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A MESSAGE FROM PPG’S
INDEPENDENT LEAD DIRECTOR | 
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I am honored to have been elected by the Board in October as PPG’s independent Lead Director. The Lead Director role is a critical part of our effective corporate governance practices, facilitating the interaction between the independent directors and the Chairman and CEO and supporting the Company’s long-term success.
In PPG’s 140th year of operation, the 53,000 PPG people around the world made it happen by delivering record 2023 financial results and positioning the Company for growth in 2024. While the global demand environment remained challenging, the breadth, diversity and resiliency of PPG’s business portfolio continued to aid its strong operating performance in 2023. Record full-year reported net sales were $18.2 billion, up about 3% versus the prior year, while organic sales were higher by 3% driven by higher selling prices. We also had record full-year adjusted earnings per share of $7.67 and record full-year operating cash flow from operations of $2.4 billion, up $1.4 billion year over year. Adjusted net income in 2023 increased by about 30% versus 2022 primarily due to higher selling prices, lower input costs, restructuring cost savings and acquisition-related synergies. The Company looks forward to building upon last year’s successes by focusing on the unwavering support of our customers by providing superior services and products that enhance productivity and sustainability.
Since last year’s Annual Meeting of Shareholders, the Board of Directors has been actively engaged overseeing the initial progress of PPG’s enterprise growth strategy. We also concluded a successful succession plan and unanimously elected Tim Knavish as PPG’s Chairman and CEO. Michael McGarry’s leadership set the Company on a solid path for future growth and success, and we wish him a long and happy retirement.
As part of our ongoing Board refreshment process, we welcomed Chris Roberts, Executive Vice President and General Manager, Global Food and Beverage at Ecolab Inc., to the Board. He brings strong operational, marketing, customer relations, retail and branding experience. We also saw the retirements of Hugh Grant and Steve Angel. The Board is grateful for Hugh and Steve’s thoughtful guidance and their many years of dedicated service to PPG. Our refreshment process will continue into 2024 as we seek directors who have skills and experience that dovetail with our enterprise growth strategy.
In this proxy statement, we are asking our shareholders to approve a proposal to provide shareholders holding 25% of PPG’s voting power with the right to call a special meeting of shareholders. This proposal is simply the next step forward in our corporate governance journey.
The Board is actively engaged in overseeing PPG’s sustainability strategy. We are proud that in 2023 PPG further advanced its sustainability commitments by becoming the first U.S.-based coatings manufacturer to receive validation from the Science Based Targets initiative (SBTi) for 2030 scope 1, 2 and 3 emissions reduction targets. In addition, PPG announced 2030 sustainability goals that focus on driving sales of sustainably advantaged products, reducing its environmental impact, and making a difference in our communities.
On behalf of the Board of Directors, it is my pleasure to invite you to PPG’s 2024 Annual Meeting of Shareholders, which is to be held at 11:00 a.m., Eastern Time, on Thursday, April 18, 2024, via live audio webcast at https://www.cesonlineservices.com/ppg24_vm. We encourage you to read the attached Proxy Statement and vote on the included proposals.
We thank you for your continued support of and investment in PPG.
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Michael W. Lamach
Independent Lead Director PPG Board of Directors | |
SUSTAINABILITY, CULTURE AND HUMAN RIGHTS
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| Our Culture |
At PPG, we aim to champion all employees, empowering them to be their authentic selves and allowing everyone to reach their full potential. In 2023, we achieved several key milestones, including:
| ● | Launched diversity, equity and inclusion learning journeys globally to all employees and leaders. |
| ● | Grew our eight Employee Resource Networks (“ERNs”) to more than 8,600 members, who are active in more than 60 countries. |
| ● | Garnered more than 24,000 participants who attended ERN events and diversity, equity and inclusion learning experiences to foster a culture of inclusion and belonging across the organization. |
| ● | Continued fostering a safe forum for conversations and storytelling around bias, discrimination and inclusion at a personal level by launching our Listen & Learn sessions with over 2,100 employees joining at least one session. |
| ● | Featured globally recognized speakers Deborah Liu, Ritu Bhasin, Dr. Robert Rodriguez, Cecilia Lui, Dame Inge Beale, Bernice Chao, Petra Velzeboer and Steven Van Cohen to share their insights and powerful stories to inspire action and courage against bias, discrimination and microaggressions. |
| ● | Promoted and encouraged use of our Employee Assistance Program to include all global employees, ensuring access to a variety of tools and resources to manage the many facets of wellness. |
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| Our Communities |
At PPG, our community engagement supports our purpose to protect and beautify the world. Our efforts are focused on education, employee engagement and community sustainability, three areas that represent an intersection of our business strengths and our ability to create positive impacts across our communities, all while integrating and upholding our values of diversity, equity and inclusion. Our global giving totaled more than $17.5 million in 2023, supporting hundreds of community organizations worldwide.
Within education, we seek to build the next generation of diverse and innovative leaders in science, technology, engineering and mathematics (“STEM”) through programs such as STEM Talent Girls (STG) and the ASTI Robotics Challenge in Spain, X-Bots Robotics across the U.S. and several science centers worldwide, including the Carnegie Science Center in Pittsburgh. In 2023, we invested $10.3 million in advancing STEM education, and reached 89% progress toward our commitment to invest $20 million by 2025 to advance racial equity in the U.S. by funding educational pathways for Black communities and people of color. We also committed to investing $2 million through 2025 to support workforce development initiatives that provide training and opportunities for future skilled workers in manufacturing and coatings application.
Our community sustainability investments deliver community transformations through colorful spaces, support essential needs (particularly in times of disaster), and provide opportunities to thrive in the communities where we operate. We activate the time and talent of our employees to make a difference in our local communities. Our COLORFUL COMMUNITIES® program brings together PPG volunteers, PPG products and financial support to provide a fresh coat of paint and rejuvenation to community spaces. In 2023, we completed 60 projects in 16 countries, 90% of which included elements of sustainability as defined by our internal guidelines, including 27 school makeovers as part of the program’s New Paint for a New Start campaign. We also reached our 500th Colorful Communities project milestone. Since 2015, 26,500 PPG employee and community volunteers have positively impacted more than 9.2 million people in 50 countries.
As an extension of our sustainability efforts, we also committed to investing $5 million in environmental sustainability education by 2030. Our efforts aim to strengthen support of the next generation of innovators and maximize the impact within communities where we operate through partnerships with organizations such as the National Energy Education Development (NEED) Program, the STEM Learning organization in the U.K., and Junior Achievement in Brazil to teach environmental sustainability to students.
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8 2024 Proxy Statement | 
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| Our Environment |
At PPG, we are committed to using resources efficiently, developing industry-leading sustainable solutions, and prioritizing decarbonization to protect the world for current and future generations. In 2023, we became the first U.S.-based coatings manufacturer to receive validation from the Science Based Targets initiative (SBTi) for our 2030 scope 1, 2 and 3 emissions reduction targets and rolled out 2030 sustainability goals that focus on driving sales of sustainably advantaged products, reducing our environmental impact, and making a difference in communities.
Our paints, coatings and specialty materials protect and beautify the world, many of which offer benefits that support our customers’ sustainability ambitions. In 2023, 44% of sales were from sustainably advantaged products and processes that we have defined as addressing multiple sustainability benefits, including lower emissions, lower toxicity, energy efficiency, use of renewable raw materials or extending durability. One leading example of a sustainably advantaged product is PPG’s expanded bake ENVIRO-PRIME® electrocoat (eCoat) EPIC 300. The coating can be applied to heavy electric vehicle assemblies using less energy and heat, resulting in a savings of 20 kWh of energy and 4 kilograms of carbon emissions per vehicle produced. The product is also water-based and generates minimal waste due to its application efficiency. Another example is SEIGNEURIE™ EVOLUTEX™ Bas Carbone by PPG, an architectural coating launched in France that uses a bio-based binder and has a 20% lower carbon footprint than previous coatings.
In addition to product innovations, minimizing the environmental footprint of our operations is an ongoing focus, and PPG locations are guided by our 2030 sustainability targets. We continue advancing the use of renewable energy, and in 2023 we completed an agreement with NRG Energy Inc., which will enable PPG paints and coatings manufacturing facilities and PPG PAINTS® stores in Texas to reduce their carbon footprint. Through the agreement, PPG's Gainesville, Temple, Dallas and Grand Prairie manufacturing locations, as well as 62 PPG Paints stores in Texas, will purchase Renewable Energy Certificates (RECs) generated by a wind facility located in Crockett County, Texas, which will help reduce emissions associated with their annual power usage. The agreement includes approximately 126,000 megawatt hours (MWh), resulting in a total reduction of approximately 9,400 metric tons of greenhouse gas (“GHG”) emissions annually. We have also partnered with a renewable energy provider to define our decarbonization roadmap that, when implemented, is expected to reduce our operational GHG emissions by 50% by 2030.
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2023 Achievements |
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Sustainably advantaged products | | | Greenhouse gas emissions
(scope 1 and 2) | | | Water intensity |
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44% | | | ò 10% | | | ò 13% |
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44% of sales from sustainably advantaged products, allowing customers to reduce their environmental impact | | | 10% reduction in scope 1 and 2 greenhouse gas emissions
against a 2019 baseline | | | 13% reduction in water intensity
at priority sites in water scarce communities against a 2019 baseline |
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| Human Rights | |
We respect the dignity and human rights of all people. As stated in our Global Code of Ethics, available at www.ppg.com, we comply with all laws pertaining to freedom of association, privacy, collective bargaining, immigration, working time, and wages and hours in our operations throughout the world. We also uphold laws prohibiting forced, compulsory and child labor, human trafficking and employment discrimination. We are committed to valuing differences among us in experience, perspective, background, race, age, national origin, religion, sex, sexual orientation, gender identity and/or expression, culture, interests, geography and style. We strive for a collaborative environment in which everyone is embraced for their differences and has an equal chance to succeed. We base employment decisions on job qualifications and merit, which include education, experience, skills, ability and performance. We give equal employment opportunity to – and will not discriminate against – individuals on the basis of any status protected by applicable laws.
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| 2024 Proxy Statement 9 |
PROPOSAL 1: Election of Directors to Serve in a Class Whose Term Expires in 2025
Four directors are nominated for election to a class that will serve until the 2025 Annual Meeting of Shareholders and until their successors have been duly elected and qualified, or their earlier retirement or resignation. It is intended that the shares represented by each proxy will be voted, in the discretion of the proxies, FOR the nominees for directors set forth below, each of whom is an incumbent, or for any substitute nominee or nominees designated by our Board of Directors in the event any nominee or nominees become unavailable for election. In the event that an incumbent director receives a greater number of votes against their election than votes for such election, they are required to tender their resignation for consideration by the Nominating and Governance Committee of the Board of Directors in accordance with our Bylaws, as under “Director Resignation Policy.” The principal occupations of, and certain other information regarding, the nominees and our continuing directors are set forth below. In addition, information about each director’s specific experience, attributes and skills that led the Board to the conclusion that each of the directors is highly qualified to serve as a member of the Board is set forth below.
The Board believes that each of the Company’s directors is highly qualified to serve as a member of the Board. Each of our directors has contributed to the mix of skills, core competencies and qualifications of the Board. Our directors are highly educated and have diverse backgrounds and talents and extensive track records of success in what we believe are highly relevant positions with some of the most admired organizations in the world. Many of our directors also benefit from an intimate knowledge of our operations and corporate philosophy. The Board believes that each director’s service as the chair, chief executive officer, president, chief financial officer, group president or executive vice president of a well-respected company has provided the directors with skills that are important to serving on our Board. The Board has also considered the fact that all of our directors have worked for, or served on the boards of directors of, a variety of companies in a wide range of industries. Specifically, the Board has noted that our directors have skills that, among others, have made them particularly suited to serve as a director of PPG. Our directors’ skills that are specifically related to PPG’s strategy are illustrated in the skills matrix on page 12. The Board believes that through their varying backgrounds, our directors bring a wealth of experiences, new ideas and solutions to our Board.
