MENU
BUILDING A BETTER WORLD
2022 ANNUAL REPORT & 2023 PROXY STATEMENT
MENU
FINANCIAL HIGHLIGHTS
Years ended December 31
(dollars in millions, except per share)
Net Sales
Operating Income Margin*
Reported Adjusted
Net Income*
Reported Adjusted
$2,655
$2,655
$2,655
2020
2020
2020
$3,234
$3,234
$3,234
2021
2021
2021
$3,761
$3,761
$3,761
2022
2022
2022
14.3% 14.8%
14.3% 14.8%
14.3% 14.8%
16.3% 16.8%
16.3% 16.8%
16.3% 16.8%
12.4%
12.4%
10.6%
10.6%
12.4%
10.6%
2020
2020
2020
2021
2021
2021
2022
2022
2022
$472
$472
$486
$486
$472
$486
$373
$373
$373
$276
$276
$276
2021
2021
2021
2022
2022
2022
$250
$250
$250
$206
$206
$206
2020
2020
2020
Return on Invested Capital*
Reported Adjusted
Earnings Per Common Share*
Reported Adjusted
Average Operating Working
Capital Ratio*
23.9%
23.9%
22.1%(1) 22.7%(1)
22.1%(1) 22.7%(1)
23.9%
22.1%(1) 22.7%(1)
17.7%
17.7%
17.9%
17.9%
17.7%
17.9%
14.8%
14.8%
14.8%
2020
2020
2020
2021
2021
2021
2022
2022
2022
Cash Flow From Operations
$365
$365
$383
$383
$351
$351
$351
2020
2020
2020
$365
$383
2021
2021
2021
2022
2022
2022
$4.15
$4.15
$3.42
$3.42
$4.60
$4.60
$6.22
$6.22
$6.22
$4.15
$4.60
$3.42
2020
2020
2020
2021
2021
2021
Cash Conversion Ratio*
117%
117%
117%
2020
2020
2020
81%
81%
81%
2021
2021
2021
$8.04 $8.27
$8.04 $8.27
$8.04 $8.27
2022
2022
2022
64%
64%
64%
2022
2022
2022
17.4%
17.4%
17.4%
2020
2020
2020
16.3%
16.3%
16.3%
2021
2021
2021
20.9%(1)
20.9%(1)
20.9%(1)
2022
2022
2022
Annual Cash Dividend Per
Common Share
$2.04
$2.04
$1.96
$1.96
$2.24
$2.24
$1.96
$2.04
2020
2020
2020
2021
2021
2021
$2.24
2022
2022
2022
* Please see Appendix A for definitions and reconciliation of adjusted results to the most comparable reported results.
(1) 2022 Reported and Adjusted ROIC excluding the Fori acquisition would have been 27.9% and 28.6%, respectively. The 2022 Average operating working capital ratio
excluding Fori would have been 18.6%.
SUSTAINABILITY HIGHLIGHTS
Safety
2025 GOAL: 52% REDUCTION
16% TRCR Reduction
(2022 vs 2018)
Recycling
2025 GOAL: 80% RATE
76% In 2022
GHG Emissions
2025 GOAL: 10% REDUCTION
19% Reduction
(2022 vs 2018)
Landfill Avoidance
2025 GOAL: 97% RATE
95% In 2022
Energy Intensity
2025 GOAL: 16% REDUCTION
1% Reduction(2)
(2022 vs 2018)
Water Use
2025 GOAL: 14% REDUCTION
25% Reduction
(2022 vs 2018)
Please visit:
https://sustainability.lincolnelectric.com
for more details
(2) 2022 energy intensity performance, a ratio of gigajoules per hours worked, is impacted by fewer working hours due to automation investments and productivity.
Absolute energy use declined 5% 2022 vs 2018.
OPERATING TO A
HIGHER STANDARD TO
BUILD A BETTER WORLD
Chris Mapes Chairman, President & CEO
DEAR LINCOLN ELECTRIC SHAREHOLDERS,
I am pleased to report another year of record performance across key financial and environmental metrics
while successfully advancing results closer to our Higher Standard 2025 Strategy goals.
2022 Financial Highlights
• Record Net sales: +16% to $3.8 billion, led by +20%
organic sales
• Record Adjusted operating margin: +200bps to 16.8%
• Record Adjusted earnings per share: +33% to $8.27
• Strong cash flow generation: +5% to $383 million
• Top quartile Adjusted ROIC: 22.7%
• Returned $312 million to shareholders
(dividends and share repurchases)
While the year was marked by persistent inflation, challenging
operating conditions and greater instability in international
markets - we achieved solid growth from our innovative
solutions and leading service levels, which returned volumes to
pre-pandemic 2019 levels. We delivered superior profit and
return results at those volume levels by effectively mitigating
inflation, maintaining an agile operating plan, and achieving
greater operational efficiency through our Lincoln Business
System (LBS). These achievements reflect the success of our
customer-first approach and our disciplined, high-performance
team who is aligned around our Higher Standard 2025 Strategy
and guided by the Golden Rule.
Higher Standard 2025 Strategy Progress
We are progressing well against our Higher Standard 2025
Strategy goals at the midpoint of the strategy window. We
began the year by increasing our sales and profitability
2025 targets to reflect the higher value our strategic
initiatives are generating and made meaningful progress
across most metrics in 2022:
Metric
2025 Goal
2020-2022 Performance
2022 Performance
Sales CAGR
(Volume, 2% price & acquisitions)
High single digit to low
double digit percent
12% CAGR
9% (vs. prior year)
Average Adj. Operating Income Margin
Average 16.0%
(+/- 150bps)
Average 14.7%
Americas Welding Adj. EBIT margin
17% to 19%
International Welding Adj. EBIT margin
12% to 14%
Harris Products Group Adj. EBIT margin
13% to 15%
17.0%
9.6%
13.9%
16.8%
19.2%
12.2%
12.1%
Adj. EPS CAGR
High teens to Low
20% CAGR
41% CAGR
33% (vs. prior year)
Average Adjusted ROIC
18% to 20% Average
Average 21.4%
22.7%
Average operating working capital to sales
15.0% in 2025
20.9% in 2022;
18.6% excluding Fori
20.9% in 2022;
18.6% excluding Fori
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LINCOLN ELECTRIC 2022 ANNUAL REPORT We are in growth mode entering 2023 with high backlog levels
and most of our end markets are driving higher demand levels.
We also expect to continue to benefit from long-term secular
growth trends that favor Lincoln Electric, including the global
labor shortage, the electrification of transportation, renewable
energy and infrastructure investments, and reshoring of
manufacturing to de-risk supply chains. These growth drivers,
combined with our LBS initiatives driving operational
excellence, an expanded shared service structure and the
digitization of back office functions positions us well and we will
continue to challenge ourselves to accelerate performance.
Advancing Automation Leadership
A key driver of record performance in 2022 was the
approximate 30% organic sales growth achieved in our global
automation portfolio and the doubling of their adjusted
operating income margin through operating leverage and the
diligent execution of LBS initiatives.
In addition, we acquired Fori Automation, LLC, our largest
acquisition to date, and exited the year with an $850 million
automation portfolio sales run rate, which positions us to
exceed our 2025 goal of achieving $1 billion in automation
sales. Fori extends our presence into full line build capabilities,
automated industrial material handling (AGVs), and expands
our automation presence internationally. Customers can now
access the most extensive automation portfolio and
engineering expertise in the industry and we are able to
support their needs at any level of adoption, from cobots to
lights out automation across four continents.
Growth Momentum with Proprietary Solutions for
Electrification, Renewables and Infrastructure
The rapid expansion of renewable energy and the
electrification of transportation and supporting infrastructure
has challenged customers with finding the right technologies
and application expertise to support their aggressive growth
plans. In 2022, our proprietary solutions supporting efficient
wind tower fabrication, EV battery tray welding and automated
structural steel fabrication gained greater market traction given
their outperformance versus competitive offerings and have
positioned Lincoln as the partner of choice in these growing
areas. These solutions, along with our strong 57% vitality index
in equipment, reinforce Lincoln Electric as the innovative leader
in helping customers achieve their operational and
sustainability goals.
Expanding Our Growth Vectors
This year, we continued to invest in our large-scale wire metal
3D printing platform and now operate the world’s largest
platform of its kind, further advantaged by our vertical
integration of wire feedstock manufacturing and the machining
of finished parts. We are currently working with energy,
industrial, defense and aerospace customers to rapidly print
large-scale metal parts, molds and prototypes to accelerate
project timelines and help customers overcome elongated
supply chains. We expect this state-of-the-art technology to
mature through our strategy window.
We also announced our new DC fast charge EV charger
initiative to supply level-3 EV chargers for public, fleet and
heavy industry use. While this initiative is not tied to the ‘arc’, it
leverages our existing power electronics, engineering and
manufacturing competencies to produce a rugged, reliable and
domestically produced level-3 charger, which has been
challenging to source. We are targeting the production and
shipment of our scalable 150kW charger in late 2023 and are
actively engaged with prospective customers and partners.
Thank you
Looking ahead to 2023, we remain focused on serving our
customers, executing on our Higher Standard 2025 Strategy
initiatives and driving growth. By living our values and
leading by the Golden Rule we expect to continue to
generate superior value for all of our stakeholders. On behalf
of the entire organization and our Board of Directors, thank
you for your support and helping us achieve our purpose to
Build a Better World.
Chris Mapes
Chairman, President and Chief Executive Officer
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LINCOLN ELECTRIC 2022 ANNUAL REPORT MENU
MENU
2023 PROXY
STATEMENT
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
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LINCOLN ELECTRIC 2023 PROXY STATEMENT NOTICE OF ANNUAL MEETING
ANNUAL MEETING OF
SHAREHOLDERS
ITEMS TO BE VOTED ON
RECOMMENDATION
PROPOSAL 1
To elect ten Director Nominees named in
this Proxy Statement to hold office until
the 2024 Annual Meeting or until their
successors are duly elected and qualified
PROPOSAL 2
To ratify the appointment of Ernst & Young
LLP as Lincoln Electric’s independent
registered public accounting firm for the
year ending December 31, 2023
PROPOSAL 3
To approve, on an advisory basis, the
compensation of our named executive
officers (NEOs)
PROPOSAL 4
To recommend, on an advisory basis,
the frequency for future advisory votes to
approve the compensation of our NEOs
✔ FOR all
Director nominees
PAGE 22
✔ FOR this proposal
PAGE 89
✔ FOR this proposal
PAGE 91
✔ For EVERY YEAR
PAGE 94
MENU
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, Ohio 44117
DATE & TIME
WEDNESDAY, APRIL 19, 2023
11:00 AM ET
PLACE
Online at
www.virtualshareholdermeeting.com/LECO2023
ACCESS
Online at
www.virtualshareholdermeeting.com/LECO2023.
You must have your 16-digit control number which
is printed on your proxy card.
PARTICIPATION
Submit pre-meeting questions online by visiting
www.proxyvote.com before Friday, April 14,
2023 at 5:00 pm ET.
RECORD DATE
Shareholders of record on the close of
business on February 28, 2023 are entitled
to vote at the 2023 Annual Meeting.
HOW TO CAST YOUR VOTE
Your vote is important! Please vote your shares
PROPOSAL 5
To approve Lincoln Electric’s 2023
Equity and Incentive Compensation Plan ✔ FOR this proposal
PAGE 95
promptly in one of the following ways:
PROPOSAL 6
To approve Lincoln Electric’s 2023 Stock
Plan for Non-Employee Directors
✔ FOR this proposal
PAGE 105
By Order of the Board of Directors,
Christopher L. Mapes
Chairman, President and
Chief Executive Officer
Jennifer I. Ansberry
Executive Vice President,
General Counsel and Secretary
WE WILL BEGIN MAILING THIS PROXY STATEMENT ON OR ABOUT MARCH 17, 2023.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Shareholders to Be Held on April 19, 2023:
This Proxy Statement and the related form of proxy, along with our 2022 Annual Report on
Form 10-K, are available free of charge at www.lincolnelectric.com/proxymaterials.
BY INTERNET USING YOUR
COMPUTER
Visit www.proxyvote.com until
April 18, 2023
BY PHONE
Call 1-800-690-6903 by
April 18, 2023
BY INTERNET USING YOUR
TABLET OR SMARTPHONE
Scan this QR code to vote with your
mobile device by April 18, 2023
BY MAIL
Sign, date and return your proxy card
or voting instruction form, which
must be received by April 18, 2023
DURING MEETING
Vote online on April 19, 2023 during
the Annual Meeting at:
www.virtualshareholdermeeting.com/LECO2023
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LINCOLN ELECTRIC 2023 PROXY STATEMENT BUSINESS
OVERVIEW
OUR PURPOSE:
OPERATING BY A HIGHER STANDARD TO BUILD
A BETTER WORLD
Lincoln Electric is the world leader in the design,
development and manufacture of arc welding products,
automated joining, assembly and cutting systems, plasma
and oxyfuel cutting equipment, and has a leading global
position in brazing and soldering alloys.
We are recognized as The Welding Experts® for our leading
materials science, software development, automation
engineering, and application expertise, which advance
customers’ fabrication capabilities to help them build a better
world. We leverage these strengths, our global presence and a
broad distribution network to serve an array of customers
across various end markets including: general metal
fabrication, energy, structural steel construction and
infrastructure (commercial buildings and bridges), heavy
industries (agricultural, mining, construction and rail equipment,
as well as shipbuilding), and automotive/transportation.
Headquartered in Cleveland, Ohio, U.S.A., we operate
71 manufacturing locations in 20 countries and distribute
to over 160 countries. In 2022, we generated a record
$3.8 billion in sales.
OUR GLOBAL FOOTPRINT
FAST FACTS
FOUNDED
1895
EMPLOYEES
WORLDWIDE
12,000
COUNTRY
FOOTPRINT/
DISTRIBUTION
20/160+
MANUFACTURING
FACILITIES
71
CORPORATE
HEADQUARTERS
CLEVELAND, OH
BROADEST
SOLUTIONS
PORTFOLIO
GLOBALLY
2022 REVENUE
$3.8B
41
WORLD WIDE
NEW PRODUCT
VITALITY INDEX1
37%
LARGEST
COMMERCIAL &
TECHNICAL TEAM
(1)
Vitality index represents the percentage of 2022 sales from new
products launched in the last five years. Excludes customized
automation sales.
LOCATIONS
Global Headquarters
Cleveland, Ohio USA
Manufacturing
Tech Center
Sales
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
OUR GUIDING PRINCIPLE: THE GOLDEN RULE
TREAT OTHERS AS YOU WOULD LIKE TO BE TREATED
For nearly 130 years, we have achieved success through innovation and business practices that seek to align and generate superior value for
all our stakeholders. Our long-term strategic initiatives and investments drive alignment by providing:
• Customers with market-leading solutions that are manufactured
• Suppliers with a shared commitment to responsible operations
responsibly, operate safely and efficiently, and are supported by
that are safe, compliant and efficient;
our superior technical application capabilities;
• Communities with a responsible and engaged partner who is
• Employees with an incentive and results-driven culture where
focused on helping neighbors thrive; and
engagement and professional growth and development is a priority;
• Shareholders with above-market returns.
OUR HIGHER STANDARD 2025 STRATEGY
We are executing on our long-term strategy, the “Higher Standard 2025 Strategy” (“2025
Strategy”), which focuses on accelerating sales growth, profitability and earnings performance
from 2020 to 2025 by putting customers’ needs first, enhancing employee development and
engagement, further differentiating ourselves with innovative solutions, and advancing
operational excellence. Our 2025 Sustainability strategy is integrated into each of these four key
strategic areas of the business, which are highlighted below:
CUSTOMER FOCUSED:
Enhance our value proposition
and the ease of doing business
with us by leveraging our CRM
system and investments in
industry-segment market-facing
teams, product portfolios and
application resource centers.
EMPLOYEE DE VELOPMENT:
Improve opportunities for our
employees to learn and grow
through new development
programs, resource groups,
engagement initiatives,
and enhanced HR systems
and tools.
SOLUTIONS & VALUE:
Develop solutions that improve
customers’ ability to make their
products better, safer and easier.
Key initiatives include
accelerating growth in
automated solutions and additive
services, enhanced software
(IoT and AI), and designing
greater efficiency and
sustainability into new products.
OPER ATIONAL E XCELLENCE:
Improve our quality, costs and
processes by maximizing
continuous improvement
through our Lincoln Business
System, further digitization of
our operations and processes,
and achievement of our
sustainability goals.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
All of the 2025 Strategy’s key financial targets are integrated into the Company’s key short-term and long-term compensation metrics and are
incorporated into the Chief Executive Officer (CEO) and executive leadership’s individual annual compensation goals and further cascaded
through the organization.
KEY FINANCIAL METRICS
2025 GOAL
(2020 BASELINE)
SHORT-TERM COMPENSATION
METRICS
LONG-TERM COMPENSATION
METRICS
Sales CAGR
(Volume, 2% price & acquisitions)
High single-digit to Low
double-digit percent
ü1
Average Adjusted Operating
Income Margin
16% (+/- 150 bps)
ü1
(Representative of EBITB)
Adjusted Earnings per share
CAGR
High-teens to Low 20%
ü1
(Three-Year Cumulative Growth
of Adjusted Net Income for
Compensation Purposes)
Average Operating Working
Capital Ratio
15% in 2025
ü1
Average Adjusted Return on
Invested Capital
18% to 20% (Top quartile
performance vs. proxy peers)
ü1
(1) Performance measures used in the design of the executive compensation program are defined in Appendix A
Our 2025 sustainability goals and initiatives are aligned across each peak of our 2025 Higher Standard Strategy and are incorporated in
annual individual performance goals. Our sustainability initiatives focus on reducing our operational footprint through reduced emissions,
lower energy intensity, greater conservation of natural resources, strong governance, increased diversity, equity and inclusion, enhanced
employee development and engagement programming, and maintaining strong community partnerships.
Additionally, we are focused on advancing sustainability in our customers’ operations and designing solutions to support decarbonization
across the end markets we serve. Our product stewardship initiatives focus on improving the design, manufacture, packaging, and
transportation of our products to improve customer safety, increase recyclability, and reduce our products’ overall carbon footprint. Our
application expertise and proprietary solutions are also at the forefront of supporting the expansion of clean technology by enabling the
fabrication of renewable energy infrastructure and power generation, as well as the electrification of the transportation sector.
2025 STRATEGY SUSTAINABILITY GOALS
Goals reflect targeted 2025 performance versus our 2018 baseline:
SAFETY
52% REDUCTION
(-10% YoY)
Total Recordable
Case Rates
GREENHOUSE GAS
(GHG) EMISSIONS
10% REDUCTION
(-1.5% YoY)
ENERGY
INTENSITY
16% REDUCTION
(-2.5% YoY)
RECYCLING &
LANDFILL AVOIDANCE
80% RATE
(All Waste)
97% RATE
(Landfill Avoidance)
WATER USE
14% REDUCTION
(-2.1% YoY)
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
PROXY
SUMMARY
This section provides an overview of important items related to this Proxy Statement and the 2023 Annual Meeting. We encourage you to
read the entire Proxy Statement for more information before voting.
2022 PERFORMANCE HIGHLIGHTS
In 2022, we achieved record sales, adjusted operating income margin and adjusted earnings per share performance, while diligently
managing inflationary headwinds and increasingly challenging operating conditions in our international business. By prioritizing employee
safety and training, leading with a “customer-first” approach, and maintaining an agile manufacturing and supply chain strategy, we
successfully exited 2022 at 2019 volume levels on a consolidated basis yet with significantly higher returns in 2022. This achievement
demonstrates the strong execution and value creation of our 2025 Strategy.
We also remained focused on our long-term 2025 Strategy and sustainability targets. We continued to invest in growth and expanded our
vitality index of new products, supported product redesigns to accommodate supply chain substitutions, continued to expand automation
and our large scale, metal 3D printing solutions, and announced our newest organic growth initiative to manufacture DC fast chargers for
electric vehicles in late 2023. In addition, we completed our Company’s largest acquisition, with the addition of Fori Automation, LLC
(“Fori”) in December 2022, which extends our welding industry leadership in automation with greater capabilities and engineering
expertise, and broader international footprint. With Fori, our automation portfolio was at an $850 million revenue run rate at year-end, and
we believe we are well-positioned for continued growth and the ability to exceed our 2025 $1 billion automation revenue target.
Record profitability and earnings in 2022 reflect diligent cost management and greater operating leverage from our Lincoln Business
System, with most notable improvements in our automation portfolio. We also benefited from efficiencies gained from our shared service
center structure and initiatives that are increasing the digitization and automation of back office activities. These achievements, along with
enhanced employee training and development programming and continued progress across many of our sustainability metrics, generated
strong cash generation, adjusted returns on investment capital and superior shareholder returns in 2022.
2022 FINANCIAL HIGHLIGHTS
End markets remained resilient in 2022, led by strength in Americas Welding and in our automation portfolio. Sales increased approximately
16% to a record $3.8 billion, primarily due to 20% organic sales growth and an approximate 2% contribution from acquisitions. We achieved
strong operating income performance with a 200 basis point increase in our operating income margin to a record 16.3% versus the prior
year. Higher operating leverage from 5% volume growth, effective cost management and benefits of our Lincoln Business System initiatives
generated our record results. Adjusted operating income margin also improved 200 basis points to a record 16.8%. Cash flows from
operations increased approximately 5% versus the prior year despite maintaining higher inventory levels to service customers’ needs.
NET SALES
OPERATING INCOME MARGIN
DILUTED EPS
Reported
Organic Sales
Reported
Adjusted
Reported
Adjusted
$3.8B +16% +20%
(Record)
vs. 2021
vs. 2021
16.3% 16.8%
+200 bps vs. 2021
(Record)
+200 bps vs. 2021
(Record)
$8.04 $8.27
+75% vs. 2021
(Record)
+33% vs. 2021
(Record)
CASH FLOW FROM
OPERATIONS
$383M
+5% vs. 2021
AVERAGE OPERATING WORKING
CAPITAL TO NET SALES RATIO1
20.9%
RETURN ON INVESTED CAPITAL 2
Reported
Adjusted
22.1% 22.7%
27th
CONSECUTIVE DIVIDEND INCREASE
14.3%
NEW PRODUCT VITALITY INDEX
37%
1 Average operating working capital excluding Fori would have been 18.6% as a percent of Net sales.
2 Return on invested capital and Adjusted return on invested capital excluding Fori would have been 27.9% and 28.6%, respectively.
See Appendix A for definitions and/or reconciliation of these metrics to results reported in accordance with GAAP. Performance measures used in the design of the executive compen-
sation program are presented within the Compensation Discussion and Analysis section.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT Our 2022 performance advances our progress towards our 2025 Strategy financial targets, with several metrics pacing at or above their
MENU
2025 target:
KEY FINANCIAL METRICS
Sales CAGR
(Volume, 2% price & acquisitions)
2025 GOAL
(vs. 2020 BASELINE)
2020 TO 2022 PROGRESS
Average Adjusted Operating Income Margin
16% (+/- 150 bps)
Adjusted Earnings per share CAGR
High-teens to Low 20%
High single-digit to Low double-digit percent
12%
14.7%
41%
Average Operating Working Capital Ratio
15% in 2025
20.9% at 12/31/20221
Average Adjusted Return on Invested Capital
18% to 20% (Top quartile performance vs.
proxy peers)
21.4%1
(1) The Average Operating Working Capital Ratio and the Average Adjusted ROIC performance were impacted by the inclusion of Fori on the balance sheet at
December 31, 2022 without commensurate sales. Excluding Fori, the 2022 Average Operating Working Ratio would have been 18.6% and the 2020 to
2022 average Adjusted ROIC would have been 23.4%
2022 SHAREHOLDER RETURNS
We continued to generate solid cash flows and pursued a balanced capital allocation strategy with strong shareholder returns in 2022
despite the challenging operating conditions. In 2022, we returned $312 million to shareholders through our dividend program and share
repurchases. In addition, the Board approved the Company’s 27th consecutive dividend increase, raising the dividend rate by 14.3%.
These returns were complemented by a record $508 million in growth investments from internal capital expenditures and acquisitions.
$312M
RETURNED TO
SHAREHOLDERS
IN 2022
TOTAL SHAREHOLDER
RETURN
=
$131M
IN DIVIDENDS
+
$181M
IN SHARE REPURCHASES
+5% +58%
1-Year
3-Year
+74%
5-Year
In 2022, Lincoln Electric was one of two machinery firms recognized by Investor’s Business Daily® as a “Top 100 Best ESG Company.”
The ranking recognizes companies with leading environmental, social and governance ratings, as well as stock performance.
1 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT 2022 SAFETY AND ENVIRONMENTAL HIGHLIGHTS
Safety, operational excellence and sustainability are a priority at Lincoln Electric and we strive to improve our performance annually to
achieve our 2025 goals across these key safety and environmental metrics: our total recordable case rate safety metric, carbon emis-
sions, energy intensity, recycling, and water use. Our performance to goal demonstrates continued structural improvements achieved in
the business through our 2025 Strategy and our commitment to best-in-class performance.
MENU
Safety (TRCR)
Greenhouse Gas Emissions (Absolute)
Energy Intensity (Gigajoules used/Hours
worked)
Recycling (All Waste)
Water Use (Absolute)
2025 GOAL
(vs. 2018 BASELINE)
52% Reduction
10% Reduction
16% Reduction
80% Rate
14% Reduction
2022 PERFORMANCE
(vs. 2018 BASELINE)
16% Reduction
19% Reduction
1% Reduction1
+250 bps to 76% Rate
25% Reduction
(1) Our 2022 energy intensity performance is impacted by lower labor hours reflecting productivity improvements and automation investments.
Absolute energy use declined 5% in 2022 vs. 2018 baseline.
2022 GLOBAL WORKFORCE AND DIVERSITY AND INCLUSION PROGRAMS
In executing our 2025 Strategy, we continue to focus on the importance of employee development, engagement and building a culture to
develop and foster the vast talents of our employees. Our CEO and Chief Human Resources Officer lead our diversity and inclusion (D&I)
initiatives, and report on the Company’s D&I programs, talent attraction and retention, and succession planning to the Board twice annu-
ally and our Compensation and Executive Development Committee is briefed at every committee meeting on D&I matters throughout the
year. Our D&I programs focus on:
• Internal D&I education and training programs
• Employee development programs to cultivate, grow and promote talent from within
• Intentional recruiting efforts to increase our diverse talent pool
• Support expansion of activities within employee resource groups, including Diversity Councils
• Maintain Advisory Boards where department representatives meet regularly with management to raise key topics
• Partnering with diverse customers, suppliers and community organizations
DIVERSITY HIGHLIGHTS
LEADERSHIP TEAM
BOARD OF DIRECTORS
GLOBAL WORKFORCE
US WORKFORCE
36%
Ethnic or
Gender Diverse
60%
of 2022 Named Executive
Officers are ethnic and
gender diverse
40%
Ethnic or
Gender Diverse
21%
Women
24%
Racially or
Ethnically
Diverse
1 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT
In 2022, we expanded initiatives to further build, acquire and foster increased diversity, engagement and connectedness among our global
organization. Highlights include:
MENU
• We developed a cadence to regularly “listen” to various global employee populations to include pulse surveys, small group listening
sessions, and local town hall meetings. These actions guide both short term actions and longer term planning opportunities for our
global leaders.
• Across the globe we built localized action plans in response to feedback from our 2021 global employee discovery survey. Teams
gathered to review their survey results, identified areas of focus and documented and executed changes in response. Employees were
empowered and managers were held accountable to not only build their action plans, but also periodically demonstrate progress and
success.
• Our new “Work Appropriately” program was launched in 2022. Many office-based roles are included which allows for hybrid work
while continuing to meet objectives and successfully service customers. In addition, a new work category of “permanently remote”
allows many employees to build a successful career and help our business grow outside our physical offices. Whether hybrid, office or
work-from-home, this format has provided an inclusive opportunity to help employees balance location preferences with professional
success. We continue to assess the use of this program across our network of global office locations.
EMPLOYEE DEVELOPMENT & TRAINING
One of the four peaks of our 2025 Strategy is focused directly on our employees’ engagement and professional development because a
highly-engaged workforce drives innovation, productivity and improved bottom-line results. One key area of engagement is our investment
in training and development to ensure a strong succession pipeline and ample development opportunities to advance skills, knowledge
and expertise to prepare our employees for future career opportunities.
In addition to formal leadership, management and professional development programs, in 2022 we launched a bold initiative to repay up to
$125,000 towards each of our U.S. employees’ student loan debt obligations. This program has been enthusiastically welcomed by both
our existing talent and at recruiting events on university campuses across the country.
We also continue to provide tuition reimbursement for external accredited programs, mentoring, self-guided online courses, instructor-led
programs, and special project and rotational assignments that can lead to extensive global exposure and talent development.
2022 also marked the introduction of TalentLaunch – a global development program for early career employees. Over 250 employees
began a 2-year learning journey structured around our core competencies, including living by the Golden Rule. Employees also work
together in cohorts to expand their global network and build teamwork.
In addition to our career development programs, our annual talent and succession planning process reviews 100% of our global profes-
sional staff. This ensures all high potential employees have an active individual development plan to guide their career aspirations. This
process also helps to ensure we have an appropriate talent pipeline for critical roles in general management, engineering and operations.
These talent reviews include our CEO and all segment and functional leaders who use this process to identify and support high potential
and diverse talent in succession planning for the next generation of Lincoln Electric’s leaders.
COMMUNITY ENGAGEMENT
In 2022, we maintained our employee assistance program, supported our internal employee resource group initiatives and community
engagement through our Lincoln Electric Foundation grants, our U.S. employee matching program for donations and volunteerism, in-kind
gifts, sponsorship of key events, and the hosting of community and academic events at our facilities. In 2022, we were pleased to host the
WorldSkills® International Competition – Special Edition for welding and construction metal work at our Cleveland, Ohio headquarter
campus. This event welcomed over 135 international competitors, experts and delegates from over 30 countries who represented
premiere talent in metal fabrication and thought leaders discussing the future of workforce development. In addition, we maintained our
community educational/career programming among secondary and high school students to address the skills gap in industry and expand
awareness of attractive career pathways in manufacturing. This programming, along with our continued support of regional youth
programs, welding competitions and serving as the global welding sponsor of WorldSkills® are foundational to our efforts to promote the
trades and the science of welding.
1 2
LINCOLN ELECTRIC 2023 PROXY STATEMENT
CORPORATE GOVERNANCE HIGHLIGHTS
Lincoln Electric has a solid track record of integrity and corporate governance practices that promote thoughtful management by its officers
and Board of Directors, facilitating profitable growth while strategically balancing risk to maximize shareholder value. The tables below
summarize select Board and governance information, and highlight certain information about the 10 Director Nominees that shareholders
are being asked to elect at the 2023 Annual Meeting.
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BOARD COMPOSITION AND PRACTICES
Size of Board
Number of independent Directors
Average age of Directors Nominees
Ethnically diverse Director Nominees
10
9
61
2
Number of fully independent Board committees
Independent Directors meet without management
Director attendance at Board and committee meetings
Mandatory retirement age (75)
Percentage of Female Director Nominees
30%
Stock ownership guidelines for Directors
Board meetings held in 2022
New Directors in the last 5 years
Average tenure (years) of Director Nominees
Annual election of Directors
Majority voting policy for Directors
Lead Independent Director
SHAREHOLDER PROTECTIONS
One share, One vote standard
Dual-class common stock or Poison pill
Cumulative voting
Vote standard for Code of Regulations amendment
Shareholder right to call a special meeting
Annual election of Directors
Majority voting policy for Directors
Lead Independent Director
Executive sessions without management present
6
3
10
✔
✔
✔
✔
✘
✘
67%
✔**
✔
✔
✔
✔
** Special meetings can be called by shareholders holding at least 25%
of the voting power
Annual Board and committee self-assessments
Code of Conduct for Directors, officers & employees
No overboarded Directors (per ISS or Glass Lewis)
Succession planning and implementation process
Strategy, ESG and risk management oversight
Corporate culture, D&I oversight
COMPENSATION PRACTICES
Pay for Performance
Annual Say-on-Pay Advisory Vote
Compensation aligned with strategic goals and individual
performance
Incentive plans do not encourage excessive risk taking
No excessive perquisites
Robust stock ownership guidelines for NEOs
Clawback policy
Double-trigger change-in-control policy
Anti-hedging/pledging policy
CEO Pay Ratio
ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) POLICIES AND ENVIRONMENTAL GOALS
Board oversight of ESG
Compensation and Executive Development Committee oversight of human capital policies and practices, including
corporate culture, and D&I
Audit Committee oversight of environmental, health & safety matters
Audit Committee oversight of information security and cybersecurity matters
ESG performance incorporated into CEO’s annual performance goals and compensation metrics (and other
executives)
Global Code of Conduct
Human Rights Policy
No-Harassment Policy
Anti-Corruption Policy
Supplier and Channel Partner Codes of Conduct
Environmental, Health, Safety & Quality Policy
Environment management system
Long-term safety and environmental goals
Aligned with select UN Sustainable Development Goals (SDGs)
Sustainability Accounting Standards Board (SASB) Index
Sustainability Report
4
✔
>75%
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
164:1
1 3
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
DIRECTOR NOMINEES AND BOARD SUMMARY
PROPOSAL 1
Election of 10 Directors
to serve until 2024
Annual Meeting or until
their successors are duly
elected and qualified
✔
➜
The Board recommends a vote FOR all Director Nominees.
Our Nominating and Corporate Governance Committee and our Board of Directors have
determined that each of the Director Nominees possesses the right skills, qualifications and
experience to effectively oversee Lincoln Electric’s long-term business strategy.
See “Proposal 1 – Election of Directors” beginning on page 22 of this Proxy Statement.
You are being asked to vote on the election of ten Director Nominees. Selected biographical information of each Director Nominee, as well
as committee membership and committee chair information is listed below. Additional information can be found in the Director biographies
under Proposal 1.
DIRECTOR NOMINEES
Name
Brian D. Chambers
Chair, President and CEO,
Owens Corning
Curtis E. Espeland
(Lead Independent Director)
Retired Executive Vice President and CFO,
Eastman Chemical Company
Patrick P. Goris
Senior Vice President and CFO,
Carrier Global Corporation
Michael F. Hilton
Retired President and CEO,
Nordson Corporation
Kathryn Jo Lincoln
Chair and CIO,
Lincoln Institute of Land Policy
Christopher L. Mapes (Chairman)
President and CEO,
Lincoln Electric Holdings, Inc.
Phillip J. Mason
Retired President,
EMEA Sector of Ecolab, Inc.
Ben P. Patel
Former Senior Vice President and
Chief Technology Officer,
Cooper Tire & Rubber Company
Hellene S. Runtagh
Retired President and CEO,
Berwind Group
Kellye L. Walker
Executive Vice President and
Chief Legal Counsel,
Eastman Chemical Company
u Chair l Member
Director
Since
Age
Independent
Audit
Compensation &
Executive
Development
Nominating &
Corporate
Governance
Finance
Other Public
Company
Boards
l
l
u
l
56
2022
58
2012
51
2018
68
2015
68
1995
61
2010
72
2013
55
2018
74
2001
56
2020
✔
✔
✔
✔
✔
✔
✔
✔
✔
l
l
l
l
u
l
u
l
l
l
l
l
l
u
l
1
1
—
2
—
1
—
—
—
—
1 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT COMPOSITION OF DIRECTOR NOMINEES
Gender Diversity
Ethnic Diversity
30%
At Risk
85%
Gender Diverse
3
Women
7
Men
2Ethnically
Diverse
At Risk
85%
Independence
Tenure of Independent Director Nominees
At Risk
85%
1
Non-
independent
9
Independent
40-5 Years
10 Years
Average Tenure
26-9 Years
110-14 Years
215 Years of more
Age of Independent Director Nominees
2
70s
2
60s
62 Years
Average Age
550s
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1 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM SUMMARY
PROPOSAL 2
Ratification of
independent registered
public accounting firm
✔
➜
The Board recommends a vote FOR this proposal.
Our Board of Directors recommends that shareholders vote “FOR” the ratification of the
appointment of Ernst & Young LLP as Lincoln Electric’s independent registered public
accounting firm for the year ending December 31, 2023.
See “Proposal 2—Ratification of Independent Registered Public Accounting Firm” beginning
on page 89 of this Proxy Statement.
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EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS
PROPOSAL 3
Approval, on an advisory
basis, of NEO
compensation
✔
➜
The Board recommends a vote FOR this proposal.
Our Board of Directors recommends that shareholders vote “FOR” the approval, on an
advisory basis, of the compensation of our NEOs.
See “Proposal 3—Approval, on an advisory basis, of NEO compensation beginning on page
91 of this Proxy Statement and “Compensation Discussion and Analysis” beginning on page
43 of this Proxy Statement.
We have a long history of driving an incentive management culture, emphasizing pay for performance to align compensation with the
achievement of enterprise, segment and individual goals.
We believe our compensation program and practices provide an appropriate balance between profitability, cash flow and returns, on the
one hand, and suitable levels of risk-taking, on the other. This balance, in turn, aligns compensation strategies with shareholder interests,
as reflected by the consistently high level of shareholders voting for the compensation of our NEOs.
2022 NAMED EXECUTIVE OFFICERS
The Compensation Discussion and Analysis (CD&A) provides information regarding our executive compensation program for the following
NEOs in 2022:
Christopher L. Mapes
Chairman, President and Chief Executive
Officer
Steven B. Hedlund
Executive Vice President,
Chief Operating Officer
Gabriel Bruno
Jennifer I. Ansberry
Executive Vice President, Chief Financial
Officer and Treasurer
Executive Vice President, General Counsel
and Secretary
Michele R. Kuhrt
Executive Vice President, Chief
Human Resources Officer
ACTIONS TO FURTHER ALIGN EXECUTIVE COMPENSATION WITH SHAREHOLDER INTERESTS
The Compensation and Executive Development Committee of the Board reviews the framework of our executive compensation program
and seeks to align executive pay with our pay for performance philosophy. Each year, our Compensation and Executive Development
Committee monitors our executive compensation program and how it relates to our corporate performance and shareholder interests. The
historically high approval of our “say-on-pay” proposals on the compensation of our NEOs, including at the 2022 Annual Meeting, demon-
strate the alignment of our executive compensation program with corporate performance and shareholder interests.
1 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT
In 2022, our Compensation and Executive Development Committee reviewed the overall design of our executive compensation program,
and held the program consistent with policies developed in prior years. In support of the company’s short and long-term strategy, the
Compensation and Executive Development Committee modified the Company’s short-term incentive plan design for 2022. Changes
approved by the Committee included a revision to the formula used for calculating each executive’s bonus that places a focus on first
achieving financial performance, then considers the impact of individual performance. Further, the Compensation and Executive
Development Committee approved adding a revenue metric to the Financial Metrics used in the bonus calculation
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2022 EXECUTIVE COMPENSATION PRACTICES
What We Do
What We Don’t Do
We have long-term compensation programs focused on
profitability, net income growth, ROIC and total shareholder
✔ We do not allow hedging or pledging of our shares
returns
We use targeted performance metrics to align pay with
performance
✔ We do not reprice stock options and do not issue
discounted stock options without shareholder approval
We maintain stock ownership guidelines (5x base salary for
CEO; 3x base salary for other NEOs)
We have shareholder-approved incentive plans
We have a broad clawback policy
We have a double-trigger change in control policy
✔ We do not provide excessive perquisites
✔
✔
✔
We do not have multi-year guarantees for compensation
increases
✘
✘
✘
✘
COMPENSATION FRAMEWORK & PHILOSOPHY
Our compensation program is designed to attract and retain exceptional employees. We also maintain a strong pay for performance
culture. As indicated below, we design our compensation system to reflect current best practices, including setting base pay below the
competitive market for each position, targeting incentive-based cash compensation above the competitive market and promoting quality
corporate governance in compensation decisions. We believe these practices result in sustained, long-term shareholder value and reflect
our philosophy that the pay for our best performers should align with the results of our long-term goals.
Percentile Rank
25th
45th
50th
65th
75th
100th
Base
Salary
LTI
Benefits
Target Total Cash
Compensation
(base + annual bonus)
Our executive compensation program consists of three primary elements of total direct compensation: base salary (fixed), short-term
incentive compensation (at-risk) in the form of an annual bonus (EMIP), and long-term incentive compensation (at-risk) in the form of stock
options, restricted stock units (RSUs) and performance shares.
• Base salary: only component of total direct compensation that is
• Long-term incentive compensation: based on our financial
fixed
performance over a three-year cycle
• Short-term incentive compensation: based on annual
consolidated and, if applicable, segment performance, and
individual performance
Short-term incentive compensation and long-term incentive compensation is variable, or “at risk,” and is a significant percentage of total
compensation.
1 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT AVERAGE MIX OF KEY COMPENSATION COMPONENTS AND KEY COMPENSATION METRICS
The following charts present the mix of 2022 target direct compensation for our Chief Executive Officer (CEO) and all of our other NEOs,
as established in the beginning of 2022. As shown below, 87% of our CEO’s compensation value and, on average, 73% of all of our other
NEOs’ compensation value was “at risk,” with the actual amounts realized based on annual and long-term performance as well as our
stock price.
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CEO Target Compensation Mix
All Other NEOs Target Compensation Mix
87%
At Risk
23%
21%
23%
13%
23%
18%
14%
16%
16%
27%
73%
At Risk
14%
16%
25%
27%
Base (fixed)
Annual Bonus (EMIP)
Stock Options
Restricted Stock Units
Performance Shares
Long-Term
We use the following key performance measures in our short-term and long-term compensation programs.
Key Performance Metrics Tied to Executive Compensation
Adjusted Revenue1
Metric
EBITB1,2 (Adjusted earnings before interest, taxes and bonus)
Average Operating Working Capital to Sales1 ratio
Individual performance (includes ESG-related metrics)3
Adjusted Net Income1 growth
Return on Invested Capital (ROIC)1
Short-Term
Compensation (Annual Bonus)
Long-Term Incentive Compensation
Program (3-yr Performance Cycle)
✔
✔
✔
✔
✔
✔
(1) Both consolidated and segment financial performance measures are used in the design of the executive compensation program and are defined in
Appendix A. Adjusted Revenue for Compensation Purposes, EBITB, Average Operating Working Capital to Sales for Compensation Purposes, Adjusted
Net Income for Compensation Purposes, and Return on Investment Capital for Compensation Purposes have discrete definitions relative to our executive
compensation program.
(2) EBITB is an internal measure that tracks our adjusted operating income.
(3) Individual performance goals are set annually and a significant portion of our executive officers’ individual performance goals are tied to one or more
aspect of our 2025 Strategy including human capital and other ESG related matters.
1 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT
SAY-ON-FREQUENCY
PROPOSAL 4
To recommend, on an
advisory basis, the
frequency for future
advisory votes to approve
the compensation of our
NEOs
✔
➜
The Board recommends a vote for EVERY YEAR.
Our Board recommends that shareholders vote for “EVERY YEAR” for the frequency on
future advisory votes to approve the compensation of our NEOs.
See “Proposal 4—To recommend, on an advisory basis, the frequency for future advisory
votes to approve the compensation of our NEOs” beginning on page 94 of this Proxy
Statement.
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LINCOLN ELECTRIC’S 2023 EQUITY AND INCENTIVE COMPENSATION PLAN
PROPOSAL 5
To approve Lincoln
Electric’s 2023 Equity
and Incentive
Compensation Plan
✔
➜
The Board recommends a vote FOR this proposal.
Our Board recommends that shareholders vote “FOR” the approval of Lincoln Electric’s 2023
Equity and Incentive Compensation Plan.
See “Proposal 5—To approve Lincoln Electric’s 2023 Equity and Incentive Compensation
Plan” beginning on page 95 of this Proxy Statement.
LINCOLN ELECTRIC’S 2023 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
PROPOSAL 6
To approve Lincoln
Electric’s 2023 Stock
Plan for Non-Employee
Directors
✔
➜
The Board recommends a vote FOR this proposal.
Our Board recommends that shareholders vote “FOR” the approval of Lincoln Electric’s 2023
Stock Plan for Non-Employee Directors.
See “Proposal 6—To approve Lincoln Electric’s 2023 Stock Plan for Non-Executive
Directors” beginning on page 105 of this Proxy Statement.
1 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT
LINCOLN ELECTRIC HOLDINGS, INC.
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING
BUSINESS OVERVIEW
PROXY SUMMARY
PROPOSAL 1—ELECTION OF DIRECTORS
Nasdaq Board Diversity Matrix
Director Nominees
Corporate Governance
Our Board Committees
Oversight of Our Company
Compensation-Related Risk
Related-Party Transactions
Director Compensation
EXECUTIVE COMPENSATION
Compensation Discussion And Analysis
Compensation Committee Report
Executive Compensation Tables
Termination And Change In Control Arrangements
Pay Ratio
Pay Versus Performance
MANAGEMENT OWNERSHIP OF SHARES
Beneficial Ownership Table
Equity Compensation Plan Information
Delinquent Section 16(a) Reports
OTHER OWNERSHIP OF SHARES
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
ANNUAL MEETING PROPOSALS
Proposal 1—Election Of Directors
Proposal 2—Ratification Of Independent Registered Public Accounting Firm
Proposal 3—Approval, On An Advisory Basis, Of Named Executive Officer Compensation
Proposal 4—Recommendation, On An Advisory Basis, Frequency for Future Advisory Votes to Approve Compensation of NEOs
Proposal 5—Approval of Lincoln Electric’s 2023 Equity and Incentive Compensation Plan
Proposal 6—Approval of Lincoln Electric’s 2023 Stock Plan for Non-Employee Directors
AUDIT COMMITTEE REPORT
FAQS
APPENDIX A—DEFINITIONS AND NON-GAAP FINANCIAL MEASURES
APPENDIX B—2023 EQUITY AND INCENTIVE COMPENSATION PLAN
APPENDIX C—2023 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
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05
06
09
22
23
25
30
33
35
37
37
38
42
43
66
67
75
80
81
85
85
86
86
87
88
89
89
89
91
94
95
105
113
114
118
122
135
2 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
Cautionary Note on Forward-Looking Statements: This Proxy Statement contains forward-looking statements, including statements
regarding Lincoln Electric’s strategy and current expectations as well as sustainability and other ESG-related strategies, commitments,
targets and goals, within the meaning of applicable federal securities laws and regulations. These statements reflect management’s
current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of
words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance,” “goal,” “target” or words of similar
meaning. Actual results (including the Company’s performance with respect to any sustainability or other ESG-related targets and goals)
may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results and
ability to achieve its targets and goals. The factors include, but are not limited to: general economic, financial and market conditions; the
effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit
markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation;
actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate
acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the
effects of changes in tax law; tariff rates in the countries where the Company conducts business; the Company’s ability to achieve its
sustainability and other ESG-related targets and goals for a variety of reasons, including, among others, (i) technical and operating
factors, (ii) assumptions not being realized, (iii) the outcome of current and future scientific research efforts and technological
developments, and (iv) evolving sustainability strategies and best practices, and the possible effects of events beyond our control, such as
the impact of the Russia-Ukraine conflict, political unrest, acts of terror, natural disasters and pandemics, including the coronavirus
disease (“COVID-19”) pandemic, on the Company or its customers, suppliers and the economy in general. For additional discussion, see
“Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. These forward-looking statements
speak only as of the date on which such statements were made, and we undertake no obligation to update these statements except as
required by federal securities law. Forward-looking and other statements in this Proxy Statement regarding our sustainability and other
ESG-related strategies, commitments, targets and goals are not an indication that these statements are necessarily material to investors
or required to be disclosed in our filings with the Securities and Exchange Commission (SEC).
2 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
PROPOSAL 1—
ELECTION OF DIRECTORS
DIRECTOR NOMINEES
Brian D. Chambers
Curtis E. Espeland
Patrick P. Goris
Michael F. Hilton
Kathryn Jo Lincoln
Christopher L. Mapes
Phillip J. Mason
Ben P. Patel
Hellene S. Runtagh
Kellye L. Walker
Our shareholders are being asked to elect ten Directors to serve until the 2024 Annual Meeting or until their successors are duly elected
and qualified. All of the Director Nominees have been previously elected by our shareholders. Each of the Director Nominees has agreed
to stand for re-election. The biographies of our Director Nominees can be found in this section.
If any Director Nominee is unable to stand for election, the Board may provide for a lesser number of nominees or designate a substitute.
In the latter event, shares represented by proxies solicited by the Directors may be voted for the substitute. We have no reason to believe
that any of the nominees will be unable to stand for election.
HOW WE SELECT DIRECTOR NOMINEES
In evaluating Director candidates, including persons nominated by shareholders, the Nominating and Corporate Governance Committee
expects that any candidate must have these minimum qualifications:
• Demonstrates character, integrity and judgment
• Specialized experience and background that will add to the depth
• High-level managerial experience or experience dealing with
and breadth of the Board
complex business matters
• Independence as defined by the Nasdaq listing standards (for
• Ability to work effectively with others
• Sufficient time to devote to the affairs of Lincoln Electric
non-employee Directors)
• Financial literacy
We are also committed to having Director candidates that can provide perspective on the industry challenges that we face and our long-
term commitment to a pay for performance culture. The Nominating and Corporate Governance Committee’s process for identifying and
evaluating nominees for Director includes annually discussing prospective Director specifications, which serve as the baseline to evaluate
candidates. When recruiting new Director candidates, we may involve a recognized search firm, and the CEO and/or a member of the
Nominating and Corporate Governance Committee (usually, the Chair) will contact the prospective director to gauge his or her interest and
availability. The candidate will then meet with several members of the Board, including our Lead Independent Director. At the same time,
references for the prospect will be contacted. A background check is generally completed before a final recommendation is made to the
Board to elect a candidate to the Board.
During 2022, the Nominating and Corporate Governance Committee retained the search firm of Heidrick & Struggles to help identify
director prospects, perform candidate outreach, assist in reference and background checks and provide other related services. The Board
targeted diverse candidates with an eye toward gender diverse candidates who are active senior executives of public companies with
experience in managing global businesses.
Shareholders may nominate one or more persons for election as Director of Lincoln Electric. The process for doing so is set forth in the
FAQs section of this Proxy Statement. Director candidates recommended by our shareholders will be considered by the Nominating and
Corporate Governance Committee in accordance with the criteria outlined above. For this year, the window for such nominations closed
on January 21, 2023.
2 2
LINCOLN ELECTRIC 2023 PROXY STATEMENT
DIRECTOR NOMINEES’ SKILLS, EXPERIENCE AND BACKGROUND
Throughout 2022, the Nominating and Corporate Governance Committee reviewed the skills, qualifications and experience of each
Director Nominee to ensure that each can effectively oversee our long-term business strategy. As shown below, our Director Nominees
have a mix of skills and experience that we believe are relevant to the Company’s long-term strategy and success.
MENU
SKILLS, EXPERIENCE AND BACKGROUND
SKILLS, EXPERIENCE AND BACKGROUND
Senior Leadership Management
Senior Leadership Management
Manufacturing Expertise
Manufacturing Expertise
Other Public Company Board Service
Other Public Company Board Service
Financial Acumen & Expertise
Financial Acumen & Expertise
International Operations Excellence
International Operations Excellence
M&A Experience
M&A Experience
Innovation Experience
Innovation Experience
Sales/Marketing Experience
Sales/Marketing Experience
Information Technology/
Information Technology/
Information Security Experience
Information Security Experience
100%
100%
90%
90%
60%
60%
100%
100%
90%
90%
100%
100%
50%
50%
70%
70%
80%
80%
BOARD DIVERSITY
The Nominating and Corporate Governance Committee believes that having a diverse Board enhances overall corporate governance. The
Nominating and Corporate Governance Committee considers diversity to include differences in race, gender, national origin, as well as
professional background and capabilities, knowledge of specific industries, and geographic experience. To complement Board diversity,
the Nominating and Corporate Governance Committee instructs any search firm engaged for each director candidate search to include
individuals that represent diverse characteristics, whether by race, gender or other diverse qualities.
NASDAQ BOARD DIVERSITY MATRIX
In accordance with Nasdaq’s Board Diversity Rules, the following Board Diversity Matrix highlights the composition of our Board members
as of February 15, 2023, which is based on voluntary self-identification. Each of the categories listed in the table has the meaning pro-
vided in Nasdaq Rule 5605(f).
BOARD DIVERSITY MATRIX (AS OF FEBRUARY 15, 2023)*
Total Number of Directors
Part I: Gender Identity
Directors
Part II: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
*Includes information disclosed by all Director Nominees
10
Female
Male
Non-Binary
3
1
0
0
0
0
2
0
0
0
0
0
0
0
0
0
7
0
0
1
0
0
6
0
0
0
Did Not
Disclose
Gender
0
0
0
0
0
0
0
0
2 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT MAJORITY VOTING POLICY
The Director Nominees receiving the greatest number of votes will be elected (plurality standard). However, our majority voting policy
states that any Director who fails to receive a majority of the votes cast in an uncontested director election in his/her favor is required to
submit his/her resignation to the Board. The Nominating and Corporate Governance Committee would then consider each resignation and
determine whether to accept or reject it, with full Board approval of such decision. Abstentions and broker non-votes will have no effect on
the election of a Director and are not counted under our majority voting policy. Holders of common stock do not have cumulative voting
MENU
rights with respect to the election of a Director.
ANNUAL MEETING ATTENDANCE; NO SPECIAL ARRANGEMENTS
Directors are expected to attend each annual meeting. The Director Nominees plan to attend this year’s virtual Annual Meeting. All of our
Director Nominees attended our 2022 Annual Meeting.
None of the Director Nominees has any special arrangement or understanding with any other person pursuant to which the Director
Nominee was or is to be selected as a Director or Director Nominee. There are no family relationships, as defined by SEC rules, among
any of our Directors or executive officers. SEC rules define the term “family relationship” to mean any relationship by blood, marriage or
adoption, not more remote than first cousin.
YOUR BOARD RECOMMENDS A VOTE FOR EACH DIRECTOR NOMINEE
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
DIRECTOR NOMINEES
BRIAN D. CHAMBERS
Director since 2022
COMMITTEES:
Audit
Finance
AGE: 56
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
Owens Corning (NYSE: OC)
since 2019
CURTIS E. ESPELAND
Director since 2012
Lead Independent
Director since 2018
COMMITTEES:
Audit
Finance
AGE: 58
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
Huntsman Corporation
(NYSE: HUN) since 2022
Experience
Experience
Mr. Chambers has served as the Chair, President and Chief
Mr. Espeland is the former Executive Vice President and Chief
Executive Officer of Owens Corning, a global building and
Financial Officer of Eastman Chemical Company, an advanced
construction materials company, since 2020, and as President
materials and specialty additives manufacturer, a position he
and Chief Executive Officer since 2019. During his over
held from 2014 until his retirement in 2020. Mr. Espeland
nineteen-year tenure with Owens Corning, Mr. Chambers has
joined Eastman Chemical Company in 1996 and, during his
served in various leadership positions including Chief
tenure, he also served as Vice President, Finance and Chief
Operating Officer from 2018 to 2019, and President of the
Accounting Officer from 2005 to 2008, and Senior Vice
Roofing Division from 2014 to 2018. Mr. Chambers has also
President and Chief Financial Officer from 2008 to 2014.
held several commercial and operational roles at Saint-
Gobain, Honeywell and BOC Gases.
Reasons for Nomination
Reasons for Nomination
• Extensive experience in corporate finance and accounting,
having served in various finance and accounting roles, and
• Executive leadership experience as CEO and Chair of a
ultimately as the Chief Financial Officer, at a large publicly-
global publicly-traded company engaged in manufacturing
traded company.
operations.
• Significant experience in the areas of strategy, mergers and
• Strong leadership skills, business strategy development,
acquisitions, taxation and enterprise risk management.
international business and operations experience with a
multi-national company.
• International auditing experience having served as an
independent auditor at Arthur Andersen LLP, working in both
• The Board has determined that Mr. Chambers’ extensive
the United States and abroad (Europe and Australia).
accounting and financial experience qualifies him as an
"audit committee financial expert."
• The Board has determined that Mr. Espeland's extensive
accounting and financial experience qualifies him as an
• Valuable knowledge of key governance matters, including
"audit committee financial expert."
sustainability matters, gained through executive leadership of
various publicly-traded companies and as a director of
Owens Corning.
• Valuable insight into advancing the business priorities of
Lincoln Electric's international operations gained from his
international business experience.
• Valuable knowledge of key governance matters gained
through his various directorships, including as a director of
Lincoln Electric.
2 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
PATRICK P. GORIS
Director since 2018
COMMITTEES:
Audit (Chair)
Nominating and Corporate
Governance
AGE: 51
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
None
MICHAEL F. HILTON
Director since 2015
COMMITTEES:
Compensation and Executive
Development (Chair)
Nominating and Corporate
Governance
AGE: 68
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
Ryder Systems, Inc. (NYSE: R)
since 2012
Regal Rexnord Corporation
(NYSE: RBC) since 2019
Nordson Corporation
(NASDAQ: NDSN) through 2019
Experience
Experience
Mr. Goris has served as the Senior Vice President and Chief
Mr. Hilton is the former President and Chief Executive Officer
Financial Officer of Carrier Global Corporation, a leading
of Nordson Corporation, a company that engineers,
global provider of healthy, safe and sustainable building and
manufactures and markets differentiated products and
cold chain solutions, since November 2020. Prior to joining
systems used for precision dispensing of adhesives, coatings,
Carrier, he served as Senior Vice President and Chief
sealants, biomaterials, polymers, plastics and other materials,
Financial Officer of Rockwell Automation, a global industrial
fluid management, test inspection, UV curing and plasma
automation and information solutions provider, from February
surface treatment, a position he held from 2010 until his
2017 to November 2020.
Reasons for Nomination
• Relevant global financial expertise from serving in various
finance roles, and ultimately as the Chief Financial Officer, of
publicly-traded, multinational organizations.
retirement in 2019. During his tenure at Nordson Corporation,
Mr. Hilton also served as a director. Prior to joining Nordson,
Mr. Hilton was Senior Vice President and General Manager for
Air Products and Chemicals, Inc., a global company that
provides a unique portfolio of atmospheric gases, process and
specialty gases, performance materials, and equipment and
• Extensive experience in accounting, financial planning and
services, with specific responsibility for leading its $2 billion
analysis, investor relations and mergers and acquisitions.
global Electronics and Performance Materials segment.
• Experience with a global industrial automation and
Reasons for Nomination
information solutions company provides Mr. Goris with broad
• With over 30 years of global manufacturing experience,
exposure to digital operations and "smart" manufacturing
solutions using data and analytics, which enhances
Mr. Hilton brings to the Board an intimate understanding of
management leadership.
operational intelligence, productivity and risk management in
manufacturing processes. These are key initiatives for our
business and our customers' businesses.
• Extensive experience with strategy development and day-to-
day operations of a multi-national company, including product
line management, new product technology, talent development,
• The Board has determined that Mr. Goris' extensive
manufacturing, distribution and other sales channels, business
accounting and financial experience qualifies him as an
processes, international operations and global markets
"audit committee financial expert."
expertise.
• Valuable knowledge of key governance matters gained as a
• Valuable knowledge of key governance matters gained as a
director of Lincoln Electric.
director of Lincoln Electric and several other publicly-traded
companies.
2 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
K ATHRYN JO LINCOLN
Director since 1995
COMMITTEES:
Compensation and
Executive Development
Nominating and
Corporate Governance
AGE: 68
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
None
CHRISTOPHER L. MAPES
Director since 2010
Chairman since 2013
COMMITTEES:
None
AGE: 61
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
The Timken Company (NYSE:
TKR) since 2014
Experience
Experience
Ms. Lincoln has served as the Board Chair and Chief
Mr. Mapes is the Chairman, President and Chief Executive
Investment Officer of the Lincoln Institute of Land Policy, an
Officer of Lincoln Electric. Mr. Mapes has served as President
independent, global foundation focused on addressing
and Chief Executive Officer since December 2012. In
significant policy issues through innovation land use and
December 2013, Mr. Mapes was appointed as Chairman of the
taxation methods, since 1996. As Chief Investment Officer,
Board in addition to his other responsibilities. From September
Ms. Lincoln manages and directs all aspects of the Institute's
2011 to December 2012, Mr. Mapes served as the Chief
endowment, including strategic asset allocation and policy
Operating Officer of Lincoln Electric. From 2004 to August
development, which have contributed to its current $800 million
2011, Mr. Mapes served as an Executive Vice President of A.O.
asset base. In her role as Chair, she plays a crucial role in the
Smith Corporation, a global manufacturer with a water heating
strategic direction and planning of the Institute, with ongoing
and water treatment technologies business, which has
involvement in the development of education programs,
residential, commercial, industrial and consumer applications,
demonstration projects and impact measurement. Ms. Lincoln
and the President of its former Electrical Products unit.
is a member of the board of directors of HonorHealth Network,
Mr. Mapes started his career with General Motors and has held
and Claremont Lincoln University, and formerly served as a
roles in industrial manufacturing for over 35 years. In addition,
director of Johnson Bank Arizona, N.A. She is also the
Mr. Mapes has served as a director of The Timken Company
Co-Chair of the International Center for Land Policy Studies
since 2014.
and Training in Taiwan and was appointed as a director for The
Hope Effect, a non-profit entity.
Reasons for Nomination
• Extensive leadership experience, addressing strategic
planning, asset allocation matters and corporate governance.
• As a Lincoln family member and long-standing director of
Lincoln Electric, Ms. Lincoln has a keen sense of knowledge
about Lincoln Electric, its culture and the founding principles.
• Broad experience and commitment to board and corporate
governance excellence, named as a Board Leadership
Fellow of the National Association of Corporate Directors.
Named by WomenInc. as one of 2019's most influential
corporate directors.
• Valuable knowledge of key governance matters gained
through her various directorships, including as a director of
Lincoln Electric.
Reasons for Nomination
• Extensive leadership experience in large, global publicly-
traded companies engaged in manufacturing operations.
• Keen understanding of the manufacturing industry and
challenges organizations face growing globally.
• In addition to business management experience, Mr. Mapes
has an MBA and a law degree.
• Valuable knowledge of key governance matters gained as a
director of Lincoln Electric and The Timken Company.
2 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
PHILLIP J. MASON
Director since 2013
COMMITTEES:
Compensation and Executive
Development
Finance (Chair)
AGE: 72
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
GCP Applied
Technologies
(NYSE: GCP) through
2020
BEN P. PATEL
Director since 2018
COMMITTEES:
Audit
Finance
Nominating and
Corporate Governance
AGE: 55
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
None
Experience
Experience
Mr. Mason is the former President of the Europe, Middle East &
Mr. Patel served as Senior Vice President, Chief Technology
Africa Sector (EMEA Sector) of Ecolab, Inc., a leading provider
Officer of Cooper Tire & Rubber Company, a global manufac-
of food safety, public health and infection prevention products
turer of specialized passenger car, light truck, medium truck,
and services, a position he held from 2010 until his retirement
motorcycle and racing tires from November 2019 until July
in 2012. Prior to leading Ecolab’s EMEA Sector, Mr. Mason had
2021. He previously served as Senior Vice President and Chief
responsibility for Ecolab’s Asia Pacific and Latin America busi-
Technology Officer of Tenneco, Inc., a manufacturer of automo-
nesses as President of Ecolab’s International Sector from 2005
tive emission control and ride control products and systems.
to 2010 and as Senior Vice President, Strategic Planning in
During his 8-year tenure at Tenneco, beginning in 2011, he held
2004. In addition, Mr. Mason has public company board experi-
roles leading regional advanced technology development and
ence, previously serving as a director of GCP Applied
establishing a global research and development organization.
Technologies from 2016 to May 2020.
Prior to joining Tenneco, Mr. Patel held numerous positions
Reasons for Nomination
• Executive leadership experience in an international business
unit for a U.S. publicly-traded company, providing Mr. Mason
extensive international business expertise, business-to-
with increasing responsibility, including senior scientist, at the
General Electric Company during his thirteen-year tenure with
the organization.
Reasons for Nomination
business and industrial sector experience.
• Over 20 years of experience serving with publicly-traded,
• Extensive international business experience, starting,
global products and technology companies.
developing and growing businesses abroad, in both mature
• Broad expertise in material science, automation and “smart”
and emerging markets, having established businesses in
systems, as well as extensive research and development
China, South Korea, Southeast Asia, Brazil, India, Russia,
experience.
Africa and the Middle East.
• Mr. Patel has been a leader in global innovation and research
• Strong finance and strategic planning proficiency, including
initiatives, which lends tremendous support to our focus on
merger and acquisition experience, along with significant
being an innovation leader in our industry and our advanced
experience working with and advising boards on diverse
manufacturing growth strategy, which helps customers
issues confronting companies with international operations.
identify value and efficiencies in their welding and cutting
• Valuable knowledge of key governance matters gained as a
operations.
director of Lincoln Electric and GCP Applied Technologies.
• Valuable knowledge of key governance matters gained as a
director of Lincoln Electric.
2 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
HELLENE S. RUNTAGH
Director since 2001
COMMITTEES:
Compensation and Executive
Development
Nominating and Corporate
Governance (Chair)
AGE: 74
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
None
KELLYE L. WALKER
Director since 2020
COMMITTEES:
Compensation and Executive
Development
Nominating and Corporate
Governance
AGE: 56
OTHER PUBLIC COMPANY
DIRECTORSHIPS:
None
Experience
Experience
Ms. Runtagh is the former President and Chief Executive
Ms. Walker has served as the Executive Vice President and
Officer of the Berwind Group, a diversified pharmaceutical ser-
Chief Legal Officer of Eastman Chemical Company, an
vices, industrial manufacturing and real estate company, a
advanced materials and specialty additives manufacturer, since
position she held in 2001. From 1997 through 2001, Ms. Runtagh
April 2020. In this role, Ms. Walker has overall leadership and
was Executive Vice President of Universal Studios, a media
responsibility for Eastman's legal organization. She also served
and entertainment company. Prior to joining Universal Studios,
as Executive Vice President and Chief Legal Officer of
Ms. Runtagh spent 27 years at General Electric Company, a
Huntington Ingalls Industries, Inc., America's largest military
diversified industrial company, in a variety of leadership posi-
shipbuilder, from 2015 to 2020. Prior to joining Huntington
tions. In addition, Ms. Runtagh has extensive board experi-
Ingalls Industries, Inc., Ms. Walker served as Senior Vice
ence, previously serving as a director of Harman International
President, General Counsel and Secretary at American Water
Industries from 2008 to 2017, NeuStar, Inc. from 2006 to 2017,
Works Company, Inc. Ms. Walker is a member of the board of
and several other publicly-traded companies.
directors of T. Rowe Price Funds, a position she has held since
Reasons for Nomination
• Over 30 years of experience in management positions with
October 2021.
Reasons for Nomination
technology focused global companies, with responsibilities in
• Seasoned senior executive with over 25 years of experience
management ranging from marketing and sales to finance,
with publicly-traded companies, helping to increase
as well as engineering and manufacturing.
organizational value through forward thinking, strategic
• Diverse management experience, including growing
discipline and a focus on continuous improvement.
businesses while maintaining high corporate governance
• Extensive experience in corporate governance, compliance
standards.
• Extensive experience as a director of publicly-traded
companies.
• Valuable knowledge of key governance matters gained as a
director of Lincoln Electric and several other publicly-traded
companies.
and litigation management, government affairs, strategy
development, product stewardship and regulatory affairs,
global business conduct and global health, safety,
environment and security.
• Long-standing general counsel of publicly-traded companies
and has also served as Chief Administrative Officer, leading
human resources, information technologies, government
affairs and corporate communications functions.
• Extensive leadership across various industries including
global public companies, government organizations and utility
companies that will lend value to advance our 2025 Strategy.
• Valuable knowledge of key governance matters gained as a
director of Lincoln Electric.
2 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
CORPORATE GOVERNANCE
GOVERNANCE FRAMEWORK
We are committed to effective corporate governance and high ethical standards. We adhere to our ethical commitments in every aspect of
our business, including our commitments to each other, in the marketplace and in the global, governmental and political arenas. These
commitments are spelled out in our Code of Conduct, which applies to all of our employees (including our CEO and our other NEOs) and
Directors.
We encourage you to visit our website at www.lincolnelectric.com, where you can find detailed information about our corporate gover-
nance programs/policies including:
• Code of Conduct
• Governance Guidelines
• Charters for our Board Committees
• Director Independence Standards
CORPORATE GOVERNANCE HIGHLIGHTS
BOARD OF DIRECTORS
• Board has an active role in risk oversight
• Our Board held six meetings in 2022
• Full Board review of succession planning annually
• During 2022, each of our Directors attended at least 75% of
• Full Board oversight of ESG
the total full Board meetings and meetings of committees
on which he or she served during the time he or she served
as a Director
• Size of Board: 10 in 2022
• Plurality vote with director resignation policy for failures to
receive a majority vote in uncontested director elections
• Lead Independent Director
• All Directors are expected to attend the Annual Meeting
BOARD COMPOSITION
• Number of independent Directors: 9 in 2022
• Diverse Board including a complementary mix of
backgrounds, experiences and expertise, as well as
balanced mix of ages, tenure of service and gender
• Several current and former CEOs
• Global experience
• Audit Committee has multiple financial experts
BOARD PROCESSES
• Independent Directors meet without management present,
with Lead Independent Director presiding over such
meetings
• Annual Board and Committee self-evaluations
• Board orientation program
• Governance Guidelines approved by Board
BOARD ALIGNMENT WITH SHAREHOLDERS
• Annual equity grants align interests of Directors and officers
with shareholders
• Annual advisory approval of named executive officer
compensation
• No poison pill
• Stock ownership guidelines for Directors and officers
COMPENSATION
• No employment agreements
• Executive compensation is tied to performance: 87% of
CEO target pay and 73% of all of our other NEO target pay
is performance-based (at risk)
• Anti-hedging and anti-pledging policies for Directors and
officers
• Recoupment/clawback policy
INTEGRITY AND COMPLIANCE
• Code of Conduct for employees, officers and Directors
• Environmental, health and safety guidelines and goals,
including long-term sustainability goals
• Annual compliance training relative to ethical behavior
• Enterprise risk management program with Board oversight
3 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
SHAREHOLDER ENGAGEMENT
We are committed to engaging in constructive conversations with shareholders and nurturing long-term relationships with the investment
community. We maintain an active shareholder engagement program where executives and management from various departments meet
with shareholders regularly to discuss a variety of topics including business performance, strategic initiatives, corporate governance
practices, corporate sustainability initiatives, executive compensation, and other matters of shareholder interest. The Board values an
active investor relations program as it believes that shareholder input strengthens its role as an informed and engaged fiduciary.
Our shareholder engagement program includes participation at investor conferences, holding meetings and tours at Lincoln Electric, visiting
investors at their offices, hosting tradeshow tours, being accessible to shareholder inquiries throughout the year and communicating with
transparency. In 2022, we maintained active engagement with the investment community with calls/video conferencing, a virtual annual
shareholder meeting, virtual and in-person investor conferences and non-deal roadshows. In addition, we invited institutional investors
representing approximately 55 percent of our outstanding shares to discuss ESG matters with us as part of our annual ESG non-deal
roadshow. These discussions provide good insights on our ESG practices and policies. We received positive feedback on our ESG
disclosures, enhanced ESG governance framework, the alignment of our ESG strategy with our Higher Standard 2025 Strategy, corporate
governance practices, executive compensation, our environmental, health and safety practices, and our investor relations program.
OUR BOARD OF DIRECTORS
Our Board oversees management of the long-term interest of Lincoln Electric and our stakeholders. The Board’s major responsibilities
include:
• Overseeing the conduct of our business
• Reviewing and approving key financial objectives, strategic and
• Establishing an appropriate governance structure, including
appropriate Board composition and succession planning
operating plans and other significant actions
• Overseeing enterprise risk management and cybersecurity
• Evaluating CEO and senior management performance and
• Overseeing the ethics and compliance program
determining executive compensation
• Planning for CEO succession and monitoring management’s
succession planning for other key executives
DIRECTOR INDEPENDENCE
• Overseeing ESG and D&I matters
Each of our non-employee Directors meets the independence standards set forth in the Nasdaq listing standards, which are reflected in
our Director Independence Standards. Additionally, Stephen G. Hanks, G. Russell Lincoln and William E. MacDonald, III, all of whom
served on our Board in 2022, met the independence standards set forth in the Nasdaq listing standards. To be considered independent,
the Nominating and Corporate Governance Committee must affirmatively determine that the Director has no material relationship with
Lincoln Electric. In addition to outlining the independence standards set forth in the Nasdaq listing standards, the Director Independence
Standards outline specific relationships that are deemed to be categorically immaterial for purposes of director independence. The
Director Independence Standards are available on our website at www.lincolnelectric.com.
During 2022, the independent Directors met in regularly scheduled Executive Sessions in conjunction with each of the regular Board
meetings. The Lead Independent Director presided over these sessions.
BOARD LEADERSHIP STRUCTURE
• Chairman of the Board: Christopher L. Mapes
• Lead Independent Director: Curtis E. Espeland
• All four Board committees are composed of independent Directors
• Independent Directors met in Executive Session at each of the regular 2022 Board meetings
The Board evaluates the leadership structure to determine what is optimal for our Company. As a part of our current structure, Mr. Mapes,
our President and CEO, serves as Chairman of the Board, in addition to his other responsibilities. Our Board believes having one individ-
ual serve as Chairman and CEO is beneficial to us because the dual role enhances Mr. Mapes’ ability to provide direction and insight on
strategic initiatives impacting us and our shareholders. The Board also believes the dual role is consistent with good corporate gover-
nance practices because it is complemented by a Lead Independent Director. As Chairman, Mr. Mapes is responsible for planning, formu-
lating and coordinating the development and execution of our corporate strategy, policies, goals and objectives. In his role as Chairman,
Mr. Mapes has the following duties, responsibilities and expectations:
• reports directly to our Board, who reviews and approves his annual
• works with our management on transactional matters by
performance objectives;
networking with strategic relationships;
• works closely with our management to develop our strategic plan;
• promotes and monitors the Board’s fulfillment of its oversight and
governance responsibilities;
3 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
• encourages the Board to set and implement our goals and
• makes available to all members of our Board opportunities to
strategies;
acquire sufficient knowledge and understanding of our business
• establishes procedures to govern our Board’s work;
• oversees the execution of the financial and other decisions of our
Board;
LEAD INDEPENDENT DIRECTOR
To complement our Chairman of the Board, the Board has a strong
Lead Independent Director, which we believe appropriately
addresses the need for independent leadership and an
organizational structure for our independent Directors. Our Lead
Independent Director focuses on overseeing the Board’s processes
and prioritizing the right areas of focus. Our Lead Independent
Director is appointed each year by the independent Directors and
serves as a liaison between the Chairman of the Board and the
independent Directors.
to enable them to make informed judgments;
• presides over meetings of our shareholders; and
• sets the agenda and presides over Board meetings.
