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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.            )
 
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[   ]        Preliminary Proxy Statement
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[X]   Definitive Proxy Statement
[   ]   Definitive Additional Materials
[   ]   Soliciting Material Pursuant to §240.14a-12

  THE CLOROX COMPANY  
  (Name of Registrant as Specified In Its Charter)  
 
       
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 

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To Our Stockholders


Dear Stockholders:

I am pleased to invite you to attend our 2018 Annual Meeting of Stockholders.

Clorox delivered strong results in fiscal year 2018, and as we enter the sixth and penultimate year of our 2020 Strategy, we remain focused on the drivers of good growth that is profitable, sustainable and responsible. We continue to engage our people as business owners, with inclusion and diversity remaining a top priority. We are focused on delivering superior consumer value by investing in strong product innovation and driving sustainable product improvements. And as part of our ongoing commitment to corporate responsibility, we continue to reduce the environmental impact of our operations and improve the sustainability of our supply chain, which can also help fund growth in the process. Our focus on increasing the value proposition of our brands has yielded dividends, with 80 percent of consumers saying they perceive our brands to be superior or equal in value to the competition, continuing a four-year upward trend.

Our Board continues to provide excellent guidance and leadership, setting the right tone at the top. Whether it’s strategic oversight, risk management, or human capital management, the Board is constantly thinking about how the Company can meet the needs of our consumers through innovation and strong, purpose-driven brands in a way that is responsible to continue to generate long-term financial returns for you, our stockholders.

We look forward to sharing our progress and results with you at our Annual Meeting. Thank you for your continued support and investment in Clorox.

Sincerely,


Benno Dorer
Chair and Chief Executive Officer


Dear Stockholders:

As Lead Independent Director of Clorox, it is my honor to serve with our other independent directors as an independent voice representing you, the stockholders, to help ensure that the Company continues to be managed with integrity, strong corporate governance, and appropriate oversight of strategy and risks.

The diverse skills and experiences of our Board enable us to provide strong guidance to Clorox as the Company continues to pursue responsible growth. Once again in fiscal year 2018 I participated in outreach meetings with our stockholders to better understand the issues that are most important to our investors. As a Board, we continue to regularly discuss and consider investor feedback on a wide variety of environmental, social, governance and compensation issues, along with other topics as we strive to be responsible stewards of the Company.

I am also committed to inclusion and diversity. As Clorox seeks to develop its diverse workforce and to foster a culture that is inclusive and respectful of different perspectives, experiences, and backgrounds, I and other Board members encourage and engage with our employees directly. Succession planning and talent management remain crucial to the business and the Board regularly discusses talent development across all our businesses and functions. In addition to fostering a diverse workforce, Clorox is also committed to developing a diverse supply chain and creating a positive societal impact across its global operations.

On behalf of the independent directors, thank you for your confidence and your support.

Sincerely,


Pamela Thomas-Graham
Lead Independent Director


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Notice of Annual Meeting of Stockholders

To be held on November 14, 2018

The 2018 Annual Meeting of Stockholders of The Clorox Company will be held at 9:00 a.m. Pacific time on Wednesday, November 14, 2018, at the Company’s Oakland, CA, offices, 1221 Broadway, Oakland, CA 94612, for the following purposes:

1. To elect the twelve director nominees named in the proxy statement;
2. To hold an advisory vote to approve executive compensation;
3. To ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm; and
4. To approve an amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting provision.

Stockholders also will consider and act upon such other business as may properly come before the Annual Meeting or any adjournment or postponement.

Stockholders of record at the close of business on September 17, 2018, are entitled to vote at the Annual Meeting and any adjournment or postponement.

Proof of share ownership as of the record date will be required to attend the Annual Meeting. Please see the “Attending the Annual Meeting” section of the proxy statement for more information.

On or about October 1, 2018, we began mailing a Notice of Internet Availability of Proxy Materials to our stockholders informing them that our Proxy Statement, Integrated Annual Report–Executive Summary, and voting instructions are available on the Internet as of the same date.

Your vote is very important. Even if you plan to attend the Annual Meeting, we hope that you will read the proxy statement and vote your proxy by telephone, via the Internet, or by signing, dating, and returning the proxy card in the envelope provided.

By Order of the Board of Directors,

Angela C. Hilt
Vice President – Corporate Secretary
& Deputy General Counsel

The Clorox Company
1221 Broadway
Oakland, California 94612

October 1, 2018

Important Notice Regarding the Availability of Proxy Materials for The Clorox Company Stockholders Meeting to be Held on November 14, 2018: The Notice of Annual Meeting, Proxy Statement, and 2018 Integrated Annual Report–Executive Summary are available at www.edocumentview.com/CLX.

THE CLOROX COMPANY - 2018 Proxy Statement



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YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN

If you have questions about how to vote your shares, or need additional assistance, please contact Innisfree M&A Incorporated, who is assisting us in the solicitation of proxies:


501 Madison Avenue, 20th Floor
New York, New York 10022

Stockholders may call toll-free at (877) 750-9499

Banks and brokers may call collect at (212) 750-5833


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      Proxy Summary       1
  Our Commitment to Environmental, Social and Governance (ESG) Matters is a Business Imperative   4
BOARD OF DIRECTORS 7
Proposal 1: Election of Directors 7
Board of Directors’ Recommendation 7
Vote Required 7
Board Composition & Refreshment 9
Organization of the Board of Directors 18
Evaluation of Director Qualifications and Experience 18
Diversity 19
Stockholder Recommendations and Nominations of Director Candidates 19
Director Communications 19
Director Compensation 20
Stock Ownership Guidelines for Directors 21
Corporate Governance 22
Our Corporate Governance Philosophy 22
Our Commitment to Corporate Responsibility 22
Stockholder Engagement 22
  Our Corporate Governance Process   23
The Clorox Company Governance Guidelines 24
Director Independence 24
Board of Directors Leadership Structure 24
Board Committees 25
Board and Director Evaluation Process 27
Board of Directors Meeting Attendance 27
Executive Sessions 28
Conflict of Interest and Related Person Transaction Policies and Procedures 28
Code of Conduct 29
Board of Directors’ Role in Risk Management Oversight 29
Stock Ownership Information 30
Beneficial Ownership of Voting Securities 30
Section 16(a) Beneficial Ownership Reporting Compliance 31
EXECUTIVE COMPENSATION 32
Proposal 2: Advisory Vote to Approve Executive Compensation 32
Board of Directors’ Recommendation 32
Vote Required 33


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      Compensation Discussion and Analysis       34
Executive Summary 34
How We Make Compensation Decisions 36
Fiscal Year 2018 Compensation of Our Named Executive Officers 38
What We Pay: Components of Our Compensation Program 39
The Management Development and Compensation Committee Report 48
Compensation Committee Interlocks and Insider Participation 48
Compensation Discussion and Analysis Tables 49
Fiscal Year 2018 CEO Pay Ratio 62
Equity Compensation Plan Information 63
AUDIT COMMITTEE MATTERS 64
Proposal 3: Ratification of Independent Registered Public Accounting Firm 64
Board of Directors’ Recommendation 64
Vote Required 64
Audit Committee Report 65
Fees of the Independent Registered Public Accounting Firm 66
ADDITIONAL ITEMS TO BE VOTED ON 67
Proposal 4:  Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provision 67
Board of Directors’ Recommendation 67
Vote Required 68
INFORMATION ABOUT THE ANNUAL MEETING 69
Delivery of Proxy Materials 69
Voting Information 69
Form 10-K, Financial Statements, and Integrated Annual Report—Executive Summary 71
Solicitation of Proxies 71
Stockholder Proposals and Director Nominations for the 2019 Annual Meeting 72
Eliminating Duplicative Proxy Materials 72
Attending the Annual Meeting 74
Appendix A Proposed Amendment to the Company’s Restated Certificate of Incorporation A-1
Appendix B Management’s Discussion and Analysis of Financial Condition and Results of Operations, Audited Financial Statements, and Other Selected Financial Information B-1


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  Proxy Summary

This summary highlights information contained elsewhere in this proxy statement and does not contain all of the information that you should consider. For more complete information, please review the Company’s proxy statement before voting.


Proposals to be Voted on and Board Voting Recommendations

            More
information
      Board’s voting
recommendation
PROPOSAL 1 Election of Directors Page 7 FOR EACH NOMINEE
PROPOSAL 2 Advisory Vote on Executive Compensation Page 32 FOR
PROPOSAL 3 Ratification of Independent Registered Public Accounting Firm Page 64 FOR
PROPOSAL 4 Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Provision Page 67 FOR


Our Director Nominees

The following table provides summary information about each director nominee as of the date of the Annual Meeting.

Name       Age       Director
Since
      Principal Occupation       Independent       Committee
Memberships
Amy Banse 59 2016 Managing Director and Head of Funds, Comcast Ventures
AC
Richard H. Carmona 68 2007 Chief of Health Innovations, Canyon Ranch
NGCRC (Chair)
MDCC
Benno Dorer 54 2014 Chair and Chief Executive Officer, Clorox
Spencer C. Fleischer 65 2015 Managing Partner, FFL Partners, L.P.
MDCC (Chair)
Esther Lee 59 2013 Executive Vice President – Global Chief Marketing Officer, MetLife Inc.
NGCRC
A. D. David Mackay 63 2016 Former President and Chief Executive Officer, Kellogg Company
AC
MDCC
Robert W. Matschullat 70 1999 Former Vice Chairman and Chief Financial Officer, The Seagram Company Ltd.
NGCRC
Matthew J. Shattock 56 2018 Chairman and Chief Executive Officer, Beam Suntory Inc.
AC
Pamela Thomas-Graham
Lead Independent Director
55 2005 Lead Independent Director
NGCRC
Carolyn M. Ticknor 71 2005 Former President, Imaging and Printing Systems group, Hewlett-Packard Company
AC (Chair)
NGCRC
Russell J. Weiner 50 2017 Chief Operating Officer and President of the Americas, Domino’s
AC
MDCC
Christopher J. Williams 60 2015 Chairman and Chief Executive Officer, The Williams Capital Group, L.P. and Williams Capital Management, LLC
AC

AC         Audit Committee
NGCRC Nominating, Governance and Corporate Responsibility Committee
MDCC Management Development and Compensation Committee

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Business Performance and Executive Compensation Highlights

Fiscal Year 2018 Business Performance

Successes for the Company in fiscal year 2018 included:

Achieving $112 million in cost savings;

Achieving increased volume of 3%, reflecting gains in three of the Company’s reportable segments while the International reportable segment remained flat to the prior year;

Increasing earnings from continuing operations to $823 million or $6.26 diluted EPS, versus $703 million or $5.35 diluted EPS from continuing operations in the prior year;

Leveraging demand-building investments, including product innovation, to support its categories;

Launching new products in numerous categories and countries, including Clorox® performance bleach with Cloromax®, Clorox® Scentiva™ bathroom cleaners, Fresh Step® Clean Paws™ low tracking litter, Glad® ForceFlex® Plus™ advanced protection trash bags, Burt’s Bees® natural cosmetics, RenewLife® probiotic and prebiotic supplements, Hidden Valley® Simply Dinners meal preparation kits, Clorox® Triple Acción bleach and Clorox® Clothes Powder;

Evolving our portfolio with the acquisition of Nutranext in April 2018, adding leading brands of the natural channels within the Health and Wellness space, such as Rainbow Light®, Natural Vitality®, and Neocell® brands;

Continuing to receive external recognition for our leadership in corporate responsibility, diversity and inclusion and sustainability efforts; and

Returning excess capital to stockholders through stock repurchases, paying $450 million in dividends to stockholders, and increasing the quarterly dividend by 14% in February 2018.

Fiscal Year 2018 Pay For Performance

Our fiscal year 2018 results and compensation decisions continue to illustrate application of our pay-for-performance philosophy with pay being driven by performance in the following ways:

Fiscal Year 2018 Annual Incentive Payout. The annual incentive payout for each of our named executive officers was below target. Although the Company had solid operational results, and grew net sales and net earnings versus the prior fiscal year, net sales and gross margin fell short of the targets established at the beginning of the 2018 fiscal year. The Company’s net earnings exceeded both the prior year and the target for the fiscal year.

Fiscal Year 2018 Long-Term Incentive Payout. Our three-year performance share results were well above the financial target for cumulative economic profit (EP) and yielded a 150% payout, which was the maximum payout for that grant. These awards were granted in September 2015, and payment was determined in August 2018, based on performance over the period commencing July 1, 2015, and ending June 30, 2018. Fiscal years 2016 and 2017 had especially strong results.



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Proxy Summary

What We Pay: Components of Our Compensation Program


A substantial portion of our targeted direct compensation for our executives is at-risk variable compensation, with 86% of compensation for our CEO and 73% of compensation for all of our other named executive officers being at-risk. Base

salary is the only fixed direct compensation component, as outlined in the following charts, which reflect target compensation for fiscal year 2018.


Compensation Mix - CEO(1) Compensation Mix - Average of All Other NEOs(1)
Fixed compensation = 14% Fixed compensation = 27%
Variable compensation = 86% Variable compensation = 73%

(1)

Compensation mix represents the actual base salary, target annual incentive award, and actual long-term incentives granted in fiscal year 2018. Refer to the Summary Compensation Table on page 49 of this proxy statement for further details on actual compensation.

Best Pay Practices Highlights

What We Have

An executive compensation program designed to further the Company’s strategy and mitigate inappropriate risk;

Different performance horizons for the goals within our annual and long-term incentive plans;

Use of economic profit as a rigorous long-term incentive metric and net sales, net earnings and gross margin for our annual incentive metrics; 

Stringent stock ownership and retention guidelines for all of our executives;

A prohibition on speculative transactions involving the Company’s stock, including hedging and pledging;

Stock options that vest over a four-year period and have an exercise price equal to fair market value of our Common Stock on the date of grant;

Clawback provisions in both our annual and long-term incentive plans;

Double-trigger change in control provisions for all equity awards;

Reasonable cash severance provisions to support talent retention and attraction objectives, promote orderly succession planning, and avoid individual negotiation with exiting executives, thus eliminating the need for individual employment agreements;

Modest perquisites supported by sound business rationale;

Annual review of our executive compensation program by the MDCC, which yielded changes to the annual and long-term incentive programs effective in fiscal year 2018; and 

Use of an independent compensation consultant who does not provide any additional consulting services to the Company.

What We Don’t Have

Ø

Employment contracts for any executives;

Ø

Stock option re-pricing without stockholder approval;

Ø

Payment of dividends or dividend equivalents on unvested or unearned performance shares or restricted stock; and

Ø Tax gross-ups for any executive officers.

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  Our Commitment to Environmental, Social and Governance (ESG) Matters is a Business Imperative




HUMAN CAPITAL
PROMOTING DIVERSITY, OPPORTUNITY AND RESPECTFUL TREATMENT FOR ALL PEOPLE WHO TOUCH OUR BUSINESS

Clorox is committed to having a workforce that will enable the long-term success of our brands in an evolving consumer landscape by attracting and retaining key talent. Clorox embraces differing experiences and perspectives in our employees and business partners, which reflects our diverse consumer base. Clorox is also deeply committed to having business partners that embody our values of integrity and continually doing the right thing.
 
Our People:

33% of our Board and 43% of Clorox’s managers are women. This year, three of Clorox’s Named Executive Officers are women.

33% of our Board and 28% of our U.S. managers are ethnically diverse.

We have maintained a 100% score on the Human Rights Campaign’s Corporate Equality Index since 2006—consistent recognition as one of the best places to work for LGBTQ equality.
The ethnic, sexual identity and gender diversity of our senior leaders and Board helps set the tone of inclusiveness and the prospect that all are enabled to succeed at Clorox.
More than 2,000 of our employees are members and allies of Clorox employee resource groups (ERGs), including African-American, Asian, Latino, multicultural, LGBTQ and women’s groups. Members of our Board and senior management participate in these ERGs and in other settings with employees to discuss shared experiences, which allows senior decision makers to get a direct perspective on what’s important to our people, and how we as a company are doing to enable success for all our employees.
We have maintained a strong engagement rate of 88% in our 2018 annual employee engagement survey, which is 2 points higher than global high performing companies and 7 points higher than other consumer goods companies.
Our recordable incident rate has consistently been lower than 1.0, which means that for every 100 employees we averaged less than one reportable incident per year. This is a safety benchmark we consider to be world-class, well below the current industry average of 3.5.
Our newly-launched Global Mentoring Program established nearly 500 mentoring relationships, empowering our employees to develop leadership skills, build relationships and identify growth opportunities.
Clorox has a strong culture of promoting from within whenever possible to cultivate talent, drive employee engagement and promote bench strength and business continuity.
Among numerous other recognitions, we ranked 5th on Diversity MBA magazine’s 50 Out Front list of the Best Places for Women and Diverse Managers to Work in 2018, and in 2017, our CEO, Benno Dorer was voted #1 CEO of all U.S. companies in Glassdoor’s survey of employees.

Our Business Partners:

Supply chain partners are expected to adhere to our Business Partner Code of Conduct, which sets out our expectations regarding human rights and labor, health and safety, the environment, anti-corruption and ethics.
Our responsible sourcing and sustainability program helps us assess our own upstream supply chain against social and environmental impacts. We developed a Supplier Environmental Footprint Scorecard to make our upstream supply chain more sustainable. Launched in 2014, the scorecard targets our top 100 suppliers that collectively represent approximately two-thirds of our spending for goods and services.

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FOCUSING ON OUR PLANET

SHRINKING OUR ENVIRONMENTAL FOOTPRINT ENABLES GOOD GROWTH

Not only is working to minimize our impact on the planet the right thing to do, it’s good for long-term, sustainable growth.
 
Sustainable Innovation:

We continually invest in our brands to drive consumer value and to reduce costs, which can also help reduce our footprint and that of our consumers. For instance, through product innovation, we’ve been able to remove resin from our Glad® trash bags while increasing strength through ForceFlex® technology; this has not only reduced costs, it has eliminated approximately 7.7 million pounds of plastic from entering waste streams annually. Another example is our Brita® water filters and filtration systems, which provide convenient access to great tasting water and also help consumers minimize single-use plastic bottle usage. Our Brita® Longlast™ filter innovation delivers up to 120 gallons of filtered water, the equivalent of 900 disposable water bottles, helping to keep plastic waste out of landfills.
Today, 99% of Clorox paper-based packaging is made from recycled or certified sustainable fiber, and more than 90% of the packages that hold Clorox products are recyclable. We’ve added on-pack recycling instructions on more than 80% of our U.S. retail packaging.

Setting Goals and Reporting on our Progress:

We publish an integrated annual report that provides stakeholders with concise and comprehensive information about our financial and ESG performance.
We’ve already exceeded our 2020 goal to reduce solid-waste-to-landfill, water use and greenhouse gas emissions and are on target to reduce energy use 20% by 2020.
In partnership with The Forest Trust, Clorox is working toward 100% palm oil compliance by priority suppliers (representing more than 95% of domestic volume Clorox purchases) with its comprehensive responsible palm oil commitment that includes and goes beyond the principles of the Roundtable on Sustainable Palm Oil. Although Clorox’s total palm oil ingredient volume represents less than 0.01% of palm oil produced globally each year, being a good steward of the world’s forest resources is an important priority for Clorox.
Among numerous other recognitions, we were ranked 9th on Barron’s 100 Most Sustainable Companies list in 2018, and we were ranked No. 20 on Corporate Responsibility Magazine’s list of the 100 Best Corporate Citizens in 2018. Our Burt’s Bees® brand ranks No. 1 among U.S. brands on the Union for Ethical Biotrade’s 2018 Biodiversity Barometer in recognition of its commitment to people and biodiversity. MSCI rates Clorox as AA.

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COMMUNITY INVOLVEMENT
 
SAFEGUARDING FAMILIES THROUGH INITIATIVES THAT PROMOTE HEALTH, EDUCATION AND SAFETY AND MAKING A POSITIVE IMPACT IN COMMUNITIES WE TOUCH

In Clorox’s 105-plus-year history, we have been committed to the communities we call home and those that are impacted by our products. From investing in early childhood education near our corporate headquarters in Oakland, California to helping provide access to clean water for communities in South America and Africa, Clorox is dedicated to helping communities thrive.
Between fiscal year 2013 and fiscal year 2018, Clorox and its foundations awarded more than $25 million in grants to support K-12 education, cultural arts, youth development, and urban farming.
Between fiscal year 2013 and fiscal year 2018, Clorox donated $44.4 million in products and invested more than $6 million in cause-marketing campaigns.
Burt’s Bees has begun an initiative to strengthen 10 global supplier communities in areas such as access to clean water, women’s and children’s empowerment, health and safety, and biodiversity by 2020.
Between 2012 and 2017, our employees volunteered 644,553 hours of their time to improve their local communities, efforts that are valued at nearly $16 million.
In response to disasters such as hurricanes Harvey, Irma and Maria and the California wildfires, we donated more than 70,000 cases of Clorox® liquid bleach, Glad® trash bags, Clorox® disinfecting wipes and Burt’s Bees® lip balms, working with our partner the American Red Cross. The Clorox Company Foundation donated an additional $350,000 to the American Red Cross, our Professional Products Division gave $20,000 and employees donated $90,000 through our workplace giving program, which included matching funds from the foundation.
The Clorox Safe Water Project, managed through a partnership with local nongovernmental organizations, allows more than 25,000 Peruvians to make their water safe by using just a few drops of bleach from local disinfecting stations. In 2018, Clorox launched a similar program in Kenya that is expected to provide safer drinking water to approximately one million people.





OUR PRODUCTS

MAKING, MARKETING AND SELLING RESPONSIBLE PRODUCTS RESPONSIBLY
We were the first major consumer packaged goods company to introduce a voluntary, online ingredient disclosure program for cleaning, laundry and disinfecting products sold in the U.S. and Canada. We recently expanded on this transparency by committing to voluntarily listing all intentionally added ingredients on the labels of cleaning, disinfecting and laundry products that are sold in U.S. retail stores.
We have nearly attained our current goal of making sustainability improvements to 50% of our product portfolio by 2020 and expect to meet our goal next year, ahead of schedule.
We continue to lead the industry with 50% of our marketing spending focused on digital advertising.
Sales in the e-commerce channel grew more than 45 percent in fiscal year 2018 through partnerships with fast-growing retailers and strategic investments in high-value digital media. E-commerce now represents 6 percent of company sales, and is growing. We are partnering with our e-commerce customers to develop products and packaging that is primed for the evolving e-commerce environment.
Among other recognitions, we were named to Forbes magazine’s The World’s Most Innovative Companies list in 2018.