On July 20, 2023, the Board of Directors elected Christopher N. Roberts III as a director of PPG, effective October 18, 2023, and assigned him to the class of directors who are standing for election at the 2024 Annual Meeting. The Board assigned Mr. Roberts to the class of directors who are standing for election at the 2024 Annual Meeting as a matter of good corporate governance to bring him before the Company’s shareholders at the next annual meeting after his election to the Board.
Michael H. McGarry retired as PPG's Executive Chairman of the Board and as a director on October 1, 2023. The Company thanks Mr. McGarry for his over 35 years of dedicated service to PPG, including serving as a director since 2015 and as Chairman of the Board since 2016. Mr. McGarry’s extraordinary leadership made a significant impact on expanding the Company’s portfolio and reach in key growth markets, strengthened PPG’s position, and set the Company on a solid path for future growth and success.
Hugh Grant retired from our Board of Directors on December 31, 2023. The Company thanks Mr. Grant for his 18 years of dedicated service to PPG, including serving nine years as Lead Director. Mr. Grant brought considerable expertise and talents to the Board, including his exceptional leadership, an insightful approach to complex issues and an extensive knowledge of corporate affairs and governance, all of which provided an additional dimension to the Board’s deliberations.
Stephen F. Angel retired from our Board of Directors at the conclusion of the Board’s February 15, 2024 meeting. The Company thanks Mr. Angel for his 13 years of dedicated service to PPG, including chairing the Human Capital Management and Compensation Committee and the Sustainability and Innovation Committee. His leadership has played an important role in helping PPG and its leaders navigate complex issues and important decisions that have helped to further strengthen our business. His strategic mindset, global industry insights and proven experience will be missed.
PPG’s Articles of Incorporation currently provide that the Board shall be divided into three classes as nearly equal in number as possible. At the 2022 Annual Meeting, PPG’s shareholders voted in favor of a Board-sponsored proposal to declassify the Board of Directors. On May 13, 2022, PPG’s Articles of Incorporation were amended to provide that all directors will be elected annually beginning at the 2025 Annual Meeting. The directors to be elected at the 2024 Annual Meeting will be elected to serve a one-year term. At the 2025 Annual Meeting and at each annual meeting of shareholders thereafter, all directors will be elected annually.
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| 2024 Proxy Statement 15 |
whole and who have experience to contribute insight into our strategy. Using a skills matrix that includes the experience and skills of our current directors and keeping in mind the skills that the Board believes would add to the capabilities and knowledge of our Board, the Nominating and Governance Committee regularly reviews the skills and experience of our directors and potential director candidates. More information about the skills and experience of our directors can be found in the matrix on page 12 and within the biographies of our directors beginning on page 16.
Our Corporate Governance Guidelines require that any director who has attained the age of 72 retire at the next annual meeting following the director's 72nd birthday. Eight new directors have joined the Board since the end of 2016. Since the end of 2012, the average age of our directors has decreased from 64 to 62 and our average director tenure has decreased from approximately 10 years to approximately five years. Although our average tenure has fallen with the addition of new directors, the Board believes that it is important to have longer-serving directors on the Board who have an intimate knowledge of our operations and our corporate philosophy. These longer-serving directors have also guided PPG through the peaks and troughs of the business cycle and can share this experience with our newer directors.
The Nominating and Governance Committee does not a have formal policy with regard to the consideration of diversity in identifying director candidates. However, we endeavor to have a Board representing diverse experience at policy-making levels in business, government, education and technology, and in areas that are relevant to the Company’s global activities. The Nominating and Governance Committee seeks to find director candidates who have demonstrated executive leadership ability and who are representative of the broad scope of shareholder interests by identifying candidates from varied industries having diverse cultural or ethnic backgrounds, viewpoints and ages. The Nominating and Governance Committee believes that the current members of the Board provide this diversity as discussed more specifically on page 11.
Director Independence
In accordance with the rules of the New York Stock Exchange, the Board affirmatively determines the independence of each director and nominee for election or appointment as a director in accordance with the categorical guidelines it has adopted, which include all objective standards of independence set forth in the exchange listing standards. Based on these standards, at its meeting held on February 15, 2024, the Board determined that each of the following non-employee directors is independent and has no material relationship with PPG, except as a director and shareholder:
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Melanie L. Healey | Guillermo Novo |
Gary R. Heminger | Martin H. Richenhagen |
Michael W. Lamach | Christopher N. Roberts III |
Kathleen A. Ligocki | Catherine R. Smith |
Michael T. Nally | |
In addition, based on such standards, the Board affirmatively determined that Timothy M. Knavish is not independent because he is an officer of PPG. The categorical independence standards adopted by the Board are contained in the Corporate Governance Guidelines, which may be accessed from the Corporate Governance section of our website at investor.ppg.com.
Board Leadership Structure
We believe our Board leadership structure provides the appropriate balance of oversight by independent directors and management insight. The Board believes the independent directors should have the flexibility to respond to changing circumstances and choose the board leadership structure that best fits the Company’s needs as they evolve over time. Prior to 2023, we had a traditional board leadership structure under which Mr. McGarry served as our Chairman of the Board and Chief Executive Officer. Beginning on January 1, 2023, Mr. McGarry became PPG’s Executive Chairman and Mr. Knavish became PPG’s President and Chief Executive Officer. On October 1, 2023, Mr. McGarry retired, and the board appointed Mr. Knavish as Chairman and Chief Executive Officer. Having a combined Chairman and Chief Executive Officer is only one element of our leadership structure, which also includes an independent Lead Director and active, independent non-employee directors. We currently have 10 non-employee directors, each of whom is independent. Our Board has four standing committees, each of which is comprised solely of independent directors with an independent committee chair. The Board has determined that the appropriate structure for the Board at this time is for Mr. Knavish, our Chief Executive Officer, to serve as Chairman of the Board, while also providing for the counterbalance of a strong independent Lead Director role, fully independent Board committees, and other good governance practices.
The Board believes that Mr. Knavish is the best person to serve as Chairman. He is the director most familiar with PPG’s enterprise growth strategy, and he enhances the alignment between PPG management and the Board in
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| 2024 Proxy Statement 23 |
the PPG Industries Foundation and also receives updates on PPG’s other community engagement and global giving initiatives.
PPG engages in the political process when we believe that doing so will serve the best interests of the Company and our stakeholders. We support public policies that contribute to the achievement of our long-term growth. The Nominating and Governance Committee has been assigned responsibility to oversee our government affairs activities and to receive periodic reports regarding the activities of our Government Affairs team. More information about PPG’s political activities, including PPG’s Political Contributions and Activities Policy and political spending reports, are available on our Government Affairs website at http://corporate.ppg.com/Our-Company/Government-Affairs.aspx.
Each Board committee will report its activities in these areas back to the full Board of Directors.
At the management level, day-to-day implementation of our ESG initiatives is led by our Vice President, Global Sustainability, a new position created in 2021 to coordinate PPG’s ESG and sustainability programs and to communicate our ESG progress with our customers, shareholders and other stakeholders. The Vice President, Global Sustainability works with PPG’s Sustainability Committee, a committee of management consisting of senior corporate executives, to establish and monitor our sustainability goals, policies, programs and procedures that incorporate sustainability into our business practices, including resource management, climate change impacts, innovation, communications, community engagement, procurement, manufacturing and employee wellness.
Board Oversight of PPG’s Strategy
PPG’s Board is actively engaged in developing and overseeing the execution of our strategy, including major business and organizational initiatives, capital allocation priorities and potential business development opportunities. Throughout the year, the Board applies its experience in manufacturing, global business, science and technology and marketing to oversee the execution of our strategy and capital allocation and works with senior management to guide our strategy. At its October meeting, the Board devotes one full day to reviewing and formulating our strategy. At each Board meeting and during our annual strategy session, directors engage with PPG’s senior leadership in robust discussions about the Company’s overall strategy, priorities for its businesses and long-term growth opportunities.
Director Time Commitments
Pursuant to our Corporate Governance Guidelines, any director who is considering joining the board of directors of another publicly traded or privately held company must obtain the approval of the Nominating and Governance Committee. When reviewing such a request, the Nominating and Governance Committee takes into consideration the current time commitments of the requesting director, including the demands of their primary occupation and those of their service on the boards of directors of other companies and the director “overboarding” limits or policies set forth in the voting guidelines of the Company’s large institutional investors.
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| 2024 Proxy Statement 27 |
recommendations for and evaluations of potential Chief Executive Officer successors and reviews with the Board development plans for these successors. Directors engage with potential Chief Executive Officer and senior management talent at Board and committee meetings and in less formal settings to enable directors to personally interact with candidates. The Board reviews executive succession in the ordinary course of business as well as contingency planning in the event of an emergency or unanticipated event.
Corporate Governance Guidelines, Board Self-Evaluation and Board Orientation
The Board has adopted Corporate Governance Guidelines. These guidelines are revised from time to time to better address particular needs as they change over time. The Board revised the Corporate Governance Guidelines in 2021 to clarify the ESG responsibilities of the Board of Directors. The Corporate Governance Guidelines may be accessed from the Corporate Governance section of our website at investor.ppg.com.
The Board annually evaluates its own performance and that of its standing committees. The evaluation process is coordinated by the Nominating and Governance Committee and has three parts: committee self-assessments, full Board evaluations and evaluations of the individual directors in the class whose term is expiring at the next annual meeting. The committee self-assessments consider whether and how well each committee has performed the responsibilities listed in its charter. The full Board evaluations consider the committee self-assessments as well as the quality of the Board’s meeting agendas, materials and discussions. All assessments and evaluations focus on both strengths and opportunities for improvement and are shared with the Board.
The Board has a program for orienting new directors which includes presentations from members of senior management regarding our operations, technologies, governance, finances, compensation programs and other topics of interest to our new directors. The Company also provides for continuing education for all directors, including the reimbursement of expenses for continuing education.
Director Resignation Policy
Our Bylaws provide that if an incumbent director is not elected by majority vote in an “uncontested election” (where the number of nominees does not exceed the number of directors to be elected), the director must offer to tender their resignation to our Board of Directors. The Nominating and Governance Committee would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. The director who tenders their resignation will not participate in the Board’s decision with respect to their resignation. The election of directors that will be held at the 2024 Annual Meeting is an uncontested election.
Review and Approval or Ratification of Transactions with Related Persons
The Board and its Nominating and Governance Committee have adopted written policies and procedures relating to approval or ratification of “Related Person Transactions.” Under these policies and procedures, the Nominating and Governance Committee (or its chair, under some circumstances) reviews the relevant facts of all proposed Related Person Transactions and either approves or disapproves of the Related Person Transaction, by taking into account, among other factors it deems appropriate:
| ● | the benefits to PPG of the transaction; |
| ● | the impact on a director’s independence, in the event the “Related Person” is a director or an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer; |
| ● | the availability of other sources for comparable products or services; |
| ● | the terms of the transaction; and |
| ● | the terms available to unrelated third parties or to employees generally. |
No director may participate in any consideration or approval of a Related Person Transaction with respect to which they or any of their immediate family members is the Related Person. Related Person Transactions are approved only if they are determined to be in, or not inconsistent with, the best interests of PPG and its shareholders.
If a Related Person Transaction that has not been previously approved or previously ratified is discovered, the Nominating and Governance Committee, or its chair, will promptly consider all of the relevant facts. In addition, the committee generally reviews all ongoing Related Person Transactions on an annual basis to determine whether to continue, modify or terminate the Related Person Transaction.
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| 2024 Proxy Statement 29 |
Under our policies and procedures, a “Related Person Transaction” is generally a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which PPG was, is or will be a participant and the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest. A “Related Person” is generally any person who is, or at any time since the beginning of PPG’s last fiscal year was, (i) a director or executive officer of PPG or a nominee to become a director of PPG; (ii) any person who is known to be the beneficial owner of more than 5% of any class of PPG’s voting securities; or (iii) any immediate family member of any of the foregoing persons.
