreement, which superseded and terminated his then-effective employment agreement. Each of the NEOs currently employed by the Company other than Mr. J. Hagedorn and Mr. Evans is a participant in the Company’s Executive Severance Plan.

The Hagedorn Severance Agreement and the Executive Severance Plan provide for severance and continued compensation and benefit eligibility as summarized in the table below.
 Prior to CICWithin 2 Years Following CIC
 
Involuntary Without Cause or
Voluntary With Good Reason
Due to
Death or
Disability
Involuntary Without Cause or
Voluntary With Good Reason
Salary Continuation:
CEO
3x base salary (lump sum)
None
3x base salary (lump sum)
All Other NEOs**
2x base salary
None*
2x base salary (lump sum)
Annual Incentive:
CEO
3x highest bonus paid in prior 3 years (lump sum)
None
3x highest bonus paid in prior 3 years (lump sum)
All Other NEOs**
2x target bonus
None*
2x target bonus plus prorated annual bonus (lump sum)
Welfare Benefits:
CEO
Coverage ends and CEO receives lump sum payment equal to the equivalent monthly premiums to continue medical, disability and life insurance for a period of 3 years
None
Coverage ends and CEO receives lump sum payment equal to the equivalent monthly premiums to continue medical, disability and life insurance for a period of 3 years
All Other NEOs**
Coverage ends and NEO receives Benefits Offset Payment for 24 months
None*
Coverage ends and NEO receives lump sum payment equal to Benefits Offset Payment for 24 months
Non-Compete Payments:
CEO
$3.6 million, payable in $100,000 monthly installments
None
$3.6 million, payable in $100,000 monthly installments
All Other NEOs**
No additional compensation provided
None
No additional compensation provided
________________________

*    The Stump Retention Agreement provides for certain payments to Ms. Stump in the event of termination due to Disability or Retirement as described above.

**    Does not apply to Mr. Evans since he is not a participant in the Company’s Executive Severance Plan.

Under the Executive Severance Plan, if an NEO terminates his or her employment voluntarily without Good Reason, other than for retirement, or such NEO’s employment is terminated for Cause, the NEO is not entitled to receive any additional base salary, annual incentive payment or welfare benefits. The Company’s specific obligations to each of the NEOs are detailed in the separate tables that follow.


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Equity-Based Compensation Plans: Grants of NSOs, RSUs and PUs are typically subject to three-year, time-based vesting. However, our equity-based compensation plans generally provide for accelerated vesting (either full or partial) or forfeiture in certain situations, as indicated in the following table. These acceleration and forfeiture provisions apply to all Participants in our equity-based compensation plans.
Termination Due to:Treatment of Unvested NSOs, RSUs and PUs
Retirement
Vest on date of termination (PUs remain subject to the achievement of performance criteria)
Death or Disability
Vest on date of termination
For Cause
Forfeited on date of termination
Any Other Reason
Forfeited on date of termination
Subsequent to Change in Control
Generally vest on date of termination following a CIC, as described below
________________________

Retirement: A voluntary termination after a participant reaches age 55 with 10 years of service. As of September 30, 2022, Mr. J. Hagedorn, Mr. Lukemire and Ms. Stump satisfy the requirements for retirement eligibility. For purposes of the Stump Retention Agreement only, the Retirement definition does not impact the treatment of equity awards and only provides for certain cash benefits upon termination due to Retirement.

Disability: Impairment that qualifies a participant for benefits under the Company’s long-term disability plan or any other long-term disability plan sponsored by the Company.

Treatment of Equity Awards Following a Change in Control: Upon a change in control, our plan generally imposes a “double-trigger” vesting provision, which provides for vesting upon involuntary termination of employment within 24 months after a change in control if (1) equity-based awards are assumed or substituted in the transaction or (2) equity-based awards otherwise continue in effect after the transaction. On the other hand, if the Compensation Committee, after evaluating the facts and circumstances of a change in control event, reasonably concludes that equity-based awards will not be assumed, substituted or continued by the resulting entity, our plan’s “responsive” single trigger will take effect and the awards will generally cancel or vest in exchange for a lump sum cash payment. These vesting and forfeiture provisions generally apply to all participants in our equity-based compensation plans.

