DEF 14A



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.    ) 
Filed by the Registrant    ý                         
Filed by a Party other than the Registrant ¨
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
Pentair plc
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
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Title of each class of securities to which transaction applies:
 
     
 
(2
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(3
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
     
 
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
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PENTAIR PLC
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held May 10, 2016
Our Annual General Meeting of Shareholders will be held at the Four Seasons Hotel, Hamilton Place, Park Lane, London, England, W1J7DR, on Tuesday, May 10, 2016, at 8:00 a.m. local time, to consider and vote upon the following proposals:
1.
By separate resolutions, to re-elect the following director nominees:
(a) Glynis A. Bryan
 
(e) T. Michael Glenn
 
(i) Ronald L. Merriman
(b) Jerry W. Burris
 
(f) David H. Y. Ho
 
(j) William T. Monahan
(c) Carol Anthony (John) Davidson
 
(g) Randall J. Hogan
 
(k) Billie Ida Williamson    
(d) Jacques Esculier
 
(h) David A. Jones
 
 
2.
To approve, by non-binding advisory vote, the compensation of the named executive officers.
3.
To ratify, by non-binding advisory vote, the appointment of Deloitte & Touche LLP as the independent auditors of Pentair plc and to authorize, by binding vote, the Audit and Finance Committee of the Board of Directors to set the auditors’ remuneration.
4.
To authorize the price range at which Pentair plc can re-allot shares it holds as treasury shares under Irish law.
5.
To amend Pentair plc’s Articles of Association to increase the maximum number of directors from eleven to twelve.
6.
To amend Pentair plc’s (A) Articles of Association to make certain administrative amendments and (B) Memorandum of Association to make certain administrative amendments.
7.
To consider and act on such other business as may properly come before the Annual General Meeting or any adjournment of the Annual General Meeting.
Proposals 1, 2, 3 and 5 are ordinary resolutions, requiring the approval of a simple majority of the votes cast at the meeting. Proposals 4 and 6 are special resolutions, requiring the approval of not less than 75% of the votes cast.
During the Annual General Meeting, following a review of Pentair plc’s affairs, management will also present, and the auditors will report to shareholders on, Pentair plc’s Irish statutory financial statements.
Shareholders in Ireland may participate in the Annual General Meeting by audio link at the offices of Arthur Cox, Earlsfort Centre, Earlsfort Terrace, Dublin 2, Ireland, at 8:00 a.m. local time. See “Questions and Answers About Proxy Materials, Voting and the Annual General Meeting” for further information on participating in the Annual General Meeting in Ireland.
Your vote is important. Only shareholders of record as of the close of business on March 7, 2016 are entitled to receive notice of and to vote at the Annual General Meeting. All of our shareholders are cordially invited to attend the meeting. We encourage you to vote your shares by submitting a proxy as soon as possible, AND IN ANY EVENT AT LEAST 48 HOURS BEFORE THE ANNUAL GENERAL MEETING. You may submit a proxy by Internet or telephone as described in the Notice of Internet Availability of Proxy Materials. Alternatively, you may request a printed proxy card to submit your proxy as described in the Notice of Internet Availability of Proxy Materials. You may vote in person at the Annual General Meeting even if you submit your proxy by Internet, telephone or mail. IF YOU PLAN TO SUBMIT A PROXY, YOU MUST SUBMIT YOUR PROXY BY INTERNET OR TELEPHONE, OR YOUR PRINTED PROXY CARD MUST BE RECEIVED AT THE ADDRESS STATED ON THE CARD, BY NO LATER THAN 8:00 A.M. LOCAL TIME (3:00 A.M. EASTERN DAYLIGHT TIME) ON MAY 8, 2016.
If you are a shareholder who is entitled to attend and vote at the Annual General Meeting, then you are entitled to appoint a proxy or proxies to attend, speak and vote on your behalf. A proxy is not required to be a shareholder. If you wish to appoint as proxy any person other than the individuals specified by Pentair plc, please contact our Corporate Secretary at our registered office, and also note that your nominated proxy must attend the Annual General Meeting in person in order for your votes to be cast.
By Order of the Board of Directors
Angela D. Jilek, Secretary
March 25, 2016




PROXY STATEMENT
FOR THE
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
PENTAIR PLC
TO BE HELD ON TUESDAY, MAY 10, 2016
TABLE OF CONTENTS
 
  
Page
 
 




PROXY STATEMENT
FOR THE
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF
PENTAIR PLC
TO BE HELD ON TUESDAY, MAY 10, 2016
QUESTIONS AND ANSWERS ABOUT PROXY MATERIALS, VOTING
AND THE ANNUAL GENERAL MEETING
Why did I receive these proxy materials?
We are providing these proxy materials to you because the Board of Directors of Pentair plc (the “Board”) is soliciting proxies for use at our Annual General Meeting of Shareholders to be held on May 10, 2016. We either (i) mailed you a Notice of Internet Availability of Proxy Materials on or before March 25, 2016 notifying each shareholder entitled to vote at the Annual General Meeting how to vote and how to electronically access a copy of this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 or (ii) mailed you a printed copy of such proxy materials and a proxy card in paper format. You received these proxy materials because you were a shareholder of record as of the close of business on March 7, 2016.
If you received a Notice of Internet Availability of Proxy Materials and would like to receive a printed copy of our proxy materials, including a proxy card in paper format on which you may submit your vote by mail, you should follow the instructions for requesting such proxy materials in the Notice of Internet Availability of Proxy Materials.
This Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and our Irish statutory financial statements and directors’ and auditors’ reports are available online at www.proxyvote.com. These materials provide you with the information you need to know to vote your shares. In this Proxy Statement, we may also refer to Pentair plc as “the company,” “we,” “our” or “us.”
What is a proxy?
A proxy is your legal designation of another person (the “proxy”) to vote on your behalf. By voting your proxy, you are giving the persons named on the proxy card the authority to vote your shares in the manner you indicate on your proxy card. You may vote your proxy by telephone or over the Internet as directed in the Notice of Internet Availability of Proxy Materials or, if you have requested or received a proxy card, by signing and dating the proxy card and submitting it by mail.
What is the difference between a shareholder of record and a beneficial owner?
If your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent, you are a “shareholder of record.” If your shares are held in a stock brokerage account or by a bank or other custodian or nominee, you are considered the beneficial owner of shares held in “street name.” As a beneficial owner, you have the right to direct your broker, bank or other custodian or nominee on how to vote your shares.
Who is entitled to vote at the Annual General Meeting and how many votes do I have?
The Board has set the close of business on March 7, 2016 (Eastern Standard Time) as the record date for the Annual General Meeting. At the close of business on the record date, we had 180,689,113 ordinary shares outstanding and entitled to vote. All shareholders of record at the close of business on the record date are entitled to vote on the matters set forth in this Proxy Statement and any other matter properly presented at the Annual General Meeting. Beneficial owners whose banks, brokers or other custodians or nominees are shareholders registered in our share register with respect to the beneficial owners’ shares at the close of business on the record date are entitled to vote on the matters set forth in this Proxy Statement and any other matter properly presented at the Annual General Meeting. Each ordinary share is entitled to one vote on each matter properly brought before the Annual General Meeting.
How do I vote if I am a shareholder of record?
If you are a shareholder of record of ordinary shares, you can vote in the following ways:
By Internet: You can vote over the Internet at www.proxyvote.com by following the instructions in the Notice of Internet Availability of Proxy Materials or on the proxy card.


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By Telephone: You can vote over the telephone by following the instructions in the Notice of Internet Availability of Proxy Materials or on the proxy card.
By Mail: If you have requested or received a paper copy of a proxy card by mail, you can vote by completing the proxy card and then signing, dating and mailing the proxy card in the postage-paid envelope (which will be forwarded to Pentair plc’s registered address electronically).
At the Annual General Meeting: If you plan to attend the Annual General Meeting and wish to vote your ordinary shares in person, we will give you a ballot at the meeting.
How do I vote if I am a beneficial owner?
If you are a beneficial owner of ordinary shares, you can vote in the following ways:
General: You can vote by following the materials and instructions provided by your bank, broker or other custodian or nominee.
At the Annual General Meeting: If you plan to attend the Annual General Meeting and wish to vote your ordinary shares in person, then you must obtain a legal proxy, executed in your favor, from the shareholder of record of your shares (i.e., your broker, bank or other custodian or nominee) and bring it to the Annual General Meeting.
What is the deadline to vote my shares if I do not vote in person at the Annual General Meeting?
If you are a shareholder of record, you may vote by Internet or by telephone until 8:00 a.m. local time (3:00 a.m. Eastern Daylight Time) on May 8, 2016. If you are a shareholder of record and submit a proxy card, the proxy card must be received at the address stated on the proxy card by 8:00 a.m. local time (3:00 a.m. Eastern Daylight Time) on May 8, 2016. If you are a beneficial owner, please follow the voting instructions provided by your bank, broker or other custodian or nominee.
How do I attend the Annual General Meeting?
All shareholders of record as of the close of business on the record date are invited to attend and vote at the Annual General Meeting. For admission to the Annual General Meeting, shareholders should bring a form of photo identification to the shareholders check-in area at the meeting, where their ownership will be verified. Those who beneficially own shares should also bring account statements or letters from their banks, brokers or other custodians or nominees that they own our ordinary shares as of March 7, 2016 (see above for further information if you also intend to vote at the Annual General Meeting). Registration will begin at 7:00 a.m. (local time) and the Annual General Meeting will begin at 8:00 a.m. (local time) on May 10, 2016.
Shareholders in Ireland may participate in the Annual General Meeting by audio link at the offices of Arthur Cox, Earlsfort Centre, Earlsfort Terrace, Dublin 2, Ireland at 8:00 a.m. (local time) and the requirements for admission to the Annual General Meeting, as set out above, apply.

May I change or revoke my proxy?
If you are a shareholder of record and have already voted, you may change or revoke your proxy before it is exercised at the Annual General Meeting in the following ways:
By voting by Internet or telephone at a date later than your previous vote but prior to the voting deadline (which is 8:00 a.m. local time or 3:00 a.m. Eastern Daylight Time on May 8, 2016);
By mailing a proxy card that is properly signed and dated later than your previous vote and that is received prior to the voting deadline (which is 8:00 a.m. local time or 3:00 a.m. Eastern Daylight Time on May 8, 2016); or
By attending the Annual General Meeting and voting in person.
If you are a beneficial owner, you must contact the record holder of your shares to revoke a previously authorized proxy or voting instructions.
What proposals are being presented at the Annual General Meeting and what vote is required to approve each proposal?
We intend to present the proposals set forth below for shareholder consideration and voting at the Annual General Meeting. Each proposal requires an affirmative vote at the level set forth below.


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Proposal
Vote Required
1. Re-elect eleven director nominees
Majority of votes cast
2. Approve, by non-binding advisory vote, the compensation of the Named Executive Officers
Majority of votes cast
3. Ratify, by non-binding advisory vote, the appointment of Deloitte & Touche LLP as the independent auditors of Pentair plc and to authorize, by binding vote, the Audit and Finance Committee to set the auditors’ remuneration
Majority of votes cast
4. Authorize the price range at which Pentair plc can re-allot shares it holds as treasury shares under Irish law
75% of votes cast
5. Amend Pentair plc’s Articles of Association to increase the maximum number of directors from eleven to twelve
Majority of votes cast
6. Amend Pentair plc’s (A) Articles of Association to make certain administrative amendments and (B) Memorandum of Association to make certain administrative amendments
75% of votes cast
What are the Board’s recommendations on how I should vote my shares?
The Board unanimously recommends that you vote your shares FOR each of Proposals 1–6.
What is the effect of broker non-votes and abstentions?
A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular agenda item because the broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Although brokers have discretionary power to vote your shares with respect to “routine” matters, they do not have discretionary power to vote your shares on “non-routine” matters pursuant to New York Stock Exchange (“NYSE”) rules. If you do not provide voting instructions for proposals considered “non-routine” a “broker non-vote” occurs. We believe that Proposals 1, 2, 5 and 6 will be considered “non-routine” under NYSE rules and therefore your broker will not be able to vote your shares with respect to these proposals unless the broker receives appropriate instructions from you. If a broker does not receive voting instructions from you regarding Proposals 1, 2, 5 and 6, the “broker non-vote” will have no effect on the vote on such agenda items. The “routine” proposals in this Proxy Statement are Proposals 3 and 4, for which your broker has discretionary voting authority under the NYSE rules to vote your shares, even if the broker does not receive voting instructions from you.
Ordinary shares owned by shareholders electing to abstain from voting on any of the Proposals will have no effect on any of the Proposals.
How will my shares be voted if I do not specify how they should be voted?
If you submit a proxy to the company-designated proxy holders and do not provide specific voting instructions, you instruct the company-designated proxy holders, or, if your shares are held in the Pentair Retirement Savings and Stock Incentive Plan, Fidelity Management Trust Company (or its designated affiliate) to vote your shares in accordance with the recommendations of the Board.
If your shares are held in the Pentair Retirement Savings and Stock Incentive Plan and you do not submit a proxy, Fidelity Management Trust Company (or its designated affiliate) will vote your shares along with all other uninstructed shares in proportion to the voting by Pentair Retirement Savings and Stock Incentive Plan shares for which instructed proxies were received.
How will voting on any other business be conducted?
Other than matters incidental to the conduct of the Annual General Meeting and those set forth in this Proxy Statement, we do not know of any business or proposals to be considered at the Annual General Meeting. If any other business is proposed and properly presented at the Annual General Meeting, you instruct the company-designated proxy holders, in the absence of other specific instructions or the appointment of other proxy holders, to vote your shares in accordance with the recommendations of the Board.
What constitutes a quorum for the Annual General Meeting?
Our Articles of Association provide that all resolutions and elections made at a shareholders’ meeting require the presence, in person or by proxy, of a majority of all shares entitled to vote, with abstentions and broker non-votes regarded as present for purposes of establishing the quorum.


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Who will count the votes?
Representatives from The Carideo Group, Inc. will count the votes and serve as our Inspectors of Election.
Who will pay for the cost of this proxy solicitation?
We will pay the costs of soliciting proxies sought by the Board. Proxies may be solicited on our behalf by our directors, officers or employees telephonically, electronically or by other means of communication. We have engaged Morrow & Co., LLC to assist us in the solicitation of proxies at a cost to us of $10,000, plus out-of-pocket expenses. We have requested that banks, brokers and other custodians and nominees who hold ordinary shares on behalf of beneficial owners forward soliciting materials to those beneficial owners. Upon request, we will reimburse banks, brokers and other custodians and nominees for reasonable expenses incurred by them in forwarding these soliciting materials to beneficial owners of our ordinary shares.
Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials?
As explained in more detail below, we are using the “notice and access” system adopted by the U.S. Securities and Exchange Commission (the “SEC”) relating to the delivery of our proxy materials over the Internet. As a result, we mailed to many of our shareholders a notice about the Internet availability of the proxy materials instead of a paper copy of the proxy materials. Shareholders who received the notice will have the ability to access the proxy materials over the Internet and to request a paper copy of the proxy materials by mail, by e-mail or by telephone. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found on the notice. In addition, the notice contains instructions on how shareholders may request proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. The Notice of Internet Availability of Proxy Materials also serves as a Notice of Meeting.
What are the “notice and access” rules and how do they affect the delivery of the proxy materials?
The SEC’s notice and access rules allow us to deliver proxy materials to our shareholders by posting the materials on an Internet website, notifying shareholders of the availability of the proxy materials on the Internet and sending paper copies of proxy materials upon shareholder request. We believe that the notice and access rules allow us to use Internet technology that many shareholders prefer, continue to provide our shareholders with the information that they need and, at the same time, ensure more prompt delivery of the proxy materials. The notice and access rules also lower our cost of printing and delivering the proxy materials and minimize the environmental impact of printing paper copies.
Why did I receive more than one Notice of Internet Availability of Proxy Materials or proxy card?
You may have received multiple Notices of Internet Availability of Proxy Materials or proxy cards if you hold your shares in different ways or accounts (for example, 401(k) accounts, joint tenancy, trusts, custodial accounts) or in multiple accounts. If you are the beneficial owner of shares held in “street name,” you will receive your voting information from your bank, broker or other custodian or nominee, and you will vote as indicated in the materials you receive from your bank, broker or other custodian or nominee. You should vote your proxy for each separate account you have.



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CORPORATE GOVERNANCE MATTERS
Board Governance
The Board has adopted and regularly reviews and, if appropriate, revises our Corporate Governance Principles and written charters for its Audit and Finance Committee, Compensation Committee and Governance Committee in accordance with rules of the SEC and the NYSE. We and our Board continue to be committed to the highest standards of corporate governance and ethics. The Board has adopted Pentair’s Code of Business Conduct and Ethics and has designated it as the code of ethics for our Chief Executive Officer and senior financial officers. Copies of all of these documents are available, free of charge, on our website at http://www.pentair.com/en/about-us/leadership/corporate-governance.
Board Leadership Structure
Our Corporate Governance Principles describe our policies concerning:
Selection and Composition of the Board;
Board Leadership;
Board Composition and Performance;
Responsibilities of the Board;
Board Relationship to Senior Management;
Meeting Procedures;
Committee Matters; and
Leadership Development.
We do not have a policy requiring the positions of Chairman of the Board and Chief Executive Officer to be held by different persons. Rather, the Board has the discretion to determine whether or not the positions should be combined or split. Since 2002, our Chief Executive Officer has also been the Chairman of the Board. The Board believes that this leadership structure has worked well for several reasons, among them:
We historically have had a super-majority of independent directors with the Chief Executive Officer generally the only employee of our company serving as a director;
We have and have had since 2003 an independent member of the Board as our Lead Director;
Our Lead Directors have served as an effective communication channel between the independent Board members and the Chief Executive Officer and among the independent Board members;
Our independent directors meet in executive session without the Chief Executive Officer present at every regular meeting of the Board; and
Our annual Board assessment process addresses issues of Board structure and director performance.
Our Lead Director is selected by the independent directors on our Board. His role is to provide independent leadership to the Board, act as liaison between the non-employee directors and our company, and ensure that the Board operates independently of management. The principal responsibilities assigned to the Lead Director include:
Chairing the Board in the absence of the Chief Executive Officer;
Presiding over all executive sessions of the Board;
In conjunction with the Chairman of the Compensation Committee, giving annually the Board’s performance review of the Chief Executive Officer;
In conjunction with the Chairman of the Board, approving the agenda for Board meetings, including scheduling to assure sufficient time for discussion of all agenda items;
In conjunction with the Chairman of the Board and Committee Chairs, ensuring an appropriate flow of information to the Directors;
Holding one-on-one discussions with individual directors where requested by directors or the Board; and
Carrying out other duties as requested by the Board.