Certain Relationships and Related Transactions
As discussed above, the Nominating and Governance Committee is charged with reviewing potential conflicts of interest and all Related Person Transactions. PPG and its subsidiaries purchase products and services from and/or sell products and services to companies of which certain of the directors and/or executive officers of PPG are directors and/or executive officers. During 2023, PPG entered into the following transactions with Related Persons that are required to be reported under the rules of the Securities and Exchange Commission:
Stephen F. Angel, a former director of PPG who retired in February 2024, is Chairman of the Board of Linde plc. During 2023, PPG and its subsidiaries sold approximately $1.2 million of products and services to Linde plc and purchased approximately $1.0 million of industrial gases from Linde plc.
Guillermo Novo, a director of PPG, is Chairman and Chief Executive Officer of Ashland Inc. During 2023, PPG and its subsidiaries sold approximately $200,000 of products and services to Ashland Inc. and purchased approximately $18.8 million of products and services from Ashland Inc.
Christopher N. Roberts III, a director of PPG, is Executive Vice President and General Manager, Global Food and Beverage of Ecolab Inc. During 2023, PPG and its subsidiaries purchased approximately $1.1 million of products and services from Ecolab Inc.
The Nominating and Governance Committee does not consider the amounts involved in such transactions material. Such purchases from and sales to each company involved less than 1% of the consolidated gross revenues for 2023 of each of the purchaser and the seller and all of such transactions were in the ordinary course of business.
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30 2024 Proxy Statement |
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Codes of Ethics
Our Global Code of Ethics is applicable to all directors, officers and employees worldwide. The Global Code of Ethics, which was revised, updated and reformatted to make it more user friendly in 2022, embodies our principles and practices relating to the ethical conduct of our business and our long-standing commitment to honesty, fair dealing and compliance with all laws affecting our business. We also have a Code of Ethics for Senior Financial Officers that is applicable to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions. The Global Code of Ethics and Code of Ethics for Senior Financial Officers are available on the Corporate Governance section of our website at investor.ppg.com. In addition, we intend to post on our website all disclosures that are required by law, the Securities and Exchange Commission’s Form 8-K rules or the New York Stock Exchange listing standards concerning any amendments to, or waivers from, any provision of our codes.
The Board has established a means for employees, customers, suppliers, shareholders or other interested parties to submit confidential and anonymous reports of suspected or actual violations of our Global Code of Ethics. Any employee, shareholder or other interested party can call the PPG Ethics HELPLINE toll-free to submit a report. In North America, this number is (800) 461-9330. This number is operational 24 hours a day, seven days a week. PPG Ethics HELPLINE numbers for other regions may be found on the Ethics page of our website at www.ppg.com/ethics.
Communications with the Board
Shareholders and other interested parties may send communications to the Board, the independent directors (individually or as a group) or the Lead Director in writing by sending them in care of our corporate secretary at PPG Industries, Inc., One PPG Place, Pittsburgh, Pennsylvania 15272. All communications received will be opened by the corporate secretary for the sole purpose of determining whether the contents represent a message to directors. Communications deemed by the corporate secretary to be frivolous or otherwise inappropriate for the Board’s consideration will not be forwarded. The corporate secretary will maintain a log of all such communications. Communications of an urgent nature are promptly reported to the Board. Communications to directors may also be forwarded within PPG for review by a subject matter expert.
COMPENSATION OF DIRECTORS
Overview
The compensation program for our directors who are not also officers of PPG, to whom we refer as non-employee directors, is reviewed annually by the Human Capital Management and Compensation Committee to ensure that the program remains competitive. As a part of the Human Capital Management and Compensation Committee’s review, the types and levels of compensation offered to our non-employee directors are compared with those provided by a select group of comparable companies. Target total annual compensation for our directors is set at or near the market median using a comparator group of companies. The companies comprising this comparator group are used for review of the executive officer compensation program as well. The comparator group used in 2022 to set 2023 compensation was:
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3M Company | Eaton Corporation plc | International Paper Company | Textron Inc. |
Air Products and Chemicals, Inc. | Ecolab Inc. | Johnson Controls International Plc | The Sherwin-Williams Company |
Celanese Corporation | Emerson Electric Co. | Linde Plc | Trane Technologies Plc |
Dow, Inc. | Honeywell International Inc. | Parker-Hannifin Corporation | |
DuPont de Nemours, Inc. | Howmet Aerospace Inc. | Rockwell Automation, Inc. | |
Eastman Chemical Company | Illinois Tool Works Inc. | Stanley Black & Decker, Inc. | |
Taking into consideration the size of PPG relative to this comparator group and advice from FW Cook, the Human Capital Management and Compensation Committee reports its recommendations to the Board for approval. The Human Capital Management and Compensation Committee does not determine director compensation, but only makes recommendations to the Board, which approves all non-employee director compensation changes. Changes to the non-employee directors’ compensation program generally become effective as of the year following adoption.
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36 2024 Proxy Statement |
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PROPOSAL 2: Advisory Vote on Approval of the Compensation of the Named Executive Officers
We conduct a non-binding, advisory shareholder vote on our executive compensation as described in this Proxy Statement (commonly referred to as “say-on-pay”) every year.
The Board believes that PPG’s executive compensation program aligns the interests of our executives with those of our shareholders. Executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that correlate closely with the achievement of both shorter-term performance objectives and longer-term shareholder value. To this end, a substantial portion of our executives’ annual and long-term compensation is performance-based, with the payment being contingent on the achievement of performance goals. We believe our program strikes the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our executives to dedicate themselves fully to value creation for our shareholders.
We believe our compensation program is working effectively. In 2023, our financial performance exceeded our expectations as we achieved our adjusted earnings per diluted share target, our adjusted cash flow from operating activities target and our price increase target. As a result, annual incentive awards paid to executive officers ranged from 175% to 184% of target. Our total shareholder return over the past three years when measured against the S&P 500 was in the 32nd percentile resulting in the payment of long-term TSR share awards at 55.2% of target.
At the 2023 Annual Meeting, we held a shareholder advisory vote on the compensation of our named executive officers, commonly referred to as a say-on-pay vote. Our shareholders overwhelmingly approved the compensation of our named executive officers, with approximately 93% of shareholder votes cast in favor of our 2023 say-on-pay resolution. Following its review of this vote, the Human Capital Management and Compensation Committee recommended to the full Board that we retain our general approach to executive compensation, with an emphasis on short-term and long-term incentive compensation that rewards our executive officers when they deliver value for our shareholders.
Accordingly, you are asked to vote on the following resolution:
RESOLVED: The Board strongly endorses the Company’s executive compensation program and recommends that the shareholders vote in favor of the following resolution: that the shareholders approve the compensation of the Company’s named executive officers as described in this Proxy Statement on pages 41 through 72 and disclosed in accordance with rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the tabular and narrative disclosure contained therein.
Because the vote is advisory, it will not be binding upon the Board or the Human Capital Management and Compensation Committee, and neither the Board nor the Human Capital Management and Compensation Committee will be required to take any action as a result of the outcome of the vote on this proposal. However, the Human Capital Management and Compensation Committee will carefully consider the outcome of the vote when considering future executive compensation programs.
Vote Required
Adoption of the resolution approving the compensation of the Company’s named executive officers will require the affirmative vote of more than one-half of the shares present, either in person or by proxy, and entitled to vote and voting (excluding abstentions) at the Annual Meeting.
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THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
AS DESCRIBED IN THIS PROXY STATEMENT. |
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40 2024 Proxy Statement |
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Prohibition on Hedging and Pledging PPG Securities
PPG officers and directors may not engage in any transaction in which they may profit from short-term speculative swings in the value of PPG’s securities. This prohibition includes “short sales” (selling borrowed securities that the seller hopes can be purchased at a lower price in the future) or “short sales against the box” (selling owned, but not delivered securities), “put” and “call” options (publicly available rights to sell or buy securities within a certain period of time at a specified price) and other hedging transactions designed to minimize an executive’s risk inherent in owning PPG stock, such as zero-cost collars and forward sale contracts. In addition, officers may not hold PPG stock in a margin account and may not pledge PPG stock as collateral for a loan. This policy is designed to discourage risk taking with PPG securities by officers and to ensure compliance with all insider trading rules. PPG’s Global Code of Ethics prohibits all PPG employees from buying or selling PPG stock or the stock of any other company while aware of material non-public information and prohibits employees from sharing material non-public information for financial or other personal benefit.
Our Policies with Respect to the Granting of Equity Awards
Equity awards may be granted by either the Human Capital Management and Compensation Committee or its delegate. The Human Capital Management and Compensation Committee only delegates authority to grant equity awards to employees who are not executive officers, and only in aggregate amounts not exceeding amounts approved by the Human Capital Management and Compensation Committee. The Board generally does not grant equity awards, although the Human Capital Management and Compensation Committee regularly reports its activity, including approval of grants, to the Board.
Timing of Grants. Equity awards are granted in February at a regularly scheduled meeting of the Human Capital Management and Compensation Committee, and generally further grants are not made for the remainder of the year. These meetings occur approximately one month after the release of our earnings for the immediately preceding year. Beginning in February 2024, annual equity award grants are granted two business days after the filing of the Company’s Annual Report on Form 10-K based on grant values approved by the Human Capital Management and Compensation Committee at its February meeting. On limited occasions, grants may occur on an interim basis, primarily for the purpose of approving a compensation package for a newly hired or promoted executive officer. These grants are made on the second Friday of the second month of the quarter after the hire or promotion date; provided, however, that if the date of hire or promotion would fall within a Company imposed blackout period, the grant date will be the first business day following such blackout period. The timing of these grants is driven solely by the activity related to the need for the hiring or promotion, not our stock price or the timing of any release of Company information.
Option Exercise Price. The exercise price of a newly granted stock option is the closing price on the New York Stock Exchange on the date of grant. With respect to the occasional interim grants of stock options to a newly hired or promoted executive, the exercise price is the closing price on the New York Stock Exchange on the date of grant, which is the second Friday of the second month of the quarter after the hire or promotion date; provided, however, that if the date of hire or promotion would fall within a Company imposed blackout period, the grant date will be the first business day following such blackout period.
Change In Control Agreements
We have agreements in place with each of the executive officers named in the Summary Compensation Table providing for their continued employment for a period of up to three years in the event of an actual or threatened change in control of PPG (as “change in control” is defined in the agreements). We believe that these agreements serve to maintain the focus of our senior executives and ensure that their attention, efforts and commitment are aligned with maximizing the success of PPG and shareholder value. These agreements avoid distractions involving executive management that arise when the Board is considering possible strategic transactions involving a change in control and assure continuity of executive management and objective input to the Board when it is considering any strategic transaction. For additional information concerning our change in control agreements, see “Potential Payments Upon Termination or Change in Control.”
Tax Deductibility of Compensation Expense
Section 162(m) of the Internal Revenue Code limits the deductibility of compensation in excess of $1 million paid to any one of our named executive officers during any fiscal year. While it considers the tax and accounting consequences of utilizing various forms of compensation, the Human Capital Management and Compensation Committee designs our compensation programs based on the long-term interests of PPG, with deductibility of compensation being one of a variety of considerations taken into account.
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| 2024 Proxy Statement 49 |
Table: Mr. McGarry, 160%; Mr. Knavish, 145%; Mr. Morales, 100%; Ms. Foulkes, 90%; Mr. Vadlamannati, 70% and Ms. Ericson, 70%. The amount of an executive’s actual annual incentive award, in relation to the executive’s target opportunity, is determined on the basis of achievement of short-term performance objectives. The performance objectives for our Executive Chairman, Chairman and Chief Executive Officer, our Senior Vice President and Chief Financial Officer and our Senior Vice President and General Counsel include specific financial targets for Company performance (weighted 80%) and personal performance (weighted 20%). The performance objectives for our other executive officers include specific financial targets for Company performance (weighted 50%), business performance (weighted 30%) and personal performance (weighted 20%).
