DEF 14A 1 lcsw2022_def14a.htm CSW INDUSTRIALS, INC. - DEF 14A CSW_Industrials_____2022_Proxy_Statement

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

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CSW INDUSTRIALS, INC.

(Name of Registrant as Specified in its Charter)

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Invitation to
2022 Annual Meeting of Stockholders

Thursday, August 25, 2022 9:00 a.m., Central Time Virtual Meeting Site: www.virtualshareholdermeeting.com/CSWI2022
Joseph B. Armes
Chairman, CEO and President
“Positioning CSWI for sustainable, long-term success.”	Dear Fellow Stockholder: On behalf of your Board of Directors, I am pleased to invite you to attend CSW Industrials’ 2022 Annual Meeting of Stockholders. This year’s Proxy Statement highlights our accomplishments in fiscal 2022 and presents the matters for which we are seeking your approval at the 2022 Annual Meeting. I am pleased to report that CSW Industrials persevered through multiple challenges and thrived in fiscal 2022, thanks to the solid financial foundation we’ve established, the deliberate business practices we’ve followed, and the strategic planning we have executed. Despite a global pandemic and supply-chain disruptions, we continued our successful track record of delivering exceptional performance and, for the second consecutive year, registered record revenue, EBITDA, and earnings per share. In addition, during this past fiscal year we executed on all aspects of our capital allocation strategy, investing $44 million in inorganic growth and $16 million in capital expenditures. We also returned $23.9 million of cash to our stockholders through our share repurchase program and dividends. We can attribute these outstanding accomplishments to our diversified business model, disciplined capital allocation, and commitment to operational excellence, which drove impressive profitability despite global disruption and turmoil. However, as I have stated in the past, this is not the only way we measure success, because at CSWI, how we succeed matters. We are extremely proud of the way our team continues to demonstrate steady leadership, informed by our guiding objectives of treating our employees well, serving our customers well, effectively managing our supply chain, and positioning CSWI for sustainable, long-term success. We are more committed than ever to treating our team members well and promoting our employee-centric culture, which enables our delivery of compelling growth and long-term stockholder value. We believe this year’s proxy statement demonstrates our continued commitment to sound governance practices and enhanced disclosure and transparency. Consistent with our focus on continual improvement across all areas of our business, we have continued to enhance our disclosures around Board composition, governance, and executive compensation. We are pleased to share this important information with you. Your vote is very important to us and to our business, so I encourage you to vote before the meeting. You may vote online, by telephone, or by signing and returning your proxy card by mail, so that your shares will be represented and voted at the meeting. You can find instructions on how to vote beginning on page 3. I hope that you participate in the meeting. Thank you in advance for voting and for your continued support of CSW Industrials.
	Very truly yours,

| 2022 Proxy Statement

Table of Contents

Proxy Summary

Proposal One: Election of Directors

Required Vote and Recommendation

Board of Directors — Biographical Information

The Board and Committees

Governance Overview

Board Composition

Board Committees

Board of Directors Compensation

Corporate Sustainability, Culture & Compliance

Executive Officers

Proposal Two: Advisory Vote on Executive Compensation

Required Vote and Recommendation

Proposal Three: Advisory Vote on Frequency of Conducting the Advisory Vote on Executive Compensation

Required Vote and Recommendation

Executive Compensation

Compensation & Talent Development Committee Report

Compensation Discussion and Analysis

Annual Executive Compensation Program Review and Compensation Risk

Summary Compensation Table

2022 Grants of Plan-Based Awards

Outstanding Equity Awards at Year-End 2022

2022 Option Exercises and Stock Vested

2022 Pension Benefits

Potential Payments upon Termination or Change-In-Control

CEO Pay Ratio

Equity Compensation Plan Information

Section 16(a) Beneficial Ownership Reporting Compliance

Proposal Four: Ratification of Appointment of Grant Thornton LLP to Serve as our Independent Registered Public Accounting Firm for Fiscal 2023

Required Vote and Recommendation

Report of The Audit Committee

Other Audit Information

Relationship with Independent Registered Public Accounting Firm

Audit and Non-Audit Fees and Services

Audit Committee Approval Policy

Security Ownership of Directors and Certain Executive Officers

Security Ownership of Certain Beneficial Owners

General Voting and Meeting Information

Solicitation

Voting

Other Information About this Solicitation

Cost of Proxy Solicitation

Stockholders Sharing an Address

Stockholder Proposals and Nominations

Exhibit A

GAAP to NON-GAAP Reconciliations

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Thursday, August 25, 2022

9:00 a.m., Central Time

NOTICE

Virtual Meeting Site:

www.virtualshareholdermeeting.com/CSWI2022

of Annual Meeting

of Stockholders

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:		Stockholders of record of the Company’s common stock at the close of business on July 8, 2022, are entitled to notice of and to vote at the Annual Meeting. This notice and the enclosed Proxy Statement are first being mailed to stockholders on or about July 15, 2022. At the Annual Meeting, stockholders will vote on the following matters: • the election of eight director nominees to serve a one-year term expiring at the 2023 annual meeting of stockholders; • the approval, on an advisory basis, of the Company’s executive compensation, or the “Say on Pay” vote; • an advisory vote on how often the Company conducts the advisory “Say on Pay” vote; • the ratification of Grant Thornton LLP’s appointment to serve as our independent registered public accounting firm for fiscal year 2023; and • the transaction of any other business properly presented at the Annual Meeting. The enclosed Proxy Statement contains other important information that you should read and consider before you vote. The Proxy Statement and annual report to stockholders and any other proxy materials are available at www.proxyvote.com. For additional related information, please refer to the “Important Notice Regarding the Availability of Materials for the Stockholder Meeting to be held on August 25, 2022” in the enclosed Proxy Statement.
INTERNET Visit the website on your proxy card
BY TELEPHONE Call the telephone number on your proxy card
BY MAIL Sign, date and return your proxy card in the enclosed envelope
AT THE MEETING Attend the Annual Meeting virtually at www.virtualshareholdermeeting.com/CSWI2022
Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.

Your vote is important. Even if you plan to attend the Annual Meeting, your prompt cooperation in voting in advance is greatly appreciated. Thank you in advance for voting and for your support of the Company.

By Order of the Board of Directors,

Luke E. Alverson
Senior Vice President,
General Counsel and Secretary

July 15, 2022

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Proxy Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all the information that you should consider, and you should read the entire proxy statement carefully before voting.

Information About the Annual Meeting

Time and Place

Our Annual Meeting will be held as follows:



Time and Date	Location	Record Date
9:00 a.m., Central Time Thursday, August 25, 2022	Via live webcast at www.virtualshareholdermeeting.com/CSWI2022	July 8, 2022

Voting Matters

Proposal	Board’s Recommendation	Page Reference
1. Election of Directors	FOR each Director Nominee	12
2. Advisory Vote on Executive Compensation	FOR	26
3. Advisory Vote on Frequency of Advisory Vote on Executive Compensation	ONE YEAR (annual)	28
4. Ratification of Auditors	FOR	62

We may also transact any other business that may properly come before the Annual Meeting. As of the date of this proxy statement, we are not aware of any other business to be presented for consideration other than the matters described in this proxy statement.

Fiscal 2022 Performance Highlights

In fiscal 2022, we continued our successful track record of exceptional performance, delivering our second consecutive year of record revenue, operating income, EBITDA, and earnings per share. It also marked our fifth consecutive year of year over year increases in revenue and EBITDA. Our stated priorities of treating our employees well, serving our customers well, and managing our supply chains effectively drove record results in growth and profitability. Fiscal 2022 revenue reached $626 million, nearly 50% growth over the prior year, and of that total growth, half resulted from organic growth, and half came from our TRUaire and Shoemaker acquisitions. Fiscal 2022 EBITDA reached $133 million, or 46% growth over fiscal 2021. These outstanding accomplishments are attributable to our diversified business model, disciplined capital allocation, and commitment to operational excellence, which drove impressive operating leverage, despite unprecedented global disruption and turmoil.

