DEF: Valvoline Sets 2026 Annual Meeting, Proposes New Incentive Plan

Valvoline Inc. announces its 2026 Annual Meeting of Shareholders to vote on director elections, auditor ratification, executive compensation, and a new omnibus incentive plan, while reporting strong fiscal 2025 operational highlights.

Summary

• The 2026 Annual Meeting of Shareholders will be held on Wednesday, January 28, 2026, at 1:00 p.m. (ET) at Valvoline's corporate headquarters in Lexington, KY.
• Shareholders will vote on the election of nine directors, ratification of Ernst & Young LLP as the independent registered public accounting firm for fiscal 2026, a non-binding advisory resolution approving executive compensation, and approval of the Valvoline Inc. 2026 Omnibus Incentive Plan.
• Fiscal 2025 operational highlights include system-wide same-store sales (SSS) growth of 6.1%, driven by strong contributions from transactions and average ticket.
• The company added 170 system-wide stores in fiscal 2025, bringing the total system-wide store count to 2,180.
• The acquisition of Breeze Autocare, operating primarily under the Oil Changers brand, closed in early fiscal 2026.
• Key financial metrics for fiscal 2025 from continuing operations include Net Sales of $1.7 billion, Operating income of $390 million, Diluted EPS of $1.67, and Adjusted EBITDA of $467 million.
• The fiscal 2025 Valvoline Incentive Plan resulted in an overall payout of 85.8% of the target incentive award, with Net Sales at 98.4% of target and adjusted EBIT at 98.7% of target.
• Fiscal 2023-2025 Performance Stock Units (PSUs) achieved an overall payout of 98.4% of the target award, with adjusted Net Income at 99.0% of target over the three-year period.
• Shareholders demonstrated strong support for executive compensation programs, with approximately 92% of votes cast for the Say on Pay proposal at the 2025 Annual Meeting.
• Mary J. Twinem and Vada O. Manager will retire from the Board, with Janet S. Wong and Chris Carr nominated to succeed them.
• A material weakness in internal control over financial reporting related to the ERP implementation continued to exist as of September 30, 2025, with remediation efforts expected to be completed in fiscal 2026.

Sentiment

Score: 6

Explanation: The company demonstrates solid operational growth and strategic acquisitions, coupled with strong shareholder support for its governance. However, financial performance metrics for incentive plans were slightly below target, and a material weakness in internal controls persists, though remediation is underway. This presents a mixed outlook, leaning slightly positive due to growth but tempered by control issues.

Positives

• Achieved strong system-wide same-store sales (SSS) growth of 6.1% in fiscal 2025, with healthy contributions from transactions and average ticket.
• Expanded the network by adding 170 system-wide stores, reaching a total of 2,180 stores.
• Successfully completed the acquisition of Breeze Autocare (Oil Changers brand) in early fiscal 2026, supporting network growth.
• Maintained a consistent track record of 19 years of consecutive system-wide same-store sales growth.
• Received strong shareholder support for executive compensation programs, with 92% of votes cast in favor of the Say on Pay proposal at the 2025 Annual Meeting.
• Demonstrates a commitment to good corporate governance with 8 of 9 director nominees being independent and an independent Board Chairman.
• Achieved high director attendance at Board and Committee meetings, with 98% total attendance in fiscal 2025.
• Executive compensation program is highly incentive-based, effectively linking pay to financial results and stock price performance.

Negatives

• Fiscal 2025 Valvoline Incentive Plan payout was 85.8% of target, indicating performance slightly below the set targets for Net Sales (98.4% of target) and adjusted EBIT (98.7% of target).
• Fiscal 2023-2025 Performance Stock Units (PSUs) payout was 98.4% of target, with fiscal 2025 adjusted Net Income at 92.2% of target, falling short of the annual target for the final year of the performance period.

Risks

• A material weakness in internal control over financial reporting due to the ERP implementation and aggregation of related deficiencies in IT general controls and business process controls continued to exist as of September 30, 2025.
• Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, as detailed in the company's most recent Annual Report on Form 10-K.
• Failure to approve the 2026 Omnibus Incentive Plan could seriously harm the ability to attract, retain, and motivate directors, officers, and employees, negatively impacting long-term success.

Future Outlook

The company is focused on executing its strategic priorities to drive the full potential of its core business, deliver sustainable network growth, and innovate to meet the evolving needs of customers and the car parc. Remediation of the material weakness in internal controls related to the ERP system is expected to be completed in fiscal 2026. The proposed 2026 Omnibus Incentive Plan aims to attract and retain talent, aligning their interests with long-term shareholder value creation. For fiscal 2026, the annual incentive plan will shift its profitability metric from adjusted EBIT to adjusted EBITDA, and a new peer group for compensation benchmarking has been approved.

