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LOWES COMPANIES INC filed this DEF 14A on 04/17/2025

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LOWES COMPANIES INC - DEF 14A - 20250417 - SECURITY_OWNERS

Security Ownership of Certain Beneficial Owners and Management

The following table provides information about the beneficial ownership of common stock as of March 24, 2025, except as otherwise noted, by each person known by the Company to beneficially own more than 5% of the outstanding shares of common stock, as well as each director, nominee for director, named executive officer and all current directors and executive officers as a group. Except as otherwise indicated below, each of the persons named in the table has sole voting and investment power with respect to the securities indicated as beneficially owned by such person, subject to community property laws where applicable. Unless otherwise indicated, the address for each of the beneficial owners is c/o Lowe’s Companies, Inc., 1000 Lowes Boulevard, Mooresville, North Carolina 28117.



Name or Number of Persons in Group	Number of Shares⁽¹⁾			Percent of Class

Raul Alvarez		38,896			*

David H. Batchelder		37,210			*

Scott H. Baxter		1,884			*

William P. Boltz		89,573			*

Sandra B. Cochran		15,231			*

Laurie Z. Douglas		16,357			*

Richard W. Dreiling		36,978			*

Marvin R. Ellison		813,822			*

Seemantini Godbole		77,010			*

Navdeep Gupta		13			*

Joseph M. McFarland III		225,948			*

Brian C. Rogers		18,960			*

Bertram L. Scott		13,731			*

Lawrence Simkins		1,013			*

Brandon J. Sink		51,715			*

Colleen Taylor		2,240			*

Mary Beth West		3,177			*

Current Directors and Executive Officers as a Group (21 total)		1,622,124	⁽²⁾		*

The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355		51,015,444			9.1	%⁽³⁾

BlackRock, Inc. 50 Hudson Yards New York, NY 10001		39,882,058			7.1	%⁽⁴⁾

*	Represents holdings of less than 1%.

(1)

Includes shares that may be acquired or issued within 60 days through exercise of stock options, settlement of performance share unit awards upon vesting or settlement of deferred stock units upon termination of employment or Board service under the Company’s stock plans as follows: Mr. Alvarez —38,896 shares; Mr. Batchelder — 8,960 shares; Mr. Baxter — 1,884 shares; Mr. Boltz — 54,170 shares; Ms. Cochran — 13,731 shares; Ms. Douglas — 16,357 shares; Mr. Dreiling — 36,978 shares; Mr. Ellison — 552,085 shares; Ms. Godbole— 46,806 shares; Mr. Gupta— 13 shares; Mr. McFarland III — 171,849 shares; Mr. Rogers — 8,960 shares; Mr. Scott — 13,731 shares; Mr. Simkins— 13 shares; Mr. Sink — 31,241 shares; Ms. Taylor — 2,211 shares; Ms. West — 3,177 shares; and current directors and executive officers as a group (21 total) — 1,089,575 shares. Excludes shares issuable under 2024 deferred stock units granted to directors, which are subject to a vesting period adopted under the Company’s 2006 Long Term Incentive Plan as amended and restated effective May 27, 2022, but includes deferred stock unit dividend equivalents credited with respect to such grants.

(2)	Includes 178,366 shares beneficially owned by other current executive officers not individually listed in the table.

(3)

Shares held at December 29, 2023, according to a Schedule 13G/A filed with the SEC on February 13, 2024 by The Vanguard Group, Inc. (“Vanguard”). The Schedule 13G/A reported that Vanguard had sole voting power over no shares, shared voting power over 757,620 shares, sole investment power over 48,540,818 shares and shared investment power over 2,474,626 shares.

(4)

Shares held at December 31, 2023, according to a Schedule 13G/A filed with the SEC on January 26, 2024 by BlackRock, Inc. (“BlackRock”). The Schedule 13G/A reported that BlackRock had sole voting power over 35,533,173 shares, shared voting power over no shares, sole investment power over 39,882,058 shares and shared investment power over no shares.


						NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025		25

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) explains the key elements of our executive compensation program and compensation decisions as they relate to the following named executive officers (“NEOs”) of the Company in the 2024 fiscal year:



Marvin R. Ellison		Chairman, President and Chief Executive Officer

Brandon J. Sink		Executive Vice President, Chief Financial Officer

Joseph M. McFarland III		Executive Vice President, Stores

William P. Boltz		Executive Vice President, Merchandising

Seemantini Godbole		Executive Vice President, Chief Digital and Information Officer

Our CD&A is organized as follows:



I. Executive Summary		27

Fiscal 2024 Financial Highlights and Incentive Program Outcomes		27

Our Total Home Strategy		28

Compensation Philosophy and Objectives		29

Fiscal 2024 Executive Compensation		29

How Our Executive Compensation is Tied to Performance		30

Committed to Strong Compensation Governance Practices		31

Annual Say-on-Pay Vote and Shareholder Engagement		32

II. Compensation Elements		32

III. Compensation Decision-Making Process		35

Role of the Compensation Committee		35

Role of the Independent Compensation Consultant		35

Role of Management		35

Compensation Market Data and Peer Group		36

IV. Fiscal 2024 Compensation Actions		37

Base Salary Adjustments		37

Annual Incentive Awards		37

Long-Term Equity Awards		41

Benefit Restoration Plan		43

Severance Arrangements		43

Perquisites		43

V. Other Compensation Policies		43

Compensation Risk Assessment		43

Stock Ownership Guidelines		43

Clawback of Incentive Compensation		44

Equity Award Grant Practices		44

Trading in Company Securities		44

VI. Compensation Committee Report		45


26		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

EXECUTIVE SUMMARY

I. EXECUTIVE SUMMARY

We seek to generate long-term sustainable shareholder value by driving operational excellence throughout the enterprise, consistently generating high levels of cash flow and optimizing our capital deployment. We have demonstrated a strong commitment to returning capital to our shareholders and continued dividend growth since 1961.