During fiscal 2022, we executed on all aspects of our capital allocation strategy, investing $44 million with the Shoemaker acquisition in December 2021 and $16 million in capital expenditures. We returned $23.9 million of cash to our stockholders through our share repurchase program and dividends. Subsequent to fiscal year end, we increased our quarterly cash dividend by 13%, to $0.17 per share, and have remained active under our share repurchase program.

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Financial and Operational Performance

We achieved the following financial and operational results in fiscal 2022 (comparisons to fiscal 2021):

Revenues	Adjusted Operating Income*	Adjusted EPS*	Operating Cash Flow
$626.4m +49.4%	$101.3m +39.6%	$4.39 +30.7%	$69.1m +4.3%
	Adjusted EBITDA* $133.3m +46.0%	3-Year TSR 109.3%
* Reconciliation to GAAP amounts appear on Exhibit A.

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Board of Directors Highlights (page 13)

Current Board Members

Name	Age	Director Since	Occupation	Independent	Committee Memberships
Name	Age	Director Since	Occupation	Independent	Audit	Comp & Talent Dev	Nom & Gov
Joseph B. Armes	60	2015	Chairman, CEO and President, CSW Industrials, Inc.
Michael R. Gambrell	68	2015	Former EVP, The Dow Chemical Company	•		•	◊
Bobby Griffin	55	2021	Chief Diversity, Equity & Inclusion Officer, Rockwell Automation	•		•	•
Terry L. Johnston	64	2017	Former EVP and COO, Commercial Segment, Lennox International	•	•		•
Linda A. Livingstone, Ph.D.	62	2015	President, Baylor University	•		•	•
Anne B. Motsenbocker	60	2022	Former Managing Director, J.P. Morgan Chase	•	•	•
Robert M. Swartz (Lead Independent Director)	70	2015	Former EVP and COO, Glazer’s Inc.	•	◊		•
J. Kent Sweezey	69	2016	Founding Partner, Turnbridge Capital, LLC	•	•	◊
Debra L. von Storch*	62	2020	Former Partner, Ernst & Young LLP	•		•

◊

Denotes Chair

As disclosed on the Form 8-K filed with the Securities and Exchange Commission on June 28, 2022, Ms. von Storch has indicated she will not stand for reelection at this Annual Meeting.

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Eight of our nine current Board members are nominated for re-election at the Annual Meeting. As shown below, our eight Director nominees strengthen our Board with their varied professional backgrounds and experiences.

Governance Highlights

Our Board of Directors is committed to sound governance practices, including the following:

Board Independence	• Seven of our eight director nominees are independent • Our CEO is our only management director
Board Composition	• All Board members are elected annually • The Board annually assesses and evaluates its performance and the performance of its committees • The Nominating & Corporate Governance Committee leads the full Board in considering Board competencies in light of Company strategy • 25% of our director nominees are female
Board Committees	• We have three committees — Audit; Compensation & Talent Development; and Nominating & Corporate Governance • All committees are composed entirely of independent directors
Leadership Structure	• Our Board has a lead independent director that works closely with our Chairman, CEO and President in fulfilling responsibilities and duties • Among other duties, our lead independent director chairs executive sessions of the independent directors
Environmental, Social & Governance Oversight	• Our Nominating & Corporate Governance Committee oversees our Environmental, Social & Governance (ESG) Program
Risk Oversight	• Our Board is responsible for enterprise risk oversight and has designated committees with specific oversight of certain key risks • Our Audit Committee oversees administration of the Company’s Enterprise Risk Management (ERM) Program for the assessment and mitigation of key risks
Open Communication	• We encourage open communication and strong working relationships among the lead independent director, Chairman and other directors • Our directors have direct access to management and other employees
Stock Ownership	• Our directors and executive officers are subject to robust stock ownership requirements

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Stockholder Engagement

We are actively engaged with our investors. Our senior leaders participate in numerous industry and analyst conferences throughout the year, and we have dedicated resources to engage with all stockholders through a variety of mediums. The table below summarizes our engagement efforts in fiscal 2022.

Executive Compensation Highlights (page 30)

Executive Compensation Program Objectives and Elements

The Compensation Committee has designed our executive compensation program to support CSWI’s growth strategy. Our key executive compensation objectives are:

In furtherance of these objectives, the Compensation Committee maintains a thoughtful approach to our executive compensation program design and governance practices. The following table summarizes these practices.

What We Do		What We Don’t Do
	Promote a strong pay for performance plan design		No hedging, pledging, or short sales of stock permitted
	Regularly benchmark executive compensation against peers of comparable size, complexity, and industry		No change in control excise tax gross-ups
	Maintain meaningful stock ownership guidelines for our directors and executive officers		No option repricing without stockholder approval
	Have double trigger requirements for cash payments following a change in control		No perquisites offered, other than those generally provided to all employees
	Conduct an annual compensation risk review		No dividends paid and no voting rights on unvested performance-based equity awards
	Provide reasonable and standardized benefits upon severance or change in control		No duplication of metrics in annual and long-term incentive plans
	Engage an independent compensation consultant		No supplemental executive retirement plans
	Maintain an incentive compensation “clawback” policy

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Our executive compensation program is based on the following foundational elements:

Element	Form	Compensation Objective Addressed
Base Salary	Cash		Reward Current Performance
			Attract and Retain
Annual Incentive	Performance Cash Award		Stockholder Alignment
			Reward Current Performance
			Attract and Retain
Long-Term Equity Incentive	Performance Shares		Stockholder Alignment
			Drive Future Performance
			Attract and Retain

	Restricted Stock		Stockholder Alignment
			Drive Future Performance
			Attract and Retain

Fiscal 2022 Executive Total Target Compensation Mix

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Retention and Succession Arrangement with CEO (page 35)

In early calendar 2021, the Board and the Compensation Committee began to engage in strategic discussions focused on the necessity of retaining Mr. Armes’ service over a long-term period and the criticality of successful succession planning practices for the Company’s Chief Executive Officer role. These discussions were further supported by Mr. Armes’ exemplary performance and extraordinary contributions to shareholder value creation since the Company was created and eventually spun-off from Capital Southwest Corporation in September 2015. Among other things, he has recruited and assembled an impressive Board of Directors and executive team to lead the Company as a stand-alone public company, and created an “employee first” culture that emphasizes and rewards profitability and increasing shareholder value. Combined with a sharp focus on financial stewardship and a clear capital allocation strategy, Mr. Armes has led the Company to generate robust organic and inorganic growth while maintaining a strong balance sheet and financial stability through industry cycles.

As a result of the Board’s strategic discussions and with the support of NFP Consulting, the Compensation Committee’s independent compensation consultant, in April 2021, the Compensation Committee approved a long-term, special equity grant for Mr. Armes with a target value of $10,000,000, all of which is “at risk.” This award was thoughtfully and intentionally structured so that 60% of the target amount is performance based, consisting of performance shares and restricted stock units that vest based on achievement of specific, measurable performance goals that are tied directly to shareholder value creation and business continuity. Mr. Armes will not realize any compensation from this portion of the grant before the end of fiscal 2025, and then only to the extent performance goals are satisfied. The remaining 40% of the target amount is directly focused on Mr. Armes’ long-term retention, consisting of restricted stock that will not vest, in any amount (subject to limited exceptions), prior to April 2026, the fifth anniversary of the grant date.