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  Board of Directors

  Proposal 1:
Election of Directors

At the Annual Meeting, twelve people will be elected as members of the Board of Directors to serve until the 2019 Annual Meeting of Stockholders, and until their respective successors are duly elected and qualified. The Board, upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee, has nominated the twelve people listed below for election at the Annual Meeting.

Each of the nominees for director has agreed to be named in this proxy statement and to serve as a director if elected. Each nominee is currently serving as a director of the Company. Matthew J. Shattock was appointed to the Board during calendar year 2018 and is being nominated for election by the stockholders for the first time. Mr. Shattock was recommended to the Nominating, Governance and Corporate Responsibility Committee by a non-management member of the Board following an internal director search process to identify potential director candidates. Jeffrey Noddle, who has served on the Board since 2013, will be retiring from the Board on the date of the Annual Meeting and is therefore not standing for re-election.



Board of Directors’ Recommendation

The Board unanimously recommends a vote FOR each of the Board’s twelve nominees for director listed below. The Board believes that each of the nominees listed below is highly qualified and has the background, skills, experience, and attributes that qualify each of the nominees to serve as a director of the Company (see each nominee’s biographical information and the Evaluation of Director Qualifications and Experience section below for more information). The recommendation of the Board is based on its carefully considered judgment that the background, skills, experience, and attributes of the nominees make them the best candidates to serve on our Board.

Certain information with respect to each nominee appears on the following pages, including age, period served as a director, position (if any) with the Company, business experience, directorships of other publicly owned corporations, including other such directorships held during the past five years (if any), and other relevant experience and qualifications, including service on certain nonprofit or non-public company boards, that contributed to the conclusion that each director is qualified to serve as a director of the Company.



Vote Required

Majority Voting for Directors. The Company’s Bylaws require each director to be elected by a majority of the votes cast with respect to such director in uncontested elections (the number of shares voted FOR a director must exceed the number of shares voted AGAINST that director). Under the Company’s Bylaws, any director who fails to be elected by a majority of the votes cast in an uncontested election must tender his or her resignation to the Board. The Nominating, Governance and Corporate Responsibility Committee would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board would act on the Nominating, Governance and Corporate Responsibility Committee’s

recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. A director who tenders his or her resignation would not participate in the Board’s decision.

The people designated in the proxy and voting instruction card intend to vote your shares represented by proxy FOR the election of each of these nominees, unless you include instructions to the contrary. In the event any director nominee is unable to serve or for good cause will not serve, the persons named as proxies may vote for a substitute nominee recommended by the Board or the Board may reduce the size of the Board.


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Message from Rich Carmona, Chair of the Nominating, Governance and Corporate Responsibility Committee


Dear Stockholders:

Our Nominating, Governance and Corporate Responsibility Committee, along with the full Board, is focused on having the right people in the board room for the Company and its stockholders. We regularly assess our Board composition for strong, independent leadership, skills and expertise tailored to our Company’s business strategy and needs, a mix of tenures so we have fresh perspectives as well as deep knowledge of the Company, and diverse voices and backgrounds to inform our decisions. You’ll see this independence and balanced mix in the biographies of our director nominees below. This year, in addition to individual biographies, we have also provided a composite overview of the skills and experience of the Board as we believe that the diverse composition of our Board not only aligns with the Company’s values and unique culture but also provides the Company with a strong strategic advantage.

We believe that regularly reviewing and refreshing the skill sets and perspectives on the Board is important. When we think about refreshing the Board, we consider the changing environment and industry in which the Company operates, both now and several years down the road. We use our individual, committee, and Board evaluations to identify specific needs and desired attributes for director candidates. In August 2018, Matthew J. Shattock joined the Board, bringing with him years of global experience across many categories in the consumer packaged goods industry. And in accordance with the retirement provision in our Company’s Governance Guidelines, Jeffrey Noddle will retire from the Board on the date of the Annual Meeting. We thank Mr. Noddle for his contributions to the Board during his nearly six years of service.

As we continuously review and refine our processes and evaluate the Board’s leadership and structure, we remain committed and accountable to you, our stockholders.

Sincerely,


Rich Carmona
Chair, Nominating, Governance and Corporate Responsibility Committee

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Board of Directors


Board Composition & Refreshment

All Board members are highly engaged and actively involved in overseeing Clorox’s strategy. We have thoughtful Board refreshment and we engage in continuous Board succession planning. As a result of our approach, our director nominees represent diverse perspectives and experiences and bring core strategic, operating, financial and governance skills as well as consumer packaged goods expertise to our Board.

Diverse Background & Tenure*

4 women 4 ethnically diverse 11 independent 6.3
years
 average tenure

Director Skills & Experiences

Emerging technology/innovation experience

Operational experience

8/12

10/12

Significant M&A/financial expertise

Experience in product development or supply chain management

9/12

7/12

International experience

R&D, scientific experience or regulatory experience

10/12

6/12

Brand-building/marketing experience

Social responsibility, sustainability, public issues expertise

9/12

8/12

Retail experience

Cybersecurity/information technology expertise

8/12

6/12

Consumer packaged goods industry expertise

8/12

Corporate Governance Highlights

11 of our 12 Director Nominees are Independent

Majority Voting and Director Resignation Policy in Uncontested Director Elections

Strong Lead Independent Director with Ability to Call Special Meetings of the Board 

Diverse Board with Effective Mix of Skills, Experiences, and Perspectives 

Proactive Stockholder Engagement 

Proxy Access Right for Stockholders Adopted in 2015 

Robust Code of Conduct

Annual Election of All Directors

Robust Annual Board, Committee, Peer and Individual Director Evaluation Process 

Board Committees are 100% Independent 

Active Board Refreshment and Average Board Tenure of 6.3 years

Rigorous Stock Ownership Guidelines for Executives and Directors

Special Meeting Right for Stockholders

Regular Executive Sessions of Independent Directors


*   As of the date of the Annual Meeting.

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Director Since       Name, Principal Occupation, and Other Information

2016

Amy Banse

Ms. Banse has served as Managing Director and Head of Funds of Comcast Ventures, the venture capital arm of Comcast Corporation (a global media and technology company) since August 2011. From 2005 to 2011, Ms. Banse was Senior Vice President, Comcast Corporation and President, Comcast Interactive Media, a division of Comcast responsible for developing online strategy and operating the company’s digital properties, including Fandango, Xfinity.com and Xfinitytv.com. Since joining Comcast in 1991, Ms. Banse has held various positions at the company, including content development, programming investments and overseeing the development and acquisition of Comcast’s cable network portfolio. Earlier in her career, Ms. Banse was an associate at Drinker, Biddle & Reath LLP.

Other Public Company Boards:
Ms. Banse serves as a director of Adobe Systems, Inc. (May 2012 to present).

Nonprofit/Other Boards:
Ms. Banse serves on the boards of a number of Comcast Ventures’ portfolio companies, including Quantifind and TuneIn, and on the board of Tipping Point Community.

Director Qualifications:
Ms. Banse’s expertise in media and technology enables her to contribute valuable insights into digital media and online business. Her experience in starting, investing in and building businesses provides her with deep strategic and financial understanding, and her previous executive leadership roles contribute to her management and operational knowledge. Age: 59.

        

2007

Richard H. Carmona, M.D., M.P.H., F.A.C.S.

Dr. Carmona has been Chief of Health Innovations of Canyon Ranch (a life-enhancement company) since August 2017. He previously served as Vice Chairman of Canyon Ranch, Chief Executive Officer of the Canyon Ranch Health Division, and President of the nonprofit Canyon Ranch Institute from October 2006 to August 2017. He is the first Distinguished Professor of Public Health at the Mel and Enid Zuckerman College of Public Health at the University of Arizona. Prior to joining Canyon Ranch, Dr. Carmona served as the 17th Surgeon General of the United States from 2002 through 2006, achieving the rank of Vice Admiral. Previously, he was Chairman of the State of Arizona Southern Regional Emergency Medical System, a professor of surgery, public health, and family and community medicine at the University of Arizona, and surgeon and deputy sheriff of the Pima County, Arizona, Sheriff’s Department. Dr. Carmona served in the United States Army and the Army’s Special Forces.

Other Public Company Boards:
Dr. Carmona serves as a director of Axon Enterprise, Inc. (formerly Taser International, March 2007 to present) and Herbalife Ltd. (October 2013 to present).

Nonprofit/Other Boards:
Dr. Carmona serves on the boards of NuvOX Pharma LLC, DermSpectra LLC, TherimuneX Pharmaceuticals, Inc., Ross University and Health Literacy Media.

Director Qualifications:
Dr. Carmona’s experience as the Surgeon General of the United States and extensive background in public health, including as CEO of a hospital and healthcare system, provide him with a valuable perspective on health and wellness matters, as well as insight into regulatory organizations and institutions, which are important to the Company’s business strategy. In addition, his executive leadership experience, including with a global lifestyle enhancement company, provides him with international experience and enables him to make valuable contributions to the Company’s international growth strategies. Dr. Carmona’s experience in the United States Army and in academia also strengthens the Board’s collective qualifications, skills, and experience. Age: 68.



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Board of Directors

Director Since       Name, Principal Occupation, and Other Information

2014

Benno Dorer

Mr. Dorer has served as Chief Executive Officer (CEO) of the Company since November 2014 and was appointed Chair of the Board in August 2016. Prior to becoming CEO, Mr. Dorer was Executive Vice President and Chief Operating Officer – Cleaning, International and Corporate Strategy since January 2013, with responsibility for the Laundry, Home Care, and International businesses as well as Corporate Strategy and Growth. He previously served as Senior Vice President – Cleaning Division and Canada from 2011 through 2012, Senior Vice President – Cleaning Division from 2009 to 2011, and Vice President & General Manager – Cleaning Division from 2007 to 2009. Mr. Dorer joined Clorox in 2005 as Vice President & General Manager – Glad® Products. Prior to that role, he worked for The Procter & Gamble Company for 14 years, leading the marketing organization for the Glad® Products joint venture since its inception and holding marketing positions across a range of categories and countries.

Other Public Company Boards:
Mr. Dorer serves as a director of VF Corporation.

Nonprofit/Other Boards:
Mr. Dorer serves as the Vice Chair of the executive committee of the board of GMA (Grocery Manufacturers Association). He previously served on the executive committee of the board of directors of the American Cleaning Institute, the board of directors of the Chabot Space & Science Center Foundation in Oakland, California, and the executive committee of the board of the Bay Area Council.

Director Qualifications:
Mr. Dorer’s leadership experience and his in-depth knowledge of the consumer packaged goods industry, the Company’s businesses and his leadership in developing the Company’s 2020 Strategy enable him to provide valuable contributions with respect to strategy, growth and long-range plans. Additionally, his extensive international background provides him with a broad perspective on international customer and consumer dynamics and business strategy. Age: 54.

        

2015

Spencer C. Fleischer

Mr. Fleischer is Managing Partner of FFL Partners, L.P. (FFL) (a private equity firm), where he has served in various roles since co-founding FFL in 1997. Before co-founding FFL, Mr. Fleischer spent 19 years with Morgan Stanley & Company as an investment banker and manager. At Morgan Stanley & Company, he was a member of the worldwide Investment Banking Operating Committee and also held roles including head of investment banking in Asia and head of corporate finance for Europe.

Other Public Company Boards:
Mr. Fleischer was previously a director of Banner Corporation (October 2015 to December 2016).

Nonprofit/Other Boards:
Mr. Fleischer is a director of Levi Strauss & Co., Strategic Investment Management, LLC and Eyemart Express Holdings LLC. He previously served on the board of WiltonRe Holdings Limited.

Director Qualifications:
Mr. Fleischer brings to the Board more than 35 years of financial and operational expertise as well as deep international experience. His significant experience in both private equity and investment banking enables him to contribute valuable insights into strategic planning, mergers and acquisitions and operating expertise to the Company. His leadership role at FFL also allows him to provide significant experience in compensation matters. Age: 65.


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Director Since       Name, Principal Occupation, and Other Information

2013

Esther Lee

Ms. Lee has served as Executive Vice President – Global Chief Marketing Officer at MetLife Inc. (an insurance, annuities, and employee benefits company) since January 2015. Previously, Ms. Lee served as Senior Vice President – Brand Marketing, Advertising and Sponsorships for AT&T from 2009 to December 2014. From 2007 to 2008 she served as CEO of North America and President of Global Brands for Euro RSCG Worldwide. Prior to that, she served for five years as Global Chief Creative Officer for The Coca-Cola Company. Earlier in her career, Ms. Lee worked in several leadership positions in the advertising industry, including being co-founder of DiNoto Lee. In this capacity, Ms. Lee worked with several consumer packaged goods companies, including The Procter & Gamble Company, Unilever and Nestle.

Nonprofit/Other Boards:
Ms. Lee serves on the board of the MetLife Foundation.

Director Qualifications:
Ms. Lee brings to the Company significant executive and marketing expertise, focused on developing customer strategies to drive growth, building high-performing teams, and driving customer-centric change. Her current and prior executive leadership roles in global brand marketing, advertising, media and sponsorship have afforded her expertise in consumer engagement, creativity and digital transformation, as well as the operating models in these areas, that enable her to provide valuable contributions to the Company’s business strategies. Age: 59

        

2016

A. D. David Mackay

Mr. Mackay served as President and Chief Executive Officer of Kellogg Company (a food manufacturing company) from 2006 until his retirement in 2011. From 2003 to 2006, he served as the company’s President and Chief Operating Officer. Prior to that, Mr. Mackay held a number of other leadership positions at Kellogg, including roles at Kellogg Australia, United Kingdom and Republic of Ireland. He also previously served as Managing Director of Sara Lee Corporation in Australia and held various positions at Mars, Inc.

Other Public Company Boards:
Mr. Mackay is a director of Fortune Brands Home and Security Inc. (September 2011 to present). Mr. Mackay previously served as a director of Keurig Green Mountain, Inc. (December 2012 to March 2016), Beam, Inc. (October 2011 to April 2014), Fortune Brands, Inc. (January 2006 to October 2011) and Kellogg Company (February 2005 to January 2011).

Nonprofit/Other Boards:
Mr. Mackay serves on the board of FSHD Global Research Foundation Ltd. He previously served on the boards of McGrath Ltd. and Woolworths Ltd., which are Australia-based companies.

Director Qualifications:
Mr. Mackay brings significant strategic leadership and operational experience to the Board. His extensive consumer products background and his international experience allow him to contribute valuable insights regarding the Company’s industry, operations and international businesses. In addition, his previous leadership roles provide him with expertise in executive compensation and succession planning matters. Age: 63.


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Board of Directors

Director Since       Name, Principal Occupation, and Other Information

1999

Robert W. Matschullat

Mr. Matschullat served as independent lead director of the Board from November 2012 until July 2015. He was interim Chairman and interim Chief Executive Officer of the Company from March 2006 through October 2006, served as presiding director of the Board from January 2005 through March 2006 and served as Chairman of the Board from January 2004 through January 2005. Previously, he was the Vice Chairman and Chief Financial Officer of The Seagram Company Ltd. (a global company with entertainment and beverage operations). Prior to joining The Seagram Company Ltd., Mr. Matschullat served as head of worldwide investment banking for Morgan Stanley & Co. Incorporated, and was on the Morgan Stanley Group board of directors.

Other Public Company Boards:
Mr. Matschullat is Chairman of the board of Visa, Inc. (April 2013 to present), having served as a director of Visa, Inc., since October 2007. He previously served on the board of The Walt Disney Company, Inc. (December 2002 to March 2018).

Director Qualifications:
Mr. Matschullat brings to the Company a wealth of public company leadership experience at the board and executive levels. Mr. Matschullat’s executive leadership experience includes service as the chief financial officer of a major global company and as the division head of a major financial institution, providing him with expertise in business and financial matters as well as broad international experience. In addition, Mr. Matschullat has an extensive understanding of the Company’s business, having served more than 15 years on the Board, including in the leadership roles of independent lead director, non-executive Chairman and presiding director of the Board. Mr. Matschullat also served as the Company’s interim Chief Executive Officer. These experiences have provided him with a long-term perspective, as well as valuable management, governance and leadership experience. Age: 70.


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Director Since       Name, Principal Occupation, and Other Information

2018

Matthew J. Shattock

Mr. Shattock is Chairman & CEO of Beam Suntory Inc., the world’s third largest premium spirits company. He joined Beam in March 2009 as president & CEO and led the company’s successful growth strategy transformation and subsequent integration of the Beam and Suntory spirits businesses following Beam’s acquisition by Suntory in 2014. Prior to joining Beam, he spent six years at Cadbury plc (an international confectionary manufacturer), where he led their businesses first in The Americas and then in the Europe, Middle East & Africa region. Prior to Cadbury, Mr. Shattock spent 16 years at Unilever (an international manufacturer of food, home care and personal care products) in various leadership roles, culminating in his role as chief operating officer of Unilever Best Foods North America.

Other Public Company Boards:
Mr. Shattock serves as a director of VF Corporation (February 2013 to present). He previously served on the board of Beam Inc. until it was delisted in connection with the Suntory acquisition (October 2011 to April 2014).

Nonprofit/Other Boards:
Mr. Shattock serves as a director of Suntory Holdings Limited and Beam Suntory Inc. (April 2014 to present).

Director Qualifications:
Mr. Shattock brings significant experience in the consumer packaged goods industry to the Board. His current and prior leadership roles, including overseeing the successful growth, integration and strategy transformation of a global spirits company, enable him to provide valuable insights to the Company’s business. Mr. Shattock has a strong track record of driving growth through innovation, brand communication and operational excellence. Age: 56.


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Board of Directors

Director Since       Name, Principal Occupation, and Other Information

2005

Pamela Thomas-Graham

Ms. Thomas-Graham is the Lead Independent Director for the Company. She is the Founder and Chief Executive Officer of Dandelion Chandelier LLC, a private digital media enterprise focused on the world of luxury. Prior to founding Dandelion Chandelier in August 2016, she served as Chair, New Markets, of Credit Suisse Group AG (a global financial services company) from October 2015 to June 2016. She served as Chief Marketing and Talent Officer, Head of Private Banking & Wealth Management New Markets, and member of the Executive Board, of Credit Suisse from January 2010 to October 2015. From 2008 to 2009, she served as a managing director in the private equity group at Angelo, Gordon & Co. From 2005 to 2007, Ms. Thomas-Graham held the position of Group President at Liz Claiborne, Inc. She served as Chairman, President and Chief Executive Officer of CNBC from 2001 to 2005. Previously, Ms. Thomas-Graham served as an Executive Vice President of NBC and as President and Chief Executive Officer of CNBC.com. Prior to joining NBC, Ms. Thomas-Graham was a partner at McKinsey & Company.

Other Public Company Boards:
Ms. Thomas-Graham serves on the boards of Bank of N.T. Butterfield & Son (December 2017 to present) and Norwegian Cruise Line Holdings Ltd. (April 2018 to present). She previously served as a director of Idenix Pharmaceuticals, Inc. (June 2005 to January 2010).

Nonprofit/Other Boards:
Ms. Thomas-Graham serves on the boards of Peloton Interactive, Inc. and the Parsons School of Design. She previously served on the Visiting Committee of Harvard Business School and on the boards of the Harvard Alumni Association and the New York Philharmonic.

Director Qualifications:
Ms. Thomas-Graham brings to the Company significant executive expertise, including as a current and former CEO. Her current and prior executive leadership roles enable her to provide valuable contributions with respect to management, operations, growth and long-range plans. In addition, Ms. Thomas-Graham brings to the Company significant experience in the area of branding. Her prior experience as a management consultant also enables her to provide valuable contributions to the Company’s business strategies and mergers and acquisitions activities. Additionally, her leadership experience in banking and private equity provides her with financial and accounting expertise, enabling her to contribute to the oversight of the Company. Age: 55.


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Director Since       Name, Principal Occupation, and Other Information

2005

Carolyn M. Ticknor

Ms. Ticknor was President of the Imaging and Printing Systems group of the Hewlett-Packard Company (a global IT company) from 1999 until her retirement in 2001. Previously, she served as President and General Manager of the Hewlett-Packard Company’s LaserJet Solutions.

Other Public Company Boards:
Ms. Ticknor previously served as a director of OfficeMax Incorporated (formerly Boise Cascade Corporation) (February 2000 to April 2006).

Nonprofit/Other Boards:
Ms. Ticknor is currently a director of The Center for the Advancement of Science in Space (CASIS). She previously served as a director of Lucile Packard Children’s Hospital, a private nonprofit organization at the Stanford University Medical Center.

Director Qualifications:
Ms. Ticknor’s prior executive leadership roles enable her to provide valuable contributions with respect to management, operations, strategy, growth and long-range plans. Her prior leadership at a global IT company enables her to provide valuable contributions with respect to the Company’s international operations, strategies, and growth plans. She also brings to the Company significant expertise in the areas of innovation and supply chain management. Ms. Ticknor’s service as a director of Lucile Packard Children’s Hospital at Stanford University Medical Center enhances her understanding of health and wellness issues, as well as the Company’s focus on community involvement. Age: 71.

        

2017

Russell J. Weiner

Russell J. Weiner is Chief Operating Officer and President of the Americas for Domino’s (a restaurant chain), a role he assumed in July 2018. Before assuming this position, he served as President of Domino’s USA from September 2014 through June 2018. Prior to his role as President of Domino’s USA, he served as the company’s Executive Vice President, Chief Marketing Officer, starting in 2008. Before joining Domino’s, he was Vice President of Marketing, Colas at Pepsi-Cola North America from 2005 to 2008. During his tenure at Pepsi-Cola North America, which commenced in 1998, Mr. Weiner held a number of leadership roles in marketing and brand management.

