AYI DEF 14A Report ended Jan. 8, 2020

☐	Preliminary Proxy Statement

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☑	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to §240.14a-12

☑	No fee required.

☐	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

☐	Fee paid previously with preliminary materials.

☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1)	Amount Previously Paid:

2)	Form, Schedule or Registration Statement No.:

3)	Filing Party:

4)	Date Filed:

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•	Incorporated a djusted return on invested capital as an additional financial measure to the Annual Cash Incentive Plan; a djusted return on invested capital evaluates management on the efficiency of allocating capital under its control to generate returns;

•	Removed diluted earnings per share as a financial measure under both the Annual Cash Incentive Plan and the Equity Incentive Plan; adjusted o perating profit replaced adjusted diluted earnings per share as one of the financial measures for the Annual Cash Incentive Plan;

•	Implemented performance stock units ("PSUs") utilizing a three-year performance measure based on capital efficiency — average a djusted return on invested capital (adjusted ROIC) over the period must exceed the Company’s estimated weighted average cost of capital (WACC) by certain thresholds; and

•	Removed stock options as a equity incentive award instrument for fiscal 2019 performance.

•	Operating profit margin in the mid-teens or higher;

•	Annual growth in earnings per share of 15% or greater;

•	Generation of cash flow from operations less capital expenditures in excess of net income;

•	Return on stockholders’ equity of 20% or better; and

•	Return on invested capital in excess of cost of capital.

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(1)	Fiscal 2018 adjusted diluted earnings per share excludes discrete income tax benefits associated with the enactment of the U.S. Tax Cut and Jobs Act of 2017 totaling $0.84 per share, respectively.

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(2)	Represents a non-U.S. Generally Accepted Accounting Principles (GAAP) measure that the Board and management utilize to assess the performance of the business. See Appendix A for calculation of such financial measure and reconciliation to the most comparable GAAP measure.

(1)

For fiscal 2019, performance results were adjusted to exclude the distortive effect of acquisitions which consisted of acquired profit in inventory and professional fees associated with M&A activities, manufacturing inefficiencies associated with the closing of a facility, and special charges associated with streamlining activities. See Appendix A for reconciliations of adjusted financial measures to the most comparable GAAP measures.

(2)	See Fiscal 2019 Financial Measures and Weighting and Appendix A for information on calculation of these performance measures.

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•	Execution of our annual business plan and progress on achieving key strategic goals, such as exceeding the growth rate of our end markets, expanding our industry-leading portfolio of innovative products and solutions, enhancing our customer service and support capabilities, and achieving operating efficiencies;

•	Execution of our multi-year Cultural “Break-Through-Objectives” which include increasing our scores in customer satisfaction, associate engagement, and ESG; and

•	Continued focus on leadership development and performance management processes.

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(1)	Citizens Trust Bank is not a public company and its parent, Citizens Bancshares Corporation, ceased to be a publicly-traded company in January 2017.

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•	Matters pertaining to our auditing, internal control, and financial reporting, as set forth in the Committee’s report (see Report of the Audit Committee ) and in its charter.

•	Each quarter, the Audit Committee meets separately with the independent registered public accounting firm and the internal auditor without other management present.

•	Periodically, and when necessary, the Audit Committee meets separately with the chief financial officer and the general counsel without other management present to review legal and compliance matters.

•	Matters relating to the evaluation and compensation of the executive officers and non-employee directors, as set forth in its charter.

•	At most regularly scheduled meetings, the Compensation Committee meets privately with an independent compensation consultant without management present.

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•	Annually, the Compensation Committee evaluates the performance of the independent consultant in relation to the Committee’s functions and responsibilities.

•	Reviewing matters pertaining to the composition, organization, and practices of the Board.

•	Recommending Corporate Governance Guidelines

•	Recommending and overseeing the Code of Ethics and Business Conduct

•	Overseeing our ESG initiatives

•	Periodic evaluation of the Board in meeting its corporate governance responsibilities

•	Periodic evaluation of individual directors

•	Recommending to the full Board a slate of directors for election by stockholders at the annual meeting and candidates to fill a new Board position or any vacancies on the Board as explained in greater detail in Director Nomination Process .

•	The Executive Committee is composed of the Chairman and CEO, the Independent Lead Director, and the Chairs of our other standing Committees.

•

The Executive Committee is authorized to perform all of the powers of the full Board, except the power to amend the By-Laws and except as restricted by Delaware General Corporation Law (“Delaware Law”). The Executive Committee is called upon in very limited circumstances due to reliance on the other standing committees of the Board and the direct involvement of the entire Board in governance matters.