Mr. Curtis Espeland currently serves as our
Lead Independent Director, a position he has
held since 2018. Mr. Espeland was elected
to our Board in February 2012. During his
tenure on our Board, he has developed
strong working relationships with his fellow
Directors, and assisted with the onboarding of our four most
recently elected Directors.
In addition to the duties of all Directors, the Lead Independent Director has the following duties, responsibilities, and expectations:
• Collaborates with the Chairman, the Secretary and senior
• Coordinates, sets agendas and presides over executive
management on the format and adequacy of the information that
sessions of the independent Directors.
Directors receive and on the effectiveness of the Board meeting
process.
• Actively participates in the CEO evaluation process and in
interviewing candidates for the Board.
• Acts independently of the Chairman to review and approve Board
• Actively participates in the Board and committee evaluation
meeting agendas and schedules.
process.
• Acts as a sounding board to the Chairman on key aspects of the
business, and assists in promoting sound corporate governance
• Speaks on behalf of Lincoln Electric, as the Board determines
necessary.
practices.
• Calls meetings of the independent Directors as he sees fit,
presiding over such meetings.
The Board will continue to monitor the Board leadership structure, considering what trends in the marketplace and viewpoints in the
corporate governance community and, most importantly, what the Board believes is in the best interests of our Company and its
shareholders.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
OUR BOARD COMMITTEES
We have separately designated standing Audit, Compensation and Executive Development, and Nominating and Corporate Governance
Committees established in accordance with applicable provisions of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC
and Nasdaq rules. The Board also has designated a standing Finance Committee.
Each Committee has a charter, which details all of the Committee’s roles and responsibilities. The following summaries set forth the
principal responsibilities of each of our Committees, as well as other information regarding their makeup and operations. A copy of each
Committee’s charter may be found on our website at www.lincolnelectric.com.
Audit Committee
Compensation and Executive Development Committee
Chair:
Patrick P. Goris
Members:
Brian D. Chambers*
Curtis E. Espeland
Ben P. Patel
Meetings held in 2022: 6
Key Responsibilities
• Independent auditor engagement
• Reviews financial statements and disclosures, interim financial
reports and earnings press releases
• Reviews significant litigation and legal matters
• Reviews enterprise risk management policies and process
• Oversees ethics and compliance programs and risk assessment
and mitigation processes for environmental, health and safety
matters
• Reviews effectiveness of information technology security
environment and oversees risk assessment and mitigation
process for cybersecurity
• Reviews and evaluates the scope and performance of the internal
audit function
• Reviews internal control over financial reporting
Each member of our Audit Committee meets the independence
standards set forth in the Nasdaq listing standards and have likewise
Chair:
Michael F. Hilton
Meetings held in 2022: 6
Members:
Kathryn Jo Lincoln
Phillip J. Mason
Hellene S. Runtagh
Kellye L. Walker
Key Responsibilities
• Reviews and recommends to the Board total compensation of our
CEO, and reviews and establishes total compensation of our other
executive officers
• Evaluates performance (along with full Board) of our CEO and other
executive officers
• Monitors development, selection process and succession planning
of key management
• Reviews and recommends to the Board, in conjunction with the
Nominating and Corporate Governance Committee, the
appointment and removal of elected officers
• Oversees executive compensation policies, practices and
programs, as further described in the CD&A
• Reviews and recommends to the Board new or amended executive
compensation plans with our executive officers
• Oversees the implementation and effectiveness of the Company's
human capital policies and practices, including D&I programming
been determined by the Board to have the financial competency
• Reviews initiatives and strategies related to employee
required by the Nasdaq listing standards. In addition, because of the
recruitment, promotion, retention and attrition, employee
professional training and past employment experience of Messrs.
engagement and diversity, equity and inclusion matters
Chambers, Espeland and Goris, the Board has determined that they
are financially sophisticated Audit Committee members under the
Nasdaq listing standards and qualify as "audit committee financial
experts" in accordance with SEC rules. Shareholders should
understand that the designation of Messrs. Chambers, Espeland and
Goris as "audit committee financial experts" is a disclosure
requirement and that it does not impose upon them any duties,
obligations or liabilities that are greater than those generally
imposed on them as members of the Audit Committee and the Board.
*Appointed February 16, 2022
Each member of our Compensation and Executive Development
Committee meets the independence standards set forth in the Nasdaq
listing standards and each is deemed to be a "non-employee director"
within the meaning of Rule 16b-3 of the Exchange Act. The
Compensation and Executive Development Committee may, in its
discretion, delegate specific duties, responsibilities and authority to a
subcommittee, one or more Committee members or one or more
executive officers, to the extent permitted by applicable law and stock
exchange rules and regulations.
3 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT Nominating and Corporate Governance Committee
Finance Committee
Chair:
Hellene S. Runtagh
Members:
Patrick P. Goris
Michael F. Hilton
Kathryn Jo Lincoln
Ben P. Patel
Kellye L. Walker
Chair:
Phillip J. Mason
Meetings held in 2022: 5
Members:
Brian D. Chambers*
Curtis E. Espeland
Ben P. Patel
Meetings held in 2022: 5
Key Responsibilities
• Reviews our corporate governance framework including external
developments related to corporate governance matters
• Reviews and recommends guidelines with respect to size,
composition and practices of the Board, identifies Board
candidates and recommends Director nominees
Key Responsibilities
• Reviews financial performance, including comparing financial
performance to budgets and goals
• Reviews capital allocation, dividend and share repurchasing
strategies
• Reviews operating budgets
• Reviews capital expenditures
• Reviews shareholder proposals and related shareholder
• Reviews M&A activity and integration performance
engagement activities
• Oversees strategic planning and financial policy matters
• Reviews non-employee Director compensation program in light
of best practices and makes recommendations to the Board
• Reviews and determines Director independence
Each member of our Finance Committee meets the independence
standards set forth in the Nasdaq listing standards. All of our Directors
typically attend the Finance Committee meetings, a practice that has
• Oversees the self-evaluation process of the Board and its
been in place for the past several years.
Committees
• Oversees the overall corporate governance of the Company,
including compliance with stock exchange listing rules and other
applicable legal or regulatory requirements and practices
pertaining to corporate governance
Each member of our Nominating and Corporate Governance
Committee meets the independence standards set forth in the
Nasdaq listing standards.
*Appointed February 16, 2022
MENU
3 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
ANNUAL BOARD AND COMMITTEE EVALUATION PROCESS
The Board recognizes that a robust and constructive performance evaluation process is an essential component of Board effectiveness.
Our Governance Guidelines require annual evaluation of the performance of the Board. The Nominating and Corporate Governance
Committee oversees the annual evaluation process. As part of this process, each Board member completes an evaluation relative to
Committee and Board matters. A summary of the results of this process is presented to the Nominating and Corporate Governance
Committee. The results are then reported to the full Board by the Lead Director, which considers the results and ways in which Board
processes and effectiveness may be enhanced.
OVERSIGHT OF OUR COMPANY
BOARD OVERSIGHT OF STRATEGY
One of the Board’s key responsibilities is overseeing the Company’s strategic planning process, including reviewing the steps taken to
develop strategic plans and approving the final plans. In 2022, this included receiving periodic updates regarding the Company’s execution
and performance as we continue to implement our 2025 Strategy. Our Board regularly discusses the key priorities of our Company, taking
into consideration global economic, consumer and other significant trends. The Company’s long-term strategic plan is reviewed regularly
with the Board, along with its annual operating plan, capital structure and sustainability performance.
BOARD OVERSIGHT OF ENTERPRISE RISK MANAGEMENT
In the ordinary course of business, we face various strategic, operating and compliance risks. Our enterprise risk management process
seeks to identify and address material risks to the organization, and the Board provides oversight as to how management is addressing
these risks. The Company maintains a risk management review process where risk is assessed throughout our entire organization, and is
reported to our internal corporate risk committee, comprised of members of our business units and various functional leaders (e.g., IT,
Finance, Legal), led by our Vice President of Enterprise Risk Management. High-priority risks facing the organization are identified
each year and are assigned to either the full Board or various Board Committees for further review, analysis and development of
appropriate plans for management and mitigation.
Our Board oversees the management of these risks on an enterprise-wide basis, and the Lead Independent Director promotes our
Board’s engagement in this process. A fundamental part of the process is to understand the Company’s risks, and to provide oversight as
to how management is addressing these risks. The Board, or Board designated committee, reviews with management its process for
enterprise risk management and actively engages with management to understand and oversee our most significant risks. The Audit
Committee oversees the Company’s risk assessment and management process each year, including ensuring that management has
instituted processes to identify critical risks and has developed plans to manage such risks.
BOARD OVERSIGHT OF INFORMATION SECURITY AND CYBERSECURITY
Information security and cybersecurity have been identified as high-priority risks and the Audit Committee receives updates at each
meeting on these matters. The Company maintains an insurance policy with respect to information security and has undergone several
simulation, preparedness and response exercises. The Company has not experienced a reportable information security breach within the
last three years and is tested externally on its information security environment annually. In addition, the Company has an information
security training program, training all computer-based employees two times per year, through various employee training modules relative
to information security matters, and simulates phishing events with employees to raise cybersecurity awareness on a monthly basis.
BOARD OVERSIGHT OF ESG AND SUSTAINABILITY MATTERS
Our approach to ESG and sustainability began with our founders who established the Company under the guiding principle of
The Golden Rule: Treating others how you would like to be treated. Our culture, values and our commitment to D&I reflect The
Golden Rule and our Purpose of Operating by a Higher Standard to Build a Better World.
The Board recognizes the importance of achieving our goals responsibly, and aligning with our key stakeholders to drive long-term value
creation. The Board has broad oversight responsibility for ESG and sustainability matters and reviews sustainability initiatives and prog-
ress made towards our long-term safety and sustainability metrics. In addition, the Board receives a formal annual update on corporate
governance matters, including ESG developments and pending considerations. The Nominating and Corporate Governance Committee
assists the Board in fulfilling its oversight responsibilities related to corporate governance matters, monitoring new issues, regulatory
changes and trends in corporate governance, environmental and social responsibility matters. Our Audit Committee oversees our ethics
and compliance programs and cybersecurity, and reviews our Enterprise Risk Management policies and processes. Our Compensation
and Executive Development Committee oversees the implementation and effectiveness of the Company’s human capital policies and
practices, and reviews initiatives and strategies related to employee recruitment, promotion, retention and attrition, employee engagement
and diversity, equity and inclusion.
3 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
Our Company has clear responsibilities and a robust governance structure related to ESG and sustainability matters. The Board’s over-
sight responsibility for ESG matters is reflected in our Governance Guidelines. Additionally, sustainability metrics are incorporated into the
annual individual goals of our CEO and other executives. Our Executive Vice President, General Counsel (GC), oversees corporate envi-
ronmental, health, safety & sustainability (EHS&S) initiatives and global reporting, as well as an Executive Sustainability Committee. The
GC also works closely with our Vice President of EHS&S, business unit leadership and local facilities to implement, monitor and measure
our EHS&S results. EHS&S also oversees an internal Product Sustainability Committee that was established in 2020 with a primary focus
on enhancing product stewardship with sustainable solutions and now oversees a multi-disciplinary Sustainability Disclosure Committee,
which was established in 2022.
Sustainability Governance
Board Oversight
Chairman & CEO
EVP, General Counsel
and EHS&S Leader
VP, EHS&S
Sustainability Manager
Executive Sustainability Committee
Sustainability Disclosure Committee
Product Sustainability Committee
Audit Committee: Oversees ethics and
compliance programs, cybersecutity, and
Enterprise Risk Management (ERM)
Nominating and Corporate Governance
Committee: Oversees governance matters,
regulatory changes and trends in ESG
matters
Compensation and Executive Development
Committee: Oversees human capital
policies and practices, including D&I
The following policies and business practices exemplify our commitment to ESG matters:
• Our guiding principle is The Golden Rule;
• Training and development programs to attract and retain high
• Our Code of Conduct;
• Our Human Rights Policy;
• Our Supplier Code of Conduct;
performing employees to help them reach their full potential;
• Community engagement through employee-led fundraisers, grants
provided by The Lincoln Electric Foundation, scholarships, in-kind
gifts, and an employee matching and “Dollars for Doers” program
• Our Channel Partner Code of Conduct;
to support volunteerism;
• Health, safety and wellness initiatives for our employees,
customers and communities;
• Positively impacting manufacturing and industry by promoting the
art and science of welding among students and young
• Equal employment opportunities, along with our pledge to treat
professionals through our business initiatives, partnerships with
employees fairly, with dignity, and without discrimination in
schools and associations, and programming at the J.F. Lincoln
any form;
Foundation; and
• Focus on improving safety and environmental performance,
• Enhancing D&I through employee resource groups including our
including long-term ESG goals and performance reporting, and
Diversity Councils, Veterans, Women in Lincoln Leadership, and
incorporating product stewardship and innovations to advance
our Young Professionals organizations.
clean tech at Lincoln Electric and in the industries we serve;
3 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
COMPENSATION-RELATED RISK
We regularly assess risks related to our compensation and benefit programs, including our executive compensation program, and our
Compensation and Executive Development Committee is actively involved in those assessments. In addition, WTW, a compensation con-
sultant engaged by management, has provided a risk assessment of our executive compensation program in the past. Although we have a
long history of pay for performance and incentive-based compensation, we believe our compensation programs contain many mitigating
factors to ensure that our employees are not encouraged to take unnecessary risks.
As a result of all these efforts, we do not believe the risks arising from our executive compensation policies and practices are reasonably
likely to have a material adverse effect on Lincoln Electric.
RELATED-PARTY TRANSACTIONS
The Board has adopted a policy regarding the review and approval of transactions between the Company and its subsidiaries and certain
related parties that are required to be disclosed in proxy statements, which are referred to as “related-party transactions.” Related parties
include our Directors, Director Nominees, executive officers, persons controlling 5% or more of our common shares, and the immediate
family members of these individuals. Pursuant to the policy, the Audit Committee is responsible for reviewing and approving related-party
transactions and will consider information it deems appropriate, including, but not limited to, whether the terms of the transaction are no
less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the approximate dollar
value of the transaction, and the nature and extent of the related party’s interest in the transaction. No Director will participate in any dis-
cussion or approval of a related-party transaction for which he or she is a related party, other than to provide material information con-
cerning the transaction.
We define “related-party transactions” generally as transactions collectively over $120,000 in any calendar year, in which any related party
had, has or will have a direct or indirect material interest. We have a monitoring and reporting program, which includes requirements to
report all actual or potential related-party transactions during the year and information regarding all relationships with entities involving a
related party.
The Company did not have any related-party transactions that required Audit Committee approval in 2022.
3 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
DIRECTOR COMPENSATION
OUR BOARD COMPENSATION PROGRAM
Based upon the recommendations of the Nominating and Corporate Governance Committee, the Board determines our non-employee
Director compensation. The Nominating and Corporate Governance Committee periodically reviews all elements of Board compensation
in relation to our proxy peer group (as identified in the CD&A), trends in Board compensation and other factors it deems appropriate. In
consultation with Korn Ferry as an independent advisor, the Nominating and Corporate Governance Committee did not recommend any
adjustments to Board compensation with respect to 2022.
The objectives of our non-employee Director compensation program are to attract highly qualified and diverse individuals to serve on our
Board and to align their interests with those of our shareholders. An employee of Lincoln Electric who also serves as a Director does not
receive any additional compensation for serving as a Director.
All non-employee Directors receive cash retainers and an annual stock-based award for serving on our Board. Stock-based compensation
is provided under our 2015 Stock Plan for Non-Employee Directors.
GOOD GOVERNANCE PRACTICES
Lincoln Electric seeks to attract and retain highly qualified individuals to serve on the Board. To that end, Lincoln Electric maintains the
philosophy of paying non-employee Directors fairly and reasonably, considering external market factors, consistent with good governance
practices. With respect to our non-employee Director compensation program, our governance practices include:
What We Do
What We Don’t Do
Reasonable limits on non-employee Directors’ annual equity
awards included in 2015 Stock Plan for Non-Employee Directors
(and proposed 2023 Stock Plan for Non-Employee Directors)
✔ No Hedging or Pledging of Lincoln Electric Common
Shares
Total compensation is positioned at the peer median
✔ No Excessive Perquisites
Non-employee Director compensation approved by full Board
✔ No Excise Tax Gross-Ups or Tax Reimbursements
✘
✘
✘
Full-value equity award granted at a fixed-value
Double Trigger Provisions for Change in Control
Stock Ownership Guidelines
Independent Advisor
✔
✔
✔
✔
3 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT The following is a summary of our current Director compensation program:
MENU
Director Compensation Mix
35%
4%
61%
Restricted Stock Units
Committee and Chair Fees
Board Retainer Fees
Board Level
Lead Independent
Director
h
s
a
C
y
t
i
u
q
E
Retainer 1
$85,000
Meeting Fees2
Annual Restricted
Stock Unit (RSU) Award3
Initial RSU
Award3,4
—
Approx.
$145,000
Approx.
$145,000
Additional
$28,000
–
–
–
Committee Chairs
Additional
$20,000 for Audit, and
$15,000 for Compensation and Executive
Development, Finance and Nominating and
Corporate Governance
–
–
–
(1) Directors have the ability to defer annual cash compensation under the Non-Employee Directors’ Deferred Compensation Plan.
(2) We do not have separate meeting fees, except if there are more than eight full Board or Committee meetings in any given year, Directors will receive
$1,500 for each full Board meeting in excess of eight meetings and Committee members will receive $1,000 for each Committee meeting in excess of
eight meetings in total.
(3) Directors have the ability to defer RSUs under the Non-Employee Directors’ Deferred Compensation Plan.
(4) The initial award will be pro-rated based on the Director’s length of service during the twelve-month period preceding the next regularly scheduled annual
equity grant, which normally occurs in the fourth quarter of each year.
3 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT 2022 DIRECTOR COMPENSATION TABLE
Name
Brian D. Chambers2
Curtis E. Espeland
Patrick P. Goris
Stephen G. Hanks2
Michael F. Hilton
G. Russell Lincoln2
Kathryn Jo Lincoln
William E. MacDonald, III2
Phillip J. Mason
Ben P. Patel
Hellene S. Runtagh
Kellye L. Walker
MENU
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)
0
0
3,3405
1085
1125
0
1125
0
0
1125
0
0
Total
($)
337,687
257,864
243,204
88,328
244,976
26,154
229,976
26,154
244,864
229,976
244,864
229,864
Fees Earned or
Paid in Cash
($)
74,1393
113,000
95,0003
Stock
Awards1
($)
263,548
144,864
144,864
36,154
52,0664
100,000
144,864
26,154
0
85,0003
144,864
26,154
100,000
85,0003
100,000
85,000
0
144,864
144,864
144,864
144,864
(1) On December 12, 2022, 981 RSUs were granted to each then-serving non-employee Director under our 2015 Stock Plan for Non-Employee Directors.
For Mr. Chambers, 927 RSUs were also granted to him in February 2022 upon his initial election to the Board.
The Stock Awards column represents the grant date fair value under Accounting Standards Codification (ASC) Topic No. 718 based on a closing price of
$147.67 per share on December 12, 2022, and, with respect to the award granted to Mr. Chambers, a closing price of $128.03 per share on February 16,
2022. Assumptions used in the calculation of these amounts are included in footnote 10 to our audited financial statements for the fiscal year ended
December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on February 21, 2023.
As of December 31, 2022, the number of RSUs held by each non-employee Director was 981, except for Mr. Chambers, who held 1,908 RSUs. Each of
Messrs. Chambers, Goris, and Patel and Mses. Lincoln and Walker elected to defer receipt of the RSUs that were granted in 2022 under our Non-
Employee Directors’ Deferred Compensation Plan.
(2) Mr. Chambers was elected to the Board on February 16, 2022. Messrs. Hanks, Lincoln and MacDonald retired from the Board on April 21, 2022, the date
of our 2022 Annual Meeting.
(3) All of Messrs. Chambers’, Goris’ and Patel’s and Ms. Lincoln’s Board fees were deferred under our Non-Employee Directors’ Deferred Compensation Plan.
(4) Due to Mr. Hanks’ significant tenure with and contributions to the Company, although he did not technically qualify for retirement treatment under his 2021
RSU award (as was the case for Messrs. Lincoln and MacDonald), in connection with his retirement, the Board determined to provide Mr. Hanks with the
same pro-rated vested treatment that Messrs. Lincoln and MacDonald experienced with their RSU awards. This amount represents the incremental fair
value, calculated in accordance with SEC disclosure rules, related to the Board’s modification of Mr. Hanks’ RSU award, in connection with his retirement.
The modification value does not represent or reflect additional awards granted to Mr. Hanks.
(5) The amount shown for 2022 represents above-market non-qualified deferred compensation earnings calculated as the difference in earnings under the
Moody’s Corporate Bond Index fund in our Non-Employee Directors’ Deferred Compensation Plan and a hypothetical rate.
OTHER ARRANGEMENTS
We reimburse Directors for reasonable out-of-pocket expenses incurred in connection with attendance at Board meetings, or when travel-
ing in connection with the performance of their services for Lincoln Electric.
CONTINUING EDUCATION
Directors are generally reimbursed up to $5,000 for continuing education expenses (inclusive of travel expenses) for programs each
Director may elect to attend. We also incorporate continuing education topics for Directors into our Board meetings from time to time.
STOCK OWNERSHIP GUIDELINES
In keeping with the philosophy that Directors’ interests should be aligned with the shareholders’ interest and as part of the Board’s contin-
ued focus on corporate governance, all of our non-employee Directors must adhere to our stock ownership guidelines. RSUs, including
any RSUs that have been deferred under the Non-Employee Directors’ Deferred Compensation Plan, count toward the stock ownership
amount; shares held in another person’s name (including a relative) do not.
4 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
The stock ownership guidelines can be met by satisfying one of the two thresholds noted in the chart below. Directors have five years
from the date of election to the Board to satisfy the stock ownership guidelines. As of December 31, 2022, all of our non-employee
Directors had satisfied the stock ownership guidelines, except for Mr. Chambers who was elected to the Board in 2022.
Retainer Multiple
Shares valued at 5x annual Board retainer ($425,000)
OR
Number of Shares
3,048*
* Represents shares equal to $425,000 based on the closing price of Lincoln Electric stock as of December 31, 2021 (the last trading day of that calendar
year) of $139.47.
The Nominating and Corporate Governance Committee reviews the guidelines at least every two-and-a-half years to ensure that the com-
ponents and values are appropriate. A review was conducted during 2021, with the assistance of Korn Ferry as an independent advisor,
and it was determined that no changes to the guidelines were necessary, other than the share floor amount being reset as of December
31, 2021 and reflecting the modified Board retainer of $85,000, as the five times annual retainer guideline is consistent with the peer
group median. The revised stock ownership guidelines became effective in 2022. The next review is anticipated to occur in 2023.
EQUITY AWARDS
The non-employee Directors’ RSUs awards are granted under the 2015 Stock Plan for Non-Employee Directors. Under the terms of the
awards, RSUs vest in full one year after the date of grant. In addition, the awards vest in full in the event of a change in control of Lincoln
Electric if the Director’s service is terminated or if the award is not assumed upon the change in control. The awards also vest in full upon
the death or disability of the Director, or vest pro rata, based on length of service, upon the retirement of the Director. During the period in
which RSUs remain unvested, dividend equivalents pay out in cash when dividends are generally paid to shareholders.
DEFERRED COMPENSATION PLAN
The Non-Employee Directors’ Deferred Compensation Plan allows the non-employee Directors to defer payment of all or a portion of their
annual cash compensation and RSUs granted to them. This plan allows each participating non-employee Director to elect to begin pay-
ment of the deferred amounts as of the earlier of termination of services as a Director, death or a date not less than one full calendar year
after the year the fees are initially deferred.
The investment elections available under the plan for cash compensation deferred are the same as those available to executives under
our Top Hat Plan, which is discussed in the narrative under 2022 Deferred Compensation Benefits. RSU deferrals are deemed invested
solely in a Lincoln Electric Stock fund, and no other plan deferrals are eligible for investment into that fund.
4 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
EXECUTIVE
COMPENSATION
Our long-term strategy is focused on key actions and initiatives that generate long-term profitable growth within our targeted markets
through value-added solutions and operational excellence. We believe this approach engages our business team in creating a long-term
value proposition for shareholders that generates above-market returns through an economic cycle while maintaining a short-term focus
on improving profitability and driving operating excellence. More information on our business and strategy can be found in the “Business
Overview” section at the beginning of this Proxy Statement.
The Compensation Discussion and Analysis (CD&A) describes our executive compensation programs and how they apply to our NEOs.
The CD&A contains statements regarding future performance targets and goals. These targets and goals are disclosed in the context of
our compensation programs and should not be understood to be statements of management’s expectations or estimates of results or
other guidance. We caution investors not to apply these statements in other contexts.
Executive Compensation Table of Contents
For 2022, our NEOs were:
Executive Summary
Our Compensation Philosophy
Elements of Executive Compensation
Other Arrangements, Policies and Practices
Summary of 2022 Compensation Elements
2022 Summary Compensation Table
2022 Grants of Plan-Based Awards Table
Holdings of Equity-Related Interests
2022 Deferred Compensation Benefits
Termination and Change in Control Arrangements
CEO Pay Ratio
Pay Versus Performance
43
51
55
62
67
68
70
72
74
75
80
81
CHRISTOPHER L. MAPES
Chairman, President and Chief Executive
Officer
GABRIEL BRUNO
Executive Vice President, Chief Financial
Officer and Treasurer
STEVEN B. HEDLUND
Executive Vice President, Chief
Operating Officer
JENNIFER I. ANSBERRY
Executive Vice President, General
Counsel and Secretary
MICHELE R. KUHRT
Executive Vice President, Chief Human
Resources Officer
4 2
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
Our approach to executive compensation is generally the same as our approach to employee-wide compensation, with a strong belief in
pay for performance and a long-standing commitment to incentive-based compensation.
While maintaining our performance-driven culture, our executive compensation program is designed to achieve the following objectives:
Align Interests
Align the interests of management
Incentivize Management
Design compensation elements to
Support Long-Term Strategy
Define performance drivers which support key
(and employees) with long-term
incentivize management to deliver
financial and strategic business objectives
interests of our shareholders and other
above-market financial results
stakeholders
Good Governance Practices
Help ensure we are following good
governance practices in the design
and operation of our executive
compensation program, including
Retention &
Succession Planning
Reinforce executive retention to
enable achievement of annual and
long-term business goals through a
consideration of the risks associated
stable management team
with those practices
Pay for Performance
Link incentive-based compensation to
the company’s short-term and long-term
financial and operational performance
CEO Target Pay “At Risk”
All Other NEOs Target Pay “At Risk”
Say-on-Pay Vote
At Risk
87%
85%
At Risk
At Risk
73%
71%
At Risk
95%
98% Approval
Approval
At our 2022 Annual Meeting, shareholders
again showed strong support for our executive
compensation program with 95% of the share-
holders who voted approving, on an advisory
basis, the compensation of our NEOs
4 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
KEY FINANCIAL PERFORMANCE
We have a strong track record of delivering increased value to our shareholders and we have typically delivered above-market perfor-
mance across various financial metrics over many economic cycles. Our long-term strategy seeks to achieve profitable sales growth both
organically and through acquisitions by emphasizing value-added solutions and differentiated technologies. We anticipate this strategy will
yield improved profit margins and returns, and will generate best-in-class financial performance measured against our peer group.
In 2022, we achieved record sales, adjusted operating income margin and adjusted earnings per share performance, while diligently man-
aging through inflationary headwinds and increasingly challenging operating conditions in our international business. We also achieved
strong ROIC and Adjusted ROIC, increased cash flows from operations and maintained a strong balance sheet profile while investing in
growth and returning cash to shareholders. By prioritizing employee safety and training, leading with a “customer-first” approach, main-
taining an agile manufacturing and supply chain strategy, and strong financial discipline - we successfully executed above plan. We exited
2022 at 2019 volume levels on a consolidated basis with significantly higher returns, which demonstrates the strong execution and value
creation of our 2025 Strategy.
2022 Net sales increased 16% to a record $3.8 billion. Organic sales increased 20%, led by a 14.5% increase in price and 5% higher vol-
umes. We also benefited approximately 2% from acquisitions (which excludes the Fori acquisition, which closed on December 1, 2022). In
2022, all of our end markets generated double-digit percent organic growth, led by approximately 30% organic sales growth in the auto-
motive/transportation sector. All major geographic regions also achieved organic sales growth, led by the Americas, where strong momen-
tum in customer production activity and capital investments resulted in our highest levels of growth and strong backlogs in equipment and
automation systems. Price primarily reflected actions previously taken to mitigate inflation and unfavorable foreign exchange translation
and we successfully achieved our targeted neutral price/cost position on a full-year basis.
We also focused on the continued development and commercialization of innovative solutions and reinforced our industry-leading portfolio
of automated solutions. In 2022, we expanded our vitality index of new products to 37% of total sales and 57% of equipment sales, while
supporting product redesigns to accommodate supply chain substitutions. We also continued to expand our automation capabilities, as
well as our leading large-scale, metal 3D printing solution for industrial parts, molds and prototypes, and launched our initiative to manu-
facture DC fast chargers for electric vehicles in the U.S. market in late 2023. In addition, we completed our Company’s largest acquisition,
with the addition of Fori in December 2022. Fori extends our welding industry leadership in automation with greater capabilities and engi-
neering expertise, and establishes new Lincoln Electric automation locations in India and South Korea. With Fori, our automation portfolio
is at an $850 million revenue run rate at year-end and we believe we are well-positioned for continued growth and the ability to exceed our
2025 $1 billion automation revenue target.
We achieved record Operating income margin performance in 2022, which increased 200 basis points to 16.3%. Adjusted operating
income margin also improved 200 basis points to a record 16.8%. Diligent cost management and the benefits from continuous improve-
ment initiatives, the maturing of our Lincoln Business System across our automation portfolio, efficiencies gained from our shared service
centers, as well as continued progress across many of our sustainability metrics generated higher operating leverage in the business.
Net income increased 71% to $472.2 million in 2022, and 30% to $485.7 million on an adjusted basis. Earnings per share increased 75%
to a record $8.04, and 33% to a record $8.27 on an adjusted basis, which included an unfavorable $0.24 impact from foreign currency
translation.
Cash flows from operations increased approximately 5% versus the prior year to $383.4 million despite maintaining strategically elevated
inventory levels to mitigate supply chain challenges and service customers’ needs. Higher inventory levels, combined with the inclusion of
Fori on our balance sheet at December 31, 2022 without commensurate sales, unfavorably impacted our Average operating working capi-
tal to net sales ratio, which rose to 20.9% at year end. Excluding Fori, the Average operating working capital to net sales ratio would have
been 18.6%. Reported and Adjusted ROIC were 22.1% and 22.7%, respectively. Excluding Fori, we would have achieved ROIC and
Adjusted ROIC of 27.9% and 28.6%, respectively.
4 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT NET SALES
OPERATING INCOME MARGIN
DILUTED EPS
Reported
Organic Sales
Reported
Adjusted
Reported
Adjusted
$3.8B +16% +20%
(Record)
vs. 2021
vs. 2021
16.3% 16.8%
+200 bps vs. 2021
(Record)
+200 bps vs. 2021
(Record)
$8.04 $8.27
+75% vs. 2021
(Record)
+33% vs. 2021
(Record)
MENU
CASH FLOW FROM
OPERATIONS
$383M
+5% vs. 2021
AVERAGE OPERATING WORKING
CAPITAL TO NET SALES RATIO1
20.9%
RETURN ON INVESTED CAPITAL 2
Reported
Adjusted
22.1% 22.7%
27th
CONSECUTIVE DIVIDEND INCREASE
14.3%
NEW PRODUCT VITALITY INDEX
37%
1 Average operating working capital excluding Fori would have been 18.6% as a percent of Net sales.
2 Return on invested capital and Adjusted return on invested capital excluding Fori would have been 27.9% and 28.6%, respectively.
See Appendix A for definitions and/or reconciliation of these metrics to results reported in accordance with GAAP. Performance measures
used in the design of the executive compensation program are presented within this Compensation Discussion and Analysis section.
We remain focused on generating long-term value for our shareholders through a disciplined and balanced capital allocation strategy. In
2022, we deployed approximately $72 million towards capital projects focused primarily on growth and operational efficiency, invested
$436 million in two new acquisitions and returned approximately $312 million of cash to shareholders through our dividend program and
share repurchases. In the last five years, we have repurchased an aggregate amount of $954 million in shares and have increased the
dividend rate by 64%, including the 2022 increase in the payout rate by 14.3%, marking 27 years of consecutive dividend increases.
$312M
RETURNED TO
SHAREHOLDERS
IN 2022
=
$131M
IN DIVIDENDS
+
$181M
IN SHARE REPURCHASES
TOTAL SHAREHOLDER RETURN (TSR)
In 2022, the combined value of our dividend program and the appreciation of our stock price resulted in strong total shareholder return
(TSR) performance on a 1, 3 and 5-year basis. We believe that TSR is an important measure to demonstrate the Company’s value cre-
ation for shareholders and is important to our executives over the long-term. Approximately 69% of our CEO’s and 48% of our other NEO’s
compensation is tied to equity-based compensation, which can be favorably impacted when the TSR increases. In this case, the value of
the compensation paid to our NEOs increases in line with the appreciation received by our shareholders.
TOTAL SHAREHOLDER
RETURN
+5% +58%
1-Year
3-Year
+74%
5-Year
4 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT The following 3-Year (2020–2022) TSR Performance Percentile Rank chart illustrates our TSR performance compared to our peer group,
the S&P Composite 500 Stock Index (S&P 500), the S&P 400, and a S&P 400 Midcap Manufacturing Index. The TSR percentile rankings
show the position of our TSR performance compared to the particular group, with a 50th percentile ranking indicating median (or market)
performance. Percentiles below 50 indicate below-market performance, while percentiles above 50 indicate above-market performance.
MENU
Total Shareholder Returns (TSR)1
3-Year (2020-2022) TSR Performance
Percentile Rank to Peers and
Select Indices
100th
75th
78th
77th
Peers
S&P 500
S&P
400
S&P
Midcap
400 Mfg
100
80
60
40
20
0
(1) See Appendix A for definition for TSR.
In 2022, Lincoln Electric was one of two machinery firms recognized by Investor’s Business Daily® as a “Top 100 Best ESG Company.”
The ranking recognizes companies with leading environmental, social and governance ratings, as well as stock performance.
FINANCIAL MEASURES USED FOR COMPENSATION PURPOSES
We consider various types of widely reported financial metrics to apply to our executive compensation program. Some of these financial
metrics directly impact our executive compensation program, while in some cases we use the closest approximation to the metrics that we
use in our compensation programs. We believe that all of these financial metrics are critical to the short-term and long-term growth and
performance of our organization.
Financial metrics used to evaluate operational performance and used in our short term annual bonus (EMIP) and our long-term incentive
plan designs are:
Financial Measures:
Short Term Metrics and Weighting
Financial Measures:
Long Term Metrics and Weighting
50%
25%
25%
50%
50%
Adjusted Revenue for Compensation Purposes
3 Year Growth of Adjusted Net Income for Compensation Purposes
Adjusted earnings before interest, taxes and bonus (EBITB)
3 Year Average ROIC for Compensation Purposes
AOWC/Sales for Compensation Purposes
4 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT Short term:
Long term:
Adjusted Revenue for Compensation Purposes (Adjusted
Revenue1), weighted at 25%
Growth of Adjusted Net Income for Compensation Purposes (over a
three-year cycle), weighted at 50%
Adjusted earnings before interest, taxes and bonus (EBITB),
Three-year Average Return on Invested Capital (ROIC) for
weighted at 50%
Compensation Purposes indexed to peer performance, weighted at 50%
Average operating working capital to net sales ratio (AOWC/Sales)
for Compensation Purposes, weighted at 25%
(1) Adjusted Revenue for compensation purposes focuses on organic sales growth by emphasizing volume growth and placing a collar on price contributions
to revenue.
MENU
PERFORMANCE OF FINANCIAL MEASURES USED FOR COMPENSATION PURPOSES
SHORT-TERM COMPENSATION PROGRAM FINANCIAL METRIC PERFORMANCE
The following charts demonstrate our performance over the last three years in financial metrics incorporated in our short-term compensa-
tion program.
Net Sales
Representative of
Adjusted Revenue for
Compensation Purposes2
($ in billions)
Adjusted Operating Income1
Representative of EBITB2
($ in millions)
AOWC/Sales for
Compensation Purposes2
$2.7
$3.2
$3.8
$328
$479
$631
22.9%
21.0%
22.5%
2020
2021
2022
2020
2021
2022
2020
2021
2022
(1) Excluding special items where applicable. Definitions and reconciliation of non-GAAP results to our most closely comparable GAAP results
are included in Appendix A.
(2) See Appendix A for definitions.
LONG-TERM COMPENSATION PROGRAM FINANCIAL METRIC PERFORMANCE
The following charts demonstrate our performance over the last three years relative to the financial metrics incorporated into our long-
term compensation program: our Adjusted Net Income for Compensation Purposes and ROIC for Compensation Purposes.
The results for ROIC for Compensation Purposes are compared to our peer group, the S&P 400 Midcap Index (S&P 400), in which we
participate, and the S&P 400 Midcap Manufacturing Index. The ROIC for Compensation Purposes percentile rankings show the position
of our financial results compared to the particular group, with a 50th percentile ranking indicating median (or market) performance.
Percentiles below 50 indicate below-market performance, while percentiles above 50 indicate above-market performance. Information is
based on the most recently available public information (as accumulated by an independent third party), as of January 2023 when the
analysis was performed. In our long-term incentive plan design, ROIC for Compensation Purposes is a relative measure and payout is
determined based on our average performance over 3-years as compared to our peers.
4 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
Adjusted Net Income
for Compensation Purposes1
($ in millions)
Return on Invested Capital for
Compensation Purposes1
$238
$356
$472
2020
2021
2022
13.7% 21.5%
28.1%
2020
2021
2022
3-Year Average ROIC for Compensation
Purposes1,2 Performance and Percentile Rank
to Peers and Select Indices
95th
91st
91st
Line graph
represents
Lincoln Electric’s
percentile rank
20.6% 11.3% 7.2% 8.2%
Lincoln
Electric
Peers
S&P
400
S&P
Midcap
400 Mfg
(1) Excluding certain items as approved by the Compensation and Executive Development Committee where applicable. See discussion and
definitions on page 59 in the Performance Shares Financial Metrics section and in Appendix A.
(2) As of September 30, 2022
PAY FOR PERFORMANCE, OBJECTIVES AND PROCESS
In designing our executive compensation program, a core philosophy is that our executives should be rewarded when they deliver finan-
cial results that provide value to our shareholders. Therefore, we have established a program that ties executive compensation to superior
financial performance.
To assess pay for performance, we evaluate the relationship between CEO realizable pay and TSR performance using the ISS methodol-
ogy. This allows us to understand the relative degree of alignment over a three-year period between the pay opportunity delivered to the
CEO and the performance achieved by shareholders relative to our peer group. In conjunction with ISS resources, this analysis is per-
formed by management and reviewed by management’s compensation consultant, WTW, the Compensation and Executive Development
Committee (the “Committee”) and by the Committee’s independent consultant, Korn Ferry. This analysis was performed for the 2019 to
2021 period, which is the period for which both compensation and performance data was readily available for our peers.
4 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
In evaluating pay and performance alignment, the analysis focuses on CEO pay primarily as reflected in the Summary Compensation
Table, with the exception of valuing equity-based awards. All stock-based awards (both time and performance-vesting) are calculated by
multiplying the number of underlying shares by the closing stock price on the grant date, and option awards are calculated using the ISS
Black-Scholes option pricing model. This means that for us, the CEO is evaluated based on the following compensation elements for the
applicable three-year period:
• Base pay;
• Annual bonus (EMIP);
• The value of stock options granted (based on the ISS Black-
Scholes pricing model as of the grant date);
• The value of restricted stock units (“RSUs”) granted (based on the
• Actual nonqualified deferred compensation earnings; and
closing price of our common stock as of the grant date);
• All other compensation for the applicable three-year period.
• The value at target of performance shares granted (based on the
closing price of our common stock as of the grant date);
The shaded area in the chart below highlights the area in which ISS has a low overall concern level. As shown in the chart below, our
ranking for TSR performance and our ranking for CEO pay falls within the shaded area and demonstrates an overall alignment. Based on
this analysis, the Committee is satisfied with the alignment of our CEO’s pay with the performance of the Company.
k
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(
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Lincoln Electric Holdings, Inc. Pay for Performance
3-Year CEO Pay Percentile Rank vs. 3-Year TSR Percentile Rank
Low Pay for
High Performance
Pay for Performance Alignment
LECO (2018-2020)
LECO
Pay Rank = 72%
TSR Rank = 42%
LECO (2019-2021)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3-Year CEO Pay Rank
(Relative to ISS Peers)
High Pay for
Low Performance
While we consider the ISS methodology in assessing pay for performance, we view it as one of the variables for evaluating pay for
performance alignment. We have provided the ISS analysis in assessing pay for performance for investors that might be utilizing it in
evaluating pay for performance.
4 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
2022 EXECUTIVE COMPENSATION ACTIONS
During 2022, the Committee reviewed the design of our executive compensation program to help ensure consistency with our pay for per-
formance philosophy. Each year, the Committee monitors our executive compensation program and how it relates to our corporate perfor-
mance and shareholder interests. At our 2022 Annual Meeting, we received 95% approval, based on the total votes cast, for our annual
advisory say-on-pay vote to approve the compensation of our NEOs. The Committee considered this result, in connection with its review
of the overall design of our executive compensation program, particularly in light of the 2025 Strategy. The Committee believes the voting
results demonstrate significant support for our executive compensation program, and the Committee chose not to make any substantial
changes to the existing program previously approved for 2022 specifically in response to the 2022 say-on-pay voting results. The
Committee expects, however, to continue to work with its compensation consultant to monitor changes in executive compensation trends
to keep our executive compensation program aligned with best practices in our competitive market.
In support of the company’s short and long-term strategy, in 2021, the Committee modified the Company’s short-term incentive plan
design for 2022. Changes approved by the Committee included a revision to the formula used for calculating each executive’s annual
incentive that places a focus on first achieving financial performance, then considers the impact of individual performance. Further, the
Committee approved adding a Revenue metric to the Financial Metrics used in the bonus calculation.
GOOD GOVERNANCE PRACTICES
In addition to our emphasis on above-market financial performance and pay for performance, we design our executive compensation pro-
gram to be current with best practices and good corporate governance. We also consider the risks associated with any particular program,
design or compensation decision. We believe these assessments result in sustained, long-term shareholder value. Some of those gover-
nance practices are described in the Compensation-Related Risk section in this Proxy Statement.
The following table highlights certain of our good governance practices relative to our executive compensation program:
What We Do
What We Don’t Do
Pay for Performance Focus
(Compensation programs weighted heavily toward variable,
“at risk,” compensation; perform annual reviews of market
competitiveness and the relationship of compensation to
financial performance)
Balanced Compensation
(Compensation opportunities linked to both short-term and
long-term periods of time, while aligning compensation
with several financial performance metrics that are critical
to achievement of sustained growth and shareholder value
creation)
✔
No Guaranteed Pay
(No multi-year guarantees for compensation increases,
including base pay, and no guaranteed bonuses)
✔ No Repricing or Replacement of Underwater Stock Options
without Prior Shareholder Approval
Double Trigger Provisions for Change in Control
✔ No Payment of Dividends on Unvested Equity
Stock Ownership Guidelines for all Executive Officers
✔ No Excessive Perquisites
Clawback Policy
✔ No Excise Tax Gross-Ups or Tax Reimbursements
Independent Compensation Committee and Consultant
✔ No Hedging or Pledging of Lincoln Electric Stock
✘
✘
✘
✘
✘
✘
5 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
OUR COMPENSATION PHILOSOPHY
CORE PRINCIPLES
The primary components of our executive compensation program, summarized below, help ensure that we maintain our performance-
driven culture:
Type
Component and Competitive Target
Philosophy and Objective
Fixed Compensation
Base Pay
Incentive-Based
Compensation
Target
Total Cash
Compensation
with Annual
Bonus (EMIP)
Long-Term
Incentive
Compensation
45th
Percentile
45th
Percentile
65th
45th
Percentile
Percentile
65th
Percentile
50th
65th
Percentile
Percentile
50th
Percentile
50th
Percentile
• Targeted at the 45th percentile of market (below market) to place stronger
emphasis on incentive compensation
• Provide market-competitive fixed pay reflective of an executive officer’s role,
responsibilities and individual performance in order to attract and retain top talent
• Targeted above the competitive market, so that target total cash
compensation (base pay and annual bonus which incorporates financial
targets and individual performance goals) is set at 65th percentile of market
• Drive financial performance, including revenue, adjusted earnings before
interest, taxes and bonus (EBITB) and average operating working capital to
net sales ratio
• Deliver individual performance against specific business objectives, including
executing on our 2025 Strategy, increasing our customer satisfaction,
developing and engaging a diverse and talented workforce, driving
sustainable innovation and improving operating efficiencies
• Targeted at the 50th percentile of market (at market)
• Divided equally among 3 programs: (1) stock options; (2) restricted stock
units (RSUs); and (3) Performance Shares
• Incentivize achievement of long-term value creation through financial
performance objectives weighted more heavily toward rewards for share price
appreciation and long-term profitability
In addition to the primary components of our executive compensation program, we provide benefits and perquisites that we believe, taken
as a whole, are at the market median.
Individual performance also plays a key role in determining the amount of compensation delivered to an individual in many of our pro-
grams, with our philosophy being that the best performers should receive the greatest rewards. The following charts present the mix of
2022 target direct compensation for our CEO and all of our other NEOs, as established in the beginning of 2022. As shown below, 87% of
the CEO’s compensation mix was “at risk” and 73% of our other NEOs’ compensation mix was “at risk,” with the actual amounts realized
based on annual and long-term performance as well as our stock price.
CEO Target Compensation Mix
All Other NEOs Target Compensation Mix
87%
At Risk
23%
21%
23%
13%
23%
18%
14%
16%
16%
27%
73%
At Risk
14%
16%
25%
27%
Base (fixed)
Annual Bonus (EMIP)
Stock Options
Restricted Stock Units
Performance Shares
Long-Term
5 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
THE ROLES OF THE COMMITTEE, EXTERNAL ADVISORS AND MANAGEMENT
The Committee, which consists solely of non-employee Directors, has primary responsibility for reviewing, establishing and monitoring all
elements of our executive compensation program. The Committee is advised by its independent executive compensation consultant, Korn
Ferry, and independent legal counsel as it deems appropriate. Management provides recommendations and analysis to the Committee,
and is supported in those efforts by its own executive compensation consultant, WTW.
ROLE OF THE COMMITTEE
Compensation-Related Tasks
Organizational Tasks
Reviews, approves and administers all of our executive
Evaluates the performance of the CEO, including consideration
compensation plans, including our equity plans
of tone and embodiment of core values, with input from all
non-employee Directors
Establishes performance objectives under our short-term and long-
term incentive compensation programs1
Reviews the performance capabilities of the other executive officers,
including consideration of tone and embodiment of core values,
Determines the attainment of performance objectives and the awards
to be made to our executive officers under our short-term and long-
term incentive compensation programs1
based on input from the CEO
Reviews succession planning for officer positions, including the
position of the CEO
Determines the compensation for our executive officers, including
Reviews proposed organization or responsibility changes at the
salary and short-term and long-term incentive compensation
opportunities1
officer level
Reviews compensation practices relating to key employees to
Reviews our practices for the recruitment and development of a
confirm that these practices remain equitable and competitive
diverse talent pool
Reviews employee benefit plans that relate to executive officers and/
Retains the services of independent legal counsel from time to time
or key employees
to provide input on various matters
(1) The independent members of the Board takes such action with respect to the CEO.
ROLE OF EXTERNAL ADVISORS
Korn Ferry
• Independent executive compensation consultant for the Committee
• Discusses the CEO’s recommendations with the Committee to
• Advises on matters including competitive compensation analysis,
executive compensation trends and plan design, peer group
company configuration, competitive financial performance and
help ensure the compensation recommendations are in line with
stated compensation philosophies and are reasonable when
compared to the competitive market
financial target setting
• The Committee is not bound by Korn Ferry’s recommendation
• Reviews analysis and data collected by management (particu-
• Considering all relevant factors (as required by compensation
larly the CEO, the CFO and the Chief Human Resources Officer)
consultant independence standards set forth in applicable SEC
and WTW
• Reports directly to the Chairperson of the Committee
• Meets with the Committee in executive session without the
participation of management
WTW
rules and Nasdaq listing standards), we have assessed Korn
Ferry’s independence, and are not aware of any conflict of inter-
est that has been raised by the work performed by Korn Ferry
• Provides executive compensation analysis and other services
• Assisted with the revised design of the annual bonus program,
directly to management
which was implemented in 2022 for the EMIP team
• Performs data analysis on competitive compensation, competi-
• Considering all relevant factors (as required by compensation
tive financial performance and financial target setting
consultant independence standards set forth in applicable SEC
• Provides analysis to Korn Ferry in advance to allow Korn Ferry to
comment upon the findings and recommendations made by
management
• Assists with the design of the 2023 Equity and Incentive
Compensation Plan and the 2023 Stock-Plan for Non-Employee
Directors
rules and Nasdaq listing standards), we have assessed WTW’s
independence, and are not aware of any conflict of interest that
has been raised by the work performed by WTW
5 2
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
ROLE OF CEO AND MANAGEMENT
• Provides compensation-related recommendations to the
• Performs individual performance assessments based on
Committee
achievement of various financial and leadership objectives set by
• The CEO recommends the compensation for other executive
the CEO
management positions and provides the Committee with assess-
• Receives suggestions from the Committee for modifications to
ments of their individual performance (both of which are subject
financial and leadership objectives where warranted
to Committee review)
OUR METHODOLOGIES
SELECTION OF COMPENSATION ELEMENTS
As part of its annual review, the Committee evaluates whether changes in the philosophy or structure are warranted in light of emerging
trends, business needs and/or financial performance. The Committee then uses competitive market data, performance assessments, and
independent executive compensation consultants and management recommendations to set the pay components along the targets
described above (for example, 45th percentile for base pay). Actual pay for executive management will generally fall within a range of
these targets (plus or minus 20%). Absent significant increases due to promotion, increases for break-through individual performance or
significant changes in the competitive market data, pay increases are generally in line with national trends.
MARKET COMPARISON DATA
We collect competitive market compensation data from multiple nationally published surveys and from proxy data for a peer group of com-
panies. Nationally published survey market compensation data is statistically determined (through regression analysis) to approximate our
revenue size and aged to approximate more current data. The Company did not select the companies that comprise any of these survey
groups. The Company generally blends 50% survey and 50% peer data for benchmarking executive compensation for our NEOs.
PEER GROUP
We use a peer group of publicly traded industrial companies that are headquartered in the U.S. that serve a number of different market
segments and that have significant foreign operations. These are companies for which Lincoln Electric competes for talent and share-
holder investment. In addition, we only select companies with solid historical financial results (removing companies from the peer group
when their financial performance has consistently fallen below an acceptable level) and companies with sales that are within 2.5 times
that of Lincoln Electric. The Committee conducts an annual review of our peer group, with the assistance of Korn Ferry as an independent
advisor. In July 2021, the Committee modified its peer group to be used for 2022 compensation matters, by eliminating Illinois Tool Works
Inc., due to its large revenue size and market capitalization, Roper Technologies, Inc., due to its large market capitalization, and SPX
Corporation, due to its small international exposure and size. The Committee then added Woodward Inc. and Xylem Corporation, which
are ISS peers, and Terex Corporation, which provides segment exposure in Automation.
For 2022, our peer group consisted of the following 18 publicly traded industrial corporations:
Ametek Inc.
Flowserve Corporation
Nordson Corporation
Carlisle Companies Incorporated
Colfax Corporation (now Enovis Corporation)
Crane Co.
Graco Inc.
IDEX Corporation
ITT Inc.
Regal Rexnord Corporation
Snap-On, Incorporated
Terex Corporation
The Toro Company
Woodward Inc.
Xylem Corporation
Donaldson Company, Inc.
Kennametal Inc
The Timken Company
In April 2022, Colfax Corporation (now Enovis Corporation) announced the completion of the spinoff of its fabrication technology business
into an independently publicly-traded company, ESAB Corporation. In July 2022, the Committee modified its peer group to be used for
2023 compensation matters, by including ESAB Corporation, in lieu of Colfax Corporation (now Enovis Corporation).
5 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
EXECUTIVE COMPENSATION STRUCTURE
In evaluating our executive compensation structure, the Committee considers three primary elements: (1) business needs, (2) individual
performance and (3) pay for performance review.
Business Needs
Individual Performance
Pay for Performance Review
• Independent compensation consultant
• Individual performance is a significant
• The Committee conducts an annual
(Korn Ferry) provides information
about emerging trends in executive
compensation, along with Committee
members’ own reading and study
factor in determining annual changes (up
or down) to pay components
assessment of our financial performance
and pay for performance, in determining
whether changes will be made to the
existing philosophy or structure and
before setting compensation levels for the
upcoming year
• Trends considered in light of our
• Annual bonus (EMIP) includes an
• The annual assessments are used to
compensation philosophies and various
business needs
individual performance component in
determining the percentage of target
bonus to be paid (described below)
evaluate whether executive compensation
is properly aligned with our financial
performance
• Business needs that are evaluated can
include: talent attraction or retention
strategies, growth expectations, strategic
programs, cost-containment initiatives,
management development needs and our
company culture
• Individual performance is measured against
how well an executive demonstrates
proficiency in key leadership competencies,
as well as the executive’s achievement
against objectives established for him or
her at the beginning of the year
• No single factor guides whether changes
will be made, as the Committee uses a
holistic approach, considering a variety of
factors
• The Committee reviews the overall
performance of each NEO during the
year and assigns Individual Performance
Factors
The following chart highlights the process and timing of compensation determinations and payouts:
Prior Year Fourth Quarter
Current Year First Quarter
Throughout Current Year
• Committee reviews our
• Committee determines the
individual performance goals of
the CEO (with Board approval)
and sets the performance
goals for each corporate-based
(financial) component
• Committee meets regularly
throughout the year, with
management and in executive
session
compensation program and
philosophy, including determining
if our compensation levels are
competitive with our peer group
and if any changes should be
made to the program for the
next year
• Committee determines the
principal components of
compensation for the NEOs
• Management engages
compensation consultant (WTW)
to provide a competitive market
assessment of pay levels for the
executive officers, including the
NEOs
• CEO sets individual performance
• Ongoing review of Company
goals for each of the other
NEOs, which are reviewed by the
Committee
• Individual performance goals of
CEO and the other NEOs are
designed to drive our corporate
goals and our 2025 Strategy
• Base pay, annual bonus targets
and long-term incentive awards
are set at a regularly scheduled
Committee meeting
• Payout amounts for the annual
bonus (EMIP) and Performance
Shares are determined at
the first available Committee
meeting (normally in February)
or a subsequent special meeting
(normally in March), once financial
results are available
performance against performance
goals
5 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
ELEMENTS OF EXECUTIVE COMPENSATION
Each compensation component for our NEOs is described below, with specific actions that were taken during 2022 noted. For 2022 com-
pensation amounts, please refer to the Summary Compensation Table and other accompanying tables.
BASE PAY
Base salary is provided to our executives to compensate them for their time and proficiency in their positions, as well as the value of their
job relative to other positions at Lincoln Electric. Base salaries are set based on a subjective evaluation of the executive’s experience,
expertise, level of responsibility, leadership qualities, individual accomplishments and other factors. That being said, we aim to set base
salaries at approximately the 45th percentile of the market (slightly below market) in keeping with our philosophy that greater emphasis
should be placed on variable compensation.
2022 AND 2023 BASE PAY
Ahead of 2022, the Committee reviewed officer pay, including all NEOs, as compared to the market. The Committee approved certain
increases in NEO base salaries as detailed below, bringing the base pay within the competitive benchmark, while the base pay of the
NEOs remains, on average, slightly below the 45th percentile.
NEO
Increase %
2022 Base Salary
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
3.4%
12.4%
13.6%
2.0%
6.1%
$1,065,000
$ 500,000
$ 500,000
$ 432,500
$ 438,000
The 2022 base salary increases for Mr. Bruno and Mr. Hedlund were to bring their base pay within the competitive benchmark following
Mr. Bruno’s recent promotion to Executive Vice President, Chief Financial Officer and Treasurer in April 2020 and Mr. Hedlund’s recent
promotion to Executive Vice President, President, Americas and International Welding in November 2020. In addition, the Committee rec-
ognized that Ms. Kuhrt had continuing responsibilities as the acting Chief Information Officer, in addition to her duties as the Chief Human
Resources Officer. In light of such additional duties, the Committee approved the continuation of a temporary supplemental base salary in
an amount equal to $63,000. For 2022, excluding Ms. Kuhrt’s supplemental base salary, her increase was 4.7%. For 2022, excluding
salary increases for promotions and assigned temporary duties, the average base salary increase for the NEOs was 3.4%.
In May 2022, the Committee approved a further 20% base pay increase for Mr. Hedlund in connection with his appointment to Executive
Vice President, Chief Operating Officer, establishing his new base salary at $600,000, to bring his base pay within the competitive
framework.
For 2023, Mr. Mapes base compensation increased 4.0%. Mr. Hedlund received 8.0% base pay increase, which was to continue to prog-
ress compensation within the competitive benchmark for his recently promoted role in 2022. Mr. Bruno and Ms. Ansberry received an
8.0% and 8.2% base pay increase, respectively, which was to progress compensation and remain competitive within the benchmarks for
their roles. Ms. Kuhrt’s base compensation increased 3.0% from her 2022 compensation. The base pay for the NEOs falls within the com-
petitive benchmark and the NEOs remain, on average, slightly below the 45th percentile for base compensation.
ANNUAL BONUS (EMIP) AND TOTAL CASH COMPENSATION
The Executive Management Incentive Plan (EMIP) provides executive officers, including the NEOs, with an opportunity to receive an
annual cash bonus. We believe that, given base pay is below market, annual cash bonus opportunities should be above average to bal-
ance some of the risk associated with greater variable compensation. However, we also believe that above-market pay should only be
available for superior financial and individual performance. Therefore, we target total cash compensation (base pay and target annual
bonus) at the 65th percentile of the market, but use a structure that provides payments of above-average bonuses only where the perfor-
mance of the consolidated company and the performance of his or her particular segment or business unit, warrant it. We also consider
the impact of an officers individual performance during the year.
In 2021, the Committee approved certain changes to the Annual Bonus. The Committee changed the Annual Bonus (EMIP) formula, and
also added a new financial metric under the Company’s existing Management Incentive Plan. Changes included a revision to the formula
that places a focus on achieving financial performance, then considers the impact of individual performance. Further, the Committee
approved adding a revenue metric to the financial metrics used in the bonus calculation, which we believe is a critical metric to the short-
term and long-term growth and performance of our organization.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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ANNUAL BONUS (EMIP) FORMULA
With respect to 2022, the formula to determine each NEOs annual bonus (EMIP Bonus Payout) multiplies an individual’s Target Bonus
Amount by the Financial Performance Factor and the Individual Performance Factor. The Financial Performance Factor takes into account
the financial performance of specific financial metrics of the consolidated Company and for operations roles, the segment or business units
they support. If the financial performance target is not met on any specific financial metric, the EMIP Bonus Payout will be reduced, with the
potential that no bonus will be paid if performance across all metrics is below threshold. If financial performance exceeds expectations on any
of the specific financial metrics, the percentage of annual bonus paid can be above the Target Bonus Amount. Once financial performance is
calculated, an Individual Performance Factor is considered to determine the final EMIP Bonus Payout. The maximum EMIP Bonus Payout,
considering financial and individual performance, will not exceed 200% of an individual’s annual Target Bonus Amount.
2022 EMIP BONUS CALCULATION
Target Bonus
Amount
Financial
Performance
Factor
Individual
Performance
Factor
EMIP
Bonus
Payout
The Committee has discretion to approve EMIP payments outside of the strict application of this calculation, although no discretion was
used for calculation of the 2022 annual bonus. EMIP payout determinations for the 2022 performance period were made in the first
quarter of 2023.
ANNUAL BONUS (EMIP) FINANCIAL METRICS
A portion of the EMIP Financial Performance Factor is based upon achievement of company consolidated financial performance against
budget and another portion may be attributable to segment financial performance against budget, depending upon the individual’s span of
responsibility. By varying the financial metrics used based upon areas of responsibility, it is possible that certain participants will receive a
higher percentage of target bonus while others will receive a lower percentage of target where the segment performance for one participant
is better than the segment performance for the other. This is a key component of our pay for performance and incentive-based philosophies.
The following is a summary of the Consolidated and Segment financial performance factors used for 2022 for the NEOs:
2022 Annual Bonus (EMIP)—Financial Metrics Used
NEOs
Christopher L. Mapes—Chairman, President & CEO
Gabriel Bruno—EVP, CFO & Treasurer
Consolidated Results
Segment Results
100%
100%
—
—
Steven B. Hedlund—EVP, Chief Operating Officer (effective May 9, 2022)
50% (thru May 8, 2022)
100% (beginning May 9, 2022)
50% Americas & International Welding (thru
May 8, 2022)
Jennifer I. Ansberry—EVP, General Counsel & Secretary
Michele R. Kuhrt—EVP, Chief Human Resources Officer
100%
100%
—
—
The Financial Performance factor calculation utilizes the achievement results of three metrics weighted as follows:
• 25% Adjusted Revenue for Compensation Purposes (Adjusted Revenue);
• 50% Adjusted earnings before interest, taxes and bonus (EBITB); and
• 25% Average operating working capital to net sales (AOWC/Sales) for Compensation Purposes.
Actual results are measured against budget at budgeted exchange rates and adjusted for the results of businesses acquired during
the year. Budgets are set aggressively (based on the local and global economic climate), at the beginning of the year, are reviewed by
the Finance Committee and are approved by the full Board. For 2022 a price collar was embedded in the budgeted goals that restricts the
impact of pricing on Adjusted Revenue results. For 2022, Management was responsible for +/-2% on pricing that impacted actual revenue
results as compared to pricing in the budget. Each financial metric is calculated and interpolated on a financial payout curve to determine
the Financial Performance Factor. The financial payout curves, considering threshold and maximum opportunities, are set at the begin-
ning of the year and are approved by the Committee.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
The following table illustrates the opportunity for achievement of the Financial Performance Factor based on actual performance against
target across each financial metric and the 2022 target amounts set during the budget process.
Achievement of
Actual Results vs. Budget
Financial Metric
Weightings
Threshold
Adjusted Revenue
EBITB
AOWC to Sales
25%
50%
25%
Financial Payout Curves
90%
70%
80%
50%
Target
(Budget)
100%
100%
100%
100%
Maximum
105%
120%
120%
200%
2022 Target (Budget)
Lincoln Electric
Holdings
Americas & Int’l
Welding
$3.5 billion
$2.5 billion
$671 million
$628 million
20.5%
20.2%
ANNUAL BONUS (EMIP) INDIVIDUAL PERFORMANCE GOALS
Individual performance goals are set annually. A significant portion of our executive officers’ individual performance goals is tied to one or
more aspects of our 2025 Strategy.
The following table highlights certain of the 2022 individual performance goals for our CEO. The Committee chair, supported by the Lead
Independent Director, leads the review and evaluation process to establish the CEO’s performance goals for each year, which were
approved by the Board at the beginning of 2022. These 2022 performance goals were cascaded throughout the organization and many
are also in the individual performance goals for our other NEOs.
Individual Performance Goals
Execution of the Higher Standard 2025 Strategy
Human capital management, including D&I, employee engagement and development initiatives
Cybersecurity and enterprise risk management
Sustainability, including environmental, health and safety metrics
Financial and operating targets
Operational optimization
Product development and new market growth
CEO
✔
✔
✔
✔
✔
✔
✔
In defining the individual performance goals, the Committee considered the goals to be strategically important to the Company and its
2025 Strategy. The goals for 2022 were particularly aimed at employee engagement, D&I, cybersecurity and achieving our EHS and
Sustainability metrics. The CEO’s individual performance rating is determined based on an evaluation of performance against the underly-
ing goals with the final rating being approved by the independent Directors of the Board. In assessing the individual performance of our
NEOs, the Committee reviews the performance rating recommended by the CEO with respect to each of the other NEOs and recom-
mends revisions, as needed, prior to the Committee approval of such rating.
2022 ANNUAL BONUS (EMIP) AND TOTAL CASH COMPENSATION
The 2022 EMIP annual bonus targets for the NEOs were established and approved by the Committee in February 2022 according to the
principles discussed above. For 2022, Mr. Bruno received a 17.5% target bonus increase and Mr. Hedlund received a 24.4% target bonus
increase, which were to continue to progress target compensation within the competitive benchmark for their recently promoted roles. The
Committee recognized that Ms. Kuhrt has ongoing responsibilities as the acting Chief Information Officer, in addition to her duties as the
Chief Human Resources Officer. In light of such additional duties, the Committee approved continuing a temporary supplemental target
bonus amount of $60,000 for 2022. Excluding the temporary supplemental target bonus, Ms. Kuhrt target bonus increased 22% to continue
to progress target compensation within the competitive framework for her role. Mr. Mapes’ and Ms. Ansberry’s 2022 target bonus increased
3.4% and 3.6%, respectively. The bonus targets fall within the competitive benchmark and the NEOs remain, on average, at the 65th percen-
tile on targeted total cash compensation. In May of 2022, Mr. Hedlund was promoted to EVP, Chief Operating Officer. Upon his promotion to
the new role, his target bonus increased to $760,000, or 56.7%, to ensure his bonus was in the competitive framework for his new role.
In approving the 2022 EMIP payouts, the Committee assessed our Adjusted Revenue for Compensation Purposes performance, EBITB
performance and AOWC/Sales for Compensation Purposes performance against budget for consolidated and segments, as applicable.
On average, 2022 EMIP payments for the NEOs were 100% above their 2022 target amounts, driven primarily by strong Adjusted
Revenue and EBITB performance and achievement of individual objectives.
5 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT The following table illustrates actual results versus budget and the interpolated Financial Performance Factor for each financial metric to
arrive at the Weighted Financial Payout Factor that drives actual bonus payouts.
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Lincoln Electric Holdings
Actual vs.
Budget
103.5%
120.7%
90.5%
Interpolated
Financial
Performance
Factor
170.0%
200.0%
76.3%
Weighted
Financial
Payout factor
161.6%
Weighting
25%
50%
25%
Americas & International Welding
Actual vs.
Budget
100.2%
118.0%
90.5%
Interpolated
Financial
Performance
Factor
104.0%
190.0%
76.3%
Weighted
Financial
Payout factor
140.1%
Weighting
25%
50%
25%
Adjusted Revenue
EBITB
AOWC to Sales
Adjusted Revenue
EBITB
AOWC to Sales
Note: The Adjusted Revenue results reflect the consideration of a +2% price collar that was approved by the Committee when budgets were set. As a result, the Actual results include only
2% of the benefit of pricing that impacted revenue during the year. The EBITB performance results were adjusted for the same types of special items that impact Adjusted Operating Income
and Adjusted Net Income as disclosed in Appendix A.
The actual bonus payout to the NEO’s considers the impact of individual performance. The Committee assessed the performance of each
NEO against their Individual Performance Goals and assigned a rating that impacts the annual bonus calculation as illustrated above.
For the current year, individual performance ratings for the annual bonus for officers ranged from 112 to 129.
The following chart illustrates the actual calculated bonus considering both the Financial and Individual performance. On average, 2022
EMIP payments for the NEOs were 48% higher than the 2021 EMIP payments, driven by record financial performance.
NEO
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
Target Award
Opportunity
$ 1,544,250
$ 487,500
$ 663,562
$ 342,000
$ 415,000
Target Award
Opportunity as a
% of 2022 Base
Salary
Maximum Award
Opportunity Based
on Matrix
145%
98%
118%
79%
95%
$3,088,500
$ 975,000
$ 1,327,124
$ 684,000
$ 830,000
Actual Award
$3,088,500
$ 975,000
$ 1,317,851
$ 684,000
$ 830,000
Actual Award as a
% of Target
200%
200%
199%
200%
200%
2023 ANNUAL BONUS (EMIP) AND TOTAL CASH COMPENSATION
The 2023 EMIP target awards for the NEOs, approved in the first quarter of 2023, were established by the Committee in consultation with
WTW, based on our compensation philosophies as well as competitive market data as discussed above. For 2023, Mr. Mapes received a
4.0% target bonus increase. Mr. Hedlund received a 8.6% target bonus increase to continue to progress target compensation within the
competitive benchmark for his recently promoted roles. Mr. Bruno and Ms. Ansberry received a 16.1% and 28.7% increase, respectively,
which was to progress compensation and remain competitive within the benchmarks for their roles. Ms. Kuhrt’s target bonus remained flat
to 2022. The bonus targets still fall within the competitive benchmark and the NEOs are on average, slightly above the 65th percentile on
targeted total cash compensation.
LONG-TERM INCENTIVE COMPENSATION
We believe that long-term incentive compensation should be provided to focus rewards on factors that deliver long-term sustainability and
should be established at the median (or 50th percentile) of the market. We have targeted the median of the market, in keeping with our
pay for performance philosophy, because we believe that superior long-term financial growth itself should be the main driver of
above-market long-term incentive compensation.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT For 2022, our long-term incentive compensation program consist of three components: (1) stock options, (2) RSUs and (3) Performance
Shares (LTIP). The value of each is weighted equally. This provides an even balance with respect to the different attributes and timing
associated with each type of award. Annual awards of all three components are made to EMIP participants, including the NEOs.
The following is a summary of the three components of our long-term incentive compensation program as in effect for 2022:
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Standard Vesting
Provision
Accelerated Vesting Provisions
Stock Options
• Vest ratably
over 3 years
• Full vesting upon death or disability.
• Full vesting upon retirement for awards granted since 2021. Pro-rata
1/3
1/3
1/3
Restricted Stock
Units (RSUs)
1/3
1/3
vesting upon retirement, for awards granted prior to 2021.
• Full vesting in the event of a change in control, if (i) replacement
awards are not provided or (ii) replacement awards are provided and
there is a subsequent qualifying termination.
• Vest in full
after 3 years
• Full vesting upon death or disability.
• Full vesting upon retirement for awards granted since 2021. Pro-rata
vesting upon retirement, for awards granted prior to 2021.
• Full vesting in the event of a change in control, if (i) replacement
awards are not provided or (ii) replacement awards are provided and
there is a subsequent qualifying termination.
1/3
1/3
Performance
Shares
1/3
1/3
• Vest
based on
performance
during the
applicable
3-year
performance
period
• Vest at target upon death or disability.
• Full vesting upon retirement, based on actual performance for the
applicable 3-year performance period, for awards granted since 2021.
Pro-rata vesting upon retirement, based on actual performance for the
applicable 3-year performance period, for awards granted prior to 2021.
• Vest at target in the event of a change in control, if (i) replacement
awards are not provided or (ii) replacement awards are provided
and there is a subsequent qualifying termination for awards granted
since 2020.
Total Employees Receiving
Grant in 2022
20 employees, including
NEOs, all EMIP
participants and other
senior leaders
709 employees,
including NEOs, all EMIP
participants, other senior
leaders, managers and
significant contributors,
regardless of their
position within Lincoln
Electric
13 employees, including
NEOs and all EMIP
participants
Following a review of market data, including our peer group, the Committee approved certain changes to the terms of our Performance
Shares. Commencing with grants made in February 2020, in the event of a change in control, the Performance Shares will vest at target if
(i) replacement awards are not provided or (ii) replacement awards are provided and there is a subsequent qualifying termination. This
change was made to align with our peers and to streamline the administration of such awards in the event of a change in control.
During 2020, the Committee reviewed our retirement vesting provisions under our equity awards generally, and following a review of mar-
ket data, including our peer group, the Committee approved certain changes to the retirement vesting provisions. Commencing with grants
made in February 2021, the definition of retirement under our equity awards is defined to include retirement at or after the age of 60 and
5 years of service, or at or after the age of 55 and 15 years of service. In addition, upon retirement, stock options and RSUs will vest in
full, and Performance Shares will vest in full, based on actual performance for the applicable 3-year performance period. These changes
were made to align with our peers and to streamline the administration of such awards upon retirement.
LONG-TERM INCENTIVE PLAN (LTIP) - PERFORMANCE SHARES
Our long-term incentive compensation program includes a long-term incentive plan (LTIP), in the form of grants of Performance Shares,
which is designed to offer award opportunities aligned with the long-term performance of Lincoln Electric. Target share amounts for the
plan are set each year at the beginning of a three-year performance cycle based on a 7-day historical average of the stock price, up to
and including the grant date. Because awards are made each year and because each award relates to a three-year performance cycle,
three different cycles will be running at any point in time. The percentage of the target shares actually paid at the end of the applicable
three-year cycle will be based upon achievement of three-year company performance as interpolated against pre-established perfor-
mance thresholds. Each plan has performance thresholds with percentage payouts attributable to those thresholds ranging from 0% to
200% of target. The Committee retains discretion to modify payments to any participant, to modify targets and/or to modify the perfor-
mance thresholds (up or down).
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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PERFORMANCE SHARES FINANCIAL METRICS
Since its inception, the LTIP has used a performance measure of growth in Adjusted Net Income for Compensation Purposes over the
three-year cycle. Beginning in 2009, the Committee added a second metric of ROIC for Compensation Purposes and gave these two
financial metrics a 50/50 weighting. The awards granted for the 2022 to 2024 performance cycle utilize these same metrics and same
weighting, including as described below, just with different goals for the new three-year period.
The Adjusted Net Income for Compensation Purposes metric is an absolute metric. For the 2020 to 2022 performance cycle, the growth in
Adjusted Net Income for Compensation Purposes over the three-year cycle is based on growth above $286,285,000 (which was the
Adjusted Net Income for Compensation Purposes for 2019 when the 2020 to 2022 performance cycle was set). As the 2020 to 2022
Performance Share LTIP table demonstrates, to pay 100% of target, Adjusted Net Income for Compensation Purposes over the three-year
cycle must be at or above 140% of $286,285,000 (or $400,799,000).