The Compensation Committee believes these equity awards appropriately reflect Mr. Armes’ value to the Company and the Board’s confidence in Mr. Armes’ leadership. The Board further believes the awards are designed to achieve our long-term retention and succession-planning objectives to support the Company’s long-term strategy, all of which is consistent with the Company’s commitment to driving long-term shareholder value. The table below illustrates the vesting schedule for Mr. Armes’ special equity grant, which is discussed in further detail in the CD&A section of this Proxy Statement.

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Fiscal 2022 Executive Compensation Summary (page 52)

Name and Principal Position	Salary ($)	Bonus ($)	Stock Awards ($)		Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Joseph B. Armes Chairman, CEO & President	600,000	—	15,314,974	*	1,029,990	(6,486)	65,099	17,003,577
James E. Perry Executive VP, CFO	380,000	—	851,357		376,343	—	71,285	1,678,985
Donal J. Sullivan Executive VP & General Manager, Contractor Solutions	400,000	11,050	942,822		388,950	—	70,957	1,813,779
Luke E. Alverson Senior VP, General Counsel & Secretary	325,000	—	384,882		236,039	—	71,882	1,017,803
* Includes a grant date fair value of $13,209,147 attributable to Mr. Armes’ special equity grant, consisting of: 31,496 shares of restricted stock ($4,419,519), 19,685 restricted stock units ($2,762,199), and 27,559 shares of performance units ($6,027,429). Disclosed value of awards differs from target value due to valuation assumptions per the accounting methodology. Please refer to the “Compensation Discussion and Analysis” section of this proxy statement and the “Summary Compensation Table” for additional detail.

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Proposal One:
Election of Directors

The Company’s Board currently consists of nine directors. Debra von Storch has indicated that she will not stand for re-election to the Board at the Annual Meeting due to personal and professional external commitments and is therefore not nominated for reelection. Ms. von Storch’s decision to not stand for re-election does not result from any disagreement with the Company on any matter, including relating to its operations, policies, or practices. Ms. von Storch joined our Board in January 2020 and served as Chair of our Audit Committee and as a member of the Compensation and Talent Development Committee. We thank Ms. von Storch for her distinguished service and the leadership she has provided to the Company during her tenure.

The Board has nominated Joseph Armes, Michael Gambrell, Bobby Griffin, Terry Johnston, Linda Livingstone, Anne Motsenbocker, Robert Swartz, and Kent Sweezey, whose terms of office are expiring at this 2022 Annual Meeting, to serve a one-year term that will expire at the 2023 annual meeting of stockholders. Following the 2022 Annual Meeting, the number of directors on the Board will reduce from nine to eight.

All the nominees were elected by stockholders at the 2021 annual meeting, except for Mr. Griffin, who was appointed by the Board in December 2021, and Ms. Motsenbocker, who was appointed by the Board in June 2022. Biographical information regarding the nominees is provided on the following pages.

Required Vote and Recommendation

Our Bylaws provide that, in an uncontested election, each director nominee will be elected by a majority of the votes cast in person or represented by proxy. This means that the number of shares cast “for” a nominee’s election must exceed the number of votes “withheld” from that nominee. If this were a contested election, the directors would be elected by a plurality of the votes cast, meaning the nominees receiving the largest number of “for” votes would be elected. For more information, see “General Voting and Meeting Information—Counting of Votes.”

Our Corporate Governance Guidelines provide that in an uncontested election, any incumbent director who does not receive the affirmative vote of a majority of the votes cast must tender his or her resignation promptly after such election. The remaining independent directors of the Board, giving due consideration to the best interests of CSWI and our stockholders, will then evaluate the relevant facts and circumstances and make a decision, within 30 days after election results are certified, on whether to accept the tendered resignation. The Board will promptly disclose publicly its decision and, if applicable, the reasons for rejecting the tendered resignation. The Board may fill any vacancy resulting from a director’s accepted resignation.

The individuals named as proxies on the enclosed proxy card will vote your proxy “FOR” the election of these nominees unless you instruct otherwise or you withhold authority to vote for any one or more of the nominees. If any director is unable to stand for re-election, the Board may reduce the number of directors or choose a substitute nominee. The nominees have indicated their willingness to serve as directors, and we have no reason to believe the nominees will not be able to stand for re-election.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF ALL NOMINEES TO SERVE AS DIRECTORS.

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Board of Directors — Biographical Information

Nominees to Serve a Term Expiring at the 2023 Annual Meeting of Stockholders

JOSEPH B. ARMES
Chairman of the Board, Chief Executive Officer & President, CSW Industrials
Age 60 Director since: September 2015	Professional Highlights:
	Mr. Armes has served as Chief Executive Officer and Chairman of the Board of Directors of the Company since September 2015, and as President of the Company since February 2018. Prior to the Company’s spin-off in September 2015 from Capital Southwest Corporation, Mr. Armes served as the Chief Executive Officer and President of Capital Southwest Corporation from June 2013 to September 2015, and as Chairman of the Board from January 2014 through August 2017.
	Key Skills and Qualifications:
	We believe Mr. Armes is well qualified to serve as a director due to his position as the Company’s Chief Executive Officer, which provides the Board with knowledge of the Company’s day-to-day operations. Mr. Armes also has broad executive and board leadership experience, finance and accounting expertise, compliance and governance expertise, and corporate development experience, all of which support the Company’s strategic growth plans.
	CSWI Board Committee(s)	Other Public Company Directorships:
	• None	• Switchback Energy Acquisition Corp. (2019-2021) • RSP Permian, Inc. (2013-2018) • Capital Southwest Corporation (2013-2017)

MICHAEL R. GAMBRELL
Former Executive Vice President, The Dow Chemical Company
Age 68 Director since: September 2015 INDEPENDENT	Professional Highlights:
	Mr. Gambrell had a 37-year career at The Dow Chemical Company, a publicly traded chemicals company (now Dow, Inc.), most recently serving as an Executive Vice President and an advisor to the Chairman and CEO of Dow. During his time at Dow, Mr. Gambrell served on the company’s Executive Leadership Committee, Strategy Board, Sustainability Team, and Geographic Leadership Council, and he was an ex officio member of the board’s Environment, Health and Safety Committee. In 2012, Mr. Gambrell founded GamCo, LLC, a privately-held company providing advisory services to public, private equity, and start-up companies as well as non-profit organizations. He served as Chairman of the Campbell Institute from 2012 to 2015, and as a director and member of the Executive Committee and Strategic Planning Committee of the National Safety Council from 2011 to 2015.
	Key Skills and Qualifications:
	We believe Mr. Gambrell is well qualified to serve as a director due to his executive and board leadership experience and his extensive knowledge of the chemicals industry, which provide a global perspective and deep understanding of the Company’s products, customers, end markets, competitive landscape, and operational challenges and opportunities. In addition, Mr. Gambrell has extensive corporate development experience and integration expertise, as well as knowledge and experience in addressing health, safety and environmental issues, which provides the Board unique insight into the Company’s strategic growth plans.
	CSWI Board Committee(s):	Other Public Company Directorships:
	• Compensation & Talent Development • Nominating & Corporate Governance (Chair)	• TRW Automotive Inc. (2007-2015)

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BOBBY GRIFFIN
Chief Diversity, Equity & Inclusion Officer, Rockwell Automation
Age 55 Director since: December 2021 INDEPENDENT		Professional Highlights:
		Mr. Griffin has served as Chief Diversity, Equity & Inclusion Officer of Rockwell Automation, Inc. since February 2021. Prior to that role and beginning in 2017, Mr. Griffin served as Vice President of Diversity and Inclusion at CBRE Group, Inc., and prior to that served as Global Director of Diversity and Inclusion at Flowserve Corporation. Additionally, Mr. Griffin held various human resources and business partner leadership positions in Fortune 100 companies, including Coca-Cola Enterprises and Merck & Co.
		Key Skills and Qualifications:
		We believe Mr. Griffin is well qualified to serve as a director due to his notable expertise in corporate culture, organizational health, diversity & inclusion, talent management, leadership development, and compensation and benefits, which provides the Board a valuable perspective on the Company’s core values and employee-centric culture. His experience also provides strategic insight into the Company’s leadership development, human capital management, and organizational design opportunities in support of the Company’s strategic growth plans.
		CSWI Board Committee(s):
		• Compensation & Talent Development • Nominating & Corporate Governance