Director Qualifications:
Mr. Weiner’s experience in digital innovation enables him to help the Company maintain its leadership position in digital technology within the consumer packaged goods industry. In addition, his executive leadership experience in the food and consumer packaged goods industries enables him to contribute his deep knowledge of brand building, marketing, operations and consumer insights. Age: 50.


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Board of Directors

Director Since       Name, Principal Occupation, and Other Information

2015

Christopher J. Williams

Mr. Williams has served as the Chairman and Chief Executive Officer of The Williams Capital Group, L.P. and Williams Capital Management, LLC (Williams Capital) (an investment banking and financial services firm) since the company’s formation in 1994. Prior to founding Williams Capital, Mr. Williams managed the derivatives and structured finance division of Jefferies & Company. He previously worked at Lehman Brothers, where his roles included managing groups in the corporate debt capital markets and derivatives structuring and trading.

Other Public Company Boards:
Mr. Williams is a director of Caesars Entertainment Corporation (April 2008 to present) and Ameriprise Financial, Inc. (September 2016 to present). He previously served on the board of Wal-Mart Stores Inc. (June 2004 to June 2014).

Nonprofit/Other Boards:
Mr. Williams serves on the boards of Cox Enterprises Inc., Lincoln Center for the Performing Arts, and The Partnership for New York City. Mr. Williams previously served as Chairman of the Board of Overseers at the Tuck School of Business at Dartmouth and on the Board of Trustees of Mt. Sinai Medical Center.

Director Qualifications:
Mr. Williams brings a wealth of financial, accounting, and strategic knowledge to the Board with his years of experience in investment banking and finance, and as the former chair of the audit committee of a Fortune 100 company. He also contributes important executive management and leadership experience as the chairman and chief executive officer of an investment management firm. As a current and former director of several public and private companies, he brings a valuable perspective for the Company’s strategy and operations as well as extensive customer insights. Age: 60.


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  Organization of the Board of Directors

Evaluation of Director Qualifications and Experience

The Nominating, Governance and Corporate Responsibility Committee works closely with our Board in determining the skills, experiences, and characteristics desired for the Board as a whole and for its individual members, and screens and recommends candidates for nomination by the full Board. While the Board has not established any specific minimum qualifications that a potential nominee must possess, director candidates, including incumbent directors, are assessed based upon criteria established by the Nominating, Governance and Corporate Responsibility Committee in light of the Company’s long-term strategy, the skills and backgrounds currently represented on the Board, and any specific needs identified in the Committee’s evaluation of Board composition. Criteria include broad-based leadership and business skills and experience, prominence and reputation in their professions, global business and social perspective, ability to effectively represent the long-term interests of our stockholders, and personal integrity and judgment. The ability of incumbent directors to continue to contribute to the Board is also considered in connection with the renominating process.

The following experience and skills, among others, have been specifically identified by the Nominating, Governance and Corporate Responsibility Committee as being important in creating a diverse and well-rounded Board:

Significant Current or Prior Leadership Experience (such as service in a significant leadership role, including as a chief executive officer, or other executive officer or senior leadership position): This enables a director to contribute to the Company’s management expertise, operations, strategy, growth, and long-range plans.
Leadership Experience on Public Company, Private Company, Nonprofit, or Other Boards: This prepares a director to take an active leadership role in oversight and governance.
Knowledge of the Company’s Business, the Consumer Packaged Goods Industry, or Other Complementary Industry: This helps a director provide guidance on the Company’s strategy and position in our industry.
Experience in Emerging Technology, Innovation (including digital media and e-commerce), Brand Building, or Other Relevant Areas: This supports the Company’s strategy, innovation, marketing to consumers, and business operations.
Relevant Retail or Customer Experience: This allows a director to provide insights on customer relations and results with the Company’s customer and consumer base.
Significant Mergers and Acquisitions or Strategy Experience: This enables a director to provide perspective on the Company’s merger and acquisitions, partnership, and adjacency strategies.
International Experience: This supports the Company’s global business strategy.
Financial and Accounting Expertise: This contributes to analysis and oversight of the Company’s financial position, financial statements, and results of operations.
Regulatory, Research and Development or Scientific Experience (including experience in the health and wellness sector): This supports the Company’s portfolio and provides insights on navigating the regulatory environment, including in health and wellness.
Cybersecurity and Information Technology Knowledge: This allows a director to effectively oversee and advise on the Company’s cybersecurity and risk management programs.



Continuing Education for Directors

Our Board regularly participates in both external continuing education programs and internally developed presentations in order to enhance and expand on the key skills and experiences relevant to the Company’s industry. New directors participate in comprehensive orientation sessions that provide them with a robust overview of the Company’s business and strategies as well as a thorough

understanding of their fiduciary duties, which allows new directors to begin making contributions to the Board at the start of their service.

In addition, under the Company’s Corporate Governance Guidelines (Governance Guidelines), non-management directors whose primary job responsibilities change must offer their resignation for the Board’s consideration.


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Organization of the Board of Directors


Diversity

As highlighted in our Governance Guidelines, the Board values diversity and recognizes the importance of having unique and complementary backgrounds and perspectives in the board room. The Board endeavors to bring together diverse skills, professional experience, perspectives, age, race, ethnicity, gender, and cultural backgrounds that reflect the Company’s consumer and investor base, and to guide the Company in a way that reflects the best interests

of all of our stockholders. The Nominating, Governance and Corporate Responsibility Committee assesses the effectiveness of these efforts by examining the overall composition of the Board, assessing how individual director candidates can contribute to the overall success of the Board, and reviewing individual, committee, and Board evaluation results.



Stockholder Recommendations and Nominations of Director Candidates

The Nominating, Governance and Corporate Responsibility Committee considers recommendations from many sources, including stockholders, regarding possible candidates for director. Such recommendations, together with biographical and business experience information (similar to that required to be disclosed under applicable Securities and Exchange Commission (SEC) rules and regulations) regarding the candidate, should be submitted to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The Nominating, Governance and Corporate Responsibility Committee evaluates all candidates for the Board in the same manner, including those suggested by stockholders.

In addition, our Bylaws permit a stockholder or group of up to 20 stockholders who have owned at least 3% of the Company’s Common Stock for at least three years to submit director nominees (up to 20% of the Board) for inclusion in the Company’s proxy materials if the stockholder(s) provide(s) timely written notice of such nomination(s) and the stockholder(s) and the nominee(s) satisfy the requirements specified in the Company’s Bylaws. Stockholders who wish to nominate directors for inclusion in the Company’s proxy materials or directly at an annual meeting of stockholders in accordance with the procedures in our Bylaws should follow the instructions under the Stockholder Proposals and Director Nominations for the 2019 Annual Meeting section of this proxy statement.



Director Communications

Stockholders and interested parties may direct communications to individual directors, including the lead independent director, to a Board committee, to the independent directors as a group, or to the Board as a whole, by addressing the communications to the named individual, to the committee, to the independent directors as a group, or to the Board as a whole and sending them

to The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The Corporate Secretary will review all communications so addressed and will forward to the addressee(s) all communications determined to bear substantively on the business, management, or governance of the Company.


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Table of Contents


Director Compensation

Only our non-employee directors receive compensation for their services as directors. The Company’s non-employee director compensation program is comprised of cash compensation and an annual grant of deferred stock units.

The Management Development and Compensation Committee has the responsibility for making recommendations regarding non-employee director compensation. The Management Development and Compensation Committee reviews the form and amount of compensation of non-employee directors at least once a year to ensure that the Company’s non-employee directors are being compensated appropriately relative to peer companies. The Management Development and Compensation Committee retains the services of an

independent compensation consulting firm to assist it in the performance of its duties. During fiscal year 2018, the Management Development and Compensation Committee used the services of Frederic W. Cook & Co., Inc. (FW Cook). FW Cook’s work with the Management Development and Compensation Committee included data analysis and guidance and recommendations regarding compensation levels relative to our compensation peer group (see discussion regarding the peer group in the Compensation Discussion and Analysis section below) as well as trends and recent developments in the area of non-employee director compensation. Clorox generally aims to compensate non-employee directors at or near the median of the compensation peer group.


The following table sets forth information regarding compensation for each of the Company’s non-employee directors during fiscal year 2018.

Name       Fees Earned
or Paid in Cash
($)(2)
      Stock
Awards
($)(3)
      Total
($)
Amy Banse 100,000 150,625 250,625
Richard H. Carmona 115,000 150,625 265,625
Spencer C. Fleischer 100,000 150,625 250,625
Esther Lee 100,000 150,625 250,625
A. D. David Mackay 100,000 150,625 250,625
Robert W. Matschullat 100,000 150,625 250,625
Jeffrey Noddle 120,000 150,625 270,625
Matthew J. Shattock(1)
Pamela Thomas-Graham 150,000 150,625 300,625
Carolyn M. Ticknor 120,000 150,625 270,625
Russell J. Weiner 100,000 150,625 250,625
Christopher J. Williams 100,000 150,625 250,625
(1) Mr. Shattock did not receive any compensation from the Company during fiscal year 2018 as he began service as a director during fiscal year 2019.
(2) The amounts reported in the Fees Earned or Paid in Cash column reflect the total annual cash retainer and other cash compensation earned by each director in fiscal year 2018 and include amounts deferred into cash or deferred stock units and/or amounts issued in Common Stock in lieu of cash, as elected by the director. The annual cash retainer is paid to each director in quarterly installments.
(3) The amounts reported reflect the grant-date fair value for financial statement reporting purposes of the annual grant of deferred stock units. Awards are granted on an annual basis at the end of each calendar year. Refer to Note 15 of the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, for a discussion of the relevant assumptions used in calculating the grant-date fair value under applicable accounting guidance. As of June 30, 2018, the following directors had the indicated aggregate number of deferred stock units accumulated in their deferred accounts for all years of service as a director, which includes deferrals of cash compensation, annual awards of deferred stock units, and additional deferred stock units credited as a result of dividend equivalents earned with respect to the deferred stock units: Ms. Banse – 1,336 units; Dr. Carmona – 18,864 units; Mr. Fleischer – 5,131 units; Ms. Lee – 5,014 units; Mr. Mackay – 1,336 units; Mr. Matschullat – 83,165 units; Mr. Noddle – 5,770 units; Ms. Thomas-Graham – 23,102 units; Ms. Ticknor – 30,063 units; Mr. Weiner – 1,809 units; and Mr. Williams – 5,131 units.

Stock Unit Awards

Each non-employee director receives an annual grant of deferred stock units, the value of which was increased from $145,000 to $152,500 effective October 1, 2017. The aggregate value of the deferred stock unit award

amount earned by a non-employee director serving for the full fiscal year 2018 was $150,625. Awards are made as of the last business day in the calendar year and represent payment for services provided during such calendar year.


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Organization of the Board of Directors

Directors who serve as non-employee Board members for less than the full calendar year receive pro-rated awards based on the number of full fiscal quarters they served as a non-employee Board member during the calendar year. Deferred stock units accrue dividend equivalents and the

balance of a director’s deferred stock unit account is paid out in Common Stock following the director’s termination of service, as described in greater detail under Payment Elections below.


Fees Earned or Paid in Cash

In addition to the deferred stock units described above, directors receive cash compensation. Cash compensation consists of annual cash retainer amounts and any special assignment fees. The following table lists the various

retainers paid for Board service and service as the lead independent director or a committee chair during fiscal year 2018:


Annual director retainer $100,000
Lead independent director retainer 50,000
Committee chair retainers:
Nominating, Governance and Corporate Responsibility Committee 15,000
Audit Committee 20,000
Management Development and Compensation Committee 20,000

Directors who serve as a Board member, lead independent director, or committee chair for less than the full fiscal year receive pro-rated retainer amounts based on the number of days they served in such position during the fiscal year. In addition to the retainer amounts, each non-employee director is entitled to receive a fee of $2,500 per day for any special assignment requested by the Board. No special assignment fees were paid in fiscal year 2018.

Payment Elections

Under the Company’s Independent Directors’ Deferred Compensation Plan, a director may annually elect to receive all or a portion of his or her cash compensation in the form of cash, Common Stock, deferred cash, or deferred stock units.

Payment in Stock. Directors who elect to receive cash compensation amounts in the form of Common Stock are issued shares of Common Stock based on the fair market value of the Common Stock as determined by the closing price of the Common Stock on the last trading day of the quarter for which the fees were earned.

Elective Deferral Program. For directors who elect deferred cash, the amount deferred is credited to an unfunded cash account that is credited with interest at an annual interest rate equal to Wells Fargo Bank, N.A.’s prime lending rate in effect on January 1 of each year. Upon termination of service as a director, the amounts credited to the director’s deferred cash account are paid out in five annual cash installments or in one lump-sum cash payment, as elected by the director. For directors who elect deferred stock units, the amount deferred is credited to an unfunded account in the form of units equivalent to the fair market value of the Common Stock on the date on which the fees are scheduled to be paid. When dividends are declared, additional deferred stock units are allocated to the director’s deferred stock unit account in amounts equivalent to the dollar amount of Common Stock dividends paid by the Company divided by the fair market value of the Common Stock on the date the dividends are paid. Upon termination of service as a director, the amounts credited to the deferred stock unit account, which include any elective deferrals and the annual deferred stock unit grants described above, are paid out in shares of Common Stock in five annual installments or in one lump sum, as elected by the director.



Stock Ownership Guidelines for Directors

The Board believes that the alignment of directors’ interests with those of stockholders is strengthened when Board members are also stockholders. The Board therefore requires that each non-employee director, within five years of first being elected, own Common Stock or deferred stock units having a market value of at least five times his or her annual cash retainer. This program is designed to ensure that directors acquire a meaningful and significant

ownership interest in the Company during their tenure on the Board. Furthermore, as directors must hold the deferred stock units until termination of their service on the Board, they have an incentive to promote long-term value for stockholders during their service as a director. As of June 30, 2018, each non-employee director was in compliance with the guidelines.


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  Corporate Governance

Our Corporate Governance Philosophy

Consistent with our focus on good growth, we are committed to strong corporate governance and corporate responsibility. We regularly review our policies and practices to further the interests of our stockholders, promote the long-term health of our business, provide effective oversight of management,

and encourage responsible and ethical behavior by our directors and employees. Our Governance Guidelines, Code of Conduct, and other company policies establish a framework to further these goals and guide our decisions, as described in greater detail below.



Our Commitment to Corporate Responsibility

Corporate responsibility is the foundation of how Clorox operates, and we consider it integral to our business. As a signatory to the United Nations Global Compact, we are committed to its Ten Principles by driving our corporate responsibility strategy, a comprehensive set of commitments across our Company: from human rights, labor, and product safety to transparency, supplier responsibility, anti-corruption, environmental sustainability, and contributions to communities where we operate. Our commitment to sustainability includes, among other goals, reducing our operational footprint while growing our business, making sustainability improvements to our products, and working to drive transparency and sustainability progress in our supply chain. In the sixth year of our sustainability goal period, we have already exceeded our 2020 goals to reduce solid-waste-to-landfill, water use and greenhouse gas emissions by 20% per case of product sold and five additional Clorox sites have achieved zero-waste-to-landfill status. We have also made sustainability improvements to 49% of our product portfolio and expect to meet our 50% goal next year, two years ahead of schedule. As part of our long-term focus on diversifying our supply chain, we have spent $144 million with diverse suppliers during fiscal year 2018, a $3.7 million increase compared to fiscal year 2017.

Clorox is also committed to helping communities by supporting causes that promote health and well-being and education. The Clorox Company Foundation provides grants to support youth, education, urban farming and cultural and civic organizations where our employees live and work. We have also pledged $1 million in grants over

four years to support urban farming, which addresses food scarcity through nutrition education and by removing barriers to eating nutritious food. We also encourage our employees to support causes of their choosing by volunteering and by participating in our corporate giving campaign and have a long history of providing products and donations to assist with disaster relief globally, such as in the wake of Hurricane Maria and the California wildfires. This year, we signed a three-year partnership with Evidence Action to supply bleach for its bleach dispenser program in Africa that will provide safe drinking water to up to 4 million people in Kenya and Uganda by 2020.

We believe our financial performance and commitment to corporate responsibility go hand in hand. Each year, we publish an integrated report that highlights the intersection of our business and corporate responsibility commitments by reporting our financial, environmental, social, and governance performance. In furtherance of our focus on corporate responsibility, in fiscal year 2017 we changed the name of our Nominating and Governance Committee to the Nominating, Governance and Corporate Responsibility Committee and enhanced the Committee’s charter in the areas of corporate responsibility and sustainability. The revised charter expands the Committee’s responsibilities to include oversight of corporate responsibility and sustainability matters. While the Committee as well as the full Board has historically provided oversight in these areas, the Board felt it was important to formalize these responsibilities, reflecting our long-standing values and commitment to best practices in corporate responsibility and sustainability.



Stockholder Engagement

During the past fiscal year, members of the Board and management held meetings with a significant portion of investors to discuss a variety of key corporate governance, executive compensation, and corporate responsibility

topics. In addition to highlighting our progress in areas such as diversity and environmental sustainability, these meetings provide an opportunity for two-way dialogue and for our management and Board to listen to our


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stockholders’ perspectives and understand any concerns they may have on specific governance topics. Similar to our approach in prior years regarding the Company’s proxy access right, our directors considered the feedback from these meetings, along with best practices, market standards, policies at other companies, and Clorox’s stockholder base and circumstances, in determining

that elimination of the supermajority voting provision in our Company charter, as proposed in Proposal 4, is appropriate for the Company and our stockholders. Our Board also took into consideration stockholder input in reviewing the Company’s compensation plan design and metrics, as described in greater detail in the Compensation Discussion and Analysis section.



Our Corporate Governance Process

At Clorox, we believe that a critical component of meaningful corporate governance is a robust annual process that includes active and transparent stockholder engagement.


DID YOU KNOW?

We were among the first companies to pursue integrated annual reporting in the U.S. Our integrated annual report uses the Global Reporting Initiative framework as well as reports against the Ten Principles of the United Nations Global Compact. We engage a third party to review certain nonfinancial key performance indicators and we continue to look for opportunities to provide metrics that provide further insight into how we create value for all our stakeholders.

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The Clorox Company Governance Guidelines

The Board has adopted Governance Guidelines that can be found in the Corporate Governance section on the Company’s website at https://www.thecloroxcompany.com/who-we-are/corporate-governance/governance-guidelines/, and are available in print to any stockholder who requests them from The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888. The Governance Guidelines present a framework for the governance of the Company. They

describe responsibilities, qualifications, and operational matters applicable to the Board and the Board committees and include provisions relating to the evaluation of the CEO and ordinary-course and emergency succession planning. The Governance Guidelines are reviewed at least annually by the Nominating, Governance and Corporate Responsibility Committee, which recommends changes to the Board as appropriate based on the committee’s active and on-going review.



Director Independence

The Governance Guidelines provide that a substantial majority of the Board must consist of independent directors. The Board determines whether individual Board members are independent,as defined by the New York Stock Exchange (NYSE). The Board has adopted director independence standards, which are set forth in the Governance Guidelines, to assist it in assessing the independence of directors. The Board makes an affirmative determination regarding the independence of each director annually, based upon the recommendation of the Nominating, Governance and Corporate Responsibility Committee.

The Board has determined that each of the Company’s non-management directors as follows is independent under the NYSE listing standards and the independence standards set forth in the Governance Guidelines: Messrs. Fleischer, Mackay, Matschullat, Shattock, Weiner, and Williams, Mmes. Banse, Lee, Thomas-Graham, and Ticknor, and Dr. Carmona. Mr. Dorer is not independent as a result of his service as the Company’s CEO. In addition, Mr. Noddle was independent under the NYSE listing standards and the independence standards set forth in the Governance Guidelines during the period in fiscal year 2018 during which he served.



Board of Directors Leadership Structure

The Board believes it is in the best interests of the Company and its stockholders for the Board to have flexibility in determining the Board leadership structure of the Company. Over the years, the Board has had a variety of leadership structures, including an independent chair structure with a separate CEO; an executive chair structure, along with a separate lead independent director and separate CEO; and a combined chair and CEO structure with a separate lead independent director. The Company currently has a combined chair and CEO role with a strong lead independent director, as described in greater detail below. The Board believes that having flexibility to determine the optimal leadership structure based on the Company’s current circumstances and anticipated needs, including whether to separate or combine the roles of chair and CEO, is important and has served the Company and its stockholders well.

As part of our on-going, proactive efforts to implement effective and progressive corporate governance practices, the Nominating, Governance and Corporate Responsibility Committee regularly reviews the leadership structure of the Board in addition to its annual review of the Company’s Governance Guidelines. In addition to the Company’s

specific circumstances, it takes into account market practices, investor feedback, and corporate governance studies and expert commentary, among other things. Since August 2016, the Board leadership structure has consisted of a combined Chair and CEO role held by Mr. Dorer, a strong lead independent director position held by Ms. Thomas-Graham, and strong independent committee chairs. The Board believes that Mr. Dorer’s leadership in developing the Company’s 2020 Strategy, his in-depth knowledge of the Company’s operations, and his strong working relationship with the independent members of the Board make him best suited to chair the regular Board meetings as key business and strategic issues are discussed and to serve as Chair of the Board at this time. This role allows him to drive execution of the Company’s strategic plans and facilitate effective communication between management and the Board, to bring key issues to the Board’s attention, and to see that the Board’s guidance and decisions are implemented effectively by management. In complement of Ms. Thomas-Graham’s independent leadership, the Board is guided by strong, independent committee chairs, with Mr. Carmona leading the Nominating, Governance and Corporate Responsibility Committee and Mr. Noddle serving as the Management Development and Compensation Committee



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chair for several years. Further, in selecting Ms. Thomas-Graham to serve as the lead independent director, the Board noted her strong leadership and qualifications, including her prior experience as a CEO and her tenure on the Board, among other factors, which contribute to her ability to fulfill the role of lead independent director effectively. The Company’s Governance Guidelines require an independent director to serve as a lead director if the position of Chair is held by a management director. In order to ensure that the lead independent director has the skills and qualifications necessary to serve as a strong leader, the Company has created clearly delimited comprehensive duties and responsibilities for the lead independent director, as outlined below.