From time to time, the Committee has considered and approved certain limited adjustments to reported net income (both positive and neg-
ative) in determining achievement of performance against the thresholds. Each adjustment is reviewed in detail before it is made. The types
of adjustments the Committee has considered include: rationalization charges, certain asset impairment charges, the gains and losses on
certain transactions including the disposal of certain assets and other special items, which generally align with the special items disclosed
in the Adjusted Net Income table in Appendix A. To the extent an adjustment relates to restructuring or rationalization charges that are
intended to improve organizational efficiency, a corresponding charge (equal to the adjustment) is amortized against future years’ adjusted
net income until that adjustment is fully offset against the intended savings (generally this amortization occurs over a three-year period).
The ROIC for Compensation Purposes metric for the 2020 to 2022 performance cycle is a relative value that is derived based on our per-
formance as compared to our proxy peer group (as opposed to an absolute value). In 2022, the Committee approved excluding the impact
of the acquisition of Fori, which was acquired December 1, 2022, from the ROIC calculations and related comparisons to our proxy peer
group. The acquisition of Fori included the closure of a $400 million senior secured term loan to assist in funding the acquisition.
Both the Adjusted Net Income for Compensation Purposes metric and the ROIC for Compensation Purposes metric were set in 2020, prior
to the onset of the COVID-19 pandemic. The ability to achieve these goals was impacted by the challenges associated with the COVID-19
pandemic. Notwithstanding the challenging environment, these goals were not modified in response to the COVID-19 pandemic.
PERFORMANCE THRESHOLDS
In setting the performance thresholds for a new three-year period (including the 2022 to 2024 performance cycle), the Committee consid-
ers various factors, including historical performance against established thresholds, to try to achieve a 50% probability of the target
thresholds for any cycle. For the 2020 to 2022 Plan, the Committee did not make any modifications to the three-year adjusted net income
growth performance thresholds or the three-year average ROIC relative to peer thresholds.
TIMING FOR SETTING PERFORMANCE METRIC GOALS
Performance targets are set at the beginning of the first fiscal year in the cycle. This timing allows the Committee to see our final financial
results for the prior year and allows for more current macro-economic projections to be used.
Historical LTIPs. The following is a summary of the historical combined LTIP results for the last five completed LTIP cycles, including the
most recently completed cycle (2020 to 2022):
Historical LTIP to Budget (Results for the last five completed LTIP cycles)
Average
Highest Level
Lowest Level
Results
127.5%
181.2%
94.1%
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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2020 to 2022 Performance Share LTIP. For the 2020 to 2022 LTIP cycle, the Adjusted Net Income for Compensation Purposes perfor-
mance target and the ROIC for Compensation Purposes performance maximum were exceeded, resulting in payouts being made at
181.2% of target. The following is a summary of the performance metric goals and results for the most recently completed LTIP cycle
(2020 to 2022):
2020 to 2022 Performance Share LTIP
Payout Amount
3-Year Growth in Adjusted Net
Income for Compensation
Purposes
3-Year Average ROIC
for Compensation Purposes
Relative to LECO Peer Group
3-Year
Cumulative
Growth Rate
% of Target
Absolute LECO
Net Income
(’000s)
%ile Rank
in Peer
Group
Threshold
Target
Maximum
25%
50%
100%
150%
2022 Actual
162.4%
2022 Actual
200%
200%
10%
25%
40%
60%
65.0%
80%
$314,914
40th %ile
$357,856
50th %ile
$400,799
65th %ile
$458,056
70th %ile
$472,239
$515,313
80th %ile
89th %ile
ROIC
result
10.8%
11.2%
13.8%
14.4%
17.0%
21.1%
Actual Payout
181.2%
162.4%
@ 50%
Weighting
81.2%
200%
@ 50%
Weighting
100%
As shown above, the current plan cycle contains two metrics, each with a 50% weighting. Lincoln Electric’s Adjusted Net Income for
Compensation Purposes over the three-year period increased 65% to $472 million, which generated an 81.2% of target payout for this
metric after accounting for the weighting of the financial metric. Lincoln Electric’s three-year average ROIC for Compensation Purposes,
as compared to its peer group, was at the 89th percentile, which generated a 100% of target payout for this metric after accounting for the
weighting of the financial metric. The following chart shows the target and maximum number of shares of common stock that may be
issued for the 2020 to 2022 Performance Share LTIP based on actual performance. Combining the payouts for both metrics, the resulting
final payout for the 2020 to 2022 Performance Share LTIP was 181.2% of the target award opportunity. As previously noted, neither of
these metrics were modified specifically in response to the COVID-19 pandemic.
NEO
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
Target Award
Opportunity
(# of shares)
14,411
1,261
2,216
1,920
1,229
Maximum Award
Opportunity Based
on Thresholds
(# of shares)
Actual
Performance Share
Payout %
Actual Award
(# of shares)
28,822
2,522
4,432
3,840
2,458
181.2%
181.2%
181.2%
181.2%
181.2%
26,112
2,284
4,015
3,479
2,226
2022 LONG-TERM INCENTIVE ARRANGEMENTS
In evaluating 2022 long-term incentive compensation (at the beginning of 2022), the Committee reviewed 2020 and 2021 compensation
versus the competitive benchmarks. The Committee concluded that overall the long-term incentive compensation program for the NEOs
remained on average above the 50th percentile target but still within the competitive framework. Mr. Hedlund received a 2022 long-term
incentive compensation increase of 12.6%, which progressed his long-term incentive compensation opportunities, however maintained his
overall target direct compensation within the competitive framework. Excluding Mr. Hedlund, the Committee adjusted 2022 long-term
incentive compensation opportunities for the NEOs on average 2%, placing their LTI targets above the 50th percentile however still within
the competitive framework. All of these awards are subject to our Recovery of Funds Policy, which is discussed below. In addition, in May
2022, in connection with Mr. Hedlund’s appointment as EVP, Chief Operating Officer, the Committee approved an award of $280,000 in
restricted stock units that in general will vest in full after three years. The grant was designed to compensate Mr. Hedlund for his
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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assumption of additional duties in his new position. For more information about the quantities of the 2022 stock option, RSU and
Performance Share awards actually granted to the NEOs, see the 2022 Grants of Plan-Based Awards table and the Outstanding Equity
Awards at 2022 Fiscal Year-End table (and their related narrative disclosure) below.
2023 LONG-TERM INCENTIVE ARRANGEMENTS
In evaluating 2023 long-term incentive compensation (at the beginning of 2023), the Committee reviewed 2022 compensation versus the
competitive benchmarks. The Committee concluded that overall the long-term incentive compensation program for the NEOs remained on
average above the 50th percentile target but still within the competitive framework. Mr. Hedlund received a 2023 long-term incentive com-
pensation increase of 41.2%, which was to align his long-term incentive compensation opportunities with the role he was promoted into in
2022, however maintained his overall target direct compensation within the competitive framework. Excluding Mr. Hedlund, the Committee
adjusted 2023 long-term incentive compensation opportunities for the NEOs on average 11.9%, placing their LTI targets above the 50th
percentile however still within the competitive framework.
Valuation of Equity Awards. We use standard valuation methods to convert long-term incentive compensation values to shares upon the
grant date. These methods consider a 7-day historical average of our stock price, up to and including the grant date, for RSUs and
Performance Shares and the grant date Black-Scholes valuation for stock options.
Normal Cycle and Out-of-Cycle Equity Awards. The Committee has discretion in awarding grants to EMIP participants and does not dele-
gate its authority to management, nor does management select or influence the award dates. Occasionally, the Committee may approve
limited, out-of-cycle special awards for specific business purposes or in connection with executive promotions or the hiring of new execu-
tive employees. However, the date used for awards to all EMIP participants, including the continuing NEOs, is the date of a regularly
scheduled Committee meeting, which is fixed well in advance and generally occurs at the same time each year.
The Committee has approved delegated authority to the CEO to designate awards through 2023 to certain employees under our equity
plan, subject to specific limits established. The CEO can only grant RSU awards and cannot grant awards to any executive officers,
Section 16 officers or greater-than-10% beneficial owners of the Company, and such awards must be granted per the agreements and
vesting terms already approved by the Committee.
OTHER ARRANGEMENTS, POLICIES AND PRACTICES
OVERVIEW OF BENEFITS
We intend to provide a competitive group of benefits for all of our employees targeted at the 50th percentile of the market. Some aspects
of our benefit programs are considered non-traditional due to their relationship with our pay for performance and incentive-based philoso-
phies. For example, the premiums for Lincoln Electric-provided medical coverage are primarily paid by employees, including the NEOs, on
a pre-tax basis. Premiums for dental coverage, which is a voluntary benefit, are 100% paid by employees. Life insurance coverage paid
fully by Lincoln Electric is set at $50,000 per employee, including the NEOs, although employees may purchase additional insurance at
their own cost. The NEOs participate in this same cost-sharing approach. We attempt to balance our various non-traditional programs
(such as those with a significant portion of the cost borne by the employee) with more traditional programs.
We also provide accidental death and dismemberment benefits to officers, due to the significant amount of travel required in their jobs.
Under this program, the premiums of which are paid by the Company, a participant’s beneficiary would receive a payment of five times
annual total cash compensation up to a maximum of $3,000,000 for executive officers and $2,000,000 for other officers upon an officer’s
accidental death. The policy also provides dismemberment benefits of up to 100% of the death benefit in the event an officer is perma-
nently and totally disabled as a result of an accident, and it provides for medical evacuation coverage in the event of an accident.
PERQUISITES
Consistent with our pay for performance philosophy, we offer limited perquisites. We pay for an annual physical for officers and other
senior management to preserve our investment in them by encouraging them to maintain healthy lifestyles and be proactive in preventa-
tive care. We also make available financial planning services to certain officers, enabling them to concentrate on business matters rather
than on personal financial planning. However, the cost of these financial planning services is included in the income of the participants.
We also pay the cost of certain club dues for some officers to encourage social interaction with peers from other companies, local leader-
ship in the community and to provide the ability to hold business meetings at a convenient offsite location. All personal expenses are
borne entirely by the executive and the club dues are included in the income of the participants. Initiation fees for club memberships are
paid by the executive. Different perquisites are provided from time to time to non-U.S. based executives; however, they are customary and
reasonable in nature and amount relative to local market practices (for example, a car lease). Company-paid travel expenses are primarily
for business purposes, but occasionally spouses or other guests may accompany our executive officers on business trips. The aggregate
incremental cost of such personal travel is attributed to the applicable NEO.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT RETIREMENT PROGRAMS
Retirement benefits are provided to our NEOs through the following programs:
The Lincoln Electric Company Employee Savings Plan (401(k) Plan)
• Each eligible employee of The Lincoln Electric Company and certain affiliate companies is eligible to receive up to 6% of
annual compensation in Company contributions through:
• matching employer contributions equal to 100% of before-tax contributions made to the 401(k) Plan, but not in excess
of 3% of annual compensation; and
• automatic employer contributions equal to 3% of annual compensation
• Matching and automatic contributions are 100% vested when made
• Certain employees affected by the cessation of accruals under the defined benefit pension plan that we previously main-
tained are also eligible to receive employer contributions equal to 6% of annual compensation for a minimum period of
five years, up to the end of the year in which they complete 30 years of service
• All of the NEOs deferred amounts under the 401(k) Plan in 2022
Restoration Plan
• Created effective January 1, 2017, this unfunded plan is maintained primarily for the purpose of providing deferred com-
pensation for eligible employees whose annual compensation is expected to be in excess of the Internal Revenue Code
limit on compensation (Code Limit) applicable to the 401(k) Plan
• Each participant’s account is credited each year with deferred amounts generally as follows:
• matching employer contributions equal to 3% of annual compensation in excess of the Code Limit; and
• non-elective employer contributions equal to 3% of annual compensation in excess of the Code Limit
• All amounts deferred are fully vested at all times
• Certain employees affected by the cessation of accruals under the defined benefit pension plan that we previously main-
tained are also eligible to receive employer contributions equal to 6% of annual compensation in excess of the Code
Limit for a minimum period of five years, up to the end of the year in which they complete 30 years of service
• Upon a separation from service prior to age 55, distribution of the account will be made in a single lump sum on the first
business day of the seventh month immediately following the separation from service
• Upon a separation from service on or after age 55, distribution of the account will be made or commence on the first busi-
ness day of the seventh month immediately following the separation from service in the form of (1) a single lump sum pay-
ment; or (2) substantially equal annual installments over a period of at least two but not more than 15 years, as elected
• All NEOs participated in the Restoration Plan in 2022
• Participants can defer current income on a pre-tax basis, receiving tax-deferred returns on those deferrals
Amended and Restated 2005 Deferred Compensation Plan for Executives (Top Hat Plan)
• Up to 80% of base salary and/or annual bonus can be deferred; and
• Up to 100% of RSUs or Performance Shares can be deferred
• For cash deferrals, 27 total investment options available, 26 of which mirror the funds available under the 401(k) Plan,
plus the Moody’s Corporate Bond Average Index (which provides “above market” earnings as reported in the Summary
Compensation Table)
• RSUs and Performance Shares that are deferred are deemed invested in a Lincoln Electric Stock fund; these deferrals
can be reallocated to other investment options on the later of 6 months after the date on which the amounts are allocated
to the participant’s account or the date the participant has satisfied his or her stock ownership guidelines
• Plan includes a recovery of funds provision consistent with the requirements of Dodd-Frank
• Distributions are permitted in the event of a separation from service, disability, death, change in control or unforeseeable
emergency
• Distributions can also be made at a specified time or under a fixed schedule
• Distributions may be made in a lump-sum, or by payment in five, ten or fifteen annual installments
• As of December 31, 2022, there were 19 active employees eligible to participate in the Top Hat Plan
More information on these programs can be found in the 2022 Deferred Compensation Benefits section.
MENU
6 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
CHANGE IN CONTROL ARRANGEMENTS
We have entered into change in control agreements with all of our NEOs. The agreements are designed generally to help assure contin-
ued management in the event of a change in control of Lincoln Electric.
The change in control agreements are operative only if a change in control occurs and payments are made if the officer’s employment is
terminated under certain circumstances (or if the officer terminates employment due to certain adverse employment changes). The agree-
ments provide our NEOs with the potential for continued employment following a change in control, which helps to retain these executives
and provide for management continuity in the event of an actual or threatened change in control of Lincoln Electric. They also help ensure
that our executives’ interests remain aligned with shareholders’ interests during a time when their continued employment may be in jeop-
ardy. For a more detailed discussion of our change in control agreements, see Termination and Change in Control Arrangements below.
Outside of these change in control agreements, we do not maintain written employment or other severance agreements for U.S.-based
employees.
RECOVERY OF FUNDS POLICY
We have adopted a Recovery of Funds Policy (clawback policy) consistent with the requirements of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank). Our policy is more extensive than what Dodd-Frank requires and is applicable to all of our
officers, including our NEOs. The policy applies in the event that there is an accounting restatement involving our financial statements due
to material non-compliance with the financial reporting requirements under the U.S. federal securities laws. The policy applies to both cur-
rent and former officers and covers incentive compensation received by the officers in the 3-year period prior to the restatement. We are
aware of the final SEC clawback rules and the pending Nasdaq clawback listing standards. We expect in 2023 to review and revise the
Recovery of Funds Policy in connection with the final rules and listing standards regarding recovery of erroneously awarded compensation
as promulgated by the SEC and Nasdaq in 2022 and 2023, respectively.
Awards of incentive compensation covered by the current Recovery of Funds Policy include annual bonus payments, stock option awards,
restricted stock awards, RSUs, and Performance Shares. Under the policy, until the Nasdaq clawback listing standards are effective and
we revise the Recovery of Funds Policy, in the event of an accounting restatement of our financial statements, the Committee would
review all incentive compensation received during the 3-year covered period and would seek recovery of the amount of incentive compen-
sation paid in excess of what would have been paid if the accounts had been properly stated.
ANTI-HEDGING/PLEDGING POLICY
Consistent with our philosophy to encourage long-term investment in our common stock, our Directors, executive officers and certain
other employees are prohibited from engaging in any speculative transactions involving our securities, including buying or selling puts or
calls, or engaging in any derivative or hedging transaction that has the effect of limiting or hedging economic exposure with respect to
such person’s position in our securities, short sales and margin purchases. In addition, our insider trading policy prohibits future pledging
of Lincoln Electric securities by our Directors, executive officers and certain other employees. There are no pledges of our common stock
in place for any of our Directors or executive officers.
STOCK OWNERSHIP GUIDELINES
In keeping with our philosophy that officers should maintain an equity interest in Lincoln Electric, we have stock ownership guidelines for
officers. The guidelines were reviewed in 2021 and no changes were recommended based on a review of our peer group. Under the cur-
rent guidelines, our officers are required to own and hold a certain number of our common shares, currently at the levels set forth in the
table below:
Executive Group
Chief Executive Officer1
Executive Vice Presidents2
Senior Vice Presidents and all other
Executive Officers3
Ownership Guideline
5 times base salary
3 times base salary
2 times base salary
(1) Mr. Mapes.
(2) Includes Mr. Bruno, Mr. Hedlund, Ms. Ansberry, Ms. Kuhrt and one other EMIP participant.
(3) Includes other EMIP participants.
6 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
Each officer has five years to satisfy his or her applicable stock ownership guideline. An officer must satisfy the applicable stock owner-
ship guideline before he or she is permitted to sell shares, including shares issued as a result of RSUs vesting or Performance Shares
vesting (other than shares withheld to cover taxes) and shares obtained from the exercise of stock options (other than shares withheld to
cover exercise cost and taxes). Unless an officer is promoted into a higher guideline level, the stock ownership guideline will reset every 5
years utilizing updated base pay and stock price information. RSU awards count towards an officer’s stock ownership amount, however
common shares underlying stock options, Performance Shares and shares held in another person’s name (including a relative) do not. As
of December 31, 2022, all of our NEOs met the applicable stock ownership guideline.
DEDUCTIBILITY OF COMPENSATION
Our general philosophy has historically been to qualify future compensation for tax deductibility wherever applicable and appropriate.
Although a portion of the amount we recorded as compensation to our NEOs in 2022 was non-deductible, this did not have a significant
impact to our income tax position.
As part of the 2017 Tax Cuts and Jobs Act (the “Tax Reform Act”), the ability to rely on the performance-based compensation exception
under Section 162(m) of the U.S. Internal Revenue Code (“Section 162(m)”) was generally eliminated, and the limitation on deductibility
generally was expanded to include all NEOs (as well as certain former officers). As a result of the Tax Reform Act, after 2017 and subject
to certain grandfathered provisions, we are no longer able to deduct any compensation paid to our NEOs in excess of $1 million.
6 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
COMPENSATION
COMMITTEE REPORT
The Compensation and Executive Development Committee has reviewed and discussed the Compensation Discussion and Analysis con-
tained in this Proxy Statement with our management and, based on this review and discussion, recommends that it be included in our
Annual Report on Form 10-K for the year ended December 31, 2022 and this Proxy Statement.
By the Compensation and Executive Development Committee:
Michael F. Hilton, Chair
Kathryn Jo Lincoln
Phillip J. Mason
Hellene S. Runtagh
Kellye L. Walker
6 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT EXECUTIVE COMPENSATION TABLES
Summary of 2022 Compensation Elements
Base Pay
Purpose
Rewards responsibility,
experience and individual
performance
Competitive
Target
Financial
Metrics Used
When the
2022
Amount Was
Set
The Period to
Which the
Amount
Relates
Where
Reported
in the SCT1
Below Market
—
Beginning of 2022
2022
Salary column
Annual
Bonus (EMIP)
Rewards strong annual
financial results and
individual performance
Above Market
(target total cash
compensation)
Adjusted
Revenue2, EBITB2
and AOWC/Sales2
Beginning of 2022
2022
Performance
—
—
Beginning of 2022
2022 Based Award
Beginning of 2022
2022 Based Award
At Market
Non-Equity
Incentive Plan
Compensation
column
Option Awards
column
Stock Awards
column
m
r
e
T
-
t
r
o
h
S
m
r
e
T
-
g
n
o
L
Stock
Options
Rewards the creation of
shareholder value
RSUs
Performance
Shares
Benefits other
than
Pension
Rewards the creation
of shareholder value
and strong long-term
financial results
Rewards the creation of
long-term growth and the
efficient use
of capital
Includes 401(k)
contributions, Restoration
Plan contributions,
insurance and standard
expatriate benefits
Adjusted Net
Income2
Growth and
ROIC2
Beginning of 2022
2022 through
2024
Performance
Stock Awards
column
—
—
—
Various
2022
Various
For
above-market
earnings, shows
2022 amounts
Various
2022
All Other
Compensation
column
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings column
All Other
Compensation
column
h
t
o
B
Pension
Benefits
Includes above-market
earnings in the Top
Hat Plan
At Market
Perquisites
Meets specific business
needs—includes financial
planning, annual physical
and certain club dues
(1) Summary Compensation Table.
(2) Financial metrics used for compensation purposes are defined in Appendix A.
MENU
6 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT
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2022 Summary Compensation Table
This table details total compensation for our NEOs for 2022, 2021 and 2020.
Name and Principal
Position
Christopher L. Mapes
Chairman, President
and Chief Executive Officer
Gabriel Bruno
Executive Vice President,
Chief Financial Officer
and Treasurer
Steven B. Hedlund
Executive Vice President,
Chief Operating Officer
Jennifer I. Ansberry
Executive Vice
President, General
Counsel and Secretary
Michele R. Kuhrt
Executive Vice President, Chief
Human Resources
Officer
Year
2022
2021
2020
2022
2021
2020
2022
2021
2020
2022
2021
2020
2022
2021
2020
Salary
($)
1,065,000
1,030,000
1,000,000
500,000
445,000
364,500
564,584
440,000
Stock
Awards
($)1
3,672,156
3,483,636
2,583,316
759,474
747,554
518,648
962,817
595,576
427,500
601,608
432,500
424,000
411,730
438,000
413,000
343,000
463,212
455,938
344,180
333,902
314,928
341,400
Option
Awards
($)1
1,833,338
1,766,662
1,333,335
379,178
379,164
116,661
340,000
302,086
205,007
231,242
231,257
177,650
166,665
159,669
113,674
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings($)3
Non-Equity
Incentive Plan
Compensation
($)2
All Other
Compensation
($)4
3,088,500
2,569,567
1,868,760
975,000
698,528
419,362
1,317,851
659,373
428,765
684,000
530,871
399,073
830,000
546,773
420,841
185,377
157,838
100,170
643
364
185,194
—
—
—
—
—
56,384
—
—
253,353
252,107
206,117
191,955
159,464
119,322
94,298
186,452
225,282
643,190
130,901
114,018
109,606
131,282
109,640
78,863
Total($)
10,096,478
9,213,820
7,077,536
2,773,759
2,389,932
1,698,663
3,371,704
2,222,317
2,306,070
1,941,855
1,756,084
1,498,623
1,899,849
1,544,010
1,551,131
(1) The amounts reported for 2022 reflect the grant date fair value under FASB ASC Topic 718 for the RSU, Performance Share and stock option awards in
2022. The grant date fair value disclosed for Performance Share awards is based on target performance. Assumptions used in the calculation of these
amounts are included in footnote 10 to our audited financial statements for the fiscal year ended December 31, 2022 included in our Annual Report on
Form 10-K filed with the SEC on February 21, 2023.
The amounts shown for stock awards for 2022 represent RSU awards as follows: Mr. Mapes $1,836,078, Mr. Bruno $379,737, Mr. Hedlund $622,257,
Ms. Ansberry $231,606, and Ms. Kuhrt, $166,951. The amounts shown also include Performance Shares at target as follows: Mr. Mapes $1,836,078,
Mr. Bruno $379,737, Mr. Hedlund $340,560, Ms. Ansberry $231,606, and Ms. Kuhrt, $166,951.
The maximum Performance Share award amount with respect to each of the NEOs for 2022 is shown in the table below. The amounts
reported reflect the grant date fair value under FASB ASC Topic 718 for the Performance Share awards based on maximum performance.
Name
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
Year
2022
2022
2022
2022
2022
Maximum Payout
(# of Performance Shares)
Maximum Grant Date
Fair Value Payout
28,682
5,932
5,320
3,618
2,608
$3,672,156
$ 759,474
$ 681,120
$ 463,212
$ 333,902
(2) The amounts shown for 2022 represent payments under our annual bonus (EMIP).
6 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT
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(3) The amounts shown for 2022 represent the difference in earnings under the Moody’s Corporate Bond Index fund in our Top Hat Plan and a hypothetical rate.
2022 INCREASE IN PENSION VALUE & PREFERENTIAL EARNINGS (TOP HAT PLAN)
Name
Difference in 2022
Earnings Credited
in the Top Hat Plan ($)
Moody’s Corporate
Bond Index
Earnings($)
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
185,377
643
—
—
—
854,646
3,018
—
—
—
Hypothetical
Market
Rate($)*
669,269
2,375
—
—
—
* This rate is specified by the SEC rules for proxy disclosure purposes and is based on 120% of the applicable federal long-term rate, compounded
monthly for 2022.
(4) The amounts shown for 2022 are comprised of the following:
2022 ALL OTHER COMPENSATION
Other Benefits and Perquisites*
Company
Retirement
Contributions
($)a
Travel
Insurance
Premiums
($)
Financial
Planning
($)
Physical
Examination
($)
218,074
143,823
73,437
115,605
118,173
461
461
461
461
461
13,395
11,905
12,215
14,835
11,822
1,743
2,775
—
—
—
Club
Dues
($)
15,570
—
14,548
—
—
Name
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
Travel and
Other
Personal
Benefits
($)b
2,864
500
4,043
—
826
Standard
Expatriate
Benefits
($)c
Total All
Other
Compensation
($)
—
—
81,748
—
—
252,107
159,464
186,452
130,901
131,282
* The methodology for computing the aggregate incremental cost for the amounts is below:
(a) Includes amounts contributed to both the 401(k) Plan and the Restoration Plan
(b) Includes an employee referral bonus for Mr. Bruno and, for the other NEOs, the aggregate incremental cost of personal travel expenses attributable to
the NEOs.
(c) The expatriate benefits shown relate to Mr. Hedlund's previous international assignment and are provided to all U.S. employees who take an
international assignment. Amounts are converted to U.S. dollars on a monthly basis based on a month-end conversion price, in local currency, as
reported by Bloomberg. The conversion price for Pound Sterling was between £1.20 to £1.34 to $1.00 during the period in 2022 that Mr. Hedlund was
receiving tax services associated with his previous expatriate assignment under our standard expatriate package for all employees.
6 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
2022 Grant of Plan-Based Awards
The following table provides information relating to plan-based awards granted in 2022 to our NEOs.
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards1
Estimated Future Payouts
Under Equity Incentive
Plan Awards2
Name
Grant
Type
Grant Date
Threshold
[$]
Target
[$]
Maximum
[$]
Threshold
[#]
Target
[#]
Maximum
[#]
EMIP
2/16/2022
0
1,544,250
3,088,500
Christopher
L. Mapes
Gabriel
Bruno
Steven B.
Hedlund
Jennifer I.
Ansberry
Michele R.
Kuhrt
Options
2/16/2022
RSUs
PSUs
EMIP
2/16/2022
2/16/2022
2/16/2022
Options
2/16/2022
RSUs
PSUs
EMIP
2/16/2022
2/16/2022
2/16/2022
Options
2/16/2022
RSUs
PSUs
RSUs
EMIP
2/16/2022
2/16/2022
5/9/2022
2/16/2022
Options
2/16/2022
RSUs
PSUs
EMIP
2/16/2022
2/16/2022
2/16/2022
Options
2/16/2022
RSUs
PSUs
2/16/2022
2/16/2022
0
14,341
28,682
487,500
975,000
0
2,966
5,932
663,562
1,327,124
0
2,660
5,320
342,000
684,000
0
1,809
3,618
415,000
830,000
0
0
0
0
0
1,304
2,608
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)3
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)4
Exercise
or Base
Price of
Option
Awards
($/Sh)
Grant Date
Fair Value
of Stock
and Option
Awards
($)5
14,341
2,966
2,660
2,061
1,809
1,304
67,057
$128.03
1,833,338
1,836,078
1,836,078
13,869
$128.03
379,178
379,737
379,737
12,436
$128.03
340,000
340,560
340,560
281,697
8,458
$128.03
231,242
231,606
231,606
6,096
$128.03
166,665
166,951
166,951
(1) The performance-based amounts shown represent the range of cash payouts (from zero to the maximum amount listed) for 2022 under the EMIP.
Payments are based on the achievement of company financial performance and the NEO's individual performance. Target awards are set by the
Committee in the first quarter each year. Actual payment amounts are determined by the Committee in the first quarter of the following year. The targets
shown above are pursuant to the Annual Bonus (EMIP) Formula described in the CD&A (which allows for potential payouts of up to 200% of target).
(2) These columns show the potential number of shares of our common stock to be paid out to our NEOs under our Performance Shares (PSUs) at threshold,
target and maximum performance. The measures and potential payouts are described in more detail in the CD&A. The grant date fair value, based on target
performance for PSUs, is included in the "Stock Awards" column of the Summary Compensation Table. The PSUs generally vest based on performance
during the applicable performance period. Dividend equivalents are sequestered by us until the shares underlying the PSUs are distributed, at which time
the dividend equivalents are paid in cash. The dividend rate for dividend equivalents paid on the PSUs to the NEOs is the same as for all other shareholders
(in other words, it is not preferential). Recipients of PSUs who participate in our EMIP bonus program (which includes all of the NEOs) are eligible to elect to
defer all or a portion of their PSUs under our Top Hat Plan - see the 2022 Nonqualified Deferred Compensation section for a description of this plan.
(3) The RSUs generally vest upon the recipient remaining in continuous employment for three years from the date of grant and are paid out in our common
stock. Dividend equivalents are sequestered by us until the shares underlying the RSUs are distributed, at which time the dividend equivalents are paid in
cash. The dividend rate for dividend equivalents paid on the RSUs to the NEOs is the same as for all other shareholders (in other words, it is not
preferential). Recipients of RSUs who participate in our EMIP bonus program (which includes all of the NEOs) are eligible to elect to defer all or a portion
of their RSUs under our Top Hat Plan - see the 2022 Nonqualified Deferred Compensation section for a description of this plan. With respect to the award
of RSUs to Mr. Hedlund on May 9, 2022, the Committee approved an additional award equal in value to $280,000 in connection with his appointment as
EVP, Chief Operating Officer.
(4) The stock options were granted at the closing price of our common shares on the date of the grant. All stock options are non-qualified for tax purposes.
We value stock options using the Black-Scholes valuation method. The stock options generally vest over a three-year period (in equal annual increments).
All stock options have 10-year terms.
(5) The amounts shown represent the fair value of the RSU awards, the stock option grants and the target value for the PSU awards calculated in
accordance with FASB ASC Topic 718 as of the date of the grant. The actual amount, if any, realized upon the exercise of stock options will depend upon
the market price of our common shares relative to the exercise price per share of the stock option at the time of exercise. The actual amount realized
upon vesting of RSUs will depend upon the market price of our common shares at the time of vesting. The actual number and value of PSUs earned will
be based upon our actual performance during the three-year long-term incentive plan cycle and the market price at time of vesting. There is no
assurance that the hypothetical full values of the awards reflected in this table will actually be realized.
7 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT
NARRATIVE DISCLOSURE REGARDING 2022 SUMMARY COMPENSATION TABLE AND 2022 GRANTS OF PLAN-BASED AWARD TABLE
The following highlights the salary and annual bonus percentages of total compensation reported in the 2022 Summary Compensation
Table, based on the value of 2022 base salary and 2022 actual annual bonus (EMIP) for each of our NEOs:
MENU
Name
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
% of Base Salary and Annual Bonus
To Total Compensation
41.1%
53.2%
55.8%
57.5%
66.7%
The above percentages were based, in each case, on the value of the executive’s 2022 base salary and 2022 actual EMIP (or annual
bonus). For information regarding the amount of salary and annual bonus compensation in proportion to total compensation, see the “Our
Compensation Philosophy” section of the CD&A. Further, the grants made in 2022 to the NEOs are described more fully in the CD&A, and
information about the change in control severance agreements and the amounts payable to the NEOs pursuant to those arrangements is
provided under the section titled “Termination and Change in Control Arrangements” in this Proxy Statement.
7 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
HOLDINGS OF EQUITY-RELATED INTERESTS
The following provides information relating to exercisable and unexercisable stock options, RSUs and Performance Shares at
December 31, 2022.
Outstanding Equity Awards at 2022 Fiscal Year-End
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable1
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable1
Option
Exercise
Price
($/sh)
Option
Expiration
Date
Name
Grant Date
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)2
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)3
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
that Have
Not Vested
(#)4
Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or Other Rights
That Have
Not Vested
($)3
Christopher
L. Mapes
Gabriel Bruno
Steven B.
Hedlund
Jennifer I.
Ansberry
2/17/2016
2/22/2017
2/21/2018
2/18/2019
2/19/2020
2/17/2021
2/16/2022
4/24/2013
2/22/2017
2/21/2018
2/18/2019
2/19/2020
4/21/2020
2/17/2021
2/16/2022
4/24/2013
2/17/2016
2/22/2017
5/24/2017
2/21/2018
2/18/2019
2/19/2020
10/20/2020
2/17/2021
2/16/2022
5/9/2022
2/21/2018
2/19/2020
2/17/2021
2/16/2022
89,030
68,610
65,894
76,365
55,660
2 7,13 7
—
—
6,670
6,150
6,682
4,870
—
5,824
—
8,235
6,005
6,875
9,313
11,741
8,558
—
4,640
8,962
7,416
3,552
—
—
—
—
27,830
54,276
67,057
—
—
—
—
2,435
—
11,649
13,869
—
—
—
—
—
—
4,279
—
9,281
12,436
—
3,708
7,105
8,458
58.14
85.30
90.70
88.44
89.63
114.27
128.03
—
85.30
90.70
88.44
89.63
—
114.27
128.03
—
58.14
85.30
88.74
90.70
88.44
89.63
—
114.27
128.03
90.70
89.63
114.27
128.03
2/17/2026
2/22/2027
2/21/2028
2/18/2029
2/19/2030
2/17/2031
2/16/2032
—
2/22/2027
2/21/2028
2/18/2029
2/19/2030
—
2/17/2031
2/16/2032
—
2/17/2026
2/22/2027
5/24/2027
2/21/2028
2/18/2029
2/19/2030
—
2/17/2031
2/16/2032
2/21/2028
2/19/2030
2/17/2031
2/16/2032
—
—
—
—
14,411
15,243
14,341
3,455
—
—
—
1,261
4,027
3,271
2,966
4,579
—
—
—
—
—
2,216
2,004
2,606
2,660
2,061
—
1,920
1,995
1,809
—
—
—
—
2,082,245
2,202,461
2,072,131
499,213
—
—
—
182,202
581,861
472,627
428,557
661,620
—
—
—
—
—
320,190
289,558
376,541
384,343
297,794
—
277,421
288,258
261,382
—
—
—
—
—
—
—
—
—
—
30,486
28,682
4,404,922
4,144,262
—
—
—
—
—
—
6,542
5,932
—
—
—
—
—
—
—
5,212
5,320
—
—
3,990
3,618
—
—
—
—
—
945,254
857,115
—
—
—
—
—
—
—
753,082
768,687
—
—
576,515
522,765
7 2
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
Outstanding Equity Awards at 2022 Fiscal Year-End (Continued)
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable1
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable1
Option
Exercise
Price
($/sh)
Option
Expiration
Date
Name
Grant Date
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)2
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)3
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
that Have
Not Vested
(#)4
Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or Other Rights
That Have
Not Vested
($)3
Michele R.
Kuhrt
2/17/2016
2/22/2017
2/21/2018
2/18/2019
2/19/2020
2/17/2021
2/16/2022
3,505
4,290
3,954
5,514
4,744
2,452
—
—
—
—
—
2,374
4,906
6,096
58.14
85.30
90.70
88.44
89.63
114.27
128.03
2/17/2026
2/22/2027
2/21/2028
2/18/2029
2/19/2030
2/17/2031
2/16/2032
—
—
—
—
2,580
1,378
1,304
—
—
—
—
372,784
199,107
188,415
—
—
—
—
—
2,756
2,608
—
—
—
—
—
398,214
376,830
(1) Stock options vest in three equal annual installments, commencing on the first anniversary of the date of the grant.
(2) Amounts shown in this column represent RSU awards. The RSU awards generally vest in full three years from the date of grant. The RSU awards granted to
Mr. Bruno and Mr. Hedlund in 2013 vests over seven years following each of their attainment of age 55.
(3) The amounts shown in these columns represent the value of RSU and Performance Share awards granted pursuant to our 2006 and 2015 Equity and
Performance Incentive Plans. Value is calculated using the close price of our common stock on the last trading day of 2022.
(4) The 2021 and 2022 Performance Shares are shown at maximum payout (200% of the target award) because the target performance level would be exceeded
based on performance to date. The payout can range from 0 to 200% of the target and is based upon performance during the three-year cycle ending on
December 31 of the applicable period, as determined by the Committee. See the CD&A on how Performance Share payouts are determined.
2022 Option Exercises and Stock Vested Table
The following table provides information on stock options exercised, as well as RSUs and Performance Shares that vested during 2022.
Name
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
Option Awards1
Stock Awards2
Number of Shares
Acquired on Exercise(#)
Value Realized on
Exercise($)
Number of Shares Acquired
on Vesting(#)
Value Realized on
Vesting($)
—
13,760
6,155
10,175
2,620
—
1,214,181
495,005
536,001
208,590
41,210
4,180
7,252
5,491
3,316
6,709,039
668,082
1,176,154
893,929
545,653
(1) The number of shares acquired on exercise reflects the gross number of shares acquired, without considering any shares that were withheld to pay the
option exercise price and/or to satisfy tax withholding requirements. The value realized on exercise represents the gross number of shares acquired on
exercise multiplied by the market price of our common stock on the exercise date, less the per share exercise price.
(2) The number of shares acquired on vesting reflects the gross number of shares acquired, without considering any shares that were withheld to satisfy tax
withholding requirements. The value realized on vesting for RSUs represents the gross number of shares acquired, multiplied by the closing price of our
common stock on each applicable vesting date, plus the value of dividend equivalents. The value realized on vesting for Performance Shares represents
the gross number of shares acquired, relative to the 2020-2022 performance cycle that was considered earned as of December 31, 2022 but paid out in
March 2023, multiplied by the closing price of our common stock on such date, plus the value of dividend equivalents. Amounts are not reduced to reflect
any elections by our NEOs to defer receipt of RSUs or Performance Shares award payouts into our Top Hat Plan: Mr. Mapes, 15,098 RSUs and $90,135
in dividend equivalents deferred; and Mr. Bruno, 2,284 Performance Shares and $14,595 in dividend equivalents deferred. For more information about
this deferral program, see the CD&A in the "Overview of Benefits” section.
7 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
2022 DEFERRED COMPENSATION BENEFITS
We maintain two nonqualified deferred compensation plans in which our NEOs are eligible to participate.
DEFERRED COMPENSATION PLAN (TOP HAT PLAN)
Our Amended and Restated 2005 Deferred Compensation Plan for Executives (Top Hat Plan) is designed to be a “top-hat” plan that com-
plies with Section 409A of the Internal Revenue Code. Participation is limited to management and highly compensated employees as
approved by the Committee. A summary of the Top Hat Plan is provided in the CD&A in the “Other Arrangements, Policies and Practices”
section.
RESTORATION PLAN
Our Restoration Plan is designed to provide deferred compensation for eligible employees whose annual compensation is expected to be
in excess of the Internal Revenue Code limit on compensation (Code Limit) applicable to the 401(k) Plan. A summary of the Restoration
Plan is provided in the CD&A in the “Other Arrangements, Policies and Practices” section.
2022 NONQUALIFIED DEFERRED COMPENSATION TABLE
The following table reflects any NEO contributions and Company contributions for 2022 to our nonqualified deferred compensation plans.
Name
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
Executive
Contributions
in Last Fiscal
Year($)
Registrant
Contributions
in Last Fiscal
Year($)1
Aggregate
Earnings
in Last Fiscal
Year($)
Aggregate
Withdrawals/
Distributions($)
—
—
—
—
—
—
—
—
—
—
2,013,3183
1,604,2704
199,774
206,4235
107,223
—
55,137
—
79,005
—
81,573
(211,197)
69,4866
(73,064)
(10,478)
(49,355)
—
(89,367)
—
(42,830)
—
—
—
—
—
—
—
—
—
—
Aggregate
Balance
at Last Fiscal
Year-End($)2
31,266,728
1,124,931
1,078,782
409,730
52,635
247,671
—
388,914
—
340,919
Plan Name
Top Hat Plan
Restoration Plan
Top Hat Plan
Restoration Plan
Top Hat Plan
Restoration Plan
Top Hat Plan
Restoration Plan
Top Hat Plan
Restoration Plan
(1) Amounts reported with respect to the Restoration Plan are included in compensation for 2022 in the "All Other Compensation" column of the Summary
Compensation Table above and is described in its footnotes.
(2) The portions of the amount reported that relate to deferral contributions in prior years have all been reported in the Summary Compensation Table in
those years to the extent the individual was a NEO for those years.
(3) Represents 15,098 RSUs and $90,135 in cash attributable to dividend equivalents that vested during 2022 and were deferred into the Top Hat Plan.
(4) Of the amount reported, $185,377 is included as compensation for 2022 in the "Change in Pension Value and Nonqualified Deferred Compensation
Earnings" column of the Summary Compensation Table and is described in its footnotes.
(5) Represents 1,536 Performance Shares and $9,170 in cash attributable to dividend equivalents that vested during 2022 and were deferred into the Top
Hat Plan.
(6) Of the amount reported, $643 is included as compensation for 2022 in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings"
column of the Summary Compensation Table and is described in its footnotes.
7 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
TERMINATION AND CHANGE IN CONTROL ARRANGEMENTS
The Key Compensation Programs table below highlights the standard benefits and payments available to NEOs in the event of a
termination of employment and/or a change in control. The Termination and Change in Control Table below reflects the estimated additional
amounts of compensation each NEO would receive in the event of a termination of employment and/or a change in control. Termination
events include: a voluntary termination by the executive; normal retirement of the executive; an involuntary, not-for-cause termination by
Lincoln Electric; a for-cause termination by Lincoln Electric; a termination upon a change in control; and a termination due to death or
disability. In addition, estimated additional compensation amounts are shown in the event of a change in control without termination of
employment. The amounts shown assume that each event occurred on December 30, 2022, the last business day of the calendar year.
TERMINATION OF EMPLOYMENT
No written agreements exist that provide additional payments to a NEO in the event of a voluntary termination of employment with Lincoln
Electric or a termination of employment initiated by Lincoln Electric (whether for cause or not). We do not have employment agreements or
severance agreements, except for our change in control severance agreements described below.
Pursuant to our standard employment policies, upon termination of employment, a NEO would be entitled to receive the same benefits
and payments that are generally available to salaried employees:
• Earned but unpaid base pay, up to the date of termination;
• Amounts held in the executive's account under our Top Hat Plan
• Earned and unused paid time off, up to the date of termination;
(based on the executive's election); and
• Vested amounts held in the executive's account under our 401(k)
• Amounts held in the executive's account under our Restoration
Plan;
CHANGE IN CONTROL
Plan.
We have entered into change in control severance agreements with our NEOs. Pursuant to our change in control severance agreements,
in the event of a “change in control,” if the NEO’s employment is terminated without “cause” (as defined in the change in control severance
agreement) or the NEO terminates employment for “good reason” (as defined in the change in control severance agreement) during the
severance period (as described below) (or for certain other employment terminations prior to and related to the change in control, as
described in the change in control severance agreement), we will make severance payments and provide certain benefits as indicated in
the Key Compensation Programs table below.
The severance period commences on the date of the first occurrence of a change in control and ends on the earlier of (a) the second
anniversary of the change in control, or (b) the executive’s death. Our NEOs are required to abide by certain restrictive covenants and
execute a release of claims in order to receive certain severance payments and benefits under the change in control severance
agreements.
The following events in general would constitute a change in control:
• Any individual, entity or group is or becomes the beneficial owner
• Certain reorganizations, mergers or consolidations, or the sale or
of 30% or more of the combined voting power of the then-
other disposition of all or substantially all of the assets of Lincoln
outstanding voting stock of Lincoln Electric;
Electric, or certain other corporate transactions are consummated; or
• A majority of the Board ceases to be comprised of incumbent
• Approval by the shareholders of a complete liquidation or
Directors;
dissolution of Lincoln Electric.
7 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
Key Compensation Programs
Voluntary
Termination/
Termination
with Cause
Involuntary
Termination/
Termination
without Cause
Normal
Retirement1
Change in Control
(with Termination)2
Change in Control
(No Termination)
Death or
Disability
Severance
None
Company has
discretion
None
Annual Bonus
(EMIP)
Forfeited
Forfeited
Pro-rata portion of
EMIP3
Lump-sum payment equal
to the sum of base pay
and bonus as described in
the severance agreement
times three for the CEO and
times two for other NEOs
Pro-rata portion of EMIP
payment equal to the
greater of the actual or
target amount
Long-Term
Incentive Plan
(Performance
Shares)
Forfeited
Forfeited
Full vesting of
Performance Shares,
based on actual
performance for
awards granted in
2021 and later4
Accelerated vesting of
Performance Shares at
target, if replacement
award provided and
subsequent qualifying
termination
Stock Options
Unvested stock
options forfeited
Unvested stock
options forfeited
Entitled to
exercise vested
stock options for
a period of three
months after
termination5,6
Entitled to
exercise vested
stock options for
a period of three
months after
termination5,6
Accelerated vesting
of any unvested
stock options with
right to exercise
such vested options
for the remaining
period of the original
10-year term for
awards granted in
2021 and later6,7
Accelerated vesting of
unvested stock options,
if replacement award
provided and subsequent
qualifying termination
Entitled to exercise vested
stock options for the
remaining period of the
original 10-year term6
RSUs
Forfeited
Forfeited
Accelerated vesting
of RSU awards for
awards granted in
2021 and later8
Accelerated vesting of RSU
awards, if replacement
award provided and
subsequent qualifying
termination
None
None
Pro-rata EMIP payment equal
to the greater of the actual or
target amount
Pro-rata
portion of
EMIP3
No accelerated vesting if
replacement award provided and
continued employment
Accelerated vesting of
Performance Shares granted
prior to the change in control at
target, if no replacement award
provided
No accelerated vesting if
replacement award provided and
continued employment
Accelerated vesting of unvested
stock options granted prior
to change in control, if no
replacement award provided
No accelerated vesting if
replacement award provided and
continued employment
Accelerated vesting of RSU
awards granted prior to change
in control, if no replacement
award provided
Accelerated
vesting of
Performance
Shares at
target
Accelerated
vesting of
unvested stock
options
Entitled to
exercise stock
options for
a period of
three years
after death or
disability5,6
Accelerated
vesting of RSU
awards
Outplacement
None
None
None
Maximum of $100,000 for
CEO and $50,000 for the
other NEOs
None
None
7 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT
Key Compensation Programs (continued)
Voluntary
Termination/
Termination
with Cause
Involuntary
Termination/
Termination
without Cause
Normal
Retirement1
Change in Control
(with Termination)2
Change in Control
(No Termination)
280G
Treatment
Other
N/A
N/A
N/A
9
Continuing
medical and/ or
dental coverage
under COBRA,
for which the
executive would
pay 102% of
the applicable
premium
Continuing
medical and/ or
dental coverage
under COBRA,
for which the
executive would
pay 102% of
the applicable
premium
Continuing medical
and/or dental cov-
erage under COBRA,
for which the ex-
ecutive would pay
102% of the appli-
cable premium
Continuing medical
insurance (102% of the
premium paid by the ex-
ecutive) and life insurance
for a period of three years
following the NEO’s termi-
nation date10
N/A
10
MENU
Death or
Disability
N/A
Continuing
medical and/or
dental coverage
with 102% of
the premium
paid by the ex-
ecutive (or his
or her surviving
dependents)
(1) Subject to any 409A deferred payment requirements. For purposes of the Annual Bonus (EMIP), Normal Retirement is defined as termination at or after
age 60 and 5 years of service or at or after age 55 and 25 years of service. For purposes of Performance Shares, stock options and RSUs, commencing
with awards granted in 2021, Normal Retirement is defined as termination at or after age 60 and 5 years of service or at or after age 55 and 15 years of
service.
(2) Provision applicable in the event of a termination without Cause or termination for Good Reason in connection with a Change in Control. With respect
to Performance Shares, stock options and RSUs, such termination without Cause or termination for Good Reason must occur within a period of two
years after the Change in Control (or in certain employment terminations prior to and related to the change in control) to receive the accelerated vesting
treatment.
(3) Based on the executive's period of employment during the calendar year, subject to achievement of the applicable personal and financial goals.
(4) Pro-rata vesting of Performance Shares, based on length of employment during performance period, based on actual performance for awards granted
prior to 2021.
(5) After which time the vested stock options would expire.
(6) Vested stock options canceled if the executive is terminated for cause or the executive engaged in competitive conduct within six months of termination.
(7) Pro-rata vesting of stock options with right to exercise such vested options for the remaining period of the original 10-year term for awards granted prior to
2021.
(8) Pro-rata vesting of RSUs, based on length of employment, for awards granted prior to 2021.
(9) Severance payments reduced to the 280G (excess parachute payment) safe harbor limit, unless the executive would achieve a better after-tax result
paying the excise tax imposed on excess parachute payments. No payment, net of taxes, to compensate for any excise tax imposed.
(10) Amounts and/or shares (from vested RSUs or Performance Shares) held in executives' accounts under the Top Hat Plan automatically paid out.
7 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
Termination and Change in Control Table
The following table sets forth estimates of the potential incremental payments to each of our NEOs upon the specified termination events
and upon a change in control, both with and without a qualified termination, assuming that each such event took place on the last busi-
ness day of 2022.
The table does not quantify benefits under plans that are generally available to salaried employees that do not discriminate in favor of
NEOs, including the 401(k) Plan, the health care plan and the life insurance plan.
The Annual Bonus (EMIP) amounts represent the difference between target EMIP and actual EMIP payments (as disclosed in the Non-
Equity Incentive Plan Compensation column of the 2022 Summary Compensation Table) if target EMIP exceeds actual EMIP in connec-
tion with a hypothetical change in control as of the last business day of 2022. The LTIP (Performance Shares) amounts include amounts
for the 2021-2023 and 2022-2024 cycles, represented by the target amounts for the two cycles that were open as of the last business day
of 2022. There is no amount included for the 2020-2022 cycle because actual performance exceeded target performance.
The following table assumes, in the event of a change in control, replacement awards are provided pursuant to the 2015 Equity and
Incentive Compensation Plan’s respective Stock Option Agreement, Restricted Stock Unit Agreement, and Performance Share
Agreement (“Agreements”). Pursuant to the Agreements, if the respective equity awards are not replaced, all outstanding equity awards
will accelerate as of the closing date of the change in control. In the event of a change in control where no replacement awards are pro-
vided, the accelerated equity values are consistent with the accelerated equity values under Change in Control (Replacement Awards;
Qualified Termination).
In addition, the table includes all equity that is accelerated as a result of termination but does not include the value of outstanding
equity awards that have previously vested, such as stock options, which awards are set forth above in the Outstanding Equity
Awards at December 31, 2022 table. For descriptions of the compensation plans and agreements that provide for the payments set
forth in the following table, including our change in control agreements, see the “Elements of Executive Compensation” discussion
contained in the CD&A.
Under the normal retirement scenario, commencing with equity awards granted in 2021, the retirement definition is either at or after age
60 and 5 years of service or at or after age 55 and 15 years of service, and, as of December 30, 2022, three NEOs were eligible for nor-
mal retirement under the 2021 and 2022 equity awards. Awards prior to 2021 had a retirement definition of only at or after age 60 and 5
years of service, under which one NEO was eligible for normal retirement as of December 30, 2022. The Annual Bonus (EMIP) has a
retirement definition of either at or after age 55 and 25 years of service or at or after age 60 and 5 years of service, under which three
NEOs were eligible for normal retirement as of December 30, 2022. There are no amounts included in the retirement scenario below for
the EMIP bonus as it was fully earned. The amounts shown for the Performance Shares assumes performance at target, although actual
payout upon retirement would be based on actual performance determined in the normal course.
Involuntary Termination/Termination
without Cause before Normal Retirement:
Normal Retirement:
LTIP (Performance Shares)–Accelerated Vesting
Stock Options–Accelerated Vesting
RSUs–Accelerated Vesting
Change in Control (Replacement Awards;
Qualified Termination):
Severance
Annual Bonus (EMIP)
LTIP (Performance Shares)–Accelerated Vesting
Stock Options–Accelerated Vesting
RSUs–Accelerated Vesting
Outplacement Estimate
280G Cutback
Christopher L.
Mapes
Gabriel
Bruno
Steven B.
Hedlund
Jennifer I.
Ansberry
Michele R.
Kuhrt
N/A
N/A
N/A
N/A
N/A
14,895,010
$
2,425,286
Not Eligible
Not Eligible
$
1,041,827
4,375,085
4,067,145
6,452,780
25,147,706
9,852,491
0
4,375,085
4,270,713
6,549,417
100,000
0
$
$
$
$
$
$
$
$
$
$
$
922,490
580,306
922,490
5,419,717
2,117,890
0
922,490
713,891
2,270,953
50,000
(655,507)
N/A
N/A
N/A
$
$
$
$
$
$
$
$
6,714,624
2,720,000
0
778,548
719,904
2,446,172
50,000
0
N/A
N/A
N/A
3,817,246
1,794,944
0
562,635
557,343
852,324
50,000
0
$
$
$
$
$
$
$
$
$
$
$
396,624
248,579
396,624
$ 3,454,877
$
$
$
$
$
$
$
1,843,614
0
396,624
378,744
785,895
50,000
0
$
$
$
$
$
$
$
$
$
$
$
$
7 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
Change in Control (Replacement Awards; No
Termination):
Annual Bonus (EMIP)
LTIP (Performance Shares)–Accelerated Vesting
Stock Options–Accelerated Vesting
RSUs–Accelerated Vesting
Death or Disability:
LTIP (Performance Shares)–Accelerated Vesting
Stock Options–Accelerated Vesting
RSUs–Accelerated Vesting
Christopher L.
Mapes
Gabriel
Bruno
Steven B.
Hedlund
Jennifer I.
Ansberry
Michele R.
Kuhrt
$
$
$
$
$
$
$
$
$
0
0
0
0
0
15,195,215
4,375,085
4,270,713
6,549,417
$
$
$
$
$
$
$
$
$
0
0
0
0
0
3,907,334
922,490
713,891
2,270,953
$
$
$
$
$
$
$
$
$
0
0
0
0
0
3,94 4,624
778,548
719,904
2,446,172
$
$
$
$
$
$
$
$
$
0
0
0
0
0
$
$
$
$
$
0
0
0
0
0
1,972,302
$ 1,561, 263
562,635
557,343
852,324
$
$
$
396,624
378,744
785,895
7 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
PAY RATIO
For 2022, we estimate that the ratio of the annual total compensation of our CEO ($10,096,478 which is the same amount reported for our
CEO in the 2022 Summary Compensation Table) to the annual total compensation of our median employee ($61,687) is 164:1. We note
that, due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve
a degree of imprecision, and thus this ratio disclosure is a reasonable estimate calculated in a manner consistent with Item 402(u) of
Regulation S-K using the data and assumptions described below.
In accordance with Item 402(u) of Regulation S-K, in calculating our CEO pay ratio for 2022, we believe there has been no change in our
employee population or employee compensation arrangements that would result in a significant change to our pay ratio disclosure; there-
fore, we have used the same median employee for determining the 2022 CEO pay ratio as we used to calculate the CEO pay ratio for
2021.
In 2021 we determined our median employee based on total cash and equity compensation paid to our active employees as of October 1,
2021 for the period beginning on January 1, 2021 and ending on December 31, 2021. We included all full-time, part time, seasonal and
temporary employees, whether employed domestically or overseas, and whether employed directly or by a consolidated subsidiary.
Compensation for employees hired during 2021 was annualized for all employees other than temporary or seasonal employees, and full-
time equivalencies were not created.
Annual total compensation for the median employee for 2022 was calculated using the same methodology used for our NEOs as set forth
in the 2022 Summary Compensation Table. Of the employees that were identified as potential median employees, we selected an
employee based in the U.S. that was representative of the largest portion of our workforce. Given the different methodologies that various
public companies will use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for
comparison between companies.
8 0
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
PAY VERSUS PERFORMANCE
In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and
Consumer Protection Act, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”)
and non-PEO NEOs and certain measures of Company performance for the fiscal years listed below. The Committee did not consider the
pay versus performance disclosure below in making its pay decisions for any of the years shown.
Year
(a)
2022
2021
2020
Summary
Compensation
Table (SCT) Total
for PEO1
($)
Compensation
Actually Paid to
PEO1,2,3
($)
Average SCT Total
for Non-PEO
NEOs1
($)
Average
Compensation
Actually Paid to
Non-PEO NEOs1,2,3
($)
Net Income
($ Millions)
ROIC for
Compensation
Purposes5
Value of Initial Fixed
$100 Investment
Based on:4
Company
TSR
($)
Peer
Group
TSR
($)
(b)
10,096,478
9,213,820
7,077,536
(c)
14,415,143
17,818,888
11,078,312
(d)
2,496,792
1,978,086
1,936,038
(e)
(f)
(g)
3,176,483
3,241,658
1,600,715
157.95
123.28
149.83
141.80
122.93
113.66
(h)
472
276
206
(i)
28.1%
21.5%
13.7%
1. Christopher Mapes was our PEO for each year presented. The individuals comprising the non-PEO NEOs for each year presented are listed below.
2022
Gabriel Bruno
Steven Hedlund
Jennifer Ansberry
Michele Kuhrt
2021
Gabriel Bruno
Steven Hedlund
Jennifer Ansberry
Michele Kuhrt
2020
Gabriel Bruno
Steven Hedlund
Jennifer Ansberry
Michele Kuhrt
George Blankenship
Vincent Petrella
2. The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and may not necessarily
reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with
certain adjustments as described in footnote 3 below.
3. Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the non-PEO NEOs as set forth below. Equity
values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from
the Stock Awards and Option Awards columns set forth in the Summary Compensation Table. Amounts in the Exclusion of Change in Pension Value
column reflect the amounts attributable to the Change in Pension Value reported in the Summary Compensation Table.
Year
2022
2021
2020
Summary
Compensation Table
Total for PEO
($)
Exclusion of
Change in
Pension Value
($)
Exclusion of
Stock Awards and
Option Awards
($)
Inclusion of
Pension Service
Cost
($)
Inclusion of
Equity Values
($)
Compensation
Actually Paid to
PEO
($)
10,096,478
9,213,820
7,077,536
—
—
—
(5,505,494)
(5,250,298)
(3,916,651)
—
—
—
9,824,159
13,855,366
7,917,427
14,415,143
17,818,888
11,078,312
Year
2022
2021
2020
Average Summary
Compensation Table
Total for Non-PEO
NEOs
($)
Exclusion of
Change in
Pension Value
($)
Exclusion of
Stock Awards and
Option Awards
($)
Inclusion of
Pension Service
Cost
($)
Inclusion of
Equity Values
($)
Compensation
Actually Paid to
Non-PEO NEOs
($)
2,496,792
1,978,086
1,936,038
—
—
(130,493)
(909,123)
(796,543)
(814,714)
—
—
—
1,588,814
2,060,115
609,884
3,176,483
3,241,658
1,600,715
8 1
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Year
2022
2021
2020
Year
2022
2021
2020
Year-End Fair Value
of Equity Awards
Granted During
Year That Remained
Unvested as of Last
Day of Year for PEO
($)
Change in Fair
Value from Last
Day of Prior Year
to Last Day of Year
of Unvested Equity
Awards for PEO
($)
Vesting Date Fair
Value of Equity
Awards Granted
During Year that
Vested During Year
for PEO
($)
Change in Fair Value
from Last Day of Prior
Year to Vesting Date
of Unvested Equity
Awards that Vested
During Year for PEO
($)
Fair Value at Last
Day of Prior Year
of Equity Awards
Forfeited During
Year for PEO
($)
Total - Inclusion of
Equity Values for
PEO
($)
9,062,694
9,690,680
6,315,274
1,893,469
4,331,611
2,322,241
—
—
—
(1,132,004)
(166,925)
(720,088)
—
—
—
9,824,159
13,855,366
7,917,427
Average Year-End
Fair Value of Equity
Awards Granted
During Year That
Remained Unvested
as of Last Day of Year
for Non-PEO NEOs
($)
Average Change in
Fair Value from Last
Day of Prior Year
to Last Day of Year
of Unvested Equity
Awards for Non-PEO
NEOs
($)
Average Vesting
Date Fair Value
of Equity Awards
Granted During Year
that Vested During
Year for Non-PEO
NEOs
($)
Average Change in
Fair Value from Last
Day of Prior Year to
Vesting Date of Un-
vested Equity Awards
that Vested During
Year for Non-PEO
NEOs
($)
Average Fair Value
at Last Day of Prior
Year of Equity
Awards Forfeited
During Year for Non-
PEO NEOs
($)
Total - Average
Inclusion of
Equity Values for
Non-PEO NEOs
($)
1,455,624
1,470,209
665,988
271,916
599,806
36,797
—
—
25,136
(138,726)
(9,900)
102,767
—
—
(220,804)
1,588,814
2,060,115
609,884
4. The Peer Group Total Shareholder Return ("TSR") set forth in this table utilizes the S&P 400 Index, which we also utilize in the stock performance graph
required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2022. The comparison assumes $100 was
invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the S&P 400 Index, respectively. Historical
stock performance is not necessarily indicative of future stock performance.
5. We determined ROIC for Compensation Purposes to be the most important financial performance measure used to link Company performance to
Compensation Actually Paid to our PEO and non-PEO NEOs in 2022. More information on ROIC for Compensation Purposes can be found in Appendix A.
This performance measure may not have been the most important financial performance measure for years 2021 and 2020 and we may determine a
different financial performance measure to be the most important financial performance measure in future years
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and
Company and Peer Group Total Shareholder Return (“TSR”)
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually
Paid to our non-PEO NEOs, the Company’s cumulative TSR over the three most recently completed fiscal years, and the cumulative TSR
of the S&P 400 Index over the same period assuming initial investment of $100 on December 31, 2019.
$25M
$20M
$15M
$10M
$5M
$0M
i
d
a
P
y
l
l
a
u
t
c
A
n
o
i
t
a
s
n
e
p
m
o
C
PEO and Average Non-PEO NEO Compensation Actually
Paid Versus Company TSR and S&P 400 Index TSR
$100
$100
$123
$114
$150
$142
$158
$123
$11.1M
$1.6M
$17.8M
$3.2M
$14.4M
$3.2M
2019
2020
2021
2022
Fiscal Year
PEO Compensation Actually Paid
Average Non-PEO NEO Compensation Actually Paid
Company TSR
S&P 400 Index TSR
$200
$150
$100
$50
$0
R
S
T
e
v
i
t
a
u
m
u
C
l
8 2
LINCOLN ELECTRIC 2023 PROXY STATEMENT
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid
and Company Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually
Paid to our non-PEO NEOs, and our GAAP Net income during the three most recently completed fiscal years.
MENU
$25M
$20M
$15M
$10M
$5M
$0M
i
d
a
P
y
l
l
a
u
t
c
A
n
o
i
t
a
s
n
e
p
m
o
C
PEO and Average Non-PEO NEO Compensation Actually
Paid Versus Company Net Income
$472M
$206M
$276M
$11.1M
$1.6M
$17.8M
$3.2M
$14.4M
$3.2M
2020
2021
Fiscal Year
2022
PEO Compensation Actually Paid
Average Non-PEO NEO Compensation Actually Paid
Company Net Income
$500M
$400M
$300M
$200M
$100M
$0M
e
m
o
c
n
I
t
e
N
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and
Company ROIC for Compensation Purposes
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually
Paid to our non-PEO NEOs, and Company ROIC for Compensation Purposes (annual results) during the three most recently completed
fiscal years.
$25M
$20M
$15M
$10M
$5M
$0M
i
d
a
P
y
l
l
a
u
t
c
A
n
o
i
t
a
s
n
e
p
m
o
C
PEO and Average Non-PEO NEO Compensation Actually Paid
Versus Company ROIC for Compensation Purposes
28.1%
21.5%
13.7%
$11.1M
$1.6M
$17.8M
$3.2M
$14.4M
$3.2M
2020
2021
Fiscal Year
2022
30%
25%
20%
15%
10%
5%
0%
s
e
s
o
p
r
u
P
n
o
i
t
a
s
n
e
p
m
o
C
r
o
f
I
C
O
R
y
n
a
p
m
o
C
PEO Compensation Actually Paid
Average Non-PEO NEO Compensation Actually Paid
Company ROIC for Compensation Purposes
8 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking
Compensation Actually Paid to our PEO and our Non-PEO NEOs for 2022 to Company performance. The measures in this table are not ranked.
Return on Invested Capital (ROIC) for Compensation Purposes
Adjusted earnings before interest, taxes and bonus (EBITB)
Adjusted Revenue for Compensation Purposes (Adjusted Revenue)
Average operating working capital to net sales ratio (AOWC/Sales) for Compensation Purposes
Adjusted Net Income for Compensation Purposes
8 4
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
MANAGEMENT
OWNERSHIP OF SHARES
The following table sets forth certain information regarding ownership of shares of common stock of Lincoln Electric as of December 31,
2022 (except as otherwise indicated) by each of our Directors and NEOs, as well as our Directors and executive officers as a group. Except
as otherwise indicated, voting and investment power with respect to shares reported in this table are not shared with others.
RSUs and Performance Shares are generally not reflected in the table as there is no ability to acquire the shares attributable to them
within 60 days of December 31, 2022. In addition, any vested RSUs and Performance Shares that are deferred into the Top Hat Plan or the
Non-Employee Directors’ Deferred Compensation Plan are generally not reflected in the table as there is no ability to acquire the shares
attributable to them within 60 days of December 31, 2022. The table includes shares that would be received upon the vesting of RSUs within
60 days of December 31, 2022.
BENEFICIAL OWNERSHIP TABLE
Directors
NEOs
Brian D. Chambers
Curtis E. Espeland
Patrick P. Goris
Michael F. Hilton
Kathryn Jo Lincoln
Phillip J. Mason
Ben P. Patel
Hellene S. Runtagh
Kellye L. Walker
Christopher L. Mapes
Gabriel Bruno
Steven B. Hedlund
Jennifer I. Ansberry
Michele R. Kuhrt
All Directors and Executive Officers as a group (19 persons)
* Indicates less than 1%
Number of Shares of
Lincoln Electric
Common Stock Beneficially
Owned1
Percent of Class
—2
15,686
5863
5,3133
835,3863,4
18,0715
1,1133
28,479
2,379
505,2046
44,9307
93,7448
42,9889
44,03810
1,688,07311
*
*
*
*
1.45%
*
*
*
*
*
*
*
*
*
2.90%
(1) Reported in compliance with the beneficial ownership rules of the SEC, under which a person is deemed to be the beneficial owner of a security, for
these purposes, if he or she has, or shares, voting power or investment power over the security or has the right to acquire the security within 60 days of
December 31, 2022. With respect to the NEOs and executive officers, the amounts reported do not include any Performance Shares that vested and paid
out in March 2023, as the number of Performance Shares to be received by each executive officer was unknown within 60 days of December 31, 2022.
(2) Mr. Chambers was elected to the Board on February 16, 2022. In connection with Mr. Chambers' election, he received an initial grant of 927 RSUs that
will vest on the first anniversary of the date of grant.
(3) Each of Messrs. Goris, Hilton, Patel and Ms. Lincoln had 5,143 RSUs deferred under the Non-Employee Directors' Deferred Compensation Plan which
are not reflected in the above table.
(4) Of the shares reported, 35,109 shares were held of record by a trust established by Ms. Lincoln, under which she has sole investment and voting power.
The remaining 800,277 shares were held of record by The Lincoln Institute of Land Policy, of which Ms. Lincoln is the Chair, as to which shares
Ms. Lincoln disclaims beneficial ownership. Ms. Lincoln has shared voting and shared investment power on these 800,277 shares.
(5) Of the shares reported, Mr. Mason held of record 6,066. The remaining 12,005 shares were held of record by his spouse in the Paula J. Mason Trust, as
to which shares Mr. Mason disclaims beneficial ownership.
8 5
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
(6) Of the shares reported, Mr. Mapes held of record 45,189 shares. Mr. Mapes has or had the right to acquire 460,015 shares upon the exercise of stock
options within 60 days of December 31, 2022. Mr. Mapes had 79,276 RSUs deferred under the Top Hat Plan which are not reflected in the above table.
(7) Of the shares reported, Mr. Bruno held of record 591 shares, of which 277 shares are held jointly with spouse. Mr. Bruno has or had the right to acquire
1,261 shares upon the vesting of RSUs within 60 days of December 31, 2022. Mr. Bruno has or had the right to acquire 43,078 shares upon the exercise
of stock options within 60 days of December 31, 2022. Mr. Bruno had 6,936 Performance Shares deferred under the Top Hat Plan which are not
reflected in the above table.
(8) Of the shares reported, Mr. Hedlund held 23,097 shares of record, 640 shares of which are held in the Stock Purchase Plan, and 2,362 shares of which
are held in the 401(k) Plan. Mr. Hedlund has or had the right to acquire 2,216 shares upon the vesting of RSUs within 60 days of December 31, 2022.
Mr. Hedlund has or had the right to acquire 68,431 shares upon the exercise of stock options within 60 days of December 31, 2022.
(9) Of the shares reported, Ms. Ansberry held of record 11,059 shares, 20 shares of which are held jointly with her spouse. Ms. Ansberry has the right to
acquire 1,920 shares upon the vesting of RSUs within 60 days of December 31, 2022. Ms. Ansberry has or had the right to acquire 30,009 shares upon
the exercise of stock options within 60 days of December 31, 2022.
(10) Of the shares reported, Ms. Kuhrt held 10,141 shares of record, 256 shares of which are held in the 401(k) Plan. Ms. Kuhrt has the right to acquire 2,580
shares upon the vesting of RSUs within 60 days of December 31, 2022. Ms. Kuhrt has or had the right to acquire 31,317 shares upon the exercise of
stock options within 60 days of December 31, 2022.
(11) Includes 12,048 shares that are RSUs held by all executive officers, as a group, that vest within 60 days of December 31, 2022 and 665,006 shares
which all executive officers, as a group, have or had the right to acquire upon the exercise of stock options within 60 days of December 31, 2022.
In addition to the above management holdings, as of December 31, 2022, the 401(k) Plan held 881,086 shares of our common stock, or
approximately 1.53% of the shares of our common stock outstanding.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information regarding outstanding Stock Options, RSUs and Performance Shares and shares reserved for
issuance under our equity compensation plans as of December 31, 2022:
Plan category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders4
Total
Number of Securities
to Be Issued
Upon Exercise of
Outstanding
Options, Warrants
and Rights
(a)1
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(b)2
1,725,997
—
1,725,997
$93.31
—
—
Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected In Column (a))
(c)3
1,099,897
—
1,099,897
(1) The amount shown in column (a) includes the following: 1,117,359 Nonqualified Stock Options; 130,674 deferred RSUs and deferred Performance Shares;
173,784 Performance Shares (assuming payout levels at maximum-as a result, this aggregate reported number may overstate actual dilution); and
304,180 RSUs.
(2) The weighted average exercise price in column (b) includes nonqualified stock options only.
(3) The amount shown in column (c) represents common shares remaining available under the 2015 Equity and Incentive Compensation Plan ("Employee
Plan") and the 2015 Stock Plan for Non-Employee Directors ("2015 Director Plan"). The Employee Plan provides for the granting of options, appreciation
rights, restricted shares, RSUs and performance-based awards. The 2015 Director Plan provides for the granting of options, restricted shares and RSUs.
Under the Employee Plan, for any award that is not an Option Right or Appreciation Right, 3.24 common shares are subtracted from the maximum
number of common shares available under the plan for every common share issued under the award. For awards of Option Rights or Appreciation Rights,
however, only one common share is subtracted from the maximum number of common shares available under the Employee Plan for every common
share granted. The amount in the table assumes payout levels at maximum for Performance Shares. Under the Director Plan only one common share is
subtracted from the maximum number of common shares available for every common share granted.
(4) The Company does not maintain equity compensation plans that have not been approved by its shareholders.
DELINQUENT 16(a) REPORTS
Section 16(a) of the Exchange Act requires our Directors and officers and beneficial owners of 10% or more of the outstanding shares of
common stock of Lincoln Electric to file reports of beneficial ownership and changes in beneficial ownership with respect to our securities with
the SEC and to furnish copies of those reports to us. Based solely on a review of the Forms 3, 4 and 5 and amendments thereto furnished to
us with respect to the fiscal year ended December 31, 2022, we believe that for the 2022 calendar year, all filing requirements were met on a
timely basis, except that one officer, Gregory Doria, who is not an NEO, filed one late Form 4 with the SEC on December 19, 2022, relating to
shares withheld to cover taxes for an RSU award that vested on July 1, 2022, which was previously unreported due to administrative error.
8 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
OTHER
OWNERSHIP OF SHARES
Set forth below is information about the number of shares held by any person (including any “group” as that term is used in Section 13(d)(3) of
the Exchange Act) known to us to be an owner of more than 5% of the shares of our common stock as of December 31, 2022.
Name and Address of Beneficial Owner
Number of Shares and Nature of
Beneficial Ownership
6,024,8561
Percent of
Class
10.46%
The Vanguard Group
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
BlackRock, Inc.
55 East 52nd Street
New York, New York 10055
5,274,0372
9.15%
(1) According to its Schedule 13G/A filed on February 9, 2023, The Vanguard Group has sole voting power over 0 shares, shared voting power over 25,014
shares, sole dispositive power over 5,950,567 shares and shared dispositive power over 74,289 shares. In its Schedule 13G/A filing, The Vanguard Group
states that the shares of our common stock reported in the filing were acquired and are held in the ordinary course of business and were not acquired
and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired in
connection with or as a participant in any transaction having that purpose or effect, other than activities solely in connection with a nomination under
§240.14a-11.
(2) According to its Schedule 13G/A filed on January 25, 2023, BlackRock, Inc. has sole voting power over 5,162,680 shares and sole dispositive power over
5,274,037 shares. In its Schedule 13G/A filing, BlackRock states that the shares of our common stock reported in the filing were acquired and are held in
the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the
issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.