For many years, PPG has been committed to sustainability. Recognizing the importance of sustainability and its ability to drive innovation in our business, PPG includes sustainability goals in the performance goals of its Executive Chairman and President and Chief Executive Officer. Performance against these goals is reviewed by the Human Capital Management and Compensation Committee of the Board of Directors. Annual incentive compensation of PPG’s executives and senior managers is partially (20%) based on personal goals that tie to overall corporate business goals, with the remainder based on company and business financial performance. Depending on their role, some executives and senior managers, by virtue of their responsibilities, may have goals related to social or environmental performance. In addition, executive business unit leaders receive sustainability scorecards for their business unit, and they are responsible for driving improvement in their business unit’s sustainability metrics. Safety, waste costs, energy usage and costs, and sustainably advantaged product sales are part of these executives’ annual performance review.
Beginning in 2022, our executive officers have ESG goals included in the individual performance component of their annual incentive award. Each executive officer has a diversity, equity and inclusion goal and sustainability targets that align with the Company’s strategies.
The potential payout of the Company performance component of the annual incentive is based on a pre-determined schedule recommended by management and approved by the Human Capital Management and Compensation Committee. The schedule corresponds to various levels of potential Company financial performance measured by adjusted earnings per diluted share from continuing operations (weighted 60%), adjusted cash flow from operating activities (weighted 20%), price increase (weighted 10%) and sales volume growth (weighted 10%), assuming the minimum adjusted earnings per diluted share from continuing operations threshold is met. The maximum payout of this component under the schedule is 220% of target.
In assessing Company performance against objectives, the Human Capital Management and Compensation Committee considers reported results against the approved target objectives, taking into consideration whether significant uncontrollable and unforeseen events or economic obstacles or more favorable circumstances impacted the Company’s results. Adjustments that are applied to determine the corporate component of the annual incentive are typically consistent with the non-GAAP adjustments reported in our quarterly financial statements, but the adjustments applied by the Human Capital Management and Compensation Committee may differ depending on the circumstances. The assessment of Company performance determines the percentage of the target award that will be awarded to each executive for the Company performance component of the annual incentive award. For 2023, as described below, the Human Capital Management and Compensation Committee exercised discretion and approved certain non-operating adjustments to the 2023 reported earnings per diluted share from continuing operations, cash flow from operating activities – continuing operations results, price increase and sales volume growth, consistent with guidelines established previously by the Human Capital Management and Compensation Committee and the non-GAAP adjustments reported in our quarterly financial statements. In the past, select adjustments have related to items such as legacy litigation or legacy environmental remediation, accounting rule changes and major business portfolio changes, including planned restructuring initiatives. Beginning with the calculation of the 2022 annual incentive award, one half of the earnings impact (positive or negative) of foreign currency translation versus plan will be applied as an adjustment to earnings per diluted share.
In February 2023, the Human Capital Management and Compensation Committee approved a financial performance standard for the Company component of the award of $6.05 adjusted earnings per diluted share from continuing operations, adjusted cash flow from operating activities of $1,895 million, price increase of 3.80% and sales volume growth of -1.20%. If achieved, this standard would generate 100% of the target bonus for the Company component of the award. The approved performance standard for 2023 included a threshold adjusted earnings per diluted share from continuing operations of $4.47, below which no bonus would be paid, regardless of the adjusted cash flow from operating activities, the sales increase or the sales volume growth results. The committee also set threshold cash flow from continuing operations performance of $1,180 million, a threshold price increase performance of 0.00% and a threshold sales volume growth performance of -2.40% for payment on those three components. In addition, the approved performance standard for 2023 included a maximum bonus opportunity of 220% if adjusted earnings per
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| 2024 Proxy Statement 51 |
diluted share from continuing operations of $6.75, adjusted cash flow from operating activities of $2,122 million, price increase of 5.70% and sales volume growth of -0.60% were achieved.
For 2023, the Human Capital Management and Compensation Committee approved the actual Company performance component for incentive awards based on adjusted earnings per diluted share from continuing operations of $7.50, adjusted cash flow from operating activities of $2,514 million, price increase of 4.60% and sales volume growth of - 1.80%. The earnings per diluted share performance component included adjustments of $0.67 for impairment and other related charges, $0.61 for a pension settlement charge, $0.51 for acquisition-related amortization expense, $0.24 for portfolio optimization costs, $0.14 for business restructuring-related costs, net, $0.10 for environmental remediation costs, $0.10 for Argentina currency devaluation losses, and ($0.05) for insurance recoveries. Beginning with the calculation of the 2023 annual incentive award, one half of the earnings impact (positive or negative) of foreign currency translation versus plan will be applied as an adjustment to earnings per diluted share. For 2023, an adjustment of $0.17 for favorable currency translation was applied. Adjustments to the cash flow from operating activities performance component included adding back $57 million for restructuring cash spending and $46 million for cash contributions to pension plans.
Adjusted earnings per diluted share from continuing operations of $7.50, adjusted cash flow from operating activities of $2,514 million, price increase of 4.60% and sales volume growth of -1.80% resulted in a payout of 196% of target for the Company performance component, based on the schedule discussed above. For the adjusted earnings per diluted share component, this schedule yielded a payout of 220% for the result of $7.50 per share. For the adjusted cash flow from operating activities component, this schedule yielded a payout of 220% for the result of $2,514 million. For the price increase component, this schedule yielded a payout of 150% for the result of 4.60%. For the sales volume growth component, this schedule yielded a payout of 50% for the result of -1.80%. Combining these four results using the 60%, 20%, 10% and 10% weightings, respectively, yielded an overall result of 196%, which was approved by the Human Capital Management and Compensation Committee.
Approved 2023 Performance Components
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Adjusted Earnings Per Diluted | | Adjusted Cash Flow from Operating Activities |
Share - Continuing Operations | | (20% Weighting) |
(60% Weighting) | | |
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Price Increase | | Sales Volume Growth |
(10% Weighting) | | (10% Weighting) |
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The personal performance component of the annual incentive is based on measures of individual performance relevant to the particular individual’s job responsibilities. The personal performance assessments of our Executive Chairman and President and Chief Executive Officer are determined by the Human Capital Management and Compensation Committee with input from the other non-management members of the Board. The personal performance of each other executive officer is determined by our Chairman and Chief Executive Officer. The following factors were considered in
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52 2024 Proxy Statement |
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assessing the personal performance of the executive officers named in the Summary Compensation Table for 2023 against individual objectives:
Under Mr. McGarry’s leadership, the Company successfully transitioned the roles of Chief Executive Officer and Chairman of the Board to Mr. Knavish. Mr. McGarry’s mentorship during this transition was an important element to Mr. Knavish’s and the Company’s success in 2023. Mr. McGarry also led director recruitment efforts resulting in the election of Mr. Roberts to the Board. Under his leadership, the Board was integral in overseeing PPG’s new enterprise growth strategy. These results exceeded expectations.
Mr. Knavish led the Company to record net sales, adjusted earnings per share and operating cash flow. The breadth and diversity of PPG’s business portfolio was a key driver, as the company benefited from solid volume growth in China and continued growth in aerospace coatings and automotive OEM coatings, despite lackluster global industrial demand. The Company’s 2023 full-year reported net income from continuing operations was $1.3 billion, or $5.35 per diluted share versus $1.0 billion, or $4.33 per diluted share, in 2022. Full-year 2023 adjusted earnings per diluted share from continuing operations was a record, increasing 27% year-over-year to $7.67 compared with $6.05 in 2022. Adjusted net income from continuing operations for 2023 was $1.8 billion, versus $1.4 billion in 2022. Aggregate segment margins were 310 basis points higher than the prior year, driven by strong selling price realization and moderating raw material costs, partially offset by higher selling, general and administrative costs and lower sales volumes. Demand was mixed by geographic region. Raw material cost inflation trended lower for most of the year. Mr. Knavish successfully activated PPG’s new enterprise growth strategy and made progress accelerating growth in key areas. New Science-Based Targets were validated by the Science-Based Targets Initiative in 2023, and the Company made progress against its targets. However, PPG’s spill and release and injury and illness rates did not meet target for 2023. PPG achieved its overall goal of increasing year-over-year representation of our targeted demographics. The Company also promoted an inclusive culture as demonstrated through the increase in enterprise-wide employee resource network and diversity, equity and inclusion capability building and training participation. He effectively led the Executive Committee, positively influencing the results of the Company. Finally, employee engagement increased for the eighth year in a row. These results exceeded expectations.
Mr. Morales led the finance organization. In 2023, the Company generated record cash flow from operations of approximately $2.4 billion, which is higher than 2022 by $1.4 billion, primarily due to strong earnings and reductions in working capital compared to the prior year, reflecting the impact of lower raw material costs on inventories and higher selling prices on trade receivables. Operating working capital as a percentage of fourth quarter sales annualized for 2023 was lower than 2022 by 170 basis points. Year-over-year segment margins improved, and operating working capital decreased. He led the Company’s efforts to contain costs, delivering about $60 million in savings from restructuring actions, including the impact of acquisition-related synergies, and to return capital to our shareholders through $100 million of share repurchases and approximately $600 million of dividends. The Company also reduced its net debt by $1.2 billion year over year. Mr. Morales was the executive sponsor of our Abilities First Employee Resource Network. Mr. Morales performed effectively as a member of the Executive Committee, positively influencing the results of the Company. These results exceeded expectations.
Ms. Foulkes led the legal organization. She has expertly managed litigation, compliance and environmental concerns globally for the Company. In addition, she continued to effectively manage the complexities associated with the Company’s divestiture of its businesses in Russia and the divestitures of several smaller businesses. Her department was also responsible for securing a significant arbitration award, an important ruling in a case alleging liability for lead contamination and for certain insurance recoveries. She was the executive sponsor of our Lesbian, Gay, Bisexual, Transgender, Queer (LGBTQ+) Employee Resource Network. Engagement scores for the Law Department were among the highest in the Company. Ms. Foulkes performed effectively as a member of the Executive Committee, positively influencing the results of the Company. These results exceeded expectations.
Mr. Vadlamannati led the global Operations function and participated in the protective and marine coatings bonus plan for the first quarter of 2023. The Operations function made progress reducing the Company’s manufacturing costs and reducing complexity across the Company. He provided leadership to his functional responsibilities for the global Procurement and EH&S organizations. The Procurement organization was successful in lowering the Company’s overall raw materials costs, but PPG’s spill and release and injury and illness rates did not meet target for 2023. Mr. Vadlamannati provided leadership of the Company’s Operations function, which delivered above-target performance. These results met expectations.
Ms. Ericson led the global protective and marine coatings business and the Latin America region. Organic sales in the protective and marine coatings business were higher by a mid-single-digit percentage due to selling price realization and higher sales volumes. In her first year of leading the protective and marine coatings business, she developed and implemented a robust growth strategy. She was a strong proponent of the Company’s diversity, equity and inclusion efforts. These results exceeded expectations.
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| 2024 Proxy Statement 53 |
Business unit short-term performance objectives and their assessment are specific to each particular business and are based on earnings before taxes and interest, working capital reduction, price increase and sales volume growth. The overall assessment of business performance determines the percentage of target paid to applicable executives for the business component of the annual incentive award.
For 2023, we assessed the performance of 12 defined businesses against the criteria discussed above. Actual payouts of the business performance component ranged from 40% to 190% of target. The business performance component payout for our executive officer named in the Summary Compensation Table who has primarily business unit responsibility, Ms. Ericson, is based on the performance of the specific business for which she was responsible.
Ms. Ericson’s business performance component was based on the results of the protective and marine coatings business. The performance of this business exceeded performance objectives for earnings before interest and taxes, working capital reduction, price increase and sales volume growth and resulted in achieving 190% of target for this component.
The level of achievement of corporate and personal performance objectives for 2023 for Messrs. McGarry, Knavish, Morales and Ms. Foulkes corresponded to payouts of 183%, 184%, 183% and 183% of target, respectively. The level of achievement of business, corporate and personal performance objectives for 2023 for Mr. Vadlamannati and Ms. Ericson corresponded to payouts of 175% and 181% of target, respectively. The annual incentive awards actually paid to each of these executives for 2023 are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. Annual incentive awards for these executive officers for the years that they have been named executive officers have ranged from 63% to 184% of target.
