Form 4: AIT Executive Receives Equity Compensation

Applied Industrial Technologies' VP-Chief HR Officer Kurt W. Loring reported acquisitions of restricted stock units, performance shares, and stock appreciation rights.

Summary

• Kurt W. Loring, VP-Chief HR Officer of Applied Industrial Technologies Inc. (AIT), reported changes in his beneficial ownership of company securities.
• Acquired 593 shares of common stock as restricted stock units (RSUs) on August 12, 2025, which vest three years from the grant date and are settled in shares.
• Acquired 1,840 shares of common stock as performance shares on August 12, 2025, resulting from 2025 performance, which vest at the end of a three-year program and are settled in shares.
• Disposed of 1,207 shares of common stock on August 12, 2025, at a price of $270.68 per share, to satisfy tax withholding obligations on the vesting of performance shares.
• Acquired 1,825 stock appreciation rights (SARs) on August 12, 2025, with an exercise price of $270.68.
• SARs become exercisable in annual increments of 25% commencing one year after the grant date (August 12, 2026) and expire on August 12, 2035.
• Following these transactions, direct beneficial ownership of common stock is 20,176 shares, and indirect ownership through a Retirement Savings Plan is 33.321 shares.
• Direct beneficial ownership of stock appreciation rights is 1,825.

Sentiment

Score: 6

Explanation: Slightly positive due to the grant of performance shares indicating good company performance and the alignment of executive incentives with shareholder interests, offset by the routine nature of the filing.

Positives

• The grant of performance shares indicates strong company performance in 2025, leading to shares being 'banked' for executives.
• Equity compensation awards (RSUs, performance shares, SARs) align the interests of the VP-Chief HR Officer with those of shareholders, incentivizing long-term company growth and value creation.

Negatives

• A portion of vested shares (1,207 shares) was withheld to cover tax obligations, which is a standard practice but reduces the immediate net share gain for the executive.

Risks

• No specific risks were detailed in this Form 4 filing beyond the inherent risks associated with holding equity securities, such as market fluctuations affecting the value of shares and SARs.

Future Outlook

The filing indicates future vesting of restricted stock units and performance shares over a three-year period, and stock appreciation rights becoming exercisable over a multi-year period, aligning executive incentives with long-term company performance.

Industry Context

This filing is a routine disclosure of executive equity compensation, common across publicly traded companies. It reflects standard practices for incentivizing and retaining key management personnel within the industrial distribution sector.

Comparison to Industry Standards

• The structure of equity compensation, including restricted stock units, performance shares, and stock appreciation rights, is consistent with common executive compensation practices observed in large industrial technology and distribution companies.
• The use of performance-based awards (performance shares) aligns with best practices in corporate governance, linking executive pay to company financial or operational achievements, similar to peers like Fastenal Company or W.W. Grainger, Inc. who also utilize performance-based equity incentives.

Related Party Transactions

• The transactions involve the company (Registrant) and its VP-Chief HR Officer, Kurt W. Loring, which are considered related-party transactions typical for executive compensation.

Stakeholder Impact

• Shareholders: The equity grants align management's interests with shareholders, potentially leading to better long-term performance. The disposition for tax purposes is a minor, routine event.
• Employees: No direct impact on general employees is indicated, but the compensation structure for executives may reflect broader company performance that could influence employee morale or future compensation policies.
• Management: The reporting officer receives significant equity compensation, incentivizing continued dedication and performance.

Next Steps

• Restricted stock units are expected to vest three years from the grant date (August 12, 2025).
• Performance shares are expected to vest at the end of a three-year program.
• Stock appreciation rights will become exercisable in annual increments of 25% starting August 12, 2026.

Key Dates

Keywords

Applied Industrial Technologies, AIT, SEC Form 4, Insider Trading, Equity Compensation, Restricted Stock Units, Performance Shares, Stock Appreciation Rights, Executive Compensation, Beneficial Ownership