8 7
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER
PARTICIPATION
During 2022, each of Messrs. Hilton and Mason and Ms. Lincoln, Ms. Runtagh and Ms. Walker served on the Compensation and Executive
Development Committee. No Compensation and Executive Development Committee member was an employee of Lincoln Electric or any
of its subsidiaries, and there were no reportable business relationships between Lincoln Electric and the Compensation and Executive
Development Committee members. None of our executive officers serves as a member of the board of directors or compensation committee
of any entity that has one or more of its executive officers serving as a member of our Compensation and Executive Development Committee.
In addition, none of our executive officers serves as a member of the compensation committee of any entity that has one or more of its
executive officers serving as a member of our Board.
8 8
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
ANNUAL MEETING PROPOSALS
✔
➜
✔
PROPOSAL 1
Election of 10 Directors
to serve until 2024
Annual Meeting or until
their successors are duly
elected and qualified
PROPOSAL 2
Ratification of
independent registered
public accounting firm
The Board recommends a vote FOR all Director Nominees.
Our Nominating and Corporate Governance Committee and our Board of Directors have
determined that each of the Director Nominees possesses the right skills, qualifications and
experience to effectively oversee Lincoln Electric's long-term business strategy.
See "Proposal 1—Election of Directors" beginning on page 22 of this Proxy Statement for
additional information.
The Board recommends a vote FOR this proposal.
Our Board of Directors recommends that shareholders vote "FOR" the ratification of the
appointment of Ernst & Young LLP as Lincoln Electric's independent registered public
accounting firm for the year ending December 31, 2023.
Fees for professional services provided by Ernst & Young LLP as our independent auditors in each of the last two fiscal years, in each of the
following categories are:
Audit Fees
$2,482,000
$2,459,000
2022
2021
Audit-Related Fees
Tax Fees
All Other Fees
Total Fees
246,000
479,000
—
404,000
436,000
—
$3,207,000
$3,299,000
Audit Fees include fees associated with the annual integrated audit of the financial statements and internal control over financial reporting
in 2022 and 2021, the reviews of our quarterly reports on Form 10-Q, certain statutory audits required for our international subsidiaries and
services provided in connection with regulatory filings with the SEC. Audit-Related Fees for 2022 and 2021 primarily relate to audit-related
services associated with acquisitions. Tax Fees include tax compliance, transfer pricing and tax advisory services.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services performed by our independent
auditors, including the scope of and fees for such services. Generally, requests for audit, audit-related and tax services, each as defined in
the policy, must be presented for approval prior to the performance of such services, to the extent known at that time. For 2022, the Audit
Committee has resolved that four specific categories of services, namely audit services, audit-related services, tax advisory services, and tax
compliance services, are permissible without itemized pre-approval in an amount not to exceed for each service:
Pre-Approval Amount
Services
$2,728,000
$800,000
Audit, and Audit-Related services for acquisitions, new accounting pronouncements and other international
statutory requirements
Tax Advisory and Tax Compliance services
Itemized detail of all such services performed is subsequently provided to the Audit Committee. In addition, our independent auditors are
prohibited from providing certain services described in the policy as prohibited services. All of the fees included in Audit Fees, Audit- Related
Fees and Tax Fees shown above were pre-approved by the Audit Committee (or included in the pre-approved fee limits, as applicable, for
certain services as detailed above).
8 9
LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
Generally, requests for independent auditor services are submitted to the Audit Committee by our Executive Vice President, CFO and Treasurer
(or other member of our senior financial management) and our independent auditors for consideration at the Audit Committee’s regularly
scheduled meetings. Requests for additional services in the categories mentioned above may be approved at subsequent Audit Committee
meetings to the extent that none of such services is performed prior to its approval (unless such services are included in the categories of
services that fall within the dollar limits detailed above). The Chairman of the Audit Committee is also delegated the authority to approve
independent auditor services requests under certain dollar thresholds provided that the pre-approval is reported at the next meeting of the Audit
Committee. All requests for independent auditor services must include a description of the services to be provided and the fees for such services.
Representatives of Ernst & Young LLP are expected to be available at the Annual Meeting, will have an opportunity to make a statement if
they so desire and are expected to be available to respond to appropriate shareholder questions. Although ratification of the appointment of
the independent auditors is not required by law, the Audit Committee and the Board believe that shareholders should be given the opportunity
to express their views on the subject. While not binding on the Audit Committee or the Board, the failure of the shareholders to ratify the
appointment of Ernst & Young LLP as our independent auditors would be considered by the Board in determining whether or not to continue
the engagement of Ernst & Young LLP. Ultimately, the Audit Committee retains full discretion and will make all determinations with respect to
the appointment of independent auditors, whether or not our shareholders ratify the appointment.
MAJORITY VOTE NEEDED
Ratification requires the affirmative vote of the majority of the shares of our common stock present or represented and entitled to vote on the
matter at the Annual Meeting. Unless otherwise directed, shares represented by proxy will be voted FOR ratification of the appointment of
Ernst & Young LLP. Abstentions will have the same effect as a vote “against” the proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
PROPOSAL 3
Approval, on an
advisory basis, of NEO
compensation
✔
The Board recommends a vote FOR this proposal.
Our Board recommends that shareholders vote "FOR" the approval, on an advisory basis, of
the compensation of our NEOs.
Say-on-Pay Vote at
2022 Annual Meeting
95%
Approval
95%
of shareholders who voted on the
“say-on-pay” proposal voted FOR
the approval of the compensation
of our NEOs.
The Compensation and Executive Development Committee believes that the historically positive say-on-pay shareholder votes reinforce the
philosophy and objectives of our executive compensation program. We conduct annual say-on-pay votes. Subject to the outcome of the vote
on Proposal 4, our next say-on-pay vote will be held at the 2024 Annual Meeting.
Our compensation philosophy is to pay for performance, a philosophy that has been rooted in our history and tradition for almost 130
years. Our compensation program consists of elements designed to complement one another and focus on both short-term and long-term
performance. The Compensation and Executive Development Committee regularly reviews peer group data and best practices and trends
related to executive compensation to help ensure that our programs are properly aligned with our business strategy and philosophy, as well
as promote shareholder value. The Committee receives advice from independent consultants. In addition to the information provided earlier in
the CD&A section, we believe shareholders should consider the following in determining whether to approve this proposal:
OUR CULTURE AND PERFORMANCE
To maintain a performance-driven culture, we:
• Expect our executives to deliver above-market financial results;
• Provide systems that tie executive compensation to superior
• Take action when needed to address specific business challenges;
and
financial performance;
• Maintain good governance practices in the design and operation of
our executive compensation programs.
We have a long track record of delivering increased value to our shareholders.
PAY FOR PERFORMANCE
In designing our executive compensation programs, a core philosophy is that our executives should be rewarded when they deliver financial
results that provide value to our shareholders. Therefore, we have established a program that ties executive compensation to superior financial
performance.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
We have a balanced pay mix between short-term and long-term incentives:
• Base Salaries. Base salaries for our NEOs are generally targeted
• Performance Share Payouts Were Above Target. For the 2020-
at the 45th percentile of benchmark data (below market median).
2022 performance cycle, the Performance Shares paid out above
For 2022, the average base salary increase for the NEOs was
target, as a result of ROIC for Compensation Purposes
3.4% excluding salary increases for promotions and assigned
performance above maximum and Adjusted Net Income for
temporary duties.
Compensation Purposes performance above target.
• Annual Bonus Awards Are Aligned with Our Performance and
• Long-Term Incentives Are Aligned with the Interests of Our
Contain a Balanced Mix of Metrics. The total cash compensation
Shareholders. We believe that incentives should be based on
for our NEOs, which includes base pay and the annual bonus
factors that deliver long-term sustainability for Lincoln Electric.
(EMIP), is targeted at the 65th percentile of benchmark data (above
Therefore, the NEOs receive three types of long-term incentives.
market median). The EMIP is based on a balance of metrics—both
The three components are: (1) stock options, (2) RSUs and
financial and personal—with the financial components based on
(3) Performance Shares. Total awards are targeted at the 50th
Adjusted Revenue for Compensation Purposes, EBITB and AOWC/
percentile of benchmark data (at market median).
Sales for Compensation Purposes and with a mix of consolidated
and, if applicable, segment performance. For 2022, annual bonus
payments for the NEOs increased 48%.
GOOD GOVERNANCE PRACTICES
In addition to our emphasis on pay for performance, we design our programs to be current with best practices and good corporate
governance. We also consider the risks associated with any particular program, design or compensation decision. We believe these
assessments result in sustained, long-term shareholder value. Some of the governance practices include:
• Officers Are Subject to Stock Ownership Guidelines
• Broad Clawback Policy
• Compensation and Executive Development Committee Receives
• Change in Control Agreements Require a Double-Trigger
Regular Updates
• No Tax Gross-Ups
• Compensation and Executive Development Committee Retains
• No Hedging or Pledging of Lincoln Electric Stock by Officers
Independent Advisors
• Limited Perquisites
• No Compensation Consultant Conflicts of Interest
• No Multi-Year Guarantees on Compensation
• No Dividends on Unvested RSUs or Performance Shares
As illustrated above, the Compensation and Executive Development Committee has and will continue to take action to structure our executive
compensation program in a manner that is performance-based, current with best practices and good corporate governance and aimed
at sustaining long-term shareholder value. The Board believes that the executive compensation disclosed in the CD&A section, tabular
disclosures (including the 2022 Summary Compensation Table) and other narrative disclosures in this Proxy Statement aligns with our peer
group pay practices and compensation philosophy.
As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, we are asking you
to cast an advisory (non-binding) vote on the following resolution at the Annual Meeting:
RESOLVED, that the compensation awarded to our NEOs, as disclosed pursuant to Item 402 of Regulation S-K in the Compensation
Discussion and Analysis and the tabular disclosure (together with the accompanying narrative disclosure) in this Proxy Statement, as
required by the rules of the Securities and Exchange Commission, is hereby approved on an advisory basis.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
YOUR VOTE MATTERS TO US
As an advisory vote, this proposal is not binding on us. However, the Compensation and Executive Development Committee, which is
responsible for designing and administering our executive compensation programs, values the opinions expressed by shareholders in their
vote on this proposal and expects to consider the outcome of the vote when making future compensation decisions for NEOs.
MAJORITY VOTE NEEDED
A favorable vote of a majority of the shares of our common stock present or represented by proxy and entitled to vote on the matter is
necessary for approval of the proposal. Abstentions will have the same effect as a vote “against” the proposal and broker non-votes will not be
counted for determining whether the proposal is approved.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE, FOR APPROVAL, ON AN ADVISORY BASIS, OF
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
✔
The Board recommends a vote for EVERY YEAR.
Our Board recommends that shareholders vote for “EVERY YEAR” for the frequency on future
advisory votes to approve the compensation of our NEOs
PROPOSAL 4
To recommend, on an
advisory basis,
the frequency for
future advisory
votes to approve
the compensation of
our NEOs
In addition to the advisory approval of compensation for our named executive officers, we are seeking a non-binding approval by our
shareholders as to the frequency for future advisory votes to approve the compensation of our NEOs. Similar to Proposal 3, this vote is
required under Dodd-Frank, as well as the Exchange Act. We are providing shareholders the option of recommending a frequency of EVERY
YEAR, EVERY TWO YEARS, or EVERY THREE YEARS, or abstaining from voting on this proposal.
WE BELIEVE THE ADVISORY VOTE SHOULD BE HELD EVERY YEAR
We believe that the advisory vote to approve the compensation of our NEOs should be held every year, as is our current practice, so that
shareholders may express their views on a regular basis and provide more direct input and feed-back on our compensation philosophy and
programs. An annual vote will allow us to gain “real-time” feedback (and provide better clarity) as we review, modify and implement our programs.
You have the opportunity to vote to recommend the frequency for future advisory votes to approve NEO compensation that you believe is
appropriate— EVERY YEAR, EVERY TWO YEARS, or EVERY THREE YEARS —or you may abstain. The proxy card provides for these
voting options—note that you are not voting to approve or disapprove our recommendation that the vote be held every year.
YOUR VOTE MATTERS TO US
As an advisory vote, the outcome of the vote on this proposal is not binding on us. However, the Board of Directors values the opinions
expressed by shareholders, and will consider the outcome of the vote when determining the frequency of the shareholder advisory vote to
approve NEO compensation.
PLURALITY VOTE NEEDED
The choice among the three options that receives the highest number of votes cast (a plurality) will be deemed to be the shareholders’
preferred frequency with which Lincoln is to hold future shareholder advisory votes to approve the compensation of its NEOs. Abstentions and
broker non-votes will have no effect on the result of this proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EVERY YEAR FOR THE FREQUENCY FOR FUTURE
ADVISORY VOTE TO APPROVE
NAMED EXECUTIVE OFFICER COMPENSATION
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
MENU
✔
The Board recommends a vote FOR this proposal.
Our Board recommends that shareholders vote “FOR” the approval of Lincoln Electric’s 2023
Equity and Incentive Compensation Plan.
PROPOSAL 5
To approve Lincoln
Electric’s 2023 Equity
and Incentive
Compensation Plan
On February 15, 2023, upon the recommendation of the Compensation and Executive Development Committee (which we refer to as the
Compensation Committee), our Board unanimously approved and adopted the 2023 Equity and Incentive Compensation Plan (which we
refer to as the 2023 Employee Plan), subject to the approval of our shareholders at the Annual Meeting. If approved by our shareholders, the
2023 Employee Plan will succeed our 2015 Equity and Incentive Compensation Plan (which we refer to as the 2015 Employee Plan). The
2015 Employee Plan has shares remaining available for new awards as of the date of this proxy statement, but if the 2023 Employee Plan is
approved by our shareholders, no further grants will be made under the 2015 Employee Plan. Further, any grants under the 2015 Employee
Plan after February 24, 2023 will reduce the number of shares requested under the 2023 Employee Plan, as further described below.
You are being asked to approve the 2023 Employee Plan. Our shareholders previously approved our 2015 Employee Plan, which currently
allows us to grant stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares and performance units
to our officers and other employees (including those of our subsidiaries) and certain consultants. The 2023 Employee Plan will continue to
afford the Compensation Committee the ability to design compensatory awards that are responsive to our needs, and it authorizes this same
variety of award types designed to advance our interests and long-term success by encouraging stock ownership among our employees
(including officers) and those of our subsidiaries. Shareholder approval of the 2023 Employee Plan would constitute approval of 2,025,000
common shares for use under the 2023 Employee Plan, and we would no longer have available common shares remaining available under
the 2015 Employee Plan as of the effective date of the 2023 Employee Plan, as further described below.
The Board recommends that you vote to approve the 2023 Employee Plan. If the 2023 Employee Plan is approved by our shareholders at the
Annual Meeting, it will be effective as of the date of the Annual Meeting, and no further grants will be made on or after such date under the
2015 Employee Plan. Outstanding awards under the 2015 Employee Plan will, however, continue in effect in accordance with their terms. In
the event that our shareholders do not approve the 2023 Employee Plan, then it will not become effective, no awards will be granted under
the 2023 Employee Plan, and the 2015 Employee Plan will continue in accordance with its terms as previously approved by our shareholders.
The following summary of the material provisions of the 2023 Employee Plan is not intended to be exhaustive and is qualified in its entirety by
the terms of the 2023 Employee Plan, a copy of which is set forth as Appendix B to this Proxy Statement.
WHY WE BELIEVE YOU SHOULD VOTE FOR PROPOSAL 5
The 2023 Employee Plan authorizes the Compensation Committee to provide equity-based compensation in the form of option rights (or
stock options), stock appreciation rights (or SARs), restricted shares, restricted stock units (or RSUs), performance shares, performance
units, dividend equivalents and certain other cash and stock or stock-based awards as described in the 2023 Employee Plan. The purposes
of these awards is to attract and retain officers and other employees (and those of our subsidiaries), certain non-employees who perform
employee functions and certain consultants, and to provide such persons incentives and rewards for performance. Some of the key features
of the 2023 Employee Plan that reflect our commitment to effective management of equity and incentive compensation are set forth below.
We believe our future success depends in part on our ability to attract, motivate and retain highly qualified employees. The ability to provide
equity-based and incentive-based awards under the 2023 Employee Plan is critical to achieving this success. We would be at a distinct
competitive disadvantage if we could not use share-based awards to recruit and compensate our employees.
The use of our common shares as part of our compensation program is important because equity-based awards are an essential component
of our compensation program for key employees, as they help link compensation with long-term shareholder value creation and reward
participants based on service and/or performance.
As of February 24, 2023, only 462,318 shares remained available for issuance under the 2015 Employee Plan. If the 2023 Employee Plan
is approved, these shares would no longer be available for issuance. If the 2023 Employee Plan is not approved, we may be compelled to
increase the cash component of our employee compensation. This approach may not necessarily align employee compensation interests with
the investment interests of our shareholders. Replacing equity awards with cash would also increase cash compensation expense and use
cash that could potentially be better utilized.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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The following includes aggregated information regarding our view of the overhang and dilution associated with the 2015 Employee Plan, and
the potential dilution associated with the 2023 Employee Plan. Please note that we also are seeking approval for shares under our 2023 Stock
Plan for Non-Employee Directors, as described below in Proposal 6, and you may want to take the information set forth in Proposal 6 into
consideration when evaluating this Proposal 5 to fully determine the consequences of both proposed share requests. The information below is
as of February 24, 2023. As of that date, there were approximately 57,607,457 common shares outstanding:
• Outstanding full-value awards (RSUs and performance shares based on maximum performance): 613,786 shares (approximately 1.07%
of our outstanding common shares);
• Outstanding stock options: 1,184,866 shares (approximately 2.06% of our outstanding common shares) (outstanding stock options have
a weighted average exercise price of $100.20 and a weighted average remaining term of 6.3 years);
• In summary, total common shares subject to outstanding awards, as described above (full-value awards and stock options): 1,798,652
shares (approximately 3.12% of our outstanding common shares, reflecting the simple dilution of the holders of common shares);
• Total common shares available for future awards under the 2015 Employee Plan: zero shares (approximately 0% of our outstanding
common shares) (this is because no further grants will be made under the 2015 Employee Plan upon the effective date of the 2023
Employee Plan; further, any grants under the 2015 Employee Plan after February 24, 2023 will reduce the number of shares requested
under the 2023 Employee Plan, as described below);
• Considering the 2015 Employee Plan as described above, the total number of common shares subject to outstanding awards (1,798,652
shares) represents a current overhang percentage of approximately 3.12% (in other words, the potential dilution of the holders of
common shares represented by the 2015 Employee Plan);
• Proposed common shares available for awards under the 2023 Employee Plan: 2,025,000 shares (approximately 3.52% of our
outstanding common shares - this percentage reflects the initial simple dilution of the holders of common shares that would occur if the
2023 Employee Plan is approved); however, any grants under the 2015 Employee Plan after February 24, 2023 will reduce the number of
shares requested under the 2023 Employee Plan on a share-for-share basis and
• The total common shares subject to outstanding awards as of February 24, 2023 (1,798,652 shares), plus the proposed common shares
available for future awards under the 2023 Employee Plan (2,025,000 shares, assuming no grants under the 2015 Employee Plan after
February 24, 2023), represent an approximate total overhang of 3,823,652 shares (approximately 6.64%) under the 2023 Employee Plan
(this percentage reflects the total fully diluted overhang).
Based on the closing price on the NASDAQ Stock Market for our common shares on February 24, 2023 of $165.91 per share, the aggregate
market value as of February 24, 2023 of the 2,025,000 shares requested for issuance under the 2023 Employee Plan was $335,967,750. In
2020, 2021 and 2022, we granted awards under the 2015 Employee Plan covering 394,922 shares, 301,821 shares and 275,190 shares,
respectively. Based on our basic weighted average common shares outstanding for those periods of 59,633,000, 59,309,000 and 58,030,000,
respectively, for the 2020-2022 period, our average run rate, not taking into account forfeitures, was 0.55% (the run rates for these individual
periods were 0.66% for 2020, 0.51% for 2021, and 0.47% for 2022).
In determining the number of shares to request for approval under the 2023 Employee Plan, our management team worked with Willis Towers
Watson, our compensation consultant, and the Compensation Committee to evaluate a number of factors, including our recent share usage
and criteria expected to be utilized by institutional proxy advisory firms in evaluating our proposal for the 2023 Employee Plan.
If the 2023 Employee Plan is approved, we intend to utilize the shares authorized under the 2023 Employee Plan to continue our practice of
incentivizing key individuals through annual or off-cycle equity grants. We currently anticipate that the shares requested in connection with
the approval of the 2023 Employee Plan will last about 6 years, based on our historical grant rates and the approximate current stock price,
but could last for a different period of time if actual practice does not match historical rates or our stock price changes materially. As noted in
“2023 Employee Plan Highlights” and elsewhere below, our Compensation Committee would retain full discretion under the 2023 Employee
Plan to determine the number and amount of awards to be granted under the 2023 Employee Plan, subject to the terms of the 2023 Employee
Plan, and future benefits that may be received by participants under the 2023 Employee Plan are not determinable at this time.
We believe that we have demonstrated a commitment to thoughtful and responsible equity compensation practices. We recognize that equity
compensation awards dilute shareholder equity, so we have carefully managed our equity incentive compensation. Our equity compensation
practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been disciplined
and mindful of shareholder interests.
In evaluating this Proposal 5, shareholders should consider all of the information in this Proposal 5.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
2023 EMPLOYEE PLAN HIGHLIGHTS
Administration. The 2023 Employee Plan will in general be administered by the Compensation Committee (or its successor), or any other
committee of the Board designated by the Board to administer the 2023 Employee Plan. The Compensation Committee may delegate its
authority under the 2023 Employee Plan to a subcommittee. The Compensation Committee or the subcommittee may delegate to one or
more of its members or to one or more of our officers, agents or advisors, administrative duties or powers, and may authorize one or more
officers to do one or both of the following (subject to certain limitations described in the 2023 Employee Plan):
• designate employees to receive awards under the 2023 Employee Plan; and
• determine the size of any such awards.
Any interpretation, construction and determination by the Compensation Committee of any provision of the 2023 Employee Plan, or of any
agreement, notification or document evidencing the grant of awards under the 2023 Employee Plan, will be final and conclusive. The
Compensation Committee is authorized to take appropriate action under the 2023 Employee Plan subject to the express limitations contained
in the 2023 Employee Plan.
Reasonable 2023 Employee Plan Limits. Subject to adjustment as described in the 2023 Employee Plan, total awards under the 2023
Employee Plan are limited to 2,025,000 shares, minus (as of the effective date of the 2023 Employee Plan) one share for every one share
subject to an award granted under the 2015 Employee Plan between February 24, 2023 and such effective date, plus any shares made
available under the 2023 Employee Plan as described below. These shares may be shares of original issuance or treasury shares or a
combination of the foregoing. If approved by our shareholders, the 2023 Employee Plan will become effective and no further awards will be
made under the 2015 Employee Plan.
The 2023 Employee Plan also provides that, subject to adjustment as described in the 2023 Employee Plan:
• the aggregate number of common shares actually issued or transferred upon the exercise of incentive stock options, or ISOs, will not
exceed 2,025,000 common shares;
• no participant will be granted stock options and/or SARs, in the aggregate, for more than 500,000 common shares during any
calendar year;
• no participant will be granted awards of restricted shares, RSUs, performance shares and/or other stock-based awards, in the
aggregate, for more than 500,000 common shares during any calendar year;
• no participant in any calendar year will receive awards of performance units and/or other awards payable in cash having an aggregate
maximum value as of their respective grant dates in excess of $5,000,000; and
• awards that do not comply with the applicable minimum one-year vesting period requirement provided for in the 2023 Employee Plan (as
further described below) many not be granted with respect to more than 5% of the maximum number of common shares available under
the 2023 Employee Plan.
Allowances for Conversion Awards and Assumed Plans. Subject to the 2023 Employee Plan’s share counting rules, common shares covered
by awards granted under the 2023 Employee Plan will not be counted as used unless and until the shares are actually issued or transferred.
However, common shares issued or transferred under awards granted under the 2023 Employee Plan in substitution for or conversion of, or
in connection with an assumption of, stock options, SARs, restricted shares, RSUs or other stock or stock-based awards held by awardees of
an entity engaging in a corporate acquisition or merger transaction with us or any of our subsidiaries will not count against (or be added back
to) the aggregate share limit or other 2023 Employee Plan limits described above. Additionally, shares available under certain plans that we
or our subsidiaries may assume in connection with corporate transactions from another entity may be available for certain awards under the
2023 Employee Plan, under circumstances further described in the 2023 Employee Plan, but will not count against the aggregate share limit
or other 2023 Employee Plan limits described above.
Limited Share Recycling Provisions. Generally, the aggregate number of common shares available under the 2023 Employee Plan will be
reduced by one common share for every one common share subject to an award granted under the 2023 Employee Plan. If any common
shares issued or transferred pursuant to an award granted under the 2023 Employee Plan are forfeited, or an award granted under the 2023
Employee Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part) (or if after February 24, 2023, any common shares
subject to an award granted under the 2015 Employee Plan are forfeited, or an award granted under the 2015 Employee Plan is cancelled or
forfeited, expires, or is settled for cash (in whole or in part)), the common shares issued or transferred pursuant to, or subject to, such award
(as applicable) will, to the extent of such cancellation, forfeiture, expiration, or cash settlement, again be available for issuance or transfer as
described in the 2023 Employee Plan. The following common shares will not be added back to the aggregate share limit under the 2023
Employee Plan: (1) shares tendered or otherwise used in payment of an option’s exercise price; (2) shares withheld or otherwise used by
us to satisfy tax withholding obligations; and (3) shares that are repurchased by us with stock option proceeds. Further, all common shares
covered by SARs that are exercised and settled in shares, whether or not all common shares covered by the SARs are actually issued to the
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
participant upon exercise, will be considered issued or transferred pursuant to the 2023 Employee Plan. If a participant elects to give up the
right to receive compensation in exchange for common shares based on fair market value, such common shares will not count against the
aggregate share limit under the 2023 Employee Plan.
Minimum Vesting Periods/Double-Trigger Change in Control. The 2023 Employee Plan provides that, except for awards regarding up to an
aggregate of 5% of the maximum number of common shares that may be issued or transferred under the 2023 Employee Plan, no award
may have a vesting period of less than one year. Further, in the event of a Change in Control (as defined in the 2023 Employee Plan), unless
otherwise determined by the Compensation Committee or set forth in an award agreement, or as provided for in an individual severance or
employment agreement:
• If a Replacement Award (as defined in the 2023 Employee Plan) is not provided to replace or adjust an outstanding award, and the
awardee remains continuously employed by us until the Change in Control, then then outstanding Stock Options and SARs will become
fully vested and exercisable and outstanding restricted shares, RSUs, performance units, performance shares and other stock-based
awards will become fully vested (for performance awards, based on the greater of target and actual performance through the most
recent date prior to the Change in Control plus expected performance for the rest of the performance period) (we refer to this level of
payment as the CIC payout level);
• If the awardee was a party to a severance agreement with us providing for benefits in connection with the Change in Control when he or
she is terminated, and the awardee’s employment was terminated by us (1) other than for Cause (as defined in the 2023 Employee Plan)
or pursuant to an individually negotiated arrangement after the award’s date of grant, (2) following the commencement of any discussion
with a third person that resulted in the Change in Control and (3) within twelve months prior to the Change in Control, then outstanding
Stock Options and SARs will become fully vested and exercisable and outstanding restricted shares, RSUs, performance units,
performance shares and other stock-based awards will become fully vested (for performance awards, at the CIC payout level); and
• Upon termination of the awardee’s employment with us or any successor for Good Reason (as defined in the 2023 Employee Plan), a
termination of the awardee’s employment by us or any successor other than a termination for Cause (as defined in the 2023 Employee
Plan), or the awardee’s death or disability, in each case, occurring at or during two years after the Change in Control, then all
Replacement Awards will become fully vested as described in the 2023 Employee Plan, and all stock options and SARs held
immediately before such termination of employment that were held as of the Change in Control or that constitute Replacement Awards
will become fully exercisable and will remain exercisable until the expiration of the stated term of such award.
No Repricing Without Shareholder Approval. We have never repriced underwater stock options or SARs, and the repricing of options and
SARs (outside of certain corporate transactions or adjustment events described in the 2023 Employee Plan) is prohibited without shareholder
approval under the 2023 Employee Plan.
Change in Control Definition. The 2023 Employee Plan includes a definition of “Change in Control.” Generally, unless otherwise prescribed by
the Compensation Committee in an award agreement, a Change in Control will generally be deemed to have occurred if:
• a person or group (excluding certain purchases directly from us or by us or our subsidiaries, by our or our subsidiaries’ employee benefit
plans or related trusts, or by any person or group in a transaction that constitutes a “business combination” as described in the second-
to-last bullet of this paragraph) acquires beneficial ownership of 30% or more of the combined voting power of our outstanding securities
entitled to vote generally in the election of our directors (which we refer to as voting power), excluding certain inadvertent purchases or
ownership levels as described in the definition in the 2023 Employee Plan;
• individuals who as of the effective date of the 2023 Employee Plan constituted our entire Board (which we refer to as the incumbent Board)
cease to constitute at least a majority of our Board, unless their replacements are approved as described in the 2023 Employee Plan;
• we consummate a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of our assets, or the
acquisition of the stock or assets of another corporation, or other transaction (which we refer to as a business combination) unless
generally (1) owners of our voting power before the business combination generally own a majority of the outstanding voting power of the
resulting entity, (2) no person or group (excluding certain entities) beneficially owns 30% or more of the outstanding voting power of the
resulting entity, and (3) at least a majority of the board of the resulting entity were members of our incumbent Board when the initial
agreement for the business combination was signed or our Board approved the business combination, if earlier; or
• our shareholders approve a complete liquidation or dissolution of our company, except pursuant to a business combination discussed in
the immediately preceding bullet of this paragraph.
Other Features.
• The 2023 Employee Plan also provides that, except with respect to converted, assumed or substituted awards as described in the 2023
Employee Plan, no stock options or SARs will be granted with an exercise or base price less than the fair market value of our common
shares on the date of grant.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
SUMMARY OF OTHER MATERIAL TERMS OF THE 2023 EMPLOYEE PLAN
Shares Available Under the 2023 Employee Plan. Subject to adjustment as provided in the 2023 Employee Plan and the 2023 Employee Plan
share counting rules, the number of common shares that may be issued or transferred:
• upon the exercise of stock options or SARs;
• as restricted shares and released from substantial risks of forfeiture;
• in payment of RSUs;
• in payment of performance shares or performance units that have
been earned;
• as stock or other stock-based awards; or
• in payment of dividend equivalents;
will not exceed in the aggregate 2,025,000 common shares, plus any shares subtracted from or added (or added back) into the 2023
Employee Plan as described above.
Eligibility. Our and our subsidiaries’ officers and other employees (estimated to be 12,000 persons as of February 24, 2023) may be
selected by the Compensation Committee to receive awards under the 2023 Employee Plan. Any person who provides services to us or a
subsidiary that are equivalent to those typically provided by an employee (estimated to be 100 persons as of February 24, 2023) may also
be eligible to participate in the 2023 Employee Plan, subject to the terms of the 2023 Employee Plan. Consultants to us or our subsidiaries
may also be eligible to participate in the 2023 Employee Plan (no estimated participants as of February 24, 2023). The Compensation
Committee generally determines which persons will receive awards and the number of shares subject to or amount of such awards. The
basis for participation in the 2023 Employee Plan by eligible persons is the selection of such persons by the Compensation Committee (or
its authorized delegate) in its discretion.
Option Rights (Stock Options). The Compensation Committee may grant stock options that entitle the optionee to purchase a specified
number of common shares at a price (except with respect to converted, assumed or substituted awards as described in the 2023
Employee Plan) not less than market value per share on the date of grant. The option price is payable:
• in cash or by check or wire transfer at the time of exercise,
• by the transfer to us of common shares owned by the participant
having a value at the time of exercise equal to the option price,
• by a “net exercise” arrangement by which we withhold common
shares otherwise issuable upon exercise of the stock option,
• by a combination of such payment methods, or
• by such other method as may be approved by the Compensation
Committee.
To the extent permitted by law, the Compensation Committee may permit payment of the exercise price in a broker-assisted process by
which the proceeds of a sale through a broker of some or all of the option shares are forwarded to us in payment of the exercise price.
Stock options will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Employee Plan, as
the Compensation Committee may approve. No stock option may be exercisable more than ten years from the date of grant. Each grant will
specify the period of continuous service that is necessary before the stock options become exercisable. Notwithstanding the 2023 Employee
Plan minimum vesting provisions, the vesting of stock options may be accelerated in the event of the awardee’s retirement, death or disability,
in connection with a Change in Control or as otherwise provided in the applicable award agreement. Any grant of stock options may specify
management objectives (as described below) that must be achieved as a condition to exercising such rights. Stock options granted pursuant
to the 2023 Employee Plan, which may be incentive stock options under the Code or non-qualified stock options, as described in the 2023
Employee Plan, may not provide for any dividends or dividend equivalents thereon.
SARs. A SAR is a right, exercisable by the surrender of a related stock option (if granted in tandem with stock options) or by itself (if granted as a
free-standing SAR), to receive from us an amount equal to 100%, or such lesser percentage as the Compensation Committee may determine, of
the spread between the base price (or option exercise price if a tandem SAR) and the value of our common shares on the date of exercise. Any
grant may specify that the amount payable on exercise of a SAR may be paid by us in cash, in common shares, or in any combination of the two.
SARs will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Employee Plan, as the
Compensation Committee may approve. Any grant of a tandem SAR will provide that it may be exercised only at a time when the related stock
option is also exercisable, at a time when the spread is positive, and by surrender of the related stock option for cancellation. Successive
grants of a tandem SAR may be made to the same participant regardless of whether any tandem SARs previously granted to the participant
remain unexercised. Each grant will specify in respect of each free-standing SAR a base price that, except with respect to converted, assumed
or substituted awards as described in the 2023 Employee Plan, may not be less than the market value per share of a common share on the
date of grant. Successive grants may be made to the same participant regardless of whether any free-standing SARs previously granted to
the participant remain unexercised. No free-standing SAR granted under the 2023 Employee Plan may be exercised more than ten years from
the date of grant. Each grant will specify the period of continuous service with us or any subsidiary that is necessary before the SARs become
exercisable. Notwithstanding the 2023 Employee Plan minimum vesting provisions, the vesting of SARs may be accelerated in the event of the
awardee’s retirement, death or disability, in connection with a Change in Control or as otherwise provided in the applicable award agreement.
Any grant of SARs may specify management objectives (as described below) that must be achieved as a condition to exercising such SARs.
SARs granted pursuant to the 2023 Employee Plan may not provide for any dividends or dividend equivalents thereon.
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Restricted Shares. A grant of restricted shares involves the immediate transfer by us to a participant of ownership of a specific number of
common shares in consideration of the performance of services. The participant is entitled immediately to voting, dividend and other ownership
rights in such common shares, but subject to a substantial risk of forfeiture and restrictions on transfer as described below. The transfer may be
made without additional consideration or in consideration of a payment by the participant that is less than current market value at the date of
grant, as the Compensation Committee may determine.
Restricted shares that vest only upon the passage of time must be subject to a “substantial risk of forfeiture” within the meaning of Section 83
of the Internal Revenue Code for a period as the Compensation Committee may determine. Each such grant or sale of restricted shares will
provide that during or after the period for which such substantial risk of forfeiture is to continue, the transferability of the restricted shares will
be prohibited or restricted in the manner and to the extent prescribed by the Compensation Committee at the date of grant (which restrictions
may include, without limitation, rights of repurchase or first refusal or provisions subjecting the restricted shares to a continuing substantial
risk of forfeiture in the hands of any transferee). Notwithstanding the 2023 Employee Plan minimum vesting provisions, the vesting of
restricted shares may be accelerated in the event of the awardee’s retirement, death or disability, in connection with a Change in Control or as
otherwise provided in the applicable award agreement.
Any grant of restricted shares may specify management objectives that, if achieved, will result in termination or early termination of the
restrictions applicable to such shares.
Grants of restricted shares will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Employee
Plan, as the Compensation Committee may approve. Any grant or sale of restricted shares may require that any or all dividends or other
distributions paid with respect to the restricted shares during the period of restriction be automatically deferred and reinvested in additional
restricted shares. Dividends and dividend equivalents shall be subject to the same restrictions as the applicable portion of the underlying award.
Restricted Stock Units (RSUs). A grant of RSUs constitutes an agreement by us to deliver common shares or cash to the participant in the
future in consideration of the performance of services, but subject to the fulfillment of such conditions during the restriction period as the
Compensation Committee may specify. During the applicable restriction period, the participant will have no rights of ownership in the common
shares deliverable upon payment of the RSUs and will have no right to vote the common shares. The Compensation Committee may, at the
date of grant, authorize the payment of dividend equivalents on RSUs, either in cash or in additional common shares. However, dividends or
other distributions on common shares underlying RSUs will be subject to the same restrictions as the applicable portion of the underlying award.
RSUs will have a restriction period as determined by the Compensation Committee. Notwithstanding the 2023 Employee Plan minimum
vesting provisions, the vesting of RSUs may be accelerated in the event of the awardee’s retirement, death or disability, in connection with a
Change in Control or as otherwise provided in the applicable award agreement. Any grant of RSUs may specify management objectives that,
if achieved, will result in termination or early termination of the restriction period applicable to such common shares.
RSUs will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Employee Plan, as the
Compensation Committee may approve. Each grant or sale of RSUs may be made without additional consideration or in consideration of a
payment by such participant that is less than the market value per share of common shares at the date of grant. Each grant or sale of RSUs
will also specify the time and manner of payment of the RSUs that have been earned and will specify that the amount payable with respect to
such grant will be paid by us in common shares or cash, or a combination of the two.
Performance Shares and Performance Units. A performance share is the equivalent of one common share and a performance unit is the
equivalent of $1.00 or such other value as determined by the Compensation Committee. A participant may be granted any number of
performance shares or performance units, subject to the limitations set forth above. The participant will be given one or more management
objectives to meet within a specified period, or Performance Period. The specified Performance Period will be a period of time as determined
by the Compensation Committee at grant. Notwithstanding the 2023 Employee Plan minimum vesting provisions, the vesting of performance
shares and performance units may be accelerated in the event of the awardee’s retirement, death or disability, in connection with a Change in
Control or as otherwise provided in the applicable award agreement.
Each grant of performance shares or performance units may specify, in respect of the relevant management objectives, a minimum acceptable
level or levels of achievement and may set forth a formula for determining the number of performance shares or performance units that will
be earned if performance is at or above the minimum or threshold level or levels, or is at or above the target level or levels, but falls short of
maximum achievement of the specified management objectives.
To the extent earned, performance shares or performance units will be paid to the participant at the time and in the manner determined by the
Compensation Committee. Any grant may specify that the amount payable with respect thereto may be paid by us in cash, common shares,
in restricted shares or RSUs, or any combination thereof. The Compensation Committee may, at the date of grant of performance shares,
provide for the payment of dividend equivalents to a participant either in cash or in additional common shares, subject to the same restrictions
as the applicable portion of the underlying award.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
Performance shares and performance units will be evidenced by an award agreement containing such terms and provisions, consistent
with the 2023 Employee Plan, as the Compensation Committee may approve. Each grant will specify the amount of performance shares or
performance units to which it pertains, which number may be subject to adjustment to reflect changes in compensation or other factors.
Other Awards. The Compensation Committee may, subject to limitations under applicable law, grant to any participant shares or such other
awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, common
shares or factors that may influence the value of such shares, including, without limitation:
• convertible or exchangeable debt securities;
• other rights convertible or exchangeable into common shares;
• purchase rights for common shares;
• awards with value and payment contingent upon our performance or
the performance of specified subsidiaries, affiliates or other
business units of ours or any other factors designated by the
Compensation Committee; and
• awards valued by reference to the book value of common shares or
the value of securities of, or the performance of specified
subsidiaries or affiliates or other business units of ours.
The Compensation Committee will determine the terms and conditions of the other awards. Common shares delivered pursuant to an
award in the nature of a purchase right will be purchased for such consideration, paid for at such time, by such methods, and in such
forms, including, without limitation, common shares, other awards, notes or other property, as the Compensation Committee will determine.
Cash awards, as an element of or supplement to any other award granted under the 2023 Employee Plan, may also be granted.
The Compensation Committee may grant shares as a bonus, or may grant other awards in lieu of our obligations to pay cash or deliver
other property under the 2023 Employee Plan or under other plans or compensatory arrangements, subject to terms as determined by
the Compensation Committee in compliance with Section 409A of the Code. Notwithstanding the 2023 Employee Plan minimum vesting
provisions, the vesting of other awards may be accelerated in the event of the awardee’s retirement, death or disability, in connection with a
Change in Control or as otherwise provided in the applicable award agreement.
Management Objectives. The 2023 Employee Plan requires that the Compensation Committee establish “management objectives” for
purposes of performance shares and performance units. When so determined by the Compensation Committee, stock options, SARs,
restricted shares, RSUs, dividend equivalents or other awards under the 2023 Employee Plan may also specify management objectives.
Management objectives may be described in terms of company-wide objectives or objectives that are related to the performance of the
individual participant or of one or more of the subsidiaries, divisions, departments, regions, functions or other organizational units within
the company or its subsidiaries. The management objectives may be made relative to the performance of other companies or subsidiaries,
divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index
or one or more of the performance criteria themselves.
Amendments. Our Board may at any time and from time to time amend the 2023 Employee Plan in whole or in part. However, if an
amendment to the 2023 Employee Plan must be approved by our shareholders in order to comply with applicable law or the rules of the
NASDAQ Stock Market (or our other applicable securities exchange), then such amendment will be subject to shareholder approval and will
not be effective until such approval has been obtained. The Compensation Committee may amend the terms of any awards granted under the
2023 Employee Plan prospectively or retroactively. Except in connection with certain corporate transactions described in the 2023 Employee
Plan, no amendment will materially impair the rights of any participant without his or her consent. Our Board may, in its discretion, terminate
the 2023 Employee Plan at any time. Termination of the 2023 Employee Plan will not affect the rights of participants or their successors under
any outstanding awards and not exercised in full on the date of termination.
No Repricing of Stock Options or SARs Without Shareholder Approval. Except in connection with certain corporate transactions described in
the 2023 Employee Plan, the terms of outstanding awards may not be amended to reduce the option price of outstanding stock options or the
base price of outstanding SARs, or cancel outstanding stock options or SARs in exchange for cash, other awards or stock options or SARs
with an option price or base price, as applicable, that is less than the option price of the original stock options or base price of the original
SARs, as applicable, without shareholder approval. This restriction is intended to prohibit the repricing of “underwater” stock options and SARs
and will not be construed to prohibit the adjustments in connection with certain corporate transactions provided for in the 2023 Employee Plan.
This prohibition may not be amended without approval by our shareholders.
Transferability. Except as otherwise determined by the Compensation Committee, no stock option, SAR, restricted share, RSU, performance
share, performance unit, or other award granted under the 2023 Employee Plan, or dividend equivalents paid with respect to awards made under
the 2023 Employee Plan, will be transferable by the participant except pursuant to a domestic relations order (that contains any information
required by us to effectuate the transfer) or by will or the laws of descent and distribution, and in no event shall any such award granted under the
2023 Employee Plan be transferred for value. Except as otherwise determined by the Compensation Committee, stock options and SARs will be
exercisable during the participant’s lifetime only by him or her or, in the event of the participant’s legal incapacity to do so, by his or her guardian
or legal representative acting on behalf of the participant in a fiduciary capacity under state law and/or court supervision. The Compensation
Committee may provide at the date of grant additional restrictions on transfer for certain common shares earned under the 2023 Employee Plan.
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Adjustments. The Compensation Committee shall make or provide for such adjustments in the numbers of common shares covered by outstanding
stock options, SARs, RSUs, performance shares and performance units granted under the 2023 Employee Plan and, if applicable, in the number
of common shares covered by other awards, in the option price and base price provided in outstanding stock options and SARs, in the kind of stock
covered by such awards and in the other terms, as the Compensation Committee, in its sole discretion, exercised in good faith, shall determine is
equitably required to prevent dilution or enlargement of the rights of participants or optionees that otherwise would result from:
• any stock dividend, stock split, combination of shares,
• any merger, consolidation, spin-off, split-off, spin-out, split-up,
recapitalization or other change in the capital structure of our
reorganization, partial or complete liquidation or other distribution of
company;
assets, issuance of rights or warrants to purchase securities; or
• any other corporate transaction or event having an effect similar to
these events or transactions.
However, such adjustments shall be made automatically, without the necessity of Compensation Committee action, on the customary
arithmetical basis in the case of any stock split, including a stock split effected by means of a stock dividend, and in the case of any other
dividend paid in out shares. Moreover, in the event of any such transaction or event or in the event of a change in control, the Compensation
Committee shall provide in substitution for any or all outstanding awards under the 2023 Employee Plan such alternative consideration
(including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and may require the surrender of all awards
so replaced in a manner that complies with Section 409A of the Internal Revenue Code.
In addition, for each stock option or SAR with an option price or base price greater than the consideration offered in connection with any such
termination or event or change in control, the Compensation Committee may in its discretion elect to cancel such stock option or SAR without
any payment to the person holding such stock option or SAR. The Compensation Committee shall also make or provide for such adjustments
in the total number of shares of common shares available under the 2023 Employee Plan, the per-person award limits expressed in shares
and any other share limits under the 2023 Employee Plan as the Compensation Committee, in good faith, may determine is appropriate
to reflect any transaction or event described above. However, any adjustment to the number of ISOs that may be granted under the 2023
Employee Plan will be made only if and to the extent that such adjustment would not cause any option intended to qualify as an ISO to fail to
so qualify. Adjustments do not need to be the same for all awardees.
Detrimental Activity and Recapture Provisions. Any award agreement may provide for the cancellation or forfeiture of an award or the
forfeiture and repayment of any gain related to an award, or other provisions intended to have a similar effect, upon terms and conditions
determined by the Compensation Committee, if a participant, either during (1) his or her employment or other service with us or a subsidiary
or (2) within a specific period after termination of employment or service, engages in any “detrimental activity” (as defined in such award
agreement). In addition, any award agreement may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to us
of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined
by the Compensation Committee from time to time or under Section 10D of the Securities Exchange Act of 1934, as amended, or the rules of
any national securities exchange or national securities association on which our common shares are traded.
Withholding Taxes. To the extent that we are required to withhold federal, state, local or foreign taxes in connection with any payment made
or benefit realized by a participant or other person under the 2023 Employee Plan, and the amounts available to us for such withholding
are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the participant or such other
person make arrangements satisfactory to us for payment of the balance of such taxes required to be withheld, which arrangements (in
the discretion of the Compensation Committee) may include relinquishment of a portion of such benefit or the delivery to us of our common
shares. In no event shall the market value of the common shares to be withheld and delivered to satisfy applicable withholding taxes in
connection with the benefit exceed the maximum amount of taxes required to be withheld.
Effective Date and Termination. The 2023 Employee Plan will be effective as of the date the 2023 Employee Plan is approved by our
shareholders (which we refer to as the Effective Date). No grants will be made under the 2015 Employee Plan on or after the Effective Date,
except that outstanding awards granted under the 2015 Employee Plan will continue unaffected following the Effective Date.
No grant will be made under the 2023 Employee Plan after April 19, 2033, which date is 10 years after the date on which our shareholders will
have an opportunity to approve the 2023 Employee Plan, but all grants made on or prior to such date will continue in effect thereafter subject
to the terms of the applicable award agreement and the terms of the 2023 Employee Plan.
We will not be required to issue any fractional common shares under the 2023 Employee Plan, but the Compensation Committee can either
eliminate fractional common shares for no payment or settle fractional common shares in cash.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
Stock-Based Awards in Substitution for Options or Other Awards Granted by Another Company. Awards may be granted under the 2023
Employee Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights,
restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition
or merger transaction with us or any of our subsidiaries. Any conversion, substitution or assumption will be effective as of the close of the
merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Internal Revenue
Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply
with other specific terms of the 2023 Employee Plan, and may account for common shares substituted for the securities covered by the
original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original
awards, adjusted to account for differences in stock prices in connection with the transaction.
In the event that a company acquired by us or any of our subsidiaries or with which we or any subsidiary merges has shares available under
a pre-existing plan previously approved by shareholders and not adopted in contemplation of such acquisition or merger, the shares available
for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for
awards made after such acquisition or merger under the 2023 Employee Plan. However, awards using such available shares may not be
made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and
may only be made to individuals who were not our employees or directors or employees or directors of any of our subsidiaries prior to the
acquisition or merger.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of some of the federal income tax consequences of certain transactions under the 2023 Employee Plan
based on federal income tax laws in effect. This summary, which is presented for the information of shareholders considering how to vote
on this proposal and not for 2023 Employee Plan participants, is not intended to be complete and does not describe federal taxes other than
income taxes (such as Medicare and Social Security taxes), or state local or foreign tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
Non-Qualified Stock Options. In general: (1) no income will be recognized by an optionee at the time a non-qualified stock option is granted;
(2) at the time of exercise of a non-qualified stock option, ordinary income will be recognized by the optionee in an amount equal to the
difference between the option price paid for the common shares and the fair market value of the common shares, if unrestricted, on the date
of exercise; and (3) at the time of sale of common shares acquired pursuant to the exercise of a non-qualified stock option, appreciation (or
depreciation) in value of the common shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss)
depending on how long the common shares have been held.
Incentive Stock Options (ISOs). No income generally will be recognized by an optionee upon the grant or exercise of an ISO. If common
shares are issued to the optionee pursuant to the exercise of an ISO, and if no disqualifying disposition of such common shares is made by
such optionee within two years after the date of grant or within one year after the transfer of such common shares to the optionee, then upon
sale of such common shares, any amount realized in excess of the option price will be taxed to the optionee as a long-term capital gain and
any loss sustained will be a long-term capital loss.
If common shares acquired upon the exercise of an ISO are disposed of prior to the expiration of either holding period described above, the
optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of
such common shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the
option price paid for such common shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-
term capital gain (or loss) depending on the holding period.
SARs. No income will be recognized by a participant in connection with the grant of a tandem SAR or a free-standing SAR. When the SAR
is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the
amount of cash received and the fair market value of any unrestricted common shares received on the exercise.
Restricted Shares. The recipient of restricted shares generally will be subject to tax at ordinary income rates on the fair market value of
the restricted shares (reduced by any amount paid by the participant for such restricted shares) at such time as the common shares are
no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Internal Revenue Code (which we refer to as the
Restrictions). However, a recipient may instead elect under Section 83(b) of the Internal Revenue Code within 30 days of the date of transfer
of the common shares to have taxable ordinary income on the date of transfer of the shares equal to the excess of the fair market value of
such common shares (determined without regard to the Restrictions) over the purchase price, if any, of such restricted shares. If a Section
83(b) election has not been made, any dividends received with respect to restricted shares that is subject to the Restrictions generally will be
treated as compensation that is taxable as ordinary income to the participant.
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RSUs. No income generally will be recognized upon the award of RSUs. The recipient of a RSU award generally will be subject to tax at
ordinary income rates on the fair market value of unrestricted common shares on the date that such shares are transferred to the participant
under the award (reduced by any amount paid by the participant for such RSUs), and the capital gains/loss holding period for such shares will
also commence on such date.
Performance Shares and Performance Units. No income generally will be recognized upon the grant of performance shares or performance
units. Upon payment in respect of the earn-out of performance shares or performance units, the recipient generally will be required to include
as taxable ordinary income in the year of receipt an amount equal to the amount of cash received and the fair market value of any unrestricted
common shares received.
TAX CONSEQUENCES TO US OR OUR SUBSIDIARIES
To the extent that a participant recognizes ordinary income in the circumstances described above, we or the subsidiary for which the
participant performs services will be entitled to a corresponding deduction provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G
of the Internal Revenue Code and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) of the
Internal Revenue Code.
NEW PLAN BENEFITS
It is not possible to determine the specific amounts and types of awards that may be awarded in the future under the 2023 Employee Plan
because the grant and actual settlement of awards under the 2023 Employee Plan are subject to the discretion of the plan administrator.
REGISTRATION WITH THE SEC
We intend to file a Registration Statement on Form S-8 relating to the issuance of common shares under the 2023 Employee Plan with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the 2023
Employee Plan by our shareholders.
MAJORITY VOTE NEEDED
Approval of Proposal 5 requires the affirmative vote of the holders of a majority of Lincoln Electric common shares present or represented by
Proxy at the Annual Meeting and entitled to vote on the matter when a quorum is present. Abstentions will have the effect of a vote “against”.
Broker non-votes will not be considered entitled to vote on this item and, therefore, will not be counted in determining the results. Unless
otherwise directed, shares represented by proxy will be voted FOR the approval of Proposal 5.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
2023 EQUITY AND INCENTIVE COMPENSATION PLAN
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✔
The Board recommends a vote FOR this proposal.
Our Board recommends that shareholders vote “FOR” the approval of Lincoln Electric’s 2023
Stock Plan for Non-Employee Directors.
PROPOSAL 6
To approve Lincoln
Electric’s 2023 Stock
Plan for Non-Employee
Directors
On February 15, 2023, upon the recommendation of the Nominating and Corporate Governance Committee (which we refer to as the
Nominating Committee), our Board unanimously approved and adopted the 2023 Stock Plan for Non-Employee Directors (which we refer
to as the 2023 Director Plan), subject to the approval of our shareholders at the Annual Meeting. If approved by our shareholders, the 2023
Director Plan will succeed our 2015 Stock Plan for Non-Employee Directors, as amended (which we refer to as the 2015 Director Plan). The
2015 Director Plan has shares remaining available for new awards as of the date of this proxy statement, but if the 2023 Director Plan is
approved by our shareholders, no further grants will be made under the 2015 Director Plan. You are being asked to approve the 2023 Director
Plan. Our shareholders previously approved our 2015 Director Plan, which currently allows us to grant stock options, restricted shares and
restricted stock units to our non-employee directors. Shareholder approval of the 2023 Director Plan would constitute approval of 200,000
common shares for use under the 2023 Director Plan, and we would no longer have available common shares remaining available under
the 2015 Director Plan as of the effective date of the 2023 Director Plan, as further described below. The new share request under the 2023
Director Plan is subject to adjustment, including under the 2023 Director Plan share counting rules.
The Board recommends that you vote to approve the 2023 Director Plan. If the 2023 Director Plan is approved by our shareholders at the
Annual Meeting, it will be effective as of the date of the Annual Meeting, and no further grants will be made on or after such date under the 2015
Director Plan. Outstanding awards under the 2015 Director Plan will, however, continue in effect in accordance with their terms. In the event
that our shareholders do not approve the 2023 Director Plan, then it will not become effective, no awards will be granted under the 2023
Director Plan, and the 2015 Director Plan will continue in accordance with its terms as previously approved by our shareholders.
The following summary of the material provisions of the 2023 Director Plan is not intended to be exhaustive and is qualified in its entirety by
the terms of the 2023 Director Plan, a copy of which is set forth as Appendix C to this Proxy Statement.
WHY WE BELIEVE YOU SHOULD VOTE FOR PROPOSAL 6
The 2023 Director Plan authorizes the Nominating Committee to provide equity-based compensation in the form of option rights (or stock
options), stock appreciation rights (or SARs), restricted shares, restricted stock units (or RSUs), dividend equivalents and certain other cash
and stock or stock-based awards. The purposes of these awards are to: encourage our non-employee directors to own our stock; align the
non-employee directors’ interests with those of our shareholders; provide non-employee directors with a vested interest in our attainment of
our financial goals; and provide financial incentives that will help attract and retain the most qualified non-employee directors. Some of the key
features of the 2023 Director Plan that reflect our commitment to effective management of equity and incentive compensation are set forth below.
We believe our future success depends in part on our ability to attract, motivate and retain highly qualified non-employee directors. The ability
to provide equity-based awards under the 2023 Director Plan is a critical component to achieving this success. We would be at a distinct
competitive disadvantage if we could not use equity-based awards to recruit, motivate and retain non-employee directors.
We also believe that equity compensation motivates non-employee directors to appropriately focus on actions that enhance shareholder value
because they will share in that value enhancement through improved share price performance. Our equity compensation also effectively
retains our non-employee directors and promotes a focus on sustained enhancement of shareholder value because our equity compensation
awards can be subject to vesting.
As of February 24, 2023, no more than 186,917 shares remained available for issuance under the 2015 Director Plan (all of which remained
available for issuance for restricted stock or RSU awards). All expected grants for our non-employee Directors have already been made under
the 2015 Director Plan, and thus no grants with respect to any of these 186,917 shares will be made if the 2023 Director Plan is approved
by our shareholders. If the 2023 Director Plan is not approved, we may be compelled to increase the cash component of our non-employee
director compensation, which may not necessarily align non-employee director interests with the investment interests of our shareholders as
well as the alignment provided by equity-based awards. Replacing equity awards with cash would also increase cash compensation expense
and use cash that could potentially be better utilized.
The following includes aggregated information regarding our view of the overhang and dilution associated with the 2015 Director Plan and
the potential dilution associated with the 2023 Director Plan. Please note that we also are seeking approval for shares under our 2023 Equity
and Incentive Compensation Plan as described above in Proposal 5, and you may want to take the information set forth in Proposal 5 into
consideration when evaluating this Proposal 6 to fully determine the consequences of both proposed share requests. The information below is
as of February 24, 2023. As of that date, there were approximately 57,607,457 common shares outstanding:
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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UNDER THE 2015 DIRECTOR PLAN:
• Outstanding stock options: covering zero common shares (0% of
our outstanding common shares);
• Considering the 2015 Director Plan as described above, the total
number of shares subject to outstanding awards under the 2015
• Outstanding full-value awards: 34,492 shares (0.06% of our
Director Plan (34,492 shares) represents a current overhang or
outstanding shares);
dilution to our shareholders of approximately 0.06%. Again, all
• Total shares subject to outstanding awards, as described above:
expected grants for our non-employee Directors have already been
34,492 shares (0.06% of our outstanding shares);
made under the 2015 Director Plan, and thus no grants with respect
• Total shares available for future awards under the 2015 Director
Plan: no more than 186,917 shares (0.32% of our outstanding
to any of such 186,917 shares available for future awards under the
2015 Director Plan will be made if the 2023 Director Plan is
shares); and
approved by our shareholders.
UNDER THE 2023 DIRECTOR PLAN:
• Proposed total shares available for issuance under the 2023 Director Plan: 200,000 shares (which represents a potential overhang or
dilution to our shareholders of approximately 0.34%).
TOTAL POTENTIAL OVERHANG OR DILUTION UNDER 2015 DIRECTOR PLAN AND PROPOSED 2023 DIRECTOR PLAN:
• The total shares subject to outstanding awards under the 2015 Director Plan, as of February 24, 2023 (34,492 shares), plus zero total
shares available for future awards under the 2015 Director Plan as of that date (this number is zero because all expected grants for our
non-employee Directors have already been made under the 2015 Director Plan, and thus no grants with respect to any of such 186,917
shares available for future awards under the 2015 Director Plan will be made if the 2023 Director Plan is approved by our shareholders),
plus the proposed shares available for issuance under the 2023 Director Plan (200,000 shares), represent a total potential overhang or
dilution of 234,492 shares or approximately 0.41%.
Based on the closing price on the NASDAQ Stock Market for our common shares on February 24, 2023 of $165.91 per share, the aggregate
market value as of February 24, 2023 of the 200,000 shares requested for issuance under the 2023 Director Plan was $33,182,000. In 2020,
2021 and 2022, we granted awards under the 2015 Director Plan covering 12,603 shares, 11,726 shares, and 9,756 shares, respectively.
Based on our basic weighted average common shares outstanding for those three years of 59,633,000, 59,309,000 and 58,030,000,
respectively, for the three-year period 2020-2022, our average run rate, not taking into account forfeitures, was 0.02% (our individual years’
run rates were 0.02% for 2020, 0.02% for 2021 and 0.02% for 2022).
In determining the number of shares to request for approval under the 2023 Director Plan, our management team worked with Willis Towers
Watson, our compensation consultant and the Nominating Committee to evaluate a number of factors including our recent share usage and
criteria expected to be utilized by certain stakeholders in evaluating our proposal for the 2023 Director Plan.
If the 2023 Director Plan is approved, we intend to utilize the shares authorized under the 2023 Director Plan to continue our practice of
incentivizing key individuals through annual or off-cycle equity grants. We currently anticipate that the shares requested in connection with the
approval of the 2023 Director Plan will last 10 years, based on our historical grant rates and the approximate current stock price, but could last
for a different period of time if actual practice does not match historical rates or our stock price changes materially. As noted in “2023 Director
Plan Highlights” and elsewhere below, our Nominating Committee would retain full discretion under the 2023 Director Plan to determine the
number and amount of awards to be granted under the 2023 Director Plan, subject to the terms of the 2023 Director Plan, and future benefits
that may be received by participants under the 2023 Director Plan are not determinable at this time.
We believe that we have demonstrated a commitment to thoughtful and responsible equity compensation practices. We recognize that equity
compensation awards dilute shareholder equity, so we have carefully managed our equity incentive compensation. Our equity compensation
practices are intended to be competitive and consistent with market practices, and we believe our historical share usage has been disciplined
and mindful of shareholder interests.
In evaluating this Proposal 6, shareholders should consider all of the information in this Proposal 6.
2023 DIRECTOR PLAN HIGHLIGHTS
Administration. The 2023 Director Plan will in general be administered by the Nominating Committee (or its successor), or any other
committee of the Board designated by the Board to administer the 2023 Director Plan. The Nominating Committee may delegate its authority
under the 2023 Director Plan to a subcommittee.
Reasonable 2023 Director Plan Limits. Subject to adjustment as described in the 2023 Director Plan, total awards under the 2023 Director
Plan are limited to 200,000 shares, plus any shares added (or added back) into the 2023 Director Plan as described below. These shares may
be shares of original issuance or treasury shares or a combination of the foregoing. If approved by our shareholders, the 2023 Director Plan
will become effective and no further awards will be made under the 2015 Director Plan.
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The 2023 Director Plan also provides that, subject to adjustment as described in the 2023 Director Plan:
• no participant will be granted common-share based awards, in the
• no participant will be granted cash-based awards having an
aggregate, for more than 13,000 common shares during any
aggregate maximum value in excess of $300,000.
calendar year; and
Allowances for Conversion Awards and Assumed Plans. Subject to the 2023 Director Plan’s share counting rules, common shares covered
by awards granted under the 2023 Director Plan will not be counted as used unless and until the shares are actually issued or transferred.
However, common shares issued or transferred under awards granted under the 2023 Director Plan in substitution for or conversion of, or in
connection with an assumption of, stock options, SARs, restricted shares, RSUs or other stock or stock-based awards held by awardees of an
entity engaging in a corporate acquisition or merger transaction with us or any of our subsidiaries will not count against (or be added back to)
the aggregate share limit or other 2023 Director Plan limits described above. Additionally, shares available under certain plans that we or our
subsidiaries may assume in connection with corporate transactions from another entity may be available for certain awards under the 2023
Director Plan, under circumstances further described in the 2023 Director Plan, but will not count against the aggregate share limit or other
2023 Director Plan limits described above.
Limited Share Recycling Provisions. Generally, the aggregate number of common shares available under the 2023 Director Plan will be
reduced by one common share for every one common share subject to an award granted under the 2023 Director Plan. Common shares
covered by an award granted under the 2023 Director Plan will not be counted as used unless and until they are actually issued and delivered,
but the total number of common shares available under the 2023 Director Plan as of a given date will not be reduced by any common shares
relating to prior awards that have expired or have been forfeited, cancelled or settled for cash. Upon payment in cash of the benefit provided by
any award granted under the 2023 Director Plan, any common shares that were covered by the applicable portion of such award will again be
available for issuance or transfer under the 2023 Director Plan. The following common shares will not be added back to the aggregate share
limit under the 2023 Director Plan: (1) shares tendered or otherwise used in payment of an option’s exercise price; and (2) shares that are
repurchased by us with stock option proceeds. Further, all common shares covered by SARs that are exercised and settled in shares, whether
or not all common shares covered by the SARs are actually issued to the participant upon exercise, will be considered issued or transferred
pursuant to the 2023 Director Plan. If a participant elects to give up the right to receive compensation in exchange for common shares based
on fair market value, such common shares will not count against the aggregate share limit under the 2023 Director Plan.
Minimum Vesting Periods/Double-Trigger Change in Control. The 2023 Director Plan provides that, except for awards regarding up to an
aggregate of 5% of the maximum number of common shares that may be issued or transferred under the 2023 Director Plan, no award
may have a vesting period of less than one year. Further, in the event of a Change in Control (as defined in the 2023 Director Plan), unless
otherwise determined by the Compensation Committee or set forth in an award agreement, or as provided for in an individual severance or
employment agreement:
• If a Replacement Award (as defined in the 2023 Director Plan) is not
awardee’s death or disability, at or during the period of two years
provided to replace or adjust an outstanding award, then then
after the Change in Control, then all Replacement Awards will
outstanding stock options and SARs will become fully vested and
become fully vested as described in the 2023 Director Plan, and all
exercisable and outstanding restricted shares, RSUs and other
stock options and SARs held immediately before such termination of
stock-based awards will become fully vested; and
service that were held as of the Change in Control or that constitute
• Upon termination of the awardee’s service with us or any successor
other than for Cause (as defined in the 2023 Director Plan), or the
Replacement Awards will become fully exercisable and will remain
exercisable until the expiration of the stated term of such award.
No Repricing Without Shareholder Approval. We have never repriced underwater stock options or SARs, and the repricing of options and
SARs (outside of certain corporate transactions or adjustment events described in the 2023 Director Plan) is prohibited without shareholder
approval under the 2023 Director Plan.
Change in Control Definition. The 2023 Director Plan includes a definition of “Change in Control.” Generally, unless otherwise prescribed by
the Nominating Committee in an award agreement, a Change in Control will generally be deemed to have occurred if:
• a person or group (excluding certain purchases directly from us or
ownership of 30% or more of the combined voting power of our
by us or our subsidiaries, by our or our subsidiaries’ employee
outstanding securities entitled to vote generally in the election of our
benefit plans or related trusts, or by any person or group in a
directors (which we refer to as voting power), and excluding certain
transaction that constitutes a “business combination” as described
inadvertent purchases or ownership levels as described in the
in the second-to-last bullet of this paragraph) acquires beneficial
definition in the 2023 Director Plan;
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
• individuals who as of the effective date of the 2023 Director Plan
constituted our entire Board (which we refer to as the incumbent
combination generally own a majority of the outstanding voting
power of the resulting entity, (2) no person or group (excluding
Board) cease to constitute at least a majority of our Board, unless
certain entities) beneficially owns 30% or more of the outstanding
their replacements are approved as described in the 2023 Director
voting power of the resulting entity, and (3) at least a majority of the
Plan;
• we consummate a reorganization, merger or consolidation, or sale
or other disposition of all or substantially all of our assets, or the
board of the resulting entity were members of our incumbent Board
when the initial agreement for the business combination was signed
or our Board approved the business combination, if earlier; or
acquisition of the stock or assets of another corporation, or other
• our shareholders approve a complete liquidation or dissolution of
transaction (which we refer to as a business combination) unless
our company, except pursuant to a business combination discussed
generally (1) owners of our voting power before the business
in the immediately preceding bullet of this paragraph.
Exercise and Base Price Not Less Than Fair Market Value. The 2023 Director Plan also provides that, except with respect to converted,
assumed or substituted awards as described in the 2023 Director Plan, no stock options or SARs will be granted with an exercise or base
price less than the fair market value of our common shares on the date of grant.
SUMMARY OF OTHER MATERIAL TERMS OF THE 2023 DIRECTOR PLAN
Shares Available Under the 2023 Director Plan. Subject to adjustment as provided in the 2023 Director Plan and the 2023 Director Plan share
counting rules, the number of common shares that may be issued or transferred:
• upon the exercise of stock options or SARs;
• as restricted shares and released from substantial risks of forfeiture;
• in payment of RSUs;
• as stock or other stock-based awards; or
• in payment of dividend equivalents;
will not exceed in the aggregate 200,000 common shares, plus any shares added (or added back) into the 2023 Director Plan as described
above. These shares may be shares of original issuance or treasury shares or a combination of the foregoing. As of February 24, 2023, the
closing price for our common shares on the NASDAQ Stock Market was $165.91.
Eligibility. Our non-employee directors (9 persons as of February 24, 2023) may be granted awards under the 2023 Director Plan by
the Nominating Committee. The basis for participation in the 2023 Director Plan by eligible persons is the selection of such persons for
participation by the Nominating Committee (or their proper delegate) in their discretion.
Option Rights (Stock Options). The Nominating Committee may grant stock options that entitle the optionee to purchase a specified number
of common shares at a price (except with respect to converted, assumed or substituted awards as described in the 2023 Director Plan) not
less than market value per share on the date of grant. The option price is payable
• in cash or by check or wire transfer at the time of exercise,
• by the transfer to us of common shares owned by the participant
having a value at the time of exercise equal to the option price,
• by a “net exercise” arrangement by which we withhold common
shares otherwise issuable upon exercise of the stock option,
• by a combination of such payment methods, or
• by such other method as may be approved by the Nominating
Committee.
To the extent permitted by law, the Nominating Committee may permit payment of the exercise price in a broker-assisted process by which
the proceeds of a sale through a broker of some or all of the option shares are forwarded to us in payment of the exercise price.
Stock options will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Director Plan, as the
Nominating Committee may approve. No stock option may be exercisable more than ten years from the date of grant. Each grant will specify
the period of continuous service that is necessary before the stock options become exercisable. Notwithstanding the 2023 Director Plan
minimum vesting provisions, the vesting of stock options may be accelerated in the event of the awardee’s retirement, death or disability, in
connection with a Change in Control or as otherwise provided in the applicable award agreement. Stock options granted pursuant to the 2023
Director Plan may not provide for any dividends or dividend equivalents thereon.
SARs. A SAR is a right, exercisable by the surrender of a related stock option (if granted in tandem with stock options) or by itself (if
granted as a free-standing SAR), to receive from us an amount equal to 100%, or such lesser percentage as the Nominating Committee
may determine, of the spread between the base price (or option exercise price if a tandem SAR) and the value of our shares on the date
of exercise. Any grant may specify that the amount payable on exercise of a SAR may be paid by us in cash, in common shares, or in any
combination of the two.
SARs will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Director Plan, as the
Nominating Committee may approve. Any grant of a tandem SAR will provide that it may be exercised only at a time when the related stock
option is also exercisable, at a time when the spread is positive, and by surrender of the related stock option for cancellation. Successive
grants of a tandem SAR may be made to the same participant regardless of whether any tandem SARs previously granted to the participant
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remain unexercised. Each grant will specify in respect of each free-standing SAR a base price that, except with respect to converted,
assumed or substituted awards as described in the 2023 Director Plan, may not be less than the market value per share of a common share
on the date of grant. Successive grants may be made to the same participant regardless of whether any free-standing SARs previously
granted to the participant remain unexercised. No free-standing SAR granted under the 2023 Director Plan may be exercised more than
ten years from the date of grant. Each grant may specify the period of continuous service with us that is necessary before the SARs become
exercisable. Notwithstanding the 2023 Director Plan minimum vesting provisions, the vesting of SARs may be accelerated in the event of the
awardee’s retirement, death or disability, in connection with a Change in Control or as otherwise provided in the applicable award agreement.
SARs granted pursuant to the 2023 Director Plan may not provide for any dividends or dividend equivalents thereon.
Restricted Shares. A grant of restricted shares involves the immediate transfer by us to a participant of ownership of a specific number
of common shares in consideration of the performance of services. The participant is entitled immediately to voting, dividend and other
ownership rights in such common shares, but subject to a substantial risk of forfeiture and restrictions on transfer as described below. The
transfer may be made without additional consideration or in consideration of a payment by the participant that is less than current market
value at the date of grant, as the Nominating Committee may determine.
Restricted shares must be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Internal Revenue Code for a
period as the Nominating Committee may determine. Each such grant or sale of restricted shares will provide that during or after the period
for which such substantial risk of forfeiture is to continue, the transferability of the restricted shares will be prohibited or restricted in the
manner and to the extent prescribed by the Nominating Committee at the date of grant (which restrictions may include, without limitation,
rights of repurchase or first refusal or provisions subjecting the restricted shares to a continuing substantial risk of forfeiture in the hands of
any transferee). Notwithstanding the 2023 Director Plan minimum vesting provisions, the vesting of restricted shares may be accelerated in
the event of the awardee’s retirement, death or disability, in connection with a Change in Control or as otherwise provided in the applicable
award agreement.
Grants of restricted shares will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Director
Plan, as the Nominating Committee may approve. Any grant or sale of restricted shares may require that any or all dividends or other
distributions paid with respect to the restricted shares during the period of restriction be automatically deferred and reinvested in additional
restricted shares. Dividends and dividend equivalents shall be subject to the same restrictions as the applicable portion of the underlying award.
Restricted Stock Units (RSUs). A grant of RSUs constitutes an agreement by us to deliver common shares or cash to the participant in the
future in consideration of the performance of services, but subject to the fulfillment of such conditions during the restriction period as the
Nominating Committee may specify. During the applicable restriction period, the participant will have no rights of ownership in the common
shares deliverable upon payment of the RSUs and will have no right to vote the common shares. The Nominating Committee may, at the
date of grant, authorize the payment of dividend equivalents on RSUs, either in cash or in additional common shares, subject to the same
restrictions as the applicable portion of the underlying award.
RSUs will have a restriction period as determined by the Nominating Committee. Notwithstanding the 2023 Director Plan minimum vesting
provisions, the vesting of RSUs may be accelerated in the event of the awardee’s retirement, death or disability, in connection with a Change
in Control or as otherwise provided in the applicable award agreement.
RSUs will be evidenced by an award agreement containing such terms and provisions, consistent with the 2023 Director Plan, as the
Nominating Committee may approve. Each grant or sale of RSUs may be made without additional consideration or in consideration of a
payment by such participant that is less than the market value per share of common shares at the date of grant. Each grant or sale of RSUs
will also specify the time and manner of payment of the RSUs that have been earned and will specify that the amount payable with respect to
such grant will be paid by us in common shares or cash, or a combination of the two.
Other Awards. The Nominating Committee may, subject to limitations under applicable law, grant to any participant shares or such other
awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, common
shares or factors that may influence the value of such shares, including, without limitation:
• convertible or exchangeable debt securities;
• awards with value and payment contingent upon any other factors
• other rights convertible or exchangeable into common shares;
designated by the Nominating Committee; and
• purchase rights for common shares;
• awards valued by reference to the book value of common shares or
other company securities.
