Ferguson Enterprises : 2024 Notice of Annual Meeting and Proxy Statement
FERG
2024 Notice of
Annual Meeting
and Proxy
Statement
Who We Are
Ferguson is the largest value-added distributor serving the specialized professional in our $340B residential and non-residential North American construction market.
At Ferguson, we have a very distinctive culture anchored in customer service. We are a relationship business. Together we help
We help build relationships, trust, confidence and community.
Our Values
Our Purpose
We help make our customers' complex projects simple, successful and sustainable.
We provide expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more. Our associates are the driving force of the
achieve our purpose and create value. They are guided by our Vision and Values that are a reminder of the goals we are working towards and how we expect to get there.
Our Vision
To be the Ultimate Project Success Company.
Safety
Service
Impact
We put safety first.
We build relationships and
We deliver results and help
solve complex problems.
build a better world.
Integrity
Teamwork
We act fairly and honestly.
We empower unique and
passionate people to make
2024 Notice of Annual Meeting and Proxy Statement
Dear fellow shareholders,
On behalf of the board of directors of Ferguson Enterprises Inc. (the "Board"), you are cordially invited to attend the first annual meeting of stockholders of Ferguson Enterprises Inc. (the "Company"), the new U.S. parent company of the Ferguson group of companies, on Thursday, December 5, 2024 at 9:00 a.m. Eastern Time (the "2024 Annual Meeting").
Completion of Our Journey to the U.S.
Since 2019, we have considered North America to be the best long-term location for Ferguson and have worked methodically and transparently with shareholders on this transformative journey, obtaining an additional listing on the New York Stock Exchange in 2021 and moving this to be our primary listing venue in 2022. Since August 1, 2023, Ferguson has been considered a U.S. domestic issuer under the applicable U.S. Securities and Exchange Commission rules, and, in May 2024, Ferguson plc held an extraordinary general meeting at which shareholders approved a new corporate structure that completed the final step in our journey by domiciling Ferguson's ultimate parent company in the U.S.
As we look to the future, we believe the new corporate structure will only serve to strengthen shareholder value as the move better aligns our headquarters and governance with our operations and leadership.
Delivering on Our Strategic Priorities
Ferguson is the largest value-added distributor serving the specialized professional in our $340B residential and non-residential North American construction market. We remain focused on our vision to be the ultimate project success company, helping to make our customers' complex projects simple, successful and sustainable through living by our values: Safety; Integrity; Service; Teamwork; and Impact.
Engaging with Our Shareholders
The Board is committed to maintaining meaningful shareholder engagement. Over the past year, we have engaged with several institutional investors and acted on feedback received from shareholders on key governance matters related to the Company's new corporate structure. Significantly, in light of the results of the advisory vote at the extraordinary general meeting on certain matters relating to the Company's proposed organizational documents, the Board approved revisions to the organizational documents to align with our shareholders' values.
We look forward to continuing an open dialogue with shareholders as Ferguson progresses on its journey.
Strong Governance Practices
The Board has reviewed the policies and governance practices that were in place for Ferguson plc and has taken that strong governance framework and further enhanced and aligned it with U.S. best practice. Further details of these policies and practices are set out on pages 18-21 of the accompanying Proxy Statement.
The slate of Director nominees contains a broad range of experience and skills from a variety of industries and advisory roles which complement each other. This year, we have 11 Directors standing for election, including nine legacy Directors from Ferguson plc's board of directors, as well as two new independent Non-Employee Directors, Rekha Agrawal and Rick Beckwitt.
Rekha Agrawal has extensive experience leading global businesses focused both in services and manufacturing. Rick Beckwitt is an experienced executive with broad financial, operational and public company experience. I am confident that they will contribute valuable insight and specialist skills to the Board.
Thomas Schmitt and Nadia Shouraboura will step down as Non-Employee Directors at the 2024 Annual Meeting. Tom and Nadia have made significant contributions to the Board during their tenures and we thank them for their service. We wish them well for the future.
A summary of the skills and experience of each Director proposed for election is set out on page 17 of the accompanying Proxy Statement.
Your Vote Matters
Further details about the 2024 Annual Meeting and voting can be found on pages 85-90 of the accompanying Proxy Statement. You are encouraged to appoint myself and Ian Graham, our Chief Legal Officer & Corporate Secretary, as your proxy. This ensures that your vote will be counted if you are not able to attend the 2024 Annual Meeting. Your vote matters.
On behalf of the Board, we thank you for your continued investment and support in Ferguson. As always, we remain committed to serving our shareholders.
Regards,
Geoff Drabble
Board Chair
October 15, 2024
Notice of Annual Meeting
Notice is hereby given that the 2024 annual meeting of stockholders (the "2024 Annual Meeting") of Ferguson Enterprises Inc. (the "Company") will be held on December 5, 2024 at 9:00 a.m. Eastern Time at Hilton Norfolk The Main, 100 East Main Street, Norfolk, Virginia, 23510, United States.