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Board’s Role in Risk Oversight
At the direction of our Board, we have instituted an enterprise-wide risk management system to assess, monitor and mitigate risks that arise in the course of our business. The Board has determined that the Board as a whole, and not a separate committee, will oversee our risk management process. Each of our Board Committees has historically focused on specific risks within their areas of responsibility, but the Board believes that the overall enterprise risk management process is more properly overseen by all of the members of the Board. Our chief financial officer and general counsel are the primary personnel responsible to the Board in the planning, assessment and reporting of our risk profile. The Board reviews an assessment of, and a report on, our risk profile on a regular basis.
Shareholder and Other Stakeholder Communication with the Board
If you are a shareholder or other stakeholder and wish to communicate with the Board, non-management directors as a group or any individual director, including the Lead Director, you may send a letter addressed to the relevant party, c/o Corporate Secretary, Pentair plc, P.O. Box 471, Sharp Street, Walkden, Manchester, M28 8BU, United Kingdom. The Board has instructed the Corporate Secretary to forward such communications directly to the addressee(s).
Committees of the Board
The Board has three standing committees: the Audit and Finance Committee, the Compensation Committee and the Governance Committee. The committees generally hold meetings when the Board meets and additionally as needed. Management representatives attend each committee meeting. Independent directors generally also meet in executive session without management present at each meeting. 
Audit and Finance Committee
Role:
The Audit and Finance Committee is responsible, among other things, for assisting the Board with oversight of our accounting and financial reporting processes, oversight of our financing strategy, investment policies and financial condition, and audits of our financial statements. These responsibilities include the integrity of the financial statements, compliance with legal and regulatory requirements, the independence and qualifications of our external auditor and the performance of our internal audit function and of the external auditor. The Audit and Finance Committee is directly responsible for the appointment, compensation, evaluation, terms of engagement (including retention and termination) and oversight of the independent registered public accounting firm to serve as external auditor. The Audit and Finance Committee holds meetings periodically with our independent and internal auditors, the Board and management to review and monitor the adequacy and effectiveness of reporting, internal controls, risk assessment and compliance with our policies.
Meetings:
The Audit and Finance Committee held eight meetings in 2015.
Members:
The members of the Audit and Finance Committee are Ronald L. Merriman (Chair), Glynis A. Bryan, Jacques Esculier, David H.Y. Ho and Billie Ida Williamson. All members have been determined to be independent under SEC and NYSE rules. Mr. Merriman is a member of the audit committees of Aircastle Limited, Realty Income Corporation and Haemonetics Corporation, each of which is a public company. Ms. Williamson is a member of the audit committees of CSRA Inc., Energy Future Holdings Corp. and Janus Capital Group Inc., each of which is a public company. The Board has determined that neither Mr. Merriman’s nor Ms. Williamson’s service on the audit committees of three other public companies impairs the ability of Mr. Merriman to effectively serve as Chair of our Audit and Finance Committee or the ability of Ms. Williamson to effectively serve as a member of our Audit and Finance Committee.
Report:
You can find the Audit and Finance Committee Report under “Audit and Finance Committee Report” of this Proxy Statement.
Financial Experts:
The Board has unanimously determined that all members of the Audit and Finance Committee are financially literate under NYSE rules and at least one member has financial management expertise. In addition, the Board has determined that all members of the Audit and Finance Committee qualify as “audit committee financial experts” under SEC standards.
 


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Compensation Committee
Role:
The Compensation Committee sets and administers the policies that govern executive compensation. This includes establishing and reviewing executive base salaries and administering cash bonus and equity-based compensation under the Pentair plc 2012 Stock and Incentive Plan. The Compensation Committee also sets the Chief Executive Officer’s compensation based on the Board’s annual evaluation of the Chief Executive Officer’s performance. The Compensation Committee has engaged Aon Hewitt, a human resources consulting firm, to aid the Compensation Committee in its annual review of our executive and director compensation programs for continuing appropriateness and reasonableness and to make recommendations regarding executive officer and director compensation levels and structures. In reviewing our compensation programs, the Compensation Committee also considers other sources to evaluate external market, industry and peer company practices. Information regarding the independence of Aon Hewitt is included under “Compensation Discussion and Analysis – Services of Compensation Consultant.” A more complete description of the Compensation Committee’s practices can be found under “Compensation Discussion and Analysis” under the headings “Compensation Committee Practices,” “Services of Compensation Consultant,” “Role of Executive Officers in Compensation Decisions” and “Comparative Framework.”
Meetings:
The Compensation Committee held four meetings in 2015.
Members:
The members of the Compensation Committee are David A. Jones (Chair), Jerry W. Burris, T. Michael Glenn and William T. Monahan. All members have been determined to be independent under NYSE rules.
Report:
You can find the Compensation Committee Report under “Compensation Committee Report” of this Proxy Statement.
 
 
Governance Committee
Role:
The Governance Committee is responsible for, among other things, identifying individuals qualified to become directors and recommending nominees to the Board for election at annual general meetings of shareholders. In addition, the Governance Committee monitors developments in director compensation and, as appropriate, recommends changes in director compensation to the Board. The Governance Committee is also responsible for developing and recommending to the Board our corporate governance principles. Finally, the Governance Committee oversees public policy matters and compliance with our Code of Business Conduct and Ethics.
Meetings:
The Governance Committee held four meetings in 2015.
Members:
The members of the Governance Committee are T. Michael Glenn (Chair), Jerry W. Burris, David A. Jones and William T. Monahan. All members have been determined to be independent under NYSE rules.
Compensation Committee Interlocks and Insider Participation
During 2015, we did not employ any member of the Compensation Committee as an officer or employee and there were no interlock relationships.
Independent Directors
The Board determines the independence of each director for election as a director. The Board makes these determinations in accordance with the NYSE rules for independence of directors and our categorical standards of independence included in our Corporate Governance Principles. Based on these standards, the Board affirmatively determined that each of the following non-employee directors are independent and has no material relationship with us, except as a director or shareholder:
 
(1) Glynis A. Bryan
(6) David H. Y. Ho
(2) Jerry W. Burris
(7) David A. Jones
(3) Carol Anthony (John) Davidson
(8) Ronald L. Merriman
(4) Jacques Esculier
(9) William T. Monahan
(5) T. Michael Glenn
(10) Billie Ida Williamson
In addition, based on the NYSE standards and our categorical standards of independence included in the Corporate Governance Principles, the Board affirmatively determined that Randall J. Hogan is not independent because he is our Chief Executive Officer.
In determining the independence of directors, our Governance Committee considers circumstances where one of our directors also serves as an employee of a company that is our customer or supplier. The Governance Committee has reviewed


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each of these relationships, which are set forth below. In each case, the relationship involves sales to or purchases from the organization indicated which (i) amount to less than the greater of $1 million or 2% of that organization’s consolidated gross revenues during each of 2015, 2014 and 2013; and (ii) during all relevant years were not of an amount or nature that impeded the director’s exercise of independent judgment.
Director
Relationships Considered
Glynis A. Bryan
Chief Financial Officer, Insight Enterprises, Inc.
Jacques Esculier
Chief Executive Officer of WABCO Holdings, Inc.
T. Michael Glenn
Executive Vice President – Market Development and Corporate Communications, FedEx Corporation; President and Chief Executive Officer – FedEx Corporate Services
David A. Jones
Senior Advisor, Oak Hill Capital Partners
Our Governance Committee also considered the fact that Carol Anthony (John) Davidson was Senior Vice President, Controller and Chief Accounting Officer of Tyco International Ltd. (“Tyco”) until September 28, 2012. Tyco was the parent company of Pentair Ltd. until the spin-off of Pentair Ltd. to Tyco’s shareholders occurred on September 28, 2012. Immediately following the spin-off, a wholly owned subsidiary of Pentair Ltd. merged with and into Pentair, Inc., with Pentair, Inc. surviving as a wholly owned subsidiary of Pentair Ltd. (the “Merger”). Due to the resulting leadership structure after the Merger, and the fact that Mr. Davidson’s relationship with the former parent of Pentair Ltd. ceased concurrently with the Merger, the Governance Committee determined that Mr. Davidson’s former officer position with Tyco did not impede Mr. Davidson’s exercise of independent judgment.
Policies and Procedures Regarding Related Person Transactions
Our Board has adopted written policies and procedures regarding related person transactions. For purposes of these policies and procedures:
a “related person” means any of our directors, executive officers or five-percent shareholders or any of their immediate family members; and
a “related person transaction” generally is a transaction (including any indebtedness or a guarantee of indebtedness) in which we were or are a participant and the amount involved exceeds $50,000, and in which a related person had or will have a direct or indirect material interest.
Potential related person transactions must be brought to the attention of the Governance Committee directly or to the General Counsel for transmission to the Governance Committee. Disclosure to the Governance Committee should occur before, if possible, or as soon as practicable after the related person transaction is effected, but in any event as soon as practicable after the executive officer or director becomes aware of the related person transaction. The Governance Committee’s decision whether or not to approve or ratify a related person transaction is to be made in light of a number of factors, including the following:
whether the terms of the related person transaction are fair to us and on terms at least as favorable as would apply if the other party was not or did not have an affiliation with any of our directors, executive officers or five-percent shareholders;
whether there are demonstrable business reasons for us to enter into the related person transaction;
whether the related person transaction could impair the independence of a director under our Corporate Governance Principles’ standards for director independence; and
whether the related person transaction would present an improper conflict of interest for any of our directors or executive officers, taking into account the size of the transaction, the overall financial position of the director or executive officer, the direct or indirect nature of the interest of the director or executive officer in the transaction, the ongoing nature of any proposed relationship, and any other factors the Committee deems relevant.
We had no related person transactions during 2015. To our knowledge, no related person transactions are currently proposed.



8



PROPOSAL 1
Re-elect Eleven Director Nominees
(Ordinary Resolution)
Proposal of the Board
The Board, upon the recommendation of the Governance Committee, proposes all of our incumbent directors as nominees for re-election as directors for one-year terms that expire at the conclusion of the 2017 Annual General Meeting of Shareholders: Glynis A. Bryan, Jerry W. Burris, Carol Anthony (John) Davidson, Jacques Esculier, T. Michael Glenn, David H.Y. Ho, Randall J. Hogan, David A. Jones, Ronald L. Merriman, William T. Monahan and Billie Ida Williamson.
If re-elected, each of the director nominees standing for re-election at the Annual General Meeting will serve on the Board until the Annual General Meeting in 2017. If any of the nominees should become unable to accept re-election, the persons named on the proxy card as proxies may vote for other person(s) selected by the Board. Management has no reason to believe that any of the nominees named above will be unable to serve their full term if elected.
Biographies of the director nominees follow. These biographies include their ages; an account of their specific business experience; the names of publicly held and certain other corporations of which they also are, or have been within the past five years, directors; and a discussion of their specific experience, qualifications, attributes or skills that led to the conclusion that they should serve as directors.
The text of the resolution in respect of Proposal 1 is as follows:
IT IS RESOLVED, by separate resolutions, to re-elect the following director nominees:
(a) Glynis A. Bryan    (e) T. Michael Glenn    (i) Ronald L. Merriman
(b) Jerry W. Burris    (f) David H.Y. Ho    (j) William T. Monahan
(c) Carol Anthony (John) Davidson    (g) Randall J. Hogan    (k) Billie Ida Williamson”
(d) Jacques Esculier    (h) David A. Jones
Vote Requirement
Under our Articles of Association, the election of each director requires the affirmative vote of a majority of the votes cast in person or by proxy at the Annual General Meeting. A nominee who does not receive a majority of the votes cast in an uncontested election will not be elected to our Board. Your proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement.
Information About Directors
Board Composition
All of our incumbent directors, Glynis A. Bryan, Jerry W. Burris, Carol Anthony (John) Davidson, Jacques Esculier, T. Michael Glenn, David H.Y. Ho, Randall J. Hogan, David A. Jones, Ronald L. Merriman, William T. Monahan and Billie Ida Williamson, are standing for re-election at the Annual General Meeting.
Lead Director
William T. Monahan has served as the Board’s Lead Director since 2008 and acts as the presiding director for all executive sessions of the independent directors.
Directors’ Attendance
The Board held five meetings in 2015. In each of the regularly scheduled meetings, the independent directors in attendance also met in executive session, without the Chief Executive Officer or other management present. All directors attended at least 75% of the aggregate of all meetings of the Board and all meetings of the Committees on which they served during the period for which such persons served as directors in 2015. We expect our directors to attend our annual general meetings of shareholders. In May 2015, all of the directors then in office attended the 2015 Annual General Meeting of Shareholders, except for William T. Monahan who did not attend due to a family emergency.



9



Director Qualifications; Diversity and Tenure
The Governance Committee searches for qualified candidates to be a director, reviews the qualifications of each candidate and recommends to the Board the names of qualified candidates to be nominated for election or re-election as directors. The Board reviews the candidates recommended by the Governance Committee and nominates candidates for election or re-election by the shareholders.
The Governance Committee recognizes that the contribution of the Board will depend both on the character and capacities of the directors taken individually and on their collective strengths. With this in mind, the Governance Committee evaluates candidates in light of a number of criteria. Directors are chosen with a view to bringing to the Board a variety of experience and backgrounds and establishing a core of business advisers with financial and management expertise. The Governance Committee also considers candidates who have substantial experience outside the business community, such as in the public, academic or scientific communities. The Governance Committee also takes into account the tenure of a director who has already been serving on the Board with a view to having a mix of shorter tenured directors who provide a fresh perspective and longer tenured directors who provide experience regarding our company and its business.
When they consider possible candidates for appointment or election as directors, the Governance Committee and the Board are also guided by the following principles, found in our Corporate Governance Principles:
at least a majority of the Board must consist of independent directors;
each director should be chosen without regard to sex, sexual orientation, race, religion or national origin;
each director should be an individual of the highest character and integrity and have an inquiring mind, vision and the ability to work well with others;
each director should be free of any conflict of interest which would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director;
each director should possess substantial and significant experience which would be of particular importance to us in the performance of the duties of a director;
each director should have sufficient time available to devote to our affairs in order to carry out the responsibilities of a director; and
each director should have the capacity and desire to represent the balanced, best interests of the shareholders as a whole and not primarily the interests of a special interest group or constituency and be committed to enhancing long-term shareholder value.
Our Board’s policies on director qualifications emphasize our commitment to diversity at the Board level – diversity not only of sex, sexual orientation, race, religion or national origin but also diversity of experience, expertise and training. The Governance Committee in the first instance is charged with observance of these director selection guidelines, and strives in reviewing potential candidates to assess the fit of his or her qualifications with the needs of the Board and our company at that time, given the then current mix of directors’ attributes. Board composition, director effectiveness and Board processes, including director recruitment and selection, are all subject areas of our annual Board assessment.
Shareholder Nominees
Shareholders submitted to the Governance Committee no candidates for nomination for election as a director at the 2016 Annual General Meeting. According to our Articles of Association, a shareholder must give advance notice and furnish certain information in order to submit a nomination for election as a director. Any shareholder who wishes to present a candidate for consideration for election at the 2017 Annual General Meeting should send a letter identifying the name of the candidate and summary of the candidate’s qualifications, along with the other supporting documentation described in Articles 55, 57, 58 and 61 of our Articles of Association, to our Governance Committee. This letter should be addressed c/o Corporate Secretary, P.O. Box 471, Sharp Street, Walkden, Manchester, M28 8BU, United Kingdom, no earlier than January 14, 2017 and no later than February 8, 2017 for consideration at the 2017 Annual General Meeting. You may find a copy of our Articles of Association on file with the SEC by searching the EDGAR archives at http://www.sec.gov/edgar/searchedgar/webusers.htm. You may also obtain a copy from us free of charge by submitting a written request to our principal executive offices at P.O. Box 471, Sharp Street, Walkden, Manchester, M28 8BU, United Kingdom, Attention: Corporate Secretary.


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Directors Standing For Re-election
Glynis A. Bryan, director since 2003, age 57.
Since 2007, Ms. Bryan has been the Chief Financial Officer of Insight Enterprises, Inc., a leading provider of information technology products and solutions to clients in North America, Europe, the Middle East and the Asia-Pacific region. Between 2005 and 2007, Ms. Bryan was the Executive Vice President and Chief Financial Officer of Swift Transportation Co., a holding company which operates the largest fleet of truckload carrier equipment in the United States. Between 2001 and 2005, Ms. Bryan was the Chief Financial Officer of APL Logistics, the supply-chain management arm of Singapore-based NOL Group, a logistics and global transportation business. Prior to joining APL, Ms. Bryan spent 16 years with Ryder System, Inc., a truck leasing company, where she held a series of progressively responsible positions in finance. In her last assignment, Ms. Bryan was Senior Vice President of Ryder Capital Services, where she led the development of the firm’s capital services business. In 1999 and 2000, Ms. Bryan served as Senior Vice President and Chief Financial Officer of Ryder Transportation Services.
Ms. Bryan has extensive global financial and accounting experience in a variety of business operations, especially in logistics services. Ms. Bryan originally served on the Audit and Finance Committee of the Board for five years, and was selected in 2009 by the Board to serve as the Chair of the Governance Committee. In 2015, Ms. Bryan returned to the Audit and Finance Committee.
Jerry W. Burris, director since 2007, age 52.
Mr. Burris is the former President and Chief Executive Officer of Associated Materials Group, Inc., a manufacturer of professionally installed exterior building products, serving in that role from 2011 until 2014. Between 2008 and 2011, he was President, Precision Components of Barnes Group Inc. From 2006 until 2008, Mr. Burris was the President of Barnes Industrial, a global precision components business within Barnes Group. Prior to joining Barnes Group, Mr. Burris worked at General Electric Company, a multinational technology and services conglomerate, where he served as president and chief executive officer of Advanced Materials Quartz and Ceramics in 2006. From 2003 to 2006, Mr. Burris was the general manager of global services for GE Healthcare. From 2001 to 2003, he led the integration of global supply chain sourcing for the Honeywell integration and served as the general manager of global sourcing for GE Industrial Systems. Mr. Burris first joined General Electric Company in 1986 in the GE Corporate Technical Sales and Marketing Program. Mr. Burris is also a director of Schramm, Inc., a portfolio company of GenNx360 Capital Partners.
Mr. Burris brings to our Board significant experience in management of global manufacturing operations and related processes, such as supply chain management, quality control and product development. Mr. Burris provides the Board with insight into operating best practices and current developments in a variety of management contexts.
Carol Anthony (John) Davidson, director since 2012, age 60.
From 2004 until 2012, Mr. Davidson was Senior Vice President, Controller and Chief Accounting Officer of Tyco International Ltd., a provider of diversified industrial products and services. Between 1997 and 2004, Mr. Davidson held a variety of leadership roles at Dell Inc., a computer and technology services company, including the positions of Vice President, Audit, Risk and Compliance, and Vice President, Corporate Controller. From 1981 to 1997, Mr. Davidson held a variety of accounting and financial leadership roles at Eastman Kodak Company, a provider of imaging technology products and services. Mr. Davidson is also a director of DaVita HealthCare Partners Inc., a provider of kidney dialysis services (since 2010), Legg Mason, Inc., a global asset management company (since 2014), and TE Connectivity Ltd., a global designer and manufacturer of connectivity and sensors solutions (since 2016).  Mr. Davidson also serves on the Board of Governors of the Financial Industry Regulatory Authority. Mr. Davidson previously served as a member of the Board of Trustees of the Financial Accounting Foundation which oversees financial accounting and reporting standards setting processes for the United States, including oversight of the Financial Accounting Standards Board (FASB).
Mr. Davidson is a CPA with more than 30 years of leadership experience across multiple industries and brings a strong track record of building and leading global teams and implementing governance and controls processes.
Jacques Esculier, director since 2014, age 56.
Since 2007, Mr. Esculier has served as the Chief Executive Officer and a Director and, since 2009, as Chairman of WABCO Holdings, Inc., a leading global supplier of technologies and control systems for the safety and efficiency of commercial vehicles. From 2004 to 2007, Mr. Esculier served as Vice President of American Standard Companies Inc. and President of its Vehicle Control Systems business. Prior to holding that position, beginning in 2002, Mr. Esculier served as Business Leader for American Standard’s Trane Commercial Systems’ Europe, Middle East, Africa, India and Asia Region.