Annual incentive awards are payable in cash, except that any executive who does not meet the stock ownership requirements described under “PPG Stock Ownership Requirements” receives 20% of their annual incentive award in the form of PPG common stock. Such stock is restricted from sale by such executive for a period of between two and five years, depending upon the level of stock ownership of the executive. In addition, for officers who have been subject to the policy for more than five years at their current requirement level and have not met the ownership requirement, 100% of the vested shares delivered from the PBRSU award and TSR share award must be held by the officer for a minimum of one year and until the requirement is met. U.S.-based participants are entitled to defer part or all of an annual incentive award under our deferred compensation plan. All executive officers named in the Summary Compensation Table have met their stock ownership requirement. For additional information concerning our deferred compensation plan, see “Deferred Compensation Opportunities.”
Long-Term Incentive Compensation
Our Human Capital Management and Compensation Committee believes that long-term incentive compensation is an important component of our program because it has the effect of retaining executives, aligning executives’ financial interests with the interests of shareholders and incentivizing achievement of PPG’s long-term strategic goals. Payment of long-term incentive awards is based solely on Company performance. Grants are targeted at levels that approximate market value for comparable positions, utilizing the same compensation data used for setting total annual compensation. Each February, the Human Capital Management and Compensation Committee reviews and approves equity-based compensation for that year to be granted to executive officers. Three types of long-term incentive awards are granted annually to executive officers:
| ● | Total Shareholder Return contingent shares, or TSR shares; and |
| ● | Performance-based Restricted Stock Units, or PBRSUs. |
The number of stock options, TSR shares and PBRSUs granted to executive officers is intended to represent an estimated potential value that, when combined with total annual compensation, as discussed above, will approximate the market value of total annual and long-term compensation paid to executives in our comparator group and in a cross-section of general industrial companies represented in nationally-recognized executive compensation surveys.
These types of long-term incentive awards were selected to provide a program that focuses on different aspects of long-term performance: stock price appreciation, total return to shareholders and earnings per share growth and cash flow return on capital. The estimated potential value of the awards granted to each executive officer is delivered equally through each instrument, so that approximately one-third of the value of the total award is in stock options, one-third is in performance-based RSUs, and one-third is in TSR shares. The Human Capital Management and Compensation Committee selected equal distribution to emphasize its view that each of the three equity-based vehicles serves a particular purpose and is equally important in supporting our long-term compensation strategy.
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54 2024 Proxy Statement |
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Stock Options. Stock options provide our executive officers with the opportunity to purchase and maintain an equity interest in PPG and to share in the appreciation of the value of our stock. All stock options granted to executive officers in 2023 were granted from our shareholder-approved Omnibus Incentive Plan. Some features of our stock option program include:
| ● | Options become exercisable on the third anniversary of the date of grant; |
| ● | The term of each grant does not exceed ten years; |
| ● | The exercise price is equal to the closing market price on the date of grant (we do not backdate or grant discounted stock options); |
| ● | We do not grant options with “reload” or “restored” provisions; and |
| ● | Repricing of stock options is prohibited. |
We continue to use stock options as a long-term incentive because stock options focus the management team on delivering levels of company financial performance over a longer term that contribute to shareholder value. For additional information concerning the timing of grants of stock options, see “Our Policies with Respect to the Granting of Equity Awards.” In February 2023, the following stock options were awarded to each of the executive officers named in the Summary Compensation Table: Mr. Knavish, 67,115; Mr. Morales, 26,605; Ms. Foulkes, 12,874; Mr. Vadlamannati, 8,583; and Ms. Ericson, 7,724. Such awards are consistent with our program to distribute long-term incentive awards equally among three different equity-based vehicles, as discussed above.
TSR Shares. TSR shares represent a contingent share grant that is made at the beginning of a three-calendar-year performance period and vests on the last day of the performance period. The grant is settled in a combination of cash and shares of PPG common stock at the end of the performance period. The award amount generated by the grant is based on PPG’s total shareholder return relative to the S&P 500 comparison group. This comparison group represents the entire S&P 500 Index as it existed at the beginning of the performance period, excluding any companies that have been removed from the Index because they ceased to be publicly traded during the performance period. The calculation of total shareholder return assumes that all dividends were reinvested. Summarized below are the material provisions of the TSR share program:
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BASIS OF PAYOUT | PERFORMANCE PERIOD | VESTING AND PAYOUT OF BENEFIT |
Total shareholder return of PPG compared to total shareholder return for S&P 500 companies (as described above) Payout is 0% to 200% of original TSR shares awarded: | 3 calendar years | Vest on last day of performance period Settled in a combination of cash and shares at end of performance period Dividend equivalents are awarded at the end of the performance period, based on the actual number of shares earned and paid |
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PPG TSR | | GRANT PAYOUT |
90th percentile | | 200 | % |
80th percentile | | 175 | % |
70th percentile | | 150 | % |
60th percentile | | 125 | % |
50th percentile | | 100 | % |
40th percentile | | 75 | % |
30th percentile | | 50 | % |
Below | | — | % |
If minimum performance is not achieved, no payment is made with respect to the TSR share grant. If performance is above target, payment may exceed the original number of contingent TSR shares awarded. Target performance is set at the 50th percentile rank. The minimum and maximum number of shares that may be issued upon settlement of a TSR share grant ranges from 0% to 200% of the original number of contingent TSR shares awarded. Dividend equivalents are awarded at the end of the performance period, based on the actual number of shares earned and paid to an executive. TSR shares are intended to reward executives only when we provide a greater long-term return to shareholders relative to a percentage of the comparison set of companies, which is consistent with our pay-for-performance compensation philosophy.
In February 2023, the following TSR shares were awarded to each of the executive officers named in the Summary Compensation Table: Mr. Knavish, 19,883; Mr. Morales, 7,886; Ms. Foulkes, 3,816; Mr. Vadlamannati, 2,544; and Ms. Ericson, 2,290. Such awards are consistent with our program to distribute long-term incentive awards equally among three different equity-based vehicles, as discussed above under “Long-Term Incentive Compensation.”
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| 2024 Proxy Statement 55 |
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BASIS OF PAYOUT | PERFORMANCE PERIOD | VESTING AND PAYOUT OF BENEFIT |
Performance Goals: Greater than 5.0% growth in adjusted earnings per diluted share 11% cash flow return on capital Payout is 0% to 200% of original PBRSU shares awarded | 3 calendar years | Vest on last day of performance period Settled in shares in the February immediately after the end of performance period No dividend equivalents are awarded |
In February 2023, the following PBRSUs were awarded to each of the executive officers named in the Summary Compensation Table: Mr. Knavish, 21,173; Mr. Morales, 8,378; Ms. Foulkes, 4,054; Mr. Vadlamannati, 2,703; and Ms. Ericson, 2,433. Such awards are consistent with our program to distribute long-term incentive awards equally among three different equity-based vehicles, as discussed above under “Long-Term Incentive Compensation.”
The performance period for the PBRSUs granted in 2021 ended on December 31, 2023. For the 2021 grants, the payout was at 133.3% of target. Specifically, the results were as follows:
PBRSU Performance Measures for 2021-2023 Performance Period
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| | | | Payout | | Portion of | | Payout % |
| | Result | | Factor | | Performance Cycle | | Achieved |
Adjusted EPS Growth | | | | | | | | |
2021 | | 10.6% | | 100.0% | | 1/3 | | 33.3% |
2022 | | -8.1% | | 0.0% | | 1/3 | | 0.0% |
2023 | | 26.8% | | 100.0% | | 1/3 | | 33.3% |
| | | | | | | | 66.7% |
Cash Flow ROC | | | | | | | | |
2021 | | 11.0% | | 100.0% | | 1/3 | | 33.3% |
2022 | | 4.7% | | 0.0% | | 1/3 | | 0.0% |
2023 | | 15.4% | | 100.0% | | 1/3 | | 33.3% |
| | | | | | | | 66.7% |
Total Performance-based RSU payout | | | | | | | | 133.3% |
The Company made share payouts to the executive officers named in the Summary Compensation Table for the 2021 PBRSU grants as follows: Mr. McGarry, 32,248; Mr. Knavish, 6,004; Mr. Morales, 7,891; Ms. Foulkes, 3,774; Mr. Vadlamannati, 3,432; and Ms. Ericson, 3,088. Such payouts, which vested in December 2023, are reflected in the Option Exercises and Stock Vested table.
Perquisites and Other Benefits
In addition to the annual and long-term compensation described above, executive officers named in the Summary Compensation Table receive certain perquisites and other benefits. Such perquisites may include financial counseling services, limited personal use of PPG’s corporate aircraft and reimbursements of certain relocation expenses and taxes incurred due to international assignments. At the direction of the Human Capital Management and Compensation Committee, in 2011 executive officer perquisites were reviewed and reduced. Effective January 1, 2012, personal club memberships were discontinued. Other benefits for our executive officers may include Company matching contributions under our Deferred Compensation Plan. These perquisites and other benefits are provided to increase the availability of the executives to focus on the business of the enterprise or because we believe they are important to our ability to attract and retain top-quality executive talent. The costs to PPG associated with providing these benefits for executive officers named in the Summary Compensation Table are reflected in the “All Other Compensation” column of the Summary Compensation Table and in the All Other Compensation Table.
We also provide other benefits, such as medical, dental and life insurance and disability coverage, to each executive named in the Summary Compensation Table under our benefit plans, which are also provided to most eligible U.S.-based salaried employees. In addition, all of our U.S.-based executive officers are eligible to participate in the PPG Industries Foundation Matching Gift Program, which encourages charitable donations by all of our U.S. employees by matching their contributions to eligible institutions. Contributions of up to a total of $10,000 per year, in most cases, may be matched under the program. Most charitable organizations are eligible for the Matching Gifts Program, with a few exceptions. The value of these benefits is not included in the Summary Compensation Table because such benefits are made available on a Company-wide basis to most U.S. salaried employees. We also provide vacation and other paid holidays to all employees, including the executive officers named in the Summary Compensation Table, which are comparable to those provided at other large companies.
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| 2024 Proxy Statement 57 |
PROPOSAL 3: Proposal to Amend the Articles of Incorporation to Provide Shareholders with the Right to Call a Special Meeting
PPG’s Board of Directors has unanimously approved and is recommending that shareholders approve an amendment to PPG’s Restated Articles of Incorporation, as amended, to provide shareholders holding a combined 25% of the Company’s outstanding voting power to call a special meeting of shareholders.
As part of our continuous evaluation of corporate governance practices, the Board regularly reviews our governing documents and considers possible changes. Our shareholders do not have the right to request that the Company call a special meeting of shareholders. In evaluating the advisability of a special meeting request right, including a shareholder proposal received this year, which the Securities and Exchange Commission allowed PPG to exclude from this Proxy Statement due to the inclusion of this Proposal 3, the Nominating and Governance Committee and Board of Directors considered certain principal positions for and against such a right, shareholder feedback, and corporate governance trends and best practices. Currently, over half of the companies listed in the S&P 500 allow their shareholders to call a special meeting. The Board believes that the ability of shareholders to call a special meeting would enhance the ability of our shareholders to engage with the Company on significant issues facing the Company.
The Board recognizes that many companies allow a group of shareholders holding less than 25% of their common stock or voting power to call a special meeting. PPG is incorporated in Pennsylvania. Section 2521 of the Pennsylvania Business Corporation Law provides that Pennsylvania-incorporated, public companies like PPG only may allow shareholders holding a combined 25% or more of the company’s outstanding voting power to call a special meeting of shareholders (other than in the case of certain business acquisitions). Therefore, this proposal to allow 25% of the holders of PPG’s voting power to call a special meeting includes the lowest level of share ownership allowed under Pennsylvania law.
While the right to call special meetings is viewed by some of our shareholders as a helpful governance practice, the Board believes that special meetings of shareholders should be extraordinary events held only when strategic concerns or other similar considerations require that the matters to be addressed not be delayed until the Company’s next annual meeting. Special meetings impose significant costs, both administrative and operational, and our Board, management, and employees would need to devote significant time and attention to preparing for a special meeting of our shareholders, which takes their time and attention away from the oversight and operation of our business and overall goal of creating long-term shareholder value. As such, the Board believes that special meetings should only be convened in special or extraordinary circumstances, compelled by fiduciary, strategic, material or similar considerations that should be addressed immediately, not delayed until the next annual meeting, and are of interest to a broad base of shareholders.