The Nominating Committee will determine the terms and conditions of the other awards. Common shares delivered pursuant to an award in
the nature of a purchase right will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including,
without limitation, common shares, other awards, notes or other property, as the Nominating Committee will determine. Cash awards, as an
element of or supplement to any other award granted under the 2023 Director Plan, may also be granted.
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The Committee may grant shares as a bonus, or may grant other awards in lieu of our obligations to pay cash or deliver other property under
the 2023 Director Plan or under other plans or compensatory arrangements, subject to terms as determined by the Committee in compliance
with Section 409A of the Code. Notwithstanding the 2023 Director Plan minimum vesting provisions, the vesting of other awards may be
accelerated in the event of the awardee’s retirement, death or disability, in connection with a Change in Control or as otherwise provided in
the applicable award agreement.
Administration. The interpretation and construction by the Nominating Committee of any provision of the 2023 Director Plan or of any
agreement, notification or document evidencing the awards and any determination by the Nominating Committee will be final and conclusive.
No member of the Nominating Committee will be liable for any such action or determination made in good faith. In addition, the Nominating
Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations
contained in the 2023 Director Plan, and no authorization in any provision of the 2023 Director Plan is intended or may be deemed to
constitute a limitation on the authority of the Nominating Committee.
To the extent permitted by law, the Nominating Committee may delegate to one or more of its members or to one or more of our officers
or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Nominating Committee, the
subcommittee, or any person to whom duties or powers have been delegated, may employ advisers to render advice with respect to any
responsibility the Nominating Committee, the subcommittee or such person may have under the 2023 Director Plan.
Amendments. Our Board may at any time and from time to time amend the 2023 Director Plan in whole or in part. However, if an amendment
to the 2023 Director Plan must be approved by our shareholders in order to comply with applicable law or the rules of the NASDAQ Stock
Market (or our other applicable securities exchange), then such amendment will be subject to shareholder approval and will not be effective
until such approval has been obtained.
If permitted by Section 409A of the Internal Revenue Code, but subject to the terms as described below, including in case of termination of
service as a non-employee director by reason of death, disability or retirement, or in the case of unforeseeable emergency or other special
circumstances or in the event of a change in control, if a participant holds:
• a stock option or SAR not immediately exercisable in full;
• any restricted shares as to which the substantial risk of forfeiture
• any other awards subject to any vesting schedule or transfer
restriction; or
or the prohibition or restriction on transfer has not lapsed;
• common shares subject to any transfer restriction imposed by the
• any RSUs as to which the applicable restriction period has not
2023 Director Plan;
been completed;
the Nominating Committee may, in its sole discretion (subject to certain exceptions), accelerate the time at which:
• such stock option or SAR or other award may be exercised;
• such substantial risk of forfeiture or prohibition or restriction on transfer will lapse; or
• such restriction period will end.
The Nominating Committee may also waive any other limitation or requirement under any such award.
The Nominating Committee may generally amend the terms of any awards granted under the 2023 Director Plan prospectively or retroactively.
Except in connection with certain corporate transactions described in the 2023 Director Plan, no amendment will impair the rights of any
participant without his or her consent.
Our Board may, in its discretion, terminate the 2023 Director Plan at any time. Termination of the 2023 Director Plan will not affect the rights of
participants or their successors under any outstanding awards and not exercised in full on the date of termination.
No Repricing of Stock Options or SARs Without Shareholder Approval. Except in connection with certain corporate transactions described in
the 2023 Director Plan, the terms of outstanding awards may not be amended to reduce the option price of outstanding stock options or the
base price of outstanding SARs, or cancel outstanding stock options or SARs in exchange for cash, other awards or stock options or SARs
with an option price or base price, as applicable, that is less than the option price of the original stock options or base price of the original
SARs, as applicable, without shareholder approval. This restriction is intended to prohibit the repricing of “underwater” stock options and
SARs and will not be construed to prohibit the adjustments in connection with certain corporate transactions provided for in the 2023 Director
Plan. This prohibition may not be amended without approval by our shareholders.
Transferability. Except as otherwise determined by the Nominating Committee, no stock option, SAR, restricted shares, RSU or other
awards granted under the 2023 Director Plan, or dividend equivalents paid with respect to awards made under the 2023 Director Plan, will
be transferable by the participant except pursuant to a domestic relations order (that contains any information required by us to effectuate
the transfer) or by will or the laws of descent and distribution, and in no event shall any such award granted under the 2023 Director Plan
be transferred for value. Except as otherwise determined by the Nominating Committee, stock options and SARs will be exercisable during
the participant’s lifetime only by him or her or, in the event of the participant’s legal incapacity to do so, by his or her guardian or legal
representative acting on behalf of the participant in a fiduciary capacity under state law and/or court supervision.
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The Nominating Committee may provide at the date of grant additional restrictions on transfer for certain common shares earned under the
2023 Director Plan.
Adjustments. The Nominating Committee shall make or provide for such adjustments in the numbers of common shares covered by
outstanding stock options, SARs, and RSUs granted under the 2023 Director Plan and, if applicable, in the number of common shares
covered by other awards, in the option price and base price provided in outstanding stock options and SARs, in the kind of stock covered by
such awards and in the other terms as the Nominating Committee, in its sole discretion, exercised in good faith, shall determine is equitably
required to prevent dilution or enlargement of the rights of participants or optionees that otherwise would result from:
• any stock dividend, stock split, combination of shares, recapitalization
• any other corporate transaction or event having an effect similar to
or other change in the capital structure of our company;
these events or transactions.
• any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of
assets, issuance of rights or warrants to purchase securities; or
However, such adjustments will be made automatically, without the necessity of Nominating Committee action, on the customary arithmetical
basis in the case of any stock split, including a stock split effected by means of a stock dividend, and in the case of any other dividend paid
in out shares. Moreover, in the event of any such transaction or event or in the event of a change in control, the Nominating Committee shall
provide in substitution for any or all outstanding awards under the 2023 Director Plan such alternative consideration (including cash), if any, as
it, in good faith, shall determine to be equitable in the circumstances and may require the surrender of all awards so replaced in a manner that
complies with Section 409A of the Internal Revenue Code.
In addition, for each stock option or SAR with an option price or base price greater than the consideration offered in connection with any
such termination or event or change in control, the Nominating Committee may in its sole discretion elect to cancel such stock option or
SAR without any payment to the person holding such stock option or SAR. The Nominating Committee shall also make or provide for such
adjustments in the total number of common shares available under the 2023 Director Plan, the per-person award limits expressed in shares
and any other share limits under the 2023 Director Plan as the Nominating Committee, in its sole discretion, exercised in good faith, may
determine is appropriate to reflect any transaction or event described above.
Recapture Provisions. Any award agreement may provide for the cancellation or forfeiture of an award or the forfeiture and repayment to us
of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and conditions as may be determined
by the Nominating Committee from time to time or under Section 10D of the Securities Exchange Act of 1934, as amended, or the rules of any
national securities exchange or national securities association on which our common shares are traded.
Effective Date and Termination. The 2023 Director Plan will be effective as of the date the 2023 Director Plan is approved by our shareholders
(which we refer to as the Effective Date). No grants will be made under the 2015 Director Plan on or after the Effective Date, except that
outstanding awards granted under the 2015 Director Plan will continue unaffected following the Effective Date.
No grant will be made under the 2023 Director Plan after April 19, 2033, which date is 10 years after the date on which our shareholders will
have an opportunity to approve the 2023 Director Plan, but all grants made on or prior to such date will continue in effect thereafter subject to
the terms of the applicable award agreement and the terms of the 2023 Director Plan. We will not be required to issue any fractional common
shares under the 2023 Director Plan, but the Nominating Committee can either eliminate fractional common shares for no payment or settle
fractional common shares in cash.
Stock-Based Awards in Substitution for Options or Other Awards Granted by Another Company. Awards may be granted under the 2023
Director Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted
stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger
transaction with us or any of our subsidiaries. Any conversion, substitution or assumption will be effective as of the close of the merger or
acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted
may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of
the 2023 Director Plan, and may account for common shares substituted for the securities covered by the original awards and the number of
shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for
differences in stock prices in connection with the transaction.
In the event that a company acquired by us or any of our subsidiaries or with which we or any subsidiary merges has shares available under a
pre-existing plan previously approved by shareholders and not adopted in contemplation of such acquisition or merger, the shares available for
grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards
made after such acquisition or merger under the 2023 Director Plan. However, awards using such available shares may not be made after the
date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made
to individuals who were not our employees or directors or employees or directors of any of our subsidiaries prior to the acquisition or merger.
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Any common shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, ours
as described above will not reduce the common shares available for issuance or transfer under the 2023 Director Plan or otherwise count
against the limits contained in the 2023 Director Plan. In addition, no common shares that are issued or transferred by, or that are subject to
any awards that are granted by, or become obligations of, ours as described above will be added to the aggregate plan limit contained in the
2023 Director Plan.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of some of the federal income tax consequences of certain transactions under the 2023 Director Plan based
on federal income tax laws in effect. This summary, which is presented for the information of shareholders considering how to vote on this
proposal and not for 2023 Director Plan participants, is not intended to be complete and does not describe federal taxes other than income
taxes (such as Medicare and Social Security taxes), or state, local or foreign tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
Non-Qualified Stock Options. In general: (1) no income will be recognized by an optionee at the time a non-qualified stock option is granted;
(2) at the time of exercise of a non-qualified stock option, ordinary income will be recognized by the optionee in an amount equal to the
difference between the option price paid for the common shares and the fair market value of the common shares, if unrestricted, on the date
of exercise; and (3) at the time of sale of common shares acquired pursuant to the exercise of a non-qualified stock option, appreciation (or
depreciation) in value of the common shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss)
depending on how long the common shares have been held.
SARs. No income will be recognized by a participant in connection with the grant of a tandem SAR or a free-standing SAR. When the SAR
is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the
amount of cash received and the fair market value of any unrestricted common shares received on the exercise.
Restricted Shares. The recipient of restricted shares generally will be subject to tax at ordinary income rates on the fair market value of the
restricted shares (reduced by any amount paid by the participant for such restricted shares) at such time as the common shares are no longer
subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Internal Revenue Code (which we refer to as the Restrictions).
However, a recipient may instead elect under Section 83(b) of the Internal Revenue Code within 30 days of the date of transfer of the
common shares to have taxable ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such
common shares (determined without regard to the Restrictions) over the purchase price, if any, of such restricted shares. If a Section 83(b)
election has not been made, any dividends received with respect to restricted shares that are subject to the Restrictions generally will be
treated as compensation that is taxable as ordinary income to the participant.
RSUs. No income generally will be recognized upon the award of RSUs. The recipient of a RSU award generally will be subject to tax at
ordinary income rates on the fair market value of unrestricted common shares on the date that such shares are transferred to the participant
under the award (reduced by any amount paid by the participant for such RSUs), and the capital gains/loss holding period for such shares will
also commence on such date.
NEW PLAN BENEFITS
It is not possible to determine the specific amounts and types of awards that may be awarded in the future under the 2023 Director Plan
because the grant and actual settlement of awards under the 2023 Director Plan are subject to the discretion of the plan administrator.
REGISTRATION WITH THE SEC
We intend to file a Registration Statement on Form S-8 relating to the issuance of common shares under the 2023 Director Plan with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the 2023
Director Plan by our shareholders.
MAJORITY VOTE NEEDED
Approval of Proposal 6 requires the affirmative vote of the holders of a majority of Lincoln Electric common shares present or represented by
Proxy at the Annual Meeting and entitled to vote on the matter when a quorum is present. Abstentions will have the effect of a vote “against”.
Broker non-votes will not be considered entitled to vote on this item and, therefore, will not be counted in determining the results. Unless
otherwise directed, shares represented by proxy will be voted FOR the approval of Proposal 6.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2023 STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
AUDIT COMMITTEE
REPORT
The Audit Committee consists solely of independent Directors within the meaning of the Nasdaq listing standards. The Audit Committee
oversees our financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial
statements and the reporting process, including the systems of internal control over financial reporting. In fulfilling its oversight
responsibilities, the Committee reviewed and discussed with management the audited financial statements in the Annual Report, including
a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Audit Committee discussed with the independent auditors, who are responsible for expressing an opinion on the conformity of those
audited financial statements with U.S. generally accepted accounting principles, their judgments as to the quality, not just the acceptability,
of our accounting principles and such other matters as are required to be discussed with the Audit Committee by the applicable
requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. In addition, the Audit Committee has
received and has discussed with the independent auditors written disclosures regarding their independence as required by PCAOB Ethics
and Independence Rule 3526, Communication with Audit Committees Concerning Independence.
The Audit Committee discussed with our internal and independent auditors the overall scope and plan for their respective audits. The
Audit Committee met with the internal and independent auditors, with and without management present, to discuss the results of their
examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board
approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2022 for
filing with the SEC. The Audit Committee and the Board have also recommended the selection of Ernst & Young LLP as our independent
auditors for the year ending December 31, 2023 and the ratification thereof by the shareholders.
By the Audit Committee:
Patrick P. Goris, Chair
Brian D. Chambers
Curtis E. Espeland
Ben P. Patel
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
FAQS
Who is soliciting proxies and why? Who is paying for the cost of this proxy solicitation?
The Board solicits the proxy and the Company pays the solicitation cost. Certain officers and employees may also solicit proxies, but do
not receive compensation for these activities. We also reimburse custodians, nominees and fiduciaries for reasonable expenses incurred
to forward and obtain proxy materials from beneficial holders.
How do we distribute proxy materials to shareholders sharing the same address?
We use “householding” rules to deliver only one set of voting materials (Annual Report and Proxy Statement) to shareholders who share
the same address, unless we receive contrary instructions from one or more shareholders at that address. Each shareholder receives a
separate proxy card. We will promptly deliver upon request a separate set of proxy materials.
How do I obtain a separate set of proxy materials at no cost?
Send a written notice to the Corporate Secretary at Lincoln Electric Holdings, Inc., 22801 St. Clair Avenue, Cleveland, Ohio 44117-1199.
Who may vote at the Annual Meeting?
Record holders as of the close of business on February 28, 2023 (the record date) are entitled to vote at the Annual Meeting. As of the
record date, 57,597,468 shares of our common stock were outstanding and each share is entitled to one vote per proposal brought before
the meeting.
What is required for there to be a quorum at the Annual Meeting?
Holders of at least a majority of the shares of our common stock issued and outstanding on the record date (February 28, 2023) must be
present, in person or by proxy, to constitute a quorum.
How do I attend and participate in the Annual Meeting?
Any shareholder of record as of the record date (February 28, 2023) can attend the Annual Meeting online at
www.virtualshareholdermeeting.com/LECO2023. The webcast will start at 11:00 a.m. ET on April 19, 2023. Shareholders may submit
pre-meeting questions online by visiting www.proxyvote.com. Questions must be submitted by Friday, April 14, 2023 at 5:00 p.m. ET. You
will need your 16-digit control number that is printed on your proxy card or on the instructions that accompanied your proxy materials to
access the meeting. Instructions on how to attend the Annual Meeting are posted at www.virtualshareholdermeeting.com/LECO2023.
We encourage you to access the meeting prior to the start time to allow ample time to complete the online check-in process.
If you encounter any technical difficulties accessing the virtual meeting during check-in or meeting time, please call the technical support
number that will be posted on the Virtual Shareholder Meeting log in page.
Why is the Annual Meeting a virtual, online meeting?
We believe that hosting a virtual meeting will facilitate shareholder attendance and participation by enabling shareholders to participate
from any location around the world and improves our ability to communicate more effectively with our shareholders. We have designed
the virtual meeting to provide substantially the same opportunities to participate as you would have at an in-person meeting. We are
providing opportunities for shareholders to submit questions prior to the meeting to enable us to address appropriate questions at the
Annual Meeting.
What is the difference between holding shares as a registered shareholder or as a beneficial holder?
• Registered Shareholders: If your shares are directly registered in your name with our transfer agent/registrar, you are considered the
registered shareholder, or shareholder of record. Proxy materials will be sent directly to you and you may vote during the meeting at
www.virtualshareholdermeeting.com/LECO2023, or by telephone, by Internet or by mail in the envelope provided.
• Beneficial Holders: You are a beneficial holder if your shares are held indirectly in a brokerage account, by a trustee, or by another
nominee. These entities are considered the shareholder of record and the shares are considered held in “street name.” Proxy materials
are sent to the entity and they forward a voting instruction card to you, the beneficial holder. As a beneficial holder, you have the right to
direct the entity on how to vote your shares and you may also attend the Annual Meeting. Since you are not the shareholder of record,
you may not vote during the meeting unless you obtain a legal proxy from the entity that holds your shares. Please refer to the
information your broker, trustee or nominee provided to see what voting options are available to you. If you have not heard from your
broker, trustee or nominee, please contact them.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
What shares are included on the proxy card?
Shareholder type:
Registered Shareholder &
participant in The Lincoln
Electric Company Employee
Savings Plan (401(k) Plan)
Shares included on the
proxy card:
All shares registered in your name
will be represented (including
401(k) plan shares)
Note: If you do not have identical
names on your accounts, we
cannot consolidate your share
information.
Beneficial Holder with shares
held by a broker, trustee or
nominee
Both a Registered Shareholder
and a Beneficial Holder of
shares
You will receive a voting instruction
form from your broker, trustee or
nominee instructing you on how to
vote.
You will receive a proxy card
from us and a voting instruction
form from your broker, trustee or
nominee instructing you on how
to vote.
What is a broker non-vote and what effect does it have?
A broker non-vote occurs when a broker or other nominee does not receive voting instructions from the beneficial holder and is then
unable to vote the shares. If you hold your shares beneficially through a broker, trustee or nominee, you must communicate your
voting instructions to them to have your shares voted. Please note that your nominee cannot vote on your behalf on the election of
Directors (Proposal 1), the approval, on an advisory basis, of NEO compensation (Proposal 3), the recommendation, on an advisory basis,
of the frequency for future advisory votes to approve NEO compensation (Proposal 4), the approval of Lincoln Electric’s 2023 Equity and
Incentive Compensation Plan (Proposal 5) or the approval of Lincoln Electric’s 2023 Stock Plan for Non-Employee Directors (Proposal 6)
unless you provide specific voting instructions to them by following the instructions provided to you.
Broker non-votes, as well as abstentions, will be counted to determine whether a quorum is present at the Annual Meeting. Broker non-
votes will not be counted when determining votes for a particular proposal (i.e., it will not be considered a vote “cast”).
How do I vote at the Annual Meeting?
Registered Shareholders
Vote during the meeting at www.virtualshareholdermeeting.com/LECO2023 or by proxy in any one of four ways outlined in the Proxy
Summary section of this Proxy Statement.
Participants in the 401(k) Plan
The 401(k) Plan’s independent Trustee, Fidelity Management Trust Company, will vote your 401(k) Plan shares according to your voting
directions, which you can provide by Internet, telephone or mail. As 401(k) Plan shares are held in a qualified plan, you are not able to
vote 401(k) Plan shares during the Annual Meeting. If you do not vote, the Trustee will not vote your plan shares.
Beneficial Holders
If your shares are held by a bank, broker, trustee or some other nominee (in street name), that entity will give you separate voting
instructions.
What happens if I sign, date and return my proxy but do not specify how I want my shares voted on the proposals?
Registered Shareholders: Your shares will be voted FOR the election of all of the Director nominees, FOR the ratification of the
appointment of our independent registered public accounting firm, FOR the approval, on an advisory basis, of the compensation of our
NEOs, for EVERY YEAR for the frequency on future advisory votes to approve the compensation of our NEOs, FOR the approval of
Lincoln Electric’s 2023 Equity and Incentive Compensation Plan and FOR the approval of Lincoln Electric’s 2023 Stock Plan for Non-
Employee Directors.
Beneficial Holders: Your nominee cannot vote your uninstructed shares on non-routine matters such as Proposal 1 (election of Directors),
Proposal 3 (approval, on an advisory basis, of NEO compensation), Proposal 4 (recommendation for the frequency on future advisory
votes to approve the compensation of our NEOs), Proposal 5 (approval of Lincoln Electric’s 2023 Equity and Incentive Compensation
Plan) or Proposal 6 (approval of Lincoln Electric’s 2023 Stock Plan for Non-Employee Directors). Your nominee can vote your
uninstructed shares on routine matters such as Proposal 2 (ratification of the appointment of our independent registered public
accounting firm).
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
May I revoke my proxy or change my vote?
Registered Shareholders: Yes, you may change or revoke your proxy prior to the closing of the polls in any one of the following FOUR
ways:
1. Send a written notice to our Corporate Secretary stating that you want to revoke your proxy;
2. Mail a completed and signed proxy card with a later date, but prior to the cut-off dates prior to the Annual Meeting (which will
automatically revoke the earlier proxy);
3. Vote by telephone or Internet at a later date, but prior to the cut-off dates prior to the Annual Meeting (which will automatically
revoke the earlier proxy); or
4. Vote during the Annual Meeting at www.virtualshareholdermeeting.com/LECO2023. Because 401(k) plan shares are held in a
qualified plan, you are not able to revoke or change your vote on 401(k) plan shares at the Annual Meeting.
Beneficial Holders: Check with your broker, trustee or nominee to determine how to change your vote.
Who counts the votes?
Broadridge Financial Solutions, Inc. is the independent agent who receives and tabulates the votes. They are also our inspector of
elections at the Annual Meeting.
May I receive future shareholder communications over the Internet?
Registered Shareholders: Yes. Please mark the appropriate box on your proxy card, or follow the prompts if voting by telephone or
Internet.
Beneficial Holders: Refer to the information provided by your nominee on how to select future shareholder communications by Internet.
When are shareholder proposals due to be considered for inclusion in next year’s Annual Meeting in 2024?
In order to have a shareholder proposal included in our proxy materials for the 2024 Annual Meeting, a shareholder proposal must be
received in writing by the Corporate Secretary at Lincoln Electric Holdings, Inc., 22801 St. Clair Avenue, Cleveland, Ohio 44117-1199 on or
before November 18, 2023.
If shareholders want to present proposals at our 2024 Annual Meeting that are not included in Lincoln Electric’s proxy materials, they must
comply with the requirements in our Amended and Restated Code of Regulations. These include providing a written notice containing
certain information, and such notice must be received no earlier than December 21, 2023 and no later than January 20, 2024. If the Board
of Directors chooses to present any information submitted after the applicable deadlines at the 2024 Annual Meeting, then the persons
named in proxies solicited by the Board for the 2024 Annual Meeting may exercise discretionary voting power with respect to such
information.
May I submit a nomination for Director?
Yes. To submit a Director nomination, a shareholder must send a written notice to the Corporate Secretary at Lincoln Electric Holdings,
Inc., 22801 St. Clair Avenue, Cleveland, Ohio 44117-1199. The notice must include information about the shareholder and the person he
or she intends to nominate, which is required by our Amended and Restated Code of Regulations. For the 2024 Annual Meeting,
nominations must be received in the Corporate Secretary’s Office no earlier than December 21, 2023 and no later than January 20, 2024.
For the 2023 Annual Meeting, nominations must have been received by the Corporate Secretary’s Office no earlier than December 22,
2022 and no later than the close of business on January 21, 2023.
1 1 6
LINCOLN ELECTRIC 2023 PROXY STATEMENT HOW DO I CONTACT LINCOLN ELECTRIC?
FOR GENERAL INFORMATION:
TO CONTACT THE DIRECTORS:
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
Attention: Amanda Butler,
Vice President, Investor
Relations & Communications
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199
Attention: Corporate Secretary
Please name any specific intended Board recipient(s) in the
communication. Prior to forwarding any correspondence, the
Corporate Secretary will review the correspondence and, at
his or her discretion, may not forward certain items if they
are deemed of a frivolous nature or otherwise inappropriate
for the Board's consideration. In such cases, some of that
correspondence may be forwarded elsewhere within Lincoln
Electric for review and possible response.
Please visit our website at www.lincolnelectric.com for current developments at Lincoln
Electric. The information on our website is not incorporated by reference into this Proxy
Statement or any of our periodic reports.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
APPENDIX A—DEFINITIONS AND
NON-GAAP FINANCIAL MEASURES
The discussion of our results in the CD&A and other sections of this Proxy Statement includes reference to our EBIT, EBITB, Adjusted net
income, Adjusted diluted earnings per share, Adjusted EBIT, Adjusted operating income, Adjusted operating income margin, Adjusted
effective tax rate, Adjusted Return on Invested Capital (Adjusted ROIC), Average Operating Working Capital to Sales (AOWC/Sales), Total
Shareholder Return (TSR), Organic Sales, Cash Conversion and Free Cash Flow (FCF) performance. Some of these metrics are
considered Non-GAAP financial measures, as management uses various GAAP and non-GAAP financial measures in assessing and
evaluating our underlying operating performance. Non-GAAP financial measures exclude the impact of special items on our reported
financial results. Non-GAAP financial measures should be read in conjunction with the generally accepted accounting principles in the
United States (“GAAP”), as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. The
following defines the financial and non-GAAP financial measures discussed in the CD&A and other sections of this Proxy Statement.
Certain reclassifications have been made to prior year financial statements and financial measures to conform to current year
classifications.
ADJUSTED DILUTED EARNINGS PER SHARE
Adjusted Diluted Earnings Per Share is defined as reported Diluted Earnings Per Share excluding certain disclosed special items.
ADJUSTED EBIT
Adjusted EBIT is defined as reported EBIT excluding certain disclosed special items.
ADJUSTED EFFECTIVE TAX RATE
Adjusted Effective Tax Rate is defined as reported Effective Tax Rate excluding the tax effect of certain disclosed special items.
ADJUSTED NET INCOME
Adjusted Net Income is defined as reported Net Income excluding certain disclosed special items.
ADJUSTED NET INCOME FOR COMPENSATION PURPOSES
Adjusted Net Income for Compensation Purposes is defined as reported Net Income excluding certain disclosed special items and other
adjustments as approved by the Compensation and Executive Development Committee.
ADJUSTED OPERATING INCOME
Adjusted Operating Income is defined as reported Operating Income excluding certain disclosed special items.
ADJUSTED OPERATING INCOME MARGIN
Adjusted Operating Income Margin is defined as Adjusted Operating Income divided by Net sales.
ADJUSTED RETURN ON INVESTED CAPITAL (ADJUSTED ROIC)
Adjusted ROIC is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by
invested capital.
ADJUSTED REVENUE FOR COMPENSATION PURPOSES (ADJUSTED REVENUE)
Adjusted Revenue for Compensation Purposes is defined as Net sales calculated at budgeted exchange rates and adjusted for the results
of businesses acquired during the year. Additionally, a price collar may be approved by the Committee to limit the impact of pricing on the
metric, resulting in growth of the metric focusing primarily on organic sales volumes. For 2022, a +/- 2% price collar was approved by the
Compensation and Executive Development Committee for use when calculating this metric. The price collar limits the impact of either
price increases or decreases to 2%. Net sales is a representative measure of Adjusted Revenue for Compensation Purposes.
AVERAGE OPERATING WORKING CAPITAL TO SALES (AOWC/SALES)
Average operating working capital to Net Sales (AOWC/Sales) is defined as the sum of Accounts receivable, Inventories and contract
assets less Trade accounts payable and contract liabilities as of a period end divided by annualized rolling three months of Net sales.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
AVERAGE OPERATING WORKING CAPITAL TO SALES FOR COMPENSATION PURPOSES (AOWC/SALES FOR COMPENSATION PURPOSES)
Average operating working capital to Net Sales for Compensation Purposes (AOWC/Sales for Compensation Purposes) is defined as the
sum of Accounts receivable, Inventories (excluding LIFO inventory reserves) and contract assets less Trade accounts payable and
contract liabilities as of a period end divided by annualized rolling three months of Net sales.
CASH CONVERSION
Cash Conversion is defined as Free Cash Flow divided by Adjusted Net Income.
EBIT
EBIT is an amount equal to earnings before interest and tax defined as operating income plus Other income (expense).
EBITB
EBITB is an amount equal to earnings before interest, tax and bonus, calculated at budgeted exchange rates and adjusted for special
items as determined by management. The adjustments for special items include such items as rationalization charges, certain asset
impairment charges, the gains and losses on certain transactions including the disposal of assets and the results of businesses acquired
during the year. Adjusted Operating Income is a representative measure of EBITB.
FREE CASH FLOW (FCF)
Free Cash Flow is defined as Net cash provided by operating activities less Capital expenditures.
ORGANIC SALES
Organic Sales is defined as sales excluding the effects of foreign currency and acquisitions.
RETURN ON INVESTED CAPITAL (ROIC)
Return on invested capital (ROIC) is defined as rolling 12 months of Net income excluding tax-effected interest income and expense
divided by invested capital.
RETURN ON INVESTED CAPITAL (ROIC) FOR COMPENSATION PURPOSES
ROIC for Compensation Purposes is calculated by an independent third-party and is adjusted for certain transactions as approved by the
Compensation and Executive Development Committee.
TOTAL SHAREHOLDER RETURN (TSR)
TSR is an amount equal to the net stock price change for our common stock plus the reinvestment of dividends paid over the prescribed
period of time.
ADJUSTED OPERATING INCOME
The following table presents a reconciliation of Operating income as reported to Adjusted operating income for the years ended December 31,
2020 to 2022:
($ in thousand)
Operating income (as reported)
Special items (pre-tax):
Rationalization and asset impairment charges
Acquisition transaction costs
Amortization of step up in value of acquired inventories
Adjusted operating income
Adjusted operating income margin
Year Ended December 31,
2022
2021
2020
$612,336
$461,669
$282,071
11,788
6,003
1,106
9,827
1,923
5,804
45,468
—
806
$631,233
$479,223
$328,345
16.8%
14.8%
12.4%
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
The following table presents reconciliations of Net income and Diluted earnings per share as reported to Adjusted net income and
Adjusted diluted earnings per share for the years ended December 31, 2020 to 2022:
($ in thousands except per share amounts)
Year Ended December 31,
Net income (as reported)
Special items:
Rationalization and asset impairment charges
Pension settlement net charges
Acquisition transaction costs
Amortization of step up in value of acquired inventories
Tax effect of Special items
Adjusted net income
2022
2021
2020
$ 472,224
$ 276,466
$ 206,115
11,788
(4,273)
6,003
1,106
(1,192)
9,827
126,502
1,923
5,804
(47,188)
45,468
8,119
—
806
(10,594)
$ 485,656
$ 373,334
$ 249,914
Diluted earnings per share (as reported)
$ 8.04
$ 4.60
$ 3.42
Special items per share
0.23
1.62
0.73
Adjusted diluted earnings per share
$ 8.27
$ 6.22
$ 4.15
RETURN ON INVESTED CAPITAL (ROIC)
The following table presents calculations of Reported and Adjusted ROIC for the years ended December 31, 2020 to 2022:
($ in thousands)
Year Ended December 31,
Net income [as reported]
Plus: Interest expense (after-tax)
Less: Interest income (after-tax)
Net operating profit after taxes
Special Items:
Rationalization and asset impairment charges
Acquisition transaction costs
Pension settlement net charges
Amortization of step up in value of acquired
inventories
Tax effect of Special Items
2022
2021
2020
$ 472,224
$ 276,466
$ 206,115
23,276
1,202
17,794
1,172
17,933
1,486
$ 494,298
$ 293,088
$ 222,562
11,788
6,003
(4,273)
1,106
(1,192)
9,827
1,923
126,502
5,804
45,468
—
8,119
806
(47,188)
(10,594)
Adjusted net operating profit after taxes
$ 507,730
$ 389,956
$ 266,361
Invested Capital
Short-term debt
Long-term debt, less current portion
Total debt
Total equity
Invested capital
ROIC as reported
Adjusted ROIC
December 31,
2022
December 31,
2021
December 31,
2020
$ 93,483
$ 52,730
$ 2,734
1,110,396
1,203,879
1,034,041
717,089
769,819
863,909
715,456
718,190
790,250
$2,237,920
$1,633,728
$1,508,440
22.1%
22.7%
17.9%
23.9%
14.8%
17.7 %
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
CASH CONVERSION
The following table presents calculations of Cash Conversion for the years ended December 31, 2020 to 2022:
($ in thousands)
Year Ended December 31,
Net cash provided by operating activities
$ 383,386
$ 365,063
$ 351,362
Less: Capital expenditures
7 1,883
62,531
59,201
2022
2021
2020
Free Cash Flow
Adjusted net income
Cash Conversion
$ 3 1 1 ,503
$ 302,532
$ 292,16 1
$ 485,656
$ 373,334
$ 249,914
64%
81%
117%
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LINCOLN ELECTRIC 2023 PROXY STATEMENT
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APPENDIX B – LINCOLN ELECTRIC
HOLDINGS, INC.
2023 EQUITY AND INCENTIVE
COMPENSATION PLAN
Set forth below is the text of the 2023 Equity and Incentive Compensation Plan. This plan will be approved if Proposal 5 is adopted.
1. Purpose. The purpose of this 2023 Equity and Incentive Compensation Plan is to attract and retain officers, other employees and
consultants of the Company and its Subsidiaries and to provide to such persons incentives and rewards for performance.
2. Definitions. As used in this Plan:
(a) “Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and will include both Free-Standing Appreciation
Rights and Tandem Appreciation Rights.
(b) “Award” means an Option Right, an Appreciation Right, Restricted Shares, Restricted Stock Units, Performance Shares,
Performance Units or Other Awards granted in accordance with the terms of the Plan.
(c) “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation
Right or a Tandem Appreciation Right.
(d) “Board” means the Board of Directors of the Company.
(e) “Cause” means, for a Participant who is a party to a severance agreement with the Company, “Cause” as defined in such agreement. For
all other Participants, “Cause” means that, prior to termination of employment, the Participant shall have: (i) committed a criminal
violation involving fraud, embezzlement or theft in connection with the Participant’s duties or in the course of the Participant’s
employment with the Company or any Subsidiary; (ii) committed an intentional violation of the Lincoln Electric Code of Corporate
Conduct and Ethics, or any successor document, (A) in effect at the relevant time if such violation occurs prior to a Change in Control, or
(B) in effect immediately prior to a Change in Control if such violation occurs on or after a Change in Control; (iii) committed intentional
wrongful damage to property of the Company or any Subsidiary; (iv) committed intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or (v) committed intentional wrongful engagement in any of the activities set
forth in any confidentiality, non-competition or non-solicitation arrangement with the Company to which the Participant is a party; and, in
each case, any such act shall have been demonstrably and materially harmful (including financially or reputationally harmful) to the
Company. For purposes of this Plan, no act or failure to act on the part of the Participant will be deemed “intentional” if it was due
primarily to an error in judgment or negligence, but will be deemed “intentional” only if done or omitted to be done by the Participant not
in good faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company. Before a
Change in Control, the Committee shall have the sole discretion to determine whether “Cause” exists, and its determination shall be final.
After a Change in Control, any determination as to whether “Cause” exists shall be subject to de novo review.
(f) “Change in Control” has the meaning set forth in Section 12 of this Plan.
(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(h) “Committee” means the Compensation and Executive Development Committee of the Board (or its successor(s)), or any other
committee of the Board designated by the Board to administer this Plan pursuant to Section 10 of this Plan consisting solely of no
fewer than two Non-Employee Directors.
(i) “Common Shares” means the common shares of the Company, without par value, or any security into which such common shares
may be changed by reason of any transaction or event of the type referred to in Section 11 of this Plan.
(j) “Company” means Lincoln Electric Holdings, Inc., an Ohio corporation, and its successors.
(k) “Date of Grant” means the date specified by the Committee on which a grant of Option Rights, Appreciation Rights, Performance
Shares, Performance Units, or Other Awards, or a grant or sale of Restricted Shares, Restricted Stock Units, or Other Awards, will
become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).
(l) “Director” means a member of the Board.
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(m) “Effective Date” means the date this Plan is approved by the shareholders of the Company.
(n) “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the
Committee that sets forth the terms and conditions of the awards granted under the Plan. An Evidence of Award may be in an
electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the
Committee, need not be signed by a representative of the Company or a Participant.
(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law,
rules and regulations may be amended from time to time.
(p) “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in
tandem with an Option Right.
(q) “Good Reason” means, for a Participant who is a party to a severance agreement with the Company, “Good Reason” as defined in
such agreement. For all other Participants, “Good Reason” means the occurrence of any of the following events without the
Participant’s written consent:
(i) A material diminution in the Participant’s base compensation;
(ii) A material diminution in the Participant’s authority, duties, or responsibilities;
(iii) A material reduction in the Participant’s opportunity regarding annual bonus, incentive or other payment of compensation made or
to be made in regard to services rendered in any year or other period pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or arrangement (whether or not funded) of the Company;
(iv) A material change in the geographic location at which the Participant must perform the services, which adds fifty (50) miles or more
to the Participant’s one-way daily commute; and
(v) Any other action or inaction that constitutes a material breach by the Company of the Participant’s employment agreement, if any,
under which the Participant provides services to the Company, or Participant’s severance agreement with the Company, if any.
Notwithstanding the foregoing, a termination of employment by the Participant for one of the reasons set forth in clauses (i) through (v) above
will not constitute a termination of employment by Participant for “Good Reason” unless the Participant provides, within 90 days of the initial
occurrence of such condition or conditions, written notice to the Participant’s employer of the existence of such condition or conditions, the
Participant’s employer has not remedied such condition or conditions within 30 days of the receipt of such notice and Participant terminates
employment with the Company within 90 days following expiration of the cure period.
(r) “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock options” under Section 422 of the
Code or any successor provision.
(s) “Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for
Participants who have received grants of Performance Shares, Performance Units or, when so determined by the Committee, Option
Rights, Appreciation Rights, Restricted Shares, Restricted Stock Units, dividend equivalents or other awards pursuant to this Plan.
Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of
the individual Participant or of one or more of the Subsidiaries, divisions, departments, regions, functions or other organizational
units within the Company or its Subsidiaries. The Management Objectives may be made relative to the performance of other
companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and
may be made relative to an index or one or more of the performance objectives themselves.
(t) “Market Value per Share” means, as of any particular date, the closing price of a Common Share as reported for that date on the
NASDAQ Stock Market or, if the Common Shares are not then listed on the NASDAQ Stock Market, on any other national securities
exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during
which a sale occurred. If there is no regular public trading market for the Common Shares, then the Market Value per Share shall be
the fair market value as determined in good faith by the Committee. The Committee is authorized to adopt another fair market value
pricing method provided such method is stated in the Evidence of Award and is in compliance with the fair market value pricing rules
set forth in Section 409A of the Code.
(u) “Non-Employee Director” means a person who is a “Non-Employee Director” of the Company within the meaning of Rule 16b-3
promulgated under the Exchange Act.
(v) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.
(w) “Option Price” means the purchase price payable on exercise of an Option Right.
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(x) “Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan.
(y) “Other Award” means an award granted pursuant to Section 9 of the Plan.
(z) “Participant” means a person who is selected by the Committee to receive benefits under this Plan and who is at the time (i) an
officer, other employee or consultant of the Company or any Subsidiary, or (ii) a person who provides services to the Company or a
Subsidiary that are equivalent to those typically provided by an employee (provided that such person or consultant satisfies the
Form S-8 definition of an “employee”).
(aa) “Performance Period” means, in respect of a Performance Share or Performance Unit, a period of time established pursuant to
Section 8 of this Plan within which the Management Objectives relating to such Performance Share or Performance Unit are to be
achieved.
(bb) “Performance Share” means a bookkeeping entry that records the equivalent of one Common Share awarded pursuant to
Section 8 of this Plan.
(cc) “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or
such other value as is determined by the Committee.
(dd) “Plan” means this 2023 Equity and Incentive Compensation Plan.
(ee) “Predecessor Plan” means the Company’s 2015 Equity and Performance Incentive Plan.
(ff) “Restricted Shares” means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk
of forfeiture nor the prohibition on transfers has expired.
(gg) “Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the right to receive Common Shares or cash at the
end of a specified period.
(hh) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in
Section 7 of this Plan.
(ii) “Spread” means the excess of the Market Value per Share on the date when an Appreciation Right is exercised over the Option Price or
Base Price provided for in the related Option Right or Free-Standing Appreciation Right, respectively.
(jj) “Subsidiary” means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding
shares or securities (as may be the case in a partnership, joint venture, limited liability company, or unincorporated association), but
more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or
hereafter, owned or controlled, directly or indirectly, by the Company; provided, however, that for purposes of determining whether any
person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the
time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined Voting Power represented by all
classes of stock issued by such corporation.
(kk) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an
Option Right.
(ll) “Voting Power” means at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the
election of Directors in the case of the Company, or members of the board of directors or similar body in the case of another entity.
3. Shares Available Under the Plan.
(a) Maximum Shares Available Under Plan. Subject to adjustment as provided in Section 11 of this Plan, the number of Common
Shares that may be issued or transferred (A) upon the exercise of Option Rights or Appreciation Rights, (B) as Restricted Shares
and released from substantial risks of forfeiture thereof, (C) in payment of Restricted Stock Units, (D) in payment of Performance
Shares or Performance Units that have been earned, (E) as Other Awards, or (F) in payment of dividend equivalents paid with
respect to awards made under the Plan will not exceed in the aggregate (x) 2,025,000 shares, minus (y) as of the Effective Date,
one Common Share for every one Common Share subject to an award granted under the Predecessor Plan between February 24,
2023 and the Effective Date, plus (z) any Common Shares that become available under this Plan as a result of forfeiture,
cancellation, expiration, or cash settlement of awards, as provided in Section 3(b) below. Such shares may be shares of original
issuance or treasury shares or a combination of the foregoing.
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(b) Share Counting Rules.
(i) If any Common Shares issued or transferred pursuant to an award granted under this Plan are forfeited, or an award granted under
this Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part), the Common Shares issued or transferred
pursuant to, or subject to, such award (as applicable) will, to the extent of such cancellation, forfeiture, expiration, or cash
settlement, again be available for issuance or transfer under Section 3(a) above.
(ii) If after February 24, 2023, any Common Shares subject to an award granted under the Predecessor Plan are forfeited, or an award
granted under the Predecessor Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part), the Common Shares
subject to such award will, to the extent of such cancellation, forfeiture, expiration, or cash settlement, be available for issuance or
transfer under Section 3(a) above.
(iii) Notwithstanding anything to the contrary contained in this Section 3, the following Common Shares will not be added to the aggregate
number of Common Shares available for issuance or transfer under Section 3(a) above: (A) Common Shares tendered or otherwise
used in payment of the Option Price of an Option Right (or the option price of an option right granted under the Predecessor Plan);
(B) Common Shares withheld or otherwise used by the Company to satisfy a tax withholding obligation; (C) Common Shares subject
to an Appreciation Right (or an appreciation right granted under the Predecessor Plan) that are not actually issued in connection with
its Common Shares settlement on exercise thereof; and (D) Common Shares reacquired by the Company on the open market or
otherwise using cash proceeds from the exercise of Option Rights (or option rights granted under the Predecessor Plan). In addition,
if, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Common Shares based on
fair market value, such Common Shares will not count against the aggregate plan limit under Section 3(a) above.
(c) Limit on Incentive Stock Options. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to
adjustment as provided in Section 11 of this Plan, the aggregate number of Common Shares actually issued or transferred by the
Company upon the exercise of Incentive Stock Options will not exceed 2,025,000 Common Shares.
(d) Individual Participant Limits. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary, and subject to
adjustment as provided in Section 11 of this Plan:
(i) No Participant will be granted Option Rights and/or Appreciation Rights, in the aggregate, for more than 500,000 Common Shares
during any calendar year.
(ii) No Participant will be granted Restricted Shares, Restricted Stock Units, Performance Shares and/or Other Awards, in the
aggregate, for more than 500,000 Common Shares during any calendar year.
(iii) In no event will any Participant in any calendar year receive Performance Units and/or Other Awards payable in cash having an
aggregate maximum value as of their respective Dates of Grant in excess of $5,000,000.
(e) Minimum Vesting Period. Except for Awards granted with respect to a maximum of five percent (5%) of the Common Shares
authorized in Section 3(a), no Award may have a vesting period of less than one year.
4. Option Rights. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to
Participants of Option Rights. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements,
contained in the following provisions:
(a) Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this Plan.
(b) Each grant will specify an Option Price per share, which (except with respect to awards under Section 22 of this Plan) may not be
less than the Market Value per Share on the Date of Grant.
(c) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire
transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the
Optionee (or other consideration authorized pursuant to Section 4(d) of this Plan) having a value at the time of exercise equal to the
total Option Price, (iii) subject to any conditions or limitations established by the Committee, the Company’s withholding of Common
Shares otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that,
solely for purposes of determining the number of treasury shares held by the Company, the Common Shares so withheld will not be
treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by
such other methods as may be approved by the Committee.
(d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a
bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.
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(e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant
remain unexercised.
(f) Each grant will specify the period or periods of continuous service by the Optionee with the Company or any Subsidiary that is
necessary before the Option Rights or installments thereof will become exercisable.
(g) Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights.
(h) Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to
qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing.
Incentive Stock Options may only be granted to Participants who meet the definition of “employees” under Section 3401(c) of the Code.
(i) The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right
authorized under Section 5 of this Plan.
(j) No Option Right will be exercisable more than 10 years from the Date of Grant.
(k) Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(l) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will
contain such terms and provisions, consistent with this Plan, as the Committee may approve.
5. Appreciation Rights.
(a) The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting (i) to any
Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing
Appreciation Rights. A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option
Right, to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the
Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any time prior to the
exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an
Incentive Stock Option must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right will be a
right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a
percentage of the Spread (not exceeding 100 percent) at the time of exercise.
(b) Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained
in the following provisions:
(i) Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common
Shares or any combination thereof.
(ii) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the
Committee at the Date of Grant.
(iii) Any grant may specify waiting periods before exercise and permissible exercise dates or periods.
(iv) Each grant may specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is
necessary before the Appreciation Rights or installments thereof will become exercisable.
(v) Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such
Appreciation Rights.
(vi) Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such
Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with
this Plan, as the Committee may approve.
(c) Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when
the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right
for cancellation. Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any
Tandem Appreciation Rights previously granted to the Participant remain unexercised.
(d) Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
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(e) Regarding Free-Standing Appreciation Rights only:
(i) Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to awards
under Section 22 of this Plan) may not be less than the Market Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously
granted to the Participant remain unexercised; and
(iii) No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.
6. Restricted Shares. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or
sale of Restricted Shares to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of
the requirements, contained in the following provisions:
(a) Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration
of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial
risk of forfeiture and/or restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(c) Each such grant or sale will provide that the Restricted Shares covered by such grant or sale that vests upon the passage of time
will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the
Committee at the Date of Grant or upon achievement of Management Objectives referred to in subparagraph (e) below.
(d) Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares will be prohibited or restricted in the manner and to the extent prescribed by the Committee at
the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions
subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Shares may specify Management Objectives that, if achieved, will result in termination or early termination of
the restrictions applicable to such Restricted Shares.
(f) Any such grant or sale of Restricted Shares may require that any or all dividends or other distributions paid thereon during the period
of such restrictions be automatically deferred and reinvested in additional Restricted Shares, which may be subject to the same
restrictions as the underlying award; provided, however, that dividends or other distributions on Restricted Shares with restrictions
that lapse as a result of the achievement of Management Objectives will be deferred until and paid contingent upon the achievement
of the applicable Management Objectives.
(g) Each grant or sale of Restricted Shares will be evidenced by an Evidence of Award and will contain such terms and provisions,
consistent with this Plan, as the Committee may approve. Unless otherwise directed by the Committee, (i) all certificates
representing Restricted Shares will be held in custody by the Company until all restrictions thereon will have lapsed, together with a
stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering
such shares or (ii) all Restricted Shares will be held at the Company’s transfer agent in book entry form with appropriate restrictions
relating to the transfer of such Restricted Shares.
7. Restricted Stock Units. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the
granting or sale of Restricted Stock Units to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be
subject to all of the requirements, contained in the following provisions:
(a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Participant in the
future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the
achievement of Management Objectives) during the Restriction Period as the Committee may specify.
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(c) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of
ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the
Committee may, at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current
or deferred or contingent basis, either in cash or in additional Common Shares; provided, however, that dividend equivalents or other
distributions on Common Shares underlying Restricted Stock Units with restrictions that lapse as a result of the achievement of
Management Objectives will be deferred until and paid contingent upon the achievement of the applicable Management Objectives.
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(d) Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have
been earned. Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common
Shares or cash, or a combination thereof.
(e) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions,
consistent with this Plan, as the Committee may approve.
8. Performance Shares and Performance Units. The Committee may, from time to time and upon such terms and conditions as it may determine,
authorize the granting of Performance Shares and Performance Units. Each such grant may utilize any or all of the authorizations, and
will be subject to all of the requirements, contained in the following provisions:
(a) Each grant will specify the number or amount of Performance Shares or Performance Units, to which it pertains, which number or
amount may be subject to adjustment to reflect changes in compensation or other factors.
(b) The Performance Period with respect to each Performance Share or Performance Unit will be such period of time as will be
determined by the Committee at the time of grant.
(c) Any grant of Performance Shares or Performance Units will specify Management Objectives which, if achieved, will result in
payment or early payment of the award, and each grant may specify in respect of such specified Management Objectives a minimum
acceptable level or levels of achievement and may set forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the minimum or threshold level or levels, or is at or above the
target level or levels, but falls short of maximum achievement of the specified Management Objectives.
(d) Each grant will specify the time and manner of payment of Performance Shares or Performance Units that have been earned. Any
grant may specify that the amount payable with respect thereto may be paid by the Company in cash, in Common Shares, in
Restricted Shares or Restricted Stock Units or in any combination thereof.
(e) Any grant of Performance Shares or Performance Units may specify that the amount payable or the number of Common Shares or
Restricted Shares or Restricted Stock Units with respect thereto may not exceed a maximum specified by the Committee at the Date
of Grant.
(f) The Committee may, at the Date of Grant of Performance Shares, provide for the payment of dividend equivalents to the holder
thereof either in cash or in additional Common Shares, subject in all cases to deferral and payment on a contingent basis based on
the Participant’s earning of the Performance Shares with respect to which such dividend equivalents are paid.
(g) Each grant of Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other
terms and provisions, consistent with this Plan, as the Committee may approve.
9. Other Awards.
(a) Subject to applicable law and the limit set forth in Section 3 of this Plan, the Committee may grant to any Participant such other
awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to,
Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with value and
payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other
factors designated by the Committee, and awards valued by reference to the book value of the Common Shares or the value of
securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company. The Committee will
determine the terms and conditions of such awards. Common Shares delivered pursuant to an award in the nature of a purchase right
granted under this Section 9 will be purchased for such consideration, paid for at such time, by such methods, and in such forms,
including, without limitation, Common Shares, other awards, notes or other property, as the Committee determines.
(b) Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this
Section 9.
(c) The Committee may grant Common Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a
Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such
terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.
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10. Administration of this Plan.
(a) This Plan will be administered by the Committee. The Committee may from time to time delegate all or any part of its authority
under this Plan to a subcommittee thereof. To the extent of any such delegation, references in this Plan to the Committee will be
deemed to be references to such subcommittee.
(b) The interpretation and construction by the Committee of any provision of this Plan or of any agreement, notification or document
evidencing the grant of awards under this Plan and any determination by the Committee pursuant to any provision of this Plan or of
any such agreement, notification or document will be final and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith. In addition, the Committee is authorized to take any action it determines in its sole
discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan Section
or other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.
(c) To the extent permitted by law, the Committee may delegate to one or more of its members or to one or more officers of the
Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the
Committee, the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or
more persons to render advice with respect to any responsibility the Committee, the subcommittee or such person may have under
the Plan. The Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on
the same basis as the Committee: (i) designate employees to be recipients of awards under this Plan; and (ii) determine the size of
any such awards; provided, however, that (A) the Committee will not delegate such responsibilities to any such officer for awards
granted to an employee who is an officer, Director, or more than 10% beneficial owner of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with
Section 16 of the Exchange Act, or any Covered Employee; (B) the resolution providing for such authorization sets forth the total
number of Common Shares such officer(s) may grant; and (C) the officer(s) will report periodically to the Committee regarding the
nature and scope of the awards granted pursuant to the authority delegated.
11. Adjustments. The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option
Rights, Appreciation Rights, Restricted Stock Units, Performance Shares and Performance Units granted hereunder and, if applicable, in
the number of Common Shares covered by Other Awards, in the Option Price and Base Price provided in outstanding Option Rights and
Appreciation Rights, in the kind of shares covered thereby, and in the other terms, as the Committee, in its sole discretion, exercised in
good faith, shall determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise
would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the
Company, (b) any merger, consolidation, spin-off, split- off, spin-out, split-up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect
similar to any of the foregoing. However, such adjustments shall be made automatically, without the necessity of Committee action, on the
customary arithmetical basis in the case of any stock split, including a stock split effected by means of a stock dividend, and in the case of
any other dividend paid in shares of the Company. Moreover, in the event of any such transaction or event or in the event of a Change in
Control, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration
(including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and may require in connection therewith
the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each Option Right or
Appreciation Right with an Option Price or Base Price greater than the consideration offered in connection with any such transaction or
event or Change in Control, the Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any
payment to the person holding such Option Right or Appreciation Right. The Committee shall also make or provide for such adjustments in
the numbers of shares specified in Section 3 of this Plan as the Committee in its sole discretion, exercised in good faith, shall determine is
appropriate to reflect any transaction or event described in this Section 11; provided, however, that any such adjustment to the number
specified in Section 3(c) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify
as an Incentive Stock Option to fail to so qualify. Any adjustment under this Section 11 need not be the same for all Participants.
12. Change in Control.
(a) For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan,
a “Change in Control” will be deemed to have occurred upon the occurrence of any of the following events:
(i) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) is or becomes
the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the then-outstanding Voting Stock of the Company; provided, however, that:
(1) for purposes of this Section 12(a)(i), the following acquisitions will not constitute a Change in Control: (A) any acquisition of
Voting Stock of the Company directly from the Company that is approved by a majority of the Incumbent Directors, (B) any
acquisition of Voting Stock of the Company by the Company or any Subsidiary, (C) any acquisition of Voting Stock of the
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Company by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, and (D) any acquisition of Voting Stock of the Company by any Person pursuant
to a Business Transaction that complies with clauses (A), (B) and (C) of Section 12(a)(iii) below;
(2) if any Person is or becomes the beneficial owner of 30% or more of combined voting power of the then-outstanding Voting
Stock of the Company as a result of a transaction described in clause (A) of Section 12(a)(i)(1) above and such Person
thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company representing 1% or more of
the then-outstanding Voting Stock of the Company, other than in an acquisition directly from the Company that is approved by a
majority of the Incumbent Directors or as a result of a stock dividend, stock split or similar transaction effected by the Company
in which all holders of Voting Stock are treated equally, such subsequent acquisition will be treated as a Change in Control;
(3) a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 30% or more of the
Voting Stock of the Company as a result of a reduction in the number of shares of Voting Stock of the Company outstanding
pursuant to a transaction or series of transactions that is approved by a majority of the Incumbent Directors unless and until
such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company representing 1%
or more of the then-outstanding Voting Stock of the Company, other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired beneficial ownership of 30%
or more of the Voting Stock of the Company inadvertently, and such Person divests as promptly as practicable but no later than
the date, if any, set by the Incumbent Board a sufficient number of shares so that such Person beneficially owns less than 30%
of the Voting Stock of the Company, then no Change in Control will have occurred as a result of such Person’s acquisition; or
(ii) a majority of the Board ceases to be comprised of Incumbent Directors; or
(iii) the consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of
the Company or the acquisition of the stock or assets of another corporation, or other transaction (each, a “Business Transaction”),
unless, in each case, immediately following such Business Transaction (A) the Voting Stock of the Company outstanding
immediately prior to such Business Transaction continues to represent (either by remaining outstanding or by being converted into
Voting Stock of the surviving entity or any parent thereof), more than 50% of the combined voting power of the then outstanding
shares of Voting Stock of the entity resulting from such Business Transaction (including, without limitation, an entity which as a
result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or
more subsidiaries), (B) no Person (other than the Company, such entity resulting from such Business Transaction, or any employee
benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from such Business
Transaction) beneficially owns, directly or indirectly, 30% or more of the combined voting power of the then outstanding shares
of Voting Stock of the entity resulting from such Business Transaction, and (C) at least a majority of the members of the Board of
Directors of the entity resulting from such Business Transaction were Incumbent Directors at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Transaction, if earlier; or
(iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a
Business Transaction that complies with clauses (A), (B) and (C) of Section 12(a)(iii).
(b) Specifically defined terms for purposes of Section 12(a):
(i) “Board” means the Board of Directors of Lincoln Electric Holdings, Inc.
(ii) “Incumbent Directors” means the individuals who, as of the date hereof, are Directors of the Company (each, a “Director”) and
any individual becoming a Director subsequent to the date hereof whose election, nomination for election by the Company’s
shareholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific
vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without
objection to such nomination); provided, however, that an individual will not be an Incumbent Director if such individual’s election
or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board.
(iii) “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(iv) “Voting Stock” means securities entitled to vote generally in the election of directors.
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(c) In the event of a Change in Control, unless otherwise determined by the Committee or set forth in an Evidence of Award, or as
provided for in an individual severance or employment agreement between the Company and Participant, the following acceleration,
exercisability, and valuation provisions apply:
(i) Upon a Change in Control, if either (A) an award meeting the requirements of Section 12(c)(ii) (a “Replacement Award”) is not
provided to the Participant to replace or adjust an outstanding Award (a “Replaced Award”), and the Participant remains in the
continuous employ of the Company or a Subsidiary throughout the period beginning on the Date of Grant and ending on the date
of the Change in Control, or (B) the Participant was a party to a severance agreement with the Company providing for benefits in
connection with a Change in Control (a “Severance Agreement”) at the time of the Participant’s termination of employment, and
the Participant’s employment was terminated by the Company (x) other than for Cause or pursuant to an individually negotiated
arrangement after the Date of Grant, (y) following the commencement of any discussion with a third person that results in a Change
in Control and (z) within twelve months prior to the Change in Control, then outstanding Option Rights and Appreciation Rights will
become fully vested and exercisable and outstanding Restricted Shares, Restricted Stock Units, Performance Units, Performance
Shares and Other Awards will become fully vested (in the case of Awards that are subject to the achievement of performance
criteria, such vesting shall be based on the greater of target and actual performance, with actual performance determined by the
Committee based upon (I) actual performance through the most recent date prior to the Change in Control for which achievement
of the performance criteria can reasonably be determined and (II) expected performance for the remainder of the applicable
performance period (the “COC Payout Level”)).
(ii) An award meets the conditions of this Section 12(c)(ii) (and hence qualifies as a Replacement Award) if: (A) it is of the same type
as the Replaced Award (in the case of a Replaced Award subject to performance-based vesting, an award subject to performance-
based vesting); (B) it has a value at the time of grant or adjustment at least equal to the value of the Replaced Award; (C) it relates
to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with
the Company or its successor following the Change in Control; (D) if the Participant is subject to U.S. federal income tax under the
Code, the tax consequences to the Participant under the Code of the Replacement Award are not less favorable to Participant than
the tax consequences of the Replaced Award; and (E) its other terms and conditions are not less favorable to the Participant than
the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change
in Control). For purposes of clause (B) of the preceding sentence, “value” with respect to Option Rights and Appreciation Rights
means the Market Value Per Share as determined in connection with the Change in Control over the applicable exercise price,
and with respect to an Award subject to the achievement of performance criteria means a value at least equal to the value of the
portion of the Award that would vest at the COC Payout Level. Without limiting the generality of the foregoing, the Replacement
Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied.
The determination of whether the conditions of this Section 12(c)(ii) are satisfied will be made by the Committee, as constituted
immediately before the Change in Control.
(iii) Upon (A) a termination of Participant’s employment with the Company or any successor for Good Reason or (B) a termination of
Participant’s employment by the Company or its successor, other than a termination for Cause, or (C) the Participant’s death or
disability, in each case, occurring at or during the period of two years after a Change in Control, (I) all Replacement Awards held by
the Participant will become fully vested (with such Replacement Award calculated in a manner which satisfies Section 12(c)(ii)),
and (II) all Option Rights and Appreciation Rights held by the Participant immediately before such termination of employment that
the Participant held as of the date of the Change in Control or that constitute Replacement Awards will become fully exercisable
and will remain exercisable until the expiration of the stated term of such Option Right or Appreciation Right.
13. Detrimental Activity and Recapture Provisions. Any Evidence of Award may provide for the cancellation or forfeiture of an award or the forfeiture
and repayment to the Company of any gain related to an award, or other provisions intended to have a similar effect, upon such terms and
conditions as may be determined by the Committee from time to time, if a Participant, either (a) during employment or other service with
the Company or a Subsidiary or (b) within a specified period after termination of such employment or service, shall engage in any
detrimental activity. In addition, notwithstanding anything in this Plan to the contrary, any Evidence of Award may also provide for the
cancellation or forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions
intended to have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the
Exchange Act and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities
exchange or national securities association on which the Common Shares may be traded.
14. Non U.S. Participants. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for
such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of
the United States of America or who provide services to the Company under an agreement with a foreign nation or agency, as the
Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without
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limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in
effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having
been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements,
however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the shareholders of the Company.
15. Transferability.
(a) Except as otherwise determined by the Committee, no Option Right, Appreciation Right, Restricted Shares, Restricted Stock Unit,
Performance Share, Performance Unit, Other Award or dividend equivalents paid with respect to awards made under this Plan will
be transferable by the Participant except pursuant to a domestic relations order (that contains any information required by the
Company to effectuate the transfer) or by will or the laws of descent and distribution, and in no event will any such award granted
under the Plan be transferred for value. Except as otherwise determined by the Committee, Option Rights and Appreciation Rights
will be exercisable during the Participant’s lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by
his or her guardian or legal representative acting on behalf of the Participant in a fiduciary capacity under state law or court
supervision.
(b) The Committee may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by
the Company upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable
to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to
the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions
on transfer.
16. Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any
payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or
such other person make arrangements satisfactory to the Company for payment of the balance of such taxes required to be withheld,
which arrangements (in the discretion of the Committee) may include relinquishment of a portion of such benefit. If a Participant’s benefit
is to be received in the form of Common Shares, and such Participant fails to make arrangements for the payment of tax, then, unless
otherwise determined by the Committee, the Company will withhold Common Shares having a value equal to the amount required to be
withheld. Notwithstanding the foregoing, when a Participant is required to pay the Company an amount required to be withheld under
applicable income and employment tax laws, the Participant may elect, unless otherwise determined by the Committee, to satisfy the
obligation, in whole or in part, by having withheld, from the shares required to be delivered to the Participant, Common Shares having a
value equal to the amount required to be withheld or by delivering to the Company other Common Shares held by such Participant. The
shares used for tax withholding will be valued at an amount equal to the market value of such Common Shares on the date the benefit is
to be included in Participant’s income. In no event will the market value of the Common Shares to be withheld and delivered pursuant to
this Section to satisfy applicable withholding taxes in connection with the benefit exceed the maximum amount of taxes required to be
withheld. Participants will also make such arrangements as the Company may require for the payment of any withholding tax obligation
that may arise in connection with the disposition of Common Shares acquired upon the exercise of Option Rights.
17. Compliance with Section 409A of the Code.
(a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of
the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. Any reference
in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to
such Section by the U.S. Department of the Treasury or the Internal Revenue Service. The terms and conditions governing any
Awards that the Committee determines will be subject to Section 409A of the Code, including any rules for elective or mandatory
deferral of the delivery of cash or Shares pursuant thereto and any rules regarding treatment of such Awards in the event of a
Change in Control, shall be set forth in the applicable Evidence of Award.
(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation
(within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any
deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit
under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company
or any of its Subsidiaries.
(c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant is a
specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the
Company from time to time) and (ii) the Company determines that an amount payable hereunder constitutes deferred compensation
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(within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay
rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company
will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the tenth business
day of the seventh month after such separation from service.
(d) Each payment under any Award shall be treated as a separate payment for purposes of Section 409A of the Code. In no event may
a Participant, directly or indirectly, designate the calendar year of any payment to be made under any Award.
(e) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper
application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder
as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any
case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a
Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under
Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold
a Participant harmless from any or all of such taxes or penalties.
18. Amendments.
(a) The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to
this Plan must be approved by the shareholders of the Company in order to comply with applicable law or the rules of the NASDAQ
Stock Market or, if the Common Shares are not traded on the NASDAQ Stock Market, the principal national securities exchange
upon which the Common Shares are traded or quoted, then, such amendment will be subject to shareholder approval and will not
be effective unless and until such approval has been obtained.
(b) Except in connection with a corporate transaction or event described in Section 11 of this Plan, the terms of outstanding awards
may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights,
or cancel outstanding Option Rights or Appreciation Rights in exchange for cash, other awards or Option Rights or Appreciation
Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base
Price of the original Appreciation Rights, as applicable, without shareholder approval. This Section 18(b) is intended to prohibit the
repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in
Section 11 of this Plan. Notwithstanding any provision of this Plan to the contrary, this Section 18(b) may not be amended without
approval by the Company’s shareholders.
(c) Subject to Section 18(b) hereof, the Committee may amend the terms of any award theretofore granted under this Plan
prospectively or retroactively. Subject to Section 11 above, no such amendment will impair the rights of any Participant without his
or her consent. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of
Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.
19. Governing Law. This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with
the internal substantive laws of the State of Ohio.
20. Effective Date/Termination. This Plan will be effective as of the Effective Date. No grants will be made on or after the Effective Date under
the Predecessor Plan, except that outstanding awards granted under the Predecessor Plan will continue unaffected following the
Effective Date. No grant will be made under this Plan after April 19, 2033, but all grants made on or prior to such date will continue in
effect thereafter subject to the terms thereof and of this Plan.
21. Miscellaneous Provisions.
(a) The Company will not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement of fractions in cash.
(b) This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to
terminate such Participant’s employment or other service at any time.
(c) Except with respect to Section 21(e), to the extent that any provision of this Plan would prevent any Option Right that was intended
to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option
Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of
this Plan.
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(d) No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder,
would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority
having jurisdiction over this Plan.
(e) Absence on leave approved by a duly constituted officer of the Company or any of its Subsidiaries will not be considered
interruption or termination of service of any employee for any purposes of this Plan or awards granted hereunder.
(f) No Participant will have any rights as a shareholder with respect to any shares subject to awards granted to him or her under this
Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the
Company.
(g) The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or
deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a
Subsidiary to the Participant.
(h) Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance
of Common Share under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and
which are intended to comply with the requirements of Section 409A of the Code. The Committee also may provide that deferred
issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.
(i) If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any
award under any law deemed applicable by the Committee, such provision will be construed or deemed amended or limited in
scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will
remain in full force and effect.
(j) Notwithstanding anything to the contrary contained in this Plan, including Section 3(e), the vesting of any Award may be
accelerated in the event of the Participant’s retirement, death or disability, in connection with a Change in Control pursuant to
Section 12 or as otherwise provided in the applicable Evidence of Award.
(k) Notwithstanding anything to the contrary in this Plan, any dividends or dividend equivalents credited with respect to any Award shall
be subject to the same vesting conditions applicable to such Award.
22. Stock-Based Awards in Substitution for Option Rights or Awards Granted by Other Company. Notwithstanding anything in this Plan to the contrary:
(a) Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options,
stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity
engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or
assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner
that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or
substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Shares
substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any
exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with
the transaction.
(b) In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has
shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such
acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to
reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided,
however, that awards using such available shares may not be made after the date awards or grants could have been made under
the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees
or directors of the Company or any Subsidiary prior to such acquisition or merger.
(c) Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations
of, the Company under Sections 22(a) or 22(b) above will not reduce the Common Shares available for issuance or transfer under
the Plan or otherwise count against the limits contained in Section 3 of the Plan. In addition, no Common Shares that are issued or
transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a)
or 22(b) above will be added to the aggregate plan limit contained in Section 3 of the Plan.
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APPENDIX C – LINCOLN ELECTRIC
HOLDINGS, INC.
2023 STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS
Set forth below is the text of the 2023 Stock Plan for Non-Employee Directors. This plan will be approved if Proposal 6 is adopted.
1. Purposes. The purposes of this 2023 Stock Plan for Non-Employee Directors are to: (a) encourage the non-employee Directors of the
Company to own Common Shares and thereby to align their interests more closely with the interests of the Company’s other shareholders;
(b) encourage the highest level of Director achievement by providing the Directors with a vested interest in the Company’s attainment of its
financial goals; and (c) provide financial incentives that will help attract and retain the most qualified non-employee Directors.
2. Definitions. As used in this Plan:
(a) “Appreciation Right” means a right granted pursuant to Section 5 of this Plan, and will include both Free-Standing Appreciation
Rights and Tandem Appreciation Rights.
(b) “Award” means an Option Right, an Appreciation Right, Restricted Shares, Restricted Stock Units, or Other Awards granted in
accordance with the terms of the Plan.
(c) “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation
Right or a Tandem Appreciation Right.
(d) “Board” means the Board of Directors of the Company.
(e) “Cause” means that, prior to Termination of Service, the Participant shall have: (i) committed a criminal violation involving fraud,
embezzlement or theft in connection with the Participant’s duties or in the course of the Participant’s service as a Director;
(ii) committed an intentional violation of the Lincoln Electric Code of Corporate Conduct and Ethics, or any successor document,
(A) in effect at the relevant time if such violation occurs prior to a Change in Control, or (B) in effect immediately prior to a Change in
Control if such violation occurs on or after a Change in Control; (iii) committed intentional wrongful damage to property of the
Company or any Subsidiary; (iv) committed intentional wrongful disclosure of secret processes or confidential information of the
Company or any Subsidiary; or (v) committed intentional wrongful engagement in any of the activities set forth in any confidentiality,
non-competition or non-solicitation arrangement with the Company to which the Participant is a party; and, in each case, any such
act shall have been demonstrably and materially harmful (including financially or reputationally harmful) to the Company. For
purposes of this Plan, no act or failure to act on the part of the Participant will be deemed “intentional” if it was due primarily to an
error in judgment or negligence, but will be deemed “intentional” only if done or omitted to be done by the Participant not in good
faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company. Before a
Change in Control, the Committee shall have the sole discretion to determine whether “Cause” exists, and its determination shall be
final. After a Change in Control, any determination as to whether “Cause” exists shall be subject to de novo review.
(f) “Change in Control” has the meaning set forth in Section 11 of this Plan.
(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time.
(h) “Committee” means the Nominating and Corporate Governance Committee of the Board (or its successor(s)), or any other
committee of the Board designated by the Board to administer this Plan pursuant to Section 9 of this Plan consisting solely of no
fewer than two Non-Employee Directors.
(i) “Common Shares” means the common shares of the Company, without par value, or any security into which such common shares
may be changed by reason of any transaction or event of the type referred to in Section 10 of this Plan.
(j) “Company” means Lincoln Electric Holdings, Inc., an Ohio corporation, and its successors.
(k) “Date of Grant” means the date specified by the Committee on which a grant of Option Rights or Appreciation Rights or Other
Awards, or a grant or sale of Restricted Shares, Restricted Stock Units or Other Awards, will become effective (which date will not
be earlier than the date on which the Committee takes action with respect thereto).
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(l) “Director” means a member of the Board.
(m) “Disability” means permanent and total disability as defined under the Company’s long-term disability program.
(n) “Effective Date” means the date this Plan is approved by the shareholders of the Company.
(o) “Eligible Director” means a Director who is not an employee of the Company. For purposes of this Plan, an employee is an
individual whose wages are subject to the withholding of federal income tax under Section 3401 and 3402 of the Code.
(p) “Evidence of Award” means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the
Committee that sets forth the terms and conditions of the awards granted under the Plan. An Evidence of Award may be in an
electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the
Committee, need not be signed by a representative of the Company or a Participant.
(q) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law,
rules and regulations may be amended from time to time.
(r) “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in
tandem with an Option Right.
(s) “Market Value per Share” means, as of any particular date, the closing price of a Common Share as reported for that date on the
NASDAQ Stock Market or, if the Common Shares are not then listed on the NASDAQ Stock Market, on any other national securities
exchange on which the Common Shares are listed, or if there are no sales on such date, on the next preceding trading day during
which a sale occurred. If there is no regular public trading market for the Common Shares, then the Market Value per Share shall
be the fair market value as determined in good faith by the Committee. The Committee is authorized to adopt another fair market
value pricing method provided such method is stated in the Evidence of Award and is in compliance with the fair market value
pricing rules set forth in Section 409A of the Code.
(t) “Non-Employee Director” means a person who is a “Non-Employee Director” of the Company within the meaning of Rule 16b-3
promulgated under the Exchange Act.
(u) “Optionee” means the optionee named in an Evidence of Award evidencing an outstanding Option Right.
(v) “Option Price” means the purchase price payable on exercise of an Option Right.
(w) “Option Right” means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan.
(x) “Other Award” means an award granted pursuant to Section 8 of this Plan.
(y) “Participant” means an Eligible Director who is selected by the Committee to receive benefits under this Plan.
(z) “Plan” means this 2023 Stock Plan for Non-Employee Directors.
(aa) “Predecessor Plan” means the Company’s 2015 Stock Plan for Non-Employee Directors, as amended.
(bb) “Restricted Shares” means Common Shares granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk
of forfeiture nor the prohibition on transfers has expired.
(cc) “Restricted Stock Units” means an award made pursuant to Section 7 of this Plan of the right to receive Common Shares or cash at
the end of a specified period.
(dd) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in
Section 7 of this Plan.
(ee) “Retirement” means, unless otherwise determined by the Committee, a Termination of Service as a Director at the end of the Director’s
term occurring as a result of the Director’s being unable to stand for reelection under the Company’s policy relating to Director
retirement.
(ff) “Spread” means the excess of the Market Value per Share on the date when an Appreciation Right is exercised over the Option Price
or Base Price provided for in the related Option Right or Free-Standing Appreciation Right, respectively.
(gg) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an
Option Right.
(hh) “Termination of Service” means the time at which the Director ceases to serve as a Director for any reason, with or without cause,
which includes termination by resignation, removal, death or retirement.
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3. Shares Available Under the Plan.
(a) Maximum Shares Available Under Plan.
(i) Subject to adjustment as provided in Section 10 of this Plan, the number of Common Shares that may be issued or transferred
(A) upon the exercise of Option Rights or Appreciation Rights, (B) as Restricted Shares and released from substantial risks of
forfeiture thereof, (C) in payment of Restricted Stock Units, (D) as awards contemplated by Section 8 of this Plan, or (E) in payment
of dividend equivalents paid with respect to awards made under this Plan will not exceed in the aggregate 200,000 shares. Such
shares may be shares of original issuance or treasury shares or a combination of the foregoing.