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From 1995 through 2001, Mr. Esculier served in leadership positions at Allied Signal/Honeywell, including as Vice President and General Manager of Environmental Control and Power Systems Enterprise and as Vice President of Aftermarket Services-Asia Pacific. A third party search firm recommended Mr. Esculier to the Governance Committee, which considered Mr. Esculier and recommended to the Board that Mr. Esculier be appointed as a director.
Mr. Esculier has significant leadership experience demonstrating a wealth of operational management, strategic, organizational and business transformation acumen. His deep knowledge of business in general and our businesses, strengths and opportunities in particular, as well as his experience as a director in a global public company allows him to make significant contributions to the Board.
T. Michael Glenn, director since 2007, age 60.
Mr. Glenn serves as the Chair of our Governance Committee. Since 1998, Mr. Glenn has been the Executive Vice President—Market Development and Corporate Communications of FedEx Corporation, a global provider of supply chain, transportation, business and related information services. Since 2000, Mr. Glenn has also served as President and Chief Executive Officer of FedEx Corporate Services, responsible for all marketing, sales, customer service and retail operations functions for all FedEx Corporation operating companies including FedEx Office. From 1994 to 1998, Mr. Glenn was Senior Vice President—Marketing and Corporate Communications of FedEx Express. Mr. Glenn is also a director of Level 3 Communications, Inc. and was formerly a director of Deluxe Corporation from 2004 to 2007 and Renasant Corporation from 2008 to 2012.
Mr. Glenn brings extensive strategic, marketing and communications experience to our Board from his service as one of the top leaders at FedEx Corporation. He has been an active participant in the development of our strategic plans, and a strong proponent for strengthening our branding and marketing initiatives.
David H. Y. Ho, director since 2007, age 56.
Mr. Ho is Chairman and founder of Kiina Investment Limited, a venture capital firm that invests in start-up companies in the technology, media, and telecommunications industries, and has significant executive experience with global technology companies. From 2007 until his retirement in 2008, he served as the Chairman of the Greater China Region for Nokia Siemens Networks, a telecommunications infrastructure company that is a joint venture between Finland-based Nokia Corporation and Germany-based Siemens AG. Between 2002 and 2007, Mr. Ho served in various capacities for Nokia China Investment Limited, the Chinese operating subsidiary of Nokia Corporation, a multinational telecommunications company. Between 1983 and 2001, Mr. Ho held various senior positions with Nortel Networks and Motorola Inc. in Canada and China. Mr. Ho is also a director of Air Products and Chemicals, Inc. (since 2013), China Ocean Shipping Company, a Chinese state owned enterprise (since 2012), Qorvo, Inc., formerly Triquint Semiconductor (since 2010), and was a director of 3Com Corporation from 2008 to 2010, Owens-Illinois Inc. from 2008 to 2012, Sinosteel Corporation from 2008 to 2012 and Dong Fang Electric Corporation from 2009 to 2015.
Mr. Ho brings extensive experience and business knowledge of global markets in diversified industries, with a strong track record in establishing and building businesses in China, and management expertise in operations, mergers, acquisitions and joint ventures in the area.
Randall J. Hogan, director since 1999, age 60.
Since January 1, 2001, Mr. Hogan has been our Chief Executive Officer. Mr. Hogan became Chairman of the Board on May 1, 2002. From December 1999 through December 2000, Mr. Hogan was our President and Chief Operating Officer. From March 1998 to December 1999, he was Executive Vice President and President of our Electrical and Electronic Enclosures Group. From 1995 to 1997, he was President of the Carrier Transicold Division of United Technologies Corporation, a leader in the transport refrigeration and air conditioning business. From 1994 until 1995, he was Vice President and General Manager of Pratt & Whitney Industrial Turbines. From 1988 until 1994, he held various executive positions at General Electric Company in a variety of functions such as marketing, product management and business development and planning. From 1981 until 1987, he was a consultant at McKinsey & Company where he led major global engagements on strategy, operations and organization for clients in the manufacturing, energy, chemical, electronics and engineering services industries. Mr. Hogan also served as a director of Unisys Corporation from 2004 to 2006 and Covidien plc from 2007 to 2015. Mr. Hogan is also a director of Medtronic plc where he is also a member of the Audit and Finance committees. Mr. Hogan serves as the Chairman of the Board of the Federal Reserve Bank of Minneapolis.
Mr. Hogan has significant leadership experience both with us and predecessor employers demonstrating a wealth of operational management, strategic, organizational and business transformation acumen. His deep knowledge of business in


12



general and our businesses, strengths and opportunities in particular, as well as his experience as a director in two other complex global public companies allow him to make significant contributions to the Board.
David A. Jones, director since 2003, age 66.
Mr. Jones serves as the Chair of our Compensation Committee. Since 2008, Mr. Jones has been Senior Advisor to Oak Hill Capital Partners, a private equity firm. In 2010, Mr. Jones was appointed to the board of directors of Dave & Buster’s Holdings, Inc., an owner and operator of high-volume restaurant/entertainment venues, and in 2012, Mr. Jones was appointed to the board of directors of Earth Fare, Inc., one of the largest natural food retailers in the U.S., all of which are privately owned by Oak Hill Capital Partners. Between 1996 and 2007, Mr. Jones was Chairman and Chief Executive Officer of Spectrum Brands, Inc. (formerly Rayovac Corporation), a global consumer products company with major businesses in batteries, lighting, shaving/grooming, personal care, lawn and garden, household insecticide and pet supply product categories. From 1996 to 1998, he also served Rayovac as President. After Mr. Jones was no longer an executive officer of Spectrum Brands, it filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in March 2009 and exited from bankruptcy proceedings in August 2009. From 1995 to 1996, Mr. Jones was Chief Operating Officer, Chief Executive Officer, and Chairman of the board of directors of Thermoscan, Inc. From 1989 to 1994, he served as President and Chief Executive Officer of The Regina Company. Mr. Jones also served as lead director of The Hillman Group from 2010 to 2014, as a director of Simmons Bedding Company from 2000 to 2010, as a director of Spectrum Brands from 1996 to 2007, and as a director of Tyson Foods, Inc. from 1999 to 2005.
Mr. Jones’ extensive management experience with both public and private companies and private equity funds, coupled with his global operational, financial and mergers and acquisitions expertise, have given the Board invaluable insight into a wide range of business situations. Mr. Jones has served on each of our Board Committees, which has given him an understanding of the impact on us of a wide range of business situations.
Ronald L. Merriman, director since 2004, age 71.
Mr. Merriman serves as the Chair of the Audit and Finance Committee. He is the retired Vice Chair of KPMG, a global accounting and consulting firm, where he served from 1967 to 1997 in various positions, including as a member of the Executive Management Committee. He also served as Executive Vice President of Ambassador International, Inc., a publicly-traded travel services business, from 1997 to 1999; Executive Vice President of Carlson Wagonlit Travel, a global travel management firm, from 1999 to 2000; Managing Director of O’Melveny & Myers LLP, a global law firm, from 2000 to 2003; and Managing Director of Merriman Partners, a management advisory firm, from 2004 to 2010. He is also a director of Aircastle Limited, Realty Income Corporation and Haemonetics Corporation.
Mr. Merriman’s extensive accounting and financial background has strengthened our Audit and Finance Committee and its processes. In addition, his global experience has assisted us in our expansion into overseas markets.
William T. Monahan, director since 2001, age 68.
Mr. Monahan serves as our Lead Director. In 2006, Mr. Monahan served as a director and the Interim Chief Executive Officer of Novelis, Inc., a global leader in aluminum rolled products and aluminum can recycling. From 1995 to 2004, Mr. Monahan was Chairman of the board of directors and Chief Executive Officer of Imation Corp., a manufacturer of magnetic and optical data storage media. He was involved in worldwide marketing with Imation and prior to that 3M Company. Mr. Monahan is also a director of The Mosaic Company and was formerly a director of Hutchinson Technology, Inc. from 2000 to 2013, Solutia Inc. from 2008 to 2012 and Novelis, Inc. from 2005 to 2007.
Mr. Monahan brings to our Board a wealth of global operational and management experience, as well as a deep understanding of our businesses gained as a long serving member of our Board. Mr. Monahan has extensive service as a board member and chief executive officer at companies in a number of different industries. His broad international perspective on business operations has been instrumental as we become more global.
Billie Ida Williamson, director since 2014, age 63.
Ms. Williamson has over three decades of experience auditing public companies as an employee and partner of Ernst & Young LLP. From 1998 until December 2011, Ms. Williamson served Ernst & Young as a Senior Assurance Partner. Ms. Williamson was also Ernst & Young’s Americas Inclusiveness Officer, a member of its Americas Executive Board, which functions as the Board of Directors for Ernst & Young dealing with strategic and operational matters, and a member of the Ernst & Young U.S. Executive Board responsible for partnership matters for the firm. Previously, Ms. Williamson served as Senior Vice President, Finance and Corporate Controller of Marriott International, Inc., a leading global hospitality company, from 1996 to 1998. Prior to joining Marriott, Ms. Williamson served for 2 years as Chief Financial Officer of AMX


13



Corporation, a technology company focused on automation and control of work and home environments. Ms. Williamson currently also serves as a board member of CSRA Inc., where she is chair of its audit committee and a member of its Executive Committee, Energy Future Holdings Corp., where she also serves as chair of the audit committee, and Janus Capital Group Inc., where she also is a member of the audit committee and the nominating and corporate governance committee. Ms. Williamson was formerly a director of Annie’s Inc. from 2012 to 2014 and Exelis Inc. from 2012 to 2015.
Ms. Williamson is qualified to serve on our Board of Directors because of her extensive financial and accounting knowledge and experience, including her service as a principal financial officer, as an independent auditor to numerous Fortune 250 companies and as a member of the board of directors of other companies, as well as her broad experience with SEC reporting and her professional training and standing as a Certified Public Accountant.
 
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR”
RE-ELECTION OF EACH DIRECTOR NOMINEE.



14



PROPOSAL 2
Approve, by Non-Binding Advisory Vote, the Compensation of the Named Executive Officers
(Ordinary Resolution)
Proposal of the Board
The Board proposes that the shareholders approve, by non-binding advisory vote, the compensation of the Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K, including under “Compensation Discussion and Analysis” and the compensation tables and narrative discussion under “Executive Compensation” contained in this Proxy Statement.
Executive compensation is an important matter to us, the Board and the Compensation Committee and to our shareholders. As required by Section 14A of the Securities Exchange Act of 1934, we are asking our shareholders to vote, on a non-binding, advisory basis, on a resolution approving the compensation of the Named Executive Officers as disclosed under “Compensation Discussion and Analysis” and the compensation tables and narrative discussion under “Executive Compensation” contained in this Proxy Statement.
As we describe in detail under “Compensation Discussion and Analysis” and the compensation tables and narrative discussion under “Executive Compensation” contained in this Proxy Statement, we have designed our executive compensation programs to align executive and shareholder interests by rewarding the achievement of specific annual, longer-term and strategic goals that create long-term shareholder value. We utilize our executive compensation programs to provide competitive compensation within our peer group that will motivate and reward executives for achieving financial and strategic objectives, provide rewards commensurate with performance to incentivize the Named Executive Officers to perform at their highest levels, encourage innovation and growth, attract and retain the Named Executive Officers and other key executives and align our executive compensation with shareholders’ interests through the use of equity-based incentive awards.
The Compensation Committee has overseen the development and implementation of our executive compensation programs in line with these compensation objectives. The Compensation Committee also continuously reviews, evaluates and updates our executive compensation programs to ensure that we provide competitive compensation that motivates the Named Executive Officers to perform at their highest levels while increasing long-term value to our shareholders.
With these compensation objectives in mind, the Compensation Committee has taken compensation actions including the following:
Adopting a policy of not including automatic single trigger change in control vesting or excise tax gross ups in new agreements with our executive officers providing for contingent benefits upon a change in control.
Linking the annual cash incentive for the Named Executive Officers to performance goals that correlate strongly with two primary corporate objectives of improving the financial return from our businesses and strengthening our balance sheet through cash flow improvement and debt reduction.
Making a significant portion of total compensation “at risk” if certain performance goals are not satisfied or otherwise subject to our future performance to further align the incentives of our Named Executive Officers with the interests of our shareholders.
Requiring executive officers to maintain certain stock ownership levels through the establishment of stock ownership guidelines.
Generally limiting perquisites to a limited annual cash allowance and not providing tax reimbursements on such perquisites.
The Compensation Committee’s compensation actions like those described above demonstrate our continued commitment to align executive compensation with shareholders’ interests while providing competitive compensation to attract, motivate and retain the Named Executive Officers and other key executives. We will continue to review and adjust our executive compensation programs with these goals in mind to ensure the long-term success of our company and generate increased long-term value to our shareholders.
The Board and the Compensation Committee request the support of our shareholders for the compensation of the Named Executive Officers as disclosed in this Proxy Statement. This non-binding advisory vote to approve the compensation of the Named Executive Officers gives our shareholders the opportunity to make their opinions known about our executive


15



compensation programs. As we seek to align our executive compensation programs with the interests of our shareholders while continuing to retain key talented executives that drive our company’s success, we ask that our shareholders approve the compensation of the Named Executive Officers as disclosed in this Proxy Statement.
The text of the resolution in respect of Proposal 2 is as follows:
IT IS RESOLVED, that, on a non-binding, advisory basis, the compensation of Pentair plc’s Named Executive Officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables and the related disclosures contained in Pentair plc’s proxy statement is hereby approved.”
Vote Requirement
Approval, by non-binding advisory vote, of the compensation of the Named Executive Officers requires the affirmative vote of a majority of the votes cast in person or by proxy at the Annual General Meeting.
 
EACH OF THE BOARD AND THE COMPENSATION COMMITTEE
UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF
THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS.




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PROPOSAL 3
Ratify, by Non-Binding Advisory Vote, the Appointment of Deloitte & Touche LLP as the Independent Auditors of Pentair plc and to Authorize, by Binding Vote, the Audit and Finance Committee to Set the Auditors’ Remuneration
(Ordinary Resolution)
Proposal of the Board
Deloitte & Touche LLP served as our independent auditors for the fiscal year ended December 31, 2015. The Audit and Finance Committee has selected and appointed Deloitte & Touche LLP to audit our financial statements for the fiscal year ending December 31, 2016. The Board, upon the recommendation of the Audit and Finance Committee, is asking our shareholders to ratify, by non-binding advisory vote, the appointment of Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 31, 2016 and to authorize, by binding vote, the Audit and Finance Committee of the Board of Directors to set the independent auditors’ remuneration. Although approval is not required by our Articles of Association or otherwise, the Board is submitting the appointment of Deloitte & Touche LLP to our shareholders for approval by non-binding advisory vote because we value our shareholders’ views on our independent auditors. If the appointment of Deloitte & Touche LLP is not ratified by shareholders, it will be considered as notice to the Board and the Audit and Finance Committee to consider the selection of a different firm. Even if the appointment is ratified, the Audit and Finance Committee in its discretion may select a different independent auditor at any time during the year if it determines that such a change would be in the best interests of our company and our shareholders.
We expect that one or more representatives of Deloitte & Touche LLP will be present at the Annual General Meeting. Each of these representatives will have the opportunity to make a statement, if he or she desires, and is expected to be available to respond to any questions.
The text of the resolution in respect of Proposal 3 is as follows:
IT IS RESOLVED, to ratify, on a non-binding, advisory basis, the appointment of Deloitte & Touche LLP as the independent auditors of Pentair plc and to authorize, in a binding vote, the Audit and Finance Committee to set the auditors’ remuneration.”
Audit and Finance Committee Pre-approval Policy
The Audit and Finance Committee reviews and approves the external auditor’s engagement and audit plan, including fees, scope, staffing and timing of work. In addition, the Audit and Finance Committee Charter limits the types of non-audit services that may be provided by the independent auditors. Any permitted non-audit services to be performed by the independent auditors must be pre-approved by the Audit and Finance Committee after the Committee is advised of the nature of the engagement and particular services to be provided. The Audit and Finance Committee pre-approved audit fees and all permitted non-audit services of the independent auditor in 2015. Responsibility for this pre-approval may be delegated to one or more members of the Audit and Finance Committee; all such approvals, however, must be disclosed to the Audit and Finance Committee at its next regularly scheduled meeting. The Audit and Finance Committee may not delegate authority for pre-approvals to management.
Service Fees Paid to the Independent Auditors
We engaged Deloitte & Touche LLP, Deloitte AG, Deloitte & Touche (Ireland) and the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, the “Deloitte Entities”) to provide various audit, audit-related, tax and other permitted non-audit services to us during fiscal years 2015 and 2014. Their fees for these services were as follows (in thousands):
 
2015
 
2014
Audit fees (1)
$
10,842

 
$
11,262

Audit-related fees (2)
885

 
292

Tax fees (3)
 
 
 
Tax compliance and return preparation
532

 
974

Tax planning and advice
357

 
703

Total tax fees
889

 
1,677

Total
$
12,616

 
$
13,231



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(1)
Consists of fees for audits of our consolidated annual financial statements and the effectiveness of internal controls over financial reporting, reviews of our quarterly financial statements, statutory audits, reviews of SEC filings, consents for registration statements and comfort letters in connection with securities offerings.
(2)
Consists of fees for due diligence, employee benefit plan audits and certain other attest services.
(3)
Consists of fees for tax compliance and return preparation and tax planning and advice.
Vote Requirement
Ratification, by non-binding advisory vote, of the appointment of Deloitte & Touche LLP as the independent auditors of Pentair plc and the authorization, by binding vote, of the Audit and Finance Committee to set the auditors’ remuneration requires the affirmative vote of a majority of the votes cast in person or by proxy at the Annual General Meeting.
 
EACH OF THE BOARD AND THE AUDIT AND FINANCE COMMITTEE UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF PENTAIR PLC AND THE AUTHORIZATION OF THE AUDIT AND FINANCE COMMITTEE TO SET THE AUDITORS’ REMUNERATION.