The lead independent director is elected annually by and from the independent directors and in order to qualify as lead independent director, a director must have served as a member of the Board for a minimum of three years. The duties of the lead independent director, which are also included in the Governance Guidelines, include coordinating the activities of the independent directors and serving as a liaison between the Chair and the independent directors. In addition, the lead independent director:

has the ability to call special meetings of the Board;
presides at executive sessions of the independent directors and has the authority to call additional executive sessions or meetings of the independent directors;
presides at Board meetings in the Chair’s absence;
approves information sent to the Board;
approves meeting agendas and meeting schedules for the Board to ensure that there is sufficient time for discussion of all agenda items;
is available for consultation and direct communication with major stockholders if requested;
evaluates, along with the members of the Management Development and Compensation Committee and the other independent directors, the performance of the CEO; and
assists the Board and Company officers in promoting compliance with and implementation of the Governance Guidelines.

In addition to the robust duties and responsibilities listed above, Ms. Thomas-Graham has taken an active role in the Company’s diversity efforts and outreach to employees, including hosting small group meetings with high-potential, diverse employees and holding town hall meetings with all employees. She also actively participates in stockholder engagement and meets with many of the Company’s major stockholders.

All of the Company’s directors, other than Mr. Dorer, are “independent” as defined by the NYSE rules. The Board believes that this structure promotes effective governance and that, under the present circumstances, the leadership structure described above is in the best interests of the Company and its stockholders.




Board Committees

The Board has established three standing committees: the Audit Committee, the Nominating, Governance and Corporate Responsibility Committee, and the Management Development and Compensation Committee. Each of these committees consists only of non-management directors whom the Board has determined are independent under the NYSE listing standards and the Board’s independence standards set forth in the Company’s Governance Guidelines. In addition, directors who serve on the Audit Committee and the Management Development and

Compensation Committee must meet additional, heightened independence and qualification criteria applicable to directors serving on these committees under the NYSE listing standards. The charters for these committees are available in the Corporate Governance section of the Company’s website at https://www.thecloroxcompany.com/who-we-are/corporate-governance/committee-charters, or in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.


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The table below indicates the current members of each standing Board committee as of the date of the Annual Meeting:

Director       Audit       Nominating,
Governance and
Corporate Responsibility
      Management
Development and
Compensation
Amy Banse    
Richard H. Carmona Chair
Benno Dorer    
Spencer C. Fleischer Chair
Esther Lee
A.D. David Mackay
Robert W. Matschullat  
Matthew J. Shattock
Pamela Thomas-Graham  
Carolyn M. Ticknor Chair
Russell J. Weiner
Christopher J. Williams
Number of meetings in fiscal year 2018 9 5 4

Audit Committee. The Audit Committee is the principal link between the Board and the Company’s independent registered public accounting firm. The Audit Committee has the functions and duties set forth in its charter, including representing and assisting the Board in overseeing:

the integrity of the Company’s financial statements;

the independent registered public accounting firm’s qualifications, independence, and performance;

the performance of the Company’s internal audit function;

the Company’s system of disclosure controls and procedures and system of internal control over financial reporting;

the Company’s compliance with legal and regulatory requirements relating to accounting and financial reporting matters;

the Company’s framework and guidelines with respect to risk assessment and risk management; and

the Company’s material financial policies and actions.

The Audit Committee’s duties also include preparing the report required by the SEC proxy rules to be included in the Company’s annual proxy statement. The Board has determined that directors Noddle, Ticknor, and Williams are audit committee financial experts, as defined by SEC rules, and each member of the Audit Committee is financially literate, as defined by NYSE rules.

Nominating, Governance and Corporate Responsibility Committee. The Nominating, Governance and Corporate Responsibility Committee has the functions and duties set forth in its charter, including:

identifying and recruiting individuals qualified to become Board members;

recommending to the Board individuals to be selected as director nominees for the annual meeting of stockholders;

reviewing and recommending to the Board changes in the Governance Guidelines and the Code of Conduct;

overseeing the Company’s ethics and compliance program and activities, including the Company’s compliance with legal and regulatory requirements relating to matters other than accounting and financial reporting matters;

performing a leadership role in shaping the Company’s corporate governance and overseeing the evaluation of the Board and its committees;

assisting the Board in overseeing the Company’s corporate responsibility and sustainability program; and

overseeing the Company’s stockholder engagement program.


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Management Development and Compensation Committee. The Management Development and Compensation Committee has the functions and duties set forth in its charter, including:

reviewing and approving the performance goals and objectives for the CEO and other executive officers and the extent to which such performance goals and objectives have been met;

assessing the CEO’s performance and determining and approving the CEO’s compensation based on a variety of factors;

reviewing periodically with the CEO the performance of each of the other executive officers and approving

 

the compensation of each such executive officer;

determining the amount and other material terms of individual short- and long-term incentive awards to be made to executive officers;

reviewing and approving recommendations regarding retirement income and other deferred benefit plans applicable to executive officers;

reviewing and approving employment-related arrangements with executive officers; and

evaluating the outcome of the advisory vote of the stockholders regarding “say on pay” and making recommendations or taking appropriate actions in response to such advisory vote.


In addition, the Management Development and Compensation Committee oversees, with involvement of the full Board, the Company’s management development and succession planning processes.




Board and Director Evaluation Process

The Nominating, Governance and Corporate Responsibility Committee is responsible for overseeing the Board, committee, and individual director evaluation process. Under the Governance Guidelines, the Board and each of the Audit, Nominating, Governance and Corporate Responsibility, and Management Development and Compensation Committees are required to conduct an annual self-evaluation. The evaluations include a range of issues designed to assess Board and committee performance, including Board and committee composition, structure, information received, accountability, and effectiveness, among other topics.

Evaluations are conducted through individual director interviews as part of its evaluation process. Each director provides an individual assessment as well as any feedback they may have on other Board members’ performance

on an annual basis. The individual assessments are conducted by the chair of the Nominating, Governance and Corporate Responsibility Committee, who summarizes and reports the results and any related recommendations to the Nominating, Governance and Corporate Responsibility Committee and the full Board.

As a result of the evaluation process, the Board has made a number of changes, including, for example, adding regular cybersecurity updates to Audit Committee meeting agendas, adding new topics or devoting more time to particular topics and businesses of interest, incorporating external speakers on certain topics, revising the format and focus of Board materials, adding periodic updates that continue focusing on digital engagement and corporate development topics, and identifying the skills and expertise desired for future director candidates.



Board of Directors Meeting Attendance

The Board held seven meetings during fiscal year 2018. All incumbent directors attended at least 75% of the meetings of the Board and committees of which they were members during fiscal year 2018 during the period in which they served on the Board. All members of the Board are

expected to attend the Annual Meeting of Stockholders. Each of the twelve members of the Board at the time of the Company’s 2017 Annual Meeting of Stockholders held on November 15, 2017, attended the meeting.


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Executive Sessions

The independent directors generally meet in executive session at each regularly scheduled Board meeting without the presence of management directors or employees of the Company to discuss various matters related to the

oversight of the Company, the management of the Board’s affairs, and the CEO’s performance. The lead independent director chairs the executive sessions.



Conflict of Interest and Related Person Transaction Policies and Procedures

The Company has a long-standing policy of prohibiting its directors, officers, and employees from entering into transactions that are an actual or potential conflict of interest. The Company’s Code of Conduct has a detailed provision prohibiting conflicts of interests and is available on the Company’s website at https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct.

Additionally, the Company has a written policy regarding review and approval of related person transactions by the Audit Committee (Related Person Policy). The Related Person Policy defines an “Interested Transaction” as any transaction, arrangement, or relationship or series of similar transactions, arrangements, or relationships (including any indebtedness or guarantee of indebtedness) in which (i) the aggregate amount involved in any fiscal year will or may be expected to exceed $120,000 (including any periodic payments or installments due on or after the beginning of the Company’s last completed fiscal year and, in the case of indebtedness, the largest amount expected to be outstanding and the amount of annual interest thereon), (ii) the Company is a participant, and (iii) any Related Person (as defined below) has or will have a direct or indirect interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity).

A “Related Person” is (i) any person who is or was (since the beginning of the Company’s last fiscal year, even if they do not presently serve in that role) an executive officer, director, or nominee for election as a director, (ii) a beneficial owner of more than 5% of the Company’s Common Stock, or (iii) an immediate family member of any of the foregoing. For purposes of this definition, “immediate family member” includes a person’s spouse, parents, stepparents, children,

stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone residing in such person’s home (other than a tenant or employee).

Under the Related Person Policy, if a new Interested Transaction is identified for approval, it is brought to the Audit Committee to determine if the proposed transaction is reasonable and fair to the Company. The Audit Committee will review the material facts of all Interested Transactions that require its approval and either approve or disapprove of the entry into the Interested Transaction.

The Related Person Policy also contains categories of preapproved transactions that the Board has identified as not having a significant potential for an actual or potential conflict of interest or improper benefit.

In determining whether to approve or ratify an Interested Transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the Related Person’s interest in the transaction.

No director participates in any discussion or approval of an Interested Transaction for which he or she is a Related Person, except that the director will provide all material information concerning the Interested Transaction to the Audit Committee. There were no transactions considered to be an Interested Transaction during the Company’s 2018 fiscal year.


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Code of Conduct

The Company has adopted a Code of Conduct, which can be found in the Corporate Governance section of the Company’s website, https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct, or obtained in print by contacting The Clorox Company, c/o Corporate Secretary, 1221 Broadway, Oakland, CA 94612-1888.

The Code of Conduct applies to all of the Company’s employees, including executives, as well as directors. We also have established a separate Business Partner Code of Conduct outlining our standards and expectations of our suppliers and other business partners, which can also be found at https://www.thecloroxcompany.com/who-we-are/corporate-governance/codes-of-conduct.



Board of Directors’ Role in Risk Management Oversight

The Board has responsibility for the oversight of the Company’s risk management, while the Company’s management is responsible for the day-to-day risk management process. With the oversight of the Board, the Company has a comprehensive enterprise risk management program in place. The Company has an Enterprise Risk Management Steering Committee (ERM Committee), which consists of a cross-functional team of senior leaders and key executives. The ERM Committee oversees the annual key risk identification process, whereby it identifies the top risks that the Company faces with respect to its business, operations, strategy, and other factors, as well as the key mitigation strategies and the risk owner(s). At least annually, and generally in connection with the Board’s annual strategy meeting, management reports on and discusses the identified risks and risk mitigation and management efforts with the Board. The Board may allocate responsibility to a specific committee to examine a particular risk in detail if the committee is in the best position to review and assess the risk. For example, the Audit Committee reviews compliance and risk management programs and practices related to accounting and financial reporting matters and financial risk management, and the Management Development and Compensation Committee reviews the risks related to the executive compensation structure. In addition to the Board’s oversight, the Audit Committee also receives regular updates relating to cybersecurity. In the event that a committee is allocated responsibility for examining and analyzing a specific risk, such committee reports on the relevant risk exposure during its regular reports to the full Board to facilitate proper risk oversight by the entire Board.

As part of its responsibilities, the Management Development and Compensation Committee periodically reviews the Company’s compensation policies and programs to ensure that the compensation program is able to provide incentives to employees, including executive officers, while mitigating

excessive risk-taking. The overall executive compensation program contains various provisions that mitigate against excessive risk-taking, including:

An appropriate balance between annual cash compensation under the Annual Incentive Plan and equity compensation that is earned over a period of three to four years;

Caps on the payouts under executive and non-executive incentive plans, which protect against executives taking short-term actions to maximize bonuses that are not supportive of long-term objectives;

Financial metrics under the Annual Incentive Plan consisting of net sales (50% weighting), net earnings from continuing operations (30% weighting), and gross margin (20% weighting), which are intended to discourage revenue generation at the expense of profitability and profitable growth and vice versa;

Use of different financial metrics under our Annual Incentive Plan (net sales, net earnings from continuing operations and gross margin) and long-term performance shares (economic profit);

Clawback provisions applicable to current and former executives as set forth in the applicable plans that enable the recapture of previously paid compensation under certain circumstances, which serve as a deterrent to inappropriate risk-taking activities; and

Stock ownership guidelines that require executive officers to accumulate meaningful levels of equity ownership in the Company, which align executives’ short- and long-term interests with those of the Company’s stockholders.

Based on its review and the analysis provided by its independent compensation consultant, FW Cook, the Management Development and Compensation Committee has determined that the risks arising from the Company’s compensation policies and practices for its employees, including executive officers, are not reasonably likely to have a material adverse effect on the Company.


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  Stock Ownership Information

Beneficial Ownership of Voting Securities

The following table shows, as of July 31, 2018 (except as otherwise indicated below), the holdings of Common Stock by (i) any entity or person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director and nominee for director and each of the six individuals named in the Summary Compensation Table (the named executive officers), and (iii) all directors and executive

officers of the Company as a group. As discussed in the Director Compensation section of this proxy statement, the majority of director compensation is delivered in the form of deferred stock units, which are paid out in Common Stock following a director’s termination of service. Because the directors cannot dispose of those shares while they serve on the Board, they are not reflected in this table. See footnote 2 below.


Name of Beneficial Owner        Amount and Nature
of Beneficial Ownership(1)(2)
       Percent of Class(3)
The Vanguard Group, Inc.(4)
     100 Vanguard Blvd.
     Malvern, PA 19355 14,894,284 11.63
BlackRock, Inc.(5)
     55 East 52nd Street
     New York, NY 10055 10,213,418 7.97
State Street Corporation(6)
     One Lincoln Street
     Boston, MA 02111 8,236,312 6.43
Amy Banse(2) 0 *
Richard H. Carmona(2) 0 *
Benno Dorer 637,513 *
Spencer C. Fleischer(2) 0 *
Kevin Jacobsen 41,257 *
Esther Lee(2) 0 *
A. D. David Mackay(2) 5,000 *
Robert W. Matschullat(2) 1,324 *
Jeffrey Noddle(2) 1,150 *
Linda Rendle 39,918
Stephen M. Robb(7) 314,001 *
Matthew J. Shattock(8) 0 *
Laura Stein 164,630 *
Pamela Thomas-Graham(2) 1,778 *
Carolyn M. Ticknor(2) 0 *
Russell J. Weiner(2) 0 *
Christopher J. Williams(2) 0 *
Dawn Willoughby 127,756 *
All directors and executive officers as a group (27 persons)(9) 1,836,225 1.4
* Does not exceed 1% of the outstanding shares.
(1) Unless otherwise indicated, each beneficial owner listed has sole voting and dispositive power concerning the shares indicated. These totals include the following numbers of shares of Common Stock that such persons have the right to acquire through stock options exercisable within 60 days of July 31, 2018, or with respect to which such persons have shared voting or dispositive power: Mr. Dorer – 625,632 options; Mr. Jacobsen – 35,689 options; Ms. Rendle – 34,149 options; Mr. Robb – 294,780 options; Ms. Stein – 141,292 options; Ms. Willoughby – 122,115 options and shared voting and dispositive power with respect to 3,411 shares held in family trust; and all directors and executive officers as a group – 1,706,517 options. The numbers in the table above do not include the following numbers of shares of Common Stock that the executive officers have the right to acquire upon the termination of their service as employees pursuant to vested performance units that were deferred at the executive officers’ election: Mr. Dorer – 43,327; Mr. Robb – 10,239; Ms. Stein – 34,194; Ms. Willoughby – 4,700; and all executive officers as a group – 111,767.
(2) The numbers in the table above do not include the following numbers of shares of Common Stock that the non-management directors have the right to acquire upon the termination of their service as directors pursuant to deferred stock units granted under the Independent Directors’ Stock-Based Compensation Plan: Ms. Banse – 1,336; Dr. Carmona – 18,864; Mr. Fleischer – 5,131; Ms. Lee – 5,014; Mr. Mackay – 1,336; Mr. Matschullat – 83,165; Mr. Noddle – 5,770; Ms. Thomas-Graham – 23,102; Ms. Ticknor – 30,063; Mr. Weiner – 1,809; and Mr. Williams – 5,131.

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(3)

On July 31, 2018, there were 128,086,892 shares of Common Stock outstanding.

(4)

Based on information contained in a report on Schedule 13G/A filed with the SEC on February 9, 2018, The Vanguard Group reported, as of December 31, 2017, sole voting power with respect to 186,196 shares, sole dispositive power with respect to 14,668,266 shares, shared voting power with respect to 44,913 shares and shared dispositive power with respect to 226,018 shares.

(5)

Based on information contained in a report on Schedule 13G/A filed with the SEC on February 8, 2018, BlackRock, Inc. reported, as of December 31, 2017, sole voting power with respect to 8,853,698 shares and sole dispositive power with respect to all shares reported.

(6)

Based on information contained in a report on Schedule 13G filed with the SEC on February 14, 2018, State Street Corporation reported, as of December 31, 2017, shared voting power with respect to 7,449,796 shares and shared dispositive power with respect to all of these shares.

(7)

Effective March 31, 2018, Mr. Robb retired from the Company.

(8)

Effective August 1, 2018, Matthew J. Shattock was appointed to the Board.

(9)

Pursuant to Rule 3b-7 of the Securities Exchange Act of 1934, as amended (Exchange Act), executive officers include the Company’s CEO and all executive vice presidents and senior vice presidents. Effective August 1, 2018, there were 27 directors and executive officers as a group.



Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act and SEC regulations require the Company’s directors, certain officers, and holders of more than 10% of the Company’s Common Stock to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC. The reporting directors, officers, and 10% stockholders are also required by SEC rules to furnish the Company with copies of all

Section 16(a) reports they file. Based solely on its review of copies of such reports received and written representations from its directors and such covered officers, the Company believes that its directors and officers complied with all applicable Section 16(a) filing requirements during fiscal year 2018, except for one Form 4 for Mr. Dorer, which was filed a few days late due to an administrative error.


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  Executive Compensation

  Proposal 2:
Advisory Vote to Approve Executive Compensation

We are seeking a non-binding, advisory vote from our stockholders to approve the compensation of our named executive officers. This proposal gives our stockholders the opportunity to express their views on the Company’s executive compensation, and is commonly referred to as a “say-on-pay” proposal. This vote is only advisory and will not be binding upon the Company or the Board. However, the Management Development and Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholders and encourages all stockholders to vote their shares on this matter.

As discussed in the Compensation Discussion and Analysis section of this proxy statement, which begins on page 34, the Company’s compensation programs are designed to align pay with short- and long-term financial and strategic objectives to build stockholder value, while providing

a competitive level of compensation to recruit, retain, and motivate talented executives. The Board urges you to consider the factors discussed in the Compensation Discussion and Analysis section when deciding how to vote on this Proposal 2.

At our 2017 Annual Meeting of Stockholders held on November 15, 2017, our stockholders overwhelmingly approved our executive compensation policies, with approximately 94% of votes cast in favor of our proposal. We value this positive endorsement by our stockholders and believe that the outcome signals our stockholders’ support of our compensation program and continued our general approach to compensation for fiscal year 2018. We provide our stockholders the opportunity to vote on the compensation of our named executive officers every year. It is expected that the next vote on executive compensation will be at the 2019 Annual Meeting of Stockholders.



Board of Directors’ Recommendation

The Board recommends a vote FOR the advisory vote to approve executive compensation. The Company is asking its stockholders to support the compensation of the named executive officers as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers in fiscal year 2018 and the philosophy, policies, and practices underlying that compensation, which are described in this proxy statement. The Board believes that the Company’s overall compensation process effectively implements its compensation philosophy and achieves its goals.

Accordingly, the Board recommends a vote FOR the adoption of the following advisory resolution, which will be presented at the Annual Meeting:

“RESOLVED, that the stockholders of The Clorox Company approve, on an advisory basis, the compensation of the named executive officers, as disclosed in The Clorox Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure.”


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Vote Required

The affirmative vote of a majority of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve this proposal.

This vote is advisory, and therefore not binding on the Company, the Board, or the Management Development and Compensation Committee. However, the Board and the Management Development and Compensation Committee value the opinions of the Company’s stockholders and, to the extent there is any significant vote against the named

executive officers’ compensation as disclosed in the proxy statement, we will consider such stockholders’ concerns and the Management Development and Compensation Committee will evaluate whether any actions are necessary to address those concerns.

The people designated in the proxy and voting instruction card will vote your shares FOR approval unless you include instructions to the contrary.


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  Compensation Discussion and Analysis

Executive Summary

This Compensation Discussion and Analysis (CD&A) describes our executive compensation philosophy and program, the compensation decisions made under this program and the specific factors we considered in making those decisions. This CD&A focuses on the compensation of our “named executive officers” for fiscal year 2018, who were:

Benno Dorer – Chairman and Chief Executive Officer (CEO);

Kevin B. Jacobsen – Senior Vice President, Chief Financial Officer (CFO);

Dawn Willoughby – Executive Vice President, Chief Operating Officer (COO);

Laura Stein – Executive Vice President, General Counsel and Corporate Affairs;

Linda Rendle – Executive Vice President, Cleaning and Strategy; and

Stephen M. Robb – Former Executive Vice President, Chief Financial Officer (retired March 31, 2018).

Fiscal Year 2018 Performance Highlights

In fiscal year 2018, despite the increasingly competitive retail environment, Clorox delivered strong results with fiscal year sales growth of 3% and volume growth of 3% as well. This included sales and volume growth in every quarter of the fiscal year. The Company also grew diluted net earnings per share (EPS) from continuing operations by 17%. In addition, the Company maintained its focus on operational efficiencies including maintaining discipline on selling and administrative expenses, delivering cost savings, and continuing to make progress toward its product sustainability improvement and green-house gas emissions, water energy, and waste reduction goals.

