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OFFON

W.W. GRAINGER, INC.

(GWW)
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W W Grainger : Corporate Governance Fact Sheet

02/15/2021 | 03:55pm EDT

Revised 2/15/21

Replaces 12/12/18

CORPORATE GOVERNANCE FACT SHEET

OUR BOARD IS ACCOUNTABLE TO SHAREHOLDERS

1.

Majority of Directors independent

Yes

11 of our 12 Directors are independent.

2.

Directors elected annually

Yes

Annual Director elections are held at our April annual shareholder meeting.

3.

Directors elected by majority vote

Yes

Illinois law requires that our Directors be elected by majority vote in all elections.

4.

Majority voting Director resignation policy

Yes

  • If a Director standing for re-election fails to receive the required majority vote, he/she must tender a resignation.

  • The Board will publicly disclose its decision within 90 days after the annual meeting.

5.

Shareholder cumulative voting rights in Director elections

Yes

As required under Illinois law, cumulative voting applies to all Director elections.

6.

Proxy access by-laws

Yes

Shareholders who beneficially own at least 3% of our outstanding shares with at least 3 years of continuous ownership may nominate up to the greater of 2 Directors or 20% of the Directors then serving on the Board (rounded down).

7.

Shareholders may call special meetings

Yes

Holders of at least 20% of the outstanding shares may call special meeting under our by-laws.

8.

No "poison pill" or shareholders' rights plan

Yes

The Company did not renew its shareholders' rights plan when it expired in 2008.

9.

No "Over-boarded" Directors under ISS or Glass Lewis policies

Yes

  • There are no non-CEO Directors serving on more than 4 public company boards.

  • There are no CEO-Directors serving on more than 2 public company boards.

10.

All Directors attended the annual meeting of shareholders in 2020

Yes

100% attendance in 2020.

11.

No Director attended fewer than 75% of Board and Committee meetings in 2020

Yes

All Directors attended 100% of the Board and their respective Committee meetings in 2020.

12.

Board orientation/education program

Yes

  • New Directors participate in the Company's orientation process.

  • Directors participate routinely in continuing education programs and training.

13.

Directors must tender resignation upon a substantive change in career

Yes

  • Directors must tender a resignation from the Board upon a substantive change in career or vocation.

  • The Board Affairs and Nominating Committee, within 30 days, will submit a recommendation to the Board.

OUR BOARD IS ENGAGED IN COMPANY STRATEGY & OVERSIGHT

1.

Board plays active role in formulating, planning and overseeing the implementation of corporate strategy

Yes

  • Our Board is involved in a robust annual strategic planning process, with key elements of our business and financial plans, strategies, and near- and long-term initiatives developed and reviewed with the Board throughout the year.

  • Our Board also reviews short-term and long-term financial plans, which serve as the basis for the Company's annual operating and capital plans for the upcoming year.

2.

Board plays active role in Company oversight

Yes

Our Board actively oversees the Company to, among other things:

  • encourage management communication with our shareholders;

  • ensure effective succession planning to help maximize long-term corporate performance;

  • evaluate management's performance against its goals;

  • help management assess long-term strategies for, and oversee risk management processes and policies of, the Company; and

  • evaluate the Company's commitment to Environmental, Social and Governance (ESG) matters.

3.

Board plays active role in shareholder engagement

Yes

  • Our Board believes it is important that the Company's strategy is effectively communicated, and that shareholders' perspectives are understood and considered.

  • During 2020, the Lead Director offered to meet with institutional investors as part of a virtual corporate governance roadshow.

4.

Board plays active role in succession planning and management development

Yes

  • Our Board recognizes the importance of senior leadership continuity.

  • At least once a year, the Board conducts an in-depth review of senior leader development and succession planning, including emergency succession scenarios.

5.

Board plays active role in risk oversight

Yes

  • Our Board oversees risk assessment/risk management processes and policies used by the Company to identify, assess, monitor and address potential financial, compensation, operational, strategic, cybersecurity and legal risks on an enterprise wide basis.

  • The Audit Committee regularly reviews the Company's risk assessment and risk management processes and policies, including receiving reports from management on the effectiveness of our Enterprise Risk Management (ERM) initiatives, including as to cybersecurity.

  • The Board Affairs and Nominating Committee oversees risks relating to the Company's ESG programs, including environmental and sustainability, social responsibility to its communities, governance, and the Company's culture, talent strategy, and diversity, equity and inclusion (other than human capital management ERM reviews, which are overseen by the Compensation Committee of the Board).

  • The Compensation Committee assesses the relationship between potential risk created by the Company's compensation programs and its impact on long term shareholder value and oversees ERM reviews relating to human capital management.

6.

Board is committed to Environmental, Social and Governance (ESG)

Yes

  • The Board Affairs and Nominating Committee oversees the Company's ESG programs and reporting, including environmental and sustainability, social responsibility to its communities, governance, and the Company's culture, talent strategy, and diversity, equity and inclusion.

  • The Compensation Committee of the Board oversees the Company's programs and policies for human capital management and assists the Board Affairs and Nominating Committee in its oversight of the Company's programs and policies with respect to employee engagement and leadership effectiveness.