Based on the vesting and forfeiture provisions, the following treatment applies to each equity-based award type subsequent to a CIC:

If awards are assumed, substituted or continued: Following an involuntary termination, without Cause, within 24 months after a change in control of the Company, any conditions on the employee’s rights under, or any restrictions on transfer or exercisability applicable to each replaced or continued award, will be waived or lapse as of the date of termination (i.e., “double trigger”),

If awards are not substituted or continued:

NSOs: Subsequent to the change in control, and only if the unvested NSOs are not substituted or continued, (a) outstanding NSOs will be cancelled and the applicable NEO will receive cash in the amount of, or Common Shares having a fair value equal to, the difference between the change in control price per Common Share and the exercise price per Common Share associated with the cancelled NSO, or (b) the NEO exercises, with the permission of the Compensation Committee, the NEO’s outstanding NSOs within 15 days of the date of the change in control.

RSUs: Subsequent to the change in control, and only if the unvested RSUs are not substituted or continued, RSUs will vest in full and all restrictions relating to such awards will lapse. The vested awards will be distributed in (i) a single lump sum cash payment within 30 days following such change in control based on the change in control price, or (ii) at the Compensation Committee’s discretion, in the form of whole Common Shares of the Company or shares of any successor company.

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PUs: Subsequent to the change in control, and only if the unvested PUs are not substituted or continued, all service-based vesting criteria will be deemed to be satisfied and performance goals associated with outstanding awards will be deemed to have been met on the date of the change in control (as specified in the applicable award agreement), all performance periods will be accelerated to the date of the change in control and all outstanding awards will be distributed in a single lump sum cash payment within 30 days following such change in control based on the change in control price.
Termination of Employment and Change in Control — James Hagedorn

The following table describes the approximate payments that would be made to Mr. J. Hagedorn pursuant to the Hagedorn Severance Agreement or other plans or individual award agreements in the event of his termination of employment under the circumstances described below or in the event of a change in control of the Company, assuming such termination of employment or change in control took place on September 30, 2022, the last day of the 2022 fiscal year. For further information concerning the outstanding equity-based awards held by Mr. J. Hagedorn as of September 30, 2022, see the table captioned “Outstanding Equity Awards at 2022 Fiscal Year-End.”
 Termination Prior to CICFollowing CIC(1)
Executive Benefits and
Payments Upon Termination
Involuntary
Without
Cause or Voluntary
With Good Reason
Termination Due to Death
or Disability
Involuntary 
Without
Cause or Voluntary
With Good Reason
CIC Only
Compensation (2):
Base Salary (3x annual base salary)$3,600,000 $— $3,600,000 $— 
EIP — Prorated Annual Payout (3)2,100,000 2,100,000 2,100,000 — 
EIP — Payout (4)22,352,460 — 22,352,460 — 
Equity-Based Compensation:
Stock Options:
Unvested and accelerated (5)— — — — 
Restricted Stock Units:
Unvested and Accelerated2,280,029 (6)2,280,029 (6)2,280,029 (6)— 
Dividend Equivalents333,703 (7)333,703 (7)333,703 (7)— 
Performance Units:
Unvested and Accelerated965,252 965,252 965,252 — 
Dividend Equivalents44,706 44,706 44,706 — 
Benefits and Perquisites:
Health & Welfare Benefits (8)62,935 — 62,935 — 
Accrued Retirement Benefits (vested):
Associates’ Pension Plan (9)242,672 242,672 242,672 — 
Excess Benefit Plan (9)46,511.89 46,512 46,512 — 
ERP (9)8,125,668 8,125,668 8,125,668 — 
Other Payments:
Non-Compete Payments (10)3,600,000 — 3,600,000 — 
Total:$43,753,937 $14,138,542 $43,753,937 $— 
________________________

(1)    Assumes all unvested NSOs and RSUs will be assumed or substituted in connection with the change in control.