The Company’s 2020 Strategy aims to accelerate profitable growth by engaging employees as business owners,increasing brand investment behind superior products and technology that reaches consumers in a dynamic marketplace, expanding its brands into new categories and channels, and driving out waste in its work, processes, and products. Successes for the Company in fiscal year 2018 included:

Achieving $112 million in cost savings;

Achieving increased volume of 3%, reflecting gains in three of the Company’s reportable segments while the International reportable segment remained flat to the prior year;

Increasing earnings from continuing operations to $823 million or $6.26 diluted EPS, versus $703 million or $5.35 diluted EPS from continuing operations in the prior year;


Leveraging demand-building investments, including product innovation, to support its categories;

Launching new products in numerous categories and countries, including Clorox® performance bleach with Cloromax®, Clorox® Scentiva™ bathroom cleaners, Fresh Step® Clean Paws™ low tracking litter, Glad® ForceFlex® Plus™ advanced protection trash bags, Burt’s Bees® natural cosmetics, RenewLife® probiotic and prebiotic supplements, Hidden Valley® Simply Dinners meal preparation kits, Clorox® Triple Acción bleach and Clorox® Clothes Powder;

Evolving our portfolio with the acquisition of Nutranext in April 2018, adding leading brands of the natural channels within the Health and Wellness space, such as Rainbow Light®, Natural Vitality®, and Neocell® brands;

Continuing to receive external recognition for our leadership in corporate responsibility, diversity and inclusion and sustainability efforts; and

Returning excess capital to stockholders through stock repurchases, paying $450 million in dividends to stockholders, and increasing the quarterly dividend by 14% in February 2018.

How Pay Was Tied to the Company’s Performance in Fiscal Year 2018

Our fiscal year 2018 results and compensation decisions continue to illustrate application of our pay-for-performance philosophy with pay being driven by performance in the following ways:

Fiscal Year 2018 Annual Incentive Payout. The annual incentive payout for each of our named executive officers was below target. Although the Company had solid operational results, and grew net sales and net earnings versus the prior fiscal year, net sales and gross margin fell short of the targets established at the beginning of the 2018 fiscal year. The Company’s net earnings exceeded both the prior year and the target for the fiscal year.

Fiscal Year 2018 Long-Term Incentive Payout. Our three-year performance share results were well above the financial target for cumulative economic profit (EP) and yielded a 150% payout, which was the maximum payout for that grant. These awards were granted in September 2015, and payment was determined in August 2018, based on performance over the period commencing July 1, 2015, and ending June 30, 2018. Fiscal years 2016 and 2017 had especially strong results.



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Compensation Philosophy

A core principle of our compensation philosophy is to align pay with performance. We do so by delivering the majority of executive pay through “at-risk” variable incentive awards that help ensure realized pay is tied to attainment of critical operational goals and sustainable

appreciation in stockholder value. In fiscal year 2018, approximately 86% of the targeted compensation for our CEO and approximately 73% of the targeted compensation for our other named executive officers was directly tied to the achievement of short- and long-term operating goals and total stockholder return. This approach is designed to accomplish the following:


Element         Objective
Pay for Performance Reward performance that drives achievement of the Company’s short- and long-term goals and, ultimately, stockholder value.
Align Management and Stockholder Interests Align the interests of our executive officers with our stockholders by using long-term, equity-based incentives, encourage a culture of ownership with stock retention guidelines, and reward executive officers for sustained Company performance as measured by operating results and total stockholder return.
Attract, Retain, and Motivate Talented Executives Maintain market-based pay targets and program design that allow the Company to be a magnet for high-performing executives.
Address Risk-Management Considerations Motivate our executives to create long-term stockholder value and discourage behavior that could lead to unnecessary or excessive risk-taking by providing a balance of fixed and at-risk pay, and short-term and long-term performance horizons, using a variety of metrics tied to key drivers of sustainable value creation.
Support Financial Efficiency Help ensure that cash- and equity-based incentive payouts are appropriately supported by performance, and design awards in a way that is intended to minimize unnecessary accounting charges and maximize the extent to which payments are tax-deductible to the Company compensation.

In 2017, the Management Development and Compensation Committee (MDCC) undertook a detailed assessment of the Company’s overall compensation program for alignment to our business strategy, our stockholders’ interests, our pay-for-performance philosophy, and market practices. This review resulted in various changes to the annual and long-term incentive programs, which were effective beginning with fiscal year 2018, as described in greater detail below.

What We Have and Don’t Have – Elements of Our Executive Compensation Program

The following elements of our executive compensation program reflect our continued commitment to our compensation philosophy:

What We Have

An executive compensation program designed to further the Company’s strategy and mitigate inappropriate risk;

Different performance horizons for the goals within our annual and long-term incentive plans;

Use of economic profit as a rigorous long-term incentive metric and net sales, net earnings and gross margin for our annual incentive metrics;

Stringent stock ownership and retention guidelines for all of our executives;

A prohibition on speculative transactions involving the Company’s stock, including hedging and pledging;


Stock options that vest over a four-year period and have an exercise price equal to fair market value of our Common Stock on the date of grant;

Clawback provisions in both our annual and long-term incentive plans;

Double-trigger change in control provisions for all equity awards;

Reasonable cash severance provisions to support talent retention and attraction objectives, promote orderly succession planning, and avoid individual negotiation with exiting executives, thus eliminating the need for individual employment agreements;

Modest perquisites supported by sound business rationale;

Annual review of our executive compensation program by the MDCC, which yielded changes to the annual and long-term incentive programs effective in fiscal year 2018; and

Use of an independent compensation consultant who does not provide any additional consulting services to the Company.

What We Don’t Have

Ø

Employment contracts for any executives;

Ø

Stock option re-pricing without stockholder approval;

Ø

Payment of dividends or dividend equivalents on unvested or unearned performance shares or restricted stock; and

Ø

Tax gross-ups for any executive officers.



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Components of Our Executive Compensation Program

The table below outlines the components of our executive compensation program, their purposes, and certain characteristics of these components.

Component       Purpose       Characteristics
Base Salary Compensate named executive officers for their role and level of responsibility, as well as individual performance. Fixed component.
Annual Incentives(1) Promote the achievement of the Company’s annual corporate financial and strategic goals, as well as individual objectives. Performance-based cash bonus opportunity.
Long-Term Incentives(1) Promote the achievement of the Company’s long-term corporate financial goals and stock price appreciation. Values of performance share grants and stock option awards vary based on actual Company financial and stock price performance.
Retirement Plans Provide replacement income upon retirement (a long-term retention incentive). Fixed component; however, Company contributions vary based on pay and employee contributions.
Post-Termination Compensation Provide contingent payments to attract and retain named executive officers and promote orderly succession for key roles. Only payable if a named executive officer’s employment is terminated under specific circumstances as described in the applicable severance plan.
Perquisites Provide other benefits competitive with the compensation peer group and encourage executives to proactively manage their health and financial wellness. Financial planning, Company car or car allowance, paid parking, annual executive physical, and health club allowance.
(1)

Payouts under the annual and long-term incentive plans are determined based on the achievement of objectives established by the MDCC at the beginning of the performance period. The performance period is one year for the cash awarded under the Annual Incentive Plan, which is further described in What We Pay: Components of Our Compensation Program and three years for the performance shares awarded under the long-term incentive plan. Specific financial goals cannot be changed during the performance period, except in accordance with principles set by the MDCC at the time the goals were established, which, in the case of our long-term incentive plan, provide for adjustments in limited circumstances, including acquisitions, restructuring charges, or significant changes to generally accepted accounting principles, and only if the adjustments exceed a specified minimum financial impact to the Company.



How We Make Compensation Decisions

Roles and Responsibilities in Setting Executive Compensation

Management Development and Compensation Committee. The MDCC is made up entirely of independent directors as defined by our Governance Guidelines and NYSE listing standards. The MDCC regularly reviews the design and implementation of our executive compensation program and reports on its discussions and actions to the Board. In particular, the MDCC (i) oversees our executive compensation program, (ii) approves the performance goals and strategic objectives for our named executive officers, evaluates results against those targets each year, and determines and approves the compensation of our CEO (after consulting with the other independent members of the Board) and our other named executive officers, as well as officers at or above the level of senior vice president and any other officers covered by Section 16 of the Exchange Act, and (iii) makes recommendations to the Board with respect to the structure of overall incentive and equity-based plans.

The MDCC makes its determinations regarding executive compensation after consulting with management and the MDCC’s independent compensation consultant (as further described below), and its decisions are based on a variety of factors, including the Company’s performance, individual executives’ performance, peer group data, and input and recommendations from the independent compensation consultant.

In 2017, the MDCC conducted a comprehensive examination of the Company’s compensation plan design, evaluating the program for alignment to the Company’s business strategy, the interests of our stockholders, our pay-for-performance philosophy, and market practices. After an extensive review, which included discussion with and support from the MDCC’s independent compensation consultant, consideration of stockholder input, and review of compensation data from other companies (including our compensation peer group and other companies in our industry or comparable geographies and talent markets), the MDCC approved various changes to both


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the annual and long-term incentive programs, as described under What We Pay: Components of Our Compensation Program. These changes were effective beginning with fiscal year 2018.

The MDCC evaluates individual performance based on the performance of the business or operations for which the executive is responsible, the individual’s skill set relative to industry peers, overall experience and time in the position, the critical nature of the individual’s role, difficulty of replacement, expected future contributions, readiness for promotion to a higher level, and role relative to that of other executive officers.

In determining the compensation package for each of our named executive officers other than our CEO, the MDCC receives input and recommendations from our CEO and our Senior Vice President – Chief People Officer. Named executive officers do not have a role in the determination of their own compensation, but named executive officers other than our CEO do discuss their individual performance objectives and results with our CEO.

Board of Directors. The independent members of the Board undertake a thorough process during which they review our CEO’s annual performance, and each independent director provides candid feedback and observations that are shared in aggregate with our CEO. The Board considers a variety of substantive factors it has identified as being most important for effective CEO performance, with a focus on strategy, people, and operations. The full Board discusses the evaluations of our CEO’s performance against these factors and then provides its compensation recommendations to the MDCC. The MDCC, after evaluating the Board’s recommendations and receiving input from the independent compensation consultant, then makes a final determination on our CEO’s compensation. Our CEO does not have a role in his own compensation determination other than participating in a discussion with the Board regarding his performance relative to specific targets and strategic objectives set at the beginning of the fiscal year, which the Board considers in both its compensation determination and when setting performance targets for the upcoming fiscal year.

Independent Compensation Consultant. The MDCC retains the services of an independent compensation consulting firm to assist it in the performance of its duties. During fiscal year 2018, the MDCC used the services of Frederic W. Cook & Co., Inc. FW Cook’s work with the MDCC included data analysis and guidance and recommendations on the following topics: compensation levels relative to our peers, market trends in incentive plan design, risk and reward structure of executive compensation

plans, and other policies and practices, including the policies and views of third-party proxy advisory firms. FW Cook also assisted in the evaluation and implementation of changes to the Company’s incentive plans, which were effective with fiscal year 2018 and are described under What We Pay: Components of Our Compensation Program. See the section entitled Independence of the Compensation Consultant for a discussion of FW Cook’s independence from management.

Chairman and Chief Executive Officer. Our CEO makes compensation recommendations to the MDCC for all executive officers other than himself. In making these recommendations, our CEO evaluates the performance of each executive officer and considers his or her responsibilities as well as the compensation analysis provided by the independent compensation consultant.

Other Members of Management. Senior human resources management provides analyses regarding competitive practices and pay ranges, compensation and benefit plans, policies and procedures for equity awards, perquisites, general compensation, and benefits philosophy. Senior human resources, legal, and, from time to time, finance executives attend non-executive sessions of the MDCC meetings to provide additional perspective and expertise.

Independence of the Compensation Consultant

Pursuant to its charter, the MDCC is authorized to retain, oversee, and terminate any consultants as it deems necessary, as well as to approve the fees and other retention terms of any such consultants. Prior to retaining a compensation consultant or any other external advisor, from time to time as the MDCC deems appropriate but at least annually, the MDCC assesses the independence of the advisor from management. In evaluating FW Cook, the MDCC’s compensation consultant, the MDCC took into consideration all factors relevant to FW Cook’s independence, including the following factors specified in the NYSE listing standards:

other services provided to the Company by FW Cook or any of its affiliates;

the fees paid by the Company to FW Cook as a percentage of FW Cook’s total revenue;

the policies and procedures of FW Cook that are designed to prevent a conflict of interest;

any business or personal relationship between individuals at FW Cook performing consulting services for the MDCC and an MDCC member;


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any ownership of Company stock by the individuals at FW Cook performing consulting services for the MDCC; and
any business or personal relationship between individuals at FW Cook performing consulting services for the MDCC and an executive officer of the Company.

FW Cook has provided the MDCC with appropriate assurances and confirmation of its independent status in accordance with the MDCC’s charter and other considerations. The MDCC believes that FW Cook has been independent throughout its service to the MDCC and that there is no conflict of interest between FW Cook or individuals at FW Cook and the MDCC, the Company’s executive officers, or the Company.

Our Peer Group

The MDCC uses a peer group of consumer products companies (the compensation peer group) to help determine competitive compensation rates for the Company’s executive officers, including the named executive officers. The compensation peer group was selected by the MDCC based on the factors described below, with input from FW Cook. The compensation peer group is used to evaluate both the levels of executive compensation and compensation practices within the consumer products industry.

For fiscal year 2018, the compensation peer group was composed of the following 18 companies:



Avon Products, Inc. The Estee Lauder Companies Inc. McCormick & Company, Incorporated
Campbell Soup Company General Mills, Inc. Molson Coors Brewing Company
Church & Dwight Co., Inc. The Hershey Company Newell Rubbermaid Inc.
Colgate-Palmolive Company Hormel Foods Corporation Revlon, Inc.
Dr. Pepper Snapple Group, Inc. The J.M. Smucker Company S.C. Johnson & Son, Inc.
Edgewell Personal Care General Mills, Inc. Tupperware Brands Corporation

To determine the compensation peer group for each year, the MDCC considers companies that:

hold leadership positions in branded consumer products;
are of reasonably similar size based on market capitalization and revenue;
compete with the Company for executive talent; and
have executive positions similar in breadth, complexity, and scope of responsibility to those of the Company.

The MDCC annually reviews and makes adjustments to the compensation peer group as appropriate to ensure that the peer group companies continue to meet the relevant criteria. There was a change to the compensation peer group for this fiscal year. Mead Johnson Nutrition Company was removed from the group due to an acquisition in 2017. Among the remaining peers, as of March 31, 2018, the Company was at the 35th percentile for revenue, 31st percentile for net income, and 59th percentile for market capitalization compared with the compensation peer group.




Fiscal Year 2018 Compensation of Our Named Executive Officers

For fiscal year 2018, management engaged Aon Hewitt to obtain and aggregate compensation data for the compensation peer group. This data was used to advise the MDCC on setting target compensation for our named executive officers. FW Cook reviewed this information and performed an independent compensation analysis of the compensation peer group data to advise the MDCC. Although each individual component of executive compensation is reviewed, particular emphasis is placed on targeting total compensation within 15% of the median

target dollar amounts of compensation of the compensation peer group. Other factors, such as an executive’s level of experience, may result in target total compensation for individual named executive officers being set above or below this median range. For fiscal year 2018, each named executive officer’s target total compensation is within 15% of the compensation peer group median, with the exception of Mr. Jacobsen who was promoted to CFO in April 2018.


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Compensation Discussion and Analysis


What We Pay: Components of Our Compensation Program

A substantial portion of our targeted direct compensation for our executives is at-risk variable compensation, with 86% of compensation for our CEO and 73% of compensation for all of our other named executive officers being at-risk. Base

salary is the only fixed direct compensation component, as outlined in the following charts, which reflect target compensation for fiscal year 2018.


Compensation Mix - CEO(1) Compensation Mix - Average of All Other NEOs(1)
Fixed compensation = 14% Fixed compensation = 27%
Variable compensation = 86% Variable compensation = 73%

(1) Compensation mix represents the actual base salary, target annual incentive award, and actual long-term incentives granted in fiscal year 2018. Refer to the Summary Compensation Table below for further details on actual compensation.

Additional elements of our executive compensation program include retirement plans, post-termination compensation, and perquisites as appropriate to support our executive compensation philosophy. Further detail about each element is provided in the discussion below:

Base Salary. The MDCC generally seeks to establish base salaries for our named executive officers within 15% of the median of the compensation peer group. The MDCC considered factors such as the executive’s specific role, level of experience, and sustained performance, as well as the compensation peer group market data, in determining each named executive officer’s base salary for fiscal year 2018. Changes in base salary are approved by the MDCC in September and become effective in October of each year. All base salaries that went into effect in October 2017 for the named executive officers, who were executive officers at the time, were within this target pay range.

Mr. Jacobsen was promoted to CFO in April 2018 and received a 38% increase in base salary to $500,000 in connection with the promotion. Even after this increase, his salary is slightly below the target pay range due to his short tenure in the CFO role.

After conducting a review for Mr. Dorer and evaluating his individual performance and overall Company performance for fiscal year 2017, the MDCC approved a base salary increase of 4.9% for fiscal year 2018, to $1,075,000, which was within 15% of the compensation peer group median for CEOs. The annual base salary increases for our named executive officers, other than our CEO and new CFO, ranged from 2.9% to 7.2%, with an average increase of 4.8%. The actual base salaries earned by our named executive officers in fiscal year 2018 are listed in the Salary column of the Summary Compensation Table.


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Annual Incentives. The Company provides annual incentive awards to our named executive officers under the Company’s Executive Incentive Compensation Plan (Annual Incentive Plan). Payouts under the Annual Incentive Plan are based on the level of achievement of Company performance goals set annually by the MDCC, not to exceed the stockholder-approved maximums. These performance goals are tied to Board-approved corporate financial performance goals and individual objectives, which are described below. The amounts actually paid under the Annual Incentive Plan are based on four factors: (1) a target

award for each named executive officer, which is the base salary multiplied by the annual incentive target (Target Award), (2) the Company’s performance measured against pre-established corporate financial goals (Financial Performance Multiplier), and (3) the named executive officer’s individual performance (Individual Performance Multiplier), which is based primarily on the performance of the operations or functions under the individual’s responsibility. The final individual Annual Incentive Plan payout is determined by the following formula:


The Financial Performance Multiplier can range from 0% to 200% based on an objective assessment of Company performance versus goals established by the MDCC at the beginning of the year. The Individual Performance Multiplier which is also determined by the MDCC, typically has a much narrower range, which makes its impact on the total payout significantly smaller than the Financial Performance Multiplier. Over the past three years, the range for the Individual Performance Multipliers for the named executive officers was 90% to 115%. By comparison, the range for the Financial Performance Multiplier during this same time period was 75% to 161%.

Below is an illustration of the annual incentive calculation, using our CEO’s Annual Incentive Plan payout as an example. The Financial Performance Multiplier was 75% in fiscal year 2018, based on the Company’s performance compared to the targets for annual net sales, net earnings from continuing operations and gross margin that were established by the MDCC at the beginning of the year. With the CEO’s Individual Performance Multiplier of 105%, this resulted in a final payout that was below target.


For 2018, the MDCC removed the Strategic Metrics Multiplier as a separate multiplier that applies equally to all executive officers. Commencing in fiscal year 2018, the relevant strategic metrics were incorporated into the individual multipliers for each executive officer, thereby
resulting in a simpler annual incentive calculation that continues to reflect performance measured against key strategic objectives and individual contributions. The overall balanced scorecard with annual strategic priorities of financial goals, and other targets related to people,


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customer and consumer, growth, and margin targets as described above will continue to be evaluated by the Board, and used to measure the CEO’s performance as part of the CEO’s individual multiplier.

Each of the elements of the annual incentive formula is further described below.

Base Salary. The named executive officer’s actual fiscal year 2018 base salary is the starting point for the annual incentive calculation.

Annual Incentive Target. Each year, the MDCC sets an annual incentive target level for each named executive officer as a percentage of his or her base salary, based on an assessment of median bonus targets in the compensation peer group and other factors such as individual experience, as noted above. The annual incentive target level is generally set near the median of bonus targets for comparable positions in the compensation peer group. The table below sets forth the targets for the fiscal year 2018 annual incentive awards.


Named Executive Officer Annual Incentive
Target (% of
Base Salary)
Benno Dorer – Chairman and Chief Executive Officer(1) 150%
Kevin B. Jacobsen – Senior Vice President, Chief Financial Officer(2) 80%
Dawn Willoughby – Executive Vice President, Chief Operating Officer(3) 85%
Laura Stein – Executive Vice President, General Counsel and Corporate Affairs 70%
Linda Rendle – Executive Vice President, Cleaning and Strategy 65%
Stephen M. Robb – Executive Vice President, Chief Financial Officer(4) (retired March 31, 2018) 90%
(1) Mr. Dorer’s target was increased from 145% in fiscal year 2017 to 150% at the beginning of fiscal year 2018.
(2) Mr. Jacobsen’s target was increased from 50% to 80% upon his promotion to CFO on April 1, 2018.
(3) Ms. Willoughby’s target was increased from 80% in fiscal year 2017 to 85% at the beginning of fiscal year 2018.
(4) Mr. Robb’s target was increased from 85% in fiscal year 2017 to 90% at the beginning of fiscal year 2018.

Financial Performance Multiplier. At the beginning of each fiscal year, the MDCC sets financial goals for the Annual Incentive Plan based on targets approved by the Board. At the end of the year, the MDCC reviews the Company’s results against the goals set at the beginning of the year. Beginning in fiscal year 2018, the economic profit metric (in fiscal year 2017, weighted as 50% of the multiplier) was replaced by net earnings from continuing operations (weighted 30%) and gross margin (weighted 20%). As in prior years, net sales was retained as a financial goal with 50% weighting.

The change from use of economic profit to use of net earnings from continuing operations and gross margin was intended to eliminate performance metric redundancy between our annual incentive and long-term incentive plans (where the economic profit metric remains the sole performance goal), enhance the line of sight between earned cash compensation and metrics that our broader management team and employees can directly influence, and reinforce the importance of both net earnings and gross margin in driving sustainable value creation over time. Economic profit remains a key metric for the Company, but the MDCC determined that the introduction of net earnings and gross margin was preferable in the annual incentive plan after considering investor feedback regarding a preference not to use the same metric in both short- and long-term plans, evaluating the metrics most commonly used by our peers in their short-term incentive plans, the suitability of various metrics in the short term versus the long term, and the focus on business fundamentals. In replacing the economic

profit metric with net earnings and gross margin in the annual incentive, the MDCC considered the attributes of these various metrics: economic profit is the after-tax profit the Company generates after paying for assets used to run the business (or capital charge), while net earnings from continuing operations is similar to economic profit but does not include a capital charge. Because the capital charge is more difficult to influence on an annual basis, the MDCC determined that economic profit better aligns with long-term incentives, and net earnings to short-term incentives. Additionally, gross margin is a core element of profitable growth and a key metric for our investors, and the MDCC believes that adding gross margin as a metric for the annual incentive will help ensure that employees are focused on improving the Company’s profitability and ability to fund investments for future growth.