After reviewing this proposal and the considerations discussed above, the Nominating and Governance Committee recommended to the Board that the Company provide shareholders with the right to call a special meeting. Based on this recommendation and in the belief that the proposal is in the best interests of the Company, the Board adopted a resolution approving an amendment to the Company’s Articles of Incorporation to add the following Article 5.5 to the Articles of Incorporation:
FIFTH, 5.5. A special meeting of shareholders may be called by shareholders, but only if called by shareholders entitled to cast 25% or more of the votes that all shareholders would be entitled to cast at the meeting.
Vote Required
The affirmative vote of more than one-half of the shares present, either in person or by proxy, and entitled to vote and voting (excluding abstentions) at the Annual Meeting will be required for approval of this proposal. If approved, the amendment of the Articles of Incorporation will become effective upon its filing with the Secretary of the Commonwealth of Pennsylvania, which we intend to do following the Annual Meeting. If this proposal is not approved, the Articles of Incorporation will remain unchanged.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT OF PPG'S ARTICLES OF INCORPORATION TO PROVIDE FOR THE RIGHT OF SHAREHOLDERS TO CALL A SPECIAL MEETING. |
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78 2024 Proxy Statement |
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PROPOSAL 4: Proposal to Amend the Articles of Incorporation to Provide for the Exculpation of Officers of the Company
PPG’s Board of Directors has unanimously approved and is recommending that shareholders approve an amendment to PPG’s Restated Articles of Incorporation, as amended, to provide for the exculpation of the officers of the Company.
Article Eighth of our Restated Articles of Incorporation, as amended, currently exculpates the Company’s directors from monetary liability in the event they are found to have breached their duty of care to the Company consistent with the exculpatory provisions for directors set forth in the Pennsylvania Business Corporation Law. This protection has long been afforded to directors in Pennsylvania. The Commonwealth of Pennsylvania, which is the Company’s state of incorporation, recently added Section 1735 to the Pennsylvania Business Corporation Law to authorize Pennsylvania corporations also to provide exculpation for their officers in addition to their directors. Specifically, Section 1735 extends the opportunity for Pennsylvania corporations to exculpate their officers for personal, monetary liability for breaching their duty of care in certain circumstances. Section 1735 does not allow exculpation from liability for acts or omissions not taken in good faith, acts that involve intentional misconduct or a violation of law, any transaction in which the officer derived an improper personal benefit, or the officer’s failure to pay taxes.
The Board strongly believes that the company’s officers should be held to the highest standards when carrying out their duties to the Company and our shareholders. Nevertheless, the potential for officers to have personal liability for decisions made or actions taken on behalf of the Company, including for unintentional mistakes, could adversely affect the ability of our officers to make decisions that are most appropriate for the Company. Having an officer exculpation provision could also decrease the likelihood of litigation against the Company and its officers or could decrease the costs of defending against such litigation. In addition, the Board believes that it is necessary to provide protection to officers to the fullest extent permitted by law to attract and retain top talent who may be enticed to work for another company that provides for exculpation of its officers.
After reviewing this proposal and the reasons discussed above, the Board adopted a resolution approving an amendment to the Company’s Articles of Incorporation to add the following Article Ninth to the Articles of Incorporation:
NINTH. To the fullest extent that the laws of the Commonwealth of Pennsylvania, as in effect on January 4, 2023, or as thereafter amended, permit the elimination or limitation of the liability of officers, no officer of the corporation shall be personally liable for monetary damages as such for any action taken, or any failure to take any action, as an officer. This Article Ninth shall not apply to any actions filed prior to [the effective date of amendment], nor to any breach of performance of duty or any failure of performance of duty by any officer occurring prior to [the effective date of amendment]. The provisions of this Article Ninth shall be deemed to be a contract with each officer of the corporation who serves as such at any time while such provisions are in effect, and each such officer shall be deemed to be serving as such in reliance on such provisions. Any amendment to or repeal of this Article Ninth, or adoption of any other Article or Bylaw of the corporation which has the effect of increasing officer liability shall operate prospectively only and shall not have effect with respect to any action taken, or any failure to act, by an officer prior thereto.
Vote Required
The affirmative vote of more than one-half of the shares present, either in person or by proxy, and entitled to vote and voting (excluding abstentions) at the Annual Meeting will be required for approval of this proposal. If approved, the amendment of the Articles of Incorporation will become effective upon its filing with the Secretary of the Commonwealth of Pennsylvania, which we intend to do following the Annual Meeting. If this proposal is not approved, the Articles of Incorporation will remain unchanged.
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT OF PPG'S ARTICLES OF INCORPORATION TO PROVIDE FOR THE EXCULPATION OF OFFICERS OF THE COMPANY. |
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| 2024 Proxy Statement 79 |
The services performed by PricewaterhouseCoopers LLP in 2023 were pre-approved in accordance with the Audit Committee pre-approval policy and procedures adopted at its July 19, 2017 meeting. Additional services were approved during the year as needed, in accordance with this policy. In so doing, the committee determined that the provision of these services is compatible with maintaining the principal accountant’s independence. In 2023, no services were provided by PricewaterhouseCoopers LLP that were approved by the committee after such services were performed.
AUDIT COMMITTEE REPORT TO SHAREHOLDERS
The primary role of the Audit Committee is to oversee and review on behalf of the Board of Directors PPG’s processes to provide for the reliability and integrity of the Company’s financial reporting, including the Company’s disclosure practices, risk management processes and internal controls. The Audit Committee operates under a written charter adopted by the Board of Directors.
The Audit Committee is responsible for the appointment of the independent registered public accounting firm and PPG’s lead internal auditor, the Director of Corporate Audit Services. In addition, the Audit Committee led the appointment and retention of PricewaterhouseCoopers LLP as PPG’s independent registered public accounting firm for 2023. For the work performed on the 2023 audit, the Audit Committee discussed and evaluated PricewaterhouseCoopers’ performance, which included an evaluation by the Company’s management of PricewaterhouseCoopers’ performance. The Audit Committee is responsible for the compensation of the independent registered public accounting firm and has reviewed and approved in advance all services performed by PricewaterhouseCoopers.
The Audit Committee discussed with, and received regular status reports from, the Director of Corporate Audit Services and PricewaterhouseCoopers on the overall scope and plans for their audits, their plans for evaluating the effectiveness of PPG’s internal control over financial reporting and the coordination of efforts between them. The Audit Committee reviewed and discussed the key risk factors used in developing PPG’s internal audit and PricewaterhouseCoopers’ audit plans. The Audit Committee also reviewed with the Company’s management PPG’s risk management practices and an assessment of significant risks.
The Audit Committee met separately with the Vice President and Controller, the Director, Corporate Audit Services and PricewaterhouseCoopers, with and without management present, to discuss the results of their examinations, their audits of PPG’s financial statements and internal control over financial reporting and the overall quality of PPG’s financial reporting. The Audit Committee also met separately with the Company’s Senior Vice President and Chief Financial Officer and with the Company’s Senior Vice President and General Counsel. The Audit Committee annually reviews its performance and receives feedback on its performance from the Company’s management and PricewaterhouseCoopers, when appropriate.
The Company’s management is responsible for the preparation and accuracy of PPG’s financial statements. The Company is also responsible for establishing and maintaining adequate internal control over financial reporting. In 2023, PPG’s independent registered public accounting firm, PricewaterhouseCoopers, was responsible for auditing the consolidated financial statements and expressing an opinion as to their conformity with generally accepted accounting principles, as well as expressing an opinion on the effectiveness of PPG’s internal control over financial reporting.
In carrying out its responsibilities, the Audit Committee discussed and reviewed with the Company’s management the process to assemble the financial statements, including the Company’s internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations.
The Audit Committee reviewed and discussed the audited consolidated financial statements as of and for the year ended December 31, 2023 and management’s report on internal control over financial reporting with management and with PricewaterhouseCoopers. The Audit Committee also discussed with PricewaterhouseCoopers the matters required by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission.
The Audit Committee has received the written independence disclosures and letter from PricewaterhouseCoopers required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with PricewaterhouseCoopers its independence. In addition, the Audit Committee considered whether PricewaterhouseCoopers’ provision of non-audit services to PPG is compatible with maintaining its independence.
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| 2024 Proxy Statement 81 |
GENERAL MATTERS
When and where is the Annual Meeting?
The Annual Meeting will be held on Thursday, April 18, 2024, at 11:00 a.m., Eastern Time. This year’s Annual Meeting will be a virtual shareholders meeting held via the Internet which you can attend by visiting https://www.cesonlineservices.com/ppg24_vm. There will be no physical location for in-person attendance at the Annual Meeting.
Why am I receiving these proxy materials?
In connection with the solicitation of proxies by our Board of Directors to be voted at the 2024 Annual Meeting of Shareholders, these materials have been made available to you on the Internet or, upon your request or under certain other circumstances, have been delivered to you by mail in printed form.
If your shares were registered directly in your name with our transfer agent, Computershare Investor Services, as of the close of business on February 16, 2024, you are considered a shareholder of record, and we have sent you these proxy materials.
If your shares were held in the name of a bank, brokerage account or other nominee as of the close of business on February 16, 2024, you are considered a beneficial owner of the shares held in street name. Your bank, broker or other nominee has sent you these proxy materials. You should direct your bank, broker or other nominee on how to vote your shares, and we encourage you to make such direction. If you do not make a direction with respect to Proposals 1, 2, 3 or 4, your bank, broker or other nominee will not be able to vote your shares on your behalf with respect to such proposals.
What is included in these materials?
These proxy materials include:
| ● | Our Notice of Annual Meeting and Proxy Statement for the 2024 Annual Meeting; and |
| ● | Our 2023 Annual Report to shareholders, which includes our audited consolidated financial statements. |
If you received printed versions of these materials by mail, these materials also include the proxy card or vote instruction form for the Annual Meeting.
Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of printed proxy materials?
In accordance with the rules of the Securities and Exchange Commission, instead of mailing a printed copy of our proxy materials to our shareholders, we have elected to furnish these materials by providing access to these documents over the Internet. Accordingly, on or about March 7, 2024, we sent a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to our shareholders of record and beneficial owners. All shareholders have the ability to access the proxy materials on a website referred to in the Notice of Internet Availability.
What does it mean if I receive more than one set of proxy materials?
It means you have multiple accounts at the transfer agent or with banks, brokers or other nominees. If you received more than one Notice of Internet Availability, you may need to enter separate electronic control voting numbers when voting by the Internet to ensure that all of your shares have been voted. If you received more than one proxy card or vote instruction form, please complete and provide your voting instructions for all proxy cards and vote instruction forms that you receive.
How can I get electronic access to the proxy materials?
The Notice of Internet Availability provides you with instructions regarding how to (1) view our proxy materials for the Annual Meeting on the Internet; (2) vote your shares after you have viewed our proxy materials; and (3) request a printed copy of the proxy materials.
Our proxy materials are also available online at investor.ppg.com.
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| 2024 Proxy Statement 85 |
| compensation arrangements, policies and procedures. Abstentions and broker non-votes will have no effect on the outcome of this proposal. |
| ● | Proposals 3, 4 and 5: More than one-half of the shares present, either in person or by proxy, and entitled to vote and voting (excluding abstentions) at the Annual Meeting must vote for each proposal for it to be adopted. Abstentions and broker non-votes will have no effect on the outcome of these proposals. |
How do I vote?
You may vote your shares by any one of the following methods:
| ● | By Internet: Log onto the website indicated in the Notice of Internet Availability or on the proxy card or vote instruction form. |
| ● | By telephone: Call the toll-free number shown on the proxy card or vote instruction form and follow the voice prompts. |
| ● | By mail: Mark your votes, sign and return the proxy card or vote instruction form in the postage-paid envelope provided. |
| ● | By ballot: Attend the Annual Meeting virtually and vote online during the meeting. |
If you vote by the Internet or by telephone, you do not need to send in a proxy card or vote instruction form. The deadline for Internet and telephone voting will be 11:59 p.m., Eastern Time, on April 17, 2024. If your shares are held in the name of a bank, broker or other nominee, and you wish to vote your shares online while attending the virtual Annual Meeting, you will need to contact your bank, broker or other nominee to obtain a legal proxy form that you must submit to Corporate Election Services when you register to attend the meeting.