(2)    Equity valuations are based on the $42.75 closing price of our Common Shares on September 30, 2022.

(3)    Since Mr. J. Hagedorn is retirement eligible, he is entitled to a lump sum pro-rata payout of the annual bonus under the EIP for the year of termination. This is in addition to any bonus amount payable under the Hagedorn Severance Agreement. The amount shown assumes that the EIP paid out at 100% of target.

(4)    Lump sum payment of cash severance benefit in an amount equal to three times the EIP payout for the 2021 fiscal year, the highest annual bonus paid in any of the three preceding years.


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(5)    Reflects immediate vesting of all outstanding and unvested NSOs however as of September 30, 2022 there is no in the money value associated with unvested NSOs.

(6)    Since Mr. J. Hagedorn is retirement eligible, all RSUs are subject to immediate vesting upon termination for any reason other than for Cause. The vested RSUs are generally settled on the third anniversary of the grant date.

(7)    Since Mr. J. Hagedorn is retirement eligible, all deferred dividend equivalents associated with the unvested RSUs are subject to immediate vesting upon termination for any reason other than for Cause. The vested dividend equivalents are generally settled on the third anniversary of the grant date.

(8)    Reflects lump sum payment equal to the equivalent monthly premiums to continue medical, disability and life insurance for a period of three years.

(9)    Reflects respective accrued benefits, which are fully vested as of September 30, 2022 (and are not further enhanced or accelerated as a result of the potential termination event).

(10)    Per the Hagedorn Severance Agreement, Mr. J. Hagedorn will receive non-compete payments totaling $3.6 million, payable in $100,000 monthly installments over the three-year period following an involuntary termination by the Company without Cause, or a voluntary termination by Mr. J. Hagedorn for Good Reason (subject to Mr. J. Hagedorn executing a Release Agreement as prescribed by the Company).

Termination of Employment and Change in Control —Mr. Lukemire, Mr. C. Hagedorn and Ms. Stump

The following tables describe the approximate payments that would be made to each of the above-named NEOs pursuant to the Executive Severance Plan, the Stump Retention Agreement or other plans or individual award agreements in the event of termination of employment under the circumstances described below or in the event of a change in control of the Company, assuming such termination of employment or change in control took place on September 30, 2022, the last day of the 2022 fiscal year. No amounts are reflected in the following tables for Mr. Miller as he separated from the Company prior to September 30, 2022, or for Mr. Evans, since he is not entitled to any severance benefit in connection with his appointment as the Interim Chief Financial Officer. Payments made in connection with Mr. Miller’s separation are further outlined in the section captioned “SEVERANCE AND CHANGE IN CONTROL (CIC) ARRANGEMENTS — Miller Separation Agreement.” For further information concerning the outstanding equity-based awards held by each of the above-named NEOs as of September 30, 2022, see the table captioned “Outstanding Equity Awards at 2022 Fiscal Year-End.”

Involuntary Termination Without Cause, or Voluntary Termination by NEO With Good Reason:
Executive Benefits and Payments Upon TerminationMr. LukemireMr. C. HagedornMs. Stump
Compensation (1):
Base Salary (2x annual base salary)$1,440,000 $1,300,000 $1,300,000 
EIP — Prorated Annual Payout900,000 (2)— 585,000 (2)
EIP — Target Payout (2x target amount)(3)1,800,000 1,170,000 1,170,000 
Equity-Based Compensation:
Stock Options:
Unvested and Accelerated(4)— — — 
Restricted Stock Units:
Unvested and Accelerated781,983 (6)138,083 (5)283,732 (6)
Accrued Dividends116,057 (8)38,566 (7)41,428 (8)
Performance Units:
Unvested and Accelerated(9)321,779 172,625 120,683 
Dividend Equivalents(10)14,903 48,214 5,590 
Benefits and Perquisites:
Benefits Offset Payment (11)28,395 38,867 28,401 
Accrued Retirement Benefits:
Associates’ Pension Plan (12)27,641 — — 
ERP (12)4,819,197 — 4,235,626 
Total:$10,249,955 $2,906,354 $7,770,460 
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________________________

(1)    Equity valuations are based on the $42.75 closing price of our Common Shares on September 30, 2022.