$47.5 Billion

32.0%

CASH FLOWS FROM OPERATIONS

IN THE LAST FIVE YEARS

2024 ROIC*

4.6%

$11.2 Billion

$42.3 Billion

2024 PER SHARE INCREASE IN

ANNUAL DIVIDEND

DIVIDENDS PAID

IN THE LAST FIVE YEARS

SHARES REPURCHASED IN

THE LAST FIVE YEARS

For the second year in a row, our total shareholder return (“TSR”) has been positive over one-year, three-year and five-year periods, and we have outperformed our Peer Group in each period.

LOGO

TSR data is as of January 31, 2025, the Company’s fiscal year end.

⁽¹⁾ Includes companies in the Peer Group identified on page 36.

Fiscal 2024 Financial Highlights and Incentive Program Outcomes

In fiscal 2024, we delivered solid financial performance despite a challenging macroeconomic backdrop – with total sales of more than $83 billion, diluted EPS of $12.23 and adjusted diluted EPS* of $11.99. Despite lower sales, we delivered operating margin of 12.5% and adjusted operating margin* of 12.3% through our disciplined cost management and focus on our productivity initiatives. We also delivered growth in Pro and online, two of our key growth drivers within our Total Home strategy. We continue to invest in supply chain, technology and omnichannel capabilities to put us in a strong position to take share when the home improvement market recovers.

*	ROIC is calculated using a non-GAAP financial measure, and adjusted diluted EPS and adjusted operating margin are non-GAAP financial measures. Refer to Appendix A for the calculation of ROIC and a reconciliation of non-GAAP measures.


						NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025		27

Compensation Discussion and Analysis

EXECUTIVE SUMMARY

We expected a decline in the home improvement market in 2024 and comparable sales down 2 to 3% due to macroeconomic uncertainty. Our incentive goals were set based on that expectation and aligned with our financial guidance provided to investors at the beginning of the fiscal year. However, given lower than expected DIY sales and a home improvement industry backdrop that was more challenging than anticipated, our overall financial performance relative to sales and operating income goals established at the beginning of the fiscal year was slightly below our expectations, and our performance on our strategic goals was above our expectations. These results are reflected in our annual incentive awards paying out at 98.24% of target, as described in more detail below.

Our multi-year ROIC results and our performance on relative TSR compared to peers and the S&P 500 is reflected in the payout of our performance share unit awards for 2022 to 2024. Our average adjusted ROIC of 35.4% for the three-year period ending in 2024 reflected performance below our target goal of 36.0% set at the beginning of the period. Additionally, our TSR was at the median of the companies in the S&P 500 Index. These long-term results are reflected in the 91.84% of target payout of our performance share unit awards.

Overall, we believe our incentive programs are aligned with important inputs to shareholder value creation and these incentive outcomes reflect our strong commitment to aligning pay and short and long-term performance within our executive compensation programs.

Our Total Home Strategy

In 2020, we unveiled our Total Home strategy to grow our market share by providing a one-stop solution for every project across the home for both DIY and Pro customers. In fiscal 2024, we continued to execute on our Total Home strategy by remaining focused on serving the Pro customer, accelerating our online business, expanding installation services, improving localization efforts and elevating our product assortment. Through the execution of our strategy over the last four years, we have grown our Pro and online sales despite pressures in the home improvement market.

At our Analyst and Investor Conference in December 2024, we updated our Total Home strategy, aligned with the key drivers of home improvement demand, to better position the Company to take market share when the home improvement market recovers. Our Total Home strategy is designed to help our customers solve their total home improvement needs with more value and exceptional service. Looking ahead, in addition to continuing our focus on growing Pro customer and online sales, we will focus on (i) expanding home services to create a high-value installation solution for both smaller refreshes and more complex projects, (ii) creating a robust loyalty ecosystem for both our DIY and Pro customers and (iii) increasing space productivity by optimizing assortments. We are confident that we are making the right investments in the business to grow market share, generate long-term growth and continue to create sustainable shareholder value.

LOGO


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Compensation Discussion and Analysis

EXECUTIVE SUMMARY

Compensation Philosophy and Objectives

Our long-term ability to generate sustained shareholder returns, drive improvement in financial results and become the employer of choice in retail depends on our ability to attract and retain highly talented leaders who are committed to our mission, growth and strategy. Our executive compensation program is designed to drive long-term shareholder value by aligning our business strategies and operating priorities with shareholders’ interests and rewarding executives for growth in the Company’s sales and earnings. A significant portion of compensation is based on variable pay arrangements that align pay with performance against metrics tied to our strategy and business plan with a balanced focus on top- and bottom-line growth.

The primary objectives of our executive compensation program are to:

•

Attract and retain executives who have the requisite leadership skills to support the Company’s culture and strategic growth priorities;

•

Maximize long-term shareholder value through alignment of executive and shareholder interests;

•

Align executive compensation with the Company’s business strategies, which are focused on driving operational excellence and better serving our customers; and

•

Provide target total compensation that is competitive to market, with an opportunity to earn above target pay when the Company delivers results that exceed performance targets, and below target pay when the Company falls short of performance targets.

Fiscal 2024 Executive Compensation

We have a long-standing commitment to pay for performance and provide a significant portion of compensation opportunities through variable pay arrangements. These arrangements are designed to hold our executive officers accountable for business results and reward them for consistently strong financial performance and the creation of value for our shareholders. To align pay with performance, our incentive compensation programs use objective pre-established performance measures: sales, operating income, inventory turnover and Pro sales growth for our annual incentive plan and ROIC, along with a relative TSR modifier, for our performance share units. We believe these financial metrics motivate management to create sustainable shareholder value. Each of these performance measures is further described beginning on page 38.

Our fiscal 2024 executive compensation program consisted of the following elements:

•

Base salary

•

Annual incentive awards

•

Long-term equity awards granted in the form of:

• Performance share unit awards (“PSUs”)

• Stock options

• Restricted stock awards (“RSAs”)

•

Retirement, health and severance benefits

•

Limited perquisites


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Compensation Discussion and Analysis

EXECUTIVE SUMMARY

Our compensation mix is heavily performance-based with 73% of the CEO’s and 68% of the other NEOs’ average annualized target compensation at-risk and contingent upon the achievement of performance objectives or relative and absolute share price performance. Additionally, 77% of the CEO’s and 71% of the other NEOs’ average compensation is in the form of long-term incentives.