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PROPOSAL 4
Authorize the Price Range at Which Pentair plc Can Re-allot
Shares It Holds as Treasury Shares Under Irish Law
(Special Resolution)
Proposal of the Board
Our historical open-market share repurchases (redemptions) and other share buyback activities result in ordinary shares being acquired and held by us as treasury shares. We may re-allot treasury shares that we acquire through our various share buyback activities in connection with our employee compensation programs.
Under Irish law, our shareholders must authorize the price range at which we may re-allot any shares held in treasury. In this proposal, that price range is expressed as a minimum and maximum percentage of the prevailing market price (as defined below). Under Irish law, this authorization will expire after eighteen months unless renewed. Accordingly, we expect to propose renewal of this authorization at subsequent Annual General Meetings.
The authority being sought from shareholders provides that the minimum and maximum prices at which an ordinary share held in treasury may be re-allotted are 95% and 120%, respectively, of the average closing price per ordinary share, as reported on the New York Stock Exchange, for the 30 trading days immediately preceding the proposed date of re-allotment. Any re-allotment of treasury shares will be at price levels that the Board considers in the best interests of our shareholders.
The text of the resolution in respect of Proposal 4 (which is proposed as a special resolution) is as follows:
IT IS RESOLVED, as a special resolution, that for the purposes of section 1078 of the Companies Act 2014, the re-allot price range at which any treasury shares (as defined by section 106 of the Companies Act 2014) for the time being held by Pentair plc may be re-allotted off-market shall be as follows:
1.
the maximum price at which a treasury share may be re-allotted off-market shall be an amount equal to 120% of the ‘market price.’
2.
the minimum price at which a treasury share may be re-allotted off-market shall be the nominal value of the share where such a share is required to satisfy an obligation under any employee or director share or option plan operated by Pentair plc or, in all other cases, 95% of the ‘market price.’
3.
for the purposes of this resolution, the ‘market price’ shall mean the average closing price per ordinary share of Pentair plc, as reported on the New York Stock Exchange, for the 30 trading days immediately preceding the day on which the relevant share is re-issued.
FURTHER RESOLVED, that this authority to re-allot treasury shares shall expire on the date 18 months from the date of the passing of this resolution unless previously varied, revoked or renewed in accordance with the provisions of sections 109 and/or1078 (as applicable) of the Companies Act 2014 (and/or any corresponding provision of any amended or replacement legislation) and is without prejudice or limitation to any other authority of the Company to re-allot treasury shares on-market.”
Vote Requirement
Authorization of the price range at which Pentair plc can re-allot shares it holds as treasury shares under Irish law requires the affirmative vote of not less than seventy-five percent of the votes cast in person or by proxy at the Annual General Meeting.
 
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AUTHORIZATION
OF THE PRICE RANGE AT WHICH PENTAIR PLC CAN RE-ALLOT SHARES
IT HOLDS AS TREASURY SHARES UNDER IRISH LAW.




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PROPOSAL 5
Amend Pentair plc’s Articles of Association to
Increase the Maximum Number of Directors from Eleven to Twelve
(Ordinary Resolution)
Proposal of the Board
Article 71 of our Articles of Association currently provides that the number of directors on our Board shall not be less than nine nor more than eleven. Our Board has approved, and recommends that our shareholders approve, a resolution to amend the first sentence of Article 71 to increase the maximum number of directors from eleven to twelve.
The text of the resolution in respect of Proposal 5 (which is proposed as an ordinary resolution) is as follows:
IT IS RESOLVED, as an ordinary resolution, that, in accordance with Article 91 of the Articles of Association of Pentair plc, the first sentence of Article 71 of the Articles of Association of Pentair plc be, and it hereby is, amended and restated in the manner and form set forth in Appendix A of this proxy statement.”
Certain Matters Related to the Proposal
On September 7, 2015, we entered into a letter agreement (the “Letter Agreement”) with Trian Fund Management, L.P. (“Trian”), Edward P. Garden, the Chief Investment Officer and a founding partner of Trian, and Matthew Peltz and Brian Baldwin, each of whom is also a partner at Trian. Pursuant to the Letter Agreement, we agreed (i) to submit to our shareholders at our 2016 Annual General Meeting, and recommend that our shareholders approve and use our reasonable best efforts to obtain the approval of, a resolution to amend our Articles of Association to increase the maximum number of directors on our Board from eleven to twelve; (ii) to allow Mr. Garden, for a period beginning on or before September 21, 2015 (the “Commencement Date”) and continuing until the date of our 2016 Annual General Meeting, to attend and participate in all Board meetings and all Compensation Committee meetings in a non-voting participant capacity; and (iii) to allow either Mr. Peltz or Mr. Baldwin, beginning on the Commencement Date, to attend all Board meetings and all Compensation Committee meetings in a non-voting, non-participant observer capacity, subject to certain limitations. If our shareholders approve Proposal 5, our Board will immediately appoint Mr. Garden as a director pursuant to Article 94 of the Articles of Association to fill the resulting vacancy on our Board and also appoint Mr. Garden as a member of our Compensation Committee. The Letter Agreement followed a series of collaborative discussions between us and Trian, one of our largest shareholders. The foregoing description of the Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the Letter Agreement, a copy of which is filed as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on September 8, 2015 and is incorporated herein by reference.
Since November 2005, Mr. Garden, age 54, has been Chief Investment Officer and a founding partner of Trian, a multi-billion dollar alternative investment firm.
Mr. Garden has served as a member of the board of directors of The Bank of New York Mellon Corporation, a global investments company, since December 2014. Mr. Garden also served as a director of Family Dollar Stores, Inc., a discount retailer, from September 2011 until its acquisition by Dollar Tree, Inc. in July 2015, and as a director of The Wendy’s Company (formerly Wendy’s/Arby’s Group, Inc. and previously Triarc Companies, Inc. (“Triarc”)), a quick-service restaurant chain, from December 2004 until December 2015. Previously, Mr. Garden served as Vice Chairman of Triarc from December 2004 through June 2007 and Executive Vice President from August 2003 until December 2004. From 1999 to 2003, Mr. Garden was a managing director of Credit Suisse First Boston, where he served as a senior investment banker in the Financial Sponsors Group. From 1994 to 1999, he was a managing director at BT Alex Brown where he was a senior member of the Financial Sponsors Group and, prior to that, co-head of Equity Capital Markets.
Mr. Garden has over 25 years of experience advising, financing, operating and investing in companies, and he has worked with management teams and boards of directors to implement growth initiatives as well as operational, strategic and corporate governance improvements. Mr. Garden has strong operating experience, a network of relationships with institutional investors and investment banking/capital markets experience that can be utilized for our benefit.
The Board has affirmatively determined, based on the standards set forth under “Corporate Governance Matters—Independent Directors” in this proxy statement, that Mr. Garden is independent and has no material relationship with us except as a deemed beneficial shareholder. As of February 22, 2016, Trian and its affiliates, including Mr. Garden, beneficially own an aggregate total of 14,335,888, or approximately 8.0%, of the ordinary shares of Pentair plc, as disclosed in a Schedule 13D/A filed with the SEC on February 22, 2016 by Trian and its affiliates, including Mr. Garden.


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Vote Requirement
Approval of the amendment to our Articles of Association to increase the maximum number of directors from eleven to twelve requires the affirmative vote of a majority of the votes cast in person or by proxy at the Annual General Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT TO PENTAIR PLC’S ARTICLES OF ASSOCIATION TO INCREASE THE MAXIMUM NUMBER OF DIRECTORS FROM ELEVEN TO TWELVE.


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PROPOSAL 6
Amend Pentair plc’s (A) Articles of Association to Make Certain Administrative Amendments and
(B) Memorandum of Association to Make Certain Administrative Amendments
(Special Resolution)
Background
Proposal 6A sets out certain proposed amendments to our Articles of Association, and Proposal 6B sets out certain proposed amendments to our Memorandum of Association. Under Irish law, any amendment to a public company’s Articles of Association must be voted on separately from any amendment to a public company’s Memorandum of Association. For that reason, we are asking our shareholders to separately vote on Proposals 6A and 6B. However, given the inextricable link between Proposals 6A and 6B, each proposal is subject to the other being approved by our shareholders, and as a result, both proposals will fail if either proposal does not pass.
Proposal 6A of the Board
On June 1, 2015, the Companies Act 2014 (the “Act”) took effect in Ireland. The Act is meant to consolidate and modernize company law in Ireland. Although the changes to Irish company law will not impact Pentair’s day-to-day operations, we must make some administrative updates to our Articles of Association to ensure that they are not impacted or affected by the introduction of this new law. None of the updates to our Articles of Association proposed to be made in connection with the Act will materially change the rights of our shareholders.
As an example, the Act will automatically apply certain sections of the Act to Pentair unless we explicitly opt out. Given many of these sections either address matters that are already covered by our Articles of Association or are not applicable to us, we are proposing to amend our Articles of Association to explicitly opt-out of certain provisions, as permitted by the Act. For example, the Act includes a provision regarding the appointment of directors, which is already covered by existing provisions in our Articles of Association and we therefore recommend opting out of that provision.
Attached as Appendix B to this proxy statement is a table that sets out a summary of the optional provisions from which we propose to opt out, as well as certain other administrative amendments that we propose to make to our Articles of Association to address the adoption of the Act.
The text of the resolution in respect of Proposal 6A (which is proposed as a special resolution) is as follows:
IT IS RESOLVED, as a special resolution, that, subject to and conditional upon Proposal 6B being passed, the Articles of Association of Pentair plc be, and hereby are, amended and restated in the manner and form set forth in Appendix C of this proxy statement.”
Vote Requirement
Approval of the amendment to our Articles of Association to make certain administrative amendments requires the affirmative vote of not less than seventy-five percent of the votes cast in person or by proxy at the Annual General Meeting. In addition, Proposal 6A is subject to Proposal 6B being adopted. Therefore, unless our shareholders approve Proposal 6B, Proposal 6A will fail.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT TO PENTAIR PLC’S ARTICLES OF ASSOCIATION TO MAKE CERTAIN ADMINISTRATIVE AMENDMENTS.
Proposal 6B of the Board
As described above, on June 1, 2015, the Act took effect in Ireland. In addition to the proposed amendments described above to our Articles of Association to accommodate the adoption of the Act, we must also make certain corresponding administrative amendments to our Memorandum of Association to account for the adoption of the Act. None of the updates to our Memorandum of Association proposed to be made in connection with the Act will materially change the rights of our shareholders. The proposed amendments to our Memorandum of Association are each specifically described in the text of the resolution below, as required under Irish law.
The text of the resolution in respect of Proposal 6B (which is proposed as a special resolution) is as follows:


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IT IS RESOLVED, as a special resolution, that, subject to and conditional upon Proposal 6A being passed, the following amendments, as shown in Appendix C, be made to the Memorandum of Association:
(a)
The deletion of the existing clause 2 and the substitution therefor of the following new clause 2:
‘2.
The Company is a public limited company deemed to be a PLC to which Part 17 of the Companies Act 2014 applies.’
(b)
The words ‘section 155 of the Companies Act 1963’ in the existing clause 3.14 of the Memorandum of Association be removed and the words ‘the Companies Act 2014’ be substituted therefor.”
Vote Requirement
Approval of the amendment to our Memorandum of Association to make certain administrative amendments requires the affirmative vote of not less than seventy-five percent of the votes cast in person or by proxy at the Annual General Meeting. In addition, Proposal 6B is subject to Proposal 6A being adopted. Therefore, unless our shareholders approve Proposal 6A, Proposal 6B will fail.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT TO PENTAIR PLC’S MEMORANDUM OF ASSOCIATION TO MAKE CERTAIN ADMINISTRATIVE AMENDMENTS.









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COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Program, Philosophy and Objectives
The Compensation Committee (the “Committee”) of our Board sets and administers the policies that govern our executive compensation, including:
establishing and reviewing executive base salaries;
overseeing our annual incentive compensation plans;
overseeing our long-term equity-based compensation plan;
approving all awards under those plans;
annually evaluating risk considerations in connection with our executive compensation programs; and
annually approving all compensation decisions for executive officers, including those for the Chief Executive Officer and the other officers named in the Summary Compensation Table below (collectively, the “Named Executive Officers”).
The Committee, which exclusively consists of independent directors, believes that the most effective executive compensation program aligns executive initiatives with shareholders’ economic interests. The Committee seeks to accomplish this by rewarding the achievement of specific annual, longer-term and strategic goals that create lasting shareholder value. The Committee’s specific objectives include:
to motivate and reward executives for achieving financial and strategic objectives;
to align management and shareholder interests by encouraging employee stock ownership;
to provide rewards commensurate with individual and company performance;
to encourage innovation and growth; and
to attract and retain top-quality executives and key employees.
To balance these objectives, our executive compensation program uses the following elements:
base salary, to provide fixed compensation competitive in the marketplace;
annual incentive compensation, to reward short-term performance against specific financial targets and individual goals;
long-term incentive compensation, to link management incentives to long-term value creation and shareholder return; and
retirement, perquisites and other benefits, to attract and retain executives over the longer term.
We discuss each of these components below under “2015 Compensation Program Elements.”
2015 Business Results*
While 2015 proved to be a challenging year for some of our businesses, we remain focused on our long-standing commitment to performance for our shareholders. Our adjusted earnings per diluted share from continuing operations decreased to $3.94 in 2015 compared to adjusted earnings per diluted share from continuing operations of $4.23 in 2014. Our sales during 2015 were $6,449 million, down 8.4% compared to $7,039 million in 2014. Excluding the impact of foreign exchange, our sales were down 3.9%. Our segment income decreased over the prior year to $1,001 million in 2015. Our return on sales decreased 60 basis points to 15.5% compared to return on sales in 2014. Free cash flow of $643 million represented approximately 90% conversion of adjusted net income. Despite these challenges, we increased the cash dividend paid to our shareholders for the 39th consecutive year and returned $432 million to our shareholders through a combination of dividends and share repurchases during 2015.
2015 Say on Pay Vote
In May 2015 (after many of the 2015 executive compensation actions described in this Compensation Discussion and Analysis had taken place), we held our annual advisory shareholder vote on the compensation of our Named Executive Officers (our “say on pay vote”) at our annual shareholders’ meeting, and, consistent with the recommendation of the Board, our shareholders approved the compensation of our Named Executive Officers with more than 91% of votes cast in favor. Consistent with this strong vote of shareholder approval, we did not make any material changes to our executive compensation programs in response to the outcome of the vote.
Changes to our Compensation Programs in 2015
As described in more detail below, our compensation programs in 2015 were generally consistent with 2014, when we had implemented several substantive changes. However, there were three material developments in 2015 relating to Named Executive Officer compensation:

* Please see Appendix D for reconciliation of GAAP to non-GAAP financial measures included in this section.
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New Named Executive Officer. In September 2015, Beth A. Wozniak joined our company as President of our Flow & Filtration Solutions segment. As described in greater detail below, in connection with her commencement of employment, Ms. Wozniak received a signing bonus of $100,000 and an equity-based award with an aggregate grant date fair value of $1.75 million. Her base salary was set at $485,000.

Elimination of Single Trigger Change in Control Vesting and Excise Tax Gross-Ups for New Change in Control Agreements. We have adopted a policy of not including automatic single trigger change in control vesting and excise tax gross ups in new agreements with our executive officers providing for contingent benefits upon a change in control. In connection with her commencement of employment, Ms. Wozniak received such an agreement including terms generally consistent with the similar agreements we maintain with our other Named Executive Officers but excluding automatic single trigger change in control vesting and excise tax gross ups. Instead, Ms. Wozniak's agreement provides for accelerated vesting of certain equity and cash incentive awards only if there is a covered termination following a change in control. In place of a tax gross up for excise taxes, her agreement provides that, if excise taxes would otherwise be imposed in connection with a change in control, her change in control compensation protections will be either cut back to a level below the level that would trigger the imposition of the excise taxes or paid in full and subjected to the excise taxes, whichever results in the better after-tax result to her.

Decision to Replace Cash Settled Performance Units with Performance Share Units Beginning in 2016. In 2015, as in prior years, our long-term incentive compensation program consisted of three elements: stock options, restricted stock units and cash settled performance units. In December 2015, the Committee approved replacing cash settled performance units as an element of our long-term incentive compensation program with performance share units, beginning in 2016. Like the cash settled performance units, the performance share units will have a three-year performance period. However, the performance share units will be earned or forfeited on the basis of our achievement of adjusted earnings per share ("EPS") goals, rather than, as in the case of the cash settled performance units, goals relating to compounded annual revenue growth rate and return on invested capital. We decided to replace cash settled performance units with performance share units to increase participants’ line-of-sight between performance goals and award values and to strengthen the alignment of participants' interests with the interests of our long-term shareholders.

Compensation Committee Practices
The Committee meets regularly to review, discuss and approve executive compensation and employee benefit plan matters. Committee members generally receive written materials several days prior to each regularly scheduled meeting. At the close of each regularly scheduled Committee meeting, the Committee conducts an executive session without management present. When appropriate, the Committee also meets in executive session at the close of special meetings. At the Committee’s request, the Committee’s external compensation consultant reviews committee meeting materials and attends meetings.
In making changes to our compensation programs, the Committee considers our compensation philosophy and objectives, as well as external market, industry and peer company practices and shareholder feedback. The Committee reviews each element of the executive compensation program annually for continuing appropriateness and reasonableness.
The Committee reviewed and approved equity grants for newly hired and promoted employees as required throughout the year.
Services of Compensation Consultant
During 2015, the Committee continued to retain Aon Hewitt, an external compensation consultant, to advise the Committee on executive compensation issues. See “Corporate Governance Matters – Committees of the Board – Compensation Committee” for disclosure relating to services provided to us by Aon Hewitt. The Committee evaluated the independence of Aon Hewitt and the individual representatives of Aon Hewitt who served as the Committee’s consultants in light of the factors required by the NYSE. Aon Hewitt is a wholly owned subsidiary of Aon plc, which provides insurance brokerage and benefit administrative outsourcing services to us. For the year ended December 31, 2015, we paid Aon plc approximately $2,170,628 for these services and Aon Hewitt approximately $222,306 for executive compensation consulting for the Committee. The decision to engage Aon plc for insurance brokerage and benefit administrative outsourcing services was made by management and was not approved by the Board or the Committee. The Committee concluded, based on the evaluation described above, that the services performed by Aon plc with respect to insurance and benefits administration did not raise a conflict of interest or impair Aon Hewitt’s ability to provide independent advice to the Committee regarding executive compensation matters.