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•	Conduct a comprehensive and thorough review of our executive compensation programs;

•	Evaluate the performance measures used in our Annual Cash and Equity Incentive Plans;

•	Evaluate the equity instruments we utilize to better align with our performance-based compensation philosophy; and

•	Enhance disclosures related to our ESG initiatives.

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•	Certificate of Incorporation

•	By-Laws

•	Corporate Governance Guidelines

•	Statement of Responsibilities of Committees of the Board (Charters of the Committees)

•	Statement of Rules and Procedures of Committees of the Board

•	Board Diversity Policy

•	Policy Regarding Interested Party Communications with Directors

•	Policy on Stockholder Recommendations for Board of Director Candidates

•	Foreign Corrupt Practices Act Compliance Policy

•	Code of Ethics and Business Conduct

•	Whistleblower and Non-Retaliation Policy

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•	compensation should fairly pay directors for work required for a company of our size and scope;

•	compensation should align directors’ interests with the long-term interests of stockholders; and

•	the structure of the compensation should be simple, transparent, and easy for stockholders and directors to understand.

(1)	Approximately 36% of the fiscal 2019 Annual Fee is payable in cash. This portion of the Annual Fee may, at the director's election, be deferred into the Deferred Compensation Plan described below.

(2)

Approximately 64% of the fiscal 2019 Annual Fee is required to be deferred into stock units in the Deferred Compensation Plan until the director exceeds the Stock Ownership Requirement described below. Once the Stock Ownership Requirement has been met, non-employee directors may annually elect to receive this non-cash portion of the Annual Fee in vested stock grants issued pursuant to the Deferred Compensation Plan.

(3)	The cash portion of any chair or meeting fees, also payable in cash, may be deferred into the Deferred Compensation Plan described below.

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(2)	The only perquisite received by directors is a match on charitable contributions. The maximum match in any fiscal year is $5,000 and is below the required reporting threshold.

(3)	Total compensation for Mr. Wesley represents less than a full-year of compensation due to his retirement from the Board in January 2019.

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•	Incorporated a djusted return on invested capital as an additional financial measure to the Annual Cash Incentive Plan; a djusted return on invested capital evaluates management on the efficiency of allocating capital under its control to generate returns;

•	Removed diluted earnings per share as a financial measure under both the Annual Cash Incentive Plan and the Equity Incentive Plan; adjusted o perating profit replaced adjusted diluted earnings per share as one of the financial measures for the Annual Cash Incentive Plan;

•	Implemented PSUs utilizing a three-year performance measure based on capital efficiency — average a djusted return on invested capital (adjusted ROIC) over the period must exceed the Company’s estimated weighted average cost of capital (WACC) by certain thresholds; and

•	Removed stock options as a equity incentive award instrument for fiscal 2019 performance.

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(1)	Fiscal 2018 adjusted diluted earnings per share excludes discrete income tax benefits associated with the enactment of the U.S. Tax Cut and Jobs Act of 2017 totaling $0.84 per share, respectively.

(2)	Represents a non-GAAP financial measure that the Board and management utilize to assess the performance of the business. See Appendix A for calculation of such financial measure and reconciliation to the most comparable GAAP measure.

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•	Execution of our annual business plan and progress on achieving key strategic goals, such as exceeding the growth rate of our end markets, expanding our industry-leading portfolio of innovative products and solutions, enhancing our customer service and support capabilities, and achieving operating efficiencies;

•	Execution of our multi-year Cultural “Break-Through-Objectives” which include increasing our scores in customer satisfaction, associate engagement, and ESG; and

•	Continued focus on leadership development and performance management processes.

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•	Attract and retain executives by providing a competitive reward and recognition program that is driven by our success;

•	Provide rewards to executives who create value for stockholders;

•	Consistently recognize and reward superior performers, measured by achievement of results and demonstration of desired behaviors; and

•	Provide a framework for the fair and consistent administration of pay policies.

•	The total compensation program should be designed to strengthen the relationship between pay and performance, with a resulting emphasis on variable, rather than fixed, forms of compensation;

•	An appropriate balance should be struck between the focus on achievement of annual goals and the focus on encouraging long-term growth of the Company so as to appropriately balance risk;

•	Compensation should generally increase with position and responsibility, and total compensation should be higher for individuals with greater responsibility and a greater ability to influence the Company’s results, with a corresponding increase in the percentage of total compensation linked to performance; and

•	Management should focus on the long-term interests of all stakeholders, including stockholders.

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•	Operating profit margin in the mid-teens or higher;

•	Annual growth in earnings per share of 15% or greater;

•	Generation of cash flow from operations less capital expenditures in excess of net income;

•	Return on stockholders’ equity of 20% or better; and

•	Return on invested capital in excess of cost of capital.