LOGO

How Our Executive Compensation is Tied to Performance

A significant portion of our executive compensation program is performance-based with a balanced focus on top- and bottom-line growth and strategic initiatives. The performance metrics, weightings and award mix for fiscal 2024 annual and long-term incentive programs remained unchanged from the prior year. The metrics determined by the Compensation Committee, as described below, incentivize our executives to focus on operational objectives that are expected to drive sustainable shareholder value.

•

Annual Incentive Awards: Payout is based on the Company’s achievement of financial (sales and operating income) and strategic (inventory turnover and Pro sales growth) goals. Threshold performance objectives must be achieved for any payout to be earned.

•

PSUs: Payout is based on the Company’s achievement of (i) a three-year average goal based on ROIC, which is a comprehensive financial metric measuring both operating profit and effective capital deployment designed to motivate management to generate sustained profitable growth over time while balancing the Company’s effectiveness at allocating capital to drive future investment and growth, and (ii) a relative TSR modifier, which compares the Company’s TSR to the median TSR of companies listed in the S&P 500 Index over a three-year period. Threshold performance objectives must be achieved for any awards to be earned.

•

Stock Options: Realized value for stock option awards is based on the increase in the market value of our common stock relative to the value when the award was granted.

Based on our performance in fiscal 2024, the CEO and other NEOs received the following payouts of performance-based compensation:

•

Annual incentive payouts were determined based on overall performance between threshold and target for sales and operating income (as adjusted) and above target performance for inventory turnover and Pro sales growth metrics. Overall award payouts for the NEOs were at 98.24% of target.

•

PSUs for the 2022-2024 performance period paid out at 91.84% based on adjusted ROIC performance between threshold and target performance and median relative TSR.


30		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

EXECUTIVE SUMMARY

Committed to Strong Compensation Governance Practices



		WHAT WE DO						WHAT WE DON’T DO

		Target the majority of NEO compensation to be performance-based, at-risk and long-term oriented						Provide single-trigger severance payments or vesting or tax gross-ups following change-in-control

		Assess the design and alignment of our incentive plans in relation to performance goals, business strategy, organizational priorities and shareholder interests on an annual basis						Permit hedging, pledging or unauthorized trading of the Company’s securities by our executives or directors

		Assess compensation-related risks associated with regulatory, shareholder and market changes on an annual basis						Grant discounted stock options, extend the original option term, reprice or exchange underwater options without shareholder approval

		Assess peer group composition, financial and stock price performance and competitive compensation practices on an annual basis						Provide an evergreen provision in our long-term incentive plan

		Use different metrics in annual and long-term incentive plans						Provide employment agreements to executives

		Maintain a fully independent Compensation Committee, which retains an independent compensation consultant						Provide excessive perquisites

		Maintain robust clawback policies applicable to cash and equity incentive-based compensation of senior executives if there is a financial restatement or if senior executives engage in misconduct

		Limit incentive payouts as a percentage of target awards

		Require significant stock ownership by all senior executives


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Compensation Discussion and Analysis

COMPENSATION ELEMENTS

Annual Say-on-Pay Vote and Shareholder Engagement

The Board and the Compensation Committee carefully consider the results of our shareholders’ annual advisory “say-on-pay” vote. Our shareholders continue to express strong support for the Company’s executive compensation program with the Company receiving 92% advisory approval in 2024. This is consistent with the level of shareholder support received over the past 10 years. In consideration of this continued support and its belief that the program continues to promote our strategy and drive performance, the Compensation Committee maintained the principal features and performance-based elements of the executive compensation program for 2024. At the Annual Meeting, the Company’s shareholders will again have the opportunity to express support of our executive compensation program through the advisory say-on-pay vote included as Proposal 2 in this Proxy Statement.

As discussed in the “Proxy Summary” section of this Proxy Statement, we regularly engage with our institutional shareholders to understand the issues that matter most to them. During meetings we held since the beginning of 2024, we discussed key corporate governance, sustainability and human capital management topics and shared our thoughts on the Compensation Committee’s approach to setting executive compensation. Overall, with respect to our compensation program, we received generally positive feedback on its structure, evolution and responsiveness, including the metrics in our annual and long-term incentive plans and their tie to Company strategy and alignment with shareholder value creation.

II. COMPENSATION ELEMENTS

To support our compensation philosophy and objectives, the Compensation Committee has designed the executive compensation program with an appropriate balance between both annual and long-term compensation, as well as between fixed and at-risk pay. The largest portion of our executive compensation program is based upon achieving the Company’s financial and strategic performance objectives and contingent on achievement of challenging performance hurdles. The Board places significant emphasis on the long-term success of the Company and strong alignment with the interests of our shareholders, customers, associates and the communities in which we operate. Accordingly, long-term incentive award opportunities, as a percentage of total compensation, are significantly greater than annual incentive award opportunities.


32		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

COMPENSATION ELEMENTS

The following table lists the key elements of the Company’s 2024 executive compensation program:

LOGO

Note: Compensation mix shown in the preceding table reflects annualized target for CEO compensation. The average annualized compensation mix for our other NEOs is as follows: base salary (14%), annual incentive awards (15%) and long-term incentive awards (71%) with the same award mix of PSUs, stock options and RSAs as shown above.

(1)	Under the terms of these award agreements, executives must maintain employment with the Company during the three-year period, unless earlier terminated due to death, disability or qualified retirement (as defined in the grant agreement), to earn the awards.

(2)


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Compensation Discussion and Analysis

COMPENSATION ELEMENTS

We also provide broad-based financial and health and welfare benefits on the same terms and conditions applicable to all eligible associates, including a 401(k) Plan with Company match, a non-qualified deferred compensation plan and 401(k) benefit restoration plan with Company match, comprehensive group health insurance, voluntary life, disability and accident benefits, a discounted employee stock purchase plan and other benefits, such as reimbursement of costs associated with tax and financial planning, an annual physical examination, individual disability insurance and limited personal use of corporate aircraft, each of which are designed to enhance productivity and encourage the attraction and retention of top talent. Additionally, we maintain a severance plan for senior officers, which provides for severance payments, the continuation of health care benefits and Company-paid outplacement services in the event of a termination of employment with the Company under qualifying circumstances.