What happens if I do not give specific voting instructions?
The Board of Directors is asking for your proxy. Giving us your proxy means that you authorize us to vote your shares at the Annual Meeting in the manner you direct. If you (1) choose the “submit your vote” option without voting on each individual proposal when voting on the Internet or by telephone or (2) if you are a shareholder of record and sign and return a proxy card without giving specific voting instructions, then your shares will be voted in the manner recommended by our Board on all matters presented in this Proxy Statement.
If your shares are held by a broker, bank or other nominee, the broker, bank or nominee will ask you how you want to vote your shares. If you give the broker, bank or nominee instructions, your shares will be voted as you direct. If you do not give instructions, your broker, bank or nominee may vote your shares in its discretion for the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2024 (Proposal 5), but your broker, bank or nominee will not vote your shares at all with respect to any of the other proposals. We encourage you to provide instructions to your bank, broker or nominee by carefully following the instructions provided. This will ensure that your shares are voted at the Annual Meeting as you direct.
How can I change or revoke my vote after I have voted?
You have the right to change your vote or revoke your proxy before it is exercised at the Annual Meeting. You may vote again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), by signing and returning a new proxy card or vote instruction form with a later date, or by attending the virtual Annual Meeting and voting online during the meeting. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request in writing that your prior proxy be revoked. Please note that any re-votes by mail or proxy revocations must be received by our corporate secretary at PPG Industries, Inc., One PPG Place, Pittsburgh, Pennsylvania 15272 prior to the Annual Meeting in order to be effective.
How will shares in employee benefit plans be voted?
This Proxy Statement is being used to solicit voting instructions from you with respect to shares of PPG common stock that you own, but which are held by the trustees of a retirement or savings plan for the benefit of you and other plan participants. Shares held in the benefit plans that are entitled to vote will be voted by the trustees pursuant to your instructions. Shares held in any employee benefit plan that you are entitled to vote, but do not vote, will not be voted by the trustees. You must instruct the trustees to vote your shares by utilizing one of the voting methods described above.
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| 2024 Proxy Statement 87 |
Who will count and certify the votes?
Representatives of Corporate Election Services and the staff of our corporate secretary and Investor Relations offices will count the votes and certify the election results. The results will be publicly filed with the Securities and Exchange Commission on a Form 8-K within four business days after the Annual Meeting.
How can I attend the virtual Annual Meeting?
This year’s Annual Meeting will be held in a virtual format through a live webcast which you can attend by visiting https://www.cesonlineservices.com/ppg24_vm.
Shareholders of PPG as of the close of business on February 16, 2024, the record date, or those that hold a valid proxy for the meeting, are entitled to participate in and ask questions at the Annual Meeting. All shareholders wishing to attend the virtual Annual Meeting must pre-register no later than 5:00 p.m., Eastern Time, on April 17, 2024.
Registered Shareholders
Shareholders of record as of the record date may register to participate in the Annual Meeting by visiting the website https://www.cesonlineservices.com/ppg24_vm. Please have your proxy card or Notice of Internet Availability containing your 11-digit control number available and follow the instructions to complete your registration request. After registering, you will receive a confirmation email with a link and instructions for accessing the virtual Annual Meeting.
Beneficial Shareholders
Shareholders whose shares are held through a broker, bank or other nominee as of the record date may register to participate in the virtual Annual Meeting by visiting the website https://www.cesonlineservices.com/ppg24_vm. Please have your voting instruction form, Notice of Internet Availability, or other communication containing your control number available and follow the instructions to complete your registration request, including uploading a copy of one of these documents. After registering, you will receive a confirmation email with a link and instructions for accessing the virtual Annual Meeting. If you are a beneficial shareholder and you wish to vote your shares online during the virtual Annual Meeting, rather than submitting your voting instructions before the Annual Meeting, you will need to contact your bank, broker or other nominee to obtain a legal proxy form that you must submit when voting online during the Annual Meeting.
Listen-Only, Live Webcast
A listen-only, live webcast of the virtual Annual Meeting will also be available to all shareholders and guests who do not pre-register at https://www.cesonlineservices.com/ppg23_vm. Pre-registration is required to vote and submit questions during the meeting.
We encourage you to access the virtual Annual Meeting or live, listen-only webcast 15 to 30 minutes before it begins. Online check-in will start at approximately 10:30 a.m. Eastern Daylight Time on April 18, 2024. If you have difficulty accessing the meeting, please follow the instructions contained in the reminder email you will receive the evening before the meeting. We will have technicians available to assist you.
How can I ask questions at the virtual Annual Meeting?
We will have a question and answer session during the Annual Meeting. To ask a question during the Annual Meeting, you must be a shareholder and have pre-registered for the Annual Meeting as discussed above under “How can I attend the virtual Annual Meeting.” The question and answer session will answer questions submitted live during the Annual Meeting. Questions may be submitted during the Annual Meeting on the Annual Meeting website and shareholders may be limited to two questions. Substantially similar questions will be answered once to avoid repetition and allow more time for other questions. Questions pertinent to meeting matters will be answered during the Annual Meeting, subject to time constraints. If there are questions pertinent to meeting matters that are not answered during the meeting due to time constraints, management will post answers to a representative set of such questions on our Investor Relations website at investor.ppg.com. These questions and answers will be available as soon as practicable after the meeting.
How do I obtain a copy of materials related to corporate governance?
Our Corporate Governance Guidelines, charters of each standing committee of our Board of Directors, Global Code of Ethics, Code of Ethics for Senior Financial Officers and other materials related to our corporate governance are published on the Corporate Governance section of our website at investor.ppg.com.
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88 2024 Proxy Statement |
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Who is soliciting my vote and what are the solicitation expenses?
This solicitation is being made on behalf of our Board of Directors, but may also be made without additional compensation by our directors, officers or employees by telephone, facsimile, e-mail or personal interview. We will bear the expense of the preparation, printing and mailing of the Notice of Internet Availability and these proxy materials. We have hired D.F. King & Company to help us send out the proxy materials and to solicit proxies for the Annual Meeting, the estimated cost of which is approximately $17,500 plus reimbursement of certain additional out of pocket expenses. We will request brokers, banks and other nominees who hold shares of PPG common stock in their names to furnish proxy materials to beneficial owners of the shares. We will reimburse these brokers, banks and nominees for their reasonable out of pocket expenses incurred in forwarding solicitation materials to such beneficial owners.
How can I submit a proposal for consideration at the 2024 Annual Meeting of Shareholders?
To be considered for the 2025 Annual Meeting, shareholder proposals must be submitted in writing to our corporate secretary at PPG Industries, Inc., One PPG Place, Pittsburgh, Pennsylvania 15272. No proposal can be included in our Proxy Statement for the 2025 Annual Meeting unless it is received by our corporate secretary no later than November 7, 2024. The proposal must also comply with the rules of the Securities and Exchange Commission relating to shareholder proposals.
Any shareholder whose proposal is not included in our Proxy Statement relating to the 2025 Annual Meeting and who intends to present business for consideration at the 2025 Annual Meeting must give notice to our corporate secretary in accordance with Section 1.5 of our Bylaws (which are available on the Corporate Governance section of our website at investor.ppg.com) and such business must otherwise be a proper matter for shareholder action. If, as expected, the 2025 Annual Meeting of Shareholders is held on April 17, 2025, then the notice must be received by our corporate secretary on or before January 17, 2025.
How can I recommend someone as a candidate for director?
A shareholder who wishes to recommend or nominate a candidate for director of PPG may write to the chair of the Nominating and Governance Committee of the Board of Directors, in care of our corporate secretary at PPG Industries, Inc., One PPG Place, Pittsburgh, Pennsylvania 15272.
To be effective for consideration at the 2025 Annual Meeting, the recommendation or nomination must be received by our corporate secretary by the deadlines set forth in our Bylaws and must include information required under our Bylaws, including information about the nominating shareholder and information about the nominee that would be required to be included in a Proxy Statement under the rules of the Securities and Exchange Commission. Director nominations submitted pursuant to PPG’s proxy access Bylaw for consideration at the 2025 Annual Meeting must be received by PPG no earlier than October 8, 2024 and no later than November 7, 2024. For additional information regarding the nomination procedure, see “Corporate Governance—Shareholder Recommendations or Nominations for Director and Proxy Access.”