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At the direction of the Committee, Aon Hewitt advises the Committee in implementing and overseeing appropriate compensation programs and policies. As part of this process, Aon Hewitt provides the Committee with comparative market data based on analyses of the practices of the Comparator Group defined below under “Comparative Framework” and relevant survey data. The comparative market data that Aon Hewitt provides address the structure of the compensation programs maintained by the Comparator Group companies as well as the amount of compensation they provide. Aon Hewitt provides guidance on industry best practices and advises the Committee in determining appropriate ranges for base salaries, annual incentives and equity compensation for each senior executive position.
Role of Executive Officers in Compensation Decisions
At the request of the Committee, the Chief Executive Officer and the Senior Vice President, Human Resources, generally attend meetings of the Committee, but are not present in executive sessions and do not participate in deliberations of their own compensation. Our human resources group assists the Committee as requested on specific topics regarding compensation, as well as on specific recommendations for compensation for management throughout our company.
The Chief Executive Officer annually reviews with the Committee the performance of each executive officer (other than himself) and presents compensation recommendations based on these reviews to the Committee. The Committee reviews these recommendations with Aon Hewitt and exercises its discretion in adopting, rejecting or changing them.
The Board and the Committee employ a formal rating process to evaluate the Chief Executive Officer’s performance. As part of this process, the Board reviews financial and other relevant data related to the performance of the Chief Executive Officer at each meeting of the Board throughout the year. At the end of the year, each independent director provides an evaluation and rating of the Chief Executive Officer’s performance in various categories. The Committee Chair submits a consolidated rating report and the Committee’s recommendations regarding the Chief Executive Officer’s compensation to the independent directors for review and ratification. The Lead Director chairs a discussion with the independent directors in executive session without the Chief Executive Officer present. From that discussion, the Committee finalizes the Chief Executive Officer’s performance rating. The Committee Chair and the Lead Director review the final performance rating results and commentary with the Chief Executive Officer. The Committee takes the performance rating and financial data into account in determining the Chief Executive Officer’s compensation and the adoption of goals and objectives for the Chief Executive Officer for the following year.
Comparative Framework
In setting compensation for 2015, the Committee commissioned Aon Hewitt to provide benchmarking data for our executive officers, including our Named Executive Officers. The companies in the peer group from which the benchmarking data were drawn were based on four selection criteria:
Publicly-traded on a major exchange.
Similar in business scope and/or operations to our business units and global in nature.
Within a reasonable revenue range (generally 0.5x to 3x) compared to our revenue.
Same or similar industry to ours, based on Global Industry Classification Standard (“GICS”) code: industrial machinery, electrical components and equipment, building products, electronic components, industrial conglomerates and security and alarm services.
Aon Hewitt also performed a “peer-of-peers” analysis to identify companies common in other peer groups that were not identified by the four selection criteria above by reviewing peers of our current peers as well as companies that use our company in their peer group. In addition, Aon Hewitt considered those companies identified by independent corporate governance organizations as being peers of our company. Based on Aon Hewitt’s review and recommendations, the Committee removed Medtronic, Inc., which had been included in the 2014 comparator group, from the 2015 comparator group due to its anticipated merger with Covidien plc and added Cummins Inc. and AGCO Corporation as new comparator group companies for 2015.
Based on the criteria identified above, and incorporating the changes described in the preceding sentence, the Committee selected the following 17 companies as our 2015 comparator group for purposes of benchmarking (the “Comparator Group”):
 


26



AGCO Corporation
Cummins Inc.
Danaher Corporation
Dover Corporation
Eaton Corporation plc
Emerson Electric Co.
Flowserve Corporation
Illinois Tool Works Inc.
Ingersoll-Rand plc
Masco Corp.
Parker-Hannifin Corporation
Rockwell Automation, Inc.
SPX Corporation
Stanley Black & Decker, Inc.
The Timken Company
Tyco International Ltd.
Xylem Inc.
 
The Comparator Group companies had revenues ranging from approximately $3.8 billion to $24.7 billion, with median revenues of approximately $11.5 billion. Our revenue for 2015 was $6.4 billion.
2015 Compensation Program Elements
For the year ended December 31, 2015, the principal components of compensation for Named Executive Officers were:
Base salary;
Annual incentive compensation;
Long-term incentive compensation, consisting of stock options, restricted stock units and cash settled performance units;
Retirement and other benefits; and
Perquisites and other personal benefits.
The Committee reviews total compensation for executive officers and the relative levels of each of these forms of compensation against the Committee’s goals to attract, retain and incentivize talented executives and to align the interests of these executives with those of our long-term shareholders.
Base Salaries
We provide Named Executive Officers with a fixed base salary. Focusing on the market value of each position, the Committee’s goal is to target approximately the 50th percentile (the “Midpoint”) of the Comparator Group for executives’ base salary ranges based on available market data. Market data include published survey data and proxy statement data for our Comparator Group. The Committee establishes each Named Executive Officer’s salary within a range of 25% of the Midpoint. Differences in base salaries among the Named Executive Officers and the extent to which a Named Executive Officer’s base salary is set at a level other than the Midpoint are decided by the Committee based on various factors, including competitive conditions for the Named Executive Officer’s position within the Comparator Group and in the broader employment market, as well as the Named Executive Officer’s length of employment, level of responsibility, experience and individual performance.
In December 2014, the Committee undertook its annual review of base salaries for the then-serving Named Executive Officers and other management personnel, in accordance with its normal procedures. Following a market review by Aon Hewitt, the Committee approved annual merit increases to base salary ranging from 3.0-5.0% for each Named Executive Officer effective January 1, 2015. The adjusted base salaries remained within the range of 25% of the Midpoint described in the preceding paragraph. In connection with Ms. Wozniak's commencement of employment in September 2015, the Committee set her base salary at $485,000 based on a market review, prior compensation level and arm's length negotiations with Ms. Wozniak. Her base salary is within the range of 25% of the Midpoint described in the preceding paragraph.
Annual Incentive Compensation Plan
To achieve the objective of providing competitive compensation to attract and retain top talent while linking pay to annual performance, we pay a portion of our executives’ cash compensation as incentive compensation tied to annual business performance as measured against annual goals established by the Committee. In 2015, we provided cash annual incentive compensation to our executive officers, including the Named Executive Officers who served for the entire year, under our Management Incentive Plan ("MIP"). MIP awards were granted under the 2012 Plan. The Committee had no discretion to increase formula-derived incentive compensation under the MIP.

The Committee determined a percentage of each then-serving Named Executive Officer’s base salary as a targeted level of incentive compensation opportunity under the MIP, based on the Committee’s review of Aon Hewitt’s recommendations, relevant survey data and, in the case of Named Executive Officers other than the Chief Executive Officer, the recommendations of the Chief Executive Officer. The Committee sets each executive’s target incentive compensation opportunity so that if we attain target performance levels, annual cash incentive levels will be between the 50th and 75th percentiles of our Comparator Group’s target payouts. The Committee believes that establishing annual cash incentive


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compensation targets above the 50th percentile of competitive compensation programs is an effective means of enhancing the performance-based elements of our compensation program. By offering greater potential rewards for achievement of the performance goals under our annual cash incentive compensation program, we believe we provide enhanced motivation for our Named Executive Officers to achieve the performance goals determined by the Committee. This leverages the effectiveness of the performance-based elements of our compensation program, further aligning management and shareholder interests.
Differences in target levels of incentive compensation opportunity among the Named Executive Officers are decided by the Committee based on various factors, including competitive conditions for the Named Executive Officer’s position within the Comparator Group and in the broader employment market, as well as the Named Executive Officer’s length of employment, level of responsibility and experience. An executive officer’s base salary multiplied by the incentive compensation opportunity percentage establishes the target incentive compensation for which the executive officer is eligible. The Committee determined incentive compensation targets in 2015 for all Named Executive Officers. These incentive compensation targets as a percentage of salary and a dollar amount, based on actual base salary paid during 2015, were as follows:
 
 
Target as a
% of Salary
Target 
Randall J. Hogan
160%
$2,041,272
John L. Stauch
100%
$674,625
Frederick S. Koury
80%
$385,020
Angela D. Jilek
80%
$412,000
Ms. Wozniak did not participate in the MIP for 2015 because she joined our company as an executive officer late in the year. Instead, Ms. Wozniak received a sign-on bonus of $100,000. The Committee based the amount of the sign-on bonus on Ms. Wozniak's anticipated full-year compensation as an executive officer and on her compensation arrangements with her former employer. She is expected to participate in the MIP for 2016.
Actual incentive compensation awarded to each Named Executive Officer may range from 0 to 2 times the target, depending on actual company and individual performance, as described below. If we attain superior performance levels such that the actual incentive compensation awarded is at or near 2 times the target, cash incentive compensation could exceed the 75th percentile of the Comparator Group; if we do not attain target performance levels for any of the goals, cash incentive compensation will be below the 50th percentile of our Comparator Group. If we do not attain threshold performance levels for any of the goals, cash incentive compensation will be below the 25th percentile of our Comparator Group.
To establish the performance goals and related targets applied to MIP payments for the Named Executive Officers, the Committee examined goals that were recommended by the Chief Executive Officer, after consultation with the Chief Financial Officer and certain other executive officers, and that were based solely on objectively determinable financial performance measures. The Committee then assessed these recommendations in light of comparable data of the Comparator Group and relevant survey data. In February 2015, the Committee established the performance goals for 2015 for the MIP. The MIP performance goals that applied to the Named Executive Officers (prior to adjustments specified in the MIP), as well as the weight assigned to each performance goal and the corresponding payout levels, were as follows:
 
Financial Performance
Measure
Weight
Threshold
(Required for any payout; payouts begin at 75%)
Target
(100% payout)
Maximum
(200%  payout)
Operating Income
40%
$1,045 million
(2.3% increase over prior year)
$1,100 million (7.6% increase over prior year)
$1,155 million (13.0% increase over prior year)
Core Sales Growth
30%
1.5% increase over prior year
3.5% increase over prior year
5.5% increase over prior year
Free Cash Flow
10%
$794 million
$875 million
$950 million
EBITDA
20%
$1,000 million was required for any payout
The general framework of the MIP performance goals remained similar to previous years, except that the Committee increased the relative weight assigned to sales from 25% to 30% and decreased the relative weight assigned to free cash flow by a corresponding amount, from 15% to 10% to better reflect the importance of sales to our overall financial performance.


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We defined operating income under the MIP as the excess of revenues over expenses for normal operating activities, sales as sales excluding the impact of acquisitions, divestitures and currency exchange rate changes, free cash flow as cash from operating activities less capital expenditures, plus proceeds from sale of property and equipment and EBITDA as earnings before interest, taxes, depreciation and amortization.
The Committee believed that these performance goals correlate strongly with two primary corporate objectives: to improve the financial return from our businesses and to strengthen our balance sheet through cash flow improvement and debt reduction. All of the target levels for the performance goals were aligned with our corporate objectives as set forth in our annual operating plan.
To provide an added performance incentive, the Committee determined that the amount of incentive compensation related to each performance goal other than EBITDA would be scaled according to the amount by which the measure exceeded or fell short of the target. The Committee also determined that the performance goals for operating income, sales and free cash flow should have a threshold level below which no incentive compensation would be earned, and that potential payouts would be scaled from 0.75 at the threshold to 2.0 times at the maximum, as detailed above.
In the case of EBITDA, the Committee determined that attainment of this performance goal is a necessary, but not sufficient, condition to trigger a payout under the EBITDA component of the MIP. If the EBITDA threshold was not attained, no award would be made for this performance goal. If the EBITDA threshold was attained, the Named Executive Officer would be eligible for up to the maximum payout under this component of the award. The Committee retained the discretion to reduce, but not to increase, the amount of the payout under this component to a Named Executive Officer, based upon the Named Executive Officer’s individual performance, as measured according to the applicable strategy deployment factor (“SDF”). The SDF measures an individual executive’s performance against expectations in the attainment of corporate strategic goals set by the Committee. The SDF is determined by the Committee for each Named Executive Officer based on its assessment of individual performance following consultation with the Chief Executive Officer.
The actual incentive compensation of each Named Executive Officer was determined by multiplying the eligible target incentive compensation amount by a multiplier determined as described above. For 2015, actual results as measured by the performance goals under the MIP were as follows:
 
Financial Performance Measure
Weight
Actual Financial Results
Actual Payout Percentage
Operating Income (As Adjusted for the MIP)
40%
$855.8 million
0.0%
Core Sales Growth
30%
-3.9%
0.0%
Free Cash Flow
10%
$643.0 million
0.0%
EBITDA
20%
$1,126.7 million
0.0%
Adjustments to operating income and EBITDA for factors specified in the MIP included: restructuring and other charges ($120.5 million), goodwill and other intangible asset impairment ($554.7 million), acquisition and deal related costs ($50.6 million), pension “mark to market” gains ($23.0 million), and acquisitions ($24.2 million). These adjustments for factors specified in the MIP differ from those used to calculate our segment income as disclosed elsewhere in this Proxy Statement. Core sales growth is defined as the year over year rate of change in sales excluding the impact of foreign currency (-6.6%) and acquisitions (2.1%). Based on these financial results, the Committee determined that no amounts would be paid to the Named Executive Officers under the MIP for 2015.
2015 Long-Term Incentive Compensation
The Committee emphasizes executive compensation that is tied to building and sustaining our company’s value through ordinary share performance over time. We provide long-term compensation to our executives to further the objectives of:
motivating and rewarding executives through share price appreciation;
encouraging innovation and growth;
aligning management and shareholder interests; and
attracting and retaining key executive talent.
In keeping with this philosophy, the Committee establishes long-term incentive compensation targets between the 50th and 75th percentiles of competitive compensation programs, based on the Committee’s assessment of both published survey


29



data and data from our Comparator Group. The Committee believes that establishing long-term incentive compensation targets above the 50th percentile of competitive compensation programs is an effective means of enhancing the performance-based elements of our compensation program. By offering greater potential rewards for achievement of the performance goals under our long-term incentive compensation program, we believe we provide enhanced motivation for our Named Executive Officers to achieve the performance goals determined by the Committee. This leverages the effectiveness of the performance-based elements of our compensation program, further aligning management and shareholder interests.
In 2015, the Committee awarded long-term incentive compensation under the 2012 Plan. As it does each year, the Committee used benchmark data (including compensation surveys, Comparator Group information and other data provided by Aon Hewitt) to set competitive target dollar award levels for each Named Executive Officer and for each position or grade level. Differences in target dollar award levels among the Named Executive Officers were decided by the Committee based on various factors, including competitive conditions for the Named Executive Officer’s position within the Comparator Group and in the broader employment market, as well as the Named Executive Officer’s length of employment, level of responsibility, experience and individual performance. Individual awards generally range between 80 and 120 percent of the target award level, with actual award amounts determined by the Committee based on its assessment of both the executive’s individual performance against his or her individual performance goals in the previous year and company performance in the previous year against our strategic plan. If we build and sustain long-term shareholder value through superior performance, ongoing long-term incentive values may exceed the 75th percentile of our Comparator Group.
The Committee approved in December 2014 the elements and mix of long-term incentive compensation granted effective January 2, 2015 under the 2012 Plan. The Committee granted all then-serving Named Executive Officers a mix of the following components: stock options, restricted stock units and cash settled performance units. We have balanced our long-term incentive compensation program vehicles to create an equal focus on shareholder wealth creation, the creation of a sustaining business and assuring the leadership is committed to the long-term success of the enterprise. Each component was equally weighted, representing one-third of the total long-term incentive award value. The components had the features described below:
Stock options: The Committee determined that it would grant ten-year stock options, with one third of the options vesting on each of the first, second and third anniversaries of the grant date, as in prior years.
Restricted stock units: Each restricted stock unit represents the right to receive one of our ordinary shares upon vesting and includes one dividend equivalent unit, which entitles the holder to a cash payment equal to all cash dividends declared on our ordinary shares from and after the date of grant. One-third of the restricted stock units would vest on each of the first three anniversaries of the grant date if the performance hurdle described below under "Impact of Tax Considerations" was met.
Cash settled performance units: The Committee granted cash settled performance units in 2015 from a bonus pool that would be established only if our company met a specified goal for adjusted net income in 2015. From this bonus pool, each participant, including the Named Executive Officers, would be granted cash settled performance units. Each performance unit entitled the holder to a cash payment following the end of a three-year performance period if we achieved specified company performance goals on metrics established by the Committee. The performance goals selected by the Committee for the 2015 to 2017 performance period, as well as the weighting and potential payout levels, were as follows:
Financial Performance Measure
Weight
Threshold
(50% payout)
Target
(100% payout)
Maximum
(200%  payout)
Compounded Annual Growth Rate (CAGR) of Revenue in 2015-2017 Compared to 2014
50%
1.0% CAGR
3.0% CAGR
6.0% CAGR
Return on Invested Capital (ROIC) in 2015-2017 Compared to 2014
50%
100 basis point increase
250 basis point increase
450 basis point increase

Payouts would be scaled for performance between threshold and target and between target and maximum. An executive officer could elect to defer receipt of the cash payment under our Non-Qualified Deferred Compensation Plan.
Ms. Wozniak did not participate in our long-term incentive compensation program on the same terms as the other Named Executive Officers in 2015 because she joined our company as an executive officer late in the year. However, she received an equity-based award in connection with her commencement of employment. The award had an aggregate grant date fair value of $1.75 million and consisted of 50% stock options and 50% restricted stock units, each of which were subject to 4-year cliff-vesting. The Committee determined the amount and form of the award based on arm's length negotiations with Ms. Wozniak, the amount and form of Ms. Wozniak's long-term incentive compensation at her former employer and internal pay comparisons.


30



The value of stock options and restricted stock units and a range of values for the cash settled performance units granted to the Named Executive Officers in 2015 are reflected in the table under “Executive Compensation-Grants of Plan-Based Awards Table.”
The value of restricted stock units that vested for each Named Executive Officer in 2015 and the value of options exercised by each Named Executive Officer in 2015 are shown in the table under “Executive Compensation-Option Exercises and Stock Vested.”
The Committee reviews and approves all equity awards to newly hired or promoted executives at regular meetings throughout the year. As a rule, the Committee grants awards to newly hired or promoted executives that are effective the earlier of the 15th day of the month following the date of hire or promotion or the 15th day of the month following the date of the Committee meeting at which the grant is approved. If the 15th day of such month is a day on which the NYSE is not open for trading, then the grant date will be the first day following the 15th day of such month on which the NYSE is open for trading. The Committee has also given the Committee Chair and the Chief Executive Officer discretion to grant equity awards to newly hired or promoted executives as required throughout the year, within the guidelines of the 2012 Plan. The Committee then ratifies these grants at its next meeting. All options are granted with an exercise price equal to fair market value based on the closing share price on the effective day of grant.
As described above under "Changes to our Compensation Programs in 2015 -- Decision to Replace Cash Settled Performance Units with Performance Share Units Beginning in 2016," in December 2015, the Committee approved replacing the cash settled performance units with performance share units beginning in 2016. Like the cash settled performance units, the performance share units will have a three-year performance period. However, the performance share units will be earned or forfeited based on our achievement of goals relating to adjusted earnings per share, rather than, as in the case of the cash settled performance units, goals relating to compounded annual revenue growth rate and return on invested capital. We decided to replace cash settled performance units with performance share units to increase participants’ line-of-sight between performance goals and award values and to strengthen the alignment of participants' interests with the interests of our long-term shareholders.
Prior Long-Term Incentive Grants
In 2013, the Committee granted cash settled performance units to the Named Executive Officers from a bonus pool that would be established only if our company met a specified goal for free cash flow in 2013. Each performance unit entitled the holder to a cash payment following the end of the three-year performance period from 2013-2015, if we achieved specified company performance goals on metrics established by the Committee. The performance goals selected by the Committee for the 2013 to 2015 performance period were revenue growth and return on invested capital, each weighted 50%. Subject to establishment of the bonus pool and depending on cumulative company performance over the three-year performance period, we would pay nothing if a threshold were not met, 50% of the target value if the threshold were met, 100% of the target value if the target were met and 200% of the target value if the maximum were met. Payouts would be scaled for performance between threshold and target and between target and maximum.
The performance goals selected by the Committee for the 2013 to 2015 performance period, as well as the weighting, potential payout levels, actual performance and actual payout percentages were as follows:
Financial Performance Measure
Weight
Threshold
(50% payout)
Target
(100% payout)
Maximum
(200%  payout)
Actual
Actual Payout (% of Target)
Compounded Annual Growth Rate (CAGR)1 of Revenue in 2013-2015 Compared to 2012
50%
1.0% CAGR
3.0% CAGR
6.0% CAGR
1.6% CAGR
64.9%
Return on Invested Capital (ROIC) in 2013-2015 Compared to 2012
50%
100 basis point increase
250 basis point increase
450 basis point increase
130 basis point increase
59.8%
2013 Program
Total Weighted Performance
62.4%
1CAGR excludes the impact of changes in foreign currency exchange rates.
We also met the specified goal for free cash flow in 2013. Based on the foregoing, the Named Executive Officers received the payouts that are reflected in the “Non-Equity Incentive Plan Compensation” column under “Executive Compensation-Summary Compensation Table.”