34		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

COMPENSATION DECISION-MAKING PROCESS

III. COMPENSATION DECISION-MAKING PROCESS

Role of the Compensation Committee

The Compensation Committee, which currently consists of five independent directors, is responsible for developing and administering our executive compensation program. The Compensation Committee works closely with its independent compensation consultant and meets regularly – approximately six times each year – with additional meetings if and as appropriate, to make decisions related to our executive compensation programs and the compensation of our CEO (with the approval of the independent directors of the Board) and the Company’s executive officers. The Compensation Committee reports its actions to the Board at the Board meeting following each Compensation Committee meeting. The Compensation Committee’s responsibilities include approving:

•

Compensation philosophy and strategy;

•

Compensation of executive officers;

•

Annual and long-term incentive metrics and performance goals;

•

Achievement of goals in annual and long-term incentive plans;

•

Peer groups of companies used for assessing market compensation levels, pay practices and performance; and

•

CD&A disclosure in the annual proxy statement.

The full description of the Compensation Committee’s authority and responsibilities is provided in the Compensation Committee charter, which is available on our Company website at ir.lowes.com.

Role of the Independent Compensation Consultant

The Compensation Committee directly engages and regularly consults with Semler Brossy Consulting Group, LLC, its independent compensation consultant for ongoing executive compensation matters. The Compensation Committee’s compensation consultant reports directly to the Compensation Committee and does not provide any services to the Company other than the consulting services for the Compensation Committee. The Compensation Committee has assessed the independence of its compensation consultant pursuant to the independence factors specified by applicable SEC rules (as incorporated into the NYSE

listing standards) and concluded that no conflict of interest exists that would prevent its compensation consultant from independently representing the Compensation Committee. During the 2024 fiscal year, Semler Brossy Consulting Group, LLC performed the following services:

•

Attended all Compensation Committee meetings;

•

Advised the Compensation Committee on the design of the Company’s annual and long-term incentive plans (including the selection of the performance metrics and assessment of performance goals);

•

Provided the Compensation Committee with an external perspective on the reasonableness and competitiveness of our executive compensation program;

•

Reviewed the selection of the peer groups of companies used for assessing market compensation levels, pay practices and performance;

•

Provided periodic updates and guidance on regulatory and governance trends impacting compensation;

•

Assessed the alignment of CEO compensation with Company performance;

•

Assisted the Compensation Committee in conducting its annual risk assessment of our executive compensation programs; and

•

Reviewed and discussed compensation-related proxy statement disclosures.

Role of Management

When making decisions on executive compensation, the Compensation Committee considers input from the Company’s Executive Vice President, Human Resources who works most closely with the Compensation Committee, both in providing information and analysis for review and in advising the Compensation Committee concerning compensation decisions (except as it relates specifically to her compensation and the compensation of our CEO). Our CEO reviews the performance of the NEOs (other than himself) and other executive officers and provides recommendations on executive officer compensation for the Compensation Committee’s consideration. The Compensation Committee reviews and discusses pay decisions related to the CEO in executive sessions without the CEO or any other members of management present.


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Compensation Discussion and Analysis

COMPENSATION DECISION-MAKING PROCESS

Compensation Market Data and Peer Group

Each year, the Compensation Committee reviews the peer group companies used to assess compensation and performance with the advice of the independent compensation consultant. The Compensation Committee considered data from two sources for fiscal 2024: the Peer Group and the Survey Group.

The Peer Group is comprised of retail and customer service companies selected for direct relevance to Lowe’s business using the following criteria:

•

Headquartered in the United States with publicly-traded securities listed on a major U.S. exchange;

•

Operating in the Consumer Discretionary or Food & Staples retail sectors;

•

Annual revenue greater than approximately $20 billion; and

•

Retail or customer service-based business model.

The companies in the Peer Group for fiscal 2024 were:


Best Buy Co., Inc.	Costco Wholesale Corporation	CVS Health Corporation
Dollar General Corporation	Macy’s, Inc.	NIKE, Inc.
Starbucks Corporation	Target Corporation	The Home Depot, Inc.
The Kroger Co.	The TJX Companies, Inc	Walgreens Boots Alliance, Inc.
	Walmart, Inc.

The Peer Group for fiscal 2024 did not change from the prior year. Peer Group compensation data is obtained from publicly available proxy statements.



PEER GROUP DATA FOR FISCAL 2024⁽¹⁾
								TSR
	Revenues ($ in millions)		Market Capitalization ($ in millions)		Operating Income ($ in millions)		1-year		3-year		5-year
75th Percentile		$152,669		$140,284		$ 9,285		29.7%		51.5%		125.7%
50th Percentile		$107,412		$ 71,075		$ 5,797		18.1%		0.7%		39.9%
25th Percentile		$ 43,452		$ 18,356		$ 2,453		-19.2%		-42.7%		-2.5%
Lowe’s Companies, Inc.		$ 86,377		$146,832		$11,557		20.7%		17.4%		144.7%
Percentile Ranking		46.7%		75.2%		78.9%		68.0%		57.6%		80.3%

Source: S&P Capital IQ

(1)	Revenues and operating income are as of each company’s latest reported fiscal year as of January 31, 2025, which for Lowe’s is fiscal 2023. Market capitalization and TSR are as of January 31, 2025, which aligns with Lowe’s fiscal year end date.

The Survey Group is comprised of the Peer Group (other than Costco Wholesale Corporation) and other retail companies that we compete with for executive talent, generally with over $10 billion in annual revenue, and participate in a proprietary survey conducted by Korn Ferry. The Compensation Committee uses a wider range of revenue in the Survey Group to provide for a robust sample of market data for compensation benchmarking.