For fiscal year 2018, the MDCC established financial goals with a focus on increasing net sales, net earnings from continuing operations, and gross margin, as described in greater detail below, in order to drive sustainable, profitable growth and short- and long-term total stockholder returns. The net sales, net earnings from continued operations and gross margin metrics determine the Financial Performance Multiplier. They are weighted 50%, 30% and 20%, respectively, as the MDCC believes this mix effectively balances a focus on both top-line and bottom-line performance. In selecting the metrics and setting the financial goals of the Annual Incentive Plan, the MDCC carefully considered whether the goals appropriately align


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with the goals of the long-term incentive program so that the overall compensation design does not encourage participants to take unnecessary or excessive risk or actions that are inconsistent with the Company’s short- and long-term strategic and financial objectives.

For fiscal year 2018, the financial goals for the Annual Incentive Plan, the potential range of payouts for achieving those goals, and the actual results as determined by the MDCC were as follows:


      Annual Incentive
Financial Goals (in millions)
Goal 0%
(Minimum)
      100%
(Target)
      200%
(Maximum)
      Actual(1)
Net Sales (weighted 50%)      $ 5,929  $ 6,113      $ 6,296 $ 6,063
Net Earnings from Continued Operations (weighted 30%) $ 698 $ 742 $ 787 745
Gross Margin (weighted 20%) 43.8 % 45.1 % 46.1 % 44.2 %

(1) Results exclude the impact of the change in accounting for share-based payments (ASU 2016-09) and the Tax Cuts and Jobs Act from net earnings from continued operations, as well as the impact from the Nutranext Acquisition on net sales, net earnings from continuing operations and gross margin.

For fiscal year 2018, the Financial Performance Multiplier was 75%, primarily driven by lower-than-targeted sales growth, inclusive of unfavorable foreign currency exchange rates, mainly in Argentina. Additionally, rising commodity and logistics costs during the fiscal year had a negative impact on gross margin, which were partially offset by cost savings and price increases. Net earnings from continuing operations came in above target due to the impact of cost savings, price increases as well as lower advertising and sales promotion spending. As shown in the table above, all of these results have been adjusted to remove the impact of the acquisition of Nutranext, certain accounting changes, as well as the benefits of a lower tax rate as a result of the Tax Cuts and Jobs Act.

Individual Performance Multiplier. Consistent with our pay-for-performance philosophy, the annual incentive payouts initially are determined by financial results multiplied by an Individual Performance Multiplier. Based on its evaluation of individual performance, the MDCC reviewed and approved the Individual Performance Multiplier for each named executive officer to reflect the officer’s individual contributions in fiscal year 2018. In determining the multiplier for individual performance, the MDCC carefully evaluates several performance factors against objectives established at the beginning of the year. For our CEO, the MDCC conducts a detailed evaluation covering the key categories of strategy, people, operations, and overall performance, with specific goals within each category. For our other named executive officers, the CEO recommends an individual performance multiplier based on each such officer’s contribution in those key categories relevant to their roles.

To set specific targets for our CEO, the MDCC uses a balanced scorecard with annual strategic priorities of financial goals, people, customer and consumer, growth, and margin, with specific metrics and targets within each strategic priority. These targets are used to measure the CEO’s performance twice a year, with a mid-year review and a year-end evaluation.

This assessment is then used to determine the appropriate individual multiplier for the fiscal year performance. The MDCC reviewed the results for our CEO and determined his Individual Performance Multiplier was 105%, based on his continued strong performance, including progress on the Company’s 2020 Strategy, delivering solid overall operational results for fiscal year 2018, and continuing to shape a highly successful senior management team.

The range of Individual Performance Multipliers for the other named executive officers in fiscal year 2018 was 90% to 115% based on their respective contributions and results for the fiscal year. Our SVP, CFO received an Individual Performance Multiplier of 95% based primarily on the Company not meeting certain financial targets. Our EVP, COO received an Individual Performance Multiplier of 90% based on mixed financial and operational results. The EVP, General Counsel & Corporate Affairs received an Individual Performance Multiplier of 100% as she and her team continued to deliver on both internal and external objectives. Our EVP, Cleaning and Strategy received an Individual Performance Multiplier of 115%, driven by the at- or above-target results for all of her businesses. Our former EVP, CFO received an Individual Performance Multiplier of 95%, based primarily on the Company not meeting certain financial targets.

Final Individual Annual Incentive Plan Payouts. In accordance with the formula described above, the final annual incentive payouts to our named executive officers in fiscal year 2018, excluding our CEO, ranged from $168,040 to $344,250 and from 68% to 86% of the named executive officers’ Target Awards (excluding Mr. Robb’s’ payout, which was pro-rated for his partial year of service). Mr. Dorer’s annual incentive payout was $1,269,840. This award was 79% of his Target Award and is composed of a Financial Performance Multiplier of 75%, and an Individual Performance Multiplier of 105%. These payouts are also reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.


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Compensation Discussion and Analysis

Long-Term Incentives. Each year, we provide long-term incentive compensation to our named executive officers. These awards have been made in the form of performance shares and stock options, which we believe align Company performance and executive officer compensation with the interests of our stockholders. These incentive awards also support the achievement of our long-term corporate financial goals.

We use time-based restricted stock for non-executive officer employees and occasionally for special purposes for executive officers, such as in connection with a promotion or as a replacement for compensation forfeited by an externally recruited executive at a prior employer.

The MDCC annually reviews the costs of, and potential stockholder dilution attributable to, our long-term incentive program to ensure that the overall program is financially efficient and in line with that of our compensation peer group. The MDCC also seeks to calibrate the long-term incentive program design to appropriately drive performance in line with that of the compensation peer group. In determining the total value of the long-term incentive opportunity for each named executive officer, the MDCC reviews the compensation peer group data presented by both management and the independent compensation consultant on a role-by-role basis and considers recommendations by our CEO for the other named executive officers.

The MDCC’s goal is to target long-term incentive awards in amounts that are generally competitive with the median of the compensation peer group. Actual long-term incentive award target levels for individual named executive officers may vary from the median based on a variety of factors, such as the named executive officer’s sustained performance, individual experience, critical nature of his or her role, and expected future contributions. Like the annual incentive awards, actual payouts under the long-term incentive awards will vary from the target based on how the Company performs against pre-established targets. The value of payouts will also vary based on changes in the market price of our Common Stock.

The MDCC determined that our named executive officers would receive 50% of the value of their total annual long-term incentive award granted in fiscal year 2018 in performance shares and 50% in stock options. The MDCC believes this mix of equity awards supports several important objectives, including compensating named executive officers for achievement of long-term goals tied to our business strategy, rewarding named executive officers for sustained increases in the price of our Common Stock, enhancing retention by mitigating the impact of price fluctuations of our Common Stock in the overall long-term incentive value, and ensuring that the overall cost of the program is aligned

with the compensation realized by the named executive officers and the performance delivered to stockholders. The MDCC does not consider the amount of outstanding performance shares, stock options, and restricted stock currently held by a named executive officer when making annual awards of performance shares and stock options because such amounts represent compensation attributable to prior years.

Long-Term Incentive Award. The long-term incentive awards granted to our named executive officers for fiscal year 2018 were made in September 2017. The MDCC considered factors such as the executive’s role, level of experience, and sustained performance, as well as the compensation peer group market data, in determining each named executive officer’s long-term incentive award. For fiscal year 2018, the long-term incentives for our named executive officers (including the off-cycle awards discussed below), excluding our CEO, ranged in value from $700,000 to $1,500,000. Mr. Dorer received a long-term incentive award valued at $5,250,000. As discussed below, our SVP, CFO, Mr. Jacobsen received off-cycle performance share and stock option grants in connection with his promotion in April 2018. The MDCC also made an off-cycle grant of restricted stock units to our EVP, Cleaning & Strategy, Ms. Rendle upon her promotion to EVP in June 2018. The long-term incentives awarded to our named executive officers in fiscal year 2018 are listed in the Stock Awards and Option Awards columns of the Summary Compensation Table.

Performance Shares. Performance shares are grants of restricted stock units that pay out after a three-year performance period only if the Company meets pre-established financial performance goals, which are described below. Beginning in fiscal year 2018, the MDCC changed the measurement of economic profit (EP) performance from a three-year cumulative dollar amount to a three-year annual growth rate that is established at the beginning of the cycle and held constant. For purposes of the performance shares, EP is defined as earnings before interest and taxes, adjusted for non-cash restructuring charges, times one minus the tax rate, less capital charge. In addition, beginning in fiscal year 2018, the MDCC changed the potential payout range from 0% to 150% of target with a 25% payout for threshold performance (and a zero payout below threshold) to a range of 0% to 200% of target with a 50% payout threshold. In making these changes, the MDCC considered a number of factors, including practices at other comparable companies, the difficulty in setting a three-year cumulative dollar-denominated target in a rapidly evolving and volatile global economic environment, feedback from investors, and talent retention. With regard to the change from a dollar-denominated cumulative EP target to a target growth


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rate over three years, the MDCC specifically considered the volatility of year-over-year results and the potential for a single good or bad year to have a disproportionate impact on a three-year payout opportunity.

We believe that performance shares align the interests of our named executive officers with the interests of our stockholders because the number of shares earned and the shares’ potential value are tied to the achievement of performance targets. As discussed above, the performance target for the awards granted in September 2017 is a three-year annual EP growth rate target informed by our three-year financial long-range plan and the budget developed by management, which is reviewed and approved by the Board. In setting the performance targets for the performance shares, the MDCC reviews the budget and long-range plan and seeks to appropriately align the performance goals with the objectives of the Annual Incentive Plan, so that the overall compensation design does not encourage participants to take unnecessary or excessive risk or actions that are inconsistent with the Company’s short- and long-term strategic and financial objectives. The MDCC believes its use of growth in EP as a metric provides rigor and an ability to align performance with pay over the three-year performance period.

The payout of the performance share awards granted in September 2017 is subject solely to the Company’s achievement of a three-year annual growth rate EP target during the performance period of July 2017 through June 2020. The percentage range for payouts is from 0%, if the minimum EP target is not met, to a maximum of 200% of the target number of shares. The minimum EP target results in a 50% payout threshold. In connection with his promotion to SVP, CFO, Mr. Jacobsen received an off-cycle grant of performance shares in April 2018. The performance shares are subject to the same terms and conditions as the September 2017 performance shares.

For the grant made in September 2015, which was based on a performance period of July 2015 through June 2018 and paid out in August 2018, the MDCC established cumulative EP targets and set various payout levels tied to cumulative EP for the performance period. For the September 2015 grant, the cumulative EP target was set so a payout of 100% would be made if the Company achieved EP growth of approximately 5% per year during the performance period. The MDCC believes this metric directly supports the Company’s corporate strategy and long-term financial goals and correlates to stock price performance.

In August 2018, the MDCC certified the results of the September 2015 grant for the 2015-2018 performance period. The adjusted financial target for the grant was

a cumulative EP of $1.485 billion over the three-year performance period for a 100% payout. The cumulative EP target was adjusted in accordance with the grant agreements for the impact of the adoption of a change to the accounting standards for share-based payments under ASU 2016-09, as well as for the acquisitions of Renew Life in May 2016 and Nutranext in April 2018 and the Tax Cuts and Jobs Act that went into effect January 1, 2018. The Company’s actual cumulative EP of $1.629 billion was well above the payout maximum of $1.535 billion, resulting in the MDCC certifying a payout of 150%, which was the maximum possible payout for the 2015 grants.

Stock Options. Stock options align the interests of our named executive officers with those of our stockholders because the options only have value if the price of the Company’s stock increases after the stock options are granted. Stock options vest in 25% increments over a four-year period (beginning one year from the date of grant) and expire 10 years from the date of grant. In fiscal year 2018, the MDCC awarded stock options to our named executive officers as part of our annual long-term incentive plan. Additionally, in connection with his promotion to SVP, CFO, Mr. Jacobsen received an off-cycle grant of stock options in April 2018. The stock options are subject to the same terms and conditions as the annual grants. The exercise price for the stock options was equal to the closing price of our Common Stock on the date of grant. Information on all stock option grants is shown in the Grants of Plan-Based Awards table.

Retirement Plans

Our named executive officers participate in the same tax-qualified retirement benefit programs available to all other United States-based salaried and non-collectively bargained hourly employees. The Company’s retirement plans are designed to provide replacement income upon retirement and to be competitive with programs offered by our peers.

In addition, because the IRC limits the amount of benefits that can be contributed to and paid from a tax-qualified retirement plan, the Company also provides our executive officers, including our named executive officers, with additional retirement benefits intended to restore amounts that would otherwise be payable under the Company’s tax-qualified retirement plans if the IRC did not have limits on includable compensation and maximum benefits. We call these plans “restoration plans” because they restore total executive retirement benefits to the same percentage level provided to our salaried employees who are not limited by IRC restrictions.


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Compensation Discussion and Analysis

A brief description of each of our retirement programs is set forth below. Each of our named executive officers participates in these retirement programs with the exception of the Supplemental Executive Retirement Plan.

The Clorox Company Pension Plan. The Clorox Company Pension Plan (the Pension Plan) is a cash balance pension plan that was frozen effective June 30, 2011. This freeze did not affect the benefits previously accrued under the Pension Plan, which remain fully funded.

The Clorox Company 401(k) Plan. After the Pension Plan was frozen in June 2011, the Clorox Company 401(k) Plan (the 401(k) Plan) became the primary retirement plan for the Company. The Company makes an annual fixed contribution of 6% of eligible pay and a matching contribution of up to 4% of eligible pay to eligible employees.

Nonqualified Deferred Compensation Plan. Under the Nonqualified Deferred Compensation Plan (the NQDC), eligible employees may voluntarily defer receipt of up to 50% of base salary and up to 100% of their annual incentive awards. In fiscal year 2018, deferred amounts could be invested in a manner that generally mirrored the funds available in the 401(k) Plan. The NQDC permits the Company to contribute amounts that exceed the IRC compensation limits in the tax-qualified plans through a 401(k) restoration provision for those employees deferring at required levels in the plan.

Supplemental Executive Retirement Plan. The Supplemental Executive Retirement Plan (the SERP), a defined benefit plan, was closed to new participants effective April 2007 and, effective June 30, 2011, was frozen with regard to pay and offsets, while still accruing age and service credits. Benefits under the SERP have historically been calculated as an annuity based on a percentage of average compensation adjusted by age and years of service and offset by the annuity value of Company contributions to the tax-qualified retirement plans and by Social Security. Effective July 1, 2011, the SERP was replaced by the Executive Retirement Plan (the ERP) (described below). Moving from the SERP to the ERP created a defined contribution structure that is more closely aligned with the benefits provided by the Company’s compensation peer group. In March 2018, the SERP was amended to provide that designated participants whose service as an executive of the Company is succeeded by service as a consultant or advisor will be entitled to receive age and service credits while serving as a consultant or advisor for purposes of accruing an early retirement benefit under the SERP, provided that they have attained a minimum of 25 years of service and be at least 50 years old at the time that service as a consultant or advisor commences. As of July 1, 2018, only three of our named executive officers are still eligible for the SERP.

Executive Retirement Plan. Our executive officers (including named executive officers) participate in the ERP. Under the ERP, the Company makes an annual contribution of 5% of an eligible participant’s base salary and annual incentive award into the plan.

Further details about the provisions of the Pension Plan, NQDC, SERP, and ERP are provided in the Overview of Pension Benefits and the Overview of the Nonqualified Deferred Compensation Plans sections below.

Post-Termination Compensation

The Company has a severance plan (the Severance Plan) that provides our named executive officers with post-termination payments if the named executive officers’ employment is terminated by the Company other than for cause. These payments are intended to provide a measure of financial security following the loss of employment, which we believe is important to attract and retain executives. The severance benefits are designed to be competitive with the compensation peer group and external market practices.

The Company also has an Executive Change in Control Severance Plan (the CIC Plan), which provides severance benefits to certain eligible executives of the Company, including all of the Company’s named executive officers, if their employment with the Company is involuntarily terminated in connection with a change in control of the Company. In addition to helping mitigate the financial impact associated with termination after a change in control, these benefits further align the interests of our executive officers with the interests of our stockholders by providing incentives for retention, for business continuity purposes. Under the CIC Plan, a named executive officer is eligible for change in control severance benefits if his or her employment is terminated in connection with a change in control, either by the Company without cause or by the named executive officer for good reason. See the section entitled Potential Payments Upon Termination or Change in Control for additional information.

Mr. Robb retired from the Company as of March 31, 2018. With his retirement, he was eligible to receive accelerated vesting for stock options held over six months, a pro-rata share of performance units and a pro-rata bonus payout related to his partial year of service. Upon retirement, Mr. Robb was not eligible for subsidized retiree health care. Mr. Robb will serve in an advisory role until September 30, 2019. In accordance with the terms of the SERP, as most recently amended on March 28, 2018, Mr. Robb will continue to accrue age and service credit (with no other compensation) while serving in an advisory capacity.


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Perquisites

We provide our named executive officers with other limited benefits we believe are competitive with the compensation peer group and consistent with the Company’s overall executive compensation program. These benefits allow our named executive officers to proactively manage their health, work more efficiently, and, in the case of the financial planning program, help them optimize the value received from our compensation and benefits programs. These perquisites are a Company car or car allowance, paid parking at the Company’s headquarters, an annual executive physical exam, reimbursement for health club membership, and financial planning services.

Other Executive Compensation Policies and Practices

Tally Sheets. To help ensure that our executive compensation design is aligned with our overall compensation philosophy of pay for performance and that total compensation levels are appropriate, the MDCC annually reviews compensation tally sheets for each of our named executive officers. These tally sheets outline current target total compensation (including the compensation elements described above), the potential wealth creation of long-term incentive awards granted to our officers under various potential stock prices, and the potential value of payouts under various termination scenarios. As such, these tally sheets help provide the MDCC with a comprehensive understanding of all elements of the Company’s compensation program and enable the MDCC to consider changes to the Company’s compensation program, arrangements, and plans in light of best practices and emerging trends. The MDCC may consider the information presented in the tally sheets in determining future compensation.

Results of 2017 Advisory Vote on Executive Compensation. At our 2017 Annual Meeting of Stockholders held on November 15, 2017, we asked our stockholders to approve, on an advisory basis, our fiscal year 2017 compensation awarded to our named executive officers, commonly referred to as a “say-on-pay” vote. Our stockholders overwhelmingly approved the compensation to our named executive officers, with approximately 94% of votes cast in favor of our proposal. We value this positive endorsement by our stockholders of our 2017 executive compensation policies and believe that the outcome signals our stockholders’ support of our compensation program. We continued our general approach to compensation for fiscal year 2018, specifically our pay-for-performance philosophy and our efforts to attract, retain, and motivate our named executive officers, taking into account the say-on-pay results as well as specific feedback from our stockholders. We value the opinions of our stockholders and will continue to consider the results from this year’s and

future advisory votes on executive compensation, as well as feedback received throughout the year, when making compensation decisions for our named executive officers.

Stock Award Granting Practices. The Company awards long-term incentive grants each September at a regularly scheduled MDCC meeting, which typically occurs during the third week of the month, or about six weeks after the Company has publicly reported its annual earnings. The meeting date is the effective grant date for the awards, and the exercise/grant price is equal to the closing price of our Common Stock on that date.

The MDCC may also make occasional grants of stock options and other equity-based awards at other times to recognize, retain, or recruit executive officers.

Executive Stock Ownership Guidelines. To maintain alignment of the interests of the Company’s executive officers and our stockholders, all executive officers, including the named executive officers, are expected to build and maintain a significant level of direct stock ownership. Ownership levels can be achieved over time in a variety of ways, such as by retaining stock received upon the exercise of stock options or the vesting of stock awards or by purchasing stock in the open market. At a minimum, executive officers are expected to establish and maintain direct ownership of Common Stock having a value, based on the current market price of the stock, equal to a multiple of each executive officer’s annual base salary. The current minimum ownership guidelines are as follows:

Chief Executive Officer 6x annual base salary
Executive Officers (other than the CEO) 3x annual base salary
Other Senior Executives 2x annual base salary

Ownership levels are based on shares of Common Stock owned by the named executive officer or held pursuant to Company plans, including performance shares that have vested and been deferred for settlement. Unexercised stock options and shares that have not vested due to time or performance restrictions are excluded from the ownership calculations.

As of the date of this proxy statement, Mr. Dorer, Ms. Willoughby and Ms. Stein have met the required ownership levels. Ms. Rendle and Mr. Jacobsen became subject to a higher threshold with their promotions to the Executive Committee in fiscal years 2017 and 2018, respectively, and their ownership threshold increased from 2 times annual base salary to 3 times annual base salary required for executive officers other than the CEO.

Retention Ratios. Executive officers, including our named executive officers, are required to retain a certain percentage of shares obtained upon either the exercise of


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Compensation Discussion and Analysis

stock options or the release of restrictions on performance shares and restricted stock, after satisfying applicable taxes. Our CEO is expected to retain 75% of shares acquired (after taxes) until the minimum ownership level is met. After attaining the minimum ownership level, our CEO must retain 50% of any additional shares acquired (after taxes) until retirement or termination. Other executive officers must retain 75% of shares acquired (after taxes) until the minimum ownership levels are met and thereafter must retain 25% of shares acquired (after taxes) for one year after receipt.

Securities Trading Policy; Prohibition on Hedging and Pledging. To ensure alignment of the interests of our stockholders and executive officers, including our named executive officers, the Company’s Insider Trading Policy does not permit executive officers to engage in short-term or speculative transactions or derivative transactions involving the Company’s stock and includes prohibitions on options trading, hedging, or pledging the Company’s stock as collateral. Trading is permitted only during announced trading periods or in accordance with a previously established trading plan that meets SEC requirements. At all times, including during announced trading periods, executive officers are required to obtain preclearance from the Company’s General Counsel or Corporate Secretary prior to entering into any transactions in Company securities, unless those sales occur in accordance with a previously established trading plan that meets SEC requirements.