31



.
Stock Ownership Guidelines
The Committee has established stock ownership guidelines for the Named Executive Officers and other executives to motivate them to become significant shareholders and to further encourage long-term performance and growth. The Committee monitors our executives’ compliance with these stock ownership guidelines and periodically reviews the definition of “stock ownership” to reflect the practices of companies in the Comparator Group. For 2015, “stock ownership” included ordinary shares owned by the officer both directly and indirectly, the pro-rated portion of unvested restricted stock, restricted stock units, and shares held in our employee stock ownership plan or our employee stock purchase plan. The Committee determined that, over a period of five years from appointment, certain executives should accumulate and hold ordinary shares equal to specified multiples of base salary. The multiples of base salary required by the guidelines are as follows:
 
Executive Level
Stock Ownership Guidelines
(as a multiple of salary)
Chief Executive Officer
6.0x base salary
Executive Vice President and Chief Financial Officer
3.0x base salary
Senior Vice President, Human Resources; Senior Vice President and General Counsel
2.5x base salary
Other key executives
2.0x base salary
Stock Ownership for the Currently-Serving Named Executive Officers as of December 31, 2015
 
 
Share
Ownership
12/31/15
Market Value ($) (1)
Ownership
Guideline ($)
Meets
Guideline
Randall J. Hogan
641,437

31,770,375

7,360,356

Yes
John L. Stauch
184,956

9,160,871

2,023,875

Yes
Frederick S. Koury
100,548

4,980,142

1,203,188

Yes
Angela D. Jilek
41,393

2,050,195

1,287,500

Yes
Beth A. Wozniak
1,186

58,743

970,000

No(2)
(1)
The amounts in this column were calculated by multiplying the closing market price of our ordinary shares on December 31, 2015 (the last trading day of our most recently completed fiscal year) of $49.53 by the number of shares owned.
(2)
Newly hired officer on September 14, 2015.
Equity Holding Policy
We maintain an equity holding policy under which executive officers who are subject to our stock ownership guidelines are required to retain 100% of the net number of shares acquired under equity awards until the ownership guidelines are satisfied. This policy may be waived to the extent its application to any individual executive officer would cause undue hardship to the executive officer.
Clawback Policy
We maintain a clawback policy under which certain incentive compensation earned by our executive officers may be recouped if the executive officer’s fraud or intentional misconduct is a significant contributing factor to a restatement of financial results. The incentive compensation subject to this policy includes cash bonuses, cash performance units and equity-based awards subject to performance-based vesting conditions to the extent the compensation was paid, credited or earned during the year after the financial results were first disclosed. We intend to amend the policy as and when necessary to reflect applicable changes in law and stock exchange listing standards, including the requirements of the final regulations and listing standards expected to be issued pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Policy Prohibiting Hedging and Pledging
We maintain a policy that prohibits our executive officers and directors from engaging in hedging or pledging transactions involving our ordinary shares or other Pentair securities.


32



Retirement and Other Benefits
Eligible Named Executive Officers and other executives and employees participate in the Pentair, Inc. Pension Plan, the Pentair, Inc. Retirement Savings and Stock Incentive Plan (the "RSIP/ESOP Plan"), the Pentair, Inc. Supplemental Executive Retirement Plan and the Pentair, Inc. Restoration Plan. We also provide other benefits such as medical, dental and life insurance and disability coverage to employees, including the Named Executive Officers. We aim to provide employee and executive benefits at levels that reflect competitive market levels, and established such benefits at approximately the 50th percentile of similar benefits offered by our peers at the time our benefit programs were established. Descriptions of the Pentair, Inc. Pension Plan, the RSIP/ESOP Plan, the Pentair, Inc. Supplemental Executive Retirement Plan and the Pentair, Inc. Restoration Plan are below under “Executive Compensation – Pension Benefits.”
Medical, Dental, Life Insurance and Disability Coverage
Employee benefits such as medical, dental, life insurance and disability coverage are available to all U.S.-based participants through our active employee plans. In addition to these benefits for active employees, we provide post-retirement medical, dental and life insurance coverage to certain retirees in accordance with the legacy company plans which applied at the time the employees were hired. We provide up to one and a half times annual salary (up to $1,000,000) in life insurance, and up to $15,000 per month in long-term disability coverage. The value of these benefits is not required to be included in the Summary Compensation Table since they are made available to all of our U.S. salaried employees.
Other Paid Time-Off Benefits
We also provide vacation and other paid holidays to all employees, including the Named Executive Officers, which we have determined to be comparable to those provided at other large companies.
Deferred Compensation
We sponsor a non-qualified deferred compensation program, called the Sidekick Plan, for our U.S. executives within or above the pay grade that has a midpoint annual salary of $202,600 in 2015. This plan permits executives to defer up to 25% of their base salary and 75% of their annual cash incentive compensation. Executives also may defer receipt of restricted stock units or cash settled performance units. We normally make contributions to the Sidekick Plan on behalf of participants similar to our contributions under the RSIP/ESOP Plan with respect to each participant’s contributions from that portion of his or her income above the maximum imposed by Section 401(a)(17) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), which was $265,000 in 2015, but below the Sidekick Plan’s compensation limit of $700,000.
Participants in the Sidekick Plan are allowed to invest their account balances in a number of possible mutual fund investments. Fidelity Investments Institutional Services Co. provides these investment vehicles for participants and handles all allocation and accounting services for the Plan. We do not guarantee or subsidize any investment earnings under the Plan, and our ordinary shares are not a permitted investment choice under the Plan, although deferred restricted stock units are automatically invested in shares.
Amounts deferred, if any, under the Sidekick Plan by the Named Executive Officers are included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns under “Executive Compensation-Summary Compensation Table.” Our contributions allocated to the Named Executive Officers under the Sidekick Plan are included in the “All Other Compensation” column under “Executive Compensation-Summary Compensation Table.”
Perquisites and Other Personal Benefits
We provide Named Executive Officers with a perquisite program (the “Flex Perq Program”) under which the Named Executive Officers receive a cash perquisite allowance in an amount that the Committee believes is customary, reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews market data provided by Aon Hewitt to assess the levels of perquisites provided to Named Executive Officers.
For 2015, the total aggregate annual allowance under the Flex Perq Program was $50,000 for Mr. Hogan and $40,000 for all other executive officers (other than Ms. Wozniak, who received only $10,000 to reflect her partial year of service). In addition to the allowance provided under the Flex Perq Program, we paid for annual executive physicals for Mr. Hogan and Ms. Jilek, expenses related to the physical for Mr. Hogan and a fitness center reimbursement and holiday gifts for certain of our Named Executive Officers. The fitness center reimbursement is provided pursuant to a broad-based policy that applies generally to U.S. employees. During 2015, we permitted one instance of personal use of a chartered aircraft on a single flight by our Chief Executive Officer. The personal use did not result in any aggregate incremental cost to us.


33



The amounts of the annual allowance under the Flex Perq Program, the fitness center reimbursement and the holiday gifts are included in the “All Other Compensation” column under “Executive Compensation – Summary Compensation Table” and are set forth in more detail in footnote 5 to that table. No amounts are included in the “All Other Compensation” column relating to the personal use of the aircraft described above because the personal use did not result in any aggregate incremental cost to us.
Severance and Change-in-Control Benefits
We provide severance and change-in-control benefits to selected executives to provide for continuity of management upon a threatened or completed change in control. These benefits are designed to provide economic protection to key executives following a change in control of our company so that our executives can remain focused on our business without undue personal concern. We believe that the security that these benefits provide helps our key executives to remain focused on our on-going business and reduces the key executive’s concerns about future employment. We also believe that these benefits allow our executives to consider the best interests of our company and its shareholders due to the economic security afforded by these benefits. We currently provide only the following severance and change-in-control benefits to our executive officers:
We have agreements with our key corporate executives and other key leaders, including all Named Executive Officers, that provide for contingent benefits upon a change in control or upon a covered termination following a change in control.
The 2012 Plan provides that, upon a change in control, all options, restricted stock and restricted stock units that are unvested become fully vested; all cash performance awards (other than annual incentive awards) are paid in full based on performance at the better of target or trend; and all annual incentive awards are paid based on full satisfaction of the performance goals (i.e., target). In addition, if an employee’s employment is involuntarily terminated for a reason other than cause, death or disability, or if an employee who is a Board-appointed corporate officer voluntarily terminates employment for good reason, then the employee’s outstanding awards under the 2012 Plan will be eligible for continued or accelerated vesting as described below under “Executive Compensation-Potential Payments Upon Termination Or Change In Control.”
Upon certain types of terminations of employment (other than a termination following a change in control), severance benefits may be paid to the Named Executive Officers at the discretion of the Committee.
We explain these benefits more fully below under “Executive Compensation-Potential Payments Upon Termination Or Change In Control.” In connection with his cessation of employment on March 1, 2016, Mr. Koury's outstanding awards under the 2012 Plan were eligible for continued or accelerated vesting and he received other severance benefits as described below under "Executive Compensation-Potential Payments Upon Termination Or Change In Control."
Impact of Tax Considerations
Section 162(m) of the Code places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to each of our Chief Executive Officer and our three other most highly paid executive officers (other than our Chief Financial Officer). There is an exception to the $1,000,000 limitation for performance-based compensation meeting certain requirements, including periodic shareholder approval of the benefit plans under which we pay such performance-based compensation. Annual and long-term cash incentive compensation generally is performance-based compensation meeting those requirements and, as such, is fully deductible. The Committee included a performance hurdle on grants of restricted stock units in 2015 that requires our company to meet a specified goal for adjusted net income for any vesting to take place. This performance condition is intended to make the restricted stock units eligible to be treated as performance-based compensation. Stock options that we grant under the 2012 Plan are also treated as performance-based compensation. At the Annual General Meeting in 2013, our shareholders approved the performance goals under the 2012 Plan, making awards granted under the Plan eligible to be treated as performance-based compensation under Section 162(m) if the Committee elects to make the awards otherwise compliant with the applicable requirements of Section 162(m).
The Committee also considers the impact of other tax provisions, such as the restrictions on deferred compensation set forth in Section 409A of the Code, and attempts to structure compensation in a tax-efficient manner, both for the Named Executive Officers and for our company. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy requiring all compensation to be deductible.



34



COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2015.
THE COMPENSATION COMMITTEE
David A. Jones, Chair
Jerry W. Burris
T. Michael Glenn
William T. Monahan



35



EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation paid to or earned by each of the Named Executive Officers for the years ended December 31, 2013, 2014 and 2015.
 
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Name and
Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($) (1)
Option
Awards
($) (2)
Non-Equity
Incentive Plan
Compensation
($) (3)
Change in Pension Value and Non-Qualified Deferred Compensation Earnings
($) (4)
All Other
Compensation
($) (5)
Total
Compensation
($)
Randall J. Hogan
Chairman and
Chief Executive Officer
2015
1,275,795

3,133,360

3,132,877

1,860,352


101,657

9,504,041

2014
1,226,726

3,130,377

3,130,873

3,639,624

3,595,207

113,895

14,836,702

2013
1,173,900

2,981,318

3,156,470

4,287,977

1,057,943

95,187

12,752,795

 
 
 
 
 
 
 
 
 
 
John L. Stauch
Executive Vice President
and Chief Financial
Officer
2015
674,625

800,027

799,883

416,000

67,883

81,408

2,839,826

2014
642,500

750,021

750,127

1,168,709

1,293,988

76,978

4,682,323

2013
566,250

666,686

705,834

1,242,580

163,044

80,688

3,425,082

 
 
 
 
 
 
 
 
 
 
Frederick S. Koury
Senior Vice President,
Human Resources (6)
2015
481,275

416,683

416,613

208,000


81,520

1,604,091

2014
465,000

400,031

400,061

675,960

850,891

66,186

2,858,129

2013
427,500

333,317

352,910

717,362

18,355

79,145

1,928,589

 
 
 
 
 
 
 
 
 
 
Angela D. Jilek
Senior Vice President,
General Counsel and Secretary
2015
515,000

366,673

366,614

208,000

74,630

82,884

1,613,801

2014
500,000

333,308

333,377

610,000

555,765

59,816

2,392,266

2013
452,750

333,317

352,910

638,680

70,095

72,237

1,919,989

 
 
 
 
 
 
 
 
 
 
Beth A. Wozniak
President, Flow & Filtration Solutions (7)
2015
145,133

100,000
875,016

875,297



11,972

2,007,418

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
The amounts in column (e) represent the aggregate grant date fair value, computed in accordance with Accounting Standards Codification 718 (“ASC
718”), of restricted stock units granted during each year. Assumptions used in the calculation of the amounts in column (e) are included in footnote 15 to our audited financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2016.

(2)
The amounts in column (f) represent the aggregate grant date fair value, computed in accordance with ASC 718, of stock options granted during each year. Assumptions used in the calculation of these amounts are included in footnote 15 to our audited financial statements for the year December 31, 2015 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2016.

(3)
The amounts in column (g) with respect to 2015 reflect cash awards to the named individuals pursuant to awards under the MIP in 2015, which were determined by the Compensation Committee at its February 22, 2016 meeting and, to the extent not deferred by the executive, paid shortly thereafter, as well as payments to the named individuals pursuant to cash settled performance units granted in 2013 that vested in 2015. The amounts paid pursuant to awards under the MIP were as follows: Mr. Hogan – $0; Mr. Stauch – $0; Mr. Koury – $0; and Ms. Jilek – $0. The amounts paid pursuant to cash settled performance units earned at the end of a three-year performance period from 2013-2015 were as follows: Mr. Hogan –$1,860,352; Mr. Stauch –$416,000; Mr. Koury – $208,000; and Ms. Jilek – $208,000. Ms. Wozniak did not participate in the MIP or receive any payments pursuant to cash settled performance units in 2015.

(4)
The amounts in column (h) reflect the increase in the actuarial present value of the Named Executive Officer’s accumulated benefits under all of our pension plans determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. The actual present value of such accumulated benefits for Messrs. Hogan and Koury decreased by ($169,653) and ($4,301), respectively, in 2015. In accordance with regulations of the Securities and Exchange Commission, these negative amounts are not reflected in the sums reported in column (h).

(5)
The table below shows the components of column (i) for 2015, which include perquisites and other personal benefits; and the Company contributions under the Sidekick Plan, RSIP/ESOP Plan and the Employee Stock Purchase Plan:






36



 
(A)
(B)
(C)
(D)
Name
Perquisites
under the
Flex Perq
Program
($)(a)
Other
Perquisites
and Personal
Benefits
($)(b)
Contributions
under Defined
Contribution
Plans
($)(c)
Matches
under the
Employee
Stock
Purchase Plan
($)
Mr. Hogan
50,000

12,582

39,075


Mr. Stauch
40,000

533

39,075

1,800

Mr. Koury
40,000

195

39,075

2,250

Ms. Jilek
40,000

3,809

39,075


Ms. Wozniak
10,000

305

1,667



(a)
The amount shown in column (A) for each individual reflects amounts paid to or for the benefit of each Named Executive Officer under the Flex Perq Program, which is designed to provide corporate officers and other key executives with an expense allowance for certain personal and business-related benefits.

(b)
The amounts shown in column (B) consist of the cost of annual executive physicals for Mr. Hogan and Ms. Jilek, the costs of travel, food and lodging related to the physical for Mr. Hogan, holiday gifts for Mr. Stauch, Ms. Jilek and Ms. Wozniak, and a fitness center reimbursement for Messrs. Stauch and Koury and Ms.Wozniak provided pursuant to a broad-based policy that applies generally to U.S. employees. No amounts are included in column (B) relating to personal use of a chartered aircraft on a single flight by Mr. Hogan because the personal use did not result in any aggregate incremental cost to us.

(c)
The amount shown in column (C) for each individual reflects amounts contributed by us to the RSIP/ESOP Plan and the Sidekick Plan during 2015. In the case of the Sidekick Plan, the amounts contributed by us during 2015 relate to salary deferrals in 2014.

(6)
Mr. Koury's employment ceased on March 1, 2016.

(7)
Ms. Wozniak became President of our Flow & Filtration Solutions business segment in September 2015. The amount shown in the "Bonus" column reflects the signing bonus Ms. Wozniak received in connection with her commencement of employment.



37



GRANTS OF PLAN-BASED AWARDS IN 2015

 
  
  
  
Estimated Future Payouts Under Non- Equity Incentive Plan Awards (2) (3)
Estimated Future Payouts Under Equity Incentive Plan Awards
  
  
  
  
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
Name
Grant Date
Compen-sation Committee Approval Date (1)
Threshold ($)
Target ($)
Maximum ($)
Threshold (#)
Target (#)
Maximum (#)
All Other Stock Awards: Number of Shares of Stock or Units (#) (4)
All Other Option Awards: Number of Securities Underlying Options (#) (5)
Exercise or Base Price of Option Awards ($/sh)
Grant Date Fair Value of Stock and Option Awards ($) (6)
Randall J. Hogan













01/02/2015
12/8/2014






46,991


3,133,360

01/02/2015
12/8/2014







186,786
    66.68
3,132,877

01/02/2015
12/8/2014
1,566,667
3,133,334
6,266,668










1,530,954
2,041,272
4,082,544







John L. Stauch













01/02/2015
12/8/2014






11,998


800,027

01/02/2015
12/8/2014







47,690
    66.68
799,883

01/02/2015
12/8/2014
400,000
800,000
1,600,000










505,969
674,625
1,349,250







Frederick S. Koury













01/02/2015
12/8/2014






6,249


416,683

01/02/2015
12/8/2014







24,839
    66.68
416,613

01/02/2015
12/8/2014
208,334
416,667
833,334










288,765
385,020
770,040







Angela D. Jilek













01/02/2015
12/8/2014






5,499


366,673

01/02/2015
12/8/2014







21,858
    66.68
366,614

01/02/2015
12/8/2014
183,334
366,667
733,334










309,000
412,000
824,000







Beth A. Wozniak













09/15/2015
9/6/2015






16,192


875,016

09/15/2015
9/6/2015







65,443
    54.04
875,297

(1)
The Compensation Committee’s practices for granting options and restricted stock units, including the timing of all grants and approvals therefor, are described under “Compensation Discussion and Analysis – 2015 Long-Term Incentive Compensation.”