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•	Value of annual awards should approximate the median target value of awards for similar positions at our peer group. The value of the actual award may be slightly higher or lower based on Company and individual performance;

•	50% of annual award is in the form of RSUs that vest ratably over a four-year period;

•	50% of annual award is in the form of PSUs that vest only if the three-year performance measure is achieved; and

•	Actual payout of the PSUs is dependent on the achievement of an established performance measure in excess of related thresholds, which may allow for payout up to three-times the shares originally awarded.

•	Base salary;

•	Performance-based annual cash incentive awards;

•	Time-vesting restricted stock units (with four-year vesting period);

•	Performance-based equity incentive awards with a three-year performance measure (vests after three years and subject to achievement of performance measure); and

•	Post-termination compensation (retirement benefits as well as severance and change in control arrangements).

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(1)	Based on individual performance objectives, as discussed below.

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•	Adjusted operating profit is calculated as operating profit, and may be adjusted as described below.

•	Adjusted operating profit margin is calculated as operating profit divided by net sales and may be adjusted as described below.

•	Adjusted free cash flow is calculated as cash provided by operating activities, minus purchases of property, plant, and equipment, plus cash received from the sale of property, plant, and equipment, and adjusted as described below.

•	Adjusted return on invested capital may be adjusted as described below.

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•	Comparing actual performance to daily job responsibilities and pre-established individual objectives consistent with overall company objectives, and

•	Considering, on a qualitative basis, whether the individual’s performance reflects our corporate values and business philosophies, such as continuous improvement.

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(1)

For fiscal 2019, performance results were adjusted to exclude the distortive effect of acquisitions which consisted of acquired profit in inventory and professional fees associated with M&A activities, manufacturing inefficiencies associated with the closing of a facility, and special charges associated with streamlining activities. See Appendix A for reconciliation of adjusted financial measures to U.S. GAAP measures.

(2)	See Fiscal 2019 Financial Measures and Weighting and Appendix A for information on calculation of these performance measures.

(1)	The maximum award is capped by the Annual Cash Incentive Plan's limit of $6.0 million maximum award payable to an individual participant for any fiscal year.

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•	Value of annual awards should approximate the median target value of awards for similar positions at our peer group. The value of the actual award may be slightly higher or lower based on Company and individual performance;

•	50% of annual award is in the form of RSUs that vest ratably over a four-year period;

•	50% of annual award is in the form of PSUs that vest only if the three-year performance measure is achieved;

•	Actual payout of the PSUs is dependent on the achievement of an established performance measure in excess of related thresholds, which may allow for payout up to three-times the shares originally awarded; and

•	Stock options were replaced by PSUs.

•	No shares earned if our average adjusted ROIC over the three-year period does not exceed or equal our average estimated WACC over the same period by at least 2 percentage points.

•	Target shares earned (100%) if our average adjusted ROIC over the three-year period equals or exceeds our average estimated WACC over the same period by 2 percentage points.

•	Maximum shares earned (300%) if our average adjusted ROIC over the three-year period equals our average estimated WAAC over the same period by a minimum of 6 percentage points.

•	Between Target and Maximum, the number of shares earned will be interpolated between 100% and 300%.

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•	Peer group assessment, market compensation analysis, and overall compensation program design for the chief executive officer and the other named executive officers;

•	Market compensation analysis for non-employee directors;

•	Assistance and support on various issues, including updates related to evolving executive compensation and governance trends; and

•	Review of the draft proxy statement and input and disclosure suggestions.

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•

The various financial performance measures that are set under the Annual Cash Incentive Plan and Equity Incentive Plan are balanced and typically based upon year-over-year improvement levels and multi-year performance targets that are reviewed and approved by the Board and that we believe are challenging and yet attainable without the need to take inappropriate risks or make material changes to our business or strategy.

•	Awards under the Equity Incentive Plan are made in the form of equity grants that either vest over time or upon the achievement of three-year performance targets. We believe the three and four year vesting of the equity awards plays an important role in mitigating unnecessary or excessive risk taking.

•	The Annual Cash Incentive Plan and the Equity Incentive Plan have maximum payout limitations for each participant and on the total amount of payments to all eligible associates in a fiscal year.

•	Because the value of the equity awards is best realized through long-term appreciation of stockholder value, especially when coupled with our stock ownership guidelines (described below), we believe this encourages a long-term growth mentality among our executives and aligns their interests with those of our stockholders.

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(1)	Messrs. Reece and Vernerey received discretionary cash incentives for fiscal 2018 in recognition of their individual performance and to align their long-term interests with that of stockholders. For more information, see Compensation Discussion and Analysis–Elements of Executive Compensation–Fiscal 2018 Annual Cash Incentive Award in the Company's Fiscal 2018 Proxy Statement.