(2)    Since Mr. Lukemire and Ms. Stump are retirement eligible, they are entitled to a lump sum pro-rata payout of the annual bonus under the EIP for the year of termination. This is in addition to any bonus amount payable under the Executive Severance Plan. The amount shown assumes that the EIP paid out at 100% of target.

(3)    Reflects a lump sum payment in an amount equal to two times the target annual bonus award which would be payable to the NEO, in two equal installments, on the first and second anniversary of the termination effective date, subject to the NEO’s continued compliance with any post-employment obligations to the Company.

(4)    For Mr. Lukemire and Ms. Stump, based on their retirement eligibility, reflects immediate vesting of all outstanding and unvested NSOs, however as of September 30, 2022 there is no in the money value associated with unvested NSOs.

(5)    For Mr. C. Hagedorn, pursuant to the terms of the applicable award agreement, if a termination occurs for any reason other than for Cause within 180 days of the award vesting date, the vesting of the RSUs is deemed to occur on the third anniversary of the grant date. The vested RSUs are generally settled on the third anniversary of the grant date.

(6)    Since Mr. Lukemire and Ms. Stump are retirement eligible, all RSUs are subject to immediate vesting upon termination for any reason other than for Cause. The vested RSUs are generally settled on the third anniversary of the grant date.

(7)    For Mr. C. Hagedorn, all deferred dividend equivalents associated with RSUs that vest as a result of involuntary termination, other than for Cause, within 180 days of the award vesting date are deemed to vest on the third anniversary of the grant date. The vested dividend equivalents are generally settled on the third anniversary of the grant date.

(8)    Since Mr. Lukemire and Ms. Stump are retirement eligible, all deferred dividend equivalents associated with unvested RSUs are subject to immediate vesting upon termination for any reason other than for Cause. The vested dividend equivalents are generally settled on the third anniversary of the grant date.

(9)    For Mr. C. Hagedorn, pursuant to the terms of the applicable award agreement, if a termination occurs for any reason other than for Cause within 180 days of the award vesting date, the vesting of the PUs granted on February 3, 2020 is deemed to occur on the third anniversary of the grant date (reflects actual performance achievement of 125% as of September 30, 2022). The vested PUs are generally settled on the third anniversary of the grant date.

(10)    For Mr. C. Hagedorn, all deferred dividend equivalents associated with PUs granted on February 3, 2020 will be paid out based on actual performance achievement of 125% as of September 30, 2022, to the extent the underlying PUs are vested.

(11)    Reflects an amount equal to the excess of the current COBRA premium charged by the Company to terminated employees over the premium charged to active employees as of September 30, 2022; calculated for a period of 24 months and payable on a monthly basis.

(12)    Reflects respective accrued benefits, which are fully vested as of September 30, 2022 (and are not further enhanced or accelerated as a result of the potential termination event).

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Termination Due to Death or Disability:
Executive Benefits and Payments Upon TerminationMr. LukemireMr. C. HagedornMs. Stump
Compensation (1):
Base Salary$— $— $1,300,000 (2)
EIP — Prorated Annual Payout (3)900,000 585,000 585,000 
EIP — Target Payout (2x target amount)— — 1,170,000 (4)
Equity-Based Compensation:
Stock Options:
Unvested and Accelerated(5)— — — 
Restricted Stock Units:
Unvested and Accelerated (6) 781,983 389,367 283,732 
Accrued Dividends (7)116,057 55,617 41,428 
Performance Units:
Unvested and Accelerated321,779 333,536 (8)120,683 
Dividend Equivalents 14,903 55,667 (9)5,590 
Benefits and Perquisites:
Benefits Offset Payment— — 28,401 (10)
Accrued Retirement Benefits:
Associates’ Pension Plan (11)27,641