At its January 2024 meeting, the Compensation Committee reviewed detailed compensation benchmarks based on the two groups described above. Given differences in role, experience, performance and other challenges directly comparing NEO roles other than the CEO across companies, these benchmarks served as a reference point, rather than a formula-driven outcome, in determining adjustments to target total compensation levels for the NEOs.


36		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

FISCAL 2024 COMPENSATION ACTIONS

IV. FISCAL 2024 COMPENSATION ACTIONS

Base Salary Adjustments

The Compensation Committee reviews and adjusts the NEO base salaries each year after it has considered competitive benchmark and relative compensation positioning, which includes consideration of:

•

Market adjustments;

•

Internal alignment;

•

Experience in the role; and

•

Performance and any changes to roles or responsibilities.

Given the Company’s strong performance under Mr. Ellison’s leadership, the Board approved a salary increase of 3.4% for Mr. Ellison, which is the first base salary increase he received since his appointment as CEO in 2018. Additionally, Mr. Sink received a salary increase of 6% to recognize his contributions and to provide competitive pay that aligns with broader market benchmarking. Further, as a result of the review and consideration of the factors in the preceding paragraph, Messrs. McFarland and Boltz and Ms. Godbole received salary increases of between 2.0%-4.0% for 2024 as set forth in the table below.

In 2024, the Compensation Committee approved the following base salaries for the NEOs:

Name and Position

2023

Base Salary

2024

Base Salary

% Increase

Marvin R. Ellison

Chairman, President and Chief Executive Officer

1,450,000

1,500,000

3.4

Brandon J. Sink

Executive Vice President, Chief Financial Officer

721,000

764,300

6.0

Joseph M. McFarland III

Executive Vice President, Stores

860,600

877,800

2.0

William P. Boltz

Executive Vice President, Merchandising

844,400

869,700

3.0

Seemantini Godbole

Executive Vice President, Chief Digital and Information Officer

782,300

813,600

4.0

Annual Incentive Awards

Our annual incentive plan provides each NEO the opportunity to receive an annual cash award based on the Company’s achievement of pre-determined financial and strategic performance goals. The formula for computing annual incentive payouts is as follows:

BASE SALARY

TARGET AWARD

PERCENTAGE

(% of Base Salary)

PERFORMANCE GOAL

ACHIEVEMENT LEVEL

(% of Target Level)

Base salary eligible earnings in fiscal

year 2024 with 2023
and 2024 base salaries pro-rated for the number of days in the fiscal year prior to and following the March 2024 effective date for 2024 base salary adjustments

• 200% of base salary for the CEO

• 100% of base salary for other NEOs

• Threshold percentage for all NEOs was 25% of target

• Maximum opportunity of 200% of target for all performance
metrics

ANNUAL INCENTIVE

AWARD EARNED


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Compensation Discussion and Analysis

FISCAL 2024 COMPENSATION ACTIONS

The following table describes the financial and strategic goals for the 2024 annual incentive awards and the weighting assigned to each goal, which are the same for all of the NEOs:


	Performance Metric			Metric Weighting
	Performance Metric	Description	Performance Measured By	Metric Weighting
Financial Goals	Sales	Rewards NEOs on effective merchandising, driving market share gains and the enhancement of the Company’s omnichannel sales and marketing	Company sales	40%
Financial Goals	Operating Income	Rewards NEOs for profitability of Company operations and focuses management on operational efficiency and expense management	Company operating income	40%
Strategic Goals	Inventory Turnover	Rewards NEOs for focusing on improving inventory management, which generates cash flow for investing in the business and returning value to shareholders	Cost of goods sold / average inventory	10%
Strategic Goals	Pro Sales Growth	Rewards NEOs for focusing on growing Pro market share, which drives long-term sustainable sales growth and profitability for the business	Percentage increase in Pro customer sales over the prior fiscal year	10%

For fiscal 2024, the Compensation Committee approved the terms for our annual incentive awards, maintaining the same performance metrics and weightings used in recent years, which the Compensation Committee determined continue to align with the Company’s strategic growth priorities. In light of the macroeconomic uncertainty expected at the time that goals were set, the Committee established an additional performance level of “below target” that provides an 85% payout for performance that does not achieve target but is above threshold, which the Committee believes provides our NEOs additional motivation in a pressured macroeconomic environment.


38		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

FISCAL 2024 COMPENSATION ACTIONS

The Compensation Committee determines annual incentive plan performance goals after the Company reports earnings for the prior fiscal year and establishes goals that:

•

Are sufficiently rigorous based on the Company’s strategy, annual internal operating plan and financial guidance provided to investors for the upcoming fiscal year;

•

Appropriately consider both prior year performance and the anticipated impact of the macroeconomic environment on future business conditions for the Company; and

•

Motivate management to create sustainable shareholder value, both during the performance period and over the long term.


	Performance Metric	How 2024 Goals Were Set
Financial Goals	Sales	• Target set consistent with the midpoint of our 2024 sales guidance range provided to the market on February 27, 2024 and slightly below 2023 actual performance considering headwinds related to the challenging macroeconomic environment • Wider performance goals to manage macroeconomic uncertainty with (i) threshold set approximately $4.6 billion below our guidance range and (ii) maximum set approximately $8.2 billion above our guidance range and slightly above fiscal 2023’s maximum goal
Financial Goals	Operating Income	• Target derived from the midpoint of our 2024 operating margin guidance range provided to the market on February 27, 2024 and slightly lower than 2023 adjusted results • Wider performance goals for threshold and maximum reflecting the same challenges affecting sales goals to manage macroeconomic uncertainty and maximum set slightly below fiscal 2023’s maximum goal
Strategic Goals	Inventory Turnover	• Target set slightly below 2023 actual performance, reflecting the same macroeconomic challenges affecting financial goals • Maximum set slightly above fiscal 2023 maximum goal
Strategic Goals	Pro Sales Growth	• Target set at 1.7% based on exceeding market growth expectations for the Pro customer over fiscal 2023 • Maximum set aligned with fiscal 2022 and 2021 maximum goals following fiscal 2023 performance between threshold and target

The Compensation Committee’s objectives in administering our annual incentive plan are to cause incentive awards to be calculated on a comparable basis from year-to-year and to ensure that plan participants are incentivized and rewarded appropriately for Company performance. For these reasons, the Compensation Committee may make adjustments to the achievement under each performance goal at its discretion and has adopted adjustment guidelines. The adjustment guidelines provide the Committee flexibility to approve adjustments to incentive plan compensation in certain circumstances, including adjustments to account for (i) amounts required to be reported separately under applicable accounting standards as extraordinary items, (ii) gains or losses as a result of changes in accounting principles, (iii) impact of changes in tax regulations, (iv) business results from unplanned acquisitions and divestitures, (v) costs and any other non-recurring items related to acquisition and divestiture activity, (vi) unplanned debt restructuring costs or costs associated with change in capital structure, (vii) costs of significant unplanned initiatives or investments and (viii) significant changes to stock buyback programs or capital restructuring.