(2)

Represents the aggregate grant date fair value of restricted stock and option awards granted during the applicable fiscal year. The fiscal 2019 stock and option awards for Messrs. Nagel, Reece, and Vernerey were discretionary awards to recognize their contributions and leadership during the difficult fiscal 2018 performance period. The fiscal 2018 stock award for Mr. Vernerey represents an initial grant of restricted stock upon his employment with the Company on November 1, 2017. The assumptions used to value option awards granted in and prior to fiscal 2019 can be found in Note 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended August 31, 2019. Restricted stock awards are valued at the closing price on the NYSE on the grant date. For information regarding stock awards granted in fiscal 2020, see Compensation Discussion and Analysis–Equity Incentive Awards–Fiscal 2019 Equity Incentive Awards .

(3)	Represents amounts earned under the Annual Cash Incentive Plan for the applicable fiscal year. For fiscal 2019, awards were earned at approximately 90% of target, even though 188% of target was achieved. For more information, see Compensation Discussion and Analysis–Elements of Executive Compensation–Fiscal 2019 Annual Cash Incentive Award .

(4)

Represents the increase or decrease in the actuarial present value of benefits under the SERP. The change in the pension value for fiscal 2019 was primarily attributed to additional benefits accrued for Messrs. Nagel and Reece as the result of a 2019 SERP amendment and a decrease in the discount rate. Approximately 28% of the change in pension value was attributed to a combination of a lower discount rate and the passage of time with the remainder due to an increase in benefit resulting from a 2019 SERP amendment. For a description of the 2019 SERP amendment, see Pension Benefits in Fiscal 2019 . The decrease in the pension value for fiscal 2018 for Messrs. Nagel and Reece was attributable to an increase in the discount rate. There are no above-market earnings for our deferred compensation plans. For more information, see Pension Benefits in Fiscal 2019 and Fiscal 2019 Non-Qualified Deferred Compensation .

(5)	For fiscal 2019, the amount shown for Mr. Nagel does not include a contribution into the non-qualified deferred compensation plan as in prior years; therefore, All Other Compensation includes only the following:

(6)	Mr. Vernerey joined the Company on November 1, 2017. Effective September 1, 2019, at his request, Mr. Vernerey will serve in a reduced role as Strategic Business Development Executive.

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(1)

These columns show the possible fiscal 2019 payout for each named executive officer under the Annual Cash Incentive Plan if the threshold, target, or maximum goals were achieved. The maximum award for Mr. Nagel is capped by the Annual Cash Incentive Plan's limit of $6.0 million maximum award payable to an individual participant for any fiscal year. For fiscal 2019, awards were earned at approximately 188% of target; however, the Committee applied their judgment and awards were paid at 90% of target. See Fiscal 2019 Summary Compensation Table for final amounts earned. See Compensation Discussion and Analysis –2019 Elements and Determination of Executive Compensation–Performance Based Annual Cash Incentive Awards for a description of the program.

(2)

These columns show the potential value, in dollars, of the fiscal 2019 equity payout for each named executive officer for annual equity incentive awards if the threshold, target, or maximum goals were achieved. Target award assumes median target value of peer group for each respective position. Equity incentive awards were made on October 24, 2019. Because the grants were made after the end of the fiscal year, they do not appear in the Fiscal 2019 Summary Compensation Table. See Compensation Discussion and Analysis –2019 Elements and Determination of Executive Compensation–Long-Term Equity Incentive Awards for a description of the program.

(3)

These columns show the number of restricted shares and stock options granted on October 24, 2018 to Messrs. Nagel, Reece, and Vernerey as discretionary equity incentive awards. The restricted stock grants vest ratably in four equal annual installments beginning one year from the grant date. Dividends are paid on the restricted shares at the same rate as for other outstanding shares; dividends accrue and are only paid when the underlying restricted shares vest. The stock options vest ratably in three equal annual installments beginning one year from the grant date and expire at the end of ten years.

(4)

This column shows the grant date fair value of the restricted stock and the stock options under the Accounting Standards Codification Topic 718. The grant date fair value of restricted stock awards is calculated using the closing price of our common stock on the NYSE on the grant date. The grant date fair value of the stock options is calculated at the time of the award using the Black-Scholes Model. The assumptions used to value option awards granted can be found in Note 10 to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended August 31, 2019.

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(1)	The market value is calculated as the product of (a) $125.41 per share, the closing market price of our common stock on the NYSE on August 30, 2019, the last trading day of the fiscal year, multiplied by (b) the number of shares that have not vested.