TERRY L. JOHNSTON
Former Executive Vice President & COO, Commercial Segment, Lennox International
Age 64 Director since: January 2017 INDEPENDENT		Professional Highlights:
		Mr. Johnston was Executive Vice President and Chief Operating Officer of the Commercial Segment of Lennox International Inc., a leading international provider of heating and cooling systems and technologies for residential and commercial applications, from 2013 until October 2019. Before assuming that position, Mr. Johnston held roles of increasing responsibility with Lennox International from the time he joined the company in 2001. Prior to his time with Lennox International, Mr. Johnston spent 20 years with General Electric Company, serving primarily in marketing and commercial leadership roles.
		Key Skills and Qualifications:
		We believe Mr. Johnston is well qualified to serve as a director due to his executive leadership experience and extensive knowledge of the Company’s served industrial markets. In addition, Mr. Johnston has extensive strategic planning experience and operational and commercial expertise, which provides the Board with a global perspective and positions him well to support the Company’s growth strategy and manufacturing optimization focus.
		CSWI Board Committee(s):
		• Audit • Nominating & Corporate Governance


LINDA A. LIVINGSTONE, PH.D.
President, Baylor University
Age 62 Director since: September 2015 INDEPENDENT		Professional Highlights:
		Dr. Livingstone is President of Baylor University, a position she has held since June 2017. From August 2014 through May 2017, she served as Dean of The George Washington University School of Business, and she previously served as Dean of the Graziadio School of Business and Management at Pepperdine University for twelve years. Dr. Livingstone began her academic career at Baylor University, where she served for eleven years as an Assistant and then Associate Professor of Management, which included serving for four years as Associate Dean for Graduate Programs. Dr. Livingstone currently serves on the Board of Directors and as a member of the Executive Committee for each of the American Council on Education and the Big 12 Conference. She also serves on the NCAA Board of Governors and the NCAA Division 1 Board of Directors, as well as the Board of Directors of Independent Colleges and Universities of Texas.
		Key Skills and Qualifications:
		We believe Dr. Livingstone is well qualified to serve as a director due to her extensive leadership experience as an administrator and educator in the field of business administration, which provides the Board a valuable perspective on organizational development, corporate governance, information security, executive compensation and leadership development matters.
		CSWI Board Committee(s):
		• Compensation & Talent Development • Nominating & Corporate Governance

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ANNE B. MOTSENBOCKER
Former Managing Director, J.P. Morgan Chase
Age 60 Director since: June 2022 INDEPENDENT	Professional Highlights:
	Ms. Motsenbocker is a former Managing Director of J.P. Morgan Chase, a global financial services company. She retired from J.P. Morgan Chase in February 2021 after a 36-year career with the firm, serving most recently as Managing Director and senior leader of the Southwest Region of the Commercial Bank. In prior leadership roles with J.P. Morgan Chase, she served as National Head of Multinational Corporations, Chairman of Dallas Market Leadership, President of Dallas Region Middle Market Banking, and Head of the Dallas Region of the Private Bank. Since 2016, Ms. Motsenbocker has served as a director of Children’s Health System of Texas, one of the nation’s largest pediatric healthcare systems, where she serves on the Audit Committee and previously served as the chair of the HR and Compensation Committee. Since 2021, she has also served on the board of the United Way Foundation of Metropolitan Dallas.
	Key Skills and Qualifications:
	We believe Ms. Motsenbocker is well qualified to serve as a director due to her executive and board leadership experience and her strategic and financial acumen. Ms. Motsenbocker’s extensive experience advising companies in the development and implementation of capital strategies, managing risk, achieving operational excellence, and growing organically and inorganically positions her well to support the Company’s strategic growth plans.
	CSWI Board Committee(s):	Other Public Company Directorships:
	• Audit • Compensation & Talent Development	• U.S. Physical Therapy, Inc. (2022-Present)

ROBERT M. SWARTZ
Former Executive Vice President & COO, Glazer’s, Inc.
Age 70 Director since: September 2015 Lead Independent Director since: September 2015 INDEPENDENT	Professional Highlights:
	From January 2011 until June 2016, Mr. Swartz served as the Executive Vice President and Chief Operating Officer for Glazer’s, Inc., a privately-held distributor of wines and spirits, prior to Glazer’s combination with Southern Wine and Spirits. For the remainder of 2016, Mr. Swartz oversaw the integration of the combined company, Southern Glazer’s Wine and Spirits of America. Since January 2017, Mr. Swartz has served as a member of the board of managers of Glazer’s Beer & Beverage, LLC. Since 2018, Mr. Swartz has been a partner in Northaven Capital Partners, a lower middle market private equity firm focused on businesses headquartered in the southwestern U.S. Additionally, Mr. Swartz served in various executive positions at Centex Corporation from 1999 to 2007.
	Key Skills and Qualifications:
	We believe Mr. Swartz is well qualified to serve as a director due to his experience and expertise in corporate development, finance, and accounting. Mr. Swartz also has extensive executive and board leadership experience as well as deep operational expertise that provides the Board with insight into the Company’s operations and leadership development opportunities.
	CSWI Board Committee(s):	Other Public Company Directorships:
	• Audit (Chair) • Nominating & Corporate Governance	• Resolute Energy Corporation (2009-2015)

J. KENT SWEEZEY
Founding Partner, Turnbridge Capital, LLC
Age 69 Director since: December 2016 INDEPENDENT		Professional Highlights:
		Mr. Sweezey is a founding partner of Turnbridge Capital, LLC, an energy services, equipment and infrastructure-focused private equity firm, which was founded in 2008. He currently serves as a member of the board of directors of Impact Selector, Inc., a privately-held company. Prior to co-founding Turnbridge Capital, Mr. Sweezey served as the Managing Partner of Centre Southwest Partners, LLC, a middle-market private equity firm focused primarily on energy services and equipment-related investments. Prior to his time with Centre Southwest Partners, Mr. Sweezey was with Donaldson, Lufkin & Jenrette (“DLJ”) and its successor firm, Credit Suisse First Boston, where he focused on transactions in the energy sector, as well as in the consumer products, building products, and manufacturing sectors. Mr. Sweezey was also involved in DLJ’s early principal investing activities through its investments in Seven-Up Company, Dr Pepper/Seven-Up Companies, and Dr Pepper Bottling Company of Texas, where he served on the board of directors from 1989 to 1999.
		Key Skills and Qualifications:
		We believe Mr. Sweezey is well qualified to serve as a director due to his executive leadership experience, strategic acquisition and financial expertise, and governance expertise. His extensive experience in corporate development matters positions him well to support the execution of the Company’s growth strategy and capital allocation plans.
		CSWI Board Committee(s):
		• Audit • Compensation & Talent Development (Chair)

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The Board and Committees

Governance Overview

The Board has a responsibility to oversee the Chief Executive Officer and other members of senior management in the competent and ethical operation of the Company and to ensure that our stockholders’ best interests are being served. To meet this responsibility, the Board has established Corporate Governance Guidelines designed to promote effective oversight of the Company’s business affairs. The Board monitors and updates these Guidelines periodically as it deems appropriate.

As discussed in this section of the proxy, the Guidelines cover a range of matters, including:

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the director selection process;

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the composition of the Board and its committees;

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the review and evaluation of the Chief Executive Officer;

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succession planning and management development;

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director compensation;

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the review of individual directors and the Board’s performance; and

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independence requirements and age limits and other restrictions for directors.