  • Grainger publishes an annual ESG Report that is periodically updated and is available on our website athttps://www.GraingerESG.com.

OUR BOARD ENGAGES IN ONGOING REFRESHMENT EFFORTS, A RIGOROUS EVALUATION PROCESS, & A WELL-EXECUTED DIRECTOR SEARCH PROCESS

1.

Director Skills/Background Matrix regularly reviewed and annually disclosed

Yes

Our Board regularly reviews the experience, qualifications, attributes, skills, and backgrounds that are relevant to service on Grainger's Board and annually discloses a skills/background matrix.

2.

Board periodically refreshes itself

Yes

  • Our Board seeks new Directors with fresh viewpoints, while valuing Directors who have a deeper understanding of the Company, both of which provide significant shareholder value.

  • Since July 2014, 5 new independent Directors have been appointed to the Board.

3.

Board has well-defined Director recruitment strategy and process

Yes

  • The Board periodically evaluates whether it has the right mix of skills, experience, attributes and diverse viewpoints and backgrounds necessary to be good stewards for the Company's shareholders and recommends nominees to the Board.

  • Russell Reynolds Associates, Inc., a nationally recognized third party search firm, assists in recruitment efforts and helps identify candidates that satisfy the Board's criteria.

4.

Board has appropriate mix of Director tenures

Yes

  • The Board believes that it has the appropriate mix of relatively new Directors and those with longer service to the Company.

  • As a group, average Board tenure is 9.8 years, with 33% of independent Directors having tenure of less than 5 years.

5.

Retirement Age Guideline (72)

Yes

  • Grainger's Criteria for Membership on the Board provide that an outside Director generally will not be nominated after the age of 72.

  • Within the last 5 years, two Directors did not stand for re-election based on retirement age.

6.

Board Diversity / "Rooney Rule"

Yes

  • Our Board seeks qualified nominees from a variety of backgrounds, including candidates of gender and racial diversity.

  • In any retained search, the Board is seeking candidates with gender and racial diversity and will only consider and interview slates that include gender and racially diverse candidates.

  • 6 of 11 current independent Directors are diverse:

    • o 3 female; 8 male

    • o 3 African American males; 1 Hispanic female; 5 Caucasian males; 2 Caucasian females

    • o Of the Board's 3 Committee Chairs, 1 is a Caucasian female (Audit Committee Chair) and 1 is an African American male (Compensation Committee Chair)

7.

Board, Committee and Director Self-Evaluations

Yes

  • Our Board undertakes an annual evaluation process to promote strong corporate governance and ongoing Board effectiveness. Each year, the Lead Director conducts a full Board evaluation and individual Director self-evaluations, and the Committee Chairs conduct evaluations for their respective Committees.

  • The Board adopted an approach designed to facilitate conversation focused on the Board's challenges and opportunities which includes:

    • o one-on-one discussions of open-ended questions on Board, Committee, and individual

      Director engagement and effectiveness;

    • o questions related to (a) Board composition dynamics, operations, structure, performance and composition and (b) the Board's engagement in strategy, enterprise risk management, reputation/culture, and the Company's business;

    • o Management's feedback on the Board's operation and engagement; and

    • o an "after action" process that reviews routine matters such as information flow, meeting content, and management interaction following each meeting in executive session.

OUR STRONG INDEPENDENT LEAD DIRECTOR COUPLED WITH A COMBINED CHAIRMAN/CEO PROVIDES AN

OPTIMAL LEADERSHIP STRUCTURE TO GRAINGER

1.

Company has strong independent Lead Director

Yes

  • Lead Director elected annually by and from the Board's independent Directors.

  • Responsibilities include:

    • o reviewing and approving meeting agendas for the Board to ensure that critical issues are included;

    • o presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent Directors;

    • o serving as the primary liaison between the Chairman and the independent Directors;

    • o conducting the Board's annual self-evaluation, including coordinating Board Committee evaluations;

    • o leading the Board in its annual review of the Board and management's performance, including the CEO, to the extent necessary to supplement the Compensation Committee's review of the CEO's performance relative to applicable compensation goals and objectives;

    • o being available, as necessary, for consultation and communication with major shareholders; and

  • o coordinating the Director recruitment process with the Board Affairs and Nominating

    Committee.

2.

Combined Chairman and CEO

Yes

A combined Chairman/CEO position in conjunction with an independent Lead Director provides effective oversight of management and results in a high level of management accountability to shareholders.

*****

Disclaimer

W.W. Grainger Inc. published this content on 15 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 February 2021 20:54:01 UTC.


© Publicnow 2021
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Sales 2021 12 358 M - -
Net income 2021 982 M - -
Net Debt 2021 1 762 M - -
P/E ratio 2021 22,0x
Yield 2021 1,57%
Capitalization 21 406 M 21 406 M -
EV / Sales 2021 1,87x
EV / Sales 2022 1,76x
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Last Close Price 408,98 $
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Spread / Average Target -1,28%
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Donald G. Macpherson Chairman & Chief Executive Officer
Deidra Cheeks Merriwether Chief Financial Officer & Senior Vice President
Jonny LeRoy Chief Technology Officer
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