(ii) Common Shares covered by an award granted under this Plan will not be counted as used unless and until they are actually
issued and delivered to a Participant. If any Common Shares issued or transferred pursuant to an award granted under this Plan
are forfeited, or an award granted under this Plan is cancelled or forfeited, expires or is settled for cash (in whole or in part), the
Common Shares issued or transferred pursuant to, or subject to, such award (as applicable) will, to the extent of such cancellation,
forfeiture, expiration, or cash settlement, again be available for issuance or transfer under Section 3(a)(i) above. Without
limiting the generality of the foregoing, upon payment in cash of the benefit provided by any award granted under this Plan, any
Common Shares that were covered by the applicable portion of such award will be available for issuance or transfer hereunder.
Notwithstanding anything to the contrary contained herein: (A) if Common Shares are tendered or otherwise used in payment of the
Option Price of an Option Right, the total number of Common Shares covered by the Option Right being exercised will reduce the
aggregate plan limit described above; and (B) the number of Common Shares covered by an Appreciation Right, to the extent that it
is exercised and settled in Common Shares, and whether or not all Common Shares covered by the Appreciation Right are actually
issued to the Participant upon exercise of the Appreciation Right, will be considered issued or transferred pursuant to this Plan. In
the event that the Company repurchases Common Shares with Option Right proceeds, such Common Shares will not be added to
the aggregate plan limit described above. If, under this Plan, a Participant has elected to give up the right to receive compensation
in exchange for Common Shares based on fair market value, such Common Shares will not count against the aggregate plan limit
described above.
(b) Individual Participant Limit. Notwithstanding anything in this Section 3, or elsewhere in this Plan to the contrary, and subject to
adjustment as provided in Section 10 of this Plan, in no event will any Participant receive in any calendar year (i) Common Share-
based awards under this Plan for, in the aggregate, more than 13,000 Common Shares, and (ii) cash-based awards under this Plan
having an aggregate maximum value in excess of $300,000.
(c) Minimum Vesting Period. Except for Awards granted with respect to a maximum of five percent (5%) of the Common Shares
authorized in Section 3(a)(i), no Award may have a vesting period of less than one year.
4. Option Rights. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting to
Participants of Option Rights. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements,
contained in the following provisions:
(a) Each grant will specify the number of Common Shares to which it pertains subject to the limitations set forth in Section 3 of this
Plan.
(b) Each grant will specify an Option Price per share, which (except with respect to awards under Section 20 of this Plan) may not be
less than the Market Value per Share on the Date of Grant.
(c) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire
transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the
Optionee (or other consideration authorized pursuant to Section 4(d) of this Plan) having a value at the time of exercise equal to the
total Option Price, (iii) subject to any conditions or limitations established by the Committee, the Company’s withholding of Common
Shares otherwise issuable upon exercise of an Option Right pursuant to a “net exercise” arrangement (it being understood that,
solely for purposes of determining the number of treasury shares held by the Company, the Common Shares so withheld will not be
treated as issued and acquired by the Company upon such exercise), (iv) by a combination of such methods of payment, or (v) by
such other methods as may be approved by the Committee.
(d) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a
bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.
(e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant
remain unexercised.
(f) Each grant will specify the period or periods of continuous service by the Optionee with the Company that is necessary before the
Option Rights or installments thereof will become exercisable.
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(g) The exercise of an Option Right will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right
authorized under Section 5 of this Plan.
(h) No Option Right will be exercisable more than 10 years from the Date of Grant.
(i) Option Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(j) Each grant of Option Rights will be evidenced by an Evidence of Award. Each Evidence of Award will be subject to this Plan and will
contain such terms and provisions, consistent with this Plan, as the Committee may approve.
5. Appreciation Rights.
(a) The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting (i) to any
Optionee, of Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, of Free-Standing
Appreciation Rights. A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option
Right, to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the
Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any time prior to the
exercise or termination of the related Option Rights; provided, however, that a Tandem Appreciation Right awarded in relation to an
Incentive Stock Option must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right will be a
right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a
percentage of the Spread (not exceeding 100 percent) at the time of exercise.
(b) Each grant of Appreciation Rights may utilize any or all of the authorizations, and will be subject to all of the requirements, contained
in the following provisions:
(i) Each grant may specify that the amount payable on exercise of an Appreciation Right will be paid by the Company in cash, Common
Shares or any combination thereof.
(ii) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the
Committee at the Date of Grant.
(iii) Any grant may specify waiting periods before exercise and permissible exercise dates or periods.
(iv) Each grant may specify the period or periods of continuous service by the Participant with the Company that is necessary before the
Appreciation Rights or installments thereof will become exercisable.
(v) Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such
Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with
this Plan, as the Committee may approve.
(c) Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when
the related Option Right is also exercisable and at a time when the Spread is positive, and by surrender of the related Option Right
for cancellation. Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any
Tandem Appreciation Rights previously granted to the Participant remain unexercised.
(d) Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.
(e) Regarding Free-Standing Appreciation Rights only:
(i) Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to awards
under Section 20 of this Plan) may not be less than the Market Value per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously
granted to the Participant remain unexercised; and
(iii) No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.
6. Restricted Shares. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the grant or
sale of Restricted Shares to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of
the requirements, contained in the following provisions:
(a) Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration
of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial
risk of forfeiture and/or restrictions on transfer hereinafter referred to.
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(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(c) Each such grant or sale will provide that the Restricted Shares covered by such grant or sale that vests upon the passage of time will
be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the
Committee at the Date of Grant.
(d) Each such grant or sale will provide that during or after the period for which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares will be prohibited or restricted in the manner and to the extent prescribed by the Committee
at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or
provisions subjecting the Restricted Shares to a continuing substantial risk of forfeiture in the hands of any transferee).
(e) Any such grant or sale of Restricted Shares may require that any or all dividends or other distributions paid thereon during the period
of such restrictions be automatically deferred and reinvested in additional Restricted Shares, which may be subject to the same
restrictions as the underlying award.
(f) Each grant or sale of Restricted Shares will be evidenced by an Evidence of Award and will contain such terms and provisions,
consistent with this Plan, as the Committee may approve. Unless otherwise directed by the Committee, (i) all certificates
representing Restricted Shares will be held in custody by the Company until all restrictions thereon will have lapsed, together with a
stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering
such shares or (ii) all Restricted Shares will be held at the Company’s transfer agent in book entry form with appropriate restrictions
relating to the transfer of such Restricted Shares.
7. Restricted Stock Units. The Committee may, from time to time and upon such terms and conditions as it may determine, authorize the
granting or sale of Restricted Stock Units to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be
subject to all of the requirements, contained in the following provisions:
(a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Participant in the
future in consideration of the performance of services, but subject to the fulfillment of such conditions during the Restriction Period
as the Committee may specify.
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(c) During the Restriction Period, the Participant will have no right to transfer any rights under his or her award and will have no rights of
ownership in the Common Shares deliverable upon payment of the Restricted Stock Units and will have no right to vote them, but the
Committee may, at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a
current or deferred or contingent basis, either in cash or in additional Common Shares.
(d) Each grant or sale of Restricted Stock Units will specify the time and manner of payment of the Restricted Stock Units that have
been earned. Each grant or sale will specify that the amount payable with respect thereto will be paid by the Company in Common
Shares or cash, or a combination thereof.
(e) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions,
consistent with this Plan, as the Committee may approve.
8. Other Awards.
(a) Subject to applicable law and the limit set forth in Section 3 of this Plan, the Committee may grant to any Participant such other
awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to,
Common Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into Common Shares, purchase rights for Common Shares, awards with
value and payment contingent upon any other factors designated by the Committee, and awards valued by reference to the book
value of the Common Shares or the value of securities of the Company. The Committee will determine the terms and conditions of
such awards. Common Shares delivered pursuant to an award in the nature of a purchase right granted under this Section 8 will be
purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Common
Shares, other awards, notes or other property, as the Committee determines.
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(b) Cash awards, as an element of or supplement to any other award granted under this Plan, may also be granted pursuant to this
Section 8.
(c) The Committee may grant Common Shares as a bonus, or may grant Other Awards in lieu of obligations of the Company or a
Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such
terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.
9. Administration of this Plan.
(a) This Plan will be administered by the Committee. The Committee may from time to time delegate all or any part of its authority under
this Plan to a subcommittee thereof. To the extent of any such delegation, references in this Plan to the Committee will be deemed
to be references to such subcommittee.
(b) The interpretation and construction by the Committee of any provision of this Plan or of any agreement, notification or document
evidencing the grant of awards under this Plan and any determination by the Committee pursuant to any provision of this Plan or of
any such agreement, notification or document will be final and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith. In addition, the Committee is authorized to take any action it determines in its sole
discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any Plan Section or
other provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.
(c) To the extent permitted by law, the Committee may delegate to one or more of its members or to one or more officers of the
Company, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Committee,
the subcommittee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to
render advice with respect to any responsibility the Committee, the subcommittee or such person may have under the Plan.
10. Adjustments. The Committee shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding
Option Rights, Appreciation Rights, and Restricted Stock Units granted hereunder and, if applicable, in the number of Common Shares
covered by Other Awards, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, in the
kind of shares covered thereby, and in the other terms, as the Committee, in its sole discretion, exercised in good faith, shall determine
is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from
(a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company,
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of
assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to
any of the foregoing. However, such adjustments shall be made automatically, without the necessity of Committee action, on the
customary arithmetical basis in the case of any stock split, including a stock split effected by means of a stock dividend, and in the case
of any other dividend paid in shares of the Company. Moreover, in the event of any such transaction or event or in the event of a
Change in Control, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative
consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and may require in
connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for
each Option Right or Appreciation Right with an Option Price or Base Price greater than the consideration offered in connection with
any such transaction or event or Change in Control, the Committee may in its sole discretion elect to cancel such Option Right or
Appreciation Right without any payment to the person holding such Option Right or Appreciation Right. The Committee shall also make
or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Committee in its sole discretion,
exercised in good faith, shall determine is appropriate to reflect any transaction or event described in this Section 10.
11. Change in Control.
(a) For purposes of this Plan, except as may be otherwise prescribed by the Committee in an Evidence of Award made under this Plan,
a “Change in Control” will be deemed to have occurred upon the occurrence of any of the following events:
(i) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) is or becomes
the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
Voting Power of the then-outstanding Voting Stock of the Company; provided, however, that:
(1) for purposes of this Section 11(a)(i), the following acquisitions will not constitute a Change in Control: (A) any acquisition of
Voting Stock of the Company directly from the Company that is approved by a majority of the Incumbent Directors, (B) any
acquisition of Voting Stock of the Company by the Company or any Subsidiary, (C) any acquisition of Voting Stock of the
Company by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, and (D) any acquisition of Voting Stock of the Company by any Person pursuant
to a Business Transaction that complies with clauses (A), (B) and (C) of Section 11(a)(iii) below;
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(2) if any Person is or becomes the beneficial owner of 30% or more of combined Voting Power of the then-outstanding Voting
Stock of the Company as a result of a transaction described in clause (A) of Section 11(a)(i)(1) above and such Person
thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company representing 1% or more of
the then-outstanding Voting Stock of the Company, other than in an acquisition directly from the Company that is approved by a
majority of the Incumbent Directors or as a result of a stock dividend, stock split or similar transaction effected by the Company
in which all holders of Voting Stock are treated equally, such subsequent acquisition will be treated as a Change in Control;
(3) a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 30% or more of the
Voting Stock of the Company as a result of a reduction in the number of shares of Voting Stock of the Company outstanding
pursuant to a transaction or series of transactions that is approved by a majority of the Incumbent Directors unless and until
such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Company representing 1%
or more of the then-outstanding Voting Stock of the Company, other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired beneficial ownership of 30%
or more of the Voting Stock of the Company inadvertently, and such Person divests as promptly as practicable but no later than
the date, if any, set by the Incumbent Board a sufficient number of shares so that such Person beneficially owns less than 30%
of the Voting Stock of the Company, then no Change in Control will have occurred as a result of such Person’s acquisition; or
(ii) a majority of the Board ceases to be comprised of Incumbent Directors; or
(iii) the consummation of a reorganization, merger or consolidation, or sale or other disposition of all or substantially all of the assets of
the Company or the acquisition of the stock or assets of another corporation, or other transaction (each, a “Business Transaction”),
unless, in each case, immediately following such Business Transaction (A) the Voting Stock of the Company outstanding
immediately prior to such Business Transaction continues to represent (either by remaining outstanding or by being converted into
Voting Stock of the surviving entity or any parent thereof), more than 50% of the combined Voting Power of the then outstanding
shares of Voting Stock of the entity resulting from such Business Transaction (including, without limitation, an entity which as a
result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or
more subsidiaries), (B) no Person (other than the Company, such entity resulting from such Business Transaction, or any employee
benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from such Business
Transaction) beneficially owns, directly or indirectly, 30% or more of the combined Voting Power of the then outstanding shares
of Voting Stock of the entity resulting from such Business Transaction, and (C) at least a majority of the members of the Board of
Directors of the entity resulting from such Business Transaction were Incumbent Directors at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Transaction, if earlier; or
(iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a
Business Transaction that complies with clauses (A), (B) and (C) of Section 11(a)(iii).
(b) Specifically defined terms for purposes of Section 11(a):
(i) “Board” means the Board of Directors of Lincoln Electric Holdings, Inc.
(ii) “Incumbent Directors” means the individuals who, as of the date hereof, are Directors of the Company (each, a “Director”) and
any individual becoming a Director subsequent to the date hereof whose election, nomination for election by the Company’s
shareholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific
vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without
objection to such nomination); provided, however, that an individual will not be an Incumbent Director if such individual’s election
or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board.
(iii) “Subsidiary” means an entity in which the Company directly or indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(iv) “Voting Power” means at any time, the combined voting power of the then-outstanding securities entitled to vote generally in the
election of Directors in the case of the Company, or members of the board of directors or similar body in the case of another entity.
(v) “Voting Stock” means securities entitled to vote generally in the election of directors.
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(c) In the event of a Change in Control, unless otherwise determined by the Committee or set forth in an Evidence of Award, or as
provided for in an individual agreement between the Company and Participant, the following acceleration, exercisability, and
valuation provisions apply:
(i) Except to the extent that an award meeting the requirements of Section 11(c)(ii) (a “Replacement Award”) is provided to the
Participant to replace or adjust an outstanding Award (a “Replaced Award”), upon a Change in Control, outstanding Option Rights
and Appreciation Rights will become fully vested and exercisable and outstanding Restricted Shares, Restricted Stock Units and
Other Awards will become fully vested.
(ii) An award meets the conditions of this Section 11(c)(ii) (and hence qualifies as a Replacement Award) if: (A) it is of the same type
as the Replaced Award; (B) it has a value at the time of grant or adjustment at least equal to the value of the Replaced Award;
(C) it relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is
affiliated with the Company or its successor following the Change in Control; (D) if the Participant is subject to U.S. federal income
tax under the Code, the tax consequences to the Participant under the Code of the Replacement Award are not less favorable
to Participant than the tax consequences of the Replaced Award; and (E) its other terms and conditions are not less favorable to
the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a
subsequent Change in Control). For purposes of clause (B) of the preceding sentence, “value” with respect to Option Rights and
Appreciation Rights means the Market Value Per Share as determined in connection with the Change in Control over the applicable
exercise price. Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the
Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this
Section 11(c)(ii) are satisfied will be made by the Committee, as constituted immediately before the Change in Control.
(iii) Upon a Termination of Service by the Company or its successor other than for Cause, or due to death or disability, at or during the
period of two years after a Change in Control, (A) all Replacement Awards held by the Participant will become fully vested (with
such Replacement Award calculated in a manner which satisfies Section 11(c)(ii)), and (B) all Option Rights and Appreciation
Rights held by the Participant immediately before such Termination of Service that the Participant held as of the date of the Change
in Control or that constitute Replacement Awards will become fully exercisable and will remain exercisable until the expiration of the
stated term of such Option Right or Appreciation Right.
12. Recapture Provisions. Notwithstanding anything in this Plan to the contrary, any Evidence of Award may provide for the cancellation or
forfeiture of an award or the forfeiture and repayment to the Company of any gain related to an award, or other provisions intended to
have a similar effect, upon such terms and conditions as may be required by the Committee or under Section 10D of the Exchange Act
and any applicable rules or regulations promulgated by the Securities and Exchange Commission or any national securities exchange
or national securities association on which the Common Shares may be traded.
13. Non U.S. Participants. In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for
such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside
of the United States of America or who provide services to the Company under an agreement with a foreign nation or agency, as the
Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the
Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without
limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as
in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having
been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements,
however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the shareholders of the Company.
14. Transferability.
(a) Except as otherwise determined by the Committee, no Option Right, Appreciation Right, Restricted Shares, Restricted Stock Unit,
Other Award or dividend equivalents paid with respect to awards made under this Plan will be transferable by the Participant except
pursuant to a domestic relations order (that contains any information required by the Company to effectuate the transfer) or by will
or the laws of descent and distribution, and in no event will any such award granted under the Plan be transferred for value. Except
as otherwise determined by the Committee, Option Rights and Appreciation Rights will be exercisable during the Participant’s
lifetime only by him or her or, in the event of the Participant’s legal incapacity to do so, by his or her guardian or legal representative
acting on behalf of the Participant in a fiduciary capacity under state law or court supervision.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
(b) The Committee may specify at the Date of Grant that part or all of the Common Shares that are (i) to be issued or transferred by the
Company upon the exercise of Option Rights or Appreciation Rights or upon the termination of the Restriction Period applicable to
Restricted Stock Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6
of this Plan, will be subject to further restrictions on transfer.
15. Compliance with Section 409A of the Code.
(a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of
the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and
any grants made hereunder will be administered in a manner consistent with this intent. Any reference in this Plan to Section 409A
of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the
U.S. Department of the Treasury or the Internal Revenue Service.
(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation
(within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any
deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under
this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any
of its Subsidiaries.
(c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant is a
specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the
Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes
deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant
to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the
Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest,
on the tenth business day of the seventh month after such separation from service.
(d) Each payment under any award granted under this Plan shall be treated as a separate payment for purposes of Section 409A of the
Code. In no event may a Participant, directly or indirectly, designate the calendar year of any payment to be made under any award
granted under this Plan.
(e) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper
application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as
the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any
case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a
Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under
Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold
a Participant harmless from any or all of such taxes or penalties.
16. Amendments.
(a) The Board may at any time and from time to time amend this Plan in whole or in part; provided, however, that if an amendment to
this Plan must be approved by the shareholders of the Company in order to comply with applicable law or the rules of the NASDAQ
Stock Market or, if the Common Shares are not traded on the NASDAQ Stock Market, the principal national securities exchange
upon which the Common Shares are traded or quoted, then, such amendment will be subject to shareholder approval and will not
be effective unless and until such approval has been obtained.
(b) Except in connection with a corporate transaction or event described in Section 10 of this Plan, the terms of outstanding awards
may not be amended to reduce the Option Price of outstanding Option Rights or the Base Price of outstanding Appreciation Rights,
or cancel outstanding Option Rights or Appreciation Rights in exchange for cash, other awards or Option Rights or Appreciation
Rights with an Option Price or Base Price, as applicable, that is less than the Option Price of the original Option Rights or Base
Price of the original Appreciation Rights, as applicable, without shareholder approval. This Section 16(b) is intended to prohibit the
repricing of “underwater” Option Rights and Appreciation Rights and will not be construed to prohibit the adjustments provided for in
Section 10 of this Plan. Notwithstanding any provision of this Plan to the contrary, this Section 16(b) may not be amended without
approval by the Company’s shareholders.
(c) If permitted by Section 409A of the Code, but subject to the paragraph that follows, including in the case of termination of service as
a non-employee director by reason of death, Disability or Retirement, or in the case of unforeseeable emergency or other special
circumstances or in the event of a Change in Control, to the extent a Participant holds an Option Right or Appreciation Right not
1 4 3
LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
immediately exercisable in full, or any Restricted Shares as to which the substantial risk of forfeiture or the prohibition or restriction
on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Other
Awards subject to any vesting schedule or transfer restriction, or who holds Common Shares subject to any transfer restriction
imposed pursuant to Section 14(b) of this Plan, the Committee may, in its sole discretion, accelerate the time at which such Option
Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or
restriction on transfer will lapse or the time when such Restriction Period will end or when such awards will be deemed to have been
fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such
award.
Subject to Section 16(b) hereof, the Committee may amend the terms of any award theretofore granted under this Plan
prospectively or retroactively. Subject to Section 10 above, no such amendment will impair the rights of any Participant without his
or her consent. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of
Participants or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.
17. Governing Law. This Plan and all grants and awards and actions taken hereunder will be governed by and construed in accordance with
the internal substantive laws of the State of Ohio.
18. Effective Date/Termination. This Plan will be effective as of the Effective Date. No grants will be made on or after the Effective Date under
the Predecessor Plan, except that outstanding awards granted under the Predecessor Plan will continue unaffected following the
Effective Date. No grant will be made under this Plan after April 19, 2033, but all grants made on or prior to such date will continue in
effect thereafter subject to the terms thereof and of this Plan.
19. Miscellaneous Provisions.
(a) The Company will not be required to issue any fractional Common Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.
(b) This Plan will not confer upon any Participant any right with respect to continuance of service as a Director of the Company, nor will
it interfere in any way with any right the Company would otherwise have to terminate such Participant’s service at any time.
(c) No award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder,
would be, in the opinion of counsel selected by the Company, contrary to law or the regulations of any duly constituted authority
having jurisdiction over this Plan.
(d) No Participant will have any rights as a shareholder with respect to any shares subject to awards granted to him or her under this
Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the
Company.
(e) The Committee may condition the grant of any award or combination of awards authorized under this Plan on the surrender or
deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or a
Subsidiary to the Participant.
(f) Except with respect to Option Rights and Appreciation Rights, the Committee may permit Participants to elect to defer the issuance
of Common Share under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan and
which are intended to comply with the requirements of Section 409A of the Code. The Committee also may provide that deferred
issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts.
(g) If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any
award under any law deemed applicable by the Committee, such provision will be construed or deemed amended or limited in
scope to conform to applicable laws or, in the discretion of the Committee, it will be stricken and the remainder of this Plan will
remain in full force and effect.
(h) Notwithstanding anything to the contrary contained in this Plan, including Section 3(c), the vesting of any Award may be
accelerated in the event of the Participant’s retirement, death or disability, in connection with a Change in Control pursuant to
Section 11 or as otherwise provided in the applicable Evidence of Award.
(i) Notwithstanding anything to the contrary contained in this Plan, any dividends or dividend equivalents credited with respect to any
Award shall be subject to the same vesting conditions applicable to such Award.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT MENU
20. Stock-Based Awards in Substitution for Option Rights or Awards Granted by Other Company. Notwithstanding anything in this Plan to the contrary:
(a) Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options,
stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity
engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or
assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner
that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or
substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Shares
substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any
exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with
the transaction.
(b) In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has
shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such
acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to
reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided,
however, that awards using such available shares may not be made after the date awards or grants could have been made under
the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or
directors of the Company or any Subsidiary prior to such acquisition or merger.
(c) Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations
of, the Company under Sections 20(a) or 20(b) above will not reduce the Common Shares available for issuance or transfer under
the Plan or otherwise count against the limits contained in Section 3 of the Plan. In addition, no Common Shares that are issued or
transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 20(a)
or 20(b) above will be added to the aggregate plan limit contained in Section 3 of the Plan.
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LINCOLN ELECTRIC 2023 PROXY STATEMENT [THIS PAGE INTENTIONALLY LEFT BLANK]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(cid:1409) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
or
(cid:1407) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 0-1402
LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Ohio
(State or other jurisdiction of
incorporation or organization)
22801 St. Clair Avenue, Cleveland, Ohio
(Address of principal executive offices)
34-1860551
(I.R.S. Employer Identification No.)
44117
(Zip Code)
(216) 481-8100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Shares, without par value
Trading Symbol
LECO
Name of each exchange on which registered
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:1409) No (cid:1407)(cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:1407) No (cid:1409)(cid:3)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes (cid:1409) No (cid:1407)(cid:3)
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes (cid:1409) No (cid:1407)(cid:3)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
(cid:1409)
(cid:1407)
Smaller reporting company
Emerging growth company
(cid:1407)
(cid:1407)
(cid:1407)
(cid:3)
(cid:3)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. (cid:1407)(cid:3)
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(c)) by the registered public accounting firm that prepared or issued its audit report.(cid:3)(cid:1409)(cid:3)
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. (cid:1407)(cid:3)
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). (cid:1407)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:1407) No (cid:1409)(cid:3)
The aggregate market value of the common shares held by non-affiliates as of June 30, 2022 was $7,021,065,796 (affiliates, for this purpose, have been deemed to be
Directors and Executive Officers of the Company and certain significant shareholders).
The number of shares outstanding of the registrant’s common shares as of January 31, 2023 was 57,581,543.
(cid:3)
Part III of this Annual Report on Form 10-K incorporates by reference certain information from the registrant’s definitive proxy statement with respect to the registrant’s
2023 Annual Meeting of Shareholders.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:20)(cid:38)(cid:17)(cid:3) (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:36)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:86)(cid:3)
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
PART II
Equity Securities
Item 6. (cid:53)(cid:72)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:71)
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:28)(cid:17)(cid:3) (cid:38)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:39)(cid:76)(cid:86)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:68)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:28)(cid:36)(cid:17)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:28)(cid:37)(cid:17)(cid:3) (cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:20)(cid:19)(cid:17)(cid:3) (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:15)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)
Item 11. Executive Compensation
PART III
(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:20)(cid:21)(cid:17)(cid:3) (cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:50)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:37)(cid:72)(cid:81)(cid:72)(cid:191)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:48)(cid:68)(cid:87)(cid:87)(cid:72)(cid:85)(cid:86)(cid:3)
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
PART IV
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PART I
ITEM 1. BUSINESS
General
As used in this Annual Report on Form 10-K, the term "Company," except as otherwise indicated by the context, means
Lincoln Electric Holdings, Inc. and its wholly-owned and majority-owned subsidiaries for which it has a controlling
interest. The Lincoln Electric Company began operations in 1895 and was incorporated under the laws of the State of
Ohio in 1906. During 1998, The Lincoln Electric Company reorganized into a holding company structure, and Lincoln
Electric Holdings, Inc. became the publicly-held parent of Lincoln Electric subsidiaries worldwide, including The
Lincoln Electric Company.
The Company is one of only a few worldwide broad-line manufacturers of welding, cutting and brazing products. The
Company is the world leader in the design, development and manufacture of arc welding products, automated joining,
assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position
in brazing and soldering alloys.
The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment,
plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas
regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting,
material handling, module assembly, and end of line testing.
The arc welding power sources and wire feeding systems manufactured by the Company range in technology from basic
units used for light manufacturing and maintenance to highly sophisticated robotic applications for high volume
production welding and fabrication. Three primary types of arc welding consumables are produced: (1) coated manual or
stick electrodes; (2) solid wire produced in coil, reel or drum forms for continuous feeding in mechanized welding; and
(3) cored wire produced in coil form for continuous feeding in mechanized welding.
The Company has, through wholly-owned subsidiaries, manufacturing facilities located in the United States, Australia,
Austria, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Mexico, Poland, Portugal, Romania, Russia,
South Korea, Spain, Turkey and the United Kingdom.
The Company’s business units are aligned into three operating segments. The operating segments consist of Americas
Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding
operations in North and South America. The International Welding segment includes welding operations in Europe,
Africa, Asia and Australia. The Harris Products Group includes the Company’s global cutting, soldering and brazing
businesses, specialty gas equipment, as well as the retail business in the United States.
On December 1, 2022, the Company acquired Fori Automation, LLC (“Fori”) for a cash purchase price of $427,000,
subject to customary working capital adjustments. Fori is a leading designer and manufacturer of complex, multi-armed
automated welding systems, with an extensive range of automated assembly systems, automated material handling
solutions, automated large-scale, industrial guidance vehicles, and end of line testing systems. The Fori acquisition will
extend the Company’s market presence within the automotive sector as well as its automation footprint in the
International Welding segment.
Customers
The Company’s products are sold in both domestic and international markets. In the Americas, products are sold
principally through industrial distributors, retailers and also directly to users of welding products (OEMs, manufacturers
and integrators). Outside of the Americas, the Company has an international sales organization comprised of Company
employees and agents who sell products from the Company’s various manufacturing sites to distributors and product
users.
1
The Company’s major end-user markets include:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
general fabrication,
energy (oil and gas, power generation and process industries),
heavy industries (heavy fabrication, ship building and maintenance and repair),
automotive and transportation, and
construction and infrastructure.
The Company is not dependent on a single customer or a few customers and no individual customer currently accounts
for more than ten percent of total Net sales. However, the loss of a large customer could have an adverse effect on the
Company’s business. The Company’s operating results are sensitive to changes in general economic conditions,
including an increase in interest rates, inflationary pressures and fluctuations in foreign currency rates. The arc welding
and cutting industry is generally a mature industry in developed markets such as North America and Western Europe and
is cyclical in nature. Overall demand for arc welding and cutting products is largely determined by economic cycles and
the level of capital spending in manufacturing and other industrial sectors. The Company experiences some variability in
reported period-to-period results as historical demand for the Company’s products is mildly seasonal with generally
higher demand in the second and third quarters. See "Item 1A. Risk Factors" for further discussion regarding risks
associated with customers, general economic conditions and demand.
Competition
Conditions in the arc welding and cutting industry are highly competitive. The Company believes it is the world’s largest
manufacturer of consumables and equipment with relatively few major broad-line competitors worldwide, but numerous
smaller competitors in specific geographic markets. The Company continues to pursue strategies to heighten its
competitiveness in domestic and international markets, which includes positioning low cost manufacturing facilities in
most geographical markets. Competition in the arc welding and cutting industry is based on brand preference, product
quality, price, performance, warranty, delivery, service and technical support. The Company believes its performance
against these factors has contributed to the Company’s position as the leader in the industry.
Most of the Company’s products may be classified as standard commercial articles and are manufactured for stock. The
Company believes it has a competitive advantage in the marketplace because of its highly trained technical sales force
and the support of its welding research and development staff to assist customers in optimizing their welding
applications. This allows the Company to introduce its products to new users and to establish and maintain close
relationships with its customers. This close relationship between the technical sales force and the direct customers,
together with its supportive relationship with its distributors, who are particularly interested in handling the broad range
of the Company’s products, is an important element of the Company’s market success and a valuable asset of the
Company.
Raw Materials
The principal raw materials essential to the Company’s business are steel, electronic components, engines, brass, copper,
silver, aluminum alloys, robotic components and various chemicals, all of which are normally available for purchase in
the open market.
Patents and Trademarks
The Company holds many valuable patents, primarily in arc welding, and actively protects its innovations as research
and development has progressed in both the United States and major international jurisdictions. The Company believes
its trademarks are an important asset and aggressively pursues brand management.
2
Environmental Regulations
The Company’s facilities are subject to environmental regulations. To date, compliance with these environmental
regulations has not had a material adverse effect on the Company’s earnings. The Company is ISO 14001 certified at
most significant manufacturing facilities in North America and Europe and is progressing towards certification at its
remaining facilities worldwide. In addition, the Company is ISO 9001 certified at 42 facilities worldwide.
The Company ensures compliance as well as the continuous improvement of the environmental performance of its
products and operations through its global Environmental, Health, Safety and Quality (“EHS&Q”) systems. The
Company’s systems are guided by the Corporate EHS&Q Policy, global directives and corporate standards that establish
consistent guidelines for the management, measurement and reporting of environmental, health and safety activities, as
well as quality across the Company’s global platform. The Company’s products support our customers' sustainability
initiatives through enhanced worker safety, reduced emissions, improved energy efficiency, reduced waste and
regulatory compliance.
International Operations
The Company conducts a significant amount of its business and has a number of operating facilities in countries outside
the United States. As a result, the Company is subject to business risks inherent to non-U.S. activities, including
political uncertainty, import and export limitations, exchange controls and currency fluctuations.
Human Capital Management
Employee Profile
The Company’s employees are its most valuable asset as they represent the foundation of the Company and its future
success. The number of persons employed by the Company worldwide at December 31, 2022 was approximately
12,000.
Employee Engagement
The Company strongly believes that employee engagement drives better business results and that a highly engaged
workforce can increase innovation, productivity and bottom-line performance while reducing costs. The Company
engages employees through individual, small group and town hall meetings, its Advisory Board, global intranet,
employee surveys, resource groups, health and safety communications and initiatives, training and development,
employee wellness programs, and an ethics hotline, among other vehicles.
Talent Management and Development
In order to ensure the competitiveness of our workforce as well as a strong succession pipeline, the Company provides
development opportunities to advance skills, knowledge and expertise. The Company’s programs include formal
leadership, management and professional development programs, tuition reimbursement for external accredited
programs, mentoring, self-guided online courses, instructor-led programs and special project and rotational assignments
that can lead to extensive global exposure.
Diversity and Inclusion
The Company has a longstanding commitment to equal opportunity in all aspects of employment—including employee
compensation, job placement and promotion regardless of gender, race or other personal characteristics. The Company’s
culture is underpinned by its core values, including the guiding principles championed by James F. and John C. Lincoln
when they founded Lincoln Electric over 125 years ago – The Golden Rule: Treat Others How You Would Like to Be
Treated. The Company has implemented several measures that focus on ensuring that accountability exists for making
progress in diversity. The CEO and other senior leaders have diversity and inclusion objectives as part of their annual
3
performance goals. The Company focuses on diverse talent sourcing strategies and partners with external organizations
that develop and supply diverse talent. The Company reviews and updates its human resources processes and
benchmarks roles and compensation externally on a regular basis to help prevent bias and promote a diverse and
inclusive workplace.
Compensation
The Company’s compensation program is designed to attract and retain exceptional employees and to maintain a strong
pay for performance culture. The Company has designed its compensation system to reflect current best practices,
including setting base pay below the competitive market for each position, targeting incentive-based cash compensation
above the competitive market and promoting quality corporate governance in compensation decisions.
The Company’s annual talent and succession planning process reviews 100% of its global professional staff worldwide
to support the development of a talent pipeline for critical roles in general management, engineering and operations.
This evaluation includes the Company’s CEO, as well as segment business and functional leaders, and focuses on high
potential talent, diverse talent and succession within the Company’s most critical roles.
The Company believes that the practices outlined above result in sustained increases in shareholder value and reflect its
compensation philosophy of aligning long-term pay and performance.
Health and Safety
Health and safety is a priority for the Company, its vision is an accident-free workplace with zero safety incidents. The
Company follows a rigorous health and safety program that adheres to stringent safety standards and best practices to
ensure its manufacturing operations, related processes and products do not negatively impact the health and welfare of
its employees, customers and neighbors.
In addition to Company-led programs and employee engagement in behavior-based safety and wellness committees, the
Company actively engages in health and safety standard development committees at key industry organizations such as
the American Welding Society, the International Institute of Welding and across various International Standards
Organization committees to ensure best practices for its employees and end users.
The Company’s standard health and safety programs adhere to stringent safety standards and best practices to ensure that
its operations, related processes and products do not negatively impact the health and welfare of its employees,
customers or community.
Community Engagement
The Company is an active member in the communities in which it operates and where its employees live. The Company
participates in community meetings, local business associations, offers plant visits, provides grants to nonprofit
organizations and donates resources and time through in-kind gifts, employee volunteerism and non-profit board service.
The Company’s partnership with academia includes executive-led lectures and donations of equipment and engineering
expertise to support lab and research initiatives. In addition, the Company supports community educational / career
programming among secondary and high school students in order to address skills gaps in the industry and maintain
awareness of attractive career pathways in manufacturing.
See "Part I, Item 1C" for information regarding the Company’s executive officers, which is incorporated herein by
reference.
4
Website Access
The Company’s website, www.lincolnelectric.com, is used as a channel for routine dissemination of important
information, including news releases and financial information. The Company posts its filings as soon as reasonably
practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission ("SEC"),
including annual, quarterly and current reports on Forms 10-K, 10-Q and 8-K, respectively; proxy statements; and any
amendments to those reports or statements. The Company also posts its Code of Corporate Conduct and Ethics on its
website. All such postings and filings are available on the Company’s website free of charge. In addition, this website
allows investors and other interested persons to sign up to automatically receive e-mail alerts when news releases and
financial information is posted on the website. The SEC also maintains a website, www.sec.gov, that contains reports,
proxy and information statements and other information regarding issuers that file electronically with the SEC. The
content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference into this Annual
Report unless expressly noted.
ITEM 1A. RISK FACTORS
From time to time, information we provide, statements by our employees or information included in our filings with the
SEC may contain forward-looking statements that are not historical facts. Those statements are "forward-looking" within
the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be
identified by the use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "forecast,"
"guidance" or words of similar meaning. Actual results may differ materially from such statements due to a variety of
factors that could adversely affect the Company’s operating results. Forward-looking statements, and our future
performance, operating results, financial position and liquidity, are subject to a variety of factors that could materially
affect results, including those risks described below. Forward-looking statements made in this report speak only as of the
date of the statement, and, except as required by law, we undertake no obligation to update those statements.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of
future performance, unless expressed as such, and should only be viewed as historical data.
In the ordinary course of our business, we face various strategic, operating, compliance and financial risks. These risks
could have a material impact on our business, financial condition, operating results and cash flows. Our Enterprise Risk
Management ("ERM") process seeks to identify and address significant risks. Our ERM process is a company-wide
initiative that is designed with the intent of prioritizing risks and allocating appropriate resources to address such risks.
We use the integrated risk framework of the Committee of Sponsoring Organizations to assess, manage and monitor
risks.
Management has identified and prioritized critical risks based on the severity and likelihood of each risk and assigned an
executive to address each major identified risk area and lead action plans to monitor and mitigate risks, where possible.
Our Board of Directors provides oversight of the ERM process and systematically reviews identified critical risks. The
Audit Committee also reviews major financial risk exposures and the steps management has taken to monitor and control
them.
Our goal is to pro-actively manage risks in a structured approach and in conjunction with the strategic planning process,
with the intent to preserve and enhance shareholder value. However, these and other risks and uncertainties could cause
our results to vary materially from recent results or from our anticipated future results. The risk factors and uncertainties
described below, together with information incorporated by reference or otherwise included elsewhere in this Annual
Report on Form 10-K, should be carefully considered. Although the risks are organized by headings, and each risk is
discussed separately, many are interrelated. Additional risks and uncertainties of which we are currently unaware or that
we currently believe to be immaterial may also adversely affect our business. Readers should not interpret the disclosure
of any risk factor to imply that the risk has not yet already materialized.
5
Risks Related to Economic Conditions
General economic, financial and market conditions may adversely affect our financial condition, results of
operations and access to capital markets.
Our operating results are sensitive to changes in general economic conditions. Recessionary economic cycles, global
supply chain disruptions, higher logistics costs, higher interest rates, inflation, higher raw materials costs, higher labor
costs, trade barriers in the world markets, financial turmoil related to sovereign debt and changes in tax laws or trade
laws or other economic factors affecting the countries and industries in which we do business could adversely affect
demand for our products. An adverse change in demand could impact our results of operations, collection of accounts
receivable and our expected cash flow generation from current and acquired businesses, which may adversely affect our
financial condition, results of operations and access to capital markets.
In March 2022, in response to Russia’s invasion of Ukraine, the Company announced it had ceased operations in Russia
and implemented plans to support its Russian employees. Although the Company’s Net sales and Total assets in Russia
were less than 1% of consolidated Net sales and Total assets for the year ended December 31, 2022, the Russia-Ukraine
conflict and sanctions imposed globally may result in economic and supply chain disruptions, the ultimate financial
impact of which cannot be reasonably estimated at this time. The Company continues to monitor the Russia-Ukraine
conflict and its potential impacts.
We conduct our sales and distribution operations on a worldwide basis and maintain manufacturing facilities in a
number of foreign countries, which subjects us to risks associated with doing business outside the United States.
As a growing global enterprise, the share of sales and profits we derive from our international operations and exports
from the United States is significant. This trend increases our exposure to the performance of many developing
economies in addition to the developed economies outside of the United States. If international economies were to
experience significant slowdowns, it could adversely affect our financial condition, results of operations and cash flows.
There are a number of risks in doing business internationally, which may impede our ability to achieve our strategic
objectives relating to our foreign operations, including:
(cid:120) Political and economic uncertainty and social turmoil;
(cid:120) Corporate governance and management challenges in consideration of the numerous U.S. and foreign laws and
regulations, including regulations relating to import-export control, technology transfer restrictions, repatriation
of earnings and funds, exchange controls, labor regulations, nationalization, tariffs, data protection and privacy
requirements, anti-boycott provisions and anti-bribery laws (such as the Foreign Corrupt Practices Act and the
Organization for Economic Cooperation and Development Convention);
(cid:120)
International terrorism and hostilities;
(cid:120) Changes in the global regulatory environment, including revised or newly created laws, regulations or standards
relating to the Company, our products or the markets in which we operate; and
(cid:120) Significant fluctuations in relative currency values; in particular, an increase in the value of the U.S. dollar
against foreign currencies could have an adverse effect on our profitability and financial condition, as well as
the imposition of exchange controls, currency devaluations and hyperinflation.
The cyclical nature and maturity of the arc welding and cutting industry in developed markets may adversely affect
our performance.
The arc welding and cutting industry is generally a mature industry in developed markets such as North America and
Western Europe and is cyclical in nature. Overall demand for arc welding and cutting products is largely determined by
the level of capital spending in manufacturing and other industrial sectors, and the welding industry has historically
6
experienced contraction during periods of slowing industrial activity. If economic, business and industry conditions
deteriorate, capital spending in those sectors may be substantially decreased, which could reduce demand for our
products and have an adverse effect on our revenues and results of operations.
Risks Related to Manufacturing and Operations
Economic and supply disruptions associated with events beyond our control, such as war, acts of terror, political
unrest, pandemic, labor disputes, natural disasters could adversely affect our supply chain and distribution channels
or result in loss of sales and customers.
Our facilities and operations, and the facilities and operations of our suppliers and customers, could be disrupted by
events beyond our control, such as war, political unrest, pandemics, including the current coronavirus disease (“COVID-
19”) pandemic, labor disputes and natural disasters, including events caused by climate change. Any such disruption
could cause delays in the production and distribution of our products and the loss of sales and customers. Insurance
proceeds may not adequately compensate the Company for the losses.
We continue to experience supply shortages and inflationary pressures for certain components and raw materials due to
the effects of the COVID-19 pandemic. We expect these supply chain challenges and cost impacts to continue for the
foreseeable future as markets recover. Although we have secured additional supply from existing and alternate suppliers
and have taken other mitigating actions to mitigate supply disruptions, we cannot guarantee that we can continue to do
so in the future. In this event, our business, results and financial condition could be adversely affected. Maintaining
higher inventory levels to service customers may result in excess or obsolete inventory and related charges if demand for
these products is lower than our expectations. This may adversely affect financial results.
Availability of and volatility in energy costs or raw material prices may adversely affect our performance.
In the normal course of business, we are exposed to market risks related to the availability of and price fluctuations in
the purchase of energy and commodities used in the manufacture of our products (primarily steel, brass, copper, silver,
aluminum alloys, electronic components, electricity and natural gas). The availability and prices for energy costs and
raw materials, including steel, nonferrous metals and chemicals, are subject to volatility and are influenced by worldwide
economic conditions, including the current rising inflationary pressure. They are also influenced by import duties and
tariffs speculative action, world supply and demand balances, inventory levels, availability of substitute materials,
currency exchange rates, anticipated or perceived shortages, government trade practices and regulations and other
factors.
Increases in the cost of raw materials and components may adversely affect our profitability if we are unable to pass
along to our customers these cost increases in the form of price increases or otherwise reduce our cost of goods sold.
Although most of the raw materials and components used in our products are commercially available from a number of
sources and in adequate supply, any disruption in the availability of such raw materials and components, our inability to
timely or otherwise obtain substitutes for such items, or any deterioration in our relationships with or the financial
viability of our suppliers could adversely affect our business.
We are subject to risks relating to our information technology systems.
The conduct and management of our business relies extensively on information technology systems, which contain
confidential information related to our customers, suppliers and employees and other proprietary business information.
We maintain some of these systems and are also dependent on a number of critical corporate infrastructure services
provided by third parties relating to, among other things, human resources, electronic communication services and
finance functions. Like many multinational companies, our systems are subject to regular cyber attacks and other
malicious efforts to cause cyber security incidents. To date, these attacks have not had a material impact on our business
or operations. However, if as a result of future attacks, our systems are significantly damaged, cease to function properly
or are subject to a significant cyber security breach, we may suffer an interruption in our ability to manage and operate
the business, and our results of operations and financial condition could be adversely affected. The Company continues
7
to invest in cyber security, including maintaining and improving cyber security resilience, and the Company’s cyber
security risks are regularly monitored by the Audit Committee of our Board of Directors. Nevertheless, due to the nature
of cyber threats, there can be no assurance that our preventive efforts can fully mitigate the risks of all cyber incidents,
and a significant security breach could result in financial loss, unfavorable publicity, damage to our reputation, loss of
our trade secrets and other competitive information, allegations by our customers that we have not performed our
contractual obligations, litigation by affected parties and fines and other sanctions resulting from any related breaches of
data privacy regulations. Any of these could have an adverse effect on our results of operations and financial condition.
Risks Related to Human Capital
Our operations depend on maintaining a skilled workforce, and any interruption in our workforce could negatively
impact our results of operations and financial condition.
Our success depends in part on the efforts and abilities of our management team and key employees. Their skills,
experience and industry knowledge significantly benefit our operations and performance. Our future success will also
depend on our ability to identify, attract and retain highly qualified managerial and technical (including research and
development) personnel. Competition for these individuals is intense and compensation rates are increasing due to lower
labor availability. Under these conditions, we may not succeed in identifying, attracting or retaining qualified personnel.
With our strategy to expand internationally into developing markets, we may incur additional risks as some developing
economies lack a sufficiently trained labor pool.
Any interruption of our workforce, including rationalization efforts related to the integration of acquired businesses,
interruptions due to unionization efforts, changes in labor relations or shortages of appropriately skilled individuals
could impact our results of operations and financial condition.
Risks Related to Business Strategy
We may not be able to complete our acquisition or divestiture strategies, successfully integrate acquired businesses
and in certain cases we may be required to retain liabilities for certain matters.
Part of our business strategy is to pursue targeted business acquisition opportunities, including foreign investment
opportunities. We cannot be certain that we will be successful in pursuing potential acquisition candidates or that the
consequences of any acquisition would be beneficial to us. Future acquisitions may expose us to unexpected liabilities
and involve the expenditure of significant funds and management time. Further, we may not be able to successfully
integrate an acquired business with our existing businesses or recognize the expected benefits from any completed
acquisition. Integration efforts may include significant rationalization activities that could be disruptive to the business.
Our current operational cash flow is sufficient to fund our acquisition plans, but a significant acquisition could require
access to the capital markets.
Additionally, from time to time we may identify assets for strategic divestitures that would increase capital resources
available for other activities and create organizational and operational efficiencies. Various factors could materially
affect our ability to dispose of such assets or complete announced divestitures, including the receipt of approvals of
governmental agencies or third parties and the availability of purchasers willing to acquire the interests or purchase the
assets on terms and at prices acceptable to us.
Sellers typically retain certain liabilities or indemnify buyers for certain matters. The magnitude of any such retained
liability or indemnification obligation may be difficult to quantify at the time of the transaction and ultimately may be
material. Also, as is typical in divestitures, third parties may be unwilling to release us from guarantees or other credit
support provided prior to the sale of the divested assets. As a result, after a divestiture, we may remain secondarily liable
for the obligations guaranteed or supported to the extent that the buyer of the assets fails to perform these obligations.
8
If we cannot continue to develop, manufacture and market products that meet customer demands, continue to enforce
the intellectual property rights on which our business depends or if third parties assert that we violate their
intellectual property rights, our revenues, gross margins and results of operations may suffer.
Our continued success depends, in part, on our ability to continue to meet our customers’ needs for welding and cutting
products through the introduction of innovative new products and the enhancement of existing product design and
performance characteristics. We must remain committed to product research and development and customer service in
order to remain competitive. We cannot be assured that new products or product improvements, once developed, will
meet with customer acceptance and contribute positively to our operating results, or that we will be able to continue our
product development efforts at a pace to sustain future growth. Further, we may lose customers to our competitors if they
demonstrate product design, development or manufacturing capabilities superior to ours.
We rely upon patent, trademark, copyright and trade secret laws in the United States and similar laws in foreign
countries, as well as agreements with our employees, customers, suppliers and other third parties, to establish and
maintain our intellectual property rights. However, any of our intellectual property rights could be challenged,
invalidated or circumvented, or our intellectual property rights may not be sufficient to provide a competitive advantage.
Further, the laws and their application in certain foreign countries do not protect our proprietary rights to the same extent
as U.S. laws. Accordingly, in certain countries, we may be unable to protect our proprietary rights against unauthorized
third-party copying or use, which could impact our competitive position.
Further, third parties may claim that we or our customers are infringing upon their intellectual property rights. Even if
we believe that those claims are without merit, defending those claims and contesting the validity of patents can be time
consuming and costly. Claims of intellectual property infringement also might require us to redesign affected products,
enter into costly settlements or license agreements, pay costly damage awards or face a temporary or permanent
injunction prohibiting us from manufacturing, marketing or selling certain of our products.
The competitive pressures we face could harm our revenue, results of operations and prospects.
We operate in a highly competitive global environment and compete in each of our businesses with other broad-line
manufacturers and numerous smaller competitors specializing in particular products. We compete primarily on the basis
of brand, product quality, price, performance, warranty, delivery, service and technical support. We have previously
initiated, and may in the future initiate significant rationalization activities to align our business with market conditions
and improve our overall competitiveness, including with respect to the integration of acquired businesses. Such
rationalization activities could fail to deliver the desired competitive cost structure and could result in disruptions in
customer service. If our products, services, support and cost structure do not enable us to compete successfully based on
any of the criteria listed above, our revenue, results of operations and prospects could suffer.
Further, in the past decade, the arc welding industry in the United States and other developed countries has been subject
to increased levels of foreign competition as low cost imports have become more readily available. Our competitive
position could be harmed if new or emerging competitors become more active in the arc welding business. For example,
while steel manufacturers traditionally have not been significant competitors in the domestic arc welding industry, some
foreign integrated steel producers manufacture selected consumable arc welding products and robotic arm manufacturers
compete in the automated welding and cutting space. In addition, in certain markets of the world, distributors
manufacture and sell arc welding products. Our sales and results of operations, as well as our plans to expand in some
foreign countries, could be adversely affected by this practice.
We may incur additional restructuring charges as we continue to contemplate rationalization actions in an effort to
optimize our cost structure and may not achieve the anticipated savings and benefits of these actions.
We may take additional actions in the future to further optimize our cost structure and improve the efficiency of our
operations, which will reduce our profitability in the periods incurred. As a result of these actions, we will likely
continue to incur charges, which may include but are not limited to asset impairments, employee severance costs,
charges for pension and other postretirement contractual benefits and pension settlements, any of which could be
9
significant, and could adversely affect our financial condition and results of operations. In addition, we may not realize
anticipated savings or benefits from past or future rationalization plans in full or in part or within the time periods we
expect. Failure to realize anticipated savings or benefits from our cost reduction actions could have a material adverse
effect on our business, financial condition, liquidity, results of operations and cash flows. For more information
regarding rationalization plans, refer to the rationalization and asset impairment related disclosure under Note 7 to the
Company’s consolidated financial statements.
Risks Related to Legal, Compliance and Regulatory Matters
We are a co-defendant in litigation alleging asbestos induced illness. Liabilities relating to such litigation could
reduce our profitability and impair our financial condition.
As of December 31, 2022, we were a co-defendant in cases alleging asbestos induced illness involving claims by
approximately 1,483 plaintiffs. In each instance, we are one of a large number of defendants. The asbestos claimants
allege that exposure to asbestos contained in welding consumables caused the plaintiffs to develop adverse pulmonary
diseases, including mesothelioma and other lung cancers.
Since January 1, 1995, we have been a co-defendant in asbestos cases that have been resolved as follows: 56,877 of
those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or
resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,012 were decided in favor of the
Company following summary judgment motions.
The long-term impact of the asbestos loss contingency, in the aggregate, on operating results, operating cash flows and
access to capital markets is difficult to assess, particularly since claims are in many different stages of development and
we benefit significantly from cost-sharing with co-defendants and insurance carriers. While we intend to contest these
lawsuits vigorously, and believe we have applicable insurance relating to these claims, there are several risks and
uncertainties that may affect our liability for personal injury claims relating to exposure to asbestos, including the future
impact of changing cost sharing arrangements or a change in our overall trial experience.
Asbestos use in welding consumables in the U.S. ceased in 1981.
We may incur material losses and costs as a result of product liability claims that may be brought against us or
failure to meet contractual performance commitments.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture, sale and
application of our products and the products of third-party suppliers that we utilize or resell. Our products are used in a
variety of applications, including infrastructure projects such as oil and gas pipelines and platforms, buildings, bridges
and power generation facilities, the manufacture of transportation and heavy equipment and machinery and various other
construction projects. We face risk of exposure to product liability claims in the event that accidents or failures on these
projects result, or are alleged to result, in bodily injury or property damage. Further, our products are designed for use in
specific applications, and if a product is used inappropriately, personal injury or property damage may result. In certain
cases, we design automated welding systems for use in a customer’s production facilities (including automotive
production facilities), which could expose us to financial losses or professional liability.
The occurrence of defects in or failures of our products, or the misuse of our products in specific applications, could
cause termination of customer contracts, increased costs and losses to us, our customers and other end users. We cannot
be assured that we will not experience any material product liability losses in the future or that we will not incur
significant costs to defend those claims. Further, we cannot be assured that our product liability insurance coverage will
be adequate for any liabilities that we may ultimately incur or that product liability insurance will continue to be
available on terms acceptable to us. Even if we are successful defending such claims or product liability coverage is
adequate, claims of this nature could cause customers to lose confidence in our products and our Company. Warranty
claims are not generally covered by insurance and we may incur significant warranty costs in the future for which we
would not be reimbursed.
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We may incur losses if we do not achieve contractual commitments, including project performance requirements or
project schedules. Project performance can be affected by a number of factors, including but not limited to, availability
of materials, changes in the project scope of services, environmental conditions or labor disruptions. In addition, our
backlog consists of the expected revenue from projects for which we have an executed contract or commitment with a
customer. Project cancellations, scope adjustments, deferrals or changes in cost estimates may reduce the dollar amount
of revenue and profits that we actually earn.
Changes in tax rates or exposure to additional income tax liabilities could affect profitability.
Our business is subject to income taxes in the United States and various foreign jurisdictions. Domestic and international
tax liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be
adversely affected by changes in the mix among earnings in countries with differing statutory tax rates, changes in the
valuation allowances of deferred tax assets or changes in tax laws.
The amount of income taxes paid is subject to ongoing audits by the United States federal, state and local tax authorities
and by foreign tax authorities. If these audits result in assessments different from amounts reserved, future financial
results may include unfavorable adjustments which could have a material adverse effect on our results of operations.
Our global operations are subject to increasingly complex environmental regulatory requirements.
We are subject to increasingly complex environmental regulations affecting international manufacturers, including those
related to air and water emissions, waste management and climate change. Some environmental laws impose strict,
retroactive and joint and several liability for the remediation of the release of hazardous substances, even for conduct
that was lawful at the time it occurred, or for the conduct of or conditions caused by prior operators, predecessors or
third parties. Failure to comply with environmental laws could expose us to penalties or clean-up costs, civil or criminal
liability and sanctions on certain of our activities, as well as damage to property or natural resources. These liabilities,
sanctions, damages and remediation efforts related to any non-compliance with such laws and regulations could
negatively impact our ability to conduct our operations and our financial condition and results of operations. In addition,
there can be no assurances that we will not be adversely affected by costs, liabilities or claims with respect to existing or
subsequently acquired operations or under present laws and regulations or those that may be adopted or imposed in the
future.
Changes in environmental laws or regulations could result in higher expenses and payments, and uncertainty relating to
environmental laws or regulations may also affect how we conduct our operations and structure our investments and
could limit our ability to enforce our rights. Changes in environmental and climate change laws or regulations, including
laws relating to greenhouse gas emissions, could subject us to additional costs and restrictions, including increased
energy and raw material costs. If environmental laws or regulations are either changed or adopted and impose significant
operational restrictions and compliance requirements upon us or our products, they could negatively impact our business,
capital expenditures, results of operations, financial condition and competitive position.
It is our policy to apply strict standards for environmental protection to all of our operations inside and outside of the
United States, even when we are not subject to local government regulations. We may incur substantial costs, including
cleanup costs, fines and civil or criminal sanctions, liabilities resulting from third-party property damage or personal
injury claims, or our products could be prohibited from entering certain jurisdictions, if we were to violate or become
liable under environmental laws, if our products become non-compliant with environmental laws or if we were to
undertake environmental protection actions voluntarily.
We also face increasing complexity in our products design and procurement operations as we adjust to new and future
requirements relating to the design, production and labeling of our products that are sold worldwide in multiple
jurisdictions. The ultimate costs under environmental laws and the timing of these costs are difficult to predict.
11
We may be exposed to certain regulatory and financial risks related to climate change.
A number of governments and agencies in the U.S. and in foreign jurisdictions have proposed and may continue to
introduce regulatory changes to address climate change, including regulations related to greenhouse gas emissions. We
may be subject to additional regulations or restrictions in jurisdictions where we operate, including charges to fund
additional energy-efficient activities, assessments or fees, and operational restrictions such as reduced emission
allowances. Compliance with climate change regulations and restrictions may result in additional costs, including
increased production costs and taxes, which could adversely impact our financial position. In addition, climate change
regulations and related operating restrictions may unfavorably affect our competitive position with companies who may
not be subject to equivalent requirements in their jurisdictions. In addition, negative publicity or public perception of
climate change issues associated with us or our industry may cause reputational damage and financial harm to the
Company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C. INFORMATION ABOUT OUR EXECUTIVE OFFICERS
EXECUTIVE OFFICERS OF THE REGISTRANT
Name
Christopher L. Mapes
Age Position
61
Chairman of the Board effective December 21, 2013; President and Chief Executive Officer effective
December 31, 2012; Chief Operating Officer from September 1, 2011 to December 31, 2012; Director since
February 2010.
Gabriel Bruno
55
Executive Vice President, Chief Financial Officer and Treasurer since April 22, 2020; Executive Vice
President, Finance from January 1, 2019 to April 22, 2020; Executive Vice President, Chief Human Resources
Officer from July 1, 2016 to January 1, 2019; Executive Vice President, Chief Human Resources Officer and
Chief Information Officer from February 18, 2016 to July 1, 2016; Executive Vice President, Chief
Information Officer and Interim Chief Human Resources Officer from March 7, 2015 to February 18, 2016;
Executive Vice President, Chief Information Officer from February 19, 2014 to March 7, 2015; Vice
President, Chief Information Officer from May 1, 2012 to February 19, 2014; Vice President, Corporate
Controller from 2005 to May 1, 2012.
Jennifer I. Ansberry
49
Executive Vice President, General Counsel and Secretary since April 20, 2017; Vice President, Deputy
Steven B. Hedlund
56
Michele R. Kuhrt
56
General Counsel from August 1, 2014 to April 20, 2017; Deputy General Counsel from 2004 to August 1,
2014.
Executive Vice President, Chief Operating Officer since May 9, 2022; Executive Vice President and President,
Americas and International Welding from October 21, 2020 to May 9, 2022; Executive Vice President and
President, International Welding from June 1, 2017 to October 21, 2020; Senior Vice President and President,
Global Automation from January 22, 2015 to June 1, 2017; Senior Vice President, Strategy & Business
Development from February 19, 2014 to January 22, 2015; Vice President, Strategy and Business
Development from September 15, 2008 to February 19, 2014.
Executive Vice President, Chief Human Resources Officer since February 25, 2019; Executive Vice President,
Chief Information Officer from July 1, 2016 to February 25, 2019; Senior Vice President, Tax from 2006 to
July 1, 2016.
Lisa A. Dietrich
50
Executive Vice President, Chief Information Officer since May 9, 2022. Senior Vice President and Chief
Geoffrey P. Allman
52
Information Officer, American Greetings Corporation (a global leader in the large and enduring Celebrations
marketplace) from March 2018 until April 2022; Vice President of Business Transformation and Executive
Director, American Greetings Corporation from January 2011 to March 2018.
Senior Vice President, Strategy and Business Development since January 1, 2019; Senior Vice President,
Corporate Controller from January 14, 2014 to January 1, 2019; Corporate Controller from July 1, 2012 to
January 14, 2014; Director, Regional Finance North America from October 1, 2009 to July 1, 2012.
Michael J. Whitehead
49
Senior Vice President, President, Global Automation, Cutting and Additive Businesses since January 1, 2019;
Senior Vice President, Strategy and Business Development from August 1, 2016 to January 1, 2019;
President, Lincoln Canada from January 1, 2015 to August 1, 2016; Director, New Product Development,
Consumables R&D from January 1, 2012 to January 1, 2015.
Peter M. Pletcher
49
Senior Vice President, President International since August 1, 2022. Senior Vice President, President,
Gregory Doria
46
International Welding from December 10, 2020 to August 1, 2022; Vice President, President, Europe Welding
from April 1, 2019 to December 10, 2020; Vice President, President, Global Automation from January 1, 2018
to April 1, 2019; Director, Business Development, Cutting Products from January 1, 2016 to January 1, 2018.
Senior Vice President, President, Harris Products Group since October 1, 2021; Senior Vice President, Chief
Operating Officer, Harris Products Group from April 21, 2021 to September 30, 2021; Vice President,
Marketing from July 1, 2019 to April 20, 2021; Director, Global Industry Segments from March 1, 2017 to
June 30, 2019; Regional Sales Manager, West Region from October 6, 2014 to February 28, 2017.
The Company has been advised that there is no arrangement or understanding among any one of the officers listed and
any other persons pursuant to which he or she was elected as an officer. The executive officers are elected by the Board
of Directors normally for a term of one year and/or until the election of their successors.
ITEM 2. PROPERTIES
The Company’s corporate headquarters and principal United States manufacturing facilities are located in the Cleveland,
Ohio area. Total Cleveland area property consists of 244 acres, of which present manufacturing facilities comprise an
area of approximately 3,017,090 square feet.
13
The Company has 71 manufacturing facilities, including operations and joint ventures in 20 countries, the significant
locations (grouped by operating segment) of which are as follows:
Americas Welding:
United States
Brazil
Canada
Colombia
Mexico
International Welding:
Australia
Austria
China
France
Germany
India
Italy
Poland
Romania
Russia
South Korea
Spain
Turkey
United Kingdom
The Harris Products Group:
United States
Cleveland, Columbus, Coldwater, Fort Loramie, and Orrville, Ohio; Reno, Nevada;
Ladson, South Carolina; Chattanooga, Tennessee; Detroit, Michigan; Fort Collins,
Colorado; Bettendorf, Iowa; Churubusco, Indiana.
Atibaia; Guarulhos; Sao Paulo.
Toronto; Mississauga; Hamilton; Montreal; Vankleek Hill.
Bogota.
Mexico City; Torreon; Saltillo.
Newcastle; Gladstone.
Scheifling.
Tangshan; Shanghai; Beijing.
Grand-Quevilly; Partheny.
Essen; Eisenberg; Frankfurt; Merzig.
Chennai; Pune.
Corsalone; Due Carrare.
Bielawa; Dzierzoniow.
Buzau.
Mtsensk.
Siheung-si.
Valencia; Zaragoza.
Istanbul.
Sheffield, England; Port Talbot, Wales.
Mason, Ohio; Gainesville, Georgia; Winston Salem, North Carolina; Gordonsville,
Carthage, Tennessee; Florence, Alabama.
Brazil
Italy
Mexico
Poland
Portugal
Maua.
Verona.
Guadalupe.
Dzierzoniow.
Albergaria-a-Velha.
All properties relating to the Company’s Cleveland, Ohio headquarters and manufacturing facilities are owned by the
Company. Most of the Company’s foreign subsidiaries own manufacturing facilities in the country where they are
located. The Company believes that its existing properties are in good condition and are suitable for the conduct of its
business. In March 2022, in response to Russia’s invasion of Ukraine, the Company ceased operations in Russia.
In addition, the Company maintains operating leases for some manufacturing facilities, distribution centers and sales
offices throughout the world. Refer to Note 17 to the consolidated financial statements for information regarding the
Company’s lease commitments.
14
ITEM 3. LEGAL PROCEEDINGS
The Company is subject, from time to time, to a variety of civil and administrative proceedings arising out of its normal
operations, including, without limitation, product liability claims, regulatory claims and health, safety and environmental
claims. Among such proceedings are the cases described below.
As of December 31, 2022, the Company was a co-defendant in cases alleging asbestos induced illness involving claims
by approximately 1,483 plaintiffs, which is a net decrease of 6 claims from those previously reported. In each instance,
the Company is one of a large number of defendants. The asbestos claimants seek compensatory and punitive damages,
in most cases for unspecified sums. Since January 1, 1995, the Company has been a co-defendant in other similar cases
that have been resolved as follows: 56,877 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried
to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial
amount and 1,012 were decided in favor of the Company following summary judgment motions.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common shares are traded on The NASDAQ Global Select Market under the symbol "LECO." The
number of record holders of common shares at December 31, 2022 was 2,238.
Issuer purchases of equity securities for the fourth quarter 2022 were:
Period
October 1 - 31, 2022
November 1 - 30, 2022
December 1 - 31, 2022
Total
Total Number of
Shares
Purchased
Maximum
Number
of Shares that May
as Part of Publicly Yet be Purchased
Average Price Announced Plans or Under the Plans
or Programs (2) (3)
Programs
Paid Per Share
Total Number of
Shares
Purchased
65,983
(1) $
128.36
65,429
9,018,517
57,782
(1)
145.39
57,772
8,960,745
(1)
56,476
180,241
145.31
139.13
56,419
179,620
8,904,326
(1) The above share repurchases include the surrender of the Company’s common shares in connection with the vesting
of restricted awards.
(2) On April 20, 2016, the Company announced that the Board of Directors authorized a new share repurchase program,
which increased the total number of the Company’s common shares authorized to be repurchased to 55 million
shares. Total shares purchased through the share repurchase program were 55 million shares at a cost of $2.5 billion
for a weighted average cost of $44.89 per share through December 31, 2022.
(3) On February 12, 2020, the Company’s Board of Directors authorized a new share repurchase program for up to an
additional 10 million shares of the Company’s common stock. Total shares purchased through the share repurchase
program were 1.1 million shares at a total cost of $145.3 million for a weighted average cost of $132.65 per share
through December 31, 2022.
15
The following line graph compares the yearly percentage change in the cumulative total shareholder return on the
Company’s common stock against the cumulative total return of the S&P Composite 500 Stock Index ("S&P 500") and
the S&P 400 MidCap Index ("S&P 400") for the five-year calendar period commencing January 1, 2018 and ending
December 31, 2022. This graph assumes that $100 was invested on December 31, 2017 in each of the Company’s
common shares, the S&P 500 and the S&P 400. A peer-group index for the welding industry, in general, is not readily
available because the industry is comprised of a large number of privately held competitors and competitors that are
smaller parts of large publicly traded companies.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars in thousands, except per share amounts)
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together
with the Company’s consolidated financial statements and other financial information included elsewhere in this Annual
Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and
uncertainties. Actual results may differ materially from those indicated in the forward-looking statements. See "Item 1A.
Risk Factors" for more information regarding forward-looking statements.
General
The Company is the world’s largest designer and manufacturer of arc welding and cutting products, manufacturing a
broad line of arc welding equipment, consumable welding products and other welding and cutting products.
16
The Company is one of only a few worldwide broad-line manufacturers of welding, cutting and brazing products. The
Company is the world leader in the design, development and manufacture of arc welding products, automated joining,
assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position
in brazing and soldering alloys.
The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment,
plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas
regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting,
material handling, module assembly, and end of line testing.
The Company invests in the research and development of arc welding products in order to continue its market leading
product offering. The Company continues to invest in technologies that improve the quality and productivity of welding
products. In addition, the Company actively protects its innovations as research and development has progressed in both
the United States and other major international jurisdictions. The Company believes its significant investment in
research and development and its highly trained technical sales force coupled with its extensive distributor network
provide a competitive advantage in the marketplace.
The Company’s products are sold in both domestic and international markets. In the Americas, products are sold
principally through industrial distributors, retailers and also directly to users of welding products. Outside of the
Americas, the Company has an international sales organization comprised of Company employees and agents who sell
products from the Company’s various manufacturing sites to distributors and product users.
The Company’s major end-user markets include:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
general fabrication,
energy (oil and gas, power generation and process industries),
heavy industries (heavy fabrication, ship building and maintenance and repair),
automotive and transportation, and
construction and infrastructure.
The Company has, through wholly-owned subsidiaries, manufacturing facilities located in the United States, Australia,
Austria, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Mexico, Poland, Portugal, Romania, Russia,
South Korea, Spain, Turkey and the United Kingdom.
The principal raw materials essential to the Company’s business are steel, electronic components, engines, brass, copper,
silver, aluminum alloys, robotic components and various chemicals, all of which are normally available for purchase in
the open market.
The Company’s facilities are subject to environmental regulations. To date, compliance with these environmental
regulations has not had a material adverse effect on the Company’s earnings. The Company is ISO 14001 certified at
most significant manufacturing facilities in North America and Europe and is progressing towards certification at its
remaining facilities worldwide. In addition, the Company is ISO 9001 certified at 42 facilities worldwide.
The Company ensures compliance and the continuous improvement of the environmental performance of its products
and operations through its global Environmental, Health, Safety and Quality (“EHS&Q”) systems. The Company’s
systems are guided by the Corporate EHS&Q Policy, global directives and corporate standards that establish consistent
guidelines for the management, measurement and reporting of environmental, health and safety activities, as well as
quality across the Company’s global platform. The Company’s products support our customers' sustainable operations
through enhanced worker safety, reduced emissions, improved energy efficiency, reduced waste and regulatory
compliance.
17
On December 1, 2022, the Company acquired Fori Automation, LLC (“Fori”) for a cash purchase price of $427,000,
subject to customary working capital adjustments. The Company funded the transaction with available cash on hand and
a $400,000 senior unsecured term loan. Fori is a leading designer and manufacturer of complex, multi-armed automated
welding systems, with an extensive range of automated assembly systems, automated material handling solutions,
automated large-scale, industrial guidance vehicles, and end of line testing systems. The Fori acquisition will extend the
Company’s market presence within the automotive sector as well as its automation footprint in the International Welding
segment. Fori’s balance sheet is included in the Company’s Consolidated Balance Sheet as of December 31, 2022.
Key Indicators
Key economic measures relevant to the Company include industrial production trends, steel consumption, purchasing
manager indices, capacity utilization within durable goods manufacturers and consumer confidence indicators. Key
industries which provide a relative indication of demand drivers to the Company include steel, farm machinery and
equipment, construction and transportation, fabricated metals, electrical equipment, ship and boat building, defense,
truck manufacturing, energy and railroad equipment. Although these measures provide key information on trends
relevant to the Company, the Company does not have available a more direct correlation of leading indicators which can
provide a forward-looking view of demand levels in the markets which ultimately use the Company’s welding products.
Key operating measures utilized by the operating units to manage the Company include orders, backlog, sales, inventory
and fill-rates, all of which provide key indicators of business trends. These measures are reported on various cycles
including daily, weekly and monthly depending on the needs established by operating management.
Key financial measures utilized by the Company’s executive management and operating units in order to evaluate the
results of its business and in understanding key variables impacting the current and future results of the Company
include: sales; gross profit; selling, general and administrative expenses; operating income; earnings before interest and
taxes; earnings before interest, taxes and bonus; net income; adjusted operating income; adjusted earnings before interest
and income taxes; adjusted earnings before interest, taxes and bonus; adjusted net income; adjusted diluted earnings per
share; operating cash flows; and capital expenditures, as well as applicable ratios such as return on invested capital and
average operating working capital to sales. These measures are reviewed at monthly, quarterly and annual intervals and
compared with historical periods, as well as objectives established by the Board of Directors of the Company.
The discussion that follows includes a comparison of our results of operations, liquidity and capital resources for
fiscal years ended December 31, 2022 and 2021. For a comparison of the Company’s results of operations, liquidity and
capital resources for the fiscal years ended December 31, 2021 and 2020, see Item 7, Management’s Discussion and
Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2021, which was filed with the SEC on February 18, 2022.
18
Results of Operations
The following table shows the Company’s results of operations:
Year Ended December 31,
2022
2021
% of Sales
% of Sales
Amount
$ 3,761,211
2,480,451
1,280,760
Amount
$ 3,234,180
2,165,575
34.1 % 1,068,605
Favorable (Unfavorable)
2022 vs. 2021
$
$ 527,031
(314,876)
33.0 % 212,155
16.3 %
(14.5)%
19.9 %
%
656,636
17.5 %
597,109
18.5 %
(59,527)
(10.0)%
11,788
612,336
29,500
9,991
592,827
120,603
0.3 %
16.3 %
15.8 %
9,827
461,669
22,214
(114,457)
324,998
48,418
0.3 %
(1,961)
14.3 % 150,667
(7,286)
124,448
10.0 % 267,829
(72,185)
(20.0)%
32.6 %
(32.8)%
108.7 %
82.4 %
(149.1)%
20.3 %
14.9 %
(5.4)%
472,224
276,580
195,644
70.7 %
—
472,224
8.04
$
$
12.6 % $
$
114
276,466
4.60
(114)
8.5 % $ 195,758
3.43
$
(100.0)%
70.8 %
74.6 %
Net sales (Note 2)
Cost of goods sold
Gross profit
Selling, general & administrative
expenses
Rationalization and asset impairment
charges (Note 7)
Operating income
Interest expense, net
Other income (expense) (Note 12)
Income before income taxes
Income taxes (Note 13)
Effective tax rate (Note 13)
Net income including non-controlling
interests
Non-controlling interests in
subsidiaries' income
Net income
Diluted earnings per share (Note 3)
Net Sales:
The following table summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net
sales for the twelve months ended December 31, 2022 on a consolidated basis:
Change in Net Sales due to:
Lincoln Electric Holdings, Inc.