The Corporate Governance Guidelines are available on the Company’s website at www.cswindustrials.com under the “Investors — Corporate Governance” caption.

Board Independence

Our Corporate Governance Guidelines require that a majority of the Board members satisfy applicable independence requirements set forth in NASDAQ listing rules and under applicable law. Only those directors who have no material relationship with the Company (except in their role as a director) are deemed independent. The Board has determined that, other than Mr. Armes, who is the Company’s Chairman, Chief Executive Officer and President, each member of the Board meets the independence standards set forth in the applicable rules of the Securities and Exchange Commission (the “SEC”) and NASDAQ.

Board Leadership Structure

The Board’s current leadership structure is characterized by:

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An engaged, qualified and independent Board;

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A combined Chairman of the Board and Chief Executive Officer;

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An independent, highly experienced Lead Independent Director with well-defined responsibilities that support and facilitate the Board’s oversight responsibilities; and

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A strong committee structure consisting entirely of independent directors with well-defined authority and risk oversight responsibilities.

The Board has appointed Mr. Swartz as the lead independent director of the Board. The lead independent director serves an important leadership and oversight role by providing input on the Board’s annual schedule and collaborating with the Chairman and CEO on the agendas for all Board meetings. Additionally, the lead independent director provides support and advice to the Chairman and CEO, reinforcing the Chief Executive Officer’s reporting relationship and accountability to the Board.

The Board believes it is important to retain flexibility to allocate the responsibilities of the positions of Chairman of the Board and Chief Executive Officer in a manner that it believes is in the best interests of the Company and its stockholders. The Board does not have a policy mandating that the Chief Executive Officer should or should not also serve as Chairman. Rather, the Board considers this issue as part of the CEO succession planning process, and decides based on its evaluation of current circumstances and the needs of the Company at the time it is considering candidates for the CEO role. Based on Mr. Armes’ significant knowledge of the Company, the Board has concluded that combining the roles of Chairman and Chief Executive Officer, along with the presence of a strong lead independent director, is in the best interests of the Company and its stockholders at this time to promote the pursuit of the Company’s business objectives and strategic growth plans.

Lead Independent Director Responsibilities

• Provide leadership to the independent Board members

• Provide support and advice to the Chairman and CEO

• Preside over executive sessions of the independent Board members

• Collaborate with the Chairman and CEO on Board meeting agendas

• Oversee director recruiting

• Coordinate the Board’s self-assessment processes

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Board Diversity

NASDAQ listing rules require the Company to present the Board’s diversity statistics. The Board Diversity Matrix below presents the Board’s current diversity statistics in the format prescribed by NASDAQ rules. As reflected in the matrix, Dr. Livingstone, Ms. Motsenbocker, and Ms. von Storch are female, and Mr. Griffin is African-American or Black. As previously noted, at the conclusion of the 2022 Annual Meeting, Ms. von Storch’s service as a Board member will end.

Board Diversity Matrix (As of June 30, 2022)
Total Number of Directors	9
		Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors		3	6	0	0
Part II: Demographic Background
African American or Black		0	1	0	0
Alaskan Native or Native American		0	0	0	0
Asian		0	0	0	0
Hispanic or Latinx		0	0	0	0
Native Hawaiian or Pacific Islander		0	0	0	0
White		3	5	0	0
Two or More Races or Ethnicities		0	0	0	0
LGBTQ+	0
Did Not Disclose Demographic Background	0

Board’s Role in Risk Oversight

The Company’s Chief Executive Officer and other members of senior management are responsible for the ongoing assessment and management of the risks the Company faces. These enterprise risks are formally assessed annually by management as part of the Company’s robust Enterprise Risk Management program. At least annually, the Board—both as a whole and through its committees—oversees the Company’s risk profile and management’s policies and processes for assessing and managing risk. Responsibilities for risk management are allocated generally as set forth below.

The Board is regularly informed through committee reports of each committee’s activities in overseeing risk management within their respective areas of oversight responsibility.

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Board Self-Evaluation

Our Board has conducted an annual self-evaluation since CSWI became an independent public company. The self-evaluation is designed to assess whether the Board and its committees are functioning effectively. Individual Board committees also conduct annual self-evaluations for the same purpose. These evaluations focus on the performance of the Board or the committee, as applicable, as a unit, rather than the performance of any individual director. The Nominating & Corporate Governance Committee (“N&CG Committee”) oversees our annual self-evaluation process, which is illustrated below. The Board believes this annual self-evaluation process supports its effectiveness and continuous improvement.

Director Attendance at Meetings

Board members are expected to devote the time necessary to appropriately discharge their responsibilities and to rigorously prepare for and, to the extent possible, attend and participate in all Board meetings and meetings of Board committees on which they serve. Executive sessions of non-employee directors are normally held at each regular Board meeting. Any non-employee director may request that additional executive sessions be scheduled. In fiscal 2022, the Board held six meetings, and each director attended 100% of the meetings of the Board and the committees on which he or she served during the period for which he or she was a director.

The Company encourages all directors to attend the annual meeting of stockholders, though we do not have a specific policy with respect to director attendance. All of the Company’s then-current directors attended the 2021 annual meeting of stockholders.

Age and Term Limits

Our Corporate Governance Guidelines provide that no individual may be nominated to stand for election or reelection to the Board if they would reach the age of 73 before the date of election. We do not have term limits, as our Board believes such limits work against retaining the valued contributions of directors who have developed increasing insight into the Company and its operations over time.

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Limits on Other Board Service

Board members are expected to ensure that their other commitments do not materially interfere with their service as a director. To that end, we expect that directors will not serve on more than three other public company boards. Directors must advise the Chairman of the Board and the Chair of the N&CG Committee before accepting an invitation to serve on the board of directors or similar body of another company.

Stockholder Communications with the Board

Stockholders and other interested parties may communicate with the Board directly by writing to: Robert Swartz, Lead Independent Director, c/o CSW Industrials’ Corporate Secretary, CSW Industrials, Inc., 5420 Lyndon B. Johnson Freeway, Suite 500, Dallas, Texas 75240. All such communications will be delivered to our lead independent director.

Board Composition

What We Look for in Director Candidates

Before considering director nominee candidates, the N&CG Committee assesses whether the Board’s current size and composition are appropriate and whether any vacancies on the Board are expected due to retirement, age limits or other factors. If additional directors are needed or vacancies are anticipated or otherwise arise, the N&CG Committee utilizes a variety of methods for identifying and evaluating possible nominees.

The Company’s Corporate Governance Guidelines establish the criteria for Board membership. As a starting point, the N&CG Committee assesses a director candidate’s judgment, skill, diversity, integrity, experience with business and other organizations of comparable size, and the interplay of the candidate’s experience with the experience of current Board members. In evaluating these characteristics, including diversity, the Board considers individual qualities and attributes, such as educational background, professional skills, business experience, and cultural viewpoint, as well as more categorical diversity metrics, such as race and ethnicity, gender, and age. The Board considers whether this evaluation process is effective in promoting diversity during its annual self-assessment process.

How We Identify Director Candidates

The N&CG Committee considers various potential director candidates who come to their attention through professional search firms, current Board members, stockholders or other sources. A stockholder who wants to recommend a candidate for election to the Board should submit a written notice, as required by the Company’s Bylaws, including the candidate’s name and qualifications to our Corporate Secretary, who will refer the recommendation to the N&CG Committee. The N&CG Committee may require any stockholder-recommended candidate to furnish such other information as may reasonably be required to determine the candidate’s eligibility or to assist in evaluating the candidate. The N&CG Committee also may require the submission of a fully completed and signed Questionnaire for Directors and Executive Officers on the Company’s standard form and a written consent by the stockholder-recommended candidate to serve as a director, if so elected.