(2)
The amounts shown in column (d) to which no grant date applies reflect the total of the threshold payment levels for each element under our MIP. This amount is 75% of the target amounts shown in column (e). The amounts shown in column (f) are 200% of such target amounts. These amounts are based on the individual’s actual salary paid for 2015 and current position.
.
(3)
The amounts shown in column (d) as having been granted on January 2, 2015, reflect the total of the threshold payment levels for awards of cash settled performance units granted in 2015 under the 2012 Plan, which are 50% of the target amounts shown in column (e). The amounts shown in column (f) are 200% of such target amounts. These amounts are based on the individual’s current salary and position. Any amounts payable with respect to performance units would be paid in March 2018, based on cumulative Company performance for the period 2015 to 2017.

(4)
The amounts shown in column (j) reflect the number of restricted stock units granted to each Named Executive Officer in 2015.

(5)
The amounts shown in column (k) reflect the number of options to purchase ordinary shares granted to each Named Executive Officer in 2015.

(6)
The amounts shown in column (m) reflect the grant date fair value of the awards of restricted stock units and stock options computed in accordance with ASC 718.



38




OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2015
  
Option Awards
Stock Awards
Name
Number of securities underlying unexercised options (#) Exercisable
Number of securities underlying unexercised options (#) Unexercisable
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)
Option exercise price ($)(1)
Option expiration date
Number of shares of stock or units that have not been vested (#)(2)
Market value of shares of stock or units that have not vested ($)(3)
Equity incentive plan awards: Number of unearned shares that have not vested (#)
Equity incentive plan awards: Market or payout value of unearned shares that have not vested ($)
Randall J. Hogan








227,962

11,290,958




316,448



30.05

1/3/2017







330,325



34.18

1/2/2018







305,253



24.78

1/2/2019







362,572



33.38

1/4/2020







171,324



36.98

1/3/2021







193,777



34.12

1/3/2022







132,554

66,277 (4)


50.61

1/2/2023







18,188

9,094 (5)


52.69

3/15/2023







45,526

91,053 (6)


76.87

1/2/2024








186,786 (7)


66.68

1/2/2025






 John L. Stauch








62,520

3,096,616




112,500



34.18

1/2/2018







59,220



33.38

1/4/2020







54,890



36.98

1/3/2021







60,953



34.12

1/3/2022







33,875

16,938 (4)


50.61

1/2/2023







10,907

21,816 (6)


76.87

1/2/2024








47,690 (7)


66.68

1/2/2025






Frederick S. Koury








33,378

1,653,212




68,642



33.38

1/4/2020







31,603



36.98

1/3/2021







36,026



34.12

1/3/2022







16,937

8,469 (4)


50.61

1/2/2023







5,817

11,635 (6)


76.87

1/2/2024








24,839 (7)


66.68

1/2/2025






Angela D. Jilek








29,067

1,439,689




2,799



32.40

3/3/2018







4,815



19.13

3/3/2019







12,763



34.23

3/2/2020







12,812



36.98

1/3/2021







18,586



34.12

1/3/2022







16,311

8,330 (4)


50.61

1/2/2023







4,847

9,696 (6)


76.87

1/2/2024








21,858 (7)


66.68

1/2/2025






Beth A. Wozniak








16,192

801,990





65,443 (8)


54.04

9/15/2025










39




(1)
The exercise price for all stock option grants is the fair market value of our ordinary shares on the date of grant.
(2)
For the restricted stock unit awards granted prior to 2014, the restrictions with respect to half of the shares will lapse on the third anniversary of the grant date and the restrictions on the remaining half of the shares will lapse on the fourth anniversary of the grant date. For the 2015 awards of restricted stock units, the restrictions with respect to one-third of the shares will lapse on the first, second, and third anniversaries of the grant date, except for the award of restricted stock units to Ms. Wozniak in 2015, which vests in full on the fourth anniversary of the grant date.
(3)
The amounts in this column were calculated by multiplying the closing market price of our ordinary shares on December 31, 2015 (the last trading day of our most recently completed fiscal year) of $49.53 by the number of unvested restricted stock units.
(4)
One-third of these options will vest on each of the first, second and third anniversaries of the grant date, January 2, 2013.
(5)
One-third of these options will vest on each of the first, second and third anniversaries of the grant date, March 15, 2013.
(6)
One-third of these options will vest on each of the first, second and third anniversaries of the grant date, January 2, 2014.
(7)
One-third of these options will vest on each of the first, second and third anniversaries of the grant date, January 2, 2015.
(8)
100% of these options will vest on the fourth anniversary of the grant date, September 15, 2015.



40



2015 OPTION EXERCISES AND STOCK VESTED TABLE
The following table shows a summary of the stock options exercised by the Named Executive Officers in 2015 and the restricted stock or restricted stock units vested for the Named Executive Officers during 2015.
 
Name
Option awards
Stock awards
Number of
shares
acquired on
exercise (#)
Value
realized on
exercise
($)(1)
Number of
shares
acquired on
vesting (#)
Value
realized on
vesting
($)(2)
Randall J. Hogan


129,686

7,459,987

John L. Stauch


41,628

2,383,792

Frederick S. Koury


25,402

1,450,838

Angela D. Jilek


17,665

995,856

Beth A. Wozniak





(1)
Reflects the amount calculated by multiplying the number of options exercised by the difference between the market price of our ordinary shares on the exercise date and the exercise price of options.

(2)
Reflects the amount calculated by multiplying the number of shares vested by the market price of our ordinary shares on the vesting date.
2015 PENSION BENEFITS
Listed below are the number of years of credited service and present value of accumulated pension benefits as of December 31, 2015 for each of the Named Executive Officers under the Pentair, Inc. Pension Plan, the Pentair, Inc. Supplemental Executive Retirement Plan and the Pentair, Inc. Restoration Plan, which are described in detail under “Compensation Discussion and Analysis – Retirement and Other Benefits.” The disclosed amounts are actuarial estimates only and do not necessarily reflect the actual amounts that will be paid to the Named Executive Officers, which will only be known at the time that they become eligible for payment.

Name
Plan name
Number of 
years
credited
service (#)
Present value
of
accumulated
benefit ($)(1)
Payments
during last 
fiscal year
($)
Randall J. Hogan
Pentair, Inc. Pension Plan
18

660,215


Pentair, Inc. Supplemental Executive Retirement Plan
18

19,190,065


John L. Stauch
Pentair, Inc. Pension Plan
9

221,550


Pentair, Inc. Supplemental Executive Retirement Plan
9

3,946,537


Frederick S. Koury
Pentair, Inc. Pension Plan
12

352,669


Pentair, Inc. Supplemental Executive Retirement Plan
12

3,188,025


Angela D. Jilek
Pentair, Inc. Pension Plan
13

289,336


Pentair, Inc. Supplemental Executive Retirement Plan
6

1,322,651


Beth A. Wozniak
Pentair, Inc. Pension Plan
N/A

N/A


Pentair, Inc. Supplemental Executive Retirement Plan



(1)
The Supplemental Executive Retirement Plan benefits, which include amounts under the Restoration Plan, are payable following retirement at age 55 or later in the form of an annuity. The actuarial present values above were calculated using the following methods and assumptions:
The Pension Plan present values were based on the accrued benefit payable at age 65 and were calculated as of December 31, 2015.
Present values for the Pension Plan are based on a life-only annuity. Present values for the Supplemental Executive Retirement Plan are based on a 180-month-certain only annuity.
The present value of Pension Plan benefits as of December 31, 2015 was calculated assuming a 4.28% interest rate and the MRP2007 male and female generational mortality (no collar adjustments) with improvement scale MMP2007 for post-retirement decrements with no pre-retirement mortality used.
The present value of Supplemental Executive Retirement Plan benefits as of December 31, 2015 was calculated assuming a 3.85% interest rate.
The actual amount of pension benefits ultimately paid to a Named Executive Officer may vary based on a number of factors, including differences from the assumptions used to calculate the amounts.


41



The Pentair, Inc. Pension Plan, the Pentair, Inc. Retirement Savings and Stock Incentive Plan, the Pentair, Inc. Supplemental Executive Retirement Plan and the Pentair, Inc. Restoration Plan were all amended in 2008 to comply with final regulations under Section 409A of the Code. As a result of these amendments, benefits vested prior to January 1, 2005 are separated from benefits earned after January 1, 2005, and may offer different distribution or other options to participants as described below.
The Pentair, Inc. Pension Plan
The Pentair, Inc. Pension Plan (the “Pension Plan”) is a funded, tax-qualified, noncontributory defined-benefit pension plan that covers certain employees, including each of the Named Executive Officers other than Ms. Wozniak. Participation in the Pension Plan is restricted to those Named Executive Officers and other employees who were hired on or before December 31, 2007. Benefits under the Pension Plan are based upon an employee’s years of service and highest average earnings in any five-year period during the ten-year period preceding the employee’s retirement (or, in the case of an employee with more than five years but less than ten years of service, during any five-year period preceding the employee’s retirement). No additional benefits may be earned under the Pension Plan after December 31, 2017. Benefits under the Pension Plan are payable after retirement in the form of an annuity.
Compensation covered by the Pension Plan for the Named Executive Officers equals the amounts set forth in the “Salary” column under “Executive Compensation-Summary Compensation Table” and 2015 incentive compensation paid under the MIP in March 2016 set forth in the “Non-Equity Incentive Plan Compensation” column under “Executive Compensation-Summary Compensation Table.” The amount of annual earnings that may be considered in calculating benefits under the Pension Plan is limited by law. For 2015, the annual limitation was $265,000.
Benefits under the Pension Plan are calculated as an annuity equal to the participant's years of service multiplied by the sum of:
1.0% of the participant’s highest final average earnings; and
0.5% of such earnings in excess of Primary Social Security compensation.
Years of service under these formulas cannot exceed 35. Contributions to the Pension Plan are made entirely by us and are paid into a trust fund from which the benefits for all participants will be paid.
The Pentair Supplemental Executive Retirement and Restoration Plan
The Pentair, Inc. Supplemental Executive Retirement Plan (“SERP”) and the Pentair, Inc. Restoration Plan (“Restoration Plan”) are unfunded, nonqualified defined benefit pension plans. Employees eligible for participation in the SERP include all executive officers and other key executives selected for participation by the Committee. Participation in the Restoration Plan is limited to eligible employees under the SERP who were eligible employees on or before December 31, 2007. Benefits under these two Plans vest upon the completion of five years of benefit service (all service following initial participation). These Plans are combined for all administrative, accounting and other purposes. Each of the Named Executive Officers participates in the SERP and each of the Named Executive Officers other than Ms. Jilek and Ms. Wozniak participates in the Restoration Plan. All Named Executive Officers other than Ms. Wozniak are fully vested in these Plans.
    
Benefits under the SERP are based upon the number of an employee’s years of service following initial participation and the highest average earnings for a five calendar-year period (ending with retirement). Benefits vested as of December 31, 2004, are payable after retirement in the form of either a 15-year certain annuity or, at the participant’s option, a 100% joint and survivor annuity. Benefits earned after December 31, 2004, are payable after retirement in the form of a 15-year certain annuity. Compensation covered by the SERP and the Restoration Plan for the Named Executive Officers equals the amounts set forth in the “Salary” column under “Executive Compensation-Summary Compensation Table” and 2015 incentive compensation paid under the MIP in March 2016 set forth in the “Non-Equity Incentive Plan Compensation” column under “Executive Compensation-Summary Compensation Table.”
Benefits under the SERP are calculated as:
final average compensation as defined above; multiplied by
benefit service percentage, which equals 15% multiplied by years of benefit service.
As discussed above, the Pension Plan limits retirement benefits for compensation earned in excess of the annual limitation imposed by Code Section 401(a)(17), which was $265,000 in 2015. The Restoration Plan is designed to provide retirement benefits based on compensation earned by participants in excess of this annual limitation. The only participants in


42



the Restoration Plan are those executive officers and other selected key leaders who participate in the SERP and who otherwise qualify for participation in the Restoration Plan. Restoration Plan benefits are combined and administered with those payable under the SERP and are paid in the same manner and at the same time.
Benefits under the Restoration Plan are calculated as:
final average compensation as defined above, less compensation below the annual limitation amount in each year; multiplied by
earned benefit service percentage (which is weighted based on age at the time of service), in accordance with the following table:
Service Age
Percentage
Under 25
4%
25-34
5.5%
35-44
7%
45-54
9%
55 or over
12%
The benefit percentages calculated above are added and the resulting percentage is multiplied by the covered compensation amount. Benefits vested as of December 31, 2004 are payable after retirement in the form of a 15-year certain annuity or, at the participant’s option, a 100% joint and survivor annuity. Benefits earned after December 31, 2004 are payable after retirement in the form of a 15-year certain annuity. No additional benefits may be earned under the Restoration Plan after December 31, 2017.
The present value of the combined accumulated benefits for the Named Executive Officers under both the SERP and the Restoration Plan is set forth in the table under “Executive Compensation-Pension Benefits.”
The Pentair Retirement Savings and Stock Incentive Plan
The Pentair Retirement Savings and Stock Incentive Plan (“RSIP/ESOP Plan”) is a tax-qualified 401(k) retirement savings plan, with a companion Employee Stock Ownership Plan (“ESOP”) component. Participating employees may contribute up to 50% of base salary and incentive compensation on a before-tax basis and 15% of compensation on an after-tax basis, into their 401(k) plan (“RSIP”). We normally match an amount equal to one dollar for each dollar contributed to the RSIP by participating employees on the first 1%, and 50 cents for each dollar contributed to the RSIP by participating employees on the next 5%, of their regular earnings to incent employees to make contributions to our retirement plan. In addition, after the first year of employment, we contribute to the ESOP an amount equal to 1 1/2 % of cash compensation (salary and incentive compensation) for each participant in the RSIP. The RSIP/ESOP Plan limits the amount of cash compensation considered for contribution purposes to the maximum imposed by Code Section 401(a)(17), which was $265,000 in 2015.
Participants in the RSIP/ESOP Plan are allowed to invest their account balances in a number of possible mutual fund investments. Our ordinary shares are also a permitted investment choice under the RSIP. We also make ESOP contributions in our ordinary shares.
Fidelity Investments Institutional Services Co. provides these investment vehicles for participants and handles all allocation and accounting services for the Plan. We do not guarantee or subsidize any investment earnings under the Plan.
Amounts deferred, if any, under the RSIP/ESOP Plan by the Named Executive Officers are included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns under “Executive Compensation-Summary Compensation Table.” Amounts contributed by us to the RSIP/ESOP Plan for the Named Executive Officers are included in the “All Other Compensation” column under “Executive Compensation-Summary Compensation Table.” Matching contributions are generally made a year in arrears.
NONQUALIFIED DEFERRED COMPENSATION TABLE
The following table sets forth the contributions, earnings, distributions and 2015 year-end balances for each of the Named Executive Officers under our Sidekick Plan described under “Compensation Discussion and Analysis – Retirement and Other Benefits – Deferred Compensation.” Contributions we make to the Sidekick Plan are intended to make up for contributions to our RSIP/ESOP Plan (including our matching contributions) for cash compensation above the maximum imposed by Code Section 401(a)(17), which was $265,000 in 2015. Because the Code does not permit contributions on amounts in excess of that limit under a tax-qualified plan, the Sidekick Plan is designed to permit matching contributions on


43



compensation in excess of the maximum imposed by Code Section 401(a)(17). We make these matching contributions to the Sidekick Plan on amounts in excess of the maximum imposed by Code Section 401(a)(17), but below the $700,000 compensation limit contained in our Sidekick Plan (such contributions by a Named Executive Officer, “Covered Sidekick Compensation”).
 
Name
Executive
Contributions in
2015
($)
Registrant
Contributions in
2015
($)
Aggregate
Earnings/
(Loss)
in 2015
($)
Aggregate
Withdrawals/
Distributions
in 2015
($)
Aggregate
Balance at
December 31, 
2015
($) (1)
Randall J. Hogan
25,453

22,000

(966,417
)
(583,773
)
5,285,290

John L. Stauch
476,382

22,000

(698,078
)
(302,993
)
4,012,835

Frederick S. Koury
60,626

22,000

(18,389
)
(64,324
)
513,365

Angela D. Jilek

22,000

(58,047
)
(38,710
)
404,180

Beth A. Wozniak
20,208


(434
)

19,775

(1)
Amounts deferred under the Sidekick Plan that have also been reported in the Summary Compensation Table since 2006 for each Named Executive Officer are: Mr. Hogan — $5,257,836; Mr. Stauch — $4,533,323; Mr. Koury — $595,167; Ms. Jilek — $552,989; Ms. Wozniak — $20,208. To the extent the amounts in this column are less than the amounts that have also been reported in the Summary Compensation Table since 2006, the difference is due to losses, withdrawals or distributions.
The amounts set forth in the column “Executive Contributions in 2015” reflect the amount of cash compensation each Named Executive Officer deferred in 2015 under the Sidekick Plan.
The amounts set forth in the column “Registrant Contributions in 2015” are the totals of contributions we made in 2015 under the Sidekick Plan for the account of each Named Executive Officer. These amounts, in addition to contributions we made under the RSIP/ESOP Plan, are included in the “Summary Compensation Table” in the column labeled “All Other Compensation” above. The contributions we made are derived from some or all of the following sources:
Matching contributions equal to one dollar for each dollar contributed up to 1% of Covered Sidekick Compensation, and 50 cents for each incremental dollar contributed on the next 5%, deferred in 2014 by each Named Executive Officer; we normally make these contributions one year in arrears.
A discretionary contribution of up to 1 1/2% of Covered Sidekick Compensation earned in 2014 for each Named Executive Officer; we normally make these contributions one year in arrears.
The amounts set forth in the column “Aggregate Earnings/(Loss) in 2015” reflect the amount of investment earnings realized by each Named Executive Officer on the investments chosen that are offered to participants in our RSIP/ESOP Plan and Sidekick Plan. Fidelity Investments Institutional Services Co. provides these investment vehicles for participants and handles all allocation and accounting services for these plans. We do not guarantee or subsidize any investment earnings in either Plan.
For some participants, including the Named Executive Officers, the selected distribution events under the Sidekick Plan included a change in control, which included the Merger. As a result, the distribution of some previously earned and vested, but unpaid, amounts under Pentair’s deferred compensation programs to the Named Executive Officers commenced upon the consummation of the Merger. Some of these amounts were distributed in installments, and the amounts of the installments occurring in 2015 are set forth in the column “Aggregate Withdrawals/Distributions in 2015.”