The guidelines also provide that adjustments may be made in certain cases depending on the relevant facts and circumstances to account for: (i) impact of foreign

currency fluctuations, (ii) impact of tariffs and unanticipated regulatory and policy changes, (iii) asset impairments or write-offs, including store closing costs, (iv) restructuring costs, (v) litigation costs and settlements for historical transactions, (vi) timing impact for items accelerated or delayed near year-end, (vii) acts of God and (viii) impact of global pandemics and public health emergencies.

In February 2025, the Compensation Committee reviewed the Company’s 2024 performance results relative to the goals to determine the annual incentive awards earned under the annual incentive plan for fiscal year 2024. The Company’s 2024 performance results were between threshold and target for sales and operating income (as adjusted) and above target performance for inventory turnover and Pro sales growth metrics. Consistent with the adjustment guidelines’ provisions for non-recurring items related to divestitures and adjustments made in prior years, the Compensation Committee determined to exclude a $177 million gain associated with the Company’s fiscal 2022 sale of its Canadian retail business for purposes of determining operating income performance. This adjustment had the overall effect of modestly reducing the achievement result for operating income performance and thus, the overall payout for this year.


						NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025		39

Compensation Discussion and Analysis

FISCAL 2024 COMPENSATION ACTIONS

Based on the performance metrics established by the Compensation Committee and the Compensation Committee’s assessment of the Company’s 2024 performance, the Compensation Committee determined that Lowe’s achieved 98.24% of the target incentive opportunities for the NEOs.

LOGO

Dollars in millions.

⁽¹⁾

The Compensation Committee approved an adjustment to operating income as described on page 39.

⁽²⁾

Pro sales growth is based on fiscal year-over-year performance.

Based on results of the performance metrics approved by the Compensation Committee, the NEOs earned the following annual incentive awards for 2024:



Name	Base Salary⁽¹⁾			x	Target Award % (% of Base Salary)			x	Performance Goal Achievement Level (% of Target)			=	Actual Award Earned

Marvin R. Ellison		$	1,494,231			200	%			98.24	%			$	2,935,865

Brandon J. Sink		$	759,304			100	%			98.24	%			$	745,940

Joseph M. McFarland III		$	875,815			100	%			98.24	%			$	860,401

William P. Boltz		$	866,781			100	%			98.24	%			$	851,525

Seemantini Godbole		$	809,988			100	%			98.24	%			$	795,733

(1)	Based on base salary eligible earnings in fiscal year 2024 with 2023 and 2024 base salaries pro-rated for the number of days in the fiscal year prior to and following the March 2024 effective date for 2024 base salary adjustments


40		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

FISCAL 2024 COMPENSATION ACTIONS

Long-Term Equity Awards

In March each year, the Compensation Committee approves a long-term equity award for each executive officer with a target value, expressed as a percentage of base salary, and for 2024 approved an equity award mix for the NEOs of:

•

50% PSUs

•

25% stock options

•

25% time-vested RSAs

Target awards are determined based on each executive officer’s position and level of responsibility, the Company’s historical grant practices and market benchmarks reviewed annually by the Compensation Committee. For fiscal 2024, the NEOs’ target awards as a percentage of base salary were not changed from the targets used in fiscal 2023.

2024 Award Mix. For 2024, the Compensation Committee did not change the award mix and weightings from the prior year. The Compensation Committee believes the mix of equity award types continues to create an appropriate balance between providing incentive compensation for the achievement of Company-specific performance measures (PSUs), increases in the market value of the common stock (stock options) and retention (RSAs).

2024 Target Value. The following table reflects the target value of long-term equity awarded to each NEO for 2024, both expressed as a percentage of base salary and in dollars.



	2024 Target Long-Term			Target Total Equity
Name	% of Base Salary⁽¹⁾			Award Value ($000s)⁽²⁾

Marvin R. Ellison		1,000	%		$	15,000

Brandon J. Sink		450	%		$	3,439

Joseph M. McFarland III		500	%		$	4,389

William P. Boltz		500	%		$	4,349

Seemantini Godbole		450	%		$	3,661

(1)	Base salary considered for long-term incentive plan purposes is as of April 1, 2024.

(2)	Target total equity award values are rounded to the nearest thousand dollars.

2024 PSU Performance Metrics. The Compensation Committee determined that the PSUs awarded in 2024 will be earned based on the Company’s ROIC for the three-year performance period of fiscal years 2024 through 2026 and the relative TSR modifier.

ROIC is computed by dividing the Company’s lease adjusted net operating profit after taxes for the year by the average of the Company’s invested capital as of the beginning and end of the fiscal year. Invested capital for these purposes means the average of the current year and prior year ending debt and shareholders’ (deficit)/equity. See Appendix A for our fiscal 2024 ROIC calculation. The return percentages for each fiscal year in the performance period are averaged to yield a ROIC measure for the three-year performance period. The Compensation Committee believes strong ROIC performance is aligned with creating long-term value for the Company’s shareholders. Specifically, ROIC is a comprehensive long-term financial metric that incorporates both operating profit and effective capital deployment in the calculation. This metric motivates management to generate sustained profitable growth over time while balancing the Company’s effectiveness at allocating capital to drive future investment and growth.