All identified candidates, including stockholder-recommended candidates, are evaluated by the N&CG Committee using generally the same methods and criteria, although those methods and criteria may vary from time to time depending on the N&CG Committee’s assessment of the Company’s needs and current situation.

Board Committees

The Board maintains an Audit Committee, a Compensation & Talent Development Committee (“Compensation Committee”), and a N&CG Committee. Only independent directors are eligible to serve on these standing Board committees. Each committee is governed by a written charter, all of which are available on the Company’s website at www.cswindustrials.com under “Investors — Corporate Governance.”

The Board has determined that all members of all committees meet the independence standards of the SEC and NASDAQ, including the heightened independence requirements for certain committee members.

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Audit Committee

Members and Other Information

Primary Oversight Responsibilities

Committee Chair:

Robert Swartz

Other Members:

Terry Johnston

Anne Motsenbocker

J. Kent Sweezey

5 Meetings in Fiscal 2022

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Engage the Company’s independent auditors and approve the scope of the annual external audit

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Approve any audit and non-audit services provided by the independent auditor

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Meet regularly with the independent auditors in executive session to discuss audit reports and auditor recommendations on a confidential basis

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Oversee financial reporting processes, including the integrity of the Company’s financial statements and compliance with legal and regulatory requirements

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Oversee internal controls matters, which includes information security and cybersecurity risk

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Oversee the Company’s compliance program, including the Company’s Code of Business Conduct and Ethics

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Oversee management’s administration of the Enterprise Risk Management program

The Board has determined that Mr. Swartz qualifies as an audit committee financial expert under SEC rules. The Board has also determined that all members of the Audit Committee are financially sophisticated within the meaning of NASDAQ’s corporate governance requirements.

Nominating & Corporate Governance Committee

Members and Other Information

Primary Oversight Responsibilities

Committee Chair:

Michael Gambrell

Other Members:

Bobby Griffin

Terry Johnston

Linda Livingstone

Rob Swartz

4 Meetings in Fiscal 2022

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Identify and recommend candidates for membership to the Board

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Recommend to the Board candidates for Chairman of the Board and Chief Executive Officer

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Manage risks associated with Board independence and potential conflicts of interest

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Establish corporate governance principles and policies, including overseeing the Company’s Corporate Governance Guidelines

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Oversee the Company’s ESG program and related initiatives

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Oversee the Board and committee self-evaluation process

Compensation & Talent Development Committee

Members and Other Information

Primary Oversight Responsibilities

Committee Chair:

J. Kent Sweezey

Other Members:

Michael Gambrell

Bobby Griffin

Linda Livingstone

Anne Motsenbocker

Debra von Storch

5 Meetings in Fiscal 2022

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Establish executive compensation for the Company’s officers, including compensation philosophy

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Oversee risk management related to the Company’s executive compensation programs

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Administer the Company’s equity and incentive compensation plan

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Review management succession plans and talent development

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Oversee the Company’s Diversity & Inclusion program and related initiatives

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Recommend changes in director compensation to the Board

Oversight of the Executive Compensation Program

The Compensation Committee administers our executive compensation programs and has overall responsibility for setting the compensation for our CEO and Named Executive Officers. Consistent with NASDAQ corporate governance requirements, the Compensation Committee is composed entirely of independent, non-employee members of the Board.

The Compensation Committee is also responsible for reviewing management succession plans and for recommending changes in director compensation to the Board. The Compensation Committee periodically reviews the organizational design, management development plans and managerial capabilities of the Company. The Compensation Committee also prepares and issues the Compensation & Talent Development Committee Report included in this proxy statement.

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The Compensation Committee has retained NFP Consulting (“NFP”) as its independent executive compensation consultant. NFP assists and advises the Compensation Committee on certain aspects of our executive compensation program, and it provides no other services to the Company. The services NFP provides include:

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providing and analyzing competitive market compensation data;

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analyzing the effectiveness of executive compensation programs and making recommendations, as appropriate;

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analyzing the appropriateness of the compensation comparator group (discussed below); and

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evaluating how well our compensation programs adhere to the philosophies and principles stated below under “—Executive Compensation Program Objectives and Principles.”

Compensation Committee Interlocks and Insider Participation

During fiscal 2022, the members of the Compensation Committee included Mr. Sweezey (current Chair), Mr. Gambrell, Mr. Griffin, Dr. Livingstone (former Chair), Ms. von Storch, and former director Bill Quinn (retired August 2021). None of the members of the Compensation Committee were formerly an officer of the Company or were at any time during fiscal 2022 an officer or employee of the Company. None of our executive officers serve as a member of the board of directors or a compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Board of Directors Compensation

2022 Director Compensation Elements

In fiscal 2022, the Compensation Committee conducted a review of non-employee director compensation levels and elements, the structure of which had been in place since fiscal 2019. As part of the review, the Compensation Committee analyzed data prepared by NFP, the Compensation Committee’s independent consultants, that showed competitive director compensation levels among the market generally and among the Company’s compensation peer group, which is discussed under “Executive Compensation—Executive Compensation Program Principles.”

As a result of this review, the Board approved the following changes to non-employee director compensation levels and elements:

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Eliminated meeting fees for the Board and all committees;

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Increased the annual cash retainer from $60,000 to $75,000 to align with market median, which also had the effect of offsetting the elimination of meeting fees and kept overall cash compensation generally consistent;

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Increased the target value for equity compensation from $85,000 to $100,000 to align with market median; and

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Made market-driven adjustments to annual retainers for Board leadership roles.

The following table shows the non-employee director compensation elements approved for fiscal 2022:

Director Fee Element	Fees ($)
Annual Cash Retainer	75,000
Equity Compensation (target value)	100,000
Lead Independent Director Retainer (annual)	25,000
Audit Committee Chair Retainer (annual)	20,000
Compensation Committee Chair Retainer (annual)	15,000
N&CG Committee Chair Retainer (annual)	10,000

The equity portion of non-employee director compensation is provided in the form of restricted stock of the Company having a target value of $100,000 on the date of grant. This equity grant value was established in fiscal 2022 and was based on competitive benchmarking and market analysis in consultation with NFP. The Company typically makes these annual non-employee director equity grants on October 1 of each year (grant values are prorated if a director joins the Board mid-year). The restricted stock, which fully vests on the earliest of one year from the date of grant, the termination of the director’s service due to death or disability, or a change in control, has full voting rights and is eligible to receive dividends (if any are paid) from the date of grant.

Directors are also eligible to receive special additional compensation when performing services that are determined by the Board to be well above and beyond the normal director service requirements. The Board has not set a compensatory rate for these services, and no fees were paid for this purpose in fiscal 2022.

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Stock Ownership Guidelines

Under the Company’s Common Stock Ownership and Retention Guidelines, all non-employee directors are expected to own shares of Company common stock with a value equal to at least five times the annual cash retainer (currently $375,000) by their fifth anniversary of Board service. As of March 31, 2022, all non-employee directors were in compliance with Company ownership guidelines.

2022 Director Compensation Table

The following table sets forth certain information with respect to our non-employee director compensation for the fiscal year ended March 31, 2022. Compensation information for Mr. Armes is set forth below under “Executive Compensation—Summary Compensation Table.” Mr. Armes did not receive any additional compensation for his service as a director.