Record Date
Holders of common stock of the Company as of the close of business on October 9, 2024 are entitled to notice of and to vote at the 2024 Annual Meeting.
How to Vote
By Internet
Vote via the internet at proxyvote.com.
By Telephone
To vote by telephone, call the telephone number on the Notice of Internet Availability or proxy card.
By Mail
If you elected to receive proxy materials by mail, mark, sign, date, and return the proxy card in the enclosed postage-paid envelope.
BOARD
ITEMS OF BUSINESS
RECOMMENDATION PAGE
1. To elect each of the 11 Director nominees named
in the Proxy Statement to hold office until the
FOR each
Company's next annual meeting and until such
9
Director's successor shall have been elected and
Director nominee
qualified
2. To ratify the appointment of Deloitte & Touche
LLP as the Company's independent registered
FOR
32
public accounting firm for fiscal 2025
3. To approve, on an advisory basis, the fiscal 2024
compensation of the Company's Named Executive
FOR
79
Officers
4. To approve, on an advisory basis, the frequency of
future shareholder advisory votes to approve the
FOR every ONE YEAR 80
compensation of the Company's Named Executive
Officers
Shareholders will also transact such other business as may properly come before the 2024 Annual Meeting or any adjournment or postponement thereof.
By order of the Board,
Ian Graham
Chief Legal Officer & Corporate Secretary
October 15, 2024
Proxy Statement
for the 2024 Annual Meeting
This Proxy Statement relates to the solicitation of votes or proxies by Ferguson Enterprises Inc., on behalf of the Board, for use at the Company's 2024 annual meeting of stockholders (the "2024 Annual Meeting") and at any adjournment or postponement of such meeting.
As previously disclosed, on August 1, 2024, Ferguson plc, a company incorporated in Jersey, completed a merger transaction (the "Merger") that resulted in (i) Ferguson plc becoming a direct wholly owned subsidiary of Ferguson Enterprises Inc., a Delaware corporation, and (ii) the shareholders of Ferguson plc at the designated record time for the Merger no longer holding ordinary shares of Ferguson plc but instead holding shares of common stock of Ferguson Enterprises Inc. As a result of the Merger, Ferguson Enterprises Inc. became the successor issuer to Ferguson plc, which was renamed "Ferguson (Jersey) Limited" and changed its status to a private company.
Unless otherwise specified or the context otherwise requires:
The Company's website address is corporate.ferguson.com. We include website addresses throughout this Proxy Statement for reference only. The information contained in, or available through, these websites is not part of, or incorporated by reference into, this Proxy Statement. Addresses, including electronic addresses provided in this Proxy Statement, are provided solely for the purposes so specified. You may not use any electronic address provided in this Proxy Statement or other proxy materials to communicate with the Company for any purpose other than those expressly stated herein or therein.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on December 5, 2024
We have elected to take advantage of the U.S. Securities and Exchange Commission (the "SEC") rules that allow us to provide shareholders access to our proxy materials over the internet. Our Annual Report for the fiscal year ended July 31, 2024 (the "2024 Annual Report") and the Notice of Annual Meeting and Proxy Statement are available at proxyvote.com.
Beginning on October 15, 2024, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the "Notice of Internet Availability") containing instructions regarding how to access our 2024 Annual Report and the Notice of Annual Meeting and Proxy Statement online. The Notice of Internet Availability contains instructions regarding how you can elect to receive these proxy materials in printed form by mail or electronically by email. This election to receive proxy materials by mail or email will remain in effect until you terminate it.
2024 PROXY STATEMENT
FERGUSON ENTERPRISES INC.
Table of Contents
Letter from the Board Chair
Notice of Annual Meeting
11 Director Nominee Biographies
18 Corporate Governance Guidelines
18 Board Leadership
20 Board Evaluation
20 Board Refreshment and Tenure
22 Committees of the Board
24 Board Oversight
26 Code of Business Conduct and Ethics
26 Related Party Transactions
29 Director Compensation
37 Compensation Discussion and Analysis
40 Executive Summary
42 Compensation Determination Process
44 Elements of Our Compensation Program
62 Management of Compensation Related Risks
83 Other Information
83 Communications with the Board
83 Process for Shareholder Recommendation and Nomination of Directors
83 Shareholder Proposals for 2025 Annual Meeting
91 Cautionary Note Regarding Forward-Looking Statements
93 Non-GAAP Reconciliations and Supplementary Information
2024 PROXY STATEMENT
FERGUSON ENTERPRISES INC.