(1)	The value realized is the closing market price on the day the stock awards vest, multiplied by the total number of shares vesting.

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•	Participants may elect to receive the actuarial equivalent of the total incremental monthly benefits in the form of a lump sum cash payment.

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The definition of actuarial equivalent (with respect to accrued benefits other than the participant’s vested accrued benefit as of December 31, 2004) was changed. Prior to the amendment, the definition of actuarial equivalent used an interest rate equal to the lesser of 7% per annum or the yield on 10-Year U.S. Treasury Bonds plus 1.5%; after the amendment, an interest rate equal to the lesser of 2.5% per annum or the yield on 10-Year U.S. Treasury Bonds will be used.

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Upon the occurrence of a Section 409A change in control event (as defined in the SERP), the SERP shall be terminated consistent with the requirements of Treasury Regulation section 1.409A-3(j)(4)(ix)(B), and the Company shall, within five (5) days of such an event, pay to each participant a lump sum cash payment equal to the lump sum actuarial equivalent of the participant’s accrued benefit as of such date.

•	If any action at law or in equity is necessary for a participant to enforce or interpret the terms of the SERP, the Company shall promptly pay the participant’s reasonable attorneys’ fees and other reasonable expenses incurred with respect to such action.

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(1)	The accumulated benefit in the SERP is based on service and earnings (base salary and bonus, as described above) considered by the SERP for the period through August 31, 2019. The present value has been calculated assuming the benefit is payable commencing at a retirement of age 65. The discount rate assumed in the calculation is 2.75% compared with 3.90% in the prior year.

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(1)	None of the earnings in fiscal 2019 were considered above-market earnings, as defined by the SEC.

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•	an adverse change in the executive’s title or position which represents a demotion;

•	requiring the executive to be based more than 50 miles from the primary workplace where the executive is currently based, subject to certain exceptions for ‘reasonable travel’ as per the specific agreements;

•	a reduction in base salary and target bonus opportunity (not the bonus actually earned) below the level in the employment letter for Mr. Nagel and below the level in effect immediately prior to the change in control for Mr. Reece, unless such reduction is consistent with reductions being made at the same time for other of our officers in comparable positions;

•	a material reduction in the aggregate benefits provided to the executive by us under associate benefits plans, except in connection with a reduction in benefits which is consistent with reductions being made at the same time for other of our officers in comparable positions;

•	an insolvency or bankruptcy filing by us; or

•	a material breach by us of the severance agreement.

•	a material diminution in authority, duties or responsibilities, which, in executive’s judgment, represents an adverse change in status, title, position or responsibilities;

•	a reduction in the executive’s base salary or any failure to pay the executive any compensation or benefits to which he is entitled within five days of the date due;

•	requiring the executive to be based more than 50 miles from the primary workplace where executive is currently based, except for reasonably required business travel; or

•	a material breach by us of the severance agreement.

•	termination is the result of an act or acts by the executive which have been found in an applicable court of law to constitute a felony (other than traffic-related offenses);

•	termination is the result of an act or acts by the executive which are in the good faith judgment of the Company to be in violation of law or of written policies of the Company and which result in material injury to the Company;

•	termination is the result of an act or acts of dishonesty by the executive resulting or intended to result directly or indirectly in gain or personal enrichment to the executive at the expense of the Company; or

•	the continued failure by the executive substantially to perform the duties reasonably assigned to him, after a demand in writing for substantial performance of such duties is delivered by the Company.

•	monthly severance payments for the severance period in an amount equal to the executive’s then current base salary rate;

•	continuation of health care and life insurance coverage for the severance period;

•	outplacement services not to exceed 10% of base salary;

•	a cash payment based on a predefined percentage of base salary, calculated on a pro rata basis;

•	accelerated vesting of any performance-based restricted stock for which performance targets have been achieved;

•	additional benefits, at the discretion of the Compensation Committee, including without limitation, additional retirement benefits and acceleration of equity incentive awards, if the executive is terminated prior to age 65 and suffers a diminution of projected benefits; and

•	for Mr. Vernerey, an amount equal to his accrued but unused vacation.

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•	continued vesting during the severance period of unvested stock options;

•	exercisability of vested stock options and stock options that vest during the severance period for the shorter of the remaining exercise term or the length of the severance period;

•	accelerated vesting during the severance period of restricted stock that is not performance-based on a monthly pro rata basis determined from the date of grant to the end of the severance period;

•	continued vesting during the severance period of performance-based restricted stock for which performance targets are achieved and vesting begins during the severance period; and

•	continued accrual during the severance period of credited service under the SERP.

1.