The relative TSR modifier also helps align executive outcomes with the creation of long-term shareholder value by reducing payouts when the Company’s TSR underperforms the median performance of companies listed in the S&P 500 Index and increasing payouts when the Company’s TSR outperforms the median performance of companies listed in the S&P 500 Index, subject to a 200% cap on payouts.


						NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025		41

Compensation Discussion and Analysis

FISCAL 2024 COMPENSATION ACTIONS

The chart below illustrates how the relative TSR modifier influences the payout opportunity of the 2024 PSU performance award to range from 34% of target at threshold performance to 200% of target at maximum performance:

Target

Number of

PSUs

Granted

ROIC

Performance

Level

Payout Percentage

(% of Target

Award)⁽¹⁾

Lowe’s 3-Year TSR
Percentage Spread
from Median of
Companies in
S&P 500 Index

Modifier⁽¹⁾

PSU

Performance

Level

Final Payout

Opportunity

(% of Target Award)⁽¹⁾

Maximum

150%

≥+20%

1.33x

Maximum

200%

Target

100%

1.00x

Target

100%

Threshold

50%

≤ (20)%

0.67x

Threshold

34%

<Threshold

(1)	Performance between discrete points will be interpolated; TSR modifier cannot be lower than 0.67x or higher than 1.33x; if ROIC is below threshold, there will be no payout.

In line with the factors described above in setting targets for annual incentive awards, the Compensation Committee determines ROIC targets in the year the PSUs are granted, with an aim to set goals that are sufficiently rigorous based on the Company’s internal long range plan, appropriately consider recent performance and the potential impact of the macroeconomic environment, and motivate management to create sustainable shareholder value over the long-term.

2022 PSU Awards. The performance period for the PSUs awarded in 2022 (the “2022 PSUs”) ended on January 31, 2025, the last day of the 2024 fiscal year. The 2022 PSUs were eligible to be earned based on the Company’s average ROIC and relative TSR performance for fiscal years 2022 through 2024.

The Compensation Committee based the target ROIC performance level for the 2022 PSUs on achievement of average ROIC goals over the performance period. Threshold and maximum ROIC performance levels were set at 90% and 110%, respectively, of the target performance level. Based on the target performance level set by the Compensation Committee, the Company’s adjusted ROIC performance as determined by the Committee, and relative TSR performance during the performance period, 91.84% of the 2022 PSUs were earned and converted into shares of common stock. For purposes of determining the Company’s ROIC performance and the number of PSUs earned, the Compensation Committee determined to exclude, consistent with its adjustment guidelines and with its treatment of prior years’ PSU awards, the cumulative impact of the Company’s fiscal 2022 sale of its Canadian retail business on net operating profit after taxes of $2.2 billion and average invested capital of $1.1 billion (which would have reduced three-year average ROIC by 2.42%).



Performance Metric	Threshold			Target			Maximum			2022-2024 Adjusted Performance		TSR Modifier		Performance Goal Achievement (% of Target)
ROIC		32.4	%		36.0	%		39.6	%		35.4%		1.00⁽¹⁾		91.84%

(1)	Based on Lowe’s fiscal year 2022-2024 TSR spread exceeding the median performance of companies listed in the S&P 500 Index by 0.27%.

2024 Stock Option Awards. The Compensation Committee views options as performance-based incentive compensation as they provide no realizable value to recipients if our share price does not increase from the grant date. These awards promote the value-creating actions necessary to increase the market value of our common stock.

The number of options awarded is calculated based on the Black-Scholes option pricing model. The exercise price of stock options is set at 100% of the fair market value of our common stock on the date of grant. Stock options granted to our NEOs in 2024 vest ratably over a three-year period and have a ten-year term.

2024 RSAs. RSAs promote executive retention, stock ownership and alignment with shareholders’ interests. The number of RSAs awarded is determined based on the fair market value of our common stock as of the grant date. RSAs awarded to our NEOs in 2024 cliff vest after three years.


42		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Compensation Discussion and Analysis

OTHER COMPENSATION POLICIES

Benefit Restoration Plan

The Benefit Restoration Plan, adopted by the Company in August 2002 and as amended effective January 1, 2025, is intended to provide NEOs and other qualifying executives with benefits lost due to qualified plan limitations imposed by the Internal Revenue Code of 1986, as amended (the “Code”) that are equivalent to those received by all other employees under the Company’s qualified retirement plans. The Company makes matching contributions to each executive officer’s Benefit Restoration Plan account under the same matching contribution formula based on the executive’s elective contribution to Lowe’s 401(k) Plan, regardless of the Code limitations.

Severance Arrangements

The Compensation Committee approved an amended and restated severance plan for senior executives (the “Severance Plan”) in August 2024, that covers all current NEOs other than Mr. Ellison. The terms of the Severance Plan are described on page 53. Mr. Ellison’s severance entitlements are governed by his offer letter, the terms of which are described on page 53.

All NEOs are also parties to agreements that provide severance benefits in the context of a change-in-control of the Company (the “Change-in-Control Agreements”). The Change-in-Control Agreements are described beginning on page 52.

Perquisites

NEOs and other qualifying executives are eligible for an annual routine physical to assess overall health and to screen for chronic diseases, which is intended to protect the investment we make in these key individuals. Services are accessed through Novant, Atrium Health or Emory Health. In addition, these executives are eligible for a reimbursement of up to $15,000 for financial and tax planning services. NEOs and other qualifying executives are also eligible for individual disability insurance, which supplements the Company’s long-term disability plan.

The Company owns and operates business aircraft to allow associates to safely and efficiently travel for business purposes. Company policy requires that Mr. Ellison use corporate aircraft for all of his travel, both for business and personal purposes, with limited personal travel allowed for certain other executives. The corporate aircraft allows executive officers to be far more productive than commercial flights since the corporate aircraft provides a confidential, safe and productive environment in which to conduct business.

The personal usage of the corporate aircraft by the Chairman, President and Chief Executive Officer is currently capped at $200,000 of incremental cost per year.