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	⁽¹⁾⁽²⁾	Total ($)
Michael Gambrell	89,989	100,024		190,013
Bobby Griffin⁽³⁾	28,410	83,390		111,800
Terry Johnston	87,000	100,024		187,024
Linda Livingstone	89,011	100,024		189,035
Anne Motsenbocker⁽⁴⁾	–	–		–
William Quinn (former director)⁽⁵⁾	42,217	–		42,217
Robert Swartz	114,011	100,024		214,035
Kent Sweezey	92,978	100,024		193,002
Debra von Storch	93,957	100,024		193,981
(1) Eligible non-employee directors received an annual equity grant of 765 shares of restricted stock on October 1, 2021. The amounts shown in this column reflect the grant date fair value of the awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, “Compensation — Stock Compensation,” and are calculated using a price per share of $130.75, the closing market price of the Company’s common stock as quoted by NASDAQ on the date of grant. Assumptions used in the valuations are discussed in Note 6 to the Company’s audited consolidated financial statements for the year ended March 31, 2022, in the Annual Report on Form 10-K filed with the SEC on May 18, 2022. (2) The current non-employee directors each had 765 shares of restricted stock outstanding at March 31, 2022, except for Mr. Griffin, whose initial grant was prorated based on partial-year service. The non-employee directors did not have any stock option awards outstanding at March 31, 2022. (3) Mr. Griffin joined the Board on December 1, 2021. He received a pro-rated grant of restricted stock upon joining the Board. (4) Ms. Motsenbocker joined the Board in June 2022, after year end. (5) Mr. Quinn retired from the Board effective August 25, 2021; compensation amounts shown are through the date of retirement.

Corporate Sustainability, Culture & Compliance

Environmental, Social and Governance Matters

CSWI’s Environmental, Social, and Governance (ESG) strategy is based on our belief that long-term stockholder value, sustainable growth, and social responsibility are interrelated. Corporate responsibility lies at the heart of our culture and speaks directly to our core values of Accountability, Citizenship, Teamwork, Respect, Integrity, Stewardship, and Excellence. Driven by our executive leadership team, sustainability influences how we operate our business, take care of our people, and serve our customers. Our ESG initiatives are aligned with and inform the long-term strategies of our operating companies and corporate center. Additionally, ESG-related enterprise risks and opportunities are identified and addressed through our strategic processes, helping further align our initiatives and strategy.

Corporate Sustainability lies at the heart of our culture and speaks directly to our core values of Accountability, Citizenship, Teamwork, Respect, Integrity, Stewardship, and Excellence

Our Board’s proactive engagement and oversight on ESG matters is demonstrated in the following ways:

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Our N&CG Committee has primary oversight responsibility for our ESG program.

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Our Board and its committees engage at least quarterly with our executive team members having responsibility to present and discuss various ESG topics. In the past year, management has presented to the Board and its committees on initiatives such as business continuity, environmental compliance, employee health and safety, gender pay equity, diversity and inclusion, and employee welfare programs.

•

Our Audit Committee and Board have direct engagement with ESG risk areas through our robust Enterprise Risk Management (“ERM”) program.

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Commitment to Environmental Stewardship

We are committed to being good stewards of the environment. We demonstrate our commitment by actively working to reduce the environmental impact of our operations and by providing environmentally responsible products and services to our customers. Our products help protect and reduce emissions from industrial systems and mission-critical equipment; improve the energy efficiency and resource consumption of HVAC/R, plumbing, and electrical systems; and make commercial and residential buildings safer for occupants and their surrounding communities. Additionally, certain manufacturing facilities within our operating companies are ISO 14001 certified.

In the last year, we have made progress on many environment-focused initiatives, which have included:

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Reducing overall energy consumption as a percentage of sales and increasing the amount of consumed electricity that is generated from renewable sources, such as solar and wind

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Reducing the amount of scrap and non-recyclable waste generated by our operations by increasing the use of rework and recycled materials

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Increasing ISO 14001 certification at manufacturing facilities

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Expanding LEED certifications for product categories

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Reducing the usage of PVC material in produced products

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Increasing usage of CSWI-produced environmentally-friendly lubricants in manufactured mechanical products

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Reducing hazardous waste generation as a percentage of finished goods

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Continuing and increasing our efforts to improve air quality by reducing VOC emissions

As we look forward, we are focused on making the environmental initiatives of our various operating companies more coordinated and standardized. This will help us provide more disclosure about these initiatives and align such disclosures with the SASB Industrial Machinery and Goods and Chemicals Reporting Standards.

Commitment to Our Employees and Communities

At CSWI, how we succeed matters. We live out our commitment to doing the right things the right way by first taking care of the health, safety, and wellbeing of our employees—our most valuable asset. We view this duty holistically and address it on multiple fronts, including through competitive total rewards compensation; comprehensive benefits and retirement plans, including employer-funded healthcare coverage and defined contribution benefit plans with profit sharing; health and safety training and programs; and training and development, including job skills and compliance training, leadership training, and advancement opportunities.

In fiscal 2022, we demonstrated our commitment to our employees in numerous ways, including:

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Continued to promote equal employment opportunities in all our operations, which begins with employee recruiting process and continues through our employees’ relationship with the Company

•

Continued to provide Company-subsidized medical, dental, vision, life, short-term and long-term disability insurance plans, as well as paid supplemental life and accident insurance plans

•

Assessed employee engagement through targeted surveys, providing feedback on subjects including safety, communications, diversity and inclusion, performance management, development opportunities, respect and recognition and management support, with 93% of our employees participating in our fiscal 2022 survey.

•

Provided over 8,400 hours of training and professional development

•

Achieved a Company-wide voluntary retention rate well in excess of manufacturing industry averages

•

Held our second annual Safety Awareness Month with supplemental training

Demonstrating the effectiveness of our safety focus, we improved our Total Recordable Incident Rate (“TRIR”) almost 60% year over year, achieving a TRIR of 1.3 at the end of calendar 2021, compared to a TRIR of 3.2 at the end of calendar 2020. Through the first three months of calendar 2022 (the end of our fiscal year), we further improved our TRIR to 1.2, demonstrating our consistent, sharp focus on safety performance.

In fiscal 2022, we maintained our comprehensive and competitive retirement and benefit programs. Since our inception, we have provided a 100% match of employee contributions to our 401(k) plan up to 6% of compensation, as well as an additional 7% to 11% of eligible compensation each year through profit sharing benefit programs, including our Employee Stock Ownership Plan, which strongly aligns our employees’ interests with those of our stockholders. This equates to 13% to 17% of each employee’s annual eligible compensation that we invest to help provide a safe, secure, and dignified retirement for our people.

Commitment to Sound Governance Practices

Sound governance practices are foundational to any high performing organization. We believe the principles and policies described throughout this proxy statement clearly demonstrate our commitment to thoughtful, value-focused governance that helps us effectively manage our enterprise risks and ultimately preserve and create stockholder value.

Our ERM program, which is overseen by our Audit Committee, supports our efforts in this area. Since our inception, our ERM program has begun with an annual risk assessment survey. Near the end of each calendar year, approximately 30 key leaders across our organization receive a focused questionnaire that they use to provide feedback on a universe of enterprise risks covering six distinct risk categories: Strategic; Financial; Legal & Compliance; Operational; IT & Systems; and Talent Management.

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In the survey, each risk is evaluated on impact, likelihood of occurrence, and controls effectiveness. The survey results are compiled and calibrated, which produces a prioritized list of inherent and residual enterprise risks. Once these enterprise risk priorities are established, a “dashboard” for each risk is developed that identifies the risk owner, what we are doing to prevent or mitigate the risk, how we can improve our prevention or mitigation efforts, and key risk indicators. This process is completed in our first fiscal quarter of the year, which enables the annual ERM program results to inform and be incorporated into our strategic planning efforts.

Integrity and Ethics

Our core values form the foundation for our decentralized, entrepreneurial culture, and our Code of Business Conduct represents our shared commitment to living out these core values with the highest level of ethical conduct. All our employees across the globe, including our executive officers, are required to abide by our Code of Business Conduct to ensure that our business is conducted in a consistently legal and ethical manner. Our Code of Business Conduct covers many topics, including conflicts of interest, anticorruption, financial reporting, confidentiality, insider trading, antitrust and competition law, cybersecurity and information security, appropriate use of social media, and respect in the workplace. All employees receive on-line and in-person training on all topics addressed in our Code of Business Conduct every year, and they are required to certify that they will comply with the Code.