Upon a change in control, all restrictions on any outstanding incentive awards will lapse and the awards will immediately become fully vested, all outstanding stock options will become fully vested and immediately exercisable, and we may be required to immediately purchase for cash, on demand, at the then per-share fair market value, any shares of unrestricted stock and shares purchased upon exercise of options.

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2.	If the employment of the named executive officer is terminated within 24 months following a change in control or in certain other instances in connection with a change in control either by us other than for cause or disability or by the officer for good reason (as each term is defined in the change in control agreement), the officer will be entitled to receive:

•	a pro rata bonus for the year of termination;

•	a lump sum cash payment equal to a multiple of the sum of his base salary and annual cash incentive payment (in each case at least equal to his base salary and bonus prior to a change in control), subject to certain adjustments;

•	continuation of life insurance, disability, medical, dental, and hospitalization benefits for the specified term;

•	a cash payment representing additional months of participation in our qualified or non-qualified deferred compensation plans (36 months for Mr. Nagel and 30 months for Messrs. Reece and Vernerey); and

•	a cash payment equal to the lump sum actuarial equivalent of the accrued benefit under the SERP as of the date of termination of employment, whether or not the accrued benefit has vested.

•	the acquisition of 20% (for Mr. Vernerey, 30%) or more of the combined voting power of our then outstanding voting securities;

•	a change in more than one-third of the members of our Board of Directors (for Mr. Vernerey, 50% of the members of the Board of Directors) who were either members as of the distribution date or were nominated or elected by a vote of two-thirds of those members or members so approved;

•	consummation of a merger or consolidation through which our stockholders no longer hold more than 60% of the combined voting power of our outstanding voting securities resulting from the merger or consolidation in substantially the same proportion as prior to the merger or consolidation;

•	consummation of a complete liquidation or dissolution or the sale or other disposition of all or substantially all of our assets; or

•	for Mr. Vernerey, the approval by stockholders of the sale of all or substantially all of the assets of the Company or any merger, consolidation, issuance of securities or purchase of assets, the result of which would be the occurrence of any of the events described in the prior two bullets.

•	intentionally and continually failed to substantially perform his duties, which failure continued for a period of at least 30 days after a written notice of demand for substantial performance has been delivered to the executive specifying the manner in which the executive has failed to substantially perform; or

•	intentionally engaged in conduct which is demonstrably and materially injurious to us, monetarily or otherwise.

•	any change in the executive’s status, title, position or responsibilities which, in the executive’s reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect immediately prior; the

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•	a reduction in the executive’s base salary or any failure to pay the executive any compensation or benefits to which he is entitled within five days of the date due;

•	a failure to increase the executive’s base salary at least annually at a percentage of base salary no less than the average percentage increases (other than increases resulting from the executive’s promotion) granted to the executive during the three full years ended prior to a change in control (or such lesser number of full years during which the executive was employed);

•	requiring the executive to be based more than 50 miles from the primary workplace where the executive is based immediately prior to the change in control except for reasonably required travel on business which is not greater than such travel requirements prior to the change in control;

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the failure by us (1) to continue in effect any compensation or benefit plan in which the executive was participating immediately prior to the change in control or (2) to provide the executive with compensation and benefits, in the aggregate, at least equal to those provided for under each other compensation or benefit plan, program and practice as in effect immediately prior to the change in control;

•	the insolvency or the filing of a petition for bankruptcy by us;

•	the failure by us to obtain an agreement from a successor to assume and agree to perform the agreement; and

•	a purported termination of executive’s employment for cause that does not follow the procedures of the change in control agreement or other material breach of the agreement.

•	a material diminution in authority, duties, or responsibilities, which, in executive’s judgment, represents an adverse change in status, title, position, or responsibilities;

•	a reduction in the executive’s base salary or any failure to pay the executive any compensation or benefits to which he is entitled within five days of the date due;

•	requiring the executive to be based more than 50 miles from the primary workplace where executive is currently based, except for reasonably required business travel; or

•	a material breach by us of the severance agreement.

•	Stock options become fully vested and are exercisable to the earlier of the expiration date or one year after the event. Restricted shares become fully vested and are immediately payable.

•	Company contributions in Deferred Compensation Plans including the 401(k) and SDSP vest and are payable upon death or total and permanent disability.

•	Vested options are exercisable to the earlier of the expiration date or five years after retirement.

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Effective for equity awards in October 2019 and thereafter, the Board reinstated a policy that provides for the continued vesting of awards following retirement for all eligible participants who have attained age 60 and have at least 10 years of service with the Company. The Board believes that continued vesting encourages associates to make business decisions in the long-term interest of the Company and its stockholders. This decision was made following a comprehensive review of our compensation program.