44



POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Except for items described below, we have no agreements, arrangements, or plans that entitle executive officers to severance, perquisites, or other enhanced benefits upon termination of their employment; such payments or benefits (other than following a change in control) would be at the discretion of the Compensation Committee.
Change in Control Agreements
We have previously entered into agreements with certain key corporate executives and business division leaders, including all Named Executive Officers, that provide for contingent benefits upon a change in control. These agreements are intended to provide for continuity of management upon a completed or threatened change in control. The agreements provide that covered executive officers could be entitled to certain severance or other benefits following a change in control. If, following such a change in control, the executive officer is involuntarily terminated, other than for disability or for cause, or if such executive officer terminates his or her employment for conditions that constitute good reason, then the executive officer is entitled to certain severance payments.
Under these agreements, the term “cause” means:
engaging in intentional conduct that causes us demonstrable and serious financial injury;
conviction of a felony; or
continuing willful and unreasonable refusal by an officer to perform his or her duties or responsibilities.
Under these agreements, the term “good reason” means:
a breach of the agreement by us;
any reduction in an officer’s base salary, percentage of base salary available as incentive compensation or bonus opportunity or benefits;
an officer’s removal from, or any failure to reelect or reappoint him or her to serve in, any of the positions held with us on the date of the change in control or any other positions to which he or she is thereafter elected, appointed or assigned, except in the event that such removal or failure to reelect or reappoint relates to our termination of an officer’s employment for cause or by reason of disability;
a good faith determination by an officer that there has been a material adverse change in his or her working conditions or status relative to the most favorable working conditions or status in effect during the 180-day period prior to the change in control, or, to the extent more favorable to him or her, those in effect at any time while employed after the change in control, including but not limited to a significant change in the nature or scope of his or her authority, powers, functions, duties or responsibilities or a significant reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements, but in each case excluding for this purpose an isolated, insubstantial and inadvertent event not occurring in bad faith that we remedy within 10 days after receipt of notice thereof;
relocation of an officer’s principal place of employment to a location more than 50 miles from his or her principal place of employment on the date 180 days prior to the change in control;
imposition of a requirement that an officer travel on business 20% in excess of the average number of days per month he or she was required to travel during the 180-day period prior to the change in control;
our failure to cause a successor to assume an officer’s agreement; or
only in the case of the Chief Executive Officer, a voluntary termination for any reason within 30 days following the first anniversary of any change in control.

Under these agreements, a “change in control” is deemed to have occurred if:
any person is or becomes the beneficial owner of securities representing 20% (or 30% in the cases of Mr. Stauch, Ms. Jilek and Ms. Wozniak) or more of our outstanding ordinary shares or combined voting power;
a majority of the Board changes in a manner that has not been approved by at least two-thirds of the incumbent directors or successor directors nominated by at least two-thirds of the incumbent directors;
we consummate a merger, consolidation or share exchange with any other entity (or the issuance of voting securities in connection with a merger, consolidation or share exchange) which our shareholders have approved and in which our shareholders control less than 50% of combined voting power after the merger, consolidation or share exchange; or
we consummate a plan of complete liquidation or dissolution or an agreement for the sale or disposition of all or substantially all of our assets which our shareholders have approved.


45



The benefits under the change in control agreements that could be triggered by a change in control and a covered termination in connection with such a change in control include:
upon any change in control:
incentive compensation awards for the year in question to be paid at target;
for Named Executive Officers other than Ms. Wozniak, immediate vesting of all unvested stock options and termination of all restrictions on restricted stock awards;
for Named Executive Officers other than Ms. Wozniak, cash settled performance awards to be paid at one-third of target if the award cycle has been in effect less than 12 months, at two-thirds of the then-current value if the award cycle has been in effect for between 12 and 24 months, and at the then-current value if the award cycle has been in effect for 24 months or more, in each case as if all performance or incentive requirements and periods had been satisfied; and
in certain cases for Named Executive Officers other than Ms. Wozniak, reimbursement of any excise taxes triggered by payments to the executive and any additional taxes on this reimbursement. In place of a tax gross up for excise taxes, Ms. Wozniak's agreement provides that, if excise taxes would otherwise be imposed in connection with a change in control, her change in control compensation protections will be either cut back to a level below the level that would trigger the imposition of the excise taxes or paid in full and subjected to the excise taxes, whichever results in the better after-tax result to her.
upon termination of the executive by us other than for death, disability or cause or by the executive for good reason, after a change in control:
severance payable upon termination in an amount equal to 300% (for the Chief Executive Officer), 250% (for the other Named Executive Officers other than Ms. Wozniak) or 200% (for Ms. Wozniak) of annual base salary plus the greater of the executive’s target bonus for the year of termination or the actual bonus paid with respect to the year prior to the change in control;
replacement coverage for Company-provided group medical, dental and life insurance policies for up to three years (for Mr. Hogan) or two years (for Mr. Stauch, Ms. Jilek and Ms. Wozniak);
the cost of an executive search agency not to exceed 10% of the executive’s annual base salary;
the accelerated accrual and vesting of benefits under the SERP (for those executives who have been made participants of such plan); and for executives having fewer than seven years of participation in the SERP, up to three additional years of service can be credited, up to a maximum of seven years of service;
up to $15,000 in fees and expenses of consultants and legal or accounting advisors; and
for Ms. Wozniak, whose agreement does not provide for single-trigger equity vesting, all equity-based and cash incentive awards granted prior to the change in control will be subject to the terms of the incentive plan under which they were granted (including accelerated vesting, if provided for in the applicable plan), and all equity-based and cash incentive awards granted after on or after the change in control will vest or be earned in full upon such termination.
In the case of each Named Executive Officer, the agreement also requires the executive to devote his or her best efforts to us or our successor during the three-year or two-year period, to maintain the confidentiality of our information during and following employment and to refrain from competitive activities for a period of one year following termination of employment with us or our successor.

Change in Control and Termination Provisions of Incentive Plans
Change in Control Provisions
The 2012 Plan provides that, upon a change in control, unless an agreement between us and the executive provides for a more favorable result to the executive:
all outstanding options, restricted stock and restricted stock units that are not performance awards are immediately vested;


46



all outstanding performance awards (other than annual incentive awards) are paid in full based on performance at the better of target or trend; and
all outstanding annual incentive awards are paid based on full satisfaction of the performance goals.
The 2004 Omnibus Plan and 2008 Omnibus Plan each provides that, upon a change in control, unless otherwise provided in an agreement between us and the executive that discusses the effect of a change in control on the executive’s awards:
all outstanding options (which are the sole form of awards currently outstanding under the plans) that are unvested become fully vested.
Termination Provisions
Retirement. If any of the Named Executive Officers terminates employment in a retirement with at least 10 years of service, the 2012 Plan and its predecessor plans provide as follows:
If the retirement is prior to age 60: unvested options are forfeited; restricted stock and restricted stock units (that are not performance awards or for which any performance goals have been satisfied) vest pro rata; and performance awards are paid on a pro rata basis based on actual performance; or
If the retirement is after age 60: options continue to vest for 5 years; restricted stock and restricted stock units (that are not performance awards or for which any performance goals have been satisfied) vest in full; and performance awards are paid in full based on actual performance.
Death or Disability. If any of the Named Executive Officers terminates employment as a result of death or disability, the 2012 Plan and its predecessor plans provide that options, restricted stock and restricted stock units are immediately vested; and performance awards are paid in full based on actual performance.
Termination Without Cause or for Good Reason. If any of the Named Executive Officers terminates employment in an involuntary termination for a reason other than cause, death or disability, or in a voluntarily termination for good reason, then the employee’s outstanding awards under the 2012 Plan will be eligible for continued or accelerated vesting, as described below. A termination of employment under these circumstances is referred to in the 2012 Plan as a “Covered Termination.” For a Named Executive Officer’s termination to be considered a Covered Termination, the officer must execute a general release in a form and manner determined by us. Upon a Covered Termination, the 2012 Plan provides that awards held by a Board-appointed corporate officer, including such a Named Executive Officer, will be treated as follows:
Stock options will remain outstanding, and will continue to vest in accordance with their terms as if the officer had remained in employment, until the earlier of the expiration date of the stock option and the fifth anniversary of the covered termination.
Restricted stock and restricted stock units (that are not performance awards or for which any performance goals have been satisfied) will vest in full.
Performance awards, including restricted stock and restricted stock units that have performance-based vesting, will be paid following the end of the performance period based on achievement of the performance goals established for the awards as if the employee had not experienced a covered termination.
Under the 2012 Plan, the term “cause” means an act or omission by the officer as is determined by the Plan administrator to constitute cause for termination, including but not limited to any of the following:
a material violation of any company policy;
embezzlement from, or theft of property belonging to, us or any of our affiliates;
willful failure to perform, or gross negligence in the performance of, or failure to perform, assigned duties; or
other intentional misconduct, whether related to employment or otherwise, which has, or has the potential to have, a material adverse effect on our business.
Under the 2012 Plan, the term “good reason” means:
any material breach by us of the terms of any employment agreement;


47



any reduction in base salary or percentage of base salary available as incentive compensation or bonus opportunity, or any material reduction in nonqualified deferred compensation retirement benefits;
a good faith determination by the officer that there has been a material adverse change in the officer’s working conditions or status;
a relocation of the principal place of employment to a location more than 50 miles; or
an increase of 20% or more in travel requirements.
For an event to constitute good reason, we must receive written notice and an opportunity to cure.
Benefits pursuant to these incentive plans are generally applicable to all other participants who meet the requisite criteria as well as to the Named Executive Officers.
Quantification of Compensation Payable upon a Change in Control or Termination of Employment
The amounts each Named Executive Officer would receive upon a termination as a result of a Covered Termination, a qualifying retirement with 10 years of service, death or disability, in each case in the absence of a change in control, is shown below. As required by the SEC rules, the amounts shown assume that such termination was effective as of December 31, 2015, and thus are estimates of the amounts that would actually be received. The actual amounts to be received can only be determined in connection with the termination event. As indicated in the table below, the only benefits the Named Executive Officer would be entitled to receive upon a termination as a result of a Covered Termination, a qualifying retirement with 10 years of service, death or disability, in each case in the absence of a change in control, relate to accelerated vesting or payment of long-term incentive awards. Any severance, perquisites, or other enhanced benefits upon termination of employment in the absence of a change in control would be at the discretion of the Compensation Committee.
 
Executive
Stock Option Vesting
Restricted Stock Unit Vesting(1)
Cash Settled Perform- ance Unit Vesting(2)
Total
Randall J. Hogan
$—
$—
$6,636,401
$6,636,401
John L. Stauch
$—
$3,096,616
$1,550,000
$4,646,616
Frederick S. Koury
$—
$1,709,132
$816,667
$2,525,799
Angela D. Jilek
$—
$1,439,689
$700,001
$2,139,690
Beth A. Wozniak
$—
$801,990
$—
$801,990
(1)
None of the restricted stock units would vest upon a retirement prior to 10 years of service, and only a pro rata portion of the restricted stock units would vest upon a retirement with 10 years of service prior to age 60.

(2)
The amount shown assumes target performance. The actual amount is determined on the basis of actual performance through the end of the applicable performance period.
Mr. Koury's employment ceased on March 1, 2016, and his stock options, restricted stock units and cash settled performance units received the treatment described above for a Covered Termination. In addition, he received separation payments of (i) $1,169,145 within 20 days following his execution of a release of claims and (ii) provided that he is in compliance with non-solicitation and non-competition covenants at all times through January 2017, $1,189,145 on or about February 1, 2017. Mr. Koury also received an additional payment of $42,950, which he may use toward the cost of future health insurance premiums or for other purposes, at the same time the first separation payment is made. Under the terms of his separation, Mr. Koury did not receive a cash bonus for 2015 and will not be eligible to receive a cash bonus for 2016. We agreed to pay for fees and expenses of consultants and/or legal or accounting advisors to Mr. Koury as to matters relating to his separation agreement up to $15,000 and to pay for outplacement services up to $48,000 or to provide a cash payment of $48,000 in lieu of outplacement services.
The amount of compensation payable to each Named Executive Officer upon a change in control without a termination or upon a change in control followed by a termination of the executive by us other than for death, disability or cause or by the executive for good reason is shown below. The amounts shown assume that such termination was effective as of December 31, 2015, and thus are estimates of the amounts that would be paid out to the executives upon a change in control or their termination following a change in control. The actual amounts to be paid out can only be determined in connection with a change in control or termination following a change in control. Because Mr. Koury's employment ceased on March 1, 2016, he is not included in the table below.
 


48



Executive
Cash Termination Payment (1)
Stock  Option Vesting (2)
Restricted Stock Unit Vesting (2)
Cash Settled Perform- ance Unit Vesting (2)
SERP & 
Related Pension (1)
Incentive Compen- sation (2)
Outplace- ment (1)
Legal & Account- ing Advisors (1)
Medical, Dental, Life Insur- ance (1)
Total: Change in Control (2)
Excise Tax Gross Up or Cutback (3)
Total: Change in Control Followed  by Term- ination (1)
Randall J. Hogan
$9,951,201
$—
$—
$6,636,401
$—
$2,041,272
$50,000
$15,000
$39,930
$8,677,673
$—
$18,733,804
John L. Stauch
$3,373,125
$—
$3,096,616
$1,550,000
$—
$674,625
$50,000
$15,000
$36,341
$5,321,241
$—
$8,795,707
Angela D. Jilek
$2,317,500
$—
$1,439,689
$700,001
$107,411
$412,000
$50,000
$15,000
$23,555
$2,551,690
$1,835,995
$6,901,151
Beth A. Wozniak
$970,000
$—
$801,990
$—
$237,313
$—
$48,500
$15,000
$27,297
$801,990
$(119,149)
$1,980,951

(1)
Triggered only upon a change in control and a termination of the executive officer by us other than for death, disability or cause or by the executive for good reason.

(2)
Triggered solely upon a change in control under the change in control agreement for executives other than Ms. Wozniak and under the 2012 Plan for Ms. Wozniak. The amount shown for cash settled performance units assumes target performance.

(3)
For each of the executives other than Ms. Wozniak, reflects either the amount of the gross-up for excise taxes or a reduction mandated by the change in control agreement in the event that the excise tax on certain “parachute payments” can be avoided by reducing the amount of the payments by not more than 10%. In place of a tax gross up for excise taxes, Ms. Wozniak's agreement provides that, if excise taxes would otherwise be imposed in connection with a change in control, her change in control compensation protections will be either cut back to a level below the level that would trigger the imposition of the excise taxes or paid in full and subjected to the excise taxes, whichever results in the better after-tax result to her.
The amounts in the two tables above assume, to the extent applicable, that:
our ordinary shares were valued at $49.53, the closing market price for our ordinary shares on December 31, 2015;
outplacement services fees are $50,000 for Messrs. Hogan and Stauch and Ms. Jilek and the maximum possible under the change in control agreements (10% of annual base salary) for Ms. Wozniak;
legal and accounting advisor fees are the maximum possible under the change in control agreements for each executive officer; and
medical, dental and life insurance coverage will continue until three years (for Mr. Hogan) or two years (for Mr. Stauch, Ms. Jilek and Ms. Wozniak) after a change in control, in each case at the current cost per year for each executive.
Under certain circumstances, as reflected above, we may pay to an executive covered by a change in control agreement (other than Ms. Wozniak) an excise tax gross up. In place of a tax gross up for excise taxes, Ms. Wozniak's agreement provides that, if excise taxes would otherwise be imposed in connection with a change in control, her change in control compensation protections will be either cut back to a level below the level that would trigger the imposition of the excise taxes or paid in full and subjected to the excise taxes, whichever results in the better after-tax result to her. In determining the amount of any gross up or cut back included in the tables above, we made the following material assumptions: an excise tax rate of 20% under Section 280G of the Code, a combined federal and state individual tax rate of 41.9%, and we would be able to overcome any presumption that grants of stock options or restricted stock units in 2015 were made in contemplation of a change in control pursuant to regulations promulgated under the Code. In addition, no excise tax gross up will be made if the portion of the payments treated as “parachute payments” received by an executive in the event of a change in control can be reduced by not more than 10% and escape an excise tax. In that event, the payments will be reduced to the highest qualifying amount and no gross up will be paid. Furthermore, it was assumed that no value will be attributed to any non-competition agreement. At the time of any such change in control or termination, a value may be attributed, which would result in a reduction of amounts subject to the excise tax.
RISK CONSIDERATIONS IN COMPENSATION DECISIONS
The Committee believes that paying for performance is an important part of its compensation philosophy, but recognizes the risk that incentivizing specific measures of performance may pose to the performance of the Company as a whole if personnel were to act in ways designed primarily to maximize their compensation. Therefore the Committee annually conducts an assessment of potential risks arising from its compensation programs and policies. In its December 2015 assessment, the Committee noted the following considerations, among others:
The balance of our fixed and variable compensation in our executive officer compensation programs


49



The balance in our compensation programs between the achievement of short-term objectives and longer-term value creation
The mix of compensation forms within our long-term incentive compensation program
Our use of multiple performance measures under our incentive compensation programs
The impact of these performance measures on our financial results
Our use of performance curves that require achievement of a minimum level of performance before receiving any incentive payout
Capped payouts under our incentive programs
Our adoption of a clawback policy pursuant to which certain incentive compensation earned by our executive officers may be subject to recoupment
Our stock ownership guidelines and equity holding policy
Our adoption of an equity holding policy
Based on its assessment, the Committee concluded that the risks arising from our compensation programs and policies are not reasonably likely to have a material adverse effect on our company. The Committee will continue to assess our compensation programs to align employee interests with those of long-term shareholder interests.
DIRECTOR COMPENSATION
Director compensation is determined by the Governance Committee of the Board of Directors of Pentair plc. We use a combination of cash and equity-based incentive compensation to attract and retain qualified directors. Compensation of our directors reflects our belief that a significant portion of directors’ compensation should be tied to long-term growth in shareholder value.
Mr. Hogan, our only employee-director, is not and will not be separately compensated for service as a member of the Board.
Director Fees
 
 
Annual retainers for non-employee directors’ service on the Board and Board Committees are as follows:
 
Board Retainer …………………………………………………..
$123,000
 
 
Lead Director Supplemental Retainer ……………………………
$40,000
 
 
Audit and Finance Committee Chair Supplemental Retainer …….
$25,000
 
 
Compensation Committee Chair Supplemental Retainer ..….……
$25,000
 
 
Governance Committee Chair Supplemental Retainer …………..
$20,000
 
 
Audit and Finance Committee Retainer …………………………..
$23,500
 
 
Other Committee Retainer (per committee) …..…………………
$11,750
 
Equity Awards
Non-employee directors also receive a grant of options and restricted stock units under the 2012 Plan as a part of their compensation unless a director has not met the stock ownership guidelines described below, in which case a director only receives a grant of restricted stock units. Directors who have not met the stock ownership guidelines receive only restricted stock units to assist them in meeting the ownership level required by the guidelines in a timely manner. Options granted are exercisable at the closing price of our stock on the date of grant, have a ten-year term and vest in one-third increments on the first, second and third anniversaries of the grant date. Restricted stock units granted vest on the first anniversary of the grant date. Each restricted stock unit represents the right to receive one of our ordinary shares upon vesting and includes one dividend equivalent unit, which entitles the holder to all cash dividends declared on one of our ordinary shares from and after the date of grant.


50



Stock Ownership Guidelines
We maintain stock ownership guidelines for our non-employee directors. Non-employee directors are expected to acquire and hold our ordinary shares or stock equivalents having a value equal to five times the annual retainer for non-employee directors within five years after election.
Stock Ownership for Directors Serving as of December 31, 2015
 
Share Ownership(1)
12/31/15 Market Value ($)(2)
Ownership Guideline ($)
Meets Guideline
Glynis A. Bryan
21,733
1,076,435
615,000
Yes
Jerry W. Burris
13,941
690,498
615,000
Yes
Carol Anthony (John) Davidson
14,175
702,088
615,000
Yes
Jacques Esculier
3,648
180,685
615,000
No (3)
T. Michael Glenn
15,927
788,864