V. OTHER COMPENSATION POLICIES

Compensation Risk Assessment

Each November, the Compensation Committee performs a risk assessment of our compensation programs, which includes a targeted audit and analysis of the risk associated with the Company’s executive compensation program conducted by the Compensation Committee’s independent compensation consultant. In its annual review, the Compensation Committee considers the balance between pay components, measures of performance, magnitude of pay, pay caps, plan time horizons and overlapping performance cycles, program design and administration and other features that are designed to mitigate risk (e.g., stock ownership guidelines and clawback policies). Following its review, the Compensation Committee has determined that our compensation practices and policies do not incentivize inappropriate or excessive risk taking behavior by Company executives. Management and the Compensation Committee have determined that our compensation practices and policies do not create risks that are reasonably likely to have a material adverse effect on the Company.

Stock Ownership Guidelines

The Compensation Committee strongly believes that executive officers should own appropriate amounts of common stock to align their interests with those of the Company’s shareholders. Executives can acquire common stock through our 401(k) Plan, employee stock purchase plan and long-term incentive awards.

The Compensation Committee has adopted stock ownership and retention guidelines for all senior executives in the Company. The ownership targets under the current guidelines are as follows:



Position		Target Ownership (Multiple of Base Salary)

Chairman, President and Chief Executive Officer		6.0x

Executive Vice Presidents		4.0x

Senior Vice Presidents		2.0x

The Compensation Committee reviews compliance with the guidelines annually. The Company determines the number of shares of common stock required to be held


						NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025		43

Compensation Discussion and Analysis

OTHER COMPENSATION POLICIES

by each senior officer by dividing the applicable salary multiple ownership requirement (expressed as a dollar amount) by the average closing price of the common stock for the preceding fiscal year. Shares of common stock are counted towards ownership as follows:

•

All shares held or credited to a senior officer’s accounts under the Lowe’s 401(k) Plan, benefit restoration, deferred compensation and employee stock purchase plans;

•

All shares owned directly by the senior officer and his or her immediate family members residing in the same household; and

•

100% of the number of shares of unvested RSAs.

Senior officers may not sell the net shares resulting from an RSA or PSU vesting event or stock option exercise until the ownership requirement has been satisfied.

All of our current NEOs are in compliance with the stock ownership guidelines.

Clawback of Incentive Compensation

The Compensation Committee supports transparent governance and compliance practices and protecting the interests of the Company’s shareholders. To reinforce the Company’s practices in these areas, the Company has two clawback policies, to address not only required recovery of incentive-based compensation in the event of an accounting error causing a financial restatement, but also appropriate recovery of compensation in case of officer misconduct. The Company maintains a

“no-fault”

clawback policy as required under NYSE and SEC rules. In the event the Company is required to prepare an accounting restatement due to material

non-compliance

with any financial reporting requirement under the federal securities laws, the Company will recover the amount of any incentive-based compensation received by any covered executive, including current and former NEOs, during the prior three fiscal years that exceeds the amount the executive otherwise would have received had the incentive-based compensation been determined based on the restated financial statements.

Additionally, the Company maintains a fault-based clawback policy applicable to officers at the level of

senior vice president or higher. Under this policy, the Compensation Committee can seek to recover all or a portion of any cash or equity-based compensation that was provided to any current or former officer under the Company’s annual or long-term incentive plans (whether or not such compensation has already been paid or

vested), if the Compensation Committee determines that (i) the compensation was based on the Company having met or exceeded specific performance targets that were satisfied due to the covered officer engaging in fraud or intentional misconduct, including, but not limited to, conduct resulting in a significant restatement of the Company’s financial results or (ii) the current or former officer engaged in any intentional misconduct that results in significant financial or reputational harm to the Company.

Equity Award Grant Practices

The Compensation Committee has followed a practice of granting annual equity awards, including annual awards of PSUs, stock options and time-based RSAs granted to the NEOs, on April 1 each year. Interim equity grants, such as grants made to newly hired executives, are typically made on March 15, June 15, September 15 and December 15 each year. During fiscal 2024, the Compensation Committee did not consider material

non-public

information when determining the timing or terms of equity awards, and the Company

did not time

the disclosure of material

non-public

information for the purpose of affecting the value of any executive compensation awarded during the year.

The Compensation Committee did not grant stock options to any NEO in 2024 during the period beginning four business days before and ending one business day after the filing or furnishing of a Form

10-K,

Form

10-Q

or Form

8-K

that discloses material non-public information.

Trading in Company

Securities

The Company has adopted an Insider Trading Policy that sets forth policies and procedures governing the purchase, sale and other transactions in the Company’s securities by directors, officers, associates and certain other persons, and the Company has established procedures applicable to transactions by the Company itself, that the Company believes are reasonably designed to promote compliance with insider trading laws, rules and regulations and listing standards applicable to the Company.

Persons subject to the Insider Trading Policy are, among other provisions, prohibited from engaging in a transaction involving the Company’s securities or “tipping” while aware of material

non-public

information about the Company. The Policy also prohibits short sales of Company common stock. The Policy limits trading in Company common stock, including stock held in an


44		NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025

Table of Contents

Compensation Discussion and Analysis

COMPENSATION COMMITTEE REPORT

account under the Lowe’s 401(k) Plan, by an executive and the executive’s immediate family members who reside with the executive or whose transactions are subject to the executive’s influence or control, to open window trading periods designated by the Company’s Chief Legal Officer. All transactions by an executive officer or director involving common stock are to be

pre-cleared

by the Chief Legal Officer. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to our Annual Report on Form

10-K

filed with the SEC on March 24, 2025.

In addition, the Company’s anti-hedging policy prohibits all executive officers, directors and associates from engaging in any transaction involving the use of a security or other investment designed to hedge or offset any decrease in the market value of Company securities or, alternatively, to leverage the potential return of a predicted price movement (up or down) in Company securities. Executive officers, directors and certain designated associates are also prohibited from using common stock as collateral for any purpose, including in a margin account.

VI. COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management of the Company. Based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the

Compensation

Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on

Form 10-K

for the fiscal year ended January 31, 2025.

Raul Alvarez, Chair

David H. Batchelder

Scott

. Baxter

Navdeep Gupta

Mary Beth West


						NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2025		45