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(1)	For benefits related to a change-in-control, this represents a multiple of salary and the highest of current year bonus, prior year bonus, or average of bonus for last three years. For benefits related to a severance agreement, this represents salary for the severance period plus a cash payment based on a predefined percentage of base salary.

(2)

The value realized on unvested equity awards represents the difference between the fair market value of unvested awards at August 31, 2019, using our closing price of $ 125.41 on August 30, 2019 (less the exercise price of unvested options). August 30, 2019 was the last trading day of our common stock for fiscal 2019. No payment is made for unvested options where the exercise price is greater than our closing price on August 30, 2019.

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(3)

Includes payments in respect of continued health, welfare, retirement benefits, and deferred compensation benefits as outlined in change-in-control agreements, including the present value of additional credited service in the SERP or annual Company contributions in the 401(k) plan equal to the number of months associated with the multiple, and unvested Company contributions in deferred compensation plans that vest upon a change in control, as follows:

(4)	Includes payments in respect of continued health, welfare, retirement benefits, and deferred compensation benefits as outlined in severance agreements including the present value of additional credited service in the SERP or annual Company contributions in the 401(k) plan equal to the number of months associated with the multiple, as follows:

(5)

An excise tax gross-up is applicable to Messrs. Nagel and Reece in the event of a change in control. The excise tax gross-up is calculated assuming the excise tax rate of 20% of the excess of the value of the change in control payments over the executive’s average W-2 earnings for the last five calendar years. The excise tax gross-up is only applicable if the sum of all payments equals or exceeds three times the executive’s average W-2 earnings for the past five calendar years. Further, the excise tax gross-up is based on an assumed effective aggregate tax rate of 37% for the executive, and assumes no value is assigned to the non-compete and other restrictive covenants that may apply to the executive. Upon a change in control and termination of the executive’s employment, we expect to assign a portion of the amount paid to the executive as value for the restrictive covenants, which would decrease the total parachute payments and the amount of the excise tax gross-up.

(6)

The change in control agreement for Mr. Vernerey provides that if the payments to be made under the change in control agreement would be subject to excise tax, (a) the net benefit after excise payments will be compared to (b) the net benefit if covered payments are limited to the extent necessary to avoid excise payments. If the net amount payable in (a) is less than that payable under (b), then the payment will be reduced in a manner that maximizes Mr. Vernerey’s economic position.

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We reviewed the total headcount as of August 31, 2019, the measurement date, in each of the jurisdictions in which we conduct business and determined pursuant to the de minimis exemption rule that we could exclude 516 associates in international locations other than Mexico, which represents less than 5% of our employee population. The excluded associates are located in each of following jurisdictions: Canada ( 228 ), the United Kingdom ( 112 ), France ( 71 ), the Netherlands ( 73 ), China ( 27 ), Germany ( 3 ), Italy ( 1 ) and Sweden ( 1 ). We included all full and part-time associates and excluded our CEO, independent contractors, and leased workers.

•	As a result, we included 11,188 associates of our 11,704 total employee population, or 95.6% , as of the measurement date in our analysis.

•

We then calculated the total cash compensation for the 12-months prior to the measurement date for all individuals who were employed on the measurement date. We converted the calculated total cash compensation for non-U.S. associates to U.S. dollars using the average currency exchange rate for the fiscal year period. We believe the use of total cash compensation is an appropriate consistently applied compensation measure for purposes of this analysis.

•	Using this annual cash compensation data, we identified the median employee.

•	Once the median employee was identified, the total annual compensation for that median employee was determined in the same manner as the “Total Compensation” shown for Mr. Nagel in the Summary Compensation Table.

(1)	Annual total compensation, as calculated in accordance with Item 402 of Regulation S-K.

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(1)

Includes the Amended and Restated 2012 Omnibus Equity Incentive Plan ("Amended and Restated Plan") that was approved by our stockholders in January 2018, the Employee Stock Purchase Plan, amended and restated effective March 1, 2006, that was approved by our sole stockholder in November 2001, the 2006 Nonemployee Directors’ Deferred Compensation Plan (the “2006 NEDC”) that was approved by our sole stockholder in November 2001, and the 2011 Nonemployee Director’s Deferred Compensation Plan (the “2011 NEDC”) that was approved by our stockholders in January 2012.

(2)	Includes 418,268 stock options, 37,736 RSUs and 119,190 deferred stock units.

(3)	Represents weighted-average exercise price of outstanding stock options noted in footnote 2.

(4)

Represents the number of shares available for future issuance under stockholder approved equity compensation plans, including, 1,426,469 shares available for grant without further stockholder approval under the Amended and Restated 2012 Plan, 1,025,772 shares available for issuance under the Employee Stock Purchase Plan, and 237,336 shares available for issuance without further stockholder approval under the 2011 NEDC. No further awards may be granted under the 2006 NEDC.