% Change
Lincoln Electric Holdings, Inc.
Net Sales
2021
Volume
$ 3,234,180 $ 160,362 $ 74,645
Acquisitions
Price
$ 468,925
Foreign
Exchange
Net Sales
2022
$ (176,901) $ 3,761,211
5.0 %
2.3 %
14.5 %
(5.5) %
16.3 %
Net sales increased primarily as a result of higher demand levels, increased product pricing as a result of higher input
costs and the impact of acquisitions, partially offset by unfavorable foreign exchange.
Gross Profit:
Gross profit for 2022 increased, as a percent of sales, compared to the prior year primarily due to higher volumes, the
benefit of profit improvement and cost reduction actions, which offset higher input costs. Last-in, first-out (“LIFO”)
charges were $19,733 in the twelve months ended December 31, 2022 as compared with charges of $38,595 in the prior
year.
Selling, General & Administrative ("SG&A") Expenses:
SG&A expense increased in 2022 as compared to 2021 was primarily due to higher employee costs.
19
Other Income (Expense):
The increase in 2022 as compared to 2021 was primarily due to non-cash pension settlement charges in 2021 related to
the termination of a pension plan. Refer to Note 12 to the consolidated financial statements for details.
Income Taxes:
The 2022 effective tax rate was higher than 2021 primarily due to a change in the mix of earnings, as well as the impact
of the 2021 pension plan termination.
Segment Results
Net Sales:
The table below summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales
for the twelve months ended December 31, 2022:
Change in Net Sales due to:
Net Sales
2021
Volume
Acquisitions (1) Price (2)
Foreign
Exchange (3)
Net Sales
2022
Operating Segments
Americas Welding
International Welding
The Harris Products Group
% Change
Americas Welding
International Welding
The Harris Products Group
$ 1,824,481 $ 156,561 $
948,125
461,574
(9,019)
12,820
17,602 $ 298,928 $ (8,638) $ 2,288,934
954,281
17,632 159,130 (161,587)
517,996
(6,676)
10,867
39,411
8.6 %
(1.0)%
2.8 %
1.0 %
1.9 %
8.5 %
16.4 %
16.8 %
2.4 %
(0.5) %
(17.0) %
(1.4) %
25.5 %
0.6 %
12.2 %
(1) Increase due to the acquisitions discussed in Note 4.
(2) Increase for all segments reflects increased product pricing taken in response to higher input costs and unfavorable
foreign exchange translation.
(3) Decrease for 2022 in International Welding primarily due to the devaluation of the Turkish Lira and Euro.
20
Adjusted Earnings Before Interest and Income Taxes (“Adjusted EBIT”):
Segment performance is measured and resources are allocated based on a number of factors, the primary measure being
the Adjusted EBIT profit measure. EBIT is defined as Operating income plus Equity earnings in affiliates and Other
income. EBIT is adjusted for special items as determined by management such as the impact of rationalization activities,
certain asset impairment charges and gains or losses on disposals of assets.
The following table presents Adjusted EBIT by segment:
Year Ended December 31,
Favorable (Unfavorable)
2022 vs. 2021
2022
2021
$
%
Americas Welding:
Net sales
Inter-segment sales
Total Sales
Adjusted EBIT (4)
As a percent of total sales (1)
International Welding:
Net sales
Inter-segment sales
Total Sales
Adjusted EBIT (5)
As a percent of total sales (2)
The Harris Products Group:
Net sales
Inter-segment sales
Total Sales
Adjusted EBIT (6)
As a percent of total sales (3)
Corporate / Eliminations:
Inter-segment sales
Adjusted EBIT (7)
Consolidated:
Net sales
Net income
As a percent of total sales
Adjusted EBIT (8)
As a percent of sales
$ 2,288,934
122,019
$ 2,410,953
$ 462,819
$ 1,824,481
140,650
$ 1,965,131
$ 329,016
$ 464,453
(18,631)
$ 445,822
$ 133,803
19.2 %
16.7 %
$ 954,281
31,503
$ 985,784
$ 120,157
12.2 %
$
$ 948,125
26,331
$ 974,456
$ 106,208
$
$
10.9 %
$
$ 517,996
11,040
$ 529,036
64,008
$
$ 461,574
8,096
$ 469,670
$
68,447
12.1 %
$
$
14.6 %
6,156
5,172
11,328
13,949
56,422
2,944
59,366
(4,439)
25.5 %
(13.2)%
22.7 %
40.7 %
2.5 %
0.6 %
19.6 %
1.2 %
13.1 %
1.3 %
12.2 %
36.4 %
12.6 %
(6.5)%
(2.5)%
$ (164,562)
(10,033)
$ (175,077)
(12,403)
$
10,515
2,370
6.0 %
19.1 %
$ 3,761,211
$ 472,224
$ 3,234,180
$ 276,466
$ 527,031
$ 195,758
12.6 %
8.5 %
$ 636,951
$ 491,268
$ 145,683
16.9 %
15.2 %
16.3 %
70.8 %
4.1 %
29.7 %
1.7 %
(1) Increase for 2022 as compared to 2021 primarily driven by higher volumes, the impact of profit improvement
initiatives and pricing actions taken to offset higher input costs, partially offset by higher employee costs.
(2) Increase for 2022 as compared to 2021 primarily driven by profit improvement initiatives including cost reduction
activities.
(3) Decrease for 2022 compared to 2021 primarily driven by acquisition integration activities, unfavorable mix and
declining commodity pricing in certain metal offerings.
21
(4) 2022 excludes a favorable adjustment related to the termination of a pension plan of $3,735, the amortization of step
up in value of acquired inventories of $1,106 and Rationalization and asset impairment gains of $431 related to
severance and gains or losses on the disposal of assets as discussed in Note 7 to the consolidated financial
statements.
2021 excludes non-cash pension settlement charges of $123,091 as discussed in Note 11 to the consolidated
financial statements.
(5) 2022 excludes Rationalization and asset impairment gains of $11,681 related to impairment charges as discussed in
Note 7 to the consolidated financial statements.
2021 excludes Rationalization and asset impairment charges of $9,804 related to severance and gains or losses on
the disposal of assets as discussed in Note 7 to the consolidated financial statements, the amortization of step up in
value of acquired inventories of $4,984 related to an acquisition and pension settlement charges of $446.
(6) 2021 excludes the amortization of step up in value of acquired inventories of $820 related to an acquisition and non-
cash pension settlement charges of $2,965 as discussed in Note 11 to the consolidated financial statements.
(7) 2022 excludes acquisition transaction and integration costs of $6,003 related to the acquisition as discussed in Note
4 to the consolidated financial statements.
2021 excludes acquisition transaction and integration costs of $1,923 related to the acquisitions as discussed in
Note 4 to the consolidated financial statements.
(8) See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.
Non-GAAP Financial Measures
The Company reviews Adjusted operating income, Adjusted EBIT, Adjusted net income, Adjusted effective tax rate,
Adjusted diluted earnings per share, Adjusted return on invested capital, and Adjusted net operating profit after taxes, all
non-GAAP financial measures, in assessing and evaluating the Company’s underlying operating performance. These
non-GAAP financial measures exclude the impact of special items on the Company’s reported financial results. Non-
GAAP financial measures should be read in conjunction with the generally accepted accounting principles in the United
States ("GAAP") financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP
financial measures. From time to time, management evaluates and discloses to investors the following non-GAAP
measures: Free cash flow ("FCF"), defined as Net cash provided by operating activities less Capital expenditures (the
Company considers FCF to be a liquidity measure that provides useful information to management and investors about
how the amount of cash generated by our business, after the purchase of property and equipment, can be used for debt
service, acquisitions, paying dividends and repurchasing our common shares); Cash conversion, defined as FCF divided
by Adjusted net income; Organic sales, defined as sales excluding the effects of foreign currency and acquisitions.
The following table presents a reconciliation of Operating income as reported to Adjusted operating income:
Operating income as reported
Special items (pre-tax):
Rationalization and asset impairment charges (1)
Acquisition transaction costs (2)
Amortization of step up in value of acquired inventories (3)
Adjusted operating income
Year Ended December 31,
2022
$ 612,336 $
2021
461,669
11,788
6,003
1,106
$ 631,233 $
9,827
1,923
5,804
479,223
22
(1) Charges primarily consist of employee severance, gains or losses on the disposal of assets and other related costs
and non-cash asset impairment charges.
(2) Costs related to acquisition and included in Selling, general & administrative expenses.
(3) Costs related to acquisitions and included in Cost of goods sold.
The following table presents the reconciliations of Net income as reported to Adjusted net income and Adjusted EBIT,
Effective tax rate as reported to Adjusted effective tax rate and Diluted earnings per share as reported to Adjusted diluted
earnings per share:
Net income as reported
Special items:
Rationalization and asset impairment charges (1)
Acquisition transaction costs (2)
Pension settlement net charges (3)
Amortization of step up in value of acquired inventories (4)
Tax effect of Special items (5)
Adjusted net income
Non-controlling interests in subsidiaries’ earnings (loss)
Interest expense, net
Income taxes as reported
Tax effect of Special items (5)
Adjusted EBIT
Effective tax rate as reported
Net special item tax impact
Adjusted effective tax rate
Diluted earnings per share as reported
Special items per share
Adjusted diluted earnings per share
Year Ended December 31,
2022
2021
$ 472,224 $ 276,466
11,788
6,003
(4,273)
1,106
(1,192)
9,827
1,923
126,502
5,804
(47,188)
$ 485,656 $ 373,334
114
22,214
48,418
47,188
$ 636,951 $ 491,268
—
29,500
120,603
1,192
20.3 %
(0.2)%
20.1 %
8.04 $
0.23
8.27 $
14.9 %
5.5 %
20.4 %
4.60
1.62
6.22
$
$
(1) Charges primarily consist of employee severance, gains or losses on the disposal of assets and other related costs
and non-cash asset impairment charges.
(2) Costs related to acquisitions as discussed in Note 4 to the consolidated financial statements.
(3) Net charges related to lump sum pension payments and the purchase of a group annuity contract as discussed in
Note 11 to the consolidated financial statements.
(4) Costs related to acquisitions and included in Cost of goods sold.
(5) Includes the net tax impact of Special items recorded during the respective periods.
The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the
applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.
Liquidity and Capital Resources
The Company’s cash flow from operations can be cyclical. Operational cash flow is a key driver of liquidity. In
assessing liquidity, the Company reviews working capital measurements to define areas for improvement. Management
23
anticipates the Company will be able to satisfy cash requirements for its ongoing businesses for the foreseeable future
primarily with cash generated by operations, existing cash balances, borrowings under its existing credit facilities and
raising debt in capital markets.
The Company continues to expand globally and periodically looks at transactions that would involve significant
investments. The Company can fund its global expansion plans with operational cash flow, but a significant acquisition
may require access to capital markets, in particular, the long-term debt market, as well as the syndicated bank loan
market. The Company’s financing strategy is to fund itself at the lowest after-tax cost of funding. Where possible, the
Company utilizes operational cash flows and raises capital in the most efficient market, usually the United States, and
then lends funds to the specific subsidiary that requires funding. If additional acquisitions providing appropriate financial
benefits become available, additional expenditures may be made.
The following table reflects changes in key cash flow measures:
Cash provided by operating activities (1)
Cash used by investing activities (2)
Capital expenditures
Acquisition of businesses, net of cash acquired
Cash provided by (used by) financing activities (3)
Proceeds from short-term borrowings
Proceeds from (payments on) long-term borrowings
Purchase of shares for treasury
Cash dividends paid to shareholders
Increase (decrease) in Cash and cash equivalents (4)
Year Ended December 31,
2021
2022
$ 383,386 $ 365,063 $
(504,691)
(71,883)
(436,298)
133,725
34,351
405,444
(181,293)
(130,724)
4,192
(205,356)
(62,531)
(156,106)
(221,940)
46,476
(508)
(164,526)
(121,851)
(64,321)
$ Change
18,323
(299,335)
(9,352)
(280,192)
355,665
(12,125)
405,952
(16,767)
(8,873)
68,513
(1) Cash provided by operating activities increased for the twelve months ended December 31, 2022 compared with the
twelve months ended December 31, 2021 primarily due to higher company earnings.
(2) Cash used by investing activities increased for the twelve months ended December 31, 2022 compared with the
twelve months ended December 31, 2021 due to cash used in the acquisition of businesses in 2022. The Company
currently anticipates capital expenditures of $80,000 to $100,000 in 2023. Anticipated capital expenditures include
investments to increase capacity and improve operational effectiveness. Management critically evaluates all
proposed capital expenditures and expects each project to increase efficiency, reduce costs, promote business
growth or improve the overall safety and environmental conditions of the Company’s facilities.
(3) Cash provided by (used by) financing activities increased in the twelve months ended December 31, 2022 compared
with the twelve months ended December 31, 2021 due to higher long-term borrowings in 2022 partially offset by an
increase in the purchase of shares for treasury.
(4) Cash and cash equivalents increased 2.2%, or $4,192, to $197,950 during the twelve months ended December 31,
2022, from $192,958 as of December 31, 2021. The increase was predominantly due to higher cash provided by
operating activities and an increase in long term borrowings offset by increase in cash used in the purchase of
common shares for treasury, dividends paid to shareholders and for the acquisition of businesses in 2022.
The Company paid $130,724 and $121,851 in cash dividends to its shareholders in the twelve months ended
December 31, 2022 and 2021, respectively. In January 2023, the Company paid a cash dividend of $0.64 per share, or
$36,879, to shareholders of record on December 31, 2022, which reflects a 14.3% increase in the Company’s dividend
payout rate.
24
Working Capital Ratios
Average operating working capital to Net sales (1) (2)
Days sales in Inventories (2)
Days sales in Accounts receivable
Average days in Trade accounts payable
2022 (3)
2021
20.9 %
132.5
57.0
57.0
16.3 %
121.0
50.3
59.8
(1) Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and
contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling
three months of Net sales.
(2) In order to minimize potential supply chain disruptions in serving customers due to the continued impacts of the
COVID-19 pandemic, the Company increased inventories relative to expected Net sales resulting in higher Days
sales in Inventories.
(3) Average operating working capital excluding Fori would have been 18.6% as a percent of Net sales.
Rationalization and Asset Impairments
Refer to Note 7 to the consolidated financial statements for a discussion of the Company’s rationalization plans. The
Company believes the rationalization actions will positively impact future results of operations and will not have a
material effect on liquidity and sources and uses of capital.
Acquisitions
Refer to Note 4 to the consolidated financial statements for a discussion of the Company’s recent acquisitions.
Debt
At December 31, 2022 and 2021, the total amount of debt outstanding was $1,203,879 and $769,819, respectively, while
the fair value of long-term debt, including the current portion, was approximately $1,009,020 and $776,655,
respectively, which was determined using available market information and methodologies requiring judgment. The
carrying value of this debt at such dates was $1,121,435 and $717,855, respectively. Since judgment is required in
interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a
current market exchange.
Senior Unsecured Notes
On April 1, 2015 and October 20, 2016, the Company entered into separate Note Purchase Agreements pursuant to
which it issued senior unsecured notes (the "Notes") through a private placement. The Notes each have an aggregate
principal amount of $350,000. Interest on the Notes are payable semi-annually. The proceeds of the Notes were used for
general corporate purposes. The Notes contain certain affirmative and negative covenants. As of December 31, 2022, the
Company was in compliance with all of its debt covenants relating to the Notes.
The Company’s total weighted average effective interest rate and remaining weighted average term, inclusive of the
2015 Notes and 2016 Notes, is 3.3% and 11.4 years, respectively.
25
Revolving Credit Agreements
On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the
Second Amended and Restated Credit Agreement (“Credit Agreement”). The Credit Agreement has a line of credit
totaling $500,000, has a term of 5 years with a maturity date of April 23, 2026 and may be increased, subject to certain
conditions including the consent of its lenders, by an additional amount up to $150,000. The interest rate on borrowings
is based on LIBOR plus a spread based on the Company’s net leverage ratio. The Credit Agreement contains customary
representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of
this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with
respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with
affiliates. As of December 31, 2022, the Company was in compliance with all of its covenants and had $45,000 of
outstanding borrowings under the Credit Agreement.
The Company has other lines of credit and debt agreements totaling $92,078. As of December 31, 2022, the Company
was in compliance with all of its covenants and had $37,444 outstanding at December 31, 2022.
Term Loan
On November 29, 2022, the Company entered into a term loan in the aggregate principal amount of $400,000 (the “Term
Loan”), which was borrowed in full. The Term Loan matures on November 29, 2025. The Term Loan bears an interest at
a rate based on Term SOFR, plus a margin ranging from 0.75% to 1.75% based on the Company’s consolidated net
leverage ratio. The proceeds of the Term Loan were used to pay a portion of the purchase price in connection with the
acquisition of Fori.
The agreement governing the Term Loan (the “Term Loan Credit Agreement”) contains representations and warranties,
as well as customary affirmative, negative and financial covenants for credit facilities of this type, including limitations
on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions,
dispositions of assets and transactions with affiliates. The Term Loan Credit Agreement requires the Company to
maintain a minimum consolidated fixed charges coverage ratio and maximum consolidated net leverage ratio. As of
December 31, 2022, the Company was in compliance with all of its covenants.
Shelf Agreements
On November 27, 2018, the Company entered into seven uncommitted master note facilities (the "Shelf Agreements")
that allow borrowings up to $700,000 in the aggregate. The Shelf Agreements have a five-year term and the average life
of borrowings cannot exceed 15 years. The Company is required to comply with covenants similar to those contained in
the 2015 Notes and 2016 Notes. As of December 31, 2022, the Company was in compliance with all of its covenants and
had no outstanding borrowings under the Shelf Agreements.
Return on Invested Capital
The Company reviews return on invested capital ("ROIC") in assessing and evaluating the Company’s underlying
operating performance. Adjusted ROIC is a non-GAAP financial measure that the Company believes is a meaningful
metric to investors in evaluating the Company’s financial performance and may be different than the method used by
other companies to calculate ROIC. Adjusted ROIC is defined as rolling 12 months of Adjusted net income excluding
tax-effected interest income and expense divided by invested capital. Invested capital is defined as total debt, which
includes Amounts due banks, Current portion of long-term debt and Long-term debt, less current portions, plus Total
equity.
26
The following table presents the reconciliation of ROIC and Adjusted ROIC to net income:
Return on Invested Capital
Net income as reported
Plus: Interest expense (after-tax)
Less: Interest income (after-tax)
Net operating profit after taxes
Special items:
Rationalization and asset impairment charges
Acquisition transaction costs
Pension settlement net charges
Amortization of step up in value of acquired inventories
Tax effect of Special items (1)
Adjusted net operating profit after taxes
Invested Capital
Short-term debt
Long-term debt, less current portion
Total debt
Total equity
Invested capital
Return on invested capital as reported (2)
Adjusted return on invested capital (2)
2022
472,224
23,276
1,202
494,298
$
$
2021
276,466
17,794
1,172
293,088
$
$
11,788
6,003
(4,273)
1,106
(1,192)
507,730
9,827
1,923
126,502
5,804
(47,188)
389,956
$
$
$
93,483
1,110,396
1,203,879
1,034,041
$ 2,237,920
$
52,730
717,089
769,819
863,909
$ 1,633,728
22.1 %
22.7 %
17.9 %
23.9 %
(1) Includes the net tax impact of Special items recorded during the respective periods.
The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the
applicable tax rate. The applicable tax rate reflects the taxable jurisdiction and nature of each Special item.
(2) Return on invested capital and Adjusted return on invested capital excluding Fori would have been 27.9% and
28.6%, respectively.
Contractual and Other Obligations
The Company’s cash requirements for contractual and other obligations as of December 31, 2022 are as follows:
Payments Due By Period
Long-term debt, including current portion (Note 9)
Interest on long-term debt (Note 9)
Amounts due banks (Note 9)
Operating leases (Note 17)
Purchase commitments (1)
Transition Tax (2)
Total
2024 to
2025
2026 to
2027
Total
$ 1,118,336 $
345,782
82,444
51,798
2028 and
Beyond
— $ 600,000
39,970 172,207
—
14,558
187
—
$ 3,613,691 $ 2,150,024 $ 627,080 $ 49,635 $ 786,952
2023
11,039 $ 507,297 $
45,448
82,444
11,342
2,003,872 1,999,751
—
88,157
—
16,588
3,579
11,459
—
9,310
355
—
11,459
(1) Purchase commitments include contractual obligations for raw materials and services.
(2) Federal income taxes on the Company’s transition tax pursuant to the U.S. Tax Act is payable over eight years.
Amounts reflect the utilization of 2017 overpayments and foreign tax credits.
27
As of December 31, 2022, there were $17,424 of tax liabilities related to unrecognized tax benefits and a $39,090
liability for deferred compensation. Because of the high degree of uncertainty regarding the timing of future cash
outflows associated with these liabilities, the Company is unable to estimate the years in which settlement will occur.
Stock-Based Compensation
On April 23, 2015, the shareholders of the Company approved the 2015 Equity and Incentive Compensation Plan
("Employee Plan"). The Employee Plan provides for the granting of options, appreciation rights, restricted shares,
restricted stock units and performance-based awards up to an additional 5,400,000 of the Company’s common shares. In
addition, on April 23, 2015, the shareholders of the Company approved the 2015 Stock Plan for Non-Employee
Directors ("2015 Director Plan"). The 2015 Director Plan provides for the granting of options, restricted shares and
restricted stock units up to an additional 300,000 of the Company’s common shares. At December 31, 2022, there were
1,381,427 common shares available for future grant under all plans.
Under these plans, options, restricted shares and restricted stock units granted were 284,946 in 2022 and 313,547 in
2021. The Company issued common shares from treasury upon all exercises of stock options, vesting of restricted stock
units and the granting of restricted stock awards in 2022 and 2021.
Total stock-based compensation expense recognized in the Consolidated Statements of Income for 2022 and 2021 was
$25,276 and $23,787, respectively, with a related tax benefit of $6,363 and $5,988, respectively. As of December 31,
2022, total unrecognized stock-based compensation expense related to non-vested stock options and restricted stock
units was $17,610, which is expected to be recognized over a weighted average period of approximately 1.3 years.
The aggregate intrinsic value of options outstanding and exercisable, which would have been received by the optionees,
had all awards been exercised at December 31, 2022 was $58,282 and $49,024, respectively. The total intrinsic value of
awards exercised during 2022 and 2021 was $7,082 and $20,442, respectively.
Product Liability Costs
Product liability costs incurred can be volatile and are largely related to trial activity. The costs associated with these
claims are predominantly defense costs which are recognized in the periods incurred.
The long-term impact of product liability contingencies, in the aggregate, on operating results, operating cash flows and
access to capital markets is difficult to assess, particularly since claims are in many different stages of development and
the Company benefits significantly from cost sharing with co-defendants and insurance carriers. Moreover, the Company
has been largely successful to date in its defense of these claims.
Off-Balance Sheet Arrangements
The Company utilizes letters of credit to back certain payment and performance obligations. Letters of credit are subject
to limits based on amounts outstanding under the Company’s Credit Agreement.
New Accounting Pronouncements
Refer to Note 1 to the consolidated financial statements for a discussion of new accounting pronouncements.
Critical Accounting Policies and Estimates
The Company’s consolidated financial statements are based on the selection and application of significant accounting
policies, which require management to make estimates and assumptions. These estimates and assumptions are reviewed
periodically by management and compared to historical trends to determine the accuracy of estimates and assumptions
used. If warranted, these estimates and assumptions may be changed as current trends are assessed and updated.
Historically, the Company’s estimates have been determined to be reasonable. No material changes to the Company’s
28
accounting policies were made during 2022. The Company believes the following accounting policies are some of the
more critical judgment areas affecting its financial condition and results of operations.
Legal and Tax Contingencies
The Company, like other manufacturers, is subject from time to time to a variety of civil and administrative proceedings
arising in the ordinary course of business. Such claims and litigation include, without limitation, product liability claims,
administrative claims, regulatory claims and health, safety and environmental claims, some of which relate to cases
alleging asbestos induced illnesses. The costs associated with these claims are predominantly defense costs, which are
recognized in the periods incurred. Insurance reimbursements mitigate these costs and, where reimbursements are
probable, they are recognized in the applicable period. With respect to costs other than defense costs (i.e., for liability
and/or settlement or other resolution), reserves are recorded when it is probable that the contingencies will have an
unfavorable outcome. The Company accrues its best estimate of the probable costs after a review of the facts with
management and counsel and taking into account past experience. If an unfavorable outcome is determined to be
reasonably possible but not probable, or if the amount of loss cannot be reasonably estimated, disclosure would be
provided for material claims or litigation. Many of the current cases are in differing procedural stages and information on
the circumstances of each claimant, which forms the basis for judgments as to the validity or ultimate disposition of such
actions, varies greatly. Therefore, in many situations a range of possible losses cannot be made. Reserves are adjusted as
facts and circumstances change and related management assessments of the underlying merits and the likelihood of
outcomes change. Moreover, reserves only cover identified and/or asserted claims. Future claims could, therefore, give
rise to increases to such reserves.
The Company is subject to taxation from U.S. federal, state, municipal and international jurisdictions. The calculation of
current income tax expense is based on the best information available and involves significant management judgment.
The actual income tax liability for each jurisdiction in any year can in some instances be ultimately determined
several years after the financial statements are published.
The Company maintains liabilities for unrecognized tax benefits related to uncertain income tax positions in various
jurisdictions. The Company uses judgment in determining whether the technical merits of tax positions are more-likely-
than-not to be sustained. Judgment is also used in measuring the related amount of tax benefit that qualifies for
recognition, including the interpretation of applicable tax law, regulation and tax ruling.
Liabilities are settled primarily through the completion of audits within each individual tax jurisdiction or the closing of
a statute of limitation. Liabilities can be affected by changes in applicable tax law, regulations, tax rulings or such other
factors, which may cause management to believe a revision of past estimates is appropriate. Management believes that
an appropriate liability has been established for uncertain income tax positions; however, actual results may materially
differ from these estimates. Refer to Note 13 to the consolidated financial statements for further discussion of uncertain
income tax positions.
Deferred Income Taxes
Deferred income taxes are recognized at currently enacted tax rates for temporary differences between the GAAP and
income tax basis of assets and liabilities and operating loss and tax credit carry-forwards. The Company repatriates
earnings for certain non-U.S. subsidiaries, which are subject to foreign withholding taxes. The Company considers
remaining earnings in all other non-U.S. subsidiaries to be indefinitely reinvested and has not recorded any deferred
taxes as such estimate is not practicable.
At December 31, 2022, the Company had approximately $142,430 of gross deferred tax assets related to deductible
temporary differences and tax loss and credit carry-forwards, which may reduce taxable income in future years. In
assessing the realizability of deferred tax assets, the Company assesses whether it is more-likely-than-not that a portion
or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax
liabilities, tax planning strategies and projected future taxable income in making this assessment. At December 31, 2022,
a valuation allowance of $44,627 was recorded against certain deferred tax assets based on this assessment. The
29
Company believes it is more-likely-than-not that the tax benefit of the remaining net deferred tax assets will be realized.
The amount of net deferred tax assets considered realizable could be increased or reduced in the future if the Company’s
assessment of future taxable income or tax planning strategies changes.
Pensions
The Company maintains a number of defined benefit ("Pension") and defined contribution plans to provide retirement
benefits for employees. These plans are maintained and contributions are made in accordance with the Employee
Retirement Income Security Act of 1974 ("ERISA"), local statutory law or as determined by the Board of Directors. The
plans generally provide benefits based upon years of service and compensation. Pension plans are funded except for a
domestic non-qualified pension plan for certain key employees and certain foreign plans.
A significant element in determining the Company’s pension expense is the discount rate for plan liabilities. To develop
the discount rate assumption, the Company refers to the yield derived from matching projected pension payments with
maturities of a portfolio of available non-callable bonds rated AA or an equivalent quality. The Company determined
this rate to be 4.3% at December 31, 2022 and 1.8% at December 31, 2021. A 10 basis point change in the discount rate
would not have a significant impact to pension expense.
The Company’s defined benefit plan (income) expense was $(2,280) and $124,929 in 2022 and 2021, respectively.
Pension expense includes $367 and $126,013 in settlement charges in 2022 and 2021, respectively. The Company’s
defined contribution plan expense was $29,569 and $26,281 in 2022 and 2021, respectively. The Company expects total
2023 expense related to retirement plans to increase by a range of approximately $500 to $1,500, excluding settlement
charges. Refer to Note 11 to the consolidated financial statements for additional information.
The Accumulated other comprehensive loss, excluding tax effects, recognized on the Consolidated Balance Sheet was
$3,759 as of December 31, 2022 and $16,173 as of December 31, 2021. The decrease is primarily the result of a pension
plan termination described below.
In March 2020, the Company approved an amendment to terminate the Lincoln Electric Company Retirement Annuity
Program (“RAP”) plan effective as of December 31, 2020. The Company provided notice to participants of the intent to
terminate the plan and applied and received a determination letter. During 2021, pension obligations were distributed
through a combination of lump sum payments to eligible plan participants and through the purchase of a group annuity
contract in October 2021. The lump sum payments and annuity purchase resulted in pre-tax settlement charges of
$126,056 in the twelve months ended December 31, 2021. The remaining surplus assets of $68,458 at December 31,
2021 were transferred to a suspense account in January 2022 and are being used to fund employer matching
contributions in a qualified employee savings plan. The surplus assets as of December 31, 2022 were $56,418 and are
recorded in Other current assets and Other assets in the Company’s Consolidated Balance Sheets.
Inventories
Inventories are valued at the lower of cost or net realizable value. Fixed manufacturing overhead costs are allocated to
inventory based on normal production capacity and abnormal manufacturing costs are recognized as period costs. Cost
for a substantial portion of U.S. inventories is determined on a LIFO basis. LIFO was used for 38% and 36% of total
inventories at December 31, 2022 and 2021, respectively. Cost of other inventories is determined by costing methods
that approximate a FIFO basis. The valuation of LIFO inventories is made at the end of each year based on inventory
levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of
expected year-end inventory levels and costs. Actual year-end inventory levels and costs may differ from interim LIFO
inventory valuations. The excess of current cost over LIFO cost was $133,909 at December 31, 2022 and $114,176 at
December 31, 2021.
The Company reviews the net realizable value of inventory on an on-going basis with consideration given to
deterioration, obsolescence and other factors. If actual market conditions differ from those projected by management,
30
and the Company’s estimates prove to be inaccurate, write-downs of inventory values and adjustments to Cost of goods
sold may be required. Historically, the Company’s reserves have approximated actual experience.
Long-Lived Assets
The Company periodically evaluates whether current facts or circumstances indicate that the carrying value of its
depreciable long-lived assets, including leases and intangible assets that do not have indefinite lives, to be held and used
may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows
produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine
whether impairment exists. If an asset is determined to be impaired, a loss is recognized to the extent that carrying value
exceeds fair value. Fair value is measured based on quoted market prices in active markets, if available. If quoted market
prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted
value of estimated future cash flows.
Goodwill and Intangibles
The Company performs an annual impairment test of goodwill and indefinite-lived intangible assets in the fourth quarter
using the same date each year or more frequently if changes in circumstances or the occurrence of events indicate
potential impairment.
The fair value of each indefinite-lived intangible asset is compared to its carrying value and an impairment charge is
recorded if the carrying value exceeds the fair value. For goodwill, the Company first assesses qualitative factors to
determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, and
whether it is necessary to perform the quantitative goodwill impairment test. The quantitative test is only required if the
Company concludes that it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount. The
Company may also perform a quantitative test in instances where the more-likely-than-not threshold has not been met,
including when general macroeconomic conditions or changes to the reporting unit warrant a refresh of the baseline used
in a qualitative test. For quantitative testing, the Company compares the fair value of each reporting unit with its carrying
amount. If the carrying amount exceeds the fair value, an impairment charge is recognized for the amount by which the
carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that
reporting unit.
Fair values are determined using established business valuation techniques and models developed by the Company,
estimates of market participant assumptions of future cash flows, future growth rates and discount rates to value
estimated cash flows. Changes in economic and operating conditions, actual growth below the assumed market
participant assumptions or an increase in the discount rate could result in an impairment charge in a future period.
Acquisitions
Upon acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for
the valuation as appropriate. The valuation inputs in these models and analyses are based on market participant
assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or
most advantageous market for the asset or liability.
Fair value estimates are based on a series of judgments about future events and uncertainties and rely on estimates and
assumptions. Management values property, plant and equipment using the cost approach supported where available by
observable market data, which includes consideration of obsolescence. Management values acquired intangible assets
using the relief from royalty method or excess earnings method, forms of the income approach supported by observable
market data for peer companies. The significant assumptions used to estimate the value of the acquired intangible assets
include discount rates and certain assumptions that form the basis of future cash flows (such as revenue growth rates,
customer attrition rates and royalty rates). Acquired inventories are marked to fair value. For certain items, the pre-
acquisition carrying value is determined to be a reasonable approximation of fair value based on information available to
the Company. Refer to Note 4 to the consolidated financial statements for additional details.
31
Revenue Recognition
Revenue is recognized when obligations under the terms of a contract are satisfied and control is transferred to the
customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for
goods or services. Substantially all of the Company’s sales arrangements are short-term in nature involving a single
performance obligation. The Company recognizes revenue when the performance obligation is satisfied and control of
the product is transferred to the customer based upon shipping terms. In addition, certain customized automation
performance obligations are accounted for over time. Under this method, revenue recognition is primarily based upon
the ratio of costs incurred to date compared with estimated total costs to complete. The cumulative impact of revisions to
total estimated costs is reflected in the period of the change, including anticipated losses. Less than 10% of the
Company’s Net sales are recognized over time.
The Company recognizes any discounts, credits, returns, rebates and incentive programs based on reasonable estimates
as a reduction of sales to arrive at Net sales at the same time the related revenue is recorded. Taxes collected by the
Company, including sales tax and value added tax, are excluded from Net sales. The Company recognizes freight billed
as a component of Net sales and shipping costs as a component of Cost of goods sold when control transfers to the
customer. Sales commissions are expensed when incurred because the amortization period is generally one year or less.
These costs are recorded within Selling, general and administrative expenses in the Company’s Consolidated Statements
of Income.
Refer to Note 2 to the consolidated financial statements for additional details.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s primary financial market risks include fluctuations in currency exchange rates, commodity prices and
interest rates. The Company manages these risks by using derivative financial instruments in accordance with
established policies and procedures. The Company does not enter into derivatives or other financial instruments for
trading or speculative purposes.
Included below is a sensitivity analysis based upon a hypothetical 10% weakening or strengthening in the U.S. dollar
compared to foreign currency exchange rates at December 31, 2022, a 10% change in pricing of commodity contracts
and a 100 basis point increase in effective interest rates at December 31, 2022. The derivative, borrowing and investment
arrangements in effect at December 31, 2022 were compared to the hypothetical foreign exchange or interest rates in the
sensitivity analysis to determine the effect on the Company’s current period consolidated financial statements.
Foreign Currency Exchange Risk
The Company enters into forward foreign exchange contracts principally to hedge the currency fluctuations in
transactions denominated in foreign currencies, thereby limiting the Company’s risk that would otherwise result from
changes in exchange rates.
At December 31, 2022, the Company hedged certain third-party and intercompany purchases and sales. The gross
notional dollar amount of these foreign exchange contracts at December 31, 2022 was $66,296. At December 31, 2022, a
hypothetical 10% strengthening or weakening in the U.S. dollar would have changed Accumulated other comprehensive
income (loss) by $284.
The Company enters into forward foreign exchange contracts to hedge transaction exposures or significant cross-border
intercompany loans by either purchasing or selling specified amounts of foreign currency at a specified date. The gross
notional dollar amount of these foreign exchange contracts at December 31, 2022 was $380,443. A hypothetical 10%
change in the year-end exchange rates would have resulted in an increase or decrease to Income before income taxes of
$12,936 related to these positions. However, any loss (or gain) resulting from a hypothetical 10% change would be offset
by the associated gain (or loss) on the underlying balance sheet exposure and would ultimately not materially affect the
Company’s financial statements. The Company also has a foreign currency forward contract hedge designated as a net
32
investment hedge with a notional dollar amount of $88,843 at December 31, 2022. At December 31, 2022, a hypothetical
10% strengthening or weakening in the U.S. dollar would have changed Accumulated other comprehensive income
(loss) by $8,758.
Commodity Price Risk
From time to time, the Company uses various hedging arrangements to manage exposures to price risk from commodity
purchases. These hedging arrangements have the effect of fixing for specified periods the prices the Company will pay
for the volume to which the hedge relates. The notional amount of these contracts was 875,000 pounds at December 31,
2022. At December 31, 2022, a hypothetical 10% change in the price would have resulted in an increase or decrease to
the value of the contracts by $319.
Interest Rate Risk
In anticipation of future debt issuance associated with the Notes referenced in Note 9 to the consolidated financial
statements, the Company has interest rate forward starting swap agreements to hedge the variability of future changes in
interest rates. The gross notional dollar value of these contracts was $100,000 at December 31, 2022. At December 31,
2022, a hypothetical 100 basis point increase to effective interest rates would have changed Accumulated other
comprehensive income (loss) by $7,584. At December 31, 2022, a hypothetical 100 basis point increase to variable
interest rates would have changed Interest expense by approximately $5,600.
The fair value of the Company’s cash and cash equivalents at December 31, 2022 approximated cost due to the short-
term duration. These financial instruments are subject to concentrations of credit risk. The Company has minimized this
risk by entering into investments with a number of major banks and financial institutions and investing in high-quality
instruments. The Company does not expect any counter-parties to fail to meet their obligations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted in a separate section of this Annual Report on Form 10-K following the signature
page.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
None.
ITEM 9A. CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief
Financial Officer, the Company conducted an evaluation of disclosure controls and procedures, as such term is defined
in Rule 13a-15(e) of the Exchange Act. Based on this evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period
covered by this Annual Report on Form 10-K.
Management’s Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of
the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company
conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2022 based
on the 2013 framework in "Internal Control – Integrated Framework" issued by the Committee of Sponsoring
33
Organizations of the Treadway Commission. Based on the Company’s evaluation under such framework, management
concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.
During 2022, the Company completed the acquisition of Fori. Fori’s assets are included in the Company’s Consolidated
Balance Sheet from the date of the acquisition and constituted approximately 14.6% of total assets as of December 31,
2022. As permitted by guidance issued by the Securities and Exchange Commission, the Company has elected to
exclude Fori from our assessment of the effectiveness of our internal control over financial reporting as of December 31,
2022.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 has been audited
by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included
elsewhere in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
In December 2022, the Company acquired Fori. The acquired business operated under its own set of systems and
internal controls and the Company is currently maintaining those systems and much of that control environment until it
is able to incorporate its processes into the Company’s own systems and control environment. The Company expects to
complete the incorporation of the acquired business’ operations into the Company’s systems and control environment in
2023.
Except for changes in connection with the Company’s acquisition of Fori business noted above, there have been no
changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2022 that
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Company is expected to file its 2023 proxy statement pursuant to Regulation 14A of the Exchange Act within 120
days after December 31, 2022.
Except for the information set forth within Part I, Item 1C section of this Annual Report on Form 10-K concerning our
Executive Officers, the information required by this item is incorporated by reference from the 2023 proxy statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the 2023 proxy statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from the 2023 proxy statement.
34
For further information on the Company’s equity compensation plans, see Note 1 and Note 10 to the Company’s
consolidated financial statements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference from the 2023 proxy statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference from the 2023 proxy statement.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The following reports and consolidated financial statements of the Company are included in a separate section of
this report following the signature page and certifications:
Report of Independent Registered Public Accounting Firm (PCAOB ID 42)
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
Consolidated Statements of Income – Years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Income – Years ended December 31, 2022, 2021 and 2020
Consolidated Balance Sheets – December 31, 2022 and 2021
Consolidated Statements of Equity – Years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows – Years ended December 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
The following consolidated financial statement schedule of the Company is included in a separate section of this
report following the signature page:
Schedule II – Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and
Exchange.
Commission are not required under the related instructions or are inapplicable, and therefore, have been omitted.
35
(a)(3) Exhibits
Exhibit
N
3.1
3.2
4.1
Description
Amended and Restated Articles of Incorporation of Lincoln Electric Holdings, Inc., as amended on
October 19, 2021 (filed as Exhibit 3.1 to Form 8-K of Lincoln Electric Holdings, Inc. filed on
October 22, 2021, SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
Amended and Restated Code of Regulations of Lincoln Electric Holdings, Inc., as amended on February
15, 2023 (filed as Exhibit 3.1 to Form 8-K of Lincoln Electric Holdings, Inc. filed on February 17,
2023, SEC File No.-0-1402, and incorporated herein by reference and made a part hereof).
Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934 (filed as
Exhibit 4.1 to Form 10-K of Lincoln Electric Holdings, Inc. for the year ended December 31, 2019,
SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.1
Second Amended and Restated Credit Agreement, dated as of April 23, 2021, by and among Lincoln
10.2
10.3
10.4
10.5
Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding
Company, J.W. Harris Co., Inc., Lincoln Electric Automation, Inc., Lincoln Global, Inc., the Lenders
and KeyBank National Association (filed as Exhibit 10.4 to Form 10-Q of Lincoln Electric Holdings,
Inc. for the quarter ended March 31, 2021, SEC File No. 0-1402, and incorporated herein by reference
Credit Agreement, dated as of November 29, 2022, by and among Lincoln Electric Holdings, Inc., The
Lincoln Electric Company, Lincoln Electric International Holding Company, J.W. Harris Co., Inc.,
Lincoln Electric Automation, Inc., Lincoln Global, Inc., the Lenders and PNC Bank, National
Association (filed as Exhibit 10.1 to form 8-K of Lincoln Electric Holdings, Inc. filed on December 1,
2022, SEC File No. 0-1402 and incorporated herein by reference and made a part hereof).
Note Purchase Agreement, dated as of April 1, 2015, by and among Lincoln Electric Holdings, Inc., The
Lincoln Electric Company, Lincoln Electric International Holding Company, J.W. Harris Co., Inc.,
Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc. and the purchasers party thereto
(filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc. filed on April 2, 2015, SEC File
No. 0-1402, and incorporated herein by reference and made a part hereof).
Amendment No. 1 to Note Purchase Agreement, dated as of April 1, 2015, by and among Lincoln
Electric Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding
Company, J.W. Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc.
and the purchasers party thereto, dated July 30, 2019 (filed as Exhibit 10.1 to Form 10-Q of Lincoln
Electric Holdings, Inc. for the quarter ended September 30, 2019, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Note Purchase Agreement, dated as of October 20, 2016, by and among Lincoln Electric Holdings, Inc.,
The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W. Harris Co., Inc.,
Techalloy, Inc. and Wayne Trail Technologies, Inc. and the purchaser party thereto (filed as
Exhibit 10.4 to Form 10-K of Lincoln Electric Holdings, Inc. for the year ended December 31, 2016,
SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.6
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., MetLife
Investment Advisors, LLC and/or one or more of its affiliates or related funds, as purchasers thereunder
(filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 29, 2018, SEC
File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.7
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., Voya
Retirement Insurance and Annuity Company and/or one or more of its affiliates or related funds, as
purchasers thereunder (filed as Exhibit 10.2 to Form 8-K of Lincoln Electric Holdings, Inc. filed on
November 29, 2018, SEC File No. 0-1402, and incorporated herein by reference and made a part
36
10.8
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., State Farm Life
Insurance Company and/or one or more of its affiliates or related funds, as purchasers thereunder (filed
as Exhibit 10.3 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 29, 2018, SEC File
No. 0-1402, and incorporated herein by reference and made a part hereof).
10.9
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., AIG Asset
Management (U.S.), LLC and/or one or more of its affiliates or related funds, as purchasers thereunder
(filed as Exhibit 10.4 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 29, 2018, SEC
File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.10
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., John Hancock
Life Insurance Company (U.S.A.) and/or one or more of its affiliates or related funds, as purchasers
thereunder (filed as Exhibit 10.5 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 29,
2018, SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.11
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., Thrivent
Financial for Lutherans and/or one or more of its affiliates or related funds, as purchasers thereunder
(filed as Exhibit 10.6 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 29, 2018, SEC
File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.12
Uncommitted Master Note Facility, dated as of November 27, 2018, by and among Lincoln Electric
Holdings, Inc., The Lincoln Electric Company, Lincoln Electric International Holding Company, J.W.
Harris Co., Inc., Lincoln Global, Inc., Techalloy, Inc., Wayne Trail Technologies, Inc., Allianz Life
Insurance Company of North America and/or one or more of its affiliates or related funds, as purchasers
thereunder (filed as Exhibit 10.7 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 29,
2018, SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.13*
Supplemental Executive Retirement Plan (Amended and Restated as of December 31, 2008) (filed as
Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc. filed on January 7, 2009, SEC File
No. 0-1402, and incorporated herein by reference and made part hereof).
10.14*
Amendment No. 1 to Supplemental Executive Retirement Plan (As Amended and Restated as of
10.15*
December 31, 2008) (filed as Exhibit 10.6 to Form 10-K of Lincoln Electric Holdings, Inc. for the year
ended December 31, 2016, SEC File No. 0-1402, and incorporated herein by reference and made a part
hereof).
Amendment No. 2 to Supplemental Executive Retirement Plan (As Amended and Restated as of
December 31, 2008) (filed as Exhibit 10.4 to Form10-Q of Lincoln Electric Holdings, Inc. for
the quarter ended September 30, 2020, SEC File No. 0-1402, and incorporated herein by reference and
made a part hereof).
10.16*
Deferred Compensation Plan for Certain Retention Agreements and Other Contractual Arrangements
(Amended and Restated as of January 1, 2004) (filed as Exhibit 10(i) to Form 10-K of Lincoln Electric
Holdings, Inc. for the year ended December 31, 2003, SEC File No. 0-1402, and incorporated herein by
reference and made a part hereof).
10.17*
Non-Employee Directors’ Deferred Compensation Plan (Amended and Restated as of January 1, 2021)
(filed as Exhibit 10.18 to Form 10-K of Lincoln Electric Holdings, Inc. for the year ended December 31,
2020, SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
10.18*
2005 Deferred Compensation Plan for Executives (Amended and Restated as of January 1, 2021) (filed
as Exhibit 10.21 to Form 10-K of Lincoln Electric Holdings, Inc. for the year ended December 31,
2020, SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
37
10.19*
The Lincoln Electric Company Restoration Plan (filed as Exhibit 4.3 to Form S-8 of Lincoln Electric
Holdings, Inc. filed on December 19, 2016, SEC File No. 333-215168, and incorporated herein by
reference and made a part hereof).
10.20*
Amendment No. 1 to The Lincoln Electric Company Restoration Plan (filed as Exhibit 10.3 to
Form 10-Q of Lincoln Electric Holdings, Inc. for the quarter ended September 30, 2020, SEC File
No. 0-1402, and incorporated herein by reference and made a part hereof).
10.21*
The Lincoln Electric Company Employee Savings Plan As Amended and Restated Effective January 15,
10.22*
10.23*
10.24*
10.25*
2021 (filed as Exhibit 10.20 to Form 10 K of Lincoln Electric Holdings, Inc. for the year ended
December 31, 2021, SEC File No. 0 1402, and incorporated herein by reference and made a part
Amendment No. 1 to The Lincoln Electric Company Employee Savings Plan As Amended and Restated
Effective January 15, 2021 (filed as Exhibit 10.21 to Form 10 K of Lincoln Electric Holdings, Inc. for
the year ended December 31, 2021, SEC File No. 0 1402, and incorporated herein by reference and
made a part hereof).
Amendment No. 2 to The Lincoln Electric Company Employee Savings Plan As Amended and Restated
Effective January 15, 2021 (filed as Exhibit 10.22 to Form 10 K of Lincoln Electric Holdings, Inc. for
the year ended December 31, 2021, SEC File No. 0 1402, and incorporated herein by reference and
made a part hereof).
Form of Change in Control Severance Agreement (as entered into by the Company and its executive
officers) (filed as Exhibit 10.1 to Form 8-K of Lincoln Electric Holdings, Inc. filed on November 21,
2017, SEC File No. 0-1402, and incorporated herein by reference and made a part hereof).
Amendment No. 1 to Form of Change in Control Severance Agreement (as entered into by the
Company and its executive officers) (filed as Exhibit 10.5 to Form 10-Q of Lincoln Electric
Holdings, Inc. for the quarter ended September 30, 2020, SEC File No. 0-1402, and incorporated herein
by reference and made a part hereof).
10.26*
2006 Equity and Performance Incentive Plan (Restated as of March 3, 2011) (filed as Annex A to
10.27*
10.28*
10.29*
10.30*
Lincoln Electric Holdings, Inc. proxy statement filed on March 18, 2011, SEC File No. 0-1402 and
incorporated herein by reference and made a part hereof).
2015 Equity and Incentive Compensation Plan (filed as Appendix B to Lincoln Electric Holdings, Inc.
definitive proxy statement filed on March 18, 2015, SEC File No. 0-1402, and incorporated herein by
reference and made a part hereof).
2015 Stock Plan for Non-Employee Directors (filed as Appendix C to Lincoln Electric Holdings, Inc.
definitive proxy statement filed on March 18, 2015, SEC File No. 0-1402, and incorporated herein by
reference and made a part hereof).
Amendment No. 1 to the 2015 Stock Plan for Non-Employee Directors (filed as Appendix C to Lincoln
Electric Holdings, Inc. proxy statement dated March 20, 2017, SEC File No. 0-1402, and incorporated
by reference and made a part hereof).
Form of Restricted Stock Unit Agreement for Non-Employee Directors (filed as Exhibit 10.30 to Form
10-K of Lincoln Electric Holdings, Inc. for the year ended December 31, 2021, SEC File No. 0-1402,
and incorporated herein by reference and made a part hereof).
10.31*
10.32*
Form of Restricted Stock Unit Agreement for Non-Employee Directors (filed herewith).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.4 to Form 10-Q of Lincoln
10.33*
10.34*
Electric Holdings, Inc. for the quarter ended September 30, 2010, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.37 to Form 10-K of the
Lincoln Electric Holdings, Inc. for the year ended December 31, 2010, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.27 to Form 10-K of
Lincoln Electric Holdings, Inc. for the year ended December 31, 2017, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
38
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
10.43*
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.28 to Form 10-K of
Lincoln Electric Holdings, Inc. for the year ended December 31, 2017, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.37 to Form 10-K of
Lincoln Electric Holdings, Inc. for the year ended December 31, 2018, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.38 to Form 10-K of
Lincoln Electric Holdings, Inc. for the year ended December 31, 2019, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.1 to Form 10-Q of Lincoln
Electric Holdings, Inc. for the quarter ended March 31, 2021, SEC File No. 0-1402, and incorporated
herein by reference and made a part hereof).
Form of Stock Option Agreement for Executive Officers (filed as Exhibit 10.1 to Form 10-Q of Lincoln
Electric Holdings, Inc. for the quarter ended March 31, 2022, SEC File No. 0-1402, and incorporated
herein by reference and made a part hereof).
Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.33 to Form 10-K
of Lincoln Electric Holdings, Inc. for the year ended December 31, 2013, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.21 to Form 10-K
of Lincoln Electric Holdings, Inc. for the year ended December 31, 2015, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.41 to Form 10-K
of Lincoln Electric Holdings, Inc. for the year ended December 31, 2018, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.43 to Form 10-K
of Lincoln Electric Holdings, Inc. for the year ended December 31, 2019, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
10.44*
Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.2 to Form 10-Q of
Lincoln Electric Holdings, Inc. for the quarter ended March 31, 2021, SEC File No.-0-1402, and
incorporated herein by reference and made a part hereof).
10.45*
Form of Restricted Stock Unit Agreement for Executive Officers (filed as Exhibit 10.2 to Form 10-Q of
10.46*
10.47*
10.48*
10.49*
10.50*
10.51*
Lincoln Electric Holdings, Inc. for the quarter ended March 31, 2022, SEC File No.-0-1402, and
incorporated herein by reference and made a part hereof).
Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.44 to
Form 10-K of Lincoln Electric Holdings, Inc. for the year ended December 31, 2018, SEC File
No. 0-1402, and incorporated herein by reference and made a part hereof).
Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.47 to Form
10-K of Lincoln Electric Holdings, Inc. for the year ended December 31, 2019, SEC File No. 0-1402,
and incorporated herein by reference and made a part hereof).
Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-
Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2021, SEC File No.-0-1402, and
incorporated herein by reference and made a part hereof).
Form of Performance Share Award Agreement for Executive Officers (filed as Exhibit 10.3 to Form 10-
Q of Lincoln Electric Holdings, Inc., for the quarter ended March 31, 2022, SEC File No.-0-1402, and
incorporated herein by reference and made a part hereof).
Form of Officer Indemnification Agreement (effective February 23, 2012) (filed as Exhibit 10.1 to
Form 8-K of Lincoln Electric Holdings, Inc. filed on February 29, 2012, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
Form of Director Indemnification Agreement (effective February 23, 2012) (filed as Exhibit 10.2 to
Form 8-K of Lincoln Electric Holdings, Inc. filed on February 29, 2012, SEC File No. 0-1402, and
incorporated herein by reference and made a part hereof).
39
21
23
24
Subsidiaries of the Registrant (filed herewith).
Consent of Independent Registered Public Accounting Firm (filed herewith).
Powers of Attorney (filed herewith).
31.1
Certification by the Chairman, President and Chief Executive Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934 (filed herewith).
31.2
Certification by the Executive Vice President, Chief Financial Officer and Treasurer pursuant to
Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
101.IN
S
101.SC
H
101.CA
L
101.LA
B
101.PR
E
101.DE
F
104
Oxley Act of 2002 (filed herewith).
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Cover page Interactive Data File (embedded within the Inline XBRL document)
* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to
Item 15(b) of this report.
ITEM 16. FORM 10-K SUMMARY
None.
40
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
LINCOLN ELECTRIC HOLDINGS, INC.
By:
/s/ Gabriel Bruno
Gabriel Bruno
Executive Vice President, Chief Financial Officer and
Treasurer
(principal financial and accounting officer)
February 21, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
/s/ Christopher L. Mapes
Christopher L. Mapes,
Chairman, President and Chief Executive Officer
(principal executive officer)
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno,
Executive Vice President, Chief Financial Officer and
Treasurer
(principal financial and accounting officer)
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Brian D. Chambers, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Patrick P. Goris, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Kathryn Jo Lincoln, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Ben P. Patel, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Kellye L. Walker, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Curtis E. Espeland, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Michael F. Hilton, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Phillip J. Mason, Director
February 21, 2023
/s/ Gabriel Bruno
Gabriel Bruno as
Attorney-in-Fact for
Hellene S. Runtagh, Director
February 21, 2023
41
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Lincoln Electric Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lincoln Electric Holdings, Inc. (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity and cash
flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement
schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) and our report dated February 21, 2023 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or
complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
F-1
Description of
the Matter
Goodwill impairment evaluation – Reporting Unit within International Welding Segment
As disclosed in Note 5 to the consolidated financial statements, at December 31, 2022, the Company’s
total goodwill was $665.3 million, of that, $129.9 million relates to the International Welding
segment. As disclosed in Note 1 to the consolidated financial statements, goodwill is tested for
impairment in the fourth quarter using the same date each year or more frequently if changes in
circumstances or the occurrence of events indicate potential impairment. The Company first assesses
qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting
unit is less than its carrying amount and whether it is necessary to perform a quantitative goodwill
impairment test. The Company may perform a quantitative test in instances where the more-likely-
than-not threshold has not been met, including when general macroeconomic conditions or changes
to the reporting unit warrant a refresh of the baseline used in a qualitative test. The Company
performed a quantitative assessment for a reporting unit within the International Welding segment
and determined that the fair value of the reporting unit was in excess of the carrying value.
Auditing the annual goodwill impairment test for the aforementioned reporting unit under the
quantitative assessment was complex and judgmental due to the significant estimation required in
determining the fair value of the reporting unit. In particular, the fair value estimate using the income
approach was sensitive to significant assumptions such as the weighted average cost of capital and
the terminal period revenue growth rate. Elements of these significant assumptions are forward-
looking and could be affected by future economic conditions.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the Company’s goodwill impairment evaluation, including controls over the
significant assumptions mentioned above.
To test the estimated fair value used in the Company’s annual goodwill impairment test for the
reporting unit within the International Welding segment, our audit procedures included, among
others, assessing the valuation methodology, testing the significant assumptions discussed above,
and testing the completeness and accuracy of the underlying data used by the Company in its
analysis. As it pertains to the terminal period revenue growth rate, we compared the significant
assumptions used by management to third party industry data and economic trends, changes to the
Company’s business model, customer base or product mix, as applicable. We involved valuation
specialists to assist with our evaluation of the methodology applied and the reasonableness of certain
assumptions selected by management, including, the weighted average cost of capital. Specifically,
we evaluated the components of the weighted average cost of capital assumptions used by
performing an independent corroborative analysis with involvement of valuation specialists. We
performed sensitivity analyses of assumptions to evaluate the changes in the fair value of the
reporting unit that would result from changes in the significant assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since at least 1923, but we are unable to determine the specific year.
Cleveland, OH
February 21, 2023
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Lincoln Electric Holdings, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Lincoln Electric Holdings, Inc.’s internal control over financial reporting as of December 31, 2022,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Lincoln Electric
Holdings, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2022, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Fori Automation, LLC (Fori), which is included in the 2022 consolidated financial statements of the
Company and constituted 14.6% of total assets as of December 31, 2022. Our audit of internal control over financial
reporting of the Company also did not include an evaluation of the internal control over financial reporting of Fori.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the 2022 consolidated financial statements of the Company and our report dated February 21, 2023
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
F-3
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Cleveland, Ohio
February 21, 2023
F-4
LINCOLN ELECTRIC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Year Ended December 31,
2021
2022
2020
Net sales (Note 2)
Cost of goods sold
Gross profit
Selling, general & administrative expenses
Rationalization and asset impairment charges (Note 7)
Operating income
Interest expense, net
Other income (expense) (Note 12)
Income before income taxes
Income taxes (Note 13)
Net income including non-controlling interests
Non-controlling interests in subsidiaries’ income
Net income
$ 3,761,211 $ 3,234,180 $ 2,655,400
1,784,059
871,341
543,802
45,468
282,071
21,973
3,942
264,040
57,896
206,144
29
$ 472,224 $ 276,466 $ 206,115
2,480,451
1,280,760
656,636
11,788
612,336
29,500
9,991
592,827
120,603
472,224
—
2,165,575
1,068,605
597,109
9,827
461,669
22,214
(114,457)
324,998
48,418
276,580
114
Basic earnings per share (Note 3)
Diluted earnings per share (Note 3)
Cash dividends declared per share
$
$
$
8.14 $
8.04 $
2.32 $
4.66 $
4.60 $
2.09 $
3.46
3.42
1.98
See notes to these consolidated financial statements.
F-5
LINCOLN ELECTRIC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income including non-controlling interests
Other comprehensive income (loss), net of tax:
Unrealized gain on derivatives designated and qualifying as cash flow
hedges, net of tax of $3,099 in 2022; $1,523 in 2021; $605 in 2020
Defined pension plan activity, net of tax of $964 in 2022; $33,214 in 2021;
$(10,622) in 2020
Currency translation adjustment
Other comprehensive (loss) income:
Comprehensive income
Comprehensive income (loss) attributable to non-controlling interests
Comprehensive income attributable to shareholders
Year Ended December 31,
2021
2022
2020
$ 472,224 $ 276,580 $ 206,144
5,815
5,607
861
11,450
(35,084)
(17,819)
454,405
94
(31,224)
4,068
(26,295)
179,849
74
$ 454,311 $ 321,270 $ 179,775
88,539
(49,745)
44,401
320,981
(289)
See notes to these consolidated financial statements.
F-6
LINCOLN ELECTRIC HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable (less allowance for doubtful accounts of $12,556 in 2022; $11,105
in 2021)
Inventories (Note 16)
Other current assets
Total Current Assets
Property, plant and equipment, net (Note 1)
Intangibles, net (Note 5)
Goodwill (Note 5)
Deferred income taxes (Note 13)
Other assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Amounts due banks (Note 9)
Trade accounts payable
Accrued employee compensation and benefits
Dividends payable
Other current liabilities
Current portion of long-term debt (Note 9)
Total Current Liabilities
Long-term debt, less current portion (Note 9)
Deferred income taxes (Note 13)
Other liabilities
Total Liabilities
Shareholders' Equity
December 31,
2022
2021
$
197,150 $
192,958
541,529
665,451
153,660
1,557,790
544,871
202,706
665,257
22,811
187,111
429,074
539,919
127,642
1,289,593
511,744
149,393
430,162
18,318
193,097
$ 3,180,546 $ 2,592,307
$
82,444 $
352,079
109,369
36,879
261,087
11,039
852,897
1,110,396
17,022
166,190
2,146,505
51,964
330,230
108,562
32,921
231,462
766
755,905
717,089
56,718
198,686
1,728,398
Preferred shares, without par value - at stated capital amount; authorized - 5,000,000
shares; issued and outstanding - none
Common shares, without par value - at stated capital amount; authorized - 240,000,000
shares; issued - 98,581,434 shares in 2022 and 2021; outstanding - 57,623,539 shares in
2022 and 58,786,776 shares in 2021
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss (Note 8)
Treasury shares, at cost - 40,957,895 shares in 2022 and 39,794,658 shares in 2021
Total Shareholders' Equity
Non-controlling interests
Total Equity
TOTAL LIABILITIES AND TOTAL EQUITY
—
—
9,858
481,857
3,306,500
(275,299)
(2,488,776)
1,034,140
(99)
1,034,041
9,858
451,268
2,970,303
(257,386)
(2,309,941)
864,102
(193)
863,909
$ 3,180,546 $ 2,592,307
See notes to these consolidated financial statements.
F-7
LINCOLN ELECTRIC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except per share amounts)
Common
Additional
Accumulated
Other
Shares
Common Paid-In
Retained
Comprehensive Treasury
Outstanding Shares Capital Earnings Income (Loss) Shares
Non-
Controlling
Interests
Total
60,592 $ 9,858 $ 389,446 $ 2,736,481 $
(275,850) $ (2,041,763) $
206,115
905 $ 819,077
206,144
29
457
(1,408)
59,641
9,858
27,076
(6,564)
409,958
(118,423)
(2,814)
2,821,359
276,466
393
(1,247)
58,787
9,858
38,720
2,590
451,268
(124,669)
(2,853)
2,970,303
472,224
(31,224)
861
4,023
5,504
(113,455)
(302,190)
(2,149,714)
88,539
5,607
(49,342)
4,299
(164,526)
(257,386)
(2,309,941)
11,450
5,815
(35,178)
211
(1,374)
(134,931)
29,194
1,395
(1,096)
2,458
(181,293)
57,624 $ 9,858 $ 481,857 $ 3,306,500 $
(275,299) $ (2,488,776) $
See notes to these consolidated financial statements.
45
979
114
(403)
(883)
(193)
(31,224)
861
4,068
(118,423)
32,580
(113,455)
(9,378)
790,250
276,580
88,539
5,607
(49,745)
(124,669)
43,019
(164,526)
(1,146)
863,909
472,224
11,450
94
5,815
(35,084)
(134,931)
31,652
(181,293)
299
(99) $ 1,034,041
Balance at December 31, 2019
Net income
Unrecognized amounts from defined benefit
pension plans, net of tax
Unrealized gain on derivatives designated and
qualifying as cash flow hedges, net of tax
Currency translation adjustment
Cash dividends declared – $1.98 per share
Stock-based compensation activity
Purchase of shares for treasury
Other
Balance at December 31, 2020
Net income
Unrecognized amounts from defined benefit
pension plans, net of tax
Unrealized gain on derivatives designated and
qualifying as cash flow hedges, net of tax
Currency translation adjustment
Cash dividends declared – $2.09 per share
Stock-based compensation activity
Purchase of shares for treasury
Other
Balance at December 31, 2021
Net income
Unrecognized amounts from defined benefit
pension plans, net of tax
Unrealized gain on derivatives designated and
qualifying as cash flow hedges, net of tax
Currency translation adjustment
Cash dividends declared – $2.32 per share
Stock-based compensation activity
Purchase of shares for treasury
Other
Balance at December 31, 2022
F-8
LINCOLN ELECTRIC HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2021
2022
2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Non-controlling interests in subsidiaries' income (loss)
Net income including non-controlling interests
Adjustments to reconcile Net income including non-controlling interests to Net cash
provided by operating activities:
Rationalization and asset impairment net charges (gains) (Note 7)
Depreciation and amortization
Equity earnings in affiliates, net
Deferred income taxes (Note 13)
Stock-based compensation
Pension settlement charges
Other, net
Changes in operating assets and liabilities, net of effects from acquisitions:
(Increase) decrease in accounts receivable
(Increase) decrease in inventories
(Increase) decrease in other current assets
Increase (decrease) in trade accounts payable
(Decrease) increase in other current liabilities
Net change in other assets and liabilities
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Acquisition of businesses, net of cash acquired (Note 4)
Proceeds from sale of property, plant and equipment
Other investing activities
NET CASH USED BY INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (payments on) short-term borrowings
Proceeds from (payments on) long-term borrowings
Proceeds from exercise of stock options
Purchase of shares for treasury
Cash dividends paid to shareholders
Other financing activities
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES
Effect of exchange rate changes on Cash and cash equivalents
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of period
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 472,224 $ 276,466 $ 206,115
29
206,144
—
472,224
114
276,580
8,100
78,059
80
(48,207)
25,267
—
11,902
(1,054)
81,146
(499)
(28,556)
23,787
126,502
(16,975)
(65,010)
(81,188)
(18,297)
16,852
(8,199)
(8,197)
383,386
(65,844)
(154,347)
(23,913)
82,394
68,292
(2,450)
365,063
(71,883)
(436,298)
3,331
159
(504,691)
(62,531)
(156,106)
6,781
6,500
(205,356)
21,835
80,492
(408)
(2,948)
15,388
8,119
(18,115)
3,582
22,751
14,711
(17,919)
22,310
(4,580)
351,362
(59,201)
—
7,667
2,321
(49,213)
34,351
405,444
6,385
(181,293)
(130,724)
(438)
133,725
(8,228)
4,192
46,476
(508)
19,232
(164,526)
(121,851)
(763)
(221,940)
(2,088)
(64,321)
(31,760)
—
17,192
(113,455)
(118,118)
—
(246,141)
1,708
57,716
192,958
199,563
$ 197,150 $ 192,958 $ 257,279
257,279
See notes to these consolidated financial statements.
F-9
LINCOLN ELECTRIC HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share and per share amounts)
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc. and its wholly-owned and
majority-owned subsidiaries for which it has a controlling interest (the "Company") after elimination of all inter-
company accounts, transactions and profits.
General Information
The Company is the world leader in the design, development and manufacture of arc welding products, automated
joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global
position in brazing and soldering alloys.
The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment,
plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas
regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting,
material handling, module assembly, and end of line testing.
In March 2022, in response to Russia’s invasion of Ukraine, the Company announced it was ceasing operations in Russia
and implementing plans to support its Russian employees. Although the Company’s Net sales and Total assets in Russia
are less than 1% of consolidated Net sales and Total assets as of December 31, 2022, the Russia-Ukraine conflict and
sanctions imposed globally may result in economic and supply chain disruptions, the ultimate financial impact of which
cannot be reasonably estimated at this time. The Company continues to monitor the Russia-Ukraine conflict and its
potential impacts.
Translation of Foreign Currencies
Asset and liability accounts are translated into U.S. dollars using exchange rates in effect at the dates of the Consolidated
Balance Sheets; revenue and expense accounts are translated at average monthly exchange rates. Translation adjustments
are reflected as a component of Total equity. For subsidiaries operating in highly inflationary economies, both historical
and current exchange rates are used in translating balance sheet accounts and translation adjustments are included in Net
income. An economy is considered highly inflationary under GAAP if the cumulative inflation rate for a three-year
period meets or exceeds 100 percent. The Turkish economy exceeded the three-year cumulative inflation rate of
100 percent during the second quarter of 2022. As a result, the financial statements of the Company’s Turkish operation
are reported under highly inflationary accounting rules as of April 1, 2022. Under highly inflationary accounting, the
financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency
(U.S. dollar). Beginning April 1, 2022, the exchange gains and losses from the remeasurement of monetary assets and
liabilities are reflected in current earnings, rather than “Accumulated other comprehensive loss” on the balance sheet.
For the year ended December 31, 2022, this impact was not significant to the Company’s results.
The translation of assets and liabilities originally denominated in foreign currencies into U.S. dollars is for consolidation
purposes, and does not necessarily indicate that the Company could realize or settle the reported value of those assets
and liabilities in U.S. dollars. Additionally, such a translation does not necessarily indicate that the Company could
return or distribute the reported U.S. dollar value of the net equity of its foreign operations to shareholders.
Foreign currency transaction gains and losses are included in Selling, general & administrative expenses and were gains
of $3,633, $1,332 and $4,229 in 2022, 2021 and 2020, respectively.
F-10
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash
equivalents.
Inventories
Inventories are valued at the lower of cost or net realizable value. Fixed manufacturing overhead costs are allocated to
inventory based on normal production capacity and abnormal manufacturing costs are recognized as period costs. Cost
for a substantial portion of U.S. inventories is determined on a last-in, first-out (“LIFO”) basis. At December 31, 2022
and 2021, approximately 38% and 36% of total inventories, respectively, were valued using the LIFO method. Cost of
other inventories is determined by costing methods that approximate a first-in, first-out (“FIFO”) basis. Refer to Note 16
to the consolidated financial statements for additional details.
Reserves are maintained for estimated obsolescence or excess inventory equal to the difference between the cost of
inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.
The reserve for excess and obsolete inventory was $30,164 and $23,087 at December 31, 2022 and 2021, respectively.
Long-lived Assets
Property, Plant and Equipment
Property, plant and equipment are stated at cost and include improvements which significantly increase capacities or
extend the useful lives of existing plant and equipment. Depreciation and amortization are computed using a straight-line
method over useful lives ranging from 3 years to 20 years for machinery, tools and equipment, and up to 40 years for
buildings. Net gains or losses related to asset dispositions are recognized in earnings in the period in which dispositions
occur.
Routine maintenance, repairs and replacements are expensed as incurred. The Company capitalizes interest costs
associated with long-term construction in progress.
Property, plant and equipment, net in the Consolidated Balance Sheet is comprised of the following components:
Land
Buildings
Machinery and equipment
Less accumulated depreciation
Total
Leases
December 31,
2022
$
71,446 $
447,098
916,870
1,435,414
890,543
544,871 $
$
2021
67,897
426,165
885,718
1,379,780
868,036
511,744
The Company determines if an agreement is a lease at inception. The Company records a right-of-use asset on its
Consolidated Balance Sheets to represent its right to use an underlying asset for the lease term. The Company records a
lease liability on its Consolidated Balance Sheets to represent its obligation to make lease payments arising from the
lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the
present value of lease payments over the lease term. As most of the Company’s operating leases do not provide an
implicit rate, the Company uses its incremental borrowing rate based on information available at commencement date to
present value the lease payments.
F-11
The Company has operating leases for sales offices, manufacturing facilities, warehouses and distribution centers,
transportation equipment, office equipment and information technology equipment. Some of these leases are
noncancelable. Variable or short-term lease costs contained within the Company’s operating leases are not material.
Most leases include one or more options to renew, which can extend the lease term from 1 to 11 years or more. The
exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the
leased property. Leases with an initial term of 12 months or less are not recorded on the Company’s Consolidated
Balance sheets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a
transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any
material residual value guarantees or material restrictive covenants.
The Company periodically evaluates whether current facts or circumstances indicate that the carrying value of its
depreciable long-lived assets, including right-of-use assets and finite-lived intangible assets, to be held and used may not
be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by
the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether
impairment exists. If an asset is determined to be impaired, a loss is recognized to the extent that carrying value exceeds
fair value. Fair value is measured based on quoted market prices in active markets, if available. If quoted market prices
are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of
estimated future cash flows. Refer to Notes 5, 7 and 17 to the consolidated financial statements for additional details.
Goodwill and Intangibles
Goodwill is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired.
Intangible assets other than goodwill are recorded at fair value at the time acquired or at cost, if applicable. Intangible
assets that do not have indefinite lives are amortized in line with the pattern in which the economic benefits of the
intangible asset are consumed. If the pattern of economic benefit cannot be reliably determined, the intangible assets are
amortized on a straight-line basis over the shorter of the legal or estimated life. These types of assets are assessed for
impairment in a manner consistent with long-lived assets described above. Goodwill and indefinite-lived intangible
assets are not amortized, but are tested for impairment in the fourth quarter using the same date each year or more
frequently if changes in circumstances or the occurrence of events indicate potential impairment.
In performing the annual impairment test, the fair value of each indefinite-lived intangible asset is compared to its
carrying value and an impairment charge is recorded if the carrying value exceeds the fair value. For goodwill, the
Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a
reporting unit is less than its carrying amount, and whether it is necessary to perform the quantitative goodwill
impairment test. The quantitative test is only required if the Company concludes that it is more-likely-than-not that a
reporting unit’s fair value is less than its carrying amount. The Company may also perform a quantitative test in
instances where the more-likely-than-not threshold has not been met, including when general macroeconomic conditions
or changes to the reporting unit warrant a refresh of the baseline used in a qualitative test. For quantitative testing, the
Company compares the fair value of each reporting unit with its carrying amount. If the carrying amount exceeds the fair
value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair
value, not to exceed the total amount of goodwill allocated to that reporting unit.
Fair values are determined using established business valuation techniques and models developed by the Company,
estimates of market participant assumptions of future cash flows, future growth rates and discount rates to value
estimated cash flows. Changes in economic and operating conditions, actual growth below the assumed market
participant assumptions or an increase in the discount rate could result in an impairment charge in a future period. Refer
to Note 5 to the consolidated financial statements for additional details.
F-12
Fair Value Measurements
Financial assets and liabilities, such as the Company’s defined benefit pension plan assets and derivative contracts, are
valued at fair value using the market and income valuation approaches. Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (exit price). The following hierarchy is used to classify the inputs that measure fair value:
Level 1
Level 2
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active
markets.
Inputs to the valuation methodology include:
(cid:120) Quoted prices for similar assets or liabilities in active markets;
(cid:120) Quoted prices for identical or similar assets or liabilities in inactive markets;
(cid:120) Inputs other than quoted prices that are observable for the asset or liability; and
(cid:120) Inputs that are derived principally from or corroborated by observable market data by correlation or
other means.
