DEF: Zurn Elkay Water Solutions Sets Date for 2025 Annual Stockholders Meeting, Proposes Director Elections and Incentive Plan Amendment

Zurn Elkay Water Solutions Corporation will hold its annual meeting of stockholders on May 1, 2025, to elect directors, approve executive compensation, amend the performance incentive plan, and ratify the selection of Ernst & Young LLP as the company's independent accounting firm.

Summary

• Zurn Elkay Water Solutions Corporation will hold its annual meeting of stockholders on May 1, 2025, at its corporate offices in Milwaukee, Wisconsin.
• Stockholders of record as of March 4, 2025, are entitled to vote.
• The meeting will address the election of four directors for three-year terms expiring in 2028, an advisory vote on executive compensation, approval of an amendment to the Performance Incentive Plan, and ratification of Ernst & Young LLP as the company's independent accounting firm for 2025.
• The board of directors recommends voting FOR all director nominees, the approval of executive compensation, the amendment to the Performance Incentive Plan, and the ratification of Ernst & Young LLP.
• The company encourages stockholders to vote in advance of the meeting via the internet.
• In 2024, Zurn Elkay delivered $272 million free cash flow, repurchased $150 million of shares, increased its quarterly dividend by 13 percent and ended with its lowest ever net debt leverage.
• The company actively seeks stockholder input and conducted extensive outreach in the first quarter of 2025, contacting stockholders representing approximately 65% of outstanding common stock and meeting with holders of 73% of those contacted.
• Stockholders generally expressed support for the amendment to the PIP as a way to incentivize key executives and employees.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook, highlighting financial achievements, sustainability efforts, and stakeholder engagement. The tone is optimistic and confident about the company's future.

Positives

• The company is actively engaging with stockholders to gather feedback on corporate governance, executive compensation, and sustainability.
• The board is committed to building a highly-engaged, independent board with diverse skills and experiences.
• The company's compensation program is designed to align executive pay with company performance and stockholder interests.
• The company is focused on sustainability and has received recognition for its efforts.
• The company delivered $272 million free cash flow, repurchased $150 million of shares, increased its quarterly dividend by 13 percent and ended with its lowest ever net debt leverage in 2024.

Risks

• The document mentions the world faces an array of climate-and water related crises, including flooding and drought events exacerbated by climate change, water pollution and its impact on biodiversity and human health, and aging infrastructure that can contaminate water supplies.
• The company depends heavily on information technology infrastructure to manage our business objectives and operations, support our customers requirements and protect sensitive information and a material security breach could impede the Company's ability to carry on business in the normal course.

Future Outlook

The company is confident that with continued support, it will continue to succeed in the challenges and opportunities ahead.

Management Comments

• Building value in the collective best interest of all our stakeholders including stockholders, associates, customers, suppliers, sales and distribution partners and, more than ever, our natural world has always been our strategy.
• As a leader in water management solutions, we are uniquely capable of solving complex water challenges on behalf of all of our stakeholders and we embrace that responsibility.
• Operating by our guiding principle Simply Do the Right Thing continues to earn us recognition from others.
• Our achievements in 2024 fuel our excitement for the challenges and opportunities ahead.
• Im confident that with your continued support, we will continue to succeed.

Industry Context

The company is a leader in water management solutions, addressing complex water challenges and focusing on sustainability goals, including filtered drinking water solutions and water conservation.

Comparison to Industry Standards

• The company's peer group includes A.O. Smith Corporation, Itron, Inc., Advanced Drainage Systems, Inc., Kadant Inc., Badger Meter, Inc., Lindsay Corporation, Enpro, Inc., Mueller Water Products, Inc., ESCO Technologies, Inc., Nordson Corporation, Franklin Electric Co., Inc., Pentair Plc, Graco Inc., Watts Water Technologies, Inc., and Helios Technologies, Inc.
• The CEO's long-term incentive being 100% performance-based was higher than the peer group comparison as the peer group awarded a lower percentage of performance-based long-term incentives, however the Committee believes awarding 100% performance-based long-term incentives creates better alignment with stockholders.

Related Party Transactions

• On February 11, 2025, the Company entered into an Underwriting Agreement (the Underwriting Agreement) by and among the Company, Ice Mountain LLC (the Selling Stockholder), and Evercore Group L.L.C. as representative of the several underwriters (collectively, the Underwriters), for the sale of up to 8,912,500 (inclusive of an overallotment option that was granted to the Underwriters) shares of common stock of the Company by the Selling Stockholder.
• In connection with the transaction, the Company repurchased from the Underwriters 1,636,905 of such shares of Common Stock (or approximately $55,000,000) at a price per share equal to the price per share paid by the Underwriters to the Selling Stockholder in the offering.
• The terms and conditions of the share repurchase and related matters were reviewed and approved by the Audit Committee.

Stakeholder Impact

• The company's actions are intended to benefit stockholders through increased value creation.
• Associates are impacted through compensation programs and professional development opportunities.
• Customers benefit from sustainable water solutions.
• Communities benefit from the company's philanthropic efforts and water stewardship initiatives.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will continue to engage with stockholders to gather feedback and address concerns.
• The board will continue to review and evaluate corporate governance, executive compensation, and sustainability programs.

Key Dates