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*	Represents less than 1% of our common stock.

(1)	Subject to applicable community property laws and, except as otherwise indicated, each beneficial owner has sole voting and investment power with respect to all shares shown.

(2)	Includes shares that may be acquired within 60 days of November 11, 2019 upon the exercise of stock options, as follows: Mr. Nagel, 183,686 shares; Mr. Reece, 69,812 shares; Mr. Vernerey, 3,426 and all executive officers as a group, 270,813 shares.

(3)

Includes time-vesting restricted shares granted under our Amended and Restated 2012 Omnibus Stock Incentive Compensation Plan, portions of which vest in January 2020, 2021, and 2022; March 2020, 2021, 2022, and 2023; August 2020, 2021, 2022, and 2023; September 2020 and 2021; October 2020, 2021, and 2022; and November 2020 and 2021. The executives have sole voting power over these restricted shares. Restricted shares are included for the following individuals: Mr. Nagel, 18,482 shares; Mr. Reece, 8,382 shares; Mr. Vernerey, 10,844 shares; Messrs. Battle, Browning, Hance, McCullough, Pileggi and Robinson and Ms. North, 429 shares; Mr. Dillard, 507 shares; Ms. Winston, 461 shares; and all current directors and executive officers as a group, 49,521 shares.

(4)	Based on aggregate of 39,623,111 shares of Acuity Brands common stock issued and outstanding as of November 11, 2019 .

(5)	Includes the following: share units held by non-employee directors in the 2006 and 2011 Nonemployee Directors’ Deferred Compensation Plan as shown for each director; RSUs and PSUs (at target) as shown for Messrs. Nagel and Reece; and all current directors and officers as a group, 168,861 units. Share units are considered for purposes of compliance with the Company’s share ownership requirement.

(6)	This information is based on a Schedule 13G/A filed with the SEC by BlackRock, Inc., 55 East 52nd Street, New York, New York 10022, on January 24, 2019 containing information as of December 31, 2018.

(7)	This information is based on a Schedule 13G/A filed with the SEC by The Vanguard Group, 100 Vanguard Blvd., Malvern, Pennsylvania 19355, on February 11, 2019 containing information as of December 31, 2018.

(8)	This information is based on a Schedule 13G filed with the SEC by Generation Investment Management LLP, 20 Air Street, 7th Floor, London, United Kingdom W1B 5AN, on February 14, 2019 containing information as of December 31, 2018.

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•	a list of immediate family members;

•	a list of entities where the director or executive officer is an associate, director, or executive officer;

•	each entity where an immediate family member of a director or executive officer is an executive officer;

•	each entity in which the director or executive officer or an immediate family member is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest; and

•	each charitable or non-profit organization where the director or executive officer or an immediate family member is an associate, executive officer, director, or trustee.

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•	voting again by the Internet or by telephone prior to 11:59 p.m. Eastern Time, on January 7, 2020;

•	giving written notice to our Corporate Secretary that you wish to revoke your proxy and change your vote; or

•	voting in person at the annual meeting.

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(1)	According to our By-Laws, the “affirmative vote of the majority of votes cast” means that the number of shares cast “for” a director’s election exceeds the number of votes cast “against” that director.

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(1)	Incremental costs incurred due to manufacturing inefficiencies directly related to the closure of a facility.

(2)	Acquisition-related items include professional fees and may include certain acquired profit in inventory amounts.

(3)

Special charges in fiscal 2019 primarily related to move costs associated with the previously announced transfer of activities from a planned facility closure; fiscal 2018 charges primarily related to the planned consolidation of certain facilities and associated reduction in associate headcount; fiscal 2017 charges primarily consisted of severance and associate-related benefit costs for the elimination of certain operations and positions following a realignment of the Company's operating structure.

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(1)	Incremental costs incurred due to manufacturing inefficiencies directly related to the closure of a facility.

(2)	Acquisition-related items include professional fees and may include certain acquired profit in inventory amounts.

(3)

Special charges in fiscal 2019 primarily related to move costs associated with the previously announced transfer of activities from a planned facility closure; fiscal 2018 charges primarily related to the planned consolidation of certain facilities and associated reduction in associate headcount; fiscal 2017 charges primarily consisted of severance and associate-related benefit costs for the elimination of certain operations and positions following a realignment of the Company's operating structure.

(4)	A gain was realized on the sale of our former Spanish business in fiscal 2018 and a gain was realized on the sale of an unconsolidated affiliate in fiscal 2017.

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