2024 Proxy Statement Summary
Ferguson at a Glance
Ferguson is the largest value-added distributor serving the specialized professional in our $340B residential and non-residential North American construction market. We help make our customers' complex projects simple, successful and sustainable by providing expertise and a wide range of products and services from plumbing, HVAC, appliances, and lighting to PVF, water and wastewater solutions, and more.
Our North American customer groups have leading positions in large, growing and fragmented markets with over 75% of revenue estimated to come from #1 or #2 market positions. These markets have historically grown above GDP and their long-term structural characteristics remain supportive. We have an intentional balance between attractive end markets and serve customers principally in North America. Residential and non-residential markets each account for approximately half of our net sales, with net sales within these combined markets balanced between repair, maintenance and improvement ("RMI") (approximately two-thirds of our net sales) and new construction (approximately one-third of our net sales), based on management's estimates. This balance continues to serve us well and creates resilience with a less cyclical and more robust business model.
Balanced market exposure
~1/3
~1/2%
New
Residential
construction
2/3
1/2
~
~
Repair, Maintenance
and Improvement (RMI)
Non-residential
2024 PROXY STATEMENT
1
FERGUSON ENTERPRISES INC.
2024 Proxy Statement Summary
Our business model enables us to connect approximately 36,000 suppliers with more than one million customers, and our scale has continued to help us consistently outperform the market. Through scale deployed locally utilizing our world-class supply chain, value- added solutions and digital tools, along with our expert associates, we help meet our customers' unique needs.
36k
Suppliers
5%
No supplier accounts for more than 5% of total cost of sales
CORE STRENGTHS
1m+
Customers
World-class supply chain
1%
Value-added solutions
Digital tools
No customer
accounts for more than
Expert associates
1% of net sales
1m+35k
Products
Associates
~1,800
~5,900Fleet vehicles
Branches
>58m ft²
Footprint
We look to generate long-term shareholder value by investing for organic growth, consolidating our fragmented markets through acquisitions and returning surplus capital to shareholders. We have a demonstrated long-term track record of returning capital to our shareholders, with over $11 billion returned via dividends and share repurchases over the past ten years.
2
2024 PROXY STATEMENT
FERGUSON ENTERPRISES INC.
2024 Proxy Statement Summary
Fiscal 2024 Performance
We delivered a strong performance in fiscal year 2024 despite challenging end markets during the year. Net sales of $29.6 billion were broadly flat as we continued to consolidate our markets with above market share gains and high quality acquisitions.
Operating profit of $2,652 million was $7 million lower than last year with diluted earnings per share of $8.53, a decrease of 6.5%. Adjusted operating profit* of $2,824 million was $93 million lower than last year with adjusted diluted earnings per share* of $9.69, a decrease of 1.5% principally arising due to the lower adjusted operating profit, partially offset by the impact of share repurchases.
Cash generation remains an important strength of our business, with operating cash flow of approximately $1.9 billion during the year. Our cash generative model and strong balance sheet allowed us to invest for organic growth, sustainably grow our dividend, consolidate our fragmented markets through acquisitions and return capital to shareholders. During the year we invested $0.4 billion in capital expenditures, paid $0.8 billion of dividends, invested $0.3 billion in ten acquisitions, and repurchased 3.3 million of our outstanding shares equating to $0.6 billion.
The Board declared total annual dividends for the fiscal year of $3.16 per share which reflects 5% growth over the prior year.
Net sales
$28,566m
$29,734m
$29,635m
$22,792m
$19,940m
2020
2021
2022
2023
2024
$29.6B
Adjusted operating profit*
$2,951m
$2,917m
$2,824m
$2,092m
$1,587m
2020
2021
2022
2023
2024
$2.8B
Adjusted EPS - diluted*
$9.76
$9.84
$9.69
$6.75
$5.04
2020
2021
2022
2023
2024
$9.69
Return on capital employed (ROCE)*
40.4%
34.5%
34.6%
28.5%
31.1%
2020
2021
2022
2023
2024
31.1%
Governance Transition & Timeline and Related Board of Director Matters
Governance Transition & Timeline
Since 2019, Ferguson plc's Board of Directors (the "Ferguson plc Board") considered North America to be the best long-term location for the Company and worked methodically and transparently with shareholders on a journey to align the Company's headquarters and governance with its operations and leadership. As part of this effort, the Company obtained an additional listing of its ordinary shares on the New York Stock Exchange ("NYSE") effective March 8, 2021, and, on May 12, 2022, the Company relocated its primary listing to the NYSE following the transfer of its listing category on the London Stock Exchange ("LSE") from a Premium listing to a Standard listing. Following this transfer, the Company was no longer required to comply (or explain non-compliance) with the U.K. Corporate
2024 PROXY STATEMENT
3
FERGUSON ENTERPRISES INC.
Disclaimer
Ferguson Enterprises Inc. published this content on October 15, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on October 15, 2024 at 12:05:13.216.