Management Comments

• "We cordially invite you to attend the 2026 Annual Meeting of Shareholders of Valvoline Inc."
• "We appreciate your continued confidence in Valvoline Inc. and look forward to seeing you at the meeting."
• "Valvoline continued to execute against our strategic priorities to (i) drive the full potential of our core business, (ii) deliver sustainable network growth, and (iii) innovate to meet the evolving needs of customers and the car parc."
• "In fiscal 2025, we made very good progress to drive the full potential of our core business where we saw strong system-wide same stores sales (SSS) growth of 6.1% with healthy contributions from transactions and average ticket."
• "We believe that this approach provides a convenient way for you to access our proxy materials and vote your shares, while reducing the costs of printing and distributing our proxy materials and conserving natural resources."
• "Management believes those efforts will result in an appropriately designed control environment that addresses the deficiencies in design of business process controls that aggregated to the material weakness."
• "The Compensation Committee believes that the significant level of shareholder support the Company continues to receive on Say on Pay is a positive endorsement of our executive compensation program."

Industry Context

Valvoline operates within the automotive maintenance services industry, with a strategic focus on retail services. The company's growth strategy emphasizes driving the full potential of its core business, achieving sustainable network expansion, and innovating to adapt to changing customer demands and the overall vehicle fleet (car parc). The executive compensation peer group is drawn from the retail or consumer staples industries, specifically targeting companies with storefront operations, specialized consumer services, reliance on repeat customers, or a franchise/license business model. A notable trend in fiscal 2025 was fleet growth outpacing the consumer business, suggesting a strong performance or strategic shift towards commercial automotive services.

Comparison to Industry Standards

• Valvoline's relative Total Shareholder Return (TSR) of 41.6% over the fiscal 2023-2025 period placed it at the 58th percentile of the S&P MidCap 400 Index, indicating above-average performance compared to this broad market benchmark.
• The executive compensation peer group for fiscal 2025 included companies such as Driven Brands Holdings, Inc., Floor & Decor Holdings, Inc., H&R Block, Inc., Jack in the Box Inc., Leslies, Inc., Mister Car Wash, Inc., Monro, Inc., National Vision Holdings, Inc., The Container Store Group, The Wendys Company, Warby Parker Inc., and Wingstop Inc.
• For fiscal 2026, the compensation peer group will be updated to include Planet Fitness, Inc., Dutch Bros Inc., Shake Shack Inc., Boot Barn Holdings, Inc., and Five Below, Inc., while removing LL Flooring, The Container Store, Haverty Furniture, and Warby Parker, reflecting an adjustment to better align with Valvoline's financial size and business characteristics within the retail and consumer service sectors.

Management Changes

Corporate Governance

Related Party Transactions

• The Governance & Nominating Committee determined that there were no Related Person Transactions that were required to be reported under Item 404(a) of Regulation S-K since the beginning of fiscal 2025, nor are there any currently proposed.

Stakeholder Impact

• Shareholders will directly influence corporate direction by voting on director elections, auditor ratification, executive compensation, and a new incentive plan at the upcoming Annual Meeting.
• The new 2026 Omnibus Incentive Plan is designed to attract, retain, and motivate key employees and executives, aligning their long-term interests with shareholder value creation.
• Customers may benefit from the company's strategic focus on innovation and meeting evolving needs, as well as the continued expansion of the service network.
• Employees are subject to compensation programs designed to link pay to performance, with changes in base salary and incentive opportunities reflecting competitive market adjustments.
• The ongoing remediation of a material weakness in internal controls could impact operational efficiency and financial reporting reliability until fully resolved, affecting investor confidence.

Next Steps

• Hold the 2026 Annual Meeting of Shareholders on January 28, 2026, to vote on director elections, auditor ratification, executive compensation, and the 2026 Omnibus Incentive Plan.
• The Board will appoint a new Chair for the Governance & Nominating Committee and an additional member for the Audit Committee in January 2026.
• Management expects to complete the remediation of the material weakness in internal control over financial reporting in fiscal 2026.
• Shareholders can submit proposals for the 2027 Annual Meeting by August 21, 2026, for inclusion in the proxy statement.
• Shareholders can submit direct nominations for the 2027 Annual Meeting between September 30, 2026, and October 30, 2026.
• J. Kevin Willis's target long-term incentive compensation opportunity will be no less than $950,000, starting with the fiscal 2026 annual grant.

Key Dates

Recommendation

Solid operational growth, strategic acquisitions, and strong shareholder support for governance are evident. However, financial performance metrics for incentive plans were slightly below target, and a material weakness in internal controls persists, though remediation is underway. The company's proactive steps in addressing these issues and its commitment to aligning executive compensation with performance suggest a stable outlook, but the unresolved control weakness warrants a cautious "hold" stance until remediation is fully confirmed and sustained performance against targets is demonstrated.

Keywords

Valvoline, Proxy Statement, Corporate Governance, Executive Compensation, Director Election, Auditor Ratification, Incentive Plan, Financial Results, Fiscal 2025, Retail Services, Automotive Maintenance, Same-Store Sales, SSS, EBITDA, EPS, Risk Management, Internal Controls, ERP, Shareholder Meeting