Clawback Provisions. Under our Annual Incentive Plan and long-term incentive plan, in the event of a restatement of financial results to correct a material error or other factors as described in the long-term incentive plan, the MDCC is authorized to reduce or recoup an executive officer’s award, as applicable, to the extent that the MDCC determines such executive officer’s fraud or intentional misconduct was a significant contributing factor to the need for a restatement.

Tax Deductibility Limits on Executive Compensation. For our 2017 fiscal year, Section 162(m) limits the tax deductibility of compensation paid to our CEO and the three other most highly compensated named

executive officers employed at the end of the year (other than the CFO) to $1 million per year, unless such amounts are determined to be performance-based compensation. Our policy with respect to Section 162(m) seeks to balance the interests of the Company in maintaining flexible incentive plans against the possible loss of a tax deduction when taxable compensation for any of the executive officers subject to Section 162(m) exceeds $1 million per year. The Annual Incentive Plan and long-term incentive plan are designed to provide the Committee with the ability to decide whether or not to make performance-based compensation awards that are intended to meet the requirements of Section 162(m). The Committee generally seeks to satisfy the requirements necessary to allow the compensation of its executives to be deductible under Section 162(m) of the IRC, but retains the discretion and may also approve compensation that is not deductible under Section 162(m). The rules and regulations promulgated under Section 162(m) are complex and subject to change from time to time, sometimes with retroactive effect. There can be no guarantee, therefore, that amounts potentially subject to the Section 162(m) limitations will be treated by the Internal Revenue Service as “qualified performance-based compensation” under Section 162(m) and/or deductible by the Company.

With the enactment of the Tax Cuts and Jobs Act in December 2017, for taxable years beginning after December 31, 2017, the deductibility exemption for performance-based compensation under Section 162(m) has been eliminated. As a result, compensation in excess of $1 million paid to covered executive officers generally will not be deductible unless the compensation qualifies for certain transition relief under the Tax Cuts and Jobs Act. As a result, the Company continues to assess how the amendments to Section 162(m) may affect its annual and long-term incentive compensation. Given the commitment of the Company and the MDCC to tying the compensation of its executives to the performance of the Company, at this time we do not expect there to be material changes made to the manner in which the Company awards its incentive compensation.


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The Management Development and Compensation Committee Report

As detailed in its charter, the Management Development and Compensation Committee of the Board oversees the Company’s executive compensation program and policies. As part of this function, the MDCC discussed, and reviewed with management, the CD&A. Based on this review and discussion, we have recommended to the Board that the CD&A be included in the proxy statement.

THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE

Jeffrey Noddle, Chair
Richard H. Carmona
Spencer C. Fleischer
David Mackay


Compensation Committee Interlocks and Insider Participation

Each of Dr. Carmona and Messrs. Fleischer, Mackay, and Noddle served as a member of the MDCC during part or all of fiscal year 2018. None of the members was an officer or employee of the Company or any of its subsidiaries during fiscal year 2018 or in any prior fiscal year. No executive officer of the Company served on the board of directors or compensation committee of any other entity that has or had one or more executive officers who served as a member of the Board or MDCC during fiscal year 2018.

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Compensation Discussion and Analysis Tables

FISCAL YEAR 2018 SUMMARY COMPENSATION TABLE

The following table sets forth the compensation earned, paid, or awarded to our named executive officers for the fiscal years ended June 30, 2018, 2017, and 2016.

Name and Principal
Position
    Year     Salary
($)(1)
    Stock
Awards
($)(2)(3)
    Option
Awards
($)(2)
    Non-Equity
Incentive Plan
Compensation
($)(4)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
    All Other
Compensation
($)(6)
    Total
($)
Benno Dorer 2018 $ 1,061,538 $ 2,624,635 $ 2,625,829       $ 1,269,840          $ 131,210          $ 420,015 $ 8,133,067
Chairman and Chief 2017 $ 1,010,577 2,374,406 2,374,959 1,569,480 188,548 550,919 8,068,890
Executive Officer  2016 976,154 2,175,084 2,175,010 2,469,220 710,100 428,424 8,933,992
Kevin B. Jacobsen 2018 388,463 349,952 350,091 168,040 7,476 107,965 1,371,987
Senior Vice President  
— Chief Financial Officer  
Dawn Willoughby 2018 593,269 624,978 625,154 344,250 2,643 183,041 2,373,335
Executive Vice President 2017 537,692 750,534 449,985 436,680 2,208 223,421 2,427,520
— Chief Operating Officer 2016 515,154 399,528 400,023 766,130 2,293 177,569 2,260,697
Laura Stein 2018 607,288 500,253 500,093 321,300 177,933 2,106,867
Executive Vice President 2017 590,317 412,352 412,475 399,500 227,339 2,041,983
— General Counsel and 2016 582,050 399,528 400,023 754,980 862,607 226,861 3,226,049
Corporate Affairs
Linda Rendle 2018 435,923 563,379 312,577 271,900 1,401 117,181 1,702,362
Executive Vice President  
— Cleaning and Strategy  
Stephen M. Robb 2018 484,231 749,702 750,215 309,210 683,981 186,161 3,163,500
Executive Vice President 2017 601,346 700,382 700,053 522,650 262,971 2,787,402
— Chief Financial Officer 2016 576,846 550,188 550,065 945,010 366,586 224,752 3,213,447
(Retired March 31, 2018)
(1) Reflects actual salary earned for fiscal years 2018, 2017, and 2016. Fiscal year 2016 had an extra day of earnings (versus 2017 and 2018) as a result of the leap year.
(2) The amounts reflected in these columns are the values determined under FASB ASC Topic 718 for the awards granted in the fiscal years ended June 30, 2018, 2017, and 2016, in accordance with the applicable accounting standard. The assumptions made in valuing stock awards and option awards reported in these columns are discussed in Note 1, Summary of Significant Accounting Policies under subsection “Stock-Based Compensation”, and in Note 16, Stock-Based Compensation Plans, to the Company’s consolidated financial statements for the three years in the period ended June 30, 2018, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. Additional information regarding the stock awards and option awards granted to our named executive officers during fiscal year 2018 is set forth in the Grants of Plan-Based Awards Table.
(3) The grant date fair value of the performance share awards reflected in this column is the target payout based on the probable outcome of the performance-based conditions, determined as of the grant date. The maximum potential payout of the stock awards granted in fiscal year 2018 would be 200% of the target shares awarded on the grant date. The maximum value of the performance share awards for 2018 determined as of the date of grant would be as follows for each respective named executive officer: Mr. Dorer – $5,249,270; Mr. Jacobsen – $699,904; Ms. Willoughby – $1,249,955; Ms. Stein – $1,000,507; Ms. Rendle – $626,333; and Mr. Robb – $1,499,404. The payout of the performance share award granted to Mr. Robb in fiscal year 2018 was prorated due to his retirement. See the Grants of Plan-Based Awards Table for more information about the performance shares granted under the 2005 Stock Incentive Plan.
(4) Reflects annual incentive awards earned for fiscal years 2018, 2017, and 2016 and paid out in September 2018, September 2017, and September 2016, respectively, under the Annual Incentive Plan. Information about the Annual Incentive Plan is set forth in the Compensation Discussion and Analysis under "Annual Incentives". Mr. Robb’s award for fiscal year 2018 was pro-rated for his partial year of service.

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(5) The amounts reflect the aggregate change in the present value of accumulated benefits during fiscal years 2018, 2017, and 2016 under the SERP, the Pension Plan, and the cash balance restoration benefit of the NQDC (note that the SERP, the Pension Plan, and the cash balance restoration benefit of the NQDC are all frozen benefits; refer to the Pension Benefits Table for further information). Each plan amount in fiscal year 2018 is set forth in the following table:

      Benno
Dorer
      Kevin B.
Jacobsen
      Dawn
Willoughby
      Laura
Stein
      Linda
Rendle
      Stephen M.
Robb
The Pension Plan   $ 1,552      $ 3,695         $ 2,418     $ 3,848    $ 1,401    $ 4,405
SERP 126,001 (165,701 ) 678,754
Cash Balance Restoration Benefit 3,657 3,781 225 29,013 822
Total $ 131,210 $ 7,476 $ 2,643 $ (132,840 ) $ 1,401 $ 683,981
(6) The amounts shown in the All Other Compensation column represent (i) actual Company contributions under the Company’s 401(k) Plan, (ii) nonqualified contributions under the NQDC and ERP, and (iii) perquisites available to named executive officers of the Company:

      Benno
Dorer
      Kevin B.
Jacobsen
      Dawn
Willoughby
      Laura
Stein
      Linda
Rendle
      Stephen M.
Robb
The Clorox Company 401(k) Plan  $ 26,050  $ 29,271    $ 26,784  $ 25,552  $ 27,997     $ 27,504
Nonqualified Deferred Compensation Plan 364,196 52,855 127,982 122,541 68,741 143,944
Company Paid Perquisites
(see sub-table below) 29,769 25,839 28,275 29,840 20,444 14,713
Total $ 420,015 $ 107,965 $ 183,041 $ 177,933 $ 117,181 $ 186,161

The following table sets forth the perquisites we make available to our named executive officers and the cost to the Company for providing these perquisites during fiscal year 2018. The amounts shown in the Other Perquisites row consist of paid parking at the Company’s headquarters, health club reimbursement, and an annual executive physical.

      Benno
Dorer
      Kevin B.
Jacobsen
      Dawn
Willoughby
      Laura
Stein
      Linda
Rendle
      Stephen M.
Robb
Executive Automobile Program $ 13,200     $ 4,781       $ 13,200 $ 13,200 $ 13,200       $ 9,900
Basic Financial Planning 9,683 16,016 9,259 10,651 2,000 2,428
Other Perquisites 6,886 5,042 5,816 5,989 5,244 2,385
Total $ 29,769 $ 25,839 $ 28,275 $ 29,840 $ 20,444 $ 14,713

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Compensation Discussion and Analysis

FISCAL YEAR 2018 GRANTS OF PLAN-BASED AWARDS

This table shows grants of plan-based awards to the named executive officers during fiscal year 2018.

Name   Grant
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
  Exercise
or Base
Price of
Option
Awards
($/Sh)
  Grant Date
Fair Value
of Stock
and Option
Awards
($)
Benno Dorer
Annual Incentive Plan(1) $ 1,612,500 $ 4,837,500
Performance Shares(2) 9/12/2017 9,680 19,360 38,720 2,624,635
Stock Options(3) 9/12/2017 171,960    $ 135.57 2,625,829
Kevin B. Jacobsen
Annual Incentive Plan(1) 235,850 707,550
Performance Shares(2) 9/12/2017 555 1,110 2,220 150,483
4/2/2018 775 1,550 3,100 199,470
Stock Options(3) 9/12/2017 9,830 $ 135.57 150,104
4/2/2018 11,160 $ 128.69 199,987
Dawn Willoughby
Annual Incentive Plan(1) 510,000 1,530,000
Performance Shares(2) 9/12/2017 2,305 4,610 9,220 624,978
Stock Options(3) 9/12/2017 40,940 $ 135.57 625,154
Laura Stein
Annual Incentive Plan(1) 428,400 1,285,200
Performance Shares(2) 9/12/2017 1,845 3,690 7,380 500,253
Stock Options(3) 9/12/2017 32,750 $ 135.57 500,093
Linda Rendle
Annual Incentive Plan(1) 315,250 945,750
Performance Shares(2) 9/12/2017 1,155 2,310 4,620 313,167
Stock Options(3) 9/12/2017 20,470 $ 135.57 312,577
Restricted Stock(4) 6/29/2018 1,850 250,213
Stephen M. Robb
(Retired March 31, 2018)
Annual Incentive Plan(1) 432,395 1,297,185
Performance Shares(2)(5) 9/12/2017 2,765 5,530 11,060 749,702
Stock Options(3)(5) 9/12/2017 49,130 $ 135.57 750,215
(1) Represents estimated possible payouts of annual incentive awards for fiscal year 2018 under the Annual Incentive Plan for each of our named executive officers. The Annual Incentive Plan is an annual cash incentive opportunity and, therefore, awards are earned in the year of grant. The target amounts represent the potential payout if both Company performance (financial metric) and individual performance are at target levels. The amounts actually paid under the Annual Incentive Plan are based on three factors for each named executive officer: (1) the base salary multiplied by the annual incentive target, (2) the Company’s financial performance multiplier, which ranges from 0% to 200%, and (3) the named executive officer’s individual performance multiplier (which has ranged from 90% to 115% for the named executive officers for the last five fiscal years). The maximum amount represents the maximum payout in the Annual Incentive Plan for the named executive officers based on the annual incentive target for each of named executive officers for fiscal year 2018, a financial performance modifier of 200%, and an individual performance multiplier of 150%. In prior years, the maximum reflected the maximum payout amount approved for purposes of IRC Section 162(m). See the Summary Compensation Table for the actual payout amounts in fiscal year 2018 under the Annual Incentive Plan. See “Annual Incentives” in the Compensation Discussion and Analysis for additional information about the Annual Incentive Plan.
(2) Represents possible future payouts of Common Stock underlying performance shares awarded in fiscal year 2018 to each of our named executive officers as part of their participation in the 2005 Stock Incentive Plan. These awards will vest upon the achievement of performance measures based on average economic profit growth over a three-year period, with the threshold, target, and maximum awards equal to 50%, 100%, and 200%, respectively, of the number of performance shares granted. If the minimum financial goals are not met at the end of the three-year period, no awards will be paid out under the 2005 Stock Incentive Plan. See “Long-Term Incentives” in the Compensation Discussion and Analysis for additional information.
(3) Represents stock options awarded to each of our named executive officers under the 2005 Stock Incentive Plan. All stock options vest in equal installments on the first, second, third, and fourth anniversaries of the grant date.
(4) Represents restricted stock awarded under the 2005 Stock Incentive Plan to Ms. Rendle when she became the EVP-Cleaning & Strategy effective June 29, 2018. The award cliff vests on the third anniversary of the grant date.
(5) The options granted to Mr. Robb in fiscal year 2018 were accelerated at his retirement due to meeting retirement eligibility. The performance shares granted to Mr. Robb in fiscal year 2018 were prorated at his retirement due to meeting retirement eligibility.

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OUTSTANDING EQUITY AWARDS AT FISCAL 2018 YEAR-END

The following equity awards granted to our named executive officers were outstanding as of the end of fiscal year 2018.

Name Number of
Securities
Underlying
Unexercised
Options-
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options-
Unexercisable
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
Market
Value of
Shares
or
Units of
Stock
That
Have Not
Vested
($)
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($)(1)
Benno Dorer                                                        
Stock Options(2) 17,460    $ 57.25 9/15/2019
19,826 $ 66.48 9/14/2020
19,809 $ 68.15 9/13/2021
31,058 $ 72.11 9/11/2022
26,559 $ 74.09 1/2/2023
30,598 $ 84.45 9/17/2023
38,085 12,695 (3) $ 89.82 9/17/2024
165,877 55,293 (4) $ 100.24 11/20/2024
82,700 82,700 (5) $ 111.60 9/15/2025
43,212 129,638 (6) $ 123.09 9/13/2026
171,960 (7) $ 135.57 9/12/2027
Performance Shares(2) 29,235 (8) 3,954,034
19,290 (9) 2,608,973
19,360 (10) 2,618,440
Kevin B. Jacobsen
Stock Options(2) 3,585 $ 84.45 9/17/2023
11,722 3,908 (3) $ 89.82 9/17/2024
5,705 5,705 (5) $ 111.60 9/15/2025
2,730 8,190 (6) $ 123.09 9/13/2026
9,830 (7) $ 135.57 9/12/2027
11,160 (11) $ 128.69 4/2/2028
Performance Shares(2) 2,010 (8) 271,853
1,220 (9) 165,005
1,110 (10) 150,128
1,550 (13) 209,638
Dawn Willoughby
Stock Options(2) 11,550 $ 72.11 9/11/2022
6,830 $ 74.09 1/2/2023
20,490 $ 84.45 9/17/2023
17,580 5,860 (3) $ 89.82 9/17/2024
7,785 2,595 (12) $ 97.23 9/22/2024
15,210 15,210 (5) $ 111.60 9/15/2025
8,187 24,563 (6) $ 123.09 9/13/2026
40,940 (7) $ 135.57 9/12/2027
Performance Shares(2) 5,370 (8) 726,293
3,660 (9) 495,015
4,610 (10) 623,503
Restricted Shares(2) 2,230 (14)   $ 301,608

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Compensation Discussion and Analysis

Name Number of
Securities
Underlying
Unexercised
Options-
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options-
Unexercisable
(#)
Option
Exercise
Price
($)
Option
Expiration
Date
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
Market
Value of
Shares
or
Units of
Stock
That
Have Not
Vested
($)
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other Rights
That Have Not
Vested
($)(1)
Laura Stein                                                        
Stock Options(2) 13,650    $ 72.11 9/11/2022
39,960 $ 84.45 9/17/2023
31,252 10,418 (3) $ 89.82 9/17/2024
15,210 15,210 (5) $ 111.60 9/15/2025
7,505 22,515 (6) $ 123.09 9/13/2026
32,750 (7) $ 135.57 9/12/2027
Performance Shares(2) 5,370 (8) 726,293
3,350 (9) 453,088
3,690 (10) 499,073
Linda Rendle
Stock Options(2) 1,697 $ 72.11 9/11/2022
2,935 $ 84.45 9/17/2023
5,887 1,963 (3) $ 89.82 9/17/2024
6,180 6,180 (5) $ 111.60 9/15/2025
3,640 10,920 (6) $ 123.09 9/13/2026
20,470 (7) $ 135.57 9/12/2027
Performance Shares(2) 2,190 (8) 296,198
1,620 (9) 219,105
2,310 (10) 312,428
Restricted Shares(2) 1,490 (15)  $ 201,523
1,850 (16) $ 250,213
Stephen M. Robb
(Retired March 31, 2018)
Stock Options(2) 54,600 $ 72.11 9/11/2022
40,980 $ 84.45 3/31/2023
57,290 $ 89.82 3/31/2023
41,830 $ 111.60 3/31/2023
50,950 $ 123.09 3/31/2023
49,130 $ 135.57 3/31/2023
Performance Shares(2) 6,779 (8) 916,792
3,319 (9) 448,895
1,383 (10) 187,051
(1)

Represents unvested “target” number of performance shares under the 2005 Stock Incentive Plan multiplied by the closing price of our Common Stock on June 30, 2018, except as noted below in footnote (8). The ultimate value will depend on whether performance criteria are met and the value of our Common Stock on the actual vesting date.

(2)

Grants were made under the 2005 Stock Incentive Plan.

(3)

Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 17, 2014.

(4)

Represents unvested portion of off-cycle stock options granted to Mr. Dorer when he was promoted to Chief Executive Officer, effective November 20, 2014. Options vest in four equal installments beginning one year from the grant date of November 20, 2014.

(5)

Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 15, 2015.

(6)

Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 13, 2016.

(7)

Represents unvested portion of stock options that vest in four equal installments beginning one year from the grant date of September 12, 2017.


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(8)

Represents the actual number of performance shares that were paid out under our 2005 Stock Incentive Plan. The grants from the plan have a three-year performance period (fiscal years 2016 through 2018). Performance is based on achievement of cumulative economic profit growth. After completion of fiscal year 2018, the MDCC determined whether the performance measures had been achieved and based on the results, on August 16, 2018, the MDCC approved the payout of this award at 150% of target.

(9)

Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The grants from the plan have a three-year performance period (fiscal years 2017 through 2019). Performance is based on achievement of cumulative economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2019.

(10)

Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The grants from the plan have a three-year performance period (fiscal years 2018 through 2020). Performance is based on achievement of average economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2020.

(11)

Represents unvested portion of off-cycle stock options granted to Mr. Jacobsen when he was promoted to Senior Vice President, Chief Financial Officer, effective April 1, 2018. Options vest in four equal installments beginning one year from the grant date of April 2, 2018.

(12)

Represents unvested portion of off-cycle stock options granted to Ms. Willoughby when she was promoted to Executive Vice President, Chief Operating Officer – Cleaning and International effective September 22, 2014. Options vest in four equal installments beginning one year from the grant date of September 22, 2014.

(13)

Represents the “target” number of performance shares that can be earned under our 2005 Stock Incentive Plan. The off-cycle grants from the plan, which was granted to Mr. Jacobsen when he was promoted to Senior Vice President, Chief Financial Officer, effective April 1, 2018, have a three-year performance period (fiscal years 2018 through 2020). Performance is based on achievement of average economic profit growth. The MDCC will determine whether the performance measures have been achieved after the completion of fiscal year 2020.

(14)

Represents unvested one-time off-cycle restricted stock grant that was granted to Ms. Willoughby when she became the sole Executive Vice President – Chief Operating Officer effective April 3, 2017. Restricted stock units vest three years from the anniversary of the grant date.

(15)

Represents unvested one-time off-cycle restricted stock grant that was granted to Ms. Rendle when she became the Senior Vice President – GM, Cleaning Division & PPD effective April 3, 2017. Restricted stock units vest three years from the anniversary of the grant date.

(16)

Represents unvested one-time off-cycle restricted stock grant that was granted to Ms. Rendle when she became the Executive Vice President – Cleaning & Strategy effective June 29, 2018. Restricted stock units vest three years from the anniversary of the grant date.


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Compensation Discussion and Analysis

FISCAL YEAR 2018 OPTION EXERCISES AND STOCK VESTED

This table shows stock options exercised and stock vested for the named executive officers during fiscal year 2018.

Option Awards Stock Awards
Name Number
of Shares
Acquired
on Exercise
(#)
Value
Realized on
Exercise
($)(1)
Number of
Shares
Acquired
on Vesting
(#)
Value
Realized on
Vesting
($)(2)
Benno Dorer          14,380 (3)                  $ 1,154,570          32,963 (4)(5)                  $ 4,521,535
Kevin B. Jacobsen 30,155 (3) 1,743,944 2,675 (4) 366,930
Dawn Willoughby (3) 6,087 (4) 834,954
Laura Stein (3) 7,129 (4)(5) 977,885
Linda Rendle (3) 2,371 (4) 325,230
Stephen M. Robb (Retired March 31, 2018) (3) 9,805 (4) 1,344,952
(1)

The dollar value realized reflects the difference between the market price of the Common Stock upon exercise and the stock option exercise price.