If the asset or liability has a specific (contractual) term, the Level 2 input must be observable for
substantially the full term of the asset or liability.
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Level 3
Refer to Notes 11 and 15 to the consolidated financial statements for additional details.
Revenue Recognition
Revenue is recognized when obligations under the terms of a contract are satisfied and control is transferred to the
customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for
goods or services. Substantially all of the Company’s sales arrangements are short-term in nature involving a single
performance obligation. The Company recognizes revenue when the performance obligation is satisfied and control of
the product is transferred to the customer generally based upon shipping terms. In addition, certain customized
automation performance obligations are accounted for over time. Under this method, revenue recognition is primarily
based upon the ratio of costs incurred to date compared with estimated total costs to complete. The cumulative impact of
revisions to total estimated costs is reflected in the period of the change, including anticipated losses. Less than 10% of
the Company’s Net sales are recognized over time.
The Company recognizes any discounts, credits, returns, rebates and incentive programs based on reasonable estimates
as a reduction of sales to arrive at Net sales at the same time the related revenue is recorded. Taxes collected by the
Company, including sales tax and value added tax, are excluded from Net sales. The Company recognizes freight billed
as a component of Net sales and shipping costs as a component of Cost of goods sold when control transfers to the
customer. Sales commissions are expensed when incurred because the amortization period is generally one year or less.
These costs are recorded within Selling, general and administrative expenses in the Company’s Consolidated Statements
of Income.
The Company’s payment terms vary by the type and location of the customer and the products or services offered. The
Company does not offer any payment terms that would meet the requirements for consideration as a financing
component under Topic 606.
Refer to Note 2 to the consolidated financial statements for additional details.
Distribution Costs
Distribution costs, including warehousing and freight related to product shipments, are included in Cost of goods sold.
F-13
Stock-Based Compensation
Expense is recognized for all awards of stock-based compensation by allocating the aggregate grant date fair value over
the vesting period. No expense is recognized for any stock options, restricted or deferred shares or restricted stock units
ultimately forfeited because the recipients fail to meet vesting requirements.
Common stock issuable upon the exercise of employee stock options is excluded from the calculation of diluted earnings
per share when the calculation of option equivalent shares is anti-dilutive. Refer to Note 10 to the consolidated financial
statements for additional details.
Financial Instruments
The Company uses derivative instruments to manage exposures to interest rates, commodity prices and currency
exchange rate fluctuations on certain purchase and sales transactions, balance sheet and net investment exposures.
Derivative contracts to hedge currency and commodity exposures are generally written on a short-term basis, but may
cover exposures for up to 3 years while interest rate contracts may cover longer periods consistent with the terms of the
underlying debt. The Company does not enter into derivatives for trading or speculative purposes.
All derivatives are recognized at fair value on the Company’s Consolidated Balance Sheets. The accounting for gains
and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and
qualifies for hedge accounting. The Company formally documents the relationship of the hedge with the hedged item as
well as the risk-management strategy for all designated hedges. Both at inception and on an ongoing basis, the hedging
instrument is assessed as to its effectiveness, when applicable. If and when a derivative is determined not to be highly
effective as a hedge, the underlying hedged transaction is no longer likely to occur, or the derivative is terminated, hedge
accounting is discontinued. The cash flows from settled derivative contracts are recognized in Net cash provided by
operating activities in the Company’s Consolidated Statements of Cash Flows.
The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a
number of major banks and financial institutions. The Company manages individual counterparty exposure by
monitoring the credit rating of the counterparty and the size of financial commitments and exposures between the
Company and the counterparty.
Cash flow hedges
Certain foreign currency forward contracts and commodity contracts are qualified and designated as cash flow hedges.
The effective portion of the fair value unrealized gain or loss on cash flow hedges are reported as a component of
Accumulated other comprehensive income ("AOCI") with offsetting amounts recorded as Other current assets, Other
assets, Other current liabilities or Other liabilities depending on the position and the duration of the contract. At
settlement, the realized gain or loss is recorded in Cost of goods sold or Net sales for hedges of purchases and sales,
respectively, in the same period or periods during which the hedged transaction affects earnings. The ineffective portion
on cash flow hedges is recognized in current earnings.
In anticipation of future debt issuance associated with the Notes referenced in Note 9, the Company has interest rate
forward starting swap agreements to hedge the variability of future changes in interest rates. The forward starting swap
agreements were qualified and designated as a cash flow hedge. The changes in fair value are recorded as part of AOCI,
and upon completion of debt issuance and termination of the swaps, are amortized to interest expense over the life of the
underlying debt.
Fair value hedges
Certain interest rate swap agreements were qualified and designated as fair value hedges. The interest rate swap
agreements designated as fair value hedges meet the shortcut method requirements under accounting standards for
derivatives and hedging. Accordingly, changes in the fair value of these agreements are considered to exactly offset
F-14
changes in the fair value of the underlying long-term debt. Changes in fair value are recorded in Other assets or Other
liabilities with offsetting amounts recorded as a fair value adjustment to the carrying value of Long-term debt, less
current portion.
Net investment hedges
For derivative instruments that qualify as a net investment hedge, the effective portion of the fair value gains or losses
are recognized in AOCI with offsetting amounts recorded as Other current assets, Other assets, Other current liabilities
or Other liabilities depending on the position and the duration of the contract. The gains or losses are subsequently
reclassified to Selling, general and administrative expenses, as the underlying hedged investment is liquidated.
Derivatives not designated as hedging instruments
The Company has certain foreign exchange forward contracts which are not designated as hedges. These derivatives are
held as hedges of certain balance sheet exposures. The gains or losses on these contracts are recognized in Selling,
general and administrative expenses, offsetting the losses or gains on the exposures being hedged.
Refer to Note 14 to the consolidated financial statements for additional details.
Research and Development
Research and development costs are charged to Selling, general & administrative expenses as incurred and totaled
$63,207, $55,969 and $51,414 in 2022, 2021 and 2020, respectively.
Bonus
The Company’s discretionary employee bonus programs, which for certain U.S.-based employees are net of medical
costs, are included in Selling, general & administrative expenses. Bonus costs were $159,281, $120,686 and $87,407 in
2022, 2021 and 2020, respectively.
Income Taxes
Deferred income taxes are recognized at currently enacted tax rates for temporary differences between the GAAP and
income tax basis of assets and liabilities and operating loss and tax credit carry-forwards. In assessing the realizability of
deferred tax assets, the Company assesses whether it is more-likely-than-not that a portion or all of the deferred tax
assets will not be realized.
The Company maintains liabilities for unrecognized tax benefits related to uncertain income tax positions in various
jurisdictions. The Company uses judgment in determining whether the technical merits of tax positions are more-likely-
than-not to be sustained. Judgment is also used in measuring the related amount of tax benefit that qualifies for
recognition, including the interpretation of applicable tax law, regulations and tax rulings.
The Company elects to treat any Global Intangible Low Taxed Income inclusion as a period expense in the year
incurred.
Refer to Note 13 to the consolidated financial statements for additional details.
Acquisitions
Upon acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for
the valuation as appropriate. The valuation inputs in these models and analyses are based on market participant
F-15
assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or
most advantageous market for the asset or liability.
Fair value estimates are based on a series of judgments about future events and uncertainties and rely on estimates and
assumptions. Management values property, plant and equipment using the cost approach supported where available by
observable market data, which includes consideration of obsolescence. Management values acquired intangible assets
using the relief from royalty method or excess earnings method, forms of the income approach supported by observable
market data for peer companies. The significant assumptions used to estimate the value of the acquired intangible assets
include discount rates and certain assumptions that form the basis of future cash flows (such as revenue growth rates,
customer attrition rates, and royalty rates). Acquired inventories are marked to fair value. For certain items, the pre-
acquisition carrying value is determined to be a reasonable approximation of fair value based on information available to
the Company. Refer to Note 4 to the consolidated financial statements for additional details.
Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions in certain circumstances that affect the amounts reported in the accompanying consolidated financial
statements and notes. Actual results could differ from these estimates.
New Accounting Pronouncements
The following section provides a description of new Accounting Standards Updates (“ASU”) issued by the Financial
Accounting Standards Board ("FASB") that are applicable to the Company.
The following ASUs were adopted as of January 1, 2022 and did not have a significant financial impact on the
Company’s consolidated financial statements unless otherwise described within the table below:
Standard
ASU No. 2022-06, Reference
Rate Reform (Topic 848), issued
December 2022.
Description
The U.S. dollar LIBOR rates will no longer be published and regulators have
identified alternative reference rates that are more observable or transparent-based
and less susceptible to manipulation. This ASU provides optional relief in
accounting for the impact of reference rate reform by deferring the sunset date of
Topic 848 from December 31, 2022 to December 31, 2024.
The Company is currently evaluating the impact on its financial statements of the following ASUs:
Standard
ASU No. 2022-04, Liabilities-
Supplier Finance Programs
(Subtopic 405-50), issued
September 2022.
Description
Requires disclosure about a company’s supplier finance program, including key
terms, amount outstanding, assets pledged as applicable, presentation on the
balance sheet and a period-over-period balance roll forward. Except for the roll
forward requirement, the ASU is effective for interim and annual periods
beginning January 1, 2023 and should be applied retrospectively. The roll forward
requirement is effective January 1, 2024 and should be applied prospectively.
Early adoption of the roll forward requirement is permitted.
F-16
NOTE 2 — REVENUE RECOGNITION
The following table presents the Company’s Net sales disaggregated by product line:
Year Ended December 31,
2021
2020
2022
Consumables
Equipment
Net sales
$ 2,183,019 $ 1,856,880 $ 1,509,509
1,145,891
$ 3,761,211 $ 3,234,180 $ 2,655,400
1,578,192
1,377,300
Consumable sales consist of brazing and soldering filler metals. Equipment sales consist of arc welding, welding
accessories, arc welding equipment, wire feeding systems, fume control equipment, plasma and oxy-fuel cutting
systems, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions
for joining, cutting, material handling, module assembly, and end of line testing. Consumable and Equipment products
are sold within each of the Company’s operating segments.
Within the Equipment product line, there are certain customer contracts related to automation products that may include
multiple performance obligations. For such arrangements, the Company allocates revenue to each performance
obligation based on its relative standalone selling price. The Company generally determines the standalone selling price
based on the prices charged to customers or using expected cost plus margin.
At December 31, 2022, the Company recorded $78,756 related to advance customer payments and $34,771 related to
billings in excess of revenue recognized. These contract liabilities are included in Other current liabilities in the
Consolidated Balance Sheets. At December 31, 2021, the balances related to advance customer payments and billings in
excess of revenue recognized were $72,047 and $40,450, respectively. Substantially all of the Company’s contract
liabilities are recognized within twelve months based on contract duration. The Company records an asset for contracts
where it has recognized revenue, but has not yet invoiced the customer for goods or services. At December 31, 2022 and
2021, $35,252 and $25,300, respectively, related to these future customer receivables was included in Other current
assets in the Consolidated Balance Sheets. Contract asset amounts are expected to be billed within the next
twelve months.
NOTE 3 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
Numerator:
Net income
Denominator (shares in 000's):
Basic weighted average shares outstanding
Effect of dilutive securities - Stock options and awards
Diluted weighted average shares outstanding
Basic earnings per share
Diluted earnings per share
2022
Year Ended December 31,
2021
2020
$
472,224 $
276,466 $
206,115
58,030
719
58,749
59,309
753
60,062
$
$
8.14 $
8.04 $
4.66 $
4.60 $
59,633
615
60,248
3.46
3.42
For the years ended December 31, 2022, 2021 and 2020, common shares subject to equity-based awards of 127,358,
2,949 and 615,302, respectively, were excluded from the computation of diluted earnings per share because the effect of
their exercise would be anti-dilutive.
F-17
NOTE 4 – ACQUISITIONS
On December 1, 2022, the Company acquired 100% ownership of Fori Automation, LLC (“Fori”) for an agreed upon
purchase price of $427,000, which was adjusted for certain debt like obligations, for total purchase price consideration of
$465,598 or $413,268 net of cash acquired. Fori is a leading designer and manufacturer of complex, multi-armed
automated welding systems, with an extensive range of automated assembly systems, automated material handling
solutions, automated large-scale, industrial guidance vehicles, and end of line testing systems. The acquisition of Fori
will extend the Company’s market presence within the automotive sector as well as its automation footprint in the
International Welding segment. In 2022, Fori generated sales of approximately $200,000 (unaudited).
The acquisition of Fori has been accounted for as a business combination which requires the assets and liabilities
assumed be recognized at their respective fair values as of the acquisition date. The process of estimating the fair values
of certain tangible assets, identifiable intangible assets and assumed liabilities requires the use of judgment in
determining the appropriate assumptions and estimates. The table below summarizes the preliminary estimated fair
values of the assets acquired and liabilities assumed on the acquisition date. These preliminary estimates are based on
available information and may be revised during the measurement period, not to exceed 12 months from the acquisition
date, as third-party valuations are finalized, further information becomes available and additional analyses are
performed. The Company does not expect any such revisions to have a material impact on the Company's preliminary
purchase price allocation. The preliminary purchase price allocation is expected to be finalized within the allowable
measurement period.
Assets Acquired and Liabilities Assumed
Cash and cash equivalents
Accounts receivable
Inventory
Property, plant and equipment (1)
Intangible assets (2)
Accounts payable
Net other assets and liabilities (3)
Total purchase price consideration
Preliminary Purchase Price Allocation
52,330
$
64,654
63,304
36,863
69,850
17,996
196,593
465,598
$
(1) Property, plant and equipment acquired includes a number of manufacturing and distribution sites, including the
related facilities, land and leased sites, and machinery and equipment for use in manufacturing operations.
(2) Intangible asset balances of $22,000 and $18,700, respectively, were assigned to trade names and customer
relationships (15 year weighted average useful life). Of the remaining amount, $24,900 was assigned to
technology know-how (10 year weighted average useful life) and $4,250 was assigned to restrictive covenants
(4 year weighted average life).
(3) Consists primarily of goodwill of $237,445.
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the
anticipated synergies of acquiring Fori. A portion of the goodwill is deductible for tax purposes. See Note 5 for
additional information about goodwill and other intangible assets.
Acquisition-related transaction costs totaled $6,003 in 2022. These costs were expensed as incurred and are included in
“Selling, general, and administrative expenses” in the Consolidated Statements of Income.
On March 1, 2022, the Company acquired 100% ownership of Kestra Universal Soldas, Industria e Comercio,
Imporacao e Exportacao Ltda. (“Kestra”), a privately held manufacturer headquartered in Atibaia, Sao Paulo State,
Brazil. The net purchase price was $22,294, net of cash acquired and accounted for as a business combination. In 2021,
Kestra generated sales of approximately $15,000 (unaudited). Beginning March 1, 2022, the Company’s Consolidated
Statements of Income include the results of Kestra, including Net sales of $17,602 through December 31, 2022 and the
impact on net income for the year ended December 31, 2022 was not material. Kestra manufactures and provides
F-18
specialty welding consumables, wear plates and maintenance and repair services for alloy and wear-resistant products
commonly used in mining, steel, agricultural and industrial mill applications. The acquisition broadens the Company’s
specialty alloys portfolio and services.
On July 28, 2021, the Company acquired 100% ownership of Overstreet-Hughes Company, Inc. and Shoals Tubular,
Inc. (“FTP”). The net purchase price was $71,716, net of cash acquired and accounted for as a business combination.
The Company recognized $346 in acquisition transaction costs in 2021 which were expensed as incurred and are
included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income. In 2020, FTP
generated sales of approximately $50,000 (unaudited). Beginning July 28, 2021, the Company’s Consolidated
Statements of Income include the results of FTP, including Net sales of $24,953 through December 31, 2021 and the
impact on net income for the year ended December 31, 2021 was not material. FTP manufactures copper and aluminum
headers, distributor assemblies and manifolds in the United States and Mexico for the heating, ventilation, and air
conditioning sector (“HVAC”). The acquisition further differentiated The Harris Products Group’s competitive position
serving HVAC original equipment manufacturers with a comprehensive portfolio of solutions for the fabrication of
HVAC coils and accelerates growth in this market.
On April 1, 2021, the Company acquired 100% ownership of Zeman Bauelemente Produktionsgesellschaft m.b.H.
(“Zeman"), a division of the Zeman Group. The net purchase price was $84,390, net of cash acquired and accounted for
as a business combination. The Company recognized $1,577 in acquisition transaction costs in 2021, which were
expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements
of Income. In 2020, Zeman generated sales of approximately $40,000 (unaudited). Beginning April 1, 2021, the
Company’s Consolidated Statements of Income include the results of Zeman, including Net sales of $24,473 through
December 31, 2021 and the impact on net income for the year ended December 31, 2021 was not material. Zeman, based
in Vienna, Austria, is a leading designer and manufacturer of robotic assembly and arc welding systems that automate
the tacking and welding of steel beams. The acquisition expanded the Company’s international automation capabilities
to serve customers in the structural steel and infrastructure sectors.
The acquired companies discussed above are not material individually, or in the aggregate, to the actual or pro forma
Consolidated Statements of Income or Consolidated Statements of Cash Flows; as such, pro forma information related to
these acquisitions have not been presented.
NOTE 5 – GOODWILL AND INTANGIBLES
The changes in the carrying amount of goodwill by reportable segments for the years ended December 31, 2022 and
2021 were as follows:
Balance as of December 31, 2020
Additions and adjustments (1)
Foreign currency translation
Balance as of December 31, 2021
Additions and adjustments (2)
Foreign currency translation
Balance as of December 31, 2022
The Harris
Products
Group
Americas
Welding
International
Welding
$ 279,810 $
—
173
279,983
215,617
(3,413)
39,060 $
77,317
(9,284)
107,093
31,288
(8,462)
$ 492,187 $ 129,919 $
Consolidated
16,723 $ 335,593
103,836
26,519
(9,267)
(156)
430,162
43,086
246,746
(159)
(11,651)
224
43,151 $ 665,257
(1) Additions to International Welding reflect goodwill recognized in the acquisition of Zeman in 2021. Additions to
The Harris Products Group reflect goodwill recognized in the acquisition of FTP in 2021.
(2) Additions to Americas Welding reflect goodwill recognized in the acquisition of Fori and Kestra in 2022.
International Welding reflect goodwill recognized in the acquisition of Fori in 2022.
F-19
Gross carrying values and accumulated amortization of intangible assets other than goodwill by asset class were as
follows:
Intangible assets not subject to amortization
Trademarks and trade names
Intangible assets subject to amortization
Trademarks and trade names
Customer relationships
Patents
Other
Total intangible assets subject to amortization
December 31, 2022
December 31, 2021
Gross
Amount
Accumulated Gross
Amortization Amount
Accumulated
Amortization
$ 15,963
$ 15,828
$ 93,424 $
170,231
23,603
112,404
47,969 $ 72,755 $ 44,623
92,404
154,634
95,385
15,058
24,734
15,113
49,696
83,223
54,452
$ 399,662 $ 212,919 $ 335,346 $ 201,781
During 2022, the Company acquired intangible assets either individually or as part of a group of assets, with an initial
purchase price allocation and weighted-average as follows:
Acquired intangible assets subject to amortization
Trademarks and trade names
Customer relationships
Other
Total acquired intangible assets subject to amortization
Year Ended December 31, 2022
Weighted
Purchase Price
Average Life
Allocation
$
$
23,770
24,243
30,661
78,674
13
13
9
Aggregate amortization expense was $21,908, $21,155 and $20,363 for 2022, 2021 and 2020, respectively. During 2020
and 2022, the Company determined that for certain intangible assets, the carrying value of the assets exceeded the fair
value resulting in an impairment. The Company recognized non-cash impairment charges of $1,018 and $45,468 in
2022 and 2020, respectively, which are recorded in Rationalization and asset impairment charges in the Company’s
Consolidated Statements of Income. During 2022, the Company Estimated annual amortization expense for intangible
assets for each of the next five years is $25,327 in 2023, $23,728 in 2024, $22,823 in 2025, $21,372 in 2026 and $19,302
in 2027.
NOTE 6 – SEGMENT INFORMATION
The Company’s primary business is the design, development and manufacture of arc welding products, automated
joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global
position in brazing and soldering alloys.
The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment,
plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas
regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting,
material handling, module assembly, and end of line testing.
The Company has aligned its organizational and leadership structure into three operating segments to support growth
strategies and enhance the utilization of the Company’s worldwide resources and global sourcing initiatives. The
operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas
Welding segment includes welding operations in North and South America. The International Welding segment includes
welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global
cutting, soldering and brazing businesses, specialty gas equipment, as well as its retail business in the United States.
F-20
Segment performance is measured and resources are allocated based on a number of factors, the primary measure being
the adjusted earnings before interest and income taxes ("Adjusted EBIT") profit measure. EBIT is defined as Operating
income plus Equity earnings in affiliates and Other income. Segment EBIT is adjusted for special items as determined by
management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on
disposals of assets. The accounting principles applied at the operating segment level are generally the same as those
applied at the consolidated financial statement level with the exception of LIFO. Segment assets include inventories
measured on a FIFO basis while consolidated inventories include inventories reported on a LIFO basis. Segment and
consolidated income before interest and income taxes include the effect of inventories reported on a LIFO basis. At
December 31, 2022, 2021 and 2020 approximately 38%, 36% and 35%, respectively, of total inventories were valued
using the LIFO method. LIFO is used for a substantial portion of U.S. inventories included in Americas Welding. Inter-
segment sales are recorded at agreed upon prices that approximate arm’s length prices and are eliminated in
consolidation. Corporate-level expenses are allocated to the operating segments.
F-21
Financial information for the reportable segments follows:
Americas
International Products
Welding (1) Welding (2) Group (3)
Corporate /
Eliminations (4) Consolidated
The Harris
For the Year Ended December 31, 2022
Net sales
Inter-segment sales
Total
Adjusted EBIT
Special items charge (gain)
EBIT
Interest income
Interest expense
Income before income taxes
Total assets
Equity investments in affiliates
Capital expenditures
Depreciation and amortization
For the Year Ended December 31, 2021
Net sales
Inter-segment sales
Total
Adjusted EBIT
Special items charge (gain)
EBIT
Interest income
Interest expense
Income before income taxes
Total assets
Equity investments in affiliates
Capital expenditures
Depreciation and amortization
For the Year Ended December 31, 2020
Net sales
Inter-segment sales
Total
Adjusted EBIT
Special items charge
EBIT
Interest income
Interest expense
Income before income taxes
Total assets
Equity investments in affiliates
Capital expenditures
Depreciation and amortization
$ 2,288,934 $
122,019
$ 2,410,953 $
462,819 $
$
(3,060)
465,879 $
$
954,281 $
31,503
985,784 $
120,157 $
11,681
108,476 $
517,996 $
11,040
529,036 $
64,008 $
—
64,008 $
— $ 3,761,211
(164,562)
—
(164,562) $ 3,761,211
636,951
14,624
622,327
1,607
(31,107)
592,827
(10,033) $
6,003
(16,036) $
$
$ 2,122,729 $
5,101
43,003
47,291
994,905 $
—
17,955
20,949
361,989 $
—
10,925
9,819
(299,077) $ 3,180,546
5,101
71,883
78,059
—
—
—
$ 1,824,481 $
140,650
$ 1,965,131 $
329,016 $
$
123,114
205,902 $
$
948,125 $
26,331
974,456 $
106,208 $
15,234
90,974 $
461,574 $
8,096
469,670 $
68,447 $
3,785
64,662 $
— $ 3,234,180
—
(175,077)
(175,077) $ 3,234,180
491,268
144,056
347,212
1,567
(23,781)
324,998
(12,403) $
1,923
(14,326) $
$
$ 1,521,083 $
5,181
37,717
49,510
938,061 $
—
16,916
24,998
330,678 $
—
7,898
6,795
(197,515) $ 2,592,307
5,181
62,531
81,146
—
—
(157)
$ 1,509,870 $
109,378
$ 1,619,248 $
245,728 $
$
34,989
210,739 $
$
786,809 $
18,494
805,303 $
44,979 $
19,404
25,575 $
358,721 $
7,034
365,755 $
55,154 $
—
55,154 $
— $ 2,655,400
(134,906)
—
(134,906) $ 2,655,400
340,406
54,393
286,013
1,986
(23,959)
264,040
(5,455) $
—
(5,455) $
$
$ 1,423,393 $
4,682
30,811
51,744
807,407 $
—
21,819
23,859
225,959 $
—
6,571
4,982
(142,306) $ 2,314,453
4,682
59,201
80,492
—
—
(93)
(1) 2022 special items reflect Rationalization and asset impairment gains of $431, final settlement gains related to the
termination of a pension plan of $3,735 and amortization of step up in value of acquired inventories of $1,106.
2021 special items reflect pension settlement charges of $123,091.
2020 special items reflect Rationalization and asset impairment charges of $26,870 and pension settlement charges
of $8,119
(2) 2022 special items reflect Rationalization and asset impairment charges of $11,681.
F-22
2021 special items reflect Rationalization and asset impairment charges of $9,804, pension settlement charges of
$446 and amortization of step up in value of acquired inventories of $4,984.
2020 special items reflect Rationalization and asset impairment charges of $18,598 and amortization of step up in
value of acquired inventories of $806.
(3) 2021 special items reflect pension settlement charges of $2,965 and amortization of step up in value of acquired
inventories of $820.
(4) 2022 special items reflect acquisition transaction and integration costs of $6,003 related acquisitions as discussed in
Note 4 to the consolidated financial statements.
2021 special items reflect acquisition transaction and integration costs of $1,923 related acquisitions as discussed in
Note 4 to the consolidated financial statements.
Export sales (excluding inter-company sales) from the United States were $173,033 in 2022, $149,110 in 2021 and
$132,637 in 2020. No individual customer comprised more than 10% of the Company’s total revenues for any of the
three years ended December 31, 2022.
The geographic split of the Company’s Net sales, based on the location of the customer, and property, plant and
equipment were as follows:
Year Ended December 31,
2021
2022
2020
Net sales:
United States
Foreign countries
Total
Property, plant and equipment, net:
United States
Foreign countries
Eliminations
Total
$ 2,128,457 $ 1,726,498 $ 1,431,859
1,223,541
$ 3,761,211 $ 3,234,180 $ 2,655,400
1,632,754
1,507,682
2022
December 31,
2021
2020
$
$
267,654 $
277,217
—
544,871 $
262,247 $
249,497
—
511,744 $
247,931
274,214
(53)
522,092
NOTE 7 – RATIONALIZATION AND ASSET IMPAIRMENTS
During 2020 and 2021, the Company initiated rationalization plans within the Americas Welding and International
Welding segments. The plans include headcount restructuring and the consolidation of manufacturing facilities to better
align the cost structure with economic conditions and operating needs. At December 31, 2022, liabilities of $2,207 for
International Welding were recognized in Other current liabilities in the Company's Consolidated Balance Sheet. The
Company does not anticipate significant additional charges related to the completion of these plans.
F-23
The Company recorded rationalization and asset impairment net charges of $11,788, $9,827 and $45,468 for the years
ended December 31, 2022, 2021 and 2020, respectively, related to these plans. The charges are primarily related to
employee severance, asset impairments and gains or losses on the disposal of assets.
The Company believes the rationalization actions will positively impact future results of operations and will not have a
material effect on liquidity and sources and uses of capital. The Company continues to evaluate its cost structure and
additional rationalization actions may result in charges in future periods.
The following table summarizes the activity related to the rationalization liabilities:
Balance at December 31, 2020
Payments and other adjustments
Charged to expense
Balance at December 31, 2021
Payments and other adjustments
Charged to expense
Balance at December 31, 2022
International
Welding
Consolidated
13,597
(21,488)
10,881
2,990
(4,471)
3,688
2,207
$
$
$
13,622
(21,513)
10,881
2,990
(4,471)
3,688
2,207
$
$
$
NOTE 8 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")
The following tables set forth the total changes in accumulated other comprehensive income (loss) ("AOCI") by
component, net of taxes:
Year Ended December 31, 2022
Unrealized gain
(loss) on derivatives
designated and
qualifying as cash
flow hedges
Defined benefit
pension plan
activity
Currency
translation
adjustment
Total
Balance at December 31, 2020
$
2,487 $ (101,770) $ (202,907) $ (302,190)
Other comprehensive income (loss) before
reclassification
Amounts reclassified from AOCI
Net current-period other comprehensive income (loss)
Balance at December 31, 2021
Other comprehensive income (loss) before
reclassification
Amounts reclassified from AOCI
Net current-period other comprehensive income (loss)
Balance at December 31, 2022
$
$
3
6,753
(1,146) 1
5,607
8,094 $
6,279
(36,310)
(49,342)
—
82,260 2
81,114
88,539
44,804
(49,342)
(13,231) $ (252,249) $ (257,386)
3, 4
7,866
(2,051) 1
5,815
13,909 $
(13,401)
13,911
(2,461) 2
(4,512)
11,450
(17,913)
(1,781) $ (287,427) $ (275,299)
(35,178)
—
(35,178)
(1) During 2022, this AOCI reclassification is a component of Net sales of $665 (net of tax of $297) and Cost of goods
sold of $(1,386) (net of tax of $(351)); during 2021, the reclassification is a component of Net sales of $1,553 (net
of tax of $671) and Cost of goods sold of $407 (net of tax of $179). Refer to Note 14 to the consolidated financial
statements for additional details.
(2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $(476) and
$46,609 during the years ended December 31, 2022 and 2021, respectively). Refer to Note 11 to the consolidated
financial statements for additional details.
F-24
(3) The Other comprehensive income before reclassifications excludes $94 and $(403) attributable to Non-controlling
interests in the years ended December 31, 2022 and 2021, respectively. The reclassified AOCI component is
included in the computation of Non-controlling interests. Refer to the Consolidated Statements of Equity for
additional details.
(4) Includes a gain of $9,440 from derivatives designated as net investment hedges.
NOTE 9 – DEBT
At December 31, 2022 and 2021, debt consisted of the following:
Long-term debt
Senior Unsecured Notes due through 2045, interest at 2.8% to 4.0% (net of debt issuance
costs of $1,585 and $1,074 at December 31, 2022 and 2021, respectively)
Term Loan due through 2025
Other borrowings due through 2030, interest up to 16.0%
Less current portion
Long-term debt, less current portion
Short-term debt
Amounts due banks, weighted average interest at 4.0% in 2022 and 1.8% in 2021
Current portion long-term debt
Total short-term debt
Total debt
December 31,
2022
2021
$
703,124
$
704,313
400,000
18,311
1,121,435
11,039
1,110,396
82,444
11,039
93,483
1,203,879
$
—
13,542
717,855
766
717,089
51,964
766
52,730
769,819
$
At December 31, 2022 and 2021, the fair value of long-term debt, including the current portion, was approximately
$1,009,020 and $776,655, respectively, which was determined using available market information and methodologies
requiring judgment. The carrying value of this debt at such dates was $1,121,435 and $717,855, respectively. Since
judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which
could be realized in a current market exchange.
Senior Unsecured Notes
On April 1, 2015 and October 20, 2016, the Company entered into separate Note Purchase Agreements pursuant to
which it issued senior unsecured notes (the "Notes") through a private placement. Interest on the Notes is paid semi-
annually. The proceeds of the Notes were used for general corporate purposes. The Notes contain certain affirmative and
negative covenants. As of December 31, 2022, the Company was in compliance with all of its debt covenants relating to
the Notes.
The maturity and interest rates of the 2015 Notes and 2016 Notes are as follows:
2015 Notes
Series A
Series B
Series C
Series D
2016 Notes
Series A
Series B
Series C
Series D
Amount
Maturity Date
Interest Rate
$ 100,000 August 20, 2025
100,000 August 20, 2030
April 1, 2035
April 1, 2045
50,000
100,000
$ 100,000 October 20, 2028
100,000 October 20, 2033
100,000 October 20, 2037
50,000 October 20, 2041
3.15 %
3.35 %
3.61 %
4.02 %
2.75 %
3.03 %
3.27 %
3.52 %
F-25
The Company’s total weighted average effective interest rate and remaining weighted average term, inclusive of the
2015 Notes and 2016 Notes, is 3.3% and 11.4 years, respectively.
Revolving Credit Agreement
On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the
Second Amended and Restated Credit Agreement (“Credit Agreement”). The Credit Agreement has a line of credit
totaling $500,000, has a term of 5 years with a maturity date of April 23, 2026 and may be increased, subject to certain
conditions including the consent of its lenders, by an additional amount up to $150,000. The interest rate on borrowings
is based on LIBOR plus a spread based on the Company’s net leverage ratio. The Credit Agreement contains customary
representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of
this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with
respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with
affiliates. As of December 31, 2022, the Company was in compliance with all of its covenants and had $45,000 of
outstanding borrowings under the Credit Agreement.
The Company has other lines of credit and debt agreements totaling $92,078. As of December 31, 2022 the Company
was in compliance with all of its covenants and had $37,444 outstanding at December 31, 2022.
Shelf Agreements
On November 27, 2018, the Company entered into seven uncommitted master note facilities (the "Shelf Agreements")
that allow borrowings up to $700,000 in the aggregate. The Shelf Agreements have a term of 5 years and the average life
of borrowings cannot exceed 15 years. The Company is required to comply with covenants similar to those contained in
the 2015 Notes and 2016 Notes. As of December 31, 2022, the Company was in compliance with all of its covenants and
had no outstanding borrowings under the Shelf Agreements.
Term Loan
On November 29, 2022, the Company entered into a term loan in the aggregate principal amount of $400,000 (the “Term
Loan”), which was borrowed in full. The Term Loan matures on November 29, 2025. The Term Loan bears an interest at
a rate based on SOFR, plus a margin ranging from 0.75% to 1.75% based on the Company’s consolidated net leverage
ratio. The proceeds of the Term Loan were used to pay a portion of the purchase price in connection with the acquisition
of Fori.
The agreement governing the Term Loan (the “Term Loan Credit Agreement”) contains representations and warranties,
as well as customary affirmative, negative and financial covenants for credit facilities of this type, including limitations
on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions,
dispositions of assets and transactions with affiliates. The Term Loan Credit Agreement requires the Company to
maintain a minimum consolidated fixed charges coverage ratio and maximum consolidated net leverage ratio. As of
December 31, 2022, the Company was in compliance with all of its covenants.
Other
Maturities of long-term debt, including payments for amounts due banks, for the five years succeeding December 31,
2022 are $93,483 in 2023, $5 in 2024, $507,292 in 2025, $0 in 2026, $0 in 2027 and $600,000 thereafter. Total interest
paid was $23,547 in 2022, $23,752 in 2021 and $26,332 in 2020. The difference between interest paid and interest
expense is due to the accrual of interest associated with the Senior Unsecured Notes and interest rate derivative contracts
discussed in Note 14 to the consolidated financial statements.
F-26
NOTE 10 – STOCK PLANS
On April 23, 2015, the shareholders of the Company approved the 2015 Equity and Incentive Compensation Plan
("Employee Plan"). The Employee Plan provides for the granting of options, appreciation rights, restricted shares,
restricted stock units and performance-based awards up to an additional 5,400,000 of the Company’s common shares. In
addition, on April 23, 2015, the shareholders of the Company approved the 2015 Stock Plan for Non-Employee
Directors ("2015 Director Plan"). The 2015 Director Plan provides for the granting of options, restricted shares and
restricted stock units up to an additional 300,000 of the Company’s common shares. At December 31, 2022, there were
1,381,427 common shares available for future grant under all plans.
Stock Options
The following table summarizes stock option activity for the year ended December 31, 2022 under all Plans:
Balance at beginning of year
Options granted
Options exercised
Options canceled
Options forfeited
Balance at end of year
Exercisable at end of year
Number of
Options
1,068,224
145,213
(94,234)
(591)
(1,253)
1,117,359
800,353
$
Weighted
Average
Exercise
Price
86.28
128.19
75.16
47.91
89.63
93.31
84.22
Options granted under both the Employee Plan and its predecessor plans may be outstanding for a maximum of 10 years
from the date of grant. The majority of options granted vest ratably over a period of 3 years from the grant date. The
exercise prices of all options were equal to the quoted market price of the Company’s common shares at the date of
grant. The Company issued shares of common stock from treasury upon all exercises of stock options in 2022. In 2022,
all options issued were under the Employee Plan.
The Company uses the Black-Scholes option pricing model for estimating fair values of options. In estimating the fair
value of options granted, the expected option life is based on the Company’s historical experience. The expected
volatility is based on historical volatility. The weighted average assumptions for each of the three years ended
December 31 were as follows:
Expected volatility
Dividend yield
Risk-free interest rate
Expected option life (years)
Weighted average fair value per option granted during the year
2022
2021
2020
27.14 %
1.84 %
1.94 %
4.7
27.42
$
28.01 %
2.17 %
0.55 %
4.7
21.70
$
25.80 %
2.51 %
1.41 %
4.6
15.97
$
F-27
The following table summarizes non-vested stock options for the year ended December 31, 2022:
Balance at beginning of year
Granted
Vested
Canceled
Forfeited
Balance at end of year
Number of
Options
341,253
145,213
(167,616)
(591)
(1,253)
317,006
Weighted Average
Fair Value at
Grant Date
$
19.11
27.42
18.41
15.91
15.97
13.93
The aggregate intrinsic value of options outstanding and exercisable which would have been received by the optionees
had all awards been exercised at December 31, 2022 was $58,282 and $49,024, respectively. The total intrinsic value of
awards exercised during 2022, 2021 and 2020 was $7,082, $20,442 and $13,269, respectively. The total fair value of
options that vested during 2022, 2021 and 2020 was $3,086, $2,983 and $3,564, respectively.
The following table summarizes information about awards outstanding as of December 31, 2022:
Outstanding
Weighted Weighted
Weighted Weighted
Number of Average Average Number of Average Average
Exercisable
Exercise Price Range
Under $49.99
$50.00 - $59.99
Over $60.00
Stock
Options
Exercise Remaining
Price
Life (years) Options Price
Stock
— $
—
58.13
97.53
119,681
997,678
—
— $
3.10 119,681
6.30 680,672
Exercise Remaining
Life (years)
—
3.10
5.40
—
58.13
88.80
1,117,359
6.00 800,353
5.00
Restricted Stock Units ("RSUs") and Performance Share Units ("PSUs")
The following table summarizes RSU and PSU activity for the year ended December 31, 2022 under all Plans:
Balance at beginning of year
Units granted
Units vested
Units forfeited
Balance at end of year
$
Number of
Units
403,826
139,733
(140,013)
(12,474)
391,072
Weighted
Average
Grant Date
Fair Value
98.65
129.75
91.70
109.59
111.90
RSUs are valued at the quoted market price on the grant date. The majority of RSUs vest over a period of 3 years. The
Company issues shares of common stock from treasury upon the vesting of RSUs and any earned dividend equivalents.
Conversion of 24,404 RSUs and PSUs to common shares in 2022 were deferred as part of the 2005 Deferred
Compensation Plan for Executives (the "2005 Plan"). As of December 31, 2022, 130,674 RSUs and PSUs, including
related dividend equivalents, have been deferred under the 2005 Plan. These units are reflected within dilutive shares in
the calculation of earnings per share. In 2022, 106,170 RSUs were issued under the Employee Plan and the 2015
Director Plan. The remaining weighted average vesting period of all non-vested RSUs is 1.2 years as of December 31,
2022.
F-28
PSUs are valued at the quoted market price on the grant date. PSUs vest over a period of 3 years and are based on the
Company’s performance relative to pre-established performance goals. The Company issues common stock from
treasury upon the vesting of PSUs and any earned dividend equivalents. In 2022, the Company issued 33,563 PSU’s and
has 86,892 PSUs outstanding under the Employee Plan at a weighted average fair value of $110.93 per share. The
remaining weighted average vesting period of all non-vested PSUs is 1.1 years as of December 31, 2022.
Stock-Based Compensation Expense
Expense is recognized for all awards of stock-based compensation by allocating the aggregate grant date fair value over
the vesting period. No expense is recognized for any stock options, restricted or deferred shares, RSUs or PSUs
ultimately forfeited because recipients fail to meet vesting requirements. Total stock-based compensation expense
recognized in the Consolidated Statements of Income for 2022, 2021 and 2020 was $25,276, $23,787 and $15,388,
respectively. The related tax benefit for 2022, 2021 and 2020 was $6,363, $5,988 and $3,874, respectively. As of
December 31, 2022, total unrecognized stock-based compensation expense related to non-vested stock options, RSUs
and PSUs was $17,610, which is expected to be recognized over a weighted average period of approximately 1.3 years.
Lincoln Stock Purchase Plan
The 1995 Lincoln Stock Purchase Plan provides employees the ability to purchase open market shares on a commission-
free basis up to a limit of ten thousand dollars annually. Under this plan, 800,000 shares have been authorized to be
purchased. There were no shares purchased in 2022, 9,070 in 2021 and 13,667 in 2020.
NOTE 11 – RETIREMENT ANNUITY AND GUARANTEED CONTINUOUS EMPLOYMENT PLANS
The Company maintains a number of defined benefit and defined contribution plans to provide retirement benefits for
employees. These plans are maintained and contributions are made in accordance with the Employee Retirement Income
Security Act of 1974 ("ERISA"), local statutory law or as determined by the Board of Directors. The plans generally
provide benefits based upon years of service and compensation. Pension plans are funded except for a domestic non-
qualified pension plan for certain key employees and certain foreign plans. The Company uses a December 31
measurement date for its plans.
The Company does not have, and does not provide for, any postretirement or postemployment benefits other than
pensions and certain non-U.S. statutory termination benefits.
F-29
Defined Benefit Plans
Contributions are made in amounts sufficient to fund current service costs on a current basis and to fund past service
costs, if any, over various amortization periods.
Obligations and Funded Status
December 31,
2022
2021
Change in benefit obligations
Benefit obligations at beginning of year
Service cost
Interest cost
Plan participants' contributions
Acquisitions & other adjustments
Actuarial (gain) loss (1)
Benefits paid
Settlements/curtailments (2)
Currency translation
Benefit obligations at end of year
Change in plan assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants' contributions
Acquisitions & other adjustments
Benefits paid
Settlements (2)
Currency translation
Fair value of plan assets at end of year
Funded status at end of year
Unrecognized actuarial net loss
Unrecognized prior service cost
Unrecognized transition assets, net
Net amount recognized
U.S. pension
plans
Non-U.S.
pension plans
U.S. pension
Non-U.S.
plans
pension plans
$
10,930 $ 164,005 $ 557,946 $ 190,141
1,413
2,567
84
(115)
(10,759)
(9,586)
(4,466)
(5,274)
164,005
194
8,926
—
—
(7,774)
(10,118)
(538,244)
—
10,930
1,077
2,644
54
(341)
(30,229)
(7,066)
(398)
(11,257)
118,489
199
262
—
2,689
(4,706)
—
—
—
9,374
68,458
59
—
—
(68,517)
—
—
—
—
(9,374)
1,734
—
—
114,557
(16,319)
1,634
54
(195)
(4,757)
—
(8,431)
86,543
618,024
(2,058)
—
—
—
(9,264)
(538,244)
—
68,458
117,058
4,694
2,097
84
—
(6,864)
(1,072)
(1,440)
114,557
(31,946)
2,073
(73)
25
57,528
2,897
—
—
(49,448)
13,274
(23)
25
60,425 $ (36,172)
$
(7,640) $ (29,921) $
(1) Actuarial gains in 2022 were primarily the result of an increase in the Company’s pension plan discount rates.
(2) Settlements in 2022 and 2021 resulting from lump sum pension payments and the purchase of a group annuity
contract in October 2021 related to the termination of a pension plan.
The after-tax amounts of unrecognized actuarial net loss, prior service costs and transition assets included in
Accumulated other comprehensive loss at December 31, 2022 were $1,815, $(51) and $17, respectively. The actuarial
loss represents changes in the estimated obligation not yet recognized in the Consolidated Income Statement.
In March 2020, the Company approved an amendment to terminate the Lincoln Electric Company Retirement Annuity
Program (“RAP”) plan effective as of December 31, 2020. The Company provided notice to participants of the intent to
terminate the plan and applied and received a determination letter. During 2021, pension obligations were distributed
through a combination of lump sum payments to eligible plan participants and through the purchase of a group annuity
F-30
contract in October 2021. The lump sum payments and annuity purchase resulted in pre-tax settlement charges of
$126,056 in the twelve months ended December 31, 2021. The remaining surplus assets of $68,458 at December 31,
2021 were transferred to a suspense account in January 2022 and are being used to fund employer matching
contributions in the Company’s Savings Plan. The surplus assets as of December 31, 2022 were $56,418 and are
recorded in Other current assets and Other assets in the Company’s Consolidated Balance Sheets.
Amounts Recognized in Consolidated Balance Sheets
December 31,
2022
2021
Prepaid pensions (1)
Accrued pension liability, current (2)
Accrued pension liability, long-term (3)
Accumulated other comprehensive loss, excluding tax effects
Net amount recognized in the balance sheets
$
$
— $
1,603 $
(523)
(33,026)
2,025
(2,403)
(6,971)
1,734
(7,640) $ (29,921) $
plans
68,458 $
(690)
(10,240)
2,897
pension plans
2,425
(2,546)
(49,327)
13,276
60,425 $ (36,172)
U.S. pension
plans
Non-U.S.
Pension plans
U.S. pension
Non-U.S.
(1) Included in Other assets. In 2021, U.S. pension plans include $9,776 in Other current assets and $58,682 in Other
assets.
(2) Included in Other current liabilities.
(3) Included in Other liabilities.
Components of Pension Cost for Defined Benefit Plans
2022
Year Ended December 31,
2021
2020
U.S. pension Non-U.S.
U.S. pension Non-U.S.
U.S. pension Non-U.S.
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of net loss
Settlement and curtailment charges (gains) (1)
Defined benefit plans
plans
plans
plans
$
199 $
262
—
—
132
(3,735)
$ (3,142) $
pension plans
194 $
1,077 $
2,644
8,926
(3,525) (13,050)
—
—
299
1,966
367 126,055
862 $ 124,091 $
pension plans
1,413 $
156 $
2,567 14,670
(3,990) (23,377)
—
1,346
8,118
913 $
8
882
(42)
838 $
pension plans
3,140
2,755
(4,217)
57
1,986
237
3,958
(1) Pension settlement net charges resulting from lump sum pension payments and the purchase of a group annuity
contract in 2021.
The components of Pension cost for defined benefit plans, other than service cost, are included in Other income
(expense) in the Company’s Consolidated Statements of Income.
Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets
December 31,
2022
2021
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
$
F-31
U.S. pension
U.S. pension
Non-U.S.
Non-U.S.
pension plans
plans
9,331 $
8,937
—
82,378 $
80,444
48,974
plans
pension plans
10,886 $ 121,894
120,037
10,372
70,199
—
The total accumulated benefit obligation for all plans was $125,031 as of December 31, 2022 and $171,755 as of
December 31, 2021.
Benefit Payments for Plans
Benefits expected to be paid for the plans are as follows:
Estimated Payments
2023
2024
2025
2026
2027
2028 through 2032
Assumptions
U.S. pension
Plans
Non-U.S.
pension plans
$
$
2,575
851
1,160
1,172
1,147
5,546
7,173
35,957
7,196
6,335
5,684
31,065
Weighted average assumptions used to measure the benefit obligation for the Company’s significant defined benefit
plans as of December 31, 2022 and 2021 were as follows:
December 31,
2022
2021
U.S. pension Non-U.S.
U.S. pension Non-U.S.
Discount Rate
Rate of increase in compensation
plans
pension plans
4.2 %
3.7 %
5.8 %
3.0 %
plans
pension plans
1.8 %
3.1 %
2.5 %
3.0 %
Weighted average assumptions used to measure the net periodic benefit cost for the Company’s significant defined
benefit plans for each of the three years ended December 31 were as follows:
2022
December 31,
2021
2020
U.S. pension Non-U.S.
U.S. pension Non-U.S.
U.S. pension Non-U.S.
Discount rate
Rate of increase in compensation
Expected return on plan assets
plans
pension plans
1.8 %
3.1 %
3.4 %
2.5 %
3.0 %
—
plans
pension plans
1.3 %
2.7 %
3.3 %
2.2 %
2.5 %
3.0 %
plans
pension plans
1.7 %
2.6 %
4.1 %
3.4 %
2.5 %
4.0 %
To develop the discount rate assumptions, the Company refers to the yield derived from matching projected pension
payments with maturities of bonds rated AA or an equivalent quality. The expected long-term rate of return assumption
is based on the weighted average expected return of the various asset classes in the plans’ portfolio and the targeted
allocation of plan assets. The asset class return is developed using historical asset return performance as well as current
market conditions such as inflation, interest rates and equity market performance. The rate of compensation increase is
determined by the Company based upon annual reviews.
Pension Plans’ Assets
The primary objective of the pension plans’ investment policy is to ensure sufficient assets are available to provide
benefit obligations when such obligations mature. Investment management practices must comply with ERISA or any
other applicable regulations and rulings. The overall investment strategy for the defined benefit pension plans’ assets is
to achieve a rate of return over a normal business cycle relative to an acceptable level of risk that is consistent with the
F-32
long-term objectives of the portfolio. Excluding the RAP plan assets, the target allocation for plan assets is 30% to 40%
equity securities and 60% to 70% debt and other securities.
The following table sets forth, by level within the fair value hierarchy, the pension plans’ assets as of December 31,
2022:
Pension Plans' Assets at Fair Value as of December 31, 2022
Cash and cash equivalents
Fixed income securities (1)
Corporate debt and other obligations
Investments measured at NAV (2)
Common trusts and 103-12 investments (3)
Total investments at fair value
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$
16,694 $
— $
— $
Total
16,694
—
4,912
—
4,912
—
16,694 $
$
—
4,912 $
—
— $
64,937
86,543
The following table sets forth, by level within the fair value hierarchy, the pension plans’ assets as of December 31,
2021:
Pension Plans' Assets at Fair Value as of December 31, 2021
Quoted Prices
in Active Markets
for Identical
Assets
Significant Other
Observable Inputs
Significant
Unobservable
Inputs
Cash and cash equivalents
Fixed income securities (1)
Corporate debt and other obligations
Investments measured at NAV (2)
Common trusts and 103-12 investments (3)
Total investments at fair value
(Level 1)
(Level 2)
(Level 3)
Total
$
71,199 $
— $
— $ 71,199
—
5,240
—
5,240
—
—
$
71,199 $
5,240 $
—
106,576
— $ 183,015
(1) Fixed income securities are primarily comprised of governmental and corporate bonds directly held by the plans.
Governmental and corporate bonds are valued using both market observable inputs for similar assets that are traded
on an active market and the closing price on the active market on which the individual securities are traded.
(2) Certain assets that are measured at fair value using the net asset value ("NAV") practical expedient have not been
classified in the fair value hierarchy.
(3) Common trusts and 103-12 investments (collectively "Trusts") are comprised of a number of investment funds that
invest in a diverse portfolio of assets including equity securities, corporate and governmental bonds, equity and
credit indexes and money markets. Trusts are valued at the NAV as determined by their custodian. NAV represents
the accumulation of the unadjusted quoted close prices on the reporting date for the underlying investments divided
by the total shares outstanding at the reporting dates.
Supplemental Executive Retirement Plan
The Company maintained a domestic unfunded Supplemental Executive Retirement Plan ("SERP") under which non-
qualified supplemental pension benefits are paid to certain employees in addition to amounts received under the
Company’s qualified retirement plan which is subject to IRS limitations on covered compensation. The annual cost of
this program has been included in the determination of total net pension costs shown above and was $253, $213 and
F-33
$1,225 in 2022, 2021 and 2020, respectively. The projected benefit obligation associated with this plan is also included
in the pension disclosure shown above and was $7,339, $7,947 and $8,194 at December 31, 2022, 2021 and 2020,
respectively.
Defined Contribution Plans
Substantially all U.S. employees are covered under defined contribution plans. In October 2016, the Company
announced a plan redesign of The Lincoln Electric Company Employee Savings Plan (“Savings Plan”) that was effective
January 1, 2017. The Savings Plan provides that eligible employees receive up to 6% of employees’ annual
compensation through Company matching contributions of 100% of the first 3% of employee compensation contributed
to the plan, and automatic Company contributions equal to 3% of annual compensation. In addition, certain employees
affected by the RAP freeze in 2016 are also eligible to receive employer contributions equal to 6% of annual
compensation for a minimum period of five years or to the end of the year in which they complete thirty years of service.
Effective January 1, 2017, the Company created The Lincoln Electric Company Restoration Plan (“Restoration Plan”).
The Restoration Plan is a domestic unfunded plan maintained for the purpose of providing certain employees the ability
to fully participate in standard employee retirement offerings, which are limited by IRS regulations on covered
compensation.
The annual costs recognized for defined contribution plans were $29,569, $26,282 and $22,593 in 2022, 2021 and 2020,
respectively.
Other Benefits
The Cleveland, Ohio, area operations have a Guaranteed Continuous Employment Plan covering substantially all
employees which, in general, provides that the Company will provide work for at least 75% of every standard work
week (presently 40 hours). This plan does not guarantee employment when the Company’s ability to continue normal
operations is seriously restricted by events beyond the control of the Company. The Company has reserved the right to
terminate this plan effective at the end of a calendar year by giving notice of such termination not less than six months
prior to the end of such year.
NOTE 12 — OTHER INCOME (EXPENSE)
The components of Other income (expense) were as follows:
Equity earnings in affiliates
Other components of net periodic pension (cost) income (1)
Other income (expense)
Total Other income (expense)
$
$
Year Ended December 31,
2021
2020
2022
499 $
(153) $
3,556
6,588
9,991 $ (114,457) $
(123,920)
8,964
408
(1,575)
5,109
3,942
(1) Other components of net periodic pension (cost) income includes pension settlements and curtailments as discussed
in Note 11 to the consolidated financial statements.
F-34
NOTE 13 – INCOME TAXES
The components of income before income taxes were as follows:
U.S.
Non-U.S.
Total
The components of income tax expense (benefit) were as follows:
Current:
Federal
Non-U.S.
State and local
Deferred:
Federal
Non-U.S.
State and local
Total
2022
359,760 $
233,067
592,827 $
Year Ended December 31,
2021
143,290 $
181,708
324,998 $
2020
179,650
84,390
264,040
$
$
Year Ended December 31,
2021
2020
2022
$
88,974 $
55,664
24,423
169,061
23,415 $
44,828
10,298
78,541
(38,462)
(3,281)
(6,715)
(48,458)
120,603 $
(21,538)
(4,488)
(4,097)
(30,123)
48,418 $
$
30,091
18,020
8,770
56,881
(1,898)
3,196
(283)
1,015
57,896
The differences between total income tax expense and the amount computed by applying the statutory federal income tax
rate to income before income taxes for the three years ended December 31, 2022 were as follows:
Statutory rate applied to pre-tax income
State and local income taxes, net of federal tax benefit
Excess tax benefits resulting from exercises of stock-based
compensation
Resolution and settlements to uncertain tax positions
Foreign Derived Intangible Income Deduction
Foreign rate variance
Valuation allowances
Research and development credit
Pension plan termination adjustment
U.S. tax cost (benefit) of foreign source income
Other
Total
Effective tax rate
$
$
2022
124,492
12,904
Year Ended December 31,
2021
68,250
4,005
$
$
(2,500)
(350)
(13,356)
5,020
(4,547)
(6,800)
—
783
4,957
120,603
$
20.3 %
(4,681)
577
(2,197)
2,131
(4,209)
(5,300)
(14,711)
3,488
1,065
48,418
$
14.9 %
2020
55,448
6,148
(2,471)
(4,146)
(1,267)
85
4,753
(4,400)
—
269
3,477
57,896
21.9 %
The 2022 effective tax rate was higher than 2021 primarily due to a change in the mix of earnings, as well as the impact
of the 2021 pension plan termination.
Total income tax payments, net of refunds, were $151,818 in 2022, $87,288 in 2021 and $59,360 in 2020.
F-35
Deferred Taxes
Significant components of deferred tax assets and liabilities at December 31, 2022 and 2021, were as follows:
Deferred tax assets:
Tax loss and credit carry-forwards
Inventory
Other accruals
Research and development capitalization
Employee benefits
Pension obligations
Other
Deferred tax assets, gross
Valuation allowance
Deferred tax assets, net
Deferred tax liabilities:
Property, plant and equipment
Intangible assets
Inventory
Pension and other benefit liabilities
Other
Deferred tax liabilities
Total deferred taxes
December 31,
2022
2021
44,674
937
29,601
26,982
26,674
6,218
7,344
142,430
(44,627)
97,803
40,198
23,790
3,846
13,787
10,393
92,014
5,789
$
$
46,967
1,929
13,395
—
25,741
9,760
5,073
102,865
(51,983)
50,882
40,422
18,253
3,716
16,397
10,494
89,282
(38,400)
$
$
At December 31, 2022, certain subsidiaries had net operating loss carry-forwards of approximately $6,995 that expire in
various years from 2023 through 2036, plus $157,288 for which there is no expiration date.
In assessing the realizability of deferred tax assets, the Company assesses whether it is more-likely-than-not that a
portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred
tax liabilities, tax planning strategies and projected future taxable income in making this assessment. At December 31,
2022, a valuation allowance of $44,627 was recorded against certain deferred tax assets based on this assessment. The
Company believes it is more-likely-than-not that the tax benefit of the remaining net deferred tax assets will be realized.
The amount of net deferred tax assets considered realizable could be increased or reduced in the future if the Company’s
assessment of future taxable income or tax planning strategies changes.
The Company determined it will repatriate earnings for certain non-U.S. subsidiaries, which are subject to foreign
withholding taxes. The Company has estimated the associated tax to be $75. The Company considers remaining earnings
and outside basis in all other non-U.S. subsidiaries to be indefinitely reinvested and has not recorded any deferred taxes
as such estimate is not practicable.
Unrecognized Tax Benefits
Liabilities for unrecognized tax benefits related to uncertain tax positions are classified as Other liabilities unless
expected to be paid in one year. Additionally, to the extent a position would not result in a cash tax liability, those
amounts are generally recorded to Deferred income taxes to offset tax attributes. The Company recognizes interest and
penalties related to unrecognized tax benefits in Income taxes. Current income tax expense included benefits of $486 for
the year ended December 31, 2022 and benefits of $485 for the year ended December 31, 2021 for interest and penalties.
For those same years, the Company’s accrual for interest and penalties related to unrecognized tax benefits totaled
$2,292 and $3,209, respectively.
F-36
The following table summarizes the activity related to unrecognized tax benefits:
Balance at beginning of year
Increase related to current year tax provisions
Increase/(decrease) related to prior years' tax positions
Decrease related to settlements with taxing authorities
Resolution of and other decreases in prior years' tax liabilities
Other
Balance at end of year
$
$
2022
2021
18,211 $
2,263
91
(868)
(1,379)
(895)
17,423
$
17,596
2,693
(17)
—
(1,585)
(476)
18,211
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $14,504 at
December 31, 2022 and $14,918 at December 31, 2021.
The Company files income tax returns in the U.S. and various state, local and foreign jurisdictions. With few exceptions,
the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities
for years before 2018. The Company is currently subject to various state audits and non-U.S. income tax audits. The
Company is generally not able to precisely estimate the ultimate settlement amounts or timing until after the close of an
audit. The Company evaluates its tax positions and establishes liabilities for unrecognized tax benefits related to
uncertain tax positions that may be challenged by local authorities and may not be fully sustained.
Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances,
including management’s judgment in the interpretation of applicable tax law, regulation or tax ruling, the progress of tax
audits and closing of statutes of limitations. Based on information currently available, management believes that
additional audit activity could be completed and/or statutes of limitations may close relating to existing unrecognized tax
benefits. It is reasonably possible there could be a further reduction of $1,279 in prior years’ unrecognized tax benefits in
2023.
NOTE 14 – DERIVATIVES
The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity
prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that
qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was
immaterial for each of the three years in the period ended December 31, 2022.
The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a
number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty
was considered significant at December 31, 2022. The Company does not expect any counterparties to fail to meet their
obligations.
Cash flow hedges
Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross
notional amount of these short-term contracts was $66,296 at December 31, 2022 and $72,630 at December 31, 2021.
The Company has interest rate forward starting swap agreements that are qualified and designated as cash flow hedges.
The dollar equivalent gross notional amount of the long-term contracts was $100,000 at December 31, 2022 and 2021
and have a termination date of August 2025.
The Company has commodity contracts with a notional amount of 875,000 pounds at December 31, 2022 that are
qualified and designated as cash flow hedges.
F-37
Fair value hedges
Certain interest rate swap agreements are qualified and designated as fair value hedges. At December 31, 2022, the
Company had no interest rate swap agreements outstanding. The Company terminated $50,000 of interest rate swaps in
the year ended December 31, 2020, which resulted in a gain of $6,629 that is amortized to interest expense over the
remaining life of the underlying debt.
Net investment hedges
The Company has held cross currency swaps that are qualified and designated as net investment hedges. The dollar
equivalent gross notional amount of these contracts was $0 and $25,000, respectively, as of December 31, 2022 and
2021.
The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The
dollar equivalent gross notional amount of these short-term contracts was $88,843 at December 31, 2022.
Derivatives not designated as hedging instruments
The Company has certain foreign exchange forward contracts which are not designated as hedges. These derivatives are
held as hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was
$380,443 at December 31, 2022 and $301,685 at December 31, 2021.
Fair values of derivative instruments in the Company’s Consolidated Balance Sheets follow:
Derivatives by hedge designation
Designated as hedging instruments:
Foreign exchange contracts
Forward starting swap agreements
Net investment contracts
Commodity contracts
Not designated as hedging
instruments:
Foreign exchange contracts
Total derivatives
December 31, 2022
December 31, 2021
Other
Current
Assets
Other
Current
Other
Liabilities Assets
Other
Other
Current
Liabilities Assets
Other
Current
Other
Liabilities Assets
Other
Liabilities
$ 1,467 $
—
—
181
738 $
—
2,229
33
19,291
—
—
— $
— $ 772 $ 535 $
—
—
—
—
2,095
311
—
—
—
6,990
—
—
— $
—
—
608
—
2,348
790
$ 3,996 $ 3,790 $ 19,291 $
—
4,656
—
—
— $ 7,834 $ 3,980 $ 6,990 $ 608
3,445
—
The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of
the following:
Derivatives by hedge designation
Not designated as hedges:
Foreign exchange contracts
Classification of gain (loss)
Year Ended December 31,
2021
2022
Selling, general
& administrative expenses
$
4,805 $
7,707
F-38
The effects of designated cash flow hedges on AOCI and the Company’s Consolidated Statements of Income consisted
of the following:
Total gain (loss) recognized in AOCI, net of tax
Foreign exchange contracts
Forward starting swap agreements
Net investment contracts
Commodity contracts
December 31, 2022
December 31, 2021
$
$
627
13,191
9,440
91
284
5,232
2,339
239
The Company expects a gain of $718 related to existing contracts to be reclassified from AOCI, net of tax, to earnings
over the next 12 months as the hedged transactions are realized.
Derivative type
Foreign exchange contracts
Commodity contracts
NOTE 15 – FAIR VALUE
Gain (loss) recognized in the
Consolidated Statements of Income:
Sales
Cost of goods sold
Cost of goods sold
Year Ended December 31,
2022
2021
$
962 $
1,906
(169)
2,224
586
—
The following table provides a summary of fair value assets and liabilities as of December 31, 2022 measured at fair
value on a recurring basis:
Description
Assets:
Foreign exchange contracts
Commodity contracts
Forward starting swap agreements
Pension surplus
Total assets
Liabilities:
Foreign exchange contracts
Net investment contracts
Commodity contracts
Deferred compensation
Total liabilities
Quoted Prices in
Active Markets for
Identical Assets or Significant Other
Significant
Balance as of
December 31, 2022
Liabilities
(Level 1)
Observable Inputs Unobservable
Inputs (Level 3)
(Level 2)
$
$
$
$
3,815 $
181
19,291
56,418
79,705 $
1,528 $
2,229
33
39,090
42,880 $
— $
—
—
56,418
56,418 $
— $
—
—
—
— $
3,815 $
181
19,291
—
23,287 $
1,528 $
2,229
33
39,090
42,880 $
—
—
—
—
—
—
—
—
—
—
F-39
The following table provides a summary of fair value assets and liabilities as of December 31, 2021 measured at fair
value on a recurring basis:
Description
Assets:
Foreign exchange contracts
Net investment contracts
Commodity Contracts
Forward starting swap agreements
Total assets
Liabilities:
Foreign exchange contracts
Net investment contracts
Deferred compensation
Total liabilities
Quoted Prices in
Active Markets for
Identical Assets or Significant Other
Significant
Balance as of
December 31, 2021
Liabilities
(Level 1)
Observable Inputs Unobservable
Inputs (Level 3)
(Level 2)
$
$
$
$
5,428 $
2,095
311
6,990
14,824 $
3,980 $
608
41,612
46,200 $
— $
—
—
—
— $
— $
—
—
— $
5,428 $
2,095
311
6,990
14,824 $
3,980 $
608
41,612
46,200 $
—
—
—
—
—
—
—
—
—
The Company’s derivative contracts are valued at fair value using the market approach. The Company measures the fair
value of foreign exchange contracts, interest rate swap agreements, forward starting swap agreements and cross currency
swaps using Level 2 inputs based on observable spot and forward rates in active markets. During the year ended
December 31, 2022, there were no transfers between Levels 1, 2 or 3.
The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan. The
Company measures the fair value of the liability using the market values of the participants’ underlying investment fund
elections.
The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are
included in the Level 1 fair value hierarchy. The pension surplus assets are invested in money market and short-term
duration bond funds at December 31, 2022.
The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and
forward contracts. While these financial instruments are subject to concentrations of credit risk, the Company has
minimized this risk by entering into arrangements with a number of major banks and financial institutions and investing
in several high-quality instruments. The Company does not expect any counterparties to fail to meet their obligations.
The fair value of Cash and cash equivalents, Accounts receivable, Amounts due banks and Trade accounts payable
approximated book value due to the short-term nature of these instruments at both December 31, 2022 and December 31,
2021. Refer to Note 9 to the consolidated financial statements for the fair value estimate of debt.
NOTE 16 – INVENTORY
Inventories in the Consolidated Balance Sheet is comprised of the following components:
Raw materials
Work-in-process
Finished goods
Total
December 31, 2022 December 31, 2021
143,394
$
97,834
298,691
539,919
181,076 $
164,778
319,597
665,451 $
$
The valuation of LIFO inventories is made at the end of each year based on inventory levels and costs at that time.
Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and
costs. Actual year-end inventory levels and costs may differ from interim LIFO inventory valuations. At December 31,
F-40
2022 and 2021, approximately 38% and 36% of total inventories, respectively, were valued using the LIFO method. The
excess of current cost over LIFO cost was $133,909 at December 31, 2022 and $114,176 at December 31, 2021.
NOTE 17 – LEASES
The table below summarizes the right-of-use assets and lease liabilities in the Company’s Consolidated Balance sheets:
Operating Leases
Right-of-use assets
Current liabilities
Noncurrent liabilities
Total lease liabilities
Balance Sheet Classification December 31, 2022 December 31, 2021
47,966
Other assets
44,810 $
$
Other current liabilities $
Other liabilities
$
10,378 $
35,945
46,323 $
10,218
38,960
49,178
Total lease expense, which is included in Cost of goods sold and Selling, general and administrative expenses in the
Company’s Consolidated Statements of Income, was $20,548, $21,630 and $23,499 in the years ended December 31,
2022, 2021 and 2020, respectively. Cash paid for amounts included in the measurement of lease liabilities for the years
ended December 31, 2022 and 2021 was $12,036 and $15,723, respectively, are included in Net cash provided by
operating activities in the Company’s Consolidated Statements of Cash Flows. Right-of-use assets obtained in exchange
for operating lease liabilities during the years ended December 31, 2022 and 2021 were $9,332 and $12,257,
respectively.
The total future minimum lease payments for noncancelable operating leases were as follows:
2023
2024
2025
2026
2027
After 2027
Total lease payments
Less: Imputed interest
Operating lease liabilities
$
December 31, 2022
11,342
9,911
6,677
5,417
3,893
14,558
51,798
5,475
46,323
$
$
As of December 31, 2022 and 2021, the weighted average remaining lease term was 7.8 years and 8.6 years,
respectively. As of December 31, 2022 and 2021, the weighted average discount rate used to determine the operating
lease liability was 2.96% and 3.1%, respectively.
NOTE 18 – CONTINGENCIES
The Company, like other manufacturers, is subject from time to time to a variety of civil and administrative proceedings
arising in the ordinary course of business. Such claims and litigation include, without limitation, product liability claims,
regulatory claims, employment-related claims and health, safety and environmental claims, some of which relate to cases
alleging asbestos induced illnesses. The claimants in the asbestos cases seek compensatory and punitive damages, in
most cases for unspecified amounts. The Company believes it has meritorious defenses to these claims and intends to
contest such suits vigorously.
The Company accrues its best estimate of the probable costs, after a review of the facts with management and counsel
and taking into account past experience. For claims or litigation that are material, if an unfavorable outcome is
determined to be reasonably possible and the amount of loss can be reasonably estimated, or if an unfavorable outcome
is determined to be probable and the amount of loss cannot be reasonably estimated, disclosure would be provided.
Many of the current cases are in differing procedural stages and information on the circumstances of each claimant,
F-41
which forms the basis for judgments as to the validity or ultimate disposition of such actions, varies greatly. Therefore,
in many situations a range of possible losses cannot be made. Reserves are adjusted as facts and circumstances change
and related management assessments of the underlying merits and the likelihood of outcomes change. Moreover,
reserves only cover identified and/or asserted claims. Future claims could, therefore, give rise to increases to such
reserves.
Based on the Company’s historical experience in litigating product liability claims, including a significant number of
dismissals, summary judgments and defense verdicts in many cases and immaterial settlement amounts, as well as the
Company’s current assessment of the underlying merits of the claims and applicable insurance, the Company believes
resolution of these claims and proceedings, individually or in the aggregate, will not have a material effect on the
Company’s consolidated financial statements.
F-42
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS
LINCOLN ELECTRIC HOLDINGS, INC.
(In thousands)
Additions
Balance at
Beginning
Charged to
Costs and
Expenses
Of period
Charged
(Credited) to
Balance at End
Other Accounts (1) Deductions (2)
of Period
Description
Allowance for doubtful accounts:
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
$
11,105 $
14,779
16,002
1,778
718
1,391
Deferred tax asset valuation allowance:
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
$
55,619 $
65,413
71,546
2,262
1,147
9,606
$
$
$
$
598
(2,491)
(1,239)
(5,197)
(3,873)
(6,741)
$
$
925
1,901
1,375
8,057
7,068
8,998
12,556
11,105
14,779
44,627
55,619
65,413
(1) Currency translation adjustment, reductions from restructuring and other adjustments.
(2) For the Allowance for doubtful accounts, deductions relate to uncollectible accounts written-off, net of recoveries.
For the Deferred tax asset valuation allowance, deductions relate to the reversal of valuation allowances due to the
realization of net operating loss carryforwards.
F-43
CORPORATE
INFORMATION
MENU
MENU
LINCOLN ELECTRIC HOLDINGS, INC.
BOA R D OF DIR ECTOR S
L E A DER SHIP T E A M
CORPORATE INFORMATION
Brian D. Chambers
Chair, President and
Chief Executive Officer
Owens Corning
Curtis E. Espeland
Retired Executive Vice President
and Chief Financial Officer
Eastman Chemical Company
Patrick P. Goris
Senior Vice President and
Chief Financial Officer
Carrier Global Corporation
Michael F. Hilton
Retired President and
Chief Executive Officer
Nordson Corporation
Kathryn Jo Lincoln
Chair and Chief Investment Officer
Lincoln Institute of Land Policy
Christopher L. Mapes
Chairman, President and
Chief Executive Officer
Lincoln Electric Holdings, Inc.
Phillip J. Mason
Retired President
Ecolab EMEA sector
Ben P. Patel
Former Senior Vice President
and Chief Technology Officer
Cooper Tire & Rubber Company
Hellene S. Runtagh
Retired President and
Chief Executive Officer
Berwind Group
Kellye L. Walker
Executive Vice President
and Chief Legal Officer
Eastman Chemical Company
Geoffrey P. Allman
Senior Vice President
Strategy and Business Development
Jennifer I. Ansberry
Executive Vice President
General Counsel and Secretary
Gabriel Bruno
Executive Vice President
Chief Financial Officer and Treasurer
Lisa A. Dietrich
Executive Vice President
Chief Information Officer
Gregory D. Doria
Senior Vice President
President, Harris Products Group
Steven B. Hedlund
Executive Vice President
Chief Operating Officer
Michele R. Kuhrt
Executive Vice President
Chief Human Resources Officer
Douglas S. Lance
Senior Vice President
President, North America Welding
Christopher L. Mapes
Chairman, President and
Chief Executive Officer
Peter M. Pletcher
Senior Vice President
President, International
Michael J. Whitehead
Senior Vice President
President, Global Automation,
Cutting & Additive Businesses
For additional corporate information and copies of
Lincoln Electric’s 2022 Annual Report and Form 10-K,
and 2023 Proxy Statement, please contact Amanda
Butler in Investor Relations at (216) 383-2534,
email: Amanda_Butler@lincolnelectric.com,
22801 St. Clair Avenue, Cleveland, Ohio 44117-1199 USA,
or visit www.lincolnelectric.com.
TRANSFER AGENT AND REGISTRAR
Inquiries about dividends, shareholder records, share
transfers, changes in ownership and address changes
should be directed to Computershare Inc.:
Mail
Computershare
Attn: Shareholder Services
P.O. Box 43078
Providence, RI 02940-3078
Courier
Computershare
Attn: Shareholder Services
150 Royall Street, Ste. 101
Canton, MA 02021
Direct
(800) 736-3001 or (781) 575-3100
Email: webqueries@computershare.com
Online: www.computershare.com
SUSTAINABILITY
Visit https://sustainability.lincolnelectric.com to
learn about our policies and programs.
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Ernst & Young LLP
ANNUAL MEETING
Wednesday, April 19, 2023
11:00 a.m. Eastern Time
Online at:
www.virtualshareholdermeeting.com/LECO2023
STOCK INFORMATION
The Company’s stock is traded on the NASDAQ Stock
Market (“NASDAQ”) under the symbol LECO.
Number of record holders of common shares at
December 31, 2022: 2,236
MENU
Lincoln Electric Holdings, Inc.
22801 St. Clair Avenue
Cleveland, Ohio 44117-1199 U.S.A.
www.lincolnelectric.com