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| 2024 Proxy Statement 89 |
Pay vs Performance Disclosure
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12 Months Ended |
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Dec. 31, 2023
USD ($)
$ / shares
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Dec. 31, 2022
USD ($)
$ / shares
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Dec. 31, 2021
USD ($)
$ / shares
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Dec. 31, 2020
USD ($)
$ / shares
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| Pay vs Performance Disclosure |
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| Pay vs Performance Disclosure, Table |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COMPANY | | | | | | | | | AVERAGE | | | AVERAGE | | | | | | | | | | | SELECTED | | | | | | | | | SUMMARY | | | COMP. | | VALUE OF INITIAL FIXED $100 | | | | | MEASURE: | | | | | | | COMP. TABLE | | ACTUALLY PAID | | INVESTMENT BASED ON: | | | | ADJUSTED | | | SUMMARY | | COMP. | | TOTAL FOR | | TO NON-PEO | | | | PEER GROUP(3) | | | | EARNINGS | | | COMP. TABLE | | ACTUALLY | | NON-PEO NAMED | | NAMED | | TOTAL | | TOTAL | | NET | | PER | | | TOTAL FOR | | PAID TO | | EXECUTIVE | | EXECUTIVE | | SHAREHOLDER | | SHAREHOLDER | | INCOME | | DILUTED | YEAR | | PEO(1) | | PEO(1) | | OFFICERS(2) | | OFFICERS(2) | | RETURN | | RETURN | | (in millions) | | SHARE | 2023 | | $ | 12,472,955 | | $ | 15,222,098 | | $ | 4,903,304 | | $ | 6,491,421 | | $ | 120 | | $ | 120 | | $ | 1,270 | | $ | 7.50 | 2022 | | $ | 8,867,377 | | $ | 238,659 | | $ | 2,280,483 | | $ | (26,911) | | $ | 99 | | $ | 101 | | $ | 1,028 | | $ | 6.22 | 2021 | | $ | 13,199,616 | | $ | 22,568,453 | | $ | 3,035,088 | | $ | 5,267,224 | | $ | 133 | | $ | 135 | | $ | 1,420 | | $ | 6.77 | 2020 | | $ | 15,903,993 | | $ | 16,689,353 | | $ | 3,607,399 | | $ | 3,526,539 | | $ | 110 | | $ | 112 | | $ | 1,056 | | $ | 6.12 |
| (1) | The principal executive officer was Mr. McGarry for years 2020-2022 and the principal executive officer for 2023 was Mr. Knavish. |
| (2) | The non-principal executive officer named executive officers were Mr. Morales, Mr. Knavish, Ms. Liebert and Ms. Foulkes for years 2020-2022. For 2023 the non-principal executive officer named executive officers were Mr. McGarry, Mr. Morales, Ms. Foulkes and Mr. Vadlamannati. Ms. Ericson was included as a non-principal executive officer named executive officer for 2023. |
| (3) | The peer group consists of: 3M Co., Akzo Nobel N.V., Axalta Coatings Systems Ltd., Dow, Inc., Dupont de Nemours, Inc., Eastman Chemical Co., Masco Corp., RPM International Inc., and The Sherwin-Williams Co. See Exhibit 13.1 of our Form 10-K for the year ended December 31, 2023. |
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| Company Selected Measure Name |
Adjusted earnings per diluted share
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| Named Executive Officers, Footnote |
| (1) | The principal executive officer was Mr. McGarry for years 2020-2022 and the principal executive officer for 2023 was Mr. Knavish. |
| (2) | The non-principal executive officer named executive officers were Mr. Morales, Mr. Knavish, Ms. Liebert and Ms. Foulkes for years 2020-2022. For 2023 the non-principal executive officer named executive officers were Mr. McGarry, Mr. Morales, Ms. Foulkes and Mr. Vadlamannati. Ms. Ericson was included as a non-principal executive officer named executive officer for 2023. |
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| Peer Group Issuers, Footnote |
| (3) | The peer group consists of: 3M Co., Akzo Nobel N.V., Axalta Coatings Systems Ltd., Dow, Inc., Dupont de Nemours, Inc., Eastman Chemical Co., Masco Corp., RPM International Inc., and The Sherwin-Williams Co. See Exhibit 13.1 of our Form 10-K for the year ended December 31, 2023. |
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| PEO Total Compensation Amount |
$ 12,472,955
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$ 8,867,377
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$ 13,199,616
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$ 15,903,993
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| PEO Actually Paid Compensation Amount |
$ 15,222,098
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238,659
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22,568,453
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16,689,353
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| Adjustment To PEO Compensation, Footnote |
A reconciliation of PEO SCT total compensation to CAP is provided in the following table. PEO SCT Total Compensation to CAP Reconciliation (2020-2023) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PLUS CHANGE | | | | | | | | | | | | | | | | | | | | | | | FROM BOY TO | | PLUS CHANGE | | | | | | | | | | | | | | | | | | PLUS EOY | | EOY IN FAIR | | IN FAIR VALUE | | | | | | | | | | | | | | | | | | FAIR VALUE | | VALUE OF | | FROM BOY TO | | | | | | | | | | | | | | | | | | OF EQUITY | | AWARDS | | VESTING DATE | | | | | | | | | | | | | | | | | | AWARDS | | GRANTED IN | | OF AWARDS | | | | | | | | | | | | | | | | | | GRANTED | | ANY PRIOR | | GRANTED IN | | | | | | | | | | | PLUS | | | | | DURING YEAR | | YEAR | | ANY PRIOR | | | | | | | | | MINUS SCT | | PENSION | | | | | THAT ARE | | THAT ARE | | YEAR THAT | | | | | | SCT | | CHANGE IN | | VALUE | | | | OUTSTANDING | | OUTSTANDING | | VESTED | | | | | | TOTAL FOR | | PENSION | | SERVICE | | MINUS SCT | | AND UNVESTED | | AND UNVESTED | | DURING | | PEO | YEAR | | PEO | | VALUE | | COST | | EQUITY | | AT EOY | | AT EOY | | THE YEAR | | CAP | 2023 | | $ | 12,472,955 | | $ | (312,592) | | $ | — | | $ | (7,499,749) | | $ | 9,111,166 | | $ | 744,589 | | $ | 705,729 | | $ | 15,222,098 | 2022 | | $ | 8,867,377 | | $ | 4,368,862 | | $ | — | | $ | (10,000,026) | | $ | 7,834,096 | | $ | (4,197,554) | | $ | (6,634,096) | | $ | 238,659 | 2021 | | $ | 13,199,616 | | $ | 218,598 | | $ | — | | $ | (9,400,002) | | $ | 10,917,328 | | $ | 4,275,913 | | $ | 3,357,000 | | $ | 22,568,453 | 2020 | | $ | 15,903,993 | | $ | (4,289,632) | | $ | 180,279 | | $ | (8,249,709) | | $ | 11,073,569 | | $ | 1,559,781 | | $ | 511,072 | | $ | 16,689,353 | | | | | | | | | | | | | | | | | | | | | | | | | | "EOY" = end of Year; "BOY" = Beginning of Year | | | | | | | | | | | | |
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| Non-PEO NEO Average Total Compensation Amount |
$ 4,903,304
|
2,280,483
|
3,035,088
|
3,607,399
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| Non-PEO NEO Average Compensation Actually Paid Amount |
$ 6,491,421
|
(26,911)
|
5,267,224
|
3,526,539
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| Adjustment to Non-PEO NEO Compensation Footnote |
A reconciliation of average non-PEO SCT total compensation to CAP is provided in the following table. Average Non-PEO NEOs SCT Total Compensation to CAP Reconciliation (2020-2023) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | PLUS CHANGE | | | | | | | | | | | | | | | | | | | | | | | | | | | FROM BOY TO | | PLUS CHANGE | | MINUS FAIR | | | | | | | | | | | | | | | | | | PLUS EOY | | EOY IN FAIR | | IN FAIR VALUE | | VALUE AT | | | | | | | | | | | | | | | | | | FAIR VALUE | | VALUE OF | | FROM BOY TO | | BOY OF | | | | | | | | | | | | | | | | | | OF EQUITY | | AWARDS | | VESTING DATE | | AWARDS | | | | | | | | | | | | | | | | | | AWARDS | | GRANTED IN | | OF AWARDS | | GRANTED | | | | | | | | | | | | | | | | | GRANTED | | ANY PRIOR | | GRANTED IN | | IN PRIOR | | | | | | | | | | | PLUS | | | | | DURING YEAR | | YEAR | | ANY PRIOR | | YEAR THAT | | | | | | SCT | | MINUS SCT | | PENSION | | | | | THAT ARE | | THAT ARE | | YEAR THAT | | WERE | | | | | | TOTAL FOR | | CHANGE IN | | VALUE | | | | OUTSTANDING | | OUTSTANDING | | VESTED | | FORFEITED | | NON-PEO | | | NON-PEO | | PENSION | | SERVICE | | MINUS SCT | | AND UNVESTED | | AND UNVESTED | | DURING | | DURING | | NEOs | YEAR | | NEOs | | VALUE | | COST | | EQUITY | | AT EOY | | AT EOY | | THE YEAR | | THE YEAR | | CAP | 2023 | | $ | 4,903,304 | | $ | (245,779) | | $ | — | | $ | (2,279,917) | | $ | 2,546,287 | | $ | 753,488 | | $ | 814,038 | | $ | — | | $ | 6,491,421 | 2022 | | $ | 2,280,483 | | $ | 846,793 | | $ | — | | $ | (1,970,003) | | $ | 1,253,448 | | $ | (546,994) | | $ | (815,908) | | $ | (1,074,730) | | $ | (26,911) | 2021 | | $ | 3,035,088 | | $ | 105,473 | | $ | — | | $ | (1,724,948) | | $ | 2,003,403 | | $ | 1,388,365 | | $ | 459,843 | | $ | — | | $ | 5,267,224 | 2020 | | $ | 3,607,399 | | $ | (995,665) | | $ | 117,478 | | $ | (1,399,950) | | $ | 1,879,152 | | $ | 201,719 | | $ | 116,406 | | $ | — | | $ | 3,526,539 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | "EOY" = end of Year; "BOY" = Beginning of Year | | | | | | | | | | | | | | | |
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| Compensation Actually Paid vs. Total Shareholder Return |
As shown in the chart below, the PEO and other NEOs’ CAP amounts are aligned with the Company’s TSR. This is due primarily to the Company’s use of equity incentives, which are tied directly to stock price in addition to the Company’s financial performance. 
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| Compensation Actually Paid vs. Net Income |
As shown in the chart below, the PEO and other NEOs’ CAP amounts are aligned with the Company’s net income. This is due in large part to the significant emphasis the Company places on equity incentives, which are sensitive to changes in stock price. In addition, the Company does not use net income to determine compensation levels or incentive plan payouts. 
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| Compensation Actually Paid vs. Company Selected Measure |
The chart below compares the PEO and the other non-PEO NEOs’ CAP to PPG’s company-selected measure, adjusted earnings per diluted share, which indicates there is a very strong relationship between adjusted earnings per diluted share and CAP. This is due primarily to the Company’s use of equity incentives, which are tied directly to earnings per share in addition to the Company’s stock price and cash flow performance. 
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| Total Shareholder Return Vs Peer Group |
As shown in the chart below, the Company’s TSR performance for the immediately preceding three years was aligned with the companies included in the peer group, and when the six-year TSR is compared to peers, the Company has outperformed the peers. 
The peer group consists of: 3M Co., Akzo Nobel N.V., Axalta Coatings Systems Ltd., Dow, Inc., Dupont de Nemours, Inc., Eastman Chemical Co., Masco Corp., RPM International Inc., and The Sherwin-Williams Co.
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| Tabular List, Table |
The three items listed below represent the most important financial performance measures used by PPG to link compensation actually paid to our named executive officers for 2023 to the Company’s performance: | MOST IMPORTANT PERFORMANCE MEASURES | Adjusted earnings per diluted share | Cash flow return on capital | Total shareholder return |
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| Total Shareholder Return Amount |
$ 120
|
99
|
133
|
110
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| Peer Group Total Shareholder Return Amount |
120
|
101
|
135
|
112
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| Net Income (Loss) |
$ 1,270,000,000
|
$ 1,028,000,000
|
$ 1,420,000,000
|
$ 1,056,000,000
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| Company Selected Measure Amount | $ / shares |
7.50
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6.22
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6.77
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6.12
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| PEO Name |
Mr. Knavish
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| Measure:: 1 |
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| Pay vs Performance Disclosure |
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| Name |
Adjusted earnings per diluted share
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| Measure:: 2 |
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| Pay vs Performance Disclosure |
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| Name |
Cash flow return on capital
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| Measure:: 3 |
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| Pay vs Performance Disclosure |
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| Name |
Total shareholder return
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| PEO | MINUS SCT CHANGE IN PENSION VALUE |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
$ (312,592)
|
$ 4,368,862
|
$ 218,598
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$ (4,289,632)
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| PEO | PLUS PENSION VALUE SERVICE COST |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
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|
180,279
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| PEO | MINUS SCT EQUITY |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
(7,499,749)
|
(10,000,026)
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(9,400,002)
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(8,249,709)
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| PEO | PLUS EOY FAIR VALUE OF EQUITY AWARDS GRANTED DURING YEAR THAT ARE OUTSTANDING AND UNVESTED AT EOY |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
9,111,166
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7,834,096
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10,917,328
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11,073,569
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| PEO | PLUS CHANGE FROM BOY TO EOY IN FAIR VALUE OF AWARDS GRANTED IN ANY PRIOR YEAR THAT ARE OUTSTANDING AND UNVESTED AT EOY |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
744,589
|
(4,197,554)
|
4,275,913
|
1,559,781
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| PEO | PLUS CHANGE IN FAIR VALUE FROM BOY TO VESTING DATE OF AWARDS GRANTED IN ANY PRIOR YEAR THAT VESTED DURING THE YEAR |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
705,729
|
(6,634,096)
|
3,357,000
|
511,072
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| Non-PEO NEO | MINUS SCT CHANGE IN PENSION VALUE |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
(245,779)
|
846,793
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105,473
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(995,665)
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| Non-PEO NEO | PLUS PENSION VALUE SERVICE COST |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
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|
117,478
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| Non-PEO NEO | MINUS SCT EQUITY |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
(2,279,917)
|
(1,970,003)
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(1,724,948)
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(1,399,950)
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| Non-PEO NEO | PLUS EOY FAIR VALUE OF EQUITY AWARDS GRANTED DURING YEAR THAT ARE OUTSTANDING AND UNVESTED AT EOY |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
2,546,287
|
1,253,448
|
2,003,403
|
1,879,152
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| Non-PEO NEO | PLUS CHANGE FROM BOY TO EOY IN FAIR VALUE OF AWARDS GRANTED IN ANY PRIOR YEAR THAT ARE OUTSTANDING AND UNVESTED AT EOY |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
753,488
|
(546,994)
|
1,388,365
|
201,719
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| Non-PEO NEO | PLUS CHANGE IN FAIR VALUE FROM BOY TO VESTING DATE OF AWARDS GRANTED IN ANY PRIOR YEAR THAT VESTED DURING THE YEAR |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
$ 814,038
|
(815,908)
|
$ 459,843
|
$ 116,406
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| Non-PEO NEO | MINUS FAIR VALUE AT BOY OF AWARDS GRANTED IN PRIOR YEAR THAT WERE FORFEITED DURING THE YEAR |
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| Pay vs Performance Disclosure |
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| Adjustment to Compensation, Amount |
|
$ (1,074,730)
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