Employees are required to report any conduct that they believe in good faith violates our Code of Business Conduct. Through our Ethics Hotline, the Audit Committee has adopted procedures to receive and address complaints related to accounting policy, internal controls, auditing matters or fraud, and to enable the confidential and anonymous submission by employees or others of concerns relating to questionable accounting or auditing matters. Information on how to submit any such communications through our Ethics Hotline is on the Company’s website at www.cswindustrials.com under the “Investors — Corporate Governance” caption, and also is available through cswindustrials.ethicspoint.com. Our Senior Vice President and General Counsel, who serves as our chief compliance officer, reports directly to the Audit Committee on compliance matters, and periodically updates the Audit Committee on compliance with the Company’s Code of Business Conduct, including the overall effectiveness of the Company’s compliance program.

Our integrity and compliance program also includes, among other elements, a Supplier Code of Business Conduct that extends to our operating companies’ global supply chains. The Supplier Code of Business Conduct reinforces our expectation that suppliers will live up to our high standards of integrity and compliance, including our policies regarding Conflict Minerals, Human Trafficking, and Environmental, Health and Safety. Suppliers are monitored according to these standards, and if found to be deficient, are issued a corrective action plan or are replaced.

Certain Relationships and Related Transactions

The Company has adopted a written policy for approval of transactions between the Company and its directors, director nominees, executive officers, greater-than-5% beneficial owners, and their respective immediate family members, where the amount involved in the transaction exceeds or is expected to exceed $120,000 in a single calendar year.

The policy provides that the N&CG Committee reviews transactions subject to the policy and determines whether to approve or ratify those transactions. In doing so, the N&CG Committee takes into account, among other factors it deems appropriate, whether a transaction is on terms that are no less favorable to the Company than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. In addition, the Board has delegated authority to the Chairman of the N&CG Committee to pre-approve or ratify transactions where the aggregate amount involved is expected to be less than $1 million. A summary of any new transactions pre-approved by the Chairman is provided to the full N&CG Committee for its review in connection with each regularly scheduled N&CG Committee meeting.

The N&CG Committee has considered and adopted standing pre-approvals under the policy for limited transactions with related persons. Pre-approved transactions include:

•

business transactions with other companies in which a related person’s only relationship is as an employee, director or less-than-10% beneficial owner if the amount of business falls below the thresholds in NASDAQ’s listing standards and the Company’s director independence standards; and

•

charitable contributions, grants or endowments to a charitable organization where a related person is an employee if the aggregate amount involved does not exceed the greater of $1 million or 2% of the organization’s total annual receipts.

The N&CG Committee was not requested to and did not approve any transactions required to be reported under applicable SEC rules in fiscal 2022.

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Executive Officers

The following sets forth information about the Company’s executive officers. Information for Mr. Armes, who is both Chairman of the Board and an executive officer of the Company, is presented above under “Board of Directors—Biographical Information—Nominees to Serve a Term Expiring at the 2022 Annual Meeting of Stockholders.”

Name	Age	Year Joined CSWI	Position With the Company	In Position Since
Joseph B. Armes	60	2015	Chairman, CEO & President	2015
James E. Perry	51	2020	Executive VP, CFO	2020
Donal J. Sullivan	59	2015	Executive VP & GM, Contractor Solutions	2020
Luke E. Alverson	44	2016	Senior VP, General Counsel and Secretary	2016

James E. Perry has served as Executive Vice President and Chief Financial Officer since June 2020. From 2004 through May 2020, Mr. Perry served in senior financial leadership roles with Trinity Industries, a publicly held, diversified industrial company, including serving as Chief Financial Officer from May 2010 to February 2019. From 2001 to 2004, Mr. Perry served in senior financial leadership roles at RMH Teleservices, a telemarketing and customer service company, including serving as Chief Financial Officer. Mr. Perry began his career at JP Morgan Chase & Co. in the investment banking division, and he also served in a consulting group within Ernst & Young LLP.

Donal J. Sullivan has served as Executive Vice President & General Manager, Contractor Solutions since May 2020, and previously served as Senior Vice President & General Manager, Industrial Products from January 2016, and was appointed as an executive officer of the Company in March 2019. From May 2015 to January 2016, Mr. Sullivan was the Chief Operating Officer for RectorSeal, one of the Company’s operating subsidiaries. From October 2010 to April 2015, he served as Division President of Goodman Global, a member of the Daikin Group, a leading global HVAC manufacturer. Prior to 2005, Mr. Sullivan held a variety of management positions at Carrier Corporation, a leading heating, air-conditioning and refrigeration solutions company, including sales, product management and general management.

Luke E. Alverson has served as Senior Vice President, General Counsel and Secretary since February 2016. From May 2008 to February 2016, he held roles of increasing responsibility with Flowserve Corporation, a leading global manufacturer of fluid motion control products and provider of related services, serving most recently as Vice President, Corporate Legal Services and Assistant Secretary. Prior to 2008, Mr. Alverson was associated with the law firms of Vinson & Elkins, LLP in Dallas, Texas, and Hallett & Perrin, P.C., in Dallas, Texas.

| 2022 Proxy Statement 25

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Proposal Two:

Advisory Vote on Executive Compensation

The Board is providing stockholders the opportunity to cast an advisory vote on the compensation of our Named Executive Officers pursuant to Section 14A of the Securities Exchange Act of 1934. This proposal, commonly known as a “Say on Pay” proposal, gives our stockholders the opportunity to endorse or not endorse our executive compensation programs and policies and the compensation paid to our Named Executive Officers. We currently hold annual “Say on Pay” votes.

The Board values the opinions of the Company’s stockholders as expressed through their votes and other communications. This Say on Pay vote is advisory, meaning that it is not binding on the Compensation Committee or the Board. This vote will not affect any compensation already paid or awarded to any Named Executive Officer, nor will it change any decisions the Board has made. Nonetheless, the Compensation Committee and the Board will review and carefully consider the outcome of this advisory vote when making future decisions regarding our executive compensation programs and policies.

We design our executive compensation programs to implement our core objectives of attracting and retaining key leaders, rewarding current performance, driving future performance, and aligning the long-term interests of our executives with those of our stockholders. Stockholders are encouraged to read the Compensation Discussion & Analysis (“CD&A”) section of this proxy statement, including the “Executive Summary.” In the CD&A, we describe our compensation programs, including the underlying philosophy and strategy, the individual elements of compensation, and how our compensation plans are administered. We also describe how the Compensation Committee continues to evolve our executive compensation program based on stockholder feedback.

We believe stockholders should consider the following financial performance data and compensation design elements when voting on this proposal:

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Concerning our annual incentive plan, the consolidated operating income performance metric was 106% of target, resulting in a payout of 121% of target for that metric, and the operating cash flow performance metric was 81% of target, resulting in a payout of 63% of target for that metric. Combined, this resulted in a weighted average financial performance metric payout of 109.4% of target for the consolidated CSWI metrics.

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On average, the Named Executive Officers had 74.7% (or 81.1% in the case of the CEO) of their target pay “at risk,” or dependent upon both Company and individual performance.

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Maximum payout levels for the annual cash incentive award are capped at 200% of target, with formulaic positive or negative adjustment for financial and individual performance, and the performance share award payouts are capped at 200% of target. These caps moderate total compensation amounts and reduce the incentive to engage in unnecessarily risky behavior.

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The annual cash incentive award and the performance share award have threshold performance requirements, ensuring that incentive compensation is reduced or eliminated altogether if minimum performance levels are not achieved.

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Our officers are subject to stock ownership guidelines, which fur

SEC Form DEF 14A filed by CSW Industrials Inc.