(2)

The dollar value realized reflects the market value of the vested shares and dividend equivalent units based on the closing price of the Common Stock on the vesting date.

(3)

The number represents the exercise of nonqualified stock options granted in previous years under the Company’s 2005 Stock Incentive Plan.

(4)

The number of stock awards listed represent the vesting of performance shares and dividend equivalent units at 150% of target, granted through participation in the Company's 2005 Stock Incentive Plan. The grant from the plan had a three-year performance period (fiscal years 2015 through 2018). Performance is based on the achievement of cumulative economic profit growth. On August 16, 2018, the MDCC approved the payout of this award at 150% of target and the award was settled on August 17, 2018.

(5)

These shares have been deferred and will be distributed in a single installment at separation.


Overview of Pension Benefits

Historically, pension benefits have been paid to the named executive officers under the following plans: (i) the Pension Plan, (ii) the cash balance restoration provision in the NQDC, and (iii) the SERP. Effective June 30, 2011, the

Pension Plan and the cash balance restoration provision under the NQDC were frozen. The SERP was also frozen as of June 30, 2011, with regard to pay and offsets, while still allowing age and service credits, as most recently amended in March 2018, as described in the Retirement Plans section of the CD&A.


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FISCAL YEAR 2018 PENSION BENEFITS TABLE

The following table sets forth each named executive officer’s pension benefits under the Company’s pension plans for fiscal year 2018.

Name       Plan Name       Number of Years
of Credited
Service
(#)(1)
      Present Value
of Accumulated
Benefit
($)(2)
      Payments
During Last
Fiscal Year
($)
Benno Dorer The Clorox Company Pension Plan(3) 13          $ 55,125        $
SERP(4) 13 2,627,903
Cash Balance Restoration(5) 13 147,439
Kevin B. Jacobsen The Clorox Company Pension Plan(3) 22 131,196
SERP(4) 22
Cash Balance Restoration(5) 22 49,932
Dawn Willoughby The Clorox Company Pension Plan(3) 17 85,873
SERP(4) 17
Cash Balance Restoration(5) 17 18,288
Laura Stein The Clorox Company Pension Plan(3) 21 136,607
SERP(4) 21 4,307,434
Cash Balance Restoration(5) 21 268,145
Linda Rendle The Clorox Company Pension Plan(3) 15 49,717
SERP(4) 15
Cash Balance Restoration(5) 15
Stephen M. Robb The Clorox Company Pension Plan(3) 29 156,405
(Retired March 31, 2018) SERP(4) 29 2,399,862
Cash Balance Restoration(5) 29 54,684 13,677
(1)

Number of years of credited service is rounded down to the nearest whole number.

(2)

Present value of the accumulated benefit was calculated using the following assumptions: mortality table: MILES-CGFD; discount rate: 4.10%; and age at June 30, 2018.

(3)

The Pension Plan was frozen effective June 30, 2011. Participants keep their accumulated pay credits and receive only quarterly interest credits after that date.

(4)

The SERP was frozen with regards to pay and offsets effective June 30, 2011. Age and service credits continue to accrue for covered service. Messrs. Dorer and Robb and Ms. Stein are the only named executive officers eligible for the SERP.

(5)

The cash balance restoration provision in the NQDC was eliminated effective July 1, 2011, when the Pension Plan was frozen. Participants keep their accumulated pay credits but no contributions were made under this provision after July 1, 2011.


Overview of the Nonqualified Deferred Compensation Plans

Executive Retirement Plan. Our executive officers (including each of our named executive officers) are eligible for participation in the ERP. The ERP provides that the Company will make an annual contribution of 5% of an eligible participant’s base salary plus annual incentive payment into the plan. Company contributions will vest over a three-year period and will fully vest upon the participant’s attainment of age 62 with 10 years of service with the Company (at which time the individuals are considered retirement-eligible under the ERP). An eligible participant can elect distribution in a lump sum or up to 15 annual installments upon a qualifying payment event.

Nonqualified Deferred Compensation Plan. Under the NQDC, participants, including each of our named executive officers, may voluntarily defer the receipt of up to 50% of their base salary and up to 100% of their annual incentive award. In addition, the NQDC offers a 401(k) restoration provision for those who defer at a required

level. All Company retirement contributions are made in the form of (i) a fixed 6% employer annual contribution and (ii) an employer match of up to 4% of pay into the 401(k) Plan, subject to IRC compensation limits. Contributions on eligible compensation that exceed the IRC compensation limits are contributed into a participant’s NQDC account under the 401(k) restoration provision.

Participants in the NQDC may elect to receive benefits from the NQDC either in a lump sum or up to 15 annual payments upon a qualifying payment event. Participants may choose from an array of investment crediting rates that generally mirror the investment fund options available in the 401(k) Plan. The NQDC uses the same benefit formulas, types of compensation to determine benefits, and vesting requirements as our tax-qualified 401(k) plan. The responsibility to pay benefits under the NQDC is an unfunded and unsecured obligation of the Company.

The following table provides information regarding the accounts of the named executive officers under the NQDC and ERP in fiscal year 2018.


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Compensation Discussion and Analysis

FISCAL YEAR 2018 NONQUALIFIED DEFERRED COMPENSATION

Name Executive
Contributions
in Last FY
($)(1)
        Registrant
Contributions
in Last FY
($)(2)
        Aggregate
 Earnings
in Last FY
($)(3)
        Aggregate
Balance
at Last FYE
($)(4)(5)
Benno Dorer             $ 94,625         $ 364,196  $ (2,031 )    $ 3,108,245
Kevin B. Jacobsen 30,186 52,855 49,979 683,449
Dawn Willoughby 36,345 127,982 94,693 1,692,123
Laura Stein 25,019 122,541 410,978 4,509,238
Linda Rendle 21,877 68,741 26,374 290,373
Stephen M. Robb (Retired March 31, 2018) 35,802 143,944 188,911 1,758,608
(1)

Amounts represent the annual base salary and incentive award that each executive deferred during fiscal year 2018. Deferred base salary is also reported in the Summary Compensation Table – Salary. Deferred annual incentive awards are also reported in the Summary Compensation Table – Non-Equity Incentive Plan Compensation.

(2)

Represents that portion of the Company’s 401(k) match and Company contribution of up to 10% of eligible compensation that is in excess of IRC compensation limits pursuant to the 401(k) restoration provision of the NQDC and the Company’s contribution under the ERP. These contributions are also reported in the Summary Compensation Table – All Other Compensation and are included under the caption “Nonqualified Deferred Compensation Plan” in footnote (6) to the Summary Compensation Table.

(3)

Earnings are based on an array of investment options that generally mirror the 401(k) Plan. Earnings vary based on participant investment elections.

(4)

Reflects aggregate balances under the restoration provision of the NQDC and any deferred base salary and annual incentive awards as of the end of fiscal year 2018.

(5)

The executive and registrant contribution total amounts in the table below are also reported as compensation in the Summary Compensation Table in the years indicated:


Fiscal Year         Benno
Dorer
        Kevin B.
Jacobsen
        Dawn
Willoughby
        Laura
Stein
        Linda
Rendle
        Stephen M.
Robb
2018    $ 458,821         $ 83,041       $ 164,328     $ 147,560      $ 90,618      $ 179,746
2017 $ 620,819 $ 210,516 $ 222,120 $ 259,053
2016 $ 465,815 $ 444,799 $ 217,646 $ 229,316

Potential Payments Upon Termination or Change in Control

Payments Upon Termination

Severance Plan for Named Executive Officers. Under the terms of the Severance Plan, our named executive officers are eligible to receive benefits if their employment is terminated by the Company without cause (other than in connection with a change in control). No benefits are payable under the terms of the Severance Plan if the Company terminates the employment of the named executive officer for cause or if the named executive officer voluntarily resigns.

Regardless of the manner in which a named executive officer’s employment terminates, each named executive officer would retain the amounts he or she had earned over the course of his or her employment prior to the termination event, such as balances under the NQDC, vested and accrued retirement benefits, and previously vested stock options, except as outlined below under Termination for Misconduct. For further information about previously earned amounts, see the Summary Compensation Table, Outstanding Equity Awards at Fiscal 2018 Year-End Table, Option Exercises and Stock Vested Table, Pension Benefits Table, and Nonqualified Deferred Compensation Table.

Under the Severance Plan, each named executive officer agrees to return and not to use or disclose proprietary information of the Company and, for two years following any such termination, the named executive officer is also prohibited from soliciting for employment any employee of the Company, or diverting or attempting to divert from the Company any business.

Termination benefits under the Severance Plan for our named executive officers are as follows:

Involuntary Termination Without Cause. If the Company terminates the employment of a named executive officer (other than the CEO) without cause, the Severance Plan entitles the named executive officer to receive a lump-sum severance payment after termination equal to two times the named executive officer’s then-current base salary. In the case of the CEO, the severance amount is equal to the sum of (i) two times the CEO’s base salary and (ii) two times the CEO’s three-year average annual bonus multiplied by 75%. Under the Severance Plan, a named executive officer (other than the CEO) is also entitled to an amount equal to 75% of his or her Annual Incentive Plan award for the


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fiscal year in which he or she was terminated. The CEO is entitled to an amount equal to 100% of his Annual Incentive Plan award for the fiscal year in which he was terminated.

The amount of severance paid is calculated using the actual Company Financial Performance Multiplier and assumes an Individual Performance Multiplier of 100%, prorated to the date of termination. If the named executive officer is retirement-eligible under the terms of the Annual Incentive Plan, the executive would be eligible for either the treatment under the Severance Plan or retirement treatment for purposes of the Annual Incentive Plan award payout (retirement treatment would be 100%, versus 75%, of his or her Annual Incentive Plan award for the fiscal year in which he or she was terminated, prorated to the date of termination). It is the MDCC’s decision as to which treatment to apply.

The Severance Plan provides that the named executive officer is entitled to continue to participate in the Company’s medical, vision, and dental insurance programs for up to two years following termination on the same terms as active employees. In addition, at the end of this coverage, a named executive officer will be eligible to participate in the Company’s medical, vision, and/or dental plans offered to former employees who retire at age 55 or older, provided the executive has completed at least 10 years of service, on the same terms as such other former employees. If eligible, this coverage will continue until the named executive officer turns age 65. Thereafter, the named executive officer may participate in the Company’s general retiree health plan as it may exist in the future, if otherwise eligible. If the named executive officer will be age 55 or older and will have completed at least 10 years of service at the end of, and including, the two-year period following termination, the named executive officer will be deemed to be age 55 and/or to have 10 years of service under any pre-65 retiree health plan as well as the SERP.

The above severance-related benefits are provided only if the named executive officer executes a general release prepared by the Company.

Termination Due to Retirement. Under the Company’s policy applicable to all employees, upon retirement the named executive officer is entitled to his or her salary through the last day of employment and is eligible for a pro-rata portion of the Annual Incentive Plan award for the fiscal year in which his or her retirement occurs. Based on the provisions of the respective plans, he or she will also be eligible to receive SERP, ERP, and other benefits under applicable Company retirement plans. In addition to the amounts that the named executive officer has earned or accrued over the course of his or her employment under the Company’s qualified and nonqualified plans, a named executive officer who is at least age 55 with 10 years of service or who has 20 years of service regardless of age is

eligible to receive retirement-related benefits under the long-term incentive program. Stock options held for longer than six months will vest in full and remain exercisable for five years following the named executive officer’s retirement, or until the expiration date, whichever is sooner, and performance shares will be paid out on a pro-rata basis at the end of the relevant performance period based on the actual level of performance achieved during that period.

Termination Due to Death or Disability. Under the Company’s policy applicable to all employees, if the named executive officer’s employment is terminated due to his or her death, the named executive officer’s beneficiary or estate is entitled to (i) the named executive officer’s salary through the date of his or her death, (ii) a pro-rata portion of the named executive officer’s actual Annual Incentive Plan award for the fiscal year of his or her death, (iii) a pro-rata portion of the named executive officer’s 6% annual contribution to the 401(k) plan for the fiscal year of his or her death, and (iv) benefits pursuant to the Company’s life insurance plan. Stock options and restricted stock units will vest in full, and all vested options remain exercisable for an additional year following the named executive officer’s death or until the expiration date, whichever is earlier, and all performance shares will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period.

If the named executive officer begins to receive benefits under the Company’s long-term disability plan, the Company may terminate the named executive officer’s employment at any time, in which case the named executive officer will receive his or her salary through the date of his or her termination and will also be entitled to a pro-rata portion of his or her actual Annual Incentive Plan award for the fiscal year of his or her termination. Stock options will vest in full, and all vested options will remain exercisable for an additional year following the named executive officer’s disability or until the expiration date, whichever is earlier, and all performance shares will be paid out at the end of the relevant performance period based on the actual level of performance achieved during that period.

Termination for Misconduct. The Company may terminate a named executive officer’s employment for misconduct at any time without notice. Upon the named executive officer’s termination for misconduct, the named executive officer is entitled to his or her salary through the date of his or her termination, but is not entitled to any Annual Incentive Plan award for the fiscal year in which his or her termination for misconduct occurs. “Misconduct” under the Severance Plan means: (i) the willful and continued neglect of significant duties or willful and continued violation of a material Company policy after having been warned in writing, (ii) a material act of dishonesty, fraud, misrepresentation, or other act of moral turpitude, (iii) gross negligence in the course of employment, (iv) the failure to


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obey a lawful direction of the Board or a corporate officer to whom the named executive officer reports, directly or indirectly, or (v) an action that is inconsistent with the Company’s best interests and values. All outstanding stock option and restricted stock units grants are forfeited upon a termination for misconduct. In addition, any retirement-related benefits a named executive officer would normally receive related to performance shares are also forfeited upon a termination for misconduct.

Voluntary Termination. A named executive officer may resign from his or her employment at any time. Upon the named executive officer’s voluntary resignation, the named executive officer is entitled to his or her salary through the date of termination, but is not entitled to any Annual Incentive Plan award for the fiscal year of termination. All unvested outstanding stock options, restricted stock units, and performance share grants are forfeited upon voluntary termination.

The Company also maintains the CIC Plan for the benefit of each of our named executive officers. Please see the Potential Payments Upon Termination or Change in Control section for further details on the CIC Plan.

Potential Payments Upon Change in Control

Change in Control Severance Plan for Named Executive Officers. Under the CIC Plan, executives are eligible for change in control severance benefits, subject to the execution of a waiver and release, if they are terminated without cause or resign for good reason (each as defined under the CIC Plan and as further described below) during (i) the two-year period following a change in control or (ii) a period of up to one year prior to the change in control in limited circumstances where the executive’s termination is directly related to or in anticipation of a change in control.

The severance benefits under the CIC Plan include (i) a lump-sum severance payment equal to two times (or, in the case of the CEO, three times) the sum of (a) the executive’s base salary and (b) average Annual Incentive Plan award for the three completed fiscal years prior to termination, (ii) a lump-sum amount equal to the difference between the actuarial equivalent of the benefit the named executive officer would have been entitled to receive if his or her employment had continued until the second anniversary of the date of termination and the actuarial equivalent of the aggregate benefits paid or payable as of the date of termination under the qualified and nonqualified retirement plans, (iii) continuation of healthcare benefits for a maximum of two (or, in the case of the CEO, three) years following a severance-qualifying termination, (iv) continued financial planning services for the year of termination, (v) vesting of all outstanding equity awards granted prior to the change in control, and (vi) an amount equal to the average Annual Incentive Plan award for the three completed fiscal

years preceding termination prorated for the number of days employed in the fiscal year during which termination occurred. In addition, the CIC Plan provides for an excise tax cutback such that the excise tax under Sections 280G and 4999 of the IRC would not apply (unless the executive would receive a greater amount of severance benefits on an after-tax basis without a cutback, in which case the cutback would not apply). The CIC Plan permits the MDCC to make changes to the CIC Plan that are adverse to covered executives with 12 months’ advance notice. If a change in control of the Company occurs during that 12-month period, then such changes would not become effective. Each participant under the CIC Plan is subject to certain restrictive covenants including confidentiality and non-disparagement provisions and a non-solicitation provision during the term of his or her employment and for two years thereafter.

“Cause” is generally defined as (i) willful and continued failure to substantially perform duties upon written demand or (ii) willfully engaging in illegal conduct or gross misconduct that is materially and demonstrably injurious to the Company. A termination for cause requires a vote of 75% of the Board at a meeting after notice to the executive has been given and the executive has had an opportunity to be heard.

“Good Reason” is generally defined as (i) an assignment of duties inconsistent with the executive officer’s position (including offices and reporting requirements), authority, duties, or responsibilities (other than reassignments with a substantially similar level and scope of authority, duties, responsibilities, and reporting relationships), (ii) any failure to substantially comply with any of the material provisions of compensation plans, programs, agreements, or arrangements as in effect immediately prior to the change in control, which material provisions consist of base salary, cash incentive compensation target bonus opportunity, equity compensation opportunity in the aggregate, savings and retirement benefits in the aggregate, and welfare benefits (including medical, dental, life, disability, and severance benefits) in the aggregate, (iii) relocation of principal place of employment that increases the executive officer’s commuting distance by more than 50 miles, (iv) termination of employment by the Company other than as expressly permitted by the CIC Plan, or (v) failure of a successor company to assume the CIC Plan.

Estimated Potential Payments Upon Termination or Change in Control

The following table reflects the estimated amount of compensation payable to each of the Company’s named executive officers upon termination of the named executive officer’s employment under various scenarios. The amounts exclude earned amounts such as vested or accrued benefits,


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other than benefits vested under the Company’s SERP. If a named executive officer is eligible for his or her SERP benefit as of the assumed termination date, the respective SERP benefit amount reported under the Retirement column is also included in the scenarios for Involuntary Termination Without Cause and Involuntary Termination After Change in Control on the Retirement Plan Benefits line.

The amounts shown are calculated using an assumed termination date effective as of the last business day of fiscal year 2018 (June 29, 2018) and the closing trading price of our Common Stock of $135.25 on such date. Although the calculations are intended to provide reasonable estimates

of the potential compensation payable upon termination, they are based on assumptions outlined in the footnotes of the table and may not represent the actual amount the named executive officer would receive if an eligible termination event were to occur.

The table does not include compensation or benefits provided under plans or arrangements that are generally available to all salaried employees. Amounts reflected for change in control assume that each named executive officer is involuntarily terminated by the Company without cause or voluntarily terminates for good reason within two years after a change in control.


FISCAL YEAR 2018 TERMINATION TABLE

Name and Benefits Involuntary
Termination
Without Cause
  Involuntary
Termination
After Change
In Control
  Retirement   Disability   Death  
Benno Dorer
Cash Payment         $ 6,622,260 (1)             $ 10,851,027 (2)           $ (3)           $ (4)           $ (4) 
Stock Options 6,044,795 (5)    7,567,990 (6)    7,567,990 (6) 
Restricted Stock
Performance Shares 8,203,186 (7)    8,203,186 (8)    8,203,186 (8) 
Retirement Plan Benefits 3,641,544 (20)    4,791,647 (19)    3,084,025 (9)    1,857,747 (10) 
Health & Welfare Benefits 21,000 (11)    31,500 (12)   
Financial Planning 16,500 (13)   
Total Estimated Value $ 10,284,804 $ 29,938,654 $ $ 18,855,201 $ 17,628,923
Kevin B. Jacobsen
Cash Payment $ 1,400,000 (14)    $ 1,913,088 (15)    $ (3)    $ (4)    $ (4) 
Stock Options 609,236 (16)    803,442 (5)    609,236 (16)    803,442 (6)    803,442 (6) 
Restricted Stock
Performance Shares 429,462 (17)    729,644 (7)    429,462 (17)    729,644 (8)    729,644 (8) 
Retirement Plan Benefits 131,196 (9)    131,196 (10) 
Health & Welfare Benefits 33,960 (11)    33,960 (12)   
Financial Planning 16,500 (13)   
Total Estimated Value $ 2,472,658 $ 3,496,633 $ 1,038,698 $ 1,664,281 $ 1,664,281
Dawn Willoughby
Cash Payment $ 1,582,500 (14)    $ 3,047,160 (15)    $ (3)    $ (4)    $ (4) 
Stock Options 1,023,284 (5)    1,380,486 (6)    1,380,486 (6) 
Restricted Stock 301,608 (21)    301,608 (21)    301,608 (21) 
Performance Shares 1,668,588 (7)    1,668,588 (8)    1,668,588 (8) 
Retirement Plan Benefits
Health & Welfare Benefits 24,120 (11)    24,120 (12)   
Financial Planning 16,500 (13)   
Total Estimated Value $ 1,606,620 $ 6,081,260 $ $ 3,350,682 $ 3,350,682
Laura Stein
Cash Payment $ 1,652,400 (14)    $ 3,129,660 (15)    $ (3)    $ (4)    $ (4) 
Stock Options 1,734,372 (16)    1,734,372 (5)    1,734,372 (16)    1,734,372 (6)    1,734,372 (6) 
Restricted Stock
Performance Shares 1,001,174 (17)    1,497,979 (7)    1,001,174 (17)    1,497,979 (8)    1,497,979 (8) 
Retirement Plan Benefits 5,795,705 (18)    6,205,252 (18)    5,795,705 (18)    4,444,041 (9)    2,584,506 (10) 
Health & Welfare Benefits 15,654 (11)    15,654 (12)   
Financial Planning 16,500 (13)   
Total Estimated Value $ 10,199,306 $ 12,599,417 $ 8,531,252 $ 7,676,392 $ 5,816,857

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Name and Benefits       Involuntary
Termination
Without Cause
  Involuntary
Termination
After Change
In Control
  Retirement   Disability   Death  
Linda Rendle                          
Cash Payment $ 1,104,450 (14)    $ 1,064,036 (15)    $ (3)    $ (4)    $ (4) 
Stock Options 368,123